<PAGE>
As filed with the Securities and Exchange
Commission on May 3, 1999
File Nos. 333-16093
811-7923
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 8
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 9
CNI CHARTER FUNDS
(Exact Name of Registrant as Specified in its Charter)
400 North Roxbury Drive
Beverly Hills, California 90210
(Address of Principal Executive Office)
(800) 708-8881
(Registrant's Telephone Number, Including Area Code)
WILLIAM SOUZA, ESQ.
400 North Roxbury Drive
Beverly Hills, California 90210
(Name and Address of Agent for Service)
--------------------------------
It is proposed that this filing will become effective:
immediately upon filing pursuant to Rule 485(b)
------
on April 30, 1999 pursuant to Rule 485(b)
------
X 60 days after filing pursuant to Rule 485(a)(1)
------
75 days after filing pursuant to Rule 485(a)(2)
------
on ___________ pursuant to Rule 485(a)(1)
------
-----------
Please Send Copy of Communications to:
MITCHELL E. NICHTER, ESQ.
KELVIN K. LEUNG, ESQ.
Paul, Hastings, Janofsky & Walker LLP
345 California Street
San Francisco, California 94104
(415) 835-1600
<PAGE>
CHARTER FUNDS
CONTENTS OF THE POST-EFFECTIVE AMENDMENT
This Post-Effective Amendment to the registration statement of the Registrant
contains the following documents:
Facing Sheet
Contents of the Post-Effective Amendment
Part A - Prospectus for the Class A shares of the CNI Charter
Money Market Fund
Part A - Prospectus for the Class S shares of the CNI Charter
Money Market Fund
Part B - Statement of Additional Information for Class A and Class S
shares of CNI Charter Money Market Fund.
Part C - Other Information
Signature Page
Exhibits
<PAGE>
------------------------------------------------------------
PART A
PROSPECTUS FOR
CHI CHARTER MONEY MARKET FUND CLASS A SHARES
------------------------------------------------------------
<PAGE>
CNI CHARTER
FUNDS(SM)
MONEY MARKET FUND
CLASS A
PROSPECTUS
DATED , 1999
INVESTMENT MANAGER:
CITY NATIONAL INVESTMENTS
A division of City National Bank
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the accuracy or adequacy of this prospectus.
Any representation to the contrary is a criminal offense.
MUTUAL FUND SHARES ARE NOT BANK DEPOSITS, NOR ARE THEY OBLIGATIONS
OF, OR GUARANTEED BY CITY NATIONAL BANK. MUTUAL FUND SHARES ARE NOT
FDIC INSURED. INVESTING IN MUTUAL FUNDS AND OTHER SECURITIES INVOLVES
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Overview.......................................................................3
Our goals.............................................................3
How we plan to achieve our goals......................................3
Types of securities...................................................3
Classes of shares.....................................................3
Principal risks of investing in our Fund..............................4
Past performance......................................................4
Understanding expenses.........................................................5
Fee and expenses of the Fund..........................................5
Example...............................................................6
Management of the Fund.........................................................7
Investment manager....................................................7
Administrator, fund accountant and transfer agent.....................7
Distributor...........................................................7
Account policies...............................................................8
Understanding earnings and taxes...............................................9
How to buy and sell shares....................................................10
How to place an order................................................10
Buying shares........................................................11
Selling shares.......................................................11
Financial highlights..........................................................12
Important terms to know.......................................................13
Key definitions......................................................13
For more information..................................................back cover
</TABLE>
More detailed information on all subjects covered in this simplified prospectus
is contained within the Statement of Additional Information (SAI). Investors
seeking more in-depth explanations of the Fund should request the SAI and review
it before purchasing shares.
2
<PAGE>
OVERVIEW
OUR GOALS
The Fund is a money market fund that seeks to provide current income
through low-risk investments. Also, the Fund seeks to maintain a $1.00
per share net asset value. The goals of the Fund can only be changed
with shareholder approval.
HOW WE PLAN TO ACHIEVE OUR GOALS
OUR PRINCIPAL STRATEGY. We purchase liquid, high quality, short-term
debt securities in U.S. dollar denominated money market instruments.
The securities must have a maturity period of no more than 397 days
and, in our opinion, present minimal credit risk.
TYPES OF SECURITIES
The Fund's principal investments are as follows:
- Certificates of deposit, time deposits;
- Commercial paper;
- Short-term corporate obligations; and
- Shares of investment companies that invest exclusively in the
same types of securities as we do (up to 10% of the Fund's
total assets, with no more than 5% in any individual
investment company).
Please review the SAI for more detailed descriptions of these
securities and other securities in which the Fund may invest in
addition to the types of securities described above.
CLASSES OF SHARES
This Prospectus offers Class A shares of the Fund. The Fund offers
other classes of shares which are subject to the same management fee
and other expenses but may be subject to different distribution and/or
shareholder servicing costs.
3
<PAGE>
PRINCIPAL RISKS OF INVESTING IN OUR FUND
As with any money market fund, there are risks to investing. We cannot
guarantee that we will meet our investment goals. Here are principal
risks to consider:
MAINTAINING THE NET ASSET value. We cannot guarantee that the Fund will
be able to maintain a stable net asset value of $1.00 per share. You
may lose money by investing in the Fund.
NO FEDERAL GUARANTEES. As with any money market mutual fund, an
investment in the Fund is not a deposit of a bank and is not insured,
guaranteed, or protected by the FDIC, Federal Reserve Board, or any
agency of the U.S. Government.
THE EFFECT OF INTEREST RATES. A money market fund's yield is affected
by interest rate changes. When rates decline, the fund's yield will
tend to be somewhat higher than prevailing market rates. When rates
rise, the fund's yield will tend to be somewhat lower.
ISSUER DEFAULT. We may not be able to maintain a $1.00 per share value
if the issuers of securities do not make their principal or interest
payments on time. We attempt to minimize the risk of default by
purchasing only highly rated securities.
OTHER ADVERSE CONDITIONS. The Fund's performance may be affected by
changes in market, economic, political, or other conditions. Companies
offering securities we invest in may also be affected by these
conditions as well as by government regulations and interest rate
volatility.
YEAR 2000. Many computer systems cannot distinguish the year 2000 from
1900. This is known as the "Year 2000" problem. A computer system's
inability to tell the difference could cause accounting and other
problems. Our software vendors and service providers have assured us,
but have not guaranteed, that their systems will be adapted in time to
avoid serious problems. We do not expect Year 2000 conversion costs to
have much impact on the Fund because those costs are borne primarily by
the vendors and service providers, and not directly by the Fund.
PAST PERFORMANCE
The Fund began operations on March 23, 1998. The Fund's past
performance results have not been provided because it has not been in
existence long enough. For a current yield, call 1-888-889-0799.
4
<PAGE>
UNDERSTANDING EXPENSES
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. You pay no sales charges or transaction fees
for buying or selling shares of the Fund.
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C> <C>
Management Fee 0.25%
Distribution (12b-1) Fee 0.50%
Other Expenses
Shareholder Servicing Fee 0.25%
Other Fund Expenses 0.28%
Total Other Expenses 0.53%
TOTAL FUND OPERATING EXPENSES (BEFORE FEE 1.28%
WAIVERS AND/OR EXPENSE REIMBURSEMENTS)
</TABLE>
The "Management Fee" is an annual fee, payable monthly out of the
Fund's net assets.
The investment manager has voluntarily agreed to limit its fees and/or
reimburse expenses of the Fund so that its total operating expenses
(after waivers and/or reimbursements) will not exceed 0.85% of the
Fund's total assets. The Fund is required to reimburse the
investment manager for any reduction of fees and reimbursement of
expenses only during the three years following such reductions
and/or reimbursements and only if certain conditions are satisfied.
5
<PAGE>
EXAMPLE
The Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other money market funds. It
assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return
each year and that the Fund's operating expenses are 0.63% for the
first two years and 0.80% for the remaining years in the 3, 5 and 10
year examples. Your actual costs may be higher or lower. The Example
should not be considered a representation of past or future expenses or
performance.
Based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------
<S> <C> <C> <C>
$130 $405 $701 $1,540
</TABLE>
6
<PAGE>
MANAGEMENT OF THE FUND
INVESTMENT MANAGER
City National Bank ("CNB") is the Fund's investment manager. As
investment manager, CNB provides the Fund with investment management
services. CNB has provided trust and fiduciary services to individuals
and businesses for over 30 years through its trust and investment
division, City National Investments (CNI). CNI currently provides
investment management services to individuals, pension and profit
sharing plans, endownments, and foundations. As of December 31, 1998,
CNI had approximately $15 billion in assets under administration and
$1.2 billion in assets under management.
CNB, founded in the early 1950's, is a federally chartered commercial
bank with approximately $6.4 billion in assets as of December 31, 1998.
It is a wholly-owned subsidiary of City National Corporation ("CNC"), a
New York Stock Exchange listed company. CNB's address is 400 North
Roxbury Drive, Beverly Hills, California 90210.
ADMINISTRATOR, FUND ACCOUNTANT AND TRANSFER AGENT
SEI Investment Mutual Funds Services serves as administrator and fund
accountant to the Fund. SEI Investments Fund Management serves as
transfer agent for the Fund. Both are located at One Freedom Valley
Drive, Oaks, Pennsylvania 19456 and can be reached at 1-888-889-0799.
DISTRIBUTOR
SEI Investments Distribution Co. (the "Distributor") serves as the
Fund's distributor pursuant to a distribution agreement with the Fund.
The Distributor is located at One Freedom Valley Drive, Oaks,
Pennsylvania, 19456 and can be reached at 1-888-889-0799.
7
<PAGE>
ACCOUNT POLICIES
HOW WE PRICE SHARES. Shares are priced at net asset value (NAV). The
NAV is calculated by adding the values of all securities and other
assets of the Fund, subtracting the liabilities, and dividing the net
amount by the number of outstanding shares. We expect the NAV of the
Fund to remain constant at $1.00 per share. Securities are valued at
amortized cost, which approximates market value.
WHEN SHARES ARE PRICED. NAV calculations are made once each day,
usually by 2:00 p.m. Eastern time. Shares may be purchased on any day
that the New York Stock Exchange and the Federal Reserve are open for
business (a "Business Day"). Shares, however, cannot be purchased by
Federal Reserve wire on days when either the New York Stock Exchange or
the Federal Reserve is closed.
REPORTING FUND PERFORMANCE. From time to time the Fund may advertise
its yield and effective yield. Performance figures are based upon
historical results and are not intended to indicate future performance.
If you have any questions about the Fund, please call the Fund at
1-888-889-0799.
8
<PAGE>
UNDERSTANDING EARNINGS AND TAXES
DECLARING AND PAYING DIVIDENDS. Dividends are declared daily and paid
monthly. Dividends are normally paid on the last business day of each
month. Net capital gain, if any, will be paid once a year.
WHEN DO DIVIDENDS ACCRUE? Your dividends begin to accrue on the day of
purchase for shares bought before 1:30 p.m. Eastern time. They begin to
accrue on the following day for shares purchased after 1:30 p.m.
Eastern time. You will not be credited with dividends for shares on the
day you sell them.
DISTRIBUTION OPTIONS. Your dividends will be automatically reinvested
in additional full or fractional shares, unless you instruct the Fund
in writing prior to the date of distribution of your election to
receive payment in cash. Your election will be effective for all
dividends and distributions paid after the Fund receives your written
notice. To cancel your election, please send the Fund another written
notice. Proceeds from distributions will normally be wired to your
financial institution on the business day after distributions are
credited to your account.
TAX CONSIDERATIONS. The Fund intends to distribute substantially all of
its net investment income (including net short-term capital gain) to
shareholders. Generally, all distributions, whether received in cash or
reinvested in additional shares of the Fund, may be subject to federal
and state income tax. Dividends, distributions, purchases and sales
will appear on your account statements. You will be notified at least
annually about the tax consequences of distributions made each year. BE
SURE TO CONSULT YOUR TAX ADVISOR ABOUT THE SPECIFIC TAX IMPLICATIONS OF
YOUR INVESTMENTS. For additional information regarding tax
considerations, see the SAI.
BACKUP WITHHOLDING. You must provide your financial institution with
your social security or tax identification number on your account
application form and specify whether or not you are subject to backup
withholding. Otherwise, you may be subject to backup withholding at a
rate of 31%.
9
<PAGE>
HOW TO BUY AND SELL SHARES
Here are the details you should know about buying and selling shares:
HOW TO PLACE AN ORDER
You may place an order with:
- an approved broker-dealer; or
- any other approved financial institution.
ORDERING THROUGH A BROKER-DEALER OR FINANCIAL INSTITUTION. You may
purchase shares through accounts with brokers and other financial
institutions that are authorized to place trades in Fund shares for
their customers. If you invest through an authorized institution, you
will have to follow its procedures, which may be different from the
procedures for investing directly. Your institution may charge a fee
for its services, in addition to the fees charged by the Fund. You will
also generally have to address your correspondence or questions
regarding the Fund to your institution.
WHEN ORDERS WILL BE COMPLETED. You may have to transmit purchase or
exchange requests to your financial institution at an earlier time for
your transaction to become effective that day. This allows the
financial institution time to process your request and transmit it to
the Fund. For more information about how to purchase or exchange fund
shares through your financial institution, you should contact your
financial institution directly.
If we receive your purchase order, through your financial institution,
before 1:30 p.m., Eastern time, the order will be executed that same
day. Orders received after 1:30 p.m., Eastern time will be executed the
following business day. Your shares will be bought, only after we
receive a properly completed order with full payment.
