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CNI Charter RCB
Small Cap Value Fund
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CNI Charter RCB Small Cap Value Fund

 

As of October 1, 2001 RCB is the Investment Advisor to the CNI Charter RCB Small Cap Value Fund.

 

CNI CHARTER RCB SMALL CAP VALUE FUND - CLASS R
Data at Close March 12, 2010
Closing NAV $20.12
Change in NAV -0.01
Closing Offering Price $20.85
Closing Net Assets $17,319,828


CNI CAPITAL GAIN DISTRIBUTIONS 12/31/09
Record Date December 16, 2009
Ex-Date December 17, 2009
Reinvest Date December 18, 2009
Payable Date December 18, 2009
Short-term Cap Gains $0.00
Long-term Cap Gains $0.00

Total Cap Gains

Distributions to Shareholders

$0.00

30 Day SEC Yield as of 12/31/09

0.31%

Unsubsidized 30 Day SEC Yield

as of 12/31/09

0.17%

 

CNI CHARTER RCB SMALL CAP VALUE - CLASS R
FUND FACTS (As of 12/31/09)
Fund Classification Small Cap Value
Benchmark Russell 2000 Value
Manager Jeffrey Bronchick/Thomas Kerr
Inception Date September 30, 1998
Minimum Investment $25,000
Minimum for IRA $1,000
IRA Subsequent $100
Maximum Sales Charge 3.5%
CUSIP Number 125977710 (Class R)
Ticker Symbol RCBSX
Total Net Assets $16,504,766
# Issues in Portfolio 31
Dividend Frequency Annual
Returns at NAV 4th Quarter 2009: 1.80%
  Year-to-Date: 59.97%
  One Year: 59.97%
  Three Years: -8.93%
  Five Years: -3.35%
  Ten Years: 6.16%
  Average Annual Since Inception (9/30/98): 9.35%
Returns (Load Adjusted) 4th Quarter 2009: -1.78%
  Year-to-Date: 54.35%
  One Year: 54.35%
  Three Years: -10.00%
  Five Years: -4.04%
  Ten Years: 5.79%
  Average Annual Since Inception (9/30/98): 9.00%

The performance quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. Performance data current to the most recent month-end may be obtained by calling (888) 889-0799 or visit www.cnicharterfunds.com.

Shares of the Fund were sold without a sales charge through March 31, 1999; since that date, the maximum sales charge of 3.50% has been in effect and load-adjusted returns are shown.

Investment performance reflects voluntary fee waivers in effect. In the absence of such fee waivers, total returns would be reduced.  The fund's total annual operating expense is 1.95%.  CNB has contractually agreed to waive its shareholder servicing fee of 0.25% for the period ending January 28, 2010, resulting in a net annual fund operating expense of 1.46%.


Top 5 Sectors  
1 Consumer Discretionary: 25.5%
2 Financials: 24.7%
3 Materials: 11.5%
4 Consumer Staples: 10.9%
5 Industrials: 10.8%
Top 10 Holdings  
1 White Mountains Insurance Grp: 7.2%
2 Spartech: 5.2%
3 Liberty Media Capital 'A': 5.0%
4 Wendys/Arby's Group: 4.6%
5 Alleghany: 4.6%
6 Ralcorp Holdings: 4.4%
7 Actuant Class A: 4.2%
8 Central Garden & Pet 'A': 4.2%
9 Chimera Investment : 4.2%
10 Washington Post: 4.2%

Holdings are subject to change.

Commentary 12/31/09:

Given the fireworks and volatility of 2009, it is with some relief we note that most major asset classes edged higher into the new year with little fan fare. What is clear to us is that the extreme bargains that were available in the first quarter of 2009 are not with us today, and we are acting accordingly and more defensively. During any time period, but particularly in the short run, we re-emphasize our long-term goal – be competitive in rising markets and outperform in challenging to down markets.

In portfolio moves, we completely sold out of two longer-term mistakes, Fisher Communications and Exterran Holdings, both of which we bought high, bought much lower, and sold out after impressive 2009 rallies. We also cut our losses on one newer stock, Technitrol, as the original investment thesis materially changed due to a shift in the manufacturing strategy of their largest customer. We continued to trim back some of our superb winners in the fourth quarter, such as Liberty Media Interactive, Nalco and Altra Holdings, as they approached fair value on an absolute basis or relative to their size within the portfolio. We used some of the proceeds to slowly sneak into a very select group of high-quality regional banking companies which now consists of small positions in Wilmington Trust, TCF Financial and banking wannabe Hilltop Holdings, a $12 pile of cash run by noted bank turnaround investor Gerald Ford.

It is our well-researched belief that the “Great Pendulum Swing” of the last two years has mostly run its course, and we are now entering into a more normalized world containing the usual litany of economic and political questions, very few of which we pretend to have the answer. As economic historian John Kenneth Galbraith noted, “There are two types of forecasters, those who don’t know and those who don’t know they don’t know.” If 2009 proved anything, it is that the ability of an investor to reliably pinpoint major market inflection points and act accordingly is extraordinarily limited.

