[LOGO OMITTED]
MONEY MARKET FUND
GOVERNMENT FUND
CALIFORNIA TAX EXEMPT FUND
ANNUAL REPORT
OCTOBER 31, 1999
INVESTMENT MANAGER:
CITY NATIONAL INVESTMENTS
A division of City National Bank
<PAGE>
CNI CHARTER FUNDS
- --------------------------------------------------------------------------------
To our Shareholders:
We are pleased to provide you with this report on the CNI Charter Funds for its
annual reporting period ended October 31, 1999. In addition to the CNI Charter
Money Market Fund, we have expanded our money market mutual fund offering by
introducing the CNI Charter Government Fund and the CNI Charter California Tax
Exempt Fund in June 1999. The CNI Charter Funds continue to provide competitive
money market returns in their respective sectors while preserving principal and
maintaining a high degree of liquidity.
Continued strong economic growth, low but rising inflation, strong equity
markets and rising interest rates have all characterized the U.S. economy thus
far in 1999. During the last half of 1999, the Fed enacted a series of three
rate hikes (3/4 of 1% in total) as a pre-emptive strike against potential
inflation. The goal of these actions was to help ensure that the U.S. economy
could sustain its non-inflationary growth rate. The economy continues its
pattern of strong growth and low unemployment as evidenced by the third quarter
revision to Real GDP growth of 5.5% and October's unemployment rate of 4.1% -- a
30-year low. Consumer spending remains robust and incomes are up as well. Oil
prices hover near Gulf War levels ranging from $25 to $27 a barrel while wage
and employment costs threaten to move upward. Furthermore, most domestic stock
markets have rallied to new highs raising the concern of exacerbating the
consumer wealth effect, which in turn may cause prices for goods and services to
climb.
The CNIFunds conservative strategy of shorter average maturities has been well
rewarded this year as we reinvest at higher and higher rates. In the CNI Charter
Money Market Fund we increased our exposure to include more corporate floating
rate obligations. This move allowed us to maintain our shorter maturity
structure while quickly realizing greater yields as the interest rates on the
floating rate securities reset at higher levels. In a similar vein, the
allocation of repurchase agreements in the CNI Charter Government Fund was
redirected to introduce government floating rate notes. In the CNI Charter
California Tax Exempt Fund, the emphasis continues to be on daily and weekly
variable rate securities which provide continuous liquidity as well as
potentially higher yields, depending on supply and demand.
The CNI Charter Fund managers are mindful of the need for liquidity leading into
year-end as well as the likelihood for further rate hikes. We will continue to
look for superior investment opportunities in our various funds in order to meet
the needs of investors and the Funds.
Thank you for choosing the CNI Charter Funds. We look forward to meeting your
investment needs.
Sincerely,
[signature omitted] [signature omitted]
Rodney J. Olea Vernon C. Kozlen
SENIOR VICE PRESIDENT EXECUTIVE VICE PRESIDENT
PORTFOLIO MANAGER CITY NATIONAL INVESTMENTS
<PAGE>
STATEMENT OF NET ASSETS
CNI CHARTER FUNDS -- OCTOBER 31, 1999
MONEY MARKET FUND
Face
Amount Value
(000) (000)
- --------------------------------------------------------------
COMMERCIAL PAPER (76.6%)
BANKS (3.5%)
Bank of Austria
5.300%, 11/10/99 $4,000 $ 3,995
Toronto Dominion Holding
5.270%, 11/26/99 1,000 996
--------
4,991
--------
BUILDING SOCIETIES (1.4%)
Bradford & Bingley Building
5.320%, 11/09/99 2,000 1,998
--------
COSMETICS & TOILETRIES (3.5%)
Estee Lauder Companies
5.350%, 11/01/99 3,000 3,000
5.330%, 11/15/99 2,000 1,996
--------
4,996
--------
FINANCE AUTO LOANS (7.0%)
Ford Motor Credit Company
5.293%, 11/19/99 5,000 5,000
General Motors Acceptance
Corporation
6.071%, 01/26/00 5,000 5,000
--------
10,000
--------
FINANCE CREDIT CARD (3.5%)
American Express Credit Company
5.338%, 11/08/99 5,000 5,000
--------
FINANCE OTHER SERVICES (13.2%)
CIT Group Incorporated
5.307%, 11/24/99 4,000 4,000
John Deere Capital Corporation
5.346%, 11/22/99 5,000 5,000
John Hancock Capital Corporation
5.330%, 12/01/99 5,000 4,978
Metropolitan Life Funding
5.300%, 11/12/99 5,000 4,992
--------
18,970
--------
FINANCE SERVICES --
SPECIAL PURPOSE ENTITY (14.4%)
Barton Capital Corporation
5.400%, 12/02/99 3,000 2,986
5.400%, 11/10/99 2,000 1,997
Giro Funding U.S. Corporation
5.350%, 11/01/99 5,000 5,000
Face
Amount Value
(000) (000)
- --------------------------------------------------------------
Quincy Capital Corporation
5.390%, 11/18/99 $1,174 $ 1,171
Trident Capital Finance
5.360%, 11/02/99 4,000 3,999
Westpac Trust Securities NZ Ltd.
5.350%, 11/17/99 3,550 3,542
World Omni Vehicle
5.400%, 12/10/99 2,000 1,988
--------
20,683
--------
GOVERNMENT AGENCY (3.5%)
Hydro Quebec
5.300%, 12/06/99 5,000 4,974
--------
INVESTMENT BANKER/BROKER (5.6%)
Merrill Lynch & Company
5.260%, 11/05/99 3,000 2,998
Prudential Funding Corporation
5.873%, 01/25/00 5,000 5,000
--------
7,998
--------
LEISURE PRODUCTS (1.4%)
Hasbro Incorporated
5.300%, 11/17/99 2,000 1,995
--------
MEDICAL (3.6%)
Amgen Incorporated
5.320%, 11/03/99 5,110 5,108
--------
MISCELLANEOUS BUSINESS CREDIT (2.8%)
General Electric Capital Corporation
5.379%, 12/07/99 4,000 4,000
--------
OIL EXPLORATION & PRODUCTION (4.8%)
Arco British Limited
5.340%, 11/03/99 3,000 2,999
5.260%, 11/16/99 2,000 1,996
Mobil Corporation
5.250%, 11/01/99 1,954 1,954
--------
6,949
--------
PRINTING & PUBLISHING (4.9%)
McGraw-Hill Companies
5.300%, 11/15/99 2,500 2,495
5.300%, 11/23/99 1,600 1,595
Times Mirror Company
5.250%, 11/04/99 3,000 2,999
--------
7,089
--------
See accompanying notes to financial statements.
