UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-CSR
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
INVESTMENT COMPANY ACT FILE NUMBER 811-0792
CNI CHARTER FUNDS
(Exact name of registrant as specified in charter)
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400 North Roxbury Drive
Beverly Hills, CA 90210
(Address of principal executive offices) (Zip code)
SEI Investments Distributors
1 Freedom Valley Drive
Oaks, PA 19456
(Name and address of agent for service)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-888-889-0799
DATE OF FISCAL YEAR END: SEPTEMBER 30, 2005
DATE OF REPORTING PERIOD: SEPTEMBER 30, 2005
ITEM 1. REPORTS TO STOCKHOLDERS.
[GRAPHIC OMITTED]
BACKGROUND PHOTO: CITY NATIONAL BANK
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CNI Charter Funds
2005 Annual Report
September 30, 2005
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[GRAPHIC OMITTED]
PHOTO: CITY NATIONAL BANK
This report and the financial statements contained herein are provided for the
general information of the shareholders of the CNI Charter Funds. This report is
not authorized for distribution to prospective investors in the CNI Charter
Funds unless preceded or accompanied by an effective prospectus. Please remember
that past performance is no guarantee of future results.
Shares of CNI Charter Funds are not deposits or obligations of any bank, are not
guaranteed by any bank, and are not insured by the FDIC or any other agency and
involve investment risks, including the possible loss of the principle amount
invested.
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TABLE OF CONTENTS
CNI Charter Funds Annual Report
02 Letter to Our Shareholders
04 Equity Funds Investment Adviser's Report
06 Equity Funds Overview
10 Fixed Income Funds Investment Adviser's Report
12 Fixed Income Funds Overview
16 Money Market Funds Investment Adviser's Report
17 Statements of Net Assets
57 Statements of Operations
60 Statements of Changes in Net Assets
64 Financial Highlights
67 Notes to Financial Statements
74 Report of Independent Registered Public Accounting Firm
75 Board Members and Officers
78 Notice to Shareholders
79 Disclosure of Fund Expenses
81 Approval of Investment Advisory Agreements
CNI CHARTER FUNDS | PAGE 1
letter to our shareholders
SEPTEMBER 30, 2005
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This annual report covers the CNI Charter Funds for the fiscal year ended
September 30, 2005. On the following pages, you will find the specific details
of each fund's portfolio and investment performance.
Our unique philosophy and disciplined approach to capital market investment
continued to show well over the last twelve months in the face of a presidential
election, a maturing economic recovery, significant commodity price inflation,
continued global terrorist activity and several major natural disasters. Despite
all of these financial and economic "hurdles", both the equity and fixed income
markets fared well during this period, with domestic stocks gaining 12.3% (as
measured by the S&P 500 Index), international equities rising 25.8% on average
(as measured by the MSCI EAFE Index), and domestic bonds adding 2.8% (as
measured by the Lehman Brothers U.S. Aggregate Bond Index). Over the past twelve
months, as was the case in the prior twelve months, one of the driving forces
behind the markets was the significant rise in the price of oil, as well as many
other commodities. In fact, without the contribution of the energy stock sector
(which rose by over 45% over the preceding twelve months), broader market
returns would have been much closer to 0% as opposed to 12%. However, by
adhering strictly to our fundamental investment strategies we were able to
produce highly competitive results in all asset categories, despite this
significantly skewed distribution of returns.
City National Asset Management, Inc.'s underlying investment philosophy is to
pursue the long-term goals and objectives specified for each of the Funds. With
an active yet disciplined style, all Funds are managed to achieve competitive
rates of return consistent with their respective, prescribed risk parameters.
CNI Charter Funds follow a disciplined investment process. Our broad based
research process takes advantage of the most advanced investment technology,
fundamental valuation, and quantitative tools to determine the most attractive
sectors and securities within each Fund's area of concentration. The final step
is to construct and continuously monitor precise portfolios that meet the
objectives of the specific Funds, without being swayed by short-term trends and
fads. This approach continued to serve shareholders well during the period of
economic growth encountered in the period ended September 30, 2005.
TWELVE-MONTH MARKET WATCH:
OCTOBER 2004 - SEPTEMBER 2005
Domestic economic growth continued to be strong, both on an absolute and
relative basis over this twelve month period. In fact, relative to our major
economic competitors, U.S. real economic growth remained ahead of the global
pack. Additionally, longer-term interest rates in the U.S., although low by
historical comparison, continued to appear relatively attractive in the global
fixed income marketplace, especially when viewed on an inflation- and
risk-adjusted basis. This global attractiveness continued to support both
domestic equity and bond prices over the past year. Perhaps the only fly in the
ointment is the deceleration in growth rate that has become more apparent as the
year progressed. It is widely forecast that real economic growth in 2006 and
2007 will be below that of 2005, making for a tougher investment environment
overall. This situation, combined with eleven successive Federal Funds rate
hikes over the past two years, is likely to produce a financial environment
where both asset allocation and individual issue selection become more
difficult. Returns to financial assets in period of decelerating (but not
necessarily negative) economic growth with increasing inflation and interest
rates are generally sub-par, historically speaking.
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Twelve-Month October 2004 -
Index Watch: September 2005
EQUITIES:
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S&P 500 Index: ................................... + 12.3%
Dow Jones Industrials: ........................... + 7.2%
NASDAQ: .......................................... + 14.2%
MSCI EAFE Index: ................................. + 25.8%
BONDS:
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Lehman Brothers U.S. Gov't/Credit Index: ......... + 2.6%
Lehman Brothers U.S. Aggregate
Bond Index: ................................... + 2.8%
Lehman Brothers CA Tax-Exempt
Bond Index: ................................... + 5.0%
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CNI CHARTER FUNDS | PAGE 2
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CNI CHARTER FUNDS
PERFORMANCE AND HIGHLIGHTS
By adhering to our basic investment discipline and maintaining the appropriate
amount of risk control in the various portfolios, the Funds continued to provide
returns that are competitive in their respective investment arenas.
All four of our equity-oriented funds showed solid gains over the past twelve
months, in keeping with the broader market trends. The Technology Growth Fund
rose 16.8% to lead our equity fund pack. Close behind was the 14.4% return of
the Large Cap Value Equity Fund. The Large Cap Growth Equity Fund rose 10.6% and
the RCB Small Cap Value Equity Fund rose 9.9% during this period. Returns shown
are for the Institutional Class Shares.
All four CNI Charter Bond Funds kept pace with their respective markets and
evidenced positive, albeit single digit gains for the year. Once again, the High
Yield Bond Fund led the way with a 4.9% total return. The California Tax-Exempt
Bond Fund rose 1.7%, while the Government Bond Fund gained 1.4% and the
Corporate Bond Fund returned 1.3%. Returns shown are for the Institutional Class
Shares.
Lastly, all three of the CNI Charter Money Market Funds produced steady,
consistent, and competitive returns. These returns were in line with their
respective investment mandates.
Please read the following pages carefully as they contain important information
on the assets and financial condition of the Funds. If you have any questions
about this report or the CNI Charter Funds, please call your investment
professional or (888) 889-0799.
Thank you for choosing CNI Charter Funds.
Sincerely,
/s/ Richard A. Weiss
Richard A. Weiss
PRESIDENT AND CHIEF INVESTMENT OFFICER
CITY NATIONAL ASSET MANAGEMENT, INC.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. CERTAIN SHAREHOLDERS MAY BE
SUBJECT TO THE ALTERNATIVE MINIMUM TAX (AMT). FEDERAL INCOME TAX RULES APPLY TO
ANY CAPITAL GAIN DISTRIBUTIONS.
FUND EXPENSES HAVE BEEN WAIVED DURING THE PERIOD ON WHICH THE PERFORMANCE IS
BASED. WITHOUT WAIVERS, PERFORMANCE WOULD BE LOWER.
THIS INFORMATION MUST BE PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS. PLEASE
READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
INVESTING IN MUTUAL FUNDS INVOLVES RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
IN ADDITIONAL TO THE NORMAL RISKS ASSOCIATED WITH INVESTING, INVESTMENTS IN
SMALLER COMPANIES TYPICALLY EXHIBIT HIGHER VOLATILITY, AND PRODUCTS OF COMPANIES
IN WHICH TECHNOLOGY FUNDS INVEST MAY BE SUBJECT TO SEVERE COMPETITION AND RAPID
OBSOLESCENCE. AN INVESTMENT IN THE FUNDS IS NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
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*NOT FDIC INSURED *NO BANK GUARANTEE *MAY LOSE VALUE
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CNI Charter Funds Welcomes the AHA Investment Funds
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On October 3, 2005, CNI Charter Funds expanded their offering by merging the AHA
Investment Funds into the CNI Charter Funds family.
Endorsed by the American Hospital Association, the five AHA Investment Funds
encourage healthy behavior by having guidelines that prohibit investment in any
tobacco-related securities.
The five AHA Funds joining the CNI Charter Fund family are:
o AHA Limited Maturity Fixed Income Fund o AHA Diversified Equity Fund
o AHA Full Maturity Fixed Income Fund o AHA Socially Responsible Equity Fund
o AHA Balanced Fund
These new Funds join the existing family of eleven CNI Charter Funds to provide
an unwavering commitment to client satisfaction and quality investments that
help successful individuals, families and businesses achieve their financial
goals.
For more information about the CNI Charter Funds (including the AHA Investment
Funds) visit CNICHARTERFUNDS.COM.
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CNI CHARTER FUNDS | PAGE 3
investment adviser's report
SEPTEMBER 30, 2005
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EQUITY FUNDS
In the past fiscal year ending September 30, 2005, the U.S. equity market, as
measured by the S&P 500 Index, returned 12.3%. This is a solid return for the
equity market, in a period where most were expecting below average equity
returns. The majority of the return was produced in the fourth quarter of 2004
with the presidential election results and declining oil prices providing the
catalyst. Still, 2005 continued the upward price momentum with two out of the
three quarters producing positive returns.
During the year, investors struggled with the possibility of a slowing economy;
flattening corporate profit growth; rising inflation; rising interest rates;
higher oil prices; and global terrorism remaining a threat to the markets given
the London bombings. Additionally, investors were grappling with the likelihood
of an inverted yield curve and the impact of future economic growth that such a
condition presents. At the end of this period, investors were still trying to
gauge what impact hurricanes Katrina and Rita will have on the economy let alone
the federal budget.
With all these elements weighing on the market, each of the four equity funds in
the CNI Charter family produced positive returns. Following is a brief highlight
of each fund's performance:
For the fiscal year ending September 30, 2005, the LARGE CAP VALUE EQUITY FUND
returned 14.4% (Institutional Class). The S&P 500/BARRA Value Index returned
13.8% and the Lipper Large Cap Value Funds Classification returned 13.4%. As no
active sector positions were taken during the year, the Fund's performance was
dictated by the stock selection within each sector. The Fund's health care
holdings added value, as healthcare providers WellPoint and Aetna (rising 73.8%
and 72.5%, respectively) gained due to increased membership enrollment and
higher premiums. The energy sector was the best performing sector in the Fund.
Burlington Resources, up 99.4%, benefited from higher prices for oil and natural
gas as well as increased global demand. The utility sector also produced strong
results with companies like TXU Corp. gaining 77.1% on improved balance sheets
and above average revenue growth. Stocks that detracted from the Fund's
performance included Alcoa, down 25.8%, on lower alumina prices and an expected
reduction in global demand. Tektronix, a computer test equipment company, lost
33.4% as they continued to disappoint investors with lower than expected
earnings.
The LARGE CAP GROWTH EQUITY FUND returned 10.6% (Institutional Class) for the 12
months ending September 30, 2005. The S&P 500/BARRA Growth Index returned 10.7%
and the Lipper Large Cap Growth Funds Classification returned 12.6%. The Fund
benefited from the health care holdings as pharmacy benefit manager, Express
Scripts, gained 88.9% on solid earnings growth. Amgen, the largest biotechnology
company, gained 35.4% on strong earnings and a promising drug pipeline. The
technology sector also produced strong performers as Nvidia, the top producer of
graphic chips, gained 134% on increased sales and higher profit margins. In
addition, Broadcom, which makes chips for networks and consumer electronics,
gained 71.9%, as sales topped analyst estimates. Some well know names in the
consumer sectors detracted from the Fund's performance. Wal-Mart stores lost
16.7% as sales were hurt due to the effect of higher energy costs on consumers.
Harley-Davidson fell 17.6% as demand for its well known motorcycles declined.
Additionally, eBay lost 10.4% as earnings failed to meet analysts' estimates,
causing investors to be fearful of slowing growth.
The RCB SMALL CAP VALUE FUND returned 9.9% (Institutional Class) for the 12
months ending September 30, 2005 as compared with the Russell 2000 Value Index
at 17.8%, the Russell 2000 Index at 18.0%, the Russell 2500 Value Index at
21.3%, the Lipper Small Cap Core Funds Classification at 18.9% and the Lipper
Small Cap Value Funds Classification at 18.5%.
CNI CHARTER FUNDS | PAGE 4
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Positive returns came from a number of recently announced takeovers such as SBS
Broadcasting (+61.5%), the year's best performer; NDCHealth (+18.1%); and
Certegy (+8.1%), which joined Price Legacy and Grey Global Group with the Fund's
crop of fiscal year takeovers. In all, 20% of the Fund's portfolio at the
beginning of the year was taken over at significant premiums to the Fund's cost
basis. However, much of this positive news was offset by three negatives: (1)
the Fund's lack of exposure to the energy sector, which contributed
significantly to the performance of the benchmarks; (2) a significant portfolio
holding, Whitehall Jewellers (-79.0%), a retailer of fashion and bridal jewelry
which suffered from a combination of external market factors and poor management
by the Board; and (3) a somewhat higher cash position than desirable due to
difficulties in identifying good companies which were not overvalued.
The TECHNOLOGY GROWTH EQUITY FUND returned 16.8% (Institutional Class) for the
12 months ending September 30, 2005. The Russell 3000 Technology Index returned
15.4% and the Lipper Science & Technology Funds Objective returned 17.4%. The
semiconductor industry was the best performing over the past 12 months. Texas
Instruments, one of the leading providers of chips for wireless phones, gained
59.9%, on solid revenue and earnings growth. MEMC Electronic Materials, another
semiconductor company, produced a 168.8% return on consistent earnings,
ownership restructuring, and the inclusion into a major equity index. Outside
the semiconductor sector, Cerner Corp, provider of health care information
systems, gained 100.9% on excellent new business bookings. Those companies that
detracted from performance included Novatel Wireless, which lost 56.9% on
reduced earnings per share numbers. Additionally, Sanmina-SCI, a top
manufacturer of electronic components, fell 32.9% due to revenue and earning
numbers below analyst expectations.
Looking forward, the market faces many challenges: higher interest rates; high
oil prices; slowing growth; budget and trade deficits; natural disasters; and
global terrorism. These may seem like too much to overcome, but in reality,
these conditions have exhibited themselves in the past. The equity market will
always have risks, otherwise there would be no risk-premium attached to stocks.
Most economists, when queried, still do not see the U.S. economy hitting a
recession in 2006, but in fact, forecast solid real GDP growth. In this
environment, the CNI Charter Equity Funds will continue to focus on those
companies that we expect will be able to weather any proverbial storm. We will
continue to apply our disciplined investment approach across the various equity
markets we manage with the objective of providing superior investment results.
Sincerely,
/s/ Brian L. Garbe
Brian L. Garbe
DIRECTOR OF RESEARCH
CITY NATIONAL ASSET MANAGEMENT, INC.
CNI CHARTER FUNDS | PAGE 5
fund overview
SEPTEMBER 30, 2005
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LARGE CAP VALUE EQUITY FUND
The Fund seeks to provide capital appreciation and moderate income consistent
with current returns available in the market place by investing in large U.S.
corporations and U.S. dollar denominated American Depository Receipts of large
foreign corporations which are undervalued and whose market valuations compare
favorably relative to similar companies.
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Comparison of Change in the Value of a $10,000 Investment in the Large Cap Value
Equity Fund, Institutional Class or Class A Shares, versus the S&P 500/BARRA
Value Index, and the Lipper Large Cap Value Funds Classification(*)(1)
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
CNI Large Cap Value Fund, CNI Large Cap Value Fund, S&P 500/ Lipper Large Cap
Institutional Class Shares Class A Shares BARRA Value Index(**) Value Funds Index
1/31/00 $10,000 $10,000 $10,000 $10,000
9/30/00 10,530 10,525 10,781 10,853
9/30/01 8,807 8,769 8,960 9,963
9/30/02 7,145 7,106 6,966 7,988
9/30/03 8,861 8,793 8,816 9,793
9/30/04 10,581 10,465 10,621 11,401
9/30/05 12,103 11,945 12,088 12,924
(*) In order to compare the Fund's performance against its benchmark, the
Fund's performance shown above begins at the month-end after the Fund's
inception.
(**) Standard and Poor's has changed the name and the construction methodology
of their style indices. The S&P 500/Barra Value Index becomes the S&P
500/Citigroup Value Index in mid-December 2005. The Large Cap Value Fund
will use the new index as a comparative investment benchmark going
forward.
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
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Ticker 1-Year 3-Year 5-Year Inception
Shares Symbol Return Return Return to Date
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Institutional Class (1)^ CNLIX 14.39% 19.21% 2.82% 2.64%
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Class A (2) CVEAX 14.14% 18.90% 2.56% 2.41%+
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(1) Commenced operations on January 14, 2000.
(2) Commenced operations on April 13, 2000.
^ The Fund's Institutional Class Shares are currently offered only to accounts
where City National Bank serves as trustee or in a fiduciary capacity.
+ Class A Shares performance for the period prior to April 13, 2000 reflects
the performance of the Fund's Institutional Shares. The performance of the
Institutional Shares has not been adjusted to reflect the higher Rule 12b-1
Fees and expenses applicable to Class A Shares. If it had, performance would
have been lower than that shown.
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Top Ten Holdings*
% OF PORTFOLIO
Bank of America 3.1
Pfizer 2.6
ConocoPhillips 2.5
Citigroup 2.4
Chevron 2.4
Wells Fargo 2.0
Hewlett-Packard 2.0
Verizon Communications 1.9
Goldman Sachs Group 1.7
Wachovia 1.6
* Excludes Cash Equivalents
CNI CHARTER FUNDS | PAGE 6
fund overview
SEPTEMBER 30, 2005
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LARGE CAP GROWTH EQUITY FUND
The Fund seeks to provide capital appreciation by investing in large U.S.
corporations and U.S. dollar denominated American Depository Receipts of large
foreign corporations with the potential for growth and that possess superior
management, strong market position, consistent records of increased earnings and
a strong operating and financial position.
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Comparison of Change in the Value of a $10,000 Investment in the Large Cap
Growth Equity Fund, Institutional Class or Class A Shares, versus the S&P
500/BARRA Growth Index, and the Lipper Large Cap Growth Funds
Classification(*)(1)
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW
CNI Large Cap Growth Fund, CNI Large Cap Growth Fund, S&P 500/BARRA Lipper Large Cap
Institutional Class Shares Class A Shares Growth Index(**) Growth Funds
1/31/00 $10,000 $10,000 $10,000 $10,000
9/30/00 9,873 9,852 10,025 10,710
9/30/01 6,702 6,670 6,446 6,272
9/30/02 5,533 5,490 5,198 4,962
9/30/03 6,723 6,660 6,364 6,003
9/30/04 7,139 7,051 6,843 6,440
9/30/05 7,893 7,775 7,572 7,249
(*) In order to compare the Fund's performance against its benchmark, the
Fund's performance shown above begins at the month-end after the Fund's
inception.
(**) Standard and Poor's has changed the name and the construction methodology
of their style indices. The S&P 500/Barra Growth Index becomes the S&P
500/Citigroup Growth Index in mid-December 2005. The Large Cap Growth Fund
will use the new index as a comparative investment benchmark going
forward.
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
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Ticker 1-Year 3-Year 5-Year Inception
Shares Symbol Return Return Return to Date
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Institutional Class (1)^ CNGIX 10.55% 12.57% (4.38)% (4.94)%
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Class A (2) CLEAX 10.28% 12.30% (4.63)% (5.18)%+
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(1) Commenced operations on January 14, 2000.
(2) Commenced operations on March 28, 2000.
^ The Fund's Institutional Class Shares are currently offered only to
accounts where City National Bank serves as trustee or in a fiduciary
capacity.
+ Class A Shares performance for the period prior to March 28, 2000 reflects
the performance of the Fund's Institutional Shares. The performance of the
Institutional Shares has not been adjusted to reflect the higher Rule 12b-1
Fees and expenses applicable to Class A Shares. If it had, performance
would have been lower than that shown.
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Top Ten Holdings*
% OF PORTFOLIO
Exxon Mobil 5.2
Wal-Mart Stores 3.4
Procter & Gamble 3.1
General Electric 3.0
Johnson & Johnson 2.7
Microsoft 2.6
Amgen 2.4
Intel 2.3
Dell 2.3
UnitedHealth Group 1.8
* Excludes Cash Equivalents
CNI CHARTER FUNDS | PAGE 7
fund overview
SEPTEMBER 30, 2005
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RCB SMALL CAP VALUE FUND
The Fund seeks to provide capital appreciation by investing primarily in smaller
U.S. corporations which are considered undervalued.
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Comparison of Change in the Value of a $10,000 Investment in the RCB Small Cap
Value Fund, Institutional Class, Class A or Class R Shares, versus the Russell
2000 Index, the Russell 2000 Value Index, the Lipper Small Cap Value Funds
Classification(*)(1), and the Lipper Small Cap Core Funds Classification(*)(1)
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW
CNI RCB Small
Cap Value Fund, CNI RCB Small CNI RCB Small
Institutional Cap Value Fund, Cap Value Fund, Russell 2000 Russell 2000 Lipper Small Cap Lipper Small Cap
Class Shares Class A Shares Class R Shares Index Value Index Value Index Core Index
9/30/98 $10,000 $10,000 $ 9,650 $10,000 $10,000 $10,000 $10,000
9/30/99 15,120 15,120 14,591 11,907 10,583 11,142 12,099
9/30/00 16,859 16,859 16,269 14,692 12,209 13,027 15,923
9/30/01 18,395 18,395 17,751 11,576 12,893 13,654 14,027
9/30/02 16,353 16,331 15,740 10,499 12,705 13,654 13,139
9/30/03 23,802 23,714 22,856 14,332 16,728 17,750 17,284
9/30/04 29,745 29,557 28,485 17,022 21,020 22,051 20,778
9/30/05 32,681 32,380 31,208 20,077 24,751 26,139 24,696
(*) In order to compare the Fund's performance against its benchmark, the
Fund's performance shown above begins at the month-end after the Fund's
inception.
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
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Ticker 1-Year 3-Year 5-Year Inception
Shares Symbol Return Return Return to Date
- --------------------------------------------------------------------------------
Institutional Class (1)^ RCBIX 9.87% 25.96% 14.15%+ 18.43%+
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Class A (1) RCBAX 9.55% 25.63% 13.95%+ 18.28%+
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Class R (2) RCBSX 9.56% 25.63% 13.91% 18.25%
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Class R with load RCBSX 5.74% 24.16% 13.10% 17.66%
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(1) Commenced operations on October 3, 2001.
(2) Commenced operations on September 30, 1998.
^ The Fund's Institutional Class Shares are currently offered only to
accounts where City National Bank serves as trustee or in a fiduciary
capacity.
+ The performance of the Institutional Class and Class A Shares for the
period prior to October 3, 2001 reflect the performance of the Class R
Shares of a predecessor mutual fund. The performance of the Class R Shares
has not been adjusted to reflect the Rule 12b-1 Fees and expenses
applicable to Institutional and Class A Shares. Fees for the Institutional
Class Shares are lower than the fees for the Class R Shares;
correspondingly, performance would have been higher than that shown.
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Top Ten Holdings*
% OF PORTFOLIO
Fairfax Financial Holdings 4.4
SBS Broadcasting 4.3
Hilb Rogal & Hobbs 3.9
Alleghany 3.7
Emmis Communications 3.5
Conseco 3.5
Intrawest 3.4
Certegy 3.3
Sea Containers, Cl A 3.2
Triarc, Cl B 3.1
* Excludes Repurchase Agreement
CNI CHARTER FUNDS | PAGE 8
fund overview
SEPTEMBER 30, 2005
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TECHNOLOGY GROWTH FUND
The Fund seeks to provide long-term capital appreciation by investing in U.S.
corporations and U.S. dollar denominated American Depository Receipts of foreign
corporations with the potential for growth and that are engaged in the
production, distribution and development of products or services based on
technology and should benefit significantly from advances or improvements in
technology.
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Comparison of Change in the Value of a $10,000 Investment in the Technology
Growth Fund, Institutional Class or Class A Shares, versus the Russell 3000
Technology Index, and the Lipper Science & Technology Funds Objective(*)(1)
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
CNI Technology
Growth Fund, CNI Technology Russell Lipper Science
Institutional Growth Fund, 3000 Technology Funds
Class Shares Class A Shares Technology Index Objective
10/31/00 $10,000 $10,000 $10,000 $10,000
9/30/01 3,530 3,525 3,675 3,523
9/30/02 2,253 2,241 2,494 2,329
9/30/03 3,490 3,466 4,026 3,842
9/30/04 3,450 3,406 4,024 3,898
9/30/05 4,028 3,964 4,644 4,576
(*) In order to compare the Fund's performance against its benchmark, the
Fund's performance shown above begins at the month-end after the Fund's
inception.
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on fund distributions or the redemptions of fund
shares.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
Ticker 1-Year 3-Year Inception
Shares Symbol Return Return to Date
- --------------------------------------------------------------------------------
Institutional Class (1)^ CTEIX 16.76% 21.36% (16.59)%
- --------------------------------------------------------------------------------
Class A (2) CTGAX 16.37% 20.94% (17.39)%
(1) Commenced operations on October 3, 2000.
(2) Commenced operations on October 23, 2000.
^ The Fund's Institutional Class Shares are currently offered only to
accounts where City National Bank serves as trustee or in a fiduciary
capacity.
- --------------------------------------------------------------------------------
Top Ten Holdings*
% OF PORTFOLIO
Microsoft 7.7
Hewlett-Packard 5.2
Intel 4.6
IBM 4.2
Dell 4.2
Qualcomm 3.8
Texas Instruments 3.7
Cisco Systems 3.2
Oracle 2.7
EMC-Mass 2.2
* Excludes Cash Equivalents
CNI CHARTER FUNDS | PAGE 9
investment adviser's report
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
FIXED INCOME FUNDS
The bond market was extremely eventful over the past fiscal year. The yield
curve continued to confound market participants as it flattened dramatically.
Indeed, the yield spread between 2-year and 10-year Treasuries compressed from
151 basis points on September 30, 2004 to a mere 16 basis points on September
30, 2005. The Federal Reserve ("Fed") followed through on their word that they
would remove some of the stimulus in the system by raising short-term interest
rates at a "measured pace". Over the past fiscal year, the Fed has raised the
Federal Funds rate eight straight times from 1.75% to 3.75%. With two scheduled
meetings left in 2005, it's likely that the Fed will boost rates another
quarter-point at each and position the Fed Funds Rate at 4.25% heading into
2006. The Fed's statement after its most recent meeting indicates that the
central bank remains focused on preventing inflation from accelerating.
Moreover, Fed Chairman Alan Greenspan, whose 18-year tenure ends on January 31,
2006, does not want to taint his legacy of price stability by allowing a
rekindling of inflation. Though laudable, that finale may be difficult, even for
him.
During the fiscal year, City National Asset Management, Inc. continued to remain
defensively postured portfolio for our investment grade funds. To that end, the
funds were quite active during the last 12 months. Indeed, average maturities
were shortened versus our comparative benchmarks, average coupons were optimized
and credit quality remained of paramount importance. Although our general
strategy was defensive, a modified barbell stance was utilized with modest
concentrations in two- and ten-year maturities. This strategy was and continues
to be beneficial given the flattening yield curve environment.
The CORPORATE BOND FUND (INSTITUTIONAL CLASS) produced a total return of 1.3%
for the last 12 months. For the same period, the Lehman Intermediate Corporate
Index returned 1.8%. The corporate bond universe is heavily weighted in lower
quality (Baa) rated securities that did well during this most recent period in
tandem with the continued economic recovery. Our Fund continued to retain a
higher quality profile than the index and thus did not capture all of the
performance garnered by the lower quality bonds. Our performance compares
favorably with its peer group where the Lipper Short/Intermediate Investment
Grade Debt Objective was up 1.2%.
The GOVERNMENT BOND FUND (INSTITUTIONAL CLASS) produced a total return of 1.4%
for the last 12 months. For the same period, the Lehman Intermediate U.S.
Government Bond Index returned 1.3%. Our defensive portfolio structure drove
relative performance this past year, and we continue to believe that the Fund is
positioned prudently with higher rates potentially on the horizon. The Fund's
performance relative to the peer group is very competitive as measured by the
Lipper Short/Intermediate U.S. Government Objective return of 0.9%.
The CALIFORNIA TAX EXEMPT BOND FUND (INSTITUTIONAL CLASS) produced a total
return of 1.7% for the last 12 months. For the same period, the Lehman CA
Intermediate/ Short Municipal Index returned 1.9%. We continue to believe that
our modestly defensive strategic posture will prove beneficial in the near
future as interest rate volatility becomes more prevalent. The Fund's ranking
relative to its peer group continues to be high (#5 ranking out of 17 funds as
of September 30, 2005), but the absolute performance of the peer group was
materially skewed upward by one volatile, concentrated fund. Indeed, the Lipper
CA Short/ Intermediate Municipal Debt Objective returned 2.7%.
The HIGH YIELD BOND FUND (INSTITUTIONAL CLASS) produced a
CNI CHARTER FUNDS | PAGE 10
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
total return of 4.9% for the last 12 months. For the same period, the Citigroup
Bond High Yield Market Index was up 5.7% and the Lipper High Current Yield Bond
Funds Index was up 6.9%. Absolute performance continues to be strong for this
sector of the bond market as lower quality bonds did quite well during this
period. The Fund's relative performance vis-a-vis its peer group was
competitive, where the Lipper High Current Yield Bond Funds Objective returned
6.1%.
STRATEGIC OUTLOOK FOR BOND FUNDS
With inflation concerns growing and the economic expansion likely to be
prolonged by storm recovery spending, this is not the time to extend on the
maturity curve or to dip down to lower quality bonds. The last quarter of 2005
and first quarter of 2006 will be crucial in assessing how the economy weathers
the damage along the Gulf and in measuring the inflationary impact of the
recovery spending. Rising inflation is the biggest concern bond investors face
in the coming quarters and one the Fed will most likely continue to address.
These key factors remain central to our strategy - and we monitor them as well
as other indicators in order to continue to add value to our actively managed
bond funds.
Sincerely,
/s/ Rodney J. Olea
Rodney J. Olea
DIRECTOR OF FIXED INCOME
CITY NATIONAL ASSET MANAGEMENT, INC.
CNI CHARTER FUNDS | PAGE 11
fund overview
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
The Fund seeks to provide current income (as the primary component of a total
return, intermediate duration strategy) by investing in a diversified portfolio
of investment grade fixed income securities, primarily corporate bonds issued by
domestic and international companies denominated in U.S. dollars.
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the Corporate Bond
Fund, Institutional Class or Class A Shares, versus the Lehman Intermediate
Corporate Index, and Lipper Short/Intermediate Investment Grade Debt
Objective(*)(1)
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
Lipper Short/
CNI Corporate Intermediate
Bond Fund, CNI Corporate Lehman Investment
Institutional Bond Fund, Intermediate Grade Debt
Class Shares Class A Shares Corporate Index Objective
1/31/00 $10,000 $10,000 $10,000 $10,000
9/30/00 10,595 10,610 10,645 10,599
9/30/01 11,882 11,892 11,993 11,765
9/30/02 12,602 12,568 12,853 12,417
9/30/03 13,451 13,381 14,130 13,004
9/30/04 13,740 13,648 14,687 13,265
9/30/05 13,913 13,772 14,947 13,415
(*) In order to compare the Fund's performance against its benchmark, the
Fund's performance shown above begins at the month-end after the Fund's
inception.
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on fund distributions or the redemptions of fund
shares.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
Ticker 1-Year 3-Year 5-Year Inception
Shares Symbol Return Return Return to Date
- --------------------------------------------------------------------------------
Institutional Class (1)^ CNCIX 1.26% 3.35% 5.60% 5.92%
- --------------------------------------------------------------------------------
Class A (2) CCBAX 0.91% 3.09% 5.35% 5.73%+
- --------------------------------------------------------------------------------
(1) Commenced operations on January 14, 2000.
(2) Commenced operations on April 13, 2000.
^ The Fund's Institutional Class Shares are currently offered only to
accounts where City National Bank serves as trustee or in a fiduciary
capacity.
+ Class A Shares performance for the period prior to April 13, 2000 reflects
the performance of the Fund's Institutional Shares. The performance of the
Institutional Shares has not been adjusted to reflect the higher Rule 12b-1
Fees and expenses applicable to Class A Shares. If it had, performance
would have been lower than that shown.
- --------------------------------------------------------------------------------
Top Ten Holdings
% OF PORTFOLIO
General Electric Capital,
Ser A, MTN
6.000%, 06/15/12 3.1
Union Planters Bank
5.125%, 06/15/07 2.4
Lehman Brothers Holdings
8.250%, 06/15/07 2.2
National Rural Utilities,
Ser C, MTN
7.250%, 03/01/12 2.2
AXA Financial
7.750%, 08/01/10 2.2
Citigroup
7.250%, 10/01/10 2.1
WPS Resources
7.000%, 11/01/09 2.1
U.S. Treasury Inflation Index Note
2.000%, 01/15/14 2.1
Crestar Finance
6.500%, 01/15/08 2.1
Kohl's
6.300%, 03/01/11 2.1
CNI CHARTER FUNDS | PAGE 12
fund overview
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
GOVERNMENT BOND FUND
The Fund seeks to provide current income (as the primary component of a total
return, intermediate duration strategy) by investing primarily in U.S.
government securities either issued or guaranteed by the U.S. government or its
agencies or instrumentalities.
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the Government Bond
Fund, Institutional Class or Class A Shares, versus the Lehman Intermediate U.S.
Government Bond Index, and the Lipper Short/Intermediate U.S. Government
Objective(*)(1)
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW
CNI Government Lehman Lipper Short/
Bond Fund, CNI Government Intermediate Intermediate
Institutional Bond Fund, U.S. Government U.S. Government
Class Shares Class A Shares Bond Index Objective
1/31/00 $10,000 $10,000 $10,000 $10,000
9/30/00 10,594 10,566 10,661 10,566
9/30/01 11,831 11,755 12,034 11,745
9/30/02 12,721 12,633 13,048 12,524
9/30/03 13,062 12,975 13,505 12,844
9/30/04 13,168 13,046 13,760 13,011
9/30/05 13,355 13,198 13,940 13,130
(*) In order to compare the Fund's performance against its benchmark, the
Fund's performance shown above begins at the month-end after the Fund's
inception.
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
Ticker 1-Year 3-Year 5-Year Inception
Shares Symbol Return Return Return to Date
- --------------------------------------------------------------------------------
Institutional Class (1)^ CNBIX 1.42% 1.63% 4.74% 5.14%
- --------------------------------------------------------------------------------
Class A (2) CGBAX 1.16% 1.47% 4.55% 4.92%+
(1) Commenced operations on January 14, 2000.
(2) Commenced operations on April 13, 2000.
^ The Fund's Institutional Class Shares are currently offered only to
accounts where City National Bank serves as trustee or in a fiduciary
capacity.
