CNL GLOBAL REAL ESTATE FUND
CLASS A SHARES
INSTITUTIONAL CLASS SHARES
ANNUAL REPORT
THE CNL FUNDS
(GRAPHIC)
DECEMBER 31, 2008
SUB-ADVISED BY CB RICHARD ELLIS GLOBAL REAL ESTATE SECURITIES, LLC
(CNL(R) LOGO)
CNL FUND ADVISORS COMPANY
Table of Contents
Letter to Shareholders .................................................... 1
Portfolio Management Review ............................................... 2
Fund Performance Summary .................................................. 4
Understanding Your Ongoing Costs .......................................... 6
Investment Portfolio ...................................................... 7
Statement of Assets and Liabilities ....................................... 11
Statement of Operations ................................................... 12
Statement of Changes in Net Assets ........................................ 13
Financial Highlights ...................................................... 14
Notes to Financial Statements ............................................. 16
Report of Independent Registered Certified Public Accounting Firm ......... 24
Tax and Other Information (Unaudited) ..................................... 25
Trustees and Officers (Unaudited) ......................................... 26
This material is authorized for distribution only when preceded or accompanied
by a current prospectus.
The Fund concentrates its investments in real estate securities, including
REITs. A fund with a concentrated investment portfolio is vulnerable to the
risks of the industry in which it invests and is subject to greater risks and
market fluctuations than funds investing in a broader range of industries. Real
estate securities are susceptible to the risks associated with direct ownership
of real estate, such as declines in property values; increases in property
taxes, operating expenses, interest rates or competition; zoning changes; and
losses from casualty and condemnation. The Fund may directly purchase securities
of foreign issuers. Investing in securities of foreign issuers involves special
risks not typically associated with investing in securities of U.S. issuers. The
risks include possible revaluation of currencies, the ability to repatriate
funds, less complete financial information about companies and possible future
adverse political and economic developments. Moreover, securities of many
foreign issuers and their markets may be less liquid and their prices more
volatile than those of securities of comparable U.S. issuers. Note 7 of the
Financial Statements presents additional discussion of the risks of investing in
the Fund.
Letter to Shareholders
Dear Shareholders:
We are pleased to present this annual report for The CNL Funds to you, our
shareholders in the CNL Global Real Estate Fund (the "Fund").
First, we welcome the new shareholders who joined the Fund this year and look
forward to communicating regularly with all shareholders and their financial
advisors regarding the performance of the Fund, and the investment conditions
and economic events that generally drive returns for publicly traded real estate
companies.
The investment program for CNL Global Real Estate Fund is managed by CNL Fund
Advisors Company and the portfolio management team at CB Richard Ellis Global
Real Estate Securities, LLC. The portfolio management team is highly focused on
the research of regional economies that generate growth in demand for real
estate. Gathering and processing fundamental real estate market data is
essential to making investment decisions about hundreds of real estate companies
around the world. We believe that the portfolio management team's presence and
in-depth knowledge of global real estate markets are critical elements for
attempting to mitigate investment risks in the global real estate investment
sector.
In the second half of 2008, the global economy deteriorated significantly
creating uncertainty for investors in the United States and overseas financial
markets. The headline themes, including credit market illiquidity, sub-prime
mortgage sector fallout, and uncertain asset valuations, have cast a shadow over
financial companies and real estate companies. The Fund's portfolio management
team is quite cognizant of the correlation between debt markets and the business
of real estate. The portfolio managers stress the importance of selecting
companies with strong balance sheets to weather this market adjustment period.
At the same time, the portfolio management team focuses on company and regional
fundamentals to ensure that the highest quality companies are selected for
inclusion in the portfolio while seeking to avoid extraordinary risk. These
recent events underscore the importance of the CNL Global Real Estate Fund's
investment strategy, which is to be well positioned with its investments in real
estate companies within stable and improving economies on a global basis. While
the persistence of financial and economic news continues to impact most asset
classes, we believe the stock prices of many real estate companies around the
world represent remarkable values by every historic measure.
FINANCIAL RESULTS
During the twelve months ended December 31, 2008, the Fund received
approximately $45.94 million in gross proceeds from the sale of shares. The Fund
used this investment capital to acquire interests in 56 public companies that
are listed on the securities exchanges in 12 countries. In 2008, net investment
income was $380,422. Distributions paid to shareholders totaled $469,843 for the
same period, representing 100% ordinary income dividends. The net asset value
per share had declined from $8.64 per share on December 31, 2007 to $4.62 per
share (Institutional Class) on December 31, 2008, resulting in a total return of
-45.66%. The Fund's benchmark registered a total return of -47.72% over the same
twelve month period. The value of shares in real estate companies generally
declined across the board in North America, Asia Pacific and Europe in 2008.
LOOKING AHEAD
The quest for attractive risk-adjusted investment returns within the real estate
sector is the driving force behind the investment program for the CNL Global
Real Estate Fund. The events over the past year reinforced the viewpoint that
severe market dislocations create opportunities to acquire investment positions
in high quality real estate companies at attractive prices. As stated in the
Fourth Quarter 2008 report by the Fund's portfolio managers, Steve Carroll and
Jeremy Anagnos of CB Richard Ellis Global Real Estate Securities:
"We remain defensively positioned in companies with strong balance sheets
and proven management teams with the potential to post outsized earnings
growth in the recovery by capitalizing on market opportunities at a time
when there will likely be limited participants."
Thank you for your continuing confidence in the CNL Global Real Estate Fund.
Sincerely,
/s/ Robert A. Bourne /s/ J. Grayson Sanders
------------------------------------- ----------------------------------------
Robert A. Bourne J. Grayson Sanders
Chairman President
The CNL Funds The CNL Funds
February 24, 2009
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
any market forecasts discussed will be realized.
CNL GLOBAL REAL ESTATE FUND - 1
Portfolio Management Review
This report provides management's discussion of performance for CNL Global Real
Estate Fund (the "Fund') for the annual reporting period ended December 31,
2008.
INVESTMENT OBJECTIVE & PORTFOLIO MANAGEMENT
The Fund seeks to achieve a high total return through a combination of current
income and capital appreciation. The Fund is managed by: Jeremy Anagnos,
Portfolio Manager, Co-Chief Investment Officer and Managing Director, Steve
Carroll, Portfolio Manager, Co-Chief Investment Officer and Managing Director,
and William Morrill, Portfolio Manager, Managing Director of CB Richard Ellis
Global Real Estate Securities LLC. ("CBRE GRES") - the Sub-Advisor.
INVESTMENT STRATEGIES AND POLICIES
Under normal circumstances, the Fund invests at least 80% of its net assets in
equity securities issued by real estate and real estate-related companies,
including real estate investment trusts (REITs) and real estate operating
companies (REOCs). The Fund considers a company to be a real estate or real
estate-related company if at least 50% of its assets, gross income or net
profits are attributable to ownership, construction, management or sale of
residential, commercial or industrial real estate or whose products or services
are related to the real estate industry, such as manufacturers and distributors
of building supplies and financial institutions that issue mortgages. Real
estate companies in other countries may have similar features to U.S.-qualified
REITs; however the specific characteristics and regulations for REIT-like
companies may not be identical to those of U.S.-qualified REITs.
Under normal market conditions, the Fund will invest significantly (at least
40%, unless market conditions are not deemed favorable by CNL Fund Advisors
Company (the "Adviser"), in which case the Fund would invest at least 30%) in
equity securities issued by real estate and real estate-related companies
organized or located outside the U.S. or doing a substantial amount of business
outside the U.S. The Fund will allocate its assets among no less than three
different countries. The Fund may invest up to 15% of its total assets in equity
securities that are traded on the major stock exchanges located in emerging
markets.
The Fund may invest in common equities, preferred equities, and convertible debt
issued by real estate and real estate-related companies located primarily in
North America, Europe, and the Asia Pacific. The Fund also gives particular
investment consideration to equity securities traded on major exchanges in the
following sub-regions: United States, Canada, United Kingdom, Continental
Europe, Japan, Hong Kong, Singapore, and Australia/New Zealand.
The Fund may invest in securities of small-, mid- and large- sized real estate
or real estate-related companies. The Fund seeks to limit risk through various
controls, such as diversifying the portfolio property types and geographic areas
as well as by limiting the size of any one holding. The Fund limits the maximum
holding of the issued capital of any individual company to no more than 10% of
the Fund's assets.
The Sub-Adviser seeks to construct a portfolio with return and risk
characteristics similar to the FTSE EPRA/NAREIT Global Real Estate Index Series
(the Fund's "Benchmark Index"). The Benchmark Index is designed to track the
performance of listed real estate companies and REITs worldwide. The Sub-Adviser
uses the Benchmark Index as a guide in structuring and designing the Fund's
portfolio, but the Fund is not an index fund.
The Fund typically maintains a portion of its assets in cash or cash equivalents
in order to meet redemption requests, pay Fund expenses or satisfy other
liquidity needs. These assets may be invested in overnight or short-term
investment vehicles.
PORTFOLIO MANAGEMENT TECHNIQUES
The Fund was managed during 2008 to maintain approximately 95% investment
allocation in common stocks of publicly-traded real estate companies. No
leverage was employed at the Fund level for investment purposes. The Fund did
not invest in any exchange-traded funds, real estate closed-end funds,
derivatives, or short positions during 2008. The Fund invested in securities
that are listed on major exchanges located in the United States, Canada,
Australia, Hong Kong, Japan, Continental Europe and United Kingdom; the Fund did
not hold any securities listed in emerging countries during 2008.
