UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-CSR
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
INVESTMENT COMPANY ACT FILE NUMBER 811-0792
CNI CHARTER FUNDS
(Exact name of registrant as specified in charter)
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400 North Roxbury Drive
Beverly Hills, CA 90210
(Address of principal executive offices) (Zip code)
SEI Investments Distributors
1 Freedom Valley Drive
Oaks, PA 19456
(Name and address of agent for service)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-888-889-0799
DATE OF FISCAL YEAR END: SEPTEMBER 30, 2007
DATE OF REPORTING PERIOD: SEPTEMBER 30, 2007
ITEM 1. REPORTS TO STOCKHOLDERS.
CNI CHARTER FUNDS(SM) [LOGO]
[GRAPHIC OMITTED]
September 30, 2007
2007 ANNUAL REPORT
[GRAPHIC OMITTED]
This report and the financial statements contained herein are provided for the
general information of the shareholders of the CNI Charter Funds. This report is
not authorized for distribution to prospective investors in the CNI Charter
Funds unless preceded or accompanied by an effective prospectus. Please remember
that past performance is no guarantee of future results.
Shares of CNI Charter Funds are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the FDIC or any other agency and
involve investment risks, including the possible loss of the principal amount
invested.
TABLE OF CONTENTS
CNI Charter Funds Annual Report
2 Letter to Our Shareholders
4 Equity Funds Investment Adviser's Report
6 Equity Funds Overview
9 Fixed Income Funds Investment Adviser's Report
11 Fixed Income Funds Overview
15 Money Market Funds Investment Adviser's Report
16 Schedules of Investments
56 Statements of Assets & Liabilities
59 Statements of Operations
62 Statements of Changes in Net Assets
66 Financial Highlights
69 Notes to Financial Statements
76 Report of Independent Registered Public Accounting Firm
77 Trustees and Officers
80 Notice to Shareholders
81 Disclosure of Fund Expenses
83 Approval of Investment Advisory Agreements
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The Funds file their complete schedules of portfolio holdings with the
Securities and Exchange Commission for the first and third quarters of each
fiscal year on Form N-Q within sixty days after the end of the period. The
Funds' Form N-Q is available on the Commission's website at http://www.sec.gov,
and may be reviewed and copied at the Commission's Public Reference Room in
Washington, DC. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330. The most current Form N-Q is also available
on the Funds' website at www.cnicharterfunds.com and without charge, upon
request, by calling 1-888-889-0799.
A description of the policies and procedures that the Funds use to determine how
to vote proxies relating to the Funds' portfolio securities, and information on
how the Funds voted proxies relating to portfolio securities during the most
recent 12-month period ending June 30 is available (1) without charge, upon
request, by calling 1-888-889-0799, (2) on the Funds' website at
www.cnicharterfunds.com, and (3) on the Securities and Exchange Commission's
website at www.sec.gov.
CNI CHARTER FUNDS | PAGE 1
letter to our shareholders
SEPTEMBER 30, 2007
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This annual report covers the CNI Charter Funds for the fiscal year ended
September 30, 2007. On the following pages, you will find the specific details
of each Fund's portfolio and investment performance.
Our unique philosophy and disciplined approach to capital market investment
continued to show well over the last twelve months. What began as a bullish
period for virtually all investment classes turned sharply and suddenly in the
summer months. Decelerating economic growth combined with overly optimistic
asset prices early in the year resulted in a rocky period for many risky assets.
In particular, smaller capitalization equities and lower credit-rated bonds took
the brunt of the broad "repricing of risk" that occurred in the wake of a crisis
in sub-prime lending and continued downtrend in housing. Towards the end of the
period, a decisive shift in monetary policy aimed at calming the global markets
by injecting liquidity and lowering interest rates began to have its desired
effect.
Despite recent market volatility, the preceding twelve months still produced
strong asset class returns virtually across the board. Equity markets, both
domestically and internationally, showed double-digit returns, while most bond
funds finished with positive, if not modest, single-digit figures. By adhering
strictly to our fundamental investment strategies we were able to produce highly
competitive results in all asset categories within the CNI Charter Fund family.
City National Asset Management, Inc.'s underlying investment philosophy is to
pursue the long-term goals and objectives specified for each of the Funds. With
an active yet disciplined style, all Funds are managed to achieve competitive
rates of return consistent with their respective, prescribed risk parameters.
CNI Charter Funds follow a disciplined investment process that begins with a
thorough assessment of the macroeconomic environment and the financial markets.
Our broad based research process takes advantage of the most advanced investment
technology, fundamental valuation, and quantitative tools to determine the most
attractive sectors and securities within each Fund's area of concentration. The
final step is to construct and continuously monitor precise portfolios that meet
the objectives of the specific Funds, without being swayed by short-term trends
and fads. This approach continued to serve shareholders well during the maturing
phase of this economic cycle encountered in the period ended September 30, 2007.
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Twelve-Month October 2006 -
Index Watch: September 2007
EQUITIES:
S&P 500 Index: ............................................... + 16.4%
Russell 2000 Index: .......................................... + 12.3%
MSCI EAFE Index: ............................................. + 24.9%
BONDS:
Lehman Brothers Gov't/Credit
Bond Index: ............................................... + 5.1%
Lehman Brothers Aggregate
Bond Index: ............................................... + 5.1%
Lehman Brothers CA Tax-Exempt
Bond Index: ............................................... + 3.7%
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CNI CHARTER FUND PERFORMANCE AND HIGHLIGHTS
(ALL RETURNS LISTED REFER TO INSTITUTIONAL CLASS SHARES)
By adhering to our basic investment discipline and maintaining the appropriate
amount of risk control in the various portfolios, the Funds continued to provide
returns that are competitive in their respective investment arenas.
Each of our equity-oriented funds produced gains over the past twelve months, in
keeping with the broader market trends. The LARGE CAP VALUE EQUITY FUND led the
pack with a 15.6% return, followed closely by the LARGE CAP GROWTH EQUITY FUND,
which gained 14.9%. The RCB SMALL CAP VALUE EQUITY FUND also showed extremely
well with a 10.7% total return during the twelve-month period.
CNI CHARTER FUNDS | PAGE 2
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All four CNI Charter Bond Funds also produced solid gains for the period. Once
again, the HIGH YIELD BOND FUND led the way with a 7.3% total return. The
CALIFORNIA TAX-EXEMPT BOND FUND rose 3.0%, while the CORPORATE BOND FUND
returned 4.6% and the GOVERNMENT BOND FUND gained 5.0%.
Lastly, all three of the CNI Charter Money Market Funds produced steady,
consistent, and competitive returns. These returns were in line with their
respective investment mandates.
Please read the following pages carefully as they contain important information
on the assets and financial condition of the Funds. If you have any questions
about this report or the CNI Charter Funds, please call your investment
professional or (888) 889-0799.
Thank you for choosing CNI Charter Funds.
Sincerely,
/s/ Richard A. Weiss
Richard A. Weiss
PRESIDENT
CITY NATIONAL ASSET MANAGEMENT, INC.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. CERTAIN SHAREHOLDERS MAY BE
SUBJECT TO THE ALTERNATIVE MINIMUM TAX (AMT). FEDERAL INCOME TAX RULES APPLY TO
ANY CAPITAL GAIN DISTRIBUTIONS.
FUND EXPENSES HAVE BEEN WAIVED DURING THE PERIOD ON WHICH THE PERFORMANCE IS
BASED. WITHOUT WAIVERS, PERFORMANCE WOULD BE LOWER.
THIS INFORMATION MUST BE PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS. PLEASE
READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
INVESTING IN MUTUAL FUNDS INVOLVES RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
IN ADDITIONAL TO THE NORMAL RISKS ASSOCIATED WITH INVESTING, INVESTMENTS IN
SMALLER COMPANIES TYPICALLY EXHIBIT HIGHER VOLATILITY. AN INVESTMENT IN THE
FUNDS IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENT AGENCY.
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*NOT FDIC INSURED *NO BANK GUARANTEE *MAY LOSE VALUE
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INTRODUCING THE CNI CHARTER MULTI-ASSET FUND
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High market volatility makes many investors turn to cash. But by doing so, they
often miss out on market opportunity. Now the CNI Charter Multi-Asset Fund
(which commenced operations on 10/1/07) offers a way to potentially lessen the
impact of market downturns and "stay in the game."
Designed for investors who seek limited downside risk and positive returns over
the long term, this fund offers distinct advantages:
o ACTIVE RISK CONTROL
o EXCEPTIONAL DIVERSIFICATION
o REFINED ASSET ALLOCATION
o PROFESSIONAL MANAGEMENT
o LIQUIDITY
....all wrapped up in the convenience of a single fund.
For more information about the Multi-Asset Fund or other CNI Charter Funds visit
www.cnicharter-funds.com.
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CNI CHARTER FUNDS | PAGE 3
investment adviser's report
SEPTEMBER 30, 2007
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EQUITY FUNDS
For the fiscal year ending September 30, 2007, the U.S. equity market, as
measured by the S&P 500 Index, returned 16.4%. This completes five straight
years of double-digit returns where the market has generated an annualized
return of 15.4% per year. An investor in the companies comprising the S&P 500
Index would have doubled his/her initial investment over this five-year time
period. The 16.4% gain generated this fiscal year did not occur without two
major setbacks. The first setback occurred in March with the sharp decline in
the Chinese equity markets increasing global fears of a possible global
slowdown. The market rebounded, though, and climbed to new highs in mid-July
only to be hit by continued deterioration of the housing market and specifically
sub-prime mortgages. This fear spread into the credit markets causing the
liquidity in the mortgage related commercial paper market to evaporate. Fearing
the break down of the credit markets, the Federal Reserve Bank ("Fed") cut the
discount rate 50 basis points (the rate charged to banks when lending directly
from the Fed) as well as injecting billion of dollars of liquidity into the
credit markets. The equity market rebounded from its mid-August lows in response
to this Fed action. The market rallied again when the Fed lowered the benchmark
rate by 50 basis points, to 4.75%, (and the discount rate another 50 basis
points) in mid-September. This was in response to the negative effect the
housing and credit markets could potentially have on the economy. The market
ended September near its all-time high.
EQUITY FUND PERFORMANCE
(ALL RETURNS LISTED FOR CNI CHARTER FUNDS REFER TO INSTITUTIONAL CLASS SHARES)
o The LARGE CAP VALUE EQUITY FUND returned 15.6% during the 12 months
ending September 30, 2007. The S&P 500/Citigroup Value Index
returned 16.1% and the Lipper Large-Cap Value Funds Classification
returned 14.6%, over the same time period. The energy sector
continued to be the top performing sector with companies such as
ConocoPhillips gaining 50.8%. The third-largest U.S. oil company
generated huge amounts of cash and looked to pay down debt and
invest up to $15 billion in its own shares via a repurchase program.
Goodrich Corp., an aerospace company and the world's largest
supplier of aircraft landing gear, gained 71.0%. The company
continued to exceed earnings expectations due to strong demand from
aircraft manufacturers. IBM gained 45.7% as the company beat
expectations on profits from recent software acquisitions. Stocks
that detracted from performance included Macy's, the second-largest
department store chain, which lost 24.2%. Macy's met recent earnings
expectations but lowered its annual forecast due to sluggish sales.
Motorola, the second largest manufacturer of wireless handsets, fell
24.9%, due to increased competition and margin compression in the
handset market.
o The LARGE CAP GROWTH EQUITY FUND returned 14.9% during the 12 months
ending September 30, 2007. The S&P 500/Citigroup Growth Index
returned 16.8% and the Lipper Large-Cap Growth Funds Classification
returned 20.4% over the same time period. Freeport-McMoRan Inc., the
world's second-largest copper producer, gained 91.9% as the company
benefited from higher metals prices and its acquisition of Phelps
Dodge. Stryker Corp., maker of orthopedic products, rose 39.2% as
sales in the medical implants market (i.e., knees and hips)
increased. Apple Inc. was once again a standout this year, gaining
99.3%, as laptops, iPods, and the introduction of the iPhone
continue to generate
CNI CHARTER FUNDS | PAGE 4
investment adviser's report
SEPTEMBER 30, 2007
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strong earnings growth. Stocks that hurt performance this year
include Starbucks, down 23.1%. Increased dairy costs and slower
growth challenged analysts' growth expectations for the company.
Forest Labs, a pharmaceutical manufacturer, lost 31.1% on fears of
margin compression due to a weakening product pipeline and impending
patent expirations.
o The RCB SMALL CAP VALUE FUND returned 10.7% during the 12 months
ending September 30, 2007. The Russell 2000 Value Index returned
6.1%, the Russell 2000 Index returned 12.3%, the Russell 2500 Value
Index returned 8.8%, and the Lipper Small-Cap Value Funds
Classification returned 9.8%. The Fund benefited from a number of
mergers and acquisitions within the portfolio during the period
including Smart & Final, Hanover Compressor, USI Holdings and
Cumulus Media. Other strong performers include LodgeNet which
received Federal Trade Commission clearance to merge with its
largest competitor and returned 34% for the period. The Fund's first
foray into coal mining stocks was in Alpha Natural Resources, which
gained 68% since purchased earlier this year. Regardless of the
political posturing, coal is plentiful, politically secure and
cheap. It will be a critical component of our energy needs for
decades in either its current or a more environmentally correct
form. This basic premise was not reflected in Alpha's low valuation
six months ago. Detractors to the portfolio included Spartech, a
manufacturer of engineered plastics, down 24% due to the sudden
departure of its CEO and reduction in guidance. Triarc Co Class B, a
franchisor of Arby's restaurants, was down 15% for the period as the
purchase transaction between Arby's and Wendy's raised concerns.
As we look forward, the strength of the market will depend on what effect the
housing market will have on the overall economy. In the U.S., we continue to see
slowing economic growth, but at this time do not expect a recession. It appears
that the Fed may continue to ease monetary policy depending on the balance
between growth and inflation. Lower interest rates have historically provided an
environment for future gains in the equity market. Of course, investors'
expectations of future earnings are a key component in determining equity price
levels. As in all market environments, we will continue to apply our disciplined
investment approach with the objective of providing superior investment results
across the various strategies we manage.
Sincerely,
/s/ Brian L. Garbe
Brian L. Garbe
DIRECTOR OF RESEARCH
CITY NATIONAL ASSET MANAGEMENT, INC.
THE COMMENTARY ABOVE EXPRESSES THE PORTFOLIO MANAGERS' VIEWS AS OF THE DATE
SHOWN AND SHOULD NOT BE RELIED UPON BY THE READER AS RESEARCH OR ADVICE
REGARDING ANY INVESTMENT. THESE VIEWS AND THE PORTFOLIO HOLDINGS ARE SUBJECT TO
CHANGE. THERE IS NO GUARANTEE THAT ANY FORECASTS MADE WILL COME TO PASS.
CNI CHARTER FUNDS | PAGE 5
fund overview
SEPTEMBER 30, 2007
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LARGE CAP VALUE EQUITY FUND
The Fund seeks to provide capital appreciation and moderate income consistent
with current returns available in the market place by investing in large U.S.
corporations and U.S. dollar denominated American Depositary Receipts of large
foreign corporations which are undervalued and whose market valuations compare
favorably relative to similar companies.
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Comparison of Change in the Value of a $10,000 Investment in the CNI Large Cap
Value Equity Fund, Institutional Class or Class A Shares, versus the S&P 500/
Citigroup Value Index, and the Lipper Large Cap Value Funds Classification(1)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
CNI Large Cap
Value Equity Fund CNI Large Cap S&P 500/ Lipper Large
Institutional Value Equity Fund Citigroup Cap Value Funds
Class Shares Class A Shares+ Value Index Classification
1/14/00 10,000 10,000 10,000 10,000
9/30/00 10,099 10,093 9,871 10,459
9/30/01 8,446 8,410 8,508 9,705
9/30/02 6,852 6,814 6,989 7,940
9/30/03 8,498 8,433 8,579 9,723
9/30/04 10,147 10,036 10,271 11,356
9/30/05 11,607 11,455 11,950 12,915
9/30/06 13,290 13,086 13,796 14,495
9/30/07 15,363 15,081 16,018 16,616
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares. Investment performance reflects fee waivers in effect. In the
absence of such waivers, total return would be reduced.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
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Ticker 1-Year 3-Year 5-Year Inception
Shares Symbol Return Return Return to Date
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Institutional Class (1)^ CNLIX 15.60% 14.83% 17.53% 5.73%
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Class A (2) CVEAX 15.24% 14.54% 17.22% 5.48%+
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(1) Commenced operations on January 14, 2000.
(2) Commenced operations on April 13, 2000.
^ The Fund's Institutional Class Shares are currently offered only to
accounts for which City National Bank serves as trustee or in a fiduciary
capacity.
+ Class A Shares performance for the period prior to April 13, 2000 reflects
the performance of the Fund's Institutional Shares. The performance of the
Institutional Shares has not been adjusted to reflect the higher Rule
12b-1 Fees and expenses applicable to Class A Shares. If it had,
performance would have been lower than that shown.
Top Ten Holdings
% OF PORTFOLIO
AT&T 3.8
Bank of America 3.0
Hewlett-Packard 2.7
Verizon Communications 2.7
Citigroup 2.5
Wells Fargo 2.4
JPMorgan Chase 2.0
ConocoPhillips 2.0
Chevron 1.9
Goldman Sachs Group 1.9
CNI CHARTER FUNDS | PAGE 6
fund overview
SEPTEMBER 30, 2007
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LARGE CAP GROWTH EQUITY FUND
The Fund seeks to provide capital appreciation by investing in large U.S.
corporations and U.S. dollar denominated American Depositary Receipts of large
foreign corporations with the potential for growth and that possess superior
management, strong market position, consistent records of increased earnings and
a strong operating and financial position.
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Comparison of Change in the Value of a $10,000 Investment in the CNI Large Cap
Growth Equity Fund, Institutional Class or Class A Shares, versus the S&P
500/Citigroup Growth Index, and the Lipper Large Cap Growth Funds
Classification(1)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
CNI Large Cap
Growth Equity Fund, CNI Large Cap S&P 500/ Lipper Large Cap
Institutional Growth Equity Fund, Citigroup Growth Funds
Class Shares Class A Shares+ Growth Index Classification
1/14/00 10,000 10,000 10,000 10,000
9/31/00 9,370 9,349 9,763 10,329
9/31/01 6,360 6,329 5,950 6,236
9/31/02 5,250 5,210 4,538 4,948
9/31/03 6,380 6,320 5,717 5,958
9/31/04 6,775 6,691 6,203 6,415
9/31/05 7,490 7,379 6,709 7,228
9/31/06 7,834 7,715 7,138 7,499
9/31/07 9,002 8,834 8,336 9,032
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares. Investment performance reflects fee waivers in effect. In the
absence of such waivers, total return would be reduced.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
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Ticker 1-Year 3-Year 5-Year Inception
Shares Symbol Return Return Return to Date
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Institutional Class (1)^ CNGIX 14.91% 9.94% 11.38% -1.36%
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Class A (2) CLEAX 14.51% 9.70% 11.14% -1.60%+
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(1) Commenced operations on January 14, 2000.
(2) Commenced operations on March 28, 2000.
^ The Fund's Institutional Class Shares are currently offered only to
accounts for which City National Bank serves as trustee or in a fiduciary
capacity.
+ Class A Shares performance for the period prior to March 28, 2000 reflects
the performance of the Fund's Institutional Shares. The performance of the
Institutional Shares has not been adjusted to reflect the higher Rule
12b-1 Fees and expenses applicable to Class A Shares. If it had,
performance would have been lower than that shown.
Top Ten Holdings
% OF PORTFOLIO
Exxon Mobil 4.9
Procter & Gamble 3.0
Chevron 2.8
Microsoft 2.8
Johnson & Johnson 2.7
Wal-Mart Stores 2.4
IBM 2.1
Apple 2.0
Qualcomm 1.8
PepsiCo 1.7
CNI CHARTER FUNDS | PAGE 7
fund overview
SEPTEMBER 30, 2007
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RCB SMALL CAP VALUE FUND
The Fund seeks to provide capital appreciation by investing primarily in smaller
U.S. corporations which are considered undervalued.
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Comparison of Change in the Value of a $10,000 Investment in the CNI RCB Small
Cap Value Fund, Institutional Class, Class A or Class R Shares, versus the
Russell 2500 Value Index, the Russell 2000 Index, the Russell 2000 Value Index,
the Lipper Small Cap Value Funds Classification, and the Lipper Small Cap Core
Funds Classification(1)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
CNI RCB Small
Cap Value Fund, CNI RCB Small CNI RCB Small Russell
Institutional Cap Value Fund, Cap Value Fund, 2000
Class Shares Class A Shares+ Class R Shares+ Index
9/30/98 10,000 10,000 9,650 10,000
9/30/99 15,120 15,120 14,591 11,907
9/30/01 16,859 16,859 16,269 14,692
9/30/02 18,395 18,395 17,751 11,576
9/30/03 16,353 16,331 15,740 10,499
9/30/04 23,802 23,714 22,856 14,332
9/30/05 29,745 29,557 28,485 17,022
9/30/06 32,681 32,380 31,208 20,077
9/30/07 32,811 32,435 31,252 22,069
9/30/07 36,306 35,798 34,511 24,792
Russell Russell Lipper Small Cap Lipper Small Cap
2000 Value 2500 Value Value Funds Core Funds
Index Index Classification Classification
9/30/98 10,000 10,000 10,000 10,000
9/30/99 10,583 10,840 11,292 11,879
9/30/01 12,209 12,547 13,347 15,299
9/30/02 12,893 12,863 13,904 13,806
9/30/03 12,705 12,784 13,773 13,071
9/30/04 16,728 16,779 17,927 17,157
9/30/05 21,020 20,899 22,264 20,747
9/30/06 24,751 25,355 26,398 24,703
9/30/07 28,219 28,177 28,652 26,590
9/30/07 29,937 30,654 31,452 30,154
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares. Investment performance reflects fee waivers in effect. In the
absence of such waivers, total return would be reduced.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
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Ticker 1-Year 3-Year 5-Year Inception
Shares Symbol Return Return Return to Date
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Institutional Class (1)^ RCBIX 10.65% 6.87% 17.29% 15.40%+
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Class A (1) RCBAX 10.37% 6.59% 17.00% 15.22%+
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Class R (2) RCBSX 10.43% 6.61% 17.00% 15.21%
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Class R with load RCBSX 6.57% 5.35% 16.18% 14.76%
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(1) Commenced operations on October 3, 2001.
(2) Commenced operations on September 30, 1998.
^ The Fund's Institutional Class Shares are currently offered only to
accounts for which City National Bank serves as trustee or in a fiduciary
capacity.
+ The performance of the Institutional Class and Class A Shares for the
period prior to October 3, 2001 reflect the performance of the Class R
Shares of a predecessor mutual fund. The performance of the Class R Shares
has not been adjusted to reflect the expenses applicable to Institutional
and Class A Shares. Fees for the Institutional Class Shares are lower than
the fees for the Class R Shares; correspondingly, Institutional Class
performance would have been higher than that shown.
Top Ten Holdings*
% OF PORTFOLIO
Annaly Capital Management 5.2
Lodgenet Entertainment 5.1
Ralcorp Holdings 4.6
Fisher Communications 4.4
White Mountains Insurance 4.3
Rosetta Resources 4.2
Spartech 4.2
Alleghany 4.2
Alpha Natural Resources 3.7
Triarc, Cl B 3.6
* Excludes Repurchase Agreement
CNI CHARTER FUNDS | PAGE 8
investment adviser's report
SEPTEMBER 30, 2007
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FIXED INCOME FUNDS
Credit markets were front and center during the third quarter of 2007, as
investors worried that a lack of liquidity would curtail the ability of
corporations to borrow and grow. Indeed, bids for lower-quality credit
instruments all but vanished for a while until the Federal Reserve Bank ("Fed")
stepped in with various forms of monetary stimulus. The yield curve has now
steepened, with shorter-term rates declining and longer-term rates rising.
During the fiscal year, City National Asset Management, Inc. altered its
strategy by moving to a longer maturity posture to its investment grade bond
funds from a neutral stance versus our comparative benchmarks. This strategy
shift came on the heels of a slower economic environment and the risk of lower
rates along with a fear of reinvestment risk. The Fed looks poised to continue
its rate cuts as long as economic growth remains at risk and core inflation
remains in check.
BOND FUND PERFORMANCE
(ALL RETURNS LISTED FOR CNI CHARTER FUNDS REFER TO INSTITUTIONAL CLASS SHARES)
o The CORPORATE BOND FUND produced a total return of 4.6% for the last
12 months. For the same period, the Lehman Intermediate Corporate
Index returned 4.4%. The Fund's strategy of underweighting lower
quality issues in favor of higher quality issues fared well during
this period of slower economic growth. Furthermore, our longer
maturity stance also enabled the Fund to outperform both its
benchmarks and its peer group as evidenced by the Lipper Short/
Intermediate Investment Grade Debt Objective return of 4.3%.
o The GOVERNMENT BOND FUND produced a total return of 5.0% for the
last 12 months. For the same period, the Lehman Intermediate U.S.
Government Bond Index returned 5.9%. The Fund slightly trailed the
benchmark due to the Fund's underweight in U.S. Treasuries and the
flight to quality during the credit crunch. We maintain our longer
maturity stance versus the benchmarks in anticipation of lower
rates. This longer maturity stance has helped the Fund to outperform
its peer group during this period as evidenced by the Lipper
Short/Intermediate U.S. Government Objective return of 4.5%.
o The CALIFORNIA TAX EXEMPT BOND FUND produced a total return of 3.0%
for the last 12 months. For the same period, the Lehman CA
Intermediate-Short Municipal Bond Index returned 3.7%. The Fund's
strategy tracked close to the benchmark but trailed slightly as we
extended our average maturity to lock in the higher yields during
the midsummer. During that time, longer maturity issues
underperformed in the market. The Fund did fare better against its
peer group, as the Lipper California Short/Intermediate Municipal
Debt Objective returned 2.6%.
o The HIGH YIELD BOND FUND produced a total return of 7.3% for the
last 12 months. For the same period, the Citigroup High Yield Market
Index returned 7.8%. Absolute performance remained strong for this
sector even though the economy is growing below a 2% year-over-year
rate. The Fund tracked below but close to the benchmark as liquidity
remains an issue in this tighter credit environment. The Fund's
relative performance vis-a-vis its peer group remained positively
competitive, as the Lipper High Current Yield Funds Objective
returned 7.0%.
STRATEGIC OUTLOOK FOR BOND FUNDS
As the fiscal year closed, fixed income investors were trying to determine which
of two major risks are going to dominate bond prices. Is there more downside
risk for the economy (which could bring additional rate
CNI CHARTER FUNDS | PAGE 9
investment adviser's report
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
FIXED INCOME FUNDS (CONTINUED)
cuts), or a greater risk of inflation (which means rising long-term rates)? We
are in the first camp, believing that the economic cycle will continue to play
out, with GDP growth slowing and inflation remaining tame. There may still be
more fallout ahead for the economy from the continued weakness in residential
housing and tighter credit markets. Given this, we maintain our higher quality
tilt along with our longer than average duration versus each Fund's benchmark
index until we see signs that the economy is rebounding from its current
trajectory.
Sincerely
/s/ Rodney J. Olea
Rodney J. Olea
DIRECTOR OF FIXED INCOME
CITY NATIONAL ASSET MANAGEMENT, INC.
THE ABOVE COMMENTARY EXPRESSES THE PORTFOLIO MANAGERS' VIEWS AS OF THE DATE
SHOWN AND SHOULD NOT BE RELIED UPON BY THE READER AS RESEARCH OR ADVICE
REGARDING ANY INVESTMENT. THESE VIEWS AND THE PORTFOLIO HOLDINGS ARE SUBJECT TO
CHANGE. THERE IS NO GUARANTEE THAT ANY FORECASTS MADE WILL COME TO PASS.
CNI CHARTER FUNDS | PAGE 10
fund overview
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
The Fund seeks to provide current income (as the primary component of a total
return, intermediate duration strategy) by investing in a diversified portfolio
of investment grade fixed income securities, primarily corporate bonds issued by
domestic and international companies denominated in U.S. dollars.
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the CNI Corporate
Bond Fund, Institutional Class or Class A Shares, versus the Lehman Intermediate
Corporate Index, and Lipper Short/Intermediate Investment Grade Debt
Objective(1)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
CNI Corporate Lehman Lipper Short/
Bond Fund, CNI Corporate Intermediate Intermediate
Institutional Bond Fund, Corporate Investment Grade
Class Shares Class A Shares+ Index Debt Objective
1/14/00 10,000 10,000 10,000 10,000
9/30/00 10,577 10,592 10,644 10,565
9/30/01 11,861 11,871 11,992 11,732
9/30/02 12,580 12,547 12,852 12,379
9/30/03 13,428 13,359 14,129 12,984
9/30/04 13,717 13,624 14,686 13,252
9/30/05 13,890 13,748 14,946 13,416
9/30/06 14,333 14,151 15,479 13,827
9/30/07 14,988 14,760 16,165 14,420
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares. Investment performance reflects fee waivers in effect. In the
absence of such waivers, total return would be reduced.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
Ticker 1-Year 3-Year 5-Year Inception
Shares Symbol Return Return Return to Date
- --------------------------------------------------------------------------------
Institutional Class (1)^ CNCIX 4.57% 3.00% 3.56% 5.38%
- --------------------------------------------------------------------------------
Class A (2) CCBAX 4.30% 2.70% 3.30% 5.18%+
- --------------------------------------------------------------------------------
(1) Commenced operations on January 14, 2000.
(2) Commenced operations on April 13, 2000.
^ The Fund's Institutional Class Shares are currently offered only to
accounts for which City National Bank serves as trustee or in a fiduciary
capacity.
+ Class A Shares performance for the period prior to April 13, 2000 reflects
the performance of the Fund's Institutional Shares. The performance of the
Institutional Shares has not been adjusted to reflect the higher Rule
12b-1 Fees and expenses applicable to Class A Shares. If it had,
performance would have been lower than that shown.
Top Ten Holdings*
% OF PORTFOLIO
Toyota Motors
4.350%, 12/15/10 2.9
General Electric Capital
6.000%, 06/15/12 2.5
Lloyds
5.043%, 10/15/07 2.4
Berkshire Hathaway Finance
4.125%, 01/15/10 2.3
PepsiCo
5.150%, 05/15/12 2.3
Anheuser-Busch Cos.
7.500%, 03/15/12 2.1
Merrill Lynch, Ser C, MTN
4.250%, 02/08/10 2.0
Credit Suisse
5.500%, 08/15/13 2.0
Goldman Sachs Group
5.625%, 01/15/17 2.0
Wachovia Bank
4.800%, 11/01/14 2.0
* Excludes Cash Equivalents
CNI CHARTER FUNDS | PAGE 11
fund overview
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
GOVERNMENT BOND FUND
The Fund seeks to provide current income (as the primary component of a total
return, intermediate duration strategy) by investing primarily in U.S.
government securities either issued or guaranteed by the U.S. government or its
agencies or instrumentalities.
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the CNI Government
Bond Fund, Institutional Class or Class A Shares, versus the Lehman Intermediate
U.S. Government Bond Index, and the Lipper Short/Intermediate U.S. Government
Objective(1)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
CNI Government Lehman Lipper Short/
Bond Fund, CNI Government Intermediate Intermediate
Institutional Bond Fund, U.S. Government U.S. Government
Class Shares Class A Shares+ Bond Index Objective
01/14/00 10,000 10,000 10,000 10,000
09/01/00 10,564 10,535 10,659 10,541
09/01/07 11,796 11,720 12,031 11,722
09/02/07 12,685 12,596 13,045 12,506
09/03/07 13,024 12,937 13,502 12,825
09/04/07 13,130 13,009 13,760 12,996
09/05/07 13,316 13,159 13,940 13,113
09/06/07 13,701 13,505 14,432 13,503
09/07/07 14,392 14,150 15,279 14,111
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares. Investment performance reflects fee waivers in effect. In the
absence of such waivers, total return would be reduced.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
Ticker 1-Year 3-Year 5-Year Inception
Shares Symbol Return Return Return to Date
- --------------------------------------------------------------------------------
Institutional Class (1)^ CNBIX 5.04% 3.10% 2.56% 4.83%
- --------------------------------------------------------------------------------
Class A (2) CGBAX 4.77% 2.84% 2.35% 4.60%+
- --------------------------------------------------------------------------------
(1) Commenced operations on January 14, 2000.
(2) Commenced operations on April 13, 2000.
^ The Fund's Institutional Class Shares are currently offered only to
accounts for which City National Bank serves as trustee or in a fiduciary
capacity.
+ Class A Shares performance for the period prior to April 13, 2000 reflects
the performance of the Fund's Institutional Shares. The performance of the
Institutional Shares has not been adjusted to reflect the higher Rule
12b-1 Fees and expenses applicable to Class A Shares. If it had,
performance would have been lower than that shown.
Top Ten Holdings
% OF PORTFOLIO
FNMA
5.500%, 09/15/09 7.6
FFCB REMIC, Ser IA2, Cl 1
5.220%, 10/21/13 7.2
FHLMC REMIC, Ser R013, Cl AB
6.000%, 12/15/21 5.4
FHLMC REMIC, Ser R009, Cl AJ
5.750%, 12/15/18 5.2
FHLMC REMIC, Ser R012, Cl AB
5.500%, 12/15/20 5.0
FHLMC REMIC, Ser R010, Cl AB
5.500%, 12/15/20 5.0
FHLB
5.250%, 10/14/11 4.6
FHLB
5.000%, 12/11/15 4.6
FHLMC REMIC, Ser R005, Cl AB
5.500%, 12/15/18 4.6
FNMA
5.010%, 11/10/10 4.6
CNI CHARTER FUNDS | PAGE 12
fund overview
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT BOND FUND
The Fund seeks to provide current income exempt from Federal and California
state income tax (as the primary component of a total return strategy) by
investing primarily in investment grade California municipal bonds and notes.
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the CNI California
Tax Exempt Bond Fund, Institutional Class or Class A Shares, versus the Lehman
CA Intermediate-Short Municipal Index, and the Lipper CA Short/Intermediate
Municipal Debt Objective(1)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
CNI California Lehman CA
Tax-Exempt CNI California Lehman CA Short/
Bond Fund, Tax-Exempt Intermediate- Intermediate
Institutional Bond Fund, Short Municipal Municipal Debt
Class Shares Class A Shares+ Index Objective
01/14/00 10,000 10,000 10,000 10,000
09/01/00 10,545 10,532 10,545 10,453
09/01/07 11,305 11,278 11,403 11,147
09/02/07 12,162 12,112 12,272 11,832
09/03/07 12,482 12,399 12,633 12,077
09/04/07 12,731 12,627 12,999 12,262
09/05/07 12,941 12,803 13,250 12,635
09/06/07 13,353 13,163 13,677 13,020
09/07/07 13,751 13,534 14,184 13,362
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares. Investment performance reflects fee waivers in effect. In the
absence of such waivers, total return would be reduced.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------------------
Ticker 1-Year 3-Year 5-Year Inception
Shares Symbol Return Return Return to Date
- -------------------------------------------------------------------------------
Institutional Class (1)^ CNTIX 2.98% 2.60% 2.49% 4.21%
- -------------------------------------------------------------------------------
Class A (2) CCTEX 2.82% 2.34% 2.24% 4.00%+
- -------------------------------------------------------------------------------
(1) Commenced operations on January 14, 2000.
