N-CSR 1 ahaar9_07comb.txt AHA INVESTMENT FUNDS AR 9_07 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------- FORM N-CSR -------- 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) -------- 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. [LOGO OMITTED] AMERICAN HOSPITAL ASSOCIATION AHA INVESTMENT FUNDS(TM) A SERIES OF THE CNI CHARTER FUNDS CCM Advisors, LLC is the AHA-sponsored investment advisor for the AHA Invesment Program [GRAPHIC OMITTED] 2007 ANNUAL REPORT September 30, 2007 -------------------------------------------------------------------------------- AHA Limited Maturity Fixed Income Fund AHA Full Maturity Fixed Income Fund AHA Balanced Fund AHA Diversified Equity Fund www.ahafunds.org AHA Socially Responsible Equity Fund www.cnicharterfunds.com -------------------------------------------------------------------------------- TABLE OF CONTENTS AHA Investment Funds Annual Report Series of CNI Charter Funds 2 Letter to Our Shareholders 6 Fund Overview 11 Schedules of Investments 35 Statements of Assets and Liabilities 36 Statements of Operations 38 Statements of Changes in Net Assets 40 Financial Highlights 42 Notes to Financial Statements 49 Report of Independent Registered Public Accounting Firm 50 Trustees and Officers 53 Notice to Shareholders 54 Disclosure of Fund Expenses 55 Approval of Advisory and Sub-Advisory Agreements -------------------------------------------------------------------------------- AVAILABILITY OF PROXY VOTING INFORMATION A description of the policies and procedures that the Funds use to determine how to vote proxies related to the Funds' portfolio securities, and information on how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ending June 30 is available (1) without charge, upon request by calling 1-800-445-1341, (2) on the CNI Charter Funds' website at WWW.CNICHARTERFUNDS.COM, and (3) on the Securities and Exchange Commission's website at WWW.SEC.GOV. AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULE The Funds file their complete 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 CNI Charter Funds' website at WWW.CNICHARTERFUNDS.COM and without charge, upon request by calling 1-800-445-1341. AHA INVESTMENT FUNDS | PAGE 1 letter to our shareholders SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- Dear Shareholder: Please find enclosed the annual report for the AHA Investment Funds series of CNI Charter Funds (the "AHA Funds"), for the year ended September 30, 2007. This letter will summarize results for the AHA Funds and our activities for the past twelve months. This is the second full year since our merger into the CNI Charter Fund family with over $4 billion in assets under management. The CNI Charter Funds and its sponsor, City National Bank, have made available their significant resources to enhance the AHA Funds' operations and services to our investors. AHA LIMITED MATURITY FIXED INCOME FUND City National Asset Management, Inc. ("CNAM") and The Patterson Corporation ("Patterson") serve as the two sub-advisers to the AHA Limited Maturity Fixed Income Fund. October 1 marks the second anniversary of the appointment of CNAM as a sub-adviser to a portion of the Fund. One of the resources brought to the Fund by CNAM is its bond management expertise in the 1-5 year maturity range, an area in which it specializes and which complements Patterson's 1-3 year maturity range. While the internal Investment Committee of CCM Advisors, LLC, the AHA Funds' investment manager, monitors the sub-advisers' performance against their individual benchmarks, the combined portfolios which comprise this Fund are benchmarked to the Merrill Lynch 1-3 Year Treasury Index and the Merrill Lynch 3-Month U.S.Treasury Index. During the fiscal year the Board of Trustees approved the Fund's purchase of securities rated BBB by Moody's and Baa by Standard & Poor's, which broadens the Fund's diversification to all Investment Grade securities, rather than the A or higher rating requirement previously in place. This was recommended by the Fund's adviser to seek additional yield and total return potential in the corporate bond sector while maintaining risk controls on credit quality. It went into effect January 31, 2007. During the fiscal year ended September 30, 2007, the Federal Reserve Bank ("Fed") changed its policy of increases in short-term interest rates because of recent concerns over the credit crunch caused by the decreasing quality of sub-prime mortgages. Please be assured that the Fund's managers do not invest in low quality or sub-prime loans. However, there was a spillover effect on the entire bond market due to fear of sub-prime mortgage defaults. Rising interest rates triggered increased monthly payment adjustments to ARMs (Adjustable Rate Mortgages), which caused the Fed to rethink its policy. Therefore the FOMC (Federal Open Market Committee) moved to decrease the discount rate in August by 0.50% and then the Fed Funds rate in September by 0.50%. The Fed actions especially affect short term yields, causing the 30-day SEC yield on the Merrill Lynch 3-Month U.S. Treasury Index ("T-Bill") to drop from 4.91% in September 2006 to 3.83% in September 2007 (see how the Interest Yield drops from 3/31/07 to 9/30/07 on the Yield Curve chart at the 3-month maturity). The 30-day SEC yield on the Fund's Institutional Class shares changed only slightly, from 4.47% in September 2006 to 4.34% in September 2007, and is currently YIELD CURVE OF U.S. TREASURY SECURITIES AS OF 9/30/06, 3/31/07 AND 9/30/07 [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Years to Maturity 9/30/2007 3/31/2007 9/30/2006 3M 3.82 5.04 4.89 6M 4.09 5.06 5.02 1 Yr 4.05 4.9 4.91 2 Yr 3.97 4.58 4.71 3 Yr 4.03 4.54 4.62 4.13 4.54 4.6 5 Yr 4.23 4.54 4.59 4.38 4.58 4.6 10 Yr 4.59 4.65 4.64 4.74 4.78 4.7 4.89 4.92 4.77 4.86 4.88 4.84 25Y+ 4.83 4.84 4.76 AHA INVESTMENT FUNDS | PAGE 2 letter to our shareholders SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- yielding more than the T-Bill. Whereas the Fund's yield rose more slowly than the T-Bill during the Fed's policy of increasing rates in 2005-2006, there is also lag behind T-Bills as yields decline. It takes longer for the higher income producing securities in the Limited Maturity Fund to reach maturity than 3-Month T-Bills. This is beneficial for shareholders who are seeking income and want to earn a higher monthly yield than T-Bills. The total net return of the Fund's Institutional Class shares was 4.63% for the fiscal year. During the credit crunch of the past six months, Treasury securities rallied in a flight to quality during the mortgage crisis. The Merrill Lynch 1-3 year Treasury Index had a return of 5.80% as it is comprised 100% of Treasury securities. Since the Limited Maturity Fund is a diversified blend of corporate (37% weighting), Treasury (11%),Agency (24%) and mortgage (37%) securities, the Fund's mortgage and corporate allocations could not keep up with Treasuries, causing the Fund's returns to lag behind the 1-3 year Treasury Index. The bond market concerns even caused federally-backed Agency securities to be depressed in price. To control risk, the Fund maintains an overall average credit quality rating of AA+, and the portfolio managers follow conservative investment guidelines. In terms of peer group performance the Fund compares favorably to the Lipper Short/Intermediate Investment Grade Debt peer group which had annual returns of 4.29%. For Class A Shares of this Fund, redesignated as Class "N" shares in October 2007 (for "No-load"), annualized return was 4.47% and the 30-day SEC yield ranged from 4.18% in September 2006 to 4.07% in September 2007. AHA FULL MATURITY FIXED INCOME The AHA Full Maturity Fixed Income Fund combines two equally weighted portfolios managed by Boyd Watterson Asset Management, LLC and Robert W. Baird & Co. Incorporated to the Fund's intermediate and aggregate indexes, respectively, to provide a "full" maturity spectrum. The intermediate portfolio manager began the fiscal year with a slightly shorter duration than its index (3.2 years vs. 3.6 years), as a defensive measure which aided performance in the rising interest rate environment of the first half of the fiscal year. However, the portfolio manager lengthened duration mid-year and shortened again to finish just under the Lehman Intermediate Government/Credit Index (3.4 years vs. 3.7). The aggregate portfolio was maintained right on the Lehman Aggregate index duration of 4.6 years which remained nearly constant throughout the year. During the fiscal year, intermediate and longer maturity bonds stabilized and gradually rose in prices earlier in the year as the Fed moved away from its policy of rate increases. Bond prices and interest rates have an inverse relationship; while yields go up prices will drop as the bond market adjusts to actions by the Fed. However, the bond market was in turmoil during the last six months of the fiscal year. The fears of defaults in the sub-prime loan market depressed returns on the entire mortgage sector. The higher interest rates mandated by the Fed in 2005-2006 began to cause many ARMs (Adjustable Rate Mortgages) to increase to an extent that the incidence of default was rising rapidly. This caused concern with many mortgage lenders and banks. In August, the Fed stepped in with a 0.50% discount rate decrease to ease the cost of borrowing and to help mortgage holders to make their payments (see Yield Curve chart to compare the yields paid at different maturities at the beginning, mid-point and end of the fiscal year). There was an investor shift to the safe haven of Treasury securities, causing Treasury prices to rally sharply and mortgage-backed securities, even of good credit quality, suffered in a spillover effect from the sub-prime sector. Even government-backed AHA INVESTMENT FUNDS | PAGE 3 letter to our shareholders SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- Agency securities showed downturns in the market. As the Fund invests in investment grade bonds only, it did not hold any high risk sub-prime assets. The Fund's average dollar-weighted credit quality is AA and has been so throughout the year. However, with a 28-29% weighting in mortgage-backed securities and a small 13-14% weighting in Treasury securities the Institutional Class and Class A (renamed N) Shares recorded net returns of 4.48% and 4.23%, respectively, for the fiscal year. This compared favorably to the peer group average of the Lipper Corporate Debt Funds A Rated Classification (which is a universe of government/corporate bond funds rated A or better) return of 4.04%. The Lehman Intermediate Government/Credit Index returned 5.44% during the fiscal year. However, the intermediate index does not contain any mortgages, and 42% of the index is comprised of Treasuries. Therefore, relative to its benchmarks the Fund was significantly overweight in mortgage-backed securities that underperformed, and underweight in Treasuries, which outperformed. The Fund's advisers still believe that shareholder interests are best served by a diversified portfolio of bonds rather than all Treasury securities, and anticipate that as the bond market adjusts to Fed actions to support the home mortgage system, the diversification of a multiple-sector bond fund will benefit investors. AHA BALANCED FUND The AHA Balanced Fund combines stocks, bonds and cash in a moderate allocation targeted at 60% stocks. The Fund's net return for the fiscal year was 9.47%. A hybrid benchmark of 60% S&P 500 Stock Index, 30% Lehman U.S. Aggregate Bond Index and 10% Merrill Lynch 3-month U.S. Treasury Index returned 11.89%. The Fund's ranking in the Morningstar moderate universe was in the 70th percentile for the year. The Fund had a market weight in energy stocks, which was the best performing sector for the year, and an overweight in the materials sector (raw materials and mining), the second best performing sector. However, an underweight in industrial stocks, which performed well, and overweights in the financial and consumer discretionary sectors were drags on performance. The aggregate duration of the Fund's fixed income allocation aided returns, and the portfolio held an index-equal weight to investment grade mortgages, but an underweight in Treasuries during the flight to quality held back performance late in the fiscal year. AHA DIVERSIFIED EQUITY FUND The AHA Diversified Equity Fund Institutional Class and Class A (redesignated Class N) Shares produced results of 11.93% and 11.62%, respectively. This Fund combines three portfolio managers: core (50% weight), traditional value (25%) and an alpha large-mid value (25%). During the year the trend in equity markets away from value oriented sectors became evident as growth oriented equities led the market and that portion of the S&P 500 Index led it to a return of 16.44%. The Fund's holdings overweighting in the best performing sectors, energy and information technology, aided performance as oil prices continued to hit record levels and growth oriented technology stocks rose. However, the largest weighting in the Fund was the Financial sector, and it was a drain on performance in the final fiscal quarter as concerns about banks' creditworthiness in the sub-prime mortgage crisis caused bank stocks in this sector to fall. The Fund's core portfolio manager, Freeman Associates Investment Management LLC's theme of low price-to-earnings ratios and strong cash flows helped minimize downside risk in the Fund. As noted above, this Fund is a blend of three major investment styles, the conservative "core" management of Freeman Associates, with a more aggressive "alpha" manager, SKBA Capital Management's Value AHA INVESTMENT FUNDS | PAGE 4 letter to our shareholders SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- Opportunity style, and AMBS Investment Counsel's Absolute Large Cap Value, a fundamental value approach. This is the first fiscal year of the alpha and fundamental managers as they began management of the AHA Diversified Equity portfolios at the start of the new fiscal year on October 1, 2006. Freeman Associates has been the core manager for over ten years. This Fund is tobacco-free and has just been listed in Schwab's socially conscious group of funds in both OneSource and Institutional. It was listed on Fidelity over the summer and the N (No-load) class is available to retail investors nationally. AHA SOCIALLY RESPONSIBLE EQUITY FUND The AHA Socially Responsible Equity Fund completed its second full fiscal year of performance. It is pro-green and designed to meet the social guidelines of church-based organizations. The Fund's Institutional Class returned 13.89% for the fiscal year, while the A (now named N) shares were up 13.64%. These returns are very close to the 13.95% of the Domini 400 Social Index. Returns were aided by overweights in information technology and energy stocks and paring back the Financial sector. The Fund's sub-adviser, SKBA Capital Management, uses their Socially Responsible Value investment style, and follows the social guidelines of the U.S. Conference of Catholic Bishops. Proactively SKBA researches companies that have good environmental sustainability, human rights and governance track records. We now have three of the four largest non-profit hospital systems in the U.S. as investors in this Fund through their employee retirement plans. This Fund is listed on Schwab as part of their socially conscious universe and is also on the Fidelity platform. The N (No-load) Class is available to investors nationally. NEW FISCAL YEAR We recently redesigned and launched a new website, WWW.AHAFUNDS.COM and WWW.AHAFUNDS.ORG, with much greater detail and background information. An exciting new development is the change in share class designation of the retail shares from "A" to "N", to emphasize that we are no-load. In conjunction with this, the AHA Socially Responsible Equity and AHA Diversified Equity Funds are now listed on Schwab, both Institutional and OneSource, under socially conscious funds. They are also on Fidelity,Wachovia, Lehman, City National Securities for purchase. We want to thank our shareholders for their confidence in the AHA Investment Funds and for enabling us to be distributed on more fund networks nationally. Sincerely, /s/ Timothy G. Solberg Timothy G. Solberg, CFA CHIEF INVESTMENT OFFICER AHA INVESTMENT FUNDS, SERIES OF THE CNI CHARTER FUNDS PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. OPINIONS EXPRESSED ABOVE ARE SUBJECT TO CHANGE, ARE NOT GUARANTEED, AND SHOULD NOT BE CONSIDERED A RECOMMENDATION TO BUY OR SELL ANY SECURITY. PLEASE REFER TO THE SCHEDULE OF INVESTMENTS IN THE REPORT FOR FUND HOLDINGS AND INDEX DEFINITIONS. PORTFOLIO HOLDINGS AND SECTOR ALLOCATIONS ARE SUBJECT TO CHANGE. THE ADVISER HAS AN AGREEMENT IN PLACE TO WAIVE FEES. IN THE ABSENCE OF SUCH WAIVERS, TOTAL RETURN WOULD BE REDUCED. MUTUAL FUND INVESTING INVOLVES RISK. PRINCIPAL LOSS IS POSSIBLE. CHANGING INTEREST RATES CAN ADVERSELY AFFECT THE VALUE OF AN INVESTMENT IN THE AHA LIMITED AND FULL MATURITY FUNDS. THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS. PLEASE READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. DISTRIBUTED BY SEI INVESTMENTS DISTRIBUTION CO. (SIDCO). AHA INVESTMENT FUNDS | PAGE 5 fund overview SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA LIMITED MATURITY FIXED INCOME FUND -------------------------------------------------------------------------------- Comparison of Change in the Value of a $10,000 Investment in the AHA Limited Maturity Fixed Income Fund, Institutional Class, versus the following indexes: the Merrill Lynch 1-3 Year Treasury Index and the Merrill Lynch 3-Month U.S. Treasury Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] Merrill Lynch AHA Limited 3-Month Merrill Lynch Maturity Fixed U.S. 1-3 Year Income, Institutional Treasury Treasury Class Shares Index Index 9/30/97 $10,000 $10,000 $10,000 9/30/98 $10,713 $10,536 $10,797 9/30/99 $11,025 $11,031 $11,146 9/30/00 $11,632 $11,669 $11,791 9/30/01 $12,814 $12,305 $13,015 9/30/02 $13,473 $12,551 $13,750 9/30/03 $13,843 $12,717 $14,111 9/30/04 $13,943 $12,856 $14,259 9/30/05 $14,035 $13,193 $14,398 9/30/06 $14,525 $13,787 $14,937 9/30/07 $15,197 $14,507 $15,803 This chart assumes an initial gross investment of $10,000 for the AHA Limited Maturity Fixed Income Fund - Institutional Class Shares, as well as the Merrill Lynch 1-3 Year Treasury Index and the Merrill Lynch 3-Month U.S. Treasury Index. Performance figures include reinvested dividends and capital gains. Class A Shares are sold with a 0.25% 12b-1 fee. 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. PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUND MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END MAY BE OBTAINED BY CALLING 1-800-445-1341. AVERAGE ANNUAL TOTAL RETURNS
----------------------------------------------------------------------------------------- Annualized Annualized Annualized Annualized One-Year 3-Year 5-Year 10-Year Inception Shares Return Return Return Return to Date ----------------------------------------------------------------------------------------- Institutional Class(1) 4.63% 2.92% 2.44% 4.28% 5.25% ----------------------------------------------------------------------------------------- Class A(2) 4.47% N/A N/A N/A 2.67% ----------------------------------------------------------------------------------------- Merrill Lynch 1-3 Year Treasury Index 5.80% 3.49% 2.82% 4.68% 5.89% ----------------------------------------------------------------------------------------- Merrill Lynch 3-Month U.S. Treasury Index 5.22% 4.11% 2.94% 3.79% 4.72% -----------------------------------------------------------------------------------------
(1) Commenced operations on October 31, 1988. (2) Commenced operations on October 22, 2004. Total cumulative return since inception for the Class A Shares was 8.05% as of September 30, 2007. MERRILL LYNCH 1-3 YEAR TREASURY INDEX A subset of the Merrill Lynch Treasury Master Index. The maturity range on these securities is from one to three years. This index is available on a monthly basis in price-only and total return versions. The value was set at 100 on December 31, 1975. MERRILL LYNCH 3-MONTH U.S. TREASURY INDEX The Merrill Lynch 3-Month U.S. Treasury Index is comprised of a single issue purchased at the beginning of the month and held for a full month. Each month the index is rebalanced and the issue selected is the outstanding Treasury Bill that matures closest to, but not beyond three months from the rebalancing date. One cannot invest directly in an index. Top Ten Holdings % OF PORTFOLIO FHLB, 4.375%, 09/17/10 3.5 U.S. Treasury Note, 4.625%, 07/31/09 2.7 FNMA, 5.500%, 03/15/11 2.6 FHLMC, 5.125%, 10/15/08 2.5 U.S. Treasury Note, 5.500%, 02/15/08 2.5 U.S. Treasury Note, 4.500%, 05/15/10 2.5 FHLMC REMIC, Ser R013, Cl AB, 6.000%, 12/15/21 2.4 U.S. Treasury Note, 6.000%, 08/15/09 2.4 FHLMC, 3.625%, 09/15/08 2.3 FNMA, 3.250%, 02/15/09 2.3 AHA INVESTMENT FUNDS | PAGE 6 fund overview SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA FULL MATURITY FIXED INCOME FUND -------------------------------------------------------------------------------- Comparison of Change in the Value of a $10,000 Investment in the AHA Full Maturity Fixed Income Fund, Institutional Class, versus the Lehman Brothers Intermediate Government/Credit Total Return Index and the Lehman Brothers U.S. Aggregate Bond Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] AHA Full Maturity Lehman Brothers Fixed Income, Intermediate Lehman Brothers Institutional Government/Credit U.S. Aggregate Class Shares Total Return Index Bond Index 9/30/97 $10,000 $10,000 $10,000 9/30/98 $11,073 $11,043 $11,151 9/30/99 $10,991 $11,113 $11,110 9/30/00 $11,730 $11,807 $11,886 9/30/01 $13,137 $13,330 $13,426 9/30/02 $14,065 $14,410 $14,580 9/30/03 $14,864 $15,276 $15,369 9/30/04 $15,376 $15,681 $15,935 9/30/05 $15,699 $15,916 $16,381 9/30/06 $16,175 $16,479 $16,982 9/30/07 $16,900 $17,376 $17,853 This chart assumes an initial gross investment of $10,000 for the AHA Full Maturity Fixed Income Fund -Institutional Class Shares and the Lehman Brothers Intermediate Government/Credit Total Return Index and the Lehman Brothers U.S. Aggregate Bond Index. Performance figures include reinvested dividends and capital gains. Class A Shares are sold with a 0.25% 12b-1 fee. 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 returns would be reduced. PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUND MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END MAY BE OBTAINED BY CALLING 1-800-445-1341. AVERAGE ANNUAL TOTAL RETURNS
----------------------------------------------------------------------------------------- Annualized Annualized Annualized Annualized One-Year 3-Year 5-Year 10-Year Inception Shares Return Return Return Return to Date ----------------------------------------------------------------------------------------- Institutional Class(1) 4.48% 3.20% 3.74% 5.39% 6.56% ----------------------------------------------------------------------------------------- Class A(2) 4.23% 2.91% N/A N/A 3.45% ----------------------------------------------------------------------------------------- Lehman Brothers Intermediate Government/Credit Total Return Index 5.44% 3.48% 3.82% 5.68% 6.90% ----------------------------------------------------------------------------------------- Lehman Brothers U.S. Aggregate Bond Index 5.13% 3.86% 4.13% 5.97% 7.40% -----------------------------------------------------------------------------------------