The sub-advisor's investment process employs a process of top-down global asset
allocation in the various regions, sub-regions, and countries as well as
bottom-up stock selection. This process is continuously ongoing and requires
regular rebalancing of
2 - CNL GLOBAL REAL ESTATE FUND
Portfolio Management Review (continued)
the Fund's global portfolio in order to meet its investment objective, to manage
portfolio risk and to satisfy the Fund's diversification requirements.
The sub-advisor's global investment decision-making process is managed by the
Co-Chief Investment Officers. CBRE GRES actively manages the portfolio
construction process using a top-down allocation method. The Co-Chief Investment
Officers target sub-regional relative deviations from the benchmark based on
economic outlook, real estate fundamentals, valuations and qualitative factors
(capital flows, currencies, sub-regional equity and bond market behavior, etc.).
The regional portfolio managers are responsible for individual sector and
security selection within their respective regions. The regional portfolio
managers recommend those stocks and sectors in their sub-region that they
believe offer superior risk/return attributes relative to their peers.
Individual stock weights are based in part on the global target of securities to
be held, the weight of the security in the benchmark, the liquidity of the
security relative to the amount to be invested, and the relative attractiveness
of the stock to other securities to be included in the portfolio in the region.
The recommendations of the regional portfolio managers, and their securities
analyst teams, and the input from the research teams of the sub-advisor's global
affiliates are crucial to assessing appropriate global allocation, stock
selection, and risk assessment. The vast global platform of direct real estate
and equity securities real-time information injects substantial added value to
the sub-advisor's investment process.
FUND PERFORMANCE
For the year ended December 31, 2008, the Fund's Class A shares, excluding sales
charges, provided a total return of (45.91%) and the Institutional Class total
return was (45.66%). The Fund's benchmark (FTSE EPRA/NAREIT Global Real Estate
Index) was (47.72%) for the twelve month period ending December 31, 2008.
Therefore Class A shares, excluding sales commission, outperformed the benchmark
by 181 basis points (1.81%) and Institutional Class shares outperformed the
benchmark by 206 basis points (2.06%). The Fund did not consistently outperform
the benchmark throughout 2008, but rather performed both below and above the
benchmark and registering positive out-performance for the final leg from late
November 2008 to the end of the year.
Global real estate stocks recorded very poor results from a historical
perspective across the board. The three main regions of North America (-40.6%),
Asia (-52.5%) and Europe (-51.1%) all registered the worst year on record,
contributing to the worst year for the aggregate global index. The credit crises
roiled through all asset classes in 2008, including the global equities and real
estate sectors. Real estate securities experienced a significant shift to very
high correlation levels with global stock indices, such as the MSCI World Index,
as investors sought indiscriminate liquidity through the disposition of
equities. Volatility became the rule, rather than the exception, as negative
financial and economic news contributed to significant price swings on a daily
and weekly basis.
Despite the streaming negative financial and economic news, the portfolio
management team continued to actively screen companies that exhibited balance
sheet quality and strength, (i.e. modest corporate leverage, minimal need for
near-term financing, etc.) and potential cash flow growth.
PORTFOLIO SPECIFICS
At the end of fiscal year 2007, the Fund held positions in 55 different common
stock positions of real estate companies. At June 30, 2008, the Fund held 58
positions in common stocks positions, and fiscal year 2008 closed with 56 common
stock positions.
At June 30, 2008, the top ten holdings accounted for 25.7% of the Fund's Total
Net Assets. By December 31, 2008, the top ten largest holdings accounted for
39.3% of the Fund's Total Net Asset's, reflecting the portfolio manager's
strategy to weight the Fund's investment capital towards larger, more liquid,
high quality real estate companies.
As mentioned above, the Fund outperformed the benchmark since late November to
wind up 181 basis points (1.81%) above the benchmark for 2008. During the final
months of 2008, the sub-advisor altered the Asia Pacific sub-regional
allocation, reducing portfolio exposure to Japan and increasing portfolio
exposure to Singapore and the United States. By the end of December 2008, the
portfolio was underweighted relative to benchmark in Australia, Hong Kong,
Japan, United Kingdom and the United States, and over-weighted to benchmark in
Continental Europe, Singapore, and Canada.
CNL GLOBAL REAL ESTATE FUND - 3
Portfolio Management Review (continued)
CURRENT STRATEGY AND OUTLOOK
The Fund continues to favor investments higher quality companies that are
expected to weather the current financial and economic crises. Additionally, the
Fund's portfolio managers will continue to seek investments in those economies
and companies that offer realistic expectations for long-term cash flow growth
in property-related earnings, where dividend payments are sustainable given
banking and financial related circumstances, and where the stock prices of real
estate companies are well below the reasonable estimates of corporate enterprise
values based on the future direction of property values.
Fund Performance Summary
ALL FUND PERFORMANCE SHOWN IS HISTORICAL, ASSUMES REINVESTMENT OF ALL DIVIDEND
AND CAPITAL GAIN DISTRIBUTIONS, AND DOES NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND PRINCIPAL VALUE FLUCTUATE WITH CHANGING MARKET CONDITIONS
SO THAT, WHEN REDEEMED, SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE SHOWN
BELOW. PLEASE VISIT WWW.THECNLFUNDS.COM FOR THE FUND'S MOST RECENT MONTHLY
PERFORMANCE.
(PERFORMANCE GRAPH)
FTSE/EPRA NAREIT Class A (no Class A (with
investment @ $10k load) @ $10k load) @ $10k
----------------- ------------ -------------
10/29/2007 $10,000.00 $10,000.00 $9,425.00
10/31/2007 $10,155.22 $10,180.00 $9,594.72
11/30/2007 $ 9,371.80 $ 9,340.00 $8,803.02
12/31/2007 $ 8,885.32 $ 8,722.60 $8,221.11
1/31/2008 $ 8,507.13 $ 8,510.59 $8,021.29
2/29/2008 $ 8,352.41 $ 8,349.06 $7,869.05
3/31/2008 $ 8,385.14 $ 8,520.69 $8,030.81
4/30/2008 $ 8,909.54 $ 9,015.37 $8,497.05
5/31/2008 $ 8,691.04 $ 8,692.31 $8,192.57
6/30/2008 $ 7,667.40 $ 7,678.01 $7,236.58
7/31/2008 $ 7,730.12 $ 7,718.42 $7,274.66
8/31/2008 $ 7,569.97 $ 7,374.93 $6,950.92
9/30/2008 $ 6,869.18 $ 6,698.25 $6,313.15
10/31/2008 $ 4,954.73 $ 4,881.61 $4,600.95
11/30/2008 $ 4,235.89 $ 4,201.63 $3,960.07
12/31/2008 $ 4,645.04 $ 4,717.97 $4,446.72
(PERFORMANCE GRAPH)
FTSE/EPRA NAREIT Institutional
investment @ $100k Class @ $100k
------------------ -------------
10/29/2007 $100,000.00 $100,000.00
10/31/2007 $101,552.21 $101,800.00
11/30/2007 $ 93,717.97 $ 93,500.00
12/31/2007 $ 88,853.23 $ 87,266.00
1/31/2008 $ 85,071.29 $ 85,144.95
2/29/2008 $ 83,524.05 $ 83,528.91
3/31/2008 $ 83,851.45 $ 85,346.96
4/30/2008 $ 89,095.39 $ 90,296.07
5/31/2008 $ 86,910.37 $ 86,962.99
6/30/2008 $ 76,673.96 $ 77,012.24
7/31/2008 $ 77,301.18 $ 77,315.84
8/31/2008 $ 75,699.73 $ 73,976.28
9/30/2008 $ 68,691.76 $ 67,137.27
10/31/2008 $ 49,547.35 $ 49,030.55
11/30/2008 $ 42,358.95 $ 42,215.10
12/31/2008 $ 46,450.37 $ 47,420.30
Based on an initial investment of $10,000 (Class A shares) and $100,000
(Institutional Class shares), the graph above illustrates the total return of
CNL Global Real Estate Fund against the benchmark index. The Fund's benchmark is
the FTSE EPRA/NAREIT Global Real Estate Index Series which is designed to track
the performance of listed real estate companies and REITs worldwide. The
free-float adjusted index constituents are liquidity, size and revenue screened
and are broken down into eight index families covering the world's largest
investment markets in various currencies. The benchmark index is unmanaged and
has no cash in its portfolio, no sales charge and incurs no operating expenses.
An investor cannot invest directly in the index. The graphs do not reflect the
deduction of taxes that a shareholder will pay on Fund distributions or the
redemption of Fund shares.
4 - CNL GLOBAL REAL ESTATE FUND
Fund Performance Summary (continued)
The maximum sales charge for Class A shares is 5.75%. Average annual returns
(Unadjusted for Sales Charges) do not reflect sales charges and would have been
lower if they had. Institutional Class shares are not subject to sales charges.
To discourage short-term trading, the Fund imposes a 1.00% redemption fee on
shareholders redeeming shares held less than 75 days, which has the effect of
lowering the total returns for short-term shareholders.