(2) Commenced operations on April 13, 2000.
^ The Fund's Institutional Class Shares are currently offered only to
accounts for which City National Bank serves as trustee or in a fiduciary
capacity.
+ Class A Shares performance for the period prior to April 13, 2000 reflects
the performance of the Fund's Institutional Shares. The performance of the
Institutional Shares has not been adjusted to reflect the higher Rule
12b-1 Fees and expenses applicable to Class A Shares. If it had,
performance would have been lower than that shown.
Top Ten Holdings
% OF PORTFOLIO
San Diego, Unified School District,
Election 1998 Project,
Ser B-1, GO, MBIA
5.000%, 07/01/17 3.2
Escondido, Union School District,
Refunding & Financing
Project, COP, MBIA
4.750%, 07/01/19 2.3
Vallejo, City Unified School District,
Election 1997 Project,
GO, AMBAC
8.600%, 08/01/10 1.9
Compton, Community College
Authority, City Hall Project,
Ser B, RB, MBIA
Callable 09/01/12 @ 100
5.250%, 09/01/16 1.9
California State, Department of
Water Resources, Power Supply
Project, Ser A, RB, AMBAC
Callable 05/01/12 @ 101
5.500%, 05/01/15 1.9
California State, Public Works
Board Lease, Department of
Corrections-State Prisons
Project, Ser A, RB, AMBAC
5.250%, 12/01/13 1.9
New York State, Ser E, RB
6.000%, 04/01/14 1.6
Hawthorne, School District,
COP, FSA
Pre-Refunded @ 101
6.000%, 11/01/10 1.6
California State, Public Works
Board Lease, Department of
Corrections, Ser D, RB, FSA
5.250%, 06/01/15 1.6
California State, GO
5.000%, 08/01/14 1.6
CNI CHARTER FUNDS | PAGE 13
fund overview
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
The Fund seeks to maximize total return by investing primarily in fixed income
securities rated below investment grade including corporate bonds and
debentures, convertible and preferred securities, and zero coupon
obligations. The Fund may also invest in fixed income securities rated below
investment grade issued by governments and agencies, both U.S. and foreign, and
in equity securities. The Fund seeks to invest in securities that offer a high
current yield as well as total return potential and diversifies across issuers,
industries and sectors to control risks.
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the CNI High Yield
Bond Fund, Institutional Class or Class A Shares, versus the Citigroup High
Yield Market Capped Index(1), Citigroup High Yield Market Index and the Lipper
High Current Yield Bond Funds Objective(2)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
CNI High Yield CNI Citigroup Lipper High
Bond Fund, High Yield High Yield Citigroup Current
Institutional Bond Fund, Market Index High Yield Yield Bond
Class Shares Class A Shares Capped Index Market Index Funds Objective
1/14/00 $10,000 $10,000 $10,000 $10,000 $10,000
9/30/00 10,420 10,394 9,974 9,974 9,887
9/30/01 10,165 10,109 9,373 9,373 9,071
9/30/02 10,653 10,563 9,460 9,059 8,908
9/30/03 12,757 12,611 12,392 12,073 11,168
9/30/04 14,348 14,142 13,916 13,586 12,432
9/30/05 15,044 14,784 14,794 14,468 13,200
9/30/06 16,082 15,757 15,796 15,536 14,090
9/30/07 17,251 16,852 16,987 16,741 15,079
(1) The Fund previously used the Citigroup High Yield Market Index as its
broad based index. Commencing September 30, 2007, the Fund uses the
Citigroup High Yield Market Capped Index (the "Capped Index") as its broad
based index. The Capped Index commenced December 31, 2001 and uses the
Citigroup High Yield Market Index as its foundation. In addition to using
the design criteria of the Citigroup High Yield Market Index, the Capped
Index limits the total debt of any single individual issuer to $5 billion
par amount outstanding and delays the entry of "fallen angels," or issuers
recently downgraded from investment grade to high yield, into the
Index. The Fund's sub-adviser believes that such constraints make the
Capped Index an appropriate benchmark for the Fund. The returns of the
Capped Index are shown commencing September 30, 2002, which is the Fund's
first fiscal year end after commencement of the Index, and are calculated
using the returns of the Citigroup High Yield Market Index as of that date
as a starting point.
(2) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares. Investment performance reflects fee waivers in effect. In the
absence of such waivers, total return would be reduced.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------------------
Ticker 1-Year 3-Year 5-Year Inception
Shares Symbol Return Return Return to Date
- -------------------------------------------------------------------------------
Institutional Class (1)^ CHYIX 7.27% 6.33% 10.12% 7.33%
- -------------------------------------------------------------------------------
Class A (1) CHBAX 6.95% 6.02% 9.79% 7.00%
- -------------------------------------------------------------------------------
(1) Commenced operations on January 14, 2000.
^ The Fund's Institutional Class Shares are currently offered only to
accounts for which City National Bank serves as trustee or in a fiduciary
capacity.
Top Ten Holdings
% OF PORTFOLIO
General Motors
7.125%, 07/15/13 1.5
Qwest
7.625%, 06/15/15 1.2
Charter Communications Holdings
10.250%, 09/15/10 1.1
GMAC
6.750%, 12/01/14 1.1
AES
9.000%, 05/15/15 0.9
Pogo Producing
6.875%, 10/01/17 0.8
Whiting Petroleum
7.000%, 02/01/14 0.8
El Paso
7.000%, 05/15/11 0.8
Dobson Communications
9.610%, 10/15/12 0.7
Dobson Cellular Systems
9.875%, 11/01/12 0.7
CNI CHARTER FUNDS | PAGE 14
investment adviser's report
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS
A lot has happened in money markets during the fiscal year that ended September
30, 2007. The Federal Reserve Bank ("Fed") lowered borrowing rates on September
18 and changed its assessment to "risk to growth. "According to the Fed Funds
Futures market, additional monetary policy easing might be on the horizon at
upcoming Federal Open Market Committee (FOMC) meetings. The main concern for the
economy is that the housing crisis and the credit crunch will cause a reduction
in consumer spending enough to slow U.S. growth to near recessionary levels. In
spite of oil, which shortly after the fiscal year end traded at over $90 a
barrel, core inflation as measured by the core PCE (core Personal Consumption
Expenditure) comes in at a 1.8% level year over year - which is within the Fed's
1-2% comfort level. Looking ahead, the credit crunch may soon work itself out
and the main concern is a fall-off in consumer spending as the housing market
continues to weaken. In these uncertain economic times we are focusing on
transparent and liquid issuers for our three money market funds.
o The PRIME MONEY MARKET FUND continued to emphasize high quality
liquid issuers as a way to weather the credit crunch felt in certain
types of asset-backed commercial paper (ABCP). With our strategy
focusing primarily on the highest quality and liquid issuers, the
Fund fared well during this period. Furthermore, we added to our US
Treasury Bill position as a way to capture some of the flight to
quality found in the short-term markets. That strategy played out
well as those holdings appreciated with the Fed ease and increased
demand. We've also extended the average life of the Fund to over 50
days in order to maintain higher yielding holdings as a slight hedge
against further Fed movements.
o The GOVERNMENT MONEY MARKET FUND was positioned well for change in
Fed policy and slower economic environment. We have extended the
maturity profile to over 50 days average life in the Fund in order
to benefit from higher yielding holdings in the face of continued
easing of monetary policy and lower rates.
o Our objective for The CALIFORNIA TAX EXEMPT MONEY MARKET FUND
continues to focus on safety and liquidity, especially important in
a decelerating economic environment. We continue to watch the state
of California real estate market very closely as the slowdown takes
hold. The size of the state and the diverse nature of its economic
makeup should help to weather the slowdown and we remain confident
in our positioning. Supply and demand of the state's and local debt
will also be monitored closely given the increased issuance of state
backed issues. We will look to increase the portfolio's average days
to maturity as we see opportunities in the supply and yields.
STRATEGIC OUTLOOK
Our outlook remains favorable for money market instruments due to the high
demand for liquid assets in these uncertain economic times. The Money Market
Funds are positioned well for a declining rate environment and slower economic
growth for the coming quarters. Our focus on safety and liquidity remains a key
element as we position ourselves for slower economic growth. We will attempt to
maintain a 50 day average portfolio life in our Funds to protect against
reinvestment risk as we manage inflows, yields and supply available in the
marketplace. City National Asset Management, Inc. continues to monitor the
objectives of the Funds very closely and seek opportunities in the markets to
best serve our shareholders.
Sincerely,
/s/ Rodney J. Olea
Rodney J. Olea
DIRECTOR OF FIXED INCOME
CITY NATIONAL ASSET MANAGEMENT, INC.
THE ABOVE COMMENTARY EXPRESSES THE PORTFOLIO MANAGERS' VIEWS AS OF THE DATE
SHOWN AND SHOULD NOT BE RELIED UPON BY THE READER AS RESEARCH OR ADVICE
REGARDING ANY INVESTMENT. THESE VIEWS AND THE PORTFOLIO HOLDINGS ARE SUBJECT TO
CHANGE. THERE IS NO GUARANTEE THAT ANY FORECASTS MADE WILL COME TO PASS.
CNI CHARTER FUNDS | PAGE 15
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
LARGE CAP VALUE EQUITY FUND
SECTOR WEIGHTINGS (UNAUDITED)*:
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
29.2% Financials
12.4% Industrials
10.5% Information Technology
8.3% Consumer Discretionary
7.4% Telecommunication Services
7.3% Energy
7.1% Healthcare
5.8% Utilities
5.4% Consumer Staples
4.1% Materials
2.5% Short-Term Investments
* Percentages based on total investments.
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
COMMON STOCK [97.5%]
AEROSPACE & DEFENSE [4.9%]
Goodrich 16,400 $ 1,119
Honeywell International 12,500 744
Lockheed Martin 13,000 1,410
Northrop Grumman 17,000 1,326
Raytheon 25,200 1,608
-----------------------------------------------------------------------------
TOTAL AEROSPACE & DEFENSE 6,207
=============================================================================
AIR FREIGHT & LOGISTICS [0.8%]
FedEx 9,600 1,006
=============================================================================
BEVERAGES [1.7%]
Coca-Cola 21,100 1,213
Coca-Cola Enterprises 20,000 484
Molson Coors Brewing, Cl B 4,500 449
-----------------------------------------------------------------------------
TOTAL BEVERAGES 2,146
=============================================================================
BUILDING PRODUCTS [0.3%]
Masco 16,500 382
=============================================================================
CAPITAL MARKETS [5.1%]
Goldman Sachs Group 11,200 2,427
Lehman Brothers Holdings 15,000 926
Merrill Lynch 9,900 706
Morgan Stanley 27,000 1,701
State Street 11,200 763
-----------------------------------------------------------------------------
TOTAL CAPITAL MARKETS 6,523
=============================================================================
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
CHEMICALS [2.7%]
Dow Chemical 36,000 $ 1,550
PPG Industries 14,000 1,058
Rohm & Haas 15,800 879
-----------------------------------------------------------------------------
TOTAL CHEMICALS 3,487
=============================================================================
COMMERCIAL BANKS [6.9%]
BB&T 14,500 586
Keycorp 10,400 336
PNC Financial Services
Group 14,300 974
SunTrust Banks 12,400 938
US Bancorp 48,000 1,562
Wachovia 26,400 1,324
Wells Fargo 84,960 3,026
-----------------------------------------------------------------------------
TOTAL COMMERCIAL BANKS 8,746
=============================================================================
COMMERCIAL SERVICES & SUPPLIES [0.3%]
Waste Management 11,600 438
=============================================================================
COMMUNICATIONS EQUIPMENT [0.7%]
Corning* 38,500 949
=============================================================================
COMPUTERS & PERIPHERALS [4.5%]
Hewlett-Packard 68,700 3,421
IBM 19,900 2,344
-----------------------------------------------------------------------------
TOTAL COMPUTERS & PERIPHERALS 5,765
=============================================================================
CONTAINERS & PACKAGING [0.4%]
Bemis 17,000 495
=============================================================================
DIVERSIFIED FINANCIAL SERVICES [7.5%]
Bank of America 75,896 3,815
Citigroup 67,786 3,164
JPMorgan Chase 56,400 2,584
-----------------------------------------------------------------------------
TOTAL DIVERSIFIED FINANCIAL SERVICES 9,563
=============================================================================
DIVERSIFIED TELECOMMUNICATION SERVICES [6.5%]
AT&T 113,117 4,786
Verizon Communications 77,109 3,414
-----------------------------------------------------------------------------
TOTAL DIVERSIFIED TELECOMMUNICATION
SERVICES 8,200
=============================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 16
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
LARGE CAP VALUE EQUITY FUND (CONTINUED)
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES [3.6%]
Duke Energy 22,000 $ 411
Edison International 13,900 771
Entergy 8,000 866
FirstEnergy 11,600 735
FPL Group 17,300 1,053
PPL 14,900 690
-----------------------------------------------------------------------------
TOTAL ELECTRIC UTILITIES 4,526
=============================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS [0.2%]
Tyco Electronics 6,600 234
=============================================================================
FOOD & STAPLES RETAILING [1.7%]
Costco Wholesale 8,700 534
Kroger 19,300 551
Safeway 31,600 1,046
-----------------------------------------------------------------------------
TOTAL FOOD & STAPLES RETAILING 2,131
=============================================================================
FOOD PRODUCTS [1.7%]
Archer-Daniels-Midland 15,900 526
General Mills 13,200 766
Sara Lee 25,000 417
Tyson Foods 22,000 393
-----------------------------------------------------------------------------
TOTAL FOOD PRODUCTS 2,102
=============================================================================
HEALTH CARE EQUIPMENT & SUPPLIES [0.5%]
Covidien* 15,400 639
=============================================================================
HEALTH CARE PROVIDERS & SERVICES [2.6%]
Aetna 22,100 1,199
Cigna 13,500 719
McKesson 23,600 1,388
-----------------------------------------------------------------------------
TOTAL HEALTH CARE PROVIDERS & SERVICES 3,306
=============================================================================
HOUSEHOLD DURABLES [0.6%]
Whirlpool 8,700 775
=============================================================================
INDEPENDENT POWER PRODUCERS &
ENERGY TRADERS [0.9%]
Constellation Energy Group 13,400 1,150
=============================================================================
INDUSTRIAL CONGLOMERATES [2.5%]
General Electric 47,500 1,966
Tyco International 27,600 1,224
-----------------------------------------------------------------------------
TOTAL INDUSTRIAL CONGLOMERATES 3,190
=============================================================================
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
INSURANCE [8.2%]
ACE 24,600 $ 1,490
Aflac 9,600 548
American International Group 29,100 1,969
Chubb 27,100 1,454
Hartford Financial Services Group 12,300 1,138
Metlife 17,100 1,192
Progressive 16,000 311
Prudential Financial 9,700 946
Travelers 27,000 1,359
-----------------------------------------------------------------------------
TOTAL INSURANCE 10,407
=============================================================================
IT SERVICES [0.7%]
Electronic Data Systems 39,900 871
=============================================================================
LIFE SCIENCES TOOLS & SERVICES [0.5%]
PerkinElmer 23,700 692
=============================================================================
MACHINERY [1.7%]
Caterpillar 18,600 1,459
Danaher 8,100 670
-----------------------------------------------------------------------------
TOTAL MACHINERY 2,129
=============================================================================
MEDIA [4.7%]
CBS, Cl B 38,750 1,221
Comcast, Cl A* 52,200 1,262
Time Warner 102,800 1,887
Walt Disney 47,900 1,647
-----------------------------------------------------------------------------
TOTAL MEDIA 6,017
=============================================================================
MULTI-UTILITIES [1.3%]
PG&E 19,600 937
Sempra Energy 12,600 732
-----------------------------------------------------------------------------
TOTAL MULTI-UTILITIES 1,669
=============================================================================
MULTILINE RETAIL [1.8%]
JC Penney 13,900 881
Macy's 12,400 401
Target 15,500 985
-----------------------------------------------------------------------------
TOTAL MULTILINE RETAIL 2,267
=============================================================================
OFFICE ELECTRONICS [0.7%]
Xerox* 53,500 928
=============================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 17
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
LARGE CAP VALUE EQUITY FUND (CONCLUDED)
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS [7.3%]
Chevron 26,140 $ 2,446
ConocoPhillips 28,280 2,482
Exxon Mobil 13,100 1,213
Marathon Oil 21,300 1,214
Occidental Petroleum 24,400 1,564
Valero Energy 4,900 329
-----------------------------------------------------------------------------
TOTAL OIL, GAS & CONSUMABLE FUELS 9,248
=============================================================================
PAPER & FOREST PRODUCTS [1.0%]
International Paper 24,500 879
MeadWestvaco 12,000 354
-----------------------------------------------------------------------------
TOTAL PAPER & FOREST PRODUCTS 1,233
=============================================================================
PERSONAL PRODUCTS [0.4%]
Alberto-Culver 20,000 496
=============================================================================
PHARMACEUTICALS [3.5%]
Bristol-Myers Squibb 66,000 1,902
Merck 22,000 1,137
Pfizer 55,500 1,356
-----------------------------------------------------------------------------
TOTAL PHARMACEUTICALS 4,395
=============================================================================
ROAD & RAIL [1.9%]
CSX 31,400 1,342
Norfolk Southern 12,600 654
Ryder System 9,300 455
-----------------------------------------------------------------------------
TOTAL ROAD & RAIL 2,451
=============================================================================
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT [2.8%]
Analog Devices 17,000 615
Applied Materials 52,500 1,087
Texas Instruments 50,000 1,829
-----------------------------------------------------------------------------
TOTAL SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT 3,531
=============================================================================
SOFTWARE [0.9%]
Microsoft 37,500 1,105
=============================================================================
SPECIALTY RETAIL [0.8%]
Best Buy 14,200 653
Staples 18,000 387
-----------------------------------------------------------------------------
TOTAL SPECIALTY RETAIL 1,040
=============================================================================
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS [0.3%]
Jones Apparel Group 20,000 $ 423
=============================================================================
THRIFTS & MORTGAGE FINANCE [1.5%]
Fannie Mae 16,000 973
Washington Mutual 26,200 925
-----------------------------------------------------------------------------
TOTAL THRIFTS & MORTGAGE FINANCE 1,898
=============================================================================
WIRELESS TELECOMMUNICATION SERVICES [0.9%]
Alltel 10,600 738
Sprint-Nextel 24,300 462
-----------------------------------------------------------------------------
TOTAL WIRELESS TELECOMMUNICATION SERVICES 1,200
=============================================================================
TOTAL COMMON STOCK
(Cost $97,943) 123,960
========================================================================
CASH EQUIVALENTS [2.5%]
Fidelity Institutional
Domestic Money Market
Portfolio, Cl I, 5.25%** 1,906,814 1,907
SEI Daily Income Trust,
Prime Obligation Fund,
Cl A, 5.35%** 1,283,632 1,284
-----------------------------------------------------------------------------
TOTAL CASH EQUIVALENTS
(Cost $3,191) 3,191
========================================================================
TOTAL INVESTMENTS [100.0%]
(Cost $101,134) $ 127,151
========================================================================
PERCENTAGES BASED ON NET ASSETS OF $127,214 ($ THOUSANDS).
* NON-INCOME PRODUCING SECURITY
** RATE SHOWN IS THE 7-DAY EFFECTIVE YIELD AS OF SEPTEMBER 30, 2007.
CL -- CLASS
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 18
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
LARGE CAP GROWTH EQUITY FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
SECTOR WEIGHTINGS (UNAUDITED)*:
21.5% Information Technology
15.6% Healthcare
15.2% Energy
13.4% Consumer Staples
10.1% Industrials
9.7% Consumer Discretionary
9.4% Financials
2.1% Short-Term Investments
2.0% Materials
1.0% Utilities
* Percentages based on total investments.
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
COMMON STOCK [98.0%]
AEROSPACE & DEFENSE [3.7%]
Boeing 3,300 $ 347
Honeywell International 11,000 654
L-3 Communications Holdings 3,000 306
Lockheed Martin 5,400 586
Precision Castparts 2,300 340
-----------------------------------------------------------------------------
TOTAL AEROSPACE & DEFENSE 2,233
=============================================================================
AIR FREIGHT & LOGISTICS [0.3%]
United Parcel Service, Cl B 2,700 203
=============================================================================
BEVERAGES [2.1%]
Coca-Cola 4,200 242
PepsiCo 14,500 1,062
-----------------------------------------------------------------------------
TOTAL BEVERAGES 1,304
=============================================================================
BIOTECHNOLOGY [4.0%]
Amgen* 9,000 509
Biogen Idec* 7,000 464
Genzyme-General Division* 6,500 403
Gilead Sciences* 25,400 1,038
-----------------------------------------------------------------------------
TOTAL BIOTECHNOLOGY 2,414
=============================================================================
CAPITAL MARKETS [3.8%]
Franklin Resources 4,500 574
Goldman Sachs Group 3,400 737
Lehman Brothers Holdings 9,900 611
T Rowe Price Group 7,000 390
-----------------------------------------------------------------------------
TOTAL CAPITAL MARKETS 2,312
=============================================================================
CHEMICALS [0.5%]
Monsanto 3,400 291
=============================================================================
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
COMMERCIAL BANKS [0.4%]
Synovus Financial 8,300 $ 233
=============================================================================
COMMERCIAL SERVICES & SUPPLIES [1.0%]
Robert Half International 12,400 370
RR Donnelley & Sons 6,300 231
-----------------------------------------------------------------------------
TOTAL COMMERCIAL SERVICES & SUPPLIES 601
=============================================================================
COMMUNICATIONS EQUIPMENT [1.8%]
Qualcomm 25,500 1,078
=============================================================================
COMPUTERS & PERIPHERALS [5.3%]
Apple* 8,075 1,240
Hewlett-Packard 3,823 190
IBM 11,100 1,308
SanDisk* 8,500 468
-----------------------------------------------------------------------------
TOTAL COMPUTERS & PERIPHERALS 3,206
=============================================================================
DIVERSIFIED FINANCIAL SERVICES [1.1%]
CME Group 1,200 705
=============================================================================
ELECTRIC UTILITIES [0.2%]
Edison International 2,000 111
=============================================================================
ENERGY EQUIPMENT & SERVICES [3.7%]
BJ Services 14,100 374
ENSCO International 10,300 578
Noble 15,100 741
Transocean* 4,900 554
-----------------------------------------------------------------------------
TOTAL ENERGY EQUIPMENT & SERVICES 2,247
=============================================================================
FOOD & STAPLES RETAILING [4.3%]
CVS 13,843 549
Sysco 16,100 573
Wal-Mart Stores 34,075 1,487
-----------------------------------------------------------------------------
TOTAL FOOD & STAPLES RETAILING 2,609
=============================================================================
FOOD PRODUCTS [2.6%]
Archer-Daniels-Midland 9,900 328
Campbell Soup 9,700 359
General Mills 4,300 249
Kellogg 11,300 633
-----------------------------------------------------------------------------
TOTAL FOOD PRODUCTS 1,569
=============================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 19
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
LARGE CAP GROWTH EQUITY FUND (CONTINUED)
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES [2.7%]
Bard (C.R.) 3,200 $ 282
Stryker* 12,800 880
Zimmer Holdings* 6,200 502
-----------------------------------------------------------------------------
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES 1,664
=============================================================================
HEALTH CARE PROVIDERS & SERVICES [2.9%]
Cardinal Health 4,600 287
McKesson 4,300 253
Quest Diagnostics 5,400 312
UnitedHealth Group 18,700 906
-----------------------------------------------------------------------------
TOTAL HEALTH CARE PROVIDERS & SERVICES 1,758
=============================================================================
HEALTH CARE TECHNOLOGY [0.4%]
IMS Health 7,500 230
=============================================================================
HOTELS, RESTAURANTS & LEISURE [2.2%]
Carnival 6,600 319
Starbucks* 19,500 511
Yum! Brands 14,800 501
-----------------------------------------------------------------------------
TOTAL HOTELS, RESTAURANTS & LEISURE 1,331
=============================================================================
HOUSEHOLD DURABLES [0.3%]
Harman International Industries 2,200 190
=============================================================================
HOUSEHOLD PRODUCTS [4.4%]
Colgate-Palmolive 11,300 806
Procter & Gamble 26,302 1,850
-----------------------------------------------------------------------------
TOTAL HOUSEHOLD PRODUCTS 2,656
=============================================================================
INDEPENDENT POWER PRODUCERS &
ENERGY TRADERS [0.8%]
AES* 24,000 481
=============================================================================
INDUSTRIAL CONGLOMERATES [2.5%]
3M 6,000 561
General Electric 23,575 976
-----------------------------------------------------------------------------
TOTAL INDUSTRIAL CONGLOMERATES 1,537
=============================================================================
INSURANCE [2.8%]
Aflac 6,600 376
American International Group 14,000 947
MetLife 5,200 363
-----------------------------------------------------------------------------
TOTAL INSURANCE 1,686
=============================================================================
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES [3.5%]
eBay* 21,175 $ 826
Google, Cl A* 1,600 908
Yahoo!* 15,000 402
-----------------------------------------------------------------------------
TOTAL INTERNET SOFTWARE & SERVICES 2,136
=============================================================================
IT SERVICES [0.4%]
Cognizant Technology Solutions, Cl A* 3,000 239
=============================================================================
MACHINERY [2.6%]
Caterpillar 12,000 941
Danaher 7,600 629
-----------------------------------------------------------------------------
TOTAL MACHINERY 1,570
=============================================================================
MEDIA [2.6%]
Comcast Cl A* 12,150 294
DIRECTV Group* 20,500 498
McGraw-Hill 10,600 540
Time Warner 13,100 240
-----------------------------------------------------------------------------
TOTAL MEDIA 1,572
=============================================================================
METALS & MINING [1.2%]
Freeport-McMoRan Copper & Gold, Cl B 4,400 461
Nucor 4,200 250
-----------------------------------------------------------------------------
TOTAL METALS & MINING 711
=============================================================================
MULTILINE RETAIL [1.4%]
Kohl's* 6,800 390
Target 7,500 477
-----------------------------------------------------------------------------
TOTAL MULTILINE RETAIL 867
=============================================================================
OIL, GAS & CONSUMABLE FUELS [11.5%]
Anadarko Petroleum 8,000 430
Chevron 18,000 1,685
Exxon Mobil 32,000 2,962
Occidental Petroleum 4,800 308
Sunoco 6,700 474
Valero Energy 2,000 134
XTO Energy 16,400 1,014
-----------------------------------------------------------------------------
TOTAL OIL, GAS & CONSUMABLE FUELS 7,007
=============================================================================
PAPER & FOREST PRODUCTS [0.3%]
International Paper 6,000 215
=============================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 20
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
LARGE CAP GROWTH EQUITY FUND (CONCLUDED)
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
PHARMACEUTICALS [5.7%]
Forest Laboratories* 11,700 $ 437
Johnson & Johnson 25,164 1,653
Pfizer 26,400 645
Wyeth 16,050 715
-----------------------------------------------------------------------------
TOTAL PHARMACEUTICALS 3,450
=============================================================================
REAL ESTATE INVESTMENT TRUSTS (REITS) [0.8%]
Simon Property Group 4,700 470
=============================================================================
REAL ESTATE MANAGEMENT & DEVELOPMENT [0.5%]
CB Richard Ellis Group, Cl A* 12,300 342
=============================================================================
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT [3.4%]
Applied Materials 16,850 349
Broadcom, Cl A* 9,050 330
Intel 17,300 447
Linear Technology 12,900 451
Texas Instruments 14,400 527
-----------------------------------------------------------------------------
TOTAL SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT 2,104
=============================================================================
SOFTWARE [7.1%]
Adobe Systems* 10,100 441
Autodesk* 10,600 530
Citrix Systems* 8,275 334
Microsoft 57,180 1,684
Oracle* 29,265 633
Symantec* 37,700 731
-----------------------------------------------------------------------------
TOTAL SOFTWARE 4,353
=============================================================================
SPECIALTY RETAIL [1.7%]
Best Buy 9,200 424
Lowe's 17,600 493
Staples 4,700 101
-----------------------------------------------------------------------------
TOTAL SPECIALTY RETAIL 1,018
=============================================================================
TEXTILES, APPAREL & LUXURY GOODS [1.5%]
Coach* 14,000 662
Nike, Cl B 4,500 264
-----------------------------------------------------------------------------
TOTAL TEXTILES, APPAREL & LUXURY GOODS 926
=============================================================================
TOTAL COMMON STOCK
(Cost $49,360) 59,629
=======================================================================
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
CASH EQUIVALENTS [2.1%]
Fidelity Institutional Domestic
Money Market Portfolio,
Cl I, 5.25%** 668,202 $ 668
SEI Daily Income Trust,
Prime Obligation Fund,
Cl A, 5.35%** 602,478 602
-----------------------------------------------------------------------------
TOTAL CASH EQUIVALENTS
(Cost $1,270) 1,270
=======================================================================
TOTAL INVESTMENTS [100.1%]
(Cost $50,630) $ 60,899
=======================================================================
PERCENTAGES ARE BASED ON NET ASSETS OF $60,847 ($ THOUSANDS).
* NON-INCOME PRODUCING SECURITY
** RATE SHOWN IS THE 7-DAY EFFECTIVE YIELD AS OF SEPTEMBER 30, 2007.
CL -- CLASS
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 21
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
RCB SMALL CAP VALUE FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
SECTOR WEIGHTINGS (UNAUDITED)*:
26.3% Financials
23.4% Consumer Discretionary
14.4% Energy
6.7% Short-Term Investment
6.4% Materials
5.3% Industrials
4.6% Information Technology
4.6% Consumer Staples
2.2% Healthcare
2.2% Telecommunication Services
2.1% Utilities
1.8% Common Stock
* Percentages based on total investments.
- --------------------------------------------------------------------------------
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
COMMON STOCK [92.7%]
AUTO COMPONENTS [2.1%]
GenTek* 41,215 $ 1,240
=============================================================================
CHEMICALS [4.3%]
Spartech 150,800 2,573
=============================================================================
DIVERSIFIED CONSUMER SERVICES [2.3%]
Coinstar* 42,800 1,377
=============================================================================
ELECTRIC UTILITIES [2.2%]
Sierra Pacific Resources 82,000 1,290
=============================================================================
ELECTRONIC EQUIPMENT & INSTRUMENTS [2.4%]
LoJack* 76,600 1,452
=============================================================================
ENERGY EQUIPMENT & SERVICES [4.3%]
Carbo Ceramics 29,800 1,512
Exterran Holdings* 13,422 1,078
-----------------------------------------------------------------------------
TOTAL ENERGY EQUIPMENT & SERVICES 2,590
=============================================================================
FINANCIAL SERVICES-SPECIAL PURPOSE
ACQUISITION [1.6%]
Symmetry Holdings* 131,000 979
=============================================================================
FOOD PRODUCTS [4.6%]
Ralcorp Holdings* 49,600 2,769
=============================================================================
HOTELS RESTAURANTS & LEISURE [5.5%]
IHOP 18,000 1,140
Triarc, Cl B 172,900 2,163
-----------------------------------------------------------------------------
TOTAL HOTELS RESTAURANTS & LEISURE 3,303
=============================================================================
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
INSURANCE [17.1%]
Alleghany* 6,300 $ 2,558
Conseco* 117,700 1,883
Hilb Rogal & Hobbs 31,925 1,383
Montpelier Re Holdings 100,000 1,770
White Mountains Insurance Group 5,000 2,599
-----------------------------------------------------------------------------
TOTAL INSURANCE 10,193
=============================================================================
LIFE SCIENCES TOOLS & SERVICES [2.2%]
PerkinElmer 45,500 1,329
=============================================================================
MACHINERY [5.1%]
Actuant, Cl A 26,600 1,728
IDEX 35,800 1,303
-----------------------------------------------------------------------------
TOTAL MACHINERY 3,031
=============================================================================
MEDIA [11.8%]
Cumulus Media, Cl A* 122,900 1,256
Fisher Communications* 53,300 2,658
Lodgenet Entertainment* 122,870 3,116
-----------------------------------------------------------------------------
TOTAL MEDIA 7,030
=============================================================================
METALS & MINING [2.3%]
Compass Minerals International 39,500 1,345
=============================================================================
MULTILINE RETAIL [2.1%]
99 Cents Only Stores* 124,100 1,274
=============================================================================
OIL, GAS & CONSUMABLE FUELS [10.3%]
Alpha Natural Resources* 97,500 2,265
Edge Petroleum 103,200 1,325
Rosetta Resources* 140,700 2,580
-----------------------------------------------------------------------------
TOTAL OIL, GAS & CONSUMABLE FUELS 6,170
=============================================================================
REAL ESTATE INVESTMENT TRUSTS (REITS) [8.0%]
Annaly Capital Management 200,000 3,186
Capital Trust, Cl A 45,300 1,608
-----------------------------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUSTS (REITS) 4,794
=============================================================================
SOFTWARE [2.3%]
Fair Isaac 37,900 1,368
=============================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 22
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
RCB SMALL CAP VALUE FUND (CONCLUDED)
DESCRIPTION SHARES/FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES [2.2%]
iPCS 38,000 $ 1,307
=============================================================================
TOTAL COMMON STOCK
(Cost $44,117) 55,414
=======================================================================
CORPORATE BONDS [2.0%]
FINANCIAL SERVICES [1.7%]
Labranche (A)
9.500%, 05/15/09 $ 1,000 990
=============================================================================
LABORATORY EQUIPMENT [0.3%]
Sea Containers, Ser B (B)
10.750%, 10/15/06 250 180
=============================================================================
TOTAL CORPORATE BONDS
(Cost $1,257) 1,170
=======================================================================
WARRANTS [0.2%]
Symmetry,*
Expires 03/07/11 72,000 94
-----------------------------------------------------------------------------
TOTAL WARRANTS
(Cost $103) 94
=======================================================================
REPURCHASE AGREEMENT (C) [6.8%]
Morgan Stanley,
4.500%, dated 9/28/07,
to be repurchased on 10/01/07,
repurchase price $4,089,823
(collateralized by a U.S. Treasury
Note, par value $3,191,279,
4.250%, 1/15/10; with total
market value $4,170,608) 4,088 4,088
-----------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $4,088) 4,088
=======================================================================
TOTAL INVESTMENTS [101.7%]
(Cost $49,565) $ 60,766
=======================================================================
PERCENTAGES ARE BASED ON NET ASSETS OF $59,759 ($THOUSANDS).
