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EXHIBIT 99.1

R. J. REYNOLDS CAPITAL
INVESTMENT PLAN

INDEPENDENT AUDITORS' REPORT

FINANCIAL STATEMENTS
Years Ended December 30, 2000 and 1999

R. J. REYNOLDS CAPITAL INVESTMENT PLAN

TABLE OF CONTENTS

PAGE

INDEPENDENT AUDITORS' REPORT 1

FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of December 30, 2000 and 1999 2
Statements of Changes in Net Assets Available for Benefits for the Years Ended December 30,
2000 and 1999 3
Notes to Financial Statements 4-10

NOTE: The accompanying financial statements have been prepared for the
purpose of filing with the Department of Labor Form 5500.
Supplemental schedules as required by the Department of Labor's Rules
and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 have been omitted because of
the absence of the conditions under which they are required.

INDEPENDENT AUDITORS' REPORT

RJR Employee Benefits Committee:

We have audited the accompanying statements of net assets available for benefits
of the R. J. Reynolds Capital Investment Plan, referred to as the Plan, as of
December 30, 2000 and 1999, and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 30,
2000 and 1999, and the changes in net assets available for benefits for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.

/s/ Deloitte & Touche LLP

May 25, 2001

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R. J. REYNOLDS CAPITAL INVESTMENT PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 30, 2000 AND 1999

2000 1999

ASSETS:
Investments, at fair market value - plan interest in Master
Trust (notes 1, 2 and 3) $1,120,387,521 $1,229,937,455
-------------- --------------
Receivables:
Investment income 652,452 9,078,445
Due from broker for sale of investments 278,754 5,219,010
-------------- --------------
Total receivables 931,206 14,297,455
-------------- --------------

Total assets 1,121,318,727 1,244,234,910
-------------- --------------

LIABILITIES:
Due to broker for purchase of investments -- 730,589
Accrued administrative expenses 412,656 --
Overdraft 224,982 --
-------------- --------------

Total liabilities 637,638 730,589
-------------- --------------

NET ASSETS AVAILABLE FOR BENEFITS $1,120,681,089 $1,243,504,321
============== ==============

See notes to financial statements.

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R. J. REYNOLDS CAPITAL INVESTMENT PLAN

STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 30, 2000 AND 1999

2000 1999

ADDITIONS:
Investment income (loss) - plan interest in Master Trust
(notes 1, 2, 3 and 4) $ (11,896,525) $ 187,480,495
--------------- ---------------
Contributions:
Employer's 11,700,841 40,050,474
Participants' 35,722,242 60,644,807
--------------- ---------------
Total contributions 47,423,083 100,695,281
--------------- ---------------
Allocation of shares of preferred stock of Nabisco Group
Holdings Corp., at fair value (notes 1 and 4) -- 34,275,056
--------------- ---------------

Total additions 35,526,558 322,450,832
--------------- ---------------

DEDUCTIONS:
Benefits paid to participants 154,253,884 178,413,549
Administrative expenses 1,937,579 1,758,432
Allocation of shares of preferred stock of Nabisco
Group Holdings Corp., at fair value (notes 1 and 4) -- 34,275,056
Interest expense -- 682,748
--------------- ---------------

Total deductions 156,191,463 215,129,785
--------------- ---------------

NET INCREASE (DECREASE) PRIOR TO TRANSFERS
TO OTHER PLANS (120,664,905) 107,321,047

NET TRANSFERS TO OTHER PLANS (note 1) (2,158,327) (895,918,298)
--------------- ---------------

NET DECREASE (122,823,232) (788,597,251)

NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 1,243,504,321 2,032,101,572
--------------- ---------------

End of year $ 1,120,681,089 $ 1,243,504,321
=============== ===============

See notes to financial statements.

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R. J. REYNOLDS CAPITAL INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 30, 2000 AND 1999

1. DESCRIPTION OF PLAN

The following description of the R. J. Reynolds Capital Investment
Plan, referred to as the Plan, provides only general information. Participants
should refer to the Plan document for a more complete description of the Plan's
provisions.