2
<PAGE>
STATEMENT OF NET ASSETS
CNI CHARTER FUNDS -- OCTOBER 31, 1999
MONEY MARKET FUND (concluded)
Face
Amount Value
(000) (000)
- --------------------------------------------------------------
TELECOMMUNICATIONS SERVICES (3.5%)
Telstra Corporation
5.380%, 12/13/99 $5,000 $ 4,969
--------
TOTAL COMMERCIAL PAPER
(Cost $109,720) 109,720
--------
CORPORATE OBLIGATIONS (13.2%)
BANKS (1.4%)
First National Bank Senior Note
6.500%, 01/14/00 2,000 2,006
--------
FINANCIAL SERVICES (0.7%)
Trans America Finance
8.310%, 12/16/99 1,000 1,003
--------
INVESTMENT BANKER/BROKER (9.1%)
Bear Stearns Company MTN (A)
5.508%, 11/22/99 5,000 5,001
Merrill Lynch & Company MTN (A)
5.853%, 11/16/99 2,000 2,002
Morgan Stanley Group MTN
6.375%, 01/18/00 6,000 6,010
--------
13,013
--------
MISCELLANEOUS BUSINESS CREDIT (0.7%)
General Electric Capital Corporation
5.600%, 01/14/00 1,000 999
--------
PERSONAL CREDIT INSTITUTIONS (1.3%)
International Lease Finance MTN
6.640%, 02/01/00 1,800 1,807
--------
TOTAL CORPORATE OBLIGATIONS
(Cost $18,828) 18,828
--------
U.S. GOVERNMENT AGENCY OBLIGATION (2.8%)
SLMA (A)
5.495%, 11/09/99 4,000 4,000
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATION
(Cost $4,000) 4,000
--------
CERTIFICATES OF DEPOSIT (4.2%)
BANKS (4.2%)
Bayerische Hypo Vereinsbank AG (A)
5.100%, 11/15/99 1,000 999
Bayerische Hypo Vereinsbank
(New York) (A)
5.316%, 11/15/99 5,000 4,999
--------
5,998
--------
Face
Amount Value
(000) (000)
- --------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $5,998) 5,998
--------
ASSET-BACKED SECURITIES (0.2%)
WFS Financial Owner Trust,
Ser 1999-A, Class A1
5.008%, 02/20/00 $ 383 $ 383
--------
TOTAL ASSET-BACKED SECURITIES
(Cost $383) 383
--------
CASH EQUIVALENT (3.1%)
SEI Daily Income Trust Prime
Obligation Fund 4,437 4,437
--------
TOTAL CASH EQUIVALENT
(Cost $4,437) 4,437
--------
TOTAL INVESTMENTS (100.1%)
(Cost $143,366)(B) 143,366
--------
OTHER ASSETS AND LIABILITIES, NET (-0.1%) (203)
--------
NET ASSETS:
Fund Shares -- Institutional Class
(unlimited authorization -- $0.01 par
value) based on 137,655,506 outstanding
shares of beneficial interest 137,623
Fund Shares -- Class A (unlimited
authorization -- $0.01 par value) based
on 4,942,019 outstanding shares of
beneficial interest 4,942
Fund Shares -- Class S (unlimited
authorization -- $0.01 par value)
based on 562,135 outstanding shares
of beneficial interest 562
Undistributed net investment income 36
--------
TOTAL NET ASSETS (100.0%) $143,163
========
Net Asset Value, Offering and Redemption
Price Per Share-- Institutional Class $1.00
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class A $1.00
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class S $1.00
========
(A) VARIABLE RATE INSTRUMENT. THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON OCTOBER 31, 1999. THE DATE SHOWN IS THE EARLIER OF
THE RESET DATE OR THE DEMAND DATE.
(B) THE COST OF INVESTMENTS FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR
FINANCIAL STATEMENT PURPOSES.
LTD -- LIMITED
MTN -- MEDIUM TERM NOTE
SER -- SERIES
SLMA -- STUDENT LOAN MARKETING ASSOCIATION
See accompanying notes to financial statements.
3
<PAGE>
STATEMENT OF NET ASSETS
CNI CHARTER FUNDS -- OCTOBER 31, 1999
GOVERNMENT FUND
Face
Amount Value
(000) (000)
- --------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS (44.2%)
FFCB (A)
5.230%, 11/01/99 $25,000 $ 24,989
5.226%, 11/10/99 11,615 11,613
FHLB (A)
5.209%, 11/15/99 81,000 80,906
5.230%, 11/28/99 50,000 49,982
5.924%, 01/04/00 35,000 34,978
FHLB
4.900%, 01/14/00 11,615 11,615
4.835%, 01/28/00 14,712 14,710
5.530%, 02/03/00 25,000 24,639
4.895%, 02/04/00 28,649 28,647
4.900%, 02/11/00 7,743 7,741
5.530%, 02/15/00 10,032 9,869
5.035%, 02/25/00 15,486 15,485
FHLMC
5.220%, 12/17/99 10,000 9,933
5.250%, 07/05/00 30,000 28,919
FNMA (A)
5.180%, 11/04/99 30,000 29,986
5.974%, 01/14/00 30,000 29,986
FNMA
5.810%, 11/12/99 2,323 2,324
5.080%, 12/15/99 50,000 49,689
5.530%, 01/20/00 60,000 59,263
5.545%, 01/20/00 48,750 48,149
4.990%, 02/22/00 7,743 7,743
5.600%, 04/06/00 20,392 19,894
4.970%, 04/12/00 23,229 23,221
5.660%, 09/07/00 45,000 44,922
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $669,203) $669,203
--------
Face
Amount Value
(000) (000)
- --------------------------------------------------------------
REPURCHASE AGREEMENTS (55.8%)
Credit Suisse First Boston (B)
5.300%, dated 10/29/99,
matures 11/01/99, repurchase
price $310,136,917
(collateralized by various
U.S. Government Obligations
ranging in par value
$25,000-$24,206,682, 5.000%-
12.000%, 02/01/00-06/01/29;
with total market value
$316,219,067) $310,000 $310,000
Lehman Brothers, Inc. (B)
5.280%, dated 10/29/99,
matures 11/01/99, repurchase
price $18,308,052
(collateralized by various
U.S.Government Obligations
ranging in par value
$23,670,853- $46,384,092,
5.500%-9.000%, 02/01/01-10/01/16;
with total market value
$18,665,361) 18,300 18,300
Morgan Stanley Dean Witter (B)
5.300%, dated 10/29/99,
matures 11/01/99, repurchase
price $305,534,885 (collateralized
by various U.S. Government
Obligations ranging in par
value $1,000- $131,396,000,
5.000%-10.500%, 11/25/99-
10/01/29; with total market
value $313,346,325) 305,400 305,400
Salomon Smith Barney (B)
5.300%, dated 10/29/99,
matures 11/01/99, repurchase
price $210,092,750
(collateralized by various
U.S. Government Obligations
ranging in par value $916,044-
$29,952,282, 5.500%-9.000%,
04/01/01-10/01/29; with total
market value $214,494,291) 210,000 210,000
------------
TOTAL REPURCHASE AGREEMENTS
(Cost $843,700) 843,700
------------
TOTAL INVESTMENTS (100.0%)
(Cost $1,512,903) (C) 1,512,903
------------
OTHER ASSETS AND LIABILITIES, NET (0.0%) 145
------------
See accompanying notes to financial statements.