* NON-INCOME PRODUCING SECURITY
(A) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION NORMALLY TO QUALIFIED INSTITUTIONS. ON SEPTEMBER 30, 2007,
THE VALUE OF THESE SECURITIES AMOUNTED TO $990 ($THOUSANDS), REPRESENTING
1.7% OF THE NET ASSETS OF THE FUND.
(B) IN DEFAULT ON INTEREST PAYMENTS
(C) TRI-PARTY REPURCHASE AGREEMENT
CL -- CLASS
SER -- SERIES
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 23
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
SECTOR WEIGHTINGS (UNAUDITED)*:
40.2% Financials
27.2% Industrial
8.0% Bank
7.2% U.S. Government Mortgage-Backed Obligations
5.6% Telephone
2.7% Utilities
2.4% Commercial Paper
1.9% Short-Term Investment
1.5% Municipal Bond
1.3% U.S. Treasury Obligations
1.0% Gas Transmission
0.7% Foreign Governments
0.2% Mortgage-Backed
0.1% Transportation
* Percentages based on total investments.
- --------------------------------------------------------------------------------
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
CORPORATE BONDS [84.5%]
AIR TRANSPORTATION [0.1%]
Federal Express, Ser A2
7.890%, 09/23/08 $ 67 $ 68
=============================================================================
AUTOMOTIVE [0.9%]
DaimlerChrysler
5.875%, 03/15/11 570 578
=============================================================================
BANKS [10.6%]
Bank of America
5.300%, 03/15/17 1,000 970
Bankers Trust
7.250%, 10/15/11 500 540
Crestar Finance
6.500%, 01/15/08 1,035 1,040
Deutsche Bank
7.500%, 04/25/09 500 519
JPMorgan Chase
7.125%, 06/15/09 675 697
Wachovia Bank
4.800%, 11/01/14 1,270 1,209
Wells Fargo
4.625%, 08/09/10 1,000 990
4.000%, 08/15/08 765 757
-----------------------------------------------------------------------------
TOTAL BANKS 6,722
=============================================================================
BEAUTY PRODUCTS [1.3%]
Avon Products
7.150%, 11/15/09 800 839
=============================================================================
CHEMICALS [0.3%]
Praxair
6.625%, 10/15/07 200 200
=============================================================================
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
COMMUNICATION & MEDIA [4.1%]
AOL Time Warner
6.750%, 04/15/11 $ 415 $ 432
Comcast Cable Communications
Holdings
8.375%, 03/15/13 440 493
News America Holdings
9.250%, 02/01/13 450 521
Walt Disney
5.700%, 07/15/11 1,100 1,116
-----------------------------------------------------------------------------
TOTAL COMMUNICATION & MEDIA 2,562
=============================================================================
COMPUTER SYSTEM DESIGN & SERVICES [3.0%]
Cisco Systems
5.500%, 02/22/16 1,000 993
IBM, MTN
4.375%, 06/01/09 900 899
-----------------------------------------------------------------------------
TOTAL COMPUTERS SYSTEM DESIGN
& SERVICES 1,892
=============================================================================
DRUGS [1.6%]
Abbott Laboratories
5.375%, 05/15/09 1,000 1,010
=============================================================================
ELECTRICAL SERVICES [2.7%]
American Electric Power
5.250%, 06/01/15 490 468
Iowa Electric Light & Power
6.000%, 10/01/08 200 201
WPS Resources
7.000%, 11/01/09 1,000 1,031
-----------------------------------------------------------------------------
TOTAL ELECTRICAL SERVICES 1,700
=============================================================================
FINANCE AUTO LOANS [1.6%]
American Honda Finance
5.125%, 12/15/10 1,000 1,014
=============================================================================
FINANCIAL SERVICES [20.7%]
American General Finance MTN
5.750%, 09/15/16 500 485
American General Finance,
Ser I, MTN
4.625%, 05/15/09 1,000 991
Boeing Capital
6.500%, 02/15/12 930 980
CIT Group
5.400%, 03/07/13 1,000 938
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 24
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
CORPORATE BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Citigroup
5.850%, 08/02/16 $ 1,000 $ 1,012
ConocoPhillips Canada Funding
5.625%, 10/15/16 600 598
General Electric Capital,
Ser A, MTN
6.875%, 11/15/10 250 264
6.000%, 06/15/12 1,540 1,588
HSBC Finance
5.250%, 04/15/15 1,250 1,197
John Deere Capital
4.625%, 04/15/09 750 746
MBNA
4.625%, 09/15/08 430 428
National Rural Utilities,
Ser C, MTN
7.250%, 03/01/12 1,000 1,067
SLM, Ser A, MTN
5.440%, 01/25/08 1,000 998
Toyota Motor Credit
4.350%, 12/15/10 1,800 1,789
-----------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES 13,081
=============================================================================
FOOD, BEVERAGE & TOBACCO [8.4%]
Anheuser-Busch
7.500%, 03/15/12 1,190 1,297
Bottling Group
5.500%, 04/01/16 1,000 1,001
Diageo Capital
3.375%, 03/20/08 1,000 990
General Mills
6.000%, 02/15/12 560 572
PepsiCo
5.150%, 05/15/12 1,425 1,440
-----------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO 5,300
=============================================================================
FOREIGN GOVERNMENTS [0.7%]
United Mexican States
5.875%, 01/15/14 450 463
=============================================================================
INSURANCE [5.8%]
Aflac
6.500%, 04/15/09 1,150 1,173
AXA Financial
7.750%, 08/01/10 1,000 1,073
Berkshire Hathaway Finance
4.125%, 01/15/10 1,475 1,450
-----------------------------------------------------------------------------
TOTAL INSURANCE 3,696
=============================================================================
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
INVESTMENT BANKER/BROKER DEALER [9.7%]
Citigroup
5.500%, 02/15/17 $ 250 $ 246
Credit Suisse
5.500%, 08/15/13 1,250 1,249
Goldman Sachs Group
5.625%, 01/15/17 1,260 1,222
Jefferies Group
5.500%, 03/15/16 665 620
JP Morgan Chase
6.750%, 02/01/11 500 525
Merrill Lynch, Ser C, MTN
4.250%, 02/08/10 1,275 1,253
Morgan Stanley
6.750%, 04/15/11 30 31
3.875%, 01/15/09 1,000 985
-----------------------------------------------------------------------------
TOTAL INVESTMENT BANKER/BROKER DEALER 6,131
=============================================================================
PETROLEUM & FUEL PRODUCTS [1.5%]
ConocoPhillips
6.375%, 03/30/09 305 312
Duke Capital
5.500%, 03/01/14 625 609
-----------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS 921
=============================================================================
REAL ESTATE INVESTMENT TRUST [0.1%]
Kimco Realty, Ser B, MTN
7.860%, 11/01/07 67 67
=============================================================================
RETAIL [4.6%]
Home Depot
5.250%, 12/16/13 1,000 960
Kohl's
6.300%, 03/01/11 1,000 1,030
Kroger
5.500%, 02/01/13 450 450
Target
5.875%, 07/15/16 500 500
-----------------------------------------------------------------------------
TOTAL RETAIL 2,940
=============================================================================
TELEPHONES & TELECOMMUNICATIONS [5.6%]
Bellsouth
4.200%, 09/15/09 1,000 985
Deutsche Telekom International
Finance
5.250%, 07/22/13 475 465
New Cingular Wireless Services
8.125%, 05/01/12 400 443
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 25
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
CORPORATE BOND FUND (CONCLUDED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Sprint Capital
8.375%, 03/15/12 $ 550 $ 606
Verizon Communications
7.250%, 12/01/10 25 27
5.550%, 02/15/16 1,000 990
-----------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS 3,516
=============================================================================
WASTE DISPOSAL [1.2%]
Waste Management
6.875%, 05/15/09 735 76
=============================================================================
TOTAL CORPORATE BONDS
(Cost $53,602) 53,460
=======================================================================
U.S. GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS [7.2%]
FFCB REMIC, Ser IA4, Cl 1
5.770%, 02/14/14 995 1,012
FHLMC REMIC, Ser 2982,
Cl NB
5.500%, 02/15/29 340 341
FHLMC REMIC, Ser R004,
Cl Al
5.125%, 12/15/13 944 942
FNMA REMIC, Ser 2002-56,
Cl MC
5.500%, 09/25/17 1,075 1,087
FNMA REMIC, Ser 2006,
Cl AB
6.000%, 06/25/16 164 165
FNMA REMIC, Ser 2007-B1,
Cl BE
5.450%, 12/25/20 979 976
-----------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT MORTGAGE-
BACKED OBLIGATIONS
(Cost $4,496) 4,523
=======================================================================
U.S. TREASURY OBLIGATIONS [1.2%]
U.S. Treasury Bond
4.625%, 02/15/17 230 231
U.S. Treasury Inflation Index Notes
2.000%, 01/15/14 564 556
-----------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $809) 787
=======================================================================
DESCRIPTION FACE AMOUNT (000)/SHARES VALUE (000)
- --------------------------------------------------------------------------------
MUNICIPAL BOND [1.5%]
CALIFORNIA [1.5%]
City of Industry, Sales Tax
Project, RB, MBIA
5.000%, 01/01/12 $ 955 $ 949
=============================================================================
TOTAL MUNICIPAL BOND
(Cost $978) 949
=======================================================================
MORTGAGE-BACKED SECURITY [0.2%]
Residential Asset Mortgage
Products, Ser 2003-RS5, Cl AI4
3.700%, 09/25/31 158 156
-----------------------------------------------------------------------------
TOTAL MORTGAGE-BACKED SECURITY
(Cost $156) 156
=======================================================================
COMMERCIAL PAPER [2.4%]
BANKS [2.4%]
Lloyds (A)
5.043%, 10/15/07 1,500 1,497
=============================================================================
TOTAL COMMERCIAL PAPER
(Cost $1,497) 1,497
=======================================================================
CASH EQUIVALENT [1.9%]
Fidelity Institutional Domestic
Money Market Portfolio,
Cl I, 5.25%* 1,178,699 1,179
-----------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(Cost $1,179) 1,179
=======================================================================
TOTAL INVESTMENTS [98.9%]
(Cost $62,717) $ 62,551
=======================================================================
PERCENTAGES ARE BASED ON NET ASSETS OF $63,253 ($THOUSANDS).
* RATE SHOWN IS THE 7-DAY EFFECTIVE YIELD AS OF SEPTEMBER 30, 2007.
(A) THE RATE REPORTED IS THE EFFECTIVE YIELD AT TIME OF PURCHASE.
CL -- CLASS
FFCB -- FEDERAL FARM CREDIT BANK
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
MBIA -- MUNICIPAL BOND INSURANCE ASSOCIATION
MTN -- MEDIUM TERM NOTE
RB -- REVENUE BOND
REMIC -- REAL ESTATE MORTGAGE INVESTMENT CONDUIT
SER -- SERIES
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 26
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
GOVERNMENT BOND FUND
SECTOR WEIGHTINGS (UNAUDITED)*:
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
63.5% U.S. Government Mortgage-Backed Obligations
34.3% U.S. Government Agency Obligations
2.2% Short-Term Investments
* Percentages based on total investments.
- --------------------------------------------------------------------------------
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
U.S. GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS [63.1%]
FFCB REMIC, Ser IA2, Cl 1
5.220%, 10/21/13 $ 1,226 $ 1,246
FFCB REMIC, Ser IA3, Cl 1
5.370%, 09/25/13 3,922 3,934
FFCB REMIC, Ser IA4, Cl 1
5.770%, 02/14/14 1,623 1,649
FHLMC REMIC, Ser R002,
Cl AH
4.750%, 07/15/15 2,102 2,078
FHLMC REMIC, Ser R003,
Cl AG
5.125%, 10/15/15 2,218 2,210
FHLMC REMIC, Ser R005,
Cl AB
5.500%, 12/15/18 2,513 2,511
FHLMC REMIC, Ser R007,
Cl AC
5.875%, 05/15/16 2,186 2,204
FHLMC REMIC, Ser R009,
Cl AK
5.750%, 12/15/18 2,355 2,369
FHLMC REMIC, Ser R010,
Cl AB
5.500%, 12/15/19 2,747 2,742
FHLMC REMIC, Ser R011,
Cl AB
5.500%, 12/15/20 1,887 1,882
FHLMC REMIC, Ser R012,
Cl AB
5.500%, 12/15/20 2,750 2,743
FHMLC REMIC, Ser R013,
Cl AB
6.000%, 12/15/21 2,910 2,941
FNMA ARM (A)
4.575%, 03/01/34 926 911
FNMA REMIC, Ser 119,
Cl DG
5.500%, 01/25/36 1,552 1,542
FNMA REMIC, Ser R009,
Cl AJ
5.750%, 12/15/18 2,828 2,845
- --------------------------------------------------------------------------------
DESCRIPTION FACE AMOUNT (000)/SHARES VALUE (000)
- --------------------------------------------------------------------------------
GNMA ARM (A)
5.000%, 08/20/35 $ 101 $ 101
4.500%, 04/20/35 947 943
---------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS
(Cost $34,746) 34,851
=======================================================================
U.S. GOVERNMENT AGENCY OBLIGATIONS [34.1%]
FHLB
6.200%, 03/22/21 2,000 1,996
5.250%, 10/14/11 2,500 2,517
5.000%, 12/11/15 2,500 2,513
FHLB DN (B)
4.920%, 10/05/07 2,000 1,999
FNMA
7.125%, 06/15/10 2,000 2,136
6.625%, 09/15/09 4,000 4,165
5.500%, 03/15/11 1,000 1,032
5.010%, 11/10/10 2,500 2,501
---------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $18,783) 18,859
=======================================================================
CASH EQUIVALENT [1.3%]
Fidelity Institutional Domestic
Money Market Portfolio,
Cl I, 5.25%* 715,651 716
---------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(Cost $716) 716
=======================================================================
REPURCHASE AGREEMENT [0.9%]
Lehman Brothers
5.050%, dated 09/28/07,
repurchased on 10/01/07,
repurchase price $500,210
(collateralized by a U.S.
Government obligation,
par value $525,000, 5.500%,
11/15/35; with total market
value $510,560) 500 500
---------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $500) 500
=======================================================================
TOTAL INVESTMENTS [99.4%]
(COST $54,745) $ 54,926
=======================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 27
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
GOVERNMENT BOND FUND (CONCLUDED)
DESCRIPTION
- --------------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $55,238 ($THOUSANDS).
* RATE SHOWN IS THE 7-DAY EFFECTIVE YIELD AS OF SEPTEMBER 30, 2007.
(A) THE RATE REPORTED IS THE EFFECTIVE YIELD AT TIME OF PURCHASE.
(B) ZERO COUPON SECURITY. THE RATE REPORTED ON THE SCHEDULE OF INVESTMENTS IS
THE EFFECTIVE YIELD AT TIME OF PURCHASE.
ARM -- ADJUSTABLE RATE MORTGAGE
CL -- CLASS
DN -- DISCOUNT NOTE
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
REMIC -- REAL ESTATE MORTGAGE INVESTMENT CONDUIT
SER -- SERIES
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 28
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT BOND FUND
SECTOR WEIGHTINGS (UNAUDITED)*:
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
28.3% Education
17.6% General Obligation
12.4% Public Facilities
10.8% General Revenue
10.1% Water
5.9% Industrial Development
5.2% Utilities
4.0% Power
2.8% Healthcare
1.1% Short-Term Investment
1.0% Transportation
0.8% Airports
* Percentages based on total investments.
- --------------------------------------------------------------------------------
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
MUNICIPAL BOND [99.3%]
ALABAMA [2.3%]
Jefferson County, Public Building
Authority, RB, AMBAC
Callable 04/01/16 @ 100
5.125%, 04/01/19 $ 500 $ 535
Jefferson County, Sewer
Authority, Ser B-8, RB, FSA
Callable 02/01/10 @ 100
5.250%, 02/01/14 250 259
-----------------------------------------------------------------------------
TOTAL ALABAMA 794
=============================================================================
ARIZONA [1.0%]
Arizona State, University Board
Regents, Ser A, COP
4.250%, 06/01/13 350 361
=============================================================================
CALIFORNIA [84.2%]
Anaheim, Public Financing
Authority, Distribution
SystemProject, Second Lien,
RB, MBIA
5.000%, 10/01/08 250 254
Bay Area Infrastructure Financing
Authority, State Payment
Acceleration Project, RB, XLCA
Callable 08/01/11 @ 100
5.000%, 08/01/14 500 525
Beverly Hills, Unified School
District Authority, Ser B, GO
Pre-Refunded @ 101 (A)
4.700%, 06/01/08 50 51
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Big Bear Lake, Water
Authority, RB, MBIA
6.000%, 04/01/11 $ 200 $ 211
Burbank, Public Financing
Authority, Golden State
Redevelopment Project,
Ser A, TA, AMBAC
Callable 12/01/13 @ 100
5.250%, 12/01/18 100 107
Burbank, Public Financing
Authority, Golden State
Redevelopment Project,
Ser A, TA, AMBAC
Pre-Refunded @ 100 (A)
5.250%, 12/01/13 75 82
California State, Daily
Kindergarten University
Project, Ser A, GO (B)
3.900%, 05/01/34 400 400
California State, Department of
Water Resources, Power Supply
Project, Ser A, RB, AMBAC
Callable 05/01/12 @ 101
5.500%, 05/01/15 600 652
California State, Department of
Water Resources, Ser W,
RB, FSA
5.500%, 12/01/13 400 443
California State, Economic
Recover Authority, Ser A, GO
5.250%, 01/01/11 500 526
California State, Educational
Facilities Authority, Pooled
College & University Projects,
Ser A, RB
4.300%, 04/01/09 100 101
California State, Educational
Facilities Authority, University
of San Francisco, RB, MBIA
6.000%, 10/01/08 300 308
California State, GO
5.000%, 04/01/10 215 222
5.000%, 08/01/14 500 538
California State, GO
Callable 02/01/12 @ 100
5.000%, 02/01/18 175 182
California State, GO
Callable 08/01/13 @ 100
5.250%, 02/01/21 250 265
California State, GO
Callable 10/01/16 @ 100
5.000%, 10/01/17 500 537
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 29
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
California State, GO
Pre-Refunded @ 100 (A)
5.250%, 09/01/10 $ 200 $ 210
5.250%, 10/01/10 70 74
5.000%, 02/01/12 400 424
California State, GO, FGIC
5.500%, 02/01/10 340 355
California State, Health Facilities
Financing Authority,
Cedars-Sinai Medical Center
Project, Ser A, RB
Pre-Refunded @ 101 (A)
6.250%, 12/01/09 490 523
California State, Infrastructure &
Economic Authority, Bay Area
Toll Bridges Project, Ser A,
RB, FSA
Pre-Refunded @ 100 (A)
5.250%, 07/01/13 125 136
California State, Infrastructure &
Economic Authority, Energy
Efficiency Master Trust,
Ser A, RB
5.000%, 03/01/11 315 330
California State, Public Works
Board Lease, California State
University, Ser C, RB
5.000%, 10/01/07 100 100
California State, Public Works
Board Lease, Department of
Corrections Project,
Ser B, RB, MBIA
Callable 09/01/08 @ 101
5.000%, 09/01/21 100 102
California State, Public Works
Board Lease, Department of
Corrections Project, Ser C, RB
Callable 12/01/13 @ 100
5.500%, 06/01/16 500 546
California State, Public Works
Board Lease, Department of
Corrections, Ser A, RB
Callable 09/01/08 @ 101
5.250%, 09/01/15 250 256
California State, Public Works
Board Lease, Department of
Corrections, Ser D, RB, FSA
5.250%, 06/01/15 500 540
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
California State, Public Works
Board Lease, Department of
Corrections-State Prisons
Project, Ser A, RB, AMBAC
5.250%, 12/01/13 $ 600 $ 640
California State, Public Works
Board Lease, Department of
Corrections-Ten Administration,
Ser A, RB, AMBAC
Callable 03/01/12 @ 100
5.250%, 03/01/18 155 163
California State, Public Works
Board Lease, Trustees California
State University, Ser A, RB
Callable 10/01/08 @ 101
5.250%, 10/01/11 100 102
California State, Public Works
Board Lease, Various University
Projects, RB, MBIA
5.500%, 06/01/14 250 270
California State, Systemwide
Project, Ser A, RB, FSA
4.000%, 11/01/14 300 308
California State, University of
California, Ser K, RB, MBIA
Pre-Refunded @ 101 (A)
5.000%, 09/01/08 150 154
California Statewide, Communities
Development Authority, Irvine-
UCI East Apartments Project, RB
Pre-Refunded @ 100 (A)
5.625%, 05/15/15 360 408
Castaic Lake, Water Agency, Water
Systems Improvement Project,
Ser A, COP, MBIA
7.000%, 08/01/13 300 352
Coachella Valley, Water District
Authority, Flood Control
Project, COP, AMBAC
Callable 10/01/07 @ 102
5.000%, 10/01/11 250 255
Compton, Community College
Authority, Ser 2004-A,
GO, MBIA
Callable 07/01/14 @ 100
5.250%, 07/01/21 605 656
Corona, Public Financing
Authority, City Hall Project,
Ser B, RB, MBIA
Callable 09/01/12 @ 100
5.250%, 09/01/16 350 376
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 30
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Culver City, Redevelopment
Finance Authority, TA, AMBAC
5.500%, 11/01/14 $ 75 $ 80
Escondido, Union School District,
Refunding & Financing Project,
COP, MBIA
4.750%, 07/01/19 735 778
Fillmore, Public Financing
Authority, Water Recycling
Financing Project, RB, CIFG
5.250%, 05/01/23 250 273
Fresno, Unified School District,
Election 2001 Project,
Ser D, GO
5.000%, 08/01/17 200 216
Fruitvale, School District, GO, FSA
Callable 08/01/09 @ 102
5.000%, 08/01/19 200 208
Golden State, Tobacco Settlement,
Ser A, RB
Callable 06/01/09 @ 100
5.000%, 06/01/19 250 252
Golden State, Tobacco Settlement,
Ser A, RB
Callable 06/01/10 @ 100
5.000%, 06/01/20 500 512
Golden State, Tobacco Settlement,
Ser B, RB
Pre-Refunded @ 100 (A)
5.750%, 06/01/08 250 254
Hawthorne, School District,
COP, FSA
Pre-Refunded @ 101 (A)
6.000%, 11/01/10 500 541
Indio, Public Financing Authority,
Public Capital Improvement
Project, Ser B, RB, AMBAC (C)
3.800%, 11/01/37 500 501
Kern, High School District,
GO, ETM
7.100%, 08/01/12 290 336
Los Angeles County, Public Works
Finance Authority, Master
Refunding Project, Ser A, RB,
MBIA
5.000%, 12/01/11 400 423
Los Angeles County, Public Works
Finance Authority, Regional
Park & Open Project, Ser A, RB
Pre-Refunded @ 101 (A)
5.500%, 10/01/07 325 328
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Los Angeles, Municipal
Improvement Authority,
Central Library Project, Ser A,
RB, MBIA
5.250%, 06/01/13 $ 230 $ 250
Los Angeles, Property Tax Project,
Ser A, GO, MBIA
4.000%, 09/01/09 250 253
Los Angeles, Wastewater Systems
Authority, RB, FSA
4.500%, 06/01/09 250 254
Los Angeles, Wastewater Systems
Authority, Sub-Ser B, RB,
MBIA
5.000%, 06/01/10 500 520
M-S-R Public Power Agency,
San Juan Project, Ser G,
RB, MBIA
Callable 07/01/07 @ 101
5.250%, 07/01/11 100 101
Metropolitan Water District,
Southern California Waterworks
Authority, RB
5.750%, 07/01/09 500 520
Northern California, Gas
Authority No. 1, Ser A, RB
5.000%, 07/01/10 500 514
Northern California, Transmission
Resource Authority, Ore
Transmission Project, Ser A,
RB, MBIA
7.000%, 05/01/13 250 283
Oakland, Joint Powers Financing
Authority, Oakland Convention
Center Project, RB, AMBAC
5.500%, 10/01/11 455 489
Oakland, Redevelopment Agency,
Central District Redevelopment
Project, TA, AMBAC
5.500%, 02/01/14 475 502
Oakland, State Building Authority,
Elihu M Harris Project, Ser A,
RB, AMBAC
Pre-Refunded @ 101 (A)
5.500%, 04/01/08 100 102
Oakland, United School District,
Alameda County Project, GO
5.000%, 08/01/16 250 273
Oakley, Civic Center Project, COP
4.000%, 05/01/12 230 234
Oxnard, School District, Election
2006 Project, Ser A, GO, CIFG
6.750%, 08/01/11 300 334
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 31
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Palm Springs, Financing Authority,
Public Capital Improvement
Lease Project, RB, AMBAC
Callable 04/01/17 @ 100
5.000%, 04/01/20 $ 470 $ 502
Pinole, Redevelopment Agency
Project, TA, FSA
Callable 08/01/09 @ 101
5.250%, 08/01/14 100 104
Redwoods, Community College,
2004 Election Project, Ser A,
GO, MBIA
5.000%, 08/01/23 420 439
Riverside, RB
Callable 10/01/08 @ 101
5.375%, 10/01/12 90 93
Riverside, RB
Pre-Refunded @ 101 (A)
5.375%, 10/01/08 10 10
Rowland, Unified School District,
Ser A, GO
Callable 08/01/16 @ 100
5.000%, 08/01/20 290 310
Sacramento County, Animal Care/
Youth Detention Project,
COP, AMBAC
Callable 10/01/17 @ 100
5.000%, 10/01/22 400 424
Sacramento County, Sanitation
District Funding Authority,
RB, ETM
Callable 11/05/07 @ 101
5.000%, 12/01/07 100 100
Sacramento, City Unified School
District, Ser A, GO, FSA
4.250%, 07/01/09 75 76
San Diego, Unified School District,
Election 1998 Project, Ser B-1,
GO, MBIA
5.000%, 07/01/17 1,000 1,093
San Diego, Unified School District,
Election 1998 Project,
Ser E, GO, FSA
Callable 07/01/13 @ 100
5.000%, 07/01/28 400 428
San Diego, University School
District, Election 1998 Project,
Ser E, GO, FSA
Callable 07/01/13 @ 101
5.250%, 07/01/16 100 109
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
San Francisco (City & County),
Airports Commission Authority,
Second Ser-27B, RB, FGIC
Callable 05/01/11 @ 100
5.250%, 05/01/12 $ 250 $ 264
San Francisco (City & County), GO
Callable 06/15/10 @ 102
5.000%, 06/15/11 235 247
San Jose, University School
District, Ser A, GO, FSA
Callable 08/01/11 @ 101
5.375%, 08/01/19 150 160
San Ysidro, School District,
Election 1997 Project, Ser C,
GO, MBIA
6.000%, 08/01/11 205 223
Sanger, Unified School District,
GO, MBIA
5.350%, 08/01/15 250 268
Santa Monica, Community
College District, 2004 Election
Project, Ser A, GO, MBIA
Pre-Refunded @ 100 (A)
5.000%, 05/01/15 400 436
Santa Monica, Public Safety
Facilities Project, RB
Callable 07/01/09 @ 101
5.250%, 07/01/14 100 104
Solano County, COP, MBIA
Pre-Refunded @ 100 (A)
5.250%, 11/01/12 100 108
Southern California, Metropolitan
Water District Authority,
Ser A, RB
5.750%, 07/01/21 280 322
Southern California, Metropolitan
Water District Authority,
Ser B-3, RB (C)
3.860%, 07/01/35 400 400
Southern Kern, Unified School
District, Ser A, GO, FGIC
Callable 11/01/13 @ 100
4.500%, 11/01/18 220 228
Tamalpais, Unified High School
District, GO, MBIA
Callable 08/01/11 @ 101
4.875%, 08/01/17 100 105
Vallejo, City Unified School
District, Election 1997 Project,
GO, AMBAC
8.600%, 08/01/10 580 660
-----------------------------------------------------------------------------
TOTAL CALIFORNIA 29,228
=============================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 32
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
FLORIDA [0.8%]
Seminole County, Water &
Sewer Authority, Refunding
Project, RB
Callable 10/01/15 @ 100
5.000%, 10/01/19 $ 250 $ 265
=============================================================================
ILLINOIS [0.6%]
Illinois State, Civic Center
Authority, RB, FSA
Callable 12/15/10 @ 100
5.500%, 12/15/14 200 211
=============================================================================
MISSOURI [0.6%]
St. Louis, Downtown Parking
Facilities Project, Sub-Ser A, RB
Pre-Refunded @ 100 (A)
6.000%, 02/01/12 200 217
=============================================================================
NEW JERSEY [1.0%]
New Jersey State, Turnpike
Authority, RB, MBIA, ETM
6.500%, 01/01/16 315 363
=============================================================================
NEW YORK [3.1%]
New York State, Environmental
Facilities Authority, Ser D, RB
Callable 08/15/14 @ 100
4.750%, 08/15/21 500 517
New York State, Ser E, RB
6.000%, 04/01/14 500 551
-----------------------------------------------------------------------------
TOTAL NEW YORK 1,068
=============================================================================
TEXAS [3.7%]
Carroll, Independent School
District, GO
6.375%, 02/15/21 430 531
Rio Grande, City Consolidated
Independent School District, GO
Pre-Refunded @ 100 (A)
5.875%, 08/15/10 200 213
San Angelo, Waterworks & Sewer
System Authority, Refunding &
Improvements Projects, RB, FSA
Callable 04/01/11 @ 100
5.250%, 04/01/19 100 104
DESCRIPTION FACE AMOUNT (000)/SHARES VALUE (000)
- --------------------------------------------------------------------------------
Travis County, Health Facilities
Development Authority,
Ascension Health Credit Project,
Ser A, RB, MBIA
Pre-Refunded @ 101 (A)
6.250%, 11/15/09 $ 400 $ 426
-----------------------------------------------------------------------------
TOTAL TEXAS 1,274
=============================================================================
UTAH [0.4%]
Central, Water Conservancy
District, Ser D, GO
Pre-Refunded @ 100 (A)
4.600%, 04/01/09 140 143
=============================================================================
PUERTO RICO [1.6%]
Puerto Rico, Electric Power
Authority, Power Project,
Ser CC, RB, MBIA
Callable 11/05/07 @ 102
5.250%, 07/01/09 100 102
Puerto Rico, Municipal Finance
Agency, Ser A, RB, FSA
Callable 11/05/07 @ 102
5.250%, 07/01/10 130 132
Puerto Rico, Public Buildings
Authority, Government Facilities
Project, Ser J, RB, AMBAC
Callable 07/01/12 @ 100
5.000%, 07/01/36 300 317
-----------------------------------------------------------------------------
TOTAL PUERTO RICO 551
=============================================================================
TOTAL MUNICIPAL BOND
(Cost $34,384) 34,475
======================================================================
CASH EQUIVALENT [1.1%]
Federated California Municipal
Money Market Fund,
Cl I, 3.52%* 382,994 383
-----------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(Cost $383) 383
======================================================================
TOTAL INVESTMENTS [100.4%]
(Cost $34,767) $ 34,858
======================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 33
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT BOND FUND (CONCLUDED)
DESCRIPTION
- --------------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $34,724 ($THOUSANDS).
* RATE SHOWN IS THE 7-DAY EFFECTIVE YIELD AS OF SEPTEMBER 30, 2007.
(A) PRE-REFUNDED SECURITY -- THE MATURITY DATE SHOWN IS THE PRE-REFUNDED DATE.
(B) SECURITIES ARE HELD IN CONJUNCTION WITH A LETTER OF CREDIT FROM A MAJOR
BANK OR FINANCIAL INSTITUTION.
(C) FLOATING RATE SECURITY -- THE RATE REFLECTED ON THE SCHEDULE OF INVESTMENTS
IS THE RATE IN EFFECT ON SEPTEMBER 30, 2007.
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
CIFG -- CDC IXIS FINANCIAL GUARANTY
CL -- CLASS
COP -- CERTIFICATE OF PARTICIPATION
ETM -- ESCROWED TO MATURITY
FGIC -- FINANCIAL GUARANTY INSURANCE COMPANY
FSA -- FINANCIAL SECURITY ASSISTANCE
GO -- GENERAL OBLIGATION
MBIA -- MUNICIPAL BOND INSURANCE ASSOCIATION
RB -- REVENUE BOND
SER -- SERIES
TA -- TAX ALLOCATION
XLCA -- XL CAPITAL ASSURANCE
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 34
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
SECTOR WEIGHTINGS (UNAUDITED)*:
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
73.7% Industrial
9.4% Financial
4.8% Telephone
4.7% Utilities
4.5% Gas Transmission
1.7% Transportation
0.7% Short-Term Investments
0.5% Common Stock
* Percentages based on total investments.