PURCHASE MINIMUMS. You may buy shares for:
- an initial amount of $100,000; and,
- additional investments of $1,000 or more.
Exceptions may be made at our discretion.
MINIMUM ACCOUNT BALANCES. If your account balance drops below $100,000
because of redemptions, the Fund may redeem your shares. However, the
Fund will always give you at least 30 days' written notice to give you
time to add to your account and avoid the involuntary redemption of
your shares.
PAYMENT RESTRICTIONS. We only accept payments by wire in U.S. funds.
Cash, checks and third-party checks will not be accepted. Consult with
your financial institution about their acceptable methods of payment.
WIRING FEE. The financial institution placing your order may charge its
own wiring fees.
10
<PAGE>
BUYING SHARES
FIRST TIME AND SUBSEQUENT PURCHASES. You will have to follow your
financial institution's procedures for transacting with the Fund.
Contact your financial institution for more information.
SELLING SHARES
GENERAL INFORMATION. You may sell your shares by contacting your
broker-dealer or financial institution. You will have to follow their
procedures. Contact your broker-dealer or financial institution for
more information.
GENERAL RESTRICTIONS. We may suspend the right to sell shares or
postpone payment for a sale of shares when either the New York Stock
Exchange or the Federal Reserve's Fedline System is closed or
restricted. We reserve the right to reject any order that is not
received in proper form. For example, if we are unable to know how many
shares you wish to sell, we may not execute your order.
OTHER REDEMPTION OPTIONS. Under conditions where cash redemptions are
detrimental to the Fund and its shareholders, we reserve the right to
make redemptions in readily marketable securities other than cash. In
unusual circumstances, the Fund may temporarily suspend the processing
of sell requests, or postpone payments of proceeds for up to five
business days, as permitted by federal securities laws.
Please see the SAI for a more detailed discussion.
CONFIRMING AUTHENTICITY. We will make every effort to verify that an
order is authentic.
To do so, we may:
- ask for a form of personal identification or written
confirmation of instructions; and
- tape record your telephone instructions.
We reserve the right to refuse an order if we cannot reasonably confirm
the authenticity of the instructions.
LIABILITY. We may be liable for losses from unauthorized or fraudulent
orders only if reasonable steps are not taken to verify an order's
authenticity.
11
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights table is intended to help you
understand the Fund's financial performance for the period of March 23,
1998 (1) through October 31, 1998. Class A shares were not offered
during this period and therefore, the financial information below
relates to another class of shares not subject to 12b-1 fees. Most of
the information reflects results based on one share of the Fund. The
total return shown below represents the rate an investor would have
earned from an investment in the Fund, assuming all dividends and
distributions were reinvested. This information has been audited by
__________________, whose report, along with the Fund's financial
statements, are included in the 1998 Annual Report (available upon
request; see the back cover of this prospectus).
<TABLE>
<S> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03
Total from investment operations 0.03
LESS DISTRIBUTION TO SHAREHOLDERS:
Dividends from net investment income (0.03)
Total distributions (0.03)
NET ASSET VALUE AT END OF PERIOD $1.00
TOTAL RETURN (NOT ANNUALIZED) 3.11%
SUPPLEMENTAL DATA AND RATIOS:
Net assets at end of period $133,427,960
Ratio of net expenses to average net assets (2) 0.63%
Ratio of net investment income to average net assets (2) 4.99%
</TABLE>
---------------------------
(1) Commencement of operations.
(2) Annualized. Net of fees waived amounting to 0.15% of average net
assets.
12
<PAGE>
IMPORTANT TERMS TO KNOW
KEY DEFINITIONS
"We", "Us" and "Our" means the CNI Charter Money Market Fund.
"You" and "Your" means the prospective investor or current shareholder.
"Liquidity" means the ability to turn investments into cash.
"Quality" means the credit rating given to a security by a nationally
recognized rating organization.
"Yield" means the interest rate you would receive if you kept your
investment in the Fund for a year. It is based on the current interest
rate for a trailing seven-day period.
"Effective Yield" means the interest rate, compounded weekly, you would
receive if you kept your investment in the Fund for a year.
13
<PAGE>
FOR MORE INFORMATION
CNI CHARTER MONEY MARKET FUND Additional information is available free of charge
in the Statement of Additional Information (SAI). The SAI is incorporated by
reference (legally considered part of this document). Additional information
about the Fund's performance is available in the Fund's Annual Report. To
receive a free copy of this prospectus, the SAI, or the Annual Report (when
available), please contact:
SEI Investments Distribution Co.,
One Freedom Valley Drive
Oaks, Pennsylvania 19456
1-888-889-0799
INFORMATION ABOUT THE FUND MAY REVIEWED AND
COPIED:
- - at the SEC's Public Reference Room in Washington, D.C. at
1-800-SEC-0330;
- - on the SEC's Internet site at: WWW.SEC.GOV; or
- - by written request (including duplication fee) to the Public Reference
Section of the SEC, Washington, D.C. 20549-6009.
For the current seven-day yield, or if you have questions about the Fund, please
call 1-888-889-0799.
The Fund's Investment Company Act file
number: 811-07923.
CNI CHARTER FUNDS(SM)
MONEY MARKET FUND
CLASS A
PROSPECTUS
DATED , 1999
14
<PAGE>
------------------------------------------------------------
PART A
PROSPECTUS FOR
CHI CHARTER MONEY MARKET FUND CLASS S SHARES
------------------------------------------------------------
<PAGE>
[LOGO]
MONEY MARKET FUND
CLASS S
PROSPECTUS
DATED , 1999
INVESTMENT MANAGER:
CITY NATIONAL INVESTMENTS
A division of City National Bank
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the accuracy or adequacy of this prospectus.
Any representation to the contrary is a criminal offense.
- -------------------------------------------------------------------------------
MUTUAL FUND SHARES ARE NOT BANK DEPOSITS, NOR ARE THEY OBLIGATIONS
OF, OR GUARANTEED BY CITY NATIONAL BANK. MUTUAL FUND SHARES ARE NOT
FDIC INSURED. INVESTING IN MUTUAL FUNDS AND OTHER SECURITIES INVOLVES
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Overview.......................................................................3
Our goals.............................................................3
How we plan to achieve our goals......................................3
Types of securities...................................................3
Classes of shares.....................................................3
Principal risks of investing in our Fund..............................4
Past performance......................................................4
Understanding expenses.........................................................5
Fee and expenses of the Fund..........................................5
Example...............................................................6
Management of the Fund.........................................................7
Investment manager....................................................7
Sub-adviser...........................................................7
Administrator, fund accountant and transfer agent.....................7
Distributor...........................................................7
Account policies...............................................................8
Understanding earnings and taxes...............................................9
How to buy and sell shares....................................................10
How to place and order...............................................10
Buying shares........................................................11
Selling shares.......................................................11
Financial highlights..........................................................12
Important terms to know.......................................................13
Key definitions......................................................13
For more information..................................................back cover
</TABLE>
More detailed information on all subjects covered in this simplified prospectus
is contained within the Statement of Additional Information (SAI). Investors
seeking more in-depth explanations of the Fund should request the SAI and review
it before purchasing shares.
2
<PAGE>
OVERVIEW
OUR GOALS
The Fund is a money market fund that seeks to provide current income
through low-risk investments. Also, the Fund seeks to maintain a $1.00
per share net asset value. The goals of the Fund can only be changed
with shareholder approval.
HOW WE PLAN TO ACHIEVE OUR GOALS
OUR PRINCIPAL STRATEGY. We purchase liquid, high quality, short-term
debt securities in U.S. dollar denominated money market instruments.
The securities must have a maturity period of no more than 397 days
and, in our opinion, present minimal credit risk.
TYPES OF SECURITIES
The Fund's principal investments are as follows:
- Certificates of deposit, time deposits;
- Commercial paper;
- Short-term corporate obligations; and
- Shares of investment companies that invest exclusively in the
same types of securities as we do (up to 10% of the Fund's
total assets, with no more than 5% in any individual
investment company).
Please review the SAI for more detailed descriptions of these
securities and other securities in which the Fund may invest in
addition to the types of securities described above.
CLASSES OF SHARES
This Prospectus offers Class S shares of the Fund. The Fund offers
other classes of shares which are subject to the same management fee
and other expenses but may be subject to different distribution and/or
shareholder servicing costs.
3
<PAGE>
PRINCIPAL RISKS OF INVESTING IN OUR FUND
As with any money market fund, there are risks to investing. We cannot
guarantee that we will meet our investment goals. Here are principal
risks to consider:
MAINTAINING THE NET ASSET VALUE. We cannot guarantee that the Fund will
be able to maintain a stable net asset value of $1.00 per share. You
may lose money by investing in the Fund.
NO FEDERAL GUARANTEES. As with any money market mutual fund, an
investment in the Fund is not a deposit of a bank and is not insured,
guaranteed, or protected by the FDIC, Federal Reserve Board, or any
agency of the U.S. Government.
THE EFFECT OF INTEREST RATES. A money market fund's yield is affected
by interest rate changes. When rates decline, the fund's yield will
tend to be somewhat higher than prevailing market rates. When rates
rise, the fund's yield will tend to be somewhat lower.
ISSUER DEFAULT. We may not be able to maintain a $1.00 per share value
if the issuers of securities do not make their principal or interest
payments on time. We attempt to minimize the risk of default by
purchasing only highly rated securities.
OTHER ADVERSE CONDITIONS. The Fund's performance may be affected by
changes in market, economic, political, or other conditions. Companies
offering securities we invest in may also be affected by these
conditions as well as by government regulations and interest rate
volatility.
YEAR 2000. Many computer systems cannot distinguish the year 2000 from
1900. This is known as the "Year 2000" problem. A computer system's
inability to tell the difference could cause accounting and other
problems. Our software vendors and service providers have assured us,
but have not guaranteed, that their systems will be adapted in time to
avoid serious problems. We do not expect Year 2000 conversion costs to
have much impact on the Fund because those costs are borne primarily by
the vendors and service providers, and not directly by the Fund.
PAST PERFORMANCE
The Fund began operations on March 23, 1998. The Fund's past
performance results have not been provided because it has not been in
existence long enough. For a current yield, call 1-888-889-0799.
4
<PAGE>
UNDERSTANDING EXPENSES
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. You pay no sales charges or transaction fees
for buying or selling shares of the Fund.
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<S> <C> <C>
Management Fee 0.25%
Distribution (12b-1) fee 0.50%
Other Expenses
Shareholder Servicing Fee 0.25%
Other Fund Expenses 0.28%
Total Other Expenses 0.53%
TOTAL FUND OPERATING EXPENSES (BEFORE FEE 1.28%
WAIVERS AND/OR EXPENSE REIMBURSEMENTS)
</TABLE>
The "Management Fee" is an annual fee, payable monthly out of the
Fund's net assets.
The investment manager has voluntarily agreed to limit its fees and/or
reimburse expenses of the Fund so that its total operating expenses
(after waivers and/or reimbursements) will not exceed 1.05% of the
Fund's total assets. The Fund is required to reimburse the
investment manager for any reduction of fees and reimbursement of
expenses only during the three years following such reductions
and/or reimbursements and only if certain conditions are satisfied.
5
<PAGE>
EXAMPLE
The Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other money market funds. It
assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return
each year and that the Fund's operating expenses are 0.63% for the
first two years and 0.80% for the remaining years in the 3, 5 and 10
year examples. Your actual costs may be higher or lower. The Example
should not be considered a representation of past or future expenses or
performance.
Based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------
<S> <C> <C> <C>
$130 $405 $701 $1,540
</TABLE>
6
<PAGE>
MANAGEMENT OF THE FUND
INVESTMENT MANAGER
City National Bank ("CNB") is the Fund's investment manager. As
investment manager, CNB provides the Fund with investment management
services. CNB has provided trust and fiduciary services to individuals
and businesses for over 30 years through its trust and investment
division, City National Investments (CNI). CNI currently provides
investment management services to individuals, pension and profit
sharing plans, endownments, and foundations. As of December 31, 1998,
CNI had approximately $15 billion in assets under administration and
$1.2 billion in assets under management.
CNB, founded in the early 1950's, is a federally chartered commercial
bank with approximately $6.4 billion in assets as of December 31, 1998.
It is a wholly-owned subsidiary of City National Corporation ("CNC"), a
New York Stock Exchange listed company. CNB's address is 400 North
Roxbury Drive, Beverly Hills, California 90210.
ADMINISTRATOR, FUND ACCOUNTANT AND TRANSFER AGENT
SEI Investment Mutual Funds Services serves as administrator and fund
accountant to the Fund. SEI Investments Fund Management serves as
transfer agent for the Fund. Both are located at One Freedom Valley
Drive, Oaks, Pennsylvania 19456 and can be reached at 1-888-889-0799.
DISTRIBUTOR
SEI Investments Distribution Co. (the "Distributor") serves as the
Fund's distributor pursuant to a distribution agreement with the Fund.
The Distributor is located at One Freedom Valley Drive, Oaks,
Pennsylvania, 19456 and can be reached at 1-888-889-0799.
7
<PAGE>
ACCOUNT POLICIES
HOW WE PRICE SHARES. Shares are priced at net asset value (NAV). The
NAV is calculated by adding the values of all securities and other
assets of the Fund, subtracting the liabilities, and dividing the net
amount by the number of outstanding shares. We expect the NAV of the
Fund to remain constant at $1.00 per share. Securities are valued at
amortized cost, which approximates market value.
