As filed with the Securities and Exchange Commission on October 7, 1997
Securities Act of 1933 File No. 2-80886
Investment Company Act of 1940 File No. 811-3626
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 38
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 33
---------------------------------
CITIZENS INVESTMENT TRUST
(Exact name of registrant as specified in charter)
One Harbour Place
Suite 525
Portsmouth, N.H. 03801
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (603) 436-5152
Sophia Collier
One Harbour Place
Suite 525
Portsmouth, N.H. 03801
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
[X] immediately upon filing pursuant to paragraph (b)
[ ] on _____________ pursuant to paragraph (b)
[ ] 75 days after filing pursuant to paragraph (a)
[ ] on (date) pursuant to paragraph (a) of Rule 485
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant
has previously registered an indefinite number of securities under the
Securities Act of 1933. The Notice required by Rule 24f-2 was filed by the
Registrant for its most recent fiscal year on August 28, 1997.
- --------------------
[bullet]This N-1A filing relates to the Working Assets Money Market (Retail
Class), Citizens Income Portfolio, Citizens Index Portfolio (Retail Class),
Citizens Emerging Growth Portfolio and Citizens Global Equity Portfolio.
<PAGE>
CITIZENS INVESTMENT TRUST
CROSS INDEX PAGE
WORKING ASSETS MONEY MARKET, CITIZENS INCOME, CITIZENS EMERGING GROWTH,
CITIZENS GLOBAL EQUITY, CITIZENS INDEX AND E[bullet]FUND PORTFOLIOS
<TABLE>
<CAPTION>
Part A INFORMATION REQUIRED IN A PROSPECTUS
ITEM REFERENCE Page
<S> <C> <C> <C>
Item 1. Cover Page Cover Page 1
Item 2. Synopsis; Fee Information Cover Page; Fee Information 1; 3
Item 3. Condensed Financial Information Condensed Financial Information; Financial 4; 5
Highlights
Item 4. General Description of Registrant Organization and Management of the Trust 10
Item 5. Management of the Fund Organization and Management of the Trust 10
Item 6. Capital Stock and other Securities How to Purchase and Redeem Shares; 12; 14
Dividends, Distributions, and Taxes
Item 7. Purchase of Securities Being Offered How to Purchase and Redeem Shares 12
Item 8. Redemption or Repurchase How to Purchase and Redeem Shares 12
Item 9. Legal Proceedings None N/A
Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 10. Cover Page Cover Page 1
Item 11. Table of Contents Table of Contents 1
Item 12. General Information & History The Fund 2
Item 13. Investment Objectives & Policies Investment Objectives and 2; 9
Policies; Other Investment Techniques
Item 14. Management of the Registrant Trustees and Officers; Additional 19; 21
Information Regarding Management Company
Item 15. Control Persons & Principal Holders of Additional Information Regarding Citizens 21
Securities Advisers
Item 16. Investment Advisory & Other Services Investment Advisory & Other Services 21
Item 17. Brokerage Allocation & Other Practices Turnover and Portfolio Transactions 9
Item 18. Capital Stock & Other Securities The Value of Our Shares 11
Item 19. Purchase, Redemption & Pricing of Additional Redemption Information 18
Securities Being Offered
Item 20. Tax Status Federal Taxes 16
Item 21. Underwriters Investment Advisory and Other Services 21
.
Item 22. Calculation of Yield Quotations of Money About Our Yield and Total Return 12
Market Funds
Item 23. Financial Statements Financial Statements 27
</TABLE>
<PAGE>
The Talking Prospectus Citizens Trust
October 3, 1997
Dear Friend,
This prospectus is a bit different from other mutual fund prospectuses. It is
written - not by a lawyer - but by the people who work for the Trust. I hope
you'll take some time to read it carefully (and retain it for your future
reference). I think you'll find we have some new and interesting ideas about how
to make money investing in mutual funds.
We believe there is a revolution going on in business today, and only certain
companies will be able to thrive in this faster-paced and environmentally
concerned business environment. At Citizens Trust, we identify and invest in
these companies - businesses with the potential to produce strong financial
results today, as well as create a world we want to live in tomorrow.
We truly believe that understanding your investments starts right here with our
own prospectus. You deserve not only lucid, concise prose, but an informative,
even enjoyable, reading experience.
[Photo: Sophia Collier, President] Sincerely,
/s/ Sophia Collier
Sophia Collier
President
Our Portfolios
Both E[bullet]fund's(R) and 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 we will be able to do so. Shares are neither insured nor guaranteed by
the U.S. Government.
Citizens Income Portfolio invests in fixed-income securities to generate current
income and pay a dividend every month.
Citizens Index Portfolio is a market weighted portfolio of 300 companies, with
the objective of long-term capital appreciation.
Citizens Emerging Growth Portfolio invests in promising small- and medium-sized
companies with the objective of aggressive growth.
Citizens Global Equity Portfolio holds U.S. and foreign stocks for capital
appreciation.
Our Statement of Additional Information, dated the same as this prospectus and
incorporated herein by reference, is filed with the Securities and Exchange
Commission. If you would like a copy, please call us toll-free at 800-223-7010.
This prospectus is available electronically at: http://www.efund.com. The
Securities and Exchange Commission maintains a website (http://www.sec.gov) that
contains the Statement of Additional Information, material incorporated by
reference and other information regarding the portfolios.
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
CITIZENS TRUST IS AN OPEN-ENDED,
DIVERSIFIED MANAGEMENT COMPANY,
NOT A BANK.
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.
[Logo: Citizens Trust(TM)]
603-436-5152
800-223-7010
1
<PAGE>
The Talking Prospectus
TABLE OF CONTENTS
Dear Friend 1
Trustee News 2
Fee Information 3
Financial Highlights 4
How We Select Our Investments 6
Citizens Index Portfolio 7
Citizens Global Equity Portfolio 7
E[bullet]fund(R) and Working Assets
Money Market Portfolio 8
Citizens Income Portfolio 9
Citizens Emerging Growth Portfolio 10
Organization and Management of
the Trust 10
How to Purchase and Redeem Shares 12
Shareholder Services 14
Dividends, Distributions and Taxes 15
Mailing Address/
Wiring Instructions 15
Trustee Profiles 16
Trustee News
If you are interested in becoming a shareholder in any of the Citizens Trust
portfolios, we'd like to tell you about what our board of trustees has been
working on. The board of trustees meets quarterly; and our most recent meeting
was held August 4, 1997. Among matters taken up at the August 1997 meeting were
the assignment of sub-advisory services for two portfolios of the Trust and the
merger of the Trust's two money market portfolios.
The assignment of sub-advisory services for the Citizens Income Portfolio and
the Citizens Emerging Growth Portfolio is proposed simply because our current
sub-adviser, GMG/Seneca Capital Management, L.P., is merging with an affiliate,
GMG/ Seneca Capital Management LLC, and this affiliate has in turn entered into
an agreement to be acquired by Phoenix, Duff & Phelps. This merger and
acquisition will not result in a change of the management of the sub-adviser or
a change in the portfolio manager, but it will result in the termination of the
present sub-advisory agreement, and the board of trustees therefore has approved
a new one, which will therefore be submitted to shareholders of the Income
Portfolio and the Emerging Growth Portfolio for their approval.
The board of trustees has also considered a proposal to merge the Trust's two
money market funds by reorganizing the E[bullet]fund(R) into the Working Assets
Money Market Portfolio. The board approved a plan of reorganization and it will
soon be submitted to shareholders of the E[bullet]fund(R) for their approval. We
are excited about this plan and believe it will be of benefit to shareholders
should it be approved.
We do our best to keep our shareholders informed of developments at Citizens
Trust, and our board of trustees encourages shareholder participation and ideas.
Confidentiality of Shareholder Transactions
"As Trustees, we have a firm `no exceptions' policy stating that no shareholder
transaction information will be sold or shared with anyone, except as required
by law, or with the shareholder's permission."
No Load
All portfolios are no load. All portfolios, except the E[bullet]fund(R), are
subject to 12b-1 fees.
Minimum Initial Investment
There is a minimum investment of $2,500 for all portfolios except the
E[bullet]fund(R), which requires an initial investment of only $1,000. With the
exception of the E[bullet]fund(R), you can invest in any portfolio for as little
as $250 if you set up an Automatic Investment Plan, currently $50 per month.
Escrow Policy
We reserve the right to wait up to 7 (seven) business days to redeem any
investments made by check, and 5 (five) business days for purchases made by ACH
transfer. Therefore, if you need to redeem shares within 7 (seven) business days
of your purchase, please invest by wire. We also reserve the right to close your
account for any lawful reason including, but not limited to, reasonable
suspicion of fraud or other illegal activity in connection with the account.
Please make all checks payable to "Citizens Trust". We are unable to accept
third-party checks.
2
<PAGE>
Citizens Trust
Fee Information
<TABLE>
<CAPTION>
WORKING
ASSETS
MONEY EMERGING GLOBAL
MARKET INCOME GROWTH INDEX E[BULLET]FUND(R) EQUITY
Shareholder Transaction Expenses
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases None None None None None None
(as a % of offering price)
Maximum Sales Load Imposed on Reinvested None None None None None None
Dividends (as a % of offering price)
Deferred Sales Load (as a % of the original None None None None None None
purchase price or redemption proceeds)
Redemption Fees (as a % of amount redeemed) None None None None None None
Exchange Fee (per exchange) None None None None None None
Annual Portfolio Operating Expenses
(as a percentage of Average Net Assets)
Management Fees .35% .65% 1.00% .50% .10% 1.00%
Distribution Expense .20% .25% .25% .25% None .25%
Other Expenses (+after waiver and reimbursement) .70%+ .55% .82% .84% 1.37%+ .88%
Total Portfolio Operating Expenses 1.25%* 1.45%* 2.07%* 1.59%* 1.47%* 2.13%*
</TABLE>
*Restated to reflect current fees and expenses
+The Adviser waived certain fees and reimbursed certain expenses. The ratio
prior to reimbursement for the year ending June 30, 1997, for the Working
Assets Money Market Portfolio and E[bullet]fund(R) are 1.39% and 1.47%,
respectively.
................................................................................
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 5 Years 10 Years
------ ------- ------- --------
Working Assets Money Market Portfolio $13 $40 $69 $151
E[bullet]fund(R) 50 151 255 526
Citizens Income Portfolio 15 46 79 174
Citizens Index Portfolio 16 50 87 189
Citizens Emerging Growth Portfolio 21 65 111 240
Citizens Global Equity Portfolio 22 67 114 246
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.
The example for the E[bullet]fund(R) includes the $35 annual fee for the
Citizens Access Account.
Costs For Other Services
<TABLE>
<S> <C>
Returned checks (all portfolios) ...................................................................................$15.00
Returned Electronic Purchase/Payment - ACH (all portfolios).........................................................$10.00
Outgoing wire transfer (all portfolios).......$10.00 / International wire transfer (all portfolios).................$20.00
Incoming wire (all portfolios)........................................................................................Free
Two-day electronic payment - ACH (all portfolios).................................2 per month free / $0.50 each thereafter
Per check fee (excluding E[bullet]fund(R))..........................................................................$.50**
Stop payments (All portfolios)......................................................................................$10.00
Checkbooks (Working Assets & E[bullet]fund(R..............first 20 free / box of 200 checks $15.95 (E[bullet]fund(R) only)
ATM cost (E[bullet]fund(R) only)...........................................................$0.65 each /cash advance: $2.50
Annual fee for E[bullet]fund(R) ................................................................................... $35.00
Debit card replacement (Citizens Access Account) ...................................................................$10.00
Copies of statements, checks and tax forms..................................................................... $2.00 each
Below minimum $2,500.00 balance (excluding E[bullet]fund(R))............................................$3.00 each month**
</TABLE>
**Effective December 1, 1997
3
<PAGE>
The Talking Prospectus
Financial Highlights
<TABLE>
<CAPTION>
Per Share Data
Income (Loss) From Investment Operations Less Distributions
Net Gains
(Losses)
Net Asset on Securities Distributions
Year Value Net (both Total from Dividends (from Net Net Asset
Ending Beginning of Income Realized and Investment (from Net Realized Total Value, End
June 30 Period (Loss) Unrealized) Operations Income) Gain) Distributions of Period
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Working Assets Money Market Portfolio
1988 1.00 0.06 0.00 0.06 (0.06) 0.00 (0.06) 1.00
1989 1.00 0.08 0.00 0.08 (0.08) 0.00 (0.08) 1.00
1990 1.00 0.08 0.00 0.08 (0.08) 0.00 (0.08) 1.00
1991 1.00 0.07 0.00 0.07 (0.07) 0.00 (0.07) 1.00
1992 1.00 0.04 0.00 0.04 (0.04) 0.00 (0.04) 1.00
1993 1.00 0.02 0.00 0.02 (0.02) 0.00 (0.02) 1.00
1994 1.00 0.02 0.00 0.02 (0.02) 0.00 (0.02) 1.00
1995 1.00 0.04 0.00 0.04 (0.04) 0.00 (0.04) 1.00
1996 1.00 0.05 0.00 0.05 (0.05) 0.00 (0.05) 1.00
1997 1.00 0.04 0.00 0.04 (0.04) 0.00 (0.04) 1.00
E[bullet]fund(R)
1996(5) 1.00 0.06 0.00 0.06 (0.06) 0.00 (0.06) 1.00
1997 1.00 0.06 0.00 0.06 (0.06) 0.00 (0.06) 1.00
Citizens Income Portfolio
1992(1) 10.00 0.01 0.07 0.08 (0.01) 0.00 (0.01) 10.07
1993 10.07 0.46 0.54 1.00 (0.47) 0.00 (0.47) 10.60
1994 10.60 0.55 (0.54) 0.01 (0.55) (0.02) (0.57) 10.04
1995 10.04 0.65 0.36 1.01 (0.65) (0.02) (0.67) 10.38
1996 10.38 0.66 (0.10) 0.56 (0.66) 0.00 (0.66) 10.28
1997 10.28 0.67 0.28 0.95 (0.67) 0.00 (0.67) 10.56
Citizens Index Portfolio
1995(4) 10.00 0.01 0.93 0.94 0.00 0.00 0.00 10.94
1996 10.94 0.08 2.47 2.55 (0.03) (0.05) (0.08) 13.41
1997 13.41 0.00 4.78 4.78 (0.06) (0.09) (0.15) 18.04
Citizens Emerging Growth
1994(2) 10.00 0.01 (0.08) (0.07) 0.00 0.00 0.00 9.93
1995 9.93 0.07 2.18 2.25 (0.09) (0.22) (0.31) 11.87
1996 11.87 (0.13) 4.72 4.59 0.00 (1.59) (1.59) 14.87
1997 14.87 (0.16) 0.68 0.52 0.00 (1.25) (1.25) 14.14
Citizens Global Equity Portfolio
1994(2) 10.00 0.01 (0.21) (0.20) 0.00 0.00 0.00 9.80
1995 9.80 (0.01) 0.96 0.95 0.00 (0.06) (0.06) 10.69
1996 10.69 (0.10) 1.43 1.33 0.00 (0.13) (0.13) 11.89
1997 11.89 (0.07) 2.65 2.58 0.00 0.00 0.00 14.47
</TABLE>
(1) Period from June 10, 1992 (commencement of operations)
(2) Period from February 8, 1994 (commencement of operations)
(3) Annualized
(4) Period from March 3, 1995 (commencement of operations)
(5) Period from July 1, 1995 (commencement of operations)
4
<PAGE>
<TABLE>
<CAPTION>
Citizens Trust
Ratios And Supplemental Data
Ratio of Ratio of
Net Expenses to Ratio of Net Income
Assets Ratio of Average Net Net Income (Loss) to
Portfolio End of Expenses Assets (Loss) to Average Net
Turnover Period to Average Prior to Average Net Assets Prior to Total
Rate (in 000's) Net Assets Reimbursement Assets Reimbursement Return
<S> <C> <C> <C> <C> <C> <C>
NA 123,861 1.15% 1.15% 5.98% 5.98% 6.19%
NA 166,285 1.13% 1.13% 7.74% 7.74% 8.02%
NA 214,603 1.05% 1.05% 7.50% 7.50% 7.81%
NA 243,194 1.02% 1.02% 6.47% 6.47% 6.67%
NA 223,951 1.07% 1.07% 4.09% 4.09% 4.16%
NA 152,625 1.11% 1.11% 2.41% 2.41% 2.43%
NA 103,766 1.16% 1.16% 2.31% 2.31% 2.35%
NA 97,611 1.16% 1.16% 4.39% 4.39% 4.51%
NA 78,326 1.21% 1.21% 4.56% 4.56% 4.60%
NA 85,179 1.27% 1.39% 4.23% 4.12% 4.30%
NA 11,082 0.00% 1.55% 6.02% 4.64% 6.10%
NA 20,702 0.10% 1.47% 5.76% 4.39% 5.90%
0.00% 1,030 1.75%(3) NA 4.38%(3) NA 0.80%
22.35% 12,601 1.42% 2.38% 4.98% 4.02% 10.08%
52.62% 24,410 1.25% 2.01% 5.43% 4.68% 0.04%
46.03% 30,122 1.35% 1.48% 6.47% 6.34% 10.45%
41.36% 32,276 1.43% 1.48% 6.26% 6.21% 5.48%
64.56% 33,230 1.47% 1.47% 6.44% 6.44% 9.57%
64.95% 106,096 1.75%(3) NA 0.98%(3) NA 9.40%
6.44% 136,980 1.82% 1.82% 0.68% 0.68% 23.41%
18.64% 211,116 1.59% 1.59% 0.02% 0.02% 35.88%
33.35% 3,754 1.89%(3) 3.81%(3) 0.63%(3) (1.29%)(3) (0.70%)
231.30% 10,638 1.90% 2.93% 0.53% (0.50%) 23.24%
337.41% 36,409 2.10% 2.34% (1.64%) (1.88%) 42.43%
228.66% 60,341 2.01% 2.01% (1.32%) (1.32%) 4.03%
0.00% 5,639 2.50%(3) 3.16%(3) 0.25%(3) (0.41%)(3) (2.00%)
22.10% 9,503 2.50% 2.99% 0.00% (0.49%) 9.77%
85.92% 15,595 2.72% 2.72% (1.01%) (1.01%) 12.52%
69.34% 29,573 2.33% 2.33% (0.70%) (0.70%) 21.70%
</TABLE>
5
<PAGE>
The Talking Prospectus
Auditor
[Photo: Jim Mahoney]
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 preceding page are for the fiscal year ended
June 30, 1997. The complete statements and our auditor's opinion on the
condensed financial information for the most recent five years appear in the
1997 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 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 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 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.