- --------------------------------------------------------------------------------
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
CORPORATE BONDS [96.5%]
AEROSPACE & DEFENSE [1.1%]
DRS Techologies
6.625%, 02/01/16 $ 100 $ 99
Esterline Technologies
7.750%, 06/15/13 100 101
L-3 Communications
5.875%, 01/15/15 200 192
-----------------------------------------------------------------------------
TOTAL AEROSPACE & DEFENSE 392
=============================================================================
AIRLINES [0.3%]
DAE Aviation Holdings (A)
11.250%, 08/01/15 100 105
=============================================================================
APPAREL/TEXTILES [0.8%]
Hanesbrands, Ser B (C)
8.784%, 12/15/14 100 99
Levi Strauss
9.750%, 01/15/15 100 105
Phillips-Van Heusen
7.250%, 02/15/11 75 76
-----------------------------------------------------------------------------
TOTAL APPAREL/TEXTILES 280
=============================================================================
AUTO RENT & LEASE [1.5%]
Avis Budget Car Rental
7.750%, 05/15/16 100 98
Hertz
10.500%, 01/01/16 150 162
Rental Service (A)
9.500%, 12/01/14 100 96
United Rentals North America
6.500%, 02/15/12 100 101
Williams Scotsman
8.500%, 10/01/15 100 110
-----------------------------------------------------------------------------
TOTAL AUTO RENT & LEASE 567
=============================================================================
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
AUTOMOTIVE [2.4%]
General Motors
7.700%, 04/15/16 $ 200 $ 180
7.125%, 07/15/13 600 550
UCI Holdco (A)
4.258%, 12/15/13 164 156
-----------------------------------------------------------------------------
TOTAL AUTOMOTIVE 886
=============================================================================
AUTOPARTS [1.3%]
Accuride
8.500%, 02/01/15 150 144
Altra Industrial Motion
9.000%, 12/01/11 100 101
Asbury Automotive Group (A)
7.625%, 03/15/17 100 92
Cooper-Standard Automotive
8.375%, 12/15/14 50 44
Pep Boys (A)
7.500%, 12/15/14 100 96
-----------------------------------------------------------------------------
TOTAL AUTOPARTS 477
=============================================================================
BEAUTY PRODUCTS [0.3%]
Chattem
7.000%, 03/01/14 100 99
=============================================================================
BROADCASTING & CABLE [6.7%]
Albritton Communications
7.750%, 12/15/12 150 152
Atlantic Broadband Finance
9.375%, 01/15/14 100 97
Barrington Broadcasting Group (A)
10.500%, 08/15/14 100 103
Bonten Media Acquisition (A)
9.000%, 06/01/15 150 134
Cablevision Systems, Ser B
8.000%, 04/15/12 250 242
Charter Communications Holdings
10.250%, 09/15/10 400 409
CSC Holdings
7.625%, 07/15/18 100 96
Echostar DBS
6.625%, 10/01/14 200 201
Fisher Communication
8.625%, 09/15/14 150 155
Insight Communications (B)
12.250%, 02/15/11 100 103
Kabel Deutschland
10.625%, 07/01/14 200 214
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 35
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Local TV Finance (A)
9.250%, 06/15/15 $ 100 $ 94
Mediacom Capital
7.875%, 02/15/11 150 147
Nexstar Finance Holdings (B)
17.968%, 04/01/13 200 197
Olympus Communications (D)
10.625%, 07/15/04 100 --
Quebecor Media (A)
7.750%, 03/15/16 75 72
Videotron Ltee
6.875%, 01/15/14 100 98
-----------------------------------------------------------------------------
TOTAL BROADCASTING & CABLE 2,514
=============================================================================
BUILDING & CONSTRUCTION [2.7%]
Ainsworth Lumber
7.250%, 10/01/12 100 69
6.750%, 03/15/14 100 64
DR Horton
5.625%, 01/15/16 125 105
Esco (A)
8.625%, 12/15/13 50 49
Goodman Global Holdings
7.875%, 12/15/12 75 74
Interline Brands
8.125%, 06/15/14 50 49
International Utility Structures (D)
10.750%, 02/01/08 100 1
KB Home
8.625%, 12/15/08 50 50
Nortek
8.500%, 09/01/14 200 173
Panolam Industries (A)
10.750%, 10/01/13 250 237
Ply Gem Industries
9.000%, 02/15/12 150 122
-----------------------------------------------------------------------------
TOTAL BUILDING & CONSTRUCTION 993
=============================================================================
BUSINESS SERVICES [0.8%]
Corrections
7.500%, 05/01/11 100 101
FTI Consulting
7.625%, 06/15/13 50 51
Geo Group
8.250%, 07/15/13 150 151
-----------------------------------------------------------------------------
TOTAL BUSINESS SERVICES 303
=============================================================================
CHEMICALS [3.8%]
Basell (A)
8.375%, 08/15/15 250 228
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Equistar Chemicals
10.625%, 05/01/11 $ 86 $ 90
Georgia Gulf
9.500%, 10/15/14 150 137
Huntsman International
7.875%, 11/15/14 115 122
Innophos
8.875%, 08/15/14 100 99
Lyondell Chemical
8.250%, 09/15/16 60 68
8.000%, 09/15/14 60 66
6.875%, 06/15/17 50 54
Mosaic (A)
7.375%, 12/01/14 75 79
Nova Chemicals
6.500%, 01/15/12 150 142
Polymer Holdings (B)
16.366%, 07/15/14 250 229
Terra Capital, Ser B
7.000%, 02/01/17 100 97
-----------------------------------------------------------------------------
TOTAL CHEMICALS 1,411
=============================================================================
CIRCUIT BOARDS [0.1%]
Viasystems
10.500%, 01/15/11 50 50
=============================================================================
COAL MINING [0.4%]
Alpha Natural Resources
10.000%, 06/01/12 150 158
=============================================================================
COMMERCIAL SERVICES [1.4%]
ARAMARK Services (C)
8.856%, 02/01/15 100 101
Iron Mountain
8.750%, 07/15/18 150 156
8.625%, 04/01/13 100 101
Mobile Mini
6.875%, 05/01/15 75 73
Tube City IMS
9.750%, 02/01/15 100 98
-----------------------------------------------------------------------------
TOTAL COMMERCIAL SERVICES 529
=============================================================================
COMPUTER SYSTEM DESIGN & SERVICES [0.7%]
Activant Solutions
9.500%, 05/01/16 100 88
Compucom Systems (A)
12.000%, 11/01/14 125 157
-----------------------------------------------------------------------------
TOTAL COMPUTERS SYSTEM DESIGN
& SERVICES 245
=============================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 36
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
CONGLOMERATE [0.3%]
KAR Holdings (A)
8.750%, 05/01/14 $ 100 $ 96
=============================================================================
CONSUMER PRODUCTS & SERVICES [4.8%]
Ames True Temper (C)
9.360%, 01/15/12 100 99
Central Garden & Pet
9.125%, 02/01/13 100 94
Jarden
7.500%, 05/01/17 75 73
Johnsondiversey Holdings (B)
10.670%, 05/15/13 200 202
Johnsondiversey, Ser B
9.625%, 05/15/12 150 152
Libbey Glass (C)
12.385%, 06/01/11 100 108
MSX International (A)
12.500%, 04/01/12 100 97
Prestige Brands
9.250%, 04/15/12 90 91
Sealy Mattress
8.250%, 06/15/14 200 201
Southern States Cooperative (A)
10.500%, 11/01/10 200 206
Spectrum Brands
7.375%, 02/01/15 300 231
Steinway Musical (A)
7.000%, 03/01/14 100 95
Visant Holding
8.750%, 12/01/13 100 102
Yankee Acquisition, Ser B
9.750%, 02/15/17 50 47
-----------------------------------------------------------------------------
TOTAL CONSUMER PRODUCTS & SERVICES 1,798
=============================================================================
CONTAINERS & PACKAGING [2.6%]
Aleris International
10.000%, 12/15/16 50 44
Crown Americas
7.750%, 11/15/15 150 155
Exopack Holding
11.250%, 02/01/14 100 104
Graham Packaging
9.875%, 10/15/14 100 99
Intertape Polymer US
8.500%, 08/01/14 50 47
Owens-Brockway Glass Container
6.750%, 12/01/14 150 148
Plastipak Holdings (A)
8.500%, 12/15/15 100 103
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Solo Cup
8.500%, 02/15/14 $ 200 $ 177
Stone Container Finance
7.375%, 07/15/14 100 96
-----------------------------------------------------------------------------
TOTAL CONTAINERS & PACKAGING 973
=============================================================================
DIVERSIFIED OPERATIONS [0.7%]
Bombardier (A)
8.000%, 11/15/14 75 79
Trinity Industries
6.500%, 03/15/14 200 192
-----------------------------------------------------------------------------
TOTAL DIVERSIFIED OPERATIONS 271
=============================================================================
EDUCATIONAL SERVICES [0.3%]
Education Management
10.250%, 06/01/16 60 62
8.750%, 06/01/14 60 62
-----------------------------------------------------------------------------
TOTAL EDUCATIONAL SERVICES 124
=============================================================================
ELECTRIC UTILITIES [4.7%]
AES (A)
9.000%, 05/15/15 300 315
7.750%, 03/01/14 100 102
Allegheny Energy Supply
7.800%, 03/15/11 200 210
Aquila
7.625%, 11/15/09 100 104
Calpine Generating (D)
11.070%, 04/01/10 50 53
CMS Energy
6.875%, 12/15/15 150 151
Edison Mission Energy (A)
7.000%, 05/15/17 150 148
ESI Tractebel Acquisitions, Ser B
7.990%, 12/30/11 55 57
Mirant North America
7.375%, 12/31/13 150 152
NRG Energy
7.375%, 02/01/16 100 100
Reliant Energy
7.625%, 06/15/14 200 201
Sierra Pacific Resources
8.625%, 03/15/14 70 74
TECO Energy
7.200%, 05/01/11 100 104
-----------------------------------------------------------------------------
TOTAL ELECTRIC UTILITIES 1,771
=============================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 37
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
ENERGY & POWER [0.5%]
Aventine Renewable Energy
10.000%, 04/01/17 $ 100 $ 91
VeraSun Energy (A)
9.375%, 06/01/17 100 86
-----------------------------------------------------------------------------
TOTAL ENERGY & POWER 177
=============================================================================
ENTERTAINMENT & GAMING [10.2%]
AMC Entertainment
11.000%, 02/01/16 100 107
Buffalo Thunder Development
Authority (A)
9.375%, 12/15/14 100 94
CCM Merger (A)
8.000%, 08/01/13 225 219
Choctaw Resort Development
Enterprise (A)
7.250%, 11/15/19 194 191
Chukchansi Economic
Development Authority (A)
8.000%, 11/15/13 150 152
Circus & Eldorado Joint Venture/
Silver Legacy Capital
10.125%, 03/01/12 150 156
Fantainebleau Las Vegas
Holdings (A)
10.250%, 06/15/15 150 141
Greektown Holdings (A)
10.750%, 12/01/13 125 124
Herbst Gaming
8.125%, 06/01/12 150 134
Inn of the Mountain Gods
Resort & Casino
12.000%, 11/15/10 150 158
Isle of Capri Casinos
7.000%, 03/01/14 200 179
Jacobs Entertainment
9.750%, 06/15/14 75 75
MGM Mirage
8.500%, 09/15/10 200 209
6.750%, 09/01/12 100 98
6.000%, 10/01/09 100 99
Mohegan Tribal Gaming Authority
7.125%, 08/15/14 150 150
MTR Gaming Group, Ser B
9.750%, 04/01/10 200 205
OED/Diamond Jo
8.750%, 04/15/12 100 100
Penn National Gaming
6.875%, 12/01/11 100 101
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Pinnacle Entertainment (A)
7.500%, 06/15/15 $ 100 $ 95
San Pasqual Casino (A)
8.000%, 09/15/13 100 101
Seminole Hard Rock
Entertainment (A) (C)
8.194%, 03/15/14 100 98
Seneca Gaming
7.250%, 05/01/12 100 101
Shingle Springs Tribal Gaming
Authority (A)
9.375%, 06/15/15 100 101
Snoqualmie Entertainment
Authority (A) (C)
9.063%, 02/01/14 100 97
Speedway Motorsports
6.750%, 06/01/13 100 99
Tunica-Biloxi Gaming
Authority (A)
9.000%, 11/15/15 125 124
Waterford Gaming (A)
8.625%, 09/15/14 100 100
Wynn Las Vegas Capital
6.625%, 12/01/14 200 196
-----------------------------------------------------------------------------
TOTAL ENTERTAINMENT & GAMING 3,804
=============================================================================
FINANCIAL SERVICES [2.1%]
Ford Motor Credit
7.375%, 10/28/09 200 196
7.375%, 02/01/11 200 192
GMAC
6.750%, 12/01/14 425 385
-----------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES 773
=============================================================================
FOOD, BEVERAGE & TOBACCO [2.0%]
Alliance One (A)
8.500%, 05/15/12 75 74
Beverages & More (A)
9.250%, 03/01/12 100 101
Chiquita Brands International
7.500%, 11/01/14 100 86
Del Monte
8.625%, 12/15/12 50 51
Land O' Lakes
8.750%, 11/15/11 6 6
Le-Natures (A) (D)
9.000%, 06/15/13 150 41
Leiner Health Products
11.000%, 06/01/12 100 84
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 38
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
National Beef Packing
10.500%, 08/01/11 $ 100 $ 101
Pilgrim's Pride
8.375%, 05/01/17 100 102
Smithfield Foods, Ser B
8.000%, 10/15/09 100 103
-----------------------------------------------------------------------------
TOTAL FOOD, BEVERAGE & TOBACCO 749
=============================================================================
FORESTRY [0.2%]
Tembec Industries
7.750%, 03/15/12 150 58
=============================================================================
GAS/NATURAL GAS [2.5%]
Colorado Interstate Gas
6.800%, 11/15/15 150 155
El Paso
7.000%, 05/15/11 275 280
7.000%, 06/15/17 150 152
Targa Resources (A)
8.500%, 11/01/13 200 201
Williams (A)
6.375%, 10/01/10 150 151
-----------------------------------------------------------------------------
TOTAL GAS/NATURAL GAS 939
=============================================================================
INSURANCE [0.3%]
USI Holdings (A) (C)
9.433%, 11/15/14 125 119
=============================================================================
MACHINERY [0.9%]
Baldor Electric
8.625%, 02/15/17 100 104
Terex
7.375%, 01/15/14 100 102
Trimas
9.875%, 06/15/12 115 117
-----------------------------------------------------------------------------
TOTAL MACHINERY 323
=============================================================================
MEDICAL PRODUCTS & SERVICES [2.1%]
Advanced Medical Optics
7.500%, 05/01/17 100 92
Bio-Rad Laboratories
7.500%, 08/15/13 100 102
Community Health Systems (A)
8.875%, 07/15/15 100 103
HCA (A)
9.250%, 11/15/16 50 53
MQ Associates (B)
12.955%, 08/15/12 200 173
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Tenet Healthcare
9.250%, 02/01/15 $ 200 $ 176
Vanguard Health Holding
9.000%, 10/01/14 100 97
-----------------------------------------------------------------------------
TOTAL MEDICAL PRODUCTS & SERVICES 796
=============================================================================
METALS & MINING [1.5%]
American Rock Salt
9.500%, 03/15/14 150 153
Freeport-McMoRan
Copper & Gold
8.250%, 04/01/15 125 135
Noranda Aluminum
Acquisition (A)
9.360%, 05/15/15 150 141
Novelis
7.250%, 02/15/15 150 145
-----------------------------------------------------------------------------
TOTAL METALS & MINING 574
=============================================================================
MISCELLANEOUS BUSINESS SERVICES [2.3%]
Affinion Group
11.500%, 10/15/15 150 157
Allied Security Escrow
11.375%, 07/15/11 150 150
Carriage Services
7.875%, 01/15/15 200 200
CHR Intermediate Holding (A)
12.871%, 06/01/13 50 51
Compagnie Generale
de Geophysique
7.500%, 05/15/15 100 103
MCBC Holdings (A) (C)
11.521%, 10/15/14 50 50
Mobile Services Group (A)
9.750%, 08/01/14 150 150
-----------------------------------------------------------------------------
TOTAL MISCELLANEOUS BUSINESS SERVICES 861
=============================================================================
MISCELLANEOUS MANUFACTURING [2.9%]
AGY Holding (A)
11.000%, 11/15/14 100 100
American Railcar Industries
7.500%, 03/01/14 50 50
Coleman Cable
9.875%, 10/01/12 100 97
Dresser-Rand Group
7.375%, 11/01/14 133 133
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 39
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
General Cable
7.125%, 04/01/17 $ 100 $ 98
Hawker Beechcraft
Acquisition (A)
9.750%, 04/01/17 75 80
8.500%, 04/01/15 100 102
Koppers Holdings (B)
12.709%, 11/15/14 250 214
MAAX
9.750%, 06/15/12 200 100
Mueller Water Products (A)
7.375%, 06/01/17 100 93
-----------------------------------------------------------------------------
TOTAL MISCELLANEOUS MANUFACTURING 1,067
=============================================================================
PAPER & RELATED PRODUCTS [3.1%]
Appleton Papers, Ser B
9.750%, 06/15/14 100 100
Cellu Tissue Holdings
9.750%, 03/15/10 100 98
Domtar
7.125%, 08/15/15 150 144
Georgia-Pacific
7.700%, 06/15/15 100 99
Newark Group
9.750%, 03/15/14 200 192
Norampac
6.750%, 06/01/13 100 96
Norske Skog Canada
7.375%, 03/01/14 250 186
Smurfit Kappa Funding
7.750%, 04/01/15 150 146
Verso Paper Holdings, Ser B
9.125%, 08/01/14 100 103
-----------------------------------------------------------------------------
TOTAL PAPER & RELATED PRODUCTS 1,164
=============================================================================
PETROLEUM & FUEL PRODUCTS [8.9%]
Atlas Pipeline Partners
8.125%, 12/15/15 200 197
Chesapeake Energy
6.250%, 01/15/18 100 97
Clayton William Energy
7.750%, 08/01/13 150 141
Comstock Resources
6.875%, 03/01/12 150 144
Dynegy Holdings (A)
7.750%, 06/01/19 100 96
6.875%, 04/01/11 100 98
Forest Oil
8.000%, 06/15/08 150 152
8.000%, 12/15/11 100 104
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Frontier Oil
6.625%, 10/01/11 $ 150 $ 147
MarkWest Energy Partners, Ser B
8.500%, 07/15/16 150 148
Newfield Exploration
6.625%, 09/01/14 150 147
OPTI Canada (A)
7.875%, 12/15/14 100 100
Pacific Energy
7.125%, 06/15/14 100 103
Parker Drilling
9.625%, 10/01/13 150 160
Petroplus Finance (A)
7.000%, 05/01/17 125 119
Plains Exploration &
Production (A)
7.750%, 06/15/15 150 147
Pogo Producing
6.875%, 10/01/17 300 301
Pride International
7.375%, 07/15/14 100 103
Regency Energy Partners (A)
8.375%, 12/15/13 65 68
Seitel (A)
9.750%, 02/15/14 50 47
SemGroup (A)
8.750%, 11/15/15 175 171
Swift Energy
7.625%, 07/15/11 100 100
Whiting Petroleum
7.000%, 02/01/14 300 288
Williams
7.625%, 07/15/19 50 54
Williams Partners
7.250%, 02/01/17 100 102
-----------------------------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS 3,334
=============================================================================
PRINTING & PUBLISHING [3.0%]
Dex Media (B)
12.285%, 11/15/13 200 188
Dex Media West, Ser B
8.500%, 08/15/10 100 103
Idearc
8.000%, 11/15/16 125 125
MediMedia USA (A)
11.375%, 11/15/14 50 52
R. H. Donnelley
6.875%, 01/15/13 200 189
R. H. Donnelley, Ser A-2
6.875%, 01/15/13 50 47
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 40
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Reader's Digest Association (A)
9.000%, 02/15/17 $ 75 $ 67
Sheridan Group
10.250%, 08/15/11 150 151
Valassis Communication
8.250%, 03/01/15 140 122
Warner Music Group
7.375%, 04/15/14 100 87
-----------------------------------------------------------------------------
TOTAL PRINTING & PUBLISHING 1,131
=============================================================================
REAL ESTATE [0.2%]
Realogy (A)
10.500%, 04/15/14 100 85
=============================================================================
REAL ESTATE INVESTMENT TRUST [0.4%]
Host Marriott, Ser O
6.375%, 03/15/15 150 147
=============================================================================
RETAIL [2.8%]
Buffets
12.500%, 11/01/14 100 70
Clair's Stores (A)
9.625%, 06/01/15 100 82
Group 1 Automotive
8.250%, 08/15/13 100 100
Landry's Restaurants, Ser B
7.500%, 12/15/14 100 99
Leslie's Poolmart
7.750%, 02/01/13 100 95
NPC International
9.500%, 05/01/14 100 91
Rare Restaurant Group (A)
9.250%, 05/15/14 100 97
Rite Aid
8.125%, 05/01/10 100 100
Sbarro
10.375%, 02/01/15 50 46
Suburban Propane Partners
6.875%, 12/15/13 100 97
True Temper Sports
8.375%, 09/15/11 150 83
United Auto Group
7.750%, 12/15/16 100 96
-----------------------------------------------------------------------------
TOTAL RETAIL 1,056
=============================================================================
RUBBER & PLASTIC [0.3%]
Goodyear Tire & Rubber
9.000%, 07/01/15 98 105
=============================================================================
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
SEMI-CONDUCTORS [1.2%]
Amkor Technology
9.250%, 06/01/16 $ 100 $ 101
Flextronics International
6.250%, 11/15/14 100 94
Freescale Semiconductors
10.125%, 12/15/16 150 139
Sensata Technologies
8.000%, 05/01/14 100 97
-----------------------------------------------------------------------------
TOTAL SEMI-CONDUCTORS 431
=============================================================================
STEEL & STEEL WORKS [1.1%]
AK Steel
7.750%, 06/15/12 150 152
Gerdau Ameristeel
10.375%, 07/15/11 100 105
International Steel Group
6.500%, 04/15/14 150 149
-----------------------------------------------------------------------------
TOTAL STEEL & STEEL WORKS 406
=============================================================================
TELEPHONES & TELECOMMUNICATIONS [7.5%]
American Cellular, Ser B
10.000%, 08/01/11 25 26
American Tower
7.125%, 10/15/12 150 153
Broadview Networks
Holdings (A)
11.375%, 09/01/12 100 104
Centennial Communications
10.125%, 06/15/13 100 106
8.125%, 02/01/14 50 51
Cincinnati Bell
8.375%, 01/15/14 185 184
Dobson Cellular Systems
9.875%, 11/01/12 230 248
Dobson Communications (C)
9.610%, 10/15/12 250 254
Insight Midwest
9.750%, 10/01/09 104 104
Level 3 Financing
9.250%, 11/01/14 125 123
MetroPCS Wireless (A)
9.250%, 11/01/14 100 102
Nordic Telephone (A)
8.875%, 05/01/16 50 53
NTL Cable
9.125%, 08/15/16 150 155
PanAmSat
9.000%, 08/15/14 96 99
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 41
schedule of investments
SEPTEMBER 30, 2007
- -------------------------------------------------------------------------------
HIGH YIELD BOND FUND (CONCLUDED)
DESCRIPTION FACE AMOUNT (000)/SHARES VALUE (000)
- -------------------------------------------------------------------------------
Qwest
7.625%, 06/15/15 $ 414 $ 434
Radio One, Ser B
8.875%, 07/01/11 100 99
Rogers Wireless
9.625%, 05/01/11 100 113
7.250%, 12/15/12 50 53
Telenet Group Holding (B)
1.250%, 06/15/14 22 22
Time Warner Telecom Holdings
9.250%, 02/15/14 100 104
Triton PCS
8.500%, 06/01/13 150 157
West
11.000%, 10/15/16 55 58
-----------------------------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS 2,802
=============================================================================
TRANSPORTATION SERVICES [2.5%]
Kansas City Southern Railway
9.500%, 10/01/08 100 102
Navios Maritime Holdings (A)
9.500%, 12/15/14 100 103
NCL
10.625%, 07/15/14 100 101
Pegasus Solutions (A)
10.500%, 04/15/15 100 90
Saint Acquisition (A) (C)
13.308%, 05/15/15 200 136
Ship Finance International
8.500%, 12/15/13 200 206
Stena
7.000%, 12/01/16 200 199
-----------------------------------------------------------------------------
TOTAL TRANSPORTATION SERVICES 937
=============================================================================
WASTE DISPOSAL [0.3%]
Allied Waste North America, Ser B
7.125%, 05/15/16 100 102
=============================================================================
TOTAL CORPORATE BONDS
(Cost $36,650) 35,982
=======================================================================
COMMON STOCK [0.2%]
BROADCASTING & CABLE [0.2%]
Olympus Communications* 8,500 9
Time Warner Cable, Cl A* 1,967 65
-----------------------------------------------------------------------------
TOTAL BROADCASTING & CABLE 74
=============================================================================
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------------------------
BUILDING & CONSTRUCTION SUPPLIES [0.0%]
Dayton Superior* 149 $ 1
=============================================================================
TOTAL COMMON STOCK
(Cost $82) 75
=======================================================================
CASH EQUIVALENTS [0.7%]
Evergreen Select Money Market,
Institutional Class, 5.39%** 133,414 133
Fidelity Institutional Domestic
Money Market Portfolio,
Cl I, 5.25%** 133,414 133
-----------------------------------------------------------------------------
TOTAL CASH EQUIVALENTS
(Cost $266) 266
=======================================================================
WARRANTS [0.0%]
Diva Systems,
Expires 03/01/08 (A)* 600 --
Pliant, Expires 06/01/10 (A)* 100 --
-----------------------------------------------------------------------------
TOTAL WARRANTS
(Cost $0) --
=======================================================================
TOTAL INVESTMENTS [97.4%]
(Cost $36,998) $ 36,323
=======================================================================
PERCENTAGES ARE BASED ON NET ASSETS OF $37,258 ($ THOUSANDS).
* NON-INCOME PRODUCING SECURITY
** RATE SHOWN IS THE 7-DAY EFFECTIVE YIELD AS OF SEPTEMBER 30, 2007.
(A) SECURITY SOLD WITHIN THE TERMS OF A PRIVATE PLACEMENT MEMORANDUM, EXEMPT
FROM REGISTRATION UNDER SECTION 144A OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY BE SOLD ONLY TO DEALERS IN THAT PROGRAM OR OTHER
"ACCREDITED INVESTORS. "THE TOTAL VALUE OF THESE SECURITIES AS OF
SEPTEMBER 30, 2007, WAS $8,015 ($THOUSANDS) AND REPRESENTS 21.5% OF NET
ASSETS. THESE SECURITIES ARE DEEMED LIQUID.
(B) STEP BOND -- THE RATE REFLECTED ON THE SCHEDULE OF INVESTMENTS IS THE RATE
IN EFFECT ON SEPTEMBER 30, 2007. THE COUPON ON A STEP BOND CHANGES ON A
SPECIFIC DATE.
(C) FLOATING RATE SECURITY -- THE RATE REFLECTED ON THE SCHEDULE OF
INVESTMENTS IS THE RATE IN EFFECT ON SEPTEMBER 30, 2007.
(D) IN DEFAULT ON INTEREST PAYMENTS. RATE SHOWN REPRESENTS THE LAST COUPON
RATE PRIOR TO DEFAULT.
CL -- CLASS
SER --SERIES
AMOUNTS DESIGNATED AS "--" ARE $0 OR HAVE BEEN ROUNDED TO $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 42
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
PRIME MONEY MARKET FUND
SECTOR WEIGHTINGS (UNAUDITED)*:
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
37.3% Repurchase Agreements
22.9% Commercial Paper
17.6% Certificates of Deposit
15.9% Corporate Bonds
3.7% U.S. Government Agency Obligations
2.6% U.S. Treasury Obligation
0.0% Cash Equivalent
* Percentages are based on total investments.
- --------------------------------------------------------------------------------
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
COMMERCIAL PAPER (A) [22.9%]
ASSET BACKED SECURITIES [3.6%]
Laguna (B)
5.362%, 10/05/07 $ 35,000 $ 34,979
Siemens Capital
4.839%, 12/19/07 35,000 34,633
-----------------------------------------------------------------------------
TOTAL ASSET BACKED SECURITIES 69,612
=============================================================================
BANKS [8.5%]
Bank of Ireland
5.414%, 11/09/07 35,000 34,797
Bayerische
5.096%, 12/20/07 35,000 34,609
Depfa Bank
5.440%, 02/19/08 35,000 34,271
HSBC
5.430%, 11/20/07 25,000 24,814
Westpac Trust
5.290%, 10/19/07 35,000 34,909
-----------------------------------------------------------------------------
TOTAL BANKS 163,400
=============================================================================
FINANCE AUTO LOANS [1.8%]
Toyota Motor Credit
5.310%, 11/02/07 35,000 34,837
=============================================================================
FOOD, BEVERAGE & TOBACCO [1.8%]
Nestle
4.846%, 01/22/08 35,000 34,476
=============================================================================
INSURANCE [1.8%]
Prudential Funding
5.476%, 10/15/07 35,000 34,926
=============================================================================
PERSONAL CREDIT INSTITUTIONS [1.8%]
ING Funding
5.321%, 11/08/07 35,000 34,806
=============================================================================
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
SECURITY BROKERS & DEALERS [3.6%]
Bear Stearns
5.321%, 10/10/07 $ 35,000 $ 34,954
JPMorgan Chase
5.126%, 01/23/08 35,000 34,442
-----------------------------------------------------------------------------
TOTAL SECURITY BROKERS & DEALERS 69,396
=============================================================================
TOTAL COMMERCIAL PAPER
(Cost $441,453) 441,453
=======================================================================
CERTIFICATES OF DEPOSIT [17.6%]
Bank of America
5.300%, 10/23/07 35,000 35,000
Bank of Montreal
5.490%, 10/15/07 35,000 35,000
Bank of Nova Scotia
5.330%, 11/06/07 35,000 35,000
Barclays Bank
5.330%, 03/26/08 25,000 25,000
BNP Paribas
5.300%, 11/05/07 35,000 35,000
Citibank
5.640%, 12/05/07 35,000 35,000
Comerica Bank
5.410%, 11/26/07 35,000 35,001
Deutsche Bank
5.270%, 10/02/07 35,000 35,000
Societe General
5.300%, 10/25/07 35,000 35,000
Toronto-Dominia Bank
5.000%, 03/20/08 35,000 35,000
-----------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $340,001) 340,001
=======================================================================
CORPORATE BONDS [15.9%]
BANKS [3.3%]
Key Bank
6.500%, 04/15/08 18,927 19,046
Royal Bank of Canada (C)
5.558%, 03/20/08 19,225 19,226
UBS
5.400%, 11/28/07 25,000 25,000
-----------------------------------------------------------------------------
TOTAL BANKS 63,272
=============================================================================
FINANCIAL SERVICES [5.7%]
American Honda (B) (C)
5.320%, 01/28/08 35,000 35,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 43
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
PRIME MONEY MARKET FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
General Electric Capital (C)
5.661%, 03/04/08 $ 25,000 $ 25,009
General Electric Capital MTN
3.500%, 12/05/07 15,000 14,948
Sigma Financial (B) (C)
5.318%, 11/21/07 35,000 35,000
-----------------------------------------------------------------------------
TOTAL FINANCIAL SERVICES 109,957
=============================================================================
INSURANCE [0.6%]
Metropolitan Life Global
Funding (B)
2.600%, 06/19/08 12,000 11,775
=============================================================================
PERSONAL CREDIT INSTITUTIONS [1.9%]
American Express Bank (C)
5.106%, 01/22/08 20,000 20,000
HSBC Finance
5.836%, 02/15/08 16,300 16,335
-----------------------------------------------------------------------------
TOTAL PERSONAL CREDIT INSTITUTIONS 36,335
=============================================================================
SECURITY BROKERS & DEALERS [4.4%]
Citigroup Global Markets
Holding
6.500%, 02/15/08 4,000 4,019
Goldman Sachs Group
4.125%, 01/15/08 25,459 25,366
Lehman Brothers Holdings
4.000%, 01/22/08 20,000 19,921
Morgan Stanley, Ser F MTN (C)
5.485%, 01/18/08 36,400 36,418
-----------------------------------------------------------------------------
TOTAL SECURITY BROKERS & DEALERS 85,724
=============================================================================
TOTAL CORPORATE BONDS
(Cost $307,063) 307,063
=======================================================================
U.S. GOVERNMENT AGENCY OBLIGATIONS [3.7%]
FHLB (A)
5.173%, 02/06/08 50,000 49,103
5.300%, 03/19/08 5,000 5,000
5.200%, 04/09/08 5,000 5,000
FNMA
5.150%, 11/21/07 5,000 4,999
5.150%, 02/04/08 7,984 7,983
-----------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $72,085) 72,085
=======================================================================
DESCRIPTION SHARES/FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATION [2.6%]
U.S. Treasury Notes (A) $ 50,000 $ 49,504
=============================================================================
TOTAL U.S. TREASURY OBLIGATION
(Cost $49,504) 49,504
=======================================================================
CASH EQUIVALENT [0.0%]
Fidelity Institutional Domestic
Money Market Portfolio,
Cl I, 5.25%* 209,780 210
-----------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(Cost $210) 210
=======================================================================
REPURCHASE AGREEMENTS (D) [37.2%]
Bank of America
5.050%, date 09/28/07,
repurchased on 10/01/07,
repurchase price $175,073,646
(collateralized by various U.S.
Government obligations,
ranging in par value
$71,370,499-$163,193,784,
5.00%, 06/01/35-10/01/35;
with total market value
$178,500,00) 175,000 175,000
Barclays
5.050%, dated 09/28/07,
repurchased on 10/01/07,
repurchase price, $192,808,137
(collateralized by various U.S.
Government obligations,
ranging in par value
$2,848,019-$134,554,433,
5.500%-6.500%, 02/01/26-
01/01/37; with total market
value $196,656,000) 192,800 192,800
Bear Stearns
5.050%, dated 09/28/07,
repurchased on 10/01/07,
repurchase price $175,074,083
(collateralized by various U.S.
Governement obligations,
ranging in par value
$4,450,706-$26,911,717,
5.500%-7.000%, 05/01/32-
10/01/37; with total
market value $178,502,747) 175,000 175,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 44
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
PRIME MONEY MARKET FUND (CONCLUDED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Lehman Brothers
5.050%, dated 09/28/07,
repurchased on 10/01/07,
repurchase price $175,073,646
(collateralized by various U.S.
Government obligations,
ranging in par value
$135,000-$20,000,000,
4.500%-6.000%, 06/15/31-
10/15/36; with total
market value $178,501,623) $ 175,000 $ 175,000
-----------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $717,800) 717,800
=======================================================================
TOTAL INVESTMENTS [99.9%]
(Cost $1,928,116) $1,928,116
=======================================================================
PERCENTAGES ARE BASED ON NET ASSETS OF $1,929,371 ($THOUSANDS).
* RATE SHOWN IS THE 7-DAY EFFECTIVE YIELD AS OF SEPTEMBER 30, 2007.
(A) THE RATE REPORTED IS THE EFFECTIVE YIELD AT TIME OF PURCHASE.
(B) SECURITY EXEMPT FROM REGISTRATION UNDER RULE 144A OF THE SECURITIES ACT OF
1933. THESE SECURITIES MAY BE RESOLD IN TRANSACTIONS EXEMPT FROM
REGISTRATION NORMALLY TO QUALIFIED INSTITUTIONS. ON SEPTEMBER 30, 2007,
THE VALUE OF THESE SECURITIES AMOUNTED TO $116,754 ($ THOUSANDS),
REPRESENTING 6.1% OF THE NET ASSETS OF THE FUND.
(C) VARIABLE RATE SECURITY -- THE RATE REFLECTED ON THE SCHEDULE OF
INVESTMENTS IS THE RATE IN EFFECT AS OF SEPTEMBER 30, 2007.
(D) TRI-PARTY REPURCHASE AGREEMENT
CL -- CLASS
FHLB -- FEDERAL HOME LOAN BANK
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
MTN -- MEDIUM TERM NOTE
SER -- SERIES
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 45
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
GOVERNMENT MONEY MARKET FUND
SECTOR WEIGHTINGS (UNAUDITED)*:
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
58.5% U.S. Government Agency Obligations
41.5% Repurchase Agreements
* Percentages are based on total investments.