GENERAL - The Plan is a voluntary and automatic defined contribution
plan for eligible employees of R.J. Reynolds Tobacco Holdings, Inc., referred to
as RJR or the Company, and participating subsidiaries. All eligible employees
become participants unless they elect not to participate. The RJR Employee
Benefits Committee controls and manages the operation and administration of the
Plan. Wachovia Bank, N.A., referred to as Wachovia, served as the trustee of the
Plan through April 30, 2000. Effective May 1, 2000, the trustee of the Plan was
changed to Citibank, N.A., referred to as Citibank. During 2000 and 1999,
PricewaterhouseCoopers Unifi Network, formerly PricewaterhouseCoopers Kwasha HR
Solutions, served as the recordkeeper for the Plan. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974, referred to
as ERISA.

In April 2001, the Company registered with the Securities and Exchange
Commission an additional five million shares of RJR common stock for issuance
pursuant to the Plan and another plan sponsored by a subsidiary of the Company.

In August 2000, RJR completed a $30.4 million equity financing with
investors that resulted in RJR decreasing its ownership to approximately 43% in
Targacept, Inc., a privately held biotechnology company. As a result of this
equity financing, effective December 1, 2000, net assets of $2,158,327 were
transferred from the Plan to the Targacept Retirement Savings Plan, a new plan
sponsored by Targacept, Inc.

Prior to June 14, 1999, the Plan was named the RJR Nabisco Capital
Investment Plan and was sponsored by RJR Nabisco, Inc. During 1999, RJR Nabisco
Holdings Corp., referred to as Holdings, was renamed Nabisco Group Holdings
Corp., referred to as NGH. On May 18, 1999, RJR, the owner of 100% of R. J.
Reynolds Tobacco Company, referred to as RJR Tobacco, transferred its
approximately 80.5% interest in Nabisco Holdings Corp., referred to as Nabisco,
to NGH through a merger transaction. On June 14, 1999, NGH distributed all of
the outstanding shares of RJR common stock to NGH stockholders of record as of
May 27, 1999.

Due to the spin-off transaction, the Plan became sponsored by RJR, and
its name was changed to the R. J. Reynolds Capital Investment Plan. In addition,
the Nabisco Inc. Capital Investment Plan was adopted for Nabisco participants,
which became effective June 14, 1999, and concurrently, net assets of
$891,619,532 were transferred from the Plan to the Nabisco Inc. Capital
Investment Plan.

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With the spin-off transaction, the Company registered with the
Securities and Exchange Commission four million shares of RJR common stock for
issuance pursuant to the Plan and another plan sponsored by a subsidiary of the
Company. Each share of Nabisco common stock in the RJR Nabisco Common Stock
Fund, which was offered to participants of the Plan as an investment option, was
converted to one share of NGH common stock. Affected participants then received
one share of RJR common stock for every three shares of NGH common stock.

During 1999, the Plan was amended to accommodate the change in
corporate structure. The RJR Common Stock Fund was established, which invests in
common stock of RJR. Additionally, the Nabisco Common Stock Fund and the Nabisco
Group Holdings Stock Fund, formerly named the RJR Nabisco Stock Fund, were
"frozen." Participants could no longer make contributions of any type to these
funds, but could transfer amounts in these funds to the other funds offered
under the Plan. In accordance with action taken by the RJR Employee Benefits
Committee and communicated to Plan participants, the frozen Nabisco and NGH
stock funds were eliminated effective January 31, 2000. Assets still held in the
frozen funds on that date were transferred to the Interest Income Fund in the
Plan.

An Asset Purchase Agreement, referred to as the Agreement and dated
July 17, 1998, between ConAgra, Inc. and Nabisco, Inc., was entered into to
provide, in part, for the sale of the tablespreads business. Based upon the
terms of the Agreement, transferred employees who were participants of the Plan
became fully vested and active participation in the Plan ceased as of the
closing date. Additionally, the Plan was amended to provide for the direct
trustee-to-trustee transfer of assets representing the full account balances of
transferred employees. During 1999, net assets of $4,298,766 were transferred
from the Plan to ConAgra, Inc. in accordance with the terms of the Agreement.