Repurchase Agreements
To allow us to earn a return on surplus cash, we usually invest this cash
overnight or for longer periods through an arrangement called a repurchase
agreement, or "repo," with a financially strong company that is
6
<PAGE>
either a large stock broker or a substantial bank that is a member of the
Federal Reserve. As additional security, we always require all vendors of
repurchase agreements to set aside collateral in our name in the form of
government securities equal to 102% of the value of any repurchase agreement.
However, it is important to note that while repurchase agreements are a useful
tool in managing the portfolio, they do have some greater risk than direct
investing in securities. If a bank or stockbroker becomes bankrupt, or otherwise
defaults after selling us a repurchase agreement, we may suffer some delay and
expense in liquidating our collateral or have a loss of principal or interest.
However, in any default, the resold securities are expected to provide
collateral sufficient to cover the amount of the repurchase agreement, so we do
not feel these risks outweigh the benefits of repurchase agreements.
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).
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 of these are very large companies that also are 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 as
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.
Citizens Global Equity Portfolio
Objective: Holds U.S. and foreign stocks for capital appreciation.
The world is changing rapidly, with new companies - and even new
Citizens Trust
Manager
[Photo: Edwin Ek]
Portfolio manager for Citizens
Index Portfolio, EDWIN EK 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.
"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."
7
<PAGE>
The Talking Prospectus
Manager
[Photo: Lilia Clemente]
LILIA CLEMENTE is the Chairman of
Clemente Capital, Inc., the lead
member of the team which manages
the Citizens Global Equity
Portfolio:
"As a person who was born in the
Philippines and who has traveled
throughout the world as a global
investor, I believe global
investment offers an opportunity
to reduce risk and increase
returns by linking security and
prosperity to the performance of
an array of markets and companies,
instead of concentrating only in
the U.S. "
Laura Povost is the lead manager
of the team that manages our money
market funds. She joined Citizens
Advisers in 1997. Previously, she
was a portfolio manager with John
Hancock Mutual Funds.
countries - being created every year. We expect that tremendous value will be
created and earned by those companies and by investors who are successful at
understanding these new markets. In the Citizens Global Equity Portfolio, we
invest primarily in common stocks of both U.S. domestic and foreign companies.
We seek companies with growing sustainable earnings, innovative products,
services and business strategies, revised corporate strategies, or beneficiaries
of political or economic conditions. We plan to allocate more than half our
assets to foreign markets, in most circumstances in a minimum of three
countries. From time to time, we also may buy other securities, such as
convertible or preferred stocks and short-term debt securities.
Risk Factors
You should be aware of the potential risks of investing outside of the United
States. Foreign stock markets are generally less efficient and more volatile
than those in the United States. This creates opportunities, but also risk.
Settlement and trading costs are generally higher on foreign exchanges than in
the U.S. The economies and governments of some countries that the portfolio may
invest in may be less mature and stable than those of the U.S., and when
political or economic changes occur, there can be an adverse impact on the
portfolio. This includes exchange control regulation, expropriation,
confiscatory taxation and political or social instability. The risks of
investing in emerging market countries are even greater, and can involve risk of
higher inflation, high sensitivity to commodity prices and economic dependence
on few industries - or government-owned industries.
To moderate these risks and gain potential benefits, we use a number of
investment techniques. One of these is country selection. We restrict our
investments in riskier emerging nations (such as Argentina or Singapore) to no
more than 25% of the assets of Citizens Global Equity Portfolio.
When we invest in foreign exchanges we buy securities in the currency of the
local country. Often the local currency will fluctuate against the dollar. To
moderate this risk we sometimes use currency "hedging." We do this by entering
into arrangements to buy or sell a particular currency, security, or securities
index for a stated value against the dollar at a given time. While there is a
cost involved in hedging, as well as a risk that our hedging strategy may not
work and will add cost or reduce our potential gains, we still think hedging can
be a valuable tool.
The E[bullet]fund(R) and the Working Assets Money Market Portfolio
Objective: Current income consistent with safety and liquidity.
These are good vehicles 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.
8
<PAGE>
Citizens Trust
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
rated only 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.
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.
Risk Factors
The shares of the E[bullet]fund(R) and the Working Assets Money Market Portfolio
are neither insured nor guaranteed by the U.S. government, and there is no
assurance that either portfolio will be able to maintain a stable Net Asset
Value of $1.00 per share, despite our care and caution.
Citizens Income Portfolio
Objective: To generate current income and pay a dividend every month.
Citizens Income Portfolio is similar to the money market portfolios in that it
lends money to the agencies and enterprises of the government and to companies
in exchange for interest payments. However, unlike the money market portfolio
(which only makes short-term loans), the Income Portfolio invests most of its
money in bonds or mortgages that are due within two to 30 years, although at
times it will hold short-term securities as well. Our average maturity in the
Citizens Income Portfolio is usually between five and 15 years. By committing
money for this longer period, we generally can earn higher interest than in the
money market portfolios.
At least 65% of Citizens Income Portfolio's assets are invested in securities
rated "investment grade" (BBB or above). Up to 35% may be invested in bonds or
other debt instruments rated as below investment grades. Although bonds rated
below BBB are considered speculative (and are referred to as "junk bonds") and
therefore add risk, we believe by limiting the overall portfolio exposure to a
maximum level of 35%, the higher yield usually available in these securities can
benefit the portfolio and more than compensate for the greater risk.
Occasionally, we buy securities that are not rated. In these cases, the security
must be of comparable quality, in our judgment, to the rated securities we buy
for the applicable portfolio.
In our Statement of Additional Information, we give more detailed information
about each rating agency and its system of ratings.
Risk Factors
Bond prices, like stock prices, go up and down in value. These market price
fluctuations will be reflected in the value of the Citizens Income Portfolio.
When interest rates rise, the market value of our Income Portfolio will decline,
and when interest rates fall, the market value of our Income Portfolio will
rise.
Manager
[Photo: Gail Seneca]
The managing partner of our
sub-adviser, GMG/Seneca Capital
Management, L.P. , GAIL SENECA is
the primary manager of the
Citizens Income Portfolio.
"Since our goal is to achieve a
reliable stream of monthly income,
we analyze carefully the credit
quality of the debt we purchase."
9
<PAGE>
The Talking Prospectus
Manager
[Photo: Rick Little]
Part of the team that manages the
Citizens Emerging Growth
Portfolio, RICK LITTLE has worked
in the investment field for 24
years. He has been with GMG/Seneca
Capital Management, LP., since its
inception in 1990 and was
previously a senior vice president
at NatWest Securities. He explains
the investment approach used to
manage the Emerging Growth
Portfolio:
"We are looking to build a
portfolio of companies that have
special characteristics, and
therefore have the ability to grow
in their sales and earnings at a
rapid rate. These are the
companies we hope can become `the
next Microsoft,' developing new
and innovative products and
services."
Citizens Emerging Growth Portfolio
Objective: Aggressive growth through investment in small- and medium-sized
companies.
Our Citizens Emerging Growth Portfolio looks for aggressive gains with long-term
investing in mid-cap companies. During normal market conditions, at least 65% of
this portfolio's assets will be invested in the common or preferred stock of
companies that average at least $2 billion in market capitalization.
Risk Factors
While many of these companies will have strong businesses, some will still be
unseasoned and therefore may have some speculative characteristics. Investing in
smaller companies is a long-term process with the potential for significant
gains. However, the value of this portfolio can have significant fluctuation
because smaller companies have unique risks. They may be dependent on individual
managers or have a harder time obtaining financing and market share. Further,
their shares are more volatile and thinly traded. To moderate this risk we plan
typically to hold between 30 and 50 companies in the portfolio.
Since most of the companies we will purchase for the Citizens Emerging Growth
Portfolio are relatively new, we don't expect much, if any, dividend income. At
times we may also buy short-term fixed-income securities for the portfolio.
Organization and Management of the Trust
Citizens Investment Trust began November 24, 1982. Today, it's affectionately
known as Citizens Trust. We are a Massachusetts business trust and an open-end
investment company registered under the Investment Company Act of 1940 as a
diversified management company. The Trust is also a "series" company, which
means we can have several portfolios, each with its own investment objective,
assets, and liabilities. The Trust is supervised by a board of trustees.
In order to manage the Trust on a day-to-day basis, we have signed a Management
Agreement with our investment adviser, Citizens Advisers, with offices at One
Harbour Place, Portsmouth, NH 03801. Citizens Advisers has managed the Trust's
assets since the Trust's inception.
Citizens Advisers and its wholly-owned subsidiary, Citizens Securities, are both
California corporations. Sophia Collier is the 60% owner. Fellow shareholders
are three brothers, John P. Dunfey, Robert J. Dunfey, Sr. and Gerald F. Dunfey,
who own 12% each, and William B. Hart, who owns 4%.
The Role of Investment Adviser
Our investment adviser's job is to determine which companies meet the Trust's
investment criteria and will be carried on our "Approved List." To assist with
portfolio management, they have retained at their own expense these
sub-advisers.
GMG/Seneca Capital Management, L.P.
Our sub-adviser for the Citizens Income and Emerging Growth Portfolios,
GMG/Seneca Capital Management L.P., is a registered investment adviser
established in 1990. It is a wholly-owned subsidiary of GMG Capital Management,
LLC, which manages over $3 billion from its offices at 909 Montgomery Street,
San Francisco, CA. Organized as a California limited
10
<PAGE>
Citizens Trust
partnership, GMG/Seneca Capital Management, L.P. has two general partners, Gail
Seneca and Genesis Merchant Group, L.P., an Illinois Limited Partnership.
Genesis Merchant Group, in turn, has three general partners: William K.
Weinstein, Gail Seneca and Philip C. Stapleton. Prior to starting GMG/Seneca,
Gail was employed by Wells Fargo Bank as a senior investment officer.
Clemente Capital, Inc.
Our sub-adviser for the Citizens Global Equity Portfolio, Clemente Capital,
Inc., is a registered investment adviser organized in 1979. It is majority owned
by Lilia Clemente with 61.15%; Wilmington Trust of Wilmington, DE, with 24%; and
Diaz-Verson Capital Investments, Inc. of Columbus, GA, with 14.85%. Clemente
also manages the First Philippine and Clemente Global Growth Funds, two
closed-end funds traded on the New York Stock Exchange. Its headquarters are at
Carnegie Hall Tower, 152 West 57th Street, New York, NY.
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.
Citizens Trust's Management Agreement
Citizens Trust's Management Agreement with Citizens Advisers specifies fees as
follows (based on average annual net assets of the respective portfolios):
TRUST ADVISER
PAYS PAYS
PORTFOLIO ADVISER SUB-ADVISER
Working Assets
Money Market Portfolio .35% -
E[bullet]fund(R) Money Market Portfolio .10% -
Income Portfolio .65% .17%
Index Portfolio .50% .10%
Emerging Growth Portfolio 1.00% .35%
Global Equity Portfolio 1.00% .35%
Citizens Advisers also has a separate administrative contract for providing
general administrative services, shareholder servicing and sub-accounting,
telephone services and services related to the organization of a portfolio's
federal and state regulatory filings. The fees paid by the Trust under this
contract are set by the Trustees based upon the services required. Citizens
Advisers will sometimes contract to have specialized services provided by third
parties, such as investment advisers for pension funds or other institutions
which maintain omnibus accounts with the Trust. Under the administrative
contract for the year ending June 30, 1997, we paid $1,711,524 to Citizens
Advisers for its administrative services.
