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 811-07923
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, 2006
DATE OF REPORTING PERIOD: SEPTEMBER 30, 2006
ITEM 1. REPORTS TO STOCKHOLDERS.
[LOGO]
AMERICAN HOSPITAL CNI CHARTER FUNDS(SM) [LOGO OMITTED](R)
ASSOCIATION
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[GRAPHIC OMITTED]
AHA Investment Funds
A Series of CNI Charter Funds
2006 Annual Report o September 30, 2006
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AHA Limited Maturity Fixed Income Fund
AHA Full Maturity Fixed Income Fund
AHA Balanced Fund
AHA Diversified Equity Fund www.ahafunds.org
AHA Socially Responsible Equity Fund www.cnicharterfunds.com
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TABLE OF CONTENTS
AHA INVESTMENT FUNDS
A SERIES OF CNI CHARTER FUNDS
ANNUAL REPORT
1 Letter to Our Shareholders
4 Asset Allocations
6 Performance Information
11 Schedules of Investments
32 Statements of Assets and Liabilities
33 Statements of Operations
35 Statements of Changes in Net Assets
40 Financial Highlights
49 Notes to Financial Statements
57 Report of Independent Registered Public Accounting Firm
58 Trustees and Officers
61 Shareholder Voting Results
62 Notice to Shareholders
63 Disclosure of Fund Expenses
65 Approval of Sub-Advisory Agreement
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AVAILABILITY OF PROXY VOTING INFORMATION
A description of the policies and procedures that the Funds use to determine how
to vote proxies related 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 1-800-445-1341, (2) on the CNI Charter Funds' website at
www.cnicharterfunds.com, and (3) on the Securities and Exchange Commission's
website at www.sec.gov.
AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULE
The Funds file their complete schedule of portfolio holdings with the Securities
and Exchange Commission on Form N-Q. The Funds will file Form N-Q 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 CNI Charter Funds' website at www.
cnicharterfunds.com and without charge, upon request by calling 1-800-445-1341.
AHA INVESTMENT FUNDS
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SHAREHOLDER LETTER
September 30, 2006
Dear Shareholder:
Please find enclosed the annual report for the AHA Investment Funds, (the "AHA
Funds"), dated September 30, 2006. This letter will summarize results for the
AHA mutual funds and activities for the past twelve months. As you will
remember, October 1, 2005, was the effective date for the reorganization of the
American Hospital Association sponsored AHA Investment Funds into the CNI
Charter Funds family with over $4 billion in assets under management. This
combination was approved by a vote of shareholders of over 90% for each AHA
Fund, and we are pleased to report that the new structure has brought the
resources of the CNI Charter Funds and their parent, City National Corporation,
with state of the art support systems. One of the results of the reorganization
is that the fiscal year end of the AHA Funds was changed from June 30th to
September 30th; and last year you received a special audit report for the three
months ended September 30, 2005, which aligned the AHA Funds with the CNI
Charter Funds.
AHA LIMITED MATURITY FIXED INCOME FUND
We made changes to this Fund with the objective of enhancing returns by
extending the duration. This was accomplished by adding a second portfolio
manager, with over 90% shareholder approval by proxy vote, at the beginning of
the fiscal year. This manager has a 1-5 year maturity range of securities to
complement the existing manager's 1-3 year range. Therefore, the fiscal year
ended September 30, 2006 was the first year that this Fund had a 1-5 year
maturity portfolio managed by City National Asset Management, Inc. in
combination with the 1-3 year maturity portfolio managed by The Patterson
Capital Corporation. We gradually increased the weighting of the 1-5 year
portfolio so that by mid-fiscal year March 31st it constituted half of the Fund.
Changes in the Fund's customized benchmark over the year corresponded to
increasing allocation to the new manager. Whereas before this fiscal year the
Fund was benchmarked wholly to the Merrill Lynch 1-3 Year Treasury Index, it was
modified over the year as weighting was shifted to the new portfolio. The mix
went from 75% ML 1-3 Year Treasury and 25% Lehman 1-5 Year Government Credit
Bond Index for the first half of the fiscal year, to 50/50% for the second half.
The 50/50 mix will be the customized benchmark going forward, as it represents
the combined portfolios of the two sub-advisers.
The Federal Reserve Bank's ("Fed") continued policy of increases in short-term
interest rates through June 2006 was spurred in part by inflation concerns
related to record oil prices. Because the Fed controls short-term yields; it
affected those short maturity securities held by AHA Limited Maturity Fixed
Income Fund Class I Shares: in October 2005, this Fund's 30 day SEC yield was
3.20% and by September 2006, it rose to 4.47%. The total return of the Fund's
Class I Shares was 3.49% for the fiscal year which was slightly lower than the
customized benchmark return of 3.77%. This is because conservative shorter
durations aided performance earlier in the year and lagged after the Fed ceased
their rate increases in the summer quarter.
The Class A Shares of this Fund had their first complete year of performance.
The total return was 3.17% and the 30 day SEC yield rose from 2.94% in October
2005 to 4.18% in September 2006.
AHA FULL MATURITY FIXED INCOME
This Fund also had a new manager for the fiscal year: Boyd Watterson Asset
Management, L.L.C. ("BWAM") took over the intermediate portfolio in December
2005, bringing expertise in corporate and Yankee (US $ denominated
international) bond research to Fund shareholders.
The fiscal year saw intermediate and longer maturity bonds dip in prices earlier
in the year in response to the Fed's rate increases. Bond prices and interest
rates have an inverse relationship, so that while yields go up, prices will drop
as the bond market adjusts to the Fed's actions. However, once the Fed stopped
the rate increases over the summer, the bond market prices rallied, bringing
about a positive fiscal year end conclusion. As a result, the AHA
1
Full Maturity Fixed Income Fund Class I and Class A Shares recorded a total
return of 3.03% and 2.67%, respectively, for the fiscal year, while the Lehman
Government/Credit Intermediate Total Return Index returned 3.54%. The AHA Full
Maturity Fixed Income Fund combines two equally weighted portfolios managed to
the intermediate (BWAM) and aggregate (Robert W. Baird & Co., Incorporated)
indices to provide a "full" maturity spectrum. The intermediate portfolio
manager maintained shorter durations than its index as a defensive measure,
which aided performance in a rising interest rate environment, but contributed
to the difference in performance during the bond market rally.
AHA BALANCED FUND
The AHA Balanced Fund combines stocks, bonds and cash in a moderate allocation
targeted at 60% stocks per Morningstar's definition. Its total return for the
fiscal year was 8.32%, outperforming a benchmark of 60% S&P 500 Stock Index, 30%
Lehman U.S. Aggregate Bond Index and 10% Merrill Lynch 3-month U.S. Treasury
Index, which returned 8.02%. Its ranking in the Morningstar moderate universe
was in the upper 25th percentile for the year. This Fund benefited from stock
overweights in energy for the first part of the year and healthcare and
technology later in the year. The aggregate duration of its fixed income
allocation benefited from the rally in bonds after the Fed left rates flat in
July.
AHA DIVERSIFIED EQUITY FUND
During the first three quarters of the fiscal year oil and gas prices rose to
record levels, the Fed's rate increases shifted focus away from housing and
slowed down large ticket consumer spending, which is interest rate sensitive.
The AHA Diversified Equity Fund Class I Shares produced results of 10.16% versus
the S&P 500 Index of 10.79%. The Diversified Equity Fund Class A Shares had a
net annual total return of 9.87%. While "alpha" manager Cambiar Investors'
sector overweighting in the energy sector aided performance in the earlier part
of the year during the run up in oil prices, it was a drag on performance in the
final fiscal quarter. The core portfolio manager, Freeman Associates Investment
Management's theme of low price-to- earnings ratios and strong cash flows helped
minimize downside risk in the Fund. The Fund's Class I Shares ranked in the
upper 40th percentile of its Morningstar peer group universe for the year ended
September 30, 2006.
As noted above, this Fund combined two major investment styles, Freeman's
conservative "core" management with Cambiar's more aggressive "alpha" style. An
"alpha" manager is more concentrated in certain sectors and produces returns in
excess of the market based (or "beta") return. The "core" manager is broadly
diversified in the S&P 500 stocks, maintaining similar market weightings in each
industry sector as the index, but selecting the best security in each industry
by factoring in its analyst's price support, market momentum and discounted
fundamental evaluations. In September of 2006, after a national search for a
replacement manager for the alpha portfolio, it was determined that dividing the
Cambiar portfolio in two would provide an even more favorable total fund
construction in terms of potential returns with controlled risk. A proxy ballot
was sent to AHA Diversified Equity Fund shareholders recommending that we split
the alpha half of the portfolio equally between two new managers, SKBA Capital
Management's Value Opportunity style and AMBS Investment Counsel's Absolute
Large Cap Value. A shareholders meeting was held on September 25, 2006 and the
proposal to add the Fund's two new managers passed by over 90% of the shares
casting votes. We believe that the addition of these two new portfolio managers,
who had greater than 5% alpha over the past three years, will benefit Fund
shareholders. They began management of the AHA Diversified Equity Fund's alpha
portfolios at the start of the new fiscal year on October 1, 2006.
AHA SOCIALLY RESPONSIBLE EQUITY FUND
The new AHA Socially Responsible Equity Fund, which was designed to meet the
social guidelines of church-based organizations, produced a 7.69% total return
for the year for Class I Shares, which is very close to the 7.71% of the Domini
400 Social Index, while the A Shares completed their first year of operation and
had a 7.40% total return. This Fund had heavy sector weightings in financials,
consumer discretionary and healthcare stocks and an underweight in technology.
Energy stocks as a sector comprised a middle level weighting (7.9%) of the Fund;
as with other equity portfolios, this sector aided the portfolio in the first
three fiscal quarters and lagged in the final quarter.
2
The Fund's sub-adviser is SKBA Capital Management. SKBA follows a socially
responsible value investment style and the social guidelines of the National
Council of Bishops, which includes restrictions of "sin" stocks as well as
inclusion of "good citizen" companies that have good environmental, human rights
and governance track records. It has doubled in size over the year.
NEW FISCAL YEAR
As we start our new fiscal year we want to thank our investors for their
confidence and trust. If you have any questions, please do not hesitate to call
us at 800.357.4675. The AHA Investment Funds are part of an expanding network of
investment funds offered through the CNI Charter Funds. We have two websites:
www.ahafunds.org serving both I and A class investors, and
www.cnicharterfunds.com for A class investors. Look for us on the Schwab
platform in 2007.
Sincerely,
/s/ Timothy G. Solberg
Timothy G. Solberg, CFA
Chief Investment Officer
AHA Investment Funds, a series of the CNI Charter Funds
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
Opinions expressed above are subject to change, are not guaranteed, and should
not be considered a recommendation to buy or sell any security. Please refer to
the schedule of investments in the report for fund holdings and index
definitions. Portfolio holdings and sector allocations are subject to change.
The adviser has agreed to voluntarily waive fees to the extent necessary to keep
operating expenses at or below specific limits. In the absence of such waivers,
total returns would be reduced.
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.
CHANGING INTEREST RATES CAN ADVERSELY AFFECT THE VALUE OF AN INVESTMENT IN THE
AHA LIMITED AND FULL MATURITY FUNDS.
This material must be preceded or accompanied by a current prospectus. Please
read it carefully before you invest or send money.
Distributed by SEI Investments Distribution Co. (SIDCo).
3
AHA INVESTMENT FUNDS
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ASSET ALLOCATIONS*
September 30, 2006
AHA LIMITED MATURITY FIXED INCOME FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Corporate Bonds 42.5%
U.S. Government Agency Obligations 20.9%
U.S. Government Mortgage-Backed Obligations 15.0%
U.S. Treasury Obligations 8.0%
Mortgage-Backed Securities 6.5%
Asset-Backed Securities 3.6%
Cash Equivalent 3.5%
AHA FULL MATURITY FIXED INCOME FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Corporate Bonds 35.6%
U.S. Government Mortgage-Backed Obligations 18.1%
U.S. Treasury Obligations 16.1%
U.S. Government Agency Obligations 14.3%
Mortgage-Backed Securities 8.8%
Asset-Backed Securities 3.8%
Cash Equivalent 2.6%
Foreign Government Bonds 0.6%
Municipal Bond 0.1%
*Percentages based on total investments.
4
AHA INVESTMENT FUNDS
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ASSET ALLOCATIONS*
September 30, 2006
AHA BALANCED FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Common Stock 60.7%
U.S. Government Mortgage-Backed Obligations 7.3%
Mortgage-Backed Securities 7.2%
Corporate Bonds 7.1%
U.S. Government Agency Obligations 6.3%
U.S. Treasury Obligations 6.2%
Cash Equivalent 2.4%(1)
Commercial Paper 1.3%
Asset-Backed Securities 0.9%
Foreign Government Bonds 0.5%
Municipal Bond 0.1%
AHA DIVERSIFIED EQUITY FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Common Stock 94.5%
Cash Equivalents 3.7%(1)
Commercial Paper 1.8%
AHA SOCIALLY RESPONSIBLE EQUITY FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Common Stock 94.4%
Cash Equivalent 4.9%(1)
Commercial Paper 0.7%
*Percentages based on total investments.
(1) Includes securities held as collateral for securities on loan.
5
AHA LIMITED MATURITY FIXED INCOME FUND
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HYPOTHETICAL GROWTH OF $10,000
[GRAPH OMITTED: PLOT POINTS BELOW]
AHA Limited
Maturity Fixed Merrill Lynch Merrill Lynch Lehman 1-5 Year
Income Fund - 50/50 Hybrid 3-Month Treasury 1-3 Year Treasury Government
Class I Shares Index Bill Index Index Credit Index
9/30/96 $10,000 $10,000 $10,000 $10,000 $10,000
9/30/97 10,645 10,715 10,539 10,690 10,741
9/30/98 11,404 11,625 11,104 11,542 11,710
9/30/99 11,736 11,944 11,626 11,915 11,977
9/30/00 12,382 12,654 12,298 12,605 12,707
9/30/01 13,641 14,064 12,968 13,913 14,221
9/30/02 14,342 14,954 13,227 14,699 15,219
9/30/03 14,736 15,501 13,402 15,084 15,936
9/30/04 14,842 15,723 13,549 15,243 16,224
9/30/05 14,940 15,880 13,904 15,392 16,388
9/30/06 15,462 16,479 14,530 15,968 17,011
This chart assumes an initial gross investment of $10,000 for the AHA Limited
Maturity Fixed Income Fund - Class I Shares, as well as the Merrill Lynch
3-Month U.S. Treasury Index, the Merrill Lynch 1-3 Year Treasury Index, and the
50/50 Hybrid Index. The Fund's performance will no longer be compared to the
Merrill Lynch 3-Month U.S. Treasury Index and the Merrill Lynch 1-3 Year
Treasury Index, as the 50/50 Hybrid Index better reflects the Fund's investment
strategy. Performance figures include reinvested dividends and capital gains.
Class A Shares are sold with a 0.25% 12b-1 fee. Investment performance reflects
fee waivers in effect. In the absence of such waivers, total return would be
reduced.
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE
FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUND MAY BE LOWER OR HIGHER
THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH
END MAY BE OBTAINED BY CALLING 1-800-445-1341.
TOTAL RETURNS AS OF 9/30/06
AVERAGE ANNUAL AVERAGE ANNUAL
ONE YEAR RETURN FIVE YEAR RETURN TEN YEAR RETURN
--------------- ---------------- ---------------
AHA Limited Maturity Fixed Income Fund - Class I Shares .......... 3.49% 2.54% 4.45%
AHA Limited Maturity Fixed Income Fund - Class A Shares .......... 3.17% N/A N/A
Lehman 1-5 Year Government Credit Bond Index ..................... 3.80% 3.65% 5.46%
Merrill Lynch 3-Month U.S. Treasury Index ........................ 4.50% 2.30% 3.81%
Merrill Lynch 1-3 Year Treasury Index ............................ 3.74% 2.79% 4.79%
50/50 Hybrid Index ............................................... 3.77% 3.22% 5.12%
Class A Shares commenced operations on October 22, 2004. Total cumulative return
since inception for the Class A Shares was 3.43% as of September 30, 2006.
LEHMAN 1-5 YEAR YEAR GOVERNMENT CREDIT BOND INDEX
A total return index consisting of investment grade corporate debt issues as
well as debt issues of U.S. government agencies and the U.S. Treasury. The debt
issues all maintain maturities within a range of one to five years.
MERRILL LYNCH 3-MONTH U.S. TREASURY INDEX
The Merrill Lynch 3-Month U.S. Treasury Index is comprised of a single issue
purchased at the beginning of the month and held for a full month. Each month
the index is rebalanced and the issue selected is the outstanding Treasury Bill
that matures closest to, but not beyond three months from the rebalancing date.
MERRILL LYNCH 1-3 YEAR TREASURY INDEX
A subset of the Merrill Lynch Treasury Master Index. The maturity range on these
securities is from one to three years. This index is available on a monthly
basis in price-only and total return versions. The value was set at 100 on
December 31, 1975.
50/50 HYBRID INDEX
This is a customized index with a blend of two indices, consisting of 50%
Merrill Lynch 1-3 Year Treasury Index and 50% Lehman 1-5 Year Government Credit
Bond Index.
One cannot invest directly in an index.
6
AHA FULL MATURITY FIXED INCOME FUND
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HYPOTHETICAL GROWTH OF $10,000
[GRAPH OMITTED: PLOT POINTS BELOW]
AHA Full Lehman Brothers
Maturity Fixed Government/
Income Fund - Credit Intermediate
Class I Shares Total Return Index
9/30/96 $10,000 $10,000
9/30/97 10,962 10,819
9/30/98 12,138 11,947
9/30/99 12,048 12,023
9/30/00 12,858 12,774
9/30/01 14,401 14,422
9/30/02 15,418 15,590
9/30/03 16,293 16,527
9/30/04 16,856 16,965
9/30/05 17,210 17,220
9/30/06 17,731 17,829
This chart assumes an initial gross investment of $10,000 for the AHA Full
Maturity Fixed Income Fund - Class I Shares and the Lehman Brothers
Government/Credit Intermediate Total Return Index. Performance figures include
reinvested dividends and capital gains. Class A Shares are sold with a 0.25%
12b-1 fee. Investment performance reflects fee waivers in effect. In the absence
of such waivers, total returns would be reduced.
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE
FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUND MAY BE LOWER OR HIGHER
THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH
END MAY BE OBTAINED BY CALLING 1-800-445-1341.
TOTAL RETURNS AS OF 9/30/06
AVERAGE ANNUAL AVERAGE ANNUAL
ONE YEAR RETURN FIVE YEAR RETURN TEN YEAR RETURN
--------------- ---------------- ---------------
AHA Full Maturity Fixed Income
Fund - Class I Shares .......................................... 3.03% 4.25% 5.90%
AHA Full Maturity Fixed Income
Fund - Class A Shares .......................................... 2.67% N/A N/A
Lehman Brothers Government/Credit Intermediate
Total Return Index ............................................. 3.54% 4.33% 5.95%
Class A Shares commenced operations on May 11, 2004. Total cumulative return
since inception for the Class A Shares was 7.73% as of September 30, 2006.
LEHMAN BROTHERS 1-5 GOVERNMENT/CREDIT TOTAL RETURN INDEX
A total return index consisting of investment grade corporate debt issues as
well as debt issues of U.S. government agencies and the U.S. Treasury. The debt
issues all maintain maturities within a range of one to five years.
One cannot invest directly in an index.
7
AHA BALANCED FUND
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HYPOTHETICAL GROWTH OF $10,000
[GRAPH OMITTED: PLOT POINTS BELOW]
AHA Balanced Merrill Lynch
Fund - Class I 60/30/10 Lehman U.S. 3-Month U.S.
Shares Hybrid Index S&P 500 Index Aggregate Index Treasury Index
9/30/06 $10,000 $10,000 $10,000 $10,000 $10,000
9/30/97 13,025 12,656 14,045 10,971 10,539
9/30/98 12,858 13,879 15,316 12,234 11,104
9/30/99 14,918 16,225 19,574 12,188 11,626
9/30/00 17,520 17,968 22,173 13,040 12,298
9/30/01 16,236 15,647 16,271 14,729 12,968
9/30/02 14,703 14,058 12,937 15,996 13,227
9/30/03 16,786 16,358 16,092 16,861 13,402
9/30/04 18,727 17,916 18,324 17,482 13,549
9/30/05 20,841 19,431 20,569 17,971 13,904
9/30/06 22,575 20,990 22,788 18,631 14,530
This chart assumes an initial gross investment of $10,000 for the AHA Balanced
Fund, a customized Index, the 60/30/10 Hybrid Index and the S&P 500 Index.
Performance figures include reinvested dividends and capital gains. Investment
performance reflects fee waivers in effect. In the absence of such waivers,
total return would be reduced.
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE
FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUND MAY BE LOWER OR HIGHER
THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH
END MAY BE OBTAINED BY CALLING 1-800-445-1341.
TOTAL RETURNS AS OF 9/30/06
AVERAGE ANNUAL AVERAGE ANNUAL
ONE YEAR RETURN FIVE YEAR RETURN TEN YEAR RETURN
--------------- ---------------- ---------------
AHA Balanced Fund - Class I Shares .............................. 8.32% 6.82% 8.48%
60/30/10 Hybrid Index ........................................... 8.02% 6.05% 7.70%
S&P 500 Index ................................................... 10.79% 6.97% 8.59%
Lehman U.S. Aggregate Bond Index ................................ 3.67% 4.81% 6.42%
Merrill Lynch 3-Month U.S. Treasury Index ....................... 4.50% 2.30% 3.81%
S&P 500 INDEX
The S&P 500 is a broad market-weighted average of U.S. blue-chip companies. The
S&P 500 Index is a registered trademark of McGraw-Hill, Inc.
LEHMAN U.S. AGGREGATE BOND INDEX
The Lehman Brothers U.S. Aggregate Bond Index represents securities that are
SEC-registered, taxable, and dollar denominated. The index covers the U.S.
investment grade fixed rate bond market, with index components for government
and corporate securities, mortgage pass-through securities, and asset-backed
securities. These major sectors are subdivided into more specific indices that
are calculated and reported on a regular basis.
MERRILL LYNCH 3-MONTH U.S. TREASURY INDEX
The Merrill Lynch 3-Month U.S. Treasury Index is comprised of a single issue
purchased at the beginning of the month and held for a full month. Each month
the index is rebalanced and the issue selected is the outstanding Treasury Bill
that matures closest to, but not beyond three months from the rebalancing date.
60/30/10 HYBRID INDEX
This is a customized index with a blend of three indices, consisting of 60% in
the S&P 500 Index, 30% in the Lehman U.S. Aggregate Bond Index and 10% in the
Merrill Lynch 3-Month U.S. Treasury Index.
One cannot invest directly in an index.
8
AHA DIVERSIFIED EQUITY FUND
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HYPOTHETICAL GROWTH OF $10,000
[GRAPH OMITTED: PLOT POINTS BELOW]
AHA Diversified
Equity Fund -
Class I Shares S&P 500 Index
9/30/96 $10,000 $10,000
9/30/97 14,196 14,045
9/30/98 13,940 15,316
9/30/99 17,431 19,574
9/30/00 21,008 22,173
9/30/01 17,832 16,271
9/30/02 14,592 12,937
9/30/03 17,758 16,092
9/30/04 20,626 18,324
9/30/05 24,025 20,569
9/30/06 26,466 22,788
This chart assumes an initial gross investment of $10,000 for the AHA
Diversified Equity Fund - Class I Shares, the S&P 500 Index and the Russell 1000
Value Index. Performance figures include reinvested dividends and capital gains.