WHEN SHARES ARE PRICED. NAV calculations are made once each day,
usually by 2:00 p.m. Eastern time. Shares may be purchased on any day
that the New York Stock Exchange and the Federal Reserve are open for
business (a "Business Day"). Shares, however, cannot be purchased by
Federal Reserve wire on days when either the New York Stock Exchange or
the Federal Reserve is closed.
REPORTING FUND PERFORMANCE. From time to time the Fund may advertise
its yield and effective yield. Performance figures are based upon
historical results and are not intended to indicate future performance.
If you have any questions about the Fund, please call the Fund at
1-888-889-0799.
8
<PAGE>
UNDERSTANDING EARNINGS AND TAXES
DECLARING AND PAYING DIVIDENDS. Dividends are declared daily and paid
monthly. Dividends are normally paid on the last business day of each
month. Net capital gain, if any, will be paid once a year.
WHEN DO DIVIDENDS ACCRUE? Your dividends begin to accrue on the day of
purchase for shares bought before 1:30 p.m. Eastern time. They begin to
accrue on the following day for shares purchased after 1:30 p.m.
Eastern time. You will not be credited with dividends for shares on the
day you sell them.
DISTRIBUTION OPTIONS. Your dividends will be automatically reinvested
in additional full or fractional shares, unless you instruct the Fund
in writing prior to the date of distribution of your election to
receive payment in cash. Your election will be effective for all
dividends and distributions paid after the Fund receives your written
notice. To cancel your election, please send the Fund another written
notice. Proceeds from distributions will normally be wired to your
financial institution on the business day after distributions are
credited to your account.
TAX CONSIDERATIONS. The Fund intends to distribute substantially all of
its net investment income (including net short-term capital gain) to
shareholders. Generally, all distributions, whether received in cash or
reinvested in additional shares of the Fund, may be subject to federal
and state income tax. Dividends, distributions, purchases and sales
will appear on your account statements. You will be notified at least
annually about the tax consequences of distributions made each year. BE
SURE TO CONSULT YOUR TAX ADVISOR ABOUT THE SPECIFIC TAX IMPLICATIONS OF
YOUR INVESTMENTS. For additional information regarding tax
considerations, see the SAI.
BACKUP WITHHOLDING. You must provide your financial institution with
your social security or tax identification number on your account
application form and specify whether or not you are subject to backup
withholding. Otherwise, you may be subject to backup withholding at a
rate of 31%.
9
<PAGE>
HOW TO BUY AND SELL SHARES
Here are the details you should know about buying and selling shares:
HOW TO PLACE AN ORDER. You may place an order with:
- an approved broker-dealer; or
- any other approved financial institution.
ORDERING THROUGH A BROKER-DEALER OR FINANCIAL INSTITUTION. You may
purchase shares through accounts with brokers and other financial
institutions that are authorized to place trades in Fund shares for
their customers. If you invest through an authorized institution, you
will have to follow its procedures, which may be different from the
procedures for investing directly. Your institution may charge a fee
for its services, in addition to the fees charged by the Fund. You will
also generally have to address your correspondence or questions
regarding the Fund to your institution.
WHEN ORDERS WILL BE COMPLETED. You may have to transmit purchase or
exchange requests to your financial institution at an earlier time for
your transaction to become effective that day. This allows the
financial institution time to process your request and transmit it to
the Fund. For more information about how to purchase or exchange fund
shares through your financial institution, you should contact your
financial institution directly.
If we receive your purchase order, through your financial institution,
before 1:30 p.m., Eastern time, the order will be executed that same
day. Orders received after 1:30 p.m., Eastern time will be executed the
following business day. Your shares will be bought, only after we
receive a properly completed order with full payment.
PURCHASE MINIMUMS. You may buy shares for:
- an initial amount of $100,000; and,
- additional investments of $1,000 or more.
Exceptions may be made at our discretion.
MINIMUM ACCOUNT BALANCES. If your account balance drops below $100,000
because of redemptions, the Fund may redeem your shares. However, the
Fund will always give you at least 30 days' written notice to give you
time to add to your account and avoid the involuntary redemption of
your shares.
PAYMENT RESTRICTIONS. We only accept payments by wire in U.S. funds.
Cash, checks and third-party checks will not be accepted. Consult with
your financial institution about their acceptable methods of payment.
WIRING FEE. The financial institution placing your order may charge its
own wiring fees.
10
<PAGE>
BUYING SHARES
FIRST TIME AND SUBSEQUENT PURCHASES. You will have to follow your
financial institution's procedures for transacting with the Fund.
Contact your financial institution for more information.
SELLING SHARES
GENERAL INFORMATION. You may sell your shares by contacting your
broker-dealer or financial institution. You will have to follow their
procedures. Contact your broker-dealer or financial institution for
more information.
GENERAL RESTRICTIONS. We may suspend the right to sell shares or
postpone payment for a sale of shares when either the New York Stock
Exchange or the Federal Reserve's Fedline System is closed or
restricted. We reserve the right to reject any order that is not
received in proper form. For example, if we are unable to know how many
shares you wish to sell, we may not execute your order.
OTHER REDEMPTION OPTIONS. Under conditions where cash redemptions are
detrimental to the Fund and its shareholders, we reserve the right to
make redemptions in readily marketable securities other than cash. In
unusual circumstances, the Fund may temporarily suspend the processing
of sell requests, or postpone payments of proceeds for up to five
business days, as permitted by federal securities laws. Please see the
SAI for a more detailed discussion.
CONFIRMING AUTHENTICITY. We will make every effort to verify that an
order is authentic.
To do so, we may:
- ask for a form of personal identification or written
confirmation of instructions; and
- tape record your telephone instructions.
We reserve the right to refuse an order if we cannot reasonably confirm
the authenticity of the instructions.
LIABILITY. We may be liable for losses from unauthorized or fraudulent
orders only if reasonable steps are not taken to verify an order's
authenticity.
11
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights table is intended to help you
understand the Fund's financial performance for the period of March 23,
1998 (1) through October 31, 1998. Class S shares were not offered
during this period and therefore, the financial information below
relates to another class of shares not subject to 12b-1 fees. Most of
the information reflects results based on one share of the Fund. The
total return shown below represents the rate an investor would have
earned from an investment in the Fund, assuming all dividends and
distributions were reinvested. This information has been audited by
__________________, whose report, along with the Fund's financial
statements, are included in the 1998 Annual Report (available upon
request; see the back cover of this prospectus).
<TABLE>
<S> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.03
Total from investment operations 0.03
LESS DISTRIBUTION TO SHAREHOLDERS:
Dividends from net investment income (0.03)
Total distributions (0.03)
NET ASSET VALUE AT END OF PERIOD $1.00
TOTAL RETURN (NOT ANNUALIZED) 3.11%
SUPPLEMENTAL DATA AND RATIOS:
Net assets at end of period $133,427,960
Ratio of net expenses to average net assets (2) 0.63%
Ratio of net investment income to average net assets (2) 4.99%
</TABLE>
---------------------------
(1) Commencement of operations.
(2) Annualized. Net of fees waived amounting to 0.15% of average net
assets.
12
<PAGE>
IMPORTANT TERMS TO KNOW
KEY DEFINITIONS
"We", "Us" and "Our" means the CNI Charter Money Market Fund.
"You" and "Your" means the prospective investor or current shareholder.
"Liquidity" means the ability to turn investments into cash.
"Quality" means the credit rating given to a security by a nationally
recognized rating organization.
"Yield" means the interest rate you would receive if you kept your
investment in the Fund for a year. It is based on the current interest
rate for a trailing seven-day period.
"Effective Yield" means the interest rate, compounded weekly, you would
receive if you kept your investment in the Fund for a year.
13
<PAGE>
FOR MORE INFORMATION
CNI CHARTER MONEY MARKET FUND
Additional information is available free of charge in the Statement of
Additional Information (SAI). The SAI is incorporated by reference (legally
considered part of this document). Additional information about the Fund's
performance is available in the Fund's Annual Report. To receive a free copy of
this prospectus, the SAI, or the Annual Report (when available), please contact:
SEI Investments Distribution Co.,
One Freedom Valley Drive
Oaks, Pennsylvania 19456
1-888-889-0799
INFORMATION ABOUT THE FUND MAY REVIEWED AND COPIED:
- - at the SEC's Public Reference Room in Washington, D.C. at
1-800-SEC-0330;
- - on the SEC's Internet site at: WWW.SEC.GOV; or
- - by written request (including duplication fee) to the Public Reference
Section of the SEC, Washington, D.C. 20549-6009.
For the current seven-day yield, or if you have questions about the Fund, please
call 1-888-889-0799.
The Fund's Investment Company Act file number:
811-07923.
[LOGO]
MONEY MARKET FUND
CLASS S
PROSPECTUS
DATED , 1999
14
<PAGE>
PART B
COMBINED STATEMENT OF ADDITIONAL INFORMATION
CNI CHARTER MONEY MARKET FUND
CLASS A AND CLASS S SHARES
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
CNI CHARTER FUNDS
400 North Roxbury Drive, Beverly Hills, California 90210
CNI CHARTER MONEY MARKET FUND
Class A and Class S Shares
______________ 1999
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the CNI Charter Money Market Fund Class A Shares or Class S
Shares Prospectuses, each dated June ____, 1999, which may be amended from time
to time. The Fund is a diversified investment portfolio of CNI Charter Funds
(the "Trust"), an open-end, management investment company. The Fund was formerly
called Berkeley Money Market Fund and the Trust was formerly called Berkeley
Funds.
To obtain a free copy of the above-referenced Prospectus, please contact SEI
Investments Fund Management (the "Transfer Agent") at 1-888-889-0799.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
INVESTMENT TECHNIQUES........................................................2
INVESTMENT RESTRICTIONS......................................................6
RISK CONSIDERATIONS..........................................................9
MANAGEMENT OF THE TRUST.....................................................10
PORTFOLIO TRANSACTIONS AND TURNOVER.........................................15
DISTRIBUTIONS AND TAXES.....................................................16
SHARE PRICE CALCULATION.....................................................19
YIELD.......................................................................19
GENERAL INFORMATION.........................................................20
PRINCIPAL HOLDERS OF SECURITIES.............................................20
PURCHASE AND REDEMPTION OF SHARES...........................................21
OTHER INFORMATION...........................................................21
FINANCIAL STATEMENTS........................................................22
APPENDIX - RATINGS OF INVESTMENT SECURITIES................................A-1
</TABLE>
<PAGE>
INVESTMENT TECHNIQUES
The Fund invests exclusively in the following types of U.S. dollar-denominated
money market instruments which are deemed to mature in 397 days or less in
accordance with federal securities regulations and which the Investment Manager
has determined present minimal credit risk:
- Certificates of deposit, time deposits, notes and bankers' acceptances of
U.S. domestic banks (including their foreign branches), Canadian chartered
banks, U.S. branches of foreign banks and foreign branches of foreign
banks having total assets of $5 billion or greater.
- Commercial paper, including asset-backed commercial paper, rated in one of
the two highest rating categories by Moody's Investors Services
("Moody's), Standard and Poor's Corporation ("S&P"), Duff and Phelps
Credit Rating Co. ("Duff"), Fitch Investors Service, Inc. ("Fitch"), or
any other nationally recognized statistical rating organization ("NRSRO"),
or commercial paper or notes of issuers with an unsecured debt issue
outstanding currently rated in one of the two highest rating categories by
any NRSRO where the obligation is on the same or a higher level of
priority and collateralized to the same extent as the rated issue.
- The Fund may also invest in other corporate obligations such as publicly
traded bonds, debentures, and notes rated in one of the two highest rating
categories by any NRSRO and other similar securities which, if unrated by
any NRSRO, are determined by the Investment Manager, using guidelines
approved by the Trust's Board of Trustees, to be at least equal in quality
to one or more of the above referenced securities.
- Obligations of, or guaranteed by, the U.S. or Canadian governments,
their agencies or instrumentalities.
- Repurchase agreements involving obligations that are suitable for
investment under the categories listed above.
ASSET-BACKED COMMERCIAL PAPER. The Fund can invest a portion of its assets in
asset-backed commercial paper and other money market fund Eligible Securities
(as that term is defined on page 7). The credit quality of most asset-backed
commercial paper depends primarily on the credit quality of the assets
underlying such securities, how well the entity issuing the security is
insulated from the credit risk of the originator (or any other affiliated
entities), and the amount and quality of any credit support provided to the
securities.
Repayment of asset-backed commercial paper is intended to be obtained from an
identified pool of assets including automobile receivables, credit-card
receivables, and other types of assets. Asset-backed commercial paper is issued
by a special purpose vehicle (usually a corporation) that has been established
for the purpose of issuing the commercial paper and purchasing the underlying
pool of assets. The issuer of commercial paper bears the direct risk of
prepayment on the receivables constituting the underlying pool of assets.
To lessen the effect of failures by obligors on these underlying assets to make
payments, such securities may contain elements of credit support. Credit support
for asset-backed securities may be based on the underlying assets or credit
enhancements provided by a third party. Credit enhancement techniques include
letters of credit, insurance bonds, limited guarantees, and
over-collateralization.