The individual portfolios pay all expenses not expressly assumed by Citizens
Advisers. These include interest, taxes, audit and legal fees, custodian and
transfer agent charges, shareholder service and administration, insurance
premiums, cost of registering shares under federal and state laws, dues and any
litigation costs, as well as the cost of typesetting, print-
11
<PAGE>
The Talking Prospectus
Voting Rights
Our shareholders are entitled to
one vote for each full share owned
and a fractional vote for
fractional shares. Shares of each
portfolio generally vote
separately on matters that only
concern that portfolio. However,
all shareholders of the Trust vote
together on the selection of
trustees and other matters as
required by the Investment Company
Act of 1940, as amended. The
holders of shares have no
preemptive, conversion or
subscription rights, and voting
rights are not cumulative. To save
money, we do not hold annual
meetings. However, a meeting may
be called by our trustees or at
the request of 10% of the Trust
shares. We will assist
shareholders in communicating with
one another to arrange such a
meeting.
ing and distributing shareholder reports and prospectuses sent to shareholders.
When a cost is shared by several portfolios, the staff at Citizens Advisers will
allocate the expense in a reasonable manner under the supervision of the board
of trustees.
For the Working Assets Money Market Portfolio and Citizens Income Portfolio,
Citizens Advisers has agreed to reimburse the Trust if the costs to be borne by
the portfolios exceed a specified limit in the ordinary course of business.
Please see the Statement of Additional Information for a full description.
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. These
costs include the printing of prospectuses and reports not sent to current
shareholders, as well as other sales material, advertising and salaries for
salespeople and other personnel. We will also pay commissions to outside brokers
or service organizations for similar services.
AMOUNTS PAID FISCAL YEAR ENDED JUNE 30, 1997:
Working Assets Money Market $162,353
E[bullet]fund(R) none
Income Portfolio 83,851
Index Portfolio 414,701
Emerging Growth Portfolio 125,797
Global Equity Portfolio 51,646
Sometimes Citizens Securities makes additional promotional expenditures that are
not reimbursed by the 12b-1 plan, such as expense reimbursements to non-dealers
for meetings, advertising and other valid promotional purposes.
How to Purchase and Redeem Shares
How to Buy Shares
It's easy to buy shares in Citizens Trust portfolios. Just fill out an
application and send in your payment by check, wire transfer, exchange from
another portfolio or through arrangement with your investment dealer.
All checks must be made payable to Citizens Trust. Foreign checks drawn off of
U.S. dollars are accepted but must be held in escrow for 20 days.
Shares in the E[bullet]fund(R) or Working Assets Money Market Portfolio cost
$1.00 per share. For all other portfolios, your cost will be the Net Asset Value
next determined after your payment is received. You can purchase both full and
fractional shares, which will be rounded to the nearest 1/1000th of a share. If
your check is returned for any reason, you will be assessed a fee of $15.00.
The E[bullet]fund(R) is open only to clients of the Citizens Access Account.
Many shareholders take advantage of the "E" in the E[bullet]fund(R) by investing
electronically either by direct payroll deposit or through another automated
deposit program. This is a safe and easy way to go.
Investment Minimums
We encourage every investor to make a minimum investment of $2,500 ($1,000 for
the E[bullet]fund(R)) per portfolio. Shareholders who sign up for our Automatic
Investment Plan can start with an investment balance as low as $250, with an
automatic investment of $50.00 per month (except the E[bullet]fund(R), which
always requires a $1,000 minimum).
12
<PAGE>
Citizens Trust
Automatic Investment Plan
To enroll in our Automatic Investment Plan, simply check off that box on the
account application and provide us with your bank information and the amount and
frequency of your investment into your chosen portfolio. We will do the rest.
Payroll Deduction
Setting up direct payroll deposit is very easy. We will send you a form
including the necessary information and steps to follow. Simply complete and
sign the form, then give it to your payroll administrator for processing. If you
or your payroll administrator have any questions, please call our shareholder
service department.
Funds will be deposited into your account using the Electronic Funds Transfer
System. We will provide the account number. Your payroll department will let you
know the date of the pay period when your investment begins. Excepting the
E[bullet]fund(R), if your account falls below $2,500 per portfolio, you will be
assessed a monthly fee of $3.00 until you bring your balance back up over
$2,500. If you do not bring your balance up to the minimum, we may close your
account by sending you a check for your balance.
How to Redeem Shares
We offer you several convenient ways to redeem your shares in any of the
Citizens Trust Portfolios.
Call Us
We have a Telephone Exchange and Redemption option on your account application.
Under this option you can call us and tell us how much you want us to redeem.
Depending upon your instructions, we will then deposit your redemption into
another Citizens Trust Portfolio account, mail you a check or electronically
transfer your redemption to your pre-designated account. One-day wired funds
cost $10, or we offer two-day service via the Automated Clearing House (ACH).
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 it may increase the risk of error or of an unauthorized party gaining
access to your account. To keep these problems to a minimum, we record all
telephone calls. But please remember, neither the Trust, our Adviser 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 redemption
on the next business day after we receive your request.
Write a Check
When you open an account in the E[bullet]fund(R) or Working Assets Money Market
Portfolio, we will send you a free starter book of 20 checks. E[bullet]fund(R)
shareholders will receive an order form to purchase additional checks ($15.95
for 200 checks). Shareholders in Working Assets Money Market Portfolio can
request additional books of 20 free checks. Although these checks are payable
through a banking agent of Citizens Trust, your account is not FDIC insured, and
your shares are subject to fluctuations in value. You may write a check for any
amount. There is a .50 fee per check in the Working Assets Money Market
portfolio. There will be a $15.00 charge for any checks returned for any reason.
Remember, if you attempt to draw off of escrowed shares, your
Manager
[Photo: Azie Taylor Morton]
Azie Taylor Morton, chair of the
Audit Committee, explains the
Trust's relationship with its
advisers.
"One of the Trust's most important
contracts is our Management
Agreement with Citizens Advisers.
It states that Citizens Advisers
has authority to manage our
portfolios and will provide all
necessary office space,
facilities, equipment and
personnel to do so."
Transfer Agent:
PFPC Inc.
400 Bellevue Parkway
Suite 108
Wilmington, DE 19809
Dividend Paying Agent:
PFPC Inc.
400 Bellevue Parkway
Suite 108
Wilmington, DE 19809
Phone: 800-223-7010
13
<PAGE>
The Talking Prospectus
Use the E[bullet]fund(R)
Debit Card:
The E[bullet]fund(R) serves as a
transaction account for holders of
the Citizens Access Account and is
available through the Fund's
distributor, Citizens Securities.
Shareholders who use this account
may request an optional debit card
and use it to redeem shares for
cash at ATM machines or to make
purchases at any merchant who
accepts the debit card.
- ----------------------------------
Common Transactions That Require
Signature Guarantees:
[bullet] Written request for
redemption
[bullet] Changing your account
title in any way
[bullet] Authorizing a telephone
transaction for the first
time
[bullet] Changing your
predesignated wire or ACH
instructions
[bullet] Establishing or modifying
a systematic withdrawal
plan
[bullet] Exchanges between
accounts which do not
have identical titles
Eligible Guarantors:
[bullet] Commercial Bank
[bullet] Trust Company
[bullet] Savings Associations
[bullet] Credit Unions
[bullet] Members of domestic stock
exchange
Note: Notaries public are not
eligible guarantors.
- ----------------------------------
check may be returned for uncollected funds. We reserve the right to refuse any
order to purchase shares in the E[bullet]fund(R) from any shareholder who makes
more than 35 withdrawals (other than debit card purchases) from the
E[bullet]fund(R) per month.
Written Request for Redemption
If you do not 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 a signature guarantee. We may require further
documentation from corporations, fiduciaries, pension plans and/or institutional
investors.
Redeem Your Shares in Person
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. However, in rare
cases, payments for the redemption of non-money market accounts may take up to
five business days.
We also reserve the right to hold your redemption proceeds for up to seven
business days when you redeem any investments that have been made by check, or
up to five business days for an ACH transfer. Therefore, if you need your
redemption proceeds within seven business days of your purchase, please invest
by wire.
Shareholder Services and Policies
Exchange Privilege
Since people's investment needs change over time, we provide for easy exchanges
among our portfolios at no charge. You may make an exchange at any time and to
any portfolio. Just call us or write to us with your request.
Systematic Withdrawal Plan
You can send us a written request to automatically redeem a portion of your
shares and make a regular monthly, quarterly or annual payment on your behalf.
Making a Change in Your Account
After your account is set up, you may want to make a change in one of the
options or in the account title. We are pleased to assist, but to protect both
you and Citizens Trust from fraud, we may require a signature guarantee from all
registered owners of the accounts.
Tax-Sheltered Retirement Plans
Our distributor, Citizens Securities, has arranged for shareholders to have
access to qualified Individual Retirement Accounts (IRAs) and 403(b) plans
(non-profit employees). Our portfolios are also suitable for other types of
retirement plans as well.
14
<PAGE>
Citizens Trust
Dividends, Distributions and Taxes
Unless you give us other instructions, we will automatically reinvest your
dividends and distributions at the Net Asset Value, calculated on the dividend's
payable date.
We can also pay your dividends and distributions to you by check or electronic
transfer through the Automated Clearing House to your bank account. The details
of your dividends and other distributions will be included on your statement.
Payments of dividends and distribution of capital gains, if any, are declared
and paid on the following schedule:
DIVIDEND CAPITAL GAINS PAID
Declared Paid Long-term Short-term
E[bullet]fund(R) Daily Monthly None None
Working Assets
Money Market Portfolio Daily Monthly None None
Citizens Income Portfolio Monthly Monthly Annually Annually
Citizens Emerging
Growth Portfolio Annually Annually Annually Annually
Citizens Index Portfolio Annually Annually Annually Annually
Citizens Global Equity
Portfolio Annually Annually Annually Annually
How We Report Yields
There are a number of ways of reporting performance, and we'll walk you through
each one we use; when you look at any mutual fund, remember, actual mileage may
vary.
Every business day, the Working Assets Money Market Portfolio and the
E[bullet]fund(R) quote 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, annualize it and then divide by the Net Asset Value per
share (expected always to be $1.00) to get a percentage. The "Effective Yield"
assumes you have reinvested your dividends.
Citizens Income Portfolio's Yield
To calculate yield, we start with Net Investment Income per share for the most
recent 30 days and divide it by the maximum offering price per share on the 30th
day, then annualize the result assuming a semi-annual compounding.
Total Return and Other Quotations
For all portfolios except the money markets, we start with the total number of
shares you can buy for $1,000 at the beginning of the period. We then add all
the additional shares 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.
Valuation of Shares
To calculate our Net Asset Value, we add up the total assets of the portfolio,
subtract all liabilities, then divide by the number of shares outstanding. To
value money market securities, we use an accounting system called the amortized
cost method. This system is described in the Statement of Additional
Information.
Mailing and
Wiring Instructions
Regular U.S. Mail:
Please use the business reply
envelope provided with this
Prospectus, or mail to:
Citizens Trust
c/o PFPC Inc.
PO Box 8962
Wilmington, DE
19899-8962
Our Wiring Address:
Instructions:
PNC Bank, N.A.
Philadelphia, PA
ABA#: 031000053
For Further Credit
A/C# 86-1030-3646
Shareholder
name/acct. number
Overnight Delivery Package
(i.e. Federal Express, UPS,
Airborne Express etc.):
No U.S. mail, please.
Send to:
Citizens Trust
c/o PFPC Inc.
400 Bellevue Parkway
Suite 108
Wilmington, DE 19809
Phone: 800-223-7010
Please send overnight delivery
packages only to this address.
Regular U.S. Mail will not be
accepted at this address and may
be returned to you.
15
<PAGE>
The Talking Prospectus
From the President: "There are
many ways of reporting mutual fund
performance. It's no wonder
investors can become confused.
Remember: When you look at mutual
fund quotations, you are looking
at history - how the fund did in
the past. And, as Jim Mahoney said
at the front of this prospectus,
there are only two ways you can
make money from your investment:
through an increase in Net Asset
Value or through `Net Income.'
These two elements are the
building blocks of all performance
calculations." -Sophia Collier
[Logo: Citizens Trust]
[Recycle symbol]
Printed on recycled paper with
soy-based ink.
(C)1997 Citizens Securities
Working Assets is a registered
trademark of Working Assets
Funding Service. Used under
license. The Talking Prospectus is
a trademark of Citizens
Securities.
In our non-money market portfolios, we value our holdings at the most recent
closing price or, if there is no closing sale price, halfway between the bid and
asked price. If no market quotation is available for a given security, our
adviser will fairly value that security in good faith. Securities maturing
within 60 days normally are valued at amortized cost, which approximates market
value.
From time to time, we may compare the investment results of our portfolios to
unmanaged market indices, and other data and rankings from recognized
independent publishers.
Tax Matters
The dividends you have earned are taxable to you as dividends (unless, of
course, you are otherwise not subject to taxes). Remember, the exchange of
shares is treated as a sale, and any exchanging shareholder may, therefore,
realize a taxable gain or loss. You may also be subject to state and local taxes
on dividends and distributions from the Trust. Please consult your own tax
adviser. We will send you a complete statement each January as to the federal
tax status of dividends and distributions paid by each portfolio during the
previous calendar year.
We do not expect the Trust itself to pay any federal income or excise taxes,
because each year we expect to qualify each portfolio as a separate regulated
investment company under the Internal Revenue Code. To do this, the portfolio
must meet certain income, distribution and diversification requirements, such as
distributing all of the portfolio's Net Investment Income and realized capital
gains to shareholders in a timely manner.
Trustee Profiles
Azie Taylor Morton, chair of the board of trustees, operates an investment
management firm and was the 36th Treasurer of the United States.
William D. Glenn II is the executive director of Continuum HIV Day Services in
San Francisco.
*Sophia Collier is the Trust's president and principal owner of our investment
adviser, Citizens Adviser.
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)
16
<PAGE>
Statement of Additional Information
October 3, 1997
This Statement is not a prospectus and should be read in conjunction
with the Prospectus dated October 3, 1997, as may be amended from
time to time. A copy of the current Prospectus can be obtained by
calling (800) 223-7010, or by writing Citizens Investment Trust
(hereafter Citizens Trust), One Harbour Place, Portsmouth, NH 03801.
This Statement and the Citizens Trust Prospectus may be supplemented
from time to time.