- --------------------------------------------------------------------------------
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS [58.5%]
FAMC MTN
5.250%, 01/11/08 $ 14,725 $ 14,725
FFCB
3.000%, 04/15/08 1,800 1,779
3.375%, 07/15/08 12,000 11,831
FFCB DN (B)
4.712%, 10/04/07 21,000 20,992
FHLB
4.903%, 10/03/07 (A) 100,000 99,973
5.260%, 10/23/07 25,000 25,000
4.125%, 10/26/07 20,000 19,985
5.500%, 12/27/07 15,000 15,010
4.142%, 01/10/08 (A) 25,500 25,500
3.625%, 01/15/08 3,450 3,434
5.250%, 01/16/08 9,445 9,445
4.625%, 01/18/08 26,850 26,831
5.250%, 02/01/08 20,000 19,998
4.000%, 02/01/08 10,520 10,477
4.132%, 02/07/08 (A) 20,000 20,001
5.250%, 02/13/08 10,780 10,786
5.000%, 02/15/08 7,000 6,989
5.125%, 02/21/08 17,665 17,657
5.125%, 02/26/08 23,690 23,694
5.300%, 03/19/08 50,000 50,000
5.200%, 04/09/08 50,000 49,993
4.125%, 04/18/08 49,630 49,327
4.800%, 05/02/08 25,000 24,974
5.310%, 07/30/08 35,000 35,000
5.390%, 08/15/08 (A) 20,000 20,012
5.200%, 08/28/08 20,000 20,000
FHLB DN (B)
4.674%, 10/01/07 150,000 150,000
4.645%, 10/04/07 100,000 99,961
4.800%, 10/05/07 200,000 199,894
4.706%, 10/10/07 50,000 49,941
4.645%, 10/19/07 50,000 49,884
4.767%, 11/16/07 30,000 29,819
5.214%, 06/13/08 12,533 12,090
FHLMC
4.625%, 02/21/08 3,000 2,992
FHLMC DN (B)
4.562%, 10/05/07 30,000 29,985
4.938%, 10/12/07 30,000 29,955
5.248%, 11/30/07 13,107 12,997
FHLMC MTN
5.000%, 12/12/07 25,465 25,452
5.140%, 12/14/07 38,645 38,643
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
FNMA
5.150%, 11/21/07 $ 25,000 $ 24,998
5.010%, 01/11/08 4,000 3,997
5.500%, 01/15/08 9,430 9,434
3.800%, 01/18/08 22,700 22,641
3.500%, 01/28/08 19,000 18,893
5.150%, 02/04/08 10,000 9,998
5.750%, 02/15/08 25,000 25,039
4.000%, 07/25/08 14,500 14,406
FNMA DN (B)
4.732%, 10/03/07 25,627 25,620
FNMA MTN
6.340%, 10/16/07 35,000 35,018
-----------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $1,555,070) 1,555,070
========================================================================
REPURCHASE AGREEMENTS (C) [41.4%]
Bank of America
5.050%, dated 09/28/07,
repurchased on 10/01/07,
repurchase price $200,084,167
(collateralized by a U.S.
Government obligation,
par value $276,989,316,
5.000%, 06/01/35; with
total market value
$204,000,001) 200,000 200,000
Barclays
5.050%, dated 09/28/07,
repurchased on 10/01/07,
repurchase price $201,684,840
(collateralized by U.S.
Government obligations,
ranging in par value
$105,239,867-$119,862,353,
6.000%, 08/01/36-
07/01/37; with total market
value $205,632,000) 201,600 201,600
Bear Stearns Inc. & Co.
5.080%, dated 09/28/07,
repurchased on 10/01/07,
repurchase price $175,074,083
(collateralized by U.S.
Government obligations,
ranging in par value
$12,243,987-$25,623,411,
5.000%-6.500%, 11/01/12-
09/01/37, with total market
value $178,504,675) 175,000 175,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 46
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
GOVERNMENT MONEY MARKET FUND (CONCLUDED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Deutsche Bank
5.100%, dated 09/28/07,
repurchased on 10/01/07,
repurchase price $200,085,000
(collateralized by U.S.
Government obligations,
ranging in par value
$250,763-$47,533,550,
4.336%-6.915%, 05/01/34-
07/01/37; with total market
value $204,000,001) $ 200,000 $ 200,000
Lehman Brothers
5.050%, dated 09/28/07,
repurchased on 10/01/07,
repurchase price $200,084,167
(collateralized by U.S.
Government obligations,
ranging in par value
$605,000-$50,000,000,
4.500%-7.500%, 11/15/08-
01/15/37; with total market
value $204,001,811) 200,000 200,000
UBS Warburg
5.050%, dated 09/28/07,
repurchased on 10/01/07,
repurchase price $125,052,604
(collateralized by U.S.
Government obligations,
ranging in par value
$34,850,000-$72,608,798,
5.500%-6.500%, 12/01/32-
09/01/37; with total market
value $127,501,200) 125,000 125,000
-----------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $1,101,600) 1,101,600
=======================================================================
TOTAL INVESTMENTS [99.9%]
(Cost $2,656,670) $ 2,656,670
=======================================================================
PERCENTAGES ARE BASED ON NET ASSETS OF $2,660,057 ($THOUSANDS).
(A) THE RATE REPORTED IS THE EFFECTIVE YIELD AT TIME OF PURCHASE.
(B) ZERO COUPON SECURITY. THE RATE REPORTED ON THE SCHEDULE OF INVESTMENTS IS
THE EFFECTIVE YIELD AT TIME OF PURCHASE.
(C) TRI-PARTY REPURCHASE AGREEMENT
DN -- DISCOUNT NOTE
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
MTN -- MEDIUM TERM NOTE
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 47
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND
SECTOR WEIGHTINGS (UNAUDITED)*:
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
16.9% General Obligation
13.2% Industrial Development
11.2% General Revenue
11.2% Education
10.8% Water
9.3% Power
7.8% Transportation
6.7% Utilities
4.2% Healthcare
3.7% Public Facilities
3.5% Housing
0.6% Commercial Paper
0.4% Airport
0.4% Equipment
0.1% Board Bank Revenue
* Percentages based on total investments.
- -------------------------------------------------------------------------------
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------------------------
MUNICIPAL BOND [98.4%]
CALIFORNIA [92.0%]
ABAG, Finance Authority for
Non-Profit Corporations,
Public Policy Institute, Ser A,
RB (A) (B) (C)
3.750%, 11/01/31 $ 2,915 $ 2,915
ABAG, Finance Authority for
Non-Profit Corporations,
Ser C, COP (A) (B) (C)
3.860%, 10/01/27 5,120 5,120
ABAG, Finance Authority for
Non-Profit Corporations,
Ser D, COP
Callable 08/01/07 @ 100
(A) (B) (C)
3.860%, 10/01/27 2,840 2,840
Anaheim, Multi-Family Housing
Authority, Heritage Village
Apartments Project, Ser A,
RB (A) (B) (D)
3.750%, 07/15/33 4,685 4,685
Berkeley, TRAN
4.000%, 10/31/07 9,550 9,554
Berkeley, YMCA Project,
RB (A) (B) (C)
3.750%, 06/01/23 1,795 1,795
California State, Bay Area Toll
Authority, San Francisco
Bay Area Project, Ser B,
RB, AMBAC (A) (B)
3.630%, 04/01/39 4,500 4,500
California State, Bay Area Toll
Authority, San Francisco
Bay Area Project, Ser B-1,
RB, AMBAC (A) (B)
3.630%, 04/01/45 10,285 10,285
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------------------------
California State, Bay Area Toll
Authority, San Francisco
Bay Area Project, Ser B-2,
RB, XLCA (A) (B)
3.630%, 04/01/45 $ 2,100 $ 2,100
California State, Community
College Financing Authority,
Ser A, TRAN
4.500%, 06/30/08 7,500 7,545
California State, Daily
Kindergarten University
Project, Ser A, GO
(A) (B) (C)
3.900%, 05/01/34 5,265 5,265
California State, Daily
Kindergarten University,
Ser A-2, GO (A) (B) (C)
3.750%, 05/01/34 10,400 10,400
California State, Daily
Kindergarten University,
Ser A-3, GO (A) (B) (C)
3.900%, 05/01/34 6,900 6,900
California State, Daily
Kindergarten University,
Ser B-1, GO (A) (B) (C)
3.900%, 05/01/34 6,165 6,165
California State, Department of
Water Resource & Power,
Ser B-1, RB (A) (B) (C)
3.800%, 05/01/22 6,270 6,270
California State, Department of
Water Resource & Power,
Ser B-5, RB (A) (B) (C)
3.860%, 05/01/22 6,250 6,250
California State, Department of
Water Resource & Power,
Ser B-6, RB (A) (B) (C)
3.840%, 05/01/22 1,200 1,200
California State, Department of
Water Resource & Power,
Ser C-15, RB (A) (B) (C)
3.650%, 05/01/22 5,000 5,000
California State, Department of
Water Resource & Power,
Sub-Ser F-2, RB (A) (B) (C)
3.930%, 05/01/20 5,750 5,750
California State, Department of
Water Resource & Power,
Sub-Ser F-5, RB (A) (B) (C)
3.970%, 05/01/22 1,050 1,050
California State, Department of
Water Resource & Power,
Sub-Ser G-1, RB (A) (B) (C)
3.680%, 05/01/11 1,000 1,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 48
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------------------------
California State, Department of
Water Resource & Power,
Sub-Ser G-3, RB, FSA (A) (B)
3.730%, 05/01/16 $ 1,050 $ 1,050
California State, Department of
Water Resource & Power,
Sub-Ser G-4, RB, FSA (A) (B)
3.730%, 05/01/16 10,000 10,000
California State, Economic
Development Financing
Authority, KQED Project,
RB (A) (B) (C)
3.750%, 04/01/20 1,200 1,200
California State, Economic
Recovery Authority,
Ser C, RB (B) (A)
3.860%, 07/01/23 8,760 8,760
California State, Economic
Recovery Authority,
Ser C-1, RB (A) (B)
4.010%, 07/01/23 10,070 10,070
California State, Economic
Recovery Authority,
Ser C-12, RB (A) (B)
3.750%, 07/01/23 2,895 2,895
California State, Economic
Recovery Authority,
Ser C-13, RB, XLCA (A) (B)
3.760%, 07/01/23 6,000 6,000
California State, Economic
Recovery Authority,
Ser C-16, RB, FSA (A) (B)
3.730%, 07/01/23 3,700 3,700
California State, Economic
Recovery Authority,
Ser C-4, RB (A) (B)
3.800%, 07/01/23 20,625 20,625
California State, Economic
Recovery Authority,
Ser C-8, RB (A) (B) (C)
3.900%, 07/01/23 3,500 3,500
California State, Educational
Facilities Authority, Chapman
University Project,
RB (A) (B) (C)
3.750%, 12/01/30 1,000 1,000
California State, Educational
Facilities Authority, Stanford
University Project, Ser S-4,
RB (A) (B)
3.610%, 11/01/50 14,050 14,050
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------------------------
California State, Educational
Facilities Authority, University
San Francisco, RB (A) (B) (C)
3.630%, 05/01/30 $ 5,100 $ 5,100
California State, Health Facilities
Finance Authority, Adventist
Health Systems Project,
Ser B, RB (A) (B) (C)
3.940%, 09/01/25 4,400 4,400
California State, Health Facilities
Finance Authority, Adventist
Hospital Project, Ser A,
RB, MBIA (A) (B)
3.880%, 09/01/28 7,490 7,490
California State, Health Facilities
Finance Authority, Adventist
3.880%, 09/01/28 6,135 6,135
California State, Infrastructure &
Economic Authority, Asian Art
Museum Foundation Project,
RB, MBIA (A) (B)
3.880%, 06/01/34 5,100 5,100
California State, Infrastructure &
Economic Authority,
Contemporary Jewish Museum
Project, RB (A) (B) (C)
3.950%, 12/01/36 5,000 5,000
California State, Infrastructure &
Economic Authority, India
Community Center Project,
RB (A) (B) (C)
3.950%, 12/01/36 1,700 1,700
California State, Infrastructure &
Economic Authority, J Paul
Getty Trust Project,
Ser B, RB (A) (B)
3.750%, 10/01/23 6,240 6,240
3.830%, 04/01/33 (A) (B) 6,200 6,200
California State, Infrastructure &
Economic Authority, Jewish
Community Center Project,
RB, FGIC (A) (B)
3.950%, 12/01/31 16,000 16,000
California State, Infrastructure &
Economic Authority, RAND
Corporation Project, Ser B, RB,
AMBAC (A) (B)
3.840%, 04/01/42 4,000 4,000
California State, Kindergarten-
University Project,
Ser B-3, GO (A) (B)
3.840%, 05/01/34 2,300 2,300
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 49
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
California State, Ser A-1,
GO (A) (B) (C)
3.900%, 05/01/33 $ 5,700 $ 5,700
California State, Ser A-2,
GO (A) (B) (C)
3.830%, 05/01/33 8,700 8,700
California State, Ser A-3,
GO (A) (B)
3.860%, 05/01/33 8,800 8,800
California State, Ser B,
Sub-Ser B-4, GO (A) (B) (C)
3.730%, 05/01/40 6,480 6,480
California State, Ser B,
Sub-Ser B-6, GO (A) (B) (C)
3.900%, 05/01/40 9,050 9,050
California State, Ser B,
Sub-Ser B-7, GO (A) (B) (C)
3.900%, 05/01/40 7,000 7,000
California State, Ser B-1,
GO (A) (B) (C)
3.750%, 05/01/33 7,000 7,000
California State, Ser C-2,
GO (A) (B) (C)
3.700%, 05/01/33 7,700 7,700
California State, Weekly
Kindgarten University,
Ser B-5, GO (A) (B) (C)
3.740%, 05/01/34 11,825 11,825
California Statewide,
Communities Development
Authority, Masters College
Project, RB (A) (B) (C)
3.750%, 02/01/37 3,000 3,000
California Statewide,
Communities Development
Authority, Museum of Art
Project, Ser C, RB, FGIC
(A) (B)
3.740%, 12/01/34 10,550 10,550
California Statewide,
Communities Development
Authority, North Peninsula
Jewish Project, RB (A) (B) (C)
3.880%, 07/01/34 6,100 6,100
California Statewide,
Communities Development
Authority, Park Century
School Project, RB (A) (B) (C)
3.800%, 11/01/32 4,000 4,000
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Contra Costa County, Merrithew
Memorial Hospital Project,
COP, MBIA
Pre-Refunded @ 102 (E)
5.500%, 11/01/07 $ 2,855 $ 2,916
Contra Costa County,
Ser A, TRAN
4.500%, 12/11/07 5,000 5,011
East Bay, Municipal Utilities
District Authority,
Ser A, RB, FSA (A) (B)
3.740%, 06/01/25 9,960 9,960
East Bay, Municipal Utilities
District Authority,
Sub-Ser 1, RB,
XLCA (A) (B)
3.750%, 06/01/38 6,600 6,600
East Bay, Municipal Utilities
District Authority,
Sub-Ser B-1, RB,
XLCA (A) (B)
3.750%, 06/01/38 15,135 15,135
East Bay, Municipal Utilities
District Authority,
Sub-Ser B-3, RB,
XLCA (A) (B)
3.730%, 06/01/38 4,970 4,970
Eastern California, Municip
Water District, COP,
Ser B, TA, FGIC (A) (B)
3.700%, 07/01/20 4,700 4,700
Fremont, Family Center Finance
Project, COP (A) (B) (C)
3.730%, 08/01/28 4,130 4,130
Fremont, Office Building
Improvement & Fire
Equipment Project,
COP (A) (B) (C)
3.780%, 08/01/30 3,280 3,280
Fresno, Palm Lakes Apartment
Project, RB (A) (B) (C)
3.780%, 05/01/15 3,615 3,615
Glendale, Police Building
Project, COP (A) (B)
3.780%, 06/01/30 14,100 14,100
Grant, Joint Union High School
District, School Facility
Bridge Funding Project,
COP, FSA (A) (B)
3.700%, 09/01/34 1,000 1,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 50
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Huntington Beach, Union High
School District, School
Facility Bridge Funding
Project, COP, FSA (A) (B)
3.700%, 09/01/28 $ 1,890 $ 1,890
Irvine Ranch, Water District
#140-240-105-250,
GO (A) (B) (C)
3.840%, 04/01/33 4,125 4,125
Irvine Ranch, Water District,
GO (A) (B) (C)
3.840%, 01/01/21 3,300 3,300
Irvine, Improvement Board, Act
1915 Project, District #03-19,
Ser A, SAB (A) (B) (C)
3.840%, 09/02/29 9,798 9,798
Irvine, Improvement Board, Act
1915 Project, District #03-19,
Ser B, SAB (A) (B)
3.950%, 09/02/29 3,726 3,726
Irvine, Improvement Board, Act
1915 Project, District #04-20,
Ser A, RB (A) (B) (C)
3.850%, 09/02/30 4,760 4,760
Irvine, Improvement Board, Act
1915 Project, District #05-21,
Ser A, RB (A) (B) (C)
3.950%, 09/02/31 9,500 9,500
Irvine, Improvement Board, Act
1915 Project, District #85-7,
Ser A, SAB (A) (B)
3.950%, 09/02/32 2,000 2,000
Irvine, Improvement Board, Act
1915 Project, District #87-8,
SAB (A) (B) (C)
3.850%, 09/02/24 2,845 2,845
Irvine, Improvement Board, Act
1915 Project, District #93-14,
SAB (A) (B) (C)
3.840%, 09/02/25 4,100 4,100
Irvine, Improvement Board, Act
1915, Assessment No. 07-22,
Ser A, RB (A) (B) (C)
3.950%, 09/02/32 17,050 17,050
Lemon Grove, Multifamily
Housing, Hillside Terrace
Project, RB (A) (B) (D)
3.740%, 02/15/31 4,955 4,955
Los Angeles County, TRAN
4.500%, 06/30/08 6,000 6,038
Los Angeles, Department of
Water & Power, Sub-Ser B-1,
RB (A) (B)
3.780%, 07/01/35 7,000 7,000
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Los Angeles, Department of
Water, Sub-Ser -2,
RB (A) (B)
3.840%, 07/01/35 $ 15,050 $ 15,050
Los Angeles, Metropolitan
Transit Commission, Ser A,
RB, FGIC (A) (B)
3.740%, 07/01/12 6,830 6,830
Los Angeles, Metropolitan
Transportation Authority,
Proposition C, Ser A, RB,
MBIA (A) (B)
3.700%, 07/01/20 21,015 21,015
Los Angeles, TRAN
4.500%, 06/30/08 7,000 7,043
Los Angeles, Unified School
District, Administration
Building Project, Ser A,
COP, AMBAC (A) (B)
3.730%, 10/01/24 8,365 8,365
Los Angeles, Unified School
District, TRAN
4.000%, 12/03/07 3,155 3,157
Los Angeles, Wastewater
Systems, Sub-Ser A,
RB, XLCA (A) (B)
3.720%, 06/01/28 10,130 10,130
Los Angeles, Wastewater
Systems, Sub-Ser B-1,
RB, XLCA (A) (B)
3.720%, 06/01/28 4,480 4,480
Los Angeles, Water & Power
Resource Authority,
Power System Project,
Sub-Ser A-7, RB (A)(B)
3.740%, 07/01/35 15,000 15,000
Los Angeles, Water & Power
Resource Authority,
Sub-Ser B-2, RB (A) (B)
3.650%, 07/01/34 2,000 2,000
Los Angeles, Water & Power
Resource Authority,
Sub-Ser B-3, RB (A) (B)
3.900%, 07/01/34 8,550 8,550
Los Angeles, Water & Power
Resource Authority,
Sub-Ser B-6, RB (A) (B)
3.880%, 07/01/34 5,500 5,500
Moorpark, Unified School
District, Ser A, COP,
FSA (A) (B)
3.700%, 11/01/28 1,000 1,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 51
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Mount Diablo, Unified School
District, TRAN
4.000%, 11/21/07 $ 5,000 $ 5,004
Oakland, Capital Equipment
Project, COP (A) (B) (C)
3.810%, 12/01/15 3,590 3,590
Oakland-Alameda County,
Coliseum Project, Ser C-1,
RB (A) (B) (C)
3.740%, 02/01/25 15,000 15,000
Oceanside, Multi-Family,
Lakeridge Apartments Project,
RB (A) (B) (D)
3.760%, 08/01/17 1,880 1,880
Orange County, Apartment
Development Authority,
Bear Brand Apartments
Project, RB (A) (B) (D)
3.720%, 11/01/07 1,900 1,900
Orange County, Apartment
Development Authority,
Hidden Hills Project,
Ser C, RB (A) (B)
3.720%, 11/01/09 3,200 3,200
Orange County, Apartment
Development Authority,
Riverbend Apartments
Project, Ser B, RB (A) (B) (D)
3.740%, 12/01/29 5,000 5,000
Orange County, Apartment
Development Authority,
Seaside Meadow Project,
Ser C, RB (A) (B) (D)
3.720%, 08/01/08 8,000 8,000
Orange County, Improvement
Board, Assessment District
No. 01-1, Ser A, SAB
(A) (B) (C)
3.850%, 09/02/33 1,500 1,500
Orange County, Improvement
Board, Assessment District
No. 88, RB (A) (B) (C)
3.880%, 09/02/18 1,100 1,100
Orange County, Sanitation
District Authority, Ser A,
COP (A) (B)
3.850%, 08/01/29 2,755 2,755
Orange County, Sanitation
District Authority,
Ser B, COP (A) (B)
3.850%, 08/01/30 9,300 9,300
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Orange County, Water
District Authority,
Ser A, COP (A) (B)
3.740%, 08/01/42 $ 2,800 $ 2,800
Pasadena, Public Financing
Authority, Rose Bowl
Refinancing & Improvement
Project, RB (A) (B) (C)
3.700%, 12/01/23 6,575 6,575
Riverside County, Ser C,
COP (A) (B) (C)
3.700%, 12/01/15 14,700 14,700
Riverside, Unified School
District, Ser C, School
Facility Bridge Funding
Project, COP, FSA (A) (B)
3.700%, 09/01/27 1,610 1,610
Sacramento County, Housing
Authority, Bent Tree
Apartments Project,
Ser A, RB (A) (B) (D)
3.740%, 02/15/31 2,500 2,500
Sacramento County, Ser A,
TRAN 4.250%, 07/09/08 5,000 5,022
Sacramento County, TRAN
4.500%, 07/09/08 5,000 5,031
San Bernardino County,
Housing Authority, Alta Loma
Heritage Project, Ser A,
RB (A) (B) (C)
3.710%, 02/01/23 1,354 1,354
San Diego, Museum of Art
Project, COP (A) (B) (C)
3.750%, 09/01/30 1,400 1,400
San Diego, Unified School
District, Ser A, TRAN
4.500%, 07/22/08 6,000 6,039
San Francisco (City & County),
Moscone Center Expansion
Project, Ser 1, RB,
AMBAC (A) (B)
3.700%, 04/01/30 600 600
San Francisco (City & County),
Moscone Center Expansion
Project, Ser 2, RB,
AMBAC (A) (B)
3.730%, 04/01/30 1,125 1,125
San Francisco Bay Area Toll
Authority, Ser A-1, RB,
AMBAC (A) (B)
3.620%, 04/01/45 5,000 5,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 52
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND (CONCLUDED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
San Francisco, Bay Area Toll
Authority, Ser A, RB,
AMBAC (A) (B)
3.620%, 04/01/36 $ 12,450 $ 12,450
San Francisco, Bay Area Toll
Authority, Ser C, RB,
AMBAC (A) (B)
3.700%, 04/01/25 5,650 5,650
San Jose, Redevelopment
Agency, Merged Area
Redevelopment Project,
Ser A, RB (A) (B) (C)
3.720%, 07/01/26 7,750 7,750
Santa Clara County, Financing
Authority, VMC Facility
Replacement Project,
Ser B, RB (A) (B)
3.730%, 11/15/25 13,475 13,475
Santa Clara Valley,
Transportation Authority,
Ser A, RB, AMBAC (A) (B)
3.630%, 06/01/26 6,300 6,300
Santa Cruz County, Board of
Education, TRAN
4.250%, 06/30/08 3,000 3,012
Santa Cruz County, TRAN
4.500%, 07/11/08 5,000 5,032
Sequoia, Unified High School
District, TRAN
4.250%, 07/03/08 3,000 3,013
Southern California,
Metropolitan Water District
Authority, RB (A) (B)
3.840%, 07/01/35 6,200 6,200
Southern California,
Metropolitan Water District
Authority, Ser B, RB (A) (B)
3.730%, 07/01/27 2,600 2,600
Southern California,
Metropolitan Water District
Authority, Ser B-3, RB (A) (B)
3.860%, 07/01/35 5,000 5,000
Southern California,
Metropolitan Water District
Authority, Ser B-4 (A) (B)
3.740%, 07/01/35 5,000 5,000
Southern California,
Metropolitan Water District
Authority, Ser C-1, RB (A) (B)
3.920%, 07/01/36 5,400 5,400
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
Southern California,
Metropolitan Water District
Authority, Ser B, RB (A) (B)
3.730%, 07/01/28 $ 5,400 $ 5,400
Southern California,
Metropolitan Water District,
Ser A, RB (A) (B)
3.800%, 07/01/25 3,800 3,800
Southern California,
Metropolitan Water District,
Ser C-1, RB (A) (B)
3.670%, 07/01/30 5,000 5,000
Southern California,
Metropolitan Water District,
Ser C-3, RB (A) (B)
3.720%, 07/01/30 8,395 8,395
Southern California,
Public Power Authority,
Southern Transmission Project,
Ser A, RB, FSA (A) (B)
3.700%, 07/01/23 6,000 6,000
Southern California,
Public Power Authority,
Southern Transmission Project,
RB, AMBAC (A) (B) (C)
3.750%, 07/01/19 13,600 13,600
State of California,
Ser B-3, GO (A) (B) (C)
3.730%, 05/01/33 6,100 6,100
Sunnyvale, Government Center
Site Acquisition Project,
Ser A, COP, AMBAC (A) (B)
3.740%, 04/01/31 4,200 4,200
Three Valleys, Municipal Water
District Authority, Miramar
Water Treatment Project,
COP (A) (B) (C)
3.750%, 11/01/14 4,700 4,700
Turlock, Irrigation District,
Capital Improvement &
Refunding Project, COP
(A) (B) (C)
3.880%, 01/01/31 9,150 9,150
Ventura County, TRAN
4.500%, 07/01/08 5,000 5,032
Westminster, Civic Center
Refinancing Program,
Ser A, COP, AMBAC (A) (B)
3.750%, 06/01/22 2,700 2,700
-----------------------------------------------------------------------------
TOTAL CALIFORNIA 886,577
=============================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 53
schedule of investments
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND (CONCLUDED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
CONNECTICUT [1.4%]
Connecticut State, Health &
Education Authority, Yale
University, Ser X-3, RB
(A) (B)
4.000%, 07/01/37 $ 13,425 $ 13,425
=============================================================================
FLORIDA [0.6%]
North Broward, Hospital
District Authority,
RB, CIFG (A) (B)
3.870%, 01/15/31 6,100 6,100
=============================================================================
ILLINOIS [0.4%]
Illinois State, Recreational
Facility Improvements
Authority, Museum of
Contemporary Art Project,
RB (A) (B) (C)
3.910%, 02/01/29 2,500 2,500
University, Auxiliary
Facilities System Project,
Ser B, RB, FSA (A) (B)
3.860%, 04/01/35 1,000 1,000
-----------------------------------------------------------------------------
TOTAL ILLINOIS 3,500
=============================================================================
INDIANA [0.1%]
Indianapolis, Local Public
Improvements Project,
Ser F-2, RB, MBIA (A) (B)
3.870%, 02/01/20 1,000 1,000
=============================================================================
MASSACHUSETTS [2.2%]
Massachusetts State, Health &
Educational Facility Authority,
Harvard University Project,
Ser R, RB (A) (B)
3.800%, 11/01/49 21,000 21,000
=============================================================================
NEVADA [0.4%]
Clark County, Airport Authority,
Ser E-2, RB, FGIC (A) (B)
3.930%, 07/01/36 4,200 4,200
=============================================================================
NEW JERSEY [0.7%]
Rutgers State University,
Ser A, RB (A) (B)
3.800%, 05/01/18 7,000 7,000
=============================================================================
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
WASHINGTON [0.6%]
Seattle, Municipal Light &
Power Authority,
RB (A) (B) (C)
3.820%, 06/01/21 $ 5,615 $ 5,615
=============================================================================
TOTAL MUNICIPAL BOND
(Cost $948,417) 948,417
=======================================================================
COMMERCIAL PAPER [0.6%]
California State,
Contra Costa Water
3.500%, 10/16/07 5,800 5,800
-----------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost $5,800) 5,800
=======================================================================
TOTAL INVESTMENTS [99.0%]
(Cost $954,217) $ 954,217
=======================================================================
PERCENTAGES ARE BASED ON NET ASSETS OF $963,473 ($THOUSANDS).
(A) FLOATING RATE SECURITY -- THE RATE REFLECTED ON THE SCHEDULE OF
INVESTMENTS IS THE RATE IN EFFECT ON SEPTEMBER 30, 2007.
(B) PUT AND DEMAND FEATURE -- THE DATE REPORTED ON THE SCHEDULE OF INVESTMENTS
IS THE FINAL MATURITY, NOT THE NEXT RESET OR PUT DATE.
(C) SECURITIES ARE HELD IN CONJUNCTION WITH A LETTER OF CREDIT FROM A MAJOR
BANK OR FINANCIAL INSTITUTION.
(D) SECURITIES ARE COLLATERALIZED UNDER AN AGREEMENT FROM FHLMC/FNMA.
(E) PRE-REFUNDED SECURITY -- THE MATURITY DATE SHOWN IS THE PRE-REFUNDED DATE.