2
<PAGE>
Credit support falls into two classes: liquidity protection and protection
against ultimate default on the underlying assets. Liquidity protection refers
to the provision of advances, generally by the entity administering the pool of
assets, to ensure that scheduled payments on the underlying pool are made in a
timely fashion. Protection against ultimate default ensures payment on at least
a portion of the assets in the pool. This protection may be provided through
guarantees, insurance policies, or letters of credit obtained from third
parties, through various means of structuring the transaction, or through a
combination of such approaches. The degree of credit support provided on each
issue is based generally on historical information respecting the level of
credit risk associated with such payments. Delinquency or loss in excess of that
anticipated could adversely affect the return on an investment in an
asset-backed security.
ASSET-BACKED SECURITIES. The Fund may invest in asset-backed securities. These
types of securities represent a direct or indirect participation in, or are
secured by and payable from, pools of assets, such as motor vehicle installment
sales contracts, installment loan contracts, leases of various types of real and
personal property, and receivables from revolving credit (e.g., credit card)
agreements. Payments or distributions of principal and interest on asset-backed
securities may be supported by credit enhancements, such as various forms of
cash collateral accounts or letters of credit. These securities are subject to
the risk of prepayment. Prepayments of principal of asset-backed securities
affect the average life of the asset-backed securities in the Fund's portfolio.
Prepayments are affected by the level of interest rates and other factors,
including general economic conditions. In periods of rising interest rates, the
prepayment rate tends to decrease, lengthening the average life of a pool of
asset-backed securities. In periods of falling interest rates, the prepayment
rate tends to increase, shortening the average life of a pool. Reinvestment of
prepayments may occur at higher or lower interest rates than the original
investment, affecting the Fund's yield. Thus, asset-backed securities may have
less potential for capital appreciation in periods of falling interest rates
than other fixed-income securities of comparable duration, although they may
have a comparable risk of decline in market value in periods of rising interest
rates. Payment of principal and interest may be largely dependent upon the cash
flows generated by the assets backing the securities.
SECTION 4(2) COMMERCIAL PAPER. The Fund may invest in commercial paper and other
securities that are issued in reliance on the so-called "private placement"
exemption from registration afforded by Section 4(2) of the Securities Act of
1933, as amended (the "1933 Act") ("Section 4(2) paper"). Federal securities
laws restrict the disposition of Section 4(2) paper. Section 4(2) paper
generally is sold to institutional investors such as the Fund who agree that
they are purchasing the paper for investment and not for public distribution.
Any resale of Section 4(2) paper by the purchaser must be in an exempt
transaction and may be accomplished in accordance with Rule 144A under the 1933
Act. Section 4(2) paper normally may be resold to other institutional investors
such as the Fund through or with the assistance of the issuer or investment
dealers who make a market in the Section 4(2) paper, thus providing liquidity.
Because it is not possible to predict with assurance exactly how this market for
Section 4(2) paper sold and offered under Rule 144A will continue to develop,
the Investment Manager, pursuant to guidelines approved by the Trust's Board of
Trustees, will monitor the Fund's investments in these securities, focusing on
such important factors, among others, as valuation, liquidity, and availability
of information.
RULE 144A SECURITIES. Rule 144A under the 1933 Act establishes a safe harbor
from the registration requirements of the 1933 Act for resales of certain
securities to qualified institutional buyers. Institutional markets for
restricted securities sold pursuant to Rule 144A in many cases provide both
readily ascertainable values for restricted securities and the ability to
liquidate an investment to satisfy share redemption orders. Such markets might
include automated systems for the trading, clearance, and settlement of
unregistered securities of domestic and foreign issuers, such as the PORTAL
System sponsored by the National Association of Securities Dealers, Inc. An
insufficient number of qualified
3
<PAGE>
buyers interested in purchasing Rule 144A-eligible restricted securities,
however, could adversely affect the marketability of such portfolio securities
and result in the Fund's inability to dispose of such securities promptly or at
favorable prices.
The Board of Trustees may, in the future, delegate the function of making
day-to-day determination of liquidity to the Fund's Investment Manager pursuant
to guidelines approved by the Board. The Investment Manager will take into
account a number of factors in reaching liquidity decisions, including, but not
limited to: (i) the frequency of trades for the security, (ii) the number of
dealers that quote prices for the security, (iii) the number of dealers that
have undertaken to make a market in the security, (iv) the number of other
potential purchasers, and (v) the nature of the security and how trading is
effected (e.g., the time needed to see the security, how bids are solicited, and
the mechanics of transfer). To the extent the Investment Manager, according to
guidelines approved by the Board, determines a Rule 144A-eligible security to be
liquid, such a security, would not be subject to the Fund's percentage limit on
illiquid securities investment.
ILLIQUID SECURITIES. The Fund will not purchase illiquid securities, including
time deposits and repurchase agreements maturing in more than seven days, if, as
a result of the purchase, more than 10% of the Fund's net assets valued at the
time of the transaction are invested in such securities. The Fund will monitor
the level of liquidity and take appropriate action, if necessary, to attempt to
maintain adequate liquidity. The investment policy on the purchase of illiquid
securities is nonfundamental.
BANK NOTES. The Fund may invest in bank notes, which are unsecured promissory
notes representing debt obligations that are issued by banks in large
denominations.
INVESTMENT COMPANIES. The Fund may invest up to 10% of its total assets in
shares of other investment companies investing exclusively in securities in
which it may otherwise invest. The Fund does not intend to invest in investment
companies unless, in the Investment Manager's judgment, the potential benefits
exceed associated costs. As a shareholder in an investment company, the Fund
bears its ratable share of that investment company's expenses, including
advisory and administration fees.
TAX-EXEMPT COMMERCIAL PAPER. Tax-exempt commercial paper is unsecured short-term
obligations issued by a government or political sub-division thereof. It is not
currently expected that the Fund will invest more than 5% of its net assets in
tax-exempt commercial paper.
EURODOLLAR CERTIFICATES OF DEPOSIT AND FOREIGN SECURITIES. Before investing in
Eurodollar certificates of deposit, the Fund will consider their marketability,
possible restrictions on international currency transactions, and any
regulations imposed by the domicile country of the foreign issuer. Eurodollar
certificates of deposit may not be subject to the same regulatory requirements
as certificates of deposit issued by U.S. banks, and associated income may be
subject to the imposition of foreign taxes, including withholding taxes.
Investments in securities of foreign issuers or securities principally traded
overseas may involve certain special risks due to foreign economic, political,
and legal developments, including expropriation of assets or nationalization,
imposition of withholding taxes on dividend or interest payments, and possible
difficulty in obtaining and enforcing judgments against foreign entities.
Furthermore, issuers of foreign securities are subject to different, often less
comprehensive, accounting, reporting, and disclosure requirements than domestic
issuers. The securities of some foreign companies and foreign securities markets
are less liquid and at times more volatile than securities of comparable U.S.
companies and U.S. securities markets. Foreign brokerage commissions and other
fees are also generally higher than in the United States. There are also special
tax considerations which apply to securities of foreign issuers and securities
principally traded overseas. All such securities will be U.S. dollar
denominated.
4
<PAGE>
REPURCHASE TRANSACTIONS. The Fund may engage in repurchase agreements, which are
instruments under which the Fund acquires ownership of a security from a
broker-dealer or bank that agrees to repurchase the security at a mutually
agreed upon time and price (which price is higher than the purchase price),
thereby determining the yield during the Fund's holding period. Maturity of the
securities subject to repurchase agreements may exceed one year.
If the seller in a repurchase agreement becomes bankrupt or otherwise defaults,
the Fund might incur expenses in enforcing its rights, and could experience
losses, including a decline in the value of the underlying securities and loss
of income. The Fund will enter into repurchase agreements only with banks and
broker-dealers that the Investment Manager deems creditworthy.
It is not currently anticipated that the Fund will engage in reverse repurchase
agreements.
VARIABLE RATE SECURITIES. The Fund may invest in instruments having rates of
interest that are adjusted periodically, or which "float" continuously according
to formulas intended to minimize any fluctuation in the values of the
instruments ("Variable Rate Securities"). The interest rate of Variable Rate
Securities ordinarily is determined by reference to, or is a percentage of, an
objective standard such as a bank's prime rate, the 90-day U.S. Treasury Bill
rate, or the rate of return on commercial paper or bank certificates of deposit.
As interest rates decrease or increase, Variable Rate Securities can be expected
to experience less appreciation or depreciation than fixed-rate obligations.
Some Variable Rate Securities ("Variable Rate Demand Securities") have a demand
feature entitling the purchaser to resell the securities at an amount
approximately equal to amortized cost, or the principal amount thereof plus
accrued interest. As is the case for other Variable Rate Securities, the
interest rate on Variable Rate Demand Securities varies according to some
objective standard intended to minimize fluctuation in the values of the
instruments. The Fund determines the maturity of Variable Rate Securities in
accordance with Securities and Exchange Commission ("SEC") rules.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Fund may purchase securities on
a "when-issued" or "delayed delivery" basis. When-issued or delayed delivery
securities are securities purchased for future delivery at a stated price and
yield. The Fund generally will not pay for such securities or start earning
interest on them until they are received. Securities purchased on a when-issued
or delayed delivery basis are recorded as an asset. The value of such securities
may change as the general level of interest rates changes.
The Fund will not invest more than 25% of its assets in when-issued or delayed
delivery securities. The Fund will not purchase these types of securities for
speculative purposes and will expect to acquire the securities when purchased.
However, the Fund reserves the right to sell any of these securities before
their settlement dates if the Investment Manager deems such a sale advisable.
BORROWING POLICY. The Fund may not borrow money except as a temporary measure
for extraordinary or emergency purposes, and then only in an amount up to
one-third of the value of its total assets in order to meet redemption requests
without immediately selling any portfolio securities. The Fund will not borrow
for leverage purposes or purchase securities or make investments while
borrowings are outstanding. If for any reason the current value of the total
assets of the Fund falls below an amount equal to three times the amount of
indebtedness for money borrowed, the Fund will, within three days, (not
including Sundays and holidays), reduce its indebtedness to the extent necessary
to meet that limitation. Any borrowings under this provision will not be
collateralized.
5
<PAGE>
INVESTMENT RESTRICTIONS
EXCEPT AS OTHERWISE NOTED WITH AN *, THE RESTRICTIONS BELOW ARE NONFUNDAMENTAL
AND CAN BE CHANGED WITHOUT APPROVAL OF THE HOLDERS OF A MAJORITY OF THE
OUTSTANDING VOTING SECURITIES (AS DEFINED IN THE INVESTMENT COMPANY ACT OF 1940,
AS AMENDED, HEREINAFTER THE "1940 ACT") OF THE FUND. THE FUND MAY NOT:
(1)* Purchase securities of any issuer (other than obligations of, or guaranteed
by, the U.S. Government, its agencies or instrumentalities) if, as a result
thereof, more than 5% of the value of its assets would be invested in the
securities of such issuer.
(2) Purchase more than 10% of any class of securities of any issuer. All debt
securities and all preferred stocks are each considered as one class.
(3)* Concentrate 25% or more of the value of its total assets in any one
industry; provided, however, that the Fund may invest up to 100% of its assets
in certificates of deposit or bankers' acceptances issued by domestic branches
of U.S. banks and U.S. branches of foreign banks (which the Fund has determined
to be subject to the same regulation as U.S. banks), or obligations of, or
guaranteed by, the U.S. Government, its agencies or instrumentalities in
accordance with its investment objective and policies.
(4) Enter into repurchase agreements if, as a result thereof, more than 10% of
its net assets valued at the time of the transaction would be subject to
repurchase agreements maturing in more than seven days and invested in
securities restricted as to disposition under the federal securities laws
(except commercial paper issued under Section 4(2) of the Securities Act of
1933). The Fund will invest no more than 10% of its net assets in illiquid
securities.
(5) Invest more than 5% of its total assets in securities restricted as to
disposition under the federal securities laws (except (i) commercial paper
issued under Section 4(2) of the Securities Act of 1933 and (ii) liquid Rule
144A - eligible restricted securities).
(6)* Invest in commodities or commodity contracts, futures contracts, real
estate or real estate limited partnerships, although it may invest in securities
which are secured by real estate and securities of issuers which invest or deal
in real estate.
(7) Invest for the purpose of exercising control or management of another
issuer.
(8) Purchase securities of other investment companies, except in connection with
a merger, consolidation, reorganization, or acquisition of assets, or as may
otherwise be permitted by the prospectus and the 1940 Act.
(9)* Make loans to others (except through the purchase of debt obligations or
repurchase agreements in accordance with its investment objectives and
policies).
(10)* Borrow money, except as a temporary measure for extraordinary or emergency
purposes, and then only in an amount up to one-third of the value of its total
assets in order to meet redemption requests without immediately selling any
portfolio securities. The Fund will not borrow for leverage purposes or purchase
securities or make investments while borrowings are outstanding. Any borrowings
by the Fund will not be collateralized. If for any reason the current value of
the total assets of the Fund
6
<PAGE>
falls below an amount equal to three times the amount of indebtedness for money
borrowed, the Fund will, within three business days, reduce its indebtedness to
the extent necessary to meet that limitation.
(11) Write, purchase, or sell puts, calls, or combinations thereof.
(12) Make short sales of securities or purchase any securities on margin, except
to obtain such short-term credits as may be necessary for the clearance of
transactions.
(13)* Underwrite securities issued by others, except to the extent it may be
deemed to be an underwriter under the federal securities laws in connection with
the disposition of securities from its investment portfolio.
(14)* Issue senior securities as defined in the 1940 Act.
Except for restrictions (3), (4) and (10), if a percentage restriction is
adhered to at the time of investment, a later increase in percentage resulting
from a change in values or net or total assets will not be considered a
violation of that restriction.