Citizens Investment Trust
E[bullet]fund(R)
Working Assets Money Market Portfolio
Citizens Income Portfolio
Citizens Emerging Growth Portfolio
Citizens Global Equity Portfolio
Citizens Index Portfolio
- --------------------------------------------------------------------------------
Table of Contents Page
The Fund 2
Investment Objectives and Policies 2
Other Investment Techniques 7
Factors that Affect the Value of Our Investments 9
Turnover and Portfolio Transactions 9
The Value of Our Shares 11
Information About Our Yield and Total Return 12
Dividends and Distributions 15
Federal Taxes 16
Redemption Information 18
Trustees and Officers 19
Additional Information Regarding Citizens Advisers 21
Investment Advisory and Other Services 21
Additional Information 24
Voting Rights 25
Shareholder and Trustee Liability 26
Custodian 26
Auditors 26
Legal Counsel 26
Proposed Reorganization 27
Financial Statements 27
Appendix: Description of Ratings 28
- --------------------------------------------------------------------------------
<PAGE>
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The Fund
Citizens Investment Trust (the "Fund" or "Citizens Trust") presently
consists of six separate portfolios: Working Assets Money Market Portfolio
(inception date 8/30/83), Citizens Income Portfolio (inception date 6/10/92),
Citizens Emerging Growth Portfolio (inception date 2/8/94), Citizens Global
Equity Portfolio (inception date 2/8/94), Citizens Index Portfolio (inception
date 3/3/95), and the E[bullet]fund(R) (inception date 7/1/95). On May 28, 1992
the Fund, which had operated as a money market fund since 1983, changed its name
from Working Assets Money Fund to Working Assets Common Holdings. 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 all six portfolios;
with respect to the Working Assets Money Market Portfolio and the Citizens Index
Portfolio, it relates only to the retail class of shares.
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Investment Objectives and Policies
The following are fundamental investment policies followed by each of the
current portfolios of the Fund (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, as amended (the
"1940 Act").
Each Portfolio:
1. 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 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. Will not invest in limited partnerships, including those which own
commodities, real estate and oil, gas and mineral leases.
3. 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. May not invest for the purpose of exercising control or management of
other companies.
5. May not buy or continue to hold securities if our Trustees, officers
or the Directors or officers of Citizens Advisers, Inc. (the "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. May not participate with others on a joint, or a joint and several,
basis in any trading account in any securities.
7. May not underwrite securities, which means we may not sell securities
for others.
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8. May 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 pursuant to Rule 144A under the Securities
Act of 1933 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.
The following is a fundamental policy for Working Assets Money Market
Portfolio, the E[bullet]fund(R), Citizens Income Portfolio, Citizens Global
Equity Portfolio and Citizens Index Portfolio and does not apply to the Citizens
Emerging Growth Portfolio.
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.
As a general policy, none of the Portfolios will invest in real estate
assets or interests therein, excluding readily marketable securities.
If a percentage restriction is adhered to at the time of investment, a
subsequent increase or decrease in a percentage resulting from a change in
values or assets will not constitute a violation of that restriction.
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The Portfolios
The following discussion elaborates on the description of each
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 Portfolios in the Prospectus.
Working Assets Money Market Portfolio and the E[bullet]fund(R)
The Working Assets Money Market Portfolio and the E[bullet]fund(R), as a
fundamental investment policy of each Portfolio, may not buy any securities
other than money market securities. Thus, each 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. Neither of the Portfolios may buy real estate, or real
estate loans, but each Portfolio may buy money market securities even though the
issuer invests in real estate or interests in real estate.
The following are also the present policies of each Portfolio, but may be
changed by our Trustees without a vote of the shareholders of the Portfolios:
1. Each 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,
Inc. ("Moody's") or Standard & Poor's Rating Services ("Standard &
Poor's").
2. Each 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. Each 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. Each 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 each
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 and for which a liquid institutional
market has developed may be considered to be liquid securities. See the
discussion
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relating to the purchase of illiquid securities in the section regarding
the fundamental investment policies of the Portfolios under "Investment
Objectives and Policies" above.
5. The E[bullet]fund(R) will not invest more than 5% of its assets in
variable rate securities.
Each 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 and the E[bullet]fund(R) each uses the amortized cost
method of valuation (see "The Value of Our Shares"), a 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 30 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
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 Working Assets Money Market Portfolio and
the E[bullet]fund(R) will each maintain a dollar-weighted average portfolio
maturity that does not exceed 90 days.
The Working Assets Money Market Portfolio and the E[bullet]fund(R) each
intends to comply with Rule 2a-7 under the 1940 Act. Under that Rule, each
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) by at least two nationally recognized statistical rating organizations
("NRSROs") (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 each 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.
Although Rule 2a-7 allows that 5% may be invested in second tier
securities, each Portfolio's policy is to invest 100% in first tier securities
only.
Citizens Income Portfolio
The objective of Citizens Income Portfolio is to provide as high a level
of current income as we believe to be consistent with prudent investment risk.
We invest in bonds and other debt securities which meet our financial and social
criteria. We intend to purchase primarily intermediate- and long- term
securities and to maintain a weighted average maturity of 5-15 years. However,
at times, we may have a longer or shorter weighted average maturity if we
believe it will help us meet our investment objective.
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We plan to invest at least 65% of the value of the Citizens Income
Portfolio's assets in debt securities that are rated BBB or better by a NRSRO
such as Standard & Poor's or Moody's; unrated securities which we believe are
comparable in credit quality to securities rated BBB or better as described
above; obligations issued or guaranteed by the U.S. Government or its agencies
or instrumentalities; mortgages and other asset backed securities; other debt
securities or cash and cash equivalents. Up to 35% of the Citizens Income
Portfolio's total assets may be invested in debt securities which do not have
the investment characteristics described above. Such debt securities could
include convertible debt securities, convertible preferred and preferred stocks
or other securities.
In pursuit of our investment objective we will sometimes purchase
securities that have warrants attached to them. These warrants are typically
held on our books at a zero value, as the value of the warrants can only be
realized upon their exercise (see "Other Investment Techniques--Warrants"). From
time to time, we will also purchase options to buy or sell securities in the
future at values determined by the performance of financial bench marks or
indexes. The use of options can add risk to the Portfolio because the portfolio
manager may determine that exercise of the option will not benefit the Portfolio
and therefore, the amount invested to acquire the option will be lost. We may
also purchase "structured securities," such as interest-only strips or similar
vehicles where one or more of the rights within the underlying securities has
been traded through the financial markets for a different right or series of
rights. The risk associated with "interest-only strips" is that the security may
prepay or default and our ability to collect interest payments will end.
The Citizens Income Portfolio is authorized to purchase the securities
described above from both U.S. and non-U.S. issuers (see "Other Investment
Techniques--Foreign Securities").
Citizens Emerging Growth Portfolio
The objective of the Citizens Emerging Growth Portfolio is aggressive
growth through investment in small and medium sized companies. Up to 100% of
this Portfolio's assets will be invested in companies in the common and
preferred stock of companies with capitalization in the range of $75 million to
$4 billion. While many of these companies will have already demonstrated their
strength, some will be still unseasoned, and therefore may have some speculative
characteristics.
The net asset value of this Portfolio is subject to significant
fluctuation. Smaller companies have the potential for a much higher reward, as
well as significantly more risk. To moderate this risk we plan to typically hold
between 30-50 companies in the Portfolio, under normal conditions.
At times we will also buy short-term fixed income securities for the
Citizens Emerging Growth Portfolio. Since most of the companies we will purchase
are relatively new, we expect dividend income to be negligible to accomplishing
the Portfolio's objective.
Citizens Global Equity Portfolio
The objective of the Citizens Global Equity Portfolio is capital
appreciation by investing in both foreign and U.S. markets. Investing in foreign
companies and on international exchanges may entail greater risk than investing
solely in the United States (see "Other Investment Techniques--Foreign
Securities").
In the Citizens Global Equity Portfolio we buy primarily common stocks of
U.S. domestic and foreign companies. From time to time, we may also buy other
securities such as convertible or preferred stocks and short-term debt
securities. We plan to allocate over half our assets to foreign markets in most
circumstances in a minimum of three countries.
To moderate these risks as well as gain potential benefits we use a
number of investment techniques. The first of these is country selection. We
restrict our investments in emerging nations (those not included in Morgan
Stanley's World Index) to no more than 25% of the assets of Citizens Global
Equity Portfolio.
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When we invest on foreign exchanges we buy securities in the currency of
the local country. Often the local currency will fluctuate vs. the dollar. To
moderate this risk we engage in currency "hedging" when we feel it is
appropriate to protect the value of our portfolio. We do this by entering into
arrangements to buy or sell a particular currency, security, or securities index
for a stated value at a given point in time. Hedging strategies, if successful,
can reduce the risk of loss by wholly or partially offsetting the negative
effect of unfavorable price movements in the investment being hedged. While
there is a cost involved in hedging, we believe it allows us to moderate the
risk of currency exchange. However, hedging strategies can also reduce the
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments (see "Other Investment Techniques--Options
Transactions").
Citizens Index Portfolio
The objective of the Citizens Index Portfolio is long-term capital
appreciation.
The Citizens Index Portfolio invests primarily in the securities
comprising the Citizens Index, a market weighted index of companies included in
the Standard & Poor's Composite Index of 500 Stocks ("S&P 500") that have passed
Citizens' 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 included in the Citizens Index to add industry diversity and other
financial characteristics that we believe will enable the Index to track the
returns of the S&P 500 as a whole.
Securities will be purchased in a proportion approximately 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 Citizens Index due to short-term cash investments
and the deduction of portfolio expenses and transaction costs.
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Other Investment Techniques
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 Income Portfolio, Citizens Emerging
Growth Portfolio, Citizens Global Equity Portfolio, Citizens Index Portfolio,
the E[bullet]fund(R) and Working Assets Money Market 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 members
of the Federal Reserve, secured by instruments issued or guaranteed by the
agencies or instrumentalities of the U.S. Government, the values including
accrued interest, or 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 securities
collateralizing the repurchase. In the event of bankruptcy or other default by
the vendor of a repurchase agreement, there may be possible delays and expenses
in liquidating the resold securities, decline in the value of the resold
securities and loss of principal or interest. However, in the opinion of
management, these risks are not material; upon default, the resold securities
constitute collateral for the repurchase obligation.
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Options Transactions
Each Portfolio, other than Working Assets Money Market Portfolio and the
E[bullet]fund(R), 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 Portfolio 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.
Warrants
Citizens Income Portfolio may invest in warrants. Warrants are
instruments which entitle the holder to buy underlying equity securities at a
specific price for a specific period of time. A warrant tends to be more
volatile than its underlying securities and ceases to have value if it is not
exercised prior to its expiration date. In addition, changes in the value of a
warrant do not necessarily correspond to changes in the value of the underlying
securities.
Foreign Securities
Each Portfolio, other than the E[bullet]fund(R), 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 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
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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
Each Portfolio, other than the Working Assets Money Market Portfolio and
the E[bullet]fund(R), 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 (the "SEC") 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
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, the E[bullet]fund(R) and Citizens Income Portfolio and a portion of
assets in the Citizens Emerging Growth Portfolio, Citizens Index Portfolio and
Citizens Global Equity Portfolio under normal conditions. 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 and the E[bullet]fund(R), 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 Emerging Growth,
Global Equity and Index Portfolios 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
With regard to the Working Assets Money Market Portfolio and the
E[bullet]fund(R), 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 have been held by
investors to maturity. However, we may from time to time sell securities and
purchase others to attempt to take
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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 Income Portfolio we purchase fixed income securities and
for Citizens Emerging Growth Portfolio, Citizens Global Equity Portfolio and 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 realize a gain or loss whereupon we reinvest these assets in
other securities.
Portfolio turnover rates will vary, depending on the type of fund and its
particular investment objective. For example, the Citizens Index Portfolio seeks
to have a turnover rate of less than 25% per year, whereas the Global Equity
Portfolio's turnover rate may be in the vicinity of 200%. Higher portfolio
turnover rates increase transaction costs and may increase taxable gains. For
the fiscal years ended June 30, 1996 and 1997, the Portfolios had the following
portfolio turnover rates: Citizens Income Portfolio -- 41.36% and 64.56%;
Citizens Emerging Growth Portfolio -- 337.41% and 228.66%; Citizens Global
Equity Portfolio -- 85.92% and 69.34%; Citizens Index Portfolio -- 6.44% and
18.64%, respectively.
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 purchase 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, 1995,
1996 and 1997, all portfolio purchases, as described above, were made directly
from issuers or from dealers, and we paid commissions in aggregate as follows:
1995-$250,000, 1996-$171,957 and 1997-$323,948.
It is the policy of Citizens Advisers and the Trust to seek to obtain the
benefit of "soft dollar" payments for a Portfolio when consistent with obtaining
best execution and the best execution policy and when doing so is within the
"safe harbor" created by Section 28(e) of the Securities Exchange Act of 1934.
To that end, Citizens Advisers will maintain an account for each Portfolio with
one or more broker-dealers which agree to provide or pay for third-party
research which benefits the Portfolio. Sub-advisers will be informed in writing
of the name of the broker-dealer and provided with account information to allow
the execution of trades through that broker-dealer. In the event that best
execution of an equity transaction is available through a broker-dealer which
has been so identified, a sub-adviser shall place the transaction with that
broker-dealer. No transactions shall be placed with such broker-dealer other
than on an agency basis.
Any "soft dollars" generated in this fashion shall be used solely to
purchase research, within the meaning of Section 28(e), which benefits the
Portfolio on whose behalf the transaction is made. For these purposes, research
means that which provides assistance to Citizens Advisers, or a sub-adviser, in
the performance of decision making responsibilities. If a product or service
serves non-research as well as research functions, "soft dollars" shall be used
to pay for the product or service only to the extent that it constitutes
research.
10
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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 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 Working Assets Money Market
Portfolio and the E[bullet]fund(R) fixed at $1.00 per share, while we expect the
net asset value per share in our other Portfolios to fluctuate.
The value of our shares for each Portfolio, other than the Working Assets
Money Market Portfolio and the E[bullet]fund(R), 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.
The value of our shares for the Working Assets Money Market Portfolio and
the E[bullet]fund(R) is determined at 4:00 p.m. Eastern Time on each day that
the Portfolios are open. The Portfolios are currently open on each day, Monday
through Friday, except New Year's Day, Martin Luther King, Jr's. Birthday
(observed), Presidents' Day (observed), Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day and
Christmas Day.
Working Assets Money Market Portfolio and the E[bullet]fund(R)
Our Trustees have determined that it is appropriate for us to value our
Working Assets Money Market Portfolio and the E[bullet]fund(R) using the
amortized cost method and that this method represents the fair value of each
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.
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 Working Assets Money
Market Portfolio and the E[bullet]fund(R) 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
11
<PAGE>
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
SEC, 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 Income Portfolio, Citizens Emerging Growth Portfolio, Citizens
Global Equity Portfolio and the Citizens Index Portfolio
As described in the Prospectus, the Citizens Income Portfolio, Citizens
Emerging Growth Portfolio, Citizens Global Equity Portfolio and Citizens Index
Portfolio are 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.
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.
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Information About Our Yield and Total Return
We report the investment performance of each 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 and the E[bullet]fund(R), the yield is
usually quoted for a seven day period. For Citizens Income Portfolio we usually
report for a 30 day period.
Current yield is determined by dividing the net investment income per
share earned during a 30-day base period by the maximum offering price per share
on the last day of the period and annualizing the result. Expenses accrued for
the period include any fees charged to all shareholders during the base period.
12
<PAGE>
Our yield is calculated by using the SEC formula:
Yield = 2[ (a-b + 1)6 - 1]
-------------
cd
where:
a = interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that were
entitled to receive income distributions
d = the maximum offering price per share on the last day of the period
Compounded effective yield, which we may also quote, is determined by
taking the base period return (computed as described above) and calculating the
effect of assumed compounding.