The alternative to reading tea leaves is of course value investing, which we continue to practice and preach at Reed Conner & Birdwell. We have built an eclectic research team of highly motivated portfolio manager/analysts who operate in a entrepreneurially disciplined environment that seeks absolute outperformance through hard work and superior insight within focused portfolios.

Recognizing the folly of elaborate forecasting, we focus our attention on the analysis and valuation of specific securities. When you have done your own work on the intrinsic value of a company, that is the benchmark with which you can compare to the publicly traded price of the stock, and this benchmark helps to keep your wits about you in the swells of popular opinion. In 2009, the key to success was having faith in this rational process and not being afraid to lean into what was obviously a terrifying wind and purchase more of very good businesses at better and better prices.

“The Lost Decade for Equities” seems to occupy a fair amount of press time these days and, in our view, represents possibly the best argument for stock investing today. Besides the old issue of data mining (starting with the highest point in history and throwing in the 2nd worst stock market year in history at the tail end), the time to be worried was exactly ten years ago when stock markets and investor confidence were at all-time highs. We cannot recall a single period in our own investing history during which we have witnessed as much rank cynicism and disregard of a few hundred years of financial and economic history as we are seeing today. To quote our favorite Omaha investor, “Be fearful when others are greedy, and greedy when others are fearful.” It is crucial to understand just how unusual it is for bonds to outperform stocks over extended periods, and we suggest that given the current level of interest rates, and the simple mathematics of dropping the 1999 market peak from the beginning of new ten year cycles, stocks outperforming bonds is very close to a slam dunk over the next ten years.

As we noted in our previous commentaries there remains a number of interesting values that can be intelligently purchased today, but we are going to need reasonable economic activity to “move the needle” in the broader equity markets over the next few years. We continue to have a balanced portfolio of offensive and defensive stocks as it relates to the correlation between investment success and relative exposure to a resumption of economic growth. Without tiptoeing into forecasting, we note that there likely is some symmetry between the possibility of good versus bad economic news on the horizon, yet much of Washington D.C. and the financial press seem to only allow for the possibility of Black Swans vs. White Swans. In both ponds and in the economic history of the United States, white swans are actually the rule, not the exception. Cycles are a fact of life and need not be feared, but be priced accordingly.

 

 

As of December 31, 2009, the Fund held the following positions: Altra Holdings 2.1%, Hilltop Holdings 2.0%, Liberty Media Interactive 4.1%, Nalco Holding 2.4%, TCF Financial 2.1% and Wilmington Trust 2.2%.

The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation.  It is a market-value weighted index (stock price times the number of shares outstanding), with each stock's weight in the index proportionate to its market value. Russell 2000 measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index.   The MSCI EAFE® Index is an unmanaged index consisting of a market-value-weighted average of the performance of international securities listed on exchanges in Europe, Australasia and the Far East .  It is not possible to invest directly in an index.

Note: Past performance is not a guarantee or indicator of future results.  The information provided herein represents the opinion of the manager at a specific point in time and is not intended to be a forecast of future events, a guarantee of future results nor investment advice. Further, there is no assurance that certain securities will remain in or out of the portfolio. Please consult an investment professional for advice concerning your particular circumstances. There are risks involved with investing, including possible loss of principal. In addition to the normal risks associated with investing, investments in smaller companies exhibit higher volatility.

MUTUAL FUND SHARES ARE: NOT FDIC INSURED, NOT BANK GUARANTEED AND MAY LOSE VALUE.

To determine if the Fund is an appropriate investment for you, carefully consider the Funds' investment objectives, risk, and charge and expenses.  This and other information can be found in the Funds' prospectus which can be obtained by calling (888) 889- 0799, by visiting www.cnicharterfunds.com, or by clicking on the link below.  Please read the prospectus carefully before investing.

References to specific investments should not be construed as a recommendation for purchase by the Fund or the Advisor.

For additional information, please contact Shareholder Services at (888) 889-0799.  RCB is the sub-advisor to the Fund and City National Asset Management serves as the investment manager. City National Asset Management, Inc. and City National Securities are subsidiaries of City National Bank. RCB is an affiliate of City National Corp. Distributed by: SEI Investments Distribution Co. located in Oaks, PA. SEI is not affiliated with Reed Conner & Birdwell investment management, City National Corp, City National Bank or any of their respective affiliates.

You can download a PDF copy of the CNI Charter RCB Small Cap Value Fund Class R prospectus by clicking on the links below. To open a new account, print and complete the New Account Application. For more information, please contact Shareholder Services at (888) 889-0799.

 

CNI Charter RCB Small Cap Value Fund Summary Prospectus

(Note: hyperlinks in the summary prospectus will direct you to the CNI Charter Fund family web site)

CNI Charter Funds Statutory Prospectus (Jan 2010)

CNI Charter Funds Statement of Additional Information (SAI)

CNI Charter RCB Small Cap Value Class R New Account Application

CNI Charter RCB Small Cap Value Fund Class R IRA Disclosure

CNI Charter RCB Small Cap Value Fund Class R IRA Application

(Note: it is recommended that the application be printed on legal size paper for easier use, although it is not required.)

 


CNI Charter Fund Family
For more information on the CNI Charter Fund family, please visit their web site at www.cnicharterfunds.com.

  

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