(1) Commenced operations on October 20, 1988. (2) Commenced operations on April 30, 2004. Total cumulative return since inception for the Class A Shares was 12.28% as of September 30, 2007. LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CREDIT TOTAL RETURN INDEX A total return index consisting of investment grade corporate debt issues as well as debt issues of U.S. government agencies and the U.S. Treasury. The debt issues all maintain maturities within a range of one to ten years. LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX The Lehman Brothers U.S. Aggregate Bond Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis. One cannot invest directly in an index. Top Ten Holdings* % OF PORTFOLIO U.S. Treasury Bond, 6.250%, 08/15/23 5.1 FNMA, 6.000%, 05/15/11 4.3 FNMA, 5.500%, 04/01/36 3.3 FHLMC, Pool G12609, 5.500%, 04/01/22 1.9 FNMA, 3.875%, 02/15/10 1.9 FHLMC, 4.375%, 07/17/15 1.7 FNMA, 6.125%, 03/15/12 1.7 U.S. Treasury Note, 4.750%, 05/15/14 1.5 FNMA, 5.250%, 01/15/09 1.5 U.S. Treasury Note, 3.000%, 02/15/08 1.3 *Excludes cash equivalents and collateral for securities lending. AHA INVESTMENT FUNDS | PAGE 7 fund overview SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA BALANCED FUND -------------------------------------------------------------------------------- Comparison of Change in the Value of a $10,000 Investment in the AHA Balanced Fund, versus a 60/30/10 Hybrid of the following indexes: the S&P 500 Index, the Lehman U.S. Aggregate Bond Index and the Merrill Lynch 3-Month U.S. Treasury Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
AHA Balanced Fund, Lehman U.S. Merrill Lynch Institutional 60/30/10 Aggregate 3-Month U.S. Class Shares Hybrid Index S&P 500 Index Bond Index Treasury Index 9/30/97 $10,000 $10,000 $10,000 $10,000 $10,000 9/30/98 $ 9,872 $10,966 $10,905 $11,151 $10,536 9/30/99 $11,453 $12,820 $13,937 $11,110 $11,031 9/30/00 $13,451 $14,193 $15,787 $11,886 $11,669 9/30/01 $12,465 $12,360 $11,585 $13,426 $12,305 9/30/02 $11,288 $11,105 $ 9,211 $14,580 $12,551 9/30/03 $12,888 $12,922 $11,458 $15,369 $12,717 9/30/04 $14,378 $14,152 $13,047 $15,935 $12,856 9/30/05 $16,001 $15,349 $14,645 $16,381 $13,193 9/30/06 $17,332 $16,580 $16,225 $16,982 $13,787 9/30/07 $18,974 $18,552 $18,893 $17,853 $14,507
This chart assumes an initial gross investment of $10,000 for the AHA Balanced Fund and in the 60/30/10 Hybrid Index, the S&P 500 Index, the Lehman U.S. Aggregate Bond Index and the Merrill Lynch 3-Month U.S. Treasury Index. Performance figures include reinvested dividends and capital gains. The performance in the above graph does not reflect the deduction of taxes the shareholder will pay on Fund distributions or the redemption of Fund Shares. Investment performance reflects fee waivers in effect. In the absence of such waivers, total return would be reduced. PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUND MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END MAY BE OBTAINED BY CALLING 1-800-445-1341. AVERAGE ANNUAL TOTAL RETURNS
----------------------------------------------------------------------------------------- Annualized Annualized Annualized Annualized One-Year 3-Year 5-Year 10-Year Inception Shares Return Return Return Return to Date ----------------------------------------------------------------------------------------- Institutional Class(1) 9.47% 9.69% 10.94% 6.61% 9.46% ----------------------------------------------------------------------------------------- 60/30/10 Hybrid Index 11.89% 9.45% 10.81% 6.38% 9.90% ----------------------------------------------------------------------------------------- S&P 500 Index 16.44% 13.14% 15.45% 6.57% 11.73% ----------------------------------------------------------------------------------------- Lehman U.S. Aggregate Bond Index 5.13% 3.86% 4.13% 5.97% 7.37% ----------------------------------------------------------------------------------------- Merrill Lynch 3-Month U.S. Treasury Index 5.22% 4.11% 2.94% 3.79% 5.11% -----------------------------------------------------------------------------------------
(1) Commenced operations on October 20, 1988. 60/30/10 HYBRID INDEX This is a customized index with a blend of three indexes, consisting of 60% in the S&P 500 Index, 30% in the Lehman U.S. Aggregate Bond Index and 10% in the Merrill Lynch 3-Month U.S. Treasury Index. S&P 500 INDEX The S&P 500 is a broad market-weighted average of U.S. blue-chip companies. The S&P 500 Index is a registered trademark of McGraw-Hill, Inc. LEHMAN U.S. AGGREGATE BOND INDEX The Lehman Brothers U.S. Aggregate Bond Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis. MERRILL LYNCH 3-MONTH U.S.TREASURY INDEX The Merrill Lynch 3-Month U.S. Treasury Index is comprised of a single issue purchased at the beginning of the month and held for a full month. Each month the index is rebalanced and the issue selected is the outstanding Treasury Bill that matures closest to, but not beyond three months from the rebalancing date. One cannot invest directly in an index. Top Ten Holdings* % OF PORTFOLIO U.S. Treasury Bond 6.250%, 08/15/23 4.7 General Electric 2.7 FNMA, Pool 254800, 5.500%, 07/01/23 1.9 Bank of America 1.7 Chevron Texaco 1.7 Exxon Mobil 1.6 Pfizer 1.5 IBM 1.5 ConocoPhillips 1.5 Apple 1.4 *Excludes cash equivalents and collateral for securities lending. AHA INVESTMENT FUNDS | PAGE 8 fund overview SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA DIVERSIFIED EQUITY FUND -------------------------------------------------------------------------------- Comparison of Change in the Value of a $10,000 Investment in the AHA Diversified Equity Fund, Institutional Class, versus the S&P 500 Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] AHA Diversified Equity Fund, Institutional Class Shares S&P 500 Index 9/30/97 $10,000 $10,000 9/30/98 $ 9,820 $10,905 9/30/99 $12,279 $13,937 9/30/00 $14,799 $15,787 9/30/01 $12,561 $11,585 9/30/02 $10,279 $ 9,211 9/30/03 $12,509 $11,458 9/30/04 $14,529 $13,047 9/30/05 $16,924 $14,645 9/30/06 $18,643 $16,225 9/30/07 $20,867 $18,893 This chart assumes an initial gross investment of $10,000 for the AHA Diversified Equity Fund - Institutional Class Shares and the S&P 500 Index. Performance figures include reinvested dividends and capital gains. Class A Shares are sold with a 0.25% 12b-1 fee. The performance in the above graph does not reflect the deduction of taxes the shareholder will pay on Fund distributions or the redemption of Fund Shares. The adviser has an agreement in place to waive fees. Currently, the expense levels have not been exceeded for the Fund. PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUND MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END MAY BE OBTAINED BY CALLING 1-800-445-1341. AVERAGE ANNUAL TOTAL RETURNS
----------------------------------------------------------------------------------------- Annualized Annualized Annualized Annualized One-Year 3-Year 5-Year 10-Year Inception Shares Return Return Return Return to Date ----------------------------------------------------------------------------------------- Institutional Class(1) 11.93% 12.82% 15.21% 7.63% 11.90% ----------------------------------------------------------------------------------------- Class A(2) 11.62% 12.52% N/A N/A 14.32% ----------------------------------------------------------------------------------------- S&P 500 Index 16.44% 13.14% 15.45% 6.57% 11.73% -----------------------------------------------------------------------------------------
(1) Commenced operations on October 20, 1988. (2) Commenced operations on December 27, 2002. Total cumulative return since inception for the Class A Shares was 89.13% as of September 30, 2007. THE S&P 500 INDEX is a broad market-weighted average of U.S. blue-chip companies. S&P 500 Index is a registered trademark of McGraw-Hill, Inc. One cannot invest directly in an index. Top Ten Holdings* % OF PORTFOLIO General Electric 3.1 Hewlett Packard 2.3 Bank of America 2.2 ConocoPhillips 2.0 Time Warner 1.9 Verizon Communications 1.9 JP Morgan Chase 1.8 Chevron Texaco 1.6 Citigroup 1.6 Johnson & Johnson 1.5 *Excludes cash equivalents and collateral for securities lending. AHA INVESTMENT FUNDS | PAGE 9 fund overview SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA SOCIALLY RESPONSIBLE EQUITY FUND -------------------------------------------------------------------------------- Comparison of Change in the Value of a $10,000 Investment in the AHA Socially Responsible Equity Fund, Institutional Class, versus the Domini 400 Social Index [THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.] AHA Socially Responsible Equity Fund, Institutional Domini 400 Class Shares Social Index 1/3/05 $10,000 $10,000 9/30/05 $10,355 $10,085 9/30/06 $11,152 $11,046 9/30/07 $12,701 $12,587 This chart assumes an initial gross investment of $10,000 made on January 3, 2005 (since inception) for the AHA Socially Responsible Equity Fund - Institutional Class Shares and the Domini 400 Social Index. Performance figures include reinvested dividends and capital gains. Class A Shares are sold with a 0.25% 12b-1 fee. The performance in the above graph does not reflect the deduction of taxes the shareholder will pay on Fund distributions or the redemption of Fund Shares. The adviser has an agreement in place to waive fees. Currently, the expense levels have not been exceeded for the Fund. PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUND MAY BE LOWER OR HIGHER THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END MAY BE OBTAINED BY CALLING 1-800-445-1341. AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------------------- Annualized One-Year Inception Shares Return to Date -------------------------------------------------------------------------------- Institutional Class(1) 13.89% 9.12% -------------------------------------------------------------------------------- Class A(2) 13.64% 10.44% -------------------------------------------------------------------------------- Domini 400 Social Index 13.95% 8.74% -------------------------------------------------------------------------------- (1) Commenced operations on January 3, 2005. (2) Commenced operations on August 12, 2005. Total cumulative return since inception for the Class A Shares was 23.60% as of September 30, 2007. THE DOMINI 400 SOCIAL INDEX(SM) is a market capitalization-weighted common stock index. It monitors the performance of 400 U.S. corporations that pass multiple, broad-based social screens. The Index consists of approximately 250 companies included in the Standard & Poor's 500 Index, approximately 100 additional large companies not included in the S&P 500 but providing industry representation, and approximately 50 additional companies with particularly strong social characteristics. One cannot invest directly in an index. Top Ten Holdings* % OF PORTFOLIO Chesapeake Energy 3.6 NASDAQ Stock Market 3.4 Emerson Electric 3.3 Johnson & Johnson 3.0 Xerox 3.0 Marsh & McLennan 2.9 Kimberly-Clark 2.9 Atmos Energy 2.9 Patterson-UTI Energy 2.8 Time Warner 2.8 *Excludes cash equivalents and collateral for securities lending. AHA INVESTMENT FUNDS | PAGE 10 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA LIMITED MATURITY FIXED INCOME FUND TYPE OF SECURITY WEIGHTINGS (UNAUDITED)*: [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] 30.0% Corporate Bonds 21.5% U.S. Government Agency Obligations 18.8% U.S. Government Mortgage-Backed Obligations 10.5% U.S. Treasury Obligations 5.5% Commercial Paper+ 5.3% Floating Rate Notes+ 3.8% Mortgage-Backed Securities 2.3% Cash Equivalents+ 2.3% Repurchase Agreement *Percentages based on total investments. +Percentages include cash collateral for securities on loan. -------------------------------------------------------------------------------- DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- CORPORATE BONDS [32.4%] AEROSPACE & DEFENSE [0.4%] United Technologies 4.375%, 05/01/10 $ 200 $ 198 ============================================================================= BANKS [2.7%] HSBC Holding 7.500%, 07/15/09 200 209 U.S. Bank, NA 6.375%, 08/01/11 710 739 Washington Mutual 4.375%, 01/15/08 250 249 ----------------------------------------------------------------------------- TOTAL BANKS 1,197 ============================================================================= BEAUTY PRODUCTS [1.6%] Procter & Gamble 6.875%, 09/15/09 710 738 ============================================================================= CHEMICALS [0.6%] Dow Chemical 5.750%, 12/15/08 250 252 ============================================================================= COMPUTER SYSTEM DESIGN & SERVICES [1.6%] IBM, MTN 4.375%, 06/01/09 710 709 ============================================================================= FINANCE AUTO LOANS [0.7%] Toyota MotorCredit 5.500%, 12/15/08 300 301 ============================================================================= FINANCIAL SERVICES [5.6%] American Express Credit 3.000%, 05/16/08 300 296 American General Finance, Ser H, MTN 5.375%, 10/01/12 710 699 DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- International Lease Finance 4.350%, 09/15/08 $ 300 $ 297 John Deere Capital, Ser D, MTN 4.500%, 01/25/08 200 199 Lehman Brothers Holdings 6.625%, 01/18/12 710 733 National Rural Utilities 3.875%, 02/15/08 275 273 ----------------------------------------------------------------------------- TOTAL FINANCIAL SERVICES 2,497 ============================================================================= FOOD, BEVERAGE & TOBACCO [0.6%] Coca-Cola Enterprises 5.750%, 11/01/08 250 251 ============================================================================= INSURANCE [0.5%] Allstate 7.200%, 12/01/09 200 209 ============================================================================= INVESTMENT BANKER/BROKER DEALER [7.2%] Citigroup 6.500%, 01/18/11 710 738 3.500%, 02/01/08 300 299 Credit Suisse First Boston 6.125%, 11/15/11 710 731 Goldman Sachs Group 6.650%, 05/15/09 710 728 Morgan Stanley 6.750%, 04/15/11 710 742 ----------------------------------------------------------------------------- TOTAL INVESTMENT BANKER/BROKER DEALER 3,238 ============================================================================= MULTI-MEDIA [1.7%] Walt Disney 6.375%, 03/01/12 710 743 ============================================================================= PETROLEUM & FUEL PRODUCTS [1.7%] Conoco Funding 6.350%, 10/15/11 710 740 ============================================================================= RETAIL [1.0%] Target 5.400%, 10/01/08 250 250 Wal-Mart Stores 6.875%, 08/10/09 200 207 ----------------------------------------------------------------------------- TOTAL RETAIL 457 ============================================================================= SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 11 schedule of investments SEPTEMBER 30, 2007 AHA LIMITED MATURITY FIXED INCOME FUND (CONTINUED) DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- SECURITY BROKERS & DEALERS [2.0%] Credit Suisse First Boston 3.875%, 01/15/09 $ 300 $ 296 Goldman Sachs Group 4.125%, 01/15/08 300 299 Merrill Lynch, Ser B, MTN 3.125%, 07/15/08 300 294 ----------------------------------------------------------------------------- TOTAL SECURITY BROKERS & DEALERS 889 ============================================================================= TELEPHONES & TELECOMMUNICATIONS [4.0%] AT&T 6.250%, 03/15/11 710 731 Bellsouth Telecommunications 5.875%, 01/15/09 300 303 Verizon Communications 7.250%, 12/01/10 710 754 ----------------------------------------------------------------------------- TOTAL TELEPHONES & TELECOMMUNICATIONS 1,788 ============================================================================= WHOLESALE [0.5%] Public Service Electric & Gas, Ser C, MTN 4.000%, 11/01/08 250 247 ============================================================================= TOTAL CORPORATE BONDS (Cost $14,481) 14,454 ======================================================================= U.S. GOVERNMENT AGENCY OBLIGATIONS [23.2%] FHLB 4.375%, 09/17/10 1,705 1,702 FHLMC 5.250%, 05/21/09 980 992 5.125%, 10/15/08 (B) 1,200 1,208 4.875%, 05/14/10 580 586 4.625%, 12/19/08 700 701 4.250%, 07/15/09 675 673 3.625%, 09/15/08 1,130 1,120 FNMA 5.500%, 03/15/11 1,200 1,239 4.875%, 04/15/09 685 689 3.250%, 08/15/08 390 385 3.250%, 02/15/09 1,105 1,087 ----------------------------------------------------------------------------- TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $10,302) 10,382 ======================================================================= DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS [20.4%] FFCB REMIC, Ser IA2, Cl 1 5.220%, 10/21/13 $ 673 $ 684 FHLMC REMIC, Ser R003, Cl AG 5.125%, 10/15/15 832 829 FHLMC REMIC, Ser R007, Cl AC 5.875%, 05/15/16 874 882 FHLMC REMIC, Ser R009, Cl AK 5.750%, 12/15/18 883 888 FHLMC, Pool J04241 5.500%, 01/01/22 1,042 1,039 FHLMC, Pool J04459 5.000%, 03/01/22 286 281 FHLMC, Pool J04492 5.000%, 03/01/22 390 382 FHLMC, Pool J04508 5.000%, 03/01/22 278 272 FHMLC REMIC, Ser R013, Cl AB 6.000%, 12/15/21 1,158 1,171 FNMA REMIC, Ser R009, Cl AJ 5.750%, 12/15/18 1,054 1,060 FNMA, Pool 541946 7.500%, 07/01/30 1 1 FNMA, Pool 584930 7.500%, 05/01/31 2 2 FNMA, Pool 837191 5.000%, 12/01/20 820 804 FNMA, Pool 837196 5.500%, 02/01/21 800 798 --------------------------------------------------------------------------- TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS (Cost $9,078) 9,093 ======================================================================= U.S. TREASURY OBLIGATIONS [11.3%] U.S. Treasury Notes 6.000%, 08/15/09 1,100 1,140 5.500%, 02/15/08 (B) 1,200 1,207 4.625%, 07/31/09 (B) 1,300 1,315 4.500%, 05/15/10 (B) 1,190 1,206 3.875%, 09/15/10 200 199 --------------------------------------------------------------------------- TOTAL U.S. TREASURY OBLIGATIONS (Cost $5,024) 5,067 ======================================================================= SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 12 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA LIMITED MATURITY FIXED INCOME FUND (CONCLUDED) DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- MORTGAGE-BACKED SECURITIES [4.1%] Bear Stearns Commercial Mortgage Securities, Ser 2001-TOP2, Cl A1 6.080%, 02/15/35 $ 345 $ 349 GMAC Commercial Mortgage Securities, Ser 2004-C3, Cl A2 3.950%, 12/10/41 354 350 JPMorgan Commercial Mortgage, Ser 2005-IDP5 Cl A1 5.035%, 12/15/44 464 463 Morgan Stanley Capital Investments, Ser 2005-T17, Cl A2 4.110%, 12/13/41 686 678 ----------------------------------------------------------------------------- TOTAL MORTGAGE-BACKED SECURITIES (Cost $1,870) 1,840 ========================================================================= COMMERCIAL PAPER [5.9%] BANKS [5.9%] Lloyds (A) 5.043%, 10/15/07 750 749 Neptune Funding (C)(F) 6.250%, 10/01/07 1,144 1,144 UBS Finance (A) 4.750%, 10/01/07 750 750 ----------------------------------------------------------------------------- TOTAL BANKS 2,643 ============================================================================= TOTAL COMMERCIAL PAPER (Cost $2,643) 2,643 ========================================================================= FLOATING RATE NOTES [5.7%] Sigma Finance (C)(D) 5.020%, 01/24/08 2,535 2,535 ============================================================================= TOTAL FLOATING RATE NOTES (Cost $2,535) 2,535 ========================================================================= DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS [2.5%] Lehman Brothers (E) 5.050%, dated 09/28/07, to be repurchased on 10/01/07, repurchase price $1,100,463 (collateralized by a U.S. Treasury obligation, par value $1,155,000, 5.500%, 11/15/35; with total market value $1,123,232) $ 1,100 1,100 ----------------------------------------------------------------------------- TOTAL REPURCHASE AGREEMENTS (Cost $1,100) 1,100 ========================================================================= CASH EQUIVALENTS [2.5%] AIM Short-Term Investment Company Liquid Assets Portfolio, 5.190% (A) (C) 178,898 $ 179 Fidelity Institutional Domestic Money Market Portfolio, Cl I, 5.25% (A) 954,535 955 ----------------------------------------------------------------------------- TOTAL CASH EQUIVALENTS (Cost $1,134) 1,134 ========================================================================= TOTAL INVESTMENTS [108.0%] (Cost $48,167) $ 48,248 ========================================================================= PERCENTAGES ARE BASED ON NET ASSETS OF $44,675. (A) THE RATE SHOWN IS THE 7-DAY EFFECTIVE YIELD AS OF SEPTEMBER 30, 2007. (B) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT SEPTEMBER 30, 2007. THE TOTAL VALUE OF SECURITIES ON LOAN AT SEPTEMBER 30, 2007 WAS $3,763,780. (C) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES LENDING. THE TOTAL VALUE OF SUCH SECURITIES AT SEPTEMBER 30, 2007 WAS $3,857,618. (D) FLOATING RATE SECURITY -- THE RATE REFLECTED ON THE SCHEDULE OF INVESTMENTS IS THE RATE IN EFFECT ON SEPTEMBER 30, 2007. (E) TRI-PARTY REPURCHASE AGREEMENT. (F) THE RATE SHOWN IS THE DISCOUNT RATE AS OF SEPTEMBER 30, 2007. CL -- CLASS 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 NA -- NATIONAL ASSOCIATION REMIC -- REAL ESTATE MORTGAGE INVESTMENT CONDUIT SER -- SERIES SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 13 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA FULL MATURITY FIXED INCOME FUND TYPE OF SECURITY WEIGHTINGS (UNAUDITED)*: [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] 26.7% Corporate Bonds 21.4% U.S. Government Agency Obligations 13.4% Mortgage-Backed Securities 12.2% U.S. Treasury Obligations 12.0% U.S. Government Mortgage-Backed Obligations 6.3% Floating Rate Notes+ 3.0% Cash Equivalents+ 2.8% Commercial Paper+ 1.5% Asset-Backed Securities 0.6% Foreign Government Bonds 0.1% Municipal Bond *Percentages based on total investments. +Percentages include cash collateral for securities on loan. -------------------------------------------------------------------------------- DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- CORPORATE BONDS [29.2%] AEROSPACE & DEFENSE [0.2%] United Technologies 4.375%, 05/01/10 $ 80 $ 79 ============================================================================= AGRICULTURE [0.2%] Bunge NA Finance 5.900%, 04/01/17 100 96 ============================================================================= BANKS [5.3%] AmSouth Bancorporation 6.750%, 11/01/25 75 77 Bank of America 10.200%, 07/15/15 100 127 5.625%, 10/14/16 150 150 Bank One 10.000%, 08/15/10 89 100 Bankers Trust 7.250%, 10/15/11 46 50 Citigroup 3.625%, 02/09/09 300 295 Deutsche Bank 6.000%, 09/01/17 180 182 Dresdner Bank - New York 7.250%, 09/15/15 150 163 European Investment Bank 4.625%, 03/21/12 450 448 HSBC Holding 7.500%, 07/15/09 285 298 Jefferies Group 6.450%, 06/08/27 100 94 Santander Central Hispano Issuances 7.625%, 09/14/10 100 107 Wachovia 6.300%, 04/15/08 150 151 ----------------------------------------------------------------------------- TOTAL BANKS 2,242 ============================================================================= DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- BUILDING & CONSTRUCTION [0.5%] American Standard 7.375%, 02/01/08 $ 150 $ 150 Hanson Australia Funding 5.250%, 03/15/13 75 72 ----------------------------------------------------------------------------- TOTAL BUILDING & CONSTRUCTION 222 ============================================================================= CABLE/MEDIA [0.2%] TCI Communications 7.875%, 08/01/13 75 82 ============================================================================= COMPUTER SYSTEM DESIGN & SERVICES [0.7%] IBM, MTN 4.375%, 06/01/09 300 300 ============================================================================= DIVERSIFIED OPERATIONS [0.4%] Hutchison Whamp International (C) 5.450%, 11/24/10 150 151 ============================================================================= DRUGS [1.0%] Abbott Laboratories 5.600%, 05/15/11 325 331 Teva Pharmaceutical 5.550%, 02/01/16 75 73 ----------------------------------------------------------------------------- TOTAL DRUGS 404 ============================================================================= ELECTRICAL SERVICES [0.2%] Public Service Company of Colorado 4.375%, 10/01/08 100 99 ============================================================================= ENERGY [1.5%] Carolina Power & Light 5.150%, 04/01/15 80 78 Exelon 5.625%, 06/15/35 75 67 Korea Electric Power 7.750%, 04/01/13 95 107 6.750%, 08/01/27 75 84 Pacific Gas & Electric 6.050%, 03/01/34 25 25 PPL Energy Supply, Ser A 5.700%, 10/15/15 75 73 PSI Energy 7.850%, 10/15/07 125 125 United Utilities 6.450%, 04/01/08 70 70 ----------------------------------------------------------------------------- TOTAL ENERGY 629 ============================================================================= SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 14 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA FULL MATURITY FIXED INCOME FUND (CONTINUED) DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- FINANCIAL SERVICES [5.2%] American Express Credit 3.000%, 05/16/08 $ 300 $ 296 American General Finance 8.450%, 10/15/09 100 107 Associates NA, Ser A 7.950%, 02/15/10 75 80 Countrywide Financial 6.250%, 05/15/16 100 91 Credit Suisse USA 5.250%, 03/02/11 325 326 General Electric Capital 5.500%, 04/28/11 330 333 General Electric Capital, Ser A, MTN 6.000%, 06/15/12 75 77 HSBC Finance 5.000%, 06/30/15 75 71 Lehman Brothers Holdings 6.625%, 01/18/12 300 310 NiSource Finance 7.875%, 11/15/10 75 80 Swedish Export Credit 4.875%, 01/19/10 280 283 UFJ Finance Aruba 6.750%, 07/15/13 125 129 ----------------------------------------------------------------------------- TOTAL FINANCIAL SERVICES 2,183 ============================================================================= FOOD, BEVERAGE & TOBACCO [0.6%] Kraft Foods 6.500%, 08/11/17 190 196 Pepsi Bottling Holdings (C) 5.625%, 02/17/09 50 51 ----------------------------------------------------------------------------- TOTAL FOOD, BEVERAGE & TOBACCO 247 ============================================================================= INSURANCE [0.2%] Protective Life 4.300%, 06/01/13 100 94 ============================================================================= INVESTMENT BANKER/BROKER DEALER [3.4%] Bear Stearns (A) 5.588%, 01/31/11 340 330 Goldman Sachs Group 6.600%, 01/15/12 200 210 5.498%, 06/28/10 (A) 100 100 5.150%, 01/15/14 75 73 Lehman Brothers Holdings 6.500%, 07/19/17 100 102 Merrill Lynch 6.000%, 02/17/09 325 327 DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- Merrill Lynch, Ser C, MTN (A) 5.580%, 02/05/10 $ 70 $ 69 Morgan Stanley (A) 5.640%, 01/15/10 140 139 4.750%, 04/01/14 75 70 ----------------------------------------------------------------------------- TOTAL INVESTMENT BANKER/BROKER DEALER 1,420 ============================================================================= MANUFACTURING [0.5%] General Electric 5.000%, 02/01/13 150 148 Tyco International Group 6.375%, 10/15/11 75 77 ----------------------------------------------------------------------------- TOTAL MANUFACTURING 225 ============================================================================= MEDICAL PRODUCTS & SERVICES [0.3%] Johnson & Johnson 5.550%, 08/15/17 130 132 ============================================================================= METALS & MINING [0.5%] Vale Overseas 6.875%, 11/21/36 100 103 6.250%, 01/23/17 100 101 ----------------------------------------------------------------------------- TOTAL METALS & MINING 204 ============================================================================= MORTGAGE FINANCE [0.1%] Residential Capital 6.000%, 02/22/11 75 61 ============================================================================= MULTI-MEDIA [0.9%] Time Warner 9.125%, 01/15/13 50 57 5.875%, 11/15/16 85 83 Viacom 7.700%, 07/30/10 75 80 Walt Disney 6.375%, 03/01/12 150 157 ----------------------------------------------------------------------------- TOTAL MULTI-MEDIA 377 ============================================================================= OIL, GAS & CONSUMABLE FUELS [1.4%] ConocoPhillips 5.300%, 04/15/12 300 300 Shell International 5.625%, 06/27/11 300 308 ----------------------------------------------------------------------------- TOTAL OIL, GAS & CONSUMABLE FUELS 608 ============================================================================= SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 15 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA FULL MATURITY FIXED INCOME FUND (CONTINUED) DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- PETROLEUM & FUEL PRODUCTS [0.3%] Energy Transfer Partners 6.625%, 10/15/36 $ 75 $ 71 Pemex Project Funding Master Trust 9.125%, 10/13/10 50 55 ----------------------------------------------------------------------------- TOTAL PETROLEUM & FUEL PRODUCTS 126 ============================================================================= PETROLEUM EXPLORATION [0.2%] Travelers Cos., Inc. (A) 5.236%, 03/15/37 100 97 ============================================================================= REAL ESTATE INVESTMENT TRUST [0.2%] Masco 6.125%, 10/03/16 75 73 ============================================================================= RETAIL [1.9%] Eksportsfinans, Ser G, MTN 5.125%, 10/26/11 300 305 Home Depot 5.250%, 12/16/13 310 298 Lowe's 5.000%, 10/15/15 200 188 ----------------------------------------------------------------------------- TOTAL RETAIL 791 ============================================================================= SECURITY BROKERS & DEALERS [0.2%] Istar Financial 5.850%, 03/15/17 100 88 ============================================================================= SHORT-TERM BUSINESS CREDIT [0.2%] Citigroup Canada 5.200%, 06/01/15 100 91 ============================================================================= TELEPHONES & TELECOMMUNICATIONS [2.6%] British Telecommunications 8.875%, 12/15/30 100 132 8.375%, 12/15/10 (B) 60 66 Deutsche Telekom 8.000%, 06/15/10 25 27 Deutsche Telekom International Finance 8.250%, 06/15/30 75 92 France Telecom 7.750%, 03/01/11 50 54 New Cingular Wireless Services 8.750%, 03/01/31 75 95 Royal KPN 8.000%, 10/01/10 10 11 SBC Communications 5.300%, 11/15/10 300 303 DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- Sprint Capital 6.900%, 05/01/19 $ 75 $ 75 Telecom Italia Capital 7.200%, 07/18/36 75 79 Telefonica Emisiones 6.421%, 06/20/16 75 77 Verizon Global Funding 4.000%, 01/15/08 100 99 ----------------------------------------------------------------------------- TOTAL TELEPHONES & TELECOMMUNICATIONS 1,110 ============================================================================= TRANSPORTATION SERVICES [0.3%] FedEx 9.650%, 06/15/12 125 148 ============================================================================= TOTAL CORPORATE BONDS (Cost $12,378) 12,379 ========================================================================== U.S. GOVERNMENT AGENCY OBLIGATIONS [23.5%] FAMC, MTN 4.250%, 07/29/08 20 20 FFCB 4.875%, 04/04/12 200 202 FHLMC 6.875%, 09/15/10 300 320 6.000%, 01/15/17 135 137 5.875%, 03/21/11 350 366 5.625%, 06/13/16 185 191 5.500%, 04/15/17 143 144 5.000%, 07/15/14 325 329 5.000%, 02/01/21 415 407 5.000%, 05/15/21 150 147 4.375%, 07/17/15 835 807 FNMA 6.625%, 09/15/09 400 417 6.125%, 03/15/12 (D) 740 786 6.000%, 05/15/11 (D) 1,900 1,995 5.500%, 04/01/36 1,546 1,516 5.250%, 01/15/09 675 681 5.000%, 11/01/35 176 168 4.625%, 05/01/13 200 198 4.375%, 09/15/12 125 124 3.875%, 02/15/10 875 865 GNMA 3.727%, 03/16/27 129 126 ----------------------------------------------------------------------------- TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $9,853) 9,946 ========================================================================== SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 16 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA FULL MATURITY FIXED INCOME FUND (CONTINUED) DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- MORTGAGE-BACKED SECURITIES [14.7%] Banc of America Alternative Loan Trust, Ser 2004-2, Cl 5A1 5.500%, 03/25/19 $ 129 $ 128 Banc of America Alternative Loan Trust, Ser 2005-4, Cl CB11 5.500%, 05/25/35 133 133 Banc of America Alternative Loan Trust, Ser 2005-6, Cl 7A1 5.500%, 07/25/20 105 103 Banc of America Alternative Loan Trust, Ser 2005-9, Cl 1CB3 5.500%, 10/25/35 121 121 Banc of America Alternative Loan Trust, Ser 2006-2, Cl 6A1 5.500%, 03/25/21 143 142 Bayview Financial Acquisition Trust, Ser 2007-A, Cl 1A2 (B) 6.205%, 04/28/37 200 200 Bear Stearns Commercial Mortgage Security, Ser 2007-PW16, Cl AM (A) 5.902%, 06/11/40 300 299 Capital One Multi-asset Execution Trust, Ser 2006-A9, Cl A9 (A) 5.768%, 05/15/13 500 497 Chase Mortgage Finance, Ser 2003-S13, Cl A11 5.500%, 11/25/33 107 107 Citigroup Mortgage Loan Trust, Ser 2005-9, Cl 2A2 5.500%, 11/25/35 114 114 Citigroup/Deutsche Bank Commercial Mortgage 5.205%, 12/11/49 400 398 Commercial Mortgage, Ser 2006-C8, Cl A2B 5.248%, 12/10/46 185 185 Countrywide Asset-Backed Certificate, Ser 2007-S1, Cl A6 (A) 5.693%, 02/25/37 200 179 Countrywide Asset-Backed Certificates, Ser 2006-11, Cl 1AF3 (A) 6.050%, 09/25/46 200 200 Deutsche Bank Alternative Securities, Ser 2006, Cl AR5 6.000%, 10/15/21 175 177 Discover Card Master Trust I, Ser DCMT 2003-4, Cl A1 (A) 5.863%, 05/15/11 400 400 DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- First Horizon Alternative Mortgage Securities, Ser 2006-FA8, Cl 2A1 5.750%, 02/25/37 $ 184 $ 185 GE Capital Commercial Mortgage, Ser 2002-3A, Cl A2 4.996%, 12/10/37 150 149 GE Capital Commercial Mortgage, Ser 2004-C3, Cl A4 (A) 5.189%, 07/10/39 200 197 GMAC Commercial Mortgage Securities, Ser 2003-C1, Cl A2 4.079%, 05/10/36 225 212 GMAC Mortgage Corporation Loan Trust, Ser 2004-GH1, Cl A6 (A) 4.810%, 07/25/35 150 146 GMAC Mortgage Corporation Loan Trust, Ser 2004-J4, Cl A2 5.500%, 08/25/14 112 112 John Deere Owner Trust, Ser 2007-A, Cl A3 5.050%, 07/15/11 420 419 JPMorgan Chase, Ser 2006-CB17, Cl ASB 5.415%, 12/12/43 200 199 JPMorgan Mortgage Trust, Ser 2006-A7, Cl 2A4R (A) 5.500%, 01/25/37 200 200 JPMorgan Mortgage Trust, Ser 2007-A2, Cl 2A3 (A) 5.732%, 04/25/37 200 201 JPMorgan Alternative Loan Trust, Ser 2006-S3, Cl A3A (B) 6.000%, 08/25/36 200 201 RAAC, Ser 2004-SP1, Cl AI4 (A) 5.285%, 08/25/27 150 146 Renaissance Home Equity, Ser 2007-1, Cl AF2 (B) 5.512%, 04/25/37 200 198 Residential Accredit Loans, Ser 2004-QS5, Cl A5 4.750%, 04/25/34 48 47 Residential Accredit Loans, Ser 2004-QS6, Cl A1 5.000%, 05/25/19 82 80 Wachovia Bank Commercial Mortgage, Ser 2003-C3, Cl A2 4.867%, 02/15/35 150 147 ----------------------------------------------------------------------------- TOTAL MORTGAGE-BACKED SECURITIES (Cost $6,282) 6,222 ====================================================================== SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 17 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA FULL MATURITY FIXED INCOME FUND (CONTINUED) DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS [13.2%] FHLMC Gold, Pool G11880 5.000%, 12/01/20 $ 159 $ 156 FHLMC REMIC, Ser 2720, Cl JB 5.000%, 12/15/16 150 150 FHLMC REMIC, Ser R003, Cl VA 5.500%, 08/15/16 172 173 FHLMC, Pool 160098 10.500%, 01/01/10 3 3 FHLMC, Pool 1B2550 (A) 5.291%, 02/01/36 210 210 FHLMC, Pool 1B2677 (A) 4.104%, 01/01/35 36 35 FHLMC, Pool 1B2683 (A) 4.087%, 01/01/35 22 21 FHLMC, Pool 1B2692 (A) 4.474%, 12/01/34 62 61 FHLMC, Pool 1Q008 (A) 5.079%, 03/01/36 321 317 FHLMC, Pool 8201 6.000%, 07/01/34 170 170 FHLMC, Pool C20300 6.500%, 01/01/29 16 17 FHLMC, Pool E01280 5.000%, 12/01/17 57 57 FHLMC, Pool G11431 6.000%, 02/01/18 39 40 FHLMC, Pool G12609 5.500%, 04/01/22 875 872 FHLMC, Pool G18124 6.000%, 06/01/21 164 167 FHLMC, Ser 2141, Cl N 5.550%, 11/15/27 13 13 FHLMC, Ser 2544, Cl QB 5.000%, 09/15/15 81 81 FHLMC, Ser 2804, Cl VC 5.000%, 07/15/21 174 169 FHLMC, Ser 3132, Cl MA 5.500%, 12/15/23 146 147 FNMA REMIC, Ser R009, Cl AJ 5.750%, 12/15/18 176 177 FNMA, Pool 254545 5.000%, 12/01/17 145 143 FNMA, Pool 13751 5.500%, 08/01/35 239 234 FNMA, Pool 252570 6.500%, 07/01/29 33 33 FNMA, Pool 253183 7.500%, 04/01/30 3 3 FNMA, Pool 253398 8.000%, 08/01/30 10 11 DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- FNMA, Pool 254510 5.000%, 11/01/17 $ 75 $ 73 FNMA, Pool 254685 5.000%, 04/01/18 109 107 FNMA, Pool 254949 5.000%, 11/01/33 89 85 FNMA, Pool 254953 5.000%, 11/01/18 59 58 FNMA, Pool 303168 9.500%, 02/01/25 8 8 FNMA, Pool 735060 6.000%, 11/01/34 118 118 FNMA, Pool 735228 5.500%, 02/01/35 100 98 FNMA, Pool 827223 (A) 4.777%, 04/01/35 190 188 FNMA, Pool 835744 5.000%, 09/01/35 555 530 FNMA, Ser 1992, Cl 136 6.000%, 08/25/22 42 42 FNMA, Ser 2003, Cl 16 5.000%, 10/25/15 150 150 FNMA, Ser 2003, Cl 18 5.000%, 03/25/16 96 96 FNMA, Ser 2003, Cl 31 4.500%, 12/25/28 90 89 FNMA, Ser 2004-W6, Cl 1A6 5.500%, 07/25/34 86 84 FNMA, Ser 2006-B2, Cl AB 5.500%, 05/25/14 233 233 GNMA, Pool 479168 8.000%, 02/15/30 8 9 GNMA, Pool 780315 9.500%, 12/15/17 16 18 GNMA, Ser 2004, Cl 78 4.658%, 04/16/29 150 146 ----------------------------------------------------------------------------- TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS (Cost $5,651) 5,592 ======================================================================= U.S. TREASURY OBLIGATIONS [13.4%] U.S.Treasury Bonds 9.125%, 05/15/18 200 274 6.250%, 08/15/23 (D) 2,075 2,384 U.S.Treasury Notes 5.750%, 08/15/10 345 361 4.875%, 08/15/16 200 205 4.750%, 05/15/14 700 716 4.375%, 12/15/10 400 404 4.000%, 04/15/10 350 350 3.500%, 02/15/10 280 277 3.000%, 02/15/08 625 622 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 18 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA FULL MATURITY FIXED INCOME FUND (CONTINUED) DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- U.S.Treasury STRIP (F) 4.924%, 11/15/15 $ 125 $ 86 ----------------------------------------------------------------------------- TOTAL U.S. TREASURY OBLIGATIONS (Cost $5,615) 5,679 ======================================================================= ASSET-BACKED SECURITIES [1.7%] CitiFinancial Mortgage Securities, Ser 2004-1, Cl AF2 (B) 2.645%, 04/25/34 70 68 Cityscape Home Equity Loan Trust, Ser 1997-C, Cl A4 (B) 7.000%, 07/25/28 14 14 Contimortgage Home Equity Loan Trust, Ser 1997-2, Cl A9 7.090%, 04/15/28 8 8 Fairbanks Capital Mortgage, Ser 1991-1, Cl A (A) 5.731%, 05/25/28 36 36 Green Tree Financial, Ser 1997-7, Cl A6 6.760%, 07/15/29 122 127 GSAA Home Equity Trust, Ser 2005-1, Cl AF2 (A) 4.316%, 11/25/34 135 133 Renaissance Home Equity Loan Trust, Ser 2005-3, Cl AF2 (B) 4.723%, 11/25/35 43 43 Residential Asset Securities, Ser 2002-RS3, Cl AI5, 5.572%, 06/25/32 80 80 Residential Asset Securities, Ser 2003-KS5, Cl AI6 (A) 3.620%, 07/25/33 173 162 Residential Asset Securities, Ser 2004-KS5, Cl AI3 (A) 4.030%, 04/25/30 23 23 UCFC Home Equity Loan, Ser 1998-C, Cl A7 5.935%, 01/15/30 19 19 ----------------------------------------------------------------------------- TOTAL ASSET-BACKED SECURITIES (Cost $722) 713 ======================================================================= FACE AMOUNT (000) DESCRIPTION /SHARES VALUE (000) -------------------------------------------------------------------------------- FOREIGN GOVERNMENT BONDS [0.7%] Cia Brasileira de Bebida 8.750%, 09/15/13 $ 175 $ 202 National Bank of Hungary 8.875%, 11/01/13 75 90 ----------------------------------------------------------------------------- TOTAL FOREIGN GOVERNMENT BONDS (Cost $283) 292 ======================================================================= MUNICIPAL BOND [0.1%] LOUISIANA [0.1%] Louisiana State,Tobacco Settlement Financing Authority, Ser 2001A 6.360%, 05/15/25 31 31 ========================================================================== TOTAL MUNICIPAL BOND (Cost $31) 31 ======================================================================= COMMERCIAL PAPER [3.1%] Neptune Funding (E) (G) 6.250%, 10/01/07 1,316 1,316 ============================================================================= TOTAL COMMERCIAL PAPER (Cost $1,316) 1,316 ======================================================================= FLOATING RATE NOTES [6.9%] Sigma Finance (A) (E) 5.020%, 01/24/08 2,914 2,914 ============================================================================= TOTAL FLOATING RATE NOTES (Cost $2,914) 2,914 ======================================================================= CASH EQUIVALENTS [3.3%] AIM Short-Term Investment Company Liquid Assets Portfolio, 5.190% (E) (F) 205,740 206 Fidelity Institutional Domestic Money Market Portfolio, Cl I, 5.25% (F) 1,192,314 1,192 ----------------------------------------------------------------------------- TOTAL CASH EQUIVALENTS (Cost $1,398) 1,398 ======================================================================= TOTAL INVESTMENTS [109.8%] (Cost $46,443) $ 46,482 ======================================================================= SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 19 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA FULL MATURITY FIXED INCOME FUND (CONCLUDED) DESCRIPTION -------------------------------------------------------------------------------- PERCENTAGES ARE BASED ON NET ASSETS OF $42,331. (A) FLOATING RATE SECURITY -- THE RATE REFLECTED ON THE SCHEDULE OF INVESTMENTS IS THE RATE IN EFFECT ON SEPTEMBER 30, 2007. (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) 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 $202 (000), REPRESENTING 0.5% OF THE NET ASSETS OF THE FUND. (D) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT SEPTEMBER 30, 2007. THE TOTAL VALUE OF SECURITIES ON LOAN AT SEPTEMBER 30, 2007 WAS $4,286,033. (E) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES LENDING. THE TOTAL VALUE OF SUCH SECURITIES AT SEPTEMBER 30, 2007 WAS $4,436,399. (F) RATE SHOWN IS THE 7-DAY EFFECTIVE YIELD AT TIME OF PURCHASE. (G) RATE SHOWN IS THE DISCOUNT RATE AS OF SEPTEMBER 30, 2007. CL -- CLASS FAMC -- FEDERAL AGRICULTURAL MORTGAGE CORPORATION FFCB -- FEDERAL FARM CREDIT BANK FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION GNMA -- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION MTN -- MEDIUM TERM NOTE NA -- NATIONAL ASSOCIATION REMIC -- REAL ESTATE MORTGAGE INVESTMENT CONDUIT SER -- SERIES STRIP -- SEPARATELY TRADED REGISTERED INTEREST AND PRINCIPAL SECURITY SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 20 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA BALANCED FUND SECTOR WEIGHTINGS (UNAUDITED)*: [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] 11.2% Mortgage-Backed Securities 10.7% Financials - Common Stock 9.5% Information Technology - Common Stock 7.5% U.S. Government Mortgage-Backed Obligations 7.0% HealthCare - Common Stock 6.7% Energy - Common Stock 6.7% Industrials - Common Stock 5.7% Corporate Bonds 5.5% U.S. Treasury Obligations 5.4% Consumer Discretionary - Common Stock 4.7% Floating Rate Notes+ 3.7% Consumer Staples - Common Stock 3.7% Materials - Common Stock 2.7% Utilities - Common Stock 2.4% Cash Equivalents+ 2.2% U.S. Government Agency Obligations 2.1% Commercial Paper+ 1.5% Telecommunication Services - Common Stock 0.6% Asset-Backed Securities 0.4% Foreign Government Bonds 0.1% Municipal Bond *Percentages based on total investments. +Percentages include cash collateral for securities on loan. -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE (000) -------------------------------------------------------------------------------- COMMON STOCK [61.9%] AEROSPACE & DEFENSE [0.8%] Lockheed Martin 1,285 $ 140 ============================================================================= AUTOMOTIVE [1.2%] Autozone* 351 41 Ford Motor 887 7 Paccar 1,804 154 ----------------------------------------------------------------------------- TOTAL AUTOMOTIVE 202 ============================================================================= BANKS [4.5%] Bank of America 6,217 312 JPMorgan Chase 5,656 259 PNC Financial Services Group 1,350 92 Wachovia 1,828 92 ----------------------------------------------------------------------------- TOTAL BANKS 755 ============================================================================= BIOMEDICAL RESEARCH & PRODUCTS [0.1%] Celgene* 294 21 ============================================================================= DESCRIPTION SHARES VALUE (000) -------------------------------------------------------------------------------- BIOTECHNOLOGY [0.6%] Amgen* 844 $ 48 Biogen Idec* 222 15 Gilead Sciences* 719 29 Millipore* 35 3 ----------------------------------------------------------------------------- TOTAL BIOTECHNOLOGY 95 ============================================================================= BROADCASTING & CABLE [0.5%] Qualcomm 2,131 90 ============================================================================= BUSINESS SERVICES [0.7%] Convergys* 2,278 39 eBay* 198 8 Xerox* 3,806 66 ----------------------------------------------------------------------------- TOTAL BUSINESS SERVICES 113 ============================================================================= CHEMICALS [1.1%] Dow Chemical 1,985 86 Eastman Chemical 754 50 Hercules* 2,230 47 ----------------------------------------------------------------------------- TOTAL CHEMICALS 183 ============================================================================= COMMUNICATION & MEDIA [1.9%] Cisco Systems* 4,077 135 DIRECTV Group* 3,039 74 Time Warner 6,235 114 ----------------------------------------------------------------------------- TOTAL COMMUNICATION & MEDIA 323 ============================================================================= COMPUTER SYSTEM DESIGN & SERVICES [0.1%] Lexmark International, Cl A* 310 13 ============================================================================= COMPUTERS & PERIPHERALS [0.0%] EMC* 201 4 ============================================================================= COMPUTERS - HARDWARE [4.7%] Apple* 1,696 260 Hewlett-Packard 5,082 253 IBM 2,350 277 ----------------------------------------------------------------------------- TOTAL COMPUTERS - HARDWARE 790 ============================================================================= COMPUTERS - SOFTWARE [1.4%] Microsoft 3,521 104 Oracle* 5,992 130 ----------------------------------------------------------------------------- TOTAL COMPUTERS - SOFTWARE 234 ============================================================================= SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 21 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA BALANCED FUND (CONTINUED) DESCRIPTION SHARES VALUE (000) -------------------------------------------------------------------------------- CONSUMER PRODUCTS & SERVICES [0.7%] Kimberly-Clark 818 $ 57 Procter & Gamble 937 66 ----------------------------------------------------------------------------- TOTAL CONSUMER PRODUCTS & SERVICES 123 ============================================================================= CONTAINERS & PACKAGING [0.8%] Pactiv* 4,585 132 ============================================================================= DIVERSIFIED MANUFACTURING [3.4%] Danaher 1,057 88 General Electric 11,669 483 ----------------------------------------------------------------------------- TOTAL DIVERSIFIED MANUFACTURING 571 ============================================================================= DIVERSIFIED METALS & MINING [0.8%] Freeport-McMoRan Copper & Gold, Cl B 1,362 