4
<PAGE>
STATEMENT OF NET ASSETS
CNI CHARTER FUNDS -- OCTOBER 31, 1999
GOVERNMENT FUND (concluded)
Value
(000)
- -----------------------------------------------------------
NET ASSETS:
Fund Shares -- Class A (unlimited
authorization -- $0.01 par value)
based on 1,512,137,032 outstanding
shares of beneficial interest $ 1,512,137
Fund Shares -- Class S (unlimited
authorization -- $0.01 par value)
based on 911,359 outstanding
shares of beneficial interest 911
-----------
TOTAL NET ASSETS (100.0%) $ 1,513,048
===========
Net Asset Value, Offering and Redemption
Price Per Share -- Class A $1.00
==========
Net Asset Value, Offering and Redemption
Price Per Share -- Class S $1.00
==========
(A) VARIABLE RATE INSTRUMENT. THE RATE REFLECTED ON THE
STATEMENT OF NET ASSETS IS THE RATE IN EFFECT ON
OCTOBER 31, 1999. THE DATE SHOWN IS THE EARLIER OF
THE RESET DATE OR THE DEMAND DATE.
(B) TRI-PARTY REPURCHASE AGREEMENT
(C) THE COST OF INVESTMENTS FOR FEDERAL INCOME TAX
PURPOSES IS THE SAME AS FOR FINANCIAL STATEMENT
PURPOSES.
FFCB -- FEDERAL FARM CREDIT BANK
FHLB -- FEDERAL HOME LOAN BANK
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
See accompanying notes to financial statements.
5
<PAGE>
STATEMENT OF NET ASSETS
CNI CHARTER FUNDS -- OCTOBER 31, 1999
CALIFORNIA TAX EXEMPT FUND
Face
Amount Value
(000) (000)
- ---------------------------------------------------------------
MUNICIPAL BONDS (100.0%)
CALIFORNIA (99.6%)
ABAG, Finance Authority, Bentley
School Project, COP (A) (B) (C)
3.000%, 11/08/99 $1,500 $1,500
Alameda County, Transportation
Authority, RB, AMBAC
4.100%, 11/01/99 900 900
Alameda-Contra Costa, School
Finance Authority, Capital
Improvement Project,
Ser F, RB (A) (B) (C)
3.450%, 11/08/99 4,800 4,800
Alhambra, Industrial Development
Authority, Sunclipse Project,
RB (A) (B) (C)
3.250%, 11/01/99 1,200 1,200
Anaheim, Housing Authority,
Heritage Village Apartments
Project, Ser A, RB (A) (B) (C)
3.450%, 11/08/99 6,135 6,135
Auburn, Unified School District
Authority, Capital Improvement
Project, GO (A) (B) (C)
3.000%, 11/08/99 1,500 1,500
Azusa, Multi-Family Housing
Authority, Pacific Glenn
Apartments Project, RB, FNMA
(A) (B) (E)
3.400%, 11/08/99 5,550 5,550
California State, Educational
Authority, Life Chiropractic
College Project, RB (A) (B) (C)
3.200%, 11/08/99 6,500 6,500
California State, Educational
Authority, Stanford University
Project, Ser L, RB (A) (B)
3.450%, 11/08/99 18,393 18,393
California State, Educational
Authority, Stanford University
Project, Ser L, RB (A) (B)
2.950%, 11/08/99 2,000 2,000
California State, Health Facilities
Finance Authority, Adventist
Health Systems West Project,
Ser 1998C, RB, MBIA (A) (B)
3.550%, 11/01/99 1,965 1,965
Face
Amount Value
(000) (000)
- ---------------------------------------------------------------
California State, Health Facilities
Finance Authority, Alexian
Brothers Project, RB, MBIA
Pre-Refunded @ 102 (D)
7.125%, 01/01/00 $ 900 $ 924
California State, Health Facilities
Finance Authority, Pomona Valley
Hospital Project, RB, MBIA
Pre-Refunded @ 102 (D)
6.750%, 01/01/00 1,395 1,432
California State, Health Facilities
Finance Authority, Pooled Loan
Program, Ser B, RB, FGIC (A) (B)
3.447%, 11/08/99 3,700 3,700
California State, Health Facilities
Finance Authority, Scripps Health
Project, Ser B, RB, MBIA (A) (B)
3.250%, 11/08/99 9,100 9,100
California State, Health Facilities
Finance Authority, Scripps
Memorial Hospital Project,
Ser B, RB, MBIA (A) (B)
3.250%, 11/08/99 900 900
California State, Health Facilities
Finance Authority, Scripps
Memorial Hospital Project,
Ser B, RB, MBIA (A) (B)
3.250%, 11/08/99 13,220 13,220
California State, Pollution Control
Authority, Pacific Gas & Electric
Project, Ser A, RB (A) (B) (C)
3.550%, 11/01/99 1,200 1,200
California State, School Financing
Authority, Capital Improvement
Project, Ser A, RB (A) (B) (C)
3.150%, 11/08/99 2,700 2,700
California State, Water Use Finance
Authority, RB, FSA (A) (B)
3.400%, 11/08/99 22,000 22,000
California Statewide, Community
Development Authority, Covenant
Retirement Communities
Project, COP (A) (B) (C)
3.300%, 11/08/99 8,000 8,000
See accompanying notes to financial statements.