+ Class A Shares performance for the period prior to April 13, 2000 reflects
the performance of the Fund's Institutional Shares. The performance of the
Institutional Shares has not been adjusted to reflect the higher Rule 12b-1
Fees and expenses applicable to Class A Shares. If it had, performance
would have been lower than that shown.
- --------------------------------------------------------------------------------
Top Ten Holdings
% OF PORTFOLIO
FNMA
7.125%, 06/15/10 13.7
U.S. Treasury Note
3.875%, 01/15/09 9.2
U.S. Treasury Note
4.250%, 11/15/13 8.9
FNMA
5.010%, 11/10/10 8.8
FNMA
4.250%, 05/15/09 7.0
FHLB
2.250%, 12/15/05 6.9
U.S. Treasury Note
5.750%, 11/15/05 6.2
FNMA
3.875%, 05/15/07 5.3
FNMA
4.620%, 03/01/34 5.2
GNMA REMIC,
Ser 2004-80, Cl GC
5.000%, 02/20/31 5.2
CNI CHARTER FUNDS | PAGE 13
fund overview
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
California Tax Exempt Bond Fund
The Fund seeks to provide current income exempt from Federal and California
state income tax (as the primary component of a total return strategy) by
investing primarily in investment grade California municipal bonds and notes.
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the California Tax
Exempt Bond Fund, Institutional Class or Class A Shares, versus the Lehman CA
Intermediate-Short Municipal Index, and the Lipper CA Short/Intermediate
Municipal Debt Objective(*)(1)
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW
CNI California CNI California Lehman CA Lipper CA Short/
Tax-Exempt Bond Fund, Tax-Exempt Bond Fund, Intermediate-Short Intermediate
Institutional Class Shares Class A Shares Municipal Index Municipal Debt Objective
1/31/00 $10,000 $10,000 $10,000 $10,000
9/30/00 10,506 10,493 10,490 10,444
9/30/01 11,263 11,236 11,344 11,158
9/30/02 12,117 12,067 12,209 11,864
9/30/03 12,436 12,353 12,568 12,107
9/30/04 12,684 12,581 12,932 12,282
9/30/05 12,894 12,756 13,182 12,614
(*) In order to compare the Fund's performance against its benchmark, the
Fund's performance shown above begins at the month-end after the Fund's
inception.
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
Ticker 1-Year 3-Year 5-Year Inception
Shares Symbol Return Return Return to Date
- --------------------------------------------------------------------------------
Institutional Class (1)^ CNTIX 1.65% 2.09% 4.18% 4.62%
- --------------------------------------------------------------------------------
Class A (2) CCTEX 1.39% 1.87% 3.98% 4.42%+
(1) Commenced operations on January 14, 2000.
(2) Commenced operations on April 13, 2000.
^ The Fund's Institutional Class Shares are currently offered only to
accounts where City National Bank serves as trustee or in a fiduciary
capacity.
+ Class A Shares performance for the period prior to April 13, 2000 reflects
the performance of the Fund's Institutional Shares. The performance of the
Institutional Shares has not been adjusted to reflect the higher Rule 12b-1
Fees and expenses applicable to Class A Shares. If it had, performance
would have been lower than that shown.
- --------------------------------------------------------------------------------
Top Ten Holdings*
% OF PORTFOLIO
San Bernardino, Community
College District, Election 2002
Project, Ser B, GO, MBIA
Pre-Refunded @ 100
5.250%, 08/01/14 3.5
California State, Department
of Water Resource & Power,
Ser B-2, RB
2.950%, 05/01/22 2.9
San Diego County, Edgemoor &
Regional Systems Projects,
COP, AMBAC
Callable 02/01/15 @ 100
5.000%, 02/01/18 2.2
East Bay, Municipal Utility
District Water System, RB, MBIA
Callable 06/01/11 @ 100
5.000%, 06/01/19 2.2
Saddleback, Community College
District, 1996 Capital Improvement
Financing Project, COP, MBIA
Callable 06/01/06 @ 102
5.500%, 06/01/15 2.2
California State, Department
of Water Resources,
Ser W, RB, FSA
5.500%, 12/01/13 1.9
Sacramento, Municipal Utility
District, Ser R, RB, MBIA
5.000%, 08/15/19 1.9
Lakewood, COP, AMBAC
Callable 12/01/10 @ 100
5.500%, 12/01/12 1.8
San Francisco (City & County),
Building Authority, Department
of General Services & Leasing,
Ser A, RB
5.000%, 10/01/13 1.8
California Statewide, Communities
Development Authority,
Ser B-2, RB, XLCA
4.000%, 11/15/06 1.7
* Excludes cash equivalents
CNI CHARTER FUNDS | PAGE 14
fund overview
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
The Fund seeks to maximize total return by investing primarily in fixed income
securities rated below investment grade including corporate bonds and
debentures, convertible and preferred securities, and zero coupon obligations.
The Fund may also invest in fixed income securities rated below investment grade
issued by governments and agencies, both U.S. and foreign, and in equity
securities. The Fund seeks to invest in securities that offer a high current
yield as well as total return potential and diversifies across issuers,
industries and sectors to control risks.
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the High Yield Bond
Fund, Institutional Class or Class A Shares, versus the Citigroup High Yield
Market Index and the Lipper High Current Yield Bond Funds Objective(*)(1)
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
CNI High Yield Bond Fund, CNI High Yield Bond Fund, Citigroup High Yield Lipper High Current
Institutional Class Shares Class A Shares Market Index Yield Bond Funds Objective
1/31/00 $10,000 $10,000 $10,000 $10,000
9/30/00 10,412 10,386 10,016 9,923
9/30/01 10,157 10,102 9,413 9,094
9/30/02 10,644 10,555 9,098 8,935
9/30/03 12,747 12,602 12,124 11,214
9/30/04 14,336 14,132 13,644 12,474
9/30/05 15,031 14,774 14,414 13,230
(*) In order to compare the Fund's performance against its benchmark, the
Fund's performance shown above begins at the month-end after the Fund's
inception.
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
Ticker 1-Year 3-Year 5-Year Inception
Shares Symbol Return Return Return to Date
- --------------------------------------------------------------------------------
Institutional Class (1)^ CHYIX 4.85% 12.19% 7.62% 7.41%
- --------------------------------------------------------------------------------
Class A (1) CHBAX 4.54% 11.86% 7.30% 7.08%
(1) Commenced operations on January 14, 2000.
^ The Fund's Institutional Class Shares are currently offered only to
accounts where City National Bank serves as trustee or in a fiduciary
capacity.
- --------------------------------------------------------------------------------
Top Ten Holdings*
% OF PORTFOLIO
General Motors Acceptance
6.750%, 12/01/14 1.4
Qwest
7.625%, 06/15/15 1.3
Georgia-Pacific
9.375%, 02/01/13 1.0
Williams
8.125%, 03/15/12 1.0
Charter Communications Holdings
10.250%, 09/15/10 1.0
Nextel Communications, Ser D
7.375%, 08/01/15 0.9
Smithfield Foods, Ser B
8.000%, 10/15/09 0.9
Pogo Producing
6.875%, 10/01/17 0.7
Whiting Petroleum
7.000%, 02/01/14 0.7
CSC Holdings
7.000%, 04/15/12 0.7
* Excludes cash equivalents
CNI CHARTER FUNDS | PAGE 15
investment adviser's report
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS
The money market environment changed dramatically over the past fiscal year.
This change was highly anticipated by most market participants had anticipated,
including City National Asset Management, Inc. It is quite possible that a
tighter monetary policy will remain with us for some time. The CNI Charter Money
Market Funds' upward trend in yield are testimony to this fundamental change
underway.
The Federal Open Market Committee (FOMC) continued to unwind the rate reductions
it put into place in earlier years. The Federal Funds rate was raised eight
times this past year - from 1.75% % to 3.75%. Additionally, as measured by
Federal Funds futures contracts at the time of this writing, there is currently
a 100% probability of another 25 basis points rate hike by the end of 2005.
The PRIME MONEY MARKET FUND continued to emphasize quality and liquidity in
these uncertain times. With interest rates coming off near historic lows this
past year, the average days to maturity has remained relatively short. This
maturity allocation positions the Fund to perform competitively as 2006
approaches. The Fund has focused primarily on high-grade short-term commercial
paper and corporate securities as well as government agency notes on the
longer-end of the money market maturity spectrum.
The GOVERNMENT MONEY MARKET FUND continued to be well positioned from both a
sector as well as maturity perspective. The maturity profile incorporated a
modified barbell strategy for most of the past fiscal year. This strategy has
been beneficial over the past year as short rates have risen. This should also
position the Fund to add value as short maturities continue to rise in 2006. The
Fund's yield continued to be enhanced by the concentration of Government Agency
securities over Treasury instruments.
Our objective for the CALIFORNIA TAX EXEMPT MONEY MARKET FUND has always been
safety and liquidity. Over the past fiscal year, prior historic budgetary
challenges in California have given way to an improving credit profile for the
state. Our stringent credit research effort remains the cornerstone to managing
the Fund in the never ending political/economic backdrop of Sacramento. The
average days to maturity remains relatively short and our credit quality profile
remains very high.
STRATEGIC OUTLOOK
Our outlook continues to be constructive for money market investments.
Short-term rates will likely continue their steady march upward into 2006. While
an expanding economy is often synonymous with rising rates that in turn may
cause dislocations in financial markets, it can also provide opportunities for
higher yields and sector allocation shifts for money market funds. City National
Asset Management, Inc. is monitoring the market very closely and will be
proactive so as to take advantage of market opportunities.
Sincerely,
/s/ Rodney J. Olea
Rodney J. Olea
DIRECTOR OF FIXED INCOME
CITY NATIONAL ASSET MANAGEMENT, INC.
CNI CHARTER FUNDS | PAGE 16
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
LARGE CAP VALUE EQUITY FUND
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW
SECTOR WEIGHTINGS (UNAUDITED)*:
34.2% Financials
11.8% Consumer Discretionary
9.4% Energy
7.9% Industrials
7.3% Information Technology
7.1% Healthcare
6.2% Utilities
5.2% telecommunications
4.5% materials
3.9% Short-term Investments
2.5% Consumer Staples
*Percentages based on total investments.
- ------------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
COMMON STOCK [97.5%]
AEROSPACE & DEFENSE [1.4%]
Honeywell International 7,000 $ 262
Northrop Grumman 6,200 337
Raytheon 3,700 141
-------------------------------------------------------
TOTAL AEROSPACE & Defense 740
=======================================================
AIR FREIGHT & LOGISTICS [0.7%]
FedEx 2,200 192
Ryder System 4,800 164
-------------------------------------------------------
TOTAL AIR FREIGHT & LOGISTICS 356
=======================================================
AUTO COMPONENTS [0.8%]
Johnson Controls 6,800 422
=======================================================
AUTOMOBILES [0.8%]
General Motors 14,000 428
=======================================================
BEVERAGES [0.4%]
Coca-Cola Enterprises 12,100 236
=======================================================
BIOTECHNOLOGY [0.6%]
Applera - Applied Biosystems
Group 12,800 297
=======================================================
CAPITAL MARKETS [8.3%]
Bank of New York 18,200 535
Goldman Sachs Group 7,600 924
Lehman Brothers Holdings 5,700 664
Mellon Financial 11,800 377
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
Merrill Lynch 13,400 $ 822
Morgan Stanley 11,800 637
State Street 10,500 514
-------------------------------------------------------
TOTAL CAPITAL MARKETS 4,473
=======================================================
CHEMICAL [1.2%]
Air Products & Chemicals 5,500 303
Dow Chemical 5,500 229
PPG Industries 1,700 101
-------------------------------------------------------
TOTAL CHEMICAL 633
=======================================================
COMMERCIAL BANKS [10.2%]
Bank of America 40,674 1,712
BB&T 14,100 551
Keycorp 10,400 335
National City 16,100 538
PNC Financial Services Group 6,800 395
Wachovia 18,000 857
Wells Fargo 18,730 1,097
-------------------------------------------------------
TOTAL COMMERCIAL BANKS 5,485
=======================================================
COMMERCIAL SERVICES & SUPPLIES [0.2%]
Cendant 5,800 120
=======================================================
COMMUNICATIONS EQUIPMENT [0.9%]
Motorola 10,000 221
Scientific-Atlanta 7,300 274
-------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT 495
=======================================================
COMPUTERS & PERIPHERALS [2.0%]
Hewlett-Packard 36,800 1,075
=======================================================
CONSUMER FINANCE [1.3%]
Capital One Financial 3,000 239
MBNA 19,210 473
-------------------------------------------------------
TOTAL CONSUMER FINANCE 712
=======================================================
Diversified Financial Services [3.5%]
CIT Group 7,400 334
Citigroup 29,086 1,324
JPMorgan Chase 5,800 197
-------------------------------------------------------
TOTAL DIVERSIFIED FINANCIAL SERVICES 1,855
=======================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 17
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
LARGE CAP VALUE EQUITY FUND (CONTINUED)
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES [3.7%]
CenturyTel 7,300 $ 255
SBC Communications 28,300 678
Verizon Communications 32,409 1,060
-------------------------------------------------------
TOTAL DIVERSIFIED TELECOMMUNICATION
SERVICES 1,993
=======================================================
ELECTRIC UTILITIES [3.4%]
Entergy 3,500 260
Exelon 12,700 679
FirstEnergy 9,700 505
FPL Group 3,200 152
PPL 6,800 220
-------------------------------------------------------
TOTAL ELECTRIC UTILITIES 1,816
=======================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS [0.5%]
Jabil Circuit* 9,100 281
=======================================================
FOOD & STAPLES RETAILING [1.3%]
Costco Wholesale 3,700 159
CVS 10,400 302
Supervalu 8,000 249
-------------------------------------------------------
TOTAL FOOD & STAPLES RETAILING 710
=======================================================
FOOD PRODUCTS [0.8%]
Archer-Daniels-Midland 16,900 417
=======================================================
HEALTH CARE EQUIPMENT & SUPPLIES [0.3%]
PerkinElmer 7,500 153
=======================================================
HEALTH CARE PROVIDERS & SERVICES [3.8%]
Aetna 7,200 620
Cigna 4,500 530
HCA 10,300 494
WellPoint* 5,200 394
-------------------------------------------------------
TOTAL HEALTH CARE PROVIDERS & SERVICES 2,038
=======================================================
HOTELS RESTAURANTS & LEISURE [0.7%]
Carnival 2,600 130
Marriott International 4,200 265
-------------------------------------------------------
TOTAL HOTELS RESTAURANTS & LEISURE 395
=======================================================
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
HOUSEHOLD DURABLES [2.1%]
Centex 4,800 $ 310
Fortune Brands 2,600 211
KB Home 4,600 337
Newell Rubbermaid 11,800 267
-------------------------------------------------------
TOTAL HOUSEHOLD DURABLES 1,125
=======================================================
INDEPENDENT POWER PRODUCER/
ENERGY TRADER [0.5%]
Constellation Energy Group 3,900 240
=======================================================
INDUSTRIAL CONGLOMERATES [1.8%]
Textron 3,000 215
Tyco International 27,700 772
-------------------------------------------------------
TOTAL INDUSTRIAL CONGLOMERATES 987
=======================================================
INSURANCE [6.8%]
ACE, ADR 4,600 216
Aflac 4,400 199
Allstate 10,500 581
American International Group 11,100 688
Chubb 4,900 439
Hartford Financial Services
Group 5,000 386
Lincoln National 6,400 333
Progressive 1,600 168
Prudential Financial 9,700 655
-------------------------------------------------------
TOTAL INSURANCE 3,665
=======================================================
IT SERVICES [1.4%]
Affiliated Computer Services,
Cl A* 13,900 312
Electronic Data Systems 8,000 437
-------------------------------------------------------
TOTAL IT SERVICES 749
=======================================================
LEISURE EQUIPMENT & PRODUCTS [0.5%]
Brunswick 6,500 245
=======================================================
MACHINERY [1.3%]
Cummins 3,700 325
Danaher 7,000 377
-------------------------------------------------------
TOTAL MACHINERY 702
=======================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 18
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
LARGE CAP VALUE EQUITY FUND (CONTINUED)
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
MEDIA [3.8%]
Clear Channel Communications 8,100 $ 266
News Corp. 25,000 390
Time Warner 19,600 355
Viacom, Cl B 15,400 508
Walt Disney 21,800 526
-------------------------------------------------------
TOTAL MEDIA 2,045
=======================================================
METALS & MINING [1.2%]
Alcoa 12,300 300
Phelps Dodge 2,600 338
-------------------------------------------------------
TOTAL METALS & MINING 638
=======================================================
MULTI-UTILITIES [2.4%]
Dominion Resources 4,400 379
PG&E 13,000 510
Sempra Energy 8,600 405
-------------------------------------------------------
TOTAL MULTI-UTILITIES 1,294
=======================================================
MULTILINE RETAIL [1.8%]
Federated Department Stores 5,875 393
JC Penney 8,000 380
Target 3,800 197
-------------------------------------------------------
TOTAL MULTILINE RETAIL 970
=======================================================
OFFICE ELECTRONICS [0.3%]
Xerox* 10,600 145
=======================================================
OIL & GAS [9.5%]
Amerada Hess 2,600 357
Anadarko Petroleum 1,700 163
Chevron 19,940 1,291
ConocoPhillips 19,680 1,376
Devon Energy 2,200 151
Exxon Mobil 4,800 305
Marathon Oil 10,000 689
Occidental Petroleum 9,200 786
-------------------------------------------------------
TOTAL OIL & GAS 5,118
=======================================================
PAPER & FOREST PRODUCTS [2.2%]
Georgia-Pacific 7,900 269
MeadWestvaco 9,500 262
Weyerhaeuser 9,200 633
-------------------------------------------------------
TOTAL PAPER & FOREST PRODUCTS 1,164
=======================================================
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
PHARMACEUTICALS [2.6%]
Pfizer 56,000 $ 1,398
=======================================================
ROAD & RAIL [2.6%]
Burlington Northern Santa Fe 8,900 532
Norfolk Southern 11,400 463
Union Pacific 5,900 423
-------------------------------------------------------
TOTAL ROAD & RAIL 1,418
=======================================================
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT [2.3%]
Applied Materials 15,700 266
Freescale Semiconductor* 13,000 307
Intel 11,150 275
Texas Instruments 11,000 373
-------------------------------------------------------
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 1,221
=======================================================
SPECIALTY RETAIL [0.4%]
Staples 11,250 240
=======================================================
TEXTILES, APPAREL & LUXURY GOODS [1.0%]
Jones Apparel Group 11,200 319
Liz Claiborne 5,500 216
-------------------------------------------------------
TOTAL TEXTILES, APPAREL & LUXURY GOODS 535
=======================================================
THRIFTS & MORTGAGE FINANCE [4.6%]
Countrywide Financial 12,198 402
Fannie Mae 9,800 439
Freddie Mac 12,530 708
Golden West Financial 6,600 392
Washington Mutual 13,000 510
-------------------------------------------------------
TOTAL THRIFTS & MORTGAGE FINANCE 2,451
=======================================================
WIRELESS TELECOMMUNICATION SERVICES [1.6%]
Alltel 4,200 273
Sprint-Nextel 24,300 578
-------------------------------------------------------
TOTAL WIRELESS TELECOMMUNICATION SERVICES 851
=======================================================
TOTAL COMMON STOCK
(Cost $41,200) 52,331
===================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 19
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
LARGE CAP VALUE EQUITY FUND (CONCLUDED)
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
CASH EQUIVALENTS [4.0%]
Fidelity Institutional Domestic
Money Market Portfolio,
Cl I 2,075,805 $ 2,076
SEI Daily Income Trust,
Prime Obligation Fund, Cl I 28,010 28
-------------------------------------------------------
TOTAL CASH EQUIVALENTS
(Cost $2,104) 2,104
===================================================
TOTAL INVESTMENTS [101.5%]
(Cost $43,304) 54,435
===================================================
OTHER ASSETS AND LIABILITIES:
Receivable for Investment Securities Sold 3,011
Payable for Investment Securities Purchased (3,815)
Income Distributions Payable (97)
Investment Advisory Fees Payable (27)
Shareholder Servicing & Distribution
Fees Payable (13)
Administration Fees Payable (2)
Other Assets and Liabilities, Net 146
-------------------------------------------------------
OTHER ASSETS AND LIABILITIES [-1.5%] (797)
===================================================
NET ASSETS [100.0%] $53,638
=======================================================
NET ASSETS:
Paid-in-Capital (unlimited authorization --
$0.01 par value) $38,725
Accumulated net realized gain on investments 3,782
Net unrealized appreciation on investments 11,131
-------------------------------------------------------
NET ASSETS $53,638
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class
($42,973,408 / 4,503,328 shares) $9.54
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A
($10,664,326 / 1,118,735 shares) $9.53
=======================================================
* NON-INCOME PRODUCING SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
CL -- CLASS
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 20
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
LARGE CAP GROWTH EQUITY FUND
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW
SECTOR WEIGHTINGS (UNAUDITED)*:
23.1% Information Technology
18.6% Healthcare
16.7% Consumer Staples
13.5% Industrials
10.2% Energy
9.5% Consumer Discretionary
3.4% Financials
3.0% Short-Term Investments
1.2% Materials
0.6% Utilities
0.2% Telecommunications
*Percentages based on total investments.
- ------------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
COMMON STOCK [97.4%]
AEROSPACE & DEFENSE [3.4%]
Engineered Support Systems 8,700 $ 357
L-3 Communications Holdings 2,500 198
Lockheed Martin 6,100 372
United Technologies 9,600 498
-------------------------------------------------------
TOTAL AEROSPACE & DEFENSE 1,425
=======================================================
AIR FREIGHT & LOGISTICS [1.4%]
United Parcel Service, Cl B 8,700 601
=======================================================
AUTOMOBILES [0.4%]
Harley-Davidson 3,200 155
=======================================================
BEVERAGES [3.3%]
Anheuser-Busch 5,800 250
Coca-Cola 9,800 423
Pepsi Bottling Group 5,700 163
PepsiCo 9,900 561
-------------------------------------------------------
TOTAL BEVERAGES 1,397
=======================================================
BIOTECHNOLOGY [3.7%]
Amgen* 12,800 1,020
Genzyme-General Division* 4,900 351
Gilead Sciences* 4,400 214
-------------------------------------------------------
TOTAL BIOTECHNOLOGY 1,585
=======================================================
BUILDING PRODUCTS [0.3%]
American Standard 2,700 126
=======================================================
CAPITAL MARKETS [0.5%]
Federated Investors 6,300 209
=======================================================
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
CHEMICALS [1.2%]
Ecolab 4,400 $ 140
International Flavors &
Fragrances 4,300 153
Praxair 4,100 197
-------------------------------------------------------
TOTAL CHEMICALS 490
=======================================================
COMMERCIAL SERVICES & SUPPLIES [2.0%]
Cendant 8,300 171
Corporate Executive Board 2,000 156
Equifax 7,000 245
Robert Half International 7,500 267
-------------------------------------------------------
TOTAL COMMERCIAL SERVICES & SUPPLIES 839
=======================================================
COMMUNICATIONS EQUIPMENT [3.0%]
Cisco Systems* 29,250 524
Qualcomm 17,000 761
-------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT 1,285
=======================================================
COMPUTERS & PERIPHERALS [5.3%]
Apple Computer* 6,300 338
Dell* 28,165 963
IBM 9,000 722
Network Appliance* 9,500 226
-------------------------------------------------------
TOTAL COMPUTERS & PERIPHERALS 2,249
=======================================================
CONSUMER FINANCE [1.3%]
Capital One Financial 2,600 207
SLM 6,400 343
-------------------------------------------------------
TOTAL CONSUMER FINANCE 550
=======================================================
DIVERSIFIED CONSUMER SERVICES [1.3%]
Apollo Group, Cl A* 4,400 292
H&R Block 10,800 259
-------------------------------------------------------
TOTAL DIVERSIFIED CONSUMER SERVICES 551
=======================================================
ELECTRIC UTILITIES [0.6%]
Exelon 4,900 262
=======================================================
ENERGY EQUIPMENT & SERVICES [3.1%]
Halliburton 9,500 651
Schlumberger 5,700 481
Transocean* 2,700 165
-------------------------------------------------------
TOTAL ENERGY EQUIPMENT & SERVICES 1,297
=======================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 21
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
LARGE CAP GROWTH EQUITY FUND (CONTINUED)
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
FOOD & STAPLES RETAILING [4.8%]
CVS 7,000 $ 203
Sysco 12,700 398
Wal-Mart Stores 32,875 1,441
-------------------------------------------------------
TOTAL FOOD & STAPLES RETAILING 2,042
=======================================================
FOOD PRODUCTS [2.0%]
Campbell Soup 6,700 200
General Mills 4,300 207
Kellogg 6,200 286
Wm. Wrigley Jr. 2,100 151
-------------------------------------------------------
TOTAL FOOD PRODUCTS 844
=======================================================
HEALTH CARE EQUIPMENT & SUPPLIES [5.9%]
Bard (C.R.) 3,200 211
Baxter International 3,800 152
Biomet 10,900 378
Boston Scientific* 8,400 196
Medtronic 9,400 504
St. Jude Medical* 8,100 379
Stryker 7,600 376
Zimmer Holdings* 4,600 317
-------------------------------------------------------
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES 2,513
=======================================================
HEALTH CARE PROVIDERS & SERVICES [2.7%]
Community Health Systems* 5,000 194
IMS Health 7,500 189
UnitedHealth Group 13,900 781
-------------------------------------------------------
TOTAL HEALTH CARE PROVIDERS & SERVICES 1,164
=======================================================
HOTELS RESTAURANTS & LEISURE [1.4%]
Starbucks* 7,200 361
Yum! Brands 5,100 247
-------------------------------------------------------
TOTAL HOTELS RESTAURANTS & LEISURE 608
=======================================================
HOUSEHOLD PRODUCTS [4.7%]
Clorox 4,400 244
Colgate-Palmolive 8,200 433
Procter & Gamble 21,900 1,302
-------------------------------------------------------
TOTAL HOUSEHOLD PRODUCTS 1,979
=======================================================
INDUSTRIAL CONGLOMERATES [4.3%]
3M 7,400 543
General Electric 37,875 1,275
-------------------------------------------------------
TOTAL INDUSTRIAL CONGLOMERATES 1,818
=======================================================
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
INSURANCE [0.5%]
Progressive 2,000 $ 210
=======================================================
INTERNET & CATALOG RETAIL [1.5%]
eBay* 15,300 630
=======================================================
INTERNET SOFTWARE & SERVICES [0.7%]
Yahoo!* 8,800 298
=======================================================
IT SERVICES [1.7%]
Affiliated Computer Services,
Cl A* 3,100 169
First Data 9,400 376
Paychex 4,800 178
-------------------------------------------------------
TOTAL IT SERVICES 723
=======================================================
MACHINERY [2.2%]
Caterpillar 9,300 547
Danaher 7,600 409
-------------------------------------------------------
TOTAL MACHINERY 956
=======================================================
MEDIA [0.7%]
Dow Jones 7,500 286
=======================================================
OIL & GAS [7.2%]
Exxon Mobil 35,100 2,230
Sunoco 4,200 329
XTO Energy 11,300 512
-------------------------------------------------------
TOTAL OIL & GAS 3,071
=======================================================
PERSONAL PRODUCTS [2.0%]
Avon Products 8,600 232
Gillette 7,900 460
NBTY* 6,500 153
-------------------------------------------------------
TOTAL PERSONAL PRODUCTS 845
=======================================================
PHARMACEUTICALS [6.3%]
Abbott Laboratories 5,595 237
Allergan 3,700 339
Forest Laboratories* 7,700 300
Johnson & Johnson 18,164 1,150
Wyeth 13,850 641
-------------------------------------------------------
TOTAL PHARMACEUTICALS 2,667
=======================================================
REAL ESTATE [0.4%]
Simon Property Group 2,400 178
=======================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 22
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
LARGE CAP GROWTH EQUITY FUND (CONCLUDED)
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENt [5.2%]
Broadcom, Cl A* 7,900 $ 371
Intel 40,150 990
Maxim Integrated Products 5,800 247
Texas Instruments 17,800 603
-------------------------------------------------------
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 2,211
=======================================================
SOFTWARE [7.2%]
Adobe Systems 12,900 385
Citrix Systems* 8,200 206
Electronic Arts* 1,700 97
Intuit* 5,000 224
Mercury Interactive* 3,300 131
Microsoft 42,730 1,099
Oracle* 49,260 610
Symantec* 13,900 315
-------------------------------------------------------
TOTAL SOFTWARE 3,067
=======================================================
SPECIALTY RETAIL [3.6%]
Bed Bath & Beyond* 2,500 101
Best Buy 3,500 152
Home Depot 18,300 698
Lowe's 8,800 567
-------------------------------------------------------
TOTAL SPECIALTY RETAIL 1,518
=======================================================
TEXTILES, APPAREL & LUXURY GOODS [0.7%]
Coach* 9,600 301
=======================================================
THRIFTS & MORTGAGE FINANCE [0.7%]
Countrywide Financial 8,600 284
=======================================================
WIRELESS TELECOMMUNICATION SERVICES [0.2%]
Sprint-Nextel 4,309 102
=======================================================
TOTAL COMMON STOCK
(Cost $37,764) 41,336
=======================================================
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
CASH EQUIVALENTS [3.0%]
Fidelity Institutional Domestic
Money Market Portfolio,
Cl I 1,243,011 $ 1,243
SEI Daily Income Trust,
Prime Obligation Fund,
Cl I 22,463 22
-------------------------------------------------------
TOTAL CASH EQUIVALENTS
(Cost $1,265) 1,265
=======================================================
TOTAL INVESTMENTS [100.4%]
(Cost $39,029) 42,601
=======================================================
OTHER ASSETS AND LIABILITIES:
Payable for Investment Securities Purchased (2,085)
Investment Advisory Fees Payable (22)
Shareholder Servicing & Distribution
Fees Payable (10)
Income Distributions Payable (9)
Administration Fees Payable (2)
Other Assets and Liabilities, Net 1,969
-------------------------------------------------------
OTHER ASSETS AND LIABILITIES [-0.4%] (159)
=======================================================
NET ASSETS [100.0%] $42,442
=======================================================
NET ASSETS:
Paid-in-Capital (unlimited authorization --
$0.01 par value) $43,280
Distributions in excess of net
investment income (1)
Accumulated net realized loss on investments (4,409)
Net unrealized appreciation on investments 3,572
-------------------------------------------------------
NET ASSETS $42,442
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class
($34,163,788 / 4,600,350 shares) $7.43
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A
($8,278,677 / 1,125,938 shares) $7.35
=======================================================
* NON-INCOME PRODUCING SECURITY
CL -- CLASS
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 23
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
RCB SMALL CAP VALUE FUND
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW
SECTOR WEIGHTINGS (UNAUDITED)*:
29.0% Consumer Discretionary
20.8% Financials
18.2% Industrials
8.7% Short-Term Investments
7.6% Information Technology
5.1% Corporate Bonds
2.6% Materials
2.5% Utilities
2.3% Healthcare
1.6% Utilities
1.6% Preferred Stock
*Percentages based on total investments.
- ------------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
COMMON STOCK [84.5%]
ADVERTISING [16.3%]
Advo 76,100 $ 2,381
Cox Radio* 110,750 1,683
Cumulus Media* 135,050 1,687
Emmis Communications* 134,200 2,965
Fisher Communications* 30,000 1,397
SBS Broadcasting* 66,800 3,631
-------------------------------------------------------
TOTAL ADVERTISING 13,744
=======================================================
BUSINESS SERVICES [10.1%]
Adesa 68,400 1,512
Arbitron 8,300 331
Hilb Rogal & Hobbs 88,000 3,284
NDCHealth 109,000 2,062
Watson Wyatt 51,300 1,382
-------------------------------------------------------
TOTAL BUSINESS SERVICES 8,571
=======================================================
CHEMICALS [1.5%]
Compass Minerals International 54,900 1,263
=======================================================
CONSUMER PRODUCTS & SERVICES [5.6%]
Central Garden & Pet* 32,250 1,460
Coinstar* 95,900 1,775
RH Donnelley* 23,400 1,480
-------------------------------------------------------
TOTAL CONSUMER PRODUCTS & SERVICES 4,715
=======================================================
DATA PROCESSING [3.3%]
Certegy 68,900 2,757
=======================================================
DIVERSIFIED MANUFACTURING [4.1%]
EnPro Industries* 53,000 1,786
Jacuzzi Brands* 206,100 1,661
-------------------------------------------------------
TOTAL DIVERSIFIED MANUFACTURING 3,447
=======================================================
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
ELECTRICAL PRODUCTS [3.0%]
GrafTech International* 199,000 $ 1,080
Littelfuse* 53,100 1,494
-------------------------------------------------------
TOTAL ELECTRICAL PRODUCTS 2,574
=======================================================
FOOD, BEVERAGE & TOBACCO [1.6%]
Ralcorp Holdings 32,800 1,375
=======================================================
INSURANCE [15.1%]
Alleghany* 10,179 3,115
Conseco* 140,000 2,955
Fairfax Financial Holdings 21,400 3,722
Montpelier Re Holdings 64,200 1,595
White Mountains Insurance
Group 2,300 1,389
-------------------------------------------------------
TOTAL INSURANCE 12,776
=======================================================
MACHINERY [2.6%]
Franklin Electric 19,400 803
IDEX 31,800 1,353
-------------------------------------------------------
TOTAL MACHINERY 2,156
=======================================================
PAPER & PAPER PRODUCTS [2.6%]
Sealed Air* 45,500 2,160
=======================================================
PREPACKAGING SOFTWARE [2.5%]
PLATO Learning* 280,200 2,132
=======================================================
PRINTING & PUBLISHING [1.8%]
Dow Jones 40,300 1,539
=======================================================
RETAIL [5.3%]
IHOP 38,570 1,571
Triarc, Cl B 169,800 2,593
Whitehall Jewellers* 208,500 353
-------------------------------------------------------
TOTAL RETAIL 4,517
=======================================================
TRANSPORTATION SERVICES [3.2%]
Sea Containers, Cl A 230,350 2,700
=======================================================
TRAVEL & LEISURE [3.4%]
Intrawest 104,400 2,850
=======================================================
UTILITIES [2.5%]
Sierra Pacific Resources* 140,700 2,089
=======================================================
TOTAL COMMON STOCK
(Cost $58,129) 71,365
===================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 24
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
RCB SMALL CAP VALUE FUND (CONCLUDED)
DESCRIPTION SHARES/FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
PREFERRED STOCK [1.6%]
ENTERTAINMENT [1.6%]
Six Flags 57,200 $ 1,358
-------------------------------------------------------
TOTAL PREFERRED STOCK
(COST $1,138) 1,358
===================================================
CORPORATE BONDS [5.1%]
FINANCIAL SERVICES [1.9%]
Fairfax Financial Holding
7.750%, 04/26/12 $ 600 576
Labranche (A)
Callable 05/15/07 @ 104.75
9.500%, 05/15/09 1,000 1,060
-------------------------------------------------------
TOTAL FINANCIAL SERVICES 1,636
=======================================================
LABORATORY EQUIPMENT [1.8%]
Sea Containers, Ser B
Callable 10/15/05 @ 100
10.750%, 10/15/06 1,500 1,504
=======================================================
MEDICAL PRODUCTS & SERVICES [1.4%]
NDChealth
Callable 12/01/07 @ 105.25
10.500%, 12/01/12 1,000 1,145
=======================================================
TOTAL CORPORATE BONDS
(Cost $4,128) 4,285
===================================================
REPURCHASE AGREEMENT (C) [8.6%]
Morgan Stanley
3.500%, dated 09/30/05,
repurchased on 10/03/05,
repurchase price $7,308,131
(collateralized by U.S. Treasury
Bills, par value $5,251,784,
4.568% (B), 11/15/21; with
total market value $7,452,387) 7,306 7,306
-------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $7,306) 7,306
===================================================
TOTAL INVESTMENTS [99.8%]
(Cost $70,701) 84,314
===================================================
DESCRIPTION VALUE (000)
- ------------------------------------------------------------
OTHER ASSETS AND LIABILITIES:
Shareholder Servicing & Distribution
Fees Payable $ (61)
Investment Advisory Fees Payable (59)
Payable for Fund Shares Redeemed (11)
Administration Fees Payable (4)
Other Assets and Liabilities, Net 337
-------------------------------------------------------
OTHER ASSETS AND LIABILITIES [0.2%] 202
===================================================
NET ASSETS [100.0%] $ 84,516
=======================================================
NET ASSETS:
Paid-in-Capital (unlimited authorization --
$0.01 par value) $ 69,726
Undistributed net investment income 43
Accumulated net realized gain on investments 1,134
Net unrealized appreciation on investments 13,613
-------------------------------------------------------
NET ASSETS $ 84,516
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class
$13,975,454 / 489,072 shares) $28.58
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A
($12,753,934 / 450,475 shares) $28.31
=======================================================
Net Asset Value and Redemption
Price Per Share -- Class R
($57,786,764 / 2,044,250 shares) $28.27
=======================================================
Maximum Offering Price
Per Share -- Class R
($28.27 / 96.50%) $29.30
=======================================================
*NON-INCOME PRODUCING SECURITY
(A) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933, AS AMENDED. THIS SECURITY MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION NORMALLY TO QUALIFIED INSTITUTIONS. SECURITY CONSIDERED
LIQUID. ON SEPTEMBER 30, 2005, THE VALUE OF THESE SECURITIES AMOUNTED TO
$1,060 (000), REPRESENTING 1.3% OF THE NET ASSETS OF THE FUND.