Class A Shares are sold with a 0.25% 12b-1 fee. The advisor has an agreement in
place to waive fees. Currently, the expense levels have not been exceeded for
the Fund.
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE
FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUND MAY BE LOWER OR HIGHER
THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH
END MAY BE OBTAINED BY CALLING 1-800-445-1341.
TOTAL RETURNS AS OF 9/30/06
AVERAGE ANNUAL AVERAGE ANNUAL
ONE YEAR RETURN FIVE YEAR RETURN TEN YEAR RETURN
--------------- ---------------- ---------------
AHA Diversified Equity Fund - Class I Shares .................... 10.16% 8.22% 10.22%
AHA Diversified Equity Fund - Class A Shares .................... 9.87% N/A N/A
S&P 500 Index ................................................... 10.79% 6.97% 8.59%
Class A Shares commenced operations on December 30, 2002. Total annualized
return since inception for the Class A Shares was 69.44% as of September 30,
2006.
S&P 500 INDEX
The S&P 500 Index is a broad market-weighted average of U.S. blue-chip
companies. S&P 500 Index is a registered trademark of McGraw-Hill, Inc.
One cannot invest directly in an index.
9
AHA SOCIALLY RESPONSIBLE EQUITY FUND
- --------------------------------------------------------------------------------
HYPOTHETICAL GROWTH OF $10,000
[GRAPH OMITTED: PLOT POINTS BELOW]
AHA Socially
Responsible
Equity Fund - Domini 400
Class I Shares Social Index S&P 500 Index Russell 1000 Index
1/3/05 $10,000 $10,000 $10,000 $10,000
9/30/05 10,355 9,969 10,360 10,501
9/30/06 11,152 10,738 11,478 11,577
This chart assumes an initial gross investment of $10,000 made on January 3,
2005 (since inception) for the AHA Socially Responsible Equity Fund - Class I
Shares and the Russell 1000 Index. Performance figures include reinvested
dividends and capital gains. The advisor has an agreement in place to waive
fees. Currently, the expense levels have not been exceeded for the Fund.
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE
FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUND MAY BE LOWER OR HIGHER
THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH
END MAY BE OBTAINED BY CALLING 1-800-445-1341.
TOTAL RETURNS AS OF 9/30/06
ONE YEAR RETURN*
----------------
AHA Socially Responsible Equity Fund - Class I Shares ............ 7.69%
AHA Socially Responsible Equity Fund - Class A Shares ............ 7.40%
Domini 400 Social Index .......................................... 7.71%
Russell 1000 Index ............................................... 10.25%
S&P 500 Index .................................................... 10.79%
Class A shares commenced operations on August 12, 2005. Total cumulative return
since inception for the Class A shares was 8.76% as if September 30, 2006.
* Class I shares commenced operations on January 3, 2005.
DOMINI 400 SOCIAL INDEX
The Domini 400 Social Index(SM)is a market capitalization-weighted common stock
index. It monitors the performance of 400 U.S. corporations that pass multiple,
broad-based social screens. The Index consists of approximately 250 companies
included in the Standard & Poor's 500 Index, approximately 100 additional large
companies not included in the S&P 500 but providing industry representation, and
approximately 50 additional companies with particularly strong social
characteristics.
RUSSELL 1000 INDEX
A market capitalization-weighted index made up of the 1,000 highest ranking U.S.
stocks in the Russell 3000.
S&P 500 INDEX
The S&P 500 Index is a broad market-weighted average of U.S. blue-chip
companies. S&P 500 is a registered trademark of McGraw-Hill, Inc.
One cannot invest directly in an index.
10
AHA LIMITED MATURITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description Face Amount (000) Value (000)
- --------------------------------------------------------------------------------
CORPORATE BONDS [43.2%]
ALUMINUM [0.5%]
Alcoa
4.250%, 08/15/07 $ 250 $ 247
===========================================================================
AUTOMOTIVE [1.7%]
Conoco Funding
6.350%, 10/15/11 750 789
===========================================================================
BANKS [4.4%]
Bank of America
7.400%, 01/15/11 750 812
U.S. Bank, NA
6.375%, 08/01/11 750 787
Wachovia
4.850%, 07/30/07 400 398
---------------------------------------------------------------------------
TOTAL BANKS 1,997
===========================================================================
BEAUTY PRODUCTS [1.7%]
Procter & Gamble
6.875%, 09/15/09 750 786
===========================================================================
COMPUTER SYSTEM DESIGN & SERVICES [4.1%]
Hewlett-Packard
5.750%, 12/15/06 750 750
IBM, MTN
6.450%, 08/01/07 400 403
IBM
4.375%, 06/01/09 750 737
---------------------------------------------------------------------------
TOTAL COMPUTER SYSTEM DESIGN & SERVICES 1,890
===========================================================================
DIVERSIFIED MANUFACTURING [1.1%]
Honeywell
7.000%, 03/15/07 510 513
===========================================================================
FINANCE AUTO LOANS [0.7%]
Toyota MotorCredit
5.500%, 12/15/08 300 302
===========================================================================
FINANCIAL SERVICES [6.3%]
American Express Credit
3.000%, 05/16/08 300 290
CIT Group
5.750%, 09/25/07 400 401
General Electric Capital, Ser A, MTN
5.000%, 06/15/07 750 749
HSBC Finance
5.750%, 01/30/07 855 856
International Lease Finance
4.350%, 09/15/08 300 295
National Rural Utilities
3.875%, 02/15/08 275 270
---------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES 2,861
===========================================================================
Description Face Amount (000) Value (000)
- --------------------------------------------------------------------------------
INSURANCE [0.9%]
UnitedHealth Group
5.200%, 01/17/07 $ 430 $ 430
===========================================================================
INVESTMENT BANKER/BROKER DEALER [10.2%]
Bear Stearns
5.700%, 01/15/07 200 200
Citigroup
6.500%, 01/18/11 750 788
3.500%, 02/01/08 300 294
Credit Suisse First Boston
6.125%, 11/15/11 750 778
Goldman Sachs Group
6.650%, 05/15/09 750 778
Lehman Brothers Holdings
4.000%, 01/22/08 300 295
Merrill Lynch
6.000%, 02/17/09 750 762
Morgan Stanley
5.800%, 04/01/07 750 751
---------------------------------------------------------------------------
TOTAL INVESTMENT BANKER/BROKER DEALER 4,646
===========================================================================
RETAIL [4.2%]
Target
5.500%, 04/01/07 1,150 1,151
Wal-Mart Stores
6.875%, 08/10/09 750 785
---------------------------------------------------------------------------
TOTAL RETAIL 1,936
===========================================================================
SECURITY BROKERS & DEALERS [2.6%]
Countrywide Home Loan, MTN
3.250%, 05/21/08 300 291
Credit Suisse First Boston
3.875%, 01/15/09 300 292
Goldman Sachs Group
4.125%, 01/15/08 300 296
Merrill Lynch, Ser B, MTN
3.125%, 07/15/08 300 289
---------------------------------------------------------------------------
TOTAL SECURITY BROKERS & DEALERS 1,168
===========================================================================
TELEPHONES & TELECOMMUNICATIONS [4.8%]
AT&T
6.250%, 03/15/11 750 774
BellSouth Telecommunications
5.875%, 01/15/09 300 304
Verizon Global Funding
6.125%, 06/15/07 1,100 1,105
---------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS 2,183
===========================================================================
TOTAL CORPORATE BONDS
(Cost $19,832) 19,748
=======================================================================
See Notes to the Financial Statements.
11
AHA LIMITED MATURITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description Face Amount (000) Value (000)
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS [21.2%]
FHLB
5.020%, 11/07/08 $ 1,500 $ 1,498
3.625%, 06/20/07 1,375 1,359
FHLMC
5.375%, 07/17/09 335 339
5.250%, 05/21/09 1,080 1,088
4.625%, 12/19/08 900 894
3.875%, 06/15/08 1,225 1,203
3.625%, 09/15/08 230 224
FNMA
6.125%, 03/15/12 500 529
5.000%, 01/23/09 1,000 997
4.875%, 04/15/09 685 684
3.250%, 02/15/09 905 871
---------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $9,681) 9,686
=======================================================================
U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS [15.3%]
FHLMC REMIC, Ser R009, Cl AK
5.750%, 12/15/18 1,157 1,160
FHLMC, Ser R003, Cl AG
5.125%, 10/15/15 1,061 1,051
FHLMC, Ser R004, Cl Al
5.125%, 12/15/13 1,337 1,326
FHLMC, Ser R007, Cl AC
5.875%, 05/15/16 1,170 1,174
FNMA, Pool 541946
7.500%, 07/01/30 1 1
FNMA, Pool 584930
7.500%, 05/01/31 2 2
FNMA, Pool 837191
5.000%, 12/01/20 943 927
FNMA, Pool 837196
5.500%, 02/01/21 908 908
GNMA, Pool 864622 (A)
4.500%, 06/20/35 424 418
---------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS
(Cost $6,965) 6,967
=======================================================================
U.S. TREASURY OBLIGATIONS [8.1%]
U.S. Treasury Bill
4.713%, 10/05/06 (B) 1,035 1,034
U.S. Treasury Notes
4.625%, 02/29/08 1,100 1,099
4.125%, 08/15/10 850 836
3.500%, 08/15/09 775 752
---------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $3,715) 3,721
===========================================================================
Description Face Amount (000)/Shares Value (000)
- --------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES [6.6%]
Bear Stearns Commercial Mortgage
Securities, Ser 2001-TOP2, Cl A1
6.080%, 02/15/35 $ 547 $ 555
GMAC Commercial Mortgage
Securities, Ser 2004-C3, Cl A2
3.950%, 12/10/41 500 490
JPMorgan Commercial Mortgage,
Ser 2005-IDP5 Cl A1
5.035%, 12/15/44 495 493
Morgan Stanley Capital Investments,
Ser 2005-T17, Cl A2
4.110%, 12/13/41 955 939
Volkswagen Auto Loan Enhanced Trust,
Ser 2005-1, Cl A3
4.800%, 07/20/09 545 543
---------------------------------------------------------------------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $3,078) 3,020
=======================================================================
ASSET-BACKED SECURITIES [3.6%]
Chase Manhattan Auto Owner Trust,
Ser 2003-A, Cl A4
2.060%, 12/15/09 492 486
Honda Auto Receivables Owner Trust,
Ser 2004-3, Cl A4
3.280%, 02/18/10 770 750
Nissan Auto Receivables Owner Trust,
Ser 2004-B, Cl A3
3.350%, 05/15/08 420 417
---------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost $1,682) 1,653
=======================================================================
CASH EQUIVALENT [3.5%]
Fidelity Institutional Domestic
Money Market Portfolio, Cl I,
5.19% (B) 1,602,512 1,603
---------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(Cost $1,603) 1,603
=======================================================================
TOTAL INVESTMENTS [101.5%]
(Cost $46,556) $ 46,398
=======================================================================
OTHER ASSETS AND LIABILITIES [-1.5%] (700)
=======================================================================
NET ASSETS -- 100.0% $ 45,698
===========================================================================
See Notes to the Financial Statements.
12
AHA LIMITED MATURITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description
- --------------------------------------------------------------------------------
(A) Floating Rate Security-- The rate reflected on the Schedule of Investments
is the rate in effect on September 30, 2006.
(B) The rate shown is the 7-day effective yield as of September 30, 2006.
Cl -- Class
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
GNMA -- Government National Mortgage Association
MTN -- Medium Term Note
NA -- National Association
REMIC -- Real Estate Mortgage Investment Conduit
Ser -- Series
See Notes to the Financial Statements.
13
AHA FULL MATURITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description Face Amount (000) Value (000)
- --------------------------------------------------------------------------------
CORPORATE BONDS [35.8%]
ADVERTISING [0.7%]
SBC Communications
5.300%, 11/15/10 $ 200 $ 199
===========================================================================
AEROSPACE & DEFENSE [0.3%]
United Technologies
4.375%, 05/01/10 80 78
===========================================================================
AIRLINES [0.2%]
Continental Airlines (A)
6.800%, 07/02/07 52 50
===========================================================================
AUTOMOTIVE [0.9%]
Auburn Hills Trust
12.375%, 05/01/20 55 82
DaimlerChrysler NA Holdings,
Ser D, MTN (B)
5.780%, 09/10/07 180 180
---------------------------------------------------------------------------
TOTAL AUTOMOTIVE 262
===========================================================================
BANKS [6.5%]
AmSouth Bancorporation
6.750%, 11/01/25 75 82
Bankers Trust
7.250%, 10/15/11 46 50
Bank of America
10.200%, 07/15/15 100 132
Bank One
10.000%, 08/15/10 89 103
Charter One Bank
5.500%, 04/26/11 250 253
Citigroup
3.625%, 02/09/09 300 290
Dime Capital Trust, Ser A
9.330%, 05/06/27 50 53
Dresdner Bank - New York
7.250%, 09/15/15 150 169
Federal Home Loan Bank
5.625%, 06/13/16 285 294
HSBC Holding
7.500%, 07/15/09 285 302
Santander Central Hispano Issuances
7.625%, 09/14/10 100 108
Wachovia
6.300%, 04/15/28 150 152
---------------------------------------------------------------------------
TOTAL BANKS 1,988
===========================================================================
BUILDING & CONSTRUCTION [0.2%]
Hanson Australia Funding
5.250%, 03/15/13 75 72
===========================================================================
BUSINESS SERVICES [0.5%]
Hewlett-Packard
5.750%, 12/15/06 150 150
===========================================================================
Description Face Amount (000) Value (000)
- --------------------------------------------------------------------------------
CABLE/MEDIA [0.3%]
TCI Communications
7.875%, 08/01/13 $ 75 $ 84
===========================================================================
CHEMICALS [0.9%]
Dow Chemical
5.750%, 12/15/08 40 40
E.I. Du Pont De Nemours
4.125%, 04/30/10 250 242
---------------------------------------------------------------------------
TOTAL CHEMICALS 282
===========================================================================
COMPUTER SYSTEM DESIGN & SERVICES [1.0%]
IBM
4.375%, 06/01/09 300 295
===========================================================================
DIVERSIFIED OPERATIONS [1.1%]
Hutchison Whamp International (A)
5.450%, 11/24/10 150 150
Wharf International Finance
7.625%, 03/13/07 175 177
---------------------------------------------------------------------------
TOTAL DIVERSIFIED OPERATIONS 327
===========================================================================
DRUGS [1.2%]
Bristol-Myers Squibb
5.750%, 10/01/11 300 305
Teva Pharmaceutical
5.550%, 02/01/16 75 74
---------------------------------------------------------------------------
TOTAL DRUGS 379
===========================================================================
ELECTRICAL SERVICES [0.3%]
Public Service Company of Colorado
4.375%, 10/01/08 100 98
===========================================================================
ENERGY [2.1%]
Carolina Power & Light
5.150%, 04/01/15 80 78
Exelon
5.625%, 06/15/35 75 71
Korea Electric Power
7.750%, 04/01/13 95 107
6.750%, 08/01/27 75 82
Pacific Gas & Electric
6.050%, 03/01/34 25 25
PPL Energy Supply, Ser A
5.700%, 10/15/15 75 74
PSI Energy
7.850%, 10/15/07 125 128
United Utilities
6.450%, 04/01/08 70 71
---------------------------------------------------------------------------
TOTAL ENERGY 636
===========================================================================
See Notes to the Financial Statements.
14
AHA FULL MATURITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description Face Amount (000) Value (000)
- --------------------------------------------------------------------------------
FINANCIAL SERVICES [8.0%]
American Express Credit
3.000%, 05/16/08 $ 300 $ 290
American General Finance
8.450%, 10/15/09 100 109
Amvescap
5.900%, 01/15/07 50 50
Associates NA, Ser A
7.950%, 02/15/10 75 81
Bear Stearns
7.625%, 12/07/09 250 268
Caterpillar Financial Services
4.875%, 06/15/07 300 299
Caterpillar Financial Services,
Ser F, MTN
3.450%, 01/15/09 50 48
CIT Group
3.375%, 04/01/09 75 72
Countrywide Financial (B)
5.730%, 05/05/08 90 90
General Electric Capital,
Ser A, MTN
6.000%, 06/15/12 75 78
5.000%, 06/15/07 300 300
HSBC Finance
5.750%, 01/30/07 75 75
5.000%, 06/30/15 75 73
Lehman Brothers Holdings
6.625%, 01/18/12 300 318
National Rural Utilities
3.875%, 02/15/08 50 49
NiSource Finance
7.875%, 11/15/10 75 81
Residential Capital (B)
6.742%, 06/29/07 90 90
UFJ Finance Aruba
6.750%, 07/15/13 75 80
---------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES 2,451
===========================================================================
FOOD, BEVERAGE & TOBACCO [0.8%]
Kraft Foods
6.250%, 06/01/12 150 156
5.625%, 11/01/11 40 40
Pepsi Bottling Holdings (A)
5.625%, 02/17/09 50 51
---------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO 247
===========================================================================
INSURANCE [0.5%]
Protective Life
4.300%, 06/01/13 100 94
WellPoint
3.750%, 12/14/07 50 49
---------------------------------------------------------------------------
TOTAL INSURANCE 143
===========================================================================
Description Face Amount (000) Value (000)
- --------------------------------------------------------------------------------
INVESTMENT BANKER/BROKER DEALER [2.7%]
Bear Stearns, Ser B, MTN
4.550%, 06/23/10 $ 50 $ 49
Citigroup
4.125%, 02/22/10 80 78
Credit Suisse First Boston
6.125%, 11/15/11 50 52
Goldman Sachs Group
6.000%, 01/15/12 200 211
5.150%, 01/15/14 75 73
Goldman Sachs Group (B)
5.790%, 06/28/10 100 100
Merrill Lynch, Ser C, MTN (B)
5.700%, 02/05/10 70 70
Morgan Stanley (B)
5.787%, 01/15/10 140 141
4.750%, 04/01/14 75 71
---------------------------------------------------------------------------
TOTAL INVESTMENT BANKER/BROKER DEALER 845
===========================================================================
MANUFACTURING [0.7%]
General Electric
5.000%, 02/01/13 150 148
Tyco International Group
6.375%, 10/15/11 75 79
---------------------------------------------------------------------------
TOTAL MANUFACTURING 227
===========================================================================
MORTGAGE FINANCE [0.2%]
Residential Capital
6.000%, 02/22/11 75 75
===========================================================================
MULTI-MEDIA [1.0%]
Time Warner
9.125%, 01/15/13 50 58
Viacom
7.700%, 07/30/10 75 81
Walt Disney
6.375%, 03/01/12 150 158
---------------------------------------------------------------------------
TOTAL MULTI-MEDIA 297
===========================================================================
OIL & GAS [1.0%]
Shell International
5.625%, 06/27/11 300 307
===========================================================================
PERSONAL CREDIT INSTITUTIONS [0.3%]
Household Finance
6.375%, 10/15/11 100 105
===========================================================================
PETROLEUM & FUEL PRODUCTS [0.5%]
Cooper Cameron
2.650%, 04/15/07 100 99
Pemex Project Funding Master Trust
9.125%, 10/13/10 50 56
---------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS 155
===========================================================================
REAL ESTATE [0.3%]
General Electric Capital
5.500%, 04/28/11 80 81
===========================================================================
See Notes to the Financial Statements.
15
AHA FULL MATURITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description Face Amount (000) Value (000)
- --------------------------------------------------------------------------------
RETAIL [0.6%]
Lowe's
5.000%, 10/15/15 $ 130 $ 127
Target
5.400%, 10/01/08 50 50
---------------------------------------------------------------------------
TOTAL RETAIL 177
===========================================================================
TELEPHONES & TELECOMMUNICATIONS [2.5%]
British Telecommunications
8.875%, 12/15/30 100 133
8.375%, 12/15/10 (C) 60 67
Deutsche Telekom International Finance
8.250%, 06/15/30 75 92
France Telecom
7.750%, 03/01/11 50 55
New Cingular Wireless Services
8.750%, 03/01/31 75 96
Royal KPN
8.000%, 10/01/10 10 11
Sprint Capital
7.625%, 01/30/11 75 81
Telecom Italia Capital
5.250%, 10/01/15 75 70
Telefonica Emisiones
6.421%, 06/20/16 75 77
Verizon Global Funding
4.000%, 01/15/08 100 98
---------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS 780
===========================================================================
TRANSPORTATION SERVICES [0.5%]
FedEx
9.650%, 06/15/12 125 151
===========================================================================
TOTAL CORPORATE BONDS
(Cost $10,885) 10,941
=======================================================================
U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS [18.2%]
FHLMC Gold, Pool G11880
5.000%, 12/01/20 185 181
FHLMC REMIC, Ser 2720, Cl JB
5.000%, 12/15/16 150 149
FHLMC REMIC, Ser R003, Cl VA
5.500%, 08/15/16 187 188
FHLMC, Pool 160098
10.500%, 01/01/10 5 5
FHLMC, Pool 1B2550 (B)
5.291%, 02/01/36 263 263
FHLMC, Pool 1B2677 (B)
4.104%, 01/01/35 45 43
FHLMC, Pool 1B2683 (B)
4.081%, 01/01/35 25 25
Description Face Amount (000) Value (000)
- --------------------------------------------------------------------------------
FHLMC, Pool 1B2692 (B)
4.461%, 12/01/34 $ 72 $ 71
FHLMC, Pool C00760
6.500%, 05/01/29 28 29
FHLMC, Pool C20300
6.500%, 01/01/29 18 18
FHLMC, Pool E01251
5.500%, 11/01/17 87 87
FHLMC, Pool E01280
5.000%, 12/01/17 70 69
FHLMC, Pool G11431
6.000%, 02/01/18 195 197
FHLMC, Pool G11723
5.500%, 07/01/20 243 243
FHLMC, Pool G18124
6.000%, 06/01/21 196 199
FHLMC, Ser 2141, Cl N
5.550%, 11/15/27 34 34
FHLMC, Ser 2533, Cl PC
5.000%, 10/15/17 63 63
FHLMC, Ser 2544, Cl QB
5.000%, 09/15/15 115 114
FHLMC, Ser 2567, Cl OD
5.000%, 08/15/15 125 124
FHLMC, Ser 2804, Cl VC
5.000%, 07/15/21 182 177
FHLMC, Ser 2835, Cl VK
5.500%, 11/15/12 118 118
FHLMC, Ser 3132, Cl MA
5.500%, 12/15/23 181 181
FNMA
7.250%, 01/15/10 250 268
5.000%, 11/01/35 192 185
FNMA, Pool 252570
6.500%, 07/01/29 39 40
FNMA, Pool 253183
7.500%, 04/01/30 3 3
FNMA, Pool 253398
8.000%, 08/01/30 13 14
FNMA, Pool 254088
5.500%, 12/01/16 72 72
FNMA, Pool 254509
5.000%, 10/01/17 77 75
FNMA, Pool 254510
5.000%, 11/01/17 91 89
FNMA, Pool 254545
5.000%, 12/01/17 58 58
FNMA, Pool 254685
5.000%, 04/01/18 131 129
FNMA, Pool 254949
5.000%, 11/01/33 100 97
FNMA, Pool 254953
5.000%, 11/01/18 70 69
See Notes to the Financial Statements.