The formula for effective yield is:
[(base period return + 1) 365/7 - 1]
Current yield and effective yield which are calculated according to a
formula prescribed by the SEC are not indicative of the amounts that actually
may be paid to our shareholders. Amounts paid to shareholders are reflected in
the quoted current distribution rate. The current distribution rate is computed
by dividing the total amount of dividends per share we paid during the past
twelve months by a current maximum offering price. Under certain circumstances,
such as when there has been a change in the amount of dividend payout, or a
fundamental change in investment policies, it might be appropriate to annualize
the dividends paid over the period such policies were in effect, rather than
using the dividends during the past twelve months. The current distribution rate
differs from the current yield computation because it may include distributions
to shareholders from additional sources (i.e., sources other than dividends and
interest, such as short-term capital gains), and is calculated over a different
period of time.
The following table sets forth various measures of performance for the
Portfolios as of June 30, 1997:
Portfolio 7-Day Yield Effective Yield 30-Day Yield
--------- ----------- --------------- ------------
Working Assets Money Market
Portfolio 4.44% 4.54% NA
E[bullet]fund(R) 5.71%* 5.87%* NA
Citizens Income Portfolio NA NA 6.74%
* These figures include waivers and reimbursements, without which the
E[bullet]fund(R)'s 7-day yield would have been 4.24% and its effective
yield would have been 4.40%
The current yield of the Working Assets Money Market Portfolio and the
E[bullet]fund(R) 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
13
<PAGE>
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 Working Assets Money Market
Portfolio and the E[bullet]fund(R) 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 Working Assets Money Market Portfolio and the
E[bullet]fund(R) since the yield is calculated on the same basis as those of
other money market funds. However, shareholders should take a number of factors
into account in using our yield information as a basis for comparison with other
investments.
Since the Working Assets Money Market Portfolio and the E[bullet]fund(R)
are 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.
The yield quotation for the Citizens Income Portfolio is based on the
annualized net investment income per share of the Portfolio over a 30 day
period. The yield is calculated by dividing the net investment income per share
of the Portfolio earned during the period by the public offering price per share
of the Portfolio on the last day of that period. The resulting figure is then
annualized. Net investment income per share is determined by dividing (i) the
dividends and interest earned by the Portfolio during the period, minus accrued
expenses for the period, by (ii) the average number of the Portfolio's shares
entitled to receive dividends during the period multiplied by the public
offering price per share on the last day of the period. Income is calculated for
the purposes of yield calculations in accordance with standardized methods
applicable to all stock and bond funds. In general, interest income is reduced
with respect to bonds trading at a premium over their par value by subtracting a
portion of the premium from income on a daily basis and is increased with
respect to bonds trading at a discount by adding a portion of the discount to
daily income. Capital gains and losses are generally excluded from the
calculation as these are reflected in the Portfolio's net asset value per share.
Total Return and Other Quotations
We also can express the investment results in terms of "total return." We
do this for the Citizens Income Portfolio, Citizens Emerging Growth Portfolio,
Citizens Global Equity Portfolio and 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.
These figures will be calculated according to the SEC formula:
P(1 + T)n = ERV
where:
P = a hypothetical initial payment of $1,000
T = average annual total return n =
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<PAGE>
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the 1, 5 or 10 year periods at the end of the 1, 5 or 10 year
periods
For the period ended June 30, 1997 the Portfolios had the following
performance:
<TABLE>
<CAPTION>
Hypothetical
Annualized Investment Return on
1 Year 5 Year Total Return $1,000 for the
Portfolio Total Return Total Return Inception 1 Year Period
--------- ------------ ------------ ------------- -----------------
<S> <C> <C> <C> <C>
Citizens Income 9.56% 7.03% 41.63% $1,095.60
Portfolio (6/10/92)
Citizens Emerging 4.03% N/A 81.34% $1,040.30
Growth Portfolio (2/8/94)
Citizens Global Equity 21.70% N/A 47.34% $1,217.00
Portfolio (2/8/94)
Citizens Index Portfolio 35.89% N/A 83.48% $1,358.90
3/3/95)
</TABLE>
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 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.
When we quote our investment results we sometimes will compare them to
unmanaged market indices such as the Dow Jones Industrial Average and the S&P
500, and other data and rankings from recognized independent publishers, sources
such as Bank Rate Monitor, Money Magazine, Morningstar, Forbes Magazine, Lipper
Analytical Services and others.
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Dividends and Distributions
Working Assets Money Market Portfolio and the E[bullet]fund(R)
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 liabilities accrued, including interest, taxes and other expense items,
amounts
15
<PAGE>
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.
Citizens Income Portfolio
The Citizens Income Portfolio distributes to its shareholders monthly
dividends substantially equal to all of its net investment income. The
Portfolio's net investment income consists of non-capital gain income less
expenses. Net realized short-term capital gains, if any, and net realized
long-term capital gains, if any, will be distributed by the Portfolio 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 at the close of the appropriate
monthly or annual period.
Citizens Emerging Growth Portfolio, Citizens Global Equity Portfolio and
Citizens Index Portfolio
The Citizens Emerging Growth Portfolio, Citizens Global Equity Portfolio
and the Citizens Index Portfolio normally declare and pay dividends
substantially equal to all net investment income annually. Net investment income
consists of non-capital gain income less 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.
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Federal Taxes
Status as a "Regulated Investment Company"
Each of the Portfolios has elected to be treated and intends to qualify
as a "regulated investment company" under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "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 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; and (b) 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).
A Portfolio that qualifies as a "regulated investment company" may
nonetheless be subject to certain federal excise taxes unless the Portfolio
meets certain additional distribution requirements. Under the 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
16
<PAGE>
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 income or excise tax. If a portfolio should fail to
qualify as a regulated investment company in any year, the Portfolio wold incur
federal and Massachusetts income taxes upon its taxable income and distributions
from the portfolio would generally be taxable as ordinary dividend income to
shareholders.
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 each of the Portfolios other than Working
Assets Money Market Portfolio, the E[bullet]fund(R) and Citizens Income
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 deducted 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, the
E[bullet]fund(R) and Citizens Income Portfolio is derived from interest rather
than dividends, no portion of the dividends received from these Portfolios will
be eligible for the dividends received deduction. Moreover, the portion of any
Portfolio's dividends that is derived from investments in foreign corporations
will not qualify for such deduction. Distributions of net capital gains (i.e.,
the excess of net long-term capital gains over net short-term capital losses)
will be taxable to shareholders as long-term capital gains without regard to the
length of time that shareholders have held their shares. It is uncertain at this
time whether all or any part of such capital gains will be eligible to be taxed
at a maximum rate below 28%. 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. Any dividend that is declared in October, November or
December of any calendar year, that is payable to shareholders of record in such
a month and that is paid the following January, will be treated as if received
by shareholders on December 31 of the year in which the dividend is declared.
Any dividend or distribution from a Portfolio other than the Working
Assets Money Market Portfolio and the E[bullet]fund(R) will have the effect of
reducing the per share net asset value of shares in the Portfolio by the amount
of the dividend or distribution. Shareholders purchasing shares in such a
Portfolio 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.
In general, any gain or loss realized upon a taxable disposition of
shares of a Portfolio by a shareholder that holds such shares as a capital asset
will be treated as a long-term capital gain or loss if the shares have been held
for more than twelve months and otherwise as a short-term capital gain or loss;
individual shareholders who realize a long-term capital gain on the sale of
shares may be eligible for reduced tax rates if the shares were held for more
than 18 months. However, any loss realized upon a disposition 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 disposition 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; none of the Portfolios other than the Global Equity Portfolio
expects to be able to pass through
17
<PAGE>
to shareholders foreign tax credits with respect to such foreign taxes.
If the Global Equity Portfolio holds more than 50% of its assets in foreign
stock and securities at the close of its taxable year, it may elect to "pass
through" to its shareholders foreign income taxes paid. If the Global Equity
Portfolio so elects, its shareholders will be required to treat their pro rata
portions of the foreign income taxes paid by the Portfolio as part of the
amounts distributed by them from the Portfolio and thus includable in their
gross income for federal income tax purposes. Shareholders who itemize
deductions would then be allowed to claim a deduction or credit (but not both)
on their federal income tax returns for such amounts, subject to certain
limitations. Shareholders who do not itemize deductions would (subject to such
limitations) be able to claim a credit but not a deduction. No deduction for
such amounts will be permitted to individuals in computing their alternative
minimum tax liability. If the Global Equity Portfolio does not qualify or elect
to "pass through" to its shareholders foreign income taxes that it pays,
shareholders will not be able to claim any deduction or credit for any part of
such taxes. The United States has entered into tax treaties with many foreign
countries which may entitle a Portfolio to a reduced rate of tax or an exemption
from tax on foreign income.
Non-U.S. Shareholders
Dividends and certain other payments to persons who are not citizens or
residents of the United States or U.S. entities ("Non-U.S. Persons") are
generally subject to U.S. tax withholding at the rate of 30%. The Portfolios
intend to withhold U.S. federal income tax at the rate of 30% (or at such lower
rate as may be permitted under an applicable treaty) on taxable dividends and
other payments to Non-U.S. Persons that are subject to such withholding. Any
amounts overwithheld may be recovered by such persons by filing a claim for
refund with the U.S. Internal Revenue Service within the time period appropriate
to such claims. Distributions from a Portfolio to a Non-U.S. Person also may be
subject to tax under the laws of the Non-U.S. Person's jurisdiction.
The Portfolios are also required in certain circumstances to apply backup
withholding at the rate of 31% on taxable dividends and (except in the case of
the Working Assets Money Market Portfolio and the E[bullet]Fund(R)) redemption
proceeds paid to any shareholder (including a Non-U.S. Person) who does not
furnish to the Portfolio certain information and certifications or who is
otherwise subject to backup withholding. Backup withholding will not, however,
be applied to payments that have been subject to 30% withholding.
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.
- --------------------------------------------------------------------------------
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 SEC. 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 Day. In addition, to
the above mentioned holidays, Working Assets Money Market Portfolio and the
E[bullet]fund(R) are also closed on Martin Luther King, Jr's. Birthday
(observed), Columbus Day and Veterans Day. 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
18
<PAGE>
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 ten 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 of each Portfolio,
other than the E[bullet]fund(R), 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.
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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
date of birth and 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 One Harbour Place, Portsmouth, New Hampshire
03801.
The Trustees who are "interested persons," as defined in the 1940 Act
("Interested Trustees"), are indicated by an asterisk.
Azie Taylor Morton (2/1/36), Chair of the Board and Trustee, was
Treasurer of the United States during the Carter Administration. From 1984 -
1989, she owned and operated the Stami Corporation, a franchisee of Wendy's Old
Fashioned Hamburgers. Her 30 year career began as a teacher at the State School
for Girls in Crockett, Texas. She went on to work at the AFL-CIO, 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. From 1990 - 1992 she was Director of Resource Coordination at Reading is
Fundamental, Inc. She is currently an investment adviser. Address: 10910
Medfield Court, Austin, Texas 78739.
William D. Glenn, II (9/9/48), Trustee, has been a shareholder of
Citizens Trust 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, California 94903.
Sophia Collier* (3/13/56), President, Treasurer and Trustee, is President
and Principal owner of Citizens Advisers. She also serves in an advisory
capacity to RhumbLine Advisers. Please see the section entitled "Additional
Information Regarding The Management Company" for more information regarding Ms.
Collier.
Juliana Eades (2/2/53), Trustee, has served as Executive Director of the
$6 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.
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<PAGE>
Lokelani Devone (4/8/57), Trustee, is the Assistant General Counsel at
DFS Group Limited, an international retail business group where she has worked
since 1989. Prior to that, she was an aide to Congresswoman Nancy Pelosi,
D-California. She is also a member of the Board of Continuum HIV Day Services in
San Francisco, where Trustee William Glenn is employed. Ms. Devone is a graduate
of the University of California at Berkeley (B.A. 1978) and the University of
California, Davis (J.D. 1983) and was an International Research Fellow at the
University of Tokyo from 1983 to 1985. Address: 525 Market Street, 33rd floor,
San Francisco, California 94105.
J.D. Nelson* (3/28/38), Trustee, is the founder and C.E.O. of RhumbLine
Advisers Corp., 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 (8/17/52), Trustee, is the former Director of the Public
Service and Social Change Program at Hampshire College. From 1985 - 1987 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 a Non-Nuclear
World. Address: 5416 Delette Avenue South, Gulfport, Florida 33707.
Our Board of Trustees functions with a Nominating Committee comprised of
the whole Board, but pursuant to our Distribution Plan (see "Our Distributor")
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 the
Fund for services provided through June 30, 1997.
CITIZENS INVESTMENT TRUST - COMPENSATION TABLE
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Name of Person and Position Aggregate Compensation from
The Fund
Azie Taylor Morton $4,514.80
Juliana Eades $4,500.00
William D. Glenn, Jr. $6,304.90
Ada Sanchez $4,000.00
Lokelani Devone $3,500.00
Sophia Collier* 0
J.D. Nelson* 0
Wilma Mankiller** $ 500.00
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* Sophia Collier and J.D. Nelson are Interested Trustees and received no
compensation from Citizens Trust.
** Wilma Mankiller is no longer a Trustee.
20
<PAGE>
The Trustees who are not "interested persons" received aggregate fees
from us of $23,319.70 for services provided through June 30, 1997 and were also
reimbursed for out-of-pocket expenses. Our Trustees and officers as a group
owned less than 1% of our outstanding shares as of October 1, 1997.
Other Officers of The Fund
Crescentia True (12/16/63) Vice President, is the Vice President and
Director of Operations of Citizens Advisers, where she has been employed since
1994. Susan Barry, (5/21/63) Treasurer, is Controller of Citizens Advisers where
she has been employed since 1992. Joseph F. Keefe (9/30/53), Secretary, is
Executive Vice President and General Counsel of Citizens Advisers. Prior to
joining Citizens Advisers in 1997, Mr. Keefe was in private law practice for 16
years.
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Additional Information Regarding Citizens Advisers
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. Ms. Collier and her partners sold American
Natural Beverage Corp. in 1989.
Four other individuals own the remaining 40% of the outstanding stock of
Citizens Advisers, Inc., 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."
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Investment Advisory 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 of the Adviser 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 sole expense, these duties may be delegated to a
sub-adviser.
Seneca Capital Management, LLC
Our sub-adviser for the Citizens Income and Emerging Growth Portfolios is
Seneca Capital Management, LLC, a registered investment adviser which manages
over $4 billion from its offices at 909 Montgomery Street, San Francisco,
California. It is majority owned by Phoenix, Duff & Phelps Corporation
("Phoenix"), with a 74.9% ownership interest. Phoenix is a diversified financial
services organization engaged primarily in investment management of
institutional and individual accounts, with over $33 billion in assets under
management. Gail Seneca, who with her partners founded Seneca's predecessor
company, GMG/Seneca Capital Management, L.P. in 1990, continues, along with her
key staff members, to be the owners of the minority interests in Seneca. Ms.
Seneca and her key
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staff members entered into long term employment contracts with Phoenix when it
purchased Seneca in 1997. The day to day business and affairs of Seneca,
including its investment management activities, remain under the control of Ms.