(B) THE RATE REPORTED IS THE EFFECTIVE YIELD AT TIME OF PURCHASE.
(C) TRI-PARTY REPURCHASE AGREEMENT
CL -- CLASS
SER -- SERIES
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 25
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
TECHNOLOGY GROWTH FUND
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW
SECTOR WEIGHTINGS (UNAUDITED)*:
21.5% Computer & Peripheral Equipment Manufacturing
21.1% Software Publishers
18.8% Semiconductor & Other Electronic Component Manufacturing
12.7% Communications Equipment Manufacturing
5.6% Information Services
5.1% Computer Systems Design & Related Services
4.9% Short-Term Investments
2.5% Data Processing Services
2.3% Telecommunications
1.7% Other Electrical Equipment & Components
1.5% Navigational/Measuring/Medical/Control Instruments Manufacturing
1.2% Commercial/Industrial Equipment Rental & Leasing
1.1% Electronic Shopping & Mail-Order Houses
*Percentages based on total investments.
- ------------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
COMMON STOCK [97.4%]
AUDIO & VIDEO EQUIPMENT
Manufacturing [0.8%]
Sony, ADR 625 $ 21
=======================================================
COMMERCIAL/INDUSTRIAL EQUIPMENT RENTAL
& LEASING [1.2%]
Comverse Technology* 1,200 31
=======================================================
COMMUNICATIONS EQUIPMENT
MANUFACTURING [12.2%]
Cisco Systems* 4,705 84
Harris 700 29
Lucent Technologies* 4,500 15
Motorola 1,125 25
Nokia, ADR 2,150 36
Qualcomm 2,300 103
Research In Motion* 200 14
Viasat* 525 14
-------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT
MANUFACTURING 320
=======================================================
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT MANUFACTURING [22.0%]
Apple Computer* 600 $ 32
Dell* 3,275 112
EMC-Mass* 4,505 58
Hewlett-Packard 4,723 138
IBM 1,400 112
NAVTEQ* 400 20
Network Appliance* 1,300 31
Sandisk* 800 38
Symbol Technologies 1,000 10
Western Digital* 1,750 23
-------------------------------------------------------
TOTAL COMPUTER & PERIPHERAL EQUIPMENT MANUFACTURING 574
=======================================================
COMPUTER SYSTEMS DESIGN &
RELATED SERVICES [5.2%]
Anteon International* 400 17
Avid Technology* 200 8
Cerner* 200 18
Check Point Software
Technologies* 450 11
Cognizant Technology
Solutions, Cl A* 800 37
Intergraph* 525 24
Jack Henry & Associates 1,100 21
-------------------------------------------------------
TOTAL COMPUTER SYSTEMS
DESIGN & RELATED SERVICES 136
=======================================================
DATA PROCESSING SERVICES [2.6%]
Acxiom 500 10
Affiliated Computer Services,
Cl A* 425 23
First Data 850 34
-------------------------------------------------------
TOTAL DATA PROCESSING SERVICES 67
=======================================================
ELECTRONIC SHOPPING &
MAIL-ORDER HOUSES [1.1%]
eBay* 725 30
-------------------------------------------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 26
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
TECHNOLOGY GROWTH FUND (CONTINUED)
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
NAVIGATIONAL/MEASURING/MEDICAL/CONTROL
INSTRUMENTS MANUFACTURING [1.5%]
L-3 Communications Holdings 500 $ 40
=======================================================
ONLINE INFORMATION SERVICES [5.8%]
Google* 125 39
Juniper Networks* 1,442 34
RSA Security* 700 9
WebEx Communications* 1,125 28
Yahoo!* 1,200 41
-------------------------------------------------------
TOTAL ONLINE INFORMATION SERVICES 151
=======================================================
OTHER ELECTRICAL EQUIPMENT & COMPONENT
MANUFACTURING [1.7%]
Corning* 2,300 44
=======================================================
SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING [19.3%]
Analog Devices 825 31
Broadcom, Cl A* 800 38
Freescale Semiconductor* 1,100 26
Intel 4,950 122
Jabil Circuit* 850 26
Linear Technology 375 14
Maxim Integrated Products 900 38
MEMC Electronic Materials* 1,400 32
Microsemi* 700 18
Nvidia* 750 26
Taiwan Semiconductor
Manufacturing, ADR 1,796 15
Texas Instruments 2,900 98
Xilinx 700 19
-------------------------------------------------------
TOTAL SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING 503
=======================================================
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
SOFTWARE PUBLISHERS [21.6%]
Adobe Systems 1,300 $ 39
Citrix Systems* 825 21
Cognos* 350 13
Electronic Arts* 400 23
Hyperion Solutions* 375 18
Intuit* 575 26
McAfee* 975 30
Mercury Interactive* 550 22
Microsoft 8,050 207
Oracle* 5,815 72
SAP, ADR 340 15
Symantec* 2,500 56
Take-Two Interactive Software* 487 11
VeriSign* 550 12
-------------------------------------------------------
TOTAL SOFTWARE PUBLISHERS 565
=======================================================
TELECOMMUNICATIONS [2.4%]
Amdocs* 1,000 28
J2 Global Communications* 450 18
Tekelec* 750 16
-------------------------------------------------------
TOTAL TELECOMMUNICATIONS 62
=======================================================
TOTAL COMMON STOCK
(Cost $2,433) 2,544
===================================================
CASH EQUIVALENTS [5.1%]
Fidelity Institutional Domestic
Money Market Portfolio,
Cl I 95,251 95
SEI Daily Income Trust,
Prime Obligation Fund,
Cl I 37,047 37
-------------------------------------------------------
TOTAL CASH EQUIVALENTS
(Cost $132) 132
===================================================
TOTAL INVESTMENTS [102.5%]
(Cost $2,565) 2,676
===================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 27
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
TECHNOLOGY GROWTH FUND (CONCLUDED)
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
OTHER ASSETS AND LIABILITIES:
Payable for Investment Securities Purchased $ (63)
Investment Advisory Fees Payable (2)
Shareholder Servicing & Distribution
Fees Payable (1)
-------------------------------------------------------
OTHER ASSETS AND LIABILITIES [-2.5%] (66)
===================================================
NET ASSETS [100.0%] $ 2,610
=======================================================
NET ASSETS:
Paid-in-Capital (unlimited authorization --
$0.01 par value) $ 4,103
Undistributed net investment income 4
Accumulated net realized loss on investments (1,608)
Net unrealized appreciation on investments 111
-------------------------------------------------------
NET ASSETS $ 2,610
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class
($1,186,454 / 293,730 shares) $4.04
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A
($1,423,339 / 357,396 shares) $3.98
=======================================================
* NON-INCOME PRODUCING SECURITY
ADR -- AMERICAN DEPOSITARY RECEIPT
CL -- CLASS
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 28
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW
SECTOR WEIGHTINGS (UNAUDITED)*:
37.9% Financials
28.7% Industrials
10.2% Banking
6.3% Telephone
3.9% Asset-Backed
3.4% Utilities
3.4% U.S. Treasury Obligations
3.1% Mortgage Related
1.7% Short-Term Investments
0.9% Government Bonds
0.5% Transportation
*Percentages based on total investments.
- ------------------------------------------------------------
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
CORPORATE BONDS [84.2%]
ADVERTISING [0.8%]
Clear Channel Communications
4.900%, 05/15/15 $ 450 $ 410
=======================================================
AIR TRANSPORTATION [0.5%]
Federal Express, Ser A2
7.890%, 09/23/08 253 262
=======================================================
AUTOMOTIVE [2.7%]
DaimlerChrysler N.A. Holdings
4.750%, 01/15/08 435 433
Toyota Motor Credit
4.250%, 03/15/10 1,000 989
-------------------------------------------------------
TOTAL AUTOMOTIVE 1,422
=======================================================
BANKS [11.2%]
Bank of America
7.500%, 09/15/06 500 513
7.125%, 09/15/06 500 512
Bankers Trust
7.250%, 10/15/11 500 560
Crestar Finance
6.500%, 01/15/08 1,035 1,078
Deutsche Bank
7.500%, 04/25/09 500 544
Union Planters Bank
5.125%, 06/15/07 1,215 1,222
US Bancorp
6.875%, 09/15/07 350 365
Wachovia
7.125%, 10/15/06 100 103
Wells Fargo
4.625%, 08/09/10 1,000 995
-------------------------------------------------------
TOTAL BANKS 5,892
=======================================================
BEAUTY PRODUCTS [1.6%]
Avon Products
7.150%, 11/15/09 800 872
=======================================================
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
CHEMICALS [0.4%]
Praxair
6.625%, 10/15/07 $ 200 $ 208
=======================================================
COMMUNICATION & Media [3.7%]
Comcast Cable Communications
Holdings
8.375%, 03/15/13 400 473
News America Holdings
9.250%, 02/01/13 450 556
Time Warner
6.750%, 04/15/11 395 424
Walt Disney
5.500%, 12/29/06 500 506
-------------------------------------------------------
TOTAL COMMUNICATION & MEDIA 1,959
=======================================================
COMPUTER SYSTEM DESIGN & SERVICES [1.7%]
IBM
4.375%, 06/01/09 900 894
=======================================================
ELECTRICAL PRODUCTS [0.2%]
Emerson Electric
6.300%, 11/01/05 100 100
=======================================================
ELECTRICAL SERVICES [3.4%]
American Electric Power
5.250%, 06/01/15 490 491
Iowa Electric Light & Power
6.000%, 10/01/08 200 207
WPS Resources
7.000%, 11/01/09 1,000 1,081
-------------------------------------------------------
TOTAL ELECTRICAL SERVICES 1,779
=======================================================
FINANCIAL SERVICES [17.9%]
Citigroup
7.250%, 10/01/10 1,000 1,107
Countrywide Home Loans
5.625%, 07/15/09 155 159
Countrywide Home Loans,
Ser L, MTN
4.000%, 03/22/11 875 831
General Electric Capital,
Ser A, MTN
6.875%, 11/15/10 250 273
6.000%, 06/15/12 1,500 1,597
HSBC Finance
5.250%, 04/15/15 1,000 1,005
International Lease Finance
5.750%, 02/15/07 1,000 1,011
John Deere Capital
4.625%, 04/15/09 750 748
JPMorgan Chase
7.125%, 06/15/09 675 728
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 29
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
CORPORATE BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
MBNA
4.625%, 09/15/08 $ 410 $ 410
National Rural Utilities,
Ser C, MTN
7.250%, 03/01/12 1,000 1,127
Washington Mutual
4.625%, 04/01/14 460 440
-------------------------------------------------------
TOTAL FINANCIAL SERVICES 9,436
=======================================================
FOOD, BEVERAGE & TOBACCO [4.4%]
Diageo Capital
3.375%, 03/20/08 1,000 971
General Mills
2.625%, 10/24/06 410 400
PepsiCo
3.200%, 05/15/07 1,000 981
-------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO 2,352
=======================================================
FOREIGN GOVERNMENTS [0.9%]
United Mexican States
5.875%, 01/15/14 450 465
=======================================================
INSURANCE [6.0%]
Aflac
6.500%, 04/15/09 1,000 1,055
AXA Financial
7.750%, 08/01/10 1,000 1,119
Berkshire Hathaway Finance
4.125%, 01/15/10 1,000 979
-------------------------------------------------------
TOTAL INSURANCE 3,153
=======================================================
INVESTMENT BANKER/BROKER DEALER [8.1%]
Goldman Sachs Group
5.150%, 01/15/14 1,000 1,001
Jefferies Group
5.500%, 03/15/16 665 653
Legg Mason
6.500%, 02/15/06 950 956
Lehman Brothers Holdings
8.250%, 06/15/07 1,100 1,162
Merrill Lynch
4.000%, 11/15/07 500 495
-------------------------------------------------------
TOTAL INVESTMENT BANKER/BROKER DEALER 4,267
=======================================================
MACHINERY [1.2%]
Caterpillar
9.000%, 04/15/06 620 633
-------------------------------------------------------
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS [3.9%]
Chevron
8.625%, 06/30/10 $ 200 $ 234
ConocoPhillips
6.375%, 03/30/09 305 322
Duke Capital
5.500%, 03/01/14 625 629
Union Oil of California,
Ser C, MTN
7.900%, 04/18/08 800 853
-------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS 2,038
=======================================================
REAL ESTATE INVESTMENT TRUSTS [2.1%]
Kimco Realty, MTN
6.960%, 07/16/07 1,000 1,043
Kimco Realty, Ser B, MTN
7.860%, 11/01/07 67 71
-------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUSTS 1,114
=======================================================
RETAIL [6.6%]
Kohl's
6.300%, 03/01/11 1,000 1,063
Kroger
5.500%, 02/01/13 450 452
McDonald's, Ser E, MTN
4.240%, 12/13/06 995 990
Wal-Mart Stores
4.375%, 07/12/07 1,000 999
-------------------------------------------------------
TOTAL RETAIL 3,504
=======================================================
TELEPHONES & Telecommunications [6.2%]
Deutsche Telekom International
Finance
5.250%, 07/22/13 435 439
GTE Florida, Ser D
6.250%, 11/15/05 200 200
New Cingular Wireless Services
8.125%, 05/01/12 400 469
Southwestern Bell
6.625%, 07/15/07 750 774
Sprint Capital
8.375%, 03/15/12 350 412
Verizon Global Funding
4.900%, 09/15/15 1,000 978
-------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS 3,272
=======================================================
WASTE DISPOSAL [0.7%]
Waste Management
6.875%, 05/15/09 375 399
=======================================================
TOTAL CORPORATE BONDS
(Cost $44,499) 44,431
=======================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 30
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
CORPORATE BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
ASSET-BACKED SECURITIES [3.9%]
Capital Auto Receivables Asset
Trust, Ser 2003-2, Cl A4A
1.960%, 01/15/09 $ 975 $ 955
Capital Auto Receivables Asset
Trust, Ser 2004-1, Cl A4
2.640%, 11/17/08 750 728
Countrywide Asset-Backed
Certificates, Ser 2004-BC3,
Cl 2A
4.210%, 08/25/34 350 351
-------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost $2,075) 2,034
===================================================
U.S. TREASURY OBLIGATIONS [3.4%]
U.S. Treasury Inflation Index Note
2.000%, 01/15/14 1,057 1,080
U.S. Treasury Notes
4.250%, 11/15/13 445 443
4.250%, 08/15/14 250 248
-------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $1,811) 1,771
===================================================
MORTGAGE-BACKED SECURITIES [2.3%]
Residential Asset Mortgage
Products, Ser 2003-RS5, Cl AI4
3.700%, 09/25/31 770 760
Residential Asset Mortgage
Products, Ser 2003-RS6, Cl AI3
3.080%, 12/25/28 448 445
Washington Mutual,
Ser 2003-AR10, Cl A3A
3.530%, 10/25/33 24 24
-------------------------------------------------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $1,233) 1,229
===================================================
MUNICIPAL BONDS [2.0%]
CALIFORNIA [2.0%]
California Statewide, Community
Development Authority,
Ser A-2, RB, XLCA
4.000%, 11/15/06 75 75
City of Industry, Sales Tax Project,
RB, MBIA
5.000%, 01/01/12 955 962
-------------------------------------------------------
TOTAL CALIFORNIA 1,037
=======================================================
TOTAL MUNICIPAL BONDS
(Cost $1,061) 1,037
===================================================
DESCRIPTION FACE AMOUNT (000)/SHARES VALUE (000)
- ------------------------------------------------------------
U.S. GOVERNMENT MORTGAGE-BACKED
OBLIGATION [0.6%]
FHLMC, Ser 2982, Cl NB
5.500%, 02/15/29 $ 340 $ 342
-------------------------------------------------------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED
OBLIGATION
(Cost $349) 342
===================================================
CASH EQUIVALENT [1.7%]
Fidelity Institutional Domestic
Money Market Portfolio,
Cl I 878,726 879
-------------------------------------------------------
TOTAL CASH EQUIVALENT
(Cost $879) 879
===================================================
TOTAL INVESTMENTS [98.1%]
(Cost $51,907) 51,723
===================================================
OTHER ASSETS AND LIABILITIES:
Payable for Investment Securities Purchased (984)
Income Distributions Payable (135)
Investment Advisory Fees Payable (17)
Payable for Fund Shares Redeemed (12)
Shareholder Servicing & Distribution
Fees Payable (11)
Administration Fees Payable (2)
Other Assets and Liabilities, Net 2,161
-------------------------------------------------------
OTHER ASSETS AND LIABILITIES [1.9%] 1,000
===================================================
NET ASSETS [100.0%] $52,723
=======================================================
NET ASSETS:
Paid-in-Capital (unlimited authorization --
$0.01 par value) $52,972
Accumulated net realized loss on investments (65)
Net unrealized depreciation on investments (184)
-------------------------------------------------------
NET ASSETS $52,723
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class
($51,193,063 / 4,987,101 shares) $10.27
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A
($1,529,592 / 148,923 shares) $10.27
=======================================================
CL -- CLASS
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
MBIA -- MUNICIPAL BOND INSURANCE ASSOCATION
MTN -- MEDIUM TERM NOTE
RB -- REVENUE BOND
SER -- SERIES
XLCA -- XL CAPITAL ASSURANCE
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 31
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
GOVERNMENT BOND FUND
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW
SECTOR WEIGHTINGS (UNAUDITED)*:
51.3% U.S. Government Agency Obligations
24.4% U.S. Treasury Obligations
23.5% U.S. Government Mortgage-Backed Obligations
0.8% Short-Term Investments
*Percentages based on total investments.
- ------------------------------------------------------------
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS [50.5%]
FHLB
2.250%, 12/15/05 $1,950 $ 1,943
2.000%, 12/02/05 1,000 997
FNMA
7.125%, 06/15/10 3,500 3,876
5.250%, 04/15/07 75 76
5.010%, 11/10/10 2,500 2,488
4.620%, 03/01/34 1,489 1,479
4.250%, 05/15/09 2,000 1,984
3.875%, 05/15/07 1,500 1,488
GNMA
5.000%, 08/20/35 160 160
-------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $14,655) 14,491
===================================================
U.S. TREASURY OBLIGATIONS [24.0%]
U.S. TREASURY NOTES
5.750%, 11/15/05 1,750 1,754
4.250%, 11/15/13 2,525 2,514
3.875%, 01/15/09 2,400 2,604
-------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $6,879) 6,872
===================================================
U.S. GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS [23.1%]
FHLMC, Ser 2480, Cl PD
6.000%, 11/15/31 985 1,001
FHLMC, Ser 2670, Cl QP
4.000%, 02/15/27 1,000 982
FHLMC, Ser 2698, Cl BE
4.500%, 11/15/32 807 792
FHLMC, Ser 2922, Cl JA
4.500%, 02/15/20 553 528
FNMA, Ser 1993-225, Cl UB
6.500%, 12/25/23 30 30
FNMA, Ser 2003-134, Cl ME
4.500%, 06/25/33 136 134
FNMA, Ser 2003-34, Cl GJ
4.000%, 02/25/33 279 272
GNMA REMIC, Ser 2004-80,
Cl GC
5.000%, 02/20/31 1,500 1,474
DESCRIPTION FACE AMOUNT (000)/SHARES VALUE (000)
- ------------------------------------------------------------
GNMA, Pool 81318
4.500%, 04/20/35 $1,443 $ 1,423
-------------------------------------------------------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS
(Cost $6,745) 6,636
===================================================
CASH EQUIVALENT [0.8%]
Fidelity Institutional Domestic
Money Market Portfolio, Cl I 227,234 227
-------------------------------------------------------
TOTAL CASH EQUIVALENT
(Cost $227) 227
===================================================
TOTAL INVESTMENTS [98.4%]
(Cost $28,506) 28,226
===================================================
OTHER ASSETS AND LIABILITIES:
Income Distributions Payable (57)
Payable for Fund Shares Redeemed (10)
Investment Advisory Fees Payable (8)
Shareholder Servicing & Distribution
Fees Payable (6)
Administration Fees Payable (1)
Other Assets and Liabilities, Net 542
-------------------------------------------------------
OTHER ASSETS AND LIABILITIES [1.6%] 460
===================================================
NET ASSETS [100.0%] $ 28,686
=======================================================
NET ASSETS:
Paid-in-Capital (unlimited authorization --
$0.01 par value) $29,022
Undistributed net investment income 3
Accumulated net realized loss on investments (59)
Net unrealized depreciation on investments (280)
-------------------------------------------------------
NET ASSETS $28,686
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class
($28,132,144 / 2,706,089 shares) $10.40
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A
($553,571 / 53,139 shares) $10.42
=======================================================
CL -- CLASS
FHLB -- FEDERAL HOME LOAN BANK
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
GNMA -- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
REMIC -- REAL ESTATE MORTGAGE INVESTMENT CONDUIT
SER -- SERIES
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 32
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT BOND FUND
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW
SECTOR WEIGHTINGS (UNAUDITED)*:
16.2% Education
14.3% General Revenue
13.6% General Obligations
12.7% Water
10.1% Facilities
9.8% Utilities
9.2% Power
8.8% Development
2.8% Transportation
1.8% Short-Term Investments
0.7% Healthcare
*Percentages based on total investments.
- ------------------------------------------------------------
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
MUNICIPAL BONDS [96.9%]
ALABAMA [1.1%]
Jefferson County, Sewer Authority,
Ser B-8, RB, FSA
Callable 02/01/10 @ 100
5.250%, 02/01/14 $250 $ 268
=======================================================
CALIFORNIA [82.9%]
Anaheim, Public Financing Authority,
Distribution System Project,
Second Lien, RB, MBIA
5.000%, 10/01/08 250 264
Anaheim, Public Financing Authority,
Electric System Distribution
Facilities, RB, AMBAC
Mandatory Put 10/01/05 @ 100
4.625%, 10/01/27 230 230
Berkeley, Ser C, GO, MBIA
Callable 11/07/05 @ 102
5.000%, 09/01/10 95 97
Beverly Hills, Unified School
District Authority, Ser B, GO
Pre-Refunded @ 101 (A)
4.700%, 06/01/08 50 53
Big Bear Lake, Water Authority,
RB, MBIA
6.000%, 04/01/11 200 222
Burbank, Public Financing Authority,
Golden State Redevelopment
Project, Ser A, RB, AMBAC
Callable 12/01/13 @ 100
5.250%, 12/01/18 175 190
California State, Daily Kindergarten
University, Ser A-3, GO (B) (C)
2.950%, 05/01/34 100 100
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
California State, Department of
Water Resource & Power,
Ser B-2, RB (B) (C)
2.950%, 05/01/22 $700 $ 700
California State, Department of
Water Resource Center,
Ser A, RB, MBIA
5.000%, 05/01/07 200 207
California State, Department of
Water Resources, Ser W, RB, FSA
5.500%, 12/01/13 400 452
California State, Economic
Recovery Authority,
Ser B, GO
Mandatory Put 07/01/08 @ 100
3.500%, 07/01/23 300 303
California State, Economic
Recovery Authority,
Ser C-1, RB (A) (B) (C)
2.950%, 07/01/23 300 300
California State, Educational
Facilities Authority, Pooled
College and University Projects,
Ser A, RB
4.300%, 04/01/09 100 103
California State, Educational
Facilities Authority, University
of San Francisco, RB, MBIA
6.000%, 10/01/08 300 326
California State, GO
4.750%, 06/01/07 100 103
California State, GO
Callable 09/01/10 @ 100
5.250%, 09/01/18 200 212
California State, GO
Callable 02/01/12 @ 100
5.000%, 02/01/18 175 183
California State, GO
Callable 08/01/13 @ 100
5.250%, 02/01/21 250 269
California State, GO
Callable 10/01/10 @ 100
5.250%, 10/01/18 70 74
California State, GO
Callable 11/01/13 @ 100
5.250%, 11/01/25 300 323
California State, Health Facilities
Finance Authority, Presbyterian
Hospital, RB, MBIA
5.500%, 05/01/07 150 156
California State, Imperial
Irrigation District, Public
Electric Project, RB
4.250%, 11/01/06 250 254
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 33
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
California State, Infrastructure &
Economic Authority, Bay Area
Toll Bridges Project,
Ser A, RB, FSA
Callable 07/01/13 @ 100
5.250%, 07/01/18 $125 $ 137
California State, Infrastructure &
Economic Authority, RB, MBIA
Pre-Refunded @ 101 (A)
5.500%, 06/01/10 350 389
California State, Public Works
Board Lease, California State
University, Ser C, RB
5.000%, 10/01/07 100 104
California State, Public Works
Board Lease, Department of
Corrections Project,
Ser B, RB, MBIA
Callable 09/01/08 @ 101
5.000%, 09/01/21 100 105
California State, Public Works
Board Lease, Department of
Corrections, Ser A, RB
Callable 09/01/08 @ 101
5.250%, 09/01/15 250 262
California State, Public Works
Board Lease, Department of
Corrections-Ten Administration,
Ser A, RB, AMBAC
Callable 03/01/12 @ 100
5.250%, 03/01/18 155 166
California State, Public Works
Board Lease, Trustees California
State University, Ser A, RB
Callable 10/01/08 @ 101
5.250%, 10/01/11 100 106
California State, State Center
Community College, Election
2002 Project, Ser A, GO, MBIA
Callable 08/01/14 @ 100
5.250%, 08/01/20 205 224
California State, University of
California, Ser K, RB, MBIA
Callable 09/01/08 @ 101
5.000%, 09/01/17 150 159
California Statewide, Communities
Development Authority,
Ser B-2, RB, XLCA
4.000%, 11/15/06 400 405
Coachella Valley, Water District
Authority, Flood Control
Project, COP, AMBAC
Callable 10/01/07 @ 102
5.000%, 10/01/11 250 263
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
Corona, Public Financing Authority,
City Hall Project, Ser B, RB
Callable 09/01/12 @ 100
5.250%, 09/01/16 $350 $ 383
Culver City, Redevelopment
Finance Authority, TA, AMBAC
Sink Date 11/01/09 @ 100
5.500%, 11/01/14 75 84
East Bay, Municipal Utility
District Water System, RB, MBIA
Callable 06/01/11 @ 100
5.000%, 06/01/19 500 530
East Bay, Municipal Utility
District Water System,
Sub-Ser 2, RB, XLCA (A) (B) (C)
2.710%, 06/01/38 300 300
El Dorado County, Public
Financing Authority, RB, FGIC
5.100%, 02/15/06 100 101
Escondido, Union School
District, Refunding &
Financing Project, COP,
MBIA
4.750%, 07/01/19 235 247
Evergreen School District,
Ser C, GO, FGIC
Pre-Refunded @ 101 (A)
5.250%, 09/01/08 200 215
Fruitvale, School District, GO, FSA
Callable 08/01/09 @ 102
5.000%, 08/01/19 200 214
Golden State, Tobacco Settlement,
Ser B, GO
Pre-Refunded @ 100 (A)
5.750%, 06/01/08 250 267
5.000%, 06/01/13 350 380
Hemet, Unified School District,
Nutrition Center Project,
COP, FSA
Callable 04/01/07 @ 102
5.750%, 04/01/17 250 265
Irvine Ranch, Water District,
Improvement District No. 182,
Ser A, GO (B) (C)
2.770%, 11/15/13 200 200
Long Beach, Ser B, RB, FGIC
Callable 05/15/14 @ 100
5.000%, 05/15/16 150 162
Los Angeles County, Metropolitan
Transportation Authority, 2nd Tier,
Ser A, RB, MBIA
Pre-Refunded @ 101 (A)
6.000%, 07/01/06 100 103
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 34
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
Los Angeles County, Public
Works Authority, Regional Park
& Open Project, Ser A, RB
Pre-Refunded @ 101 (A)
5.500%, 10/01/07 $325 $ 344
Los Angeles County, Public Works
Finance Authority,
Ser B, RB, MBIA
Callable 09/01/06 @ 102
5.250%, 09/01/14 200 208
Los Angeles County, Sanitation
Districts Financing Authority,
Capital Project, Ser A, RB, FSA
Callable 10/01/13 @ 100
5.000%, 10/01/15 345 373
Los Angeles, Harbor Development
Project, Ser C, RB
Callable 11/01/06 @ 101
5.125%, 11/01/11 180 186
Los Angeles, Municipal
Improvement Authority,
Central Library Project,
Ser A, RB, MBIA
5.250%, 06/01/13 230 255
Los Angeles, Property Tax
Project, Ser A, GO, MBIA
4.000%, 09/01/09 250 259
Los Angeles, Sanitation
Equipment Authority,
Ser A, RB, MBIA
4.000%, 02/01/07 100 102
Los Angeles, Wastewater
Systems Authority, RB, FSA
4.500%, 06/01/09 250 262
Los Angeles, Water &
Power Authority, Power Systems
Project, Ser AA1, RB, FSA
Callable 07/01/11 @ 100
5.250%, 07/01/20 250 268
Los Angeles, Water &
Power Authority, Power
Systems Project,
Ser AA1, RB, MBIA
Callable 07/01/11 @ 100
5.250%, 07/01/13 200 218
M-S-R Public Power,
Ser G, RB, MBIA
Callable 07/01/07 @ 101
5.250%, 07/01/11 100 104
Oakland, Redevelopment Agency,
Central District Redevelopment,
TA, AMBAC
6.000%, 02/01/07 300 312
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
Oakland, State Building Authority,
Elihu M Harris Project,
Ser A, RB, AMBAC
Callable 04/01/08 @ 101
5.500%, 04/01/14 $100 $ 106
Orange County, Recovery
Certificate Authority,
Ser A, COP, MBIA
6.000%, 07/01/06 250 256
Pasadena, Electric Improvements
Authority, RB, FSA
4.500%, 06/01/07 160 164
Pinole, Redevelopment Agency
Project, TA, FSA
Callable 08/01/09 @ 101
5.250%, 08/01/14 100 108
Riverside, Water Authority, RB
Callable 10/01/08 @ 101
5.375%, 10/01/12 100 107
Sacramento County, Sanitation
District Funding Authority,
RB, ETM
Callable 12/01/05 @ 100
5.000%, 12/01/07 100 103
Sacramento, City Unified
School District, Ser A, GO, FSA
4.250%, 07/01/09 75 78
Sacramento, Municipal Utility
District, Ser R, RB, MBIA
5.000%, 08/15/19 425 452
Saddleback, Community College
District, 1996 Capital Improvement
Financing Project, COP, MBIA
Callable 06/01/06 @ 102
5.500%, 06/01/15 500 518
San Bernardio, Community
College District, Election
2002 Project, Ser B, GO, MBIA
Pre-Refunded @ 100 (A)
5.250%, 08/01/14 750 837
San Diego County, Edgemoor &
Regional Systems Projects,
COP, AMBAC
Callable 02/01/15 @ 100
5.000%, 02/01/18 500 533
San Diego County, North County
Regional Center for Expansion,
COP, AMBAC
Callable 11/15/06 @ 102
5.250%, 11/15/14 100 105
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 35
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
San Diego, University School
District, Capital Appreciation-
Election 1998 Project,
Ser D, GO, FGIC
Callable 07/01/12 @ 101
5.250%, 07/01/24 $135 $ 149
San Diego, University School
District, Election 1998 Project,
Ser E, GO, FSA
Callable 07/01/13 @ 101
5.250%, 07/01/16 100 110
San Francisco (City & County),
Building Authority, Department
of General Services & Leasing,
Ser A, RB
5.000%, 10/01/13 400 431
San Francisco (City & County),
Public Utility Authority,
Ser A, RB, MBIA
Callable 11/01/06 @ 101.5
5.000%, 11/01/17 375 388
San Jose, University School
District, Ser A, GO, FSA
Callable 08/01/11 @ 101
5.375%, 08/01/19 150 165
Sanger, Public Financing
Authority, Utilities Systems
Financing Project, Ser A, RB,
AMBAC,
Pre-Refunded @ 102 (A)
5.700%, 01/01/06 325 334
Sanger, Unified School District,
GO, MBIA
5.350%, 08/01/15 250 276
Santa Monica, Public Safety
Facilities Project, RB,
Callable 07/01/09 @ 101
5.250%, 07/01/14 100 108
Solano County, COP, MBIA
Callable 11/01/12 @ 100
5.250%, 11/01/14 100 110
Southern California, Metropolitan
Water District Authority,
Ser A, RB
5.750%, 07/01/21 280 329
Southern California, Metropolitan
Water District Authority,
Ser C-1, RB (C)
2.950%, 07/01/36 200 200
Southern California, Public
Power Authority, Southern
Transmission Project,
Sub-Ser A, RB, FSA
Callable 07/01/12 @ 100
5.250%, 07/01/16 200 219
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
Wiseburn, School District,
Ser A, GO, FGIC
4.200%, 08/01/07 $125 $ 128
-------------------------------------------------------
TOTAL CALIFORNIA 20,097
=======================================================
COLORADO [2.7%]
Fremont Custer & El Paso
Counties, School District
Number 02, GO, FSA
Callable 12/01/13 @ 100
5.250%, 12/01/18 200 219
Lakewood, COP, AMBAC
Callable 12/01/10 @ 100
5.500%, 12/01/12 400 438
-------------------------------------------------------
TOTAL COLORADO 657
=======================================================
GEORGIA [0.9%]
Georgia State, Metropolitan
Atlanta Rapid Transportation
Authority, Second Indenture
Project, Ser A, RB, MBIA
6.250%, 07/01/07 200 211
=======================================================
ILLINOIS [1.6%]
Illinois State, Development
Finance Authority,
Revolving Fund-Master
Trust, RB
Callable 09/01/12 @ 100
5.500%, 09/01/13 250 278
Illinois State, Ser A, GO
Callable 10/01/13 @ 100
5.000%, 10/01/16 100 107
-------------------------------------------------------
TOTAL ILLINOIS 385
=======================================================
MICHIGAN [1.1%]
Michigan State, Building
Authority, Facilities Project,
Ser II, RB,
Pre-Refunded @ 101 (A)
5.000%, 10/15/07 250 262
=======================================================
TEXAS [2.7%]
Harris County, Flood Control
District, Ser A, GO
5.000%, 10/01/06 300 306
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 36
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT BOND FUND (CONCLUDED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
San Angelo, Waterworks &
Sewer System Authority,
Refunding & Improvements
Projects, RB, FSA
Callable 04/01/11 @ 100
5.250%, 04/01/19 $100 $ 108
Texas State, TRAN
4.500%, 08/31/06 250 253
-------------------------------------------------------
TOTAL TEXAS 667
=======================================================
UTAH [0.6%]
Central, Water Conservancy
District, Ser D, GO
Callable 04/01/09 @ 100
4.600%, 04/01/12 140 145
=======================================================
WASHINGTON [1.0%]
King County, School District
Number 414, GO, MBIA
Callable 12/01/12 @ 100
5.750%, 12/01/14 225 255
=======================================================
PUERTO RICO [2.3%]
Puerto Rico, Electric Power
Authority, Power Project,
Ser CC, RB, MBIA
Callable 07/01/07 @ 101.5
5.250%, 07/01/09 100 105
Puerto Rico, Municipal Finance
Agency, Ser A, RB, FSA
Callable 07/01/07 @ 101.5
5.250%, 07/01/10 130 137
Puerto Rico, Public Buildings
Authority, Government
Facilities Project, Ser J,
RB, AMBAC
Callable 07/01/12 @ 100
5.000%, 07/01/36 300 325
-------------------------------------------------------
TOTAL PUERTO RICO 567
=======================================================
TOTAL MUNICIPAL BONDS
(Cost $23,559) 23,514
===================================================
DESCRIPTION SHARES VALUE (000)
- ------------------------------------------------------------
CASH EQUIVALENT [1.8%]
Federated California Municipal
Money Market Fund, Cl I 432,115 $ 432
-------------------------------------------------------
TOTAL CASH EQUIVALENT
(Cost $432) 432
===================================================
TOTAL INVESTMENTS [98.7%]
(Cost $23,991) 23,946
===================================================
OTHER ASSETS AND LIABILITIES:
Income Distributions Payable (41)
Payable for Fund Shares Redeemed (7)
Shareholder Servicing & Distribution
Fees Payable (5)
Investment Advisory Fees Payable (3)
Administration Fees Payable (1)
Other Assets and Liabilities, Net 366
-------------------------------------------------------
OTHER ASSETS AND LIABILITIES [1.3%] 309
===================================================
NET ASSETS [100.0%] $24,255
=======================================================
NET ASSETS:
Paid-in-Capital (unlimited authorization --
$0.01 par value) $24,213
Accumulated net realized gain on investments 87
Net unrealized depreciation on investments (45)
-------------------------------------------------------
NET ASSETS $24,255
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class
($22,768,251 / 2,219,408 shares) $10.26
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A
($1,487,030 / 144,572 shares) $10.29
=======================================================
(A) PRE-REFUNDED SECURITY -- THE MATURITY DATE SHOWN IS THE PRE-REFUNDED DATE.