16
AHA FULL MATURITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description Face Amount (000) Value (000)
- --------------------------------------------------------------------------------
FNMA, Pool 303168
9.500%, 02/01/25 $ 10 $ 11
FNMA, Pool 735060
6.000%, 11/01/34 141 142
FNMA, Pool 735228
5.500%, 02/01/35 115 113
FNMA, Pool 827223 (B)
4.777%, 04/01/35 229 227
FNMA, Pool 835744
5.000%, 09/01/35 583 561
FNMA, Ser 1991, Cl 86
6.500%, 07/25/21 63 64
FNMA, Ser 1992, Cl 136
6.000%, 08/25/22 50 51
FNMA, Ser 1998, Cl 66
6.000%, 12/25/28 23 24
FNMA, Ser 2002, Cl 70
5.000%, 04/25/15 8 8
FNMA, Ser 2002, Cl 95
5.000%, 07/25/26 60 60
FNMA, Ser 2003, Cl 16
5.000%, 10/25/15 150 149
FNMA, Ser 2003, Cl 18
5.000%, 03/25/16 142 141
FNMA, Ser 2003, Cl 31
4.500%, 12/25/28 127 126
GNMA, Pool 479168
8.000%, 02/15/30 21 22
GNMA, Pool 780315
9.500%, 12/15/17 21 23
GNMA, Ser 2004, Cl 78
4.658%, 04/16/29 150 145
---------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS
(Cost $5,618) 5,544
=======================================================================
U.S. TREASURY OBLIGATIONS [16.2%]
U.S. Treasury Bonds
9.125%, 05/15/18 575 798
6.250%, 08/15/23 1,475 1,713
U.S. Treasury Notes
6.000%, 08/15/09 200 207
5.750%, 08/15/10 445 463
4.875%, 08/31/08 100 100
4.500%, 02/15/09 500 498
4.500%, 11/15/15 50 50
4.375%, 12/15/10 500 496
3.500%, 02/15/10 380 367
3.125%, 05/15/07 250 247
---------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $4,867) 4,939
=======================================================================
Description Face Amount (000) Value (000)
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS [14.4%]
FAMC, MTN
4.250%, 07/29/08 $ 20 $ 20
FFCB
4.875%, 04/04/12 200 200
FHLB
3.250%, 12/17/07 450 440
FHLMC
6.000%, 01/15/17 145 148
5.875%, 03/21/11 150 155
5.125%, 10/15/08 300 301
5.000%, 07/15/14 400 401
5.000%, 05/15/21 150 147
4.900%, 11/03/08 295 294
4.375%, 07/17/15 350 335
FNMA
6.625%, 09/15/09 400 419
6.000%, 05/15/11 325 339
5.500%, 04/01/36 337 332
5.375%, 11/15/11 550 562
4.625%, 05/01/13 150 145
GNMA
3.727%, 03/16/27 148 143
---------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $4,365) 4,381
=======================================================================
MORTGAGE-BACKED SECURITIES [8.8%]
Banc of America Alternative Loan Trust,
Ser 2004-2, Cl 5A1
5.500%, 03/25/19 151 151
Banc of America Alternative Loan Trust,
Ser 2005-4, Cl CB11
5.500%, 05/25/35 162 162
Banc of America Alternative Loan Trust,
Ser 2005-6, Cl 7A1
5.500%, 07/25/20 121 120
Banc of America Alternative Loan Trust,
Ser 2005-9, Cl 1CB3
5.500%, 10/25/35 136 136
Bear Stearns Commercial Mortgage,
Ser 2006-PW12, Cl A4 (B)
5.712%, 09/11/38 300 310
Chase Mortgage Finance,
Ser 2003-S13, Cl A11
5.500%, 11/25/33 119 119
Citigroup Mortgage Loan Trust,
Ser 2005-9, Cl 2a2
5.500%, 11/25/35 135 136
Countrywide Asset-Backed Certificates,
Ser 2006-11, Cl 1AF3 (B)
6.050%, 09/25/46 200 203
Deutsche Mortgage Securities,
Ser 2004-4, Cl 1A3 (B)
4.940%, 04/25/34 22 22
See Notes to the Financial Statements.
17
AHA FULL MATURITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description Face Amount (000) Value (000)
- --------------------------------------------------------------------------------
FPL Group Capital, Ser A
4.086%, 02/16/07 $ 150 $ 149
GE Capital Commercial Mortgage,
Ser 2002-3A, Cl A2
4.996%, 12/10/37 150 149
GMAC Commercial Mortgage Securities,
Ser 2003-C1, Cl A2
4.079%, 05/10/36 225 211
GMAC Mortgage Corporation Loan Trust,
Ser 2004-GH1, Cl A6 (B)
4.810%, 07/25/35 150 148
GMAC Mortgage Corporation Loan Trust,
Ser 2004-J4, Cl A2
5.500%, 08/25/14 125 125
JPMorgan Alternative Loan Trust,
Ser 2006-s3, Cl A3A
6.000%, 08/25/36 200 199
RAAC, Ser 2004-SP1, Cl AI4 (B)
5.285%, 08/25/27 150 148
Residential Accredit Loans,
Ser 2004-QS5, Cl A5
4.750%, 04/25/34 59 58
Residential Accredit Loans,
Ser 2004-QS6, Cl A1
5.000%, 05/25/19 100 99
Wachovia Bank Commercial Mortgage,
Ser 2003-C3, Cl A2
4.867%, 02/15/35 50 49
---------------------------------------------------------------------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $2,713) 2,694
===========================================================================
ASSET-BACKED SECURITIES [3.8%]
CitiFinancial Mortgage Securities,
Ser 2004-1, Cl AF2 (C)
2.645%, 04/25/34 150 145
Cityscape Home Equity Loan Trust,
Ser 1997-C, Cl A4 (C)
7.000%, 07/25/28 22 22
ContiMortgage Home Equity Loan
Trust, Ser 1997-2, Cl A9
7.090%, 04/15/28 14 14
Fairbanks Capital Mortgage,
Ser 1991-1, Cl A (B)
5.924%, 05/25/28 48 48
Green Tree Financial,
Ser 1997-7, Cl A6
6.760%, 07/15/29 146 151
GSAA Home Equity Trust,
Ser 2005-1, Cl AF2 (B)
4.316%, 11/25/34 150 147
New Century Home Equity Loan Trust,
Ser 2003-5, Cl AI3
3.560%, 11/25/33 21 21
Description Face Amount (000) Shares Value (000)
- --------------------------------------------------------------------------------
Renaissance Home Equity Loan Trust,
Ser 2005-3, Cl AF2 (C)
4.723%, 11/25/35 $ 150 $ 149
Residential Asset Securities,
Ser 2002-RS3, Cl AI5
5.572%, 06/25/32 111 111
Residential Asset Securities,
Ser 2003-KS5, Cl AI6
3.620%, 07/25/33 192 183
Residential Asset Securities,
Ser 2004-KS2, Cl AI3 (B)
3.020%, 05/25/29 39 39
Residential Asset Securities,
Ser 2004-KS5, Cl AI3 (B)
4.030%, 04/25/30 103 102
UCFC Home Equity Loan,
Ser 1998-C, Cl A7
5.935%, 01/15/30 37 37
---------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost $1,180) 1,169
=======================================================================
FOREIGN GOVERNMENT BONDS [0.6%]
National Bank of Hungary
8.875%, 11/01/13 75 90
Republic of Italy
4.375%, 10/25/06 40 40
United Mexican States
9.875%, 02/01/10 50 57
---------------------------------------------------------------------------
TOTAL FOREIGN GOVERNMENT BONDS
(Cost $177) 187
=======================================================================
MUNICIPAL BOND [0.1%]
LOUISIANA [0.1%]
Louisiana State, Tobacco Settlement
Financing Authority, Ser 2001A
6.360%, 05/15/25 38 38
---------------------------------------------------------------------------
TOTAL MUNICIPAL BOND
(Cost $38) 38
=======================================================================
CASH EQUIVALENT [2.6%]
Fidelity Institutional Domestic
Money Market Portfolio, Cl I,
5.19% (D) 799,831 800
---------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(Cost $800) 800
=======================================================================
TOTAL INVESTMENTS [100.5%]
(Cost $30,643) 30,693
=======================================================================
See Notes to the Financial Statements.
18
AHA FULL MATURITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description Value (000)
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES [-0.5%] $ (150)
=======================================================================
NET ASSETS -- 100.0% $ 30,543
===========================================================================
(A) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration nomally to qualified institutions. On September 30, 2006, the
value of these securities amounted to $251 (000), representing 0.8% of the
net assets of the Fund.
(B) Floating Rate Security-- The rate reflected on the Schedule of Investments
is the rate in effect on September 30, 2006.
(C) Step Bond -- The rate reflected on the Schedule of Investments is the rate
in effect on September 30, 2006. The coupon on a step bond changes on a
specific date.
(D) The rate shown is the 7-day effective yield as of September 30, 2006.
Cl -- Class
FAMC -- Federal Agricultural Mortgage Corporation
FFCB -- Federal Farm Credit Bank
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
GNMA -- Government National Mortgage Association
MTN -- Medium Term Note
REMIC -- Real Estate Mortgage Investment Conduit
Ser -- Series
See Notes to the Financial Statements.
19
AHA BALANCED FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCK [61.6%]
ADVERTISING [1.4%]
Avaya * 1,474 $ 17
WPP Group, ADR 3,700 228
---------------------------------------------------------------------------
TOTAL ADVERTISING 245
===========================================================================
AEROSPACE & DEFENSE [0.7%]
Lockheed Martin 400 34
Northrop Grumman 100 7
Raytheon 655 31
United Technologies 880 56
---------------------------------------------------------------------------
TOTAL AEROSPACE & DEFENSE 128
===========================================================================
APPAREL/TEXTILES [0.1%]
VF 200 15
===========================================================================
AUTOMOTIVE [0.3%]
Autozone * 200 20
Paccar 435 25
---------------------------------------------------------------------------
TOTAL AUTOMOTIVE 45
===========================================================================
BANKS [4.9%]
Bank of America 5,746 308
JPMorgan Chase 617 29
US Bancorp 4,500 150
Wachovia 1,132 63
Washington Mutual 5,940 258
Wells Fargo 1,960 71
---------------------------------------------------------------------------
TOTAL BANKS 879
===========================================================================
BIOTECHNOLOGY [1.5%]
Amgen * 3,300 236
Gilead Sciences * 368 25
---------------------------------------------------------------------------
TOTAL BIOTECHNOLOGY 261
===========================================================================
BROADCASTING & CABLE [0.5%]
Cisco Systems * 1,370 31
Freescale Semiconductor, Cl B * 119 5
Motorola 2,248 56
---------------------------------------------------------------------------
TOTAL BROADCASTING & CABLE 92
===========================================================================
BUILDING & CONSTRUCTION [0.1%]
Lennar, Cl A 390 18
---------------------------------------------------------------------------
BUSINESS SERVICES [2.1%]
First Data 6,200 260
NCR * 590 23
Omnicom Group 251 24
Realogy * 3,200 73
---------------------------------------------------------------------------
TOTAL BUSINESS SERVICES 380
===========================================================================
CABLE/MEDIA [1.3%]
DIRECTV Group * 11,900 234
===========================================================================
Description Shares value (000)
- --------------------------------------------------------------------------------
CHEMICALS [0.2%]
Eastman Chemical 294 $ 16
Rohm & Haas 290 14
---------------------------------------------------------------------------
TOTAL CHEMICALS 30
===========================================================================
CIRCUIT BOARDS [0.4%]
Flextronics * 6,300 80
===========================================================================
COMPUTER SYSTEM DESIGN & SERVICES [1.7%]
Cadence Design Systems * 7,200 122
Diebold 4,000 174
---------------------------------------------------------------------------
TOTAL COMPUTERS SYSTEM DESIGN & SERVICES 296
===========================================================================
CONSUMER PRODUCTS & SERVICES [0.6%]
Mattel 53 1
Procter & Gamble 1,559 97
Whirlpool 200 17
---------------------------------------------------------------------------
TOTAL CONSUMER PRODUCTS & SERVICES 115
===========================================================================
DIVERSIFIED MANUFACTURING [0.5%]
Danaher 326 22
General Electric 2,060 73
---------------------------------------------------------------------------
TOTAL DIVERSIFIED MANUFACTURING 95
===========================================================================
DIVERSIFIED METALS & MINING [0.9%]
Freeport-McMoran Copper &
Gold, Cl B 296 16
Hewlett-Packard 1,850 68
IBM 883 72
---------------------------------------------------------------------------
TOTAL DIVERSIFIED METALS & MINING 156
===========================================================================
DRUGS [4.5%]
Abbott Laboratories 729 35
Eli Lilly 72 4
Hospira * 100 4
Johnson & Johnson 337 22
Merck 1,570 66
Pfizer 7,073 201
Sanofi-Aventis, ADR 4,700 209
Wyeth 5,053 257
---------------------------------------------------------------------------
TOTAL DRUGS 798
===========================================================================
ELECTRICAL SERVICES [0.6%]
AES * 980 20
Duke Energy 1,226 37
TXU 690 43
Xcel Energy 780 16
---------------------------------------------------------------------------
TOTAL ELECTRICAL SERVICES 116
===========================================================================
ENTERTAINMENT [0.4%]
Carnival 100 4
Harrah's Entertainment 900 60
---------------------------------------------------------------------------
TOTAL ENTERTAINMENT 64
===========================================================================
See Notes to the Financial Statements.
20
AHA BALANCED FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description Shares value (000)
- --------------------------------------------------------------------------------
FINANCIAL SERVICES [0.9%]
CIT Group 390 $ 19
Citigroup 2,215 110
Countrywide Financial 886 31
---------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES 160
===========================================================================
FOOD, BEVERAGE & TOBACCO [2.4%]
Archer-Daniels-Midland 958 36
Coca-Cola 1,270 57
Conagra Foods 6,800 166
General Mills 590 33
Pepsi Bottling Group 556 20
Tyson Foods, Cl A 7,800 124
---------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO 436
===========================================================================
GAS/NATURAL GAS [1.1%]
El Paso 12,700 173
Nicor 390 17
---------------------------------------------------------------------------
TOTAL GAS/NATURAL GAS 190
===========================================================================
HEALTHCARE PRODUCTS & SERVICES [1.6%]
Applera - Applied Biosystems Group 382 13
Cardinal Health 590 39
Cigna 1,350 157
McKesson 490 26
UnitedHealth Group 1,061 52
---------------------------------------------------------------------------
TOTAL HEALTHCARE PRODUCTS & SERVICES 287
===========================================================================
HOTELS & LODGING [0.4%]
Starwood Hotels & Resorts Worldwide 6 --
Wyndham Worldwide * 2,600 73
---------------------------------------------------------------------------
TOTAL HOTELS & LODGING 73
===========================================================================
INSURANCE [8.3%]
ACE, ADR 3,502 192
Allstate 3,500 220
Ambac Financial Group 200 17
American International Group 212 14
Assured Guaranty 5,800 150
Chubb 605 31
Cincinnati Financial 390 19
Conseco * 7,400 155
Genworth Financial, Cl A 390 14
Hartford Financial Services Group 444 38
ING Groep, ADR 4,100 180
Lincoln National 390 24
MBIA 3,300 203
Metlife 349 20
Safeco 290 17
St Paul Travelers 3,800 178
---------------------------------------------------------------------------
TOTAL INSURANCE 1,472
===========================================================================
Description Shares value (000)
- --------------------------------------------------------------------------------
INVESTMENT BANKER/BROKER DEALER [0.7%]
Bear Stearns 63 $ 9
Goldman Sachs Group 360 61
Lehman Brothers Holdings 683 50
Morgan Stanley 3 --
---------------------------------------------------------------------------
TOTAL INVESTMENT BANKER/BROKER DEALER 120
===========================================================================
MACHINERY [2.2%]
Caterpillar 652 43
Cummins 190 23
Eaton 2,590 178
Illinois Tool Works 3,500 157
---------------------------------------------------------------------------
TOTAL MACHINERY 401
===========================================================================
MEASURING DEVICES [0.1%]
Agilent Technologies * 621 20
===========================================================================
MEDICAL PRODUCTS & SERVICES [0.2%]
Bard (C.R.) 100 7
Becton Dickinson 390 28
Coventry Health Care * 100 5
---------------------------------------------------------------------------
TOTAL MEDICAL PRODUCTS & SERVICES 40
===========================================================================
METALS & MINING [0.1%]
Phelps Dodge 191 16
===========================================================================
MISCELLANEOUS BUSINESS SERVICES [0.7%]
Interpublic Group (A) 12,300 122
===========================================================================
MULTI-MEDIA [0.5%]
News Corp., Cl A 1,770 35
Walt Disney 1,821 56
---------------------------------------------------------------------------
TOTAL MULTI-MEDIA 91
===========================================================================
OFFICE FURNITURE & FIXTURES [1.8%]
Intuit * 522 17
Microsoft 8,270 226
Oracle * 3,530 63
VeriSign * 568 11
---------------------------------------------------------------------------
TOTAL OFFICE FURNITURE & FIXTURES 317
===========================================================================
PETROLEUM & FUEL PRODUCTS [3.1%]
Baker Hughes 373 26
Chesapeake Energy 601 17
ChevronTexaco 3,200 208
ConocoPhillips 1,052 63
Devon Energy 485 31
Exxon Mobil 1,213 81
Marathon Oil 523 40
Occidental Petroleum 962 46
Valero Energy 644 33
---------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS 545
===========================================================================
See Notes to the Financial Statements.
21
AHA BALANCED FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description Shares value (000)
- --------------------------------------------------------------------------------
PETROLEUM REFINING [0.1%]
Hess 403 $ 17
===========================================================================
PETROLEUM SERVICES [2.5%]
BJ Services 2,800 84
GlobalSantaFe 4,150 208
Halliburton 5,200 148
---------------------------------------------------------------------------
TOTAL PETROLEUM SERVICES 440
===========================================================================
PRINTING & PUBLISHING [0.2%]
McGraw Hill 514 30
Meredith 290 14
---------------------------------------------------------------------------
TOTAL PRINTING & PUBLISHING 44
===========================================================================
REAL ESTATE INVESTMENT TRUSTS [0.2%]
Boston Properties 52 5
Prologis Trust 358 21
Temple-Inland 371 15
---------------------------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUSTS 41
===========================================================================
RETAIL [5.2%]
Autonation * 780 16
Big Lots * 749 15
CVS 4,100 132
Darden Restaurants 490 21
Dillard's, Cl A 490 16
Federated Department Stores 794 34
Home Depot 6,300 229
JC Penney 390 27
Kroger 1,055 24
Limited Brands 4,200 111
Lowe's 490 14
Sherwin Williams 290 16
Target 4,800 265
---------------------------------------------------------------------------
TOTAL RETAIL 920
===========================================================================
SEMI-CONDUCTORS [3.2%]
Infineon Technologies, ADR (A)* 20,100 238
Intel 12,300 253
Micron Technology * 1,066 18
Nvidia * 519 15
Texas Instruments 1,522 51
---------------------------------------------------------------------------
TOTAL SEMI-CONDUCTORS 575
===========================================================================
STEEL & STEEL WORKS [0.2%]
Nucor 454 23
United States Steel 268 15
---------------------------------------------------------------------------
TOTAL STEEL & STEEL WORKS 38
===========================================================================
Description Shares/Face Amount (000) Value (000)
- --------------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS [1.8%]
Alltel 590 $ 33
AT&T 5,800 189
BellSouth 200 9
Embarq 420 20
Verizon Communications 1,837 68
---------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS 319
===========================================================================
TRANSPORTATION SERVICES [0.1%]
Burlington Northern Santa Fe 356 26
===========================================================================
TRUCKING [0.1%]
Ryder System 390 20
===========================================================================
WHOLESALE [1.2%]
Google, Cl A * 10 4
Sysco 6,100 204
---------------------------------------------------------------------------
TOTAL WHOLESALE 208
===========================================================================
TOTAL COMMON STOCK
(Cost $9,553) 10,985
=======================================================================
U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS [7.4%]
FHLMC Gold, Pool C90691
5.500%, 07/01/23 $ 56 56
FHLMC REMIC, Ser 2673, Cl NC
5.500%, 05/15/21 75 75
FHLMC REMIC, Ser R001, Cl AE
4.375%, 04/15/15 74 72
FHLMC, Pool C00760
6.500%, 05/01/29 20 21
FHLMC, Pool G11771
6.000%, 06/01/20 91 92
FHLMC, Ser 2533, Cl PC
5.000%, 10/15/17 38 38
FHLMC, Ser 2567, Cl OD
5.000%, 08/15/15 50 50
FHLMC, Ser 2578 PD
5.000%, 08/15/14 50 50
FHLMC, Ser R007, Cl AC
5.875%, 05/15/16 94 94
FNMA, Pool 254800
5.500%, 07/01/23 207 206
FNMA, Pool 725773
5.500%, 09/01/34 133 132
FNMA, Pool 735228
5.500%, 02/01/35 57 56
FNMA, Pool 790108
6.000%, 08/01/34 68 68
FNMA, Ser 2002, Cl 70
5.000%, 04/25/15 2 2
FNMA, Ser 2002, Cl 95
5.000%, 07/25/26 20 20
FNMA, Ser 2003, Cl 16
5.000%, 10/25/15 50 50
See Notes to the Financial Statements.
22
AHA BALANCED FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description Face Amount (000) Value (000)
- --------------------------------------------------------------------------------
FNMA, Ser 2003, Cl 18
5.000%, 03/25/16 $ 118 $ 117
FNMA, Ser 2003, Cl 31
4.500%, 12/25/28 73 72
FNMA, Ser 2004-W10, Cl A24
5.000%, 08/25/34 50 49
---------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS
(Cost $1,335) 1,320
=======================================================================
MORTGAGE-BACKED SECURITIES [7.3%]
Banc of America Alternative Loan Trust,
Ser 2004-11, Cl 4A1
5.500%, 12/25/19 36 36
Banc of America Alternative Loan Trust,
Ser 2005-6, Cl 7A1
5.500%, 07/25/20 40 40
Chase Mortgage Finance,
Ser 2003-S14, Cl 3A6
5.500%, 01/25/34 56 56
Citicorp Mortgage Securities,
Ser 2003-11, Cl 2A8
5.500%, 12/25/33 61 61
Citicorp Mortgage Securities,
Ser 2004-4, Cl A5
5.500%, 06/25/34 84 83
Citigroup Mortgage Loan Trust,
Ser 2005-9, Cl 2a2
5.500%, 11/25/35 68 68
Countrywide Alternative Loan Trust,
Ser 2005-50CB, Cl 4A1
5.000%, 11/25/20 43 43
Countrywide Asset-Backed Certificates,
Ser 2005-13, Cl AF2 (B)
5.294%, 04/25/36 75 75
Countrywide Asset-Backed Certificates,
Ser 2006-11, Cl 1AF3 (B)
6.050%, 09/25/46 100 101
Credit-Based Asset Servicing Home Equity,
Ser 2005-CB8, Cl AF2 (C)
5.303%, 12/25/35 75 75
First Union National Bank CMO,
Ser 2001-C4, Cl A2
6.223%, 12/12/33 50 52
GE Capital Commercial Mortgage,
Ser 2002-3A, Cl A2
4.996%, 12/10/37 100 99
GMAC Commercial Mortgage Securities,
Ser 2003-C1, Cl A2
4.079%, 05/10/36 100 94
GMAC Mortgage Corporation Loan Trust,
Ser 2004, Cl HE5
4.390%, 09/25/34 75 73
GMAC Mortgage Corporation Loan Trust,
Ser 2004-GH1, Cl A6
4.810%, 07/25/35 75 74
Description Face Amount (000) Value (000)
- --------------------------------------------------------------------------------
GMAC Mortgage Corporation Loan Trust,
Ser 2004-J4, Cl A2
5.500%, 08/25/14 $ 62 $ 62
RAAC, Ser 2004-SP1, Cl AI4
5.285%, 08/25/27 75 74
Residential Accredit Loans,
Ser 2004-QS5, Cl A5
4.750%, 04/25/34 30 29
Residential Accredit Loans,
Ser 2004-QS6, Cl A1
5.000%, 05/25/19 33 33
Residential Funding Mortgage Securities,
Ser 2003-S11, Cl A2
4.000%, 06/25/18 75 71
---------------------------------------------------------------------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $1,317) 1,299
=======================================================================
CORPORATE BONDS [7.2%]
BANKS [2.2%]
AmSouth Bancorporation
6.750%, 11/01/25 50 54
Bank of Oklahoma
7.125%, 08/15/07 50 51
Bank United, Ser A, MTN
8.000%, 03/15/09 50 53
Bankers Trust
7.500%, 11/15/15 25 28
Compass Bank
8.100%, 08/15/09 50 54
Dresdner Bank - New York
7.250%, 09/15/15 50 56
First Maryland Bancorporation
7.200%, 07/01/07 50 51
PNC Funding
7.500%, 11/01/09 50 53
---------------------------------------------------------------------------
TOTAL BANKS 400
===========================================================================
BUILDING & CONSTRUCTION [0.3%]
Hanson Australia Funding
5.250%, 03/15/13 50 48
===========================================================================
CONTAINERS & PACKAGING [0.3%]
Pactiv
7.950%, 12/15/25 50 55
===========================================================================
ENERGY [1.0%]
Dominion Resources
6.250%, 06/30/12 50 52
Exelon Generation
6.950%, 06/15/11 50 53
Pacific Gas & Electric
6.050%, 03/01/34 25 25
PSI Energy
7.850%, 10/15/07 50 51
---------------------------------------------------------------------------
TOTAL ENERGY 181
===========================================================================
See Notes to the Financial Statements.