Seneca and her staff.
Clemente Capital, Inc.
Our sub-adviser for the Citizens Global Equity Portfolio, Clemente
Capital, Inc., is a registered investment adviser organized in 1979. It is
majority owned by Lilia Clemente with 61.15% ownership; Wilmington Trust of
Wilmington, Delaware with 24% and Diaz-Verson Capital Investments, Inc. of
Columbus, Georgia with 14.85%. Clemente also manages the First Philippine and
Clemente Global Growth Funds, two closed-end funds traded on the New York Stock
Exchange. Its headquarters are at Carnegie Hall Tower, 152 West 57th Street, New
York, New York.
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, Massachusetts. RhumbLine is owned in excess of 97% by J.D.
Nelson, who is also an interested trustee of the Trust.
The Adviser (or the sub-adviser) provides us, at the Adviser's expense,
with all office space, 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 that we are required to have and
computes our net asset value and dividends per share.
We pay the Adviser a fee for its services at a percentage of each
Portfolio's average annual net assets as follows:
Working Assets Money Market Portfolio--0.35%; the E[bullet]fund(R)--0.10%;
Citizens Income Portfolio--65%; Citizens Emerging Growth Portfolio--1.00%;
Citizens Global Equity Portfolio--1.00%; and Citizens Index Portfolio--0.50%.
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: 1.50% of the first $40 million or our average annual net
assets and 1% thereafter; and Citizens Income Portfolio: 1.75% of the first $75
million of average net assets and 1.25% thereafter.
There is no limit on expenses for the E[bullet]fund(R), Citizens Emerging
Growth Portfolio, Citizens Global Equity Portfolio and 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 2.50% of the
first $30 million of average net assets in the Portfolio, 2% of the next $70
million of average net assets, and 1.50% of the remaining average net assets in
a Portfolio in any fiscal year.
For the fiscal years ended June 30, 1995, 1996 and 1997, the Adviser
received the following fees: Working Assets Money Market Portfolio,
1995-$526,422, 1996-$423,731 and 1997-$341,144; Citizens Income Portfolio,
1995-$167,280, 1996-$207,386 and 1997-$218,016; Citizens Emerging Growth
Portfolio, 1995-$67,908, 1996-$197,492 and 1997-$503,188; Citizens Global Equity
Portfolio, 1995-$78,349, 1996-$118,662 and 1997-$206,581; and Citizens Index
Portfolio, 1995-$760,572, 1996-$689,466 and 1997-$878,074. For the fiscal period
ended June 30, 1996, the Adviser accrued expenses of $4,018 on behalf of the
E[bullet]fund(R), all of which was waived by the Adviser. For the fiscal year
ended June 30, 1997 the Adviser waived fees totaling $17,288 on behalf of the
E[bullet]fund(R).
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<PAGE>
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 the
sub-adviser, and the obligation of the Fund to indemnify the sub-adviser.
Administrative Services Agreement
The Adviser has also entered into an Administrative Services Agreement
with Citizens Trust, whereby it provides the Trust with the following facilities
and services: 1. Receipt of calls from existing shareholders in a timely manner;
2. Maintenance of a toll-free number; 3. Response to shareholder questions; 4.
Maintenance of computer interface with the Trust's transfer agent; 5. Execution
of appropriate shareholder requests. 6; Organizational services for any new
series, including, but not limited to the drafting of the prospectus and
statement of additional information, the filing of all required documents,
soliciting proxies, and clerical duties associated with the filing of any such
documents; and 7. Blue Sky reporting services as required for the issuer of
securities in the states and territories. In addition to the fees paid pursuant
to the foregoing, the Trust has agreed to reimburse Citizens Advisers for out-of
pocket expenses, including but not limited to postage, forms, telephone, and
records storage and any other expenses incurred by Citizens Advisers at the
request or with the consent of the Trust. The Trust also pays to the Adviser
shareholder servicing fees at the following fixed rates: Citizens Income
Portfolio, Citizens Emerging Growth Portfolio and Citizens Global Equity
Portfolio, 0.10% of average assets; and Citizens Index Portfolio, 0.65% of
average assets.
For the fiscal years ended June 30, 1995, 1996 and 1997, the Advisor
accrued the following administrative fees: Working Assets Money Market
Portfolio, 1995-$28,499, 1996-$186,145 and 1997-$153,084; Citizens Income
Portfolio, 1995-$25,295, 1996-$74,254 and 1997-$44,992; Citizens Emerging Growth
Portfolio, 1995-$24,120, 1996-$117,910 and 1997-$75,190; and Citizens Global
Equity Portfolio, 1995-$22,815, 1996-$68,745 and 1997-$32,743. Citizens Index
Portfolio paid fees in the amounts of $28,607, $903,081 and $919,818 for the
period from March 3, 1995 (commencement of operations) through June 30, 1995 and
the fiscal years ended June 30, 1996 and 1997, respectively. The
E[bullet]fund(R) paid fees in the amounts of $6,931 for the period from July 1,
1995 (commencement of operations) through June 30, 1996 and $11,805 for the
fiscal year ended June 30, 1997.
Distribution Plan
Pursuant to a Distribution Agreement, Citizens Securities, Inc. (the
"Distributor"), a wholly owned subsidiary of the Adviser, acts as the
distributor of our shares. There is no sales charge imposed on any of the
Portfolios of the Fund, either when you purchase or redeem shares.
Broker-dealer and other organizations, known as Service Organizations,
which assist in the distribution of our shares may receive fees from us or our
Distributor. Our Board of Trustees has adopted a Distribution Plan under Section
12(b) of the 1940 Act and Rule 12b-1 thereunder (the "Plan"). 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
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<PAGE>
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 initially 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, on June 11, 1992. The
E[bullet]fund(R) has not adopted the Plan. 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
majority of the Qualified Trustees or a vote of our outstanding voting
securities on not more than 60 days notice.
Each Portfolio is responsible for the cost of preparing and setting in
type prospectuses and reports to shareholders and distributing copies of the
prospectuses and reports to shareholders. The Distributor pays the cost of
printing and distributing all other copies of prospectuses and reports, as well
as the costs of supplemental sales literature and advertising. The Fund pays all
of our other expenses not expressly assumed by the Adviser such as interest,
taxes, audit and legal fees and expenses, charges of our custodian, our
shareholder servicing, transfer and record-keeping agent costs, insurance
premiums, stock issuance and redemption costs, certain printing costs, costs of
registering our shares under federal and state laws, and dues and assessments of
the Investment Company Institute, as well as any non-recurring expenses,
including litigation.
The Plan provides that the Distributor shall provide and the Trustee
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, 1995-$783,111,
1996-$683,515 and 1997-$838,348. The major categories of expenses for 1997 were
as follows: advertising, printing and mailing prospectuses to other than current
shareholders, compensation to broker/dealers and compensation to sales
personnel.
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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"
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investment company, as defined in the 1940 Act. As of June 30, 1997, there were
125,737,084 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, the E[bullet]fund(R), Citizens Index Portfolio
and Citizens Income Portfolio - no holders of 5% or more. Citizens Emerging
Growth Portfolio - Charles Schwab & Co, Inc., 7.4%; and Citizens Global Equity
Portfolio - Charles Schwab & Co, Inc., 25.4%.
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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.
25
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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 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.
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Custodian
State Street Bank and Trust, One Heritage Drive, North Quincy,
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.
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Auditors
Tait, Weller & Baker, Two Penn Center, Suite 700, 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 SEC 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.
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Legal Counsel
Bingham, Dana & Gould LLP, 150 Federal Street, Boston, Massachusetts.
26
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Proposed Reorganization
At a meeting to be held on December 1, 1997, shareholders of the
E[bullet]fund(R) will be asked to approve a Plan of Reorganization which sets
out the steps needed to combine the E[bullet]fund(R) with the Working Assets
Money Market Portfolio.
The basic steps in the proposed reorganization are as follows:
a) The transfer of all the assets and liabilities of the
E[bullet]fund(R) to the Working Assets Money Market Portfolio, in
exchange for shares of equal value in the Working Assets Money Market
Portfolio, Retail Class;
b) The distribution of these new Working Assets Money Market Portfolio
Retail Class shares to the shareholders of the E[bullet]fund(R); and
c) The dissolution of the E[bullet]fund(R).
If the E[bullet]fund(R) shareholders vote to approve the proposed
reorganization at the December 1, 1997 meeting, the above steps will be taken
and the reorganization will be completed a short time afterwards.
- --------------------------------------------------------------------------------
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, 1997 are incorporated herein by reference and are provided
to each person to whom the Statement of Additional Information is sent or given:
Statement of Investments - June 30, 1997
Statement of Assets and Liabilities - June 30, 1997
Statement of Operations for the year ended - June 30, 1997
Statement of Changes in Net Assets for the years ended June 30, 1996 and 1997.
Financial Highlights for the years ended June 30, 1996 and 1997.
Notes to Financial Statements
Report of Independent Certified Public Accountants
Management Discussion
It is the policy of the Fund to provide a management discussion of the
strategy and performance of each Portfolio in the Annual Report.
27
<PAGE>
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APPENDIX A: Description of Ratings
Description of Bond Ratings
We use the ratings provided by national rating services as one of several
indicators of the investment quality of fixed income securities. The following
is a description of the ratings of the two services we use most frequently. When
considering any rating, it is important to remember that the ratings of Moody's
and Standard & Poor's represent their opinions as to the quality of various debt
instruments. It should be emphasized, however, that ratings are not absolute
standards of quality. Consequently, debt instruments with the same maturity,
coupon and rating may have different yields while debt instruments with the same
maturity and coupon with different ratings may have the same yield.
Moody's
"Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risk appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.
Baa: Bonds which are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
28
<PAGE>
C: Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing."
Rating Refinements: Moody's applies numerical modifiers, 1, 2 and 3 in each
generic rating classification from Aa through B. The modifier 1 indicates that
the obligation ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and modifier 3 indicates a ranking in
the lower end of that generic rating category.
Standard & Poor's Long-Term Issue Credit Ratings
AAA: An obligation rated AAA has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA: An obligation rated AA differs from the highest rated obligations only in
small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A: An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher
rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB: An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.
BB, B, CCC, CC and C: Obligations rated BB, B, CCC, CC and C are regarded as
having significant speculative characteristics. BB indicates the least degree of
speculation and C the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.
BB: An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.
B: An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial or economic conditions will
likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.
CCC: An obligation rated CCC is currently vulnerable to nonpayment, and is
dependent upon favorable business, financial and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.
CC: An obligation rated CC is currently highly vulnerable to nonpayment.
C: The rating C may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.
D: An obligation rated D is in payment default. The D rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also
29
<PAGE>
will be used upon the filing of a bankruptcy petition or the taking of a similar
action if payments on an obligation are jeopardized.
Plus (+) or minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
r: This symbol is attached to the ratings of instruments with significant
noncredit risks. It highlights risks to principal or volatility of expected
returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk--such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.
Fitch Investors Service, Inc., Investment Grade Bond and Preferred Stock Ratings
AAA: Bonds and preferred stock considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and/or dividends and repay principal, which is unlikely to be affected
by reasonably foreseeable events.
AA: Bonds and preferred stock considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and/or dividends and repay
principal is considered very strong, although not quite as strong as bonds rated
AAA. Because bonds and preferred stock rated in the AAA and AA categories are
not significantly vulnerable to foreseeable future developments, short-term debt
of these issuers is generally rated F-1+ (i.e., Exceptionally Strong Credit
Quality).
A: Bonds and preferred stock considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and/or dividends and repay
principal is considered to be strong, but may be more vulnerable to adverse
changes in economic conditions and circumstances than debt or preferred
securities with higher ratings.
BBB: Bonds and preferred stock considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest or dividends
and repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have adverse impact on
these securities and, therefore, impair timely payment. The likelihood that the
ratings of these bonds or preferred stock will fall below investment grade is
higher than for securities with higher ratings.
Plus (+) or minus (-): Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit quality within the rating category.
Plus and minus signs, however, are not used in the AAA category.
Moody's Short-Term Prime Rating System--Taxable Debt & Deposits Globally
Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually senior debt obligations. The obligations have an original maturity
not exceeding one year, unless explicitly noted.
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:
Prime-1: Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
30
<PAGE>
[bullet] Leading market positions in well-established industries.
[bullet] High rates of return on funds employed.
[bullet] Conservative capitalization structure with moderate reliance on
debt and ample asset protection.
[bullet] Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
[bullet] Well-established access to a range of financial markets and
assured sources of alternate liquidity.
Prime-2: Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Prime-3: Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt
protections measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
Not Prime: Issuers rated Not Prime do not fall within any of the Prime rating
categories.
Note: Moody's ratings are opinions, not recommendations to buy or sell, and
their accuracy is not guaranteed. A rating should be weighed solely as one
factor in an investment decision and you should make your own study and
evaluation of any issuers whose securities or debt obligations you consider
buying or selling.
Standard & Poor's Short-Term Issue Credit Ratings
Standard & Poor's short-term issue credit ratings are a current assessment of
the likelihood of timely payment of debt having an original maturity of no more
than 365 days. Ratings are graded as follows:
A-1: A short-term obligation rated A-1 is rated in the highest category by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is strong. Within this category, certain obligations are
designated with a plus sign (+). This indicates that the obligor's capacity to
meet its financial commitment on these obligations is extremely strong.
A-2: A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.
A-3: A short-term obligation rated A-3 exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
B: A short-term obligation rated B is regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
C: A short-term obligation rated C is currently vulnerable to nonpayment and is
dependent upon favorable business, financial and economic conditions for the
obligor to meet its financial commitment on the obligation.
31
<PAGE>
D: A short-term obligation rated D is in payment default. The D rating category
is used when payments on an obligation are not made on the date due even if the
applicable grace period had not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.
32
<PAGE>
PART C
OTHER INFORMATION
Item 24: Financial Statements and Exhibits
Audited Financial Statements: the following audited Financial statements are
incorporated by reference to the Registrant's Annual Report to shareholders for
the period ended June 30, 1997, filed with the Commission on August 28, 1997
(Accession No.0000950146-97-001388).
Statement of Investments - June 30, 1997
Statement of Assets and Liabilities - June 30, 1997
Statement of Operations for the year ended June 30, 1997
Statement of Changes in Net Assets for the years ended June 30, 1996 and
June 30, 1997
Selected Per Share Data and Ratios from Inception through June 30, 1997
Notes to Financial Statements: June 30, 1997
Auditors Report: June 30, 1997
Exhibits
(1) declaration of trust ***
(2) by laws
(3) not applicable
(4) not applicable
(5) management agreement
(a) management agreement *
(b) renewal of management agreement ***
(c) amendment to management agreement dated May 30, 1996 ***
(d) form of sub-investment advisory agreement ***
(6) distribution agreement
(a) distribution agreement, as amended *
(b) renewal of distribution agreement ***
(c) amendment to distribution agreement dated May 6, 1996 ***
(d) amendment to distribution agreement dated May 30, 1996 ***
(7) not applicable
(8) custodian agreement ****
(9) other material contracts:
(a) administrative agreement as amended *
(b) amendment to administrative agreement ***
(10) opinion and consent of counsel as to the legality of the
securities being registered *
(11) consent of independent certified public accountants
(12) not applicable
(13) copies of written assurance from initial stockholders *
(14) copies of model plan used in establishment of retirement plan *
- ----------------
* Incorporated by reference to Amendment No.27 to the Registrant's
Registration Statement (File No.. 2-80886), as filed with the Securities
and Exchange Commission.