(B) SECURITIES ARE HELD IN CONJUNCTION WITH A LETTER OF CREDIT FROM A MAJOR
BANK OR FINANCIAL INSTITUTION.
(C) FLOATING RATE SECURITY -- THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON SEPTEMBER 30, 2005.
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
COP -- CERTIFICATE OF PARTICIPATION
ETM -- ESCROWED TO MATURITY
FGIC -- FINANCIAL GUARANTY INSURANCE COMPANY
FSA -- FINANCIAL SECURITY ASSURANCE
GO -- GENERAL OBLIGATION
MBIA -- MUNICIPAL BOND INSURANCE ASSOCIATION
RB -- REVENUE BOND SER -- SERIES
TA -- TAX ALLOCATION
TRAN -- TAX & Return Anticipation Note
XLCA -- XL Capital Assurance
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 37
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW
SECTOR WEIGHTINGS (UNAUDITED)*:
74.4% Industrials
6.4% Telephone
5.8% Financials
5.2% Utilities
4.4% Gas Transmission
1.9% Short-Term Investments
1.8% Transportation
0.1% Common Stock
*Percentages based on total investments.
- ------------------------------------------------------------
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
CORPORATE BONDS [97.5%]
ADVERTISING [8.7%]
Advanstar Communications
10.750%, 08/15/10 $100 $ 112
Albritton Communications
7.750%, 12/15/12 150 149
Bear Creek (A)
9.000%, 03/01/13 150 155
Cablevision Systems, Ser B
8.000%, 04/15/12 225 218
CCO Holdings
8.750%, 11/15/13 250 247
Charter Communications Holdings
10.250%, 09/15/10 400 410
Coleman Cable
9.875%, 10/01/12 100 88
CSC Holdings (A)
7.625%, 07/15/18 100 93
7.000%, 04/15/12 300 283
Dobson Cellular Systems
9.875%, 11/01/12 230 252
Echostar DBS
6.625%, 10/01/14 200 198
Fisher Communication
8.625%, 09/15/14 150 160
General Cable
9.500%, 11/15/10 100 105
Gray Television
9.250%, 12/15/11 100 108
Insight Communications (B)
10.658%, 02/15/11 100 102
Interep National Radio Sales, Ser B
10.000%, 07/01/08 75 60
Kabel Deutschland (A)
10.625%, 07/01/14 200 221
Mediacom Capital
7.875%, 02/15/11 150 142
Nexstar Finance Holdings (B)
11.620%, 04/01/13 200 148
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
Olympus Communications, Ser B (D)
10.625%, 11/15/06 $100 $ 140
RH Donnelley
6.875%, 01/15/13 200 190
Telenet Group Holding (A) (B)
9.283%, 06/15/14 150 123
Videotron Ltee
6.875%, 01/15/14 100 103
-------------------------------------------------------
TOTAL ADVERTISING 3,807
=======================================================
AEROSPACE & DEFENSE [1.0%]
Esterline Technologies
7.750%, 06/15/13 100 105
L-3 Communications
5.875%, 01/15/15 200 194
Sequa, Ser B
8.875%, 04/01/08 150 156
-------------------------------------------------------
TOTAL AEROSPACE & DEFENSE 455
=======================================================
AGRICULTURE [0.4%]
American Rock Salt
9.500%, 03/15/14 150 153
=======================================================
AIRLINES [0.4%]
American Airlines, Ser 2001-2
7.800%, 04/01/08 200 191
=======================================================
ALUMINUM [0.3%]
Novelis (A)
7.250%, 02/15/15 150 142
=======================================================
APPAREL/TEXTILES [0.4%]
Levi Strauss
9.750%, 01/15/15 100 102
Phillips-Van Heusen
7.250%, 02/15/11 75 75
-------------------------------------------------------
TOTAL APPAREL/TEXTILES 177
=======================================================
AUTO RENT & LEASE [0.7%]
Rent-way
11.875%, 06/15/10 100 110
United Rentals
7.750%, 11/15/13 100 96
6.500%, 02/15/12 90 87
-------------------------------------------------------
TOTAL AUTO RENT & LEASE 293
=======================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 38
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
AUTOPARTS [1.7%]
Accuride
8.500%, 02/01/15 $150 $ 147
Dura Operating, Ser D
9.000%, 05/01/09 75 52
Group 1 Automotive
8.250%, 08/15/13 100 98
Metaldyne (A)
10.000%, 11/01/13 100 87
Tenneco Automotive
8.625%, 11/15/14 150 151
TRW Automotive
11.000%, 02/15/13 98 111
Visteon
8.250%, 08/01/10 100 95
-------------------------------------------------------
TOTAL AUTOPARTS 741
=======================================================
BUILDING & CONSTRUCTION [4.2%]
Ainsworth Lumber
7.250%, 10/01/12 100 94
6.750%, 03/15/14 100 90
Beazer Homes USA
8.375%, 04/15/12 100 105
Brand Services
12.000%, 10/15/12 150 159
DR Horton
5.625%, 01/15/16 125 120
Goodman Global (A)
7.875%, 12/15/12 75 68
International Utility Structures (D)
10.750%, 02/01/08 100 --
K Hovnanian Enterprises (A)
6.250%, 01/15/16 100 93
KB Home
8.625%, 12/15/08 50 53
6.250%, 06/15/15 200 194
Nortek
8.500%, 09/01/14 200 184
Panolam Industries (A)
10.750%, 10/01/13 250 247
Ply Gem Industries
9.000%, 02/15/12 100 84
RMCC Acquisition (A)
9.500%, 11/01/12 150 151
Tech Olympic USA
7.500%, 01/15/15 100 91
William Lyon Homes
10.750%, 04/01/13 100 108
-------------------------------------------------------
TOTAL BUILDING & CONSTRUCTION 1,841
=======================================================
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
BUSINESS SERVICES [0.7%]
Corrections
7.500%, 05/01/11 $100 $ 103
FTI Consulting (A)
7.625%, 06/15/13 50 51
Geo Group
8.250%, 07/15/13 150 149
-------------------------------------------------------
TOTAL BUSINESS SERVICES 303
=======================================================
CHEMICALS [4.4%]
BCP Crystal US Holdings
9.625%, 06/15/14 45 50
Crompton
9.875%, 08/01/12 100 114
Crystal Holdings, Ser B (B)
9.807%, 10/01/14 73 51
Equistar Chemicals
10.625%, 05/01/11 150 163
IMC Global
10.875%, 08/01/13 100 118
IMC Global, Ser B
11.250%, 06/01/11 100 110
ISP Chemco, Ser B
10.250%, 07/01/11 100 108
Lyondell Chemical
10.500%, 06/01/13 250 283
Lyondell Chemical, Ser A
9.625%, 05/01/07 200 210
Nalco
7.750%, 11/15/11 150 153
Polymer Holdings (A) (B)
11.245%, 07/15/14 250 180
PolyOne
10.625%, 05/15/10 100 103
Rhodia
10.250%, 06/01/10 100 106
Rockwood Specialties Group
10.625%, 05/15/11 73 80
Terra Capital
11.500%, 06/01/10 65 74
-------------------------------------------------------
TOTAL CHEMICALS 1,903
=======================================================
CIRCUIT BOARDS [0.1%]
Viasystems
10.500%, 01/15/11 50 49
=======================================================
COAL MINING [0.4%]
Alpha Natural Resources
10.000%, 06/01/12 150 166
=======================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 39
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
COMMERCIAL SERVICES [0.5%]
Iron Mountain
8.625%, 04/01/13 $100 $ 105
The Brickman Group, Ser B
11.750%, 12/15/09 100 112
-------------------------------------------------------
TOTAL COMMERCIAL SERVICES 217
=======================================================
COMPUTER SYSTEM DESIGN & SERVICES [0.8%]
Unisys
7.875%, 04/01/08 100 101
Xerox
7.625%, 06/15/13 250 266
-------------------------------------------------------
TOTAL COMPUTERS SYSTEM DESIGN & SERVICES 367
=======================================================
CONSUMER PRODUCTS & SERVICES [3.8%]
Ames True Temper (C)
7.599%, 01/15/12 100 93
Amscan Holdings
8.750%, 05/01/14 150 131
Gregg Appliances (A)
9.000%, 02/01/13 150 141
Johnsondiversey Holdings (B)
12.940%, 05/15/13 200 148
Johnsondiversey, Ser B
9.625%, 05/15/12 150 150
Mail-Well I
9.625%, 03/15/12 100 107
Prestige Brands
9.250%, 04/15/12 90 92
Sealy Mattress
8.250%, 06/15/14 200 201
Southern States Cooperative (A)
10.500%, 11/01/10 200 210
Spectrum Brands
7.375%, 02/01/15 300 270
WMG Holdings (B)
9.073%, 12/15/14 130 91
-------------------------------------------------------
TOTAL CONSUMER PRODUCTS & SERVICES 1,634
=======================================================
CONTAINERS & PACKAGING [2.2%]
Graham Packaging
9.875%, 10/15/14 100 96
Intertape Polymer US
8.500%, 08/01/14 50 49
Newark Group
9.750%, 03/15/14 200 178
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
Owens-Brockway Glass Container
6.750%, 12/01/14 $100 $ 96
Owens-Illinois
8.100%, 05/15/07 100 102
Plastipak Holdings
10.750%, 09/01/11 100 109
Pliant
13.000%, 06/01/10 100 48
Solo Cup
8.500%, 02/15/14 150 133
US Can
10.875%, 07/15/10 150 158
-------------------------------------------------------
TOTAL CONTAINERS & PACKAGING 969
=======================================================
DIVERSIFIED OPERATIONS [1.9%]
Jacuzzi Brands
9.625%, 07/01/10 150 159
Kansas City Southern
9.500%, 10/01/08 100 110
Stena
7.000%, 12/01/16 200 185
TD Funding
8.375%, 07/15/11 100 105
Trinity Industries
6.500%, 03/15/14 200 197
Werner Holdings, Ser A
10.000%, 11/15/07 95 59
-------------------------------------------------------
TOTAL DIVERSIFIED OPERATIONS 815
=======================================================
ELECTRICAL PRODUCTS [6.5%]
AES
9.000%, 05/15/15 (A) 100 110
7.750%, 03/01/14 100 106
Allegheny Energy Supply
7.800%, 03/15/11 200 219
Aquila
7.625%, 11/15/09 100 105
Calpine
8.750%, 07/15/13 (A) 150 106
8.500%, 07/15/10 (A) 200 143
8.500%, 02/15/11 100 53
Calpine Generating (C)
9.443%, 04/01/10 200 202
CMS Energy
7.500%, 01/15/09 100 105
Edison Mission Energy
7.730%, 06/15/09 200 211
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 40
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
ESI Tractebel Acquisitions, Ser B
7.990%, 12/30/11 $ 65 $ 68
Freescale Semiconductors
7.125%, 07/15/14 200 213
Motors & Gears, Ser D
10.750%, 11/15/06 150 143
NRG Energy
8.000%, 12/15/13 123 131
PSEG Energy Holdings
7.750%, 04/16/07 100 102
Reliant Resources
9.500%, 07/15/13 200 221
Sanmina-SCI
10.375%, 01/15/10 150 165
Sierra Pacific Resources
8.625%, 03/15/14 200 220
TECO Energy
7.200%, 05/01/11 100 106
Texas Genco (A)
6.875%, 12/15/14 100 102
-------------------------------------------------------
TOTAL ELECTRICAL PRODUCTS 2,831
=======================================================
ENTERTAINMENT [9.4%]
AMC Entertainment
9.875%, 02/01/12 100 96
9.500%, 02/01/11 72 68
Ameristar Casinos
10.750%, 02/15/09 100 107
Argosy Gaming
7.000%, 01/15/14 200 222
Aztar
9.000%, 08/15/11 100 106
Bombardier Recreational Products
8.375%, 12/15/13 150 157
Carmike Cinemas
7.500%, 02/15/14 200 173
Chukchansi Economic
Development Authority (A)
14.500%, 06/15/09 150 181
Cinemark USA
9.000%, 02/01/13 100 103
Circus & Eldorado Joint Venture/
Silver Legacy Capital
10.125%, 03/01/12 150 157
Herbst Gaming
8.125%, 06/01/12 150 157
Inn of the Mountain Gods
12.000%, 11/15/10 100 113
Isle of Capri Casinos
7.000%, 03/01/14 200 192
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
Kerzner International (A)
6.750%, 10/01/15 $200 $ 194
Leslie's Poolmart
7.750%, 02/01/13 100 101
Majestic Star Casino
9.500%, 10/15/10 200 198
MGM Mirage
8.500%, 09/15/10 200 217
6.750%, 09/01/12 100 102
6.000%, 10/01/09 100 99
Mohegan Tribal Gaming Authority
7.125%, 08/15/14 150 155
MTR Gaming Group, Ser B
9.750%, 04/01/10 200 216
NCL (A)
11.625%, 07/15/14 100 105
OED/Diamond Jo
8.750%, 04/15/12 100 98
Penn National Gaming
8.875%, 03/15/10 100 105
6.875%, 12/01/11 100 101
Six Flags
9.750%, 04/15/13 150 148
Speedway Motorsports
6.750%, 06/01/13 100 103
Station Casinos
6.875%, 03/01/16 50 51
Waterford Gaming (A)
8.625%, 09/15/12 122 130
Windsor Woodmount
Black Hawk, Ser B (D)
13.000%, 03/15/05 18 1
Wynn Las Vegas
6.625%, 12/01/14 150 143
-------------------------------------------------------
TOTAL ENTERTAINMENT 4,099
=======================================================
FINANCIAL SERVICES [2.1%]
General Motors Acceptance
8.000%, 11/01/31 225 196
6.750%, 12/01/14 675 587
JSG Funding
7.750%, 04/01/15 150 128
-------------------------------------------------------
TOTAL FINANCIAL SERVICES 911
=======================================================
FOOD, BEVERAGE & TOBACCO [4.6%]
Chiquita Brands International
7.500%, 11/01/14 100 94
Del Monte
8.625%, 12/15/12 50 54
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 41
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
Dominos
8.250%, 07/01/11 $ 75 $ 79
Friendly Ice Cream
8.375%, 06/15/12 200 189
General Nutrition Center
8.500%, 12/01/10 150 128
Land O' Lakes
8.750%, 11/15/11 100 105
Le-Natures (A)
10.000%, 06/15/13 150 162
Leiner Health Products
11.000%, 06/01/12 100 85
National Beef Packaging
10.500%, 08/01/11 100 104
National Wine & Spirits
10.125%, 01/15/09 100 101
Pinnacle Foods
8.250%, 12/01/13 150 142
RJ Reynolds Tobacco Holdings (A)
6.500%, 07/15/10 100 100
Smithfield Foods, Ser B
8.000%, 10/15/09 350 370
Swift
12.500%, 01/01/10 200 218
WH Holdings/WH Capital
9.500%, 04/01/11 60 64
-------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO 1,995
=======================================================
FORESTRY [0.1%]
Tembec Industries
7.750%, 03/15/12 100 63
=======================================================
MACHINERY [1.4%]
Case New Holland
9.250%, 08/01/11 100 106
Cummins
9.500%, 12/01/10 150 163
Dresser-Rand Group (A)
7.375%, 11/01/14 133 138
Resolution Performance Products
13.500%, 11/15/10 100 106
Terex
7.375%, 01/15/14 100 101
-------------------------------------------------------
TOTAL MACHINERY 614
=======================================================
MEDICAL [3.6%]
Alpharma
8.625%, 05/01/11 150 154
Bio-Rad Laboratories
7.500%, 08/15/13 100 106
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
Biovail
7.875%, 04/01/10 $100 $ 104
CDRV Investors (B)
11.681%, 01/01/15 200 114
Concentra Operating
9.500%, 08/15/10 100 105
Davita
7.250%, 03/15/15 50 51
Extendicare Health
6.875%, 05/01/14 100 98
Genesis Healthcare
8.000%, 10/15/13 100 108
MQ Associates (B)
14.200%, 08/15/12 150 95
Mylan Laboratories (A)
5.750%, 08/15/10 150 150
Pacificare Health Systems
10.750%, 06/01/09 65 70
Tenet Healthcare (A)
9.250%, 02/01/15 200 202
Universal Hospital Services
10.125%, 11/01/11 200 205
-------------------------------------------------------
TOTAL MEDICAL 1,562
=======================================================
MEDICAL PRODUCTS & SERVICES [0.5%]
Rural (A)
9.875%, 03/15/15 100 106
Vanguard Health Holding
9.000%, 10/01/14 100 107
-------------------------------------------------------
TOTAL MEDICAL PRODUCTS & SERVICES 213
=======================================================
METALS [0.4%]
Southern Peru Cooper (A)
6.375%, 07/27/15 175 176
=======================================================
MISCELLANEOUS BUSINESS SERVICES [1.9%]
Allied Escrow Security
11.375%, 07/15/11 150 149
Carriage Services
7.875%, 01/15/15 200 207
CCM Merger (A)
8.000%, 08/01/13 125 126
Integrated Alarm Services Group (A)
12.000%, 11/15/11 100 102
Nell Af Sarl (A)
8.375%, 08/15/15 250 244
-------------------------------------------------------
TOTAL MISCELLANEOUS BUSINESS SERVICES 828
=======================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 42
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
MISCELLANEOUS MANUFACTURING [0.9%]
Aearo
8.250%, 04/15/12 $150 $ 150
KI Holdings (B)
9.675%, 11/15/14 250 171
Maax Holdings (A) (B)
19.831%, 12/15/12 200 84
-------------------------------------------------------
TOTAL MISCELLANEOUS MANUFACTURING 405
=======================================================
PAPER & RELATED PRODUCTS [3.1%]
Abitibi-Consolidated
7.750%, 06/15/11 100 98
Appleton Papers
9.750%, 06/15/14 100 96
Georgia-Pacific
9.375%, 02/01/13 400 446
7.700%, 06/15/15 100 110
JSG Funding
9.625%, 10/01/12 100 101
Neenah Paper
7.375%, 11/15/14 150 144
Norampac
6.750%, 06/01/13 100 100
Norske Skog Canada
7.375%, 03/01/14 250 238
-------------------------------------------------------
TOTAL PAPER & RELATED PRODUCTS 1,333
=======================================================
PETROLEUM & FUEL PRODUCTS [10.6%]
Belden & Blake
8.750%, 07/15/12 150 157
Chesapeake Energy
6.875%, 01/15/16 200 205
6.250%, 01/15/18 100 98
Citgo Petroleum
6.000%, 10/15/11 200 200
Comstock Resources
6.875%, 03/01/12 150 151
Dynegy Holdings
10.125%, 07/15/13 (A) 150 167
6.875%, 04/01/11 100 98
El Paso
7.000%, 05/15/11 275 274
El Paso Natural Gas
7.625%, 08/01/10 150 156
El Paso Production Holding
7.750%, 06/01/13 200 209
Forest Oil
8.000%, 06/15/08 150 159
8.000%, 12/15/11 100 110
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
Frontier Oil
6.625%, 10/01/11 $150 $ 155
Giant Industries
8.000%, 05/15/14 200 209
Pacific Energy
7.125%, 06/15/14 100 104
6.250%, 09/15/15 (A) 250 251
Parker Drilling
9.625%, 10/01/13 150 171
Plains Exploration & Production
8.750%, 07/01/12 150 162
Pogo Producing (A)
6.875%, 10/01/17 300 304
Pride International
7.375%, 07/15/14 100 109
Range Resources
6.375%, 03/15/15 50 50
Swift Energy
7.625%, 07/15/11 100 103
Vintage Petroleum
7.875%, 05/15/11 100 104
Whiting Petroleum (A)
7.000%, 02/01/14 300 304
Williams
8.125%, 03/15/12 400 437
7.625%, 07/15/19 50 54
6.375%, 10/01/10 (A) 150 149
-------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS 4,650
=======================================================
PRINTING & PUBLISHING [2.9%]
American Color Graphics
10.000%, 06/15/10 100 74
Canwest Media
10.625%, 05/15/11 100 109
Dex Media (B)
8.480%, 11/15/13 200 157
Dex Media East
9.875%, 11/15/09 100 109
Dex Media West, Ser B
8.500%, 08/15/10 100 106
Emmis Operating
6.875%, 05/15/12 150 149
Haights Cross Operating
11.750%, 08/15/11 200 219
JII Holdings
13.000%, 04/01/07 70 62
Primedia
8.000%, 05/15/13 100 101
Sheridan Group
10.250%, 08/15/11 150 156
-------------------------------------------------------
TOTAL PRINTING & PUBLISHING 1,242
=======================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 43
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST [0.3%]
Host Marriott, Ser O
6.375%, 03/15/15 $150 $ 145
=======================================================
RETAIL [3.4%]
Asbury Automotive Group
9.000%, 06/15/12 150 151
Autonation
9.000%, 08/01/08 100 108
Delhaize America
8.125%, 04/15/11 125 135
Denny's Holdings
10.000%, 10/01/12 150 150
JC Penney, Ser A, MTN
6.875%, 10/15/15 175 188
Jean Countu Group
8.500%, 08/01/14 150 149
Mortons Restaurant Group
7.500%, 07/01/10 150 148
Movie Gallery
11.000%, 05/01/12 100 89
Pantry
7.750%, 02/15/14 100 100
Rite Aid
8.125%, 05/01/10 100 102
True Temper Sports
8.375%, 09/15/11 150 140
-------------------------------------------------------
TOTAL RETAIL 1,460
=======================================================
RUBBER & PLASTIC [0.3%]
Goodyear Tire & Rubber (A)
9.000%, 07/01/15 150 148
=======================================================
SEMI-CONDUCTORS [1.5%]
Advanced Micro Devices
7.750%, 11/01/12 100 102
Amkor Technologies
7.750%, 05/15/13 250 214
Fisher Scientific International
6.750%, 08/15/14 150 157
6.125%, 07/01/15 (A) 100 100
Flextronics International
6.250%, 11/15/14 100 100
-------------------------------------------------------
TOTAL SEMI-CONDUCTORS 673
=======================================================
STEEL & STEEL WORKS [1.2%]
AK Steel
7.875%, 02/15/09 115 112
7.750%, 06/15/12 150 138
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
Gerdau Ameristeel
10.375%, 07/15/11 $100 $ 111
International Steel Group
6.500%, 04/15/14 150 149
-------------------------------------------------------
TOTAL STEEL & STEEL WORKS 510
=======================================================
TELEPHONES & TELECOMMUNICATIONS [8.3%]
Airgate PCS (A)
9.375%, 09/01/09 100 105
American Cellular, Ser B
10.000%, 08/01/11 150 163
American Tower
7.125%, 10/15/12 150 157
Centennial Communications
10.125%, 06/15/13 100 113
8.125%, 02/01/14 50 53
Cincinnati Bell
8.375%, 01/15/14 185 182
Dobson Communications (A) (C)
8.100%, 10/15/12 250 247
Insight Midwest
9.750%, 10/01/09 150 153
IPCS
11.500%, 05/01/12 150 173
IWO Escrow (B)
9.531%, 01/15/15 100 70
Nextel Communications, Ser D
7.375%, 08/01/15 350 375
Nextel Partners
8.125%, 07/01/11 150 162
PanAmSat
9.000%, 08/15/14 96 101
Qwest
7.625%, 06/15/15 (A) 564 576
5.625%, 11/15/08 100 99
Rogers Wireless
9.625%, 05/01/11 100 116
7.250%, 12/15/12 50 53
Rural Cellular
9.750%, 01/15/10 200 202
SBA Telecommunications (B)
7.651%, 12/15/11 117 106
Time Warner Telecom Holdings
9.250%, 02/15/14 100 101
Triton PCS
8.500%, 06/01/13 150 143
UbiquiTel Operating
9.875%, 03/01/11 150 167
-------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS 3,617
=======================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 44
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND (CONCLUDED)
DESCRIPTION FACE AMOUNT (000)/SHARES VALUE (000)
- ------------------------------------------------------------
TRANSPORTATION SERVICES [1.2%]
American Commercial Lines
9.500%, 02/15/15 $150 $ 162
H-Lines Finance Holdings (A) (B)
9.677%, 04/01/13 200 166
Ship Finance
8.500%, 12/15/13 200 195
-------------------------------------------------------
TOTAL TRANSPORTATION SERVICES 523
=======================================================
WASTE DISPOSAL [0.5%]
Allied Waste
7.375%, 04/15/14 250 235
=======================================================
WHOLESALE [0.2%]
Collins & Aikman Floor Cover, Ser B
9.750%, 02/15/10 100 97
=======================================================
TOTAL CORPORATE BONDS
(Cost $42,200) 42,553
===================================================
COMMON STOCK [0.2%]
Commercial Services [0.0%]
Magellan Health Services* 69 3
=======================================================
RETAIL [0.2%]
Crunch Equity Holding* 56 61
=======================================================
TOTAL COMMON STOCK
(Cost $62) 64
===================================================
CASH EQUIVALENTS [1.8%]
Evergreen Select Money Market,
Institutional Class 361,483 361
Fidelity Institutional Domestic
Money Market Portfolio,
Cl I 437,407 437
-------------------------------------------------------
TOTAL CASH EQUIVALENTS
(Cost $798) 798
===================================================
WARRANTS [0.0%]
Dayton Superior,
Expires 06/15/09 (A) 100 --
Diva Systems,
Expires 03/01/08 (A) 600 --
Pliant, Expires 06/01/10 (A) 100 --
-------------------------------------------------------
TOTAL WARRANTS
(Cost $0) --
===================================================
DESCRIPTION VALUE (000)
- ------------------------------------------------------------
TOTAL INVESTMENTS [99.5%]
(Cost $43,060) $43,415
===================================================
OTHER ASSETS AND LIABILITIES:
Payable for Investments Purchased (300)
Income Distribution Payable (118)
Investment Advisory Fees Payable (24)
Shareholder Servicing & Distribution
Fees Payable (15)
Administration Fees Payable (2)
Other Assets and Liabilities, Net 660
-------------------------------------------------------
OTHER ASSETS AND LIABILITIES [0.5%] 201
===================================================
NET ASSETS [100.0%] $43,616
=======================================================
NET ASSETS:
Paid-in-Capital (unlimited authorization --
$0.01 par value) $44,498
Accumulated net realized loss on investments (1,237)
Net unrealized appreciation on investments 355
-------------------------------------------------------
NET ASSETS $43,616
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class
($22,588,357 / 2,497,813 shares) $9.04
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A
($21,027,468 / 2,325,437 shares) $9.04
=======================================================
* NON-INCOME PRODUCING SECURITY
(A) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933, AS AMENDED. THIS SECURITY MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION NORMALLY TO QUALIFIED INSTITUTIONS. SECURITY CONSIDERED
LIQUID. ON SEPTEMBER 30, 2005, THE VALUE OF THESE SECURITIES AMOUNTED TO
$7,423 (000), REPRESENTING 17.0% OF THE NET ASSETS OF THE FUND.
(B) STEP BOND -- THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS IS THE RATE
IN EFFECT ON SEPTEMBER 30, 2005. THE COUPON ON A STEP BOND CHANGES ON A
SPECIFIC DATE.
(C) FLOATING RATE SECURITY -- THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON SEPTEMBER 30, 2005.
(D) IN DEFAULT ON INTEREST PAYMENTS
CL -- CLASS
MTN -- MEDIUM TERM NOTE
SER -- SERIES
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 45
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
PRIME MONEY MARKET FUND
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW
SECTOR WEIGHTINGS (UNAUDITED)*:
52.3% Commercial Paper
33.6% Repurchase Agreements
11.2% U.S. Government Agency Obligations
2.9% Certificate of Deposit
*Percentages based on total investments.
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
COMMERCIAL PAPER (A) [52.4%]
ASSET-BACKED SECURITIES [20.0%]
Barton Capital (C)
3.740%, 10/11/05 $25,000 $ 24,974
Eiffel Funding (C)
3.711%, 10/13/05 20,000 19,975
Laguna (C)
3.650%, 10/07/05 25,000 24,985
Premier Asset (C)
3.560%, 10/25/05 25,000 24,941
Ranger Funding (C)
3.600%, 10/05/05 25,000 24,990
Siemens Capital
3.730%, 10/03/05 25,000 24,995
Windmill Funding (C)
3.610%, 10/12/05 25,000 24,972
-------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES 169,832
=======================================================
BANKS [17.7%]
Bank of America
3.580%, 10/04/05 25,000 24,992
Barclays Bank
3.590%, 10/11/05 25,000 24,975
National Australia Funding
3.740%, 10/06/05 25,000 24,987
Rabobank USA Financial
3.765%, 10/05/05 25,000 24,990
Societe Generale
3.613%, 10/11/05 25,000 24,975
UBS Finance
3.600%, 10/17/05 25,000 24,960
-------------------------------------------------------
TOTAL BANKS 149,879
=======================================================
FINANCE AUTO LOANS [5.9%]
American Honda Finance
3.570%, 10/04/05 25,000 24,993
Toyota Motor Credit
3.610%, 10/06/05 25,000 24,987
-------------------------------------------------------
TOTAL FINANCE AUTO LOANS 49,980
=======================================================
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
FINANCIAL SERVICES [5.9%]
General Electric Capital
3.740%, 10/07/05 $25,000 $ 24,985
Morgan Stanley
3.800%, 10/06/05 25,000 24,987
-------------------------------------------------------
TOTAL FINANCIAL SERVICES 49,972
=======================================================
INSURANCE [2.9%]
Prudential Funding
3.710%, 10/27/05 25,000 24,933
=======================================================
TOTAL COMMERCIAL PAPER
(Cost $444,596) 444,596
=======================================================
U.S. GOVERNMENT AGENCY OBLIGATIONS [11.2%]
FHLB
3.070%, 02/13/06 5,000 5,000
4.050%, 09/29/06 5,000 5,000
FHLB (B)
3.600%, 05/24/06 10,000 10,000
3.550%, 06/22/06 5,000 5,000
3.550%, 07/11/06 5,000 5,000
3.500%, 08/09/06 5,000 5,000
3.625%, 08/11/06 5,000 5,000
3.700%, 09/13/06 5,000 5,000
FHLMC, MTN
2.570%, 12/06/05 10,000 10,000
2.980%, 02/03/06 5,000 5,000
3.050%, 02/28/06 10,000 10,000
FHLMC, MTN (B)
3.250%, 03/21/06 5,000 5,000
3.600%, 04/12/06 5,000 5,000
3.375%, 05/15/06 5,000 5,000
FNMA (B)
3.200%, 06/21/06 10,000 10,000
-------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $95,000) 95,000
=======================================================
CERTIFICATE OF DEPOSIT [3.0%]
First Tennessee Bank
3.760%, 10/20/05 25,000 25,000
-------------------------------------------------------
TOTAL CERTIFICATE OF DEPOSIT
(Cost $25,000) 25,000
=======================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 46
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
PRIME MONEY MARKET FUND (CONCLUDED)
DESCRIPTION SHARES/FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
CASH EQUIVALENT [0.0%]
Fidelity Institutional Domestic
Money Market Portfolio,
Cl I 86,334 $ 86
-------------------------------------------------------
TOTAL CASH EQUIVALENT
(Cost $86) 86
=======================================================
REPURCHASE AGREEMENTS (D) [33.6%]
Banc of America
3.850%, date 09/30/05,
repurchased on 10/03/05,
repurchase price $75,024,062
(collateralized by U.S.
Government obligations,
par value $90,687,175,
5.000%, 06/01/34 with
total market value
$76,500,000) $75,000 75,000
Barclay Bank
3.870%, dated 09/30/05,
repurchased on 10/03/05,
repurchase price, $85,427,542
(collateralized by U.S.
Government obligation,
par value $22,853,673,
5.500%, 02/01/34; with total
market value $87,108,000) 85,400 85,400
Bear Stearns
3.900%, dated 09/30/05,
repurchased on 10/03/05,
repurchase price $75,024,375
(collateralized by U.S.
Government obligations,
ranging in par value
$5,315,000-$12,589,774,
5.000%-7.000%, 12/01/32-
12/01/34; with total
market value $76,500,000) 75,000 75,000
Nomura Bank
4.000%, dated 09/30/05,
repurchased on 10/03/05,
repurchase price $50,016,667
(collateralized by U.S.