23
AHA BALANCED FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description Face Amount (000) Value (000)
- --------------------------------------------------------------------------------
FINANCIAL SERVICES [0.7%]
Amvescap
5.900%, 01/15/07 $ 25 $ 25
CIT Group
3.375%, 04/01/09 25 24
Countrywide Financial
6.250%, 05/15/16 25 25
Household Finance
8.000%, 07/15/10 40 44
---------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES 118
===========================================================================
FOOD, BEVERAGE & TOBACCO [0.1%]
Quaker Oats
9.250%, 11/27/07 25 26
---------------------------------------------------------------------------
INSURANCE [0.6%]
MetLife
6.500%, 12/15/32 50 54
Protective Life
4.300%, 06/01/13 50 47
---------------------------------------------------------------------------
TOTAL INSURANCE 101
===========================================================================
MANUFACTURING [0.1%]
Tyco International Group
6.375%, 10/15/11 25 26
===========================================================================
MULTI-MEDIA [0.3%]
Time Warner
9.125%, 01/15/13 25 29
Viacom
7.700%, 07/30/10 25 27
---------------------------------------------------------------------------
TOTAL MULTI-MEDIA 56
===========================================================================
PAPER & PAPER PRODUCTS [0.4%]
Westvaco
9.750%, 06/15/20 50 66
===========================================================================
PETROLEUM & FUEL PRODUCTS [0.2%]
Pemex Project Funding Master Trust
9.125%, 10/13/10 25 28
===========================================================================
RAILROADS [0.2%]
Union Pacific
8.660%, 07/02/11 37 40
===========================================================================
TELEPHONES & TELECOMMUNICATIONS [0.5%]
Deutsche Telekom International Finance
8.250%, 06/15/30 25 31
GTE
6.840%, 04/15/18 25 26
New Cingular Wireless Services
8.750%, 03/01/31 25 32
---------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS 89
===========================================================================
Description Face Amount (000)/Shares Value (000)
- --------------------------------------------------------------------------------
TRANSPORTATION SERVICES [0.3%]
FedEx
9.650%, 06/15/12 $ 50 $ 60
===========================================================================
TOTAL CORPORATE BONDS
(Cost $1,277) 1,294
=======================================================================
U.S. GOVERNMENT AGENCY OBLIGATIONS [6.4%]
FNMA
6.000%, 05/15/11 1,000 1,045
5.500%, 04/01/36 96 95
---------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $1,133) 1,140
=======================================================================
U.S. TREASURY OBLIGATIONS [6.3%]
U.S. Treasury Bonds
9.125%, 05/15/18 200 277
6.250%, 08/15/23 725 842
---------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $1,118) 1,119
=======================================================================
ASSET-BACKED SECURITIES [0.9%]
Residential Asset Securities,
Ser 2002-RS3, Cl AI5
5.572%, 06/25/32 128 128
Residential Asset Securities,
Ser 2004-KS5, Cl AI3 (B)
4.030%, 04/25/30 34 34
Residential Asset Securities,
Ser 2004-RS3, Cl AI2
3.052%, 06/25/29 1 1
---------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost $167) 163
=======================================================================
FOREIGN GOVERNMENT BONDS [0.5%]
Hydro-Quebec
11.750%, 02/01/12 50 65
United Mexican States
9.875%, 02/01/10 25 29
---------------------------------------------------------------------------
TOTAL FOREIGN GOVERNMENT BONDS
(Cost $96) 94
=======================================================================
MUNICIPAL BOND [0.1%]
LOUISIANA [0.1%]
Louisiana State, Tobacco Settlement
Financing Authority, Ser 2001A
6.360%, 05/15/25 25 25
---------------------------------------------------------------------------
TOTAL MUNICIPAL BOND
(Cost $25) 25
=======================================================================
See Notes to the Financial Statements.
24
AHA BALANCED FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description Face Amount (000)/Shares Value (000)
- --------------------------------------------------------------------------------
COMMERCIAL PAPER [1.3%]
Lafayette Asset Securitization,
5.45%, 10/02/06 (D) $ 234 $ 234
---------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost $234) 234
=======================================================================
CASH EQUIVALENTS [2.5%]
AIM Short-Term Investment
Company Liquid Assets
Portfolio, 5.25% (D) (E) 59,010 59
Fidelity Institutional Domestic
Money Market Portfolio, Cl I,
5.19% (E) 378,135 378
---------------------------------------------------------------------------
TOTAL CASH EQUIVALENTS
(Cost $437) 437
=======================================================================
TOTAL INVESTMENTS [101.5%]
(Cost $16,692) 18,110
=======================================================================
OTHER ASSETS AND LIABILITIES [-1.5%] (274)
=======================================================================
NET ASSETS -- 100.0% $ 17,836
===========================================================================
* Non-income producing security
(A) This security or a partial position of this security is on loan at
September 30, 2006. The total value of securities on loan at September 30,
2006 was $260,389.
(B) Floating Rate Security -- The rate reflected on the Schedule of
Investments is the rate in effect on September 30, 2006.
(C) Step Bond -- The rate reflected on the Schedule of Investments is the rate
in effect on September 30, 2006. The coupon on a step bond changes on a
specific date.
(D) This security was purchased with cash collateral received from securities
lending. The total value of such securities at September 30, 2006 was
$292,889.
(E) Rate shown is the 7-day effective yield as of September 30, 2006.
ADR -- American Depository Receipt
Cl -- Class
CMO -- Collateralized Mortgage Obligation
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
MTN -- Medium Term Note
REMIC -- Real Estate Mortgage Investment Conduit
Ser -- Series
Amounts designated as "--" are either $0 or have been rounded to $0.
See Notes to the Financial Statements.
25
AHA DIVERSIFIED EQUITY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCK [96.7%]
ADVERTISING [1.7%]
Avaya * 21,430 $ 245
WPP Group, ADR 24,800 1,531
---------------------------------------------------------------------------
TOTAL ADVERTISING 1,776
===========================================================================
AEROSPACE & DEFENSE [1.5%]
Lockheed Martin 7,790 670
Northrop Grumman 4,570 311
United Technologies 9,260 587
---------------------------------------------------------------------------
TOTAL AEROSPACE & DEFENSE 1,568
===========================================================================
AIR TRANSPORTATION [0.1%]
Fedex 1,200 130
===========================================================================
APPAREL/TEXTILES [0.2%]
VF 3,190 233
===========================================================================
AUTOMOTIVE [0.6%]
Autozone * 2,590 267
Paccar 5,485 313
---------------------------------------------------------------------------
TOTAL AUTOMOTIVE 580
===========================================================================
BANKS [8.4%]
Bank of America 55,990 3,000
JPMorgan Chase 21,430 1,006
US Bancorp 32,700 1,086
Wachovia 16,340 912
Washington Mutual 47,825 2,079
Wells Fargo 22,420 811
---------------------------------------------------------------------------
TOTAL BANKS 8,894
===========================================================================
BIOTECHNOLOGY [2.2%]
Amgen * 23,300 1,667
Gilead Sciences * 9,490 652
---------------------------------------------------------------------------
TOTAL BIOTECHNOLOGY 2,319
===========================================================================
BROADCASTING & CABLE [0.8%]
Cisco Systems * 1,790 41
Freescale Semiconductor, Cl B * 1,260 48
Motorola 31,270 782
---------------------------------------------------------------------------
TOTAL BROADCASTING & CABLE 871
===========================================================================
BUILDING & CONSTRUCTION [0.2%]
Lennar, Cl A 5,080 230
===========================================================================
BUSINESS SERVICES [3.0%]
Convergys * 10,300 213
First Data 44,600 1,873
NCR * 6,770 267
Omnicom Group 3,400 318
Realogy * 23,000 522
---------------------------------------------------------------------------
TOTAL BUSINESS SERVICES 3,193
===========================================================================
Description Shares Value (000)
- --------------------------------------------------------------------------------
CABLE/MEDIA [1.6%]
DIRECTV Group * 86,000 $ 1,692
===========================================================================
CHEMICALS [0.2%]
Eastman Chemical 4,300 232
===========================================================================
CIRCUIT BOARDS [0.5%]
Flextronics * 45,800 579
===========================================================================
COMPUTER SYSTEM DESIGN & SERVICES [2.0%]
Cadence Design Systems * 51,200 869
Computer Sciences * 1,980 97
Diebold 25,800 1,123
---------------------------------------------------------------------------
TOTAL COMPUTERS SYSTEM DESIGN & SERVICES 2,089
===========================================================================
CONSUMER PRODUCTS & SERVICES [1.3%]
Procter & Gamble 22,110 1,370
===========================================================================
DIVERSIFIED MANUFACTURING [1.3%]
Danaher 4,500 309
General Electric 28,590 1,009
Parker Hannifin 900 70
---------------------------------------------------------------------------
TOTAL DIVERSIFIED MANUFACTURING 1,388
===========================================================================
DIVERSIFIED METALS & MINING [2.3%]
Apple Computer * 2,790 215
Freeport-McMoran Copper &
Gold, Cl B 4,880 260
Hewlett-Packard 25,290 928
IBM 12,550 1,028
---------------------------------------------------------------------------
TOTAL DIVERSIFIED METALS & MINING 2,431
===========================================================================
DRUGS [6.3%]
Abbott Laboratories 3,900 189
Hospira * 1,680 64
Johnson & Johnson 4,730 307
Merck 22,110 927
Pfizer 53,035 1,504
Sanofi-Aventis, ADR 33,900 1,508
Wyeth 43,340 2,203
---------------------------------------------------------------------------
TOTAL DRUGS 6,702
===========================================================================
ELECTRICAL SERVICES [1.4%]
AES * 14,150 289
Duke Energy 17,130 517
TXU 10,560 660
Xcel Energy 1,100 23
---------------------------------------------------------------------------
TOTAL ELECTRICAL SERVICES 1,489
===========================================================================
ENERGY [0.2%]
Sempra Energy 5,180 260
===========================================================================
See Notes to the Financial Statements.
26
AHA DIVERSIFIED EQUITY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description Shares value (000)
- --------------------------------------------------------------------------------
ENTERTAINMENT [0.6%]
Carnival 5,880 $ 277
Harrah's Entertainment 5,800 385
---------------------------------------------------------------------------
TOTAL ENTERTAINMENT 662
===========================================================================
FINANCIAL SERVICES [2.5%]
American Express 5,880 330
CIT Group 5,380 261
Citigroup 31,645 1,572
Countrywide Financial 13,650 478
---------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES 2,641
===========================================================================
FOOD, BEVERAGE & TOBACCO [4.1%]
Archer-Daniels-Midland 16,050 608
Coca-Cola 20,820 930
Conagra Foods 47,500 1,163
General Mills 8,070 457
Pepsi Bottling Group 7,370 261
Safeway 1,900 58
Tyson Foods, Cl A 54,300 862
---------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO 4,339
===========================================================================
GAS/NATURAL GAS [1.3%]
El Paso 84,000 1,146
Nicor 5,280 226
---------------------------------------------------------------------------
TOTAL GAS/NATURAL GAS 1,372
===========================================================================
GOVERNMENT AGENCY [0.2%]
Johnson Controls 2,500 179
===========================================================================
HEALTHCARE PRODUCTS & SERVICES [2.4%]
Applera - Applied Biosystems Group 6,900 229
Cardinal Health 8,890 584
Cigna 9,800 1,140
HCA 1,100 55
McKesson 6,970 367
UnitedHealth Group 3,370 166
---------------------------------------------------------------------------
TOTAL HEALTHCARE PRODUCTS & SERVICES 2,541
===========================================================================
HOTELS & LODGING [0.5%]
Wyndham Worldwide * 18,600 520
===========================================================================
INSURANCE [10.4%]
ACE, ADR 30,180 1,652
Allstate 25,900 1,625
Ambac Financial Group 2,790 231
American International Group 2,784 184
Assured Guaranty 35,700 926
Chubb 9,170 476
Cincinnati Financial 5,380 259
Conseco * 50,600 1,062
Genworth Financial, Cl A 200 7
Description Shares Value (000)
- --------------------------------------------------------------------------------
Hartford Financial Services Group 6,500 $ 564
ING Groep, ADR 26,300 1,157
Lincoln National 2,480 154
MBIA 23,800 1,462
Safeco 980 58
St Paul Travelers 25,600 1,200
---------------------------------------------------------------------------
TOTAL INSURANCE 11,017
===========================================================================
INVESTMENT BANKER/BROKER DEALER [1.4%]
Goldman Sachs Group 4,880 826
Lehman Brothers Holdings 9,290 686
---------------------------------------------------------------------------
TOTAL INVESTMENT BANKER/BROKER DEALER 1,512
===========================================================================
MACHINERY [3.3%]
Caterpillar 10,760 708
Cummins 2,690 321
Eaton 18,990 1,307
Illinois Tool Works 24,700 1,109
---------------------------------------------------------------------------
TOTAL MACHINERY 3,445
===========================================================================
MEASURING DEVICES [0.3%]
Agilent Technologies * 9,170 300
===========================================================================
MEDICAL PRODUCTS & SERVICES [1.2%]
Bard (C.R.) 790 59
Baxter International 4,300 196
Becton Dickinson 5,680 402
Coventry Health Care * 4,780 246
Wellpoint * 4,390 338
---------------------------------------------------------------------------
TOTAL MEDICAL PRODUCTS & SERVICES 1,241
===========================================================================
METALS & MINING [0.2%]
Phelps Dodge 2,180 185
===========================================================================
MISCELLANEOUS BUSINESS SERVICES [0.8%]
Interpublic Group (A) 85,500 846
===========================================================================
MULTI-MEDIA [1.5%]
News Corp., Cl A 37,660 740
Walt Disney 26,500 819
---------------------------------------------------------------------------
TOTAL MULTI-MEDIA 1,559
===========================================================================
OFFICE FURNITURE & FIXTURES [2.9%]
Intuit * 7,600 244
Microsoft 69,620 1,903
Oracle * 44,100 782
VeriSign * 6,800 137
---------------------------------------------------------------------------
TOTAL OFFICE FURNITURE & FIXTURES 3,066
===========================================================================
See Notes to the Financial Statements.
27
AHA DIVERSIFIED EQUITY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description Shares value (000)
- --------------------------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS [5.9%]
Anadarko Petroleum 2,100 $ 92
Baker Hughes 2,200 150
Chesapeake Energy 10,270 298
ChevronTexaco 24,790 1,608
ConocoPhillips 17,094 1,018
Exxon Mobil 19,082 1,280
Marathon Oil 8,631 664
Occidental Petroleum 14,140 680
Valero Energy 7,970 410
---------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS 6,200
===========================================================================
PETROLEUM REFINING [0.3%]
Hess 6,780 281
===========================================================================
PETROLEUM SERVICES [3.3%]
BJ Services 20,100 606
GlobalSantaFe 29,900 1,495
Halliburton 42,970 1,222
Schlumberger 2,790 173
---------------------------------------------------------------------------
TOTAL PETROLEUM SERVICES 3,496
===========================================================================
PRINTING & PUBLISHING [0.5%]
McGraw Hill 8,100 470
Meredith 1,080 53
---------------------------------------------------------------------------
TOTAL PRINTING & PUBLISHING 523
===========================================================================
REAL ESTATE INVESTMENT TRUSTS [0.7%]
Boston Properties 2,400 248
Prologis Trust 4,300 245
Temple-Inland 5,500 221
---------------------------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUSTS 714
===========================================================================
RETAIL [7.2%]
Autonation * 10,160 212
CVS 28,300 909
Dillard's, Cl A 6,870 225
Federated Department Stores 12,350 534
Home Depot 46,500 1,687
JC Penney 5,080 347
Kroger 15,960 369
Limited Brands 29,400 779
Lowe's 6,870 193
Sherwin Williams 4,780 267
Target 34,200 1,889
TJX 9,100 255
---------------------------------------------------------------------------
TOTAL RETAIL 7,666
===========================================================================
Description Shares/Face Amount (000) Value (000)
- --------------------------------------------------------------------------------
SEMI-CONDUCTORS [4.2%]
Infineon Technologies, ADR (A)* 144,800 $ 1,713
Intel 88,400 1,818
Micron Technology * 14,000 244
Nvidia * 7,800 231
Texas Instruments 11,760 391
---------------------------------------------------------------------------
TOTAL SEMI-CONDUCTORS 4,397
===========================================================================
STEEL & STEEL WORKS [0.6%]
Nucor 7,570 375
United States Steel 3,990 230
---------------------------------------------------------------------------
TOTAL STEEL & STEEL WORKS 605
===========================================================================
TELEPHONES & TELECOMMUNICATIONS [2.7%]
Alltel 8,670 481
AT&T 42,690 1,390
BellSouth 1,590 68
Embarq 5,430 263
Verizon Communications 16,200 601
---------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS 2,803
===========================================================================
TRANSPORTATION SERVICES [0.2%]
Burlington Northern Santa Fe 3,100 228
===========================================================================
TRUCKING [0.2%]
Ryder System 5,080 263
===========================================================================
WHOLESALE [1.5%]
Google, Cl A * 500 201
Sysco 42,700 1,428
---------------------------------------------------------------------------
TOTAL WHOLESALE 1,629
===========================================================================
TOTAL COMMON STOCK
(Cost $90,648) 102,256
=======================================================================
COMMERCIAL PAPER [1.8%]
Lafayette Asset Securitization (B)
5.45%, 10/02/06 $ 1,957 1,957
---------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost $1,957) 1,957
=======================================================================
See Notes to the Financial Statements.
28
AHA DIVERSIFIED EQUITY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description Shares Value (000)
- --------------------------------------------------------------------------------
CASH EQUIVALENTS [3.8%]
AIM Short-Term Investment
Company Liquid Assets
Portfolio, 5.25% (B) (C) 493,746 $ 494
Fidelity Institutional Domestic
Money Market Portfolio, Cl I,
5.19% (C) 3,476,052 3,476
---------------------------------------------------------------------------
TOTAL CASH EQUIVALENTS
(Cost $3,970) 3,970
=======================================================================
TOTAL INVESTMENTS [102.3%]
(Cost $96,575) 108,183
=======================================================================
OTHER ASSETS AND LIABILITIES [-2.3%] (2,408)
=======================================================================
NET ASSETS -- 100.0% $ 105,775
===========================================================================
* Non-income producing security
(A) This security or a partial position of this security is on loan at
September 30, 2006. The total value of securities on loan at September 30,
2006 was $2,196,011.
(B) This security was purchased with cash collateral received from securities
lending. The total value of such securities at September 30, 2006 was
$2,450,641.
(C) The rate shown is the 7-day effective yield as of September 30, 2006.
ADR -- American Depositary Receipt
Cl -- Class
See Notes to the Financial Statements.
29
AHA SOCIALLY RESPONSIBLE EQUITY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description Shares Value (000)
- --------------------------------------------------------------------------------
COMMON STOCK [93.2%]
ADVERTISING [2.0%]
CBS, Cl B 33,000 $ 930
===========================================================================
AUTOMOTIVE [3.4%]
Honda Motor, ADR 45,400 1,527
===========================================================================
BANKS [9.4%]
Chittenden 24,100 692
International Bancshares 39,625 1,176
National City 26,100 955
PNC Financial Services Group 13,800 1,000
Wachovia 7,800 435
---------------------------------------------------------------------------
TOTAL BANKS 4,258
===========================================================================
BROADCASTING & CABLE [2.4%]
Nokia, ADR 54,200 1,067
===========================================================================
BUSINESS SERVICES [2.8%]
Xerox * 82,400 1,282
===========================================================================
CABLE/MEDIA [2.6%]
Time Warner 65,000 1,185
===========================================================================
CHEMICALS [4.6%]
Air Products & Chemicals 14,200 942
Rohm & Haas 24,600 1,165
---------------------------------------------------------------------------
TOTAL CHEMICALS 2,107
===========================================================================
COMPUTER SYSTEM DESIGN & SERVICES [1.0%]
Sun Microsystems * 87,000 432
===========================================================================
CONSUMER PRODUCTS & SERVICES [7.3%]
Kimberly-Clark 22,500 1,470
Mattel 53,700 1,058
Sony, ADR 19,200 775
---------------------------------------------------------------------------
TOTAL CONSUMER PRODUCTS & SERVICES 3,303
===========================================================================
DIVERSIFIED METALS & MINING [3.0%]
Hewlett-Packard 37,500 1,376
===========================================================================
DRUGS [6.4%]
Abbott Laboratories 23,800 1,156
Johnson & Johnson 14,300 929
Schering-Plough 36,600 808
---------------------------------------------------------------------------
TOTAL DRUGS 2,893
===========================================================================
ELECTRICAL SERVICES [3.2%]
Emerson Electric 17,200 1,442
===========================================================================
ENERGY [2.9%]
Atmos Energy 45,500 1,299
===========================================================================
FINANCIAL SERVICES [5.0%]
CIT Group 19,200 934
Citigroup 26,500 1,316
---------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES 2,250
===========================================================================
Description Shares value (000)
- --------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO [2.0%]
Supervalu 30,100 $ 893
===========================================================================
HEALTHCARE PRODUCTS & SERVICES [5.3%]
Applera - Applied Biosystems Group 44,000 1,457
Cardinal Health 14,100 927
---------------------------------------------------------------------------
TOTAL HEALTHCARE PRODUCTS & SERVICES 2,384
===========================================================================
INSURANCE [6.0%]
American International Group 14,000 928
Mercury General 14,200 704
Metlife 19,200 1,088
---------------------------------------------------------------------------
TOTAL INSURANCE 2,720
===========================================================================
OFFICE FURNITURE & FIXTURES [2.0%]
3M 12,000 893
===========================================================================
PAPER & PAPER PRODUCTS [2.2%]
MeadWestvaco 37,500 994
===========================================================================
PETROLEUM & FUEL PRODUCTS [7.5%]
BP, ADR 12,000 787
Chesapeake Energy (A) 54,300 1,575
Unit Corp. * 22,500 1,034
---------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS 3,396
===========================================================================
PRINTING & PUBLISHING [4.9%]
Lee Enterprises 41,000 1,035
Thomson 29,600 1,193
---------------------------------------------------------------------------
TOTAL PRINTING & PUBLISHING 2,228
===========================================================================
SEMI-CONDUCTORS/INSTRUMENTS [2.1%]
Intel 45,500 936
===========================================================================
TELEPHONES & TELECOMMUNICATIONS [4.7%]
Embarq 10,800 523
Sprint Nextel 41,000 703
Telephone & Data Systems 22,000 926
---------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS 2,152
===========================================================================
WASTE DISPOSAL [0.5%]
Waste Management 6,800 249
===========================================================================
TOTAL COMMON STOCK
(Cost $39,977) 42,196
=======================================================================
See Notes to the Financial Statements.