AVERAGE ANNUAL TOTAL RETURNS
ONE
YEAR ENDED ONE SINCE
DECEMBER 31, YEAR ENDED INCEPTION SINCE
2008 DECEMBER 31, (10/30/07)+ INCEPTION
UNADJUSTED FOR 2008 UNADJUSTED FOR (10/30/07)+
CNL GLOBAL REAL ESTATE FUND SALES CHARGES WITH LOAD SALES CHARGES WITH LOAD
--------------------------- -------------- ------------ -------------- -----------
Class A (45.91)% (49.04)% (47.32)% (49.91)%
Institutional Class (45.66)% N/A (47.09)% N/A
FTSE EPRA/NAREIT Global
Real Estate Index Series++ (47.72)% N/A (48.01)% N/A
Returns do not reflect the deduction of taxes that a shareholder would pay on
distributions or upon redemption of Fund shares.
+ Represents commencement date of investment operations (i.e., began to
invest in accordance with its investment objective).
++ The FTSE EPRA/NAREIT Global Real Estate Index is an index that tracks the
performance of listed real estate companies and REITs worldwide.
The annualized gross and net expense ratios, respectively, for each class of
shares as in the April 29, 2008 prospectus were as follows: Class A--19.74% and
1.80%; and Institutional Class--18.49% and 1.55%. Through April 30, 2009, the
Advisor has contractually agreed to waive its fee and/or reimburse the Fund for
expenses incurred to the extent necessary to maintain the Fund's annual
operating expenses at 1.80% for Class A shares and 1.55% for Institutional Class
shares. The annualized gross and net expense ratios, respectively, for each
class of shares as of December 31, 2008, are as follows: Class A -- 4.99% and
1.80%; and Institutional Class -- 5.49% and 1.55%. For more information, see the
Financial Highlights.
Performance results reflect applicable expense waivers in effect during the
period shown. Without such waivers Fund performance would be lower. See the
prospectus for more information.
NET ASSET VALUE AND DISTRIBUTION INFORMATION PER SHARE
INSTITUTIONAL
NET ASSET VALUE: CLASS A CLASS
---------------- ------- -------------
12/31/08 $ 4.61 $ 4.62
DISTRIBUTION INFORMATION:
Net Investment Income $0.0736 $0.0899
CNL GLOBAL REAL ESTATE FUND - 5
Understanding Your Ongoing Costs (Unaudited)
As a Fund shareholder, you incur two types of costs: (1) ongoing costs including
management fees, Fund expenses, and distribution (12b-1) fees if applicable; and
(2) transaction costs, including sales charges (loads) on purchase payments and
redemption fees, if applicable. This example is intended to help you understand
your ongoing costs (in dollars) of investing in the Fund and to compare these
costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 at the beginning of the period
and held for the entire period from July 1, 2008 through December 31, 2008.
ACTUAL EXPENSES
The first section of the table below (Actual Fund Return) provides information
about actual account values and expenses. You may use the information in this
line, together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the expense number associated with your share class on the line entitled
"Expenses Paid During the Period" to estimate the expenses you paid on your
account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table (Hypothetical 5% Fund Return) below provides
information about hypothetical account values and hypothetical expenses based on
the Fund's actual expense ratio and an assumed rate of return of 5% per year
before expenses, which is not the Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information to
compare the ongoing cost of investing in the Fund and other funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) and redemption fees. Therefore, the second section of the table
is useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
INSTITUTIONAL
ACTUAL FUND RETURN CLASS A CLASS
------------------ --------- -------------
Beginning Account Value July 1, 2008 $1,000.00 $1,000.00
Ending Account Value December 31, 2008 $ 614.50 $ 615.80
Expenses Paid per $1,000(1) $ 7.30 $ 6.30
INSTITUTIONAL
HYPOTHETICAL 5% FUND RETURN CLASS A CLASS
--------------------------- --------- -------------
Beginning Account Value July 1, 2008 $1,000.00 $1,000.00
Ending Account Value December 31, 2008 $1,016.09 $1,017.34
Expenses Paid per $1,000(1) $ 9.12 $ 7.86
INSTITUTIONAL
ANNUALIZED EXPENSE RATIOS(2) CLASS A CLASS
---------------------------- --------- -------------
1.80% 1.55%
(1) Expenses are equal to the Fund's annualized expense ratios for each class
of shares, multiplied by the average account value over the period,
multiplied by the actual days in the period (184); and then dividing that
result by the actual number of days in the fiscal year (366). The data
reflects the 184 day period from July 1, 2008 through December 31, 2008.
(2) The annualized gross expense ratio, based on the six months ended December
31, 2008, was: Class A--3.89% and Institutional Class-- 3.66%.
6 - CNL GLOBAL REAL ESTATE FUND
Investment Portfolio as of December 31, 2008
CNL GLOBAL REAL ESTATE FUND
TEN LARGEST HOLDINGS AT DECEMBER 31, 2008 (AS A PERCENTAGE OF TOTAL NET ASSETS)
MARKET VALUE (US$) PERCENT
------------------ -------
Mitsubishi Estate Co., Ltd. ........ 1,836,867 6.5%
Unibail-Rodamco .................... 1,272,544 4.5
Simon Property Group, Inc. (REIT) .. 1,242,445 4.4
Mitsui Fudosan Co., Ltd. ........... 1,233,745 4.4
Westfield Group .................... 1,099,745 3.9
Hang Lung Properties Ltd. .......... 1,009,616 3.6
Capitaland Ltd. .................... 939,713 3.4
Vornado Realty Trust (REIT) ........ 910,380 3.2
China Resources Land Ltd. .......... 765,540 2.7
Fonciere des Regions ............... 763,773 2.7
---------- ----
TOTAL .............................. 11,074,368 39.3%
---------- ----
COUNTRY SUMMARY REPORT (AS A PERCENTAGE OF TOTAL COMMON STOCK INVESTMENT
PORTFOLIO)(a)
MARKET VALUE (US$) PERCENT
------------------ -------
United States ... 9,612,434 36.7%
Japan ........... 4,397,095 16.8
Hong Kong ....... 2,582,886 9.8
Singapore ....... 2,190,680 8.4
France .......... 2,036,317 7.8
Australia ....... 1,660,249 6.3
United Kingdom .. 1,263,933 4.8
Canada .......... 1,254,130 4.8
Sweden .......... 665,805 2.5
Finland ......... 301,079 1.1
Netherlands ..... 188,699 0.7
Germany ......... 71,733 0.3
---------- -----
TOTAL ........... 26,225,040 100.0%
---------- -----
----------
(a) Country summary represents the allocation of holdings based on the country
domicile of the holding or underlying company. It does not represent the
geographic diversification of the underlying property holdings of the real
estate companies.
Following the Fund's fiscal first and third quarter-end, a complete portfolio
holdings listing is filed with the SEC on Form N-Q. The form will be available
on the SEC's Web site at www.sec.gov, and it may be reviewed and copied at the
SEC's Public Reference Room in Washington, D.C. Information on the operation of
the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
CNL GLOBAL REAL ESTATE FUND - 7
Investment Portfolio as of December 31, 2008
CNL GLOBAL REAL ESTATE FUND
SHARES VALUE (US$)
------- -----------
COMMON STOCKS 93.3%(c)
AUSTRALIA 5.9%
Stockland ............................................... 197,035 560,504
Westfield Group ......................................... 121,134 1,099,745
----------
1,660,249
CANADA 4.5%
Allied Properties Real Estate Investment Trust .......... 33,836 341,238
Boardwalk Real Estate Investment Trust .................. 18,148 375,750
Chartwell Seniors Housing Real Estate Investment Trust .. 67,317 294,461
Dundee Real Estate Investment Trust ..................... 23,777 242,681
----------
1,254,130
FINLAND 1.1%
Sponda Oyj .............................................. 68,614 301,079
FRANCE 7.2%
Fonciere des Regions .................................... 11,147 763,773
Unibail-Rodamco ......................................... 8,518 1,272,544
----------
2,036,317
GERMANY 0.2%
DIC Asset AG ............................................ 8,229 71,733
HONG KONG 9.2%
China Resources Land Ltd. ............................... 618,470 765,540
Hang Lung Properties Ltd. ............................... 459,843 1,009,616
Kerry Properties Ltd. ................................... 226,000 607,964
Sino-Ocean Land Holdings Ltd. ........................... 437,345 199,766
----------
2,582,886
JAPAN 15.6%
Global One Real Estate Investment Co., Ltd. ............. 6 50,203
Japan Real Estate Investment Corp. ...................... 60 535,988
Mitsubishi Estate Co., Ltd. ............................. 111,198 1,836,867
Mitsui Fudosan Co., Ltd. ................................ 74,000 1,233,745
Nippon Building Fund, Inc. .............................. 30 329,753
Nippon Commercial Investment Corp. ...................... 222 236,761
Nippon Residential Investment Corp. ..................... 187 173,778
----------
4,397,095
NETHERLANDS 0.7%
Prologis European Properties ............................ 41,878 188,699
SINGAPORE 7.8%
CapitaCommercial Trust .................................. 543,686 341,967
Capitaland Ltd. ......................................... 430,680 939,713
CapitaMall Trust ........................................ 356,086 396,248
Yanlord Land Group Ltd. ................................. 813,984 512,752
----------
2,190,680
SWEDEN 2.4%
Kungsleden AB ........................................... 94,557 665,805
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
8 - CNL GLOBAL REAL ESTATE FUND
Investment Portfolio as of December 31, 2008
CNL GLOBAL REAL ESTATE FUND
SHARES VALUE (US$)
------- -----------
UNITED KINGDOM 4.5%
Big Yellow Group PLC .......................... 62,683 217,909
British Land Co. PLC .......................... 28,564 228,862
Dawnay Day Treveria PLC ....................... 415,159 42,305
Derwent London PLC ............................ 31,890 335,464
Helical Bar PLC ............................... 57,820 234,979
Mapeley Ltd. .................................. 3,987 5,953
St Modwen Properties PLC ...................... 83,358 141,961
Workspace Group PLC ........................... 62,949 56,500
----------
1,263,933
UNITED STATES 34.2%
Alexandria Real Estate Equities, Inc. (REIT) .. 7,480 451,343
AMB Property Corp. (REIT) ..................... 6,571 153,893
American Campus Communities, Inc. (REIT) ...... 11,350 232,448
AvalonBay Communities, Inc. (REIT) ............ 9,235 559,456
Boston Properties, Inc. (REIT) ................ 10,960 602,800
Corporate Office Properties Trust (REIT) ...... 13,640 418,748
Digital Realty Trust, Inc. (REIT) ............. 17,889 587,654