143 ============================================================================= DRUGS [2.2%] Merck 788 41 Pfizer 11,448 280 Wyeth 1,169 52 ----------------------------------------------------------------------------- TOTAL DRUGS 373 ============================================================================= ELECTRICAL SERVICES [0.9%] DTE Energy 1,147 55 Duke Energy 4,911 92 ----------------------------------------------------------------------------- TOTAL ELECTRICAL SERVICES 147 ============================================================================= ENERGY [2.0%] Edison International 2,935 163 Entergy 1,079 117 PG&E 1,193 57 ----------------------------------------------------------------------------- TOTAL ENERGY 337 ============================================================================= ENGINEERING SERVICES [0.3%] Fluor 319 46 ============================================================================= ENTERTAINMENT & GAMING [0.6%] Carnival, Cl A 1,984 96 ============================================================================= DESCRIPTION SHARES VALUE (000) -------------------------------------------------------------------------------- FINANCIAL SERVICES [3.5%] American Capital Strategies (D) 3,913 $ 167 American Express 3,013 179 CIT Group 1,198 48 Citigroup 4,130 193 ----------------------------------------------------------------------------- TOTAL FINANCIAL SERVICES 587 ============================================================================= FOOD, BEVERAGE & TOBACCO [2.6%] Dean Foods 5,039 129 General Mills 2,730 158 Kellogg Company 694 39 Pepsi Bottling Group 1,466 55 Safeway 1,987 66 ----------------------------------------------------------------------------- TOTAL FOOD, BEVERAGE & TOBACCO 447 ============================================================================= HEALTHCARE PRODUCTS & SERVICES [3.3%] Applera - Applied Biosystems Group 127 4 Cardinal Health 2,200 138 Cigna 1,203 64 Humana* 2,386 167 UnitedHealth Group 3,930 190 ----------------------------------------------------------------------------- TOTAL HEALTHCARE PRODUCTS & SERVICES 563 ============================================================================= INSURANCE [3.0%] ACE 1,400 85 Aetna 930 50 Allstate (D) 2,505 143 Chubb 630 34 Hartford Financial Services Group 1,249 116 Lincoln National 501 33 XL Capital, Cl A 635 50 ----------------------------------------------------------------------------- TOTAL INSURANCE 511 ============================================================================= INVESTMENT BANKER/BROKER DEALER [0.0%] Franklin Resources 50 6 ============================================================================= MACHINERY [1.4%] Caterpillar 708 55 Deere 954 142 Eaton 415 41 ----------------------------------------------------------------------------- TOTAL MACHINERY 238 ============================================================================= SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 22 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA BALANCED FUND (CONTINUED) DESCRIPTION SHARES VALUE (000) -------------------------------------------------------------------------------- MEDICAL PRODUCTS & SERVICES [1.0%] Baxter International 149 $ 9 Becton Dickinson 620 51 Genzyme-General Division* 196 12 Wellpoint* 1,144 90 Zimmer Holdings* 3 -- ----------------------------------------------------------------------------- TOTAL MEDICAL PRODUCTS & SERVICES 162 ============================================================================= MULTI-MEDIA [1.2%] Walt Disney 5,942 204 ============================================================================= PETROLEUM & FUEL PRODUCTS [7.7%] Apache 703 63 Ashland 2,517 152 Chesapeake Energy 535 19 ChevronTexaco 3,306 310 ConocoPhillips 3,010 264 Ensco International 264 15 Exxon Mobil 3,124 289 Marathon Oil 2,793 159 Valero Energy 376 25 ----------------------------------------------------------------------------- TOTAL PETROLEUM & FUEL PRODUCTS 1,296 ============================================================================= PETROLEUM REFINING [0.4%] Hess 1,021 68 ============================================================================= RAILROADS [0.4%] CSX 1,717 73 ============================================================================= REAL ESTATE INVESTMENT TRUSTS [0.8%] Boston Properties 152 16 Prologis Trust 1,740 115 ----------------------------------------------------------------------------- TOTAL REAL ESTATE INVESTMENT TRUSTS 131 ============================================================================= RETAIL [3.3%] Big Lots* 4,187 125 Home Depot 441 14 JC Penney 88 6 Kroger 2,907 83 Lowe's 2,031 57 Macy's 1,947 63 Mcdonald's 2,615 142 Radioshack 1,941 40 Sherwin Williams 69 4 Wal-Mart Stores 544 24 ----------------------------------------------------------------------------- TOTAL RETAIL 558 ============================================================================= DESCRIPTION SHARES/FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- SEMI-CONDUCTORS [1.6%] Applied Materials 5,432 $ 113 Intel 4,036 104 Nvidia* 564 20 Teradyne* 2,792 39 ----------------------------------------------------------------------------- TOTAL SEMI-CONDUCTORS 276 ============================================================================= STEEL & STEEL WORKS [0.3%] United States Steel 569 60 ============================================================================= TELEPHONES & TELECOMMUNICATIONS [1.7%] AT&T 1,121 48 Embarq 2,489 138 Verizon Communications 2,152 95 ----------------------------------------------------------------------------- TOTAL TELEPHONES & TELECOMMUNICATIONS 281 ============================================================================= TRANSPORTATION SERVICES [0.0%] Norfolk Southern 1 -- Ryder System 47 2 ----------------------------------------------------------------------------- TOTAL TRANSPORTATION SERVICES 2 ============================================================================= WEB PORTALS/ISP [0.4%] Google, Cl A* 109 62 ============================================================================= TOTAL COMMON STOCK (Cost $9,618) 10,456 ========================================================================== MORTGAGE-BACKED SECURITIES [12.0%] Banc of America Alternative Loan Trust, Ser 2005-6, Cl 7A1 5.500%, 07/25/20 $ 35 35 Bayview Financial Acquisition Trust, Ser 2007-A, Cl 1A2 6.205%, 04/28/37 100 100 Capital One Multi-asset Execution Trust, Ser 2006-A9, Cl A9 (A) 5.768%, 05/15/13 100 99 Chase Mortgage Finance, Ser 2003-S14, Cl 3A6 5.500%, 01/25/34 49 49 Citicorp Mortgage Securities, Ser 2003-11, Cl 2A8 5.500%, 12/25/33 55 55 Citicorp Mortgage Securities, Ser 2004-4, Cl A5 5.500%, 06/25/34 76 75 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 23 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA BALANCED FUND (CONTINUED) DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- Citigroup Mortgage Loan Trust, Ser 2005-9, Cl 2A2 5.500%, 11/25/35 $ 57 $ 57 Countrywide Alternative Loan Trust, Ser 2005-50CB, Cl 4A1 5.000%, 11/25/20 35 34 Countrywide Alternative Loan Trust, Ser 2005-85CB, Cl 3A1 5.250%, 02/25/21 74 73 Countrywide Alternative Loan Trust, Ser 2006-7CB, Cl 3A1 5.250%, 05/25/21 58 58 Countrywide Asset-Backed Certificates, Ser 2005-13, Cl AF2 (A) 5.294%, 04/25/36 75 75 Credit-Based Asset Servicing Home Equity, Ser 2005-CB8, Cl AF2 (B) 5.303%, 12/25/35 75 74 Deutsche Bank Alternative Securities, Ser 2006, Cl AR5 6.000%, 10/15/21 87 88 Discover Card Master Trust I, Ser 2003-3, Cl A (A) 5.953%, 09/15/12 150 150 First Horizon CMO, Ser 2006-FA6, Cl 3A1 5.750%, 11/25/21 85 85 First Union National Bank CMO, Ser 2001-C4, Cl A2 6.223%, 12/12/33 50 52 GE Capital Commercial Mortgage, Ser 2002-3A, Cl A2 4.996%, 12/10/37 100 99 GE Capital Commercial Mortgage, Ser 2004-C3, Cl A4 (A) 5.189%, 07/10/39 75 74 GMAC Commercial Mortgage Securities, Ser 2003-C1, Cl A2 4.079%, 05/10/36 100 94 GMAC Mortgage Corporation Loan Trust, Ser 2004, Cl HE5 (A) 4.388%, 09/25/34 75 73 GMAC Mortgage Corporation Loan Trust, Ser 2004-GH1, Cl A6 (A) 4.810%, 07/25/35 75 73 DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- GMAC Mortgage Corporation Loan Trust, Ser 2004-J4, Cl A2 5.500%, 08/25/14 $ 56 $ 56 JPMorgan Mortgage Trust, Ser 2006-A7, Cl 2A4R (A) 5.500%, 01/25/37 100 100 JPMorgan Mortgage Trust, Ser 2007-A2, Cl 2A3 (A) 5.732%, 04/25/37 100 101 RAAC, Ser 2004-SP1, Cl AI4 (A) 5.285%, 08/25/27 75 73 Residential Accredit Loans, Ser 2004-QS5, Cl A5 4.750%, 04/25/34 24 23 Residential Accredit Loans, Ser 2004-QS6, Cl A1 5.000%, 05/25/19 27 27 Residential Funding Mortgage Securities, Ser 2003-S11, Cl A2 4.000%, 06/25/18 75 71 ----------------------------------------------------------------------------- TOTAL MORTGAGE-BACKED SECURITIES (Cost $2,044) 2,023 ========================================================================= U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATIONS [8.0%] FHLMC Gold, Pool C90691 5.500%, 07/01/23 48 47 FHLMC Gold, Pool G0182 6.000%, 05/01/35 83 83 FHLMC REMIC, Ser 2673, Cl NC 5.500%, 05/15/21 75 76 FHLMC REMIC, Ser R007, Cl AC 5.875%, 05/15/16 73 73 FHLMC, Pool G11771 6.000%, 06/01/20 67 68 FHLMC, Ser 2578 PD 5.000%, 08/15/14 50 50 FNMA, Pool 254800 5.500%, 07/01/23 357 353 FNMA, Pool 256171 6.000%, 03/01/26 203 204 FNMA, Pool 725773 5.500%, 09/01/34 116 114 FNMA, Pool 735228 5.500%, 02/01/35 50 49 FNMA, Pool 790108 6.000%, 08/01/34 60 60 FNMA, Ser 2003, Cl 18 5.000%, 03/25/16 80 80 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 24 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA BALANCED FUND (CONTINUED) DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- FNMA, Ser 2003, Cl 31 4.500%, 12/25/28 $ 51 $ 51 FNMA, Ser 2004-W10, Cl A24 5.000%, 08/25/34 50 50 ----------------------------------------------------------------------------- TOTAL U.S. GOVERNMENT MORTGAGE- BACKED OBLIGATIONS (Cost $1,366) 1,358 ========================================================================= CORPORATE BONDS [6.1%] AGRICULTURE [0.1%] Bunge NA Finance 5.900%, 04/01/17 25 24 ============================================================================= BANKS [1.4%] AmSouth Bancorporation 6.750%, 11/01/25 50 51 Bankers Trust 7.500%, 11/15/15 25 28 Compass Bank 8.100%, 08/15/09 50 53 Dresdner Bank - New York 7.250%, 09/15/15 50 54 PNC Funding 7.500%, 11/01/09 50 53 ----------------------------------------------------------------------------- TOTAL BANKS 239 ============================================================================= BUILDING & CONSTRUCTION [0.6%] American Standard 7.375%, 02/01/08 50 50 Hanson Australia Funding 5.250%, 03/15/13 50 48 ----------------------------------------------------------------------------- TOTAL BUILDING & CONSTRUCTION 98 ============================================================================= CONTAINERS & PACKAGING [0.3%] Pactiv 7.950%, 12/15/25 50 54 ============================================================================= ENERGY [0.9%] Dominion Resources, Ser B 6.250%, 06/30/12 30 31 Exelon Generation 6.950%, 06/15/11 50 52 Pacific Gas & Electric 6.050%, 03/01/34 25 25 PSI Energy 7.850%, 10/15/07 50 50 ----------------------------------------------------------------------------- TOTAL ENERGY 158 ============================================================================= DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- FINANCIAL SERVICES [0.4%] Countrywide Financial 6.250%, 05/15/16 $ 25 $ 22 Household Finance 8.000%, 07/15/10 40 43 ----------------------------------------------------------------------------- TOTAL FINANCIAL SERVICES 65 ============================================================================= FOOD, BEVERAGE & TOBACCO [0.1%] Quaker Oats, Ser B, MTN 9.250%, 11/27/07 25 25 ============================================================================= INSURANCE [0.6%] MetLife 6.500%, 12/15/32 50 52 Protective Life 4.300%, 06/01/13 50 47 ----------------------------------------------------------------------------- TOTAL INSURANCE 99 ============================================================================= INVESTMENT BANKER/BROKER DEALER [0.3%] Lehman Brothers Holdings 6.500%, 07/19/17 50 51 ============================================================================= MANUFACTURING [0.2%] Tyco International Group 6.375%, 10/15/11 25 26 ============================================================================= PAPER & PAPER PRODUCTS [0.4%] Westvaco 9.750%, 06/15/20 50 59 ============================================================================= PETROLEUM & FUEL PRODUCTS [0.2%] Pemex Project Funding Master Trust 9.125%, 10/13/10 25 28 ============================================================================= REAL ESTATE INVESTMENT TRUST [0.1%] Masco 6.125%, 10/03/16 25 24 ============================================================================= TELEPHONES & TELECOMMUNICATIONS [0.5%] Deutsche Telekom International Finance 8.250%, 06/15/30 25 30 GTE 6.840%, 04/15/18 25 27 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 25 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA BALANCED FUND (CONCLUDED) DESCRIPTION FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- New Cingular Wireless Services 8.750%, 03/01/31 $ 25 $ 32 ----------------------------------------------------------------------------- TOTAL TELEPHONES & TELECOMMUNICATIONS 89 ============================================================================= TOTAL CORPORATE BONDS (Cost $1,038) 1,039 ========================================================================= U.S. TREASURY OBLIGATION [5.9%] U.S.Treasury Bonds 9.125%, 05/15/18 100 137 6.250%, 08/15/23 (D) 750 861 ----------------------------------------------------------------------------- TOTAL U.S. TREASURY OBLIGATION (Cost $1,003) 998 ========================================================================= COMMERCIAL PAPER [2.3%] Neptune Funding (E) (F) 6.250%, 10/01/07 388 388 ============================================================================= TOTAL COMMERCIAL PAPER (Cost $388) 388 ========================================================================= U.S. GOVERNMENT AGENCY OBLIGATIONS [2.4%] FNMA (D) 6.000%, 05/15/11 225 236 5.500%, 04/01/36 172 169 ----------------------------------------------------------------------------- TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $400) 405 ========================================================================= ASSET-BACKED SECURITIES [0.6%] Residential Asset Securities, Ser 2002-RS3, Cl AI5 (A) 5.572%, 06/25/32 93 93 Residential Asset Securities, Ser 2004-KS5, Cl AI3 (A) 4.030%, 04/25/30 8 7 ----------------------------------------------------------------------------- TOTAL ASSET-BACKED SECURITIES (Cost $103) 100 ========================================================================= FOREIGN GOVERNMENT BONDS [0.4%] Hydro-Quebec, Ser FU 11.750%, 02/01/12 50 63 ============================================================================= TOTAL FOREIGN GOVERNMENT BONDS (Cost $64) 63 ========================================================================= DESCRIPTION FACE AMOUNT (000)/SHARES VALUE (000) -------------------------------------------------------------------------------- MUNICIPAL BOND [0.1%] LOUISIANA [0.1%] Louisiana State, Tobacco Settlement Financing Authority, Ser 2001A 6.360%, 05/15/25 $ 20 $ 20 ============================================================================= TOTAL MUNICIPAL BOND (Cost $21) 20 ========================================================================= FLOATING RATE NOTES [5.1%] Sigma Finance (A) (E) 5.020%, 01/24/08 858 858 ----------------------------------------------------------------------------- TOTAL FLOATING RATE NOTES (Cost $858) 858 ========================================================================= CASH EQUIVALENTS [2.6%] AIM Short-Term Investment Company Liquid Assets Portfolio, 5.190% (C) (E) 60,628 61 Fidelity Institutional Domestic Money Market Portfolio, Cl I, 5.25% (C) 370,754 371 ----------------------------------------------------------------------------- TOTAL CASH EQUIVALENTS (Cost $432) 432 ========================================================================= TOTAL INVESTMENTS [107.4%] (Cost $17,335) $ 18,140 ========================================================================= PERCENTAGES ARE BASED ON NET ASSETS OF $16,885. * NON-INCOME PRODUCING SECURITY (A) FLOATING RATE SECURITY -- THE RATE REFLECTED ON THE SCHEDULE OF INVESTMENTS IS THE RATE IN EFFECT ON SEPTEMBER 30, 2007. (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) RATE SHOWN IS THE 7-DAY EFFECTIVE YIELD AS OF SEPTEMBER 30, 2007. (D) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT SEPTEMBER 30, 2007. THE TOTAL VALUE OF SECURITIES ON LOAN AT SEPTEMBER 30, 2007 WAS $1,263,254. (E) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES LENDING. THE TOTAL VALUE OF SUCH SECURITIES AT SEPTEMBER 30, 2007 WAS $1,307,335. (F) RATE SHOWN IS THE DISCOUNT RATE AS OF SEPTEMBER 30, 2007. CL -- CLASS CMO -- COLLATERALIZED MORTGAGE OBLIGATION FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION ISP -- INTERNET SERVICE PROVIDER MTN -- MEDIUM TERM NOTE NA -- NATIONAL ASSOCIATION REMIC -- REAL ESTATE MORTGAGE INVESTMENT CONDUIT SER -- SERIES AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 26 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA DIVERSIFIED EQUITY FUND SECTOR WEIGHTINGS (UNAUDITED)*: [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] 19.6% Financials 14.4% Information Technology 11.8% Energy 11.2% HealthCare 9.9% Industrials 9.1% Consumer Discretionary 6.9% Consumer Staples 4.6% Materials 4.6% Telecommunication Services 2.9% Utilities 2.7% Cash Equivalents+ 1.6% Floating Rate Notes+ 0.7% Commercial Paper+ *Percentages based on total investments. +Percentages include cash collateral for securities on loan. -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE (000) -------------------------------------------------------------------------------- COMMON STOCK [97.5%] ADVERTISING [0.5%] CBS, Cl B 18,800 $ 592 ============================================================================= AEROSPACE & DEFENSE [1.3%] Lockheed Martin 9,052 982 Raytheon 7,700 491 ----------------------------------------------------------------------------- TOTAL AEROSPACE & DEFENSE 1,473 ============================================================================= AIR TRANSPORTATION [0.8%] FedEx 8,000 838 ============================================================================= APPAREL/TEXTILES [0.1%] Polo Ralph Lauren 948 74 VF 556 45 ----------------------------------------------------------------------------- TOTAL APPAREL/TEXTILES 119 ============================================================================= AUTOMOTIVE [1.7%] Autozone* 2,590 301 Ford Motor 4,798 41 Honda Motor, ADR 21,500 717 Paccar 9,435 804 ----------------------------------------------------------------------------- TOTAL AUTOMOTIVE 1,863 ============================================================================= BANKS [5.8%] Bank of America 49,943 2,511 International Bancshares 10,450 227 JPMorgan Chase 44,259 2,028 DESCRIPTION SHARES VALUE (000) -------------------------------------------------------------------------------- PNC Financial Services Group 5,860 $ 399 US Bancorp 23,000 748 Wachovia 11,988 601 ----------------------------------------------------------------------------- TOTAL BANKS 6,514 ============================================================================= BIOMEDICAL RESEARCH & PRODUCTS [0.7%] Celgene* 1,516 108 Quest Diagnostic 11,100 641 ----------------------------------------------------------------------------- TOTAL BIOMEDICAL RESEARCH & PRODUCTS 749 ============================================================================= BIOTECHNOLOGY [0.4%] Amgen* 4,392 248 Biogen Idec* 1,155 77 Gilead Sciences* 3,742 153 Millipore* 188 14 ----------------------------------------------------------------------------- TOTAL BIOTECHNOLOGY 492 ============================================================================= BROADCASTING & CABLE [1.4%] Motorola 16,500 306 Nokia, ADR 23,500 891 Qualcomm 7,496 317 ----------------------------------------------------------------------------- TOTAL BROADCASTING & CABLE 1,514 ============================================================================= BUILDING & CONSTRUCTION [0.1%] USG (A)* 4,200 158 ============================================================================= BUSINESS SERVICES [1.3%] Convergys* 9,434 164 eBay* 3,774 147 Xerox* 68,266 1,184 ----------------------------------------------------------------------------- TOTAL BUSINESS SERVICES 1,495 ============================================================================= CHEMICALS [0.9%] Dow Chemical 6,452 278 Eastman Chemical 3,898 260 Hercules* 11,466 241 Rohm & Haas 4,800 267 ----------------------------------------------------------------------------- TOTAL CHEMICALS 1,046 ============================================================================= COMMERCIAL BANKS [0.8%] Bank of New York Mellon 21,320 941 ============================================================================= SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 27 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA DIVERSIFIED EQUITY FUND (CONTINUED) DESCRIPTION SHARES VALUE (000) -------------------------------------------------------------------------------- COMMUNICATION & MEDIA [3.1%] Cisco Systems* 29,200 $ 967 DIRECTV Group* 15,739 382 Time Warner 117,311 2,154 ----------------------------------------------------------------------------- TOTAL COMMUNICATION & MEDIA 3,503 ============================================================================= COMPUTER SYSTEM DESIGN & SERVICES [0.8%] Lexmark International, Cl A* 2,134 89 Seagate Technology 21,000 537 Sun Microsystems (A)* 55,000 308 ----------------------------------------------------------------------------- TOTAL COMPUTER SYSTEM DESIGN & SERVICES 934 ============================================================================= COMPUTERS & PERIPHERALS [0.1%] EMC* 5,142 107 ============================================================================= COMPUTERS-HARDWARE [5.4%] Apple* 8,592 1,319 Dell* 23,000 635 Hewlett-Packard 53,541 2,666 IBM 12,226 1,440 ----------------------------------------------------------------------------- TOTAL COMPUTERS-HARDWARE 6,060 ============================================================================= COMPUTERS-SOFTWARE [1.7%] Microsoft 20,508 604 Oracle* 60,554 1,311 ----------------------------------------------------------------------------- TOTAL COMPUTERS-SOFTWARE 1,915 ============================================================================= CONSUMER PRODUCTS & SERVICES [1.0%] Kimberly-Clark 4,400 309 Mattel 20,900 490 Procter & Gamble 4,615 325 ----------------------------------------------------------------------------- TOTAL CONSUMER PRODUCTS & SERVICES 1,124 ============================================================================= CONTAINERS & PACKAGING [0.5%] Pactiv* 19,791 567 ============================================================================= DIVERSIFIED MANUFACTURING [4.1%] Danaher 5,047 417 General Electric 85,714 3,549 Parker Hannifin 5,300 593 ----------------------------------------------------------------------------- TOTAL DIVERSIFIED MANUFACTURING 4,559 ============================================================================= DESCRIPTION SHARES VALUE (000) -------------------------------------------------------------------------------- DIVERSIFIED METALS & MINING [0.7%] Freeport-McMoran