Government obligations,
ranging in par value
$1,369,065-$39,492,707,
4.264%-4.657%, 12/01/34-
08/01/35; with total
market value $51,000,001) 50,000 50,000
-------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $285,400) 285,400
===================================================
TOTAL INVESTMENTS [100.2%]
(Cost $850,082) 850,082
===================================================
DESCRIPTION VALUE (000)
- ------------------------------------------------------------
OTHER ASSETS AND LIABILITIES:
Income Distributions Payable $ (1,626)
Shareholder Servicing & Distribution
Fees Payable (299)
Investment Advisory Fees Payable (175)
Administration Fees Payable (40)
Other Assets and Liabilities, Net 405
-------------------------------------------------------
OTHER ASSETS AND LIABILITIES [-0.2%] (1,735)
===================================================
NET ASSETS [100.0%] $848,347
=======================================================
NET ASSETS:
Paid-in-Capital (unlimited authorization --
$0.01 par value) $848,749
Accumulated net realized loss on investments (402)
-------------------------------------------------------
NET ASSETS $848,347
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class
($332,392,777 / 332,528,445 shares) $1.00
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A
($312,451,764 / 312,721,135 shares) $1.00
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class S
($203,502,112 / 203,592,401 shares) $1.00
=======================================================
(A) THE RATE REPORTED IS THE EFFECTIVE YIELD AT TIME OF PURCHASE.
(B) STEP BOND -- THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS IS THE RATE
IN EFFECT ON SEPTEMBER 30, 2005. THE COUPON ON A STEP BOND CHANGES ON A
SPECIFIC DATE.
(C) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933, AS AMENDED. THIS SECURITY MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION NORMALLY TO QUALIFIED INSTITUTIONS. SECURITY CONSIDERED
LIQUID. ON SEPTEMBER 30, 2005, THE VALUE OF THESE SECURITIES AMOUNTED TO
$144,837 (000), REPRESENTING 17.1% OF THE NET ASSETS OF THE FUND.
(D) TRI-PARTY REPURCHASE AGREEMENT
CL -- CLASS
FHLB -- FEDERAL HOME LOAN BANK
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
MTN -- MEDIUM TERM NOTE
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 47
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
GOVERNMENT MONEY MARKET FUND
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW
SECTOR WEIGHTINGS (UNAUDITED)*:
59.6% U.S. Government Agency Obligations
40.4% Repurchase Agreements
* Percentages are based on total investments.
- ------------------------------------------------------------
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS [59.5%]
FFCB
3.550%, 10/04/05 $ 50,000 $ 49,985
FHLB
2.400%, 11/08/05 10,000 10,000
3.070%, 02/13/06 20,000 20,000
3.600%, 05/24/06 18,215 18,208
3.500%, 08/09/06 27,395 27,395
3.625%, 08/11/06 25,000 25,000
3.700%, 09/13/06 25,000 25,000
4.050%, 09/29/06 25,000 25,000
FHLB (A)
3.180%, 10/03/05 275,000 274,946
3.570%, 10/04/05 100,000 99,970
3.520%, 10/05/05 244,162 244,065
FHLB (B)
3.550%, 06/22/06 20,000 20,000
3.550%, 07/11/06 25,000 25,000
3.650%, 08/25/06 25,000 25,000
FHLMC, MTN
2.350%, 10/27/05 25,000 25,000
2.400%, 11/02/05 35,000 35,000
2.570%, 12/06/05 35,000 35,000
2.740%, 12/16/05 25,000 25,000
2.980%, 02/03/06 20,000 20,000
3.050%, 02/28/06 25,000 25,000
FHLMC, MTN (B)
3.250%, 03/21/06 25,000 25,000
3.600%, 04/12/06 25,000 25,000
3.375%, 05/15/06 25,000 25,000
FNMA (A)
3.590%, 10/03/05 100,000 99,980
FNMA (B)
3.375%, 05/05/06 25,000 25,000
3.200%, 06/21/06 20,000 20,000
3.500%, 07/26/06 10,000 10,000
-------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $1,284,549) 1,284,549
=======================================================
REPURCHASE AGREEMENTS (C) [40.5%]
Bank of America
3.850%, dated 09/30/05,
repurchased on 10/03/05,
repurchase price $150,048,125
(collaterized by U.S.
Government obligations,
ranging in par value
$17,543,031-$73,947,041,
4.986%-5.000%, 03/01/35-
09/01/35; with total
market value $153,000,001) 150,000 150,000
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
Barclay Bank
3.870%, dated 09/30/05,
repurchased on 10/03/05,
repurchase price $171,455,277
(collateralized by U.S.
Government obligations,
ranging in par value
$53,096,668-$112,954,858,
4.500%-5.500%, 11/01/19-
09/01/35; with total market
value $174,826,001) $171,400 $ 171,400
Bear Stearns Inc. & Co.
3.900%, dated 09/30/05,
repurchased on 10/03/05,
repurchase price $150,048,750
(collateralized by U.S.
Government obligations,
ranging in par value
$2,091,929-$8,657,036
5.000%-6.000%, 04/01/20-
09/01/35; with total market
value $153,000,823) 150,000 150,000
Deutsche Bank
3.750%, dated 09/30/05,
repurchased on 10/03/05,
repurchase price $150,046,875
(collateralized by U.S.
Government obligations,
ranging in par value
$1,687,273-$113,893,000
3.477%-6.500%, 01/01/17-
07/01/35; with total market
value $153,000,001) 150,000 150,000
Lehman Brothers
3.820%, dated 09/30/05,
repurchased on 10/03/05,
repurchase price $100,031,833
(collateralized by a U.S.
Government obligation,
par value $146,370,000
5.500%, 04/01/34; with total
market value $102,002,541) 100,000 100,000
Nomura Bank
4.000%, dated 09/30/05,
repurchased on 10/03/05,
repurchase price $50,016,667
(collateralized by U.S.
Government obligations,
ranging in par value
$27,441,643-$35,726,200
4.284%-4.666%, 12/01/34-
03/01/35; with total market
value $51,000,000) 50,000 50,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 48
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
GOVERNMENT MONEY MARKET FUND (CONCLUDED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
UBS Warburg
3.870%, dated 09/30/05,
repurchased on 10/03/05,
repurchase price $100,032,250
(collateralized by a U.S.
Government obligation,
par value $106,585,000
0.000%, 05/01/35; with total
market value $102,001,637) $100,000 $ 100,000
-------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $871,400) 871,400
===================================================
TOTAL INVESTMENTS [100.0%]
(Cost $2,155,949) 2,155,949
===================================================
OTHER ASSETS AND LIABILITIES:
Income Distributions Payable (1,769)
Shareholder Servicing & Distribution
Fees Payable (863)
Investment Advisory Fees Payable (459)
Administration Fees Payable (101)
Other Assets and Liabilities, Net 2,599
-------------------------------------------------------
OTHER ASSETS AND LIABILITIES [0.0%] (593)
=======================================================
NET ASSETS [100.0%] $2,155,356
=======================================================
NET ASSETS:
Paid-in-Capital (unlimited authorization --
$0.01 par value) $2,155,352
Undistributed net investment income 5
Accumulated net realized loss on investments (1)
-------------------------------------------------------
NET ASSETS $2,155,356
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class
($32,038,449 / 32,039,738 shares) $1.00
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A
($1,895,412,036 / 1,895,406,124 shares) $1.00
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class S
($227,905,254 / 227,905,364 shares) $1.00
=======================================================
DESCRIPTION
- ------------------------------------------------------------
(A) THE RATE REPORTED IS THE EFFECTIVE YIELD AT TIME OF PURCHASE.
(B) STEP BOND -- THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS IS THE RATE
IN EFFECT ON SEPTEMBER 30, 2005. THE COUPON ON A STEP BOND CHANGES ON A
SPECIFIC DATE.
(C) TRI-PARTY REPURCHASE AGREEMENT
FFCB -- FEDERAL FARM CREDIT BANK
FHLB -- FEDERAL HOME LOAN BANK
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
MTN -- MEDIUM TERM NOTE
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 49
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW
SECTOR WEIGHTINGS (UNAUDITED)*:
13.6% General Obligations
12.4% General Revenue
11.7% Housing
11.2% Water
8.7% Power
7.6% Industrial Development
7.5% Transportation
7.3% Utilities
6.8% Education
6.1% Public Facilities
6.0% Healthcare
0.6% Short-Term Investments
0.5% Equipment
*Percentages based on total investments.
- ------------------------------------------------------------
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
MUNICIPAL BOND [107.0%]
CALIFORNIA [107.0%]
ABAG, Finance Authority for
Non-Profit Corporations,
Hamlin School Project,
Ser A, GO (A) (B) (C)
2.740%, 08/01/32 $ 1,500 $ 1,500
ABAG, Finance Authority for
Non-Profit Corporations,
Public Policy Institute,
Ser A, RB (A) (B) (C)
2.740%, 11/01/31 2,990 2,990
ABAG, Finance Authority for
Non-Profit Corporations,
School of the Sacred Heart,
Ser B, RB (A) (B) (C)
2.820%, 06/01/30 8,300 8,300
ABAG, Finance Authority for
Non-Profit Corporations,
Ser C, COP (A) (B) (C)
2.770%, 10/01/27 10,080 10,080
ABAG, Finance Authority for
Non-Profit Corporations,
Ser D, COP (A) (B) (C)
2.770%, 10/01/27 2,630 2,630
ABAG, Financial Authority for
Non-Profit Corporations,
Jewish Community Center
Project, RB (A) (B) (C)
2.760%, 11/15/31 8,775 8,775
Anaheim, Multi-Family Housing
Authority, Heritage Village
Apartments Project, Ser A,
RB (A) (B) (D)
2.680%, 07/15/33 4,685 4,685
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
Antelope Valley, Healthcare
Project, Ser A, RB (A) (B) (C)
2.710%, 09/01/17 $13,900 $ 13,900
Berkeley, YMCA Project,
RB (A) (B) (C)
2.690%, 06/01/23 1,905 1,905
California State, Bay Area Toll
Authority, San Francisco
Bay Area Project,
Ser A, RB, AMBAC (A) (B) (C)
2.670%, 04/01/39 10,800 10,800
California State, Bay Area Toll
Authority, San Francisco
Bay Area Project,
Ser B, RB, AMBAC (A) (B) (C)
2.670%, 04/01/39 4,500 4,500
California State, Community
College Financing Authority,
Ser A, TRAN, FSA
4.000%, 06/30/06 4,500 4,545
California State, Daily
Kindergarten University,
Ser A-2, GO (A) (B) (C)
2.760%, 05/01/34 5,500 5,500
California State, Daily
Kindergarten University,
Ser A-3, GO (A) (B) (C)
2.950%, 05/01/34 15,960 15,960
California State, Daily
Kindergarten University,
Ser A-5, GO (A) (B) (C)
2.780%, 05/01/34 8,000 8,000
California State, Daily
Kindergarten University,
Ser B-1, GO (A) (B) (C)
2.800%, 05/01/34 10,850 10,850
California State, Department of
Water Resource & Power,
Ser B-2, RB (A) (B) (C)
2.950%, 05/01/22 9,350 9,350
California State, Department of
Water Resource & Power,
Ser B-4, RB (A) (B) (C)
2.780%, 05/01/22 4,400 4,400
California State, Department of
Water Resource & Power,
Ser C-13, RB, FSA (A) (B) (C)
2.690%, 05/01/22 5,000 5,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 50
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
California State, Department of
Water Resource & Power,
Ser C-15, RB (A) (B) (C)
2.630%, 05/01/22 $ 5,000 $ 5,000
California State, Department of
Water Resources,
Ser B-1, RB (A) (B) (C)
2.760%, 05/01/22 14,200 14,200
California State, Economic
Development Financing
Authority, KQED Project,
RB (A) (B) (C)
2.670%, 04/01/20 1,400 1,400
California State, Economic
Recover Authority,
Ser C-13, RB, XLCA (A) (B) (C)
2.710%, 07/01/23 5,000 5,000
California State, Economic
Recovery Authority,
Ser C-1, RB (A) (B) (C)
2.950%, 07/01/23 13,750 13,750
California State, Economic
Recovery Authority,
Ser C-4, RB (A) (B) (C)
2.760%, 07/01/23 10,000 10,000
California State, Economic
Recovery Authority,
Ser C-7, RB (A) (B) (C)
2.780%, 07/01/23 5,350 5,350
California State, Economic
Recovery Authority,
Ser C-8, RB (A) (B) (C)
2.780%, 07/01/23 3,000 3,000
California State, Educational
Facilities Authority, Chapman
University Project,
RB (A) (B) (C)
2.820%, 12/01/30 1,000 1,000
California State, Educational
Facilities Authority, University
San Francisco, RB (A) (B) (C)
2.670%, 05/01/30 4,000 4,000
California State, Golden Valley
Unified School District, BAN
3.750%, 03/08/06 4,800 4,829
California State, Health Facilities
Finance Authority, Adventist
Health Systems Project,
Ser B, RB (A) (B) (C)
2.800%, 09/01/25 4,400 4,400
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
California State, Health Facilities
Finance Authority, Adventist
Hospital Project,
Ser A, RB, MBIA (A) (B) (C)
2.760%, 09/01/28 $ 6,875 $ 6,875
California State, Housing
Finance Agency, Multi-Family
Housing Project, Ser D,
RB (A) (B) (C)
2.950%, 02/01/31 9,265 9,265
California State, Infrastructure &
Economic Authority, Asian Art
Museum Foundation Project,
RB, MBIA (A) (B) (C)
2.760%, 06/01/34 16,000 16,000
California State, Infrastructure &
Economic Authority, Colburn
School Project, Ser B,
RB (A) (B) (C)
2.670%, 08/01/37 3,655 3,655
California State, Ser A-1, GO
(A) (B) (C)
2.950%, 05/01/33 16,150 16,150
California State, Ser A-2, GO
(A) (B) (C)
2.780%, 05/01/33 12,000 12,000
California State, University
Systemwide Project,
Ser A, RB, AMBAC
4.000%, 11/01/05 2,700 2,704
California State, Weekly
Kindgarten University,
Ser B-5, GO (A) (B) (C)
2.690%, 05/01/34 5,000 5,000
California Statewide,
Communities Development
Authority, Childrens
Hospital Project, Ser B, RB,
AMBAC (A) (B) (C)
2.670%, 08/15/32 1,800 1,800
California Statewide,
Communties Development
Authority, North Peninsula
Jewish Project, RB
(A) (B) (C)
2.760%, 07/01/34 6,300 6,300
Chaffey, Community College
District, Election of 2002
Project, Ser B, GO, MBIA
3.000%, 06/01/06 2,150 2,155
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 51
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
Corona, Multi-Family Housing
Authority, Country Hills
Project, Ser A, RB (A) (B) (D)
2.670%, 02/01/25 $ 6,475 $ 6,475
East Bay, Municipal Utilities
District Authority,
Ser A, RB, FSA (A) (B) (C)
2.670%, 06/01/25 1,300 1,300
East Bay, Municipal Utilities
District Authority, Sub-Ser 1,
RB, XLCA (A) (B) (C)
2.670%, 06/01/38 6,700 6,700
East Bay, Municipal Utilities
District Authority,
Sub-Ser B-1, RB,
XLCA (A) (B) (C)
2.670%, 06/01/38 7,000 7,000
East Bay, Municipal Utilities
District Authority,
Sub-Ser B-3, RB,
XLCA (A) (B) (C)
2.710%, 06/01/38 14,880 14,880
Eastern California, Municipal
Water District, COP,
Ser B, TA, FGIC (A) (B) (C)
2.720%, 07/01/20 5,000 5,000
Fremont, Family Center Finance
Project, COP (A) (B) (C)
2.760%, 08/01/28 4,400 4,400
Fremont, Office Building
Improvement & Fire
Equipment Project,
COP (A) (B) (C)
2.760%, 08/01/30 3,395 3,395
Fresno, Multi-Family Housing
Authority, Stonepine
Apartment Project,
Ser A, RB (A) (B) (D)
2.670%, 02/15/31 1,595 1,595
Fresno, Palm Lakes Apartment
Project, RB (A) (B) (C)
2.620%, 05/01/15 3,615 3,615
Glendale, Police Building
Project, COP (A) (B) (C)
2.710%, 06/01/30 20,000 20,000
Grant, Joint Union High School
District, School Facility
Bridge Funding Project,
COP, FSA (A) (B) (C)
2.720%, 09/01/34 1,000 1,000
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
Huntington Beach, Union High
School District, School
Facility Bridge Funding
Project, COP, FSA (A) (B) (C)
2.720%, 09/01/28 $ 1,890 $ 1,890
Irvine Ranch, Water District
Conservation, Ser B, GO
(A) (B) (C)
2.991%, 08/01/09 1,230 1,230
Irvine Ranch, Water District,
Capital Improvement Project,
COP (A) (B) (C)
2.770%, 08/01/16 6,350 6,350
Irvine Ranch, Water District,
GO (A) (B) (C)
2.770%, 01/01/21 9,400 9,400
Irvine, Improvement Board, Act
1915 Project, District #87-8,
SAB (A) (B) (C)
2.770%, 09/02/24 1,900 1,900
Irvine, Improvement Board, Act
1915 Project, District #89-10,
SAB (A) (B) (C)
2.820%, 09/02/15 13,845 13,845
Irvine, Improvement Board, Act
1915 Project, District #93-14,
SAB (A) (B) (C)
2.770%, 09/02/25 1,536 1,536
Irvine, Improvement Board, Act
1915 Project, Ser A,
SAB (A) (B) (C)
2.770%, 09/02/29 1,600 1,600
Irvine, Unified School District,
Community Facilities
District No 01-1, Special
Tax (A) (B) (C)
2.770%, 09/01/38 3,200 3,200
Kings County, Multi-Family
Housing Authority, Edgewater
Isle Apartments Project, Ser A,
RB (A) (B) (D)
2.670%, 02/15/31 10,710 10,710
Lemon Grove, Multifamily
Housing, Hillside Terrace
Project, RB (A) (B) (D)
2.670%, 02/15/31 4,955 4,955
Lodi, Electric System Authority,
Ser A, COP, MBIA (A) (B) (C)
2.670%, 07/01/32 9,360 9,360
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 52
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
Los Angeles County,
Convention & Exhibit
Center Authority, COP
Pre-Refunded @ 100 (E)
9.000%, 12/01/05 $ 3,000 $ 3,032
Los Angeles County, Multi-
Family Housing Authority,
Malibu Canyon Apartments
Project, Ser B, RB (A) (B) (C)
2.690%, 06/01/10 8,000 8,000
Los Angeles County, Multi-
Family Housing Authority,
Valencia Housing Project,
Ser C, RB (A) (B) (C)
2.700%, 04/01/31 600 600
Los Angeles County, Sanitation
Financing Authority, Capital
Project, Ser A, RB, FSA
4.000%, 10/01/05 3,360 3,360
Los Angeles County, School
District, Ser A, TRAN, FSA
4.000%, 06/30/06 6,220 6,283
Los Angeles County, Ser A,
TRAN
4.000%, 06/30/06 3,000 3,032
Los Angeles, COP, MBIA
3.500%, 12/01/05 7,450 7,462
Los Angeles, Department of
Water & Power, Sub-Ser B-1,
RB (A) (B) (C)
2.710%, 07/01/35 11,000 11,000
Los Angeles, Department of
Water & Power, Sub-Ser B-3,
RB (A) (B) (C)
2.670%, 07/01/35 3,300 3,300
Los Angeles, Metropolitan
Transit Commission,
Ser A, RB, FGIC (A) (B) (C)
2.670%, 07/01/12 7,200 7,200
Los Angeles, Metropolitan
Transportation Authority,
Proposition C, Ser A, RB,
MBIA (A) (B) (C)
2.720%, 07/01/20 11,085 11,085
Los Angeles, Samuel A. Fryer
Vavney, Ser A, COP
(A) (B) (C)
2.670%, 08/01/21 7,000 7,000
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
Los Angeles, TRAN
4.000%, 06/30/06 $ 5,370 $ 5,427
Los Angeles, Water & Power
Resource Authority,
Power System Project,
Sub-Ser A-7, RB (A) (B) (C)
2.690%, 07/01/35 15,000 15,000
Los Angeles, Water & Power
Resource Authority,
Sub-Ser B-2, RB (A) (B) (C)
2.700%, 07/01/34 2,000 2,000
Los Angeles, Water & Power
Resource Authority,
Sub-Ser B-6, RB (A) (B) (C)
2.750%, 07/01/34 17,925 17,925
Moorpark, Unified School
District, Ser A, COP, FSA
(A) (B) (C)
2.720%, 11/01/28 1,000 1,000
Newport Beach, Hoag
Memorial Hospital,
Ser A, RB (A) (B) (C)
2.750%, 10/01/26 4,700 4,700
Newport Beach, Hoag
Memorial Hospital,
Ser C, RB (A) (B) (C)
2.750%, 10/01/26 2,870 2,870
Oakland, Capital Equipment
Project, COP (A) (B) (C)
2.710%, 12/01/15 4,190 4,190
Oakland, TRAN
4.000%, 07/17/06 6,000 6,064
Oakland-Alameda County,
Coliseum Project, Ser C-1,
RB (A) (B) (C)
2.760%, 02/01/25 15,000 15,000
Orange County, Apartment
Development Authority,
Hidden Hills Project, Ser C,
RB (A) (B) (C)
2.690%, 11/01/09 3,200 3,200
Orange County, Apartment
Development Authority,
Larkspur Canyon Apartments,
Ser A, RB (A) (B) (D)
2.690%, 06/15/37 1,200 1,200
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 53
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
Orange County, Apartment
Development Authority,
Riverbend Apartments
Project, Ser B, RB (A) (B) (D)
2.690%, 12/01/29 $ 5,000 $ 5,000
Orange County, Apartment
Development Authority,
Seaside Meadow Project,
Ser C, RB (A) (B) (D)
2.670%, 08/01/08 5,700 5,700
Orange County, Sanitation
District Authority, Ser A,
COP (A) (B) (C)
2.770%, 08/01/29 2,495 2,495
Orange County, Water District
Authority, Ser A, COP (A) (B) (C)
2.670%, 08/01/42 2,800 2,800
Pasadena, Rose Bowl
Improvements Project,
COP (A) (B) (C)
2.700%, 12/01/11 2,500 2,500
Riverside County, Asset Leasing
Authority, Southwest Justice
Center Project, Ser B, RB,
MBIA (A) (B) (C)
2.670%, 11/01/32 4,100 4,100
Riverside County, Ser C,
COP (A) (B) (C)
2.700%, 12/01/15 16,700 16,700
Riverside, Unified School
District, Ser C, School Facility
Bridge Funding Project,
COP, FSA (A) (B) (C)
2.720%, 09/01/27 1,610 1,610
Riverside-San Bernardino,
Sub-Pass Thru Obligations,
Ser B, RB
2.670%, 07/01/06 1,350 1,350
Sacramento County, Housing
Authority, Bent Tree
Apartments Project, Ser A,
RB (A) (B) (D)
2.670%, 02/15/31 2,500 2,500
Sacramento County, Ser A,
TRAN
4.000%, 07/10/06 15,000 15,165
San Bernardino County,
Housing Authority, Alta Loma
Heritage Project, Ser A,
RB (A) (B) (C)
2.650%, 02/01/23 1,354 1,354
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
San Diego, County & School
District Authority, Ser A,
TRAN
4.000%, 07/14/06 $ 7,860 $ 7,946
San Diego, Museum of Art
Project, COP (A) (B) (C)
2.820%, 09/01/30 1,400 1,400
San Diego, Unified School
District, Ser A, TRAN
4.000%, 07/24/06 3,000 3,032
San Diego, Water Authority,
Ser I, MBIA, COP (A) (B) (C)
2.750%, 11/01/10 5,968 5,968
San Francisco (City & County),
Housing Authority, Bayside
Village Project D, Ser A,
RB (A) (B) (C)
2.690%, 12/01/16 6,000 6,000
San Francisco, Bay Area Toll
Authority, Ser A, RB,
AMBAC (A) (B) (C)
2.670%, 04/01/36 13,850 13,850
San Francisco, Bay Area Toll
Authority, Ser C, RB,
AMBAC (A) (B) (C)
2.700%, 04/01/25 5,650 5,650
San Jose, Redevelopment
Agency, Merged Area
Redevelopment Project,
Ser A, RB (A) (B) (C)
2.670%, 07/01/26 1,900 1,900
Santa Clara County, Financing
Authority, VMC Facility
Replacement Project, Ser B,
RB (A) (B) (C)
2.650%, 11/15/25 12,375 12,375
Santa Clara Valley, Transportation
Authority, Ser A, RB,
AMBAC (A) (B) (C)
2.630%, 06/01/26 6,000 6,000
Santa Clara Valley, Water District
Authority, Refunding &
Improvements Project, COP,
FGIC
4.000%, 02/01/06 3,990 4,017
Santa Clara, Electric Authority,
Ser C, RB, AMBAC (A) (B) (C)
2.720%, 07/01/10 4,600 4,600
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 54
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
Southern California,
Metro Water District
Authority, Waterworks
Authorization, Ser B-4
(A) (B) (C)
2.670%, 07/01/35 $ 9,350 $ 9,350
Southern California,
Metropolitan Water District
Authority, Ser B, RB (A) (B) (C)
2.670%, 07/01/27 2,100 2,100
Southern California,
Metropolitan Water District
Authority, Ser C-2, RB (A) (B) (C)
2.780%, 07/01/36 4,650 4,650
Southern California,
Metropolitan Water District
Authority, Water Works
Authorization, Ser B,
RB (A) (B) (C)
2.670%, 07/01/28 4,000 4,000
Southern California,
Metropolitan Water District,
Ser A, RB (A) (B) (C)
2.690%, 07/01/25 3,300 3,300
Southern California,
Metropolitan Water District,
Ser C-1, RB (A) (B) (C)
2.690%, 07/01/30 5,000 5,000
Southern California,
Metropolitan Water District,
Ser C-3, RB (A) (B) (C)
2.670%, 07/01/30 6,200 6,200
Stockton, Multi-Family Housing
Authority, Mariners Pointe
Project, Ser A, RB (A) (B) (C)
2.720%, 09/01/18 2,100 2,100
Sunnyvale, Government Center
Site Acquisition Project, Ser A,
COP, AMBAC (A) (B) (C)
2.690%, 04/01/31 4,405 4,405
Three Valleys, Municipal Water
District Authority, Miramar
Water Treatment Project,
COP (A) (B) (C)
2.700%, 11/01/14 4,700 4,700
Turlock, Irrigation District,
Capital Improvement &
Refunding Project,
COP (A) (B) (C)
2.760%, 01/01/31 3,450 3,450
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- ------------------------------------------------------------
Upland, Community
Redevelopment Authority,
Sunset Ridge & Village
Apartments Project,
RB (A) (B) (C)
2.690%, 12/01/29 $ 6,700 $ 6,700
Westminster, Civic Center
Refinancing Program, Ser A,
COP, AMBAC (A) (B) (C)
2.740%, 06/01/22 3,100 3,100
Yolo County, Multi-Family
Housing Authority, Primero
Grove Project, Ser A,
RB (A) (B) (C)
2.650%, 11/01/27 10,485 10,485
-------------------------------------------------------
TOTAL CALIFORNIA 782,321
=======================================================
TOTAL MUNICIPAL BOND
(Cost $782,321) 782,321
=======================================================
CERTIFICATE OF DEPOSIT [0.6%]
California State
2.535%, 10/11/05 4,500 4,500
-------------------------------------------------------
TOTAL CERTIFICATE OF DEPOSIT
(Cost $4,500) 4,500
===================================================
TOTAL INVESTMENTS [107.6%]
(Cost $786,821) 786,821
===================================================
OTHER ASSETS AND LIABILITIES:
Cash Overdraft (57,717)
Income Distributions Payable (353)
Shareholder Servicing & Distribution
Fees Payable (299)
Investment Advisory Fees Payable (134)
Administration Fees Payable (36)
Other Assets and Liabilities, Net 2,782
-------------------------------------------------------
OTHER ASSETS AND LIABILITIES [-7.6%] (55,757)
===================================================
NET ASSETS [100.0%] $731,064
=======================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 55
statement of net assets
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND (CONCLUDED)
DESCRIPTION VALUE (000)
- ------------------------------------------------------------
NET ASSETS:
Paid in Capital (unlimited authorization --
$0.01 par value) $ 731,068
Distributions in excess of net investment income (5)
Accumulated net realized gain on investments 1
-------------------------------------------------------
NET ASSETS $ 731,064
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class
($73,211,462 / 73,212,754 shares) $1.00
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A
($569,670,896 / 569,677,099 shares) $1.00
=======================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class S
($88,181,757 / 88,179,290 shares) $1.00
=======================================================
(A) FLOATING RATE SECURITY -- THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON SEPTEMBER 30, 2005.
(B) PUT AND DEMAND FEATURE -- THE DATE REPORTED ON THE STATEMENT OF NET ASSETS
IS THE FINAL MATURITY, NOT THE NEXT RESET OR PUT DATE.
(C) SECURITIES ARE HELD IN CONJUNCTION WITH A LETTER OF CREDIT FROM A MAJOR
BANK OR FINANCIAL INSTITUTION.
(D) SECURITIES ARE COLLATERALIZED UNDER AN AGREEMENT FROM FHLMC/FNMA.
(E) PRE-REFUNDED SECURITY -- THE MATURITY DATE SHOWN IS THE PRE-REFUNDED DATE.
ABAG -- ASSOCIATION OF BAY AREA GOVERNMENTS
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
BAN -- BOND ANTICIPATION NOTE
COP -- CERTIFICATE OF
PARTICIPATION
FGIC -- FINANCIAL GUARANTY INSURANCE COMPANY
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
FSA -- FINANCIAL SECURITY ASSURANCE
GO -- GENERAL OBLIGATION
MBIA -- MUNICIPAL BOND INSURANCE ASSOCIATION
RB -- REVENUE BOND
SAB -- SPECIAL ASSESSMENT BOND
SER -- SERIES
TA -- TAX ALLOCATION
TRAN -- TAX & REVENUE ANTICIPATION NOTE
XLCA -- XL CAPITAL ASSURANCE
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 56
statements of operations For
THE YEAR ENDED SEPTEMBER 30, 2005
- ------------------------------------------------------------------------------------------------------------------------------
Large Cap Value Large Cap Growth RCB Small Cap Technology
Equity Fund Equity Fund Value Fund Growth Fund
(000) (000) (000) (000)
------------------------------------------------------------------------
INVESTMENT INCOME:
Dividend $1,005 $ 545 $ 622 $ 36
Interest 31 30 440 1
Less: Foreign tax withheld -- -- (4) --
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 1,036 575 1,058 37
- ------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment Advisory Fees 308 241 619 20
Shareholder Servicing Fees--Institutional Class 102 75 30 3
Shareholder Servicing Fees--Class A(1) 44 35 56 7
Shareholder Servicing Fees--Class R(1) -- -- 248 --
Administrative Fees 33 24 47 2
Trustee Fees 2 1 2 --
Transfer Agent Fees 5 4 7 --
Professional Fees 4 2 5 1
Custodian Fees 3 2 4 --
Insurance and Other Fees 5 3 6 --
- ------------------------------------------------------------------------------------------------------------------------------
Total Expenses 506 387 1,024 33
- ------------------------------------------------------------------------------------------------------------------------------
Recapture of Investment Advisory Fees Waived(2) 2 -- -- --
Less, Waiver of:
Administrative Fees (3) (2) (3) --
Transfer Agent Fees (5) (4) (7) --
- ------------------------------------------------------------------------------------------------------------------------------
Net Expenses 500 381 1,014 33
- ------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 536 194 44 4
- ------------------------------------------------------------------------------------------------------------------------------
Net Realized Gain From Securities Transactions 4,127 376 2,115 40
Net Change in Unrealized Appreciation
on Investments 1,915 2,999 3,809 320
- ------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $6,578 $3,569 $5,968 $364
==============================================================================================================================
(1) INCLUDES CLASS SPECIFIC DISTRIBUTION EXPENSES.
(2) SEE NOTE 4 FOR ADVISORY FEES RECAPTURED.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 57
statements of operations For
THE YEAR ENDED SEPTEMBER 30, 2005
- ------------------------------------------------------------------------------------------------------------------------------
California
Corporate Government Tax Exempt High Yield
Bond Fund Bond Fund Bond Fund Bond Fund
(000) (000) (000) (000)
------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 2,302 $ 913 $ 709 $ 3,932
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 2,302 913 709 3,932
- ------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment Advisory Fees 202 107 60 338
Shareholder Servicing Fees--Institutional Class 122 61 50 59
Shareholder Servicing Fees--Class A(1) 8 2 11 118
Administrative Fees 33 16 15 30
Trustee Fees 2 1 1 2
Transfer Agent Fees 5 2 2 4
Professional Fees 6 3 2 5
Printing Fees 1 1 -- 1
Custodian Fees 3 1 1 3
Insurance and Other Fees 5 2 2 4
- ------------------------------------------------------------------------------------------------------------------------------
Total Expenses 387 196 144 564
- ------------------------------------------------------------------------------------------------------------------------------
Recapture of Investment Advisory Fees Waived(2) 3 -- -- --
Less, Waiver of:
Investment Advisory Fees -- (18) (25) (42)
Administrative Fees (3) (1) (1) (2)
Transfer Agent Fees (5) (2) (2) (4)
- ------------------------------------------------------------------------------------------------------------------------------
Net Expenses 382 175 116 516
- ------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,920 738 593 3,416
- ------------------------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) From Securities Transactions (65) (55) 135 (157)
Net Change in Unrealized Depreciation
on Investments (1,281) (342) (391) (1,200)
- ------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 574 $ 341 $ 337 $ 2,059
==============================================================================================================================
(1) INCLUDES CLASS SPECIFIC DISTRIBUTION EXPENSES.
(2) SEE NOTE 4 FOR ADVISORY FEES RECAPTURED.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 58
statements of operations For
THE YEAR ENDED SEPTEMBER 30, 2005
- ------------------------------------------------------------------------------------------------------------------------------
California
Prime Government Tax Exempt
Money Money Money
Market Fund Market Fund Market Fund
(000) (000) (000)
------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $20,308 $57,351 $14,509
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 20,308 57,351 14,509
- ------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment Advisory Fees 1,881 5,666 1,925
Shareholder Servicing Fees--Institutional Class 890 111 233
Shareholder Servicing Fees--Class A(1) 1,775 14,150 4,352
Shareholder Servicing Fees--Class S(1) 1,195 1,871 297
Administrative Fees 497 1,455 471
Trustee Fees 25 76 21
Transfer Agent Fees 74 215 70
Professional Fees 77 222 62
Printing Fees 14 43 5
Registration and Filing Fees 4 28 8
Custodian Fees 46 125 41
Insurance and Other Fees 73 258 79
- ------------------------------------------------------------------------------------------------------------------------------
Total Expenses 6,551 24,220 7,564
- ------------------------------------------------------------------------------------------------------------------------------
Recapture of Investment Advisory Fees Waived(2) 42 129 --
Less, Waiver of:
Investment Advisory Fees -- -- (429)
Administrative Fees (40) (124) (38)
Shareholder Servicing Fees -- Class A(1) (662) (5,289) (1,569)
Shareholder Servicing Fees -- Class S(1) (128) (201) (28)
Transfer Agent Fees (74) (215) (70)
- ------------------------------------------------------------------------------------------------------------------------------
Net Expenses 5,689 18,520 5,430
- ------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 14,619 38,831 9,079
- ------------------------------------------------------------------------------------------------------------------------------
Net Realized Gain From Securities Transactions 1 -- --
- ------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $14,620 $38,831 $ 9,079
==============================================================================================================================
(1) INCLUDES CLASS SPECIFIC DISTRIBUTION EXPENSES.