ABAG -- ASSOCIATION OF BAY AREA GOVERNMENTS
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
BAN -- BOND ANTICIPATION NOTE
CIFG -- CDC IXIS FINANCIAL GUARANTY
COP -- CERTIFICATE OF PARTICIPATION
ETM -- ESCROWED TO MATURITY
FGIC -- FINANCIAL GUARANTY INSURANCE COMPANY
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
FSA -- FINANCIAL SECURITY ASSISTANCE
GO -- GENERAL OBLIGATION
LP -- LIMITED PARTNERSHIP
MBIA -- MUNICIPAL BOND INSURANCE ASSOCIATION
RAN -- REVENUE ANTICIPATION NOTE
RB -- REVENUE BOND
SAB -- SPECIAL ASSESSMENT BOND
SER -- SERIES
TA -- TAX ALLOCATION
TRAN -- TAX & REVENUE ANTICIPATION NOTE
XLCA -- XL CAPITAL ASSURANCE
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 54
page left intentionally blank
statements of assets and liabilities (000)
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
Large Cap Value Large Cap Growth RCB Small Cap
Equity Fund Equity Fund Value Fund
---------------------------------------------------
ASSETS:
Cost of securities (including repurchase agreements) $ 101,134 $ 50,630 $ 49,565
======================================================================================================================
Investments in securities, at value $ 127,151 $ 60,899 $ 56,678
Repurchase agreements at value -- -- 4,088
Receivable for capital shares sold 179 17 33
Income receivable 165 27 148
Cash 1 -- 1
Prepaid Expenses 1 -- 1
- ----------------------------------------------------------------------------------------------------------------------
Total Assets 127,497 60,943 60,949
- ----------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for income distributions 141 33 --
Payable for capital shares redeemed 39 11 477
Payable for investment securities purchased -- -- 609
Investment adviser fees payable 64 32 43
Shareholder servicing & distribution fees payable 29 15 57
Administrative fees payable 5 2 2
Other accrued expenses 5 3 2
- ----------------------------------------------------------------------------------------------------------------------
Total Liabilities 283 96 1,190
- ----------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 127,214 $ 60,847 $ 59,759
======================================================================================================================
NET ASSETS
Paid-in Capital
(unlimited authorization -- $0.01 par value) $ 95,713 $ 52,952 $ 39,598
Undistributed (distributions in excess of) net investment
income (5) 7 --
Accumulated net realized gain (loss) on investments 5,489 (2,381) 8,960
Net unrealized appreciation on investments 26,017 10,269 11,201
- ----------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 127,214 $ 60,847 $ 59,759
======================================================================================================================
Institutional Class Shares ($Dollars):
Net Assets $ 110,023,819 $ 45,784,664 $ 9,061,907
Total shares outstanding at end of period 9,815,893 5,166,187 294,320
Net asset value, offering and redemption price per share
(net assets / shares outstanding) $ 11.21 $ 8.86 $ 30.79
Class A Shares ($Dollars):
Net Assets $ 17,190,102 $ 15,062,709 $ 9,752,635
Total shares outstanding at end of period 1,536,113 1,717,439 320,573
Net asset value, offering and redemption price per share
(net assets / shares outstanding) $ 11.19 $ 8.77 $ 30.42
Class R Shares ($Dollars):
Net Assets $ -- $ -- $ 40,944,079
Total shares outstanding at end of period -- -- 1,347,947
Net asset value and redemption price per share
(net assets / shares outstanding) $ -- $ -- $ 30.38
Maximum offering price per share
(net asset value / 96.50%) $ -- $ -- $ 31.48
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 56
statements of assets and liabilities (000)
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
California
Corporate Government Tax Exempt High Yield
Bond Fund Bond Fund Bond Fund Bond Fund
-----------------------------------------------------------
ASSETS:
Cost of securities $ 62,717 $ 54,745 $ 34,767 $ 36,998
==============================================================================================================================
Investments in securities, at value $ 62,551 $ 54,926 $ 34,858 $ 36,323
Cash 10 -- -- 99
Income receivable 740 350 493 830
Receivable for capital shares sold 177 157 5 88
Receivable for investment securities sold -- -- -- 256
Prepaid Expenses 1 -- -- 2
- ------------------------------------------------------------------------------------------------------------------------------
Total Assets 63,479 55,433 35,356 37,598
- ------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for income distributions 182 146 59 85
Payable for capital shares redeemed 5 17 13 --
Payable for investment securities purchased -- -- 546 220
Investment adviser fees payable 21 16 5 20
Shareholder servicing & distribution fees payable 13 12 7 13
Administrative fees payable 2 2 1 1
Other accrued expenses 3 2 1 1
- ------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 226 195 632 340
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 63,253 $ 55,238 $ 34,724 $ 37,258
==============================================================================================================================
NET ASSETS
Paid-in Capital
(unlimited authorization -- $0.01 par value) $ 63,897 $ 55,624 $ 34,675 $ 38,705
Undistributed net investment income 1 -- -- 56
Accumulated net realized loss on investments (479) (567) (42) (828)
Net unrealized appreciation (depreciation) on investments (166) 181 91 (675)
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 63,253 $ 55,238 $ 34,724 $ 37,258
==============================================================================================================================
Institutional Class Shares ($Dollars):
Net Assets $ 62,210,164 $ 52,606,570 $ 33,801,658 $ 17,137,282
Total shares outstanding at end of period 6,113,704 5,091,268 3,301,130 1,923,901
Net asset value, offering and redemption price per share
(net assets / shares outstanding) $ 10.18 $ 10.33 $ 10.24 $ 8.91
Class A Shares ($Dollars):
Net Assets $ 1,042,627 $ 2,631,900 $ 922,022 $ 20,120,445
Total shares outstanding at end of period 102,396 254,182 89,812 2,258,821
Net asset value, offering and redemption price per share
(net assets / shares outstanding) $ 10.18 $ 10.35 $ 10.27 $ 8.91
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 57
statements of assets and liabilities (000)
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
California
Prime Government Tax Exempt
Money Money Money
Market Fund Market Fund Market Fund
-------------------------------------------------
ASSETS:
Cost of securities (including repurchase agreements) $ 1,928,116 $ 2,656,670 $ 954,217
=================================================================================================================================
Investments in securities, at value $ 1,210,316 $ 1,555,070 $ 954,217
Repurchase agreements, at value 717,800 1,101,600 --
Income receivable 8,531 9,099 4,691
Prepaid Expenses 14 24 10
Cash -- 10 6,203
- ---------------------------------------------------------------------------------------------------------------------------------
Total Assets 1,936,661 2,665,803 965,121
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for income distributions 5,324 3,912 1,037
Shareholder servicing fees payable 763 1,063 378
Investment adviser fees payable 396 564 170
Administrative fees payable 78 107 38
Other accrued expenses 91 100 25
Payable to custodian 638 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 7,290 5,746 1,648
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 1,929,371 $ 2,660,057 $ 963,473
=================================================================================================================================
NET ASSETS
Paid-in Capital (unlimited authorization -- $0.01 par value) $ 1,929,570 $ 2,660,042 $ 963,472
Undistributed net investment income 11 16 --
Accumulated net realized gain (loss) on investments (210) (1) 1
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 1,929,371 $ 2,660,057 $ 963,473
=================================================================================================================================
Institutional Class Shares ($Dollars):
Net Assets $ 438,639,066 $ 47,858,341 $ 89,237,463
Total shares outstanding at end of period 438,725,810 47,859,506 89,238,781
Net asset value, offering and redemption price per share
(net assets / shares outstanding) $ 1.00 $ 1.00 $ 1.00
Class A Shares ($Dollars):
Net Assets $ 870,537,376 $ 2,291,137,358 $ 695,317,484
Total shares outstanding at end of period 870,710,980 2,291,121,849 695,319,976
Net asset value, offering and redemption price per share
(net assets / shares outstanding) $ 1.00 $ 1.00 $ 1.00
Class S Shares ($Dollars):
Net Assets $ 620,194,714 $ 321,061,291 $ 178,917,718
Total shares outstanding at end of period 620,225,583 321,060,626 178,913,981
Net asset value and redemption price per share
(net assets / shares outstanding) $ 1.00 $ 1.00 $ 1.00
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 58
statements of operations
FOR THE YEAR ENDED SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
Large Cap Value Large Cap Growth RCB Small Cap
Equity Fund Equity Fund Value Fund
(000) (000) (000)
---------------------------------------------------
INVESTMENT INCOME:
Dividend Income $ 3,222 $ 822 $ 862
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 3,222 822 862
- ----------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fee 743 353 577
Shareholder Servicing Fees--Institutional Class 261 103 28
Shareholder Servicing Fees--Class A(1) 77 66 55
Shareholder Servicing Fees--Class R(1) -- -- 229
Administration fee 63 28 36
Trustee Fees 4 2 2
Professional fees 14 7 9
Transfer Agent Fees 11 5 6
Custody fees 6 3 4
Printing fees 5 3 3
Registration fees 3 1 2
Insurance and Other expenses 10 4 4
- ----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 1,197 575 955
- ----------------------------------------------------------------------------------------------------------------------------------
Less Waiver of:
Transfer Agent Fees (11) (5) (6)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Expenses 1,186 570 949
- ----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 2,036 252 (87)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Realized Gain from Securities Transactions 5,793 1,288 9,056
Net Change in Unrealized Appreciation (Depreciation) on
Investments 8,799 5,813 (1,504)
- ----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 16,628 $ 7,353 $ 7,465
==================================================================================================================================
(1) INCLUDES CLASS SPECIFIC DISTRIBUTION EXPENSES.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 59
statements of operations
FOR THE YEAR ENDED SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
California
Corporate Government Tax Exempt High Yield
Bond Fund Bond Fund Bond Fund Bond Fund
(000) (000) (000) (000)
--------------------------------------------------------
INVESTMENT INCOME:
Interest Income $ 2,995 $ 2,373 $ 1,094 $ 3,375
Dividend Income 46 45 16 10
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 3,041 2,418 1,110 3,385
- ----------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fee 237 200 85 291
Shareholder Servicing Fees--Institutional Class 145 111 76 45
Shareholder Servicing Fees--Class A(1) 6 12 5 113
Administration fee 31 24 16 20
Trustee Fees 2 2 1 1
Professional fees 7 5 4 5
Transfer Agent Fees 6 4 3 4
Custody fees 3 2 2 2
Printing fees 2 2 1 2
Registration fees 2 1 1 1
Insurance and Other expenses 5 3 2 4
- ----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 446 366 196 488
- ----------------------------------------------------------------------------------------------------------------------------------
Less Waiver of:
Advisory fees -- (31) (34) (35)
Transfer Agent Fees (6) (4) (3) (4)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Expenses 440 331 159 449
- ----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 2,601 2,087 951 2,936
- ----------------------------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) from Securities Transactions (149) (168) 1 427
Net Change in Unrealized Appreciation (Depreciation) on
Investments 209 413 14 (638)
- ----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 2,661 $ 2,332 $ 966 $ 2,725
==================================================================================================================================
(1) INCLUDES CLASS SPECIFIC DISTRIBUTION EXPENSES.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 60
statements of operations
FOR THE YEAR ENDED SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
California
Prime Government Tax Exempt
Money Money Money
Market Fund Market Fund Market Fund
(000) (000) (000)
------------------------------------------
INVESTMENT INCOME:
Interest Income $ 86,766 $ 126,537 $ 29,548
Dividend Income 50 -- --
- --------------------------------------------------------------------------------------------------
Total Investment Income 86,816 126,537 29,548
- --------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fee 4,074 6,249 2,269
Shareholder Servicing Fees--Institutional Class 1,046 112 233
Shareholder Servicing Fees--Class A(1) 5,618 15,607 4,714
Shareholder Servicing Fees--Class S(1) 3,463 2,082 889
Administration fee 848 1,254 438
Trustee Fees 52 84 31
Professional fees 196 282 100
Transfer Agent Fees 154 227 79
Custody fees 84 130 44
Printing fees 75 107 33
Registration fees 49 59 22
Insurance and Other expenses 116 210 74
- --------------------------------------------------------------------------------------------------
Total Expenses 15,775 26,403 8,926
- --------------------------------------------------------------------------------------------------
Less Waiver of:
Investment Advisory fees -- -- (494)
Shareholder Servicing Fees--Class A(1) (2,096) (5,827) (1,697)
Shareholder Servicing Fees--Class S(1) (369) (222) (83)
Transfer Agent Fees (154) (227) (79)
- --------------------------------------------------------------------------------------------------
Net Expenses 13,156 20,127 6,573
- --------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 73,660 106,410 22,975
- --------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) From Securities Transactions 192 (1) --
- --------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 73,852 $ 106,409 $ 22,975
==================================================================================================
(1) INCLUDES CLASS SPECIFIC DISTRIBUTION EXPENSES.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 61
statements of changes in net assets
FOR THE YEAR ENDED SEPTEMBER 30,
- --------------------------------------------------------------------------------
Large Cap Value Large Cap Growth
Equity Fund (000) Equity Fund (000)
---------------------- --------------------
2007 2006 2007 2006
- ----------------------------------------------------------------------- --------------------
OPERATIONS:
Net Investment Income (Loss) $ 2,036 $ 1,250 $ 252 $ 99
Net Realized Gain (Loss) from
Security Transactions 5,793 5,205 1,288 1,412
Net Change in Unrealized Appreciation
(Depreciation) on Investments 8,799 6,087 5,813 547
- ----------------------------------------------------------------------- --------------------
Net Increase in Net Assets
Resulting from Operations 16,628 12,542 7,353 2,058
- ----------------------------------------------------------------------- --------------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net Investment Income:
INSTITUTIONAL CLASS (1,807) (1,124) (212) (96)
CLASS A (232) (128) (34) (5)
CLASS R -- -- -- --
Realized Capital Gains:
INSTITUTIONAL CLASS (4,815) (3,330) -- --
CLASS A (687) (459) -- --
CLASS R -- -- -- --
- ----------------------------------------------------------------------- --------------------
Total Dividends and Distributions (7,541) (5,041) (246) (101)
- ----------------------------------------------------------------------- --------------------
CAPITAL SHARE TRANSACTIONS:(1)
INSTITUTIONAL CLASS:
Shares Issued 21,253 55,314 10,554 7,916
Shares Issued from Merger(2) -- -- 1,372 --
Shares Issued in Lieu of Dividends and
Distributions 4,589 2,902 70 30
Shares Redeemed (16,697) (14,689) (7,459) (7,829)
- ----------------------------------------------------------------------- --------------------
Increase (Decrease) in Net Assets from
Institutional Class Share Transactions 9,145 43,527 4,537 117
- ----------------------------------------------------------------------- --------------------
CLASS A:
Shares Issued 4,148 2,656 3,787 3,182
Shares Issued from Merger(2) -- -- 1,547 --
Shares Issued in Lieu of Dividends and
Distributions 728 471 23 4
Shares Redeemed (1,944) (1,743) (2,359) (1,497)
- ----------------------------------------------------------------------- --------------------
Increase (Decrease) in Net Assets from
Class A Share Transactions 2,932 1,384 2,998 1,689
- ----------------------------------------------------------------------- --------------------
CLASS R:
Shares Issued -- -- -- --
Shares Issued in Lieu of Dividends and
Distributions -- -- -- --
Shares Redeemed -- -- -- --
- ----------------------------------------------------------------------- --------------------
Decrease in Net Assets from
Class R Share Transactions -- -- -- --
- ----------------------------------------------------------------------- --------------------
Net Increase (Decrease) in Net Assets from
Share Transactions 12,077 44,911 7,535 1,806
- ----------------------------------------------------------------------- --------------------
Total Increase (Decrease) in Net Assets 21,164 52,412 14,642 3,763
- ----------------------------------------------------------------------- -------------------
NET ASSETS:
Beginning of year 106,050 53,638 46,205 42,442
- ----------------------------------------------------------------------- --------------------
End of year $ 127,214 $ 106,050 $ 60,847 $ 46,205
======================================================================= ====================
Undistributed (Distributions in Excess of)
Net Investment Income $ (5) $ (2) $ 7 $ (1)
- ----------------------------------------------------------------------- --------------------
(1) SEE NOTE 9 FOR SHARES ISSUED AND REDEEMED.
(2) SEE NOTE 8 IN THE NOTES TO FINANCIAL STATEMENTS.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 62
- --------------------------------------------------------------------------------
RCB Small Cap Corporate Bond Government
Value Fund (000) Fund (000) Bond Fund (000)
-------------------- -------------------- --------------------
2007 2006 2007 2006 2007 2006
-------------------- -------------------- --------------------
OPERATIONS:
Net Investment Income (Loss) $ (87) $ 1 $ 2,601 $ 2,227 $ 2,087 $ 1,326
Net Realized Gain (Loss) from
Security Transactions 9,056 1,110 (149) (276) (168) (360)
Net Change in Unrealized Appreciation
(Depreciation) on Investments (1,504) (908) 209 (191) 413 48
- --------------------------------------------------------------------- -------------------- --------------------
Net Increase in Net Assets
Resulting from Operations 7,465 203 2,661 1,760 2,332 1,014
- --------------------------------------------------------------------- -------------------- --------------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net Investment Income:
INSTITUTIONAL CLASS (2) (35) (2,546) (2,167) (1,976) (1,292)
CLASS A -- (1) (49) (54) (96) (32)
CLASS R -- (10) -- -- -- --
Realized Capital Gains:
INSTITUTIONAL CLASS (213) (186) -- -- -- --
CLASS A (165) (170) -- -- -- --
CLASS R (730) (785) -- -- -- --
- --------------------------------------------------------------------- -------------------- --------------------
Total Dividends and Distributions (1,110) (1,187) (2,595) (2,221) (2,072) (1,324)
- --------------------------------------------------------------------- -------------------- --------------------
CAPITAL SHARE TRANSACTIONS:(1)
INSTITUTIONAL CLASS:
Shares Issued 2,351 5,422 14,720 15,662 21,995 13,593
Shares Issued from Merger(2) -- -- -- -- -- --
Shares Issued in Lieu of Dividends and
Distributions 188 159 498 406 570 338
Shares Redeemed (8,112) (5,973) (8,362) (11,526) (5,878) (6,079)
- --------------------------------------------------------------------- -------------------- --------------------
Increase (Decrease) in Net Assets from
Institutional Class Share Transactions (5,573) (392) 6,856 4,542 16,687 7,852
- --------------------------------------------------------------------- -------------------- --------------------
CLASS A:
Shares Issued 620 1,155 214 146 1,002 1,378
Shares Issued from Merger(2) -- -- -- -- -- --
Shares Issued in Lieu of Dividends and
Distributions 136 129 23 25 30 9
Shares Redeemed (2,427) (3,396) (528) (353) (194) (162)
- --------------------------------------------------------------------- -------------------- --------------------
Increase (Decrease) in Net Assets from
Class A Share Transactions (1,671) (2,112) (291) (182) 838 1,225
- --------------------------------------------------------------------- -------------------- --------------------
CLASS R:
Shares Issued 5,384 12,077 -- -- -- --
Shares Issued in Lieu of Dividends and
Distributions 690 742 -- -- -- --
Shares Redeemed (15,167) (24,106) -- -- -- --
- --------------------------------------------------------------------- -------------------- --------------------
Decrease in Net Assets from
Class R Share Transactions (9,093) (11,287) -- -- -- --
- --------------------------------------------------------------------- -------------------- --------------------
Net Increase (Decrease) in Net Assets from
Share Transactions (16,337) (13,791) 6,565 4,360 17,525 9,077
- --------------------------------------------------------------------- -------------------- --------------------
Total Increase (Decrease) in Net Assets (9,982) (14,775) 6,631 3,899 17,785 8,767
- --------------------------------------------------------------------- -------------------- --------------------
NET ASSETS:
Beginning of year 69,741 84,516 56,622 52,723 37,453 28,686
- --------------------------------------------------------------------- -------------------- --------------------
End of year $ 59,759 $ 69,741 $ 63,253 $ 56,622 $ 55,238 $ 37,453
===================================================================== ==================== ====================
Undistributed (Distributions in Excess of)
Net Investment Income $ -- $ 3 $ 1 $ 1 $ -- $ 1
- --------------------------------------------------------------------- -------------------- --------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 63
statements of changes in net assets
FOR THE YEAR ENDED SEPTEMBER 30,
- --------------------------------------------------------------------------------
California Tax Exempt High Yield
Bond Fund (000) Bond Fund (000)
----------------------- ---------------------
2007 2006 2007 2006
- ---------------------------------------------------------------------------------- ---------------------
OPERATIONS:
Net Investment Income $ 951 $ 723 $ 2,936 $ 3,020
Net Realized Gain (Loss) from
Security Transactions 1 (35) 427 (18)
Net Change in Unrealized Appreciation (Depreciation)
on Investments 14 122 (638) (392)
- ---------------------------------------------------------------------------------- ---------------------
Net Increase in Net Assets
Resulting from Operations 966 810 2,725 2,610
- ---------------------------------------------------------------------------------- ---------------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net Investment Income:
INSTITUTIONAL CLASS (922) (692) (1,375) (1,599)
CLASS A (29) (31) (1,505) (1,421)
CLASS S -- -- -- --
Realized Capital Gains:
INSTITUTIONAL CLASS -- (90) -- --
CLASS A -- (5) -- --
Class S -- -- -- --
- ---------------------------------------------------------------------------------- ---------------------
Total Dividends and Distributions (951) (818) (2,880) (3,020)
- ---------------------------------------------------------------------------------- ---------------------
CAPITAL SHARE TRANSACTIONS: (1)
INSTITUTIONAL CLASS:
Shares Issued 15,567 8,793 1,609 4,120
Shares Issued in Lieu of Dividends and Distributions 334 255 849 895
Shares Redeemed (8,190) (5,739) (6,173) (6,503)
- ---------------------------------------------------------------------------------- ---------------------
Increase (Decrease) in Net Assets from
Institutional Class Share Transactions 7,711 3,309 (3,715) (1,488)
- ---------------------------------------------------------------------------------- ---------------------
CLASS A:
Shares Issued 58 31 1,427 1,822
Shares Issued in Lieu of Dividends and Distributions 5 6 904 817
Shares Redeemed (273) (385) (2,135) (3,425)
- ---------------------------------------------------------------------------------- ---------------------
Increase (Decrease) in Net Assets from
Class A Share Transactions (210) (348) 196 (786)
- ---------------------------------------------------------------------------------- ---------------------
CLASS S:
Shares Issued -- -- -- --
Shares Issued in Lieu of Dividends and Distributions -- -- -- --
Shares Redeemed -- -- -- --
- ---------------------------------------------------------------------------------- ---------------------
Increase (Decrease) in Net Assets from
Class S Share Transactions -- -- -- --
- ---------------------------------------------------------------------------------- ---------------------
Net Increase (Decrease) in Net Assets from
Share Transactions 7,501 2,961 (3,519) (2,274)
- ---------------------------------------------------------------------------------- ---------------------
Total Increase (Decrease) in Net Assets 7,516 2,953 (3,674) (2,684)
- ---------------------------------------------------------------------------------- ---------------------
NET ASSETS:
Beginning of year 27,208 24,255 40,932 43,616
- ---------------------------------------------------------------------------------- ---------------------
End of year $ 34,724 $ 27,208 $ 37,258 $ 40,932
================================================================================== =====================
Undistributed (Distributions in excess of)
Net Investment Income $ -- $ -- $ 56 $ --
- ---------------------------------------------------------------------------------- ---------------------
(1) SEE NOTE 9 FOR SHARES ISSUED AND REDEEMED.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 64
- --------------------------------------------------------------------------------
Prime Money Government Money California Tax Exempt
Market Fund (000) Market Fund (000) Money Market Fund (000)
--------------------------- -------------------------- ---------------------------
2007 2006 2007 2006 2007 2006
- --------------------------------------------------------------------------- -------------------------- ---------------------------
OPERATIONS:
Net Investment Income $ 73,660 $ 43,644 $ 106,410 $ 85,646 $ 22,975 $ 19,286
Net Realized Gain (Loss) from
Security Transactions 192 -- (1) 1 -- --
Net Change in Unrealized Appreciation
(Depreciation) on Investments -- -- -- -- -- --
- --------------------------------------------------------------------------- -------------------------- ---------------------------
Net Increase in Net Assets
Resulting from Operations 73,852 43,644 106,409 85,647 22,975 19,286
- --------------------------------------------------------------------------- -------------------------- ---------------------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net Investment Income:
INSTITUTIONAL CLASS (19,843) (14,704) (2,098) (2,064) (2,775) (2,080)
CLASS A (33,868) (18,919) (92,518) (74,663) (17,180) (15,136)
CLASS S (19,939) (10,020) (11,780) (8,922) (3,020) (2,065)
Realized Capital Gains:
INSTITUTIONAL CLASS -- -- -- -- -- --
CLASS A -- -- -- -- -- --
Class S -- -- -- -- -- --
- --------------------------------------------------------------------------- -------------------------- ---------------------------
Total Dividends and Distributions (73,650) (43,643) (106,396) (85,649) (22,975) (19,281)
- --------------------------------------------------------------------------- -------------------------- ---------------------------
CAPITAL SHARE TRANSACTIONS: (1)
INSTITUTIONAL CLASS:
Shares Issued 1,324,934 1,690,942 532,859 635,895 2,517,017 1,444,514
Shares Issued in Lieu of Dividends and
Distributions 3,872 2,507 4 2 -- --
Shares Redeemed (1,278,386) (1,637,671) (537,787) (615,154) (2,512,794) (1,432,711)
- --------------------------------------------------------------------------- -------------------------- ---------------------------
Increase (Decrease) in Net Assets from
Institutional Class Share Transactions 50,420 55,778 (4,924) 20,743 4,223 11,803
- --------------------------------------------------------------------------- -------------------------- ---------------------------
CLASS A:
Shares Issued 2,695,734 2,204,941 5,523,344 5,761,555 2,143,730 2,014,013
Shares Issued in Lieu of Dividends and
Distributions 12,208 5,522 62,437 51,511 13,108 12,188
Shares Redeemed (2,477,866) (1,882,549) (5,235,257) (5,767,874) (2,092,998) (1,964,398)
- --------------------------------------------------------------------------- -------------------------- ---------------------------
Increase (Decrease) in Net Assets from
Class A Share Transactions 230,076 327,914 350,524 45,192 63,840 61,803
- --------------------------------------------------------------------------- -------------------------- ---------------------------
CLASS S:
Shares Issued 1,873,534 1,261,525 775,804 1,013,412 390,230 348,788
Shares Issued in Lieu of Dividends and
Distributions -- -- -- -- -- --
Shares Redeemed (1,577,751) (1,140,675) (686,827) (1,009,234) (318,443) (329,840)
- --------------------------------------------------------------------------- -------------------------- ---------------------------
Increase (Decrease) in Net Assets from
Class S Share Transactions 295,783 120,850 88,977 4,178 71,787 18,948
- --------------------------------------------------------------------------- -------------------------- ---------------------------
Net Increase (Decrease) in Net Assets from
Share Transactions 576,279 504,542 434,577 70,113 139,850 92,554
- --------------------------------------------------------------------------- -------------------------- ---------------------------
Total Increase (Decrease) in Net Assets 576,481 504,543 434,590 70,111 139,850 92,559
- --------------------------------------------------------------------------- -------------------------- ---------------------------
NET ASSETS:
Beginning of year 1,352,890 848,347 2,225,467 2,155,356 823,623 731,064
- --------------------------------------------------------------------------- -------------------------- ---------------------------
End of year $ 1,929,371 $ 1,352,890 $ 2,660,057 $ 2,225,467 $ 963,473 $ 823,623
=========================================================================== ========================== ===========================
Undistributed (Distributions in excess of)
Net Investment Income $ 11 $ 1 $ 16 $ 2 $ -- $ --
- --------------------------------------------------------------------------- -------------------------- ---------------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 65
financial highlights
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FOR THE YEAR ENDED SEPTEMBER 30,
- --------------------------------------------------------------------------------
NET
NET REALIZED AND DISTRIBUTIONS NET
ASSET NET UNREALIZED DIVIDENDS FROM ASSET
VALUE INVESTMENT GAINS (LOSSES) FROM NET REALIZED VALUE
BEGINNING INCOME ON INVESTMENT CAPITAL END
OF PERIOD (LOSS) SECURITIES INCOME GAINS OF PERIOD
- -----------------------------------------------------------------------------------------------------------
Large Cap Value Equity Fund
Institutional Class (commenced operations on January 14, 2000)
2007 $ 10.36 $ 0.19^ $ 1.38^ $ (0.19) $ (0.53) $ 11.21
2006 9.54 0.13^ 1.21^ (0.13) (0.39) 10.36
2005 8.77 0.10^ 1.13^ (0.10) (0.36) 9.54
2004 7.41 0.08^ 1.36^ (0.08) -- 8.77
2003 6.04 0.07 1.37 (0.07) -- 7.41
Class A (commenced operations on April 13, 2000)
2007 $ 10.35 $ 0.16^ $ 1.37^ $ (0.16) $ (0.53) $ 11.19
2006 9.53 0.11^ 1.20^ (0.10) (0.39) 10.35
2005 8.76 0.09^ 1.12^ (0.08) (0.36) 9.53
2004 7.41 0.05^ 1.36^ (0.06) -- 8.76
2003 6.04 0.06 1.37 (0.06) -- 7.41
- -----------------------------------------------------------------------------------------------------------
Large Cap Growth Equity Fund
Institutional Class (commenced operations on January 14, 2000)
2007 $ 7.75 $ 0.05^ $ 1.10^ $ (0.04) $ -- $ 8.86
2006 7.43 0.02^ 0.32^ (0.02) -- 7.75
2005 6.76 0.04^ 0.67^ (0.04) -- 7.43
2004 6.37 0.01^ 0.38^ --^^ -- 6.76
2003 5.25 0.01^ 1.12^ (0.01) -- 6.37
Class A (commenced operations on March 28, 2000)
2007 $ 7.68 $ 0.01^ $ 1.10^ $ (0.02) $ -- $ 8.77
2006 7.35 --^ 0.33^ --^^ -- 7.68
2005 6.69 0.02^ 0.67^ (0.03) -- 7.35
2004 6.32 (0.01)^ 0.38^ --^^ -- 6.69
2003 5.21 (0.01)^ 1.12^ -- -- 6.32
- -----------------------------------------------------------------------------------------------------------
RCB Small Cap Value Fund
Institutional Class (commenced operations on October 3, 2001)
2007 $ 28.25 $ 0.02^ $ 3.00^ $ (0.01) $ (0.47) $ 30.79
2006 28.58 0.06^ 0.05^ (0.07) (0.37) 28.25
2005 27.30 0.07^ 2.58^ -- (1.37) 28.58
2004 21.92 0.06^ 5.40^ -- (0.08) 27.30
2003 15.06 (0.04)^ 6.90^ -- -- 21.92
Class A (commenced operations on October 3, 2001)
2007 $ 27.98 $ (0.05)^ $ 2.96^ $ -- $ (0.47) $ 30.42
2006 28.31 (0.01)^ 0.05^ --^^ (0.37) 27.98
2005 27.13 0.00 ^ 2.55^ -- (1.37) 28.31
2004 21.84 (0.02)^ 5.39^ -- (0.08) 27.13
2003 15.04 (0.08)^ 6.88^ -- -- 21.84
Class R (commenced operations on September 30, 1998)
2007 $ 27.93 $ (0.05)^ $ 2.97^ $ -- $ (0.47) $ 30.38
2006 28.27 (0.01)^ 0.04^ --^^ (0.37) 27.93
2005 27.09 0.01 ^ 2.54^ -- (1.37) 28.27
2004 21.81 (0.02)^ 5.38^ -- (0.08) 27.09
2003 15.02 (0.07)^ 6.86^ -- -- 21.81
RATIO
OF EXPENSES
RATIO TO AVERAGE
NET OF NET NET ASSETS
ASSETS RATIO INVESTMENT (EXCLUDING
END OF EXPENSES INCOME (LOSS) WAIVERS & PORTFOLIO
TOTAL OF PERIOD TO AVERAGE TO AVERAGE RECOVERED TURNOVER
RETURN+++ (000) NET ASSETS(1)(2) NET ASSETS(1) FEES)(1) RATE
- -------------------------------------------------------------------------------------------------------
Large Cap Value Equity Fund
Institutional Class (commenced operations on January 14, 2000)
2007 15.60% $ 110,024 0.96% 1.73% 0.97% 24%
2006 14.50 92,946 0.96 1.36 0.97 31
2005 14.39 42,974 0.96 1.12 0.97 34
2004 19.40 38,344 0.97 0.92 0.97 36
2003 24.03 33,016 1.00 1.12 1.00 39
Class A (commenced operations on April 13, 2000)
2007 15.24% $ 17,190 1.21% 1.47% 1.22% 24%
2006 14.24 13,104 1.21 1.13 1.22 31
2005 14.14 10,664 1.21 0.87 1.22 34
2004 19.01 6,281 1.22 0.64 1.22 36
2003 23.75 1,792 1.25 0.84 1.25 39
- -------------------------------------------------------------------------------------------------------
Large Cap Growth Equity Fund
Institutional Class (commenced operations on January 14, 2000)
2007 14.91% $ 45,784 0.99% 0.52% 1.00% 30%
2006 4.59 35,842 0.99 0.27 1.00 34
2005 10.55 34,164 0.98 0.57 1.00 27
2004 6.20 25,575 1.01 0.10 1.01 50
2003 21.51 22,249 1.05 0.16 1.03 43
Class A (commenced operations on March 28, 2000)
2007 14.51% $ 15,063 1.24% 0.28% 1.25% 30%
2006 4.55 10,363 1.24 0.03 1.25 34
2005 10.28 8,278 1.23 0.33 1.25 27
2004 5.87 5,223 1.26 (0.14) 1.26 50
2003 21.31 1,965 1.30 (0.09) 1.29 43
- -------------------------------------------------------------------------------------------------------
RCB Small Cap Value Fund
Institutional Class (commenced operations on October 3, 2001)
2007 10.65% $ 9,062 1.19% 0.08% 1.20% 57%
2006 0.40 13,435 1.20 0.20 1.21 66
2005 9.87 13,975 1.18 0.26 1.20 41
2004 24.97 8,955 1.21 0.23 1.20 40
2003 45.55 6,236 1.24 (0.20) 1.24 65
Class A (commenced operations on October 3, 2001)
2007 10.37% $ 9,753 1.44% (0.16)% 1.45% 57%
2006 0.17 10,470 1.45 (0.04) 1.46 66
2005 9.55 12,754 1.43 0.01 1.45 41
2004 24.64 7,551 1.49 (0.07) 1.48 40
2003 45.21 2,384 1.49 (0.45) 1.49 65
Class R (commenced operations on September 30, 1998)
2007 10.43% $ 40,944 1.44% (0.17)% 1.45% 57%
2006 0.14 45,836 1.45 (0.04) 1.46 66
2005 9.56 57,787 1.43 0.02 1.45 41
2004 24.63 36,473 1.49 (0.07) 1.48 40
2003 45.21 14,267 1.49 (0.41) 1.49 65
+++ RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED. FEE
WAIVERS ARE IN EFFECT; IF THEY HAD NOT BEEN IN EFFECT, PERFORMANCE WOULD
HAVE BEEN LOWER. TOTAL RETURN FIGURES DO NOT INCLUDE APPLICABLE SALES
LOADS. RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES THAT A
SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND
SHARES.
^ PER SHARE CALCULATIONS ARE BASED ON AVERAGE SHARES OUTSTANDING THROUGHOUT
THE PERIOD.
^^ AMOUNT REPRESENTS LESS THAN $0.01 PER SHARE.
(1) ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
(2) RATIO INCLUDES WAIVERS AND PREVIOUSLY WAIVED INVESTMENT ADVISORY FEES
RECOVERED. THE IMPACT OF THE RECOVERED FEES MAY CAUSE A HIGHER NET EXPENSE
RATIO.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 66
- ----------------------------------------------------------------------------------------------------------
NET
NET REALIZED AND DISTRIBUTIONS NET
ASSET UNREALIZED DIVIDENDS FROM ASSET
VALUE NET GAINS (LOSSES) FROM NET REALIZED VALUE
BEGINNING INVESTMENT ON INVESTMENT CAPITAL END
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD
- ----------------------------------------------------------------------------------------------------------
Corporate Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2007 $ 10.17 $ 0.45^ $ --^ $ (0.44) $ -- $ 10.18
2006 10.27 0.42^ (0.10)^ (0.42) -- 10.17
2005 10.60 0.40^ (0.27)^ (0.40) (0.06) 10.27
2004 10.89 0.41^ (0.18)^ (0.41) (0.11) 10.60
2003 10.65 0.46 0.24 (0.46) -- 10.89
Class A (commenced operations on April 13, 2000)
2007 $ 10.17 $ 0.42^ $ 0.01^ $ (0.42) $ -- $ 10.18
2006 10.27 0.39^ (0.10)^ (0.39) -- 10.17
2005 10.61 0.37^ (0.28)^ (0.37) (0.06) 10.27
2004 10.89 0.37^ (0.16)^ (0.38) (0.11) 10.61
2003 10.65 0.44 0.23 (0.43) -- 10.89
- ----------------------------------------------------------------------------------------------------------
Government Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2007 $ 10.28 $ 0.46^ $ 0.05^ $ (0.46) $ -- $ 10.33
2006 10.40 0.41^ (0.12)^ (0.41) -- 10.28
2005 10.62 0.31^ (0.16)^ (0.31) (0.06) 10.40
2004 10.93 0.25^ (0.17)^ (0.25) (0.14) 10.62
2003 11.02 0.36^ (0.07)^ (0.37) (0.01) 10.93
Class A (commenced operations on April 13, 2000)
2007 $ 10.30 $ 0.44^ $ 0.04^ $ (0.43) $ -- $ 10.35
2006 10.42 0.39^ (0.12)^ (0.39) -- 10.30
2005 10.64 0.29^ (0.17)^ (0.28) (0.06) 10.42
2004 10.95 0.23^ (0.17)^ (0.23) (0.14) 10.64
2003 11.01 0.33^ (0.04)^ (0.34) (0.01) 10.95
- ----------------------------------------------------------------------------------------------------------
California Tax Exempt Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2007 $ 10.25 $ 0.31^ $ (0.01)^ $ (0.31) $ -- $ 10.24
2006 10.26 0.29^ 0.03^ (0.29) (0.04) 10.25
2005 10.41 0.28^ (0.11)^ (0.28) (0.04) 10.26
2004 10.60 0.27^ (0.06)^ (0.27) (0.13) 10.41
2003 10.83 0.31 (0.04) (0.31) (0.19) 10.60
Class A (commenced operations on April 13, 2000)
2007 $ 10.27 $ 0.28^ $ --^ $ (0.28) $ -- $ 10.27
2006 10.29 0.26^ 0.02^ (0.26) (0.04) 10.27
2005 10.44 0.25^ (0.11)^ (0.25) (0.04) 10.29
2004 10.62 0.24^ (0.05)^ (0.24) (0.13) 10.44
2003 10.85 0.27 (0.02) (0.29) (0.19) 10.62
- ----------------------------------------------------------------------------------------------------------
High Yield Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2007 $ 8.96 $ 0.70^ $ (0.06)^ $ (0.69) $ -- $ 8.91
2006 9.04 0.68^ (0.08)^ (0.68) -- 8.96
2005 9.31 0.71^ (0.27)^ (0.71) -- 9.04
2004 8.95 0.72^ 0.36^ (0.72) -- 9.31
2003 8.16 0.76 0.79 (0.76) -- 8.95
Class A (commenced operations on January 14, 2000)
2007 $ 8.96 $ 0.68^ $ (0.07)^ $ (0.66) $ -- $ 8.91
2006 9.04 0.65^ (0.08)^ (0.65) -- 8.96
2005 9.31 0.69^ (0.27)^ (0.69) -- 9.04
2004 8.95 0.70^ 0.35^ (0.69) -- 9.31
2003 8.16 0.74 0.78 (0.73) -- 8.95
- -------------------------------------------------------------------------------------------------------------
RATIO
OF EXPENSES
RATIO TO AVERAGE
NET OF NET NET ASSETS
ASSETS RATIO INVESTMENT (EXCLUDING
END OF EXPENSES INCOME WAIVERS & PORTFOLIO
TOTAL OF PERIOD TO AVERAGE TO AVERAGE RECOVERED TURNOVER
RETURN+++ (000) NET ASSETS(1)(2) NET ASSETS(1) FEES)(1) RATE
- -------------------------------------------------------------------------------------------------------------
Corporate Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2007 4.57% $ 62,210 0.74% 4.39% 0.75% 30%
2006 3.19 55,290 0.75 4.14 0.75 25
2005 1.26 51,193 0.75 3.80 0.76 25
2004 2.15 47,080 0.75 3.82 0.79 57
2003 6.74 42,256 0.75 4.30 0.78 66
Class A (commenced operations on April 13, 2000)
2007 4.30% $ 1,043 0.99% 4.13% 1.00% 30%
2006 2.93 1,332 1.00 3.88 1.00 25
2005 0.91 1,530 1.00 3.55 1.01 25
2004 1.99 1,522 1.00 3.51 1.04 57
2003 6.47 830 1.00 4.00 1.03 66
- -------------------------------------------------------------------------------------------------------------
Government Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2007 5.04% $ 52,606 0.70% 4.50% 0.77% 83%
2006 2.89 35,671 0.70 4.04 0.78 62
2005 1.42 28,132 0.70 2.98 0.79 58
2004 0.81 20,901 0.70 2.39 0.81 169
2003 2.68* 15,596 0.70 3.26 0.81 54
Class A (commenced operations on April 13, 2000)
2007 4.77% $ 2,632 0.95% 4.25% 1.02% 83%
2006 2.63 1,782 0.95 3.81 1.03 62
2005 1.16 554 0.95 2.70 1.04 58
2004 0.55 436 0.95 2.14 1.06 169
2003 2.71* 18 0.95 3.00 1.06 54
- -------------------------------------------------------------------------------------------------------------
California Tax Exempt Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2007 2.98% $ 33,802 0.50% 3.04% 0.62% 43%
2006 3.18 26,074 0.50 2.85 0.62 43
2005 1.65 22,768 0.50 2.70 0.63 54
2004 2.00 17,789 0.50 2.55 0.65 51
2003 2.63 14,546 0.50 2.91 0.65 68
Class A (commenced operations on April 13, 2000)
2007 2.82% $ 922 0.75% 2.78% 0.87% 43%
2006 2.81 1,134 0.75 2.59 0.87 43
2005 1.39 1,487 0.75 2.43 0.88 54
2004 1.84 2,439 0.75 2.29 0.90 51
2003 2.37 732 0.75 2.62 0.90 68
- -------------------------------------------------------------------------------------------------------------
High Yield Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2007 7.27% $ 17,137 1.00% 7.73% 1.10% 26%
2006 6.90 20,887 1.00 7.58 1.10 23
2005 4.85 22,588 1.00 7.71 1.11 46
2004 12.47 22,860 1.00 7.87 1.14 35
2003 19.75 13,387 1.00 8.84 1.13 36
Class A (commenced operations on January 14, 2000)
2007 6.95% $ 20,121 1.30% 7.44% 1.40% 26%
2006 6.58 20,045 1.30 7.28 1.40 23
2005 4.54 21,028 1.30 7.41 1.41 46
2004 12.14 20,655 1.30 7.56 1.44 35
2003 19.39 16,878 1.30 8.44 1.43 36
* TOTAL RETURN FOR CLASS A OF THE GOVERNMENT BOND FUND IS GREATER THAN THE
INSTITUTIONAL CLASS'S DUE TO A LARGE REDEMPTION DURING THE YEAR.