30
AHA SOCIALLY RESPONSIBLE EQUITY FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 2006
Description Face Amount (000)/Shares Value (000)
- --------------------------------------------------------------------------------
COMMERCIAL PAPER [0.8%]
Lafayette Asset Securitization (B)
5.45%, 10/02/06 $ 338 $ 338
---------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost $338) 338
=======================================================================
FOREIGN COMMON STOCKS [1.9%]
MISCELLANEOUS MANUFACTURING [1.9%]
Tyco International 32 881
---------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(Cost $844) 881
=======================================================================
CASH EQUIVALENTS [4.9%]
AIM Short-Term Investment
Company Liquid Assets
Portfolio, 5.25% (B) (C) 85,301 85
Fidelity Institutional Domestic
Money Market Portfolio, Cl I,
5.19% (C) 2,145,143 2,145
---------------------------------------------------------------------------
TOTAL CASH EQUIVALENTS
(Cost $2,230) 2,230
=======================================================================
TOTAL INVESTMENTS [100.8%]
(Cost $43,389) 45,645
=======================================================================
OTHER ASSETS AND LIABILITIES [-0.8%] (361)
=======================================================================
NET ASSETS -- 100.0% $ 45,284
===========================================================================
* Non-income producing security
(A) This security or a partial position of this security is on loan at
September 30, 2006. The total value of securities on loan at September 30,
2006 was $388,868.
(B) This security was purchased with cash collateral received from securities
lending. The total value of such securities at September 30, 2006 was
$423,378.
(C) The rate shown is the 7-day effective yield as of September 30, 2006.
ADR -- American Depositary Receipt
Cl -- Class
See Notes to the Financial Statements.
31
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (000'S)
For the year ended September 30, 2006
AHA AHA AHA
LIMITED FULL AHA SOCIALLY
MATURITY MATURITY AHA DIVERSIFIED RESPONSIBLE
FIXED INCOME FIXED INCOME BALANCED EQUITY EQUITY
FUND FUND FUND FUND FUND
------------ ------------ ------------ ------------- --------------
ASSETS:
Cost of securities $ 46,556 $ 30,643 $ 16,692 $ 96,575 $ 43,389
============ ============ ============ ============= ==============
Investments in securities at value $ 46,398 $ 30,693 $ 18,110(1) $ 108,183(2) $ 45,645(3)
Cash -- -- -- 3 5
Income receivable 451 333 -- 123 65
Receivable for capital shares sold -- -- 85 31 31
Receivable for dividend tax reclaim -- -- 1 4 --
Prepaid Expenses 38 11 6 31 7
------------ ------------ ------------ ------------- --------------
Total Assets 46,887 31,037 18,202 108,375 45,753
------------ ------------ ------------ ------------- --------------
LIABILITIES:
Obligation to return securities
lending collateral -- -- 293 2,451 423
Payable for investment securities
purchased 1,034 385 52 -- --
Income distribution payable 110 77 -- -- --
Investment adviser fees payable 10 13 10 58 23
Distribution fees payable 1 -- -- 29 --
Administrative fees payable 2 1 1 5 2
Accrued expenses 32 18 10 57 21
------------ ------------ ------------ ------------- --------------
Total Liabilities 1,189 494 366 2,600 469
------------ ------------ ------------ ------------- --------------
NET ASSETS $ 45,698 $ 30,543 $ 17,836 $ 105,775 $ 45,284
============ ============ ============ ============= ==============
NET ASSETS:
Paid-in-Capital
(unlimited authorization --
$0.01 par value) $ 48,303 $ 30,901 $ 15,288 $ 86,876 $ 42,418
Undistributed net investment income 6 3 10 22 13
Accumulated net realized gain (loss)
on investments (2,453) (411) 1,120 7,269 597
Net unrealized appreciation (depreciation)
on investments (158) 50 1,418 11,608 2,256
------------ ------------ ------------ ------------- --------------
NET ASSETS $ 45,698 $ 30,543 $ $17,836 $ 105,775 $ 45,284
============ ============ ============ ============= ==============
Institutional Shares:
Net Assets $ 45,339,934 $ 30,397,747 $ 17,835,840 $ 94,653,234 $ 45,002,796
Total shares outstanding at end of year 4,293,406 2,993,093 1,825,652 5,210,015 4,124,724
Net asset value, offering and
redemption price per share
(net assets / shares outstanding) $ 10.56 $ 10.16 $ 9.77 $ 18.17 $ 10.91
Class A Shares:
Net Assets $ 357,912 $ 145,187 n/a $ 11,122,036 $ 281,286
Total shares outstanding at end of year 33,852 14,291 n/a 610,917 25,808
Net asset value, offering and
redemption price per share
(net assets / shares outstanding) $ 10.57 $ 10.16 n/a $ 18.21 $ 10.90
(1) Market value of securities on loan was $260,389 as of September 30, 2006.
(2) Market value of securities on loan was $2,196,011 as of September 30,
2006.
(3) Market value of securities on loan was $388,868 as of September 30, 2006.
See Notes to the Financial Statements.
32
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (000'S)
For the year ended September 30, 2006
AHA LIMITED MATURITY FIXED AHA FULL MATURITY FIXED
INCOME FUND INCOME FUND
--------------------------- ------------------------
INVESTMENT INCOME:
Dividends $ 39 $ 27
Interest 2,960 1,506
Income from securities lending -- net -- 1
------- -------
Total Investment Income 2,999 1,534
------- -------
EXPENSES:
Investment advisory fees 376 153
Administration fees 42 17
Trustees' fees and expenses 3 1
Distribution expense -- Class A Shares 1 --
Reorganization expenses 133 34
Transfer agent fees and expenses 44 25
Registration fees 27 6
Audit fees 11 9
Reports to shareholders 9 5
Custodian fees and expenses 9 4
Legal fees 8 2
Insurance and Other expenses 41 13
------- -------
Total expenses 704 269
------- -------
Recovery of Investment Advisory Fees Previously Waived(1) -- 2
Less Waiver of:
Investment Advisory fees (136) (17)
Transfer Agent fees (3) (8)
------- -------
Net expenses 565 246
------- -------
Net investment income 2,434 1,288
------- -------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments (1,507) (314)
Change in net unrealized appreciation
(depreciation) on investments 1,235 (122)
------- -------
Net realized and unrealized
loss on investments (272) (436)
------- -------
Net increase
in net assets resulting
from operations $ 2,162 $ 852
======= =======
(1) See Note 3 for Advisory Fees Recovered.
Amounts designated as "--" are either $0 or have been rounded to $0.
See Notes to the Financial Statements.
33
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (000'S)
For the year ended September 30, 2006
AHA SOCIALLY RESPONSIBLE
AHA BALANCED FUND AHA DIVERSIFIED EQUITY FUND EQUITY FUND
----------------- --------------------------- ------------------------
INVESTMENT INCOME:
Dividends $ 221 $ 1,944 $ 535
Interest 285 -- --
Income from securities lending -- net 1 4 3
Foreign taxes withheld (1) (12) (6)
------- ------- -------
Total investment income 506 1,936 532
------- ------- -------
EXPENSES:
Investment advisory fees 134 772 187
Administration fees 10 57 14
Distribution expense -- Class A Shares -- 25 --
Trustees' fees and expenses 1 3 1
Reorganization expenses 19 98 22
Transfer agent fees and expenses 12 62 16
Audit fees 5 33 13
Registration fees 3 19 4
Reports to shareholders 3 17 6
Custodian fees and expenses 2 12 3
Legal fees 2 8 2
Insurance and Other expenses 8 41 10
------- ------- -------
Total expenses 199 1,147 278
------- ------- -------
Recovery of Investment Advisory Fees
Previously Waived(1) -- -- 2
Less Waiver of:
Investment Advisory expense (18) (71) (18)
Transfer Agent fees (2) (11) (3)
------- ------- -------
Net expenses 179 1,065 259
------- ------- -------
Net investment income 327 871 273
------- ------- -------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 1,230 8,398 598
Change in net unrealized appreciation
(depreciation) on investments (133) 628 1,277
------- ------- -------
Net realized and unrealized gain
on investments 1,097 9,026 1,875
------- ------- -------
Net increase in net assets
resulting from operations $ 1,424 $ 9,897 $ 2,148
======= ======= =======
(1) See Note 3 for Advisory Fees Recovered.
Amounts designated as "--" are either $0 or have been rounded to $0.
See Notes to the Financial Statements.
34
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS (000'S)
AHA LIMITED MATURITY FIXED INCOME FUND
-----------------------------------------------------------
FOR THE FOR THE PERIOD FOR THE
YEAR ENDED JULY 1, 2005 TO YEAR ENDED
SEPTEMBER 30, 2006(1) SEPTEMBER 30, 2005 JUNE 30, 2005
--------------------- ------------------ --------------
OPERATIONS:
Net investment income $ 2,434 $ 703 $ 2,941
Net realized loss on investments sold (1,507) (138) (729)
Change in net unrealized appreciation
(depreciation) on investments 1,235 (310) 36
--------- --------- ---------
Net increase in net assets resulting
from investment operations 2,162 255 2,248
--------- --------- ---------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends to shareholders from
net investment income
Class I (2,446) (699) (2,955)+
Class A (14) (5) (10)+
Distributions to shareholders from
net realized gains
Class I -- -- (168)
--------- --------- ---------
Total dividends and distributions to shareholders (2,460) (704) (3,133)
--------- --------- ---------
FUND SHARE TRANSACTIONS:
Fund Share Transactions: Class I
Net proceeds from shares sold 667 421 13,268
Reinvestment of dividends 1,272 385 1,874
Cost of shares redeemed (68,684) (16,480) (45,710)
--------- --------- ---------
Total Fund Share Transactions Class I (66,745) (15,674) (30,568)
--------- --------- ---------
Fund Share Transactions: Class A
Net proceeds from shares sold 167 -- 1,066
Reinvestment of dividends 14 5 10
Cost of shares redeemed (643) (250) (1)
--------- --------- ---------
Total Fund Share Transactions Class A (462) (245) 1,075
--------- --------- ---------
Net decrease in net assets
from capital share contributions (67,207) (15,919) (29,493)
--------- --------- ---------
Total decrease in net assets (67,505) (16,368) (30,378)
--------- --------- ---------
NET ASSETS:
Beginning of period 113,203 129,571 159,949
--------- --------- ---------
End of period* $ 45,698 $ 113,203 $ 129,571
========= ========= =========
* Including undistributed
net investment income of $ 6 $ -- $ --
========= ========= =========
Amounts designated as "--" are either $0 or have been rounded to $0.
+ Includes a tax return of capital of less than $1 (000's) for the Fund for
the year ended June 30, 2005.
(1) On October 3, 2005, the Limited Maturity Fixed Income Fund was reorganized
into the AHA Limited Maturity Fixed Income Fund, a newly established
identical series of the CNI Charter Funds. See Note 1 in Notes to
Financial Statements for more information.
See Notes to the Financial Statements.
35
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS (000'S)
AHA FULL MATURITY FIXED INCOME FUND
-----------------------------------------------------------
FOR THE FOR THE PERIOD FOR THE
YEAR ENDED JULY 1, 2005 TO YEAR ENDED
SEPTEMBER 30, 2006(1) SEPTEMBER 30, 2005 JUNE 30, 2005
--------------------- ------------------ --------------
OPERATIONS:
Net investment income $ 1,288 $ 272 $ 1,092
Net realized gain (loss) on investments sold (314) (81) 230
Change in net unrealized appreciation
(depreciation) on investments (122) (356) 353
--------- --------- ---------
Net increase (decrease) in net assets resulting
from investment operations 852 (165) 1,675
--------- --------- ---------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends to shareholders from
net investment income
Class I (1,294) (276) (1,108)
Class A (5) (1) (4)
Distributions to shareholders from
net realized gains
Class I (179) -- (267)
Class A (1) -- (1)
--------- --------- ---------
Total dividends and distributions to shareholders (1,479) (277) (1,380)
--------- --------- ---------
FUND SHARE TRANSACTIONS:
Fund Share Transactions: Class I
Net proceeds from shares sold 5,099 125 5,020
Reinvestment of dividends 504 119 658
Cost of shares redeemed (6,345) -- (2,970)
--------- --------- ---------
Total Fund Share Transactions Class I (742) 244 2,708
--------- --------- ---------
Fund Share Transactions: Class A
Net proceeds from shares sold 13 1 29
Reinvestment of dividends 6 1 5
Cost of shares redeemed (5) -- (5)
--------- --------- ---------
Total Fund Share Transactions Class A 14 2 29
--------- --------- ---------
Net increase (decrease) in net assets
from capital share contributions (728) 246 2,737
--------- --------- ---------
Total increase (decrease) in net assets (1,355) (196) 3,032
--------- --------- ---------
NET ASSETS:
Beginning of period 31,898 32,094 29,062
--------- --------- ---------
End of period* $ 30,543 $ 31,898 $ 32,094
========= ========= =========
* Including undistributed
net investment income of $ 3 $ -- $ --
========= ========= =========
Amounts designated as "--" are either $0 or have been rounded to $0.
(1) On October 3, 2005, the Full Maturity Fixed Income Fund was reorganized
into the AHA Full Maturity Fixed Income Fund, a newly established
identical series of the CNI Charter Funds. See Note 1 in Notes to
Financial Statements for additional information.
See Notes to the Financial Statements.
36
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS (000'S)
AHA BALANCED FUND
-----------------------------------------------------------
FOR THE FOR THE PERIOD FOR THE
YEAR ENDED JULY 1, 2005 TO YEAR ENDED
SEPTEMBER 30, 2006(1) SEPTEMBER 30, 2005 JUNE 30, 2005
--------------------- ------------------ --------------
OPERATIONS:
Net investment income $ 327 $ 72 $ 293
Net realized gain on investments sold 1,230 82 1,152
Change in net unrealized appreciation (depreciation)
on investments (133) 182 51
--------- --------- ---------
Net increase in net assets resulting
from investment operations 1,424 336 1,496
--------- --------- ---------
DIVIDENDS TO SHAREHOLDERS:
Dividends to shareholders from
net investment income
Class I (338) (75) (301)
Distributions to shareholders from
net realized gains
Class I (1,084) -- --
--------- --------- ---------
Total dividends and distributions to shareholders (1,422) (75) (301)
--------- --------- ---------
FUND SHARE TRANSACTIONS:
Fund Share Transactions: Class I
Reinvestment of dividends 59 3 13
Cost of shares redeemed (577) -- (50)
--------- --------- ---------
Total Fund Share Transactions Class I (518) 3 (37)
--------- --------- ---------
Net increase (decrease) in net assets
from capital share contributions (518) 3 (37)
--------- --------- ---------
Total increase (decrease) in net assets (516) 264 1,158
--------- --------- ---------
NET ASSETS:
Beginning of period 18,352 18,088 16,930
--------- --------- ---------
End of period* $ 17,836 $ 18,352 $ 18,088
========= ========= =========
* Including undistributed
net investment income of: $ 10 $ 11 $ 11
========= ========= =========
Amounts designated as "--" are either $0 or have been rounded to $0.
(1) On October 3, 2005, the Balanced Fund was reorganized into the AHA
Balanced Fund, a newly established identical series of the CNI Charter
Funds. See Note 1 in Notes to Financial Statements for additional
information.
See Notes to the Financial Statements.
37
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS (000'S)
AHA DIVERSIFIED EQUITY FUND
-----------------------------------------------------------
FOR THE FOR THE PERIOD FOR THE
YEAR ENDED JULY 1, 2005 TO YEAR ENDED
SEPTEMBER 30, 2006(1) SEPTEMBER 30, 2005 JUNE 30, 2005
--------------------- ------------------ --------------
OPERATIONS:
Net investment income $ 871 $ 103 $ 639
Net realized gain on investments sold 8,398 1,203 6,989
Change in net unrealized appreciation
on investments 628 2,209 734
--------- --------- ---------
Net increase in net assets resulting
from investment operations 9,897 3,515 8,362
--------- --------- ---------
DIVIDENDS TO SHAREHOLDERS:
Dividends to shareholders from
net investment income
Class I (792) (98) (609)
Class A (63) (5) (43)
Distributions to shareholders from
net realized gains
Class I (3,919) -- --
Class A (440) -- --
--------- --------- ---------
Total dividends and distributions to shareholders (5,214) (103) (652)
--------- --------- ---------
FUND SHARE TRANSACTIONS:
Fund Share Transactions: Class I
Net proceeds from shares sold 30,944 988 8,194
Reinvestment of dividends 3,289 78 498
Cost of shares redeemed (25,250) (4,209) (2,277)
--------- --------- ---------
Total Fund Share Transactions Class I 8,983 (3,143) 6,415
--------- --------- ---------
Fund Share Transactions: Class A
Net proceeds from shares sold 1,789 391 1,161
Reinvestment of dividends 456 5 37
Cost of shares redeemed (1,034) (119) (432)
--------- --------- ---------
Total Fund Share Transactions Class A 1,211 277 766
--------- --------- ---------
Net increase (decrease) in net assets
from capital share contributions 10,194 (2,866) 7,181
--------- --------- ---------
Total increase in net assets 14,877 546 14,891
--------- --------- ---------
NET ASSETS:
Beginning of period 90,898 90,352 75,461
--------- --------- ---------
End of period* $ 105,775 $ 90,898 $ 90,352
========= ========= =========
* Including undistributed
net investment income of: $ 22 $ 5 $ 5
========= ========= =========
Amounts designated as "--" are either $0 or have been rounded to $0.
(1) On October 3, 2005, the Diversified Equity Fund was reorganized into the
AHA Diversified Equity Fund, a newly established identical series of the
CNI Charter Funds. See Note 1 in Notes to Financial Statements for
additional information.
See Notes to the Financial Statements.
38
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS (000'S)
AHA SOCIALLY RESPONSIBLE EQUITY FUND
-------------------------------------------------------------
FOR THE PERIOD
FOR THE FOR THE PERIOD JANUARY 3, 2005**
YEAR ENDED JULY 1, 2005 TO TO
SEPTEMBER 30, 2006(1) SEPTEMBER 30, 2005 JUNE 30, 2005
--------------------- ------------------ ---------------
OPERATIONS:
Net investment income $ 273 $ 49 $ 111
Net realized gain on investments sold 598 69 34
Change in net unrealized appreciation
(depreciation) on investments 1,277 1,155 (176)
--------- --------- ---------
Net increase (decrease) in net assets resulting
from investment operations 2,148 1,273 (31)
--------- --------- ---------
DIVIDENDS TO SHAREHOLDERS:
Dividends to shareholders from
net investment income
Class I (267) (45) (109)
Class A (1) -- --
Distributions to shareholders from
net realized gains
Class I (102) -- --
Class A -- -- --
--------- --------- ---------
Total dividends and distributions to shareholders (370) (45) (109)
--------- --------- ---------
FUND SHARE TRANSACTIONS:
Fund Share Transactions: Class I
Net proceeds from shares sold 22,781 467 21,083
Reinvestment of dividends 368 45 109
Cost of shares redeemed (1,713) (455) (542)
--------- --------- ---------
Total Fund Share Transactions Class I 21,436 57 20,650
--------- --------- ---------
Fund Share Transactions: Class A+
Net proceeds from shares sold 263 15 --
Reinvestment of dividends 1 -- --
Cost of shares redeemed (4) -- --
--------- --------- ---------
Total Fund Share Transactions Class A 260 15 --
--------- --------- ---------
Net increase in net assets
from capital share contributions 21,696 72 20,650
--------- --------- ---------
Total increase in net assets 23,474 1,300 20,510
--------- --------- ---------
NET ASSETS:
Beginning of period 21,810 20,510 --
--------- --------- ---------
End of period* $ 45,284 $ 21,810 $ 20,510
========= ========= =========
* Including undistributed
net investment income of: $ 13 $ 6 $ 2
========= ========= =========
** Commencement of operations.
+ Class A shares were offered starting August 12, 2005.
Amounts designated as "--" are either $0 or have been rounded to $0.
(1) On October 3, 2005, the Socially Responsible Equity Fund was reorganized
into the AHA Socially Responsible Equity Fund, a newly established
identical series of the CNI Charter Funds. See Note 1 in Notes to
Financial Statements for additional information.
See Notes to the Financial Statements.
39
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
AHA LIMITED MATURITY FIXED INCOME FUND - CLASS I SHARES
FOR THE PERIOD FOR THE YEARS ENDED JUNE 30,
FOR THE JULY 1, 2005 ---------------------------------------------
YEAR ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30,
2006+ 2005* 2005 2004 2003 2002
-------------- ---------------- -------- --------- -------- --------
PER SHARE DATA(1)(6):
Net Asset Value,
Beginning of Period $ 10.57 $ 10.61 $ 10.68 $ 10.86 $ 10.65 $ 10.43
-------- --------- -------- --------- -------- --------
Income from Investment Operations:
Net investment income 0.34 0.06 0.22 0.18 0.28 0.44
Net realized and unrealized
gain (loss) on investments 0.02 (0.04) (0.06) (0.18) 0.21 0.22
-------- --------- -------- --------- -------- --------
Total gain from
investment operations 0.36 0.02 0.16 0.00 0.49 0.66
-------- --------- -------- --------- -------- --------
Less Dividends and Distributions:
From net investment income (0.37) (0.06) (0.22)(8) (0.18) (0.28) (0.44)
From realized gains -- -- (0.01) -- -- --
-------- --------- -------- --------- -------- --------
Total dividends and distributions (0.37) (0.06) (0.23) (0.18) (0.28) (0.44)
-------- --------- -------- --------- -------- --------
Net Asset Value, End of Period $ 10.56 $ 10.57 $ 10.61 $ 10.68 $ 10.86 $ 10.65
======== ========= ======== ========= ======== ========
Total Return on Net Asset Value(2) 3.49% 0.20%(9) 1.53% (0.05)% 4.65% 6.16%
SUPPLEMENTAL DATA AND RATIOS(6):
Net assets, end of period (000's) $ 45,340 $ 112,381 $128,501 $ 159,949 $ 96,605 $ 85,644
Ratio of net operating expenses
to average net assets(3)(4):
Before waivers 0.94% 0.88%(10) 0.79% 0.73% 0.83% 0.78%
After waivers 0.75% 0.86%(10) 0.78% 0.73% 0.85% 0.76%
Program service fee(4) N/A N/A N/A N/A N/A 0.13%
Ratio of net investment income
to average net assets(3) 3.24% 2.20%(10) 2.01% 1.65% 2.58% 4.00%
Portfolio turnover rate(7) 86.31% 4.33%(9) 109.44% 97.66% N/A 60.24%(5)
* The Fund's fiscal and tax year-end changed from June 30 to September 30.
+ On October 3, 2005, the Limited Maturity Fixed Income Fund was reorganized
into the AHA Limited Maturity Fixed Income Fund, a newly established
identical series of the CNI Charter Funds. See Note 1 in Notes to
Financial Statements for more information.
(1) Information presented relates to a share of capital stock outstanding for
the entire period.
(2) Total Return on Net Asset Value is net of the service fee for the period
July 1, 2001 through October 31, 2001, and for the fiscal year ended 2001.
Beginning November 1, 2001 the management fee is included in the
calculation of the Fund's net asset value.
(3) Ratios include all management fees and expenses except for the program
service fee.