(2) SEE NOTE 4 FOR ADVISORY FEES RECAPTURED.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 59
statements of changes in net assets
FOR THE YEAR ENDED SEPTEMBER 30, 2005
- -------------------------------------------------------------------------------------------------------------------------------
Large Cap Value Large Cap Growth
Equity Fund (000) Equity Fund (000)
-------------------------- -----------------------------
2005 2004 2005 2004
- ------------------------------------------------------------------------------------------ -----------------------------
OPERATIONS:
Net Investment Income (Loss) $ 536 $ 367 $ 194 $ 20
Net Realized Gain (Loss) from
Security Transactions 4,127 1,919 376 270
Net Change in Unrealized Appreciation
(Depreciation) on Investments 1,915 4,512 2,999 1,045
- ------------------------------------------------------------------------------------------ -----------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 6,578 6,798 3,569 1,335
- ------------------------------------------------------------------------------------------ -----------------------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net Investment Income:
INSTITUTIONAL CLASS (453) (335) (172) (17)
CLASS A (82) (32) (26) --
Realized Capital Gains:
INSTITUTIONAL CLASS (1,585) -- -- --
CLASS A (323) -- -- --
CLASS R -- -- -- --
- ------------------------------------------------------------------------------------------ -----------------------------
Total Dividends and Distributions (2,443) (367) (198) (17)
- ------------------------------------------------------------------------------------------ -----------------------------
CAPITAL SHARE TRANSACTIONS:(1)
INSTITUTIONAL CLASS:
Shares Issued 8,083 7,249 10,719 7,697
Shares Issued in Lieu of Dividends and Distributions 673 78 56 5
Shares Redeemed (7,549) (7,981) (4,944) (5,658)
- ------------------------------------------------------------------------------------------ -----------------------------
Increase (Decrease) in Net Assets from
Institutional Class Share Transactions 1,207 (654) 5,831 2,044
- ------------------------------------------------------------------------------------------ -----------------------------
CLASS A:
Shares Issued 4,714 4,721 3,209 3,941
Shares Issued in Lieu of Dividends and Distributions 323 21 18 --
Shares Redeemed (1,366) (702) (785) (719)
- ------------------------------------------------------------------------------------------ -----------------------------
Increase in Net Assets from
Class A Share Transactions 3,671 4,040 2,442 3,222
- ------------------------------------------------------------------------------------------ -----------------------------
CLASS R:
Shares Issued -- -- -- --
Shares Issued in Lieu of Dividends and Distributions -- -- -- --
Shares Redeemed -- -- -- --
- ------------------------------------------------------------------------------------------ -----------------------------
Increase in Net Assets from
Class R Share Transactions -- -- -- --
- ------------------------------------------------------------------------------------------ -----------------------------
Net Increase in Net Assets from Share Transactions 4,878 3,386 8,273 5,266
- ------------------------------------------------------------------------------------------ -----------------------------
Total Increase in Net Assets 9,013 9,817 11,644 6,584
- ------------------------------------------------------------------------------------------ -----------------------------
NET ASSETS:
Beginning of Year 44,625 34,808 30,798 24,214
- ------------------------------------------------------------------------------------------ -----------------------------
End of Year $53,638 $44,625 $42,442 $30,798
========================================================================================== =============================
Undistributed (Distributions in Excess of)
Net Investment Income $ -- $ (1) $ (1) $ 3
- ------------------------------------------------------------------------------------------ -----------------------------
(1) SEE NOTE 8 FOR SHARES ISSUED AND REDEEMED.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 60
statements of changes in net assets
FOR THE YEAR ENDED SEPTEMBER 30, 2005
- -------------------------------------------------------------------------------------------------------------------------------
RCB Small Cap Technology Growth
Value Fund (000) Fund (000)
---------------------------------------------------------------
2005 2004 2005 2004
- -------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net Investment Income (Loss) $ 44 $ (3) $ 4 $ (23)
Net Realized Gain (Loss) from
Security Transactions 2,115 2,093 40 (242)
Net Change in Unrealized Appreciation
(Depreciation) on Investments 3,809 4,851 320 175
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 5,968 6,941 364 (90)
- -------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net Investment Income:
INSTITUTIONAL CLASS -- -- -- --
CLASS A -- -- -- --
Realized Capital Gains:
INSTITUTIONAL CLASS (462) (23) -- --
CLASS A (480) (11) -- --
CLASS R (2,072) (53) -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total Dividends and Distributions (3,014) (87) -- --
- -------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:(1)
INSTITUTIONAL CLASS:
Shares Issued 7,853 4,885 428 268
Shares Issued in Lieu of Dividends and Distributions 325 14 -- --
Shares Redeemed (3,616) (3,741) (379) (185)
- -------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets from
Institutional Class Share Transactions 4,562 1,158 49 83
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A:
Shares Issued 7,216 6,794 37 633
Shares Issued in Lieu of Dividends and Distributions 391 8 -- --
Shares Redeemed (2,825) (2,541) (56) (273)
- -------------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets from
Class A Share Transactions 4,782 4,261 (19) 360
- -------------------------------------------------------------------------------------------------------------------------------
CLASS R:
Shares Issued 28,095 20,199 -- --
Shares Issued in Lieu of Dividends and Distributions 1,991 52 -- --
Shares Redeemed (10,847) (2,432) -- --
- -------------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets from
Class R Share Transactions 19,239 17,819 -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Share Transactions 28,583 23,238 30 443
- -------------------------------------------------------------------------------------------------------------------------------
Total Increase in Net Assets 31,537 30,092 394 353
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Year 52,979 22,887 2,216 1,863
- -------------------------------------------------------------------------------------------------------------------------------
End of Year $84,516 $52,979 $2,610 $2,216
===============================================================================================================================
Undistributed (Distributions in Excess of)
Net Investment Income $ 43 $ -- $ 4 $ --
- -------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
Corporate Bond
Fund (000)
-----------------------------
2005 2004
- ------------------------------------------------------------------------------------------
OPERATIONS:
Net Investment Income (Loss) $ 1,920 $ 1,718
Net Realized Gain (Loss) from
Security Transactions (65) 302
Net Change in Unrealized Appreciation
(Depreciation) on Investments (1,281) (967)
- ------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 574 1,053
- ------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net Investment Income:
INSTITUTIONAL CLASS (1,865) (1,679)
CLASS A (54) (39)
Realized Capital Gains:
INSTITUTIONAL CLASS (293) (412)
CLASS A (10) (5)
CLASS R -- --
- ------------------------------------------------------------------------------------------
Total Dividends and Distributions (2,222) (2,135)
- ------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:(1)
INSTITUTIONAL CLASS:
Shares Issued 15,341 16,489
Shares Issued in Lieu of Dividends and Distributions 396 353
Shares Redeemed (10,031) (10,957)
- ------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets from
Institutional Class Share Transactions 5,706 5,885
- ------------------------------------------------------------------------------------------
CLASS A:
Shares Issued 604 1,209
Shares Issued in Lieu of Dividends and Distributions 30 26
Shares Redeemed (571) (522)
- ------------------------------------------------------------------------------------------
Increase in Net Assets from
Class A Share Transactions 63 713
- ------------------------------------------------------------------------------------------
CLASS R:
Shares Issued -- --
Shares Issued in Lieu of Dividends and Distributions -- --
Shares Redeemed -- --
- ------------------------------------------------------------------------------------------
Increase in Net Assets from
Class R Share Transactions -- --
- ------------------------------------------------------------------------------------------
Net Increase in Net Assets from Share Transactions 5,769 6,598
- ------------------------------------------------------------------------------------------
Total Increase in Net Assets 4,121 5,516
- ------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Year 48,602 43,086
- ------------------------------------------------------------------------------------------
End of Year $ 52,723 $ 48,602
==========================================================================================
Undistributed (Distributions in Excess of)
Net Investment Income $ -- $ --
- ------------------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 61
statements of changes in net assets
FOR THE YEAR ENDED SEPTEMBER 30, 2005
- -------------------------------------------------------------------------------------------------------------------------------
Government California Tax Exempt
Bond Fund (000) Bond Fund (000)
--------------------------- ------------------------------
2005 2004 2005 2004
- -------------------------------------------------------------------------------------------- ------------------------------
Operations:
Net Investment Income $ 738 $ 454 $ 593 $ 459
Net Realized Gain (Loss) from
Security Transactions (55) 116 135 38
Net Change in Unrealized Appreciation
(Depreciation) on Investments (342) (383) (391) (112)
- -------------------------------------------------------------------------------------------- ------------------------------
Net Increase in Net Assets
Resulting from Operations 341 187 337 385
- -------------------------------------------------------------------------------------------- ------------------------------
Dividends and Distributions from:
Net Investment Income:
Institutional Class (728) (446) (540) (425)
Class A (11) (4) (53) (34)
Class S -- -- -- --
Realized Capital Gains:
Institutional Class (118) (210) (71) (189)
Class A (2) (1) (11) (13)
Class S -- -- -- --
- -------------------------------------------------------------------------------------------- ------------------------------
Total Dividends and Distributions (859) (661) (675) (661)
- -------------------------------------------------------------------------------------------- ------------------------------
Capital Share Transactions:(1)
Institutional Class:
Shares Issued 12,985 9,591 8,952 7,171
Shares Issued in Lieu of Dividends and Distributions 209 179 139 83
Shares Redeemed (5,454) (3,994) (3,813) (3,735)
- -------------------------------------------------------------------------------------------- ------------------------------
Increase (Decrease) in Net Assets from
Institutional Class Share Transactions 7,740 5,776 5,278 3,519
- -------------------------------------------------------------------------------------------- ------------------------------
Class A:
Shares Issued 275 433 302 1,710
Shares Issued in Lieu of Dividends and Distributions 5 3 25 32
Shares Redeemed (153) (15) (1,240) (35)
- -------------------------------------------------------------------------------------------- ------------------------------
Increase (Decrease) in Net Assets from
Class A Share Transactions 127 421 (913) 1,707
- -------------------------------------------------------------------------------------------- ------------------------------
Class S:
Shares Issued -- -- -- --
Shares Issued in Lieu of Dividends and Distributions -- -- -- --
Shares Redeemed -- -- -- --
- -------------------------------------------------------------------------------------------- ------------------------------
Increase (Decrease) in Net Assets from
Class S Share Transactions -- -- -- --
- -------------------------------------------------------------------------------------------- ------------------------------
Net Increase (Decrease) in Net Assets from
Share Transactions 7,867 6,197 4,365 5,226
- -------------------------------------------------------------------------------------------- ------------------------------
Total Increase (Decrease) in Net Assets 7,349 5,723 4,027 4,950
- -------------------------------------------------------------------------------------------- ------------------------------
Net Assets:
Beginning of Year 21,337 15,614 20,228 15,278
- -------------------------------------------------------------------------------------------- ------------------------------
End of Year $28,686 $21,337 $24,255 $20,228
============================================================================================ ==============================
Undistributed (Distributions in excess of)
Net Investment Income $ 3 $ -- $ -- $ --
- -------------------------------------------------------------------------------------------- ------------------------------
(1) SEE NOTE 8 FOR SHARES ISSUED AND REDEEMED.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 62
- -------------------------------------------------------------------------------------------------------------------------------
High Yield Prime Money
Bond Fund (000) Market Fund (000)
------------------------------------------------------------------
2005 2004 2005 2004
- -------------------------------------------------------------------------------------------------------------------------------
Operations:
Net Investment Income $ 3,416 $ 2,860 $ 14,619 $ 2,709
Net Realized Gain (Loss) from
Security Transactions (157) 570 1 4
Net Change in Unrealized Appreciation
(Depreciation) on Investments (1,200) 735 -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations 2,059 4,165 14,620 2,713
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions from:
Net Investment Income:
Institutional Class (1,815) (1,366) (7,317) (1,845)
Class A (1,589) (1,480) (4,601) (642)
Class S -- -- (2,701) (233)
Realized Capital Gains:
Institutional Class -- -- -- --
Class A -- -- -- --
Class S -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total Dividends and Distributions (3,404) (2,846) (14,619) (2,720)
- -------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:(1)
Institutional Class:
Shares Issued 6,056 9,880 1,215,600 1,030,373
Shares Issued in Lieu of Dividends and Distributions 945 736 1,411 375
Shares Redeemed (6,600) (1,740) (1,251,828) (950,623)
- -------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets from
Institutional Class Share Transactions 401 8,876 (34,817) 80,125
- -------------------------------------------------------------------------------------------------------------------------------
Class A:
Shares Issued 4,528 12,671 958,549 697,874
Shares Issued in Lieu of Dividends and Distributions 920 897 982 154
Shares Redeemed (4,403) (10,513) (848,138) (702,159)
- -------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets from
Class A Share Transactions 1,045 3,055 111,393 (4,131)
- -------------------------------------------------------------------------------------------------------------------------------
Class S:
Shares Issued -- -- 499,380 460,307
Shares Issued in Lieu of Dividends and Distributions -- -- -- --
Shares Redeemed -- -- (411,638) (463,168)
- -------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets from
Class S Share Transactions -- -- 87,742 (2,861)
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets from
Share Transactions 1,446 11,931 164,318 73,133
- -------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 101 13,250 164,319 73,126
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets:
Beginning of Year 43,515 30,265 684,028 610,902
- -------------------------------------------------------------------------------------------------------------------------------
End of Year $43,616 $ 43,515 $ 848,347 $ 684,028
===============================================================================================================================
Undistributed (Distributions in excess of)
Net Investment Income $ -- $ -- $ -- $ --
- -------------------------------------------------------------------------------------------------------------------------------
Government Money California Tax Exempt
Market Fund (000) Money Market Fund (000)
------------------------------------------------------------------
2005 2004 2005 2004
- -------------------------------------------------------------------------------------------------------------------------------
Operations:
Net Investment Income $ 38,831 $ 7,492 $ 9,079 $ 2,231
Net Realized Gain (Loss) from
Security Transactions -- 6 -- 177
Net Change in Unrealized Appreciation
(Depreciation) on Investments -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations 38,831 7,498 9,079 2,408
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions from:
Net Investment Income:
Institutional Class (880) (293) (1,365) (539)
Class A (33,943) (6,772) (7,285) (1,641)
Class S (4,006) (427) (433) (51)
Realized Capital Gains:
Institutional Class -- -- (27) --
Class A -- -- (144) --
Class S -- -- (7) --
- -------------------------------------------------------------------------------------------------------------------------------
Total Dividends and Distributions (38,829) (7,492) (9,261) (2,231)
- -------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:(1)
Institutional Class:
Shares Issued 376,258 579,828 1,139,802 1,066,689
Shares Issued in Lieu of Dividends and Distributions 7 1 8 1
Shares Redeemed (387,834) (593,062) (1,145,985) (1,075,122)
- -------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets from
Institutional Class Share Transactions (11,569) (13,233) (6,175) (8,432)
- -------------------------------------------------------------------------------------------------------------------------------
Class A:
Shares Issued 4,965,371 4,331,865 1,822,478 1,454,752
Shares Issued in Lieu of Dividends and Distributions 23,227 4,840 6,066 1,367
Shares Redeemed (4,950,864) (4,539,896) (1,763,753) (1,490,415)
- -------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets from
Class A Share Transactions 37,734 (203,191) 64,791 (34,296)
- -------------------------------------------------------------------------------------------------------------------------------
Class S:
Shares Issued 689,747 739,765 271,376 256,655
Shares Issued in Lieu of Dividends and Distributions -- -- -- --
Shares Redeemed (724,928) (668,217) (216,708) (247,146)
- -------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets from
Class S Share Transactions (35,181) 71,548 54,668 9,509
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets from
Share Transactions (9,016) (144,876) 113,284 (33,219)
- -------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets (9,014) (144,870) 113,102 (33,042)
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets:
Beginning of Year 2,164,370 2,309,240 617,962 651,004
- -------------------------------------------------------------------------------------------------------------------------------
End of Year $ 2,155,356 $ 2,164,370 $ 731,064 $ 617,962
===============================================================================================================================
Undistributed (Distributions in excess of)
Net Investment Income $ 5 $ -- $ (5) $ 4
- -------------------------------------------------------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 63
financial highlights
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FOR THE YEAR ENDED SEPTEMBER 30,
- -------------------------------------------------------------------------------------------------------------------
NET
NET REALIZED AND DISTRIBUTIONS NET NET
ASSET NET UNREALIZED DIVIDENDS FROM ASSET ASSETS
VALUE INVESTMENT GAINS (LOSSES) FROM NET REALIZED VALUE END
BEGINNING INCOME ON INVESTMENT CAPITAL END TOTAL OF PERIOD
OF PERIOD (LOSS) SECURITIES INCOME GAINS OF PERIOD RETURN++ (000)
- -------------------------------------------------------------------------------------------------------------------
Large Cap Value Equity Fund
Institutional Class (commenced operations on January 14, 2000)
2005 $ 8.77 $ 0.10^ $ 1.13^ $(0.10) $(0.36) $ 9.54 14.39% $42,974
2004 7.41 0.08^ 1.36^ (0.08) -- 8.77 19.40 38,344
2003 6.04 0.07 1.37 (0.07) -- 7.41 24.03 33,016
2002 7.63 0.07 (1.47) (0.07) (0.12) 6.04 (18.88) 23,325
2001 10.04 0.07 (1.57) (0.07) (0.84) 7.63 (16.36) 27,293
Class A (commenced operations on April 13, 2000)
2005 $ 8.76 $ 0.09^ $ 1.12^ $(0.08) $(0.36) $ 9.53 14.14% $10,664
2004 7.41 0.05^ 1.36^ (0.06) -- 8.76 19.01 6,281
2003 6.04 0.06 1.37 (0.06) -- 7.41 23.75 1,792
2002 7.62 0.05 (1.46) (0.05) (0.12) 6.04 (18.97) 769
2001 10.04 0.04 (1.58) (0.04) (0.84) 7.62 (16.68) 704
- -------------------------------------------------------------------------------------------------------------------
Large Cap Growth Equity Fund
Institutional Class (commenced operations on January 14, 2000)
2005 $ 6.76 $ 0.04^ $ 0.67^ $(0.04) $ -- $ 7.43 10.55% $34,164
2004 6.37 0.01^ 0.38^ --^^ -- 6.76 6.20 25,575
2003 5.25 0.01^ 1.12^ (0.01) -- 6.37 21.51 22,249
2002 6.36 $ -- (1.11) -- -- 5.25 (17.45) 14,195
2001 9.37 (0.02) (2.99) -- -- 6.36 (32.12) 15,550
Class A (commenced operations on March 28, 2000)
2005 $ 6.69 $ 0.02^ $ 0.67^ $(0.03) $ -- $ 7.35 10.28% $ 8,278
2004 6.32 (0.01)^ 0.38^ --^^ -- 6.69 5.87 5,223
2003 5.21 (0.01)^ 1.12^ -- -- 6.32 21.31 1,965
2002 6.33 (0.02) (1.10) -- -- 5.21 (17.69) 798
2001 9.35 (0.03) (2.99) -- -- 6.33 (32.30) 636
- -------------------------------------------------------------------------------------------------------------------
RCB Small Cap Value Fund
Institutional Class (commenced operations on October 3, 2001)
2005 $27.30 $ 0.07^ $ 2.58^ $ -- $(1.37) $28.58 9.87% $13,975
2004 21.92 0.06^ 5.40^ -- (0.08) 27.30 24.97 8,955
2003 15.06 (0.04)^ 6.90^ -- -- 21.92 45.55 6,236
2002 17.11 (0.07) (1.98) -- -- 15.06 (11.98) 1,768
Class A (commenced operations on October 3, 2001)
2005 $27.13 $ 0.00^ $ 2.55^ $ -- $(1.37) $28.31 9.55% $12,754
2004 21.84 (0.02)^ 5.39^ -- (0.08) 27.13 24.64 7,551
2003 15.04 (0.08)^ 6.88^ -- -- 21.84 45.21 2,384
2002 17.11 (0.05) (2.02) -- -- 15.04 (12.10) 410
Class R (commenced operations on September 30, 1998)(2)
2005 $27.09 $ 0.01^ $ 2.54^ $ -- $(1.37) $28.27 9.56% $57,787
2004 21.81 (0.02)^ 5.38^ -- (0.08) 27.09 24.63 36,473
2003 15.02 (0.07)^ 6.86^ -- -- 21.81 45.21 14,267
2002 16.94 (0.12) (1.80) -- -- 15.02 (11.33) 10,174
2001* 18.84 (0.02) (1.88) -- -- 16.94 (10.08) 8,122
2001+ 15.80 (0.09) 3.85 -- (0.72)(3) 18.84 24.34 8,869
- -------------------------------------------------------------------------------------------------------------------
Technology Growth Fund
Institutional Class (commenced operations on October 3, 2000)
2005 $ 3.46 $ 0.01^ $ 0.57^ $ -- $ -- $ 4.04 16.76% $ 1,187
2004 3.50 (0.03)^ (0.01)^ -- -- 3.46 (1.14) 976
2003 2.26 (0.02) 1.26 -- -- 3.50 54.87 913
2002 3.54 (0.03) (1.25) -- -- 2.26 (36.16) 565
2001 10.00 (0.02) (6.43) (0.01) -- 3.54 (64.56) 907
Class A (commenced operations on October 23, 2000)
2005 $ 3.42 $ 0.00^ $ 0.56^ $ -- $ -- $ 3.98 16.37% $ 1,423
2004 3.48 (0.04)^ (0.02)^ -- -- 3.42 (1.72) 1,240
2003 2.25 (0.03) 1.26 -- -- 3.48 54.67 950
2002 3.54 (0.04) (1.25) -- -- 2.25 (36.44) 432
2001 10.31 (0.03) (6.73) (0.01) -- 3.54 (65.37) 481
- ----------------------------------------------------------------------------
RATIO
OF EXPENSES
RATIO TO AVERAGE
OF NET NET ASSETS
RATIO INVESTMENT (EXCLUDING
OF EXPENSES INCOME (LOSS) WAIVERS & PORTFOLIO
TO AVERAGE TO AVERAGE FEES TURNOVER
NET ASSETS(1) NET ASSETS(1) RECAPTURE)(1) RATE
- ----------------------------------------------------------------------------
Large Cap Value Equity Fund
Institutional Class (commenced operations on January 14, 2000)
2005 0.96% 1.12% 0.97% 34%
2004 0.97 0.92 0.97 36
2003 1.00 1.12 1.00 39
2002 1.00 0.90 1.05 42
2001 1.00 0.74 1.09 51
Class A (commenced operations on April 13, 2000)
2005 1.21% 0.87% 1.22% 34%
2004 1.22 0.64 1.22 36
2003 1.25 0.84 1.25 39
2002 1.25 0.65 1.30 42
2001 1.25 0.49 1.34 51
- ----------------------------------------------------------------------------
Large Cap Growth Equity Fund
Institutional Class (commenced operations on January 14, 2000)
2005 0.98% 0.57% 1.00% 27%
2004 1.01 0.10 1.01 50
2003 1.05 0.16 1.03 43
2002 1.05 (0.04) 1.09 31
2001 1.05 (0.22) 1.13 58
Class A (commenced operations on March 28, 2000)
2005 1.23% 0.33% 1.25% 27%
2004 1.26 (0.14) 1.26 50
2003 1.30 (0.09) 1.29 43
2002 1.30 (0.29) 1.34 31
2001 1.30 (0.47) 1.38 58
- ----------------------------------------------------------------------------
RCB Small Cap Value Fund
Institutional Class (commenced operations on October 3, 2001)
2005 1.18% 0.26% 1.20% 41%
2004 1.21 0.23 1.20 40
2003 1.24 (0.20) 1.24 65
2002 1.24 (0.46) 1.28 39
Class A (commenced operations on October 3, 2001)
2005 1.43% 0.01% 1.45% 41%
2004 1.49 (0.07) 1.48 40
2003 1.49 (0.45) 1.49 65
2002 1.49 (0.74) 1.53 39
Class R (commenced operations on September 30, 1998)(2)
2005 1.43% 0.02% 1.45% 41%
2004 1.49 (0.07) 1.48 40
2003 1.49 (0.41) 1.49 65
2002 1.49 (0.70) 1.53 39
2001* 1.26 (0.51) 2.63 5
2001+ 1.49 (0.69) 2.85 43
- ----------------------------------------------------------------------------
Technology Growth Fund
Institutional Class (commenced operations on October 3, 2000)
2005 1.20% 0.34% 1.21% 37%
2004 1.20 (0.82) 1.28 33
2003 1.20 (0.78) 1.36 29
2002 1.20 (0.88) 1.37 24
2001 1.20 (0.38)++ 1.41 23
Class A (commenced operations on October 23, 2000)
2005 1.50% 0.06% 1.51% 37%
2004 1.50 (1.12) 1.58 33
2003 1.50 (1.08) 1.66 29
2002 1.50 (1.18) 1.67 24
2001 1.50 (1.04)++ 1.71 23
* FOR THE THREE MONTH PERIOD ENDING SEPTEMBER 30, 2001.
+ FOR THE YEARS ENDING JUNE 30.
++ RATIOS REFLECT THE IMPACT OF THE INITIAL LOW LEVEL OF AVERAGE NET ASSETS
ASSOCIATED WITH COMMENCEMENT OF OPERATIONS AND THE EFFECTS OF
ANNUALIZATION.
++ RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED. FEE
WAIVERS ARE IN EFFECT; IF THEY HAD NOT BEEN IN EFFECT, PERFORMANCE WOULD
HAVE BEEN LOWER. TOTAL RETURN FIGURES DO NOT INCLUDE APPLICABLE SALES
LOADS. RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES THAT A
SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND
SHARES.
^ PER SHARE CALCULATIONS ARE BASED ON AVERAGE SHARES OUTSTANDING THROUGHOUT
THE PERIOD.
^^ AMOUNT REPRESENTS LESS THAN $0.01 PER SHARE.
(1) ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
(2) ON OCTOBER 3, 2001, THE RCBSMALL CAP FUND EXCHANGED ALL OF ITS ASSETS AND
LIABILITIES FOR SHARES OF THE CNI CHARTER RCBSMALL CAP VALUE FUND. THE CNI
CHARTER RCB SMALL CAP VALUE FUND IS THE ACCOUNTING SURVIVOR IN THIS
TRANSACTION, AND AS A RESULT, ITS BASIS OF ACCOUNTING FOR ASSETS AND
LIABILITIES AND ITS OPERATING RESULTS FOR THE PERIODS PRIOR TO OCTOBER 3,
2001 HAVE BEEN CARRIED FORWARD IN THESE FINANCIAL HIGHLIGHTS.
(3) INCLUDES RETURN OF CAPITAL OF $0.35 PER SHARE.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 64
financial highlights
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FOR THE YEAR ENDED SEPTEMBER 30,
- -------------------------------------------------------------------------------------------------------------------
NET
NET REALIZED AND DISTRIBUTIONS NET NET
ASSET UNREALIZED DIVIDENDS FROM ASSET ASSETS
VALUE NET GAINS (LOSSES) FROM NET REALIZED VALUE END
BEGINNING INVESTMENT ON INVESTMENT CAPITAL END TOTAL OF PERIOD
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD RETURN++ (000)
- -------------------------------------------------------------------------------------------------------------------
Corporate Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2005 $10.60 $ 0.40^ $(0.27)^ $(0.40) $(0.06) $10.27 1.26% $51,193
2004 10.89 0.41^ (0.18)^ (0.41) (0.11) 10.60 2.15 47,080
2003 10.65 0.46 0.24 (0.46) -- 10.89 6.74 42,256
2002 10.72 0.53 0.09 (0.53) (0.16) 10.65 6.06 40,807
2001 10.14 0.60 0.60 (0.60) (0.02) 10.72 12.14 32,800
Class A (commenced operations on April 13, 2000)
2005 $10.61 $ 0.37^ $(0.28)^ $(0.37) $(0.06) $10.27 0.91% $ 1,530
2004 10.89 0.37^ (0.16)^ (0.38) (0.11) 10.61 1.99 1,522
2003 10.65 0.44 0.23 (0.43) -- 10.89 6.47 830
2002 10.73 0.50 0.08 (0.50) (0.16) 10.65 5.69 544
2001 10.13 0.57 0.62 (0.57) (0.02) 10.73 12.08 93
- -------------------------------------------------------------------------------------------------------------------
Government Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2005 $10.62 $ 0.31^ $(0.16)^ $(0.31) $(0.06) $10.40 1.42% $28,132
2004 10.93 0.25^ (0.17)^ (0.25) (0.14) 10.62 0.81 20,901
2003 11.02 0.36^ (0.07)^ (0.37) (0.01) 10.93 2.68* 15,596
2002 10.80 0.44 0.34 (0.44) (0.12) 11.02 7.53 14,502
2001 10.17 0.53 0.63 (0.53) -- 10.80 11.67 12,648
Class A (commenced operations on April 13, 2000)
2005 $10.64 $ 0.29^ $(0.17)^ $(0.28) $(0.06) $10.42 1.16% $ 554
2004 10.95 0.23^ (0.17)^ (0.23) (0.14) 10.64 0.55 436
2003 11.01 0.33^ (0.04)^ (0.34) (0.01) 10.95 2.71* 18
2002 10.77 0.43 0.34 (0.41) (0.12) 11.01 7.47 525
2001 10.16 0.49 0.63 (0.51) -- 10.77 11.25 4
- -------------------------------------------------------------------------------------------------------------------
California Tax Exempt Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2005 $10.41 $ 0.28^ $(0.11)^ $(0.28) $(0.04) $10.26 1.65% $22,768
2004 10.60 0.27^ (0.06)^ (0.27) (0.13) 10.41 2.00 17,789
2003 10.83 0.31 (0.04) (0.31) (0.19) 10.60 2.63 14,546
2002 10.50 0.36 0.41 (0.35) (0.09) 10.83 7.58 16,147
2001 10.22 0.43 0.30 (0.43) (0.02) 10.50 7.21 15,526
Class A (commenced operations on April 13, 2000)
2005 $10.44 $ 0.25^ $(0.11)^ $(0.25) $(0.04) $10.29 1.39% $ 1,487
2004 10.62 0.24^ (0.05)^ (0.24) (0.13) 10.44 1.84 2,439
2003 10.85 0.27 (0.02) (0.29) (0.19) 10.62 2.37 732
2002 10.51 0.33 0.43 (0.33) (0.09) 10.85 7.40 13
2001 10.22 0.41 0.30 (0.40) (0.02) 10.51 7.08 6
- -------------------------------------------------------------------------------------------------------------------
High Yield Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2005 $ 9.31 $ 0.71^ $(0.27)^ $(0.71) $ -- $ 9.04 4.85% $22,588
2004 8.95 0.72^ 0.36^ (0.72) -- 9.31 12.47 22,860
2003 8.16 0.76 0.79 (0.76) -- 8.95 19.75 13,387
2002 8.57 0.83 (0.40) (0.84) -- 8.16 4.80 10,020
2001 9.76 0.98 (1.18) (0.98) (0.01) 8.57 (2.45) 9,310
Class A (commenced operations on January 14, 2000)
2005 $ 9.31 $ 0.69^ $(0.27)^ $(0.69) $ -- $ 9.04 4.54% $21,028
2004 8.95 0.70^ 0.35^ (0.69) -- 9.31 12.14 20,655
2003 8.16 0.74 0.78 (0.73) -- 8.95 19.39 16,878
2002 8.57 0.81 (0.40) (0.82) -- 8.16 4.49 9,397
2001 9.76 0.95 (1.18) (0.95) (0.01) 8.57 (2.74) 3,973
- -----------------------------------------------------------------------------
RATIO
OF EXPENSES
RATIO TO AVERAGE
OF NET NET ASSETS
RATIO INVESTMENT (EXCLUDING
OF EXPENSES INCOME WAIVERS & PORTFOLIO
TO AVERAGE TO AVERAGE FEES TURNOVER
NET ASSETS(1) NET ASSETS(1) RECAPTURE)(1) RATE
- -----------------------------------------------------------------------------
Corporate Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2005 0.75% 3.80% 0.76% 25%
2004 0.75 3.82 0.79 57
2003 0.75 4.30 0.78 66
2002 0.75 5.04 0.82 55
2001 0.75 5.71+ 0.86 83
Class A (commenced operations on April 13, 2000)
2005 1.00% 3.55% 1.01% 25%
2004 1.00 3.51 1.04 57
2003 1.00 4.00 1.03 66
2002 1.00 4.71 1.07 55
2001 1.00 5.67+ 1.11 83
- -----------------------------------------------------------------------------
Government Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2005 0.70% 2.98% 0.79% 58%
2004 0.70 2.39 0.81 169
2003 0.70 3.26 0.81 54
2002 0.70 4.11+ 0.86 70
2001 0.70 5.04+ 0.91 126
Class A (commenced operations on April 13, 2000)
2005 0.95% 2.70% 1.04% 58%
2004 0.95 2.14 1.06 169
2003 0.95 3.00 1.06 54
2002 0.95 3.70 1.11 70
2001 0.95 5.03+ 1.16 126
- -----------------------------------------------------------------------------
California Tax Exempt Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2005 0.50% 2.70% 0.63% 54%
2004 0.50 2.55 0.65 51
2003 0.50 2.91 0.65 68
2002 0.50 3.33 0.70 90
2001 0.50 4.11 0.75 56
Class A (commenced operations on April 13, 2000)
2005 0.75% 2.43% 0.88% 54%
2004 0.75 2.29 0.90 51
2003 0.75 2.62 0.90 68
2002 0.75 3.05 0.95 90
2001 0.75 3.82 1.00 56
- -----------------------------------------------------------------------------
High Yield Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2005 1.00% 7.71% 1.11% 46%
2004 1.00 7.87 1.14 35
2003 1.00 8.84 1.13 36
2002 1.00 9.48 1.18 30
2001 1.00 10.52 1.23 12
Class A (commenced operations on January 14, 2000)
2005 1.30% 7.41% 1.41% 46%
2004 1.30 7.56 1.44 35
2003 1.30 8.44 1.43 36
2002 1.30 9.03 1.48 30
2001 1.30 10.14 1.53 12
* TOTAL RETURN FOR CLASS A OF THE GOVERNMENT BOND FUND IS GREATER THAN THE
INSTITUTIONAL CLASS'S DUE TO A LARGE REDEMPTION DURING THE YEAR.
+ RATIOS REFLECT THE IMPACT OF SIGNIFICANT CHANGES IN AVERAGE NET ASSETS AND
THE EFFECTS OF ANNUALIZATION.
++ RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED. FEE
WAIVERS ARE IN EFFECT; IF THEY HAD NOT BEEN IN EFFECT, PERFORMANCE WOULD
HAVE BEEN LOWER. RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES THAT A
SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND
SHARES.
^ PER SHARE CALCULATIONS ARE BASED ON THE AVERAGE SHARES OUTSTANDING
THROUGHOUT THE PERIOD.