6
<PAGE>
STATEMENT OF NET ASSETS
CNI CHARTER FUNDS -- OCTOBER 31, 1999
CALIFORNIA TAX EXEMPT FUND (continued)
Face
Amount Value
(000) (000)
- ---------------------------------------------------------------
Chico, Public Finance Authority,
Southeast Chico Redevelopment
Project, Ser B, RB
Pre-Refunded @ 102 (D)
7.400%, 04/01/00 $2,245 $2,329
Corona, Multi-Family Housing
Authority, County Hills Project,
Ser B, RB (A) (B) (C)
3.450%, 11/08/99 1,355 1,355
Corona, Multi-Family Housing
Authority, Household Bank Project,
Ser B, RB (A) (B) (C)
2.800%, 11/08/99 2,500 2,500
Corona, Redevelopment Agency,
Crown Point Project,
Ser 85, RB (A) (B) (C)
3.250%, 11/01/99 6,705 6,705
Covina, Multi-Family Housing
Authority, Shadowhills Apartments
Project, Ser A, RB, FNMA
(A) (B) (E)
3.400%, 11/08/99 3,100 3,100
Cupertino, Unified School
District, TRAN
3.375%, 06/30/00 8,000 8,006
El Cerrito, TRAN
3.400%, 06/30/00 2,000 2,001
Elk Grove, Unified School
District, TRAN
4.500%, 06/30/00 6,000 6,043
Escondido, Heritage Housing Project,
RB (A) (B) (C)
3.450%, 11/08/99 5,950 5,950
Fontana, Gaf Tax Exempt Bond
Grantor Trust, Ser GA-7, RB
(A) (B) (C)
3.750%, 11/01/99 5,885 5,885
Huntington Park, Public Financing
Authority, Parking Project,
Ser A, RB (A) (B) (C)
4.000%, 11/08/99 4,315 4,315
Irvine Ranch, Water District
Consolidated Refunding Bonds,
Ser 1993A, RB (A) (B) (C)
3.650%, 11/01/99 4,800 4,800
Face
Amount Value
(000) (000)
- ---------------------------------------------------------------
Irwindale, Industrial Development
Authority, Toys "R" Us Project,
RB (A) (B) (C)
3.675%, 11/08/99 $ 4,175 $ 4,175
Lancaster, Multi-Family Housing
Authority, 20 Street Apartments
Project, Ser C, RB (A) (B) (C)
3.400%, 11/08/99 3,250 3,250
Lancaster, Multi-Family Housing
Authority, Household Bank Project,
Ser A, RB (A) (B) (C)
2.900%, 11/08/99 2,510 2,510
Lancaster, Multi-Family Housing
Authority, The Willow Project,
Ser A, RB (A) (B) (C)
2.900%, 11/08/99 6,000 6,000
Long Beach, Building Finance
Authority, Long Beach Museum
Project, RB (A) (B) (C)
3.150%, 11/08/99 2,060 2,060
Long Beach, Health Facilities
Authority, Memorial Health
Services Project, RB (A) (B)
3.150%, 11/08/99 4,500 4,500
Loomis, Unified Elementary School
District, TRAN
4.125%, 10/01/00 1,225 1,230
Los Angeles County, Community
Redevelopment Agency,
Willowbrook Project, RB
(A) (B) (C)
3.100%, 11/15/99 1,000 1,000
Los Angeles County, Housing
Authority, Malibu Meadows
Project, Ser B, RB, FNMA
(A) (B) (E)
3.100%, 11/08/99 5,000 5,000
Los Angeles County, Mortgage
Authority, Crescent Gardens
Project, Ser A, RB (A) (B)
3.300%, 11/08/99 10,700 10,700
See accompanying notes to financial statements.
7
<PAGE>
STATEMENT OF NET ASSETS
CNI CHARTER FUNDS -- OCTOBER 31, 1999
CALIFORNIA TAX EXEMPT FUND (continued)
Face
Amount Value
(000) (000)
- ---------------------------------------------------------------
Los Angeles County, Multi-Family
Housing Authority, Malibu Canyon
Apartments, Ser B, RB (A) (B) (C)
2.950%, 11/08/99 $ 3,500 3,500
Los Angeles County, Pension
Obligation, Ser B, RB,
AMBAC (A) (B)
3.150%, 11/08/99 20,000 20,000
Los Angeles County, TRAN
4.000%, 06/30/00 4,800 4,821
Los Angeles, Community
Redevelopment Authority, Central
Business District, GO
5.000%, 11/15/99 17,935 17,948
Los Angeles, Community
Redevelopment Agency, CMC
Medical Plaza Partner Project,
RB (A) (B) (C)
3.100%, 11/08/99 800 800
Los Angeles, Multi-Family Mortgage
Authority, Valencia Village Project,
Ser C, RB (A) (B) (C)
3.450%, 11/08/99 3,500 3,500
Los Angeles, Multi-Family Housing
Authority, Meadowridge
Apartments Project, RB (A) (B)
3.400%, 11/01/99 5,390 5,390
Los Angeles, Multi-Family Housing
Authority, Promonade Towers
Project, RB (A) (B) (C)
3.450%, 11/08/99 21,000 21,000
Los Angeles, Multi-Family Housing
Authority, Ser K, RB (A) (B) (C)
3.050%, 11/08/99 5,900 5,900
Los Angeles, Unified School District
Authority, Belmont Learning
Complex Project, Ser A,
RB (A) (B) (C)
3.250%, 11/08/99 10,200 10,200
Metropolitan Water District,
Waterworks Project, Ser C,
RB (A) (B) (C)
3.450%, 11/08/99 1,000 1,000
Mount Diablo, School District, GO
3.500%, 01/28/00 2,783 2,787
Oakland, Capital Equipment Project,
COP (A) (B) (C)
3.000%, 11/08/99 10,000 10,000
Face
Amount Value
(000) (000)
- ---------------------------------------------------------------
Oakland, Liquidity Facilities
Authority, Assessment Bay Area
Project, RB (A) (B) (C)
3.550%, 11/08/99 $1,820 $1,820
Oakland, School District
Authority, GO
3.250%, 11/09/99 3,711 3,712
Orange County, Apartment
Development Authority, Harbor
Pointe Project, Ser D, RB (A) (B) (C)
3.100%, 11/08/99 4,100 4,100
Orange County, Apartment
Development Authority, Hidden
Hills Project, Ser C, RB (A) (B) (C)
2.950%, 11/08/99 4,835 4,835
Orange County, Apartment
Development Authority, Radnor/
Aragon Corporation Project,
Ser D, RB (A) (B) (C)
3.675%, 11/08/99 3,160 3,160
Orange County, Apartment
Development Authority,
Villas La Paz Project,
Ser F, RB, FNMA (A) (B) (E)
3.100%, 11/08/99 3,000 3,000
Orange County, Fire
Authority, TRAN
4.500%, 07/12/00 7,000 7,049
Orange County, Housing Authority,
Monarch Bay Apartments Project,
RB (A) (B) (C)
3.100%, 11/08/99 600 600
Oxnard, Community Redevelopment
Agency, Channel Islands Business
Project, RB (A) (B) (C)
3.925%, 11/08/99 4,375 4,375
Panama-Buena Vista, Union School
District Authority, Capital
Improvements Finance Project,
COP (A) (B) (C)
3.550%, 11/08/99 8,350 8,350
Pasadena, School District, GO
4.750%, 05/01/00 427 430
Pasadena, Historical Rehabilitation
Authority, Dodsworth Building
Project, RB (A) (B) (C)
3.100%, 11/08/99 4,000 4,000
See accompanying notes to financial statements.