The Fund will only purchase securities that the Investment Manager has
determined, according to procedures approved by the Board and factors set forth
in Rule 2a-7 under the Investment Company Act of 1940, to present minimal credit
risk and which are First Tier or Second Tier Securities (otherwise referred to
as "Eligible Securities"). An Eligible Security is:
(1) a security with a remaining maturity of 397 days or less: (a) that is
rated by the requisite nationally recognized statistical rating
organizations ("NRSROs") designated by the Securities and Exchange
Commission (the "SEC") (currently Moody's Investors Service
("Moody's"), Standard & Poor's Ratings Group ("S&P"), Duff and Phelps
Credit Rating Co. ("Duff"), Fitch Investors Service, Inc. ("Fitch"),
Thomson BankWatch, and, with respect to debt issued by banks, bank
holding companies, United Kingdom building societies, broker-dealers
and broker-dealers' parent companies, and bank-supported debt, IBCA
Limited and its affiliate, IBCA, Inc.) in one of the two highest rating
categories for short-term debt obligations (two NRSROs are required but
one rating suffices if only one NRSRO rates the security), or (b) that
itself was unrated by any NRSRO, but was issued by an issuer that has
outstanding a class of short-term debt obligations (or any security
within that class) meeting the requirements of subparagraph 1(a) above
that is of comparable priority and security;
(2) a security that at the time of issuance was a long-term security but
has a remaining maturity of 397 days or less, and whose issuer received
a rating within one of the two highest rating categories from the
requisite NRSROs for short-term debt obligations with respect to a
class of short-term debt obligations (or any security within that
class) that is now comparable in priority and security with the subject
security; or
(3) a security not rated by an NRSRO but deemed by the Investment Manager,
pursuant to guidelines adopted by the Trust's Board of Trustees, to be
of comparable quality to securities described in (1) and (2) above and
to represent minimal credit risk.
A First Tier Security is any Eligible Security that carries (or if other
relevant securities issued by its issuer carry) top NRSRO ratings from at least
two NRSROs (a single top rating suffices if only one NRSRO rates the security),
that has been determined by the Investment Manager, pursuant to guidelines
adopted by the Trust's Board of Trustees, to be of comparable quality to such a
security, that is a security
7
<PAGE>
issued by a registered investment company that is a money market fund, or that
is a U.S. government security (a "Government security"). A Second Tier Security
is any other Eligible Security.
The Fund will limit its investments in the First Tier Securities of any one
issuer to no more than 5% of its total assets. (Repurchase agreements
collateralized by non-Government securities will be taken into account when
making this calculation.) Moreover, the Fund's total holdings of Second Tier
Securities will not exceed 5% of its total assets, with investment in the Second
Tier Securities of any one issuer being limited to the greater of 1% of the
Fund's total assets or $1 million. In addition, the underlying securities
involved in repurchase agreements collateralized by non-Government securities
will be First Tier Securities at the time the repurchase agreements are
executed.
8
<PAGE>
RISK CONSIDERATIONS
The Fund's portfolio will be affected by general changes in interest rates which
will result in increases or decreases in the market value of the obligations
held by the Fund. The market value of the obligations in the Fund's portfolio
can be expected to vary inversely to changes in prevailing interest rates.
Investors also should recognize that, in periods of declining interest rates,
the Fund's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates, the Fund's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net new
money to the Fund from the continuous sale of its shares will likely be invested
in portfolio instruments producing lower yields than the balance of its
portfolio, thereby reducing the Fund's current yield. In periods of rising
interest rates, the opposite can be expected to occur. In addition, securities
in which the Fund may invest may not yield as high a level of current income as
might be achieved by investing in securities with less liquidity and safety and
longer maturities.
The value of commercial paper and other securities in the Fund's portfolio may
be adversely affected by the inability of the issuers (or related supporting
institutions) to make principal or interest payments on the obligations in a
timely manner. As discussed above, the Fund will invest in securities which the
Investment Manager has determined, according to procedures approved by the
Board, and factors set forth under Rule 2a-7 under the Investment Company Act of
1940, as amended, to present minimal credit risk. The ratings assigned to
commercial paper and other corporate obligations, as well as the guidelines
approved by the Trust's Board of Trustees, are intended to enable the Investment
Manager to minimize the credit risk with respect to the securities in the Fund's
portfolio, but there can be no absolute assurance that the Investment Manager
will be successful in this regard. If issuer defaults nevertheless occur
respecting a sufficiently large portion of the Fund's portfolio, the Fund may be
unable to maintain a stable net asset value of $1.00 per share.
The Fund's performance also may be affected by changes in market or economic
conditions and other circumstances affecting the financial services industry.
Government regulation of banks, savings and loan associations, and finance
companies may limit both the amounts and types of loans and other financial
commitments these entities can make and the interest rates and fees they can
charge. The profitability of the financial services industry, which is largely
dependent on the availability and, cost of capital funds, has fluctuated in
response to volatility in interest rate levels. In addition, the financial
services industry is subject to risks resulting from general economic conditions
and the potential exposure to credit losses.
9
<PAGE>
MANAGEMENT OF THE TRUST
OFFICERS AND TRUSTEES
The officers and trustees of the Trust, their principal occupations during the
past five years, and their affiliations, if any, with the Investment Manager or
SEI Investment Distribution Co. are as follows:
<TABLE>
<CAPTION>
Principal Occupation
Name Age Position With the Trust for the Past Five Years
- ---- --- ----------------------- -----------------------
<S> <C> <C> <C>
Irwin G. Barnet, Esq.* 61 Trustee An attorney and a principal of
Sanders, Barnet, Goldman, Sanders, Barnet, Goldman, Simons &
Simons & Mosk Mosk, a law firm
1901 Avenue of the Stars, Suite 850
Los Angeles, California 90067
Maria D. Hummer, Esq. 54 Trustee An attorney with Manatt, Phelps &
Manatt, Phelps & Phillips, LLP Phillips and Chair of the Land Use
11355 West Olympic Boulevard Section of that law firm
Los Angeles, California 90064-1614
Victor Meschures, CPA 61 Trustee A Certified Public Accountant with
Meschures, Campeas, Thompson Meschures, Campeas, Thompson &
& Snyder, LLP Snyder, an accounting firm
760 North La Cienega Boulevard
Los Angeles, California 90069-5231
William R. Sweet 61 Trustee Retired; formerly, Executive Vice
81 Mt. Tiburon Road President, The Bank of California
Tiburon, California 94920 (1985-1996)
James R. Wolford 45 Trustee Senior Vice President and Chief
Bixby Ranch Company Financial Officer, Bixby Ranch
3010 Old Ranch Parkway, Suite 100 Company, an owner, operator and
Seal Beach, California 90740 developer of real estate
Mark Nagle 39 President and Chief President, Vice President and
400 North Roxbury Drive Executive Officer Controller, Funds Accounting; Vice
Beverly Hills, California 90210 President of the Administrator and
Distributor (1996-Present); BiSYS
Fund Services, Vice President of
Fund Accounting (1995-1996);
Fidelity Investments, Senior
Vice President (1981-1995).
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation
Name Age Position With the Trust for the Past Five Years
- ---- --- ----------------------- -----------------------
<S> <C> <C> <C>
Kathy Heilig 38 Controller and Chief Vice President and Assistant
400 North Roxbury Drive Accounting Officer Secretary-Treasurer of SEI
Beverly Hills, California 90210 Investments (1997-Present);
Assistant Controller of
SEI Investments Company
(1995-19997; Vice President
of SEI Investments Company
(1991-1995).
Joseph M. O'Donnell, Esq. 44 Vice President and Vice President and Assistant
400 North Roxbury Drive Assistant Secretary Secretary of the Administrator and
Beverly Hills, California 90210 the Distributor (1998-Present);
Vice President and General
Counsel, FPS Services, Inc.
(1993-1997).
Lydia A. Gavalis, Esq. 34 Vice President and Vice President and Assistant
400 North Roxbury Drive Assistant Secretary Secretary of the Administrator and
Beverly Hills, California 90210 the Distributor (1998-Present);
Assistant General Counsel and
Director of Arbitration,
Philadelphia Stock Exchange
(1989-1998)
Lynda J. Striegel, Esq. 50 Vice President and Vice President and Assistant
400 North Roxbury Drive Assistant Secretary Secretary of the Administrator and
Beverly Hills, California 90210 Distributor (1998-Present); Senior
Asset Management Counsel, Barnett
Banks, Inc. (1997-1998); Partner,
Groom and Nordberg, Chartered
(1996-1997); Associate General
Counsel, Riggs Bank, N.A.
(1991-1995).
James R. Foggo, Esq. 34 Vice President and Vice President and Assistant
400 North Roxbury Drive Assistant Secretary Secretary of the Administrator and
Beverly Hills, California 90210 Distributor (1998-Present);
Associate, Paul Weiss, Rifkind,
Wharton & Garrison (1998);
Associate, Baker & McKenzie
(1995-1998); Associate,
Battle Fowler LLP (1993-1995).
</TABLE>
*This individual is considered an interested person of the Trust as defined in
Section 2(a)(19) of the 1940 Act.
The address of each individual listed above, unless otherwise indicated, is 400
North Roxbury Drive, Beverly Hills, California 90210.
11
<PAGE>
COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
Aggregate Total Compensation
Compensation From Registrant and Fund
Name, Position From Registrant Complex Paid To Trustees
- -------------- --------------- ------------------------
<S> <C> <C>
Irwin G. Barnet, Trustee $4,000 $4,000
Maria D. Hummer, Trustee $4,000 $4,000
Victor Meschures, Trustee $4,000 $4,000
William R. Sweet, Trustee $4,000 $4,000
James R. Wolford, Trustee $4,000 $4,000
</TABLE>
- --------------------
(1) Estimated for current fiscal year.
INVESTMENT MANAGER
City National Bank serves as the Fund's discretionary investment manager
pursuant to an Investment Management Agreement dated ______, 1999 between it and
the Trust on behalf of the Fund. The Investment Manager provides a continuous
investment program including general investment and economic advice regarding
the Fund's investment strategies, manages the Fund's investment portfolio and
provides other services necessary to the operation of the Fund and the Trust.
The Investment Manager is exempt from the registration requirement as an
investment adviser under the Investment Advisers Act of 1940 because of its
status as a bank. City National Bank, founded in the early 1950's, is a
federally chartered commercial bank with approximately $6.4 billion in assets as
of December 31, 1998. It is a wholly-owned subsidiary of City National
Corporation, a New York Stock Exchange listed company.
The Investment Management Agreement will be in effect for a two-year term from
its effective date, and thereafter will continue in effect for one-year terms,
subject to annual approval by: (1) the Trust's Board of Trustees or (2) a vote
of the majority (as defined in the 1940 Act) of the outstanding voting
securities of the Fund. In either event, the continuance must also be approved
by a majority of the Trust's Board of Trustees who are not parties to the
Agreement, or interested persons (as defined in the 1940 Act) of any such party,
by vote cast in person at a meeting called for the purpose of voting on such
approval. The Investment Management Agreement may be terminated at any time upon
60-days notice by either party, or by a majority vote of the outstanding shares
of the Fund, and will terminate automatically upon assignment (as defined in the
1940 Act).
Pursuant to the Investment Management Agreement, the Investment Manager is
entitled to receive from the Fund an annual fee, payable monthly, of 0.25% of
the Fund's average daily net assets. The Investment Management Agreement allows
the Investment Manager voluntarily to waive its fees payable under the Agreement
and to reimburse all or a portion of the Fund's expenses. The Investment
Management Agreement further provides that the Investment Manager may seek
reimbursement of any reductions made to its management fee and any payments by
the Investment Manager of operating expenses that the Fund is obligated to pay
within the three-year period following such reduction or payment, subject to the
Fund's ability to effect such reimbursement and remain in compliance with any
applicable expense limitations. The Investment Manager will generally seek
reimbursement for the
12
<PAGE>
oldest of any reductions and, or waivers before payment by the Fund for fees and
expenses for the current year. Such reimbursement may be paid prior to the
Fund's payment of current expenses if so requested by the Investment Manager
even if such payment may require the Investment Manager to waive or reduce its
current fees under the Investment Management Agreement or to pay current Fund
expenses.
SHARE MARKETING PLAN
The Trust has adopted a Share Marketing Plan (or Rule 12b-1 Plan) (the "12b-1
Plan") with respect to the Class A and Class S Shares of the Fund pursuant to
Rule 12b-1 under the Investment Company Act (each, a "12b-1 Plan" and
collectively, the "12b-1 Plans"). The Investment Manager serves as the
distribution coordinator under the 12b-1 Plans and, as such, receives any fees
paid by the Class A shares and Class S shares of the Fund pursuant to the 12b-1
Plans.
Prior to April 8, 1999, the Fund offered only one class of shares. On
that date, the Board of Trustees of the Trusts, including a majority of the
Trustees who are not interested persons of the Trust and who have no direct or
indirect financial interest in the operation of the 12b-1 Plan or in any
agreement related to the 12b-1 Plan (the "Independent Trustees"), at their
regular quarterly meeting, adopted the 12b-1 Plan for the newly designated Class
A and Class S shares of the Fund. The initial shareholder of the Class A and
Class S shares, if any, of the Fund approved the 12b-1 Plan covering each Class.
The single class of shares existing before that date was redesignated the
Institutional Class shares. Institutional Class shares are not covered by the
12b-1 Plans.