Copper & Gold, Cl B 7,949 $ 834 ============================================================================= DRUG STORES [0.6%] Rite Aid (A)* 137,500 635 ============================================================================= DRUGS [5.2%] Abbott Laboratories 10,700 574 Johnson & Johnson 26,175 1,720 Merck 9,361 484 Pfizer 59,321 1,449 Schering-Plough 19,300 610 Wyeth 23,721 1,057 ----------------------------------------------------------------------------- TOTAL DRUGS 5,894 ============================================================================= ELECTRICAL COMPONENTS-MISCELLANEOUS [0.2%] Tyco Electronics* 6,750 239 ============================================================================= ELECTRICAL SERVICES [1.4%] DTE Energy 8,316 403 Duke Energy 16,144 302 Portland General Electric 31,100 864 ----------------------------------------------------------------------------- TOTAL ELECTRICAL SERVICES 1,569 ============================================================================= ENERGY [1.6%] Edison International 15,269 846 Entergy 5,781 626 PG&E 7,128 341 ----------------------------------------------------------------------------- TOTAL ENERGY 1,813 ============================================================================= ENGINEERING SERVICES [0.3%] Fluor 2,171 313 ============================================================================= ENTERTAINMENT & GAMING [0.4%] Carnival, Cl A 9,382 454 ============================================================================= FINANCIAL SERVICES [6.2%] American Capital Strategies (A) 20,361 870 American Express 15,577 925 Capital One Financial 13,000 864 CIT Group 29,836 1,199 Citigroup 39,268 1,833 Nasdaq Stock Market* 18,400 693 Western Union 27,600 579 ----------------------------------------------------------------------------- TOTAL FINANCIAL SERVICES 6,963 ============================================================================= SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 28 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA DIVERSIFIED EQUITY FUND (CONTINUED) DESCRIPTION SHARES VALUE (000) -------------------------------------------------------------------------------- FOOD, BEVERAGE & TOBACCO [4.9%] Coca-Cola Enterprises 24,100 $ 584 Conagra Foods 35,000 914 Dean Foods 26,354 674 Del Monte Foods 49,500 520 General Mills 22,024 1,277 Kellogg Company 3,619 203 Pepsi Bottling Group 8,228 306 Safeway 31,798 1,053 ----------------------------------------------------------------------------- TOTAL FOOD, BEVERAGE & TOBACCO 5,531 ============================================================================= GAS/NATURAL GAS [0.8%] El Paso 52,200 886 ============================================================================= HEALTHCARE PRODUCTS & SERVICES [3.7%] Applera - Applied Biosystems Group 20,965 726 Cardinal Health 20,259 1,267 Cigna 6,174 329 Humana* 12,413 868 UnitedHealth Group 20,735 1,004 ----------------------------------------------------------------------------- TOTAL HEALTHCARE PRODUCTS & SERVICES 4,194 ============================================================================= INSURANCE [7.3%] ACE 3,434 208 Aetna 2,033 110 Allstate (A) 25,623 1,465 American International Group 16,650 1,126 Chubb 18,548 995 Hartford Financial Services Group 6,791 629 HCC Insurance 31,300 896 ING Groep, ADR 10,800 479 Lincoln National 2,104 139 Marsh & Mclennan 22,000 561 Mercury General 7,700 415 Travelers 8,200 413 UnumProvident 22,000 538 XL Capital, Cl A 2,721 216 ----------------------------------------------------------------------------- TOTAL INSURANCE 8,190 ============================================================================= INVESTMENT BANKER/BROKER DEALER [0.1%] Franklin Resources 396 51 ============================================================================= DESCRIPTION SHARES VALUE (000) -------------------------------------------------------------------------------- MACHINERY [1.4%] Caterpillar 12,535 $ 983 Cummins 37 5 Deere 1,609 239 Eaton 3,212 318 ----------------------------------------------------------------------------- TOTAL MACHINERY 1,545 ============================================================================= MEDICAL PRODUCTS & SERVICES [1.1%] Baxter International 4,300 242 Becton Dickinson 7,933 651 Genzyme-General Division* 1,029 64 Wellpoint* 2,991 236 Zimmer Holdings* 1,131 91 ----------------------------------------------------------------------------- TOTAL MEDICAL PRODUCTS & SERVICES 1,284 ============================================================================= METALS & MINING [1.0%] Barrick Gold 27,600 1,112 ============================================================================= MISCELLANEOUS MANUFACTURING [1.0%] Covidien 6,750 280 Tyco International 19,956 885 ----------------------------------------------------------------------------- TOTAL MISCELLANEOUS MANUFACTURING 1,165 ============================================================================= MULTI-MEDIA [0.9%] Walt Disney 29,632 1,019 ============================================================================= OFFICE FURNITURE & FIXTURES [0.9%] 3M 4,500 421 Symantec* 31,375 608 ----------------------------------------------------------------------------- TOTAL OFFICE FURNITURE & FIXTURES 1,029 ============================================================================= PAPER & RELATED PRODUCTS [0.6%] Packaging Corp of America 15,500 451 Sealed Air 9,700 248 ----------------------------------------------------------------------------- TOTAL PAPER & RELATED PRODUCTS 699 ============================================================================= SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 29 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA DIVERSIFIED EQUITY FUND (CONTINUED) DESCRIPTION SHARES VALUE (000) -------------------------------------------------------------------------------- PETROLEUM & FUEL PRODUCTS [10.4%] Anadarko Petroleum 16,400 $ 881 Apache 4,082 368 Ashland 13,096 788 Chesapeake Energy 29,792 1,050 ChevronTexaco 19,711 1,845 ConocoPhillips 26,059 2,287 Ensco International 545 31 Exxon Mobil 16,674 1,543 Marathon Oil 12,886 735 Nabors Industries* 22,200 683 Unit* 14,000 678 Valero Energy 12,669 851 ----------------------------------------------------------------------------- TOTAL PETROLEUM & FUEL PRODUCTS 11,740 ============================================================================= PETROLEUM REFINING [0.8%] Hess 13,290 884 ============================================================================= PETROLEUM EXPLORATION [0.8%] GlobalSantaFe 12,000 912 ============================================================================= RAILROADS [0.4%] CSX 9,263 396 ============================================================================= REAL ESTATE INVESTMENT TRUSTS [0.6%] Boston Properties 1,565 162 Prologis Trust 7,863 522 ----------------------------------------------------------------------------- TOTAL REAL ESTATE INVESTMENT TRUSTS 684 ============================================================================= RETAIL [3.7%] Amazon.com* 52 5 Big Lots* 22,292 665 Home Depot 1,529 50 JC Penney 287 18 Kroger 16,349 466 Lowe's 12,945 363 Mcdonald's 13,456 733 Radioshack 8,782 181 Sherwin Williams 618 41 Staples 24,850 534 TJX 203 6 Wal-Mart Stores 16,743 731 Zale* 15,000 347 ----------------------------------------------------------------------------- TOTAL RETAIL 4,140 ============================================================================= DESCRIPTION FACE AMOUNT (000)/SHARES VALUE (000) -------------------------------------------------------------------------------- RUBBER & PLASTIC [0.1%] Apollo Group, Cl A* 857 $ 52 ============================================================================= SEMI-CONDUCTORS [1.7%] Applied Materials 35,599 737 Atmel* 73,000 377 Intel 17,294 447 Novellus Systems* 694 19 Nvidia* 4,964 180 Teradyne* 14,429 199 ----------------------------------------------------------------------------- TOTAL SEMI-CONDUCTORS 1,959 ============================================================================= STEEL & STEEL WORKS [0.2%] United States Steel 2,572 272 ============================================================================= TELEPHONES & TELECOMMUNICATIONS [5.8%] AT&T 28,334 1,199 Embarq 13,133 730 Idearc* 39,375 1,239 Sprint Nextel 50,100 952 Verizon Communications 48,486 2,147 Windstream 20,000 282 ----------------------------------------------------------------------------- TOTAL TELEPHONES & TELECOMMUNICATIONS 6,549 ============================================================================= TRANSPORTATION SERVICES [0.0%] Ryder System 243 12 ============================================================================= WEB PORTALS/ISP [0.2%] Google, Cl A* 322 182 Juniper Networks* 1,375 50 ----------------------------------------------------------------------------- TOTAL WEB PORTALS/ISP 232 ============================================================================= TOTAL COMMON STOCK (Cost $99,999) 109,814 ========================================================================= COMMERCIAL PAPER [0.7%] Neptune Funding (B) (E) 6.250%, 10/01/07 $ 837 837 ----------------------------------------------------------------------------- TOTAL COMMERCIAL PAPER (Cost $837) 837 ========================================================================= SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 30 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA DIVERSIFIED EQUITY FUND (CONCLUDED) DESCRIPTION FACE AMOUNT (000)/SHARES VALUE (000) -------------------------------------------------------------------------------- FLOATING RATE NOTES [1.6%] Sigma Finance (B) (D) 5.020%, 01/24/08 $ 1,855 $ 1,855 ----------------------------------------------------------------------------- TOTAL FLOATING RATE NOTES (Cost $1,855) 1,855 ========================================================================= CASH EQUIVALENTS [2.8%] AIM Short-Term Investment Company Liquid Assets Portfolio, 5.190% (B) (C) 130,910 131 Fidelity Institutional Domestic Money Market Portfolio, Cl I, 5.25% (C) 2,968,828 2,969 ----------------------------------------------------------------------------- TOTAL CASH EQUIVALENTS (Cost $3,100) 3,100 ========================================================================= TOTAL INVESTMENTS [102.6%] (Cost $105,791) $ 115,606 ========================================================================= PERCENTAGES ARE BASED ON NET ASSETS OF $112,632. * NON-INCOME PRODUCING SECURITY (A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT SEPTEMBER 30, 2007. THE TOTAL VALUE OF SECURITIES ON LOAN AT SEPTEMBER 30, 2007 WAS $2,716,791. (B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES LENDING. THE TOTAL VALUE OF SUCH SECURITIES AT SEPTEMBER 30, 2007 WAS $2,822,845. (C) THE RATE SHOWN IS THE 7-DAY EFFECTIVE YIELD AS OF SEPTEMBER 30, 2007. (D) FLOATING RATE SECURITY -- THE RATE REFLECTED ON THE SCHEDULE OF INVESTMENTS IS THE RATE IN EFFECT ON SEPTEMBER 30,2007. (E) RATE SHOWN IS THE DISCOUNT RATE AS OF SEPTEMBER 30, 2007. ADR -- AMERICAN DEPOSITARY RECEIPT CL -- CLASS ISP -- INTERNET SERVICE PROVIDER SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 31 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA SOCIALLY RESPONSIBLE EQUITY FUND SECTOR WEIGHTINGS (UNAUDITED)*: [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] 16.9% Financials 14.9% HealthCare 13.5% Information Technology 9.1% Energy 8.9% Consumer Discretionary 7.3% Industrials 6.7% Consumer Staples 5.6% Materials 4.8% Cash Equivalents+ 4.8% Utilities 4.7% Telecommunication Services 1.9% Floating Rate Notes+ 0.9% Commercial Paper+ *Percentages based on total investments. +Percentages include cash collateral for securities on loan. -------------------------------------------------------------------------------- DESCRIPTION SHARES VALUE (000) -------------------------------------------------------------------------------- COMMON STOCK [95.0%] ADVERTISING [1.9%] CBS, Cl B 34,500 $ 1,087 ============================================================================= AUTOMOTIVE [2.4%] Honda Motor, ADR 41,900 1,398 ============================================================================= BANKS [3.6%] International Bancshares 54,057 1,173 National City (A) 36,100 906 ----------------------------------------------------------------------------- TOTAL BANKS 2,079 ============================================================================= BIOMEDICAL RESEARCH & PRODUCTS [2.3%] Quest Diagnostic 22,500 1,300 ============================================================================= BROADCASTING & CABLE [4.6%] Motorola 66,000 1,223 Nokia, ADR 37,000 1,403 ----------------------------------------------------------------------------- TOTAL BROADCASTING & CABLE 2,626 ============================================================================= BUSINESS SERVICES [3.0%] Xerox* 100,400 1,741 ============================================================================= CHEMICALS [2.5%] Rohm & Haas 26,100 1,453 ============================================================================= CABLE/MEDIA [2.8%] Time Warner 88,500 1,625 ============================================================================= DESCRIPTION SHARES VALUE (000) -------------------------------------------------------------------------------- COMPUTER SYSTEM DESIGN & SERVICES [2.1%] Sun Microsystems (A)* 212,000 $ 1,189 ============================================================================= DATA PROCESSING [2.1%] Hewlett-Packard 23,500 1,170 ============================================================================= CONSUMER PRODUCTS & SERVICES [3.0%] Kimberly-Clark 24,000 1,686 ============================================================================= DRUGS [7.9%] Abbott Laboratories 25,300 1,356 Johnson & Johnson 27,000 1,774 Schering-Plough 44,600 1,411 ----------------------------------------------------------------------------- TOTAL DRUGS 4,541 ============================================================================= ELECTRICAL SERVICES [5.4%] Emerson Electric 36,900 1,964 Portland General Electric 41,000 1,140 ----------------------------------------------------------------------------- TOTAL ELECTRICAL SERVICES 3,104 ============================================================================= ENERGY [2.9%] Atmos Energy 59,500 1,685 ============================================================================= FINANCIAL SERVICES [7.2%] CIT Group 20,200 812 Citigroup 28,000 1,307 NASDAQ Stock Market* 53,500 2,016 ----------------------------------------------------------------------------- TOTAL FINANCIAL SERVICES 4,135 ============================================================================= FOOD, BEVERAGE & TOBACCO [4.0%] Del Monte Foods 95,000 997 Supervalu 32,600 1,272 ----------------------------------------------------------------------------- TOTAL FOOD, BEVERAGE & TOBACCO 2,269 ============================================================================= HEALTHCARE PRODUCTS & SERVICES [4.1%] Applera - Applied Biosystems Group 41,000 1,420 Cardinal Health 15,000 938 ----------------------------------------------------------------------------- TOTAL HEALTHCARE PRODUCTS & SERVICES 2,358 ============================================================================= SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 32 schedule of investments SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- AHA SOCIALLY RESPONSIBLE EQUITY FUND (CONCLUDED) DESCRIPTION SHARES VALUE (000) -------------------------------------------------------------------------------- INSURANCE [6.6%] American International Group 15,000 $ 1,015 Marsh & Mclennan 67,000 1,709 Mercury General 19,200 1,035 ----------------------------------------------------------------------------- TOTAL INSURANCE 3,759 ============================================================================= METALS & MINING [2.1%] Worthington Industries 52,000 1,225 ============================================================================= MISCELLANEOUS MANUFACTURING [3.0%] Covidien 14,375 597 Tyco International 25,375 1,125 ----------------------------------------------------------------------------- TOTAL MISCELLANEOUS MANUFACTURING 1,722 ============================================================================= OFFICE FURNITURE & FIXTURES [2.1%] 3M 12,800 1,198 ============================================================================= PAPER & PAPER PRODUCTS [1.1%] Packaging Corp of America 22,000 640 ============================================================================= PETROLEUM & FUEL PRODUCTS [9.4%] Chesapeake Energy 59,800 2,109 Patterson - UTI Energy 74,000 1,670 Unit* 32,500 1,573 ----------------------------------------------------------------------------- TOTAL PETROLEUM & FUEL PRODUCTS 5,352 ============================================================================= PRINTING & PUBLISHING [1.9%] Thomson 26,100 1,094 ============================================================================= SEMI-CONDUCTORS/INSTRUMENTS [2.2%] Intel 47,500 1,228 ============================================================================= TELEPHONES & TELECOMMUNICATIONS [4.8%] Embarq 10,800 600 Sprint Nextel (A) 83,000 1,577 Windstream 40,000 565 ----------------------------------------------------------------------------- TOTAL TELEPHONES & TELECOMMUNICATIONS 2,742 ============================================================================= TOTAL COMMON STOCK (Cost $49,073) 54,406 ======================================================================== FACE AMOUNT (000)/ DESCRIPTION SHARES VALUE (000) -------------------------------------------------------------------------------- COMMERCIAL PAPER [0.9%] Neptune Funding (B) (E) 6.250%, 10/01/07 $ 513 $ 513 ----------------------------------------------------------------------------- TOTAL COMMERCIAL PAPER (Cost $513) 513 ======================================================================== FLOATING RATE NOTES [2.0%] Sigma Finance (B) (D) 5.020%, 01/24/08 1,137 1,137 ----------------------------------------------------------------------------- TOTAL FLOATING RATE NOTES (Cost $1,137) 1,137 ======================================================================== CASH EQUIVALENTS [5.0%] AIM Short-Term Investment Company Liquid Assets Portfolio, 5.190% (B) (C) 80,230 80 Fidelity Institutional Domestic Money Market Portfolio, Cl I, 5.25% (C) 2,770,395 2,770 ----------------------------------------------------------------------------- TOTAL CASH EQUIVALENTS (Cost $2,850) 2,850 ======================================================================== TOTAL INVESTMENTS [102.9%] (Cost $53,573) $ 58,906 ======================================================================== PERCENTAGES ARE BASED ON NET ASSETS OF $57,231. * NON-INCOME PRODUCING SECURITY (A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT SEPTEMBER 30, 2007. THE TOTAL VALUE OF SUCH SECURITIES AT SEPTEMBER 30, 2007 WAS $1,641,830. (B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES LENDING. THE VALUE OF SUCH SECURITIES AT SEPTEMBER 30, 2007 WAS $1,730,022. (C) THE RATE SHOWN IS THE 7-DAY EFFECTIVE YIELD AS OF SEPTEMBER 30, 2007. (D) FLOATING RATE SECURITY -- THE RATE REFLECTED ON THE SCHEDULE OF INVESTMENTS IS THE RATE IN EFFECT ON SEPTEMBER 30, 2007. (E) RATE SHOWN IS THE DISCOUNT RATE AS OF SEPTEMBER 30, 2007. ADR -- AMERICAN DEPOSITARY RECEIPT CL -- CLASS SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 33 This page intentionally left blank. statements of assets and liabilities (000) SEPTEMBER 30, 2007 --------------------------------------------------------------------------------
AHA AHA AHA Limited Full AHA Socially Maturity Maturity AHA Diversified Responsible Fixed Income Fixed Income Balanced Equity Equity Fund Fund Fund Fund Fund ----------------------------------------------------------------------------- ASSETS: Cost of securities $ 48,167 $ 46,443 $ 17,335 $ 105,791 $ 53,573 ------------------------------------------------------------------------------------------------------------------------------------ Investments in securities at value $ 48,248(1) $ 46,482(2) $ 18,140(3) $ 115,606(4) $ 58,906(5) Cash -- 3 2 10 16 Dividend and interest receivable 421 406 64 137 81 Receivable for capital shares sold 37 48 -- 1 30 Receivable for dividend tax reclaim -- -- 1 2 -- Prepaid Expenses 19 6 3 15 4 ------------------------------------------------------------------------------------------------------------------------------------ Total Assets 48,725 46,945 18,210 115,771 59,037 ------------------------------------------------------------------------------------------------------------------------------------ LIABILITIES: Obligation to return securities lending collateral 3,858 4,436 1,307 2,823 1,730 Payable for investment securities purchased -- -- -- 138 -- Income distribution payable 151 141 -- -- -- Payable for capital shares redeemed -- -- -- 21 10 Investment adviser fees payable 18 17 10 82 30 Distribution fees payable 1 -- -- 29 -- Trustees fees payable -- -- -- 1 -- Administrative fees payable 2 2 1 4 2 Other accrued expenses 20 18 7 41 34 ------------------------------------------------------------------------------------------------------------------------------------ Total Liabilities 4,050 4,614 1,325 3,139 1,806 ------------------------------------------------------------------------------------------------------------------------------------ NET ASSETS $ 44,675 $ 42,331 $ 16,885 $ 112,632 $ 57,231 ------------------------------------------------------------------------------------------------------------------------------------ NET ASSETS: Paid-in-Capital (unlimited authorization -- $0.01 par value) $ 47,142 $ 42,700 $ 15,325 $ 91,279 $ 49,114 Undistributed net investment income 10 9 9 26 24 Accumulated net realized gain (loss) on investments (2,558) (417) 746 11,512 2,760 Net unrealized appreciation on investments 81 39 805 9,815 5,333 ------------------------------------------------------------------------------------------------------------------------------------ NET ASSETS $ 44,675 $ 42,331 $ 16,885 $ 112,632 $ 57,231 ------------------------------------------------------------------------------------------------------------------------------------ Institutional Class Shares ($ Dollars): Net Assets $44,364,783 $42,095,448 $16,885,426 $102,232,288 $ 56,489,721 Total shares outstanding at end of year 4,188,229 4,143,522 1,829,799 5,531,741 4,659,778 Net asset value, offering and redemption price per share (net assets / shares outstanding) $ 10.59 $ 10.16 $ 9.23 $ 18.48 $ 12.12 Class A Shares ($ Dollars): Net Assets $ 310,172 $ 235,304 n/a $ 10,399,973 $ 741,202 Total shares outstanding at end of year 29,246 23,156 n/a 561,472 61,213 Net asset value, offering and redemption price per share (net assets / shares outstanding) $ 10.61 $ 10.16 n/a $ 18.52 $ 12.11
(1) MARKET VALUE OF SECURITIES ON LOAN WAS $3,763,780 AS OF SEPTEMBER 30, 2007. (2) MARKET VALUE OF SECURITIES ON LOAN WAS $4,286,033 AS OF SEPTEMBER 30, 2007. (3) MARKET VALUE OF SECURITIES ON LOAN WAS $1,263,254 AS OF SEPTEMBER 30, 2007. (4) MARKET VALUE OF SECURITIES ON LOAN WAS $2,716,791 AS OF SEPTEMBER 30, 2007. (5) MARKET VALUE OF SECURITIES ON LOAN WAS $1,641,830 AS OF SEPTEMBER 30, 2007. AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 35 statements of operations (000) FOR THE YEAR ENDED SEPTEMBER 30, 2007 --------------------------------------------------------------------------------