8
<PAGE>
STATEMENT OF NET ASSETS
CNI CHARTER FUNDS -- OCTOBER 31, 1999
CALIFORNIA TAX EXEMPT FUND (continued)
Face
Amount Value
(000) (000)
- -------------------------------------------------------------
Pasadena, Rose Bowl Improvement
Project, COP (A) (B) (C)
3.200%, 11/08/99 $1,200 $1,200
Pasadena, Rose Bowl Improvement
Project, COP (A) (B) (C)
3.200%, 11/08/99 9,480 9,480
Placer Hills, Unified Elementary
School District Authority, TRAN
4.125%, 10/01/00 1,150 1,155
Pleasanton, Multi-Family Mortgage
Authority, Valley Plaza Project,
Ser A, RB, FNMA (A) (B) (E)
2.850%, 11/08/99 800 800
Porterville, TRAN
3.600%, 11/29/99 1,010 1,010
Rancho Cucamonga, Redevelopment
Agency, GO, FSA
4.250%, 09/01/00 940 945
Redwood City, City Hall Project,
COP (A) (B) (C)
3.200%, 11/08/99 2,000 2,000
Richmond, Joint Powers Financial
Authority, Ser B, RB
Pre-Refunded @ 102 (D)
7.250%, 05/15/00 1,856 1,933
Riverside County, Multi-Family
Housing Authority, De Anza Villas
Project, RB (A) (B) (C)
3.000%, 11/08/99 3,060 3,060
Riverside County, Multi-Family
Housing Authority, Polk
Apartments Project, Ser O, RB
(A) (B) (C)
3.156%, 11/08/99 7,340 7,340
Riverside County, Multi-Family
Housing Authority, Tyler Springs
Project, Ser C, RB (A) (B) (C)
3.100%, 11/08/99 2,250 2,250
Riverside, Multi-Family Housing
Authority, Countrywood & IA
Apartments Project, Ser E, RB
(A) (B) (C)
3.250%, 11/08/99 2,560 2,560
Rocklin, Unified School District
Authority, TRAN
4.125%, 10/01/00 1,300 1,305
Face
Amount Value
(000) (000)
- ---------------------------------------------------------------
San Bernadino County,
Center Refunding Project,
COP (A) (B) (C)
3.200%, 11/08/99 $5,800 $5,800
San Bernadino County, Multi-Family
Housing Authority, Gold West
Apartments Project, Ser A, RB
(A) (B) (C)
3.500%, 11/08/99 500 500
San Bernadino County, Industrial
Development Authority, Sandpiper
Investments Project, RB (A) (B) (C)
3.550%, 11/01/99 2,900 2,900
San Bernadino County, Multi-Family
Housing Authority, Alta Loma
Heritage Project, Ser A, RB
(A) (B) (C)
3.400%, 11/08/99 2,264 2,264
San Bernadino County, Multi-Family
Housing Authority, Indian Knoll
Apartment Project, Ser A, RB
(A) (B) (C)
3.600%, 11/08/99 3,580 3,580
San Bernadino County, Multi-Family
Housing Authority, Mountain
View Apartments, RB (A) (B) (C)
3.100%, 11/08/99 2,110 2,110
San Bernadino County, Multi-Family
Housing Authority, Parkview Place
Project, Ser A, RB (A) (B) (C)
3.100%, 11/08/99 5,220 5,220
San Bernadino County, Multi-Family
Housing Authority, Village Crossing
Project, Ser A, RB (A) (B) (C)
3.500%, 11/08/99 3,700 3,700
San Bernadino, Housing Authority,
Riatto Heritage Project,
Ser A, RB (A) (B) (C)
3.500%, 11/08/99 4,330 4,330
San Bernadino, Medical Center
Financing Project, COP
4.750%, 08/01/00 4,000 4,033
San Bernadino, Housing Authority,
Reche Canyon Apartment Project,
Ser B, RB (A) (B) (C)
3.600%, 11/08/99 1,500 1,500
See accompanying notes to financial statements.
9
<PAGE>
STATEMENT OF NET ASSETS
CNI CHARTER FUNDS -- OCTOBER 31, 1999
CALIFORNIA TAX EXEMPT FUND (continued)
Face
Amount Value
(000) (000)
- ---------------------------------------------------------------
San Bernadino County, Multi-Family
Housing Authority, Montclair
Heritage Project, Ser A, RB
(A) (B) (C)
3.500%, 11/08/99 $4,620 $ 4,620
San Diego, Multi-Family Housing
Authority, Housing Project, RB
(A) (B) (C)
2.650%, 11/08/99 2,000 2,000
San Diego, Multi-Family Housing
Authority, University Town Center
Apartments Project, RB (A) (B) (C)
2.850%, 11/08/99 1,400 1,400
San Francisco, City and County
Multi-Family Housing Authority,
737 Post Project, Ser D, RB
(A) (B) (C)
3.000%, 11/08/99 10,000 10,000
San Francisco, City and County
Finance Authority, Yerba Buena
Garden Project, RB (A) (B) (C)
3.450%, 11/08/99 965 965
San Jose, Multi-Family Housing
Authority, Timberwood Apartments
Project, RB (A) (B) (C)
3.450%, 11/08/99 1,000 1,000
San Leandro, Unified School
District, TRAN
3.375%, 06/30/00 6,000 6,005
San Lorenzo/Alameda County,
Unified School District, TRAN
3.500%, 06/30/00 2,500 2,504
San Marcos, Industrial Development
Authority, Amistar Project,
RB (A) (B) (C)
3.550%, 11/01/99 4,175 4,175
Santa Ana, Health Facility Authority,
Town & Country Project,
RB (A) (B) (C)
3.550%, 11/01/99 1,700 1,700
Santa Clara County, El Camino
Hospital District Lease Authority,
Valley Medical Center Project,
Ser 85A, RB (A) (B) (C)
3.450%, 11/08/99 500 500
Face
Amount Value
(000) (000)
- ---------------------------------------------------------------
Santa Clara County, Financing Lease
Authority, Facility Replacement
Project, Ser B, RB (A) (B) (C)
3.000%, 11/08/99 $2,000 $ 2,000
Santa Clara County, Multi-Family
Housing Authority, Briarwood
Apartments Project, Ser B, RB,
FNMA (A) (B) (E)
3.100%, 11/08/99 2,420 2,420
Simi Valley, Public Finance Authority,
Lease Revenue Project,
RB (A) (B) (C)
3.450%, 11/08/99 500 500
Simi Valley, Industrial & Economic
Development Authority, Wambold
Furniture Project, RB (A) (B) (C)
3.650%, 11/01/99 2,140 2,140
Simi Valley, Multi-Family Housing
Authority, Lincoln Wood Ranch
Project, RB (A) (B) (C)
3.450%, 11/08/99 2,500 2,500
Simi Valley, Multi-Family Housing
Authority, Ser A, RB (A) (B) (C)
3.100%, 11/08/99 2,140 2,140
South California, Public Power
Authority, Transmission Project,
Ser 91, RB, AMBAC (A) (B)
3.150%, 11/08/99 14,000 14,000
Three Valleys, Municipal Water
Authority, Miramar Water
Treatment Project, RB (A) (B) (C)
3.100%, 11/08/99 3,000 3,000
Vallejo, Multi-Family Housing
Authority, Highlands Apartments
Project, Ser A, RB (A) (B) (C)
3.000%, 11/08/99 5,620 5,620
West Basin, Municipal Water District
Authority, Phase III Recycled Water
Project, Ser A, RB (A) (B) (C)
3.050%, 11/08/99 22,345 22,345
Western Placer, Unified School
District Authority, TRAN
4.125%, 10/01/00 2,665 2,676
See accompanying notes to financial statements.