Under the 12b-1 Plans, the Fund pays distribution fees to the
Distribution Coordinator at an annual rate of up to 0.50% of the Fund's
aggregate average daily net assets attributable to each of its Class A and Class
S shares to reimburse the Distribution Coordinator for its expenses in
connection with the promotion and distribution of those Classes.
The 12b-1 Plans provide that the Distribution Coordinator may use the
distribution fees received from the Class of the Fund covered by the 12b-1 Plan
only to pay for the distribution expenses of that Class.
Distribution fees are accrued daily and paid monthly, and are charged
as expenses as accrued. Shares are not obligated under the 12b-1 Plans to pay
any distribution expense in excess of the distribution fee. Thus, if the 12b-1
Plans were terminated or otherwise not continued, no amounts (other than current
amounts accrued but not yet paid) would be owed by the Class to the Distribution
Coordinator.
Each 12b-1 Plan provides that it shall continue in effect from year to
year provided that a majority of the Board of Trustees of the Trust, including a
majority of the Independent Trustees, vote annually to continue the 12b-1 Plan.
The Board, when approving the establishment of the 12b-1 Plans, determined that
there are various anticipated benefits to the Fund from such establishment,
including the likelihood that the Plans will stimulate sales of shares of the
Trust and assist in increasing the asset base of the Trust in the face of
competition from a variety of financial products and the potential advantage to
the shareholders of the Trust of prompt and significant growth of the asset base
of the Trust, including greater liquidity, more investment flexibility and
achievement of greater economies of scale. The 12b-1 Plan (and any distribution
13
<PAGE>
agreement between the Fund, the Distributor or the Investment Manager and a
selling agent with respect to the shares) may be terminated without penalty upon
at least 60-days' notice by the Distributor or the Manager, or by the Fund by
vote of a majority of the Independent Trustees, or by vote of a majority of the
outstanding shares (as defined in the Investment Company Act) of the Class to
which the 12b-1 Plan applies. Neither any "interested person" of the Trusts (as
that term is used under the 1940 Act) nor any trustee of the Trusts who is not
any interested person of the Trusts has any direct or indirect financial
interests in the operation of the 12b-1 Plan.
All distribution fees paid by the Fund under the 12b-1 Plans will be
paid in accordance with Rule 2830 of the NASD Regulation, Inc. Rules of Conduct,
as such Rule may change from time to time. Pursuant to the 12b-1 Plans, the
Boards of Trustees will review at least quarterly a written report of the
distribution expenses incurred by the Manager on behalf of the shares of the
Fund. In addition, as long as the 12b-1 Plans remains in effect, the selection
and nomination of Trustees who are not interested persons (as defined in the
Investment Company Act) of the Trust shall be made by the Trustees then in
office who are not interested persons of the Trust.
SHAREHOLDER SERVICES AGREEMENT
The Investment Manager has entered into a Shareholder Services Agreement with
the Trust on behalf of the Fund. Pursuant to the Shareholder Services Agreement,
the Investment Manager will provide, or will arrange for others to provide,
certain specified shareholder services to shareholders of the Fund. As
compensation for the provision of such services, the Fund will pay the
Investment Manager a fee of up to 0.25% of the each class of the Fund's average
daily net assets on an annual basis, payable monthly. The Investment Manager may
pay certain banks, trust companies, broker-dealers, and other institutions (each
a "Participating Organization") out of the fees the Investment Manager receives
from the Fund under the Shareholder Services Agreement to the extent that the
Participating Organization performs shareholder servicing functions for the Fund
with respect to shares of the Fund owned from time to time by customers of the
Participating Organization. In certain cases, the Investment Manager may also
pay a fee, out of its own resources and not out of the service fee payable under
the Shareholder Services Agreement, to a Participating Organization for
providing other administrative services to its customers who invest in the Fund.
Pursuant to the Shareholder Services Agreement, the Investment Manager will
provide or arrange with a Participating Organization for the provision of the
following shareholder services: responding to shareholder inquiries; processing
purchases and redemptions of the Fund's shares, including reinvestment of
dividends; assisting shareholders in changing dividend options, account
designations, and addresses; transmitting proxy statements, annual reports,
prospectuses, and other correspondence from the Fund to shareholders (including,
upon request, copies, but not originals, of regular correspondence,
confirmations, or regular statements of account) where such shareholders hold
shares of the Fund registered in the name of the Investment Manager, a
Participating Organization, or their nominees; and providing such other
information and assistance to shareholders as may be reasonably requested by
such shareholders.
The Investment Manager may also enter into agreements with Participating
Organizations that process substantial volumes of purchases and redemptions of
shares of the Fund for their customers. Under these arrangements, the Transfer
Agent will ordinarily maintain an omnibus account for a Participating
Organization and the Participating Organization will maintain sub-accounts for
its customers for whom it processes purchases and redemptions of shares. A
Participating Organization may charge its customers a fee, as agreed upon by the
Participating Organization and the customer, for the services it provides.
14
<PAGE>
Customers of participating Organizations should read the Fund's Prospectus in
conjunction with the service agreement and other literature describing the
services and related fees provided by the Participating Organization to its
customers prior to any purchase of shares.
EXPENSES
The Trust pays the expenses of its operations, including: the fees and expenses
of independent accountants, counsel and the custodian; the cost of reports and
notices to shareholders; the cost of calculating net asset value; registration
fees; the fees and expenses of qualifying the Trust and its shares for
distribution under federal and state securities laws; and membership dues in the
Investment Company Institute and, or other industry association membership dues.
PRINCIPAL UNDERWRITER
SEI Investments Distribution Co. (the "Distributor"), a wholly-owned subsidiary
of SEI Investments, and the Trust are parties to a distribution agreement (the
"Distribution Agreement") with respect to shares of the Fund. The Distributor
receives no compensation for distribution of shares of the Fund.
The Distribution Agreement shall remain in effect for a period of two years
after the effective date of the agreement and is renewable annually. The
Distribution Agreement may be terminated by the Distributor, by a majority vote
of the Trustees who are not interested persons and have no financial interest in
the Distribution Agreement or by a majority vote of the outstanding securities
of the Trust upon not more than 60 days' written notice by either party or upon
assignment by the Distributor.
TRANSFER AGENT
Pursuant to a Transfer Agent Agreement, SEI Investments Fund Management, located
at Oaks, Pennsylvania, 19456 (the "Transfer Agent") serves as transfer agent for
the Fund. The Transfer Agent provides information and services to the Fund's
shareholders which include reporting share ownership, sales, and dividend
activity (and associated tax consequences), responding to daily inquiries, and
effecting the transfer of Fund shares. It furnishes such office space and
equipment, telephone facilities, personnel, and informational literature
distribution as is necessary or appropriate in providing shareholder and
transfer agency information and services.
CUSTODIAN AND FUND ACCOUNTANT
Pursuant to a Custodian Agreement, First Union National Bank serves as the
Custodian (the "Custodian") of the Fund's assets. Under the terms of the
Custodian Agreement, the Custodian holds and administers the securities and cash
in the Fund's portfolio.
INDEPENDENT AUDITORS
[to come]
REPORTS TO SHAREHOLDERS
Shareholders will be sent audited annual and unaudited semi-annual financial
statements. The address of KPMG LLP is 725 South Figueroa Street, Los Angeles
90017.
LEGAL COUNSEL
15
<PAGE>
The validity of the shares of beneficial interest offered hereby will be passed
upon by Paul, Hastings, Janofsky & Walker LLP, 345 California Street, San
Francisco, California 94104.
16
<PAGE>
PORTFOLIO TRANSACTIONS AND TURNOVER
PORTFOLIO TRANSACTIONS
Portfolio transactions are undertaken principally to: pursue the objective of
the Fund in relation to movements in the general level of interest rates; invest
money obtained from the sale of Fund shares; reinvest proceeds from maturing
portfolio securities; and meet redemptions of Fund shares. Portfolio
transactions may increase or decrease the yield of the Fund depending upon
management's ability correctly to time and execute them.
The Investment Manager, in effecting purchases and sales of portfolio securities
for the account of the Fund, seeks to obtain best price and execution. Subject
to the supervision of the Board of Trustees, the Investment Manager generally
selects broker-dealers for the Fund primarily on the basis of the quality and
reliability of services provided, including execution capability and financial
responsibility.
When the execution and price offered by two or more broker-dealers are
comparable, the Investment Manager may, in its discretion, utilize the services
of broker-dealers that provide it with investment information and other research
resources. Such resources may also be used by the Investment Manager when
providing advisory services to other investment advisory clients, including
other mutual funds.
The Trust expects that purchases and sales of portfolio securities will usually
be principal transactions. Securities will normally be purchased directly from
the issuer or from an underwriter or market maker for the securities.
Purchases from underwriters will include a commission or concession paid by the
issuer to the underwriter, and purchases from dealers serving as market makers
will include the spread between the bid and asked prices.
Investment decisions for the Fund are reached independently from those for other
accounts managed by the Investment Manager. Such other accounts may also make
investments in instruments or securities at the same time as the Fund. On
occasions when the Investment Manager determines the purchase or sale of a
security to be in the best interest of the Fund as well as of other clients, the
Investment Manager, to the extent permitted by applicable laws and regulations,
may aggregate the securities to be so purchased or sold in an attempt to obtain
the most favorable price or lower brokerage commissions and the most efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, will be made by the Investment
Manager in the manner it considers to be the most equitable under the
circumstances and consistent with its fiduciary obligations to the Fund and to
its other participating clients. In some cases this procedure may affect the
size or price of the position obtainable for the Fund.
PORTFOLIO TURNOVER
Because securities with maturities of less than one year are excluded from
required portfolio turnover rate calculations, the Fund's portfolio turnover
rate for reporting purposes is expected to be zero.
17
<PAGE>
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS
On each day that the Fund's net asset value per share is determined (each a
"Business Day"), the Fund's net investment income will be declared as of the
close of trading on the New York Stock Exchange (normally 4:00 p.m. Eastern
time) as a dividend to shareholders of record as of the last calculation of net
asset value prior to the declaration and to shareholders investing on that day
subject to the following conditions: (1) receipt of the purchase order by the
Transfer Agent before 1:30 p.m. Eastern time; and (2) payment in immediately
available funds wired to the Transfer Agent by the close of business the same
day. Purchases made by check will begin receiving dividends on the Business Day
the Transfer Agent receives the check if the check is received by 1:30 p.m.
Eastern time, or on the following Business Day if the check is received after
1:30 p.m. Eastern time. Shareholders will receive dividends in additional shares
unless they elect to receive cash. Dividends will normally be reinvested monthly
in full and fractional shares of the Fund at the net asset value on the last
Business Day of each month. If cash payment is requested, checks will normally
be mailed on the Business Day following the dividend reinvestment date. The Fund
will pay shareholders who redeem all of their shares all dividends accrued to
the time of the redemption within seven days after the redemption.
The Fund calculates its dividends based on its daily net investment income. For
this purpose, the net investment income of the Fund consists of: (1) accrued
interest income, plus or minus amortized discount or premium, less (2) accrued
expenses allocated to the Fund. If the Fund realizes any capital gains, they
will be distributed at least once during the year as determined by the Board of
Trustees. Any realized capital losses to the extent not offset by realized
capital gains will be carried forward. It is not anticipated that the Fund will
realize any long-term capital gains. Expenses of the Trust are accrued daily.
Should the net asset value of the Fund deviate significantly from market value,
the Board of Trustees could decide to value the investments at market value, and
any unrealized gains and losses could affect the amount of the Fund's
distributions.
FEDERAL INCOME TAXES
It is the policy of the Fund to qualify for taxation, and to elect to be taxed,
as a "regulated investment company" by meeting the requirements of Subchapter M
of the Internal Revenue Code of 1986, as amended (the "Code"). In order to so
qualify, the Fund will distribute each year substantially all of its investment
company taxable income (if any), its net exempt-interest income (if any), and
its net capital gains (if any), and will seek to meet certain other
requirements. Such qualification relieves the Fund of liability for federal
income taxes to the extent the Fund's earnings are distributed. By following
this policy, the Fund expects to eliminate or reduce to a nominal amount the
federal income tax to which it is subject.
In order to qualify as a regulated investment company, the Fund must, among
other things, annually (1) derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans and gains from
the sale or other disposition of stocks, securities, foreign currencies or other
income (including gains from options, futures or forward contracts) derived with
respect to its business of investing in stocks, securities or currencies and (2)
diversify its holdings so that at the end of each quarter of its taxable year
(i) at least 50% of the market value of the Fund's total assets is represented
by cash or cash items, U.S. Government securities, securities of other regulated
investment companies and other securities limited, in respect of any one issuer,
to a value not greater than 5% of the value of the Fund's total assets and 10%
of the outstanding voting securities of such issuer, and (ii) not more than 25%
of the value of its assets is invested in the securities of any one issuer
(other than U.S. Government securities or securities of any other regulated
investment company) or of two or more issuers that the
18
<PAGE>
Fund controls, within the meaning of the Code, and that are engaged in the same,
similar or related trades or businesses. If the Fund qualifies as a regulated
investment company, it will not be subject to federal income tax on the part of
its net investment income and net realized capital gains, if any, which it
distributes to shareholders, provided that the Fund meets certain minimum
distribution requirements. To comply with these requirements, the Fund must
distribute annually at least (a) 90% of its "investment company taxable income"
(as that term is defined in the Code) and (b) 90% of the excess of its (i)
tax-exempt interest income over (ii) certain deductions attributable to that
income (with certain exceptions), for its taxable year. The Fund intends to make
sufficient distributions to shareholders to meet these requirements.