*** Incorporated by reference to Amendment No. 34 to the Registrant's
Registration Statement (File No. 2-80886), as filed with the Securities
and Exchange Commission.
**** Incorporated by reference to Amendment No. 35 to the Registrant's
Registration Statement (File No. 2-80886), as filed with the Securities
and Exchange Commission.
<PAGE>
CITIZENS INVESTMENT TRUST
PART C (CONT'D)
(15) Rule 12b-1 distribution plan *
(16) Schedule for computation of each performance quotation provided in the
registration statement (in response to Item 22): provided in Statement
of Additional Information.
(17) Financial Data Schedule
Item 25: Persons controlled by or under common control with Registrant: None
Item 26: Number of holders of securities as of October 2, 1997:
Title Number of Record Holders
--------------------------------------------------------------------
Working Assets Money Market Portfolio 8,600
Citizens Income Portfolio 3,033
Citizens Emerging Growth Portfolio 7,414
Citizens Global Equity Portfolio 2,972
Citizens Index Portfolio 14,703
Eofund(R) 3,035
Item 27: Indemnification.
Article VII, Section 12 of the Agreement and Declaration of Trust of
Citizens Investment Trust provides that the Trust shall indemnify any person who
was or is a party or is threatened to be made a party to any proceeding by
reason of the fact that such person is or was an agent of the Trust, against
expenses, judgments, fines, settlements, and other amounts actually and
reasonably incurred in connection with such proceeding if that person acted in
good faith and reasonably believe her/his conduct to be in the best interest of
the Trust. Indemnification will not be provided in certain circumstances,
however, including instances of willful misfeasance, bad faith, gross
negligence, and reckless disregard of the duties involved in the conduct of the
particular office involved.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to the Trustees, officers, and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable in the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a Trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator are insure under an errors and omissions liability
insurance policy. The Registrant and its officers are also insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.
Item 28: Business and Other Connections of Investment Adviser. Citizens
Securities, Inc., One Harbour Place, Portsmouth, New Hampshire 03801, a
registered broker/dealer, is the principal underwriter for Citizens Investment
Trust ("Registrant") and is a wholly owned subsidiary of Citizens Advisers,
Inc., the Investment Adviser, a California corporation. The officers and
directors of Citizens Securities having other business of a substantial nature
are as follows:
<PAGE>
CITIZENS INVESTMENT TRUST
PART C (CONT'D)
Name and Principal
Business Address: Nature of Other Business:
- ----------------- -------------------------
Sophia Collier President and Trustee
One Harbour Place, Suite 525 of Registrant
Portsmouth, N.H. 03801
Item 29: Principal Underwriters
(A) Not Applicable
(B)
Positions and
Name and Principal Positions and Offices Offices with
Business Address with Underwriter Registrant
- ----------------- --------------------- -------------
Sophia Collier President and Director of President and
See Item 28 underwriter Trustee
(C) Not Applicable
Item 30: Location of Accounts and Records: The account, books, or other
documents required to be maintained by Section 31(a) of the 1940 Act and the
rules thereunder are kept by the Registrant's Transfer and Dividend Distributing
Agent, PFPC, Inc., 400 Bellevue Pkwy., Wilmington, DE 19809, and the
Registrant's Custodian Bank.
Item 31: Management Services.
Not applicable
Item 32: Undertakings.
(A) If the information called for by item 5A of Form N-1A is contained in the
latest Annual Report to shareholders, the Registrant undertakes to furnish each
person to whom a prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Portsmouth, and State of New Hampshire, on the 7th
day of October 1997.
CITIZENS INVESTMENT TRUST
By________________________________
Sophia Collier, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
/s/ Sophia Collier *
---------------- Trustee
Sophia Collier President and October 7, 1997
Principal Executive
Principal Accounting Officer
Principal Financial Officer
/s/ Azie Taylor Morton *
- ----------------------------- Trustee October 7, 1997
(Azie Taylor Morton)
/s/ William Glenn *
- ----------------------------- Trustee October 7, 1997
(William Glenn)
/s/ Ada Sanchez *
- ----------------------------- Trustee October 7, 1997
(Ada Sanchez)
/s/ J.D. Nelson *
- ----------------------------- Trustee October 7, 1997
(J.D. Nelson)
/s/ Juliana Eades *
- ----------------------------- Trustee October 7, 1997
(Juliana Eades)
/s/ Lokelani Devone *
- ----------------------------- Trustee October 7, 1997
(Lokelani Devone)
* By Sophia Collier Attorney in Fact _________________________
See Power of Attorney dated May 15, 1992, filed with the commission on May
15, 1992 as part of Citizens Trust Post Effective Amendment #12.
See Power of Attorney dated November 12, 1992, filed with the commission on
November 12, 1992 as part of Citizens Trust Post Effective Amendment #14.
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
(2) By-Laws
(11) Consent of independent
certified public accountants
(27) Financial Data Schedule
CITIZENS INVESTMENT TRUST
By - Laws
ARTICLE I
SHAREHOLDERS
Section 1. Place of Meeting. All meetings of the shareholders (which term
as used herein shall, together with all other terms defined in the Declaration
of Trust, have the same meaning as in the Declaration of Trust) shall be held at
the principal office of the Trust or at such other place as may from time to
time be designated by the Board of Trustees and stated in the notice of meeting.
Section 2. Calling of the Meetings. Meeting of the Shareholders for any
purpose or purposes (including the election of Trustees) may be called by the
Chairman of the Board of Trustees, if any, or by the President or by the Board
of Trustees and shall be called by the Secretary upon receipt of the request in
writing signed by Shareholders holding not less than one third in amount of the
entire number of Shares issued and outstanding and entitled to vote thereat.
Such request shall state the purpose or purposes of the proposed meeting.
Section 3. Notice of Meetings. Not less than ten days' and not more than
ninety days' written or printed notice of every meeting of shareholder, stating
the time and place thereof (and the general nature of the business proposed to
be transacted at any special or extraordinary meeting), shall be given to each
Shareholder entitled to vote thereat by leaving the same with him or at his
residence or usual place of business or by mailing it, postage prepaid and
addressed to said shareholder at his or her address as it appears upon the books
of the Trust.
No notice of the time, place or purpose of any meeting of Shareholders
need be given to any Shareholder who attends in person or by proxy or to any
Shareholder who, in writing executed and filed with the records of the meeting,
either before or after the holding thereof, waives such notice.
Section 4. Record Dates. The Board of Trustees may fix, in advance a
date, not exceeding ninety days' preceding the date of any meeting of
Shareholders, and not exceeding ninety days preceding any dividend payment date
or any date for the allotment of rights, as a record date for the determination
of the Shareholders entitled to receive such dividends or rights, as the case
may be; and only Shareholders of record on such date shall be entitled to notice
of and to vote at such meeting or to receive such dividends or rights, as the
case may be.
Section 5. Quorum, Adjournments of Meetings. The Presence in person or by
proxy of the holders of record of one-third of the Shares of the stock of the
Trust issued and outstanding and entitle to vote thereat, shall constitute a
quorum at all meetings of the Shareholders. If at any meeting of the
Shareholders there shall be less than a quorum present, the Shareholders present
at such a meeting may, without further notice, adjourn the same from time to
time until a quorum shall attend, but no business shall be transacted at any
such adjourned meeting except such as might have been lawfully transacted had
the meeting not be adjourned.
Section 6. Voting and Inspectors. At all meetings of Shareholders every
Shareholder of record entitled to vote thereat shall be entitled to vote at such
meeting either in person or by
<PAGE>
proxy appointed by instrument in writing subscribed by such Shareholder or his
duly authorized attorney-in-fact.
All elections of Trustees shall be had by a plurality of the votes cast
and all questions shall be decided by a majority of the votes cast, in each case
at a duly constituted meeting, except as otherwise provided in the Declaration
of Trust or in these By-Laws.
At any election of Trustees, the Board of Trustees prior thereto may, or,
if they have not so acted, the Chairman of the meeting may, and upon the request
of the holders of ten percent (10%) of the Shares entitle to vote at such
election shall, appoint two inspectors of election who shall first subscribe an
oath or affirmation to execute faithfully the duties of inspectors at such
election with strict impartiality and according to the best of their ability,
and shall after the election make a certificate of the result of the vote taken.
No candidate for the office of Trustee shall be appointed such inspector.
The Chairman of the meeting may cause a vote by ballot to be taken upon
any election or matter, and such vote shall be taken upon the request of the
holders of ten percent (10%) of the Shares entitled to vote on such election or
matter.
Section 7. Conduct of Shareholders' Meetings. The meetings of the
Shareholders shall be presided over by the Chairman of the Board of Trustees, if
any, or if he or she shall not be present, by the President, or if he or shall
not be present, a Vice-President, or if neither the Chairman of the Board of
Trustees, the President nor any Vice-President is present, by a chairman to be
elected at the meeting. The Secretary of the Trust, if present, shall act as
Secretary of such meetings, or if he or she is not present, an Assistant
Secretary so shall act; if neither the Secretary nor an Assistant Secretary is
present, then the meeting shall elect its secretary.
Section 8. Concerning Validity of Proxies, Ballots, Etc. At every meeting
of the Shareholders, all proxies shall be received and taken in charge of and
all ballots shall be received and canvassed by the secretary of the meeting, who
shall decide all questions touching the qualifications of voters, the validity
of the proxies, and the acceptance or rejection of votes, unless inspectors of
election shall have been appointed as provided in Section 6, in which event such
inspectors of election shall decide all such questions.
ARTICLE II
BOARD OF TRUSTEES
Section 1. Number and Tenure of Office. The business and property of the
Trust shall be conducted and managed by a Board of Trustees consisting of nine
(9) members, which number may be increased or decreased as provided in Section 2
of this Article. The Board of Trustees may set and alter the terms of office of
the Trustees, may lengthen or lessen their own terms or make their terms of
indefinite duration, all subject to the 1940 Act. Trustees shall at all times be
Shareholders of the Trust.
Section 2. Increase or Decrease in Number of Trustees; Removal. The Board
of Trustees may increase the number of Trustees to a number not exceeding
fifteen, and may elect Trustees to fill the vacancies created by any such
increase in the number of Trustees; the Board of Trustees may likewise decrease
the number of Trustees to a number not less than three. Vacancies occurring
other than by reason of any such increase shall be filled as provided for by a
<PAGE>
Massachusetts business corporation. In the event that after proxy material has
been printed for a meeting of Shareholders at which Trustees are to be elected,
any one or more management nominees dies or becomes incapacitated, the
authorized number of Trustees shall be automatically reduced by the number of
such nominees, unless the Board of Trustees prior to the meeting shall otherwise
determine. Any Trustees at any time may be removed either with or without cause
by resolution duly adopted by the affirmative votes of the holders of the
majority of the Shares of the Trust present in person or by proxy at any meeting
of Shareholders at which such vote may be taken, provided that a quorum is
present, or by such larger vote as may be required by Massachusetts law. Any
Trustee at any time may be removed for cause or resolution duly adopted at any
meeting of the Board of Trustees provided that notice thereof is contained in
the notice of such meeting and that such resolution is adopted by the vote of at
least two thirds of the Trustees whose removal is not proposed. As used herein,
"for cause" shall mean any cause, which under Massachusetts's law would permit
the removal of a Trustee of a business trust.
Section 3. Place of Meeting. The Trustees may hold their meetings, have
one or more offices, and keep the books of the Trust outside Massachusetts, at
any office or offices of the Trust or at any other place as they may from time
to time by resolution determine, or, in the case of meetings, as they may from
time to time by resolution determine or shall be specified or fixed in the
respective notices or waivers of notice thereof.
Section 4. Chair. The Trustees shall, by the majority vote of all the
Trustees, elect from their own number a Chair, who shall hold office for a term
of two (2) years but may not serve consecutive terms. The Chair shall not be
deemed to be an officer of the Trust solely by reason of his or her position as
Chair. The Chair shall preside at all meetings of the Trustees and shall have
other such duties as from time to time may be assigned to him or her by the
Trustees.
Section 5. Regular Meetings. Regular meetings of the Board of Trustees
shall be held at such time and on such notice, if any, as the Trustees may from
time to time determine.
Section 6. Special Meetings. Special meetings of the Board of Trustees
may be held from time to time upon call of the Chairman of the Board of
Trustees, if any, the President or two or more of the Trustees, by oral or
telegraphic or written notice duly served on or sent or mailed to each Trustee
not less than one day before such meeting. No notice need be given to any
Trustee who attends in person or to any Trustee who, in writing executed and
filed with records of the meeting either before or after the holding thereof,
waives such notice. Such notice or waiver of notice need not state the purpose
or purposes of such meeting.
Section 7. Quorum. One-third of the Trustees then in office shall
constitute a quorum for the transaction of business, provided that a quorum
shall in no case be less than two Trustees. If at any meeting of the Board there
shall be less than a quorum present (in person or by open telephone line, to the
extent permitted by the 1940 Act), a majority of those present may adjourn the
meeting from time to time until a quorum shall have been obtained. The act of
the majority of the Trustees present at any meeting at which there is a quorum
shall be the act of the Board, except as may be otherwise specifically provided
by statute, by the Declaration of Trust or by these By - Laws.
Section 8. Executive Committee. The Board of Trustees may, by the
affirmative vote of a majority of the entire Board, elect from the Trustees an
Executive Committee to consist of such number of Trustees as the Board may from
time to time determine. The Board of Trustees by such affirmative vote shall
have power at any time to change the members of such Committee and may fill
vacancies in the Committee by election from the Trustees. When the Board of
Trustees is not in session, the Executive Committee shall have and may exercise
any or all of the
<PAGE>
powers of the Board of Trustees in the management of the business and affairs of
the Trust (including the power to authorize the seal of the Trust to be affixed
to all papers which may require it) except as provided by law and except the
power to increase or decrease the size of, or fill vacancies on the Board. The
Executive Committee may fix its own rules of procedure, and may meet, when and
as provided by such rules or by resolution of the Board of Trustees, but in
every case the presence of a majority shall be necessary to constitute a quorum.
In the absence of any member of the Executive Committee the members thereof
present at any meeting, whether or not they constitute a quorum, may appoint a
member of the Board of Trustees to act in the place of such absent member.
Section 9. Other Committees. The Board of Trustees, by the affirmative
vote of a majority of the entire Board, may appoint other committees which shall
in each case consist of such number of members (not less than two) and shall
have and may exercise such powers as the Board may determine in the resolution
appointing them. A majority of all members of any such committee may determine
its action, and fix the time and place of its meetings, unless the Board of
Trustees shall otherwise provide. The Board of Trustees shall have power at any
time to change the members and powers of any such committee, to fill vacancies,
and to discharge any such committee.