(4) Program service fee discontinued as of October 31, 2001. Effective
November 1, 2001, the Advisor expense ratio is included as a general
operating expense of the Fund.
(5) Rate listed represents the portfolio turnover rate from July 1, 2001
through October 31, 2001 (date on which Feeder Fund entered into a
master-feeder fund structure).
(6) For the period from November 1, 2001 through June 30, 2003, the per share
amounts and percentages reflect income and expenses assuming inclusion of
the Fund's proportionate share of the income and expenses of its Master
Portfolio.
(7) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued. For periods less than 1 year,
portfolio turnover rate has not been annualized.
(8) Includes a tax return of capital which is less than $0.01 per share, for
the Fund for the year ended June 30, 2005.
(9) Not annualized.
(10) Annualized.
See Notes to the Financial Statements.
40
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
AHA LIMITED MATURITY FIXED INCOME FUND - CLASS A SHARES
FOR THE FOR THE PERIOD FOR THE PERIOD
YEAR ENDED JULY 1, 2005 THROUGH OCTOBER 22, 2004* THROUGH
SEPTEMBER 30, 2006+ SEPTEMBER 30, 2005** JUNE 30, 2005
------------------- -------------------- -------------------------
PER SHARE DATA(1):
Net Asset Value,
Beginning of Period $ 10.58 $ 10.62 $ 10.77
------- ------- -------
Income from Investment Operations:
Net investment income 0.30 0.05 0.14
Net realized and unrealized
loss on investments 0.03 (0.04) (0.13)
------- ------- -------
Total gain from
investment operations 0.33 0.01 0.01
------- ------- -------
Less Dividends and Distributions:
From net investment income (0.34) (0.05) (0.15)(3)
From realized gains -- -- (0.01)
------- ------- -------
Total dividends and distributions (0.34) (0.05) (0.16)
------- ------- -------
Net Asset Value, End of Period $ 10.57 $ 10.58 $ 10.62
======= ======= =======
Total Return on Net Asset Value 3.17% 0.13%(4) 0.12%(4)
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000's) $ 358 $ 822 $ 1,070
Ratio of net operating expenses
to average net assets:
Before waivers 1.18% 1.11%(5) 1.07%(5)
After waivers 1.00% 1.10%(5) 1.03%(5)
Ratio of net investment income
to average net assets 2.88% 1.95%(5) 1.75%(5)
Portfolio turnover rate(2) 86.31% 4.33%(4) 109.44%
* Commencement of operations.
** The Fund's fiscal and tax year-end changed from June 30 to September 30.
+ On October 3, 2005, the Limited Maturity Fixed Income Fund was reorganized
into the AHA Limited Maturity Fixed Income Fund, a newly established
identical series of the CNI Charter Funds. See Note 1 in Notes to
Financial Statements for more information.
(1) Information presented relates to a share of capital stock outstanding for
the entire period.
(2) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued. For periods less than 1 year,
portfolio turnover rate has not been annualized.
(3) Includes a tax return of capital of less than $0.01 per share, for the
Fund for the year ended June 30, 2005.
(4) Not annualized.
(5) Annualized.
See Notes to the Financial Statements.
41
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
AHA FULL MATURITY FIXED INCOME FUND - CLASS I SHARES
FOR THE PERIOD FOR THE YEARS ENDED JUNE 30,
FOR THE JULY 1, 2005 --------------------------------------------
YEAR ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30,
2006+ 2005* 2005 2004 2003 2002
------------- -------------- ------- ------- ------- -------
PER SHARE DATA(1)(7):
Net Asset Value,
Beginning of Period $ 10.35 $ 10.50 $ 10.39 $ 10.87 $ 10.34 $ 10.10
------- --------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income 0.43 0.09 0.38 0.36(2) 0.49 0.52
Net realized and unrealized
gain (loss) on investments (0.13) (0.15) 0.20 (0.36) 0.53 0.24
------- --------- ------- ------- ------- -------
Total gain (loss) from
investment operations 0.30 (0.06) 0.58 0.00 1.02 0.76
------- --------- ------- ------- ------- -------
Less Dividends and Distributions:
From net investment income (0.43) (0.09) (0.38) (0.39) (0.49) (0.52)
From realized gains (0.06) -- (0.09) (0.09) -- --
------- --------- ------- ------- ------- -------
Total dividends and distributions (0.49) (0.09) (0.47) (0.48) (0.49) (0.52)
------- --------- ------- ------- ------- -------
Net Asset Value, End of Period $ 10.16 $ 10.35 $ 10.50 $ 10.39 $ 10.87 $ 10.34
======= ========= ======= ======= ======= =======
Total Return on Net Asset Value(3) 3.03% (0.57)%(9) 5.72% 0.08% 10.06% 7.40%
SUPPLEMENTAL DATA AND RATIOS(7):
Net assets, end of period (000's) $30,398 $ 31,764 $31,960 $28,958 $31,264 $38,267
Ratio of net operating expenses
to average net assets(4)(5):
Before waivers 0.87% 0.83%(10) 0.95% 0.98% 1.29% 1.08%
After waivers and recovered fees** 0.80% 1.00%(10) 1.00% 1.00% 1.00% 0.76%
Program service fee(5) N/A N/A N/A N/A N/A 0.17%
Ratio of net investment income
to average net assets(4) 4.20% 3.37%(10) 3.58% 3.40% 4.51% 5.09%
Portfolio turnover rate(8) 91.35% 17.47%(9) 144.07% 302.49% N/A 99.46%(6)
* The Fund's fiscal and tax year-end changed from June 30 to September 30.
** Ratio includes waivers and previously waived investment advisory fees
recovered. The impact of the recovered fees may cause a higher net expense
ratio.
+ On October 3, 2005, the Full Maturity Fixed Income Fund was reorganized
into the AHA Full Maturity Fixed Income Fund, a newly established
identical series of the CNI Charter Funds. See Note 1 in Notes to
Financial Statements for additional information.
(1) Information presented relates to a share of capital stock outstanding for
the entire period.
(2) Net investment income per share is calculated using ending balances prior
to consideration of adjustments for permanent book and tax differences.
(3) Total Return on Net Asset Value is net of the service fee for the period
from July 1, 2001 through October 31, 2001, and for the fiscal year ended
2001. Beginning November 1, 2001 the management fee is included in the
calculation of the Fund's net asset value.
(4) Ratios include all management fees and expenses except for the program
service fee.
(5) Program service fee discontinued as of October 31, 2001. Effective
November 1, 2001, the Advisor expense ratio is included as a general
operating expense of the Fund.
(6) Rate listed represents the portfolio turnover rate from July 1, 2001
through October 31, 2001 (date on which Feeder Fund entered into a
master-feeder fund structure).
(7) For the period from November 1, 2001 through June 30, 2003, the per share
amounts and percentages reflect income and expenses assuming inclusion of
the Fund's proportionate share of the income and expenses of its Master
Portfolio.
(8) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued. For periods less than 1 year,
portfolio turnover rate has not been annualized.
(9) Not annualized.
(10) Annualized.
See Notes to the Financial Statements.
42
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
AHA FULL MATURITY FIXED INCOME FUND - CLASS A SHARES
FOR THE PERIOD FOR THE PERIOD
FOR THE JULY 1, 2005 FOR THE MAY 11, 2004*
YEAR ENDED THROUGH YEAR ENDED THROUGH
SEPTEMBER 30, 2006+ SEPTEMBER 30, 2005** JUNE 30, 2005 JUNE 30, 2004
------------------- -------------------- ------------- --------------
PER SHARE DATA(1):
Net Asset Value,
Beginning of Period $ 10.36 $ 10.50 $ 10.39 $ 10.32
-------- -------- -------- --------
Income from Investment Operations:
Net investment income 0.40 0.08 0.34 0.04
Net realized and unrealized
gain (loss) on investments (0.13) (0.14) 0.22 0.09
-------- -------- -------- --------
Total gain (loss) from
investment operations 0.27 (0.06) 0.56 0.13
-------- -------- -------- --------
Less Dividends and Distributions:
From net investment income (0.41) (0.08) (0.36) (0.06)
From realized gains (0.06) -- (0.09) --
-------- -------- -------- --------
Total dividends and distributions (0.47) (0.08) (0.45) (0.06)
-------- -------- -------- --------
Net Asset Value, End of Period $ 10.16 $ 10.36 $ 10.50 $ 10.39
======== ======== ======== ========
Total Return on Net Asset Value 2.67% (0.54)%(2) 5.46% 1.29%(2)
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000's) $ 145 $ 134 $ 134 $ 104
Ratio of net operating expenses
to average net assets:
Before expense waivers 1.12% 1.08%(3) 1.20% 1.15%(3)
After expense waivers and recovered fees*** 1.05% 1.25%(3) 1.25% 1.25%(3)
Ratio of net investment income
to average net assets 3.95% 3.12%(3) 3.33% 3.27%(3)
Portfolio turnover rate(4) 91.35% 17.47%(2) 144.07% 302.49%
* Commencement of operations.
** The Fund's fiscal and tax year-end changed from June 30 to September 30.
*** Ratio includes waivers and previously waived investment advisory fees
recovered. The impact of the recovered fees may cause a higher net expense
ratio.
+ On October 3, 2005, the Full Maturity Fixed Income Fund was reorganized
into the AHA Full Maturity Fixed Income Fund, a newly established
identical series of the CNI Charter Funds. See Note 1 in Notes to
Financial Statements for additional information.
(1) Information presented relates to a share of capital stock outstanding for
the entire period.
(2) Not annualized.
(3) Annualized.
(4) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued. For periods less than 1 year,
portfolio turnover rate has not been annualized.
See Notes to the Financial Statements.
43
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
AHA BALANCED FUND - CLASS I SHARES
FOR THE PERIOD FOR THE YEARS ENDED JUNE 30,
FOR THE JULY 1, 2005 ------------------------------------------
YEAR ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30,
2006+ 2005* 2005 2004 2003 2002
------------- -------------- ------- ------- ------- -------
PER SHARE DATA(1)(7):
Net Asset Value,
Beginning of Period $ 9.76 $ 9.62 $ 8.98 $ 8.03 $ 8.03 $ 9.17
---------- ---------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income 0.18 0.04 0.16 0.10(2) 0.11 0.12
Net realized and unrealized
gain (loss) on investments 0.59 0.14 0.64 0.97 -- (0.72)
---------- ---------- ------- ------- ------- -------
Total gain (loss) from
investment operations 0.77 0.18 0.80 1.07 0.11 (0.60)
---------- ---------- ------- ------- ------- -------
Less Dividends and Distributions:
From net investment income (0.18) (0.04) (0.16) (0.12) (0.11) (0.12)
From realized gains (0.58) -- -- -- -- (0.42)
---------- ---------- ------- ------- ------- -------
Total dividends and distributions (0.76) (0.04) (0.16) (0.12) (0.11) (0.54)
---------- ---------- ------- ------- ------- -------
Net Asset Value, End of Period $ 9.77 $ 9.76 $ 9.62 $ 8.98 $ 8.03 $ 8.03
========== ========== ======= ======= ======= =======
Total Return on Net Asset Value(3) 8.32% 1.87%(8) 8.97% 13.41% 1.40% (6.94)%
SUPPLEMENTAL DATA AND RATIOS(7):
Net assets, end of period (000's) $ 17,836 $ 18,352 $18,088 $16,930 $18,615 $23,375
Ratio of net operating expenses
to average net assets(4)(5):
Before waivers 1.11% 1.10%(9) 1.25% 1.31% 1.81% 1.64%
After waivers 1.00% 0.98%(9) 1.20% 1.50% 1.50% 1.13%
Program service fee(5) N/A N/A N/A N/A N/A 0.24%
Ratio of net investment income
to average net assets(4) 1.83% 1.54%(9) 1.69% 1.14% 1.43% 1.42%
Portfolio turnover rate 73.58% 13.53%(8) 98.60% 69.85% N/A 80.33%(6)
* The Fund's fiscal and tax year-end changed from June 30 to September 30.
+ On October 3, 2005, the Balanced Fund was reorganized into the AHA
Balanced Fund, a newly established identical series of the CNI Charter
Funds. See Note 1 in Notes to Financial Statements for additional
information.
(1) Information presented relates to a share of capital stock outstanding for
the entire period.
(2) Net investment income per share is calculated using ending balances prior
to consideration of adjustments for permanent book and tax differences.
(3) Total Return on Net Asset Value is net of the service fee for the period
from July 1, 2001 through October 31, 2001, and for the fiscal year ended
2001. Beginning November 1, 2001 the management fee is included in the
calculation of the Fund's net asset value.
(4) Ratios include all management fees and expenses except for the program
service fee.
(5) Program service fee discontinued as of October 31, 2001. Effective
November 1, 2001, the Advisor expense ratio is included as a general
operating expense of the Fund.
(6) Rate listed represents the portfolio turnover rate from July 1, 2001
through October 31, 2001 (date on which Feeder Fund entered into a
master-feeder fund structure).
(7) For the period from November 1, 2001 through June 30, 2003, the per share
amounts and percentages reflect income and expenses assuming inclusion of
the Fund's proportionate share of the income and expenses of its Master
Portfolio.
(8) Not annualized.
(9) Annualized.
See Notes to the Financial Statements.
44
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
AHA DIVERSIFIED EQUITY FUND - CLASS I SHARES
FOR THE PERIOD FOR THE YEARS ENDED JUNE 30,
FOR THE JULY 1, 2005 -----------------------------------------
YEAR ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30,
2006+ 2005* 2005 2004 2003 2002
------------- -------------- ------- ------- ------- -------
PER SHARE DATA(1)(6):
Net Asset Value,
Beginning of Period $ 17.42 $ 16.79 $ 15.39 $ 12.74 $ 13.08 $ 15.90
-------- --------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income 0.15 0.02 0.13 0.10 0.08 0.10
Net realized and unrealized
gain (loss) on investments 1.55 0.63 1.40 2.65 (0.34) (2.01)
-------- --------- ------- ------- ------- -------
Total gain (loss) from
investment operations 1.70 0.65 1.53 2.75 (0.26) (1.91)
-------- --------- ------- ------- ------- -------
Less Dividends and Distributions:
From net investment income (0.15) (0.02) (0.13) (0.10) (0.08) (0.11)
From realized gains (0.80) -- -- -- -- (0.80)
-------- --------- ------- ------- ------- -------
Total dividends and distributions (0.95) (0.02) (0.13) (0.10) (0.08) (0.91)
-------- --------- ------- ------- ------- -------
Net Asset Value, End of Period $ 18.17 $ 17.42 $ 16.79 $ 15.39 $ 12.74 $ 13.08
======== ========= ======= ======= ======= =======
Total Return on Net Asset Value(2) 10.16% 3.88%(8) 9.95% 21.60% (1.98)% (12.75)%
SUPPLEMENTAL DATA AND RATIOS(6):
Net assets, end of period (000's) $ 94,653 $ 81,447 $81,510 $68,068 $55,564 $85,673
Ratio of net operating expenses
to average net assets:(3)(4)
Before waivers 1.09% 1.08%(9) 1.07% 1.02% 1.18% 0.84%
After waivers 1.01% 1.13%(9) 1.05% 1.02% 1.18% 0.84%
Program service fee(4) N/A N/A N/A N/A N/A 0.25%
Ratio of net investment income
to average net assets(3) 0.87% 0.46%(9) 0.78% 0.67% 0.61% 0.66%
Portfolio turnover rate(7) 99.16% 20.08%(8) 128.37% 97.51% N/A 29.13%(5)
* The Fund's fiscal and tax year-end changed from June 30 to September 30.
+ On October 3, 2005, the Diversified Equity Fund was reorganized into the
AHA Diversified Equity Fund, a newly established identical series of the
CNI Charter Funds. See Note 1 in Notes to Financial Statements for
additional information.
(1) Information presented relates to a share of capital stock outstanding for
the entire period.
(2) Total Return on Net Asset Value is net of the service fee for the period
from July 1, 2001 through October 31, 2001, and for the fiscal year ended
2001. Beginning November 1, 2001 the management fee is included in the
calculation of the Fund's net asset value.
(3) Ratios include all management fees and expenses except for the program
service fee.
(4) Program service fee discontinued as of October 31, 2001. Effective
November 1, 2001, the Advisor expense ratio is included as a general
operating expense of the Fund.
(5) Rate listed represents the portfolio turnover rate from July 1, 2001
through October 31, 2001 (date on which Feeder Fund entered into a
master-feeder fund structure).
(6) For the period from November 1, 2001 through June 30, 2003, the per share
amounts and percentages reflect income and expenses assuming inclusion of
the Fund's proportionate share of the income and expenses of its Master
Portfolio.
(7) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued. For periods less than 1 year,
portfolio turnover rate has not been annualized.
(8) Not annualized.
(9) Annualized.
See Notes to the Financial Statements.
45
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
AHA DIVERSIFIED EQUITY FUND - CLASS A SHARES
FOR THE YEARS ENDED JUNE 30,
FOR THE PERIOD ---------------------------
FOR THE JULY 1, 2005 FOR THE PERIOD
YEAR ENDED THROUGH DECEMBER 30,
SEPTEMBER 30, SEPTEMBER 30, 2002* THROUGH
2006+ 2005** 2005 2004 JUNE 30, 2003
------------- -------------- -------- -------- --------------
PER SHARE DATA(1)(4):
Net Asset Value,
Beginning of Period $ 17.46 $ 16.83 $ 15.43 $ 12.75 $ 11.48
-------- --------- -------- -------- --------
Income from Investment
Operations:
Net investment income 0.11 0.01 0.09 0.06 0.03
Net realized and unrealized
gain on investments 1.55 0.63 1.40 2.65 1.26
-------- --------- -------- -------- --------
Total gain from
investment operations 1.66 0.64 1.49 2.71 1.29
-------- --------- -------- -------- --------
Less Dividends:
From net investment income (0.11) (0.01) (0.09) (0.03) (0.02)
From realized gains (0.80) -- -- -- --
-------- --------- -------- -------- --------
Total dividends and
distributions (0.91) (0.01) (0.09) (0.03) (0.02)
-------- --------- -------- -------- --------
Net Asset Value, End of Period $ 18.21 $ 17.46 $ 16.83 $ 15.43 $ 12.75
======== ========= ======== ======== ========
Total Return on Net Asset Value 9.87% 3.81%(2) 9.66% 21.24% 11.26%(2)
SUPPLEMENTAL DATA AND RATIOS(4):
Net assets, end of period (000's) $ 11,122 $ 9,451 $ 8,842 $ 7,392 $ 6,454
Ratio of net operating expenses
to average net assets:
Before waivers 1.34% 1.34%(3) 1.32% 1.27% 1.45%(3)
After waivers 1.26% 1.38%(3) 1.30% 1.27% 1.45%(3)
Ratio of net investment income
to average net assets 0.62% 0.20%(3) 0.53% 0.42% 0.48%(3)
Portfolio turnover rate(5) 99.16% 20.08%(2) 128.37% 97.51% N/A
* Commencement of operations.
** The Fund's fiscal and tax year-end changed from June 30 to September 30.
+ On October 3, 2005, the Diversified Equity Fund was reorganized into the
AHA Diversified Equity Fund, a newly established identical series of the
CNI Charter Funds. See Note 1 in Notes to Financial Statements for
additional information.
(1) Information presented relates to a share of capital stock outstanding for
the entire period.
(2) Not annualized.
(3) Annualized.
(4) For the period from December 30, 2002 through June 30, 2003, the per share
amounts and percentages reflect income and expenses assuming inclusion of
the Fund's proportionate share of the income and expenses of its Master
Portfolio.
(5) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued. For periods less than 1 year,
portfolio turnover rate has not been annualized.
See Notes to the Financial Statements.
46
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
AHA SOCIALLY RESPONSIBLE EQUITY FUND -- CLASS I SHARES
FOR THE PERIOD FOR THE PERIOD
FOR THE JULY 1, 2005 JANUARY 3, 2005*
YEAR ENDED THROUGH THROUGH
SEPTEMBER 30, 2006+ SEPTEMBER 30, 2005** JUNE 30, 2005
------------------- -------------------- ----------------
PER SHARE DATA(1):
Net Asset Value,
Beginning of Period $ 10.28 $ 9.70 $ 10.00
--------- -------- --------
Income from Investment Operations:
Net investment income 0.12 0.02 0.05
Net realized and unrealized
gain (loss) on investments 0.67 0.58 (0.30)
--------- -------- --------
Total gain (loss) from
investment operations 0.79 0.60 (0.25)
--------- -------- --------
Less Dividends:
From net investment income (0.11) (0.02) (0.05)
From realized gains (0.05) -- --
--------- -------- --------
Total dividends and
distributions (0.16) (0.02) (0.05)
--------- -------- --------
Net Asset Value, End of Period $ 10.91 $ 10.28 $ 9.70
========= ======== ========
Total Return on Net Asset Value 7.69% 6.20%(2) (2.48)%(2)
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000's) $ 45,003 $ 21,795 $ 20,510
Ratio of net operating expenses
to average net assets:
Before waivers 1.12% 1.24%(3) 1.16%(3)
After waivers and recovered fees*** 1.04% 1.15%(3) 1.12%(3)
Ratio of net investment income
to average net assets 1.10% 0.90%(3) 1.43%(3)
Portfolio turnover rate(4) 28.57% 6.89%(2) 47.56%
* Commencement of operations.
** The Fund's fiscal and tax year-end changed from June 30 to September 30.
*** Ratio includes waivers and previously waived investment advisory fees
recovered. The impact of the recovered fees may cause a higher net expense
ratio.
+ On October 3, 2005, the Socially Responsible Equity Fund was reorganized
into the AHA Socially Responsible Equity Fund, a newly established
identical series of the CNI Charter Funds. See Note 1 in Notes to
Financial Statements for additional information.
(1) Information presented relates to a share of capital stock outstanding for
the entire period.
(2) Not annualized.
(3) Annualized.
(4) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued. For periods less than 1 year,
portfolio turnover rate has not been annualized.
See Notes to the Financial Statements.
47
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
AHA SOCIALLY RESPONSIBLE EQUITY FUND -- CLASS A SHARES
FOR THE PERIOD
FOR THE AUGUST, 12, 2005*
YEAR ENDED THROUGH
SEPTEMBER 30, 2006+ SEPTEMBER 30, 2005
------------------- ------------------
PER SHARE DATA(1):
Net Asset Value,
Beginning of Period $ 10.28 $ 10.17
-------- -------
Income from Investment Operations:
Net investment income 0.09 0.01
Net realized and unrealized
gain on investments 0.67 0.12
-------- -------
Total gain from
investment operations 0.76 0.13
-------- -------
Less Dividends:
From net investment income (0.09) (0.02)
From realized gains (0.05) --
-------- -------
Total dividends and
distributions (0.14) (0.02)
-------- -------
Net Asset Value, End of Period $ 10.90 $ 10.28
======== =======
Total Return on Net Asset Value 7.40% 1.27%(2)
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000's) $ 281 $ 15
Ratio of net operating expenses
to average net assets:
Before waivers 1.37% 1.69%(3)
After waivers and recovered fees** 1.29% 1.43%(3)
Ratio of net investment income
to average net assets 0.80% 0.74%(3)
Portfolio turnover rate(4) 28.57% 6.89%(2)
* Commencement of operations.
** Ratio includes waivers and previously waived investment advisory fees
recovered. The impact of the recovered fees may cause a higher net expense
ratio.
+ On October 3, 2005, the Socially Responsible Equity Fund was reorganized
into the AHA Socially Responsible Equity Fund, a newly established
identical series of the CNI Charter Funds. See Note 1 in Notes to
Financial Statements for additional information.
(1) Information presented relates to a share of capital stock outstanding for
the entire period.