(1) ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 65
financial highlights For a Share Outstanding Throughout Each Period For the
year ended September 30,
- -----------------------------------------------------------------------------------------------------------------------------
RATIO
OF EXPENSES
RATIO TO AVERAGE
NET NET NET OF NET NET ASSETS
ASSET DIVIDENDS ASSET ASSETS RATIO INVESTMENT (EXCLUDING
VALUE NET FROM NET VALUE END OF EXPENSES INCOME WAIVERS &
BEGINNING INVESTMENT INVESTMENT END TOTAL OF PERIOD TO AVERAGE TO AVERAGE FEES
OF PERIOD INCOME INCOME OF PERIOD RETURN++ (000) NET ASSETS(1) NET ASSETS(1) RECAPTURED)(1)
- -----------------------------------------------------------------------------------------------------------------------------
Prime Money Market Fund
Institutional Class (commenced operations on March 23, 1998)
2005 $1.00 $0.021 $(0.021) $1.00 2.10% $ 332,393 0.60% 2.05% 0.61%
2004 1.00 0.006 (0.006) 1.00 0.58 367,209 0.63 0.59 0.63
2003 1.00 0.007 (0.007) 1.00 0.68 287,087 0.63 0.68 0.64
2002 1.00 0.014 (0.014) 1.00 1.37 290,778 0.63 1.37 0.67
2001 1.00 0.046 (0.046) 1.00 4.65 304,698 0.63 4.42++ 0.71
Class A (commenced operations on October 18, 1999)
2005 $1.00 $0.019 $(0.019) $1.00 1.87% $ 312,452 0.82% 1.94% 1.11%
2004 1.00 0.004 (0.004) 1.00 0.36 201,058 0.85 0.35 1.13
2003 1.00 0.005 (0.005) 1.00 0.46 205,191 0.85 0.47 1.14
2002 1.00 0.011 (0.011) 1.00 1.15 228,807 0.85 1.15 1.17
2001 1.00 0.043 (0.043) 1.00 4.42 243,340 0.85 4.39++ 1.21
Class S (commenced operations on October 26, 1999)
2005 $1.00 $0.017 $(0.017) $1.00 1.67% $ 203,502 1.02% 1.70% 1.11%
2004 1.00 0.002 (0.002) 1.00 0.21 115,761 1.00 0.21 1.13
2003 1.00 0.003 (0.003) 1.00 0.29 118,624 1.03 0.29 1.14
2002 1.00 0.009 (0.009) 1.00 0.95 129,180 1.05 0.95 1.17
2001 1.00 0.041 (0.041) 1.00 4.21 126,281 1.05 4.12++ 1.21
- -----------------------------------------------------------------------------------------------------------------------------
Government Money Market Fund
Institutional Class (commenced operations on April 3, 2000)
2005 $1.00 $0.020 $(0.020) $1.00 2.05% $ 32,039 0.61% 1.97% 0.62%
2004 1.00 0.006 (0.006) 1.00 0.57 43,608 0.63 0.56 0.64
2003 1.00 0.007 (0.007) 1.00 0.70 56,841 0.63 0.68 0.64
2002 1.00 0.014 (0.014) 1.00 1.38 51,985 0.63 1.43 0.66
2001 1.00 0.046 (0.046) 1.00 4.70 76,802 0.63 3.97++ 0.66
Class A (commenced operations on June 21, 1999)
2005 $1.00 $0.018 $(0.018) $1.00 1.82% $1,895,412 0.83% 1.80% 1.12%
2004 1.00 0.004 (0.004) 1.00 0.35 1,857,676 0.85 0.35 1.14
2003 1.00 0.005 (0.005) 1.00 0.48 2,060,860 0.85 0.48 1.14
2002 1.00 0.012 (0.012) 1.00 1.16 2,149,151 0.85 1.18 1.16
2001 1.00 0.044 (0.044) 1.00 4.47 2,531,500 0.85 4.27++ 1.16
Class S (commenced operations on October 6, 1999)
2005 $1.00 $0.016 $(0.016) $1.00 1.62% $ 227,905 1.03% 1.61% 1.12%
2004 1.00 0.002 (0.002) 1.00 0.20 263,086 1.00 0.21 1.14
2003 1.00 0.003 (0.003) 1.00 0.30 191,539 1.03 0.31 1.14
2002 1.00 0.010 (0.010) 1.00 0.96 219,387 1.05 0.93 1.16
2001 1.00 0.042 (0.042) 1.00 4.26 147,035 1.05 3.62++ 1.16
- -----------------------------------------------------------------------------------------------------------------------------
California Tax Exempt Money Market Fund
Institutional Class (commenced operations on April 3, 2000)
2005 $1.00 $0.015 $(0.015)* $1.00 1.51% $ 73,211 0.55% 1.46% 0.63%
2004 1.00 0.005 (0.005) 1.00 0.52 79,413 0.55 0.51 0.65
2003 1.00 0.006 (0.006) 1.00 0.62 87,820 0.55 0.59 0.65
2002 1.00 0.010 (0.010) 1.00 0.98 58,923 0.55 0.96 0.69
2001 1.00 0.025 (0.025) 1.00 2.51 50,543 0.55 2.12++ 0.72
Class A (commenced operations on June 21, 1999)
2005 $1.00 $0.013 $(0.013)* $1.00 1.28% $ 569,671 0.78% 1.25% 1.13%
2004 1.00 0.003 (0.003) 1.00 0.29 505,029 0.78 0.29 1.15
2003 1.00 0.004 (0.004) 1.00 0.41 539,182 0.76 0.41 1.15
2002 1.00 0.007 (0.007) 1.00 0.75 519,269 0.78 0.75 1.19
2001 1.00 0.023 (0.023) 1.00 2.28 638,446 0.78 2.22++ 1.22
Class S (commenced operations on November 12, 1999)
2005 $1.00 $0.011 $(0.011)* $1.00 1.08% $ 88,182 0.98% 1.09% 1.13%
2004 1.00 0.002 (0.002) 1.00 0.15 33,520 0.91 0.15 1.15
2003 1.00 0.003 (0.003) 1.00 0.27 24,002 0.89 0.27 1.15
2002 1.00 0.005 (0.005) 1.00 0.55 29,626 0.98 0.53 1.19
2001 1.00 0.021 (0.021) 1.00 2.08 16,851 0.98 1.96++ 1.22
* INCLUDES A REALIZED CAPITAL GAIN DISTRIBUTION OF LESS THAN $0.001.
+ RATIOS REFLECT THE IMPACT OF THE INITIAL LOW LEVEL OF AVERAGE NET ASSETS
ASSOCIATED WITH COMMENCEMENT OF OPERATIONS AND THE EFFECTS OF
ANNUALIZATION.
++ RATIOS REFLECT THE IMPACT OF SIGNIFICANT CHANGES IN AVERAGE NET ASSETS AND
THE EFFECTS OF ANNUALIZATION.
++ RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED. FEE
WAIVERS ARE IN EFFECT; IF THEY HAD NOT BEEN IN EFFECT, PERFORMANCE WOULD
HAVE BEEN LOWER. RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES THAT A
SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND
SHARES.
(1) ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 66
notes to financial staements
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
1. ORGANIZATION:
The CNI Charter Funds, a Delaware statutory trust (the "Trust"), is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company with eleven portfolios. The financial statements included
herein are those of the Large Cap Value Equity Fund, Large Cap Growth Equity
Fund, RCB Small Cap Value Fund, Technology Growth Fund (collectively, the
"Equity Funds"); Corporate Bond Fund, Government Bond Fund, California Tax
Exempt Bond Fund, High Yield Bond Fund (collectively, the "Fixed Income Funds");
Prime Money Market Fund, Government Money Market Fund and California Tax Exempt
Money Market Fund (collectively, the "Money Market Funds"); (each a "Fund",
collectively, the "Funds"). The Equity and Fixed Income Funds are registered to
offer Institutional and Class A Shares; in addition, the RCB Small Cap Value
Fund is registered to offer Class R Shares. The Money Market Funds are
registered to offer Institutional, Class A and Class S Shares. The assets of
each Fund are segregated, and a shareholder's interest is limited to the Fund in
which shares are held. The Funds' prospectuses provide a description of each
Fund's investment objectives, policies and strategies.
On April 5, 2005, the Board of Trustees of CNI Charter Funds (the "Trust")
approved the reorganization of the AHA Limited Maturity Fixed Income Fund, AHA
Full Maturity Fixed Income Fund, AHA Balanced Fund, AHA Diversified Equity Fund,
and AHA Socially Responsible Equity Fund series of AHA Investment Funds, Inc.
("AHA Funds") into newly established identical series of the Trust. The
reorganization has been approved by shareholders of AHA Funds and is effective
on October 3, 2005.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Funds.
USE OF ESTIMATES - The preparation of financial statements in conformity with
accounting principles generally accepted in the U.S. requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results could
differ from those estimates.
SECURITY VALUATION - Securities listed on a securities exchange, market or
automated quotation system for which quotations are readily available (except
for securities traded on NASDAQ) are valued at the last quoted sale price on the
primary exchange or market (foreign or domestic) on which they are traded, or,
if there is no such reported sale, at the most recent quoted bid price. For
securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. If
available, debt securities are priced based upon valuations provided by
independent, third-party pricing agents. Such values generally reflect the last
reported sales price if the security is actively traded. The third-party pricing
agents may also value debt securities at an evaluated bid price by employing
methodologies that utilize actual market transactions, broker-supplied
valuations, or other methodologies designed to identify the market value for
such securities. Debt obligations with remaining maturities of sixty days or
less may be valued at their amortized cost, which approximates market value. The
prices for foreign securities are reported in local currency and converted to
U.S. dollars using currency exchange rates. Prices for most securities held in
the Funds are provided daily by recognized independent pricing agents. If a
security price cannot be obtained from an independent, third-party pricing
agent, the Funds seek to obtain a bid price from at least one independent
broker.
Securities for which market prices are not "readily available" are valued in
accordance with Fair Value Procedures established by the Funds' Board of
Directors. The Funds' Fair Value Procedures are implemented through a Fair Value
Committee (the "Committee") designated by the Funds' Board of Trustees. Some of
the more common reasons that may necessitate that a security be valued using
Fair Value Procedures include: the security's trading has been halted or
suspended; the security has been de-listed from a national exchange; the
security's primary trading market is temporarily closed at a time when under
normal conditions it would be open; or the security's primary pricing source is
not able or willing to provide a price. When a security is valued in accordance
with the Fair Value Procedures, the Committee will determine the value after
taking into consideration relevant information reasonably available to the
Committee.
SECURITY TRANSACTIONS AND RELATED INCOME - Security transactions are accounted
for on the trade date of the security purchase or sale. Costs used in
determining net realized capital gains and losses on the sale of securities are
those of the specific securities sold. Interest income is recognized on the
accrual basis and dividend income is recognized on the ex-dividend date.
Purchase discounts and premiums on securities held by the Funds are accreted and
amortized to maturity using the scientific interest method, which approximates
the effective interest method.
CNI CHARTER FUNDS | PAGE 67
notes to financial staements
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - Securities pledged as collateral for repurchase
agreements are held by each Fund's custodian bank until maturity of the
repurchase agreements. Provisions of the agreements and procedures adopted by
the investment adviser require that the market value of the collateral,
including accrued interest thereon, is sufficient in the event of default by the
counterparty. The Funds also invest in tri-party repurchase agreements.
Securities held as collateral for tri-party repurchase agreements are maintained
by the broker's custodian bank in a segregated account until maturity of the
repurchase agreement. Provisions of the agreements require that the market value
of the collateral, including accrued interest thereon, is sufficient in the
event of default. If the counterparty defaults and the value of the collateral
declines or if the counterparty enters into an insolvency proceeding,
realization of the collateral by the Fund may be delayed or limited.
TBA TRANSACTIONS - The Funds may engage in "to be announced" ("TBA") security
transactions. Such transactions involve a commitment by the Funds to purchase or
sell securities for a predetermined price or yield, with payment and delivery
taking place beyond the customary settlement period. The Funds record
TBAsecurities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payments for the securities
purchased.
CLASSES - Class-specific expenses are borne by that class. Income, non
class-specific expenses, and realized and unrealized gains/losses are allocated
to the respective class on the basis of relative net asset value each day.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net investment
income are declared daily and paid to shareholders monthly for the Fixed Income
and Money Market Funds. Dividends from net investment income are declared and
paid quarterly for the Large Cap Value Equity, Large Cap Growth Equity, and
Technology Growth Funds. For the RCB Small Cap Value Fund, dividends from net
investment income are declared and paid annually. Distributions from net
realized capital gains are distributed to shareholders at least annually.
3. ADMINISTRATION, TRANSFER AGENT, DISTRIBUTION
AND SHAREHOLDER SERVICES AGREEMENTS:
Pursuant to an administration agreement (the "Agreement"), SEI Investments
Global Funds Services (the "Administrator"), a wholly owned subsidiary of
SEIInvestments Company, acts as the Trust's Administrator. Under the terms of
the Agreement dated April 1, 1999, as amended January 1, 2005, the Administrator
is entitled to receive an annual fee of 0.065% of aggregate average daily net
assets of the Trust not exceeding $2.5 billion, 0.045% of aggregate average
daily net assets of the Trust exceeding $2.5 billion but not exceeding $5
billion, and 0.025% of aggregate average daily net assets of the Trust exceeding
$5 billion. Each Fund is subject to a minimum annual fee of $90,000, which may
be reduced at the sole discretion of the Administrator. Prior to January 1,
2005, the Administrator received an annual fee of 0.10% of aggregate average
daily net assets of the Trust not exceeding $2.5 billion, 0.08% of aggregate
average daily net assets of the Trust exceeding $2.5 billion but not exceeding
$5 billion, and 0.06% of aggregate average daily net assets of the Trust
exceeding $5 billion, with each Fund being subject to a minimum annual fee of
$90,000.
The Trust has adopted a Rule 12b-1 Distribution Plan ("the Plan") with respect
to Class A, S and R Shares that allows each Fund to pay distribution and
servicing fees. SEI Investments Distribution Co. (the "Distributor"), as
compensation for its services under the Plan, receives a distribution fee,
computed daily and paid monthly, at the annual rate of 0.50% of the average
daily net assets of the Class A Shares and Class S Shares of the Money Market
Funds and 0.25% of the Class A Shares of the Equity and Fixed Income Funds and
the Class R Shares of the RCB Small Cap Value Fund, with the exception of 0.30%
charged to the Class A Shares of the Technology Growth and High Yield Bond
Funds, which may be used by the Distributor to provide compensation for sales
support and distribution-related activities.
The Trust and the Distributor are parties to a Distribution Agreement dated
April 1, 1999. The Distributor receives no fees for its distribution services
under this agreement.
SEI Investments Fund Management serves as Transfer Agent for the Trust whereby
they provide services at an annual rate of $15,000 per share class. The Transfer
Agent has voluntarily agreed to waive these fees.
Wachovia Bank, N.A. serves as Custodian for the Trust. The Custodian plays no
role in determining the investment policies of the Trust or which securities are
to be purchased or sold by the Trust.
The Trust has also adopted a Shareholder Servicing Agreement that permits
payment of compensation to service providers, that may include City National
Bank ("CNB"), that have agreed to provide certain shareholder support for their
customers who own Institutional Class, Class A, Class S or Class R Shares. In
consideration for such services, a shareholder servicing fee is charged at the
annual rate of up to 0.25% of each Fund's average daily net assets.
CNI CHARTER FUNDS | PAGE 68
- --------------------------------------------------------------------------------
For the year ended September 30, 2005, CNB received Shareholder Servicing fees
from the Trust in the amount of $7,396,438.
Certain officers of the Trust are also officers of City National Asset
Management, Inc. ("CNAM", the "Adviser"), the Administrator and/or the
Distributor. Such officers are paid no fees by the Trust for serving as officers
of the Trust.
4. INVESTMENT ADVISORY FEES AND OTHER AGREEMENTS:
CNAM, a wholly owned subsidiary of CNB, serves as the Investment Manager. Under
the terms of the current agreement, the Adviser receives an annual fee equal to
0.62% of the average daily net assets of the Large Cap Value Equity Fund, 0.65%
of the average daily net assets of the Large Cap Growth Equity Fund, 0.85% of
the average net assets of the RCBSmall Cap ValueFund, 0.85% of the average daily
net assets of the Technology Growth Fund, 0.40% of the average daily net assets
of the Corporate Bond Fund, 0.43% of the average daily net assets of the
Government Bond Fund, 0.27% of the average daily net assets of the California
Tax Exempt Bond Fund, 0.75% of the average daily net assets of the High Yield
Bond Fund, 0.25% of the average daily net assets of the Prime Money Market Fund,
0.26% of the average daily net assets of the Government Money Market Fund, and
0.27% of the average daily net assets of the California Tax Exempt Money Market
Fund.
Reed, Conner & Birdwell, LLC acts as the Investment Sub-Adviser on behalf of the
RCB Small Cap Value Fund.
HSBC Halbis Partners (USA), Inc. acts as the Investment Sub-Adviser on behalf of
the High Yield Bond Fund. Prior to September 1, 2005 Credit Suisse Asset
Management, LLC was the Investment Sub-Adviser.
The Adviser has voluntarily agreed to limit its fees or reimburse expenses to
the extent necessary to keep operating expenses at or below certain percentages
of the respective average daily net assets. The Adviser has voluntarily agreed
to maintain this limitation until further notice to the Trust. The voluntary
expense limitations (expressed as a percentage of average daily net assets) are
as follows:
Large Cap Large Cap RCB
Value Growth Small Cap Technology
Equity Equity Value Growth
Fund Fund Fund Fund
- --------------------------------------------------------------------------------
Institutional Class 1.00% 1.05% 1.24% 1.20%
Class A 1.25% 1.30% 1.49% 1.50%
Class R -- -- 1.49% --
- --------------------------------------------------------------------------------
California
Corporate Government Tax Exempt High Yield
Bond Bond Bond Bond
Fund Fund Fund Fund
- --------------------------------------------------------------------------------
Institutional Class 0.75% 0.70% 0.50% 1.00%
Class A 1.00% 0.95% 0.75% 1.30%
- --------------------------------------------------------------------------------
Prime California
Money Government Tax Exempt
Market Money Market Money Market
Fund Fund Fund
- --------------------------------------------------------------------------------
Institutional Class 0.63% 0.63% 0.55%
Class A 0.85% 0.85% 0.78%
Class S 1.05% 1.05% 0.98%
- --------------------------------------------------------------------------------
Any fee reductions or expense reimbursements may be repaid to the Adviser within
three years after occurrence, subject to certain restrictions and only if such
repayments do not cause the Funds' expense ratios, at the time of repayment, to
exceed the amounts shown in the preceding table.
During the year ended September 30, 2005, the Board of Trustees approved the
reimbursement of previously waived fees by the Adviser for the prior fiscal year
in the amount of $1,516, $44, $3,238, $40,558 and $125,625 for the Large Cap
Value Equity Fund, Technology Growth Fund, Corporate Bond Fund, Prime Money
Market Fund and Government Money Market Fund, respectively.
As of September 30, 2005, fees which were previously waived by the Adviser which
may be subject to possible future reimbursement to the Adviser were as follows:
Fund (000)
- --------------------------------------------------------------------------------
Technology Growth $ 2
Corporate Bond 12
Government Bond 48
California Tax Exempt Bond 70
High Yield Bond 113
California Tax Exempt Money Market 1,544
- --------------------------------------------------------------------------------
5. INVESTMENT TRANSACTIONS:
The cost of security purchases and proceeds from the sale and maturities of
securities, other than temporary investments in short-term securities for the
year ended September 30, 2005, were as follows for the Equity and Fixed Income
Funds:
Purchases Sales & Maturities
- --------------------------------------------------------------------------------
U.S. Gov`t Other U.S. Gov`t Other
Fund (000) (000) (000) (000)
- --------------------------------------------------------------------------------
Large Cap Value Equity $ -- $18,999 $ -- $16,481
Large Cap Growth Equity -- 17,340 -- 9,585
RCB Small Cap Value -- 47,158 -- 27,031
Technology Growth -- 877 -- 857
Corporate Bond 2,442 15,899 1,756 10,721
Government Bond 13,937 6,007 13,657 --
California Tax Exempt Bond -- 14,100 -- 10,841
High Yield Bond -- 20,304 -- 19,724
- --------------------------------------------------------------------------------
CNI CHARTER FUNDS | PAGE 69
notes to financial staements
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
6. FEDERAL TAX INFORMATION:
It is each Fund's intention to continue to qualify as a regulated investment
company for Federal income tax purposes and distribute all of its taxable income
and net capital gains. Accordingly, no provisions for Federal income taxes are
required.
The Funds may be subject to taxes imposed by countries in which they invest,
with respect to their investments, in issuers existing or operating in such
countries. Such taxes are generally based on income earned. The Funds accrue
such taxes when the related income is earned.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with Federal tax
regulations, which may differ from accounting principles generally accepted in
the United States of America. As a result, net investment income (loss) and net
realized gain (loss) on investment transactions for a reporting period may
differ significantly from distributions during such period. These book/tax
differences may be temporary or permanent. To the extent these differences are
permanent in nature, they are charged or credited to undistributed net
investment income (loss), or accumulated net realized gain (loss), as
appropriate, in the period that the differences arise. Accordingly, the
following permanent difference, primarily attributable to REITadjustments, the
realized gains (losses) on paydowns and the timing of distributions, have been
reclassified to/from the following accounts:
Increase/(Decrease) Increase/(Decrease)
Undistributed Accumulated
Net Investment Net Realized
Income/(Loss) Gain (Loss)
(000) (000)
- --------------------------------------------------------------------------------
RCB Small Cap Value $ (1) $ 1
Corporate Bond (1) 1
Government Bond 4 (4)
High Yield Bond (12) 12
Government Money Market 3 (3)
California Tax Exempt
Money Market (5) 5
- --------------------------------------------------------------------------------
The tax character of dividends and distributions declared during the years ended
September 30, 2005 and September 30, 2004 are shown below:
Tax
Exempt Ordinary Long-term
Income Income Capital Gain Total
Fund (000) (000) (000) (000)
- --------------------------------------------------------------------------------
Large Cap Value Equity
2005 $ -- $ 535 $1,908 $ 2,443
2004 -- 367 -- 367
Large Cap Growth Equity
2005 -- 198 -- 198
2004 -- 17 -- 17
RCB Small Cap Value
2005 -- 521 2,493 3,014
2004 -- -- 87 87
Corporate Bond
2005 -- 1,919 303 2,222
2004 -- 1,913 222 2,135
Government Bond
2005 -- 739 120 859
2004 -- 450 211 661
California Tax Exempt Bond
2005 593 -- 82 675
2004 459 63 139 661
High Yield Bond
2005 -- 3,404 -- 3,404
2004 -- 2,846 -- 2,846
Prime Money Market
2005 -- 14,619 -- 14,619
2004 -- 2,720 -- 2,720
Government Money Market
2005 -- 38,829 -- 38,829
2004 -- 7,492 -- 7,492
California Tax Exempt Money Market
2005 9,088 -- 173 9,261
2004 2,227 3 1 2,231
CNI CHARTER FUNDS | PAGE 70
- --------------------------------------------------------------------------------
As of September 30, 2005, the components of Distributable Earnings/(Accumulated
Losses) on a tax basis were as follows:
Undistributed Undistributed Undistributed Capital
Tax-Exempt Ordinary Long-term Loss
Income Income Capital Gain Carryforwards
Fund (000) (000) (000) (000)
- ------------------------------------------------------------------------------------------
Large Cap Value Equity $ -- $ 139 $3,782 $ --
Large Cap Growth Equity -- 13 -- (4,410)
RCB Small Cap Value -- 66 1,121 --
Technology Growth -- 4 -- (1,605)
Corporate Bond -- 165 -- --
Government Bond -- 77 -- --
California Tax Exempt Bond 54 26 61 --
High Yield Bond -- 251 -- (965)
Prime Money Market -- 1,987 -- (403)
Government Money Market -- 4,718 -- --
California Tax Exempt Money Market 1,030 -- -- --
Unrealized Other Total
Post-October Appreciation Temporary Distributable Earnings
Losses (Depreciation) Differences (Accumulated Losses)
Fund (000) (000) (000) (000)
- -------------------------------------------------------------------------------------------------
Large Cap Value Equity $ -- $11,131 $(139) $14,913
Large Cap Growth Equity -- 3,572 (13) (838)
RCB Small Cap Value -- 13,603 -- 14,790
Technology Growth -- 109 (1) (1,493)
Corporate Bond (64) (184) (166) (249)
Government Bond (59) (280) (74) (336)
California Tax Exempt Bond -- (45) (54) 42
High Yield Bond (272) 355 (251) (882)
Prime Money Market -- -- (1,986) (402)
Government Money Market -- -- (4,714) 4
California Tax Exempt Money Market -- -- (1,034) (4)
For tax purposes, the losses in the Funds can be carried forward for a maximum
of eight years to offset any future net realized capital gains. At September 30,
2005, the breakdown of capital loss carryforwards is as follows:
Expiring September 30,
-----------------------------------------------------
2010 2011 2012 2013
Fund (000) (000) (000) (000)
- --------------------------------------------------------------------------------
Large Cap Growth Equity $2,894 $1,516 $ -- $ --
Technology Growth 392 658 328 227
High Yield Bond 33 932 -- --
Prime Money Market 403 -- -- --
- --------------------------------------------------------------------------------
During the year ended September 30, 2005, the following funds had utilized
capital loss carryforwards to offset capital gains amounting to:
Amount
Fund (000)
- -------------------------------------------------------------------------------
Large Cap Growth Equity $357
High Yield Bond 123
Prime Money Market 1
- -------------------------------------------------------------------------------
Post-October losses represent losses realized on investments and foreign
currency transactions from November 1, 2004 through September 30, 2005 that, in
accordance with Federal income tax regulations, the Funds have elected to defer
and treat as having arisen in the following fiscal year.
The aggregate gross unrealized appreciation on securities, the aggregate gross
unrealized (depreciation) on securities and the net unrealized
appreciation/(depreciation) for tax purposes at September 30, 2005 for each of
the Equity and Fixed Income Funds were as follows:
Aggregate Aggregate Net
Gross Gross Unrealized
Federal Unrealized Unrealized Appreciation
Tax Cost Appreciation Depreciation (Depreciation)
Fund (000) (000) (000) (000)
- --------------------------------------------------------------------------------
Large Cap Value Equity $43,304 $11,851 $ (720) $11,131
Large Cap Growth Equity 39,029 5,579 (2,007) 3,572
RCB Small Cap Value 70,711 16,144 (2,541) 13,603
Technology Growth 2,567 434 (325) 109
Corporate Bond 51,907 432 (616) (184)
Government Bond 28,506 20 (300) (280)
California Tax Exempt
Bond 23,991 92 (137) (45)
High Yield Bond 43,060 1,390 (1,035) 355
- --------------------------------------------------------------------------------
7. CONCENTRATION OF CREDIT RISK:
In the normal course of business, the Funds enter into contracts that provide
general indemnifications. The Funds' maximum exposure under these arrangements
is dependent on future claims that may be made against the Funds and, therefore,
cannot be established; however, based on experience, the risk of loss from such
claim is considered remote.
CALIFORNIA TAX EXEMPT FUNDS - SPECIFIC RISKS
The ability of issuers to pay interest on, and repay principal of, California
municipal securities may be affected by economic and political developments in
the State of California.
Certain securities are backed by letters of credit from various financial
institutions and financial guaranty assurance agencies. These letters of credit
enhance the credit quality of the individual securities; however, if any of the
financial institutions or financial guaranty assurance agencies' credit quality
should deteriorate, it could cause the individual security's credit quality to
change. Additionally, if any of the Funds concentrate their letters of credit in
any one financial institution, the risk of credit quality deterioration
increases.
CNI CHARTER FUNDS | PAGE 71
- --------------------------------------------------------------------------------
8. CAPITAL SHARES ISSUED AND REDEEMED:
Capital share activity for the years ended September 30, 2005 and
September 30, 2004 were as follows:
Large Cap Value Large Cap Growth Rcb Small Cap Technology
Equity Fund (000) Equity Fund (000) Value Fund (000) Growth Fund (000)
--------------------- -------------------- ------------------- --------------------
2005 2004 2005 2004 2005 2004 2005 2004
- -------------------------------------------------------- -------------------- ------------------- --------------------
CAPITAL SHARES ISSUED AND REDEEMED:
Institutional Class:
Shares Issued 877 862 1,493 1,122 279 191 113 70
Shares Issued in Lieu of
Dividends and Distributions 74 9 7 1 12 1 -- --
Shares Redeemed (821) (951) (684) (832) (130) (148) (101) (49)
- -------------------------------------------------------- -------------------- ------------------- --------------------
Net Institutional
Class Transactions 130 (80) 816 291 161 44 12 21
======================================================== ==================== =================== ====================
Class A:
Shares Issued 515 555 454 573 259 269 9 160
Shares Issued in Lieu of
Dividends and Distributions 36 2 3 -- 14 1 -- --
Shares Redeemed (149) (82) (111) (104) (101) (101) (15) (70)
- -------------------------------------------------------- -------------------- ------------------- --------------------
Net Class A Transactions 402 475 346 469 172 169 (6) 90
======================================================== ==================== =================== ====================
Class R:
Shares Issued -- -- -- -- 1,014 784 -- --
Shares Issued in Lieu of
Dividends and Distributions -- -- -- -- 73 2 -- --
Shares Redeemed -- -- -- -- (389) (94) -- --
- -------------------------------------------------------- -------------------- ------------------- --------------------
Net Class R Transactions -- -- -- -- 698 692 -- --
======================================================== ==================== =================== ====================
California High Yield
Corporate Bond Government Bond Tax Exempt Bond Bond
Fund (000) Fund (000) Fund (000) Fund (000)
--------------------- -------------------- ------------------- --------------------
2005 2004 2005 2004 2005 2004 2005 2004
--------------------- -------------------- ------------------- --------------------
Capital Shares Issued and Redeemed:
Institutional Class:
Shares Issued 1,476 1,552 1,238 900 867 690 648 1,068
Shares Issued in Lieu of
Dividends and Distributions 38 33 20 17 13 8 102 80
Shares Redeemed (967) (1,026) (521) (375) (370) (362) (708) (188)
- -------------------------------------------------------- -------------------- ------------------- --------------------
Net Institutional
Class Transactions 547 559 737 542 510 336 42 960
======================================================== ==================== =================== ====================
Class A:
Shares Issued 58 114 26 40 29 165 485 1,376
Shares Issued in Lieu of
Dividends and Distributions 3 2 1 -- 2 3 99 98
Shares Redeemed (55) (49) (15) (1) (120) (3) (478) (1,141)
- -------------------------------------------------------- -------------------- ------------------- --------------------
Net Class A Transactions 6 67 12 39 (89) 165 106 333
======================================================== ==================== =================== ====================
AMOUNTS DESIGNATED AS "--" ARE EITHER 0 OR HAVE BEEN ROUNDED TO 0.
CNI CHARTER FUNDS | PAGE 72
- --------------------------------------------------------------------------------
California
Prime Government Tax Exempt
Money Market Money Market Money Market
Fund (000) Fund (000) Fund (000)
-------------------------- -------------------------- -------------------------
2005 2004 2005 2004 2005 2004
-------------------------- -------------------------- -------------------------
Capital Shares Issued and Redeemed:
Institutional Class:
Shares Issued 1,215,600 1,030,373 376,258 579,828 1,139,802 1,066,689
Shares Issued in Lieu of
Dividends and Distributions 1,411 375 7 1 8 1
Shares Redeemed (1,251,828) (950,623) (387,834) (593,062) (1,145,985) (1,075,122)
- -----------------------------------------------------------------------------------------------------------------------
Net Institutional
Class Transactions (34,817) 80,125 (11,569) (13,233) (6,175) (8,432)
=======================================================================================================================
Class A:
Shares Issued 958,549 697,874 4,965,371 4,331,865 1,822,478 1,454,752
Shares Issued in Lieu of
Dividends and Distributions 982 154 23,227 4,840 6,066 1,367
Shares Redeemed (848,138) (702,159) (4,950,864) (4,539,896) (1,763,753) (1,490,415)
- -----------------------------------------------------------------------------------------------------------------------
Net Class A Transactions 111,393 (4,131) 37,734 (203,191) 64,791 (34,296)
=======================================================================================================================
Class S:
Shares Issued 499,380 460,307 689,747 739,765 271,376 256,655
Shares Issued in Lieu of
Dividends and Distributions -- -- -- -- -- --
Shares Redeemed (411,638) (463,168) (724,928) (668,217) (216,708) (247,146)
- -----------------------------------------------------------------------------------------------------------------------
Net Class S Transactions 87,742 (2,861) (35,181) 71,548 54,668 9,509
=======================================================================================================================
AMOUNTS DESIGNATED AS "--" ARE EITHER 0 OR HAVE BEEN ROUNDED TO 0.
9. SUBSEQUENT EVENT:
Subsequent to the reorganization that took place on October 3, 2005, CCM
Advisors, LLC, an affiliate of City National Asset Management, Inc. ("CNAM"), is
the investment adviser to the AHA Funds. Cambiar Investors, LLC and Freeman
Associates Investment Management LLC serves as sub-advisers to the new AHA
Balanced and Diversified Equity Funds. Patterson Capital Corporation and CNAM
serves as sub-advisers to the new AHA Limited Maturity Fixed Income Fund. Robert
W. Baird & Co. Incorporated will serve as sub-adviser to the new AHA Full
Maturity Fixed Income and Balanced Funds. SKBA Capital Management, LLC will
serve as a sub-adviser to the new AHA Socially Responsible Equity Fund.
Shares of the AHA Funds are offered through separate prospectuses. To request a
prospectus, shareholders can call 1-800-445-1341 or write to AHA Investment
Funds, Inc., c/o SEI Investments Distribution Co., One Freedom Valley Drive,
Oaks, Pennsylvania 19456.
CNI CHARTER FUNDS | PAGE 73
report of independent registered public accounting firm
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
CNI CHARTER FUNDS:
We have audited the accompanying statements of net assets of the CNI Charter
Funds, comprised of the Large Cap Value Equity Fund, the Large Cap Growth Equity
Fund, the RCB Small Cap Value Fund, the Technology Growth Fund, the Corporate
Bond Fund, the Government Bond Fund, the California Tax Exempt Bond Fund, the
High Yield Bond Fund, the Prime Money Market Fund, the Government Money Market
Fund, and the California Tax Exempt Money Market Fund (collectively, "the
Funds"), as of September 30, 2005, and the related statements of operations for
the year then ended and changes in net assets for each of the years in the
two-year period then ended, and financial highlights for each of the years or
periods indicated herein. These financial statements and financial highlights
are the responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements and the financial highlights
based on our audit.
We conducted our audits 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 and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements and financial highlights. Our
procedures included confirmation of securities owned as of September 30, 2005,
by correspondence with the custodian and brokers or by other appropriate audit
procedures when replies from brokers were not received. 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Funds as of September 30, 2005, the results of their operation for the year than
ended, the changes in their net assets for each of the years in the two-year
period then ended, and their financial highlights for the periods indicated, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ KPMG LLP
November 15, 2005
Los Angeles, California
CNI CHARTER FUNDS | PAGE 74
board members and officers (UNAUDITED)
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
Information pertaining to the Trustees and Officers of the Trust is set forth
below. Trustees who are not deemed to be "interested persons" of the Trust as
defined in the 1940 Act are referred to as "Independent Board Members." Trustees
who are deemed to be "interested persons" of the Trust are referred to as
"Interested Board Members."
- ------------------------------------------------------------------------------------------------------------------------------------
TERM OF
OFFICE NUMBER OF
AND PORTFOLIOS IN OTHER
NAME POSITION(S) LENGTH OF FUNDS COMPLEX DIRECTORSHIPS
ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
AND AGE1 TRUST SERVED2 DURING PAST FIVE YEARS BOARD MEMBER3 TRUSTEE4
- ------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT
BOARD MEMBERS
- -------------
Irwin G. Barnet Trustee Since 1999 Attorney and partner at Reed Smith LLP, 16 None
Age: 67 a law firm (January 2003-present); attorney
and a principal of Crosby, Heafey, Roach &
May, a law firm (September 2000-December
2002); attorney and principal of Sanders,
Barnet, Goldman, Simons & Mosk, a law
firm prior to September, 2000.