AHA Limited Maturity Fixed AHA Full Maturity Fixed Income Fund Income Fund ----------------------------------------------------- INVESTMENT INCOME: Interest $ 2,147 $ 1,861 Dividends 38 57 Income from Securities Lending -- Net 2 3 Foreign taxes withheld -- -- ------------------------------------------------------------------------------------------------------------------------------------ Total Investment Income 2,187 1,921 ------------------------------------------------------------------------------------------------------------------------------------ EXPENSES: Investment Advisory Fees 219 182 Administration Fees 23 19 Trustees' Fees and Expenses 1 1 Distribution Expense -- Class A Shares 1 1 Transfer Agent Fees and Expenses 29 23 Reports to Shareholders 14 10 Audit Fees 13 11 Custodian Fees and Expenses 6 5 Registration Fees 4 3 Legal Fees 1 1 Insurance and Other Expenses 29 13 ------------------------------------------------------------------------------------------------------------------------------------ Total Expenses 340 269 ------------------------------------------------------------------------------------------------------------------------------------ Recovery of Investment Advisory Fees Previously Waived(1) -- 24 Less Waiver of: Investment Advisory Fees (3) -- Transfer Agent Fees (4) (3) ------------------------------------------------------------------------------------------------------------------------------------ Net Expenses 333 290 ------------------------------------------------------------------------------------------------------------------------------------ NET INVESTMENT INCOME 1,854 1,631 ------------------------------------------------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net Realized Gain (Loss) on Investments (98) (5) Change in Net Unrealized Appreciation (Depreciation) on Investments 239 (11) ------------------------------------------------------------------------------------------------------------------------------------ Net Realized and Unrealized Gain (Loss) on Investments 141 (16) ------------------------------------------------------------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,995 $ 1,615 ====================================================================================================================================
(1) SEE NOTE 3 FOR ADVISORY FEES RECOVERED. AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 36
AHA Socially Responsible AHA Balanced Fund AHA Diversified Equity Fund Equity Fund ----------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Interest $ 321 $ -- $ -- Dividends 263 2,226 1,147 Income from Securities Lending -- Net 1 5 5 Foreign taxes withheld -- (11) (10) ----------------------------------------------------------------------------------------------------------------------------------- Total Investment Income 585 2,220 1,142 ----------------------------------------------------------------------------------------------------------------------------------- EXPENSES: Investment Advisory Fees 127 832 401 Administration Fees 9 58 28 Trustees' Fees and Expenses 1 3 2 Distribution Expense -- Class A Shares -- 27 1 Transfer Agent Fees and Expenses 11 73 33 Reports to Shareholders 5 33 23 Audit Fees 6 27 19 Custodian Fees and Expenses 3 15 7 Registration Fees 1 8 4 Legal Fees -- 1 1 Insurance and Other Expenses 7 42 16 ----------------------------------------------------------------------------------------------------------------------------------- Total Expenses 170 1,119 535 ----------------------------------------------------------------------------------------------------------------------------------- Recovery of Investment Advisory Fees Previously Waived(1) 1 48 -- Less Waiver of: Investment Advisory Fees -- (2) (28) Transfer Agent Fees (2) (10) (5) ----------------------------------------------------------------------------------------------------------------------------------- Net Expenses 169 1,155 502 ----------------------------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME 416 1,065 640 ----------------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net Realized Gain (Loss) on Investments 1,759 13,160 2,822 Change in Net Unrealized Appreciation (Depreciation) on Investments (613) (1,793) 3,077 ----------------------------------------------------------------------------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) on Investments 1,146 11,367 5,899 ----------------------------------------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,562 $ 12,432 $ 6,539 ===================================================================================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 37 statements of changes in net assets (000) FOR THE YEAR ENDED SEPTEMBER 30, --------------------------------------------------------------------------------
AHA Limited Maturity AHA Full Maturity Fixed Income Fund Fixed Income Fund ------------------------------------------- 2007 2006(1) 2007 2006(2) ------------------------------------------------------------------------------------------------------- OPERATIONS: Net Investment Income $ 1,854 $ 2,434 $ 1,631 $ 1,288 Net Realized Gain (Loss) on Investments Sold (98) (1,507) (5) (314) Change in Net Unrealized Appreciation (Depreciation) on Investments 239 1,235 (11) (122) ------------------------------------------------------------------------------------------------------- Net Increase in Net Assets Resulting from Investment Operations 1,995 2,162 1,615 852 ------------------------------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends to Shareholders from Net Investment Income: INSTITUTIONAL CLASS (1,846) (2,446) (1,618) (1,294) CLASS A (11) (14) (8) (5) Distributions to Shareholders from Net Realized Gains: INSTITUTIONAL CLASS -- -- -- (179) CLASS A -- -- -- (1) ------------------------------------------------------------------------------------------------------- Total Dividends and Distributions to Shareholders (1,857) (2,460) (1,626) (1,479) ------------------------------------------------------------------------------------------------------- FUND SHARE TRANSACTIONS: FUND SHARE TRANSACTIONS: INSTITUTIONAL CLASS Net Proceeds from Shares Sold 2,382 667 11,258 5,099 Reinvestment of Dividends 423 1,272 533 504 Cost of Shares Redeemed (3,917) (68,684) (82) (6,345) ------------------------------------------------------------------------------------------------------- Total Fund Share Transactions Institutional Class (1,112) (66,745) 11,709 (742) ------------------------------------------------------------------------------------------------------- FUND SHARE TRANSACTIONS: CLASS A Net Proceeds from Shares Sold 95 167 88 13 Reinvestment of Dividends 11 14 8 6 Cost of Shares Redeemed (155) (643) (6) (5) ------------------------------------------------------------------------------------------------------- Total Fund Share Transactions Class A (49) (462) 90 14 ------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets from Capital Share Contributions (1,161) (67,207) 11,799 (728) ------------------------------------------------------------------------------------------------------- Total Increase (Decrease) in Net Assets (1,023) (67,505) 11,788 (1,355) ------------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 45,698 113,203 30,543 31,898 ------------------------------------------------------------------------------------------------------- End of period* $ 44,675 $ 45,698 $ 42,331 $ 30,543 ======================================================================================================= *Including Undistributed Net Investment Income of $ 10 $ 6 $ 9 $ 3 =======================================================================================================
(1) ON OCTOBER 3, 2005, THE LIMITED MATURITY FIXED INCOME FUND WAS REORGANIZED INTO THE AHA LIMITED MATURITY FIXED INCOME FUND, A NEWLY ESTABLISHED IDENTICAL SERIES OF THE CNI CHARTER FUNDS. SEE NOTE 1 IN NOTES TO FINANCIAL STATEMENTS FOR MORE INFORMATION. (2) ON OCTOBER 3, 2005, THE FULL MATURITY FIXED INCOME FUND WAS REORGANIZED INTO THE AHA FULL MATURITY FIXED INCOME FUND, A NEWLY ESTABLISHED IDENTICAL SERIES OF THE CNI CHARTER FUNDS. SEE NOTE 1 IN NOTES TO FINANCIAL STATEMENTS FOR ADDITIONAL INFORMATION. (3) ON OCTOBER 3, 2005, THE BALANCED FUND WAS REORGANIZED INTO THE AHA BALANCED FUND, A NEWLY ESTABLISHED IDENTICAL SERIES OF THE CNI CHARTER FUNDS. SEE NOTE 1 IN NOTES TO FINANCIAL STATEMENTS FOR ADDITIONAL INFORMATION. (4) ON OCTOBER 3, 2005, THE DIVERSIFIED EQUITY FUND WAS REORGANIZED INTO THE AHA DIVERSIFIED EQUITY FUND, A NEWLY ESTABLISHED IDENTICAL SERIES OF THE CNI CHARTER FUNDS. SEE NOTE 1 IN NOTES TO FINANCIAL STATEMENTS FOR ADDITIONAL INFORMATION. (5) ON OCTOBER 3, 2005, THE SOCIALLY RESPONSIBLE EQUITY FUND WAS REORGANIZED INTO THE AHA SOCIALLY RESPONSIBLE EQUITY FUND, A NEWLY ESTABLISHED IDENTICAL SERIES OF THE CNI CHARTER FUNDS. SEE NOTE 1 IN NOTES TO FINANCIAL STATEMENTS FOR ADDITIONAL INFORMATION. AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 38 --------------------------------------------------------------------------------
AHA Balanced AHA Diversified AHA Socially Responsible Fund Equity Fund Equity Fund ---------------------------------------------------------------------------------------------------------------------------------- 2007 2006(3) 2007 2006(4) 2007 2006(5) ---------------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net Investment Income $ 416 $ 327 $ 1,065 $ 871 $ 640 $ 273 Net Realized Gain (Loss) on Investments Sold 1,759 1,230 13,160 8,398 2,822 598 Change in Net Unrealized Appreciation (Depreciation) on Investments (613) (133) (1,793) 628 3,077 1,277 ---------------------------------------------------------------------------------------------------------------------------------- Net Increase in Net Assets Resulting from Investment Operations 1,562 1,424 12,432 9,897 6,539 2,148 ---------------------------------------------------------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends to Shareholders from Net Investment Income: INSTITUTIONAL CLASS (425) (338) (987) (792) (623) (267) CLASS A -- -- (77) (63) (6) (1) Distributions to Shareholders from Net Realized Gains: INSTITUTIONAL CLASS (2,125) (1,084) (8,054) (3,919) (654) (102) CLASS A -- -- (860) (440) (5) -- ---------------------------------------------------------------------------------------------------------------------------------- Total Dividends and Distributions to Shareholders (2,550) (1,422) (9,978) (5,214) (1,288) (370) ---------------------------------------------------------------------------------------------------------------------------------- FUND SHARE TRANSACTIONS: FUND SHARE TRANSACTIONS: INSTITUTIONAL CLASS Net Proceeds from Shares Sold -- -- 13,332 30,944 13,931 22,781 Reinvestment of Dividends 37 59 6,506 3,289 1,277 368 Cost of Shares Redeemed -- (577) (14,435) (25,250) (8,929) (1,713) ---------------------------------------------------------------------------------------------------------------------------------- Total Fund Share Transactions Institutional Class 37 (518) 5,403 8,983 6,279 21,436 ---------------------------------------------------------------------------------------------------------------------------------- FUND SHARE TRANSACTIONS: CLASS A Net Proceeds from Shares Sold -- -- 1,282 1,789 542 263 Reinvestment of Dividends -- -- 924 456 11 1 Cost of Shares Redeemed -- -- (3,206) (1,034) (136) (4) ---------------------------------------------------------------------------------------------------------------------------------- Total Fund Share Transactions Class A -- -- (1,000) 1,211 417 260 ---------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Net Assets from Capital Share Contributions 37 (518) 4,403 10,194 6,696 21,696 ---------------------------------------------------------------------------------------------------------------------------------- Total Increase (Decrease) in Net Assets (951) (516) 6,857 14,877 11,947 23,474 ---------------------------------------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 17,836 18,352 105,775 90,898 45,284 21,810 ---------------------------------------------------------------------------------------------------------------------------------- End of period* $ 16,885 $ 17,836 $ 112,632 $ 105,775 $ 57,231 $ 45,284 ================================================================================================================================== *Including Undistributed Net Investment Income of $ 9 $ 10 $ 26 $ 22 $ 24 $ 13 ==================================================================================================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 39 financial highlights FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD FOR THE YEAR ENDED SEPTEMBER 30, (UNLESS OTHERWISE INDICATED) --------------------------------------------------------------------------------
NET NET REALIZED AND NET ASSET UNREALIZED DIVIDENDS DISTRIBUTIONS ASSET VALUE NET GAINS (LOSSES) FROM NET FROM VALUE BEGINNING INVESTMENT ON INVESTMENT REALIZED END OF PERIOD INCOME(1)(3) INVESTMENTS(1)(3) INCOME GAINS OF PERIOD -------------------------------------------------------------------------------------------------------- AHA Limited Maturity Fixed Income Fund Institutional Class (commenced operations on December 22,1988) 2007 $ 10.56 $ 0.45 $ 0.03 $ (0.45) $ -- $ 10.59 2006^ 10.57 0.34 0.02 (0.37) -- 10.56 For the period July 1, through September 30, 2005+ 10.61 0.06 (0.04) (0.06) -- 10.57 For the years ended June 30, 2005 10.68 0.22 (0.06) (0.22)(5) (0.01) 10.61 2004 10.86 0.18 (0.18) (0.18) -- 10.68 2003 10.65 0.28 0.21 (0.28) -- 10.86 Class A (commenced operations on October 22, 2004) 2007 $ 10.57 $ 0.42 $ 0.04 $ (0.42) $ -- $ 10.61 2006^ 10.58 0.30 0.03 (0.34) -- 10.57 For the period July 1, through September 30, 2005+ 10.62 0.05 (0.04) (0.05) -- 10.58 For the period October 22, 2004 through June 30, 2005 10.77 0.14 (0.13) (0.15)(5) (0.01) 10.62 -------------------------------------------------------------------------------------------------------- AHA Full Maturity Fixed Income Fund Institutional Class (commenced operations on October 20, 1988) 2007 $ 10.16 $ 0.45 $ -- $ (0.45) $ -- $ 10.16 2006^^ 10.35 0.43 (0.13) (0.43) (0.06) 10.16 For the period July 1, through September 30, 2005+ 10.50 0.09 (0.15) (0.09) -- 10.35 For the years ended June 30, 2005 10.39 0.38 0.20 (0.38) (0.09) 10.50 2004 10.87 0.36(8) (0.36) (0.39) (0.09) 10.39 2003 10.34 0.49 0.53 (0.49) -- 10.87 Class A (commenced operations on May 11, 2004) 2007 $ 10.16 $ 0.42 $ -- $ (0.42) $ -- $ 10.16 2006^^ 10.36 0.40 (0.13) (0.41) (0.06) 10.16 For the period July 1, through September 30, 2005+ 10.50 0.08 (0.14) (0.08) -- 10.36 For the year ended June 30, 2005 10.39 0.34 0.22 (0.36) (0.09) 10.50 For the period May 11, through June 30, 2004 10.32 0.04 0.09 (0.06) -- 10.39 -------------------------------------------------------------------------------------------------------- AHA Balanced Fund Institutional Class (commenced operations on October 20, 1988) 2007 $ 9.77 $ 0.23 $ 0.62 $ (0.23) $ (1.16) $ 9.23 2006^^^ 9.76 0.18 0.59 (0.18) (0.58) 9.77 For the period July 1, through September 30, 2005+ 9.62 0.04 0.14 (0.04) -- 9.76 For the years ended June 30, 2005 8.98 0.16 0.64 (0.16) -- 9.62 2004 8.03 0.10(8) 0.97 (0.12) -- 8.98 2003 8.03 0.11 -- (0.11) -- 8.03 RATIO RATIO OF NET OF NET OPERATING OPERATING RATIO NET EXPENSES EXPENSES OF NET ASSETS TO AVERAGE TO AVERAGE INVESTMENT END NET ASSETS NET ASSETS INCOME PORTFOLIO TOTAL OF PERIOD BEFORE AFTER TO AVERAGE TURNOVER RETURN (000) WAIVERS(2)(3) WAIVERS(2)(3) NET ASSETS(2)(3) RATE(4) ---------------------------------------------------------------------------------------------------------- AHA Limited Maturity Fixed Income Fund Institutional Class (commenced operations on December 22,1988) 2007 4.63% $ 44,365 0.77% 0.76% 4.25% 75.71% 2006^ 3.49 45,340 0.94 0.75 3.24 86.31 For the period July 1, through September 30, 2005+ 0.20(6) 112,381 0.88(7) 0.86(7) 2.20(7) 4.33(6) For the years ended June 30, 2005 1.53 128,501 0.79 0.78 2.01 109.44 2004 (0.05) 159,949 0.73 0.73 1.65 97.66 2003 4.65 96,605 0.83 0.85 2.58 N/A Class A (commenced operations on October 22, 2004) 2007 4.47% $ 310 1.02% 1.00% 3.99% 75.71% 2006^ 3.17 358 1.18 1.00 2.88 86.31 For the period July 1, through September 30, 2005+ 0.13(6) 822 1.11(7) 1.10(7) 1.95(7) 4.33(6) For the period October 22, 2004 through June 30, 2005 0.12(6) 1,070 1.07(7) 1.03(7) 1.75(7) 109.44 ---------------------------------------------------------------------------------------------------------- AHA Full Maturity Fixed Income Fund Institutional Class (commenced operations on October 20, 1988) 2007 4.48% $ 42,096 0.73% 0.79%* 4.48% 54.97% 2006^^ 3.03 30,398 0.87 0.80* 4.20 91.35 For the period July 1, through September 30, 2005+ (0.57)(6) 31,764 0.83(7) 1.00(7)* 3.37(7) 17.47(6) For the years ended June 30, 2005 5.72 31,960 0.95 1.00* 3.58 144.07 2004 0.08 28,958 0.98 1.00* 3.40 302.49 2003 10.06 31,264 1.29 1.00* 4.51 N/A Class A (commenced operations on May 11, 2004) 2007 4.23% $ 235 0.99% 1.04%* 4.23% 54.97% 2006^^ 2.67 145 1.12 1.05* 3.95 91.35 For the period July 1, through September 30, 2005+ (0.54)(6) 134 1.08(7) 1.25(7)* 3.12(7) 17.47(6) For the year ended June 30, 2005 5.46 134 1.20 1.25* 3.33 144.07 For the period May 11, through June 30, 2004 1.29(6) 104 1.15(7) 1.25(7)* 3.27(7) 302.49(6) ---------------------------------------------------------------------------------------------------------- AHA Balanced Fund Institutional Class (commenced operations on October 20, 1988) 2007 9.47% $ 16,885 1.00% 1.00% 2.45% 127.95% 2006^^^ 8.32 17,836 1.11 1.00 1.83 73.58 For the period July 1, through September 30, 2005+ 1.87(6) 18,352 1.10(7) 0.98(7) 1.54(7) 13.53(6) For the years ended June 30, 2005 8.97 18,088 1.25 1.20 1.69 98.60 2004 13.41 16,930 1.31 1.50 1.14 69.85 2003 1.40 18,615 1.81 1.50 1.43 N/A
+ THE FUND'S FISCAL AND TAX YEAR-END CHANGED FROM JUNE 30 TO SEPTEMBER 30. ^ ON OCTOBER 3, 2005, THE LIMITED MATURITY FIXED INCOME FUND WAS REORGANIZED INTO THE AHA LIMITED MATURITY FIXED INCOME FUND, A NEWLY ESTABLISHED IDENTICAL SERIES OF THE CNI CHARTER FUNDS. SEE NOTE 1 IN NOTES TO FINANCIAL STATEMENTS FOR MORE INFORMATION. ^^ ON OCTOBER 3, 2005, THE FULL MATURITY FIXED INCOME FUND WAS REORGANIZED INTO THE AHA FULL MATURITY FIXED INCOME FUND, A NEWLY ESTABLISHED IDENTICAL SERIES OF THE CNI CHARTER FUNDS. SEE NOTE 1 IN NOTES TO FINANCIAL STATEMENTS FOR MORE INFORMATION. ^^^ ON OCTOBER 3, 2005, THE BALANCED FUND WAS REORGANIZED INTO THE AHA BALANCED FUND, A NEWLY ESTABLISHED IDENTICAL SERIES OF THE CNI CHARTER FUNDS. SEE NOTE 1 IN NOTES TO FINANCIAL STATEMENTS FOR MORE INFORMATION. * RATIO INCLUDES WAIVERS AND PREVIOUSLY WAIVED INVESTMENT ADVISORY FEES RECOVERED. THE IMPACT OF THE RECOVERED FEES MAY CAUSE A HIGHER NET EXPENSE RATIO. (1) INFORMATION PRESENTED RELATES TO A SHARE OF CAPITAL STOCK OUTSTANDING FOR THE ENTIRE PERIOD. (2) RATIOS INCLUDE ALL MANAGEMENT FEES AND EXPENSES. (3) FOR THE PERIOD FROM NOVEMBER 1, 2001 THROUGH JUNE 30, 2003, THE FUND INVESTED SUBSTANTIALLY ALL OF ITS ASSETS IN A SEPARATE SERIES OF A MUTUAL FUND CALLED THE CCM ADVISORS FUNDS (THE "MASTER PORTFOLIO"), AND AS A RESULT, THE PER SHARE AMOUNTS AND PERCENTAGES REFLECT INCOME AND EXPENSES ASSUMING INCLUSION OF THE FUND'S PROPORTIONATE SHARE OF INCOME AND EXPENSES IN THE MASTER PORTFOLIO. THE MASTER PORTFOLIO HAD SUBSTANTIALLY SIMILAR OBJECTIVES, STRATEGIES AND POLICIES AS THE FUND. (4) CALCULATED ON THE BASIS OF THE FUND AS A WHOLE WITHOUT DISTINGUISHING BETWEEN THE CLASSES OF SHARES ISSUED. FOR PERIODS LESS THAN 1 YEAR, PORTFOLIO TURNOVER RATE HAS NOT BEEN ANNUALIZED. (5) INCLUDES A TAX RETURN OF CAPITAL WHICH IS LESS THAN $0.01 PER SHARE, FOR THE FUND FOR THE YEAR ENDED JUNE 30, 2005. (6) NOT ANNUALIZED. (7) ANNUALIZED. (8) NET INVESTMENT INCOME PER SHARE IS CALCULATED USING ENDING BALANCES PRIOR TO CONSIDERATION OF ADJUSTMENTS FOR PERMANENT BOOK AND TAX DIFFERENCES. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 40
NET REALIZED AND NET UNREALIZED NET ASSET GAINS DIVIDENDS DISTRIBUTIONS ASSET VALUE NET (LOSSES) FROM NET FROM VALUE BEGINNING INVESTMENT ON INVESTMENT REALIZED END OF PERIOD INCOME(3) INVESTMENTS(3) INCOME GAINS OF PERIOD ----------------------------------------------------------------------------------------------- AHA Diversified Equity Fund Institutional Class (commenced operations on October 20, 1988) 2007 $ 18.17 $ 0.18 $ 1.89 $ (0.18) $ (1.58) $ 18.48 2006^ 17.42 0.15 1.55 (0.15) (0.80) 18.17 For the period July 1, through September 30, 2005+ 16.79 0.02 0.63 (0.02) -- 17.42 For the years ended June 30, 2005 15.39 0.13 1.40 (0.13) -- 16.79 2004 12.74 0.10 2.65 (0.10) -- 15.39 2003 13.08 0.08(3) (0.34)(3) (0.08) -- 12.74 Class A (commenced operations on December 30, 2002) 2007 $ 18.21 $ 0.13(8) $ 1.89 $ (0.13) $ (1.58) $ 18.52 2006^ 17.46 0.11 1.55 (0.11) (0.80) 18.21 For the period July 1, through September 30, 2005+ 16.83 0.01 0.63 (0.01) -- 17.46 For the years ended June 30, 2005 15.43 0.09 1.40 (0.09) -- 16.83 2004 12.75 0.06 2.65 (0.03) -- 15.43 For the period December 30, 2002, through June 30, 2003 11.48 0.03(7) 1.26(7) (0.02) -- 12.75 ----------------------------------------------------------------------------------------------- AHA Socially Responsible Equity Fund Institutional Class (commenced operations on January 3, 2005) 2007 $ 10.91 $ 0.14 $ 1.36 $ (0.14) $ (0.15) $ 12.12 2006^^ 10.28 0.12 0.67 (0.11) (0.05) 10.91 For the period July 1, through September 30, 2005+ 9.70 0.02 0.58 (0.02) -- 10.28 For the period January 3, through June 30, 2005 10.00 0.05 (0.30) (0.05) -- 9.70 Class A (commenced operations on August 12, 2005) 2007 $ 10.90 $ 0.12 $ 1.36 $ (0.11) $ (0.16) $ 12.11 2006^^ 10.28 0.09 0.67 (0.09) (0.05) 10.90 For the period August 12, through September 30, 2005 10.17 0.01 0.12 (0.02) -- 10.28 RATIO RATIO OF NET OF NET OPERATING OPERATING RATIO NET EXPENSES EXPENSES OF NET ASSETS TO AVERAGE TO AVERAGE INVESTMENT END NET ASSETS NET ASSETS INCOME PORTFOLIO TOTAL OF PERIOD BEFORE AFTER TO AVERAGE TURNOVER RETURN (000) WAIVERS(2)(3) WAIVERS(2)(3) NET ASSETS(2)(3) RATE(4) --------------------------------------------------------------------------------------------------------------- AHA Diversified Equity Fund Institutional Class (commenced operations on October 20, 1988) 2007 11.93% $ 102,232 0.99% 1.02% 0.98% 115.99% 2006^ 10.16 94,653 1.09 1.01 0.87 99.16 For the period July 1, through September 30, 2005+ 3.88(5) 81,447 1.08(6) 1.13(6) 0.46(6) 20.08(5) For the years ended June 30, 2005 9.95 81,510 1.07 1.05 0.78 128.37 2004 21.60 68,068 1.02 1.02 0.67 97.51 2003 (1.98) 55,564 1.18(3) 1.18(3) 0.61(3) N/A Class A (commenced operations on December 30, 2002) 2007 11.62% $ 10,400 1.24% 1.27% 0.73% 115.99% 2006^ 9.87 11,122 1.34 1.26 0.62 99.16 For the period July 1, through September 30, 2005+ 3.81(5) 9,451 1.34(6) 1.38(6) 0.20(6) 20.08(5) For the years ended June 30, 2005 9.66 8,842 1.32 1.30 0.53 128.37 2004 21.24 7,392 1.27 1.27 0.42 97.51 For the period December 30, 2002, through June 30, 2003 11.26(5) 6,454 1.45(6)(7) 1.45(6)(7) 0.48(6)(7) N/A --------------------------------------------------------------------------------------------------------------- AHA Socially Responsible Equity Fund Institutional Class (commenced operations on January 3, 2005) 2007 13.89% $ 56,490 1.00% 0.94%* 1.19% 29.38% 2006^^ 7.69 45,003 1.12 1.04* 1.10 28.57 For the period July 1, through September 30, 2005+ 6.20(5) 21,795 1.24(6) 1.15(6)* 0.90(6) 6.89(5) For the period January 3, through June 30, 2005 (2.48)(5) 20,510 1.16(6) 1.12(6)* 1.43(6) 47.56(5) Class A (commenced operations on August 12, 2005) 2007 13.64% $ 741 1.25% 1.19%* 0.94% 29.38% 2006^^ 7.40 281 1.37 1.29* 0.80 28.57 For the period August 12, through September 30, 2005 1.27(5) 15 1.69(6) 1.43(6)* 0.74(6) 6.89(5)