10
<PAGE>
STATEMENT OF NET ASSETS
CNI CHARTER FUNDS -- OCTOBER 31, 1999
CALIFORNIA TAX EXEMPT FUND (concluded)
Face
Amount Value
(000) (000)
- ---------------------------------------------------------------
Westminster, Redevelopment
Authority, Commercial
Redevelopment Project,
RB, AMBAC (A) (B)
3.200%, 11/08/99 $6,390 $ 6,390
--------
530,885
--------
PUERTO RICO (0.4%)
Puerto Rico Commonwealth, GO
Pre-Refunded @ 102 (D)
7.700%, 07/01/00 2,250 2,357
--------
TOTAL MUNICIPAL BONDS
(Cost $533,242) 533,242
--------
TOTAL INVESTMENTS (100.0%)
(Cost $533,242) (F) 533,242
--------
OTHER ASSETS AND LIABILITIES, NET (0.0%) 2
--------
Value
(000)
- ---------------------------------------------------------------
NET ASSETS:
Fund Shares -- Class A (unlimited
authorization -- $0.01 par value)
based on 533,238,745 outstanding
shares of beneficial interest $533,239
Undistributed net investment income 5
--------
TOTAL NET ASSETS (100.0%) $533,244
========
Net Asset Value, Offering and Redemption
Price Per Share -- Class A $1.00
========
(A) FLOATING RATE SECURITY - THE RATE REFLECTED ON THE STATEMENT
OF NET ASSETS IS THE RATE IN EFFECT ON OCTOBER 31, 1999.
(B) PUT AND DEMAND FEATURE - THE DATE REPORTED ON THE STATEMENT
OF NET ASSETS IS THE EARLIER OF THE MATURITY DATE OR THE PUT DATE.
(C) SECURITIES ARE HELD IN CONJUNCTION WITH A LETTER OF CREDIT
FROM A MAJOR BANK OR FINANCIAL INSTITUTION.
(D) PRE-REFUNDED SECURITY - THE MATURITY DATE SHOWN IS THE PRE-REFUNDED DATE.
(E) SECURITIES ARE COLLATERALIZED UNDER AN AGREEMENT FROM FNMA.
(F) THE COST OF INVESTMENTS FOR FEDERAL INCOME TAX PURPOSES IS THE
SAME AS FOR FINANCIAL STATEMENT PURPOSES.
AMBAC -- AMERICAN BOND MUNICIPAL ASSURANCE COMPANY
COP -- CERTIFICATE OF PARTICIPATION
FGIC -- FINANCIAL GUARANTY INSURANCE COMPANY
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
FSA -- FINANCIAL SECURITY ASSISTANCE
GO -- GENERAL OBLIGATION
MBIA -- MUNICIPAL BOND INSURANCE ASSOCIATION
RB -- REVENUE BOND
SER -- SERIES
TRAN -- TAX & REVENUE ANTICIPATION NOTE
See accompanying notes to financial statements.
11
<PAGE>
STATEMENT OF OPERATIONS
CNI CHARTER FUNDS
<TABLE>
<CAPTION>
MONEY MARKET GOVERNMENT FUND CALIFORNIA
FUND 6/21/99(1) TO TAX EXEMPT FUND
YEAR ENDED 10/31/99 10/31/99 6/21/99(1) TO 10/31/99
(000) (000) (000)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income
Interest $7,411 $25,399 $5,558
-------- ------- -----
Expenses:
Investment Advisory Fees 361 1,276 508
Waiver of Investment Advisory Fees (227) (487) (409)
Administrative Fees 182 496 292
Shareholder Servicing Fees--Institutional Class 360 -- --
Shareholder Servicing Fees--Class A (2) -- 3,680 1,413
Waiver Shareholder Servicing Fees Class A -- (981) (405)
Custodian Fees 16 29 11
Professional Fees 54 71 29
Transfer Agent Fees 18 7 6
Printing Fees 25 28 10
Trustee Fees 15 5 2
Registration and Filing Fees 39 39 9
Insurance and Other Fees 37 7 3
Organizational Fees 29 -- --
-------- ------- ------
Net Expenses 909 4,170 1,469
-------- ------- ------
6,502 21,229 4,089
-------- ------- ------
NET INVESTMENT INCOME:
Net Realized Loss From Security Transactions -- -- (1)
-------- ------- ------
NET INCREASE IN NET ASSETS
FROM OPERATIONS
$6,502 $21,229 $4,088
======== ======= ======
</TABLE>
(1) Commencement of operations
(2) Includes class specific distribution expenses.
Amounts designated as "-" are either $0 or have been rounded to $0.
See accompanying notes to financial statements.
12
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
CNI CHARTER FUNDS
<TABLE>
<CAPTION>
CALIFORNIA
MONEY MARKET GOVERNMENT TAX-EXEMPT
FUND FUND FUND
YEAR ENDED 3/23/98(1) TO 6/21/99(1) TO 6/21/99(1) TO
10/31/99 10/31/98 10/31/99 10/31/99
(000) (000) (000) (000)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income $ 6,502 $ 3,853 $ 21,229 $ 4,089
Net Realized Loss from Security Transactions -- -- -- (1)
-------- -------- ---------- ---------
Net Increase in Net Assets Resulting from Operations 6,502 3,853 21,229 4,088
-------- -------- ---------- ---------
DIVIDENDS DISTRIBUTED FROM:
Net Investment Income:
Institutional Class (6,496) (3,853) -- --
Class A (3) -- (21,228) (4,083)
Class S -- -- (1) --
-------- -------- ---------- ---------
Total Dividends Distributed (6,499) (3,853) (21,229) (4,083)
-------- -------- ---------- ---------
CAPITAL SHARE TRANSACTIONS
(ALL AT $1.00 PER SHARE):
Institutional Class:
Shares Issued 349,856 222,429 -- --
Shares Issued in Lieu of Cash Distributions 5 142 -- --
Shares Redeemed (345,633) (89,243) -- --
-------- -------- ---------- ---------
Increase in Net Assets From
Institutional Class Share Transactions 4,228 133,328 -- --
-------- -------- ---------- ---------
Class A:
Shares Issued 5,584 -- 2,596,166 1,098,793
Shares Issued in Lieu of Cash Distributions -- -- 14,931 2,980
Shares Redeemed (642) -- (1,098,960) (568,534)
-------- -------- ---------- ---------
Increase in Net Assets From
Class A Share Transactions 4,942 -- 1,512,137 533,239
-------- -------- ---------- ---------
Class S:
Shares Issued 562 -- 911 --
Shares Issued in Lieu of Cash Distributions -- -- -- --
Shares Redeemed -- -- -- --
-------- -------- ---------- ---------
Increase in Net Assets From
Class S Share Transactions 562 -- 911 --
-------- -------- ---------- ---------
Net Increase in Net Assets From Share Transactions 9,732 133,328 1,513,048 533,239
-------- -------- ---------- ---------
Total Increase in Net Assets 9,735 133,328 1,513,048 533,244
-------- -------- ---------- ---------
NET ASSETS:
Beginning of Period 133,428 100 -- --
-------- -------- ---------- ---------
End of Period $143,163 $133,428 $1,513,048 $ 533,244
======== ======== ========== =========
<FN>
(1) Commencement of operations
Amounts designated as "--" are either $0 or have been rounded to $0
</FN>
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
FINANCIAL HIGHLIGHTS
CNI CHARTER FUNDS -- FOR THE PERIOD ENDED OCTOBER 31,
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
RATIO
NET NET NET RATIO OF EXPENSES
ASSET DISTRIBUTIONS ASSET ASSETS RATIO OF NET TO AVERAGE
VALUE NET FROM NET VALUE END OF EXPENSES INCOME NET ASSETS
BEGINNING INVESTMENT INVESTMENT END TOTAL OF PERIOD TO AVERAGE TO AVERAGE (EXCLUDING
OF PERIOD INCOME INCOME OF PERIOD RETURN (000) NET ASSETS(7) NET ASSETS(7) WAIVERS)(7)
--------- ---------- ------------- --------- ------- --------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market Fund