Douglas Emmett, Inc. (REIT) ................... 19,230 251,144
Essex Property Trust, Inc. (REIT) ............. 3,031 232,629
Federal Realty Investment Trust (REIT) ........ 9,195 570,826
Health Care REIT, Inc. (REIT) ................. 8,847 373,343
Healthcare Realty Trust, Inc. (REIT) .......... 13,361 313,716
Medical Properties Trust, Inc. (REIT) ......... 36,073 227,621
Public Storage (REIT) ......................... 3,841 305,359
Regency Centers Corp. (REIT) .................. 10,870 507,629
Simon Property Group, Inc. (REIT) ............. 23,385 1,242,445
SL Green Realty Corp. (REIT) .................. 8,475 219,503
Tanger Factory Outlet Centers, Inc. (REIT) .... 13,975 525,739
The Macerich Co. (REIT) ....................... 24,706 448,661
Ventas, Inc. (REIT) ........................... 14,212 477,097
Vornado Realty Trust (REIT) ................... 15,085 910,380
----------
9,612,434
----------
TOTAL COMMON STOCKS (Cost $39,562,400) ........ 26,225,040
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
CNL GLOBAL REAL ESTATE FUND - 9
Investment Portfolio as of December 31, 2008
CNL GLOBAL REAL ESTATE FUND
PRINCIPAL
AMOUNT ($) VALUE (US$)
---------- -----------
REPURCHASE AGREEMENT 5.9%(c)
UNITED STATES
State Street Bank and Trust Co., 0.01%, dated 12/31/2008, to be repurchased at
$1,660,001 on 1/2/2009a ................................................... 1,660,000 1,660,000
---------
TOTAL REPURCHASE AGREEMENT (Cost $1,660,000) ................................. 1,660,000
% OF
NET ASSETS
----------
TOTAL INVESTMENT PORTFOLIO (Cost $41,222,400)(b) 99.2 27,885,040
OTHER ASSETS AND LIABILITIES, NET 0.8 235,994
----- ----------
NET ASSETS 100.0 28,121,034
(a) Collateralized by $1,700,000 U.S. Treasury Bill, with a maturity date of
7/30/2009 with a value of $1,697,450.
(b) The cost for federal income tax purpose was $42,196,967. At December 31,
2008, net unrealized depreciation for all securities based on tax cost was
$14,311,927. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of tax cost of $152,890 and
aggregate gross unrealized depreciation for all securities in which there
was an excess of tax costs over value of $14,464,817.
(c) As a percentage of net assets.
REIT: U.S. Real Estate Investment Trust. Many of the foreign companies have
adopted REIT-like corporate structures in their respective countries. The
character and features of REIT-like corporate structures in foreign
countries may differ from U.S. REITs. Therefore, only U.S. companies are
designated as "REIT" where applicable.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10 - CNL GLOBAL REAL ESTATE FUND
Statement of Assets and Liabilities as of December 31, 2008
CNL GLOBAL REAL ESTATE FUND
ASSETS
Investments:
Investments in securities, at value (cost $39,562,400) ... $ 26,225,040
Repurchase Agreement, at value (cost $1,660,000) ......... 1,660,000
------------
Total investments in securities, at value
(cost $41,222,400) ....................................... 27,885,040
------------
Cash ........................................................ 648
Foreign currency, at value (cost $175,890) .................. 177,655
Dividends receivable ........................................ 113,003
Receivable for Fund shares sold ............................. 83,747
Due from Adviser ............................................ 32,644
Prepaid insurance ........................................... 10,482
Foreign taxes recoverable ................................... 536
------------
Total assets ................................................ 28,303,755
------------
LIABILITIES
Accrued transfer agent fees ................................. 28,292
Distributions payable ....................................... 15,929
Accrued administration fees ................................. 12,209
Accrued trustees fees ....................................... 10,417
Accrued custodian and accounting fees ....................... 10,238
Payable for Fund shares redeemed ............................ 7,168
Accrued distribution (12b-1) fee - Class A .................. 218
Accrued distribution (12b-1) fee - Class C .................. 13
Accrued auditing and tax services fees ...................... 47,400
Accrued legal fees .......................................... 10,000
Accrued reports to shareholders fee ......................... 23,512
Other accrued expenses and payables ......................... 17,325
------------
Total liabilities ........................................... 182,721
------------
NET ASSETS, AT VALUE ........................................ $ 28,121,034
============
NET ASSETS
Net assets consist of:
Distributions in excess of net investment income ............ (154,356)
Net unrealized appreciation (depreciation) on:
Investments .............................................. (13,337,360)
Foreign currency related transactions .................... 2,175
Accumulated net realized gain (loss) ........................ (4,959,583)
Paid-in capital ............................................. 46,570,158
------------
NET ASSETS, AT VALUE ........................................ $ 28,121,034
============
NET ASSET VALUE:
CLASS A
Net Asset Value and redemption price per share
($1,241,158 / 269,201 shares of capital
stock outstanding, $0.001 par value,
unlimited number of shares authorized) ................... $ 4.61
------------
Maximum offering price per share ($4.61 / 0.9425) ........... $ 4.89
------------
INSTITUTIONAL CLASS
Net Asset Value offering and redemption price per
share ($26,879,876 / 5,824,130 shares of
capital stock outstanding, $0.001 par value,
unlimited number of shares authorized) ................... $ 4.62
------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
CNL GLOBAL REAL ESTATE FUND - 11
Statement of Operations for the year ended December 31, 2008
CNL GLOBAL REAL ESTATE FUND
INVESTMENT INCOME
Dividends (net of $49,466 taxes withheld) ................... $ 659,197
Interest .................................................... 7,314
------------
Total Income ................................................ 666,511
------------
EXPENSES:
Management fee .............................................. 183,260
Transfer agent fee .......................................... 140,170
Custodian and accounting fees ............................... 115,505
Administration fees ......................................... 110,108
Legal fees .................................................. 99,323
Registration fees ........................................... 82,044
Trustees fees and expenses .................................. 70,422
Auditing and tax services ................................... 52,748
Insurance ................................................... 35,642
Reports to shareholders ..................................... 20,736
Compliance services expense ................................. 52,893
Distribution (12b-1) fee - Class A .......................... 1,880
Distribution (12b-1) fee - Class C .......................... 157
Amortization of offering costs .............................. 34,774
Other ....................................................... 3,983
------------
Total expenses, before expense waiver/reimbursement ......... 1,003,645
------------
Expense waiver/reimbursement ................................ (717,556)
------------
Total expenses, after expense waiver/reimbursement .......... 286,089
------------
NET INVESTMENT INCOME (LOSS) ................................ 380,422
============
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments .............................................. (4,903,784)
Foreign currency related transactions .................... (31,853)
------------
(4,935,637)
------------
Net unrealized appreciation (depreciation) during the
period on:
Investments .............................................. (12,729,016)
Foreign currency related transactions .................... 3,714
------------
(12,725,302)
------------
NET GAIN (LOSS) ON INVESTMENT TRANSACTIONS .................. (17,660,939)
============
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS .......................................... $(17,280,517)
============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12 - CNL GLOBAL REAL ESTATE FUND
Statement of Changes in Net Assets
CNL GLOBAL REAL ESTATE FUND
YEAR YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2008 2007(a)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) .............................. $ 380,422 $ 20,471
Net realized gain (loss) on investment transactions
and foreign currency related transactions .............. (4,935,637) (63,841)
Net unrealized appreciation (depreciation) during the
period on investment transactions and foreign currency
related transactions ................................... (12,725,302) (609,883)
------------ ----------
Net increase (decrease) in net assets resulting
from operations ........................................... (17,280,517) (653,253)
------------ ----------
Distributions to shareholders from:
Net investment income:
Class A ................................................... (19,496) (579)
Class C ................................................... (176) (106)
Institutional Class ....................................... (450,171) (44,876)
------------ ----------
Decrease in net assets from distributions to
shareholders .............................................. (469,843) (45,561)
------------ ----------
Fund share transactions:
Proceeds from shares sold ................................. 45,937,265 5,148,115
Reinvestment of distributions ............................. 322,570 42,095
Cost of shares redeemed ................................... (4,991,773) --
Redemption fees ........................................... 11,916 --
------------ ----------
Net increase (decrease) in net assets from Fund
share transactions ........................................ 41,279,978 5,190,210
------------ ----------
INCREASE (DECREASE) IN NET ASSETS ............................... 23,529,618 4,491,396
============ ==========
Net assets at beginning of year .............................. 4,591,416 100,020(b)
------------ ----------
NET ASSETS AT END OF YEAR (INCLUDING DISTRIBUTIONS IN EXCESS
OF NET INVESTMENT INCOME OF $154,356 AND
$25,843, RESPECTIVELY) ....................................... $ 28,121,034 $4,591,416
============ ==========
----------
(a) For the period from October 26, 2007 (commencement of operations) to
December 31, 2007.