+ THE FUND'S FISCAL AND TAX YEAR-END CHANGED FROM JUNE 30 TO SEPTEMBER 30. ^ ON OCTOBER 3, 2005, THE DIVERSIFIED EQUITY FUND WAS REORGANIZED INTO THE AHA DIVERSIFIED EQUITY FUND, A NEWLY ESTABLISHED IDENTICAL SERIES OF THE CNI CHARTER FUNDS. SEE NOTE 1 IN NOTES TO FINANCIAL STATEMENTS FOR MORE INFORMATION. ^^ ON OCTOBER 3, 2005, THE SOCIALLY RESPONSIBLE EQUITY FUND WAS REORGANIZED INTO THE AHA SOCIALLY RESPONSIBLE EQUITY FUND, A NEWLY ESTABLISHED IDENTICAL SERIES OF THE CNI CHARTER FUNDS. SEE NOTE 1 IN NOTES TO FINANCIAL STATEMENTS FOR MORE INFORMATION. * RATIO INCLUDES WAIVERS AND PREVIOUSLY WAIVED INVESTMENT ADVISORY FEES RECOVERED. THE IMPACT OF THE RECOVERED FEES MAY CAUSE A HIGHER NET EXPENSE RATIO. (1) INFORMATION PRESENTED RELATES TO A SHARE OF CAPITAL STOCK OUTSTANDING FOR THE ENTIRE PERIOD. (2) RATIOS INCLUDE ALL MANAGEMENT FEES AND EXPENSES. (3) FOR THE PERIOD FROM NOVEMBER 1, 2001 THROUGH JUNE 30, 2003, THE PER SHARE AMOUNTS AND PERCENTAGES REFLECT INCOME AND EXPENSES ASSUMING INCLUSION OF THE FUND'S PROPORTIONATE SHARE OF THE INCOME AND EXPENSES OF ITS MASTER PORTFOLIO. (4) CALCULATED ON THE BASIS OF THE FUND AS A WHOLE WITHOUT DISTINGUISHING BETWEEN THE CLASSES OF SHARES ISSUED. FOR PERIODS LESS THAN 1 YEAR, PORTFOLIO TURNOVER RATE HAS NOT BEEN ANNUALIZED. (5) NOT ANNUALIZED. (6) ANNUALIZED. (7) FOR THE PERIOD FROM DECEMBER 30, 2002 THROUGH JUNE 30, 2003, THE PER SHARE AMOUNTS AND PERCENTAGES REFLECT INCOME AND EXPENSES ASSUMING INCLUSION OF THE FUND'S PROPORTIONATE SHARE OF THE INCOME AND EXPENSES OF ITS MASTER PORTFOLIO. (8) PER SHARE CALCULATIONS ARE BASED ON THE AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. AHA INVESTMENT FUNDS | PAGE 41 notes to financial statements SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- 1. ORGANIZATION The AHA Investment Funds (the "AHA Funds") are series of CNI Charter Funds (the "Trust"), which is registered as an open-end management investment company under the Investment Company Act of 1940. The Trust was organized as a business trust under the laws of Delaware on October 28, 1996. Each of the AHA Funds commenced operations on October 3, 2005, the effective date of the reorganization of each corresponding series (each a "Predecessor Fund" and collectively the "Predecessor Funds") of AHA Investment Funds, Inc. (the "AHA Company"), a registered investment company organized on March 14, 1988 under the laws of Maryland. On May 17, 2005, the Board of Directors of the AHA Company approved the reorganization of the Predecessor Funds into the newly established corresponding AHA Fund series of the Trust. The AHA Funds currently offer the following series of shares: the AHA Limited Maturity Fixed Income Fund ("Limited Maturity Fund"), the AHA Full Maturity Fixed Income Fund ("Full Maturity Fund"), the AHA Balanced Fund ("Balanced Fund"), the AHA Diversified Equity Fund (the "Diversified Fund"), and the AHA Socially Responsible Equity Fund (the "Socially Responsible Fund") (each a "Fund" and, collectively, the "Funds"). The shares of common stock of the Funds are divided into two classes: Class A Shares and Institutional Class Shares. As of September 30, 2007, only the Institutional Class Shares of the Funds and the Class A Shares of the Limited Maturity Fund, the Full Maturity Fund, the Diversified Fund, and the Socially Responsible Fund had commenced operations. Expenses related to the reorganization and reimbursements to the Adviser for reorganization related expenses were incurred and paid by the Funds. These amounts are subject to recapture within the next three fiscal years. The investment objectives of the Funds are set forth below. LIMITED MATURITY FUND - Seeks a high level of current income, consistent with preservation of capital and liquidity. Invests primarily in high quality fixed income securities issued or guaranteed by the government, and maintains an average dollar-weighted portfolio maturity of less than three years. FULL MATURITY FUND - Seeks the highest level of income consistent with long-term preservation of capital. Invests primarily in high quality fixed income securities issued or guaranteed by the U.S. government, its agent or instrumentalities. There is no restriction on the minimum or maximum maturity of the securities purchased. The average dollar-weighted maturity will vary and may exceed 20 years. BALANCED FUND - Seeks a combination of growth of capital and income. Invests varying proportions of its assets in equity and fixed income securities, with not less than 25 percent of total assets invested in fixed income securities. DIVERSIFIED FUND - Seeks long-term capital growth. Invests primarily in equity securities of U.S. companies that are diversified among various industries and market sectors and securities having equity characteristics. SOCIALLY RESPONSIBLE FUND - Seeks long-term capital growth. Invests primarily in equity securities whose issuers meet certain socially responsible criteria. 2. SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. 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. AHA INVESTMENT FUNDS | PAGE 42 -------------------------------------------------------------------------------- Securities for which market prices are not "readily available" are valued in accordance with Fair Value Procedures established by the Funds' Board of Trustees. The Funds' Fair Value Procedures are implemented through a Fair Value Committee (the "Committee") designated by the Funds' Board of Trustees. Some of the more common reasons that may necessitate that a security be valued using Fair Value Procedures include: the security's trading has been halted or suspended; the security has been de-listed from a national exchange; the security's primary trading market is temporarily closed at a time when under normal conditions it would be open; for international securities, market events occur after the close of the foreign markets that make closing prices not representative of fair values; or the security's primary pricing source is not able or willing to provide a price. When a security is valued in accordance with the Fair Value Procedures, the Committee will determine the value after taking into consideration relevant information reasonably available to the Committee. The Funds held no fair valued securities as of September 30, 2007. SECURITY TRANSACTIONS AND RELATED INCOME - Security transactions are accounted for on the trade date of the security purchase or sale. Costs used in determining net realized capital gains and losses on the sale of securities are those of the specific securities sold. Interest income is recognized on the accrual basis and dividend income is recognized on the ex-dividend date. Purchase discounts and premiums on securities held by the Funds are accreted and amortized to maturity using the scientific method. REPURCHASE AGREEMENTS - Securities pledged as collateral for repurchase agreements are held by each Fund's custodian bank until maturity of the repurchase agreements. Provisions of the agreements and procedures adopted by the investment adviser require that the market value of the collateral, including accrued interest thereon, be 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, be 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. EXPENSE ALLOCATION - Common expenses incurred by the Funds are allocated among the Funds (i) based upon relative average daily net assets, (ii) as incurred on a specific identification basis, or (iii) equally among the Funds, depending on the nature of the expenditure. CLASSES - Class-specific expenses are borne by the class. Income, non class-specific expenses, and realized and unrealized gains/losses are allocated to the respective classes on the basis of relative net asset value each day. FUND DISTRIBUTIONS - The Limited Maturity Fund and the Full Maturity Fund declare and pay income dividends from net investment income monthly. In the Balanced Fund, the Diversified Fund and the Socially Responsible Fund, dividends from net investment income are declared and paid quarterly. Distributions from net realized capital gains are distributed to shareholders at least annually. 3. INVESTMENT ADVISER AND SUB-ADVISER AGREEMENTS The Funds have an Investment Management Agreement dated October 1, 2005 (the "Agreement") with CCM Advisors, LLC (the "Adviser"), an affiliate of City National Asset Management, Inc. ("CNAM, Inc."), with which certain officers and trustees of the Funds are affiliated, to furnish investment advisory services to the Funds. Under the terms of the Agreement, the Funds compensate the Adviser for its management services at the annual rate of 0.50% of each Fund's average daily net assets for the Limited Maturity Fund and the Full Maturity Fund, and an annual rate of 0.75% of each Fund's average daily net assets for the Balanced Fund, Diversified Fund and the Socially Responsible Fund. Effective through September 30, 2006, the Adviser had contractually agreed to pay all operating expenses in excess of the annual rates presented below as applied to each Fund's average daily net assets. Expense Cap (as a % of average daily net assets) Limited Full Socially Maturity Maturity Balanced Diversified Responsible Fund Fund Fund Fund Fund -------------------------------------------------------------------------------- Institutional Class 0.75% 0.80% 1.00% 1.01% 1.04% Class A 1.00% 1.05% N/A 1.26% 1.29% -------------------------------------------------------------------------------- AHA INVESTMENT FUNDS | PAGE 43 notes to financial statements SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- Effective November 1, 2006, the Adviser has contractually agreed to pay all operating expenses in excess of the annual rates presented below as applied to each Fund's average daily net assets. Expense Cap (as a % of average daily net assets) Limited Full Socially Maturity Maturity Balanced Diversified Responsible Fund Fund Fund Fund Fund -------------------------------------------------------------------------------- Institutional Class 1.00% 1.00% 1.00% 1.25% 1.25% Class A 1.25% 1.25% N/A 1.50% 1.50% -------------------------------------------------------------------------------- Any fee reductions or expense reimbursements may be repaid to the Adviser within three years after occurrence, subject to certain restrictions and only if such repayments do not cause the Funds' expense ratios, at the time of repayment, to exceed the amounts shown in the preceding table. During the year ended September 30, 2007, the Board of Trustees approved the reimbursement of previously waived fees by the Adviser in the amount of $244, $24,044, $1,052 and $47,927 for the Limited Maturity Fund, the Full Maturity Fund, the Balanced Fund and the Diversified Fund, respectively. 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 -------------------------------------------------------------------------------- Limited Maturity Fund $ 15 2008 136 2009 3 2010 Balanced Fund 33 2008 18 2009 Diversified Fund 24 2009 1 2010 Socially Responsible Fund 6 2008 18 2009 27 2010 -------------------------------------------------------------------------------- THE PATTERSON CAPITAL CORPORATION and CNAM INC. act as the sub-advisers on behalf of the AHA Limited Maturity Fund and are paid by the Adviser. ROBERT W. BAIRD & CO., INCORPORATED and BOYD WATTERSON ASSET MANAGEMENT, LLC act as sub-advisers on behalf of the AHA Full Maturity Fund and are paid by the Adviser. ROBERT W. BAIRD & CO., INCORPORATED, CAMBIAR INVESTORS, LLC and FREEMAN ASSOCIATES INVESTMENT MANAGEMENT LLC act as sub-advisers on behalf of the Balanced Fund and are paid by the Adviser. CAMBIAR INVESTORS, LLC and FREEMAN ASSOCIATES INVESTMENT MANAGEMENT LLC act as sub-advisers on behalf of the AHA Diversified Equity Fund and are paid by the Adviser. Effective October 1, 2006, Cambiar was replaced with AMBS INVESTMENT COUNSEL, LLC and SKBA CAPITAL MANAGEMENT, LLC as sub-advisers for portions of the AHA Diversified Equity Fund and are paid by the Adviser. SKBA CAPITAL MANAGEMENT, LLC acts as the sub-adviser on behalf of the AHA Socially Responsible Fund and is paid by the Adviser. 4. ADMINISTRATION, TRANSFER AGENT AND DISTRIBUTION AGREEMENTS Pursuant to an administration agreement (the "Agreement"), SEI Investments Global Funds Services (the "Administrator"), a wholly owned subsidiary of SEI Investments Company, acts as the AHA Funds Administrator. Effective with the reorganization into the CNI Charter Funds on October 3, 2005, under the terms of the Agreement dated April 1, 1999, as amended January 1, 2005, the Administrator is entitled to receive an annual fee of 0.065% of aggregate average daily net assets of the Trust not exceeding $2.5 billion, 0.045% of aggregate average daily net assets of the Trust exceeding $2.5 billion but not exceeding $5 billion, and 0.025% of aggregate average daily net assets of the Trust exceeding $5 billion. The AHA Funds have adopted a Rule 12b-1 Distribution Plan ("the Plan") with respect to Class A Shares that allows each Fund to pay distribution and servicing fees. SEI Investments Distribution Co. (the "Distributor"), as compensation for its services under the Plan, receives a distribution fee, computed daily and paid monthly, at the annual rate of 0.25% of the average daily net assets of the Class A Shares of each Fund. SEI Institutional Transfer Agency, a division of SEI Investments Fund Management Corporation serves as Transfer Agent for the Trust whereby it 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 sub-transfer agent for the AHA Funds whereby it provides services at an annual rate of $14,000 per share class. U.S. Bank, N.A. (the "Custodian") serves as custodian for the Trust. The Custodian plays no role in determining the investment policies of the AHA Funds or which securities are to be purchased or sold by the AHA Funds. Certain officers of the Trust are also officers of the Adviser and/or the Administrator. Such officers are paid no fees by the Trust or the AHA Funds for serving as officers of the Funds. AHA INVESTMENT FUNDS | PAGE 44 -------------------------------------------------------------------------------- 5. FEDERAL INCOME TAXES It is each Funds' policy to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and the Funds intend to distribute investment company net taxable income and net capital gains to shareholders. Therefore, no Federal income tax provision is required. The Funds may be subject to taxes imposed by countries in which they invest, with respect to their investments in issuers existing or operating in such countries. Such taxes are generally based on income earned. The Funds accrue such taxes when the related income is earned. The timing and characterization of certain income and capital gains distributions are determined annually in accordance with Federal tax regulations, which may differ from accounting principles generally accepted in the United States. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. These book/tax differences may be temporary or permanent. To the extent these differences are permanent in nature, they are charged or credited to paid-in-capital, undistributed net investment income (loss), or accumulated net realized gain (loss), as appropriate, in the period that the differences arise. Accordingly, the following permanent differences, primarily attributable to paydown reclasses for tax purposes and REIT adjustments for tax purposes, have been reclassified to/from the following accounts as of September 30, 2007: Increase Decrease Undistributed Accumulated Net Investment Net Realized Income (Loss) Gain (Loss) Fund (000) (000) ----------------------------------------------------------------------- Limited Maturity Fund $7 $(7) Full Maturity Fund 1 (1) Balanced Fund 8 (8) Diversified Fund 3 (3) ----------------------------------------------------------------------- These reclassifications had no impact on 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 (000s): Ordinary Long-term Income Capital Gain Total Fund (000) (000) (000) ------------------------------------------------------------------------ Limited Maturity Fund September 2007 $ 1,857 $ -- $ 1,857 September 2006 2,460 -- 2,460 Full Maturity Fund September 2007 1,626 -- 1,626 September 2006 1,394 85 1,479 Balanced Fund September 2007 997 1,553 2,550 September 2006 635 787 1,422 Diversified Fund September 2007 3,146 6,832 9,978 September 2006 1,057 4,157 5,214 Socially Responsible Fund September 2007 629 659 1,288 September 2006 370 -- 370 AHA INVESTMENT FUNDS | PAGE 45 notes to financial statements SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- As of September 30, 2007, the components of Distributable Earnings/(Accumulated Losses) on a tax basis were as follows (000s):
Undistributed Undistributed Capital Unrealized Other Total Ordinary Long-term Loss Post-October Appreciation Temporary Distributable Earnings Income Capital Gain Carryforwards Losses (Depreciation) Differences (Accumulated Losses) Fund (000) (000) (000) (000) (000) (000) (000) ------------------------------------------------------------------------------------------------------------------------------------ Limited Maturity Fund $ 161 $ -- $(2,462) $ (97) $ 81 $ (150) $ (2,467) Full Maturity Fund 151 -- (399) (4) 25 (142) (369) Balanced Fund 316 479 -- -- 765 -- 1,560 Diversified Fund 3,837 8,165 -- -- 9,351 -- 21,353 Socially Responsible Fund 784 2,000 -- -- 5,333 -- 8,117
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. 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 was as follows (000s): Expiring ---------------------------------------- 2012 2013 2014 2015 Total Fund (000) (000) (000) (000) (000) -------------------------------------------------------------------------------- Limited Maturity Fund $ 76 $ 838 $ 133 $1,415 $2,462 Full Maturity Fund -- 64 46 289 399 -------------------------------------------------------------------------------- The Federal tax cost, the aggregate gross unrealized appreciation on securities, the aggregate gross unrealized depreciation on securities and the net unrealized appreciation/(depreciation) for tax purposes at September 30, 2007 for each of the Funds were as follows (000s): Aggregate Aggregated Net Gross Gross Unrealized Federal Unrealized Unrealized Appreciation Tax Cost Appreciation Depreciation (Depreciation) Fund (000) (000) (000) (000) -------------------------------------------------------------------------------- Limited Maturity Fund $ 48,167 $ 197 $ (116) $ 81 Full Maturity Fund 46,457 343 (318) 25 Balanced Fund 17,375 1,052 (287) 765 Diversified Fund 106,255 11,675 (2,324) 9,351 Socially Responsible Fund 53,573 6,487 (1,154) 5,333 -------------------------------------------------------------------------------- 6. CAPITAL SHARE TRANSACTIONS (000S): The share transactions for the years ended September 30, 2007 and September 30, 2006 are as follows:
Limited Maturity Fund (000) Full Maturity Fund (000) Balanced Fund (000) --------------------------- ------------------------ ------------------- 2007 2006 2007 2006 2007 2006 --------------------------- ------------------------ ------------------- INSTITUTIONAL CLASS Shares Sold 226 63 1,107 503 -- -- Shares Issued in Reinvestment of Dividends 40 121 51 50 4 6 Shares Redeemed (371) (6,520) (8) (628) -- (61) --------------------------------------------------------------------------- ------------------------ ------------------- Total Net Change (105) (6,336) 1,150 (75) 4 (55) =========================================================================== ======================== =================== CLASS A Shares Sold 9 16 9 1 Shares Issued in Reinvestment of Dividends 1 1 1 1 Shares Redeemed (15) (61) (1) (1) --------------------------------------------------------------------------- ------------------------ Total Net Change (5) (44) 9 1 =========================================================================== ========================
AHA INVESTMENT FUNDS | PAGE 46 -------------------------------------------------------------------------------- 6. CAPITAL SHARE TRANSACTIONS (CONTINUED) (000S):
Socially Diversified Fund Responsible Fund ---------------- ---------------- 2007 2006 2007 2006 ----------------------------------------------------------------------------------- INSTITUTIONAL CLASS Shares Sold 728 1,789 1,164 2,133 Shares Issued in Reinvestment of Dividends 367 192 108 35 Shares Redeemed (773) (1,447) (737) (163) ----------------------------------------------------------------- ---------------- Total Net Change 322 534 535 2,005 ================================================================= ================ CLASS A Shares Sold 70 102 45 25 Shares Issued in Reinvestment of Dividends 52 27 1 -- Shares Redeemed (171) (59) (11) -- ----------------------------------------------------------------- ---------------- Total Net Change (49) 70 35 25 ================================================================= ================