- ------------------------------------------------------------------------------------------------------------------------------------
Victor Meschures Trustee Since 1999 Certified Public Accountant with Meschures, 16 None
Age: 67 Campeas, Thompson, Snyder and Pariser, LLP,
an accounting firm.
- ------------------------------------------------------------------------------------------------------------------------------------
William R. Sweet Trustee Since 1999 Retired. 16 Director, Banner
Age: 68 Central Finance
Company; Director,
Hispanic Express,
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
James R. Wolford Trustee Since 1999 Chief Financial Officer, DBM Group 16 None
Age: 51 (August 2001-present); Senior Vice President
and Chief Operating Officer, Forecast
Commercial Real Estate Service, Inc.
(January 2000-August 2001); Senior Vice
President and Chief Financial Officer,
Bixby Ranch Company, a real estate
company (1985-2000).
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS
- --------
Vernon C. Kozlen President Since 2000 Chairman, City National Asset N/A N/A
City National Bank and Chief Management, Inc. (2001-Present);
400 N. Roxbury Dr. Executive Executive Vice President, City National
Beverly Hills, CA Officer Bank (1996-Present).
90210
Age: 61
- ------------------------------------------------------------------------------------------------------------------------------------
Rodney J. Olea Vice President Since 2000 Senior Vice President, City National Asset N/A N/A
City National Bank Management, Inc. (2001-Present); Senior Vice
400 N. Roxbury Dr. President and Director of Fixed Income of
Beverly Hills, CA City National Bank (1994-Present).
90210
Age: 40
- ------------------------------------------------------------------------------------------------------------------------------------
Richard A. Weiss Vice President Since 2000 President, City National Asset Management, N/A N/A
City National Bank Inc. (2001-Present); Executive Vice President
400 N. Roxbury Dr., and Chief Investment Officer of City National
Beverly Hills, CA Bank (1999-Present).
90210
Age: 45
- ------------------------------------------------------------------------------------------------------------------------------------
CNI CHARTER FUNDS | PAGE 75
board members and officers (UNAUDITED) (CONTINUED)
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
Information pertaining to the Trustees and Officers of the Trust is set forth
below as of October 3, 2005. Trustees who are not deemed to be "interested
persons" of the Trust as defined in the 1940 Act are referred to as "Independent
Board Members." Trustees who are deemed to be "interested persons" of the Trust
are referred to as "Interested Board Members." The Trust's Statement of
Additional Information ("SAI") includes additional information about the Board
Members and Officers. The SAI may be obtained without charge by calling
1-800-708-8881.
TERM OF
OFFICE NUMBER OF
AND PORTFOLIOS IN OTHER
NAME POSITION(S) LENGTH OF FUNDS COMPLEX DIRECTORSHIPS
ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
AND AGE1 TRUST SERVED2 DURING PAST FIVE YEARS BOARD MEMBER3 TRUSTEE4
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS (CONTINUED)
- --------
Savitri Pai Vice President Since 2005 General Counsel, Chief Compliance N/A N/A
109 S. Lasalle Street Officer & Chief Legal Officer of
Suite 2800 CCM Advisors, LLC (2003-Present).
Chicago, IL 60603 General Counsel, Treasurer and
Age: 39 Director, Kenilworth Fund, Inc.
(1992-2003).
- ------------------------------------------------------------------------------------------------------------------------------------
Valerie Y. Lewis Vice President Since 2005 Mutual Funds Boards Specialist, N/A N/A
City National Bank of Compliance Capital Research and Management
400 N. Roxbury Dr. Company; Compliance Specialist,
Beverly Hills, Capital International, Inc. (1999-2005)
CA 90210
Age: 49
- ------------------------------------------------------------------------------------------------------------------------------------
Eric Kleinschmidt Controller and Since 2005 SEI Investments, Director of Funds N/A N/A
SEI Investments Chief Accounting, (2004-Present);
One Freedom Operating Manager of Funds Accounting
Valley Drive Officer (1999-2004).
Oaks, PA 19456
Age: 37
- ------------------------------------------------------------------------------------------------------------------------------------
Timothy Solberg Vice President Since 2005 Founder, Managing Director & Chief N/A N/A
109 S. Lasalle Street and Assistant Investment Officer of CCM Advisors
Suite 2800 Secretary (2001-Present).
Chicago, IL 60603
Age: 52
- ------------------------------------------------------------------------------------------------------------------------------------
Timothy D. Barto Vice President Since 2000 Employed by SEI Investments since N/A N/A
One Freedom and Assistant October 1999. Vice President and
Valley Drive Secretary Assistant Secretary of the
Oaks, PA 19456 Administrator. Vice President and
Age: 37 Assistant Secretary of the Distributor
(1999-2004).
- ------------------------------------------------------------------------------------------------------------------------------------
1 Each trustee may be contacted by writing to the Trustee c/o CNI Charter
Funds, One Freedom Valley Drive, Oaks, PA 19456.
2 Each trustee shall hold office during the lifetime of this Trust until he or
she dies, resigns, is declared bankrupt or incompetent by a court of
appropriate jurisdiction, or is removed, or, if sooner, until the next
meeting of shareholders called for the purpose of electing trustees and until
the election and qualification of his or her successor in accordance with the
Trust's Declaration of Trust. The president, treasurer and secretary shall
hold office until their respective successors are chosen or qualified, or
until their removal or resignation, or in each case until he or she sooner
dies, resigns, is removed, or becomes disqualified in accordance with the
Trust's by-laws.
3 The "CNI Charter Funds Complex" consists of all registered investment
companies for which City National Asset Management, Inc. serves as investment
adviser. As of September 30, 2005, the CNI Charter Funds Complex consisted of
16 Funds.
4 Directorships of companies required to report to the Securities and Exchange
Commission under the Securities Exchange Act of 1934 (i.e., "public
companies") or other investment companies registered under the 1940 Act.
CNI CHARTER FUNDS | PAGE 76
board members and officers (UNAUDITED) (CONTINUED)
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
TERM OF
OFFICE NUMBER OF
AND PORTFOLIOS IN OTHER
NAME POSITION(S) LENGTH OF FUNDS COMPLEX DIRECTORSHIPS
ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
AND AGE1 TRUST SERVED2 DURING PAST FIVE YEARS BOARD MEMBER3 TRUSTEE4
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS (CONCLUDED)
- --------
Phillip T Masterson Vice President Since 2005 Vice President & Assistant Secretary of N/A N/A
SEI Investments and Assistant SEI Investments Global Funds Services
One Freedom Secretary since 2005. General Counsel at Citco
Valley Drive Mutual Fund Services (2003-2004).
Oaks, PA 19456 Vice President and Associate Counsel
Age: 42 at Oppenheimer Funds (1998-2003).
- ------------------------------------------------------------------------------------------------------------------------------------
James Ndiaye Vice President Since 2005 Vice President & Assistant Secretary of N/A N/A
SEI Investments and Assistant SEI Investments Global Funds Services
One Freedom Secretary since 2005. Vice President, Deutsche
Valley Drive Asset Management (2003-2004). Associate,
Oaks, PA 19456 Morgan, Lewis and Bockius LLP (2000-
Age: 37 2003). Assistant Vice President, ING
Variable Annuities Group (1999-2000).
- ------------------------------------------------------------------------------------------------------------------------------------
Sofia A. Rosala Vice President Since 2005 Vice President & Assistant Secretary of N/A N/A
SEI Investments and Assistant SEI Investments Global Funds Services
One Freedom Secretary since 2005. Compliance Officer of
Valley Drive SEI Investments (2001-2004). Account
Oaks, PA 19456 and Product Consultant, SEI Private Trust
Age: 31 Company (1998-2001).
- ------------------------------------------------------------------------------------------------------------------------------------
Michael T. Pang Vice President Since 2005 Vice President & Assistant Secretary of N/A N/A
SEI Investments and Assistant SEI Investments Global Funds Services
One Freedom Secretary since 2005. Counsel, Caledonian Bank
Valley Drive & Trust's Mutual Fund Group (2004-
Oaks, PA 19456 2005). Counsel, Permal Asset Management
Age: 33 (2001-2004). Associate, Schulte, Roth &
Zabel's Investment Management Group
(2000-2001).
- ------------------------------------------------------------------------------------------------------------------------------------
CNI CHARTER FUNDS | PAGE 77
notice to shareholders (UNAUDITED)
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
For shareholders that do not have a September 30, 2005 taxable year end, this
notice is for informational purposes only. For shareholders with a September 30,
2005 taxable year end, please consult your tax advisor as to the pertinence of
this notice.
For California income tax purposes, for the fiscal year ended September 30,
2005, California Tax Exempt Bond Fund and California Tax Exempt Money Market
Fund designate 100% and 100%, respectively, of their distributions paid from net
investment income as exempt-interest dividends under Section 17145 of the
California Revenue and Taxation Code.
For Federal income tax purposes, for the fiscal year ended September 30, 2005
each Fund is designating the following items with regard to distributions paid
during the year:
(C)** (D)***
Dividends Qualifying
(A)* (B)* Qualifying Dividend (E)****
Long Term Ordinary For Corporate Income U.S.
Capital Gain Income Tax Exempt Total Dividends Rec. (15% Rate Government
Distributions Distributions Interest Distributions Deduction for QDI) Interest
- ----------------------------------------------------------------------------------------------------------------------------------
Large Cap Value
Equity Fund 79% 21% 0% 100% 100% 100% 0%
Large Cap Growth
Equity Fund 0% 100% 0% 100% 100% 100% 0%
RCB Small Cap
Value Fund 83% 17% 0% 100% 100% 100% 0%
Technology Growth
Fund 0% 0% 0% 0% 0% 0% 0%
Corporate Bond
Fund 14% 86% 0% 100% 0% 0% 3%
Government Bond
Fund 14% 86% 0% 100% 0% 0% 42%
California Tax Exempt
Bond Fund 12% 0% 88% 100% 0% 0% 0%
High Yield Bond Fund 0% 100% 0% 100% 0% 0% 0%
Prime Money Market
Fund 0% 100% 0% 100% 0% 0% 11%
Government Money
Market Fund 0% 100% 0% 100% 0% 0% 22%
California Tax Exempt
Money Market Fund 2% 0% 98% 100% 0% 0% 0%
- ----------------------------------------------------------------------------------------------------------------------------------
* Items (A) and (B) are based on the percentage of each fund's total
distribution.
** Item (C) is based on the percentage of ordinary income distributions of
each fund. Qualifying dividends represent dividends which qualify for the
corporate dividends received deduction.
*** The percentage in Item (D) represents the amount of "Qualifying Dividend
Income" as created by the Jobs and Growth Tax Relief Reconciliation Act of
2003. It is the intention of each of the aforementioned funds to designate
the maximum amount permitted by the law.
**** "U.S. Government Interest" represents the amount of interest that was
derived from direct U.S. Government obligations and distributed during the
fiscal year. This amount is reflected as a percentage of total ordinary
income distributions (the total of short term capital gain and net
investment income distributions). For shareholders of the Funds who are
residents of California, Connecticut and New York, the statutory threshold
requirements were not satisfied to permit exemption of these amounts from
state income.
CNI CHARTER FUNDS | PAGE 78
disclosure of fund expenses (UNAUDITED)
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
All mutual funds have operating expenses. As a shareholder of the fund, your
investment is affected by these ongoing costs, which include (among others)
costs for portfolio management, administrative services, and shareholder reports
like this one. It is important for you to understand the impact of these costs
on your investment returns.
Operating expenses such as these are deducted from the fund's gross income and
directly reduce your final investment return. These expenses are expressed as a
percentage of the fund's average net assets; this percentage is known as the
fund's expense ratio.
The following examples use the expense ratio and are intended to help you
understand the ongoing costs (in dollars) of investing in your fund and to
compare these costs with those of other mutual funds. The examples are based on
an investment of $1,000 made at the beginning of the period shown and held for
the entire period.
The table below illustrates your fund's costs in two ways:
ACTUAL FUND RETURN. This section helps you to estimate the actual expenses that
your fund incurred over the period. The "Expenses Paid During Period" column
shows the actual dollar expense cost incurred by a $1,000 investment in the
fund, and the "Ending Account Value" number is derived from deducting that
expense cost from the fund's gross investment return.
You can use this information, together with the actual amount you invested in
the fund, to estimate the expenses you paid over that period. Simply divide your
actual account value by $1,000 to arrive at a ratio (for example, an $8,600
account value divided by $1,000 = $8.6), then multiply that ratio by the number
shown for your fund under "Expenses Paid During Period."
HYPOTHETICAL 5% RETURN. This section helps you compare your fund's costs with
those of other mutual funds. It assumes that the fund had an annual 5% return
before expenses during the year, but that the expense ratio (Column 3) for the
period is unchanged. This example is useful in making comparisons because the
Securities and Exchange Commission requires all mutual funds to make this 5%
calculation. You can assess your fund's comparative cost by comparing the
hypothetical result for your fund in the "Expenses Paid During Period" column
with those that appear in the same charts in the shareholder reports for other
funds.
NOTE: Because the return is set at 5% for comparison purposes - NOT your fund's
actual return - the account values shown do not apply to your specific
investment.
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
4/1/05 9/30/05 RATIOS PERIOD*
- --------------------------------------------------------------------------------
LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $1,057.60 0.96% $4.95
Class A 1,000.00 1,056.40 1.21% 6.24
HYPOTHETICAL 5% RETURN
Institutional Class 1,000.00 $1,020.26 0.96% $4.86
Class A 1,000.00 1,019.00 1.21% 6.12
- --------------------------------------------------------------------------------
LARGE CAP GROWTH FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $ 1,046.10 0.98% $5.03
Class A 1,000.00 1,044.10 1.23% 6.30
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $1,020.16 0.98% $4.96
Class A 1,000.00 1,018.90 1.23% 6.23
*Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 183/365 (to reflect
one-half year period).
CNI CHARTER FUNDS | PAGE 79
disclosure of fund expenses (UNAUDITED) (CONTINUED)
SEPTEMBER 30, 2005
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
4/1/05 9/30/05 RATIOS PERIOD*
- --------------------------------------------------------------------------------
RCB SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $1,018.50 1.18% $5.97
Class A 1,000.00 1,016.90 1.43% 7.23
Class R 1,000.00 1,017.30 1.43% 7.23
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $1,019.15 1.18% $5.97
Class A 1,000.00 1,017.90 1.43% 7.23
Class R 1,000.00 1,017.90 1.43% 7.23
- --------------------------------------------------------------------------------
TECHNOLOGY FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $ 1,100.80 1.20% $6.32
CLASS A 1,000.00 1,096.40 1.50% 7.88
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $1,019.05 1.20% $6.07
Class A 1,000.00 1,017.55 1.50% 7.59
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $1,017.40 0.75% $3.79
Class A 1,000.00 1,016.10 1.00% 5.05
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $1,021.31 0.75% $3.80
Class A 1,000.00 1,020.05 1.00% 5.06
- --------------------------------------------------------------------------------
GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $1,014.20 0.70% $3.53
Class A 1,000.00 1,011.90 0.95% 4.79
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $1,021.56 0.70% $3.55
Class A 1,000.00 1,020.31 0.95% 4.81
- --------------------------------------------------------------------------------
CALIFORNIA TAX-EXEMPT BOND FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $1,019.70 0.50% $2.53
Class A 1,000.00 1,018.40 0.75% 3.79
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $1,022.56 0.50% $2.54
Class A 1,000.00 1,021.31 0.75% 3.80
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
4/1/05 9/30/05 RATIOS PERIOD*
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $1,022.40 1.00% $5.07
Class A 1,000.00 1,020.90 1.30% 6.59
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $1,020.05 1.00% $5.06
Class A 1,000.00 1,018.55 1.30% 6.58
- --------------------------------------------------------------------------------
PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $1,013.10 0.59% $2.98
Class A 1,000.00 1,012.00 0.81% 4.09
Class S 1,000.00 1,011.00 1.01% 5.09
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $ 1,022.11 0.59% $2.99
Class A 1,000.00 1,021.01 0.81% 4.10
Class S 1,000.00 1,020.00 1.01% 5.11
- --------------------------------------------------------------------------------
GOVERNMENT MONEY MARKET FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $1,012.70 0.61% $3.08
Class A 1,000.00 1,011.60 0.83% 4.19
Class S 1,000.00 1,010.60 1.03% 5.19
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $1,022.01 0.61% $3.09
Class A 1,000.00 1,020.91 0.83% 4.20
Class S 1,000.00 1,019.90 1.03% 5.22
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $1,009.20 0.55% $2.77
Class A 1,000.00 1,008.00 0.78% 3.93
Class S 1,000.00 1,007.00 0.98% 4.93
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $ 1,022.31 0.55% $2.79
Class A 1,000.00 1,021.16 0.78% 3.95
Class S 1,000.00 1,020.16 0.98% 4.96
*Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 183/365 (to reflect
one-half year period).
CNI CHARTER FUNDS | PAGE 80
approval of investment advisory agreements (UNAUDITED)
- --------------------------------------------------------------------------------
During the six months ended September 30, 2005, in connection with the
reorganization of AHA Investment Funds (the "Predecessor Funds") into newly
formed series of the Trust (the "AHA Funds"), the Board of Trustees ("Board") of
CNI Charter Funds (the "Trust") approved the Trust's advisory agreement (the
"Management Agreement") with CCM Advisors, LLC ("CCM Advisors") and CCM
Advisors' sub-advisory agreements with each of Cambiar Investors, LLC
("Cambiar"), Freeman Associates Investment Management LLC ("Freeman"), The
Patterson Capital Corporation ("Patterson"), Robert W. Baird & Company
("Baird"), SKBA Capital Management, LLC ("SKBA") and City National Asset
Management, Inc. ("CNAM"). During the same period, the Board also approved the
sub-advisory agreement between CNAM, as investment adviser to the High Yield
Bond Fund, and HSBC Halbis Partners (USA), Inc. ("HSBC"), as sub-adviser to the
Fund. In the following text, Cambiar, Freeman, Patterson, Baird, SKBA and CNAM
are referred to as "AHA Sub-Advisers," the AHA Sub-Advisers and HSBC are
referred to as "Sub-Advisers" and the advisory agreement with each Sub-Adviser
is referred to as a "Sub-Advisory Agreement."
GENERAL INFORMATION
The information in this summary outlines the Board's considerations associated
with its approval of each of the Agreements. In connection with their
deliberations regarding the proposed advisory relationships, the Board
considered such information and factors as they believed, in light of the legal
advice furnished to them and their own business judgment, to be relevant. The
Management Agreement and the Sub-Advisory Agreement for each investment
portfolio of the Trust (each a "Fund") were considered separately, although the
Board took into account the common interests of all the relevant Funds in its
review. As described below, the Board considered the nature, quality and extent
of the various investment advisory and administrative services to be performed
by CCM Advisors and the Sub-Advisers. In considering these matters, the Board
discussed the approval of the Agreements with management and in private sessions
with counsel at which no representatives of CCM Advisors or the Sub-Advisers
were present.
The Board reviewed extensive materials regarding investment results of each of
CCM Advisors and the Sub-Advisers, advisory fee and expense comparisons,
financial and profitability information with respect to each entity,
descriptions of various functions such as compliance monitoring and portfolio
trading practices, and information about the personnel providing investment
management and administrative services to the Funds.
In deciding to approve the Agreements, the Board did not identify a single
factor as controlling and this summary does not describe all of the matters
considered. However, the Board concluded that each of the various factors
referred to below favored such approval.
AHA FUNDS
NATURE, EXTENT AND QUALITY OF SERVICES.
In reviewing the services to be provided by CCM Advisors and each AHA
Sub-Adviser, the Board considered a variety of matters, including the
background, education and experience of its key portfolio management and
operational personnel; its overall financial strength and stability; its
regulatory compliance systems and procedures; its resources and related efforts
to retain, attract and motivate capable personnel to serve the AHA Funds; and
the overall general quality and depth of its organization. With respect to CCM
Advisors, the Board also took into account the depth and quality of CCM
Advisors' capabilities as a "manager of managers"; the experience, capability
and integrity of its senior management; and its commitment and systems in place
with regard to compliance with applicable laws and regulations.
With respect to each AHA Sub-Adviser, the Board also reviewed each Sub-Adviser's
investment philosophy and processes as well as brokerage, trading and soft
dollar practices. In considering CNAM as a new sub-adviser with respect to a
portion of the AHA Limited Maturity Fixed Income Fund,
CNI CHARTER FUNDS | PAGE 81
approval of investment advisory agreements (UNAUDITED)(CONTINUED)
- --------------------------------------------------------------------------------
the Board noted that it was quite familiar with CNAM's general capabilities,
systems and procedures as a result of its past reviews of CNAM as an investment
adviser to other series of the Trust.
INVESTMENT PERFORMANCE.
The Board assessed the performance of each Predecessor Fund compared with its
respective benchmark and the average returns of all funds in its respective peer
group category selected by Morningstar Associates, LLC (each a "Morningstar
Universe").
o The Board considered that each of the Predecessor Diversified Equity, Full
Maturity Fixed Income, and Balanced Funds had either outperformed or
performed very close to its respective benchmark for the one-, three-,
five-, ten- and 15-year periods ending December 31, 2004, and had performed
in the top half of its respective Morningstar Universe for each such period
(except for the Predecessor Full Maturity Fixed Income Fund's one-year
returns).
o The Board observed that the Predecessor Limited Maturity Fixed Income Fund
had underperformed relative to its benchmarks in the rising interest rate
environment of 2004, but noted that it is not uncommon for short-term fixed
income funds to lag behind the market when interest rates are rising. The
Board also noted that this Predecessor Fund had been named a "Lipper
Leader" (i.e., ranked in the top 20th percentile of its Lipper Inc.
universe) for Preservation of Capital for the five-year period ending
December 31, 2004.
o The Trustees noted that performance information for the Predecessor
Socially Responsible Equity Fund was not yet available, as the Fund had
commenced operations on January 1, 2005. The Board noted, however that a
composite of accounts of SKBA, the Fund's investment sub-adviser, with
investment objectives substantially similar to those of the Fund had
outperformed the Russell 1000 Index for the one-, three- and five-year
periods ended December 31, 2004.
The Board also reviewed the value added by each AHA Sub-Adviser as reflected by
the performance of the allocated portion of each Fund it managed compared to the
relevant benchmarks and Morningstar Universes.
In evaluating CNAM as a new sub-adviser to the AHA Limited Maturity Fixed Income
Fund, the Trustees reviewed the returns of a composite of accounts managed by
CNAM's fixed income portfolio managers with investment strategies similar to
those of the Fund, and observed that the annualized returns of the composite for
the one-, two-, three-, four- and five-year periods ended March 31, 2005 were
greater than the corresponding returns of the composite's benchmark.
ADVISORY FEES AND FUND EXPENSES.
The Board reviewed information regarding the advisory fees to be charged by CCM
Advisors and each of the AHA Sub-Advisers, and total expenses of each of the
Predecessor Funds compared to those of the funds included in the relevant
Morningstar Universes. CCM Advisors pays the AHA Sub-Advisers' advisory fees out
of CCM Advisors' advisory fee.
The Board concluded that CCM Advisors' fees and the Sub-Advisers' fees compared
favorably to the advisory fees of the funds included in the relevant Morningstar
Universes, except for the Predecessor Diversified Equity Fund. With respect to
that Fund, the Board considered that the investment advisory fee paid by the
Predecessor Diversified Equity Fund was higher than the average management fee
of its Morningstar Universe because the Fund's Morningstar category included
many funds managed by substantially larger investment advisers and quasi-index
funds, which decreased the average management fee.
The Board noted that, although CCM Advisors serves as an investment consultant
and charges fees for those services, the Predecessor Funds represented CCM
Advisors' sole investment advisory client, and it would not be able to compare
the fees charged to the Trust by CCM Advisors with fees charged to other
institutional clients of CCM Advisors. The Board also
CNI CHARTER FUNDS | PAGE 82
approval of investment advisory agreements (UNAUDITED)(CONTINUED)
- --------------------------------------------------------------------------------
considered the fees charged by the AHA Sub-Advisers to their other institutional
clients, noting that the proposed advisory fees were significantly less than
those charged by each AHA Sub-Adviser to its institutional clients.
The Board considered the total expense ratios of the Predecessor Funds, noting
that the total expenses for each Predecessor Fund were equal to or less than the
average total expenses of the funds in its respective Morningstar Universe,
except for the Predecessor Full Maturity Fixed Income Fund. The Board noted that
the reorganization was expected to result in decreased expense ratios for the
AHA Funds, including those of the AHA Full Maturity Fixed Income Fund, relative
to those of the Predecessor Funds, as common expenses with the existing series
of the Trust would be spread over a larger asset base as a result of the
reorganization of the Predecessor Funds into the AHA Funds.
The Board considered information prepared by CCM Advisors and the Sub-Advisers
relating to their respective costs and profits with respect to the AHA Funds, as
well as the methodologies used to determine and allocate their costs to the AHA
Funds. The Board also considered the benefits to be received by CCM Advisors and
its affiliates as a result of CCM Advisors' relationship with the AHA Funds. The
Board noted that none of the AHA Sub-Advisers or their affiliates (other than
CNAM) would receive benefits other than investment advisory fees as a result of
its relationship with the AHA Funds, except the intangible benefits of the
favorable publicity arising in connection with the Funds' performance. With
respect to CNAM, the Board noted that the benefits received by CNAM and its
affiliates (which include CCM Advisors) as a result of CNAM's relationship with
the Trust includes fees paid to City National Bank and City National Securities
for providing certain shareholder servicing and sub-distribution services to the
Trust.
The Board also considered whether each AHA Fund is likely to benefit from any
economies of scale in the management of its portfolio in the event of growth in
assets of the AHA Fund. Due to the relatively small asset size of each of the
AHA Funds, the Board concluded that CCM Advisors would not currently realize any
significant economies of scale in acting as investment adviser to the Funds.
However, they noted that as the AHA Funds' assets increase in the future,
specific consideration would be given to the possibility of adding fee
breakpoints to CCM Advisors' fee schedule to share the benefit of any such
economies with the Funds' shareholders.
CONCLUSIONS.
Based on their review, including their consideration of each of the factors
referred to above, the Board concluded that the Management Agreement and each of
the AHA Sub-Advisory Agreements represent fair and reasonable compensation in
light of the nature and quality of the services being provided by CCM Advisors
and the AHA Sub-Advisors to the respective AHA Funds and their shareholders.
HIGH YIELD BOND FUND
During the period ended September 30, 2005, the Board approved HSBC to replace
Credit Suisse Asset Management, LLC ("CSAM") as the sub-adviser to the High
Yield Bond Fund. The Board approved the replacement of CSAM as a result of the
resignation from CSAM of the portfolio management team previously responsible
for management of the Fund and the subsequent employment of the team by HSBC.
NATURE, EXTENT AND QUALITY OF SERVICES
In reviewing the services to be provided by HSBC, the Board considered a variety
of matters, including the background, education and experience of its key
portfolio management and operational personnel; its overall financial strength
and stability, as well as that of its parent company; its regulatory compliance
systems and procedures; its resources and related efforts to retain, attract and
motivate capable personnel to serve the High Yield Bond Fund; and the overall
general quality and depth of its organization and that of its parent. The Board
also reviewed HSBC's investment philosophy and processes as well as brokerage,
trading and soft dollar practices, noting that it was quite familiar with the
investment processes and general
CNI CHARTER FUNDS | PAGE 83
approval of investment advisory agreements (UNAUDITED)(CONCLUDED)
- --------------------------------------------------------------------------------
capabilities of the portfolio management team as a result of the Board's past
reviews of the team when it was employed by CSAM.
INVESTMENT PERFORMANCE
The Board assessed the performance of the High Yield Bond Fund compared with its
benchmark for the one-year period ending July 31, 2005 (noting that the HSBC
portfolio management team had managed the portfolio on behalf of CSAM until
April 1, 2005), and observed that for the period the Fund had underperformed its
benchmark (the Citigroup High Yield Market Index). The Board noted, however,
that the Fund had outperformed a selected group of 11 comparable high yield bond
funds, as well as the Lipper High Yield Objective, the average of an index of
comparable funds selected by Lipper Inc., for the five-year period ended June
30, 2005.
ADVISORY FEES
The Board reviewed information regarding the advisory fees to be charged by HSBC
and noted that HSBC would charge the same fees as those previously charged by
CSAM, which were lower than HSBC's standard fee schedule for institutional
clients. CNAM pays the High Yield Bond Fund's sub-advisory fees out of CNAM's
advisory fee.
The Board also considered information prepared by HSBC relating to its costs and
projected profits with respect to the High Yield Bond Fund, as well as the
methodologies used to determine and allocate its costs to the Fund. The Board
noted that neither HSBC nor its affiliates would receive benefits other than
investment advisory fees as a result of its relationship with the Fund, except
the intangible benefits of the favorable publicity arising in connection with
the Fund's performance.
CONCLUSION
Based on its review, including its consideration of each of the factors referred
to above, the Board concluded that the HSBC Sub-Advisory Agreement represents
fair and reasonable compensation in light of the nature and quality of the
services to be provided by HSBC to the High Yield Bond Fund and its
shareholders.
CNI CHARTER FUNDS | PAGE 84
additional disclosure (UNAUDITED)
- --------------------------------------------------------------------------------
The Funds file their complete schedule of portfolio holdings with the Securities
and Exchange Commission for the first and third quarters of each fiscal year on
Form N-Q within sixty days after the end of the period. The Funds' Form N-Q is
available on the Commission's website at http://www.sec.gov, and may be reviewed
and copied at the Commission's Public Reference Room in Washington, DC.
Information on the operation of the Public Reference Room may be obtained by
calling 1-800-SEC-0330. The most current Form N-Q is also available on the
Fund's website at www.cnicharterfunds.com and without charge, upon request, by
calling 1-888-889-0799.
A description of the policies and procedures that the Funds use to determine how
to vote proxies relating to the Funds' portfolio securities, and information on
how the Funds voted proxies relating to portfolio securities during the most
recent 12-month period ending June 30 is available (1) without charge, upon
request, by calling 1-888-889-0799, (2) on the Funds' website at
www.cnicharterfunds.com, and (3) on the Securities and Exchange Commission's
website at www.sec.gov.
CNI CHARTER FUNDS | PAGE 85
notes
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notes
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notes
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- --------------------------------------------------------------------------------
THANK YOU for your investment with CNI Charter Funds. We value the trust you
have placed in us to help you achieve your financial goals.
- --------------------------------------------------------------------------------
For more information on CNI Charter Funds,
including charges and expenses, please call
1-888-889-0799 for a free prospectus.
Read it carefully before you invest or send money.
LOGO OMITTED
CNI CHARTER FUNDS sm
CNI-AR-001-0400
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer and principal
accounting officer.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The registrant's board of trustees has determined that the registrant has
at least one audit committee financial expert serving on the audit committee.
(a)(2) The audit committee financial experts are William R. Sweet and James R.
Wolford. Messrs. Sweet and Wolford are independent as defined in Form N-CSR Item
3(a)(2).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Fees billed by KPMG LLP Related to the Trust
KPMG LLP billed the Trust aggregate fees for services rendered to the Trust for
the last two fiscal years as follows:
- ------------------ ----------------------------------------------------- -----------------------------------------------------
2005 2004
- ------------------ ----------------------------------------------------- -----------------------------------------------------
All fees and All fees and All other fees All fees and All fees and All other fees
services to the services to and services to services to the services to and services to
Trust that were service service Trust that were service service
pre-approved affiliates that affiliates that pre-approved affiliates that affiliates that
were did not require were did not require
pre-approved pre-approval pre-approved pre-approval
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(a) Audit $221,500 N/A N/A $211,500 N/A N/A
Fees(1)
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(b) Audit- $0 N/A N/A $0 N/A N/A
Related
Fees
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(c) Tax Fees $41,000 N/A N/A $46,200 N/A N/A
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(d) All N/A N/A N/A $0 N/A N/A
Other
Fees
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Notes:
(1) Audit fees include amounts related to the audit of the registrant's
annual financial statements and services normally provided by the
accountant in connection with statutory and regulatory filings.
(e)(1) Not Applicable
(e)(2) Percentage of fees billed applicable to non-audit services pursuant to
waiver of pre-approval requirement were as follows:
---------------------------- ----------------- ----------------
2005 2004
---------------------------- ----------------- ----------------
Audit-Related Fees N/A N/A
---------------------------- ----------------- ----------------
Tax Fees N/A N/A
---------------------------- ----------------- ----------------
All Other Fees N/A N/A
---------------------------- ----------------- ----------------
(f) Not Applicable
(g) The aggregate non-audit fees and services billed by KPMG LLP for the last
two fiscal years were $41,000 and $46,200 for 2005 and 2004,
respectively.
(h) Not Applicable
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to open-end management investment companies.
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end management investment companies.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable. Effective for closed-end management investment companies for
fiscal years ending on or after December 31, 2005
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT COMPANY AND
AFFILIATED PURCHASERS.
Not applicable to open-end management investment companies.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
CNI Charter Funds (the "Fund") has adopted the following procedures by which
shareholders may recommend nominees to the Fund's Board of Trustees. The Fund
has a Nominating Committee comprised solely of persons who are not considered
"interested persons" of the Fund within the meaning of the Investment Company
Act of 1940. The Committee periodically reviews such issues as the Board's
composition, responsibilities, committees, compensation and other relevant
issues, and recommends any appropriate changes to the full Board of Trustees.
While the Committee normally is able to identify from its own resources an ample
number of qualified candidates, it will consider shareholder suggestions of
persons to be considered as nominees to fill future vacancies on the Board, so
long as the shareholder or shareholder group submitting a proposed nominee: (a)
beneficially owns more than 5% of the Fund's voting shares and has held such
shares continuously for two years, and (b) is not an adverse holder. No eligible
shareholder or shareholder group may submit more than one independent Board
member nominee each year. Such suggestions must be sent in writing to the Fund's
Secretary, and must be accompanied by the shareholder's contact information,
the nominee's contact information and number of Fund shares owned by the
nominee, all information regarding the nominee that would be required to be
disclosed in solicitations of proxies for elections of directors required under
the Securities Exchange Act of 1934, and a notarized letter from the nominee
stating his or her intention to serve as a nominee and be named in the Fund's
proxy statement, if so designated by the Committee and the Board of Trustees.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The certifying officers, whose certifications are included herewith, have
evaluated the registrant's disclosure controls and procedures within 90 days of
the filing date of this report. In their opinion, based on their evaluation, the
registrant's disclosure controls and procedures are adequately designed, and are
operating effectively to ensure, that information required to be disclosed by
the registrant in the reports it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms.
(b) There were no significant changes in the registrant's internal control over
financial reporting that occurred during the registrant's last fiscal half-year
that has materially affected, or is reasonably likely to materially affect, the
registrants internal control over financial reporting.
ITEMS 12. EXHIBITS.
(a)(1) Code of Ethics attached hereto.
(a)(2) A separate certification for the principal executive officer and the
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(a)), are filed
herewith.
(b) Officer certifications as required by Rule 30a-2(b) under the Investment
Company Act of 1940, as amended (17 CFR 270.30a-2(b)) also accompany this filing
as an Exhibit.
- --------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) CNI Charter Funds
By (Signature and Title)* /s/ Vern Kozlen
----------------------------
Vern Kozlen, President & CEO
Date November 28, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Vern Kozlen
----------------------------
Vern Kozlen, President & CEO
Date November 28, 2005
By (Signature and Title)* /s/ Eric Kleinschmidt
-------------------------------------
Eric Kleinschmidt, Controller and COO
Date November 28, 2005
* Print the name and title of each signing officer under his or her signature.