(b) Amount represents seed capital.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
CNL GLOBAL REAL ESTATE FUND - 13
Financial Highlights
CNL GLOBAL REAL ESTATE FUND
CLASS A
---------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2008 2007(a)
------------ ------------
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF YEAR ............................ $ 8.64 $ 10.00
Income (loss) from investment operations:
Net investment income (loss)(b) ......................... 0.10 0.07
Net realized and unrealized gain (loss)
on investment transactions ........................... (4.06) (1.35)
------- -------
Total from investment operations ........................... (3.96) (1.28)
Less distributions from:
Net investment income ...................................... (0.07) (0.08)
------- -------
Total distributions to shareholders ........................ (0.07) (0.08)
------- -------
Redemption fees ............................................... 0.00(c) --
------- -------
NET ASSET VALUE, END OF YEAR .................................. $ 4.61 $ 8.64
Total Return (%)(d) ........................................ (45.91) (12.77)(e)
------- -------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net Assets, End of Year (000s) ............................. $ 1,241 $ 61
Ratio of expenses before expense waiver/reimbursement (%) .. 4.99 29.19(f)
Ratio of expenses after expense waiver/reimbursement (%) ... 1.80 1.80(f)
Ratio of net investment income (loss) (%)(g) ............... 1.69 4.30(f)
Portfolio turnover rate (%) ................................ 25 6(e)
----------
(a) For the period from October 26, 2007 (commencement of operations) to
December 31, 2007.
(b) Per share amounts have been calculated using the average shares method.
(c) Amount is less than $0.005 per share.
(d) Does not reflect sales charges, which would reduce return.
(e) Not annualized.
(f) Annualized.
(g) Differences between classes are impacted by the timing of subscriptions and
the timing of dividend income earned by the Fund.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14 - CNL GLOBAL REAL ESTATE FUND
Financial Highlights
CNL GLOBAL REAL ESTATE FUND
INSTITUTIONAL CLASS
---------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2008 2007(a)
------------ ------------
SELECTED PER SHARE DATA
NET ASSET VALUE, BEGINNING OF YEAR ............................ $ 8.64 $ 10.00
Income (loss) from investment operations:
Net investment income (loss)(b) ......................... 0.13 0.04
Net realized and unrealized gain (loss)
on investment transactions ........................... (4.06) (1.31)
------- -------
Total from investment operations ........................... (3.93) (1.27)
Less distributions from:
Net investment income ...................................... (0.09) (0.09)
------- -------
Total distributions to shareholders ........................ (0.09) (0.09)
------- -------
Redemption fees ............................................... 0.00(c) --
------- -------
NET ASSET VALUE, END OF YEAR .................................. $ 4.62 $ 8.64
Total Return (%) ........................................... (45.66) (12.73)(d)
------- -------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net Assets, End of Year (000s) ............................. $26,880 $ 4,517
Ratio of expenses before expense waiver/reimbursement (%) .. 5.49 28.94(e)
Ratio of expenses after expense waiver/reimbursement (%) ... 1.55 1.55(e)
Ratio of net investment income (loss) (%)(f) ............... 2.09 2.45(e)
Portfolio turnover rate (%) ................................ 25 6(d)
----------
(a) For the period from October 26, 2007 (commencement of operations) to
December 31, 2007.
(b) Per share amounts have been calculated using the average shares method.
(c) Amount is less than $0.005 per share.
(d) Not annualized.
(e) Annualized.
(f) Differences between classes are impacted by the timing of subscriptions and
the timing of dividend income earned by the Fund.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
CNL GLOBAL REAL ESTATE FUND - 15
Note to Financial Statements December 31, 2008
CNL GLOBAL REAL ESTATE FUND
1. ORGANIZATION
CNL Global Real Estate Fund (the "Fund") is a series of The CNL Funds (the
"Trust") which is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as a diversified open-end management investment
company organized as a Delaware statutory trust. The Fund commenced operations
on October 26, 2007.
The Fund seeks to achieve a high total return through a combination of current
income and capital appreciation. The Fund invests at least 80% of its net assets
(plus borrowings for investment purposes, if any) in equity and equity-related
securities issued by real estate and real estate-related companies.
The Fund presently offers two classes of shares. Class A shares are offered to
investors subject to an initial sales charge of 5.75% (on investments greater
than $50,000, the sales charge is reduced). Sales charges may be reduced or
waived for certain eligible investors. Institutional Class shares are offered to
a limited group of investors, are not subject to initial or contingent deferred
sales charges and have lower ongoing expenses than Class A shares. Class C
shares were offered to investors without an initial sales charge and were
subject to higher ongoing expenses than Class A shares and a contingent deferred
sales charge of 1.00% payable upon certain redemptions within one year of
purchase. On December 17, 2008, the Board of Trustees of the Fund approved the
reclassification of the Class C shares into the Class A shares. This conversion
was completed on December 30, 2008 and shares of Class C were not available
after this date.
2. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America ("GAAP") requires management
to make estimates and assumptions that affect the reported amount and
disclosures. Actual results could differ from these estimates and those
differences could be material.
PORTFOLIO VALUATION
Generally, the Fund's investments are valued at market value. Securities traded
on a principal domestic or foreign securities exchange or the National
Association of Securities Dealers' Automated Quotation System ("NASDAQ") are
valued at the last quoted sales price, the NASDAQ official close price or, in
the absence of closing sales prices on that day, securities are valued at the
mean between the closing bid and asked prices. Securities traded on more than
one exchange are valued using the primary exchange where the security is
principally traded.
Securities for which market prices are unavailable, or securities for which CNL
Fund Advisors Company (the "Adviser") determines that prices do not reflect
market value, will be valued at fair value pursuant to valuation policies and
procedures approved by the Board of Trustees. Circumstances in which market
prices may be unavailable include, but are not limited to, when exchange trading
in a security is suspended, the exchange on which the security is traded is
subject to an unscheduled close or disruption or material events occur after the
close of the exchange on which the security is principally traded. In these
circumstances, the Adviser's Pricing Committee determines fair value in a manner
that it believes fairly reflects the market value of the security on the
valuation date based on consideration of any information or factors it deems
appropriate. These may include recent transactions in comparable securities,
information relating to the specific security and developments in the markets.
In particular, portfolio securities primarily traded on foreign markets are
generally valued at the preceding closing values of such securities on their
respective exchanges. Alternatively, the value of non-North American securities
may be adjusted to reflect the estimated fair value of such securities as of the
close of trading on the New York Stock Exchange ("NYSE") using a pricing service
and/or procedures approved by the Board of Trustees if, after the close of the
foreign markets but prior to the close of trading on the NYSE on the day the
securities are being valued, developments occur that are expected to materially
affect the value of such non-North American securities.
The Fund's use of fair value pricing may cause the net asset value of Fund
shares to differ from the net asset value that would be calculated using market
quotations. Fair value pricing involves subjective judgments and it is possible
that the fair value determined for a security may be materially different than
the value that could be realized upon the sale of that security.
16 - CNL GLOBAL REAL ESTATE FUND
Note to Financial Statements (continued) December 31, 2008
CNL GLOBAL REAL ESTATE FUND
Short-term debt securities that have a maturity date of 60 days or less are
valued at amortized cost, which approximates value.
Effective January 1, 2008, the Fund adopted Statement of Financial Accounting
Standards No. 157 ("FAS 157"). FAS 157 establishes a single definition of fair
value for financial reporting, creates a three-tier hierarchy as a framework for
measuring fair value based on inputs used to value the Fund's investments, and
requires additional disclosure about fair value. The hierarchy of inputs is
summarized below.
- Level 1 - quoted prices in active markets for identical investments
- Level 2 - significant other observable inputs (including quoted prices
for similar investments, interest rates, prepayment speeds, credit
risk, etc.)
- Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The following is a summary of the inputs used in valuing the Fund's assets
carried at fair value:
SIGNIFICANT
OTHER SIGNIFICANT
QUOTED OBSERVABLE UNOBSERVABLE
PRICES INPUTS INPUTS
DECEMBER 31, 2008 (LEVEL 1) (LEVEL 2) (LEVEL 3)
----------------- ----------- ----------- ------------
Investments in Securities $27,885,040 $10,866,564 $17,018,476 $--
----------- ----------- ----------- ---
Total $27,885,040 $10,866,564 $17,018,476 $--
----------- ----------- ----------- ---
The Fund's assets consisting of all North American exchange-traded common stocks
and rights were classified under Level 1 for this reporting period ending
December 31, 2008. Level 2 Fund assets include 31 non-North American publicly
traded stocks that represent an aggregate fair value of $15,358,476. Had the
Fund used the observable closing prices from the primary exchange instead of
using fair value procedures, then the value of these 31 securities would be
$15,122,977. One repurchase agreement in the amount of $1,660,000 was classified
under Level 2 for the same reporting period.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded on trade date. Realized gains and losses on
investments sold are recorded on the basis of identified cost. Interest income
is recorded on the accrual basis. Discounts are accreted and premiums are
amortized over the life of the respective securities. Dividend income (net of
foreign withholding taxes, if any) is recorded on the ex-dividend date. The Fund
records distributions received in excess of income from underlying investments
as a reduction of cost of investments and/or realized gain. Such amounts are
based on estimates if actual amounts are not available and actual amounts of
income, realized gain and return of capital may differ from the estimated
amounts.