7. SECURITIES TRANSACTIONS Purchases and sales and maturities of investment securities, other than short-term investments, for the year ended September 30, 2007 were as follows: Purchases Sales & Maturities ------------------------------------------------------------------------- U.S. Gov't Other U.S. Gov't Other Fund (000) (000) (000) (000) ------------------------------------------------------------------------- Limited Maturity Fund $ 23,014 $ 8,223 $14,656 $ 17,839 Full Maturity Fund 14,316 14,271 11,055 7,704 Balanced Fund 1,240 19,865 1,016 22,550 Diversified Fund -- 124,727 -- 128,510 Socially Responsible Fund -- 20,248 -- 14,818 ------------------------------------------------------------------------- 8. SECURITIES LENDING The Custodian serves as the AHA Funds' securities lending agent. Certain Funds lend their securities to approved brokers to earn additional income and receive cash and/or securities as collateral to secure the loans. Income the Funds earned on securities purchased with cash collateral is reflected on the statements of operations. Collateral was maintained at not less than 102% of the value of loaned securities. If cash collateral is received, a related liability is shown on the statement of net assets. Although the risk of lending is mitigated by the collateral, a Fund could experience a delay in recovering its securities and a possible loss of income or value if the borrower fails to return them. There was no loss of income or value reported for the securities on loan for the year ended September 30, 2007. 9. INVESTMENT RISKS In the normal course of business, the AHA Funds enter into contracts that provide general indemnifications by the Fund to the counterparty to the contract. The Funds' maximum exposure under these arrangements is dependent on future claims that may be made against the Funds and, therefore, cannot be established; however, based on experience, the risk of loss from such claim is considered remote. 10. NEW ACCOUNTING PRONOUNCEMENTS On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN 48). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the Funds' financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Funds' 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 implementating 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 AHA INVESTMENT FUNDS | PAGE 47 notes to financial statements SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- result, the Fund will incorporate FIN 48 in its semi-annual report on March 31, 2008. As of September 30, 2007, the Funds do 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 on the statement of changes in net assets for a fiscal period. 11. SUBSEQUENT EVENT Effective as of the commencement of business on October 17, 2007, the designation of the Class A shares of AHA Limited Maturity Fixed Income Fund, AHA Full Maturity Fixed Income Fund, AHA Diversified Equity Fund and AHA Socially Responsible Equity Fund is changed to Class N. AHA INVESTMENT FUNDS | PAGE 48 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 AHA Investment Funds, a series of CNI Charter Funds, comprised of the AHA Limited Maturity Fixed Income Fund, AHA Full Maturity Fixed Income Fund, AHA Balanced Fund, AHA Diversified Equity Funds and AHA Socially Responsible Equity Fund (collectively," the Funds"), including the schedules of investments, as of September 30, 2007 and the related statements of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the two-year period then ended and the period from July 1, 2005 through September 30, 2005. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and the financial highlights based on our audit. The financial highlights for the periods presented prior to July 1, 2005, were audited by another independent registered public accounting firm, whose report dated August 15, 2005, expressed an unqualified opinion thereon. 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 two-year period then ended and the period from July 1, 2005 through September 30, 2005, in conformity with U.S. generally accepted accounting principles. /s/ KPMG LLP NOVEMBER 19, 2007 AHA INVESTMENT FUNDS | PAGE 49 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, 16 None CNI Charter Funds May 2007 CNI Charter Funds (2000-2007). Executive 400 N. Roxbury Drive Vice President and Director of Asset Beverly Hills, CA 90210 Management Development, CNB (1996-2007). Age: 64 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 16 None Age: 69 law firm (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 16 None Age: 70 Bank of California (1985-1996). ------------------------------------------------------------------------------------------------------------------------------------ James Wolford Trustee Since 1999 Chief Financial Officer, Bixby Land 16 None Age: 52 Company, a 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). ------------------------------------------------------------------------------------------------------------------------------------
AHA INVESTMENT FUNDS | PAGE 50
------------------------------------------------------------------------------------------------------------------------------------ TERM OF OFFICE AND NAME POSITION LENGTH OF ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S) AND AGE TRUST SERVED DURING PAST FIVE YEARS ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS -------- Timothy D. Barto Vice President Since Attorney, Vice President and Assistant Secretary of SEI Investments SEI Investments and Assistant 2000 (1999-Present). Vice President and Assistant Secretary of Administrator One Freedom Valley Drive Secretary (1999-Present). Officer of various investment companies administered by Oaks, PA 19456 Administrator (1999-2004). Assistant Secretary of the Distributor Age: 39 (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 Bank SEI Investments and Assistant 2005 & Trust's Mutual Funds Group (2004-2005). Counsel, Permal Asset Management One Freedom Valley Drive Secretary (2001-2004). Associate, Schulte, Roth & Zabel's Investment Management Oaks, PA 19456 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 September 30, 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. AHA INVESTMENT FUNDS | PAGE 51 trustees and officers (UNAUDITED) (CONCLUDED) SEPTEMBER 30, 2007 --------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------ 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). Account One Freedom Valley Drive 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 Securities 400 N. Roxbury Drive Secretary (April 2003-present). Executive Vice President and Chief Investment Beverly Hills, CA 90210 Officer. Sanwa Bank California (1994-1999). Age: 47 ------------------------------------------------------------------------------------------------------------------------------------
AHA INVESTMENT FUNDS | PAGE 52 notice to shareholders (UNAUDITED) SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- 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 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:
(C)** (D)*** DIVIDENDS QUALIFYING (G)****** (A)* (B)* QUALIFYING DIVIDEND (E)**** (F)***** QUALIFYING LONG TERM ORDINARY FOR CORPORATE INCOME U.S. QUALIFYING SHORT-TERM CAPITAL GAIN INCOME TOTAL DIVIDENDS REC. (15% RATE GOVERNMENT INTEREST CAPITAL DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS DEDUCTION FOR QDI) INTEREST INCOME GAIN ------------------------------------------------------------------------------------------------------------------------------------ Limited Maturity Fixed Income Fund 0% 100% 100% 0% 0% 18% 81% 0% Full Maturity Fixed Income Fund 0% 100% 100% 0% 0% 16% 96% 0% Balanced Fund 61% 39% 100% 23% 24% 4% 35% 100% Diversified Equity Fund 68% 32% 100% 47% 49% 0% 0% 100% Socially Responsible Equity Fund 51% 49% 100% 67% 69% 0% 0% 100% ------------------------------------------------------------------------------------------------------------------------------------
* ITEMS (A) AND (B) ARE BASED ON THE PERCENTAGE OF EACH FUND'S TOTAL DISTRIBUTION. ** ITEM (C) IS BASED ON THE PERCENTAGE OF ORDINARY INCOME DISTRIBUTIONS OF EACH FUND. QUALIFYING DIVIDENDS REPRESENT DIVIDENDS WHICH QUALIFY FOR THE CORPORATE DIVIDENDS RECEIVED DEDUCTION. *** THE PERCENTAGE IN ITEM (D) REPRESENTS THE AMOUNT OF "QUALIFYING DIVIDEND INCOME" AS CREATED BY THE JOBS AND GROWTH TAX RELIEF RECONCILIATION ACT OF 2003. IT IS THE INTENTION OF EACH OF THE AFOREMENTIONED FUNDS TO DESIGNATE THE MAXIMUM AMOUNT PERMITTED BY THE LAW. **** ITEM (E) REPRESENTS THE AMOUNT OF INTEREST THAT WAS DERIVED FROM DIRECT U.S. GOVERNMENT OBLIGATIONS AND DISTRIBUTED DURING THE FISCAL YEAR. THIS AMOUNT IS REFLECTED AS A PERCENTAGE OF TOTAL ORDINARY INCOME DISTRIBUTIONS. GENERALLY, INTEREST FROM DIRECT U.S. GOVERNMENT OBLIGATIONS IS EXEMPT FROM STATE INCOME TAX. FOR SHAREHOLDERS OF THE FUNDS WHO ARE RESIDENTS OF CALIFORNIA, CONNECTICUT AND NEW YORK, THE STATUTORY THRESHOLD REQUIREMENTS WERE NOT SATISFIED TO PERMIT EXEMPTION OF THESE AMOUNTS FROM STATE INCOME TAX. ***** ITEM (F) REPRESENTS THE AMOUNT OF "QUALIFYING INTEREST INCOME" AS CREATED BY THE AMERICAN JOBS CREATION ACT OF 2004 AND IS REFLECTED AS A PERCENTAGE OF NET INVESTMENT INCOME DISTRIBUTIONS THAT IS EXEMPT FROM U.S. WITHHOLDING TAX WHEN PAID TO FOREIGN INVESTORS. ****** THE PERCENTAGE IN ITEM (G) REPRESENTS THE AMOUNT OF "QUALIFYING SHORT-TERM CAPITAL GAIN" AS CREATED BY THE AMERICAN JOBS CREATION ACT OF 2004 AND IS REFLECTED AS A PERCENTAGE OF SHORT-TERM CAPITAL GAIN DISTRIBUTIONS THAT IS EXEMPT FROM U.S. WITHHOLDING TAX WHEN PAID TO FOREIGN INVESTORS. AHA INVESTMENT FUNDS | PAGE 53 disclosure of fund expenses (UNAUDITED) -------------------------------------------------------------------------------- As an Institutional Class shareholder of the AHA Limited Maturity Fund, the AHA Full Maturity Fund, the AHA Balanced Fund, the AHA Diversified Fund and the AHA Socially Responsible Fund (each a "Fund" and collectively, the "Funds"), you will incur ongoing costs, including management fees and other Fund expenses. As a Class A shareholder of the AHA Limited Maturity Fund, the AHA Full Maturity Fund, the AHA Diversified Fund and the AHA Socially Responsible Fund, you will incur ongoing costs and distribution fees. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000 for the six months ended September 30, 2007. ACTUAL EXPENSES. The first line of the tables below provides information about actual account values and actual expenses. The Funds charge no sales load or transaction fees, but do assess shareholders of IRA accounts a $25.00 annual maintenance fee by Forum Shareholder Services, LLC (a division of Citigroup Fund Services, LLC) the Funds' sub-transfer agent. To the extent the Funds invest in shares of other investment companies as part of their investment strategies, you will indirectly bear your proportionate share of any fees and expenses charged by the underlying funds in which the Funds invest, in addition to the expenses of the Funds. Actual expenses of the underlying funds are expected to vary among the various underlying funds. These expenses are not included in the example below. The example below includes, but is not limited to, management fees, shareholder servicing fees, fund accounting, custody and transfer agent fees. However, the example below does not include portfolio trading commissions, related expenses and other extraordinary expenses as determined under generally accepted accounting principles. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Funds' actual expense ratios and an assumed rate of return of 5% per year before expenses, which does not the represent the Funds' actual returns. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Ending account values and expenses paid during the period are based on a hypothetical 2.50% rate of return. The rate of return is considered before expenses are deducted from the Fund. BEGINNING ENDING EXPENSES ACCOUNT ACCOUNT ANNUALIZED PAID VALUE VALUE EXPENSE DURING 4/1/07 9/30/07 RATIOS PERIOD* -------------------------------------------------------------------------------- AHA LIMITED MATURITY FIXED INCOME FUND -------------------------------------------------------------------------------- ACTUAL FUND RETURN Institutional Class $1,000.00 $1,022.20 0.72% $3.65 Class A 1,000.00 1,021.90 0.97% 4.92 HYPOTHETICAL 5% RETURN Institutional Class $1,000.00 $1,021.46 0.72% $3.65 Class A 1,000.00 1,020.21 0.97% 4.91 -------------------------------------------------------------------------------- AHA FULL MATURITY FIXED INCOME FUND -------------------------------------------------------------------------------- ACTUAL FUND RETURN Institutional Class $1,000.00 $1,019.00 0.79% $4.00 Class A 1,000.00 1,018.60 1.04% 5.26 HYPOTHETICAL 5% RETURN Institutional Class $1,000.00 $1,021.11 0.79% $4.00 Class A 1,000.00 1,019.85 1.04% 5.27 -------------------------------------------------------------------------------- AHA BALANCED FUND -------------------------------------------------------------------------------- ACTUAL FUND RETURN Institutional Class $1,000.00 $1,044.60 1.00% $5.13 HYPOTHETICAL 5% RETURN Institutional Class $1,000.00 $1,020.05 1.00% $5.06 BEGINNING ENDING EXPENSES ACCOUNT ACCOUNT ANNUALIZED PAID VALUE VALUE EXPENSE DURING 4/1/07 9/30/07 RATIOS PERIOD* -------------------------------------------------------------------------------- AHA DIVERSIFIED EQUITY FUND -------------------------------------------------------------------------------- ACTUAL FUND RETURN Institutional Class $1,000.00 $1,048.10 1.02% $5.24 Class A 1,000.00 1,046.70 1.27% 6.52 HYPOTHETICAL 5% RETURN Institutional Class $1,000.00 $1,019.95 1.02% $5.16 Class A 1,000.00 1,018.70 1.27% 6.43 -------------------------------------------------------------------------------- AHA SOCIALLY RESPONSIBLE EQUITY FUND -------------------------------------------------------------------------------- ACTUAL FUND RETURN Institutional Class $1,000.00 $1,046.30 0.93% $4.77 Class A 1,000.00 1,045.00 1.18% 6.05 HYPOTHETICAL 5% RETURN Institutional Class $1,000.00 $1,020.41 0.93% $4.71 Class A 1,000.00 1,019.15 1.18% 5.97 -------------------------------------------------------------------------------- *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 the six month period). AHA INVESTMENT FUNDS | PAGE 54 approval of sub-advisory agreement (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 CCM Advisors, LLC ("CCMA") and the related sub-advisory agreements (collectively referred to below as the "Sub-Advisory Agreements") with the following sub-advisory organizations (the "Sub-Advisers"): o CCMA's sub-advisory agreement (the "CNAM Agreement") with City National Asset Management, Inc. ("CNAM") with respect to the AHA Limited Maturity Fixed Income Fund; o CCMA's sub-advisory agreement (the "Patterson Agreement") with The Patterson Capital Corporation ("Patterson") with respect to the Limited Maturity Fund; o CCMA's sub-advisory agreements (the "Baird Agreements") with Robert W. Baird & Co. Incorporated ("Baird") with respect to the AHA Full Maturity Fixed Income Fund (the "Full Maturity Fund") and the AHA Balanced Fund; o CCMA's sub-advisory agreements (the "Freeman Agreements") with Freeman Associates Investment Management LLC ("Freeman") with respect to the Balanced Fund and the AHA Diversified Equity Fund; and o CCMA's sub-advisory agreement (the "SKBA Agreement") with SKBA Capital Management, LLC ("SKBA") with respect to the AHA Socially Responsible Equity Fund. The Management Agreement and the 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 CCMA and each of the Sub-Advisers. 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 CCMA or the Sub-Advisers were present. The Board reviewed extensive materials regarding the investment results of the Funds, advisory fee and expense comparisons, financial and profitability information with respect to each entity, descriptions of various functions such as compliance monitoring and portfolio trading practices, and information about the personnel providing investment management and administrative services to the Funds. 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. CCMA NATURE, EXTENT AND QUALITY OF SERVICES In reviewing the services provided by CCMA, the Board considered a variety of matters, including the background, education and experience of CCMA'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 and oversight of the Sub-Advisers; 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 the Institutional Class 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. for the one-, three-, five- AHA INVESTMENT FUNDS | PAGE 55 approval of sub-advisory agreement (UNAUDITED) (CONTINUED) -------------------------------------------------------------------------------- and ten-year and since-inception periods ended June 30, 2007. The Board made the following observations in reviewing the Funds' performance: o The annualized total returns of the Limited Maturity Fund were below those of the Merrill Lynch 1-3 Year Treasury Index and the Lipper short investment grade universe average for all periods. The Board noted that until January 31, 2007, the Fund could only invest in bonds rated "A" or higher, and that CNAM, Inc. was added as a new sub-adviser to the Fund in 2005. o The annualized total returns of the Full Maturity Fund were below those of the Lehman Intermediate Government Credit Index returns and the Lipper corporate debt funds A-rated universe average for all periods, except that the Fund's returns were above the Lipper universe average for the ten-year period. The Board noted that the average credit quality for the Full Maturity Fund was "AA," which is relatively high compared with its peer group. o The annualized total returns of the Balanced Fund were above those of a 60/30/10 hybrid of the S&P 500 Index, Lehman US Aggregate Bond Index and Merrill Lynch 3-Month US Treasury Bill Index, and below the Lipper mixed-asset target allocation growth fund universe average, for the three- and five-year periods; above both measures for the ten-year period; below both measures for the one-year and since-inception periods; below the S&P 500 Index for all periods except the ten-year period; and above the Lehman US Aggregate Bond Index returns for all periods. o The annualized total returns of the Diversified Equity Fund were below that of the S&P 500 Index and the Lipper large cap core funds universe average for the one-year period, and above those measures for all other periods. o The annualized total return of the Socially Responsible Fund was slightly below the return of the Domini 400 Social Index and below that of the Lipper large cap value fund universe average for the one-year period, and the Fund's annualized total returns were above those of the Domini Index and below the Lipper universe average for the since-inception and year-to-date periods. The Board noted that because the Fund is precluded from investing in approximately 200 value-oriented companies pursuant to the Fund's socially conscious investment restrictions, the Fund may not invest in all securities in which other funds in the Lipper value universe may invest. The Board and the Independent Trustees concluded that CCMA continued to provide high quality management and oversight services to the Funds. They noted that the investment results of the Funds during the past year and previous periods were generally good; that each of the Funds had met its objectives as demonstrated by various factors; 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 management fees charged by CCMA and the total expenses of each of the Funds (as percentages of their respective average annual net assets) compared to those of select peer groups of funds, 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 Funds' contractual management fees as of June 30, 2007 were below the average management fees for their peer group funds (except for Class A of the Diversified Equity Fund and the Institutional Class of the Balanced Fund). As the Funds are CCMA's sole investment advisory clients, the Board was not able to compare the fees charged to the Funds by CCMA with fees charged to other institutional clients of CCMA. With respect to the total expenses of the Funds, the Board considered that total expenses as of June 30, 2007 net of fee waivers were below the average total expenses for their peer group funds except for Class A shares of the Full Maturity Fund and Institutional Class shares of the Limited Maturity, Full Maturity, Balanced and Socially Responsible Funds. However, the Board also noted that the asset levels of the Funds were relatively small, that CCMA was waiving additional fees with respect to the Socially Responsible Fund that were not reflected in the Total Annual Fund Operating Expenses reported in the Fund's current prospectus, and that the total expenses of the Full Maturity Fund were decreasing as a result of recent increases in the Fund's assets. The Board considered information prepared by CCMA relating to its costs and profits. The Board also considered the benefits received by CCMA and its affiliates as a result of CCMA's relationship with the Funds, including investment advisory fees received by CCMA, 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 AHA INVESTMENT FUNDS | PAGE 56 approval of sub-advisory agreement (UNAUDITED) (CONCLUDED) -------------------------------------------------------------------------------- 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 relatively small and were not currently likely to lead to significant economies of scale. 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 CCMA pursuant to the Management Agreement is fair and reasonable in light of the nature and quality of the services being provided by CCMA to each Fund and its shareholders, and that renewal of the Management Agreement was in the best interest of the Funds and their shareholders. SUB-ADVISERS NATURE, EXTENT AND QUALITY OF SERVICES In reviewing the services provided by each of the Sub-Advisers, the Board considered a variety of matters, including the background, education and experience of the Sub-Adviser's 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 Funds; and the overall general quality and depth of its organization. The Board also reviewed each Sub-Adviser's investment philosophy and processes as well as its brokerage, trading and soft dollar practices. INVESTMENT PERFORMANCE The Board's observations regarding each Fund's performance are described above. As indicated above, the Board and the Independent Trustees concluded that each Sub-Adviser continued to provide high quality services to the Funds. ADVISORY FEES AND FUND EXPENSES The Board reviewed information regarding the advisory fees charged by each Sub-Adviser and observed that the fees charged by each Sub-Adviser were low compared to the fees it charged to its other institutional clients. They noted that CCMA pays all sub-advisory fees out of CCMA's advisory fee. The Board considered information prepared by each Sub-Adviser (except for Baird) relating to its costs and profits with respect to the Fund or Funds for which it serves as sub-adviser, as well as the methodologies used to determine and allocate such costs to its management of the Fund. With respect to Baird, which does not track profitability by account, the Board considered that the sub-advisory fees charged by Baird to the Funds were significantly lower than the fees set forth in its standard fee schedule. The Board also considered the benefits received by each Sub-Adviser and its affiliates as a result of its relationship with the Funds, including the sub-advisory fees paid to the Sub-Adviser, the intangible benefits of their association with the AHA Funds generally and any favorable publicity arising in connection with the Funds' performance, and in the case of CNAM and SKBA, fees paid to City National Bank and City National Securities, Inc. for providing certain shareholder servicing and sub-distribution services to the Trust. 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 each Sub-Adviser pursuant to its respective Sub-Advisory Agreement is fair and reasonable in light of the nature and quality of the services being provided by each Sub-Adviser to the respective Funds and their shareholders, and that renewal of each Sub-Advisory Agreement was in the best interest of the Funds and their shareholders. AHA INVESTMENT FUNDS | PAGE 57 -------------------------------------------------------------------------------- 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. -------------------------------------------------------------------------------- [American Hospital Association LOGO OMITTED] AHA INVESTMENT FUNDS(TM) A SERIES OF THE CNI CHARTER FUNDS CCM Advisors, LLC is the AHA-sponsored investment [LOGO OMITTED] advisor for the AHA Investment Program CNI CHARTER FUNDS(SM) CNI-AR-002-0300 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 N/A $66,075 N/A $61,600 N/A N/A Fees ------------------------------------------------------------------------------------------------------------------------------ (d) All N/A N/A N/A N/A N/A N/A Other Fees ------------------------------------------------------------------------------------------------------------------------------
Notes: (1) Audit fees include amounts related to the audit of the registrant's annual financial statements and services normally provided by the accountant in connection with statutory and regulatory filings. (e)(1) Not Applicable (e)(2) Percentage of fees billed applicable to non-audit services pursuant to waiver of pre-approval requirement were as follows: ------------------------- ----------------- ---------------- 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 29, 2007 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 29, 2007 By (Signature and Title)* /s/ Eric Kleinschmidt ---------------------------- Eric Kleinschmidt, Controller and COO Date November 29, 2007 * Print the name and title of each signing officer under his or her signature.