INTEREST IN MASTER TRUST - The Plan's investments are in the R. J.
Reynolds Defined Contribution Master Trust, which was named the Defined
Contribution Master Trust prior to the spin-off transaction, referred to as the
Master Trust, which was established for the investment of assets of the Plan and
several other Company-sponsored plans. Each participating plan has an undivided
interest in the Master Trust. The assets of the Master Trust were held by
Wachovia during 1999 and prior to May 1, 2000. The assets of the Master Trust
have been held by Citibank since May 1, 2000. Investment income and
administrative expenses relating to the Master Trust are allocated to the
individual plans based upon average monthly balances invested by each plan.

CONTRIBUTIONS - Each year, participants may make basic contributions of
up to 6% of pre-tax annual compensation, as defined in the Plan. In addition,
participants may make supplemental contributions on a pre-tax basis of up to 16%
of compensation, including the basic contribution, as well as on an after-tax
basis of up to 16% of compensation. Contributions, whether made on a pre-tax or
after-tax basis, may not, in the aggregate, exceed 16% of compensation. The
Company contributes an amount equal to 50% of basic contributions. Contributions
are subject to certain Internal Revenue Code limitations.

On December 22, 1999, the Plan was amended to permit the Company to
make a minimum employer contribution to the Plan each year. The amount of the
minimum Company contribution for the 2000 Plan year is $25,000,000.

EMPLOYEE STOCK OWNERSHIP PLAN - On April 10, 1991, the Employee Stock
Ownership Plan, referred to as the ESOP, borrowed $250 million, referred to as
the ESOP Loan, from Holdings to purchase 15,625,000 shares of RJR Nabisco
Holdings Corp. Convertible Preferred Stock, referred to as the ESOP Preferred
Stock, at the stated value of $16.00 per share. The market value of the ESOP
Preferred Stock was the greater of the stated value of the ESOP Preferred Stock
or the market value of Holdings' common stock, referred to as the ESOP market
value. The ESOP Loan had a weighted average interest rate of 8.2% effective
January 5, 1993 and matured on July 2, 2016. The ESOP Preferred Stock was
convertible into 3,125,000 shares of Holdings' common stock, subject to
adjustment in certain events,

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and bore cumulative dividends at a rate of 7.8125% of stated value per annum at
least until April 10, 1999 and was payable semi-annually in arrears commencing
January 2, 1992, when, and if, declared by the Board of Directors of Holdings.
The ESOP Preferred Stock represented an unallocated investment of the Plan which
was allocated to individual participants' accounts as the ESOP Loan was repaid.
The unallocated ESOP Preferred Stock was collateral for the ESOP Loan. The ESOP
Preferred Stock was redeemable at the option of Holdings, in whole or in part,
at any time on or after April 10, 1999, at an initial optional redemption price
of $16.25 per share.

Effective June 10, 1999, the Plan was amended to provide that the ESOP
portion of the Plan ceased to exist. In conjunction with this cessation, all
shares of the ESOP Preferred Stock held under the ESOP were redeemed by
Holdings. Participants received $16.25 per share in cash for the shares of ESOP
Preferred Stock allocated to their accounts; these funds were then invested in
the Interest Income Fund offered as an investment option of the Plan. The
remaining funds were used to repay the ESOP Loan in full.

PARTICIPANT ACCOUNTS - Each participant's account is credited with the
participant's contributions and allocations of the Company's contributions and
Plan earnings, and debited with the participant's withdrawals and an allocation
of administrative expenses. Allocations are based on participant earnings or
account balances, as defined. Forfeited balances of terminated participants'
nonvested accounts are used to reduce future Company contributions. The benefit
to which a participant is entitled is the benefit that can be provided from the
participant's vested account.

VESTING - Participants are immediately vested in their contributions
plus actual earnings thereon. Vesting in Company contributions occurs upon the
earlier of completion of 24 months of Plan participation, 60 months of service,
as defined, with the Company or affiliated companies or upon the occurrence of
certain events as defined in the Plan document.