FOREIGN CURRENCY TRANSLATION
The books and records of the Fund are maintained in U.S. dollars as follows: (1)
the foreign currency market value of investment securities, other assets and
liabilities and forward foreign currency contracts (forward contracts) are
translated at the exchange rates prevailing at the end of the period; and (2)
purchases, sales, income and expenses are translated at the exchange rates
prevailing on the respective dates of such transactions. The resultant exchange
gains and losses are recorded as realized and unrealized gain/(loss) on foreign
currency related transactions. Pursuant to U.S. federal income tax regulations,
certain foreign exchange gains/(losses) included in realized and unrealized
gain/(loss) are included in or are a reduction of ordinary income for federal
income tax purposes. The Fund does not isolate that portion of the results of
operations arising as a result of changes in the foreign exchange rates from the
changes in the market prices of the securities; such changes are included with
the net realized and unrealized gain/(loss) on investments.
CNL GLOBAL REAL ESTATE FUND - 17
Note to Financial Statements (continued) December 31, 2008
CNL GLOBAL REAL ESTATE FUND
FORWARD FOREIGN CURRENCY CONTRACTS
Forward contracts are valued daily at the appropriate exchange rates. The
resultant unrealized exchange gains and losses are recorded as unrealized
foreign currency gain or loss. The Fund records realized gains or losses on
delivery of the currency or at the time the forward contract is extinguished
(compensated) by entering into a closing transaction prior to delivery. The Fund
held no forward foreign currency contracts at December 31, 2008.
FEDERAL INCOME TAXES
It is the policy of the Fund to qualify as a regulated investment company, if
such qualification is in the best interest of the shareholders, by complying
with the requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies, and by distributing substantially all of its
taxable earnings to its shareholders. Accordingly, no provision for federal
income or excise tax is necessary. The Fund has adopted the provisions of
Financial Accounting Standards Board (FASB) Interpretation 48, Accounting for
Uncertainty in Income Taxes--an interpretation of FASB Statement 109 ("FIN 48").
FIN 48 clarifies the accounting for income taxes by prescribing the minimum
recognition threshold a tax position must meet before being recognized in the
financial statements. An assessment of the Fund's tax positions has been made
and it has been determined that there is no impact to the Fund's financial
statements. The Fund's federal tax return for the year ended December 31, 2007
remains subject to examination by the Internal Revenue Service.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income and capital gain distributions are
determined in accordance with U.S. federal income tax regulations, which may
differ from GAAP. Dividends from net investment income, if any, are declared and
paid quarterly. Net realized capital gains, unless offset by any available
capital loss carryforward, are distributed to shareholders annually. Dividends
and distributions to shareholders are recorded on the ex-dividend date and are
automatically reinvested in full and fractional shares of the Fund based on the
net asset value per share at the close of business on the ex-dividend date,
unless the shareholder has elected to have the dividends and distributions paid
in cash.
REAL ESTATE INVESTMENT TRUSTS
At year end, the Fund recharacterizes distributions received from a Real Estate
Investment Trust ("REIT") investment based on information provided by the REIT
into the following categories: ordinary income, long-term and short-term capital
gains, and return of capital. If information is not available timely from a
REIT, the recharacterization will be based on other available information.
Distributions received from REITs in excess of income are recorded as either a
reduction of cost of investments or realized gains. The Fund distinguishes
between dividends on a tax basis and a financial reporting basis and only
distributions in excess of tax basis earnings and profits are reported in the
financial statements as a tax return of capital.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements which are transactions in which
the Fund purchases a security and simultaneously agrees to resell that security
to the seller at an agreed upon price on an agreed upon future date, normally,
one to seven days later. If the Fund enters into a repurchase agreement, it will
maintain possession of the purchased securities and any underlying collateral.
Repurchase agreements must be continuously collateralized and the collateral
must have market value at least equal to the repurchase price of the securities,
plus accrued interest. Repurchase agreements could involve certain risks in the
event of default or insolvency of the counterparty including possible delays or
restrictions upon the Fund's ability to dispose of the underlying securities.
18 - CNL GLOBAL REAL ESTATE FUND
Note to Financial Statements (continued) December 31, 2008
CNL GLOBAL REAL ESTATE FUND
CLASS ALLOCATION
Investment income, realized and unrealized gains and losses, and certain
Fund-level expenses and expense reductions, if any, are borne pro rata on the
basis of relative net assets by the holders of all classes of shares, except
that each class bears distribution and shareholder servicing expenses unique to
that class. Differences in class-level expenses may result in payment of
different per share dividends by share class. All shares of the Fund have equal
rights with respect to voting subject to class-specific arrangements.
REDEMPTION FEES
The Fund imposes a redemption fee of 1.00% of the total redemption amount on the
Fund shares redeemed within 75 days of buying them. This fee is assessed and
retained by the Fund for the benefit of the remaining shareholders. The
redemption fee is accounted for as an addition to paid-in-capital.
OTHER
In the normal course of business, the Fund may enter into contracts with service
providers that contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future claims
that may be made against the Fund that have not yet been made. However, the Fund
expects the risk of loss to be remote.
OFFERING COSTS
Offering costs of $194,577 were incurred by the Fund in connection with the
offering of its shares and paid by CNL Fund Management Company (the "Management
Company"), the parent company of the Adviser. The Fund reimbursed $42,566 to the
Management Company. The Adviser has absorbed the remaining offering costs of
$152,011 and will not seek reimbursement from the Fund. The Fund amortized the
deferred offering costs of $42,566 over one year. For the year ended December
31, 2008, the Fund amortized to expense the remaining deferred offering costs of
$34,774.
3. MANAGEMENT FEES AND OTHER EXPENSES
Under the Investment Management Agreement with the Adviser, the Adviser directs
the investments of the Fund in accordance with its investment objective,
policies and restrictions. The Fund pays a monthly investment management fee,
computed and accrued daily and payable monthly, at an annual rate of 1.00% of
the Fund's average daily net assets. For the year ended December 31, 2008, the
Adviser waived $183,260 of its investment management fee and reimbursed other
operating expenses of $534,296 pursuant to an expense limitation agreement with
the Fund. CB Richard Ellis Global Real Estate Securities, LLC ("CB Richard Ellis
GRES") is the sub-adviser for the Fund. The Adviser compensates CB Richard Ellis
GRES out of the management fee it receives from the Fund.
EXPENSE LIMITATIONS
For the period from October 26, 2007 (commencement of operations) through April
30, 2009, the Adviser has contractually agreed to waive all or a portion of its
management fee and reimburse or pay certain operating expenses of the Fund to
the extent necessary to maintain the annual expenses of each class as follows:
CONTRACTUAL
CLASS EXPENSE LIMIT
----- -------------
Class A 1.80%
Institutional Class 1.55%
The Adviser may recapture all or a portion of any waived investment management
fees and expenses it has borne, if any, to the extent a class's expenses fall
below the maximum ratio within three years after the end of the fiscal year in
which the waiver was made. The Fund's Board of Trustees shall determine
quarterly, in advance, whether any reimbursement may be paid to the
CNL GLOBAL REAL ESTATE FUND - 19
Note to Financial Statements (continued) December 31, 2008
CNL GLOBAL REAL ESTATE FUND
Adviser in such quarter. The amounts subject to possible reimbursement under the
expense limitation agreements at December 31, 2007 and 2008 were as follows:
Expenses Subject to Possible Recapture through December 31, 2010 $228,405
Expenses Subject to Possible Recapture through December 31, 2011 $717,556
DISTRIBUTOR
The Trust has adopted a Rule 12b-1 plan for Class A shares under which the Fund
is authorized to pay to Foreside Fund Services, LLC (the "Distributor") or any
other approved entity (collectively, "payees") as compensation for the
distribution services and/or shareholder services provided by such payees, an
aggregate fee equal to 0.25% of the average daily net assets of Class A shares
of the Fund. The Trust had also adopted a Rule 12b-1 plan for its Class C shares
(which are not offered after December 30, 2008) under which the Fund was
authorized to pay payees compensation for the distribution services and/or
shareholder services provided by such payees. Under the Rule 12b-1 Plan for
Class C shares, the Trust paid an aggregate fee equal to 0.75% of the average
daily net assets of Class C shares of the Fund for distribution services and an
aggregate fee equal to 0.25% of the average daily net assets of Class C shares
of the Fund for shareholder services. The payees may have paid any or all
amounts received under the Rule 12b-1 plan to other persons for any distribution
or service activity conducted on behalf of the Fund. The Rule 12b-1 plan for
Class A shares is a core component of the ongoing distribution and shareholder
servicing as related to Class A shares.
For the year ended December 31, 2008, the Fund has been advised that the
Distributor received $7,215 in sales commissions from the sale of Class A
shares.