(2) Not annualized.
(3) Annualized.
(4) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued. For periods less than 1 year,
portfolio turnover rate has not been annualized.
See Notes to the Financial Statements.
48
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
September 30, 2006
1. ORGANIZATION
The AHA Investment Funds (the "AHA Funds") are a series of CNI Charter Funds
(the "Trust"), which is registered as an open-end management investment company
under the Investment Company Act of 1940. The Trust was organized as a business
trust under the laws of Delaware on October 28, 1996. Each of the AHA Funds
commenced operations on October 3, 2005, the effective date of the
reorganization of each corresponding series (each a "Predecessor Fund" and
collectively the "Predecessor Funds") of AHA Investment Funds, Inc. (the "AHA
Company"), a registered investment company organized on March 14, 1988 under the
laws of Maryland. On May 17, 2005, the Board of Directors of the AHA Company
approved the reorganization of the Predecessor Funds into the newly established
corresponding AHA Fund series of the Trust.
The AHA Funds currently offer the following series of shares: the AHA Limited
Maturity Fixed Income Fund ("Limited Maturity Fund"), the AHA Full Maturity
Fixed Income Fund ("Full Maturity Fund"), the AHA Balanced Fund ("Balanced
Fund"), the AHA Diversified Equity Fund (the "Diversified Fund"), the AHA
Socially Responsible Equity Fund (the "Socially Responsible Fund"), the AHA
International Core Equity Fund ("International Fund") and the AHA U.S.
Government Money Market Fund ("Money Market Fund") (each a "Fund" and,
collectively, the "Funds"). As of September 30, 2006, the International Fund and
the Money Market Fund had not commenced operations. The shares of common stock
of the Funds are divided into two classes: Class A Shares and Institutional
Class Shares. As of September 30, 2006, only the Institutional Class Shares of
the currently operating Funds and the Class A Shares of the Limited Maturity
Fund, the Full Maturity Fund, the Diversified Fund, and the Socially Responsible
Fund had commenced operations. To request a prospectus, shareholders can call
1-800-445-1341 or write to: CNI Charter Funds, c/o SEI Investments Distribution
Co., One Freedom Valley Drive, Oaks, Pennsylvania, 19456.
Expenses related to the reorganization and reimbursements to the Adviser for
reorganization related expenses were incurred and paid by the Funds. These
amounts are subject to recapture within the next three fiscal years.
The investment objectives of the Funds are set forth below.
LIMITED MATURITY FUND
Seeks a high level of current income, consistent with preservation of capital
and liquidity. Invests primarily in high quality fixed income securities, issued
or guaranteed by the government, and maintains an average dollar-weighted
portfolio maturity of less than three years.
FULL MATURITY FUND
Seeks the highest level of income consistent with long-term preservation of
capital. Invests primarily in high quality fixed income securities issued or
guaranteed by the U.S. government, its agent or instrumentalities. There is no
restriction on the minimum or maximum maturity of the securities purchased. The
average dollar-weighted maturity will vary and may exceed 20 years.
BALANCED FUND
Seeks a combination of growth of capital and income. Invests varying proportions
of its assets in equity and fixed income securities, with not less than 25
percent of total assets invested in fixed income securities.
DIVERSIFIED FUND
Seeks long-term capital growth. Invests primarily in equity securities of U.S.
companies that are diversified among various industries and market sectors and
securities having equity characteristics.
SOCIALLY RESPONSIBLE FUND
Seeks long-term capital growth. Invests primarily in equity securities whose
issuers meet certain socially responsible criteria.
2. SIGNIFICANT ACCOUNTING POLICIES
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 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.
49
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2006
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
Trustees. 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; for international securities, market events
occur after the close of the foreign markets that make closing prices not
representative of fair values; 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 method.
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 TBA securities on the
trade date and maintain security positions such that sufficient liquid assets
will be available to make payments for the securities purchased.
EXPENSE ALLOCATION
Common expenses incurred by the Funds are allocated among the Funds (i) based
upon relative average daily net assets, (ii) as incurred on a specific
identification basis, or (iii) equally among the Funds, depending on the nature
of the expenditure.
CLASSES
Class-specific expenses are borne by the 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.
FUND DISTRIBUTIONS
The Limited Maturity Fund and the Full Maturity Fund declare and pay income
dividends from net investment income monthly.
In the Balanced Fund, the Diversified Fund and the Socially Responsible Fund,
dividends from net investment income are declared and paid quarterly.
Distributions from net realized capital gains are distributed to shareholders at
least annually.
50
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2006
3. INVESTMENT ADVISOR AND SUB-ADVISER AGREEMENTS
The Funds have an Investment Management Agreement dated October 1, 2005 (the
"Agreement") with CCM Advisors, LLC (the "Adviser"), an affiliate of City
National Asset Management, Inc. ("CNAM, Inc."), with whom certain officers and
trustees of the Funds are affiliated, to furnish investment advisory services to
the Funds. Under the terms of the Agreement, the Funds compensate the Adviser
for its management services at the annual rate of 0.50% of each Fund's average
daily net assets for the Limited Maturity Fund and the Full Maturity Fund, and
an annual rate of 0.75% of each Fund's average daily net assets for the Balanced
Fund, Diversified Fund and the Socially Responsible Fund. Effective October 3,
2005, the Advisor lowered the expense cap on the Class I and A shares of the
Limited Maturity Fund, Full Maturity Fund, Diversified Fund and the Socially
Responsible Fund to 0.75%, 1.00%, 0.80%, 1.05%, 1.01%, 1.26%, 1.04% and 1.29%
from 1.00%, 1.25%, 1.00%, 1.25%, 1.25%, 1.50%, 1.25% and 1.50% respectively.
Through September 30, 2006, the Adviser had contractually agreed to pay all
operating expenses in excess of the annual rates presented below as applied to
each Fund's average daily net assets.
Expense Cap (as a % of average daily net assets)
Fund Class I Class A
---- ------- -------
Limited Maturity Fund 0.75% 1.00%
Full Maturity Fund 0.80% 1.05%
Balanced Fund 1.00% N/A
Diversified Fund 1.01% 1.26%
Socially Responsible Fund 1.04% 1.29%
Effective November 1, 2006, the Adviser has contractually agreed to pay all
operating expenses in excess of the annual rates presented below as applied to
each Fund's average daily net assets.
Expense Cap (as a % of average daily net assets)
Fund Class I Class A
---- ------- -------
Limited Maturity Fund 1.00% 1.25%
Full Maturity Fund 1.00% 1.25%
Balanced Fund 1.00% N/A
Diversified Fund 1.25% 1.50%
Socially Responsible Fund 1.25% 1.50%
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, 2006, the Board of Trustees approved the
reimbursement of previously waived fees by the Adviser for the prior fiscal year
in the amount of $2,139 and $1,547 for the Full Maturity Fund and the Socially
Responsible Fund, respectively.
51
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2006
As of September 30, 2006, fees which were previously waived by the Adviser which
may be subject to possible future reimbursement to the Adviser were as follows:
Fund Potential Amount of Recovery (000) Expiration
---- ---------------------------------- ----------
Limited Maturity Fund $ 15 2008
$136 2009
Full Maturity Fund $ 4 2007
$ 3 2008
$ 17 2009
Balanced Fund $ 34 2008
$ 18 2009
Diversified Fund $ 1 2008
$ 70 2009
Socially Responsible Fund $ 7 2008
$ 17 2009
Prior to November 1, 2001, the Adviser was compensated for its services directly
by the shareholders and not by the Funds pursuant to the Program Services
Agreement it had with each shareholder, under which the Adviser provided asset
allocation consulting and certain other services. The fees of the investment
managers were paid by the Adviser. The Program Service Fee was equal to 0.50% of
average daily net assets for the Full Maturity Fund and Limited Maturity Fund,
and 0.75% of average daily net assets for the Balanced Fund and Diversified
Fund. This service fee was reflected in the total return as disclosed in the
financial highlights tables.
The Patterson Capital Corporation and CNAM Inc. act as the sub-advisers on
behalf of the AHA Limited Maturity Fund and are paid by the Adviser.
Robert W. Baird & Co., Incorporated and Boyd Watterson Asset Management, LLC act
as sub-advisers on behalf of the AHA Full Maturity Fund and are paid by the
Adviser. Prior to October 3, 2005, Western Asset Management Company also acted
as the sub-adviser on behalf of the Full Maturity Fund and was paid by the
Adviser.
Robert W. Baird & Co., Incorporated, Cambiar Investors, LLC and Freeman
Associates Investment Management LLC act as sub-advisers on behalf of the
Balanced Fund and are paid by the Adviser.
Cambiar Investors, LLC and Freeman Associates Investment Management LLC act as
sub-advisers on behalf of the AHA Diversified Equity Fund and are paid by the
Adviser. Effective October 1, 2006, Cambiar was replaced with AMBS Investment
Counsel, LLC and SKBA Capital Management, LLC as sub-advisers for portions of
the AHA Diversified Equity Fund and are paid by the Adviser.
SKBA Capital Management, LLC acts as the sub-adviser on behalf of the AHA
Socially Responsible Fund and is paid by the Adviser.
4. ADMINISTRATION, TRANSFER AGENT AND DISTRIBUTION AGREEMENTS
Pursuant to an administration agreement (the "Agreement"), SEI Investments
Global Funds Services (the "Administrator"), a wholly owned subsidiary of SEI
Investments Company, acts as the AHA Funds Administrator. Effective with the
reorganization into the CNI Charter Funds on October 3, 2005, 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. Prior to October 3, 2005, under the terms of the Agreement dated
April 8, 2005, the Administrator was entitled to receive an annual fee equal to
the greater of $250,000 or 0.10% of aggregate average daily net assets of the
AHA Funds.
The AHA Funds have adopted a Rule 12b-1 Distribution Plan ("the Plan") with
respect to Class A 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 0.25% of the average
daily net assets of the Class A Shares of each Fund.
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.
Forum Shareholder Services, LLC (a division of Citigroup, LLC) serves as
sub-transfer Agent for the AHA Funds whereby they provide services at an annual
rate of $14,000 per share class.
52
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2006
U.S. Bank, N.A. serves as Custodian for the Trust. The Custodian plays no role
in determining the investment policies of the AHA Funds or which securities are
to be purchased or sold by the AHA Funds.
Certain officers of the CNI Charter Funds Trust (the "Trust") are also officers
of the Advisor and/or the Administrator. Such officers are paid no fees by the
Trust or the AHA Funds for serving as officers of the Funds.
5. FEDERAL INCOME TAXES
It is the Funds' policy to continue to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code and the Funds intend to
distribute investment company net taxable income and net capital gains to
shareholders. Therefore, no Federal income tax provision is 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. 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 paid-in-capital, undistributed net
investment income (loss), or accumulated net realized gain (loss), as
appropriate, in the period that the differences arise. Accordingly, the
following permanent differences, primarily attributable to paydown reclasses for
tax purposes and REIT adjustments for tax purposes, have been reclassified
to/from the following accounts as of September 30, 2006:
Increase Decrease
Undistributed Accumulated
Net Investment Net Realized
Income/(Loss) Gain/(Loss)
(000) (000)
-------------- ------------
Limited Maturity Fund $32 $(32)
Full Maturity Fund 14 (14)
Balanced Fund 10 (10)
Diversified Fund 1 (1)
Socially Responsible Fund 2 (2)
These reclassifications had no impact on net assets or net asset value per
share.
The tax character of dividends and distributions declared during the periods
ended September 30, 2006, September 30, 2005 and June 30, 2005 are shown below
(000's):
Ordinary Income Long-Term Capital Gain Total
----------------------------- -------------------------- ----------------------------
September September June September September June September September June
2006 2005 2005 2006 2005 2005 2006 2005 2005
--------- --------- ------- --------- --------- ---- --------- --------- ------
Limited Maturity Fund $2,460 $704 $2,965* $ -- $-- $168 $2,460 $704 $3,133
Full Maturity Fund 1,394 277 1,141 85 -- 239 1,479 277 1,380
Balanced Fund 635 75 301 787 -- -- 1,422 75 301
Diversified Fund 1,057 103 652 4,157 -- -- 5,214 103 652
Socially Responsible Fund 370 45 109 -- -- -- 370 45 109
*Includes tax return of capital of less than $1 (000's).
53
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2006
As of September 30, 2006, the components of Distributable Earnings/(Accumulated
Losses) on a tax basis were as follows (000's):
Total
Net Distributable
Undistributed Undistributed Capital Post Unrealized Other Earnings
Ordinary Long-Term loss October Appreciation Temporary (Accumulated
Income Capital Gain Carryforwards Losses (Depreciation) Differences Losses)
------------- ------------- ------------- ------- -------------- ----------- -------------
Limited Maturity
Fund $ 155 $ -- $(1,047) $(1,403) $ (162) $(148) $(2,605)
Full Maturity
Fund 108 -- (109) (283) 32 (106) (358)
Balanced Fund 228 921 -- -- 1,399 -- 2,548
Diversified Fund 1,771 5,872 -- -- 11,256 -- 18,899
Socially Responsible
Fund 13 597 -- -- 2,256 -- 2,866
Post-October losses represent losses realized on investments and foreign
currency transactions from November 1, 2005 through September 30, 2006 that, in
accordance with Federal income tax regulations, the Funds have elected to defer
and treat as having arisen in the following fiscal year.
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,
2006, the breakdown of capital loss carryforwards was as follows (000's):
Expiring
2012 2013 2014 Total
------ ------ ------ ------
Limited Maturity Fund $76 $838 $133 $1,047
Full Maturity Fund -- 64 45 109
The Federal tax cost, the aggregate gross unrealized appreciation on securities,
the aggregate gross unrealized depreciation on securities and the net unrealized
appreciation/(depreciation) for tax purposes at Sepember 30, 2006 for each of
the Funds were as follows (000's):
Aggregate Aggregate
Gross Gross Net Unrealized
Federal Unrealized Unrealized Appreciation
Tax Cost Appreciation Depreciation (Depreciation)
-------- ------------ ------------ --------------
Limited Maturity Fund $46,560 $ 80 $ (243) $ (162)
Full Maturity Fund 30,661 326 (294) 32
Balanced Fund 16,711 1,601 (202) 1,399
Diversified Fund 96,927 12,910 (1,654) 11,256
Socially Responsible Fund 43,389 3,189 933 2,256
54
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2006
6. CAPITAL SHARE TRANSACTIONS (000'S):
The Funds have 700,000,000 shares of beneficial interest, with $.01 par value,
authorized. The share transactions for the year ended September 30, 2006, the
three month period ended September 30, 2005 and the year or period ended June
30, 2005 are as follows:
LIMITED MATURITY FUND FULL MATURITY FUND BALANCED FUND
-------------------------------- -------------------------------- --------------------------------
09/30/06 09/30/05 06/30/05 09/30/06 09/30/05 06/30/05 09/30/06 09/30/05 06/30/05
-------- -------- -------- -------- -------- -------- -------- -------- --------
Class I
Shares sold 63 40 1,243 503 12 476 -- -- --
Shares issued in
reinvestment
of dividends 121 36 176 50 11 63 6 -- 1
Shares redeemed (6,520) (1,554) (4,286) (628) -- (282) (61) -- (5)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total Net change (6,336) (1,478) (2,867) (75) 23 257 (55) -- (4)
======== ======== ======== ======== ======== ======== ======== ======== ========
Class A
Shares sold 16 -- 100 1 -- 3
Shares issued in
reinvestment
of dividends 1 -- 1 1 -- --
Shares redeemed (61) (23) -- (1) -- --
-------- -------- -------- -------- -------- --------
Total Net change (44) (23) 101 1 -- 3
======== ======== ======== ======== ======== ========
SOCIALLY
DIVERSIFIED FUND RESPONSIBLE FUND
-------------------------------- --------------------------------
09/30/06 09/30/05 06/30/05 09/30/06 09/30/05 06/30/05*
-------- -------- -------- -------- -------- --------
Class I
Shares sold 1,789 57 538 2,133 46 2,159
Shares issued in
reinvestment
of dividends 192 5 31 35 5 11
Shares redeemed (1,447) (241) (138) (163) (45) (56)
-------- -------- -------- -------- -------- --------
Total Net change 534 (179) 431 2,005 6 2,114
======== ======== ======== ======== ======== ========
Class A**
Shares sold 102 23 71 25 2 --
Shares issued in
reinvestment
of dividends 27 -- 2 -- -- --
Shares redeemed (59) (7) (27) -- -- --
-------- -------- -------- -------- -------- --------
Total Net change 70 16 46 25 2 --
======== ======== ======== ======== ======== ========
*Fund commenced operations on January 3, 2005.
**Class A shares for the Socially Responsible Fund were offered starting
August 12, 2005.
55
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 2006
7. SECURITIES TRANSACTIONS
Purchases and sales and maturities of investment securities, other than
short-term investments, for the year ended September 30, 2006 were as follows:
Purchases (000's) Sales and Maturities (000's)
-------------------------- ----------------------------
U.S. Government Other U.S. Government Other
--------------- -------- --------------- -------
Limited Maturity Fund $42,092 $ 19,962 $45,094 $81,626
Full Maturity Fund 19,600 9,110 18,552 7,252
Balanced Fund 2,355 10,363 2,815 11,356
Diversified Fund -- 101,495 -- 98,048
Socially Responsible Fund -- 27,595 -- 7,093
8. SECURITIES LENDING
The Custodian serves as the AHA Funds' securities lending agent. Certain Funds
lend their securities to approved brokers to earn additional income and receive
cash and/or securities as collateral to secure the loans. Income the Funds
earned on securities purchased with cash collateral is reflected on the
statements of operations. Collateral was maintained at not less than 102% of the
value of loaned securities. If cash collateral is received, a related liability
is shown on the statement of net assets. Although the risk of lending is
mitigated by the collateral, a Fund could experience a delay in recovering its
securities and a possible loss of income or value if the borrower fails to
return them. There was no loss of income or value reported for the securities on
loan for the year ended September 30, 2006.
9. INVESTMENT RISKS
In the normal course of business, the AHA Funds enter into contracts that
provide general indemnifications by the Fund to the counterparty to the
contract. 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.
10. NEW ACCOUNTING PRONOUNCEMENTS
On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB
Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN 48). FIN
48 provides guidance for how uncertain tax positions should be recognized,
measured, presented and disclosed in the financial statements. FIN 48 requires
the evaluation of tax positions taken or expected to be taken in the course of
preparing the fund's tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority. Tax
positions not deemed to meet the more-likely-than-not threshold would be
recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is
required for fiscal years beginning after December 15, 2006 and is to be applied
to all open tax years as of the effective date. As of September 30, 2006, the
Funds have not completed their evaluation of the impact, if any, that will
result from the adoption of FIN 48.
In September 2006, the Financial Accounting Standards Board (FASB) issued
STATEMENT ON FINANCIAL ACCOUNTING STANDARDS (SFAS) NO. 157, "FAIR VALUE
MEASUREMENTS." This standard establishes a single authoritative definition of
fair value, sets out a framework for measuring fair value and requires
additional disclosures about fair value measurements. SFAS No. 157 applies to
fair value measurements already required or permitted by existing standards.
SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal years.
The changes to current generally accepted accounting principles from the
application of this Statement relate to the definition of fair value, the
methods used to measure fair value, and the expanded disclosures about fair
value measurements. As of September 30, 2006, the Funds do not believe the
adoption of SFAS No. 157 will impact the amounts reported in the financial
statements, however, additional disclosures may be required about the inputs
used to develop the measurements and the effect of certain of the measurements
reported on the statement of changes in net assets for a fiscal period.
56
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
September 30, 2006
To the Shareholders and Board of Trustees of
CNI Charter Funds:
We have audited the accompanying statements of assets and liabilities of the AHA
Investment Funds, a series of CNI Charter Funds, comprised 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
(collectively, "the Funds"), including the schedules of investments, as of
September 30, 2006, and the related statements of operations for the year then
ended, and the changes in net assets and the financial highlights for the year
ended September 30, 2006 and the period from July 1, 2005 to September 30, 2005.
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. The
changes in net assets and financial highlights for the periods presented prior
to July 1, 2005, were audited by other auditors, whose report dated August 15,
2005, expressed an unqualified opinion thereon.
We conducted our audits in accordance with the standards of 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, 2006, 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, 2006, the results of their operations for the year
then ended, and the changes in their net assets and financial highlights for the
year then ended and the period from July 1, 2005 to September 30, 2005, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ KPMG LLP
November 22, 2006
57
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION (UNAUDITED)
TRUSTEES AND OFFICERS
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."
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 AGE 1 TRUST SERVED 2 DURING PAST FIVE YEARS BOARD MEMBER 3 TRUSTEE 4
- ------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT BOARD MEMBERS
Irwin G. Barnet Trustee Since 1999 Attorney and partner at Reed Smith LLP, 16 None
Age: 68 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: 68 Campeas, Thompson, Snyder and Pariser, LLP,
an accounting firm.
- ------------------------------------------------------------------------------------------------------------------------------------
William R. Sweet Trustee Since 1999 Retired. 16 None
Age: 69
- ------------------------------------------------------------------------------------------------------------------------------------
James R. Wolford Trustee Since 1999 Chief Financial Officer, Bixby Land Company, 16 None
Age: 52 a real estate company (September, 2004-Present);
Regional Financial Officer, AIMCO, a real
estate investment trust (January, 2004-
September, 2004); Chief Financial Officer,
DBM Group, a direct mail marketing company
(August, 2001-January, 2004); 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 (1985-January, 2000).
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS
Vernon C. Kozlen President Since 2000 Executive Vice President and Director of N/A N/A
City National Bank and Chief Asset Management Development, City
400 N. Roxbury Dr. Executive National Bank (1996-present); Director,
Beverly Hills, CA Officer Reed, Conner & Birdwell, L.L.C. (2000-
90210 present) and Convergent Capital Management,
Age: 63 LLC (2003-present). Formerly, Chairman of
the Board, City National Asset Management,
Inc. ("CNAM, Inc.") (2001-September 2005)
and City National Securities, Inc. ("CNS")
(1999-September 2005); and Director, CNAM, Inc.
(2001-April 2006) and CNS (1999-April 2006).
- ------------------------------------------------------------------------------------------------------------------------------------
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: 41
- ------------------------------------------------------------------------------------------------------------------------------------
58
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION (UNAUDITED) (CONTINUED)
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 AGE 1 TRUST SERVED 2 DURING PAST FIVE YEARS BOARD MEMBER 3 TRUSTEE 4
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS (CONTINUED)
Richard A. Weiss Vice President Since 2000 President, CNAM, Inc. (2001-Present); N/A N/A
City National Bank and Executive Vice President and Chief
400 N. Roxbury Dr., Assistant Investment Officer, CNB (1999-
Beverly Hills, CA Secretary Present); Director, City National
90210 Securities (April 2003-present).
Age: 46 Formerly, Executive Vice President
and Chief Investment Officer, Sanwa
Bank California (1994-1999).
- ------------------------------------------------------------------------------------------------------------------------------------
Valerie Y. Lewis Vice President Since 2005 Chief Compliance Officer, CNAM, N/A N/A
City National Bank and Chief Inc. (August, 2005- Present). Formerly,
400 N. Roxbury Dr. Compliance Fund Boards Specialist - Assistant
Beverly Hills, Officer Secretary, Capital Research and
CA 90210 Management Company and Capital
Age: 50 International, Inc. (1999-2005).
- ------------------------------------------------------------------------------------------------------------------------------------
Eric Kleinschmidt Controller and Since 2005 SEI Investments, Director of Fund N/A N/A
SEI Investments Chief Accounting, (2004-Present).
One Freedom Operating Formerly, Manager of Fund
Valley Drive Officer Accounting (1999-2004).