INVESTMENT OPTIONS - Upon enrollment in the Plan, a participant may
direct his or her employee contributions in 1% increments in any of eight
investment fund options before June 14, 1999, and seven investment fund options
after June 14, 1999. As of June 16, 2000, three additional investment fund
options were made available. As of December 8, 2000, a brokerage account option
was made available as an additional investment option to participants. The
brokerage account option is managed by Charles Schwab & Co. Inc. Participants
may change or transfer their investments options at any time via telephone.

LOANS TO PARTICIPANTS - Participants may borrow from their fund
accounts a minimum of $1,000 up to a maximum of the lesser of $50,000, or 50% of
their vested account balance, reduced by the highest outstanding loan balance
during the preceding 12 months. Loan transactions are treated as a transfer
between the investment fund and the loan fund. Loan terms shall not be for more
than 5 years or up to 10 years for the purchase of a primary residence. The
loans are secured by the balance in the participant's account and bear interest
at a rate commensurate with local prevailing rates as determined quarterly by
the Plan administrator. Principal and interest are paid ratably through payroll
deductions.

PAYMENT OF BENEFITS - On termination of service, a participant will
receive a lump-sum amount equal to the value of the participant's vested
interest in his or her account, or for certain participants, annual installments
over a period not to exceed the lesser of 15 years or the participant's life
expectancy, if certain requirements set forth in the Plan are met.

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EXPENSES - Expenses relating to the purchase or sale of investments are
included in the cost or deducted from the proceeds, respectively. Direct charges
and expenses, including investment manager fees attributable to specific
investment funds, may be charged against that investment fund. Other Plan
expenses such as trustee, auditor, general plan recordkeeping and Internal
Revenue Service user fees may be paid directly from the Master Trust. Other
expenses continue to be paid by the Company.

2. SUMMARY OF ACCOUNTING POLICIES

BASIS OF ACCOUNTING - The accompanying financial statements of the Plan
have been prepared in accordance with accounting principles generally accepted
in the United States of America.

USE OF ESTIMATES - The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, and changes therein, and disclosure of
contingent assets and liabilities. Actual results could differ from those
estimates. The Master Trust utilizes various investment instruments. Investment
securities, in general, are exposed to various risks, such as interest rate,
credit and overall market volatility. Due to the level of risk associated with
certain investment securities, it is reasonably possible that changes in the
values of investment securities will occur in the near term and that such
changes could materially affect the amounts reported in the statements of net
assets available for benefits.

INVESTMENT VALUATION AND INCOME RECOGNITION - The Plan's interest in
the Master Trust, except for the guaranteed investment contracts, is valued at
estimated fair value. If available, quoted market prices are used to value the
underlying investments. In instances wherein quoted market prices are not
available, the fair value of investments is estimated primarily by independent
investment brokerage firms and insurance companies.

The Plan has entered into various benefit-responsive investment
contracts with insurance companies which maintain the contributions in a general
account. The accounts are credited with earnings on the underlying investments
and charged for participant withdrawals and administrative expenses. The
contracts are included in the financial statements at contract value, which
approximates fair value, as reported to the Plan by the insurance companies.
Contract value represents contributions made under the contract, plus earnings,
less participant withdrawals and administrative expenses. Participants may
ordinarily direct the withdrawal or transfer of all or a portion of their
investment at contract value. There are no reserves against contract value for
credit risk of the contract issuer or otherwise. The contract rates ranged from
5.42% to 8.10% and 4.92% to 8.10% at December 30, 2000 and 1999, respectively.
The crediting interest rate is based on a formula agreed upon with the issuer,
but may not be less than certain percentages.

Within the Master Trust, purchases and sales of securities are recorded
on a trade-date basis. Interest income is recorded on the accrual basis.
Dividends are recorded on the ex-dividend date.

PAYMENT OF BENEFITS - Benefits are recorded when paid.