ADMINISTRATOR
State Street Bank and Trust Company ("State Street") serves as administrator for
the Trust pursuant to an administration agreement (the "Administration
Agreement") with the Trust. Under the Administration Agreement, State Street is
responsible for (i) the general administrative duties associated with the
day-to-day operations of the Trust; (ii) conducting relations with the
independent registered certified public accounting firm, legal counsel and other
service providers; (iii) providing regulatory reporting; and (iv) providing the
office facilities and sufficient personnel required by it to perform such
administrative services.
TRANSFER AGENT
Boston Financial Data Services, Inc., an affiliate of State Street, acts as the
transfer agent and dividend disbursing agent of the Fund. As transfer agent and
dividend disbursing agent, the transfer agent maintains an account for each
shareholder of record of the Fund and is responsible for processing purchase and
redemption requests and paying distributions to shareholders of record.
CUSTODIAN
State Street serves as custodian of the assets of the Trust pursuant to a
custodian agreement (the "Custody Contract") with the Trust. Under the Custody
Contract, State Street holds and transfers portfolio securities on account of
the Fund, provides fund accounting and keeps all necessary records and
documents, and performs other duties, all as directed by authorized persons.
Portfolio securities purchased in the United States are maintained in the
custody of State Street or other domestic banks or depositories. Portfolio
securities purchased outside of the United States are maintained in the custody
of foreign banks and trust companies who are members of State Street's Global
Custody Network and foreign depositories (collectively "foreign subcustodians").
With respect to foreign subcustodians, there can be no assurance that the Fund,
and the value of its shares, will not be adversely affected by acts of foreign
governments, financial or operational difficulties of the foreign subcustodians,
difficulties and costs of obtaining jurisdiction over, or enforcing judgments
against, the foreign subcustodians or application of foreign law to the Fund's
foreign subcustodial arrangements.
20 - CNL GLOBAL REAL ESTATE FUND
Note to Financial Statements (continued) December 31, 2008
CNL GLOBAL REAL ESTATE FUND
TRUSTEES AND OFFICERS
Each trustee of the Trust who is not an "interested person" of the Trust, as
that term is defined in the 1940 Act (an "Independent Trustee"), is paid an
annual retainer fee of $2,000 for service to the Trust. In addition, the Audit
Committee chair, the Governance Committee chair and the Independent Trustee
Committee chair will each receive $2,000 per annum for fulfilling these roles.
In addition, each Independent Trustee will be paid a fee of $1,500 for each
regular Board meeting attended whether the regular or special Board meetings are
attended in person or by telephone. In addition, each Independent Trustee will
be paid a fee of $1,000 for each committee meeting, including Audit Committee,
Governance Committee and Independent Trustee Committee meetings. Trustees are
also reimbursed for all reasonable out-of-pocket expenses incurred in connection
with their duties as Trustees, including travel and related expenses incurred in
attending Board meetings. No officer of the Trust is compensated by the Trust.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, excluding short-term investments, for the
year ended December 31, 2008 totaled $43,845,072 and $4,284,025, respectively.
5. INCOME TAX INFORMATION
The tax character of dividends and distributions paid for the years ended
December 31, 2008 and 2007 were as follows:
FOR THE PERIOD
FOR THE YEAR OCTOBER 26, 2007*
ENDED THROUGH
DECEMBER 31, 2008 DECEMBER 31, 2007
----------------- -----------------
Ordinary income $469,843 $45,561
Long-term capital gains -- --
Tax return of capital -- --
-------- -------
Total dividends and distributions $469,843 $45,561
======== =======
* COMMENCEMENT OF OPERATIONS.
As of December 31, 2008, the tax-basis components of accumulated earnings were
as follows:
Undistributed ordinary income $ 15,999
Other temporary differences $ (34,216)
Undistributed long-term capital gains $ --
Net unrealized depreciation on investments and currency $(14,309,752)
As of December 31, 2008, the Fund had a net capital loss carryforward of
$1,169,804, which will expire on December 31, 2016. This carryforward may be
used to offset future capital gains to the extent provided by regulations. In
addition, the Fund incurred losses of $2,951,351 after October 31, 2008 that it
has elected to treat as arising in the following fiscal year.
As of December 31, 2008, the Fund had temporary book/tax differences primarily
attributable to wash sales on portfolio securities, post-October realized losses
and mark-to-market on passive foreign investment companies and permanent
book/tax differences primarily attributable to non-deductible expenses and
foreign currency losses. To reflect reclassifications arising from the permanent
differences, paid-in capital was credited $7,775, accumulated net realized loss
was credited $31,317 and distributions in excess of net investment income was
charged $39,092. Net assets were not impacted by these reclassifications.
CNL GLOBAL REAL ESTATE FUND - 21
Note to Financial Statements (continued) December 31, 2008
CNL GLOBAL REAL ESTATE FUND
6. CAPITAL STOCK
The following table summarized shares and dollar activity in the Fund:
FOR THE PERIOD
FOR THE OCTOBER 26, 2007(a)
YEAR ENDED THROUGH
DECEMBER 31, 2008 DECEMBER 31, 2007
----------------------- ---------------------
SHARES DOLLARS SHARES DOLLARS
--------- ----------- ------- ----------
CLASS A
Shares sold 498,298 $ 3,199,670 5,504(b) $ 48,115(b)
Issued as reinvestment of dividends 3,569 19,300 67 578
Shares redeemed (243,580) (1,222,503) -- --
Shares reclassified(c) 3,841 17,516 -- --
Redemption fees(d) -- 419 -- --
--------- ----------- ------- ----------
Net increase (decrease) 262,128 $ 2,014,402 5,571 $ 48,693
--------- ----------- ------- ----------
CLASS C
Shares sold 3,846 $ 26,511 --(b) --(b)
Issued as reinvestment of dividends 22 118 12 106
Shares redeemed (1,528) (7,247) -- --
Shares reclassified(c) (3,852) (17,516) -- --
Redemption fees(d) -- 8 -- --
--------- ----------- ------- ----------
Net increase (decrease) (1,512) $ 1,874 12 $ 106
--------- ----------- ------- ----------
INSTITUTIONAL CLASS
Shares sold 6,080,792 $42,711,084 511,198(b) $5,100,000(b)
Issued as reinvestment of dividends 55,049 303,152 4,793 41,411
Shares redeemed (834,702) (3,762,023) -- --
Redemption fees(d) -- 11,489 -- --
--------- ----------- ------- ----------
Net increase (decrease) 5,301,139 $39,263,702 515,991 $5,141,411
--------- ----------- ------- ----------
(a) Commencement of operations.
(b) Does not include seed shares of 1,502, 1,500 and 7,000 and seed dollars of
$15,020, $15,000 and $70,000 for Class A, Class C and Institutional Class,
respectively.
(c) On December 30, 2008, Class C shares were reclassified into Class A shares.
(d) The Fund may charge a 1.00% redemption fee on shares sold within 75 days of
the time of purchase.
7. KEY RISKS
REAL ESTATE CONCENTRATION
The Fund concentrates its investments in real estate securities, including
REITs. A fund with a concentrated investment portfolio is vulnerable to the
risks of the industry in which it invests and is subject to greater risks and
market fluctuations than funds investing in a broader range of industries. Real
estate securities are susceptible to the risks associated with direct ownership
of real estate, such as decreases in real estate values, overbuilding and space
over-supply conditions, increased competition among competing real estate
property owners and other risks related to local or general economic and
business conditions, increases in operating costs and property taxes, changes in
zoning laws, casualty or condemnation losses, possible environmental
liabilities, regulatory limitations on rental rates and fluctuations in rental
income due to lease terminations or expirations. Changes in interest rates, debt
leverage ratios, debt maturity schedules, and the availability of credit to real
estate
22 - CNL GLOBAL REAL ESTATE FUND
Note to Financial Statements (continued) December 31, 2008
CNL GLOBAL REAL ESTATE FUND
companies may also affect the value of the Fund's investment in real estate
securities. Rising interest rates may drive up mortgage and financing costs and
hinder real estate construction activity, which may negatively impact the
securities that the Fund owns. Real estate securities are dependent upon
specialized management skills at the operating company level, have limited
diversification and are, therefore, subject to risks inherent in operating and
financing a limited number of properties. Real estate securities are also
subject to heavy cash flow dependency and defaults by borrowers, including the
issuer of the real estate security. The real estate industry tends to be
cyclical. Such cycles may adversely affect the value of the Fund's portfolio.
The Fund will indirectly bear a proportionate share of a REIT's on-going
operating fees and expenses, which may include management, operating and
administrative expenses in addition to the expenses of the Fund. In addition,
U.S.-qualified REITs are subject to the possibility of failing to a) qualify for
tax-free pass-through of income under the Internal Revenue Code ("IRC") and b)
maintain exemption eligibility from the investment company registration
requirements.
FOREIGN SECURITIES
The Fund may directly purchase securities of foreign issuers. Investing in
securities of foreign issuers involves special risks not typically associated
with investing in securities of U.S. issuers. The risks include possible
revaluation of currencies, the ability to repatriate funds, less complete
financial information about companies and possible future adverse political and
economic developments. Moreover, securities of many foreign issuers and their
markets may be less liquid and their prices more volatile than those of
securities of comparable U.S. issuers.
REPURCHASE AGREEMENTS
Repurchase agreements could involve certain risks in the event of default or
insolvency of the counterparty including possible delays or restrictions upon
the Fund's ability to dispose of the underlying securities.