+ RATIOS REFLECT THE IMPACT OF SIGNIFICANT CHANGES IN AVERAGE NET ASSETS AND
THE EFFECTS OF ANNUALIZATION.
+++ RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED. FEE
WAIVERS ARE IN EFFECT; IF THEY HAD NOT BEEN IN EFFECT, PERFORMANCE WOULD
HAVE BEEN LOWER. RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES THAT
A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND
SHARES.
^ PER SHARE CALCULATIONS ARE BASED ON THE AVERAGE SHARES OUTSTANDING
THROUGHOUT THE PERIOD.
(1) ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
(2) RATIO INCLUDES WAIVERS AND PREVIOUSLY WAIVED INVESTMENT ADVISORY FEES
RECOVERED. THE IMPACT OF THE RECOVERED FEES MAY CAUSE A HIGHER NET EXPENSE
RATIO.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUND | PAGE 67
financial highlights
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FOR THE YEAR ENDED SEPTEMBER 30,
- --------------------------------------------------------------------------------
RATIO
OF EXPENSES
RATIO TO AVERAGE
NET NET NET OF NET NET ASSETS
ASSET DIVIDENDS ASSET ASSETS RATIO INVESTMENT (EXCLUDING
VALUE NET FROM NET VALUE END OF EXPENSES INCOME WAIVERS &
BEGINNING INVESTMENT INVESTMENT END TOTAL OF PERIOD TO AVERAGE TO AVERAGE RECOVERED
OF PERIOD INCOME INCOME OF PERIOD RETURN+++ (000) NET ASSETS(1)(2) NET ASSETS(1) FEES)(1)
- ---------------------------------------------------------------------------------------------------------------------------------
Prime Money Market Fund
Institutional Class (commenced operations on March 23, 1998)
2007 $1.00 $0.047 $(0.047) $1.00 4.85% $ 438,639 0.59% 4.74% 0.60%
2006 1.00 0.041 (0.041) 1.00 4.17 388,171 0.59 4.12 0.60
2005 1.00 0.021 (0.021) 1.00 2.10 332,393 0.60 2.05 0.61
2004 1.00 0.006 (0.006) 1.00 0.58 367,209 0.63 0.59 0.63
2003 1.00 0.007 (0.007) 1.00 0.68 287,087 0.63 0.68 0.64
Class A (commenced operations on October 18, 1999)
2007 $1.00 $0.045 $(0.045) $1.00 4.62% $ 870,537 0.81% 4.52% 1.10%
2006 1.00 0.039 (0.039) 1.00 3.94 640,366 0.81 3.95 1.10
2005 1.00 0.019 (0.019) 1.00 1.87 312,452 0.82 1.94 1.11
2004 1.00 0.004 (0.004) 1.00 0.36 201,058 0.85 0.35 1.13
2003 1.00 0.005 (0.005) 1.00 0.46 205,191 0.85 0.47 1.14
Class S (commenced operations on October 26, 1999)
2007 $1.00 $0.043 $(0.043) $1.00 4.41% $ 620,195 1.01% 4.32% 1.10%
2006 1.00 0.037 (0.037) 1.00 3.73 324,353 1.01 3.74 1.10
2005 1.00 0.017 (0.017) 1.00 1.67 203,502 1.02 1.70 1.11
2004 1.00 0.002 (0.002) 1.00 0.21 115,761 1.00 0.21 1.13
2003 1.00 0.003 (0.003) 1.00 0.29 118,624 1.03 0.29 1.14
- ---------------------------------------------------------------------------------------------------------------------------------
Government Money Market Fund
Institutional Class (commenced operations on April 3, 2000)
2007 $1.00 $0.047 $(0.047) $1.00 4.77% $ 47,858 0.60% 4.67% 0.61%
2006 1.00 0.040 (0.040) 1.00 4.08 52,782 0.60 4.11 0.61
2005 1.00 0.020 (0.020) 1.00 2.05 32,039 0.61 1.97 0.62
2004 1.00 0.006 (0.006) 1.00 0.57 43,608 0.63 0.56 0.64
2003 1.00 0.007 (0.007) 1.00 0.70 56,841 0.63 0.68 0.64
Class A (commenced operations on June 21, 1999)
2007 $1.00 $0.044 $(0.044) $1.00 4.54% $2,291,138 0.82% 4.45% 1.11%
2006 1.00 0.038 (0.038) 1.00 3.86 1,940,602 0.82 3.78 1.11
2005 1.00 0.018 (0.018) 1.00 1.82 1,895,412 0.83 1.80 1.12
2004 1.00 0.004 (0.004) 1.00 0.35 1,857,676 0.85 0.35 1.14
2003 1.00 0.005 (0.005) 1.00 0.48 2,060,860 0.85 0.48 1.14
Class S (commenced operations on October 6, 1999)
2007 $1.00 $0.042 $(0.042) $1.00 4.33% $ 321,061 1.02% 4.24% 1.11%
2006 1.00 0.036 (0.036) 1.00 3.65 232,083 1.02 3.60 1.11
2005 1.00 0.016 (0.016) 1.00 1.62 227,905 1.03 1.61 1.12
2004 1.00 0.002 (0.002) 1.00 0.20 263,086 1.00 0.21 1.14
2003 1.00 0.003 (0.003) 1.00 0.30 191,539 1.03 0.31 1.14
- ---------------------------------------------------------------------------------------------------------------------------------
California Tax Exempt Money Market Fund
Institutional Class (commenced operations on April 3, 2000)
2007 $1.00 $0.030 $(0.030) $1.00 3.01% $ 89,237 0.55% 2.97% 0.62%
2006 1.00 0.026 (0.026) 1.00 2.62 85,014 0.55 2.60 0.62
2005 1.00 0.015 (0.015)* 1.00 1.51 73,211 0.55 1.46 0.63
2004 1.00 0.005 (0.005) 1.00 0.52 79,413 0.55 0.51 0.65
2003 1.00 0.006 (0.006) 1.00 0.62 87,820 0.55 0.59 0.65
Class A (commenced operations on June 21, 1999)
2007 $1.00 $0.027 $(0.027) $1.00 2.78% $ 695,318 0.78% 2.73% 1.12%
2006 1.00 0.024 (0.024) 1.00 2.39 631,478 0.78 2.36 1.12
2005 1.00 0.013 (0.013)* 1.00 1.28 569,671 0.78 1.25 1.13
2004 1.00 0.003 (0.003) 1.00 0.29 505,029 0.78 0.29 1.15
2003 1.00 0.004 (0.004) 1.00 0.41 539,182 0.76 0.41 1.15
Class S (commenced operations on November 12, 1999)
2007 $1.00 $0.025 $(0.025) $1.00 2.57% $ 178,918 0.98% 2.55% 1.12%
2006 1.00 0.022 (0.022) 1.00 2.18 107,131 0.98 2.17 1.12
2005 1.00 0.011 (0.011)* 1.00 1.08 88,182 0.98 1.09 1.13
2004 1.00 0.002 (0.002) 1.00 0.15 33,520 0.91 0.15 1.15
2003 1.00 0.003 (0.003) 1.00 0.27 24,002 0.89 0.27 1.15
* INCLUDES A REALIZED CAPITAL GAIN DISTRIBUTION OF LESS THAN $0.001.
+++ RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED. FEE
WAIVERS ARE IN EFFECT; IF THEY HAD NOT BEEN IN EFFECT, PERFORMANCE WOULD
HAVE BEEN LOWER. RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES THAT
A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND
SHARES.
(1) ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
(2) RATIO INCLUDES WAIVERS AND PREVIOUSLY WAIVED INVESTMENT ADVISORY FEES
RECOVERED. THE IMPACT OF THE RECOVERED FEES MAY CAUSE A HIGHER NET EXPENSE
RATIO.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 68
notes to financial statements
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
1. ORGANIZATION:
CNI Charter Funds, a Delaware statutory trust (the "Trust"), is registered under
the Investment Company Act of 1940, as amended, as an open-end management
investment company with 16 portfolios. The financial statements included herein
are those of the Large Cap Value Equity Fund, Large Cap Growth Equity Fund, RCB
Small Cap Value Fund (collectively, the "Equity Funds"); Corporate Bond Fund,
Government Bond Fund, California Tax Exempt Bond Fund, High Yield Bond Fund
(collectively, the "Fixed Income Funds"); and Prime Money Market Fund,
Government Money Market Fund and California Tax Exempt Money Market Fund
(collectively, the "Money Market Funds") (each a "Fund", collectively, the
"Funds"). The Equity and Fixed Income Funds are registered to offer
Institutional and Class A Shares; in addition, the RCB Small Cap Value Fund is
registered to offer Class R Shares. The Money Market Funds are registered to
offer Institutional, Class A and Class S Shares. The assets of each Fund are
segregated, and a shareholder's interest is limited to the Fund in which shares
are held. The Funds' prospectuses provide a description of each Fund's
investment objectives, policies and strategies.
Class A and Institutional Class shares of the Multi-Asset Fund commenced
operations on October 1, 2007.
On April 5, 2005, the Board of Trustees of CNI Charter Funds (the "Trust")
approved the reorganization of the AHA Limited Maturity Fixed Income Fund, AHA
Full Maturity Fixed Income Fund, AHA Balanced Fund, AHA Diversified Equity Fund,
and AHA Socially Responsible Equity Fund series of AHA Investment Funds, Inc.
("AHA Funds") into newly established corresponding series of the Trust. The
reorganization was approved by shareholders of AHA Funds and was effective on
October 3, 2005. Class A and Institutional Class shares of the AHA Funds are
offered through separate prospectuses. To request a prospectus for the AHA
Funds, 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.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Funds.
USE OF ESTIMATES - The preparation of financial statements in conformity with
accounting principles generally accepted in the U.S. requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results could
differ from those estimates.
SECURITY VALUATION - Securities listed on a securities exchange, market or
automated quotation system for which quotations are readily available (except
for securities traded on NASDAQ) are valued at the last quoted sale price on the
primary exchange or market (foreign or domestic) on which they are traded, or,
if there is no such reported sale, at the most recent quoted bid price. For
securities traded on NASDAQ, the NASDAQ Official Closing Price is 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 value; 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.
CNI CHARTER FUNDS | PAGE 69
notes to financial statements
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
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 that class. Income, non
class-specific expenses, and realized and unrealized gains/losses are allocated
to the respective class on the basis of relative net asset value each day.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net investment
income are declared daily and paid to shareholders monthly for the Fixed Income
and Money Market Funds. Dividends from net investment income are declared and
paid quarterly for the Large Cap Value Equity and Large Cap Growth Equity Funds.
For the RCB Small Cap Value Fund, dividends from net investment income are
declared and paid annually. Distributions from net realized capital gains are
distributed to shareholders at least annually.
3. ADMINISTRATION, TRANSFER AGENT, DISTRIBUTION AND SHAREHOLDER SERVICES
AGREEMENTS:
Pursuant to an administration agreement (the "Agreement"), SEI Investments
Global Funds Services (the "Administrator"), a wholly owned subsidiary of SEI
Investments Company, acts as the Trust's Administrator. Under the terms of the
Agreement dated April 1, 1999, as amended January 1, 2005, the Administrator is
entitled to receive an annual fee of 0.065% of aggregate average daily net
assets of the Trust not exceeding $2.5 billion, 0.045% of aggregate average
daily net assets of the Trust exceeding $2.5 billion but not exceeding $5
billion, and 0.025% of aggregate average daily net assets of the Trust exceeding
$5 billion. Each Fund is subject to a minimum annual fee of $90,000, which may
be reduced at the sole discretion of the Administrator.
The Trust has adopted a Rule 12b-1 Distribution Plan ("the Plan") with respect
to Class A, Class S and Class R Shares that allows each Fund to pay distribution
and servicing fees. SEI Investments Distribution Co. (the "Distributor")
receives a distribution fee, computed daily and paid monthly, at the annual rate
of 0.50% of the average daily net assets of the Class A Shares and Class S
Shares of the Money Market Funds and 0.25% of the Class A Shares of the Equity
and Fixed Income Funds and the Class R Shares of the RCB Small Cap Value Fund,
with the exception of 0.30% charged to the Class A Shares of the High Yield Bond
Fund, which may be used by the Distributor to provide compensation for sales
support and distribution-related activities.
The Trust and the Distributor are parties to a Distribution Agreement dated
April 1, 1999.
SEI Institutional Transfer Agency, a division of SEI Investments Fund Management
Corporation serves as Transfer Agent for the Trust and provides services at an
annual rate of $15,000 per share class. The Transfer Agent has voluntarily
agreed to waive these fees. Citigroup Fund Services, LLC serves as the
Sub-Transfer Agent for the RCB Small Cap Value Fund.
U.S. Bank, N.A. serves as Custodian for the Trust. The Custodian plays no role
in determining the investment policies of the Trust or which securities are to
be purchased or sold by the Trust.
The Trust has also adopted a Shareholder Servicing Agreement that permits
payment of compensation to service providers, which may include City National
Bank ("CNB"), that have agreed to provide certain shareholder support for their
customers who own Institutional Class, Class A, Class S or Class R Shares. In
consideration for such services, a shareholder servicing fee is charged at the
annual rate of up to 0.25% of each Fund's average daily net assets. The Trust
has agreed to voluntarily waive shareholder servicing fees to the extent
necessary to limit the total operating expenses of the Fund. For the year ended
September 30, 2007, CNB received Shareholder Servicing fees from the Trust in
the amount of $9,849,638.
CNI CHARTER FUNDS | PAGE 70
- --------------------------------------------------------------------------------
Certain officers of the Trust are also officers of City National Asset
Management, Inc. ("CNAM", or the "Adviser") or the Administrator. Such officers
are paid no fees by the Trust for serving as officers of the Trust.
4. INVESTMENT ADVISORY FEES AND OTHER AGREEMENTS:
CNAM, a wholly owned subsidiary of CNB, serves as the Investment Manager for the
Funds. Under the terms of the current agreement, the Adviser receives an annual
fee equal to 0.62% of the average daily net assets of the Large Cap Value Equity
Fund, 0.65% of the average daily net assets of the Large Cap Growth Equity Fund,
0.85% of the average net assets of the RCB Small Cap Value Fund, 0.40% of the
average daily net assets of the Corporate Bond Fund, 0.43% of the average daily
net assets of the Government Bond Fund, 0.27% of the average daily net assets of
the California Tax Exempt Bond Fund, 0.75% of the average daily net assets of
the High Yield Bond Fund, 0.25% of the average daily net assets of the Prime
Money Market Fund, 0.26% of the average daily net assets of the Government Money
Market Fund, and 0.27% of the average daily net assets of the California Tax
Exempt Money Market Fund.
REED, CONNER & BIRDWELL, LLC acts as the Investment Sub-Adviser on behalf of the
RCB Small Cap Value Fund.
HSBC HALBIS PARTNERS (USA), INC. acts as the Investment Sub-Adviser on behalf of
the High Yield Bond Fund.
Sub-Adviser fees are paid by the Adviser.
The Adviser has voluntarily agreed to limit its fees or reimburse expenses to
the extent necessary to keep operating expenses at or below certain percentages
of the Funds' respective average daily net assets. The Adviser has voluntarily
agreed to maintain this limitation until further notice to the Trust. The
voluntary expense limitations (expressed as a percentage of average daily net
assets) are as follows:
Large Cap Large Cap RCB
Value Growth Small Cap
Equity Equity Value
Fund Fund Fund
- --------------------------------------------------------------------------------
Institutional Class 1.00% 1.05% 1.24%
Class A 1.25% 1.30% 1.49%
Class R -- -- 1.49%
- --------------------------------------------------------------------------------
California
Corporate Government Tax Exempt High Yield
Bond Bond Bond Bond
Fund Fund Fund Fund
- --------------------------------------------------------------------------------
Institutional Class 0.75% 0.70% 0.50% 1.00%
Class A 1.00% 0.95% 0.75% 1.30%
- --------------------------------------------------------------------------------
Prime California
Money Government Tax Exempt
Market Money Market Money Market
Fund Fund Fund
- --------------------------------------------------------------------------------
Institutional Class 0.63% 0.63% 0.55%
Class A 0.85% 0.85% 0.78%
Class S 1.05% 1.05% 0.98%
- --------------------------------------------------------------------------------
Any fee reductions or expense reimbursements may be repaid to the Adviser within
three years after occurrence, subject to certain restrictions and only if such
repayments do not cause the Funds' expense ratios, at the time of repayment, to
exceed the amounts shown in the preceding table.
As of September 30, 2007, fees which were previously waived by the Adviser which
may be subject to possible future reimbursement to the Adviser were as follows:
Potential Amount of
Fund Recovery (000) Expiration
- --------------------------------------------------------------------------------
Government Bond $ 18 2008
23 2009
31 2010
California Tax Exempt Bond 25 2008
28 2009
34 2010
High Yield Bond 42 2008
38 2009
35 2010
California Tax Exempt Money Market 430 2008
516 2009
494 2010
- --------------------------------------------------------------------------------
5. INVESTMENT TRANSACTIONS:
The cost of security purchases and proceeds from the sale and maturities of
securities, other than temporary investments in short-term securities for the
year ended September 30, 2007, were as follows for the Equity and Fixed Income
Funds:
Purchases Sales & Maturities
- --------------------------------------------------------------------------------
U.S. Gov't Other U.S. Gov't Other
Fund (000) (000) (000) (000)
- --------------------------------------------------------------------------------
Large Cap Value Equity $ -- $33,592 $ -- $28,467
Large Cap Growth Equity -- 22,870 -- 15,928
RCB Small Cap Value -- 36,774 -- 54,087
Corporate Bond 2,288 19,550 1,216 15,306
Government Bond 48,548 5,179 33,650 3,124
California Tax Exempt Bond -- 20,619 -- 12,472
High Yield Bond -- 9,652 -- 14,022
- --------------------------------------------------------------------------------
CNI CHARTER FUNDS | PAGE 71
notes to financial statements
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
6. FEDERAL TAX INFORMATION:
It is each Fund's intention to continue to qualify as a regulated investment
company for Federal income tax purposes and distribute all of its taxable income
and net capital gains. Accordingly, no provisions for Federal income taxes are
required.
The Funds may be subject to taxes imposed by countries in which they invest,
with respect to their investments in issuers existing or operating in such
countries. Such taxes are generally based on income earned. The Funds accrue
such taxes when the related income is earned.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with Federal tax
regulations, which may differ from accounting principles generally accepted in
the United States of America. As a result, net investment income (loss) and net
realized gain (loss) on investment transactions for a reporting period may
differ significantly from distributions during such period. These book/tax
differences may be temporary or permanent. To the extent these differences are
permanent in nature, they are charged or credited to undistributed net
investment income (loss), accumulated net realized gain (loss), or
paid-in-capital, as appropriate, in the period that the differences arise.
Accordingly, the following permanent difference, primarily attributable to
capital loss carryovers expiring due to merger, REIT adjustments, net operating
losses, the realized gains (losses) on paydowns and the timing of distributions,
have been reclassified to/from the following accounts:
Increase Increase
(Decrease) (Decrease)
Undistributed Accumulated Decrease
Net Investment Net Realized Paid-In
Income (Loss) Gain (Loss) Capital
Fund (000) (000) (000)
- ----------------------------------------------------------------------------
Large Cap Growth Equity $ 2 $ 760 ($762)
RCB Small Cap Value 86 (86) --
Corporate Bond (6) 6 --
Government Bond (16) 16 --
- ----------------------------------------------------------------------------
These reclassifications had no effect on the net assets or net asset value per
share.
The tax character of dividends and distributions declared during the years ended
September 30, 2007 and September 30, 2006 are shown below:
Tax
Exempt Ordinary Long-term
Income Income Capital Gain Total
Fund (000) (000) (000) (000)
- --------------------------------------------------------------------------------
Large Cap Value Equity
2007 $ -- $ 2,039 $ 5,502 $ 7,541
2006 -- 1,252 3,789 5,041
Large Cap Growth Equity
2007 -- 246 -- 246
2006 -- 101 -- 101
RCB Small Cap Value
2007 -- 2 1,108 1,110
2006 -- 66 1,121 1,187
Corporate Bond
2007 -- 2,595 -- 2,595
2006 -- 2,221 -- 2,221
Government Bond
2007 -- 2,072 -- 2,072
2006 -- 1,324 -- 1,324
California Tax Exempt Bond
2007 950 1 -- 951
2006 724 26 68 818
High Yield Bond
2007 -- 2,880 -- 2,880
2006 -- 3,020 -- 3,020
Prime Money Market
2007 -- 73,650 -- 73,650
2006 -- 43,643 -- 43,643
Government Money Market
2007 -- 106,396 -- 106,396
2006 -- 85,649 -- 85,649
California Tax Exempt
Money Market
2007 22,975 -- -- 22,975
2006 19,281 -- -- 19,281
CNI CHARTER FUNDS | PAGE 72
- --------------------------------------------------------------------------------
As of September 30, 2007, the components of Distributable Earnings/(Accumulated
Losses) on a tax basis were as follows:
Total
Undistributed Undistributed Undistributed Capital Unrealized Other Distributable
Tax-Exempt Ordinary Long-term Loss Post-October Appreciation Temporary Earnings
Income Income Capital Gain Carryforwards Losses (Depreciation) Differences (Accumulated Losses)
Fund (000) (000) (000) (000) (000) (000) (000) (000)
- ------------------------------------------------------------------------------------------------------------------------------------
Large Cap
Value Equity
Fund $ -- $ 420 $ 5,489 $ -- $ -- $ 26,017 $ (425) $ 31,501
Large Cap
Growth Equity
Fund -- 57 -- (2,377) -- 10,268 (53) 7,895
RCB Small Cap
Value Fund -- 2,432 6,538 -- -- 11,191 -- 20,161
Corporate Bond
Fund -- 229 -- (335) (143) (165) (230) (644)
Government Bond
Fund -- 205 -- (434) (132) 181 (206) (386)
California Tax
Exempt Bond
Fund 89 -- -- (34) (8) 92 (90) 49
High Yield Bond
Fund -- 291 -- (827) -- (676) (235) (1,447)
Prime Money
Market Fund -- 7,002 -- (210) -- -- (6,991) (199)
Government
Money Market
Fund -- 9,211 -- -- (1) -- (9,195) 15
California Tax
Exempt Money
Market Fund 2,164 -- -- -- -- -- (2,163) 1
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,
2007, the breakdown of capital loss carryforwards is as follows:
Expiring September 30,
----------------------------------------------------------------------
2008 2009 2010 2011 2012 2014 2015 Total
Fund (000) (000) (000) (000) (000) (000) (000) (000)
- ---------------------------------------------------------------------------------------------------------
Large Cap Growth Equity Fund $ 122 $ 122 $ 373 $ 1,638 $ 122 $ -- $ -- $ 2,377
Corporate Bond Fund -- -- -- -- -- 64 271 335
Government Bond Fund -- -- -- -- -- 59 375 434
California Tax Exempt Bond Fund -- -- -- -- -- -- 34 34
High Yield Bond Fund -- -- -- 558 -- 269 -- 827
Prime Money Market Fund -- -- 210 -- -- -- -- 210
During the year ended September 30, 2007, the following Funds had utilized
capital loss carryforwards to offset capital gains amounting to:
Amount
Fund (000)
- --------------------------------------------------------------------------------
Large Cap Growth Equity $ 1,288
High Yield Bond Fund 407
Prime Money Market Fund 193
- --------------------------------------------------------------------------------
Post-October losses represent losses realized on investments and foreign
currency transactions from November 1, 2006 through September 30, 2007 that, in
accordance with Federal income tax regulations, the Funds have elected to defer
and treat as having arisen in the following fiscal year.
The aggregate gross unrealized appreciation on securities, the aggregate gross
unrealized depreciation on securities and the net unrealized
appreciation/(depreciation) for tax purposes at September 30, 2007 for each of
the Equity and Fixed Income Funds were as follows:
Aggregate Aggregate Net
Gross Gross Unrealized
Federal Unrealized Unrealized Appreciation
Tax Cost Appreciation Depreciation (Depreciation)
Fund (000) (000) (000) (000)
- ----------------------------------------------------------------------------------------
Large Cap Value Equity Fund $ 101,134 $ 27,568 $ (1,551) $ 26,017
Large Cap Growth Equity 50,631 11,960 (1,692) 10,268
RCB Small Cap Value 49,574 12,896 (1,705) 11,191
Corporate Bond Fund 62,716 396 (561) (165)
Government Bond 54,745 235 (54) 181
California Tax Exempt Bond 34,766 169 (77) 92
High Yield Bond 36,999 621 (1,297) (676)
7. CONCENTRATION OF CREDIT RISK
In the normal course of business, the Funds enter into contracts that provide
general indemnifications. The Funds' maximum exposure under these arrangements
is dependent on future claims that may be made against the Funds and, therefore,
cannot be established; however, based on experience, the risk of loss from such
claim is considered remote.
CALIFORNIA TAX EXEMPT FUNDS - SPECIFIC RISKS
The ability of issuers to pay interest on, and repay principal of, California
municipal securities may be affected by economic and political developments in
the State of California.
Certain securities are backed by letters of credit from various financial
institutions and financial guaranty assurance agencies. These letters of credit
enhance the credit quality of the individual securities; however, if any of the
financial institutions or financial guaranty assurance agencies' credit quality
should deteriorate, it could cause the individual security's credit quality to
change. Additionally, if any of the Funds concentrate their letters of credit in
any one financial institution, the risk of credit quality deterioration
increases.
8. FUND MERGER
On April 15, 2007, the assets of the Technology Growth Fund were reorganized
into the Large Cap Growth Fund. In this merger, 635,779 shares of the Technology
Growth Fund were exchanged for 351,181 shares of the Large Cap Growth Fund in a
tax-free exchange.
The value of the Technology Growth Fund on April 15, 2007 was $2,920,545. Upon
the business combination of such Funds on April 15, 2007, the value of the
Technology Growth Fund, which included accumulated realized losses of
$1,428,382, and unrealized appreciation of $335,437, combined with the Large Cap
Growth Fund was $56,094,352.
CNI CHARTER FUNDS | PAGE 73
notes to financial statements
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
9. CAPITAL SHARES ISSUED AND REDEEMED:
Capital share activity for the years ended September 30, 2007 and September 30,
2006 were as follows:
Large Cap Value Large Cap Growth RCB Small Cap
Equity Fund (000) Equity Fund (000) Value Fund (000)
------------------ ------------------ ------------------
2007 2006 2007 2006 2007 2006
- ------------------------------------------------------------------- ------------------ ------------------ -----------------
CAPITAL SHARES ISSUED AND REDEEMED:
INSTITUTIONAL CLASS:
Shares Issued 1,943 5,652 1,265 1,054 74 192
Shares Issued from merger(1) -- -- 164 -- -- --
Shares Issued in Lieu of
Dividends and Distributions 433 304 8 4 6 6
Shares Redeemed (1,531) (1,488) (893) (1,036) (262) (211)
- ------------------------------------------------------------------- ------------------ ------------------ -----------------
Net Institutional
Class Transactions 845 4,468 544 22 (182) (13)
=================================================================== ================== ================== =================
CLASS A:
Shares Issued 379 275 461 425 20 41
Shares Issued from merger(1) -- -- 187 -- -- --
Shares Issued in Lieu of
Dividends and Distributions 69 50 3 1 5 5
Shares Redeemed (179) (177) (283) (202) (78) (122)
- ------------------------------------------------------------------- ------------------ ------------------ -----------------
Net Class A Transactions 269 148 368 224 (53) (76)
=================================================================== ================== ================== =================
CLASS R:
Shares Issued -- -- -- -- 171 433
Shares Issued in Lieu of
Dividends and Distributions -- -- -- -- 23 27
Shares Redeemed -- -- -- -- (487) (863)
- ------------------------------------------------------------------- ------------------ ------------------ -----------------
Net Class R Transactions -- -- -- -- (293) (403)
=================================================================== ================== ================== =================
California High Yield
Corporate Bond Government Bond Tax Exempt Bond Bond
Fund (000) Fund (000) Fund (000) Fund (000)
---------------- ----------------- ----------------- ------------
2007 2006 2007 2006 2007 2006 2007 2006
- ------------------------------------------------------------------------------ ----------------- ----------------- ------------
CAPITAL SHARES ISSUED AND REDEEMED:
INSTITUTIONAL CLASS:
Shares Issued 1,450 1,551 2,138 1,325 1,526 865 177 460
Shares Issued in Lieu of
Dividends and Distributions 49 40 55 33 33 25 94 100
Shares Redeemed (824) (1,139) (572) (594) (803) (565) (679) (726)
- ----------------------------------------------------------------------------- ---------------- ---------------- ------------
Net Institutional
Class Transactions 675 452 1,621 764 756 325 (408) (166)
============================================================================= ================ ================ ============
CLASS A:
Shares Issued 21 14 97 135 6 3 157 204
Shares Issued in Lieu of
Dividends and Distributions 2 3 3 1 1 1 100 92
Shares Redeemed (52) (35) (19) (16) (27) (38) (236) (383)
- ----------------------------------------------------------------------------- ---------------- ---------------- ------------
Net Class A Transactions (29) (18) 81 120 (20) (34) 21 (87)
============================================================================= ================ ================ ============
(1) SEE NOTE 8 IN THE NOTES TO FINANCIAL STATEMENTS.
AMOUNTS DESIGNATED AS "--" ARE EITHER 0 OR HAVE BEEN ROUNDED TO 0.
CNI CHARTER FUNDS | PAGE 74
- --------------------------------------------------------------------------------
California
Prime Government Tax Exempt
Money Market Money Market Money Market
Fund (000) Fund (000) Fund (000)
------------------------ ------------------------ ------------------------
2007 2006 2007 2006 2007 2006
- ---------------------------------------------------------------------------- ------------------------ ------------------------
CAPITAL SHARES ISSUED AND REDEEMED:
INSTITUTIONAL CLASS:
Shares Issued 1,324,934 1,690,942 532,859 635,895 2,517,017 1,444,514
Shares Issued in Lieu of
Dividends and Distributions 3,872 2,507 4 2 -- --
Shares Redeemed (1,278,386) (1,637,671) (537,787) (615,154) (2,512,794) (1,432,711)
- ---------------------------------------------------------------------------- ------------------------ ------------------------
Net Institutional
Class Transactions 50,420 55,778 (4,924) 20,743 4,223 11,803
============================================================================ ======================== ========================
CLASS A:
Shares Issued 2,695,734 2,204,941 5,523,344 5,761,555 2,143,730 2,014,013
Shares Issued in Lieu of
Dividends and Distributions 12,208 5,522 62,437 51,511 13,108 12,188
Shares Redeemed (2,477,866) (1,882,549) (5,235,257) (5,767,874) (2,092,998) (1,964,398)
- ---------------------------------------------------------------------------- ------------------------ ------------------------
Net Class A Transactions 230,076 327,914 350,524 45,192 63,840 61,803
============================================================================ ======================== ========================
CLASS S:
Shares Issued 1,873,534 1,261,525 775,804 1,013,412 390,230 348,788
Shares Issued in Lieu of
Dividends and Distributions -- -- -- -- -- --
Shares Redeemed (1,577,751) (1,140,675) (686,827) (1,009,234) (318,443) (329,840)
- ---------------------------------------------------------------------------- ------------------------ ------------------------
Net Class S Transactions 295,783 120,850 88,977 4,178 71,787 18,948
============================================================================ ======================== ========================
AMOUNTS DESIGNATED AS "--" ARE EITHER 0 OR HAVE BEEN ROUNDED TO 0.
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. Recent SEC guidance allows
implementing FIN 48 in fund asset calculations as late as the fund's last net
asset value calculation in the first required financial statement reporting
period. As a result, the Fund will incorporate FIN 48 in its semi-annual report
on March 31, 2008.As of September 30, 2007, the Fund does not anticipate a
material impact to the financial statements.
In September 2006, 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, 2007, 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 in the financial statements for a fiscal period.
11. SUBSEQUENT EVENT
Class A and Institutional Class shares of the Multi-Fund commenced operations on
October 1, 2007.