- -----------------
Institutional Class
1999 $1.00 0.045 (0.045) $1.00 4.61% $ 137,659 0.63% 4.51% 0.79%
1998(1) 1.00 0.029 (0.029) 1.00 3.11 133,428 0.63 4.99 0.78
Class A
1999(2) $1.00 0.002 (0.002) $1.00 0.18% $ 4,942 0.85% 4.62% 1.30%
Class S
1999(3) $1.00 0.001 (0.001) $1.00 0.07% $ 562 1.05% 4.42% 1.30%
Government Fund
- ---------------
Class A
1999(4) $1.00 0.016 (0.016) $1.00 1.58% $1,512,137 0.85% 4.33% 1.15%
Class S
1999(5) $1.00 0.003 (0.003) $1.00 0.30% $ 911 1.05% 4.30% 1.15%
California Tax Exempt Fund
- --------------------------
Class A
1999(6) $1.00 0.008 (0.008) $1.00 0.79% $ 533,244 0.78% 2.17% 1.21%
<FN>
(1) Money Market Fund Institutional Class shares commenced operations on March 23, 1998.
(2) Money Market Fund Class A shares commenced operations on October 18, 1999.
(3) Money Market Fund Class S shares commenced operations on October 26, 1999.
(4) Government Fund Class A shares commenced operations on June 21, 1999.
(5) Government Fund Class S shares commenced operations on October 6, 1999.
(6) California Tax Exempt Fund Class A shares commenced operations on June 21, 1999.
(7) Annualized.
</FN>
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
1. ORGANIZATION:
THE CNI CHARTER FUNDS, a Delaware business trust (the "Trust"), formerly named
the Berkeley Funds, is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company. The
financial statements included herein are those of the CNI Charter Money Market
Fund, formerly the Berkeley Money Market Fund, the CNI Charter Government Fund
and the CNICharter California Tax Exempt Fund (collectively the "Funds"). The
Trust's former sponsor, North American Trust Company, was acquired on December
31, 1998 by the Trust's current sponsor, City National Bank. Following the
acquisition, the Trust's name was changed to the CNI Charter Funds. Each Fund's
prospectus provides a description of the Fund's investment objectives, policies
and strategies. Each Fund is registered to offer three classes of shares:
Institutional Class, Class A, and Class S.
2. SIGNIFICANT ACCOUNT POLICIES:
The following is a summary of the significant accounting policies followed by
the Funds.
SECURITY VALUATION -- Investment securities are stated at amortized cost,
which approximates market value. Under this valuation method, purchase
discounts and premiums are accreted and amortized ratably to maturity and
are included in interest income.
FEDERAL INCOME TAXES -- It is each Fund's intention to qualify as a
regulated investment company by complying with the appropriate provisions
of the Internal Revenue Code of 1986, as amended. Accordingly, no provision
for Federal income taxes is required.
SECURITY TRANSACTIONS AND RELATED INCOME -- Security transactions are
accounted for on the date the security is purchased or sold (trade date).
Interest income is recognized on the accrual basis. For securities sold,
realized gains or losses are determined on the basis of the identified cost
of the securities delivered.
CLASSES -- Class-specific expenses are borne by that class. Income, non
class-specific expenses, and realized and unrealized gains/losses are
allocated to the respective class on the basis of relative net asset value
each day.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income
are declared daily and paid to shareholders monthly. Any net realized
capital gains are distributed to shareholders at least annually.
Distributions from net investment income and net realized capital gains are
determined in accordance with U.S. Federal income tax regulations, which
may differ from those amounts determined under generally accepted
accounting principles. These book/tax
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1999
differences may be temporary or permanent in nature. To the extent these
differences are permanent, they are charged or credited to paid-in-capital
or accumulated net realized gain, as appropriate, in the period that the
differences arise. Accordingly, the following permanent differences, have
been reclassified to/from the following accounts during the fiscal year
ended October 31, 1999:
Undistributed
Accumulated Net Investment
Paid-in-Capital Realized Gain Income
Funds (000) (000) (000)
------ ---------------- ---------------- --------------
Money Market Fund $(33) $-- $33
ORGANIZATIONAL COSTS -- Organizational costs of the Money Market Fund have
been capitalized and are being amortized over a period of sixty months. In
the event any of the initial shares of the Fund are redeemed by any holder
thereof during the period that the Fund is amortizing its organizational
costs, the redemption proceeds payable to the holder thereof by the Fund
will be reduced by the unamortized organizational costs in the same ratio
as the number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of redemption. USE OF ESTIMATES
--The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses during
the reporting period. Actual results could differ from those estimates.
3. SERVICE AGREEMENTS:
Prior to April 1, 1999 Firstar Mutual Fund Services, LLC served as
Administrator, Shareholder Servicing Agent and Transfer Agent of the Fund.
Effective April 1, 1999 SEI Investments Mutual Funds Services assumed the role
of Administrator whereby they provide administrative services at an annual rate
of 0.15% of the average daily net assets of the Money Market Fund, 0.101% of the
average daily net assets of the Government Fund, and 0.155% of the daily net
assets of the California Tax-Exempt Fund, subject to a minimum annual fee of
$90,000 for the Money Market Fund. As of the same date, SEI Investments Fund
Management assumed the role of Transfer Agent whereby they provide services at
an annual rate of $15,000 per fund.
On April 1, 1999 First Union National Bank assumed the role of Custodian for the
Fund from Firstar Bank Milwaukee, N.A. Fees of the Custodian are being paid on
the basis of the net assets of the
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1999
Fund. The Custodian plays no role in determining the investment policies of the
Fund or which securities are to be purchased or sold by the Fund.
Certain officers of the Trust are also officers of SEI Investments Mutual Funds
Services (the "Administrator") and/or SEI Investments Distribution Co. (the
"Distributor"). Such officers are paid no fees by the Trust for serving as
officers of the Trust.