8. NEW ACCOUNTING PRONOUNCEMENTS
In March 2008, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 161, Disclosures about Derivative Instruments
and Hedging Activities ("FAS 161"), an amendment of FASB Statement No. 133. FAS
161 requires enhanced disclosures about (a) how and why an entity uses
derivative instruments, (b) how derivative instruments and related hedged items
are accounted for, and (c) how derivative instruments and related hedged items
affect the Fund's financial position, financial performance, and cash flows.
Management is currently evaluating the impact the adoption of FAS 161 will have
on the Fund's financial statements. FAS 161-related disclosures will be
effective for fiscal years beginning after November 15, 2008.
9. CONCENTRATION OF OWNERSHIP
From time to time, the Fund may have a concentration of several shareholders
holding a significant percentage of shares outstanding. Investment activities of
these shareholders could have a material impact on the Fund. At December 31,
2008, one shareholder held 5% of Class A and one shareholder held 5% of the
Institutional Class.
CNL GLOBAL REAL ESTATE FUND - 23
Report of Independent Registered Certified Public Accounting Firm
To the Board of Trustees and Shareholders of The CNL Funds -- CNL Global Real
Estate Fund
In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of operations and
of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of CNL Global Real Estate Fund (the
"Fund") at December 31, 2008, and the results of its operations, the changes in
its net assets and the financial highlights for the periods indicated, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at December 31, 2008 by
correspondence with the custodian provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Tampa, FL
February 26, 2009
24 - CNL GLOBAL REAL ESTATE FUND
Tax Information (Unaudited)
Pursuant to the Jobs and Growth Relief Reconciliation Act of 2003, the Fund
designates qualified dividend income of $156,745. Please contact a tax advisor
if you have questions about federal or state income tax laws, or on how to
prepare your tax returns. If you have specific questions about your account,
please call 1-888-890-8934.
Other Information
PROXY VOTING RECORD
The Fund files with the Securities and Exchange Commission its proxy voting
record on Form N-PX for each 12-month period ending June 30. Form N-PX must be
filed by the Fund each year by August 31. The most recent Form N-PX is available
without charge, upon request, by calling 1-866-745-3797 or on the Securities and
Exchange Commission's website at www.sec.gov. A description of the policies and
procedures that the Fund uses to determine how to vote proxies relating to
portfolio securities is available without charge, (i) by calling 1-866-745-3797;
(ii) on the Fund's website at www.thecnlfunds.com; and (iii) on the Securities
and Exchange Commission's website at www.sec.gov.
CNL GLOBAL REAL ESTATE FUND - 25
Trustees and Officers (Unaudited)
POSITION(S)
HELD WITH NUMBER OF
TRUST AND PORTFOLIOS IN
LENGTH OF FUND COMPLEX OTHER
TIME PRINCIPAL OCCUPATION OVERSEEN BY TRUSTEESHIPS/
NAME, ADDRESS AND AGE SERVED(1) DURING PAST 5 YEARS TRUSTEE DIRECTORSHIPS HELD
------------------------- ------------ ------------------------------------- ------------- --------------------
INTERESTED TRUSTEE: Chairman Vice Chairman, CNL Financial 1 Director, CNL
Robert A. Bourne(2) of the Group, Inc. (real estate and Financial Group,
c/o CNL Fund Board development company). Mr. Bourne also Inc.; Director,
Advisors Company and serves and has served as a director CNLBank; Director,
450 South Orange Avenue Trustee, and an officer for various affiliates CNL Income
Orlando, FL 32801 May 2007 of CNL Financial Group, Inc. Properties, Inc.
Age: 61 to present including CNL Fund Advisors
Company.
INDEPENDENT TRUSTEES: Trustee, Principal, Century Capital Markets, 1 None
G. Richard Hostetter May 2007 LLC (financial services consultant)
c/o CNL Fund to present from 1999-present; Manager,
Advisors Company Strategic Redevelopment Initiatives,
450 South Orange Avenue LLC from 2005-present; Principal
Orlando, FL 32801 and employee of Florida Commerce
Age: 69 Centers, LLC from February 2008-
present.
James H. Kropp Trustee, Chief Investment Officer, i3 Funds, 1 Director, PS
c/o CNL Fund May 2007 LLC from 2009-present; Sr. VP- Business Parks, Inc.
Advisors Company to present Investments, Gazit Group USA, Inc.
450 South Orange Avenue (real estate company) from 2006-
Orlando, FL 32801 2008; Portfolio Manager, Realty
Age: 59 Enterprise Funds from 1998-2006;
Managing Director, Christopher Weil
& Co. Inc. (broker-dealer) from
1995-2004.
J. Joseph Kruse Trustee, Senior Advisor Process Sensors 1 Chairman, Topsider
c/o CNL Fund May 2007 Corp. (manufacturer of moisture Building Systems
Advisors Company to present sensors) from 2001-present; Senior Chairman,
450 South Orange Avenue Advisor, Hyde Park Capital Professional
Orlando, FL 32801 (investment banking firm) from 2006- Facilities
Age: 76 present; President, Kruse & Co., Inc. Management (manages
(merchant banking company) performing arts
from 1993-present; Partner and centers)
Senior Advisor, G. William Miller &
Co., Inc from 1983-present.
(1) Trustees hold their position with the Trust until their resignation or
removal.
(2) Robert A. Bourne is considered to be an "Interested Trustee" due to his
position as Director of CNL Financial Group, Inc., which is the parent
company of the Trust's Adviser.
The Trust's Statement of Additional Information ("SAI") includes additional
information about the Trustees. The SAI is available, without charge, upon
request. If you would like to request a copy of the SAI, you may do so by
calling the following toll-free number: 1-888-890-8934 or downloading it from
the Internet at www.thecnlfunds.com.
26 - CNL GLOBAL REAL ESTATE FUND
Trustees and Officers (Unaudited) (continued)
POSITION(S)
HELD WITH NUMBER OF
TRUST AND PORTFOLIOS IN
LENGTH OF FUND COMPLEX OTHER
TIME PRINCIPAL OCCUPATION OVERSEEN BY TRUSTEESHIPS/
NAME, ADDRESS AND AGE SERVED(1) DURING PAST 5 YEARS TRUSTEE DIRECTORSHIPS HELD
------------------------- ------------ ------------------------------------- ------------- --------------------
OFFICERS: President, President, CNL Fund Advisors N/A N/A
J. Grayson Sanders May 2007 Company from 2006-present;
CNL Fund to present President, CNL Fund Management
Advisors Company Company from 2006-2008;
450 South Orange Avenue President of CNL Capital Markets,
Orlando, FL 32801 Inc. from 2004-2006; Managing
Age: 68 Director- Marketing of AIG Global
Real Estate Investment Corp. (real
estate investment management)
from 2000-2004.
Paul S. Saint-Pierre Treasurer, Senior Vice President and CFO, N/A N/A
CNL Fund May 2007 CNL Fund Advisors Company from
Advisors Company to present 2007-present; Senior Vice President
450 South Orange Avenue and CFO, CNL Fund Management
Orlando, FL 32801 Company from 2007-2008; CFO of
Age: 54 Hovnanian Land Investment Group
(land development and investment)
from 2005-2007; Executive Vice
president of Wall Street Realty
Capital (real estate investment
banking) prior to 2005.
Paul F. Hahesy Chief Director, Foreside Compliance N/A N/A
Foreside Compliance Compliance Services, LLC from 2008-present;
Services, LLC, Officer, Compliance Manager, Foreside
Three Canal Plaza, October 2008 Compliance Services, LLC from
Suite 100 to present 2005-2008; Compliance Consultant,
Portland, ME 04101 MetLife Group, Inc. from 2001-2005.
Age: 37
Susan L. Terenzio Secretary, Corporate Paralegal, CNL Financial N/A N/A
CNL Financial Group, Inc. March 2008 Group, Inc. from 2004-present.
450 South Orange Avenue to present
Orlando, FL 32801
Age: 48
Frank J. DiPietro Assistant Senior Director and Vice President, N/A N/A
State Street Bank and Treasurer, State Street Bank & Trust Company
Trust Company May 2007 from 2005-present; Senior Manager
2 Avenue de Lafayette, to present Investment Accounting &
Boston, MA 02110 Administration of PFPC Inc.
Age: 38 from 1997-2005.
(1) Officers hold their positions with the Trust until a successor has been
duly elected and qualified or until their earlier resignation or removal.
CNL GLOBAL REAL ESTATE FUND - 27
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THIS PAGE IS INTENTIONALLY LEFT BLANK.
CNL GLOBAL REAL ESTATE FUND
INVESTMENT ADVISER
CNL Fund Advisors Company
450 South Orange Avenue
Orlando, FL 32801
SUB-ADVISER
CB Richard Ellis Global Real Estate Securities, LLC
250 West Pratt Street
Baltimore, MD 21201
ADMINISTRATOR & CUSTODIAN
State Street Bank and Trust Company
One Lincoln Street
Boston, MA 02111
DISTRIBUTOR
Foreside Fund Services, LLC
Three Canal Plaza, Suite 100
Portland, ME 04101
TRANSFER AGENT
Boston Financial Data Services, Inc.
30 Dan Road
Canton, MA 02021
LEGAL COUNSEL
Stradley Ronon Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103
INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
4221 West Boy Scout Boulevard, Suite 200
Tampa, FL 33607
INVESTMENT COMPANY ACT FILE NO. 811-22017
(CNL(R) LOGO)
CNL FUND ADVISORS COMPANY