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3. MASTER TRUST

Investments and investment income for the Master Trust were:

DECEMBER 30,
------------------------------------
2000 1999

Investments:
At fair value:
Wachovia Bank, N.A. Diversified Short-Term
Investment Fund $ -- $ 58,527,157
C. E. B. T. Liquid Reserve Fund 8,967,932 --
Nabisco Group Holdings Corp. Common Stock -- 2,482,527
Nabisco Holdings Corp. Class A Common Stock -- 13,093,331
R.J. Reynolds Tobacco Holdings, Inc. Common Stock 40,432,275 19,676,293
Mutual funds 652,053,521 689,979,659
Corporate bonds -- 98,139,938
Loans to participants 17,481,901 17,054,117
-------------- --------------
718,935,629 898,953,022
Guaranteed investment contracts, at contract value 401,451,892 330,984,433
-------------- --------------

Total investments $1,120,387,521 $1,229,937,455
============== ==============

YEAR ENDED DECEMBER 30,
------------------------------------
2000 1999

Investment income:
Net appreciation (depreciation) in fair value of investments:
Nabisco Group Holdings Corp. Common Stock $ (2,831,076) $ 40,055,886
Nabisco Holdings Corp. Class A Common Stock (137,460) (445,950)
R.J. Reynolds Tobacco Holdings, Inc. Common Stock 30,660,988 (59,151,447)
Nabisco Group Holdings Corp. Convertible Preferred
Stock -- 3,102,192
Mutual funds (93,334,263) 149,176,730
Corporate bonds -- 6,246,153
-------------- --------------
(65,641,811) 138,983,564
Interest and dividends 53,746,064 54,009,079
-------------- --------------

Total investment income (loss) $ (11,895,747) $ 192,992,643
============== ==============

The Plan's interest in the net assets of the Master Trust was 100% at
December 30, 2000 and 1999.

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4. EMPLOYEE STOCK OWNERSHIP PLAN

Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed ESOP investments
of the Plan were:

YEAR ENDED DECEMBER 30, 1999
--------------------------------------------------------
ALLOCATED UNALLOCATED TOTAL

Changes in net assets:
Additions:
Investment income $ 9,630,718 $ -- $ 9,630,718
Participants' contributions -- 32,953,961 32,953,961
Allocation of shares of preferred stock of
Nabisco Group Holdings Corp. 34,275,056 -- 34,275,056
------------- ------------ -------------
Total additions 43,905,774 32,953,961 76,859,735
------------- ------------ -------------
Deductions:
Benefits paid to participants 5,846,396 -- 5,846,396
Allocation of shares of preferred stock of
Nabisco Group Holdings Corp. -- 34,275,056 34,275,056
Redemption of shares of preferred stock of
Nabisco Group Holdings Corp. 201,707,448 -- 201,707,448
Interest expense -- 682,748 682,748
------------- ------------ -------------
Total deductions 207,553,844 34,957,804 242,511,648
------------- ------------ -------------
Interfund transfers, net (13,295,474) 13,295,474 --
------------- ------------ -------------
Net increase (decrease) prior to transfers to
other plans (176,943,544) 11,291,631 (165,651,913)
Net transfer to other plans (659,654) -- (659,654)
------------- ------------ -------------
Net increase (decrease) (177,603,198) 11,291,631 (166,311,567)
Net assets (deficit) available for benefits:
Beginning of year 177,603,198 (11,291,631) 166,311,567
------------- ------------ -------------

End of year $ -- $ -- $ --
============= ============ =============

5. RELATED PARTY TRANSACTIONS

Certain Plan investments are shares of funds managed by Citibank, the
trustee of the Plan effective May 1, 2000, and Wachovia, the trustee of the Plan
prior to May 1, 2000; therefore, these transactions qualify as
party-in-interest.

6. PLAN TERMINATION

Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of the
Plan's termination, participants would become 100% vested in their employer
contributions.

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7. INCOME TAX STATUS

The Plan obtained its latest determination letter dated February 20,
1996, in which the Internal Revenue Service stated that the Plan, as then
designed, was in compliance with the applicable requirements of the Internal
Revenue Code. The Plan has been amended and restated since receiving this
determination letter. The Company believes that the Plan is currently designed
and being operated in compliance with the applicable requirements of the
Internal Revenue Code, and the Plan and related trust continue to be tax-exempt.
Therefore, no provision for income taxes has been included in the Plan's
financial statements.

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