Section 10. Informal Action by and Telephone Meetings of Trustees and
Committees. Any action required or permitted to be taken at any meeting of the
Board of Trustees or any committee thereof may be taken without a meeting, of a
written consent to such action is signed by all members of the Board, or of such
committee, as the case may be. Trustees or members of a committee of the Board
of Trustees may participate in a meeting by means of a conference telephone or
similar communications equipment; such participation shall, except as otherwise
required by the 1940 Act, have the same effect as presence in person.
Section 11. Compensation of Trustees. Trustees shall be entitled to
receive such compensation from the Trust for their services as may from time to
time be voted by the Board of Trustees.
Section 12. Dividends. Dividends or distributions payable on the Shares
may, but need not be, declared by specific resolution of the Board as to each
dividend or distribution; in lieu of such specific resolution, the Board may, by
general resolution, determine the method of computation thereof, the method of
determining the Shareholders to which they are payable and the methods of
determining whether and to which Shareholders they are to be paid in cash or in
additional Shares.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The executive officers of the Trust shall
be chosen by the Board of Trustees. These shall include a President, one or more
Vice-Presidents (the number thereof to be determined by the Board of Trustees),
a Secretary and a Treasurer. The President shall be selected from among the
Trustees. The Board of Trustees may also in its discretion appoint Assistant
Secretaries, Assistant Treasurers, and other officers, agents and employees, who
shall have such authority and perform such duties as the Board or the Executive
Committee, may determine. The Board of Trustees may fill any vacancy, which may
occur in any office.
<PAGE>
Any two offices, except those of President and Vice-President, may be held by
the same person, but no officer shall execute, acknowledge or verify any
instrument in more than one capacity, if such instrument is required by law or
these By -Laws to be executed, acknowledged or verified by two or more officers.
Section 2. Term of Office. The terms of office of all officers shall be
fixed by the Board of Trustees; however, any officers may be removed from office
at any time with or without cause by the vote of a majority of the entire Board
of Trustees.
Section 3. Powers and Duties. The officers of the Trust shall have such
powers and duties as generally pertain to their respective offices, as well as
such powers and duties as may from time to time be conferred by the Board of
Trustees or the Executive Committee.
ARTICLE IV
SHARES
Section 1. Certificates of Shares. Each Shareholder of the Trust may be
issued a certificate or certificates for his or her Shares in such form as the
Board of Trustees may from time to time prescribe, but only if and to the extent
and on the conditions prescribed by the Board.
Section 2. Transfer of Shares. Shares shall be transferable on the books
of the Trust by the holder thereof in person or by his duly authorized attorney
or legal representative, upon surrender and cancellation of certificates, if
any, for the same number of Shares, duly endorsed or accompanied by proper
instruments of assignment and transfer, with such proof of the authenticity of
the signature as the Trust or its agent may reasonably require; in the case of
shares not represented by certificates, the same or similar requirements may be
imposed by the Board of Trustees.
Section 3. Stock Ledgers. The stock ledgers of the Trust, containing the
name and address of the Shareholders and the number of shares held by them
respectively, shall be kept at the principal office of the Trust or, if the
Trust employs a transfer agent, at the offices of the transfer agent of the
Trust.
Section 4. Lost, Stolen or Destroyed Certificates. The Board of Trustees
may determine the conditions upon which a new certificate may be issued in place
of certificate which is alleged to have been lost, stolen or destroyed; and may,
in its discretion, require the owner of such certificate or his or her legal
representative to give bond, with sufficient surety to the Trust and the
transfer agent, if any, to indemnify it and such transfer agent against any and
all loss or claims which may arise by reason of the issue of a new certificate
in the place of the one so lost, stolen or destroyed.
ARTICLE V
SEAL
The Board of Trustees shall provide a suitable seal of the Trust, in such
form and bearing such inscriptions as it may determine.
<PAGE>
ARTICLE VI
FISCAL YEAR
The fiscal year of the Trust shall be fixed by the Board of Trustees.
ARTICLE VII
AMENDMENT OF BY - LAWS
The By - Laws of the Trust may be altered, amended, added to or repealed
by the Shareholders or by majority vote of the entire Board of Trustees, but any
such alteration, amendment, addition or repeal of the By - Laws by action of the
Board of Trustees may be altered or repealed by the Shareholders.
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated July 25, 1997, accompanying the financial
statements and financial highlights of Working Assets Money Market Portfolio,
Citizens Income Portfolio, Citizens Index Portfolio, Citizens Emerging Growth
Portfolio, Citizens Global Equity Portfolio, Muir California Tax-Free Income
Portfolio, and EoFund, each a series of shares of beneficial interest of
Citizens Trust, appearing in the Annual Report to Shareholders for the year
ended June 30, 1997 which is incorporated by reference in the Post-Effective
Amendment to the Registration Statement on Form N-1A and related Prospectus of
Citizens Trust. We consent to the use of the aforementioned report and to the
references to our Firm in the Registration Statement and Prospectus.
TAIT, WELLER & BAKER
---------------------------------
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
October 2, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This FDS is to show the breakout of
retail shares for the Portfolio.
</LEGEND>
<CIK> 0000711202
<NAME> Citizens Investment Trust
<SERIES>
<NUMBER> 001
<NAME> Working Assets Money Market Portfolio
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 99,960,197
<INVESTMENTS-AT-VALUE> 99,960,197
<RECEIVABLES> 2,348,517
<ASSETS-OTHER> 62,525
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 103,511,889
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 828,592
<TOTAL-LIABILITIES> 828,592
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 102,683,297
<SHARES-COMMON-STOCK> 102,683,297
<SHARES-COMMON-PRIOR> 92,865,013
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 102,683,297
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,339,283
<OTHER-INCOME> 0
<EXPENSES-NET> 1,111,879
<NET-INVESTMENT-INCOME> 4,227,404
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,047,404
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 126,505,122
<NUMBER-OF-SHARES-REDEEMED> 120,845,951
<SHARES-REINVESTED> 4,159,113
<NET-CHANGE-IN-ASSETS> 9,818,284
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 341,144
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,223,645
<AVERAGE-NET-ASSETS> 97,470,708
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.042
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.042
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 1.27
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000711202
<NAME> Citizens Investment Trust
<SERIES>
<NUMBER> 002
<NAME> Citizens Income Portfolio
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 32,313,938
<INVESTMENTS-AT-VALUE> 32,679,403
<RECEIVABLES> 676,582
<ASSETS-OTHER> 13,252
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 33,369,303
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 139,133
<TOTAL-LIABILITIES> 139,133
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 32,965,473
<SHARES-COMMON-STOCK> 3,148,474
<SHARES-COMMON-PRIOR> 3,140,161
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (100,768)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 365,465
<NET-ASSETS> 33,230,170
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,652,968
<OTHER-INCOME> 0
<EXPENSES-NET> 492,639
<NET-INVESTMENT-INCOME> 2,160,329
<REALIZED-GAINS-CURRENT> 330,690
<APPREC-INCREASE-CURRENT> 530,520
<NET-CHANGE-FROM-OPS> 2,994,539
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,160,329
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 838,253
<NUMBER-OF-SHARES-REDEEMED> 1,003,548
<SHARES-REINVESTED> 173,608
<NET-CHANGE-IN-ASSETS> 954,318
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (431,458)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 218,016
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 511,350
<AVERAGE-NET-ASSETS> 33,540,995
<PER-SHARE-NAV-BEGIN> 10.28
<PER-SHARE-NII> 0.67
<PER-SHARE-GAIN-APPREC> 0.28
<PER-SHARE-DIVIDEND> 0.67
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.56
<EXPENSE-RATIO> 1.47
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This FDS is to show the breakout of
retail shares for the Portfolio.
</LEGEND>
<CIK> 0000711202
<NAME> Citizens Investment Trust
<SERIES>
<NUMBER> 003
<NAME> CITIZENS INDEX PORTFOLIO
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 148,772,660
<INVESTMENTS-AT-VALUE> 224,619,315
<RECEIVABLES> 20,330,008
<ASSETS-OTHER> 66,990
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 245,375,109
<PAYABLE-FOR-SECURITIES> 20,504,972
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 653,504
<TOTAL-LIABILITIES> 21,158,476
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 140,826,866
<SHARES-COMMON-STOCK> 12,576,338
<SHARES-COMMON-PRIOR> 10,211,416
<ACCUMULATED-NII-CURRENT> 97,952
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,350,160
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 75,841,655
<NET-ASSETS> 224,116,633
<DIVIDEND-INCOME> 2,792,498
<INTEREST-INCOME> 32,399
<OTHER-INCOME> 0
<EXPENSES-NET> 2,717,913
<NET-INVESTMENT-INCOME> 106,984
<REALIZED-GAINS-CURRENT> 8,049,314
<APPREC-INCREASE-CURRENT> 47,548,634
<NET-CHANGE-FROM-OPS> 55,704,932
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 699,105
<DISTRIBUTIONS-OF-GAINS> 1,036,303
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,265,385
<NUMBER-OF-SHARES-REDEEMED> 1,700,928
<SHARES-REINVESTED> 116,133
<NET-CHANGE-IN-ASSETS> 79,612,655
<ACCUMULATED-NII-PRIOR> 690,075
<ACCUMULATED-GAINS-PRIOR> 337,149
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 878,074
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,724,778
<AVERAGE-NET-ASSETS> 175,603,370
<PER-SHARE-NAV-BEGIN> 13.41
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 4.78
<PER-SHARE-DIVIDEND> 0.06
<PER-SHARE-DISTRIBUTIONS> 0.09
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.04
<EXPENSE-RATIO> 1.59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000711202
<NAME> Citizens Investment Trust
<SERIES>
<NUMBER> 004
<NAME> CITIZENS EMERGING GROWTH PORTFOLIO
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 62,496,345
<INVESTMENTS-AT-VALUE> 69,038,634
<RECEIVABLES> 2,424,031
<ASSETS-OTHER> 10,110
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 71,472,775
<PAYABLE-FOR-SECURITIES> 9,703,191
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,428,653
<TOTAL-LIABILITIES> 11,131,844
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 55,230,604
<SHARES-COMMON-STOCK> 4,268,721
<SHARES-COMMON-PRIOR> 2,448,943
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,431,962)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,542,289
<NET-ASSETS> 60,340,931
<DIVIDEND-INCOME> 224,028
<INTEREST-INCOME> 111,293
<OTHER-INCOME> 0
<EXPENSES-NET> 1,000,838
<NET-INVESTMENT-INCOME> (665,517)
<REALIZED-GAINS-CURRENT> (1,434,350)
<APPREC-INCREASE-CURRENT> 4,711,273
<NET-CHANGE-FROM-OPS> 2,611,406
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 4,391,320
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,552,259
<NUMBER-OF-SHARES-REDEEMED> 4,052,228
<SHARES-REINVESTED> 319,474
<NET-CHANGE-IN-ASSETS> 23,931,654
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,393,708
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 503,188
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,010,552
<AVERAGE-NET-ASSETS> 50,318,589
<PER-SHARE-NAV-BEGIN> 14.87
<PER-SHARE-NII> 0.16
<PER-SHARE-GAIN-APPREC> 0.68
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 1.25
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.14
<EXPENSE-RATIO> 2.01
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000711202
<NAME> Citizens Investment Trust
<SERIES>
<NUMBER> 005
<NAME> CITIZENS GLOBAL EQUITY PORTFOLIO
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 22,567,095
<INVESTMENTS-AT-VALUE> 29,314,471
<RECEIVABLES> 248,585
<ASSETS-OTHER> 9,748
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 29,603,851
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 30,895
<TOTAL-LIABILITIES> 30,895
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22,719,876
<SHARES-COMMON-STOCK> 2,044,409
<SHARES-COMMON-PRIOR> 1,311,458
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 107,740
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,745,340
<NET-ASSETS> 29,572,956
<DIVIDEND-INCOME> 210,234
<INTEREST-INCOME> 80,447
<OTHER-INCOME> 0
<EXPENSES-NET> 433,875
<NET-INVESTMENT-INCOME> (143,194)
<REALIZED-GAINS-CURRENT> 393,718
<APPREC-INCREASE-CURRENT> 4,332,342
<NET-CHANGE-FROM-OPS> 4,582,866
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 982,865
<NUMBER-OF-SHARES-REDEEMED> 249,910
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 13,977,623
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (285,977)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 206,581
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 480,618
<AVERAGE-NET-ASSETS> 20,658,261
<PER-SHARE-NAV-BEGIN> 11.89
<PER-SHARE-NII> (0.07)
<PER-SHARE-GAIN-APPREC> 2.65
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.47
<EXPENSE-RATIO> 2.33
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000711202
<NAME> Citizens Investment Trust
<SERIES>
<NUMBER> 006
<NAME> MUIR CALIFORNIA TAX-FREE INCOME PORTFOLIO
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 11,365,358
<INVESTMENTS-AT-VALUE> 11,580,447
<RECEIVABLES> 193,684
<ASSETS-OTHER> 117,159
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 11,895,368
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 17,529
<TOTAL-LIABILITIES> 17,529
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,066,338
<SHARES-COMMON-STOCK> 741,150
<SHARES-COMMON-PRIOR> 845,278
<ACCUMULATED-NII-CURRENT> 9,308
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (412,896)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 215,089
<NET-ASSETS> 11,877,839
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 651,878
<OTHER-INCOME> 0
<EXPENSES-NET> 176,877
<NET-INVESTMENT-INCOME> 475,001
<REALIZED-GAINS-CURRENT> 123,431
<APPREC-INCREASE-CURRENT> 162,280
<NET-CHANGE-FROM-OPS> 760,712
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 466,086
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 96,462
<NUMBER-OF-SHARES-REDEEMED> 225,842
<SHARES-REINVESTED> 25,252
<NET-CHANGE-IN-ASSETS> (1,343,427)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (536,326)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 78,310
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 260,653
<AVERAGE-NET-ASSETS> 12,047,694
<PER-SHARE-NAV-BEGIN> 15.64
<PER-SHARE-NII> 0.64
<PER-SHARE-GAIN-APPREC> 0.37
<PER-SHARE-DIVIDEND> 0.62
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.03
<EXPENSE-RATIO> 1.64
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000711202
<NAME> Citizens Investment Trust
<SERIES>
<NUMBER> 007
<NAME> E-Fund
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 19,711,957
<INVESTMENTS-AT-VALUE> 19,711,957
<RECEIVABLES> 609,148
<ASSETS-OTHER> 158,570
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 21,124,550
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 422,312
<TOTAL-LIABILITIES> 422,312
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 20,702,238
<SHARES-COMMON-STOCK> 20,702,238
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 20,702,238
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 921,590
<OTHER-INCOME> 74,257
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 995,847
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 995,847
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 995,847
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 65,756,652
<NUMBER-OF-SHARES-REDEEMED> 57,122,135
<SHARES-REINVESTED> 985,499
<NET-CHANGE-IN-ASSETS> 9,620,016
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 17,288
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 254,669
<AVERAGE-NET-ASSETS> 17,287,810
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.057
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.057
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