CNI CHARTER FUNDS | PAGE 75
report of independent registered public accounting firm
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
CNI CHARTER FUNDS:
We have audited the accompanying statements of assets and liabilities of the CNI
Charter Funds comprised of the Large Cap Value Equity Fund, the Large Cap Growth
Equity Fund, the RCB Small Cap Value Fund, the Corporate Bond Fund, the
Government Bond Fund, the California Tax Exempt Bond Fund, the High Yield Bond
Fund, the Prime Money Market Fund, the Government Money Market Fund, and the
California Tax Exempt Money Market Fund (collectively, "the Funds"), including
the schedule of investments, as of September 30, 2007 and the related statements
of operations for the year then ended, and the changes in net assets for each of
the years in the two-year period then ended, and financial highlights for each
of the years in the five-year period then ended. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audit.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements 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, 2007, 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, 2007, and the results of their operations for the year
then ended, and the changes in their net assets for each of the years in the
two-year period then ended, and financial highlights for each of the years in
the five-year period then ended, in conformity with U.S. generally accepted
accounting
principles.
/s/ KPMG LLP
NOVEMBER 19, 2007
CNI CHARTER FUNDS | PAGE 76
trustees and officers (UNAUDITED)
SEPTEMBER 30, 2007
- --------------------------------------------------------------------------------
Information pertaining to the Trustees and Officers of the Trust is set forth
below as of October 3, 2007. Trustees who are not deemed to be "interested
persons" of the Trust as defined in the 1940 Act are referred to as "Independent
Trustees." Trustees who are deemed to be "interested persons" of the Trust are
referred to as "Interested Trustees. "The Trust's Statement of Additional
Information ("SAI") includes additional information about the Trustees and
Officers. The SAI may be obtained without charge by calling 1-888-889-0799.
- ------------------------------------------------------------------------------------------------------------------------------------
TERM OF
OFFICE NUMBER OF
AND PORTFOLIOS IN OTHER
NAME POSITION(S) LENGTH OF FUND 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
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
- ------------------
Vernon C. Kozlen* Trustee Since President and Chief Executive Officer, CNI 16 None
Age: 64 May 2007 Charter Funds (2000-2007). Executive Vice
President and Director of Asset Management
Development, CNB (1996-2007). Director, Reed,
Conner & Birdwell LLC (2000-present), and
Convergent Capital Management, LLC
(2003-present). Chairman of the Board, CNAM, Inc.
(2001-2005). Chairman of the Board, City National
Securities, Inc. (1999-2005). Director, CNAM,
Inc. (2001-2006), and City National Securities,
Inc. (1999-2006).
- ------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT
TRUSTEES
- -----------
Irwin G. Barnet, Esq. Trustee Since 1999 Attorney and partner, Reed Smith LLP, a law firm 16 None
Age: 69 (2003-present). Attorney and principal, Crosby,
Heafey, Roach & May P.C., a law firm (2000-2002).
Attorney and principal, Sanders, Barnet,
Goldman, Simons & Mosk, a law firm (1980-2000).
- ------------------------------------------------------------------------------------------------------------------------------------
Victor Meschures Trustee Since 1999 Certified Public Accountant, Meschures, 16 None
Age: 69 Campeas, Thompson, Snyder and Pariser, LLP, an
accounting firm (1964-present).
- ------------------------------------------------------------------------------------------------------------------------------------
William R. Sweet Trustee Since 1999 Retired. Executive Vice President, Union Bank of 16 None
Age: 70 California (1985-1996).
- ------------------------------------------------------------------------------------------------------------------------------------
James Wolford Trustee Since 1999 Chief Financial Officer, Bixby Land Company, a 16 None
Age: 53 real estate company (2004-present). Regional
Financial Officer, AIMCO, a real estate
investment trust (2004). Chief Financial Officer,
DBM Group, a direct mail marketing company
(2001-2004). SeniorVice President and Chief
Operating Officer, Forecast Commercial Real
Estate Service, Inc. (2000-2001). Senior Vice
President and Chief Financial Officer, Bixby
Ranch Company (1985-2000).
- ------------------------------------------------------------------------------------------------------------------------------------
CNI CHARTER FUNDS | PAGE 77
trustees and officers (UNAUDITED) (CONTINUED)
SEPTEMBER 30, 2007
- ------------------------------------------------------------------------------------------------------------------------------------
TERM OF
OFFICE
AND
NAME POSITION LENGTH OF
ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S)
AND AGE TRUST SERVED 2 DURING PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS
- --------
Timothy D. Barto Vice President Since Attorney, Vice President and Assistant Secretary of SEI
SEI Investments and Assistant 2000 Investments (1999-Present). Vice President and Assistant Secretary of
One Freedom Valley Drive Secretary Administrator (1999-Present). Officer of various investment companies
Oaks, PA 19456 administered by Administrator (1999-2004). Assistant Secretary of the
Age: 39 Distributor (2003-2004). Vice President of the Distributor (1999-2004).
- ------------------------------------------------------------------------------------------------------------------------------------
Eric Kleinschmidt Controller and Since Director of Fund Accounting, SEI Investments (2004-Present). Manager of
SEI Investments Chief Operating 2005 Fund Accounting, SEI Investments (1999-2004).
One Freedom Valley Drive Officer
Oaks, PA 19456
Age: 39
- ------------------------------------------------------------------------------------------------------------------------------------
Richard D. Byrd President and Since Executive Vice President, CNB (2005-Present). Chairman of the Board, City
City National Bank Chief Executive May National Securities, Inc. (2005-Present). Executive Vice President, Wells
400 N. Roxbury Drive Officer 2007 Fargo Bank (1997-2005).
Beverly Hills, CA 90210
Age: 47
- ------------------------------------------------------------------------------------------------------------------------------------
Valerie Y. Lewis Vice President Since Chief Compliance Officer, CNAM, Inc. (August, 2005-present). Fund Boards
City National Bank and Chief 2005 Specialist - Assistant Secretary, Capital Research and Management and
400 N. Roxbury Drive Compliance Company Capital International, Inc. (1999-2005).
Beverly Hills, CA 90210 Officer
Age: 51
- ------------------------------------------------------------------------------------------------------------------------------------
James Ndiaye Vice President Since Attorney, SEI Investments Company (2004-present). Vice President, Deutsche
SEI Investments and Assistant 2005 Asset Management (2003-2004). Associate, Morgan Lewis & Bockius LLP
One Freedom Valley Drive Secretary (2000-2003). Assistant Vice President, ING Variable Annuities Group
Oaks, PA 19456 (1999-2000).
Age: 39
- ------------------------------------------------------------------------------------------------------------------------------------
Michael T. Pang Vice President Since Attorney, SEI Investments Company (2005-present). Counsel, Caledonian
SEI Investments and Assistant 2005 Bank & Trust's Mutual Funds Group (2004-2005). Counsel, Permal Asset
One Freedom Valley Drive Secretary Management (2001-2004). Associate, Schulte, Roth & Zabel's Investment
Oaks, PA 19456 Management Group (2000-2001).
Age: 35
- ----------
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 "Fund Complex" consists of all series of the Trust. As of October 3,
2007, the Fund 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.
* Mr. Kozlen is an "interested person" of the Trust, as defined in the 1940
Act, by virtue of his position with CNB, the parent company of CNAM, Inc.,
until March 2007.
CNI CHARTER FUNDS | PAGE 78
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
TERM OF
OFFICE
AND
NAME POSITION LENGTH OF
ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S)
AND AGE TRUST SERVED DURING PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS (CONCLUDED)
- --------------------
Rodney J. Olea Vice President Since Senior Vice President, CNAM, Inc. (2001-present). Senior Vice President
City National Bank 2000 and Director of Fixed Income, CNB (1994-present).
400 N. Roxbury Drive
Beverly Hills, CA 90210
Age: 42
- ------------------------------------------------------------------------------------------------------------------------------------
Sofia A. Rosala Vice President Since Vice President and Assistant Secretary, SEI Investments Fund Management
SEI Investments and Secretary 2004 (2005-present). Compliance Officer of SEI Investments (2001-2004).
One Freedom Valley Drive Account and Product Consultant, SEI Private Trust Company (1998-2001).
Oaks, PA 19456
Age: 33
- ------------------------------------------------------------------------------------------------------------------------------------
Timothy G. Solberg Vice President Since Managing Director and Chief Investment Officer, CCM Advisors
CCM Advisors, LLC and Assistant 2005 (2001-present); Director of Marketing and Client Services, Hewitt
190 S. LaSalle Street Secretary Investment Group, a Division of Hewitt Associates LLC (1989-2001).
Suite 2800
Chicago, IL 60603
Age: 54
- ------------------------------------------------------------------------------------------------------------------------------------
Susan Rudzinski Vice President Since Compliance Director, Convergent Capital Management, LLC (2006-present);
CCM Advisors, LLC May Self-employed Investment Advisory Compliance and Operations Consultant
190 S. LaSalle Street 2007 (2005-2006); Manager, Affiliate Contracts, The Burridge Group LLC
Suite 2800 (2003-2004).
Chicago, IL 60603
Age: 44
- ------------------------------------------------------------------------------------------------------------------------------------
Richard A. Weiss Vice President Since President, CNAM, Inc. (2001-present). Executive Vice President and Chief
City National Bank and Assistant 2000 Investment Officer, CNB (1999-present). Director, City National
400 N. Roxbury Drive Secretary Securities (April 2003-present). Executive Vice President and Chief
Beverly Hills, CA 90210 Investment Officer. Sanwa Bank California (1994-1999).
Age: 47
- ------------------------------------------------------------------------------------------------------------------------------------
CNI CHARTER FUNDS | PAGE 79
notice to shareholders (UNAUDITED)
SEPTEMBER 30, 2006
- --------------------------------------------------------------------------------
For shareholders that do not have a September 30, 2007 taxable year end, this
notice is for informational purposes only. For shareholders with a September 30,
2007 taxable year end, please consult your tax advisor as to the pertinence of
this notice.
For California income tax purposes, for the fiscal year ended September 30,
2007, each of the California Tax Exempt Bond Fund and California Tax Exempt
Money Market Fund is designating 100% of its distributions paid from net
investment income as exempt-interest dividends under Section 17145 of the
California Revenue and Taxation Code.
For Federal income tax purposes, for the fiscal year ended September 30, 2007
each Fund is designating the following items with regard to distributions paid
during the year:
(E)
DIVIDENDS
(A) (B) QUALIFYING
LONG TERM ORDINARY (C) (D) FOR CORPORATE
CAPITAL GAIN INCOME TAX EXEMPT TOTAL DIVIDENDS REC.
DISTRIBUTIONS DISTRIBUTIONS INTEREST DISTRIBUTIONS DEDUCTION (1)
- ------------------------------------------------------------------------------------------------------------------------------------
Large Cap Value Equity Fund 74.14% 25.86% 0.00% 100.00% 100.00%
Large Cap Growth Equity Fund 0.00% 100.00% 0.00% 100.00% 100.00%
RCB Small Cap Value Fund 99.78% 0.22% 0.00% 100.00% 99.02%
Corporate Bond Fund 0.00% 100.00% 0.00% 100.00% 0.00%
Government Bond Fund 0.00% 100.00% 0.00% 100.00% 0.00%
California Tax Exempt Bond Fund 0.00% 0.10% 99.90% 100.00% 0.00%
High Yield Bond Fund 0.00% 100.00% 0.00% 100.00% 0.00%
Prime Money Market Fund 0.00% 100.00% 0.00% 100.00% 0.00%
Government Money Market Fund 0.00% 100.00% 0.00% 100.00% 0.00%
California Tax Exempt Money
Market Fund 0.00% 0.00% 100.00% 100.00% 0.00%
(F)
QUALIFYING
DIVIDEND (G) (H) (I)
INCOME U.S. QUALIFIED QUALIFIED
(15% RATE GOVERNMENT INTEREST SHORT-TERM
FOR QDI) (2) INTEREST (3) INCOME (4) CAPITAL GAIN (5)
- ------------------------------------------------------------------------------------------------------------------------------------
Large Cap Value Equity Fund 100.00% 0.00% 0.14% 0.00%
Large Cap Growth Equity Fund 100.00% 0.00% 0.00% 0.00%
RCB Small Cap Value Fund 99.03% 0.00% 0.24% 0.00%
Corporate Bond Fund 0.00% 1.17% 97.26% 0.00%
Government Bond Fund 0.00% 25.59% 97.83% 0.00%
California Tax Exempt Bond Fund 0.00% 0.00% 99.47% 0.00%
High Yield Bond Fund 0.00% 0.00% 98.77% 0.00%
Prime Money Market Fund 0.00% 2.75% 99.39% 0.00%
Government Money Market Fund 0.00% 24.16% 99.54% 0.00%
California Tax Exempt Money
Market Fund 0.00% 0.00% 99.55% 0.00%
- --------------------------------------------------------------------------------
(1) "DIVIDENDS RECEIVED DEDUCTION" REPRESENT DIVIDENDS WHICH QUALIFY FOR THE
CORPORATE DIVIDENDS RECEIVED DEDUCTION.
(2) "QUALIFYING DIVIDEND INCOME" REPRESENT QUALIFYING DIVIDENDS AS CREATED BY
THE JOBS AND GROWTH TAX RELIEF RECONCILIATION ACT OF 2003. IT IS THE
INTENTION OF THE FUND TO DESIGNATE THE MAX AMOUNT PERMITTED BY LAW.
(3) "U.S. GOVERNMENT INTEREST" REPRESENT THE AMOUNT OF INTEREST THAT WAS
DERIVED FROM DIRECT U.S. GOVERNMENT OBLIGATIONS AND DISTRIBUTED DURING THE
FISCAL YEAR. GENERALLY, INTEREST FROM DIRECT U.S. GOVERNMENT OBLIGATIONS
IS EXEMPT FROM STATE INCOME TAX. HOWEVER, FOR SHAREHOLDERS WHO ARE
RESIDENTS OF CALIFORNIA, CONNECTICUT OR NEW YORK, THE STATUTORY THRESHOLD
REQUIREMENTS WERE NOT SATISFIED TO PERMIT EXEMPTION OF THESE AMOUNTS FROM
STATE INCOME.
(4) "QUALIFIED INTEREST INCOME" REPRESENT QUALIFYING INTEREST THAT IS EXEMPT
FROM U.S. WITHHOLDING TAX WHEN PAID TO FOREIGN INVESTORS AS CREATED BY THE
AMERICAN JOBS CREATION ACT OF 2004.
(5) "QUALIFIED SHORT-TERM CAPITAL GAIN" REPRESENT QUALIFYING SHORT-TERM
CAPITAL GAIN THAT IS EXEMPT FROM U.S. WITHHOLDING TAX WHEN PAID TO FOREIGN
INVESTORS AS CREATED BY THE AMERICAN JOBS CREATION ACT OF 2004.
ITEMS (A), (B), ( C) AND (D) ARE BASED ON THE PERCENTAGE OF EACH FUND'S TOTAL
DISTRIBUTION.
ITEMS (E) AND (F) ARE BASED ON THE PERCENTAGE OF "ORDINARY INCOME
DISTRIBUTIONS."
ITEM (G) IS BASED ON THE PERCENTAGE OF GROSS INCOME OF EACH FUND.
ITEM (H) IS BASED ON THE PERCENTAGE OF NET INVESTMENT INCOME DISTRIBUTIONS.
ITEM (I) IS BASED ON THE PERCENTAGE OF SHORT-TERM CAPITAL GAIN DISTRIBUTIONS.
CNI CHARTER FUNDS | PAGE 80
disclosure of fund expenses (UNAUDITED)
- --------------------------------------------------------------------------------
All mutual funds have operating expenses. As a shareholder of a Fund, your
investment is affected by these ongoing costs, which include (among others)
costs for portfolio management, administrative services, and shareholder reports
like this one. It is important for you to understand the impact of these costs
on your investment returns.
Operating expenses such as these are deducted from the Fund's gross income and
directly reduce your final investment return. These expenses are expressed as a
percentage of the Fund's average net assets; this percentage is known as the
Fund's expense ratio.
The following examples use the expense ratio and are intended to help you
understand the ongoing costs (in dollars) of investing in your Fund and to
compare these costs with those of other mutual funds. The examples are based on
an investment of $1,000 made at the beginning of the period shown and held for
the entire period.
The table below illustrates your Fund's costs in two ways:
ACTUAL FUND RETURN. This section helps you to estimate the actual expenses that
your Fund incurred over the period. The "Expenses Paid During Period" column
shows the actual dollar expense cost incurred by a $1,000 investment in the
Fund, and the "Ending Account Value" number is derived from deducting that
expense cost from the Fund's gross investment return.
You can use this information, together with the actual amount you invested in
the Fund, to estimate the expenses you paid over that period. Simply divide your
actual account value by $1,000 to arrive at a ratio (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply that ratio by the number
shown for your Fund under "Expenses Paid During Period."
HYPOTHETICAL 5% RETURN. This section helps you compare your Fund's costs with
those of other mutual funds. It assumes that the Fund had an annual 5% return
before expenses during the year, but that the expense ratio (Column 3) for the
period is unchanged. This example is useful in making comparisons because the
Securities and Exchange Commission requires all mutual funds to make this 5%
calculation. You can assess your Fund's comparative cost by comparing the
hypothetical result for your Fund in the "Expenses Paid During Period" column
with those that appear in the same charts in the shareholder reports for other
funds.
NOTE: Because the return is set at 5% for comparison purposes - NOT your Fund's
actual return - the account values shown do not apply to your specific
investment.
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
4/1/07 9/30/07 RATIOS PERIOD*
- --------------------------------------------------------------------------------
LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $1,054.30 0.96% $4.94
Class A 1,000.00 1,053.10 1.21% 6.23
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $1,020.26 0.96% $4.86
Class A 1,000.00 1,019.00 1.21% 6.12
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
4/1/07 9/30/07 RATIOS PERIOD*
- --------------------------------------------------------------------------------
LARGE CAP GROWTH FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $1,088.90 0.99% $5.18
Class A 1,000.00 1,087.20 1.24% 6.49
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $1,020.10 0.99% $5.01
Class A 1,000.00 1,018.85 1.24% 6.28
* Expenses are equal to the Fund's annualized expense ratio multiplied by
the average account value over the period, multiplied by 183/365 (to
reflect one-half year period).
CNI CHARTER FUNDS | PAGE 81
disclosure of fund expenses (UNAUDITED) (CONCLUDED)
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
4/1/07 9/30/07 RATIOS PERIOD*
- --------------------------------------------------------------------------------
RCB SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $ 949.40 1.18% $5.77
Class A 1,000.00 948.30 1.43% 6.98
Class R 1,000.00 948.50 1.43% 6.98
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $1,019.15 1.18% $5.97
Class A 1,000.00 1,017.90 1.43% 7.23
Class R 1,000.00 1,017.90 1.43% 7.23
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $1,019.80 0.74% $3.75
Class A 1,000.00 1,018.50 0.99% 5.01
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $1,021.36 0.74% $3.75
Class A 1,000.00 1,020.10 0.99% 5.01
- --------------------------------------------------------------------------------
GOVERNMENT BOND FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $1,024.20 0.70% $3.55
Class A 1,000.00 1,022.80 0.95% 4.82
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $1,021.56 0.70% $3.55
Class A 1,000.00 1,020.31 0.95% 4.81
- --------------------------------------------------------------------------------
CALIFORNIA TAX-EXEMPT BOND FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $1,018.60 0.50% $ 2.53
Class A 1,000.00 1,017.30 0.75% 3.79
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $1,022.56 0.50% $ 2.54
Class A 1,000.00 1,021.31 0.75% 3.80
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $1,007.40 1.00% $5.03
Class A 1,000.00 1,005.90 1.30% 6.54
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $1,020.05 1.00% $5.06
Class A 1,000.00 1,018.55 1.30% 6.58
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
4/1/07 9/30/07 RATIOS PERIOD*
- --------------------------------------------------------------------------------
PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $1,023.90 0.59% $2.99
Class A 1,000.00 1,022.80 0.81% 4.11
Class S 1,000.00 1,021.80 1.01% 5.12
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $1,022.11 0.59% $2.99
Class A 1,000.00 1,021.01 0.81% 4.10
Class S 1,000.00 1,020.00 1.01% 5.11
- --------------------------------------------------------------------------------
GOVERNMENT MONEY MARKET FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $1,023.50 0.60% $3.04
Class A 1,000.00 1,022.30 0.82% 4.16
Class S 1,000.00 1,021.30 1.02% 5.17
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $1,022.06 0.60% $3.04
Class A 1,000.00 1,020.96 0.82% 4.15
Class S 1,000.00 1,019.95 1.02% 5.16
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Institutional Class $1,000.00 $1,015.40 0.55% $2.78
Class A 1,000.00 1,014.20 0.78% 3.94
Class S 1,000.00 1,013.20 0.98% 4.95
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $1,022.31 0.55% $2.79
Class A 1,000.00 1,021.16 0.78% 3.95
Class S 1,000.00 1,020.16 0.98% 4.96
* Expenses are equal to the Fund's annualized expense ratio multiplied by
the average account value over the period, multiplied by 183/365 (to
reflect one-half year period).
CNI CHARTER FUNDS | PAGE 82
approval of investment advisory agreements (UNAUDITED)
- --------------------------------------------------------------------------------
The Board of Trustees (the "Board") of CNI Charter Funds (the "Trust") is
comprised of five Trustees, four of whom are independent of the Trust's
investment advisers and sub-advisers (the "Independent Trustees"). During the
six months ended September 30, 2007, the Board and the Independent Trustees
approved renewals of the Trust's advisory agreement (the "Management Agreement")
with City National Asset Management, Inc. ("CNAM"); CNAM's sub-advisory
agreement (the "RCB Agreement") with Reed, Conner & Birdwell, LLC ("RCB") with
respect to the RCB Small Cap Value Fund (the "RCB Fund"); and CNAM's
sub-advisory agreement (the "Halbis Agreement") with Halbis Capital Management
(USA), Inc. ("Halbis") with respect to the High Yield Bond Fund. The RCB
Agreement and the Halbis Agreement are collectively referred to below as the
"Sub-Advisory Agreements" and the Management Agreement and Sub-Advisory
Agreements are referred to below as the "Agreements."
GENERAL INFORMATION
The following information summarizes the Board's considerations associated with
its review 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. The
Agreements were considered separately for each relevant investment portfolio of
the Trust (each a "Fund"), although the Board took into account the common
interests of all the relevant Funds in its review. As described below, the Board
considered the nature, quality and extent of the various investment advisory and
administrative services performed by CNAM, RCB and Halbis. In considering these
matters, the Independent Trustees discussed the approval of the Agreements with
management and in private sessions with counsel at which no representatives of
CNAM, RCB or Halbis were present.
The Board reviewed extensive materials regarding the investment results of the
Funds advised by CNAM, RCB and Halbis, advisory fee and expense comparisons,
financial information with respect to each entity, descriptions of various
functions such as compliance monitoring and portfolio trading practices, and
information about the personnel providing investment management and
administrative services to the Funds. They also took into account information
they received at past Board meetings with respect to these matters.
In deciding to approve renewal of the Agreements, the Board and the Independent
Trustees did not identify a single factor as controlling and this summary does
not describe all of the matters considered. However, the Board and the
Independent Trustees concluded that each of the various factors referred to
below favored such approval.
CNAM
NATURE, EXTENT AND QUALITY OF SERVICES
In reviewing the services provided by CNAM, the Board considered a variety of
matters, including the background, education and experience of CNAM's key
portfolio management and operational personnel; its overall financial strength
and stability; its resources and efforts to retain, attract and motivate capable
personnel to serve the Funds; and the overall general quality and depth of its
organization. The Board also took into account the experience, capability and
integrity of its senior management; its investment philosophy and processes,
including sub-adviser oversight processes; its brokerage, trading and soft
dollar practices; its disaster recovery and contingency planning; and its
commitment and systems in place with regard to compliance with applicable laws
and regulations.
INVESTMENT PERFORMANCE
The Board assessed the performance of each Fund compared with its respective
benchmark and the average of all funds in its respective peer group category
(each, a "universe") selected by Lipper, Inc. and iMoneyNet, Inc. (for the money
market funds only) for the one-, two-, three- and five-year periods ended June
30, 2007. The Board also reviewed the performance of each Fund compared with the
average performance of all funds in its respective "bank channel" universe,
which includes only those funds in the Fund's Lipper universe that are
distributed through institutional and retail bank channels. The Board made the
following observations in reviewing the Funds' performance:
o The annualized total returns of the PRIME MONEY MARKET FUND, GOVERNMENT
MONEY MARKET FUND AND CALIFORNIA TAX
CNI CHARTER FUNDS | PAGE 83
approval of investment advisory agreements (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
EXEMPT MONEY MARKET FUND were slightly below but near the average returns
of the Lipper institutional money market fund universe, iMoneyNet prime
institutional fund universe, and bank channel universe.
o The annualized total returns of the LARGE CAP GROWTH EQUITY FUND were
above the average returns of the Lipper large cap growth fund universe and
bank channel universe and below the S&P 500/Citigroup Growth Index returns
for the one-year period, and below all those measures for the two-, three-
and five-year periods (except that they were above the bank channel
universe average for the five-year period).
o The annualized total returns of the LARGE CAP VALUE EQUITY FUND were above
the average returns of the Lipper large cap value funds universe and bank
channel universe, as well as the S&P 500/Citigroup Value Index returns,
for the one-year period, and above all those measures except the S&P
500/Citigroup Value Index for the two-, three- and five-year periods.
o The annualized total returns of the RCB SMALL CAP VALUE FUND were
significantly above the Lipper small cap core funds universe average
returns, Russell 2000 Index returns and bank channel universe average
returns for the one-year period, significantly below those measures for
the two- and three-year periods, and close to all those measures for the
five-year period.
o The annualized total returns of the CORPORATE BOND FUND were above the
average returns of the Lipper short/intermediate investment-grade universe
and the bank channel universe, and below the Lehman Intermediate U.S.
Corporate Index returns, for all periods.
o The annualized total returns of the GOVERNMENT BOND FUND were above the
average returns of the Lipper short/ intermediate U.S. government universe
and the bank channel universe for all periods (except for the bank channel
universe average for the five-year period), and below the Lehman U.S.
Government Bond Index returns for all periods (except the two-year
period).
o The annualized total returns of the CALIFORNIA TAX EXEMPT BOND FUND were
above the average returns of the bank channel universe for all periods
(except the one-year period) and below the Lipper California
short/intermediate debt universe average returns and the Lehman California
Intermediate-Short Municipal Index returns for all periods (except the
five-year period for the Lipper universe).
o The annualized total returns of the HIGH YIELD BOND FUND were
approximately at or above the average returns of the Lipper high current
yield bond fund universe and the bank channel universe and below the
Citigroup Bond High-Yield Market Index returns for the one- and two-year
periods and below all those measures for the three- and five-year periods.
The Board and the Independent Trustees concluded that CNAM continued to provide
high quality management and oversight services to the Funds. They noted that the
investment results of the Funds were generally good during the past year and, in
most cases, during previous periods; that in the instances where some of the
Funds had below average short-term performance results their longer term results
were good; that the results for the Money Market Funds compared to their peer
groups were acceptable given the special services and investment focuses of
those Funds; and that consideration of returns of market indexes needed to take
into account that indexes do not reflect the expenses of operating mutual funds.
ADVISORY FEES AND FUND EXPENSES
The Board reviewed information regarding the advisory fees charged by CNAM and
the total expenses of each of the Funds compared to those of the funds included
in the relevant Lipper and bank channel universes, and the Board and the
Independent Trustees concluded that the advisory fees and expenses of the Funds
continued to be reasonable.
The Board observed that the contractual advisory fees paid by the Corporate Bond
Fund, Government Bond Fund, Large Cap Growth Equity Fund and Large Cap Value
Equity Fund as of June 30, 2007 were below the bank channel universe averages;
the fees paid by the California Tax-Exempt Bond Fund were below the Lipper
universe and bank channel universe averages; and the fees paid by the other
Funds were above the averages for relevant Lipper fund universes and bank
channel universes. As the Funds represent CNAM's sole investment advisory
clients, the Board was not able to compare the fees charged to the Funds by CNAM
with fees charged to other institutional clients of CNAM.
CNI CHARTER FUNDS | PAGE 84
- --------------------------------------------------------------------------------
With respect to the total expenses of the Funds, the Board considered that total
expenses before waivers as of June 30, 2007 were below the averages for relevant
Lipper fund universes and bank channel universes except for the Prime Money
Market Fund and California Tax-Exempt Money Market Fund, each of which were
within the middle 60% of funds in its Lipper universe, and the Government Money
Market Fund, which was in the top 20% of funds in its Lipper universe. The Board
noted, however, that the Money Market Funds offered unique features such as
automatic sweep functions, late cut-off times for investment, and no minimum
transaction size requirements, and as a result had high levels of activity and
considerable asset volatility, which created substantial demands on CNAM's
portfolio management staff.
The Board considered information prepared by CNAM relating to its costs and
profits. The Board also considered the benefits received by CNAM and its
affiliates as a result of CNAM's relationship with the Funds, including
investment advisory fees paid to CNAM, fees paid to City National Bank and City
National Securities, Inc. for providing certain shareholder servicing and
sub-distribution services to the Trust, and the intangible benefits of any
favorable publicity arising in connection with the Funds' performance. They also
noted that, although there were no fee advisory fee breakpoints, the asset
levels of most of the Funds were not so substantial that they would lead to
significant economies of scale, and that as the majority of CNAM's operating
expenses are employee salaries its operating expenses would not decrease
significantly if the Funds' asset levels changed.
CONCLUSIONS
Based on their review, including their consideration of each of the factors
referred to above, the Board and the Independent Trustees concluded that the
compensation payable to CNAM pursuant to the Management Agreement is fair and
reasonable in light of the nature and quality of the services being provided by
CNAM to the respective Funds and their shareholders, and that renewal of the
Management Agreement was in the best interest of the Funds and their
shareholders.
RCB
NATURE, EXTENT AND QUALITY OF SERVICES
In reviewing the services provided by RCB to the RCB Fund, the Board considered
a variety of matters, including the background, education and experience of its
key portfolio management and operational personnel; RCB's overall financial
strength and stability; its resources and related efforts to retain, attract and
motivate capable personnel to serve the RCB Fund; and the overall general
quality and depth of its organization. The Board also reviewed RCB's investment
philosophy and processes as well as its brokerage, trading and soft dollar
practices.
INVESTMENT PERFORMANCE
The Board's observations regarding the RCB Fund's performance are described
above. As indicated above, the Board and the Independent Trustees concluded that
RCB continued to provide high quality services to the RCB Fund.
ADVISORY FEES AND FUND EXPENSES
The Board reviewed information regarding the advisory fees charged by RCB and
observed that the fees charged by RCB were low compared to the fees it charged
to its other institutional clients. They noted that CNAM pays RCB's sub-advisory
fees out of CNAM's advisory fee. Although RCB's fee schedule has no breakpoints,
they also noted that the asset levels of the RCB Fund were not so substantial
that they would lead to significant economies of scale.
The Board considered information prepared by RCB relating to its costs and
profits with respect to the RCB Fund, as well as the methodologies used to
determine and allocate such costs to its management of the Fund. The Board also
considered the benefits received by RCB and its affiliates as a result of RCB's
relationship with the Fund, including the sub-advisory fees paid to RCB, fees
paid to CNAM as the Fund's adviser, fees paid to City National Bank and City
National Securities, Inc. for providing certain shareholder servicing and
sub-distribution services to the Trust, and the intangible benefits of any
favorable publicity arising in connection with the RCB Fund's performance.
CNI CHARTER FUNDS | PAGE 85
approval of investment advisory agreements (UNAUDITED) (CONCLUDED)
- --------------------------------------------------------------------------------
CONCLUSIONS
Based on their review, including their consideration of each of the factors
referred to above, the Board and the Independent Trustees concluded that the
compensation payable to RCB pursuant to the RCB Agreement is fair and reasonable
in light of the nature and quality of the services being provided by RCB to the
RCB Fund and its shareholders, and that renewal of the RCB Agreement was in the
best interest of the Fund and its shareholders.
HALBIS
NATURE, EXTENT AND QUALITY OF SERVICES
In reviewing the services provided by Halbis to the High Yield Bond Fund, the
Board considered a variety of matters, including the background, education and
experience of Halbis' key portfolio management and operational personnel; its
overall financial strength and stability; its resources and related efforts to
retain, attract and motivate capable personnel to serve the High Yield Bond
Fund; and the overall general quality and depth of its organization. The Board
also reviewed Halbis' investment philosophy and processes as well as its
brokerage and trading practices.
INVESTMENT PERFORMANCE
The Board's observations regarding the High Yield Bond Fund's performance are
described above. As indicated above, the Board and the Independent Trustees
concluded that Halbis continued to provide high quality services to the High
Yield Bond Fund.
ADVISORY FEES AND FUND EXPENSES
The Board reviewed information regarding the advisory fees charged by Halbis and
observed that the fees charged by Halbis were low compared to its standard fee
schedule. They noted that CNAM pays Halbis' sub-advisory fees out of CNAM's
advisory fee.
The Board considered information prepared by Halbis relating to its revenues
with respect to the High Yield Bond Fund as well as the benefits received by
Halbis as a result of Halbis' relationship with the Funds, including fees paid
to Halbis as the Fund's sub-adviser and the intangible benefits of any favorable
publicity arising in connection with the High Yield Bond Fund's performance.
CONCLUSIONS
Based on their review, including their consideration of each of the factors
referred to above, the Board and the Independent Trustees concluded that the
compensation payable to Halbis pursuant to the Halbis Agreement is fair and
reasonable in light of the nature and quality of the services being provided by
Halbis to the High Yield Bond Fund and its shareholders, and that renewal of the
Halbis Agreement was in the best interest of the Fund and its shareholders.
CNI CHARTER FUNDS | PAGE 86
notes
- --------------------------------------------------------------------------------
notes
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[GRAPHIC OMITTED]
THANK YOU
for your investment with CNI Charter Funds.
We value the trust you have placed in us to
help you achieve your financial goals.
- --------------------------------------------------------------------------------
For more information on CNI Charter Funds, including charges
and expenses, please call 1-888-889-0799 for a free prospectus.
Read it carefully before you invest or send money.
- --------------------------------------------------------------------------------
CNI CHARTER FUNDS(SM) [LOGO](R)
CNI-AR-001-0600
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:
- ------------------ ----------------------------------------------------- -----------------------------------------------------
2007 2006
- ------------------ ----------------------------------------------------- -----------------------------------------------------
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 N/A $278,000 N/A $285,500 N/A N/A
Fees(1)
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(b) Audit- N/A N/A N/A $0 N/A N/A
Related
Fees
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(c) Tax Fees N/A $66,075 N/A $61,600 N/A N/A
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(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:
---------------------------- ----------------- ----------------
2007 2006
---------------------------- ----------------- ----------------
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 $66,075 and $61,600 for 2007 and 2006,
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/ Richard D. Byrd
--------------------------------
Richard D. Byrd, President & CEO
Date November _____, 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/ Richard D. Byrd
-------------------------------
Richard D. Byrd, President & CEO
Date November _____, 2007
By (Signature and Title)* /s/ Eric Kleinschmidt
--------------------------------
Eric Kleinschmidt, Controller and COO
Date November _____, 2007
* Print the name and title of each signing officer under his or her signature.