Oaks, PA 19456
Age: 38
- ------------------------------------------------------------------------------------------------------------------------------------
Timothy Solberg Vice President Since 2005 Managing Director and Chief N/A N/A
109 S. Lasalle Street and Assistant Investment Officer, CCMA (2001-
Suite 2800 Secretary Present). Formerly, Director of
Chicago, IL 60603 Marketing and Client Services,
Age: 53 Hewitt Investment Group, a Division
of Hewitt Associates LLC (1989-2001).
- ------------------------------------------------------------------------------------------------------------------------------------
Timothy D. Barto Vice President Since 2000 Attorney, Vice President and Assistant N/A N/A
One Freedom and Assistant Secretary of SEI Investments (1999-
Valley Drive Secretary Present); Vice President and Assistant
Oaks, PA 19456 Secretary of Administrator (1999-
Age: 38 Present); Officer of various investment
companies administered by Administrator
(1999-Present). Formerly, Assistant
Secretary of the Distributor (2003-2004).
Formerly, Vice President 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 is 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, 2006, 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.
59
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION (UNAUDITED) (CONTINUED)
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 AGE 1 TRUST SERVED 2 DURING PAST FIVE YEARS BOARD MEMBER 3 TRUSTEE 4
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS (CONCLUDED)
Phillip T. Masterson Vice President Since 2005 Attorney, employed by SEI Investments N/A N/A
SEI Investments and Assistant (August 2004-Present). Formerly, General
One Freedom Secretary Counsel, Citco Mutual Fund Services
Valley Drive (2003-2004); and Vice President and
Oaks, PA 19456 Associate Counsel, Oppenheimer Funds
Age: 42 (1998-2003).
- ------------------------------------------------------------------------------------------------------------------------------------
James Ndiaye Vice President Since 2005 Attorney, Employed by SEI Investments N/A N/A
SEI Investments and Assistant Company (2004- Present); Vice President,
One Freedom Secretary Deutsche Asset Management (2003-2004);
Valley Drive Associate, Morgan Lewis & Bockius LLP
Oaks, PA 19456 (2000-2003); and Assistant Vice President,
Age: 38 ING Variable Annuities Group (1999-2000).
- ------------------------------------------------------------------------------------------------------------------------------------
Sofia A. Rosala Vice President Since 2005 Vice President and Assistant Secretary N/A N/A
SEI Investments and Assistant of SEI Investments Fund Management
One Freedom Secretary (2005-present). Formerly, Compliance
Valley Drive Officer of SEI Investments (2001-2004)
Oaks, PA 19456 and Account and Product Consultant, SEI
Age: 32 Private Trust Company (1998-2001).
- ------------------------------------------------------------------------------------------------------------------------------------
Michael T. Pang Vice President Since 2005 Attorney, Employed by SEI Investments N/A N/A
SEI Investments and Assistant Company (January 2005). Formerly, Counsel,
One Freedom Secretary Caledonian Bank & Trust's Mutual Funds
Valley Drive Group (2004-2005); Counsel, Permal
Oaks, PA 19456 Asset Management (2001-2004); Associate,
Age: 34 Schulte, Roth & Zabel's Investment
Management Group (2000-2001); and
Attorney, U.S. SEC's Division of
Enforcement, Northeast Regional Office
(1997-2000).
- ------------------------------------------------------------------------------------------------------------------------------------
60
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
SHAREHOLDER VOTING RESULTS (UNAUDITED)
At a special meeting held on September 25, 2006 the shareholders of the AHA
Diversified Equity Fund voted to approve the investment sub-advisory agreement
between CCM Advisors, LLC and SKBA Capital Management, LLC and to approve the
investment sub-advisory agreement between CCM Advisors, LLC and AMBS Investment
Counsel, LLC each with respect to a portion of the Fund. The results of the vote
were as follows:
The approval of the sub-advisory agreement between CCM Advisors, LLC and SKBA
Capital Management, LLC:
% OF % OF
OUTSTANDING SHARES
NUMBER OF SHARES SHARES VOTES
- --------------------------------------------------------------------------------
AFFIRMATIVE 4,441,153.30 72.169% 100.000%
AGAINST 0.00 0.000 0.000
ABSTAIN 0.00 0.000 0.000
TOTAL 4,441,153.30 72.169% 100.000%
The approval of the sub-advisory agreement between CCM Advisors, LLC and AMBS
Investment Counsel, LLC:
% OF % OF
OUTSTANDING SHARES
NUMBER OF SHARES SHARES VOTES
- --------------------------------------------------------------------------------
AFFIRMATIVE 4,438,742.31 72.130% 99.946%
AGAINST 2,410.99 0.039 0.054
ABSTAIN 0.00 0.000 0.000
TOTAL 4,441,153.30 72.169% 100.000%
61
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
NOTICE TO SHAREHOLDERS (UNAUDITED)
September 30, 2006
For shareholders that do not have a September 30, 2006 taxable year end, this
notice is for informational purposes only. For shareholders with a September 30,
2006 taxable year end, please consult your tax advisor as to the pertinence of
this notice.
For Federal income tax purposes, for the fiscal year ended September 30, 2006
each Fund is designating the following items with regard to distributions paid
during the year:
(C)** (D)***
Dividends Qualifying (G)******
(A)* (B)* Qualifying Dividend (E)**** (F)***** Qualifying
Long Term Ordinary For Corporate Income U.S. Qualifying Short-Term
Capital Gain Income Total Dividends Rec. (15% Rate Government Interest Capital
Distributions Distributions Distributions Deduction for QDI) Interest Income Gain
- ------------------------------------------------------------------------------------------------------------------------------------
Limited Maturity
Fixed Income
Fund 0% 100% 100% 0% 0% 17% 91% 0%
Full Maturity
Fixed Income
Fund 6% 94% 100% 0% 0% 21% 93% 0%
Balanced Fund 55% 45% 100% 30% 46% 6% 66% 1%
Diversified Equity
Fund 80% 20% 100% 56% 58% 0% 0% 100%
Socially Responsible
Equity Fund 0% 100% 100% 94% 92% 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.
**** ITEM (E) 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. GENERALLY, INTEREST FROM DIRECT U.S. GOVERNMENT
OBLIGATIONS IS EXEMPT FROM STATE INCOME TAX. FOR SHAREHOLDERS OF THE
FUND 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 TAX.
***** ITEM (F) REPRESENTS THE AMOUNT OF "QUALIFYING INTEREST INCOME" AS
CREATED BY THE AMERICAN JOBS CREATION ACT OF 2004 AND IS REFLECTED AS A
PERCENTAGE OF NET INVESTMENT INCOME DISTRIBUTIONS THAT IS EXEMPT FROM
U.S. WITHHOLDING TAX WHEN PAID TO FOREIGN INVESTORS.
****** THE PERCENTAGE IN ITEM (G) REPRESENTS THE AMOUNT OF "QUALIFYING
SHORT-TERM CAPITAL GAIN" AS CREATED BY THE AMERICAN JOBS CREATION ACT OF
2004 AND IS REFLECTED AS A PERCENTAGE OF SHORT-TERM CAPITAL GAIN
DISTRIBUTIONS THAT IS EXEMPT FROM U.S. WITHHOLDING TAX WHEN PAID TO
FOREIGN INVESTORS.
62
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION - DISCLOSURE OF FUND EXPENSES (UNAUDITED)
September 30, 2006
As a Class I shareholder of the AHA Limited Maturity Fund, the AHA Full Maturity
Fund, the AHA Balanced Fund, the AHA Diversified Fund and the AHA Socially
Responsible Fund (each a "Fund" and collectively, the "Funds"), you will incur
ongoing costs, including management fees and other Fund expenses. As a Class A
shareholder of the AHA Limited Maturity Fund, the AHA Full Maturity Fund, the
AHA Diversified Fund and the AHA Socially Responsible Fund, you will incur
ongoing costs and distribution fees. The examples below are intended to help you
understand your ongoing costs (in dollars) of investing in the Funds and to
compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 for the six months ended
September 30, 2006.
ACTUAL EXPENSES
The first line of the tables below provides information about actual account
values and actual expenses. The Funds charge no sales load or transaction fees,
but do assess shareholders of IRA accounts a $25.00 annual maintenance fee by
Forum Shareholder Services, LLC (a division of Citigroup Fund Services, LLC),
the Funds' sub-transfer agent. To the extent the Funds invest in shares of other
investment companies as part of their investment strategies, you will indirectly
bear your proportionate share of any fees and expenses charged by the underlying
funds in which the Funds invest, in addition to the expenses of the Funds.
Actual expenses of the underlying funds are expected to vary among the various
underlying funds. These expenses are not included in the example below. The
example below includes, but is not limited to, management fees, shareholder
servicing fees, fund accounting, custody and transfer agent fees. However, the
example below does not include portfolio trading commissions, related expenses
and other extraordinary expenses as determined under generally accepted
accounting principles. You may use the information in this line, together with
the amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled "Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Funds' actual expense
ratios and an assumed rate of return of 5% per year before expenses, which does
not the represent the Funds' actual returns. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Funds and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds. Please note that the expenses shown in
the table are meant to highlight your ongoing costs only and do not reflect any
transactional costs. Therefore, the second line of the table is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. In addition, if these transactional costs were
included, your costs would have been higher. Ending account values and expenses
paid during the period are based on a hypothetical 2.50% rate of return. The
rate of return is considered before expenses are deducted from the Fund.
AHA LIMITED MATURITY - CLASS I Beginning Account Ending Account Expenses Paid During Period(2)
Value 04/01/06 Value 09/30/06 04/01/06 - 09/30/06
----------------- --------------- ------------------------------
Actual(1) $1,000.00 $1,025.70 $3.81
Hypothetical $1,000.00 $1,021.31 $3.80
(1) Ending account values and expenses paid during period are based on an
actual 2.57% rate of return. The rate of return is considered after
expenses are deducted from the Fund.
(2) Expenses are equal to the Fund's annualized expense ratio of 0.75%,
multiplied by the average account value over the period, multiplied by
183/365 (to reflect the six-month end period).
AHA LIMITED MATURITY - CLASS A Beginning Account Ending Account Expenses Paid During Period(2)
Value 04/01/06 Value 09/30/06 04/01/06 - 09/30/06
----------------- --------------- ------------------------------
Actual(1) $1,000.00 $1,024.40 $5.07
Hypothetical $1,000.00 $1,020.05 $5.06
(1) Ending account values and expenses paid during period are based on an
actual 2.44% rate of return. The rate of return is considered after
expenses are deducted from the Fund.
(2) Expenses are equal to the Fund's annualized expense ratio of 1.00%,
multiplied by the average account value over the period, multiplied by
183/365 (to reflect the six month period).
63
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION - DISCLOSURE OF FUND EXPENSES (UNAUDITED) (CONTINUED)
September 30, 2006
AHA FULL MATURITY - CLASS I Beginning Account Ending Account Expenses Paid During Period(2)
Value 04/01/06 Value 09/30/06 04/01/06 - 09/30/06
----------------- --------------- ------------------------------
Actual(1) $1,000.00 $1,032.10 $4.08
Hypothetical $1,000.00 $1,021.06 $4.05
(1) Ending account values and expenses are paid during period based on an
actual 3.21% rate of return. The rate of return is considered after
expenses are deducted from the Fund.
(2) Expenses are equal to the Fund's annualized expense ratio of 0.80%,
multiplied by the average account value over the period, multiplied by
183/365 (to reflect from the six month period).
AHA FULL MATURITY - CLASS A Beginning Account Ending Account Expenses Paid During Period(2)
Value 04/01/06 Value 09/30/06 04/01/06 - 09/30/06
----------------- --------------- ------------------------------
Actual(1) $1,000.00 $1,030.80 $5.35
Hypothetical $1,000.00 $1,019.30 $5.32
(1) Ending account values and expenses are paid during period based on an
actual 3.08% rate of return. The rate of return is considered after
expenses are deducted from the Fund.
(2) Expenses are equal to the Fund's annualized expense ratio of 1.05%,
multiplied by the average account value over the period, multiplied by
183/365 (to reflect from the six month period).
AHA BALANCED - CLASS I Beginning Account Ending Account Expenses Paid During Period(2)
Value 04/01/06 Value 09/30/06 04/01/06 - 09/30/06
----------------- --------------- ------------------------------
Actual(1) $1,000.00 $1,032.10 $5.09
Hypothetical $1,000.00 $1,020.05 $5.06
(1) Ending account values and expenses are paid during period based on an
actual 3.32% rate of return. The rate of return is considered after
expenses are deducted from the Fund.
(2) Expenses are equal to the Fund's annualized expense ratio of 1.00%,
multiplied by the average account value over the period, multiplied by
183/365 (to reflect from the six month period).
AHA DIVERSIFIED - CLASS I Beginning Account Ending Account Expenses Paid During Period(2)
Value 04/01/06 Value 09/30/06 04/01/06 - 09/30/06
----------------- --------------- ------------------------------
Actual(1) $1,000.00 $1,031.80 $5.14
Hypothetical $1,000.00 $1,020.00 $5.11
(1) Ending account values and expenses are paid during period based on an
actual 3.18% rate of return. The rate of return is considered after
expenses are deducted from the Fund.
(2) Expenses are equal to the Fund's annualized expense ratio of 1.01%,
multiplied by the average account value over the period, multiplied by
183/365 (to reflect from the six month period).
AHA DIVERSIFIED - CLASS A Beginning Account Ending Account Expenses Paid During Period(2)
Value 04/01/06 Value 09/30/06 04/01/06 - 09/30/06
----------------- --------------- ------------------------------
Actual(1) $1,000.00 $1,030.40 $6.41
Hypothetical $1,000.00 $1,018.75 $6.38
(1) Ending account values and expenses are paid during period based on an
actual 3.04% rate of return. The rate of return is considered after
expenses are deducted from the Fund.
(2) Expenses are equal to the Fund's annualized expense ratio of 1.26%,
multiplied by the average account value over the period, multiplied by
183/365 (to reflect from the six month period).
AHA SOCIALLY RESPONSIBLE - CLASS I Beginning Account Ending Account Expenses Paid During Period(2)
Value 04/01/06 Value 09/30/06 04/01/06 - 09/30/06
----------------- --------------- ------------------------------
Actual(1) $1,000.00 $1,023.50 $5.28
Hypothetical $1,000.00 $1,019.85 $5.27
(1) Ending account values and expenses are paid during period based on an
actual 2.35% rate of return. The rate of return is considered after
expenses are deducted from the Fund.
(2) Expenses are equal to the Fund's annualized expense ratio of 1.04%,
multiplied by the average account value over the period, multiplied by
183/365 (to reflect from the six month period).
AHA SOCIALLY RESPONSIBLE - CLASS A Beginning Account Ending Account Expenses Paid During Period(2)
Value 04/01/06 Value 09/30/06 04/01/06 - 09/30/06
----------------- --------------- ------------------------------
Actual(1) $1,000.00 $1,022.60 $6.54
Hypothetical $1,000.00 $1,018.60 $6.53
(1) Ending account values and expenses are paid during period based on an
actual 2.26% rate of return. The rate of return is considered after
expenses are deducted from the Fund.
(2) Expenses are equal to the Fund's annualized expense ratio of 1.29%,
multiplied by the average account value over the period, multiplied by
183/365 (to reflect from the six month period).
64
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
APPROVAL OF SUB-ADVISORY AGREEMENT (UNAUDITED)
The Board of Trustees of CNI Charter Funds (the "Trust") is comprised of four
Trustees, all of whom are independent of the Trust's investment advisers and
sub-advisers. During the six months ended September 30, 2006, the Board of
Trustees approved new sub-advisory agreements (the "Agreements") between CCM
Advisors, LLC ("CCMA") and each of AMBS Investment Counsel, LLC ("AMBS") and
SKBA Capital Management, LLC ("SKBA") with respect to portions of the AHA
Diversified Equity Fund (the "Fund").
The following information summarizes the Board's considerations associated with
its approval of each of the Agreements. In connection with their deliberations,
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. Each Agreement was considered separately. As described below, the
Board considered the nature, quality and extent of the various investment
advisory services to be performed by AMBS and SKBA. 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 CCMA, AMBS or
SKBA were present.
The Board reviewed extensive materials regarding AMBS' and SKBA's investment
results, advisory fee 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 Fund. In
deciding to approve each Agreement, 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.
NATURE, EXTENT AND QUALITY OF SERVICES
In connection with its review of the proposed AMBS and SKBA sub-advisory
agreements, the Board considered a variety of matters including the background,
education and experience of the proposed sub-advisers' key portfolio management
and operational personnel; their overall financial strength and stability; their
regulatory compliance systems and procedures; their resources and ability to
retain, attract and motivate capable personnel to serve the Fund; and the
overall general quality and depth of their organizations. The Board also
reviewed the proposed sub-advisers' investment philosophies and processes as
well as their brokerage, trading and soft dollar practices. The Board noted that
AMBS had not previously provided investment advisory services to mutual funds,
but concluded that providing sub-advisory services to the Fund would not involve
operational difficulties with which AMBS could not successfully cope. The Board
noted that it was familiar with SKBA's performance as a result of its services
as sub-adviser to the AHA Socially Responsible Fund series of the Trust.
INVESTMENT PERFORMANCE
The Board reviewed information regarding the historical performance of AMBS'
separate accounts, noting that the performance of AMBS' large cap value product
was in the top quartile of performance of investment advisers in the PSN Large
Cap Value Universe (published by Informa Investment Solutions, Inc., a
third-party supplier of investment manager separate account database
information) for the three- and five-year periods ended March 31, 2006, and that
it had significantly outperformed the Russell 1000 Value Index, which is the
benchmark for the portion of the Fund proposed to be allocated to AMBS, for
those periods.
The Board also reviewed information regarding the historical performance of
SKBA's separate accounts, noting that the performance of SKBA's large cap value
product was in the top quartile of performance of investment advisers in the PSN
Large Cap Value Universe for the three- and five-year periods ended March 31,
2006, and that it had significantly outperformed the Russell 1000 Value Index,
which is the benchmark for the portion of the Fund proposed to be allocated to
SKBA, for those periods.
The Board also reviewed information regarding the process by which CCMA selected
AMBS and SKBA from an initial field of over 300 large cap value investment
advisers, including performance and risk factor information for nine
semi-finalists in the search. In addition, the Board considered information
presented by CCMA indicating the hypothetical performance of a model portfolio
consisting of portions managed by AMBS, SKBA and Freeman Associates Investment
Management LLC ("Freeman"), the sub-adviser to the remaining portion of the
Fund. The model portfolio was based on Freeman's actual performance in advising
a portion of the Fund and historical performance composites of separate accounts
managed by AMBS and SKBA using substantially similar investment objectives,
policies and strategies as those it proposed to use in managing portions of the
Fund. The Board noted that the hypothetical performance of this combination of
managers outperformed the Fund's benchmark for
65
AHA INVESTMENT FUNDS
- --------------------------------------------------------------------------------
APPROVAL OF SUB-ADVISORY AGREEMENT (CONTINUED) (UNAUDITED)
the most quarters, during the three- and five-year time periods reviewed. The
Board further noted that this hypothetical performance was better than the
performance of five other model portfolios, each of which consisted of portions
managed by Freeman and one of the five finalists in the search (including model
portfolios with portions managed by Freeman and SKBA, and by Freeman and AMBS).
ADVISORY FEES AND FUND EXPENSES
The Board also reviewed information regarding the advisory fees proposed to be
charged under the AMBS and SKBA sub-advisory agreements, noting that AMBS and
SKBA would be charging the same fees as those currently charged by the existing
sub-adviser to the portion of the Fund to be managed by AMBS and SKBA, and that
such fees are lower than AMBS' and SKBA's standard fee schedules for
institutional clients. The Board noted that CCMA pays the Fund's sub-advisory
fees out of CCMA's advisory fee, and that the Fund's asset levels were not so
substantial that they could lead to significant economies of scale.
The Board also considered information prepared by AMBS relating to its projected
costs and profits with respect to the Fund. They noted that SKBA was unable to
provide an estimation of the profitability of its proposed relationship with the
Fund. However, the Board determined that such profitability was likely to be
reasonable based on the low fee rate proposed to be charged by SKBA to CCMA with
respect to the Fund. The Board recognized that AMBS and SKBA would not receive
benefits other than investment advisory fees as a result of their relationships
with the Fund, except the intangible benefits of any favorable publicity arising
in connection with the Fund's performance. The Board noted, however, that City
National Bank and City National Securities, Inc., which are affiliates of AMBS
and SKBA, receive benefits in the form of fees paid for providing certain
shareholder servicing and sub-distribution services to the Trust.
CONCLUSIONS
Based on its review, including its consideration of each of the factors referred
to above, the Board concluded that each of the proposed AMBS and SKBA
sub-advisory agreements represents fair and reasonable compensation in light of
the nature and quality of the services to be provided by AMBS and SKBA,
respectively, to the Fund and its shareholders, and that approval of each
sub-advisory agreement is in the best interest of both the Fund and its
shareholders.
SHAREHOLDER APPROVAL
Because AMBS and SKBA are affiliated with CCMA, they are not covered under an
exemption order issued to the Trust by the Securities and Exchange Commission
which permits the Trust's advisers to hire and terminate sub-advisers without
shareholder approval. Upon the Board's approval of the appointments of AMBS and
SKBA, the officers of the Trust called a meeting of Fund shareholders on
September 25, 2006, at which time the shareholders of the Fund approved the
appointments of AMBS and SKBA.
66
NOTES
- --------------------------------------------------------------------------------
NOTES
- --------------------------------------------------------------------------------
------------------------------------------
AHA INVESTMENT FUNDS
190 SOUTH LASALLE STREET, SUITE 2800
CHICAGO, ILLINOIS 60603
1-800-445-1341
------------------------------------------
INVESTMENT ADVISOR
CCM Advisors, LLC
190 South LaSalle Street, Suite 2800
Chicago, Illinois 60603
ADMINISTRATOR
SEI Investments Global Funds Services
One Freedom Valley Drive
Oaks, Pennsylvania 19456
SUB-TRANSFER AGENT AND
DIVIDEND DISBURSEMENT AGENT
Forum Shareholder Services, LLC
(a division of Citigroup Fund Services, LLC)
Two Portland Square
Portland, Maine 04101
CUSTODIAN
U.S. Bank, N.A.
2 Liberty Place, 20th Floor
Philadelphia, Pennsylvania 19102
LEGAL COUNSEL
Paul Hastings, Janofsky & Walker LLP
515 South Flower Street
Twenty-Fifth Floor
Los Angeles, California 90071
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LLP
Suite 2000
355 South Grand Avenue
Los Angeles, California 90071
DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
[LOGO]
AMERICAN HOSPITAL
ASSOCIATION CNI CHARTER FUNDS(SM) [LOGO OMITTED](R)
a tobacco-free investment
CNI-AR-002-0200
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:
- ------------------ ----------------------------------------------------- -----------------------------------------------------
2006 2005
- ------------------ ----------------------------------------------------- -----------------------------------------------------
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 $285,500 N/A N/A $221,500 N/A N/A
Fees(1)
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- ------------------
(b) Audit- $0 N/A N/A $0 N/A N/A
Related
Fees
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- ------------------
(c) Tax $60,000 N/A N/A $41,000 N/A N/A
Fees
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- ------------------
(d) All N/A N/A N/A N/A 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:
---------------------------- ----------------- ----------------
2006 2005
---------------------------- ----------------- ----------------
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 $60,000 and $41,000 for 2006 and 2005,
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
registrant's 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 27, 2006
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 27, 2006
By (Signature and Title)* /s/ Eric Kleinschmidt
---------------------------------------
Eric Kleinschmidt, Controller and COO
Date November 27, 2006
* Print the name and title of each signing officer under his or her signature.