4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
Prior to April 1, 1999 Berkeley Capital Management ("BCM") served as the
Investment Adviser for the Money Market Fund whereby they received fees at an
annual rate of 0.25% of the average daily net assets of the Fund. Following the
acquisition of North American Trust Company by City National Bank, City National
Investments ("CNI"), a division of City National Bank, assumed the role of
Investment Adviser. Under the terms of the agreements, CNI receives an annual
fee equal to 0.25% of the average daily net assets of the Money Market Fund,
0.26% of the average daily net assets of the Government Fund and 0.27% of the
average daily net assets of the California Tax Exempt Fund. During the year
ended October 31, 1999, BCM earned investment advisory fees related to the Money
Market Fund of $72,162, net of waivers. The Money Market, Government and
California Tax Exempt Funds had investment advisory fees payable, net of
waivers, to CNI at October 31, 1999 in the amount of $6,910, $201,791 and
$22,881, respectively.
Wellington Management Company, LLP ("Wellington Management") acts as the
Investment Sub- Adviser on behalf of the Government Fund.
Weiss, Peck, &Greer, L.L.C. ("WP&G) acts as the Investment Sub-Adviser on behalf
of the California Tax Exempt Fund.
In their role as Investment Adviser, CNI has contractually agreed to limit their
fees or reimburse the expenses of the Institutional Class shares of the Money
Market Fund to the same contractual limit as was provided by BCM, the Fund's
previous Investment Adviser. For the Government Fund, California Tax Exempt
Fund, and all other classes of the Money Market Fund, CNI has voluntarily agreed
to limit their fees or reimburse the expenses to the extent necessary to keep
the operating expenses at or below certain percentages of the respective average
daily net assets. The contractual and voluntary expense limitations (expressed
as a percentage of average daily net assets) are as follows:
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
OCTOBER 31, 1999
Money California
Market Government Tax-Exempt
Fund Fund Fund
---------- ---------- ----------
Institutional Class 0.63% -- --
Class A 0.85% 0.85% 0.78%
Class S 1.05% 1.05% --
CNI may remove this limit at any time after March 31, 2001, and under certain
conditions may recoup the expenses it has reimbursed or absorbed within three
years after they occur if such repayments can be achieved within the Fund's then
current expense limit.
Effective April 1, 1999 the Trust entered into Shareholder Services Agreements
(the "Agreements") with City National Bank whereby City National Bank receives
shareholder service fees at an annual rate of 0.25% of the average daily net
assets of the Funds. Under the Agreements, the Money Market, Government and
California Tax Exempt Funds had shareholder services fees payable, net of
waivers, to City National Bank, an affiliate of the Adviser, at October 31, 1999
in the amount of $29,567, $313,649 and $111,757, respectively.
The Trust and the Distributor, SEI Investments Distribution Company ("SIDCO"),
entered into Distribution Agreements dated April 8, 1999. The distributor
receives no fees for its distribution services under these agreements.
City National Bank serves as Sub-Distributor to the Funds. The Funds have
adopted Distribution Plans ("the Plans") relating to the Class A and S shares
pursuant to the Investment Company Act of 1940, Rule 12b-1. The Plans provide
for payment of fees to the Distributor at an annual rate of 0.50% of the average
daily net assets of the Class A and S shares. Such fees are then paid to the
Sub-Distributor for services provided. Under the Agreements the Money Market,
Government and California Tax Exempt Funds had distribution fees payable to City
National Bank in the amount of $265, $376,433 and $139,789, respectively.
5. CONCENTRATION OF CREDIT RISK:
The Funds invest primarily in high quality money market instruments. The Funds
maintain a diversified portfolio that currently has a concentration of assets in
the financial services industry. The ability of the issuers of the securities
held by the Funds to meet their obligations may be affected by economic
developments in the financial services industry.
CALIFORNIA TAX EXEMPT FUND-SPECIFIC RISKS
The ability of issuers to pay interest on, and repay principal of, California
municipal securities may be affected by the general financial condition of the
State of California.
18
<PAGE>
NOTICE TO SHAREHOLDERS
CNI CHARTER FUNDS -- OCTOBER 31, 1999 (UNAUDITED)
For shareholders that do not have an October 31, 1999 taxable year end, this
notice is for informational purposes only. For shareholders with an October 31,
1999 taxable year end, please consult your tax advisor as to the pertinence of
this notice.
For the fiscal year ended October 31, 1999 each fund is designating the
following items with regard to distributions paid during the year as follows:
LONG TERM ORDINARY
CAPITAL GAINS INCOME
DISTRIBUTIONS DISTRIBUTIONS TAX-EXEMPT
FUND (TAX BASIS) (TAX BASIS) INTEREST
- -------------------------- ------------- ------------- ----------
Money Market Fund 0% 100% 0%
Government Fund 0% 100% 0%
California Tax-Exempt Fund 0% 0% 100%
TOTAL
DISTRIBUTIONS
FUND (TAX BASIS)
- -------------------------- -------------
Money Market Fund 100%
Government Fund 100%
California Tax-Exempt Fund 100%
19
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Trustees of
CNI Charter Funds:
We have audited the accompanying statements of net assets of the CNI Charter
Money Market Fund, CNI Charter Government Fund, and CNI Charter California Tax
Exempt Fund (three of the funds comprising CNI Charter Funds) as of October 31,
1999, and the related statements of operations, statements of changes in net
assets, and financial highlights for the year then ended for the CNI Charter
Money Market Fund, and for the period from June 21, 1999 (commencement of
operations) through October 31, 1999 for the CNI Charter Government Fund and CNI
Charter California Tax Exempt Fund. 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 financial highlights
based on our audits. For the CNI Charter Money Market Fund, the statement of
changes in net assets and financial highlights for the period from March 23,
1998 (commencement of operations) through October 31, 1998 were audited by other
auditors whose report thereon dated December 11, 1998 expressed an unqualified
opinion on this information.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1999, by correspondence with the custodian and other appropriate
audit procedures. 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 1999 financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the aforementioned funds of CNI Charter Funds as of October 31, 1999,
the results of their operations, the changes in their net assets, and their
financial highlights for the year or period then ended as indicated above, in
conformity with generally accepted accounting principles.
[KPMG LLP logo/sig omitted]
Los Angeles, California
December 3, 1999
20
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CNI(R)CHARTER FUNDS
This report and the financial statements
contained herein are provided for the
general information of the shareholders of
the CNI Charter Funds. This report is not
authorized for distribution to prospective
investors in the CNICharter Funds unless
preceded or accompanied by an effective
prospectus.
Please remember that money market
yields fluctuate and past performance is
no guarantee of future results.
MUTUAL FUND SHARES:
[BULLET] ARE NOT FDIC INSURED
[BULLET] ARE NOT BANK GUARANTEED
[BULLET] MAY LOSE VALUE
For more information on CNI Charter Funds,
including charges and expenses, please call
1-888-889-0799 for a free prospectus. Read
it carefully before you invest or send money.
[LOGO OMITTED]
CNI-F-003-01