If the Fund fails to distribute in a calendar year (regardless of whether it has
a non-calendar taxable year) at least 98 percent of its (i) ordinary income for
such year; and (ii) capital gain net income for the one-year period ending on
October 31 of that calendar year (or later if the Fund is permitted so to elect
and so elects), plus any retained amount from the prior year, the Fund will be
subject to a nondeductible 4% excise tax on the undistributed amounts. The Fund
intends generally to make distributions sufficient to avoid imposition of this
excise tax.
Any distributions declared by the Fund in October, November, or December to
shareholders of record during those months and paid during the following January
are treated, for tax purposes, as if they were received by each shareholder on
December 31 of the year declared. The Fund may adjust its schedule for the
reinvestment of distributions for the month of December to assist in complying
with the reporting and minimum distribution requirements of the Code.
The Fund does not expect to realize any significant amount of long-term capital
gain. However, any distributions by the Fund of long-term capital gain will be
taxable to the shareholders as long-term capital gain, regardless of how long a
shareholder has held the Fund's shares.
The Fund may engage in investment techniques that may alter the timing and
character of the Fund's income. The Fund may be restricted in its use of these
techniques by rules relating to its qualification as a regulated investment
company.
The Fund may invest in some Variable Rate Demand Securities which have a feature
entitling the purchaser to resell the securities at a specified amount (a "put
option"). The Internal Revenue Service (the "IRS") has issued a revenue ruling
to the effect that, under specified circumstances, a regulated investment
company will be the owner of tax-exempt municipal obligations acquired with a
put option. The IRS subsequently announced that it will not ordinarily issue
advance ruling letters as to the identity of the true owner of property in cases
involving the sale of securities (or participation interests therein) if the
purchaser has the right to cause the security (or participation interest
therein) to be purchased by the seller or a third party. The Fund intends to
take the position that it is the owner of any securities with respect to which
it also holds a put option.
The Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of taxable dividends paid to any shareholder (1) who fails to
provide a correct taxpayer identification number certified under penalty of
perjury; (2) who provides an incorrect taxpayer identification number; (3) who
is subject to withholding for failure to properly report to the IRS all payments
of interest or dividends; or (4) who fails to provide a certified statement that
he or she is not subject to "backup withholding." This "backup withholding" is
not an additional tax and any amounts withheld may be credited against the
shareholder's ultimate U.S. tax liability.
The foregoing discussion relates only to federal income tax law as applicable to
U.S. citizens or residents. Foreign shareholders (i.e., nonresident alien
individuals and foreign corporations,
19
<PAGE>
partnerships, trusts and estates) generally are subject to U.S. withholding tax
at the rate of 30% (or a lower tax treaty rate) on distributions derived from
net investment income and short-term capital gains. Distributions to foreign
shareholders of long-term capital gains and any gains from the sale or
disposition of shares of the Fund generally are not subject to U.S. taxation,
unless the recipient is an individual who meets the Code's definition of
"resident alien." Different tax consequences may result if the foreign
shareholder is engaged in a trade or business within the U.S. In addition, the
tax consequences to a foreign shareholder entitled to claim the benefits of a
tax treaty may be different than those described above. Distributions by the
Fund may also be subject to state, local and foreign taxes, and their treatment
under applicable tax laws may differ from the U.S. federal income tax treatment.
The information above is only a summary of some of the tax considerations
generally affecting the Fund and its shareholders. No attempt has been made to
discuss individual tax consequences and this discussion should not be construed
as applicable to all shareholders' tax situations. Investors should consult
their own tax advisors to determine the suitability of the Fund and the
applicability of any state, local, or foreign taxation. Paul, Hastings, Janofsky
& Walker has expressed no opinion in respect thereof. Foreign shareholders
should consider, in particular, the possible application of U.S. withholding
taxes on certain taxable distributions from the Fund at rates up to 30% (subject
to reduction under certain income tax treaties).
20
<PAGE>
SHARE PRICE CALCULATION
The Fund values its portfolio instruments at amortized cost, which means they
are valued at their acquisition cost, as adjusted for amortization of premium or
discount, rather than at current market value. Calculations are made to compare
the value of the Fund's investments at amortized cost with market values. Market
valuations are obtained by using actual quotations provided by market makers,
estimates of market value, or values obtained from yield data relating to
classes of money market instruments published by reputable sources at the bid
prices for the instruments. The amortized cost method of valuation seeks to
maintain a stable $1.00 per share net asset value even where there are
fluctuations in interest rates that affect the value of portfolio instruments.
Accordingly, this method of valuation can in certain circumstances lead to a
dilution of a shareholder's interest.
If a deviation of 1/2 of 1% or more were to occur between the net asset value
per share calculated by reference to market values and the Fund's $1.00 per
share net asset value, or if there were any other deviation that the Board of
Trustees of the Trust believed may result in a material dilution or other unfair
results to investors or existing shareholders, the Board of Trustees is required
to cause the Fund to take such action as it deems appropriate to eliminate or
reduce to the extent reasonably practicable such dilution or unfair results. If
the Fund's net asset value per share (computed using market values) declined, or
were expected to decline, below $1.00 (computed using amortized cost), the Board
of Trustees might temporarily reduce or suspend dividend payments in an effort
to maintain the net asset value at $1.00 per share. As a result of such
reduction or suspension of dividends or other action by the Board of Trustees,
an investor would receive less income during a given period than if such a
reduction or suspension had not taken place. Such action could result in
investors receiving no dividends for the period during which they hold their
shares and receiving, upon redemption, a price per share lower than that which
they paid. On the other hand, if the Fund's net asset value per share (computed
using market values) were to increase, or were anticipated to increase above
$1.00 (computed using amortized cost), the Board of Trustees might supplement
dividends in an effort to maintain the net asset value at $1.00 per share.
YIELD
The historical performance of the Fund may be shown in the form of yield and
effective yield. These measures of performance are described below.
YIELD Yield refers to the net investment income generated by a hypothetical
investment in the Fund over a specific seven-day period. This net investment
income is then annualized, which means that the net investment income generated
during the seven-day period is assumed to be generated in each seven-day period
over an annual period, and is shown as a percentage of the investment.
EFFECTIVE YIELD Effective yield is calculated similarly, but the net investment
income earned by the investment is assumed to be compounded weekly when
annualized. The effective yield will be slightly higher than the yield due to
this compounding effect.
As of the Fund's fiscal year ended October 31, 1998, the Fund's 7-day yield was
4.73% and the 7-day effective yield was 4.84%.
21
<PAGE>
GENERAL INFORMATION
The Trust was organized as a business trust under the laws of Delaware on
October 28, 1996 and may issue an unlimited number of shares of beneficial
interest or classes of shares in one or more separate series. Currently, the
Trust offers shares of only one series (the Fund described in this SAI). As of
the date of this Statement of Additional Information, the Trust has two
additional series of shares under registration with the SEC. The Trust's Board
of Trustees may authorize the issuance of shares of additional series or classes
of shares of beneficial interest if it deems it desirable.
The Trust is generally not required to hold shareholder meetings. However, as
provided in its Agreement and Declaration of Trust and its Bylaws, shareholder
meetings may be called by the Trustees for the purpose as may be prescribed by
law, the Agreement and Declaration of Trust, or the Bylaws, or for the purpose
of taking action upon any other matter deemed by the Trustees to be necessary or
desirable including changing fundamental policies, electing or removing
Trustees, or approving or amending an investment advisory agreement. In
addition, a Trustee may be removed by shareholders at a special meeting called
upon written request of shareholders owning in the aggregate at least 10% of the
outstanding shares of the Trust..
Each Trustee serves until the next meeting of shareholders, if any, called for
the purpose of electing trustees and until the election and qualification of his
or her successor or until death, resignation, declaration of bankruptcy or
incompetence by a court of competent jurisdiction, or removal by a majority vote
of the shares entitled to vote (as described below) or of a majority of the
Trustees. In accordance with the 1940 Act (i) the Trust will hold a shareholder
meeting for the election of trustees when less than a majority of the trustees
have been elected by shareholders, and (ii) if, as a result of a vacancy in the
Board of Trustees, less than two-thirds of the trustees have been elected by the
shareholders, that vacancy will be filled by a vote of the shareholders.
The Agreement and Declaration of Trust provides that one-third of the shares
entitled to vote shall be a quorum for the transaction of business at a
shareholders' meeting, except when a larger quorum is required by applicable
law, by the Bylaws or by the Agreement and Declaration of Trust, and except that
where any provision of law, of the Agreement and Declaration of Trust, or of the
Bylaws permits or requires that (i) holders of any series shall vote as a
series, then a majority of the aggregate number of shares of that series
entitled to vote shall be necessary to constitute a quorum for the transaction
of business by that series; or (ii) holders of any class shall vote as a class,
then a majority of the aggregate number of shares of that class entitled to vote
shall be necessary to constitute a quorum for the transaction of business by
that class. Any lesser number shall be sufficient for adjournments. Any
adjourned session or sessions may be held, within a reasonable time after the
date set for the original meeting, without the necessity of further notice. The
Agreement and Declaration of Trust specifically authorizes the Board of Trustees
to terminate the Trust (or any of its investment portfolios) by notice to the
shareholders without shareholder approval.
For further information, please refer to the registration statement and exhibits
for the Trust on file with the SEC in Washington, D.C. and available upon
payment of a copying fee. The statements in the Prospectus and this Statement of
Additional Information concerning the contents of contracts or other documents,
copies of which are filed as exhibits to the registration statement, are
qualified by reference to such contracts or documents.
PRINCIPAL HOLDERS OF SECURITIES
As of February 24, 1999, City National Bank, P.O. Box 60520, Los Angeles,
90060-0520, as fiduciary for its various clients, was holder of 99% of the
outstanding shares of the Fund.
22
<PAGE>
PURCHASE AND REDEMPTION OF SHARES
The Fund's minimum initial investment is $100,000 and subsequent investments of
$1,000 or more may be made. These minimum requirements may be changed at any
time and are not applicable to certain types of investors. Exceptions to the
minimum investment requirements may be made at the discretion of the Investment
Manager including, without limitation, for employees or affiliates of the
Investment Manager or investors who are, or are related to or affiliated with,
clients of the Investment Manager. The Fund will accept investments in cash only
in U.S. dollars.
The Trust reserves the right, if conditions exist which make cash payments
undesirable, to honor any request for redemption or repurchase order in-kind by
making payment in readily marketable securities chosen by the Fund and valued as
they are for purposes of computing the Fund's net asset value. However, the
Trust has elected to commit itself to pay in cash all requests for redemption by
any Shareholder of record, limited in amount with respect to each Shareholder
during any 90-day period to the lesser of: (i) $250,000, or (ii) one percent of
the net asset value of the Fund at the beginning of such period. If payment is
made in securities, a shareholder may incur transaction expenses in converting
these securities into cash.
To minimize administrative costs, share certificates will not be issued. Records
of share ownership are maintained by the Transfer Agent.
Investors should remember that it may be difficult to complete transactions by
telephone during periods of drastic economic or market changes, when phone lines
may become busy with calls from other investors. If you want to buy or sell
shares but have trouble reaching the Fund by telephone, you may want to use
another method for completing a transaction, even though an alternative
procedure may mean that completing your transaction may take a longer period of
time.
The Fund may be required to withhold federal income tax at a rate of 31% (backup
withholding) from dividend payments, distributions, and redemption proceeds if a
shareholder fails to furnish the Fund with his/her certified social security or
tax identification number. The shareholder also must certify that the number is
correct and that he/she is not subject to backup withholding. The certification
is included as part of the share purchase application form. If the shareholder
does not have a social security number, he/she should indicate on the purchase
form that an application to obtain the number is pending. The Fund is required
to withhold taxes if a number is not delivered to the Fund within seven days.
OTHER INFORMATION
The Prospectus of the Fund and this Statement of Additional Information do not
contain all the information included in the Registration Statement filed with
the SEC under the Securities Act of 1933, as amended, with respect to the
securities offered by the Prospectus.
Certain portions of the Registration Statement have been omitted from the
Prospectus and this Statement of Additional Information pursuant to the rules
and regulations of the SEC. The Registration Statement including the exhibits
filed therewith may be examined at the office of the SEC in Washington, DC
Statements contained in the Prospectus or in this Statement of Additional
Information as to the contents of any contract or other document referred to are
not necessarily complete, and, in each instance, reference is made to the copy
of such contract or other document filed as an exhibit to the Registration
Statement of which the Prospectus and this Statement of Additional Information
form a part, each such statement being qualified in all respects by such
reference.
23
<PAGE>
THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE AN OFFERING BY THE
TRUST, THE FUND, OR BY THE PRINCIPAL UNDERWRITER IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE.
FINANCIAL STATEMENTS
[to come]
24
<PAGE>
APPENDIX A - RATINGS OF INVESTMENT SECURITIES
COMMERCIAL PAPER
MOODY'S INVESTORS SERVICE
Prime-1 is the highest commercial paper rating assigned by Moody's.
Issuers (or related supporting institutions) of commercial paper with this
rating are considered to have a superior ability to repay short-term promissory
obligations. Issuers (or related supporting institutions) of securities rated
Prime-2 are viewed as having a strong capacity to repay short-term promissory
obligations. This capacity will normally be evidenced by many of the
characteristics of issuers whose commercial paper is rated Prime-1 but to a
lesser degree.
STANDARD & POOR'S CORPORATION
An S&P A-1 commercial paper rating indicates either an overwhelming or
very strong degree of safety regarding timely payment of principal and interest.
Issues determined to possess overwhelming safety characteristics are denoted
A-1+. Capacity for timely payment on commercial paper rated A-2 is strong, but
the relative degree of safety is not as high as for issues designated A-1.
SHORT-TERM NOTES AND VARIABLE RATE DEMAND OBLIGATIONS
MOODY'S INVESTORS SERVICE
Short-term notes and variable rate demand obligations bearing the
designations MIG-1/VMIG-1 are considered to be of the best quality, enjoying
strong protection from established cash flows, superior liquidity support or
demonstrated broad based access to the market for refinancing. Obligations rated
MIG-2/VMIG-2 are of high quality and enjoy ample margins of protection although
not as large as those of the top rated securities.
STANDARD & POOR'S CORPORATION
An S&P SP-1 rating indicates that the subject securities' issuer has a
very strong capacity to pay principal and interest. Issues determined to possess
overwhelming safety characteristics are given a plus (+) designation. S&P's
determination that an issuer has a satisfactory capacity to pay principal and
interest is denoted by an SP-2 rating.
BONDS
MOODY'S INVESTORS SERVICE
Moody's rates the bonds it judges to be of the best quality Aaa. These
bonds carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or extraordinarily
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of these issues. Bonds carrying an Aa
designation are deemed to be of high quality by all standards. Together with Aaa
rated bonds, they comprise what are generally known as high grade bonds. Aa
bonds are rated lower than the best bonds because they may enjoy relatively
lower margins of protections, fluctuations of protective elements may be of
greater amplitude or there may be other factors present which make them appear
to be subject to somewhat greater long-term risks.
A-1
<PAGE>
STANDARD & POOR'S CORPORATION
AAA is the highest rating assigned by S&P to a bond and indicates the
issuer's extremely strong capacity to pay interest and repay principal. An AA
rating denotes a bond whose issuer has a very strong capacity to pay interest
and repay principal and differs from an AAA rating only in small degree.
A-2
<PAGE>
----------------------------------------------------
PART C
OTHER INFORMATION
---------------------------------------------------
<PAGE>
CNI CHARTER FUNDS
--------------
FORM N-1A
--------------
PART C
--------------
Item 23. Exhibits
(a) Agreement and Declaration of Trust.
(1) Form of Agreement and Declaration of Trust(A)
(2) Form of Amendment to the Agreement and Declaration of
Trust - filed herewith.
(3) Certificate of Amendment to the Certificate of Trust - filed
herewith.
(b) By-Laws:
(1) By-Laws dated October 25, 1996 is incorporated by reference.(A)
(2) Amendment to the By-Laws of the Trust - filed herewith.
(c) Instruments Defining Rights of Security Holder--not applicable.
(d) Form of Investment Management Agreement - filed herewith.
(e) Form of Distribution Agreement - filed herewith.
(f) Bonus or Profit Sharing Contracts - not applicable.
(g) Form of Custody Agreement - filed herewith.
(h) Other Material Contracts:
(1) Form of Administrative Services Agreement - filed herewith.
(2) Form of Transfer Agent Agreement - filed herewith.
(i) Opinion of Counsel as to legality of shares - to be filed by
Post-Effective Amendment.
(j) Other Opinions - Independent Auditors' Consent - Not Applicable.
(k) Omitted Financial Statements - not applicable.
(l) Initial Capital Agreement(A)
(m) Distribution Plans.
(1) Form of Rule 12b-1 Plan - filed herewith.
(2) Form of Share Marketing Agreement - filed herewith.
(n) Financial Data Schedule - not applicable.
(o) Rule 18f-3 Plan - filed herewith.
Item 24. Persons Controlled by or Under Common Control with the Fund
- ----------------------
(A) Previously filed as an exhibit to Registrant's Registration Statement on
Form N1-A on November 14, 1996.
<PAGE>
Item 25. Indemnification
Please see Article VI of the Registrant's By-Laws, previously filed as an
Exhibit. Pursuant to Rule 484 under the Securities Act of 1933, as amended, the
Registrant furnishes the following undertaking:
"Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a trustee, officer, or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such trustee, officer, or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue."
Notwithstanding the provisions contained in the Registrant's By-Laws,
in the absence of authorization by the appropriate court on the merits
pursuant to Sections 4 and 5 of Article VI of said By-Laws, any
indemnification under said Article shall be made by Registrant only if
authorized in the manner provided in either subsection (a) or (b) of Section
6 of said Article VI.
Item 26. Business and Other Connections of the Investment Adviser
Please see Parts A and B of this Registration Statement for discussion
of the Investment Adviser.
Item 27. Principal Underwriter
(a) Not Applicable.
(b) Not Applicable.
(c) Not Applicable.
Item 28. Location of Accounts and Records.
The accounts, books, or other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940, as amended (the
"Investment Company Act") will be kept by the Registrant's Transfer Agent,
SEI Investments Fund Management, 1 Freedom Valley Drive, Oaks, Pennsylvania
19456, except those records relating to portfolio transactions and the basic
organizational and Trust documents of the Registrant (see Subsections
(2)(iii), (4), (5), (6), (7), (9), (10) and (11) of Rule 31a-1(b)), which
will be kept by the Registrant at 400 North Roxbury Drive, Beverly Hills,
California 90210.
Item 29. Management Services.
There are no management-related service contracts not discussed in
Parts A and B.
Item 30. Undertakings.
(a) Not applicable.
(b) Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's last annual report to
Shareholders, upon request and without charge.
C-2
<PAGE>
(c) Registrant has undertaken to comply with Section 16(a) of the
Investment Company Act which requires the prompt convening of a meeting of
shareholders to elect trustees to fill existing vacancies in the Registrant's
Board of Trustees in the event that less than a majority of the trustees have
been elected to such position by shareholders. Registrant has also undertaken
promptly to call a meeting of shareholders for the purpose of voting upon the
question of removal of any Trustee or Trustees when requested in writing to
do so by the record holders of not less than 10 percent of the Registrant's
outstanding shares and to assist its shareholders in communicating with other
shareholders in accordance with the requirements of Section 16(c) of the
Investment Company Act.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended
(the "1933 Act") and the Investment Company Act of 1940, as amended, the
Registrant certifies that it meets all of the requirements for effectiveness
of this Amendment pursuant to Rule 485(b) under the 1933 Act, and that the
Registrant has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Beverly Hills, the State of California, on this 30th day of April,
1999.
THE CNI CHARTER FUNDS
By: /s/ Mark Nagle*
----------------------------------
Mark Nagle
President, Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to Registrant's Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
/s/ Mark Nagle*
- --------------- President & April 30, 1999
Mark Nagle Chief Executive Officer
/s/ Kathy Heilig*
- ----------------- Controller & April 30, 1999
Kathy Heilig Chief Accounting Officer
/s/ Irwin G. Barnet*
- -------------------- Trustee April 30, 1999
Irwin G. Barnet
/s/ Maria D. Hummer*
- -------------------- Trustee April 30, 1999
Maria D. Hummer
/s/ James R. Wolford*
- --------------------- Trustee April 30, 1999
James R. Wolford
/s/ William R. Sweet*
- --------------------- Trustee April 30, 1999
William R. Sweet
/s/ Victor Meschures*
- --------------------- Trustee April 30, 1999
Victor Meschures
* By: /s/ Mitchell E. Nichter
-------------------------------------
Mitchell E. Nichter, Attorney-in-Fact
pursuant to Powers of Attorney filed herewith.
C-4
<PAGE>
ATTACHMENT
Powers of Attorney
Irwin G. Barnet
Maria D. Hummer
Victor Meschures
William R. Sweet
James R. Wolford
Mark Nagle
Kathy Heilig
C-5
<PAGE>
POWER OF ATTORNEY
FOR
SECURITIES AND EXCHANGE COMMISSION
AND RELATED FILINGS
________________________________
Each of the undersigned Trustees and Officers of CNI CHARTER FUNDS (the
"Trust") hereby appoints JULIE ALLECTA, MITCHELL E. NICHTER and JOSEPH M.
O'DONNELL (with full power to each of them to act alone), his or her
attorney-in-fact and agent, in all capacities, to execute and to file any
documents relating to the Registration Statement of the Trust on Forms N-1A
and N-14 under the Investment Company Act of 1940, under the Securities Act
of 1933, and under the laws of all states and other domestic and foreign
jurisdictions, including any and all amendments thereto, covering the
registration statement and the sale of shares by the Trust, including all
exhibits and any and all documents required to be filed with respect thereto
with any regulatory authority, including applications for exemptive orders
rulings or filings of proxy materials. Each of the undersigned grants to
each of said attorneys full authority to do every act necessary to be done in
order to effectuate the same as fully, to all intents and purposes, as he
could do if personally present, thereby ratifying all that said
attorneys-in-fact and agents may lawfully do or cause to be done by virtue
hereof.
Each undersigned Trustee and Officer hereby executes this Power of
Attorney as of this 8th day of April, 1999.
/s/ Irwin G. Barnet
- --------------------------- --------------------------
Irwin G. Barnet Maria D. Hummer
Trustee Trustee
- --------------------------- --------------------------
Victor Meschures William R. Sweet
Trustee Trustee
- --------------------------- --------------------------
James R. Wolford Mark Nagle
Trustee President & Chief Executive Officer
- ---------------------------
Kathy Heilig
Controller and Chief Accounting Officer
C-6
<PAGE>
POWER OF ATTORNEY
FOR
SECURITIES AND EXCHANGE COMMISSION
AND RELATED FILINGS
________________________________
Each of the undersigned Trustees and Officers of CNI CHARTER FUNDS (the
"Trust") hereby appoints JULIE ALLECTA, MITCHELL E. NICHTER and JOSEPH M.
O'DONNELL (with full power to each of them to act alone), his or her
attorney-in-fact and agent, in all capacities, to execute and to file any
documents relating to the Registration Statement of the Trust on Forms N-1A
and N-14 under the Investment Company Act of 1940, under the Securities Act
of 1933, and under the laws of all states and other domestic and foreign
jurisdictions, including any and all amendments thereto, covering the
registration statement and the sale of shares by the Trust, including all
exhibits and any and all documents required to be filed with respect thereto
with any regulatory authority, including applications for exemptive orders
rulings or filings of proxy materials. Each of the undersigned grants to
each of said attorneys full authority to do every act necessary to be done in
order to effectuate the same as fully, to all intents and purposes, as he
could do if personally present, thereby ratifying all that said
attorneys-in-fact and agents may lawfully do or cause to be done by virtue
hereof.
Each undersigned Trustee and Officer hereby executes this Power of Attorney as
of this 8th day of April, 1999.
/s/ Maria D. Hummer
- --------------------------- --------------------------
Irwin G. Barnet Maria D. Hummer
Trustee Trustee
- --------------------------- --------------------------
Victor Meschures William R. Sweet
Trustee Trustee
- --------------------------- --------------------------
James R. Wolford Mark Nagle
Trustee President & Chief Executive Officer
- ---------------------------
Kathy Heilig
Controller and Chief Accounting Officer
C-7
<PAGE>
POWER OF ATTORNEY
FOR
SECURITIES AND EXCHANGE COMMISSION
AND RELATED FILINGS
________________________________
Each of the undersigned Trustees and Officers of CNI CHARTER FUNDS (the
"Trust") hereby appoints JULIE ALLECTA, MITCHELL E. NICHTER and JOSEPH M.
O'DONNELL (with full power to each of them to act alone), his or her
attorney-in-fact and agent, in all capacities, to execute and to file any
documents relating to the Registration Statement of the Trust on Forms N-1A
and N-14 under the Investment Company Act of 1940, under the Securities Act
of 1933, and under the laws of all states and other domestic and foreign
jurisdictions, including any and all amendments thereto, covering the
registration statement and the sale of shares by the Trust, including all
exhibits and any and all documents required to be filed with respect thereto
with any regulatory authority, including applications for exemptive orders
rulings or filings of proxy materials. Each of the undersigned grants to
each of said attorneys full authority to do every act necessary to be done in
order to effectuate the same as fully, to all intents and purposes, as he
could do if personally present, thereby ratifying all that said
attorneys-in-fact and agents may lawfully do or cause to be done by virtue
hereof.
Each undersigned Trustee and Officer hereby executes this Power of Attorney
as of this 8th day of April, 1999.
- --------------------------- --------------------------
Irwin G. Barnet Maria D. Hummer
Trustee Trustee
/s/ Victor Meschures
- --------------------------- --------------------------
Victor Meschures William R. Sweet
Trustee Trustee
- --------------------------- --------------------------
James R. Wolford Mark Nagle
Trustee President & Chief Executive Officer
- ---------------------------
Kathy Heilig
Controller and Chief Accounting Officer
C-8
<PAGE>
POWER OF ATTORNEY
FOR
SECURITIES AND EXCHANGE COMMISSION
AND RELATED FILINGS
________________________________
Each of the undersigned Trustees and Officers of CNI CHARTER FUNDS (the
"Trust") hereby appoints JULIE ALLECTA, MITCHELL E. NICHTER and JOSEPH M.
O'DONNELL (with full power to each of them to act alone), his or her
attorney-in-fact and agent, in all capacities, to execute and to file any
documents relating to the Registration Statement of the Trust on Forms N-1A
and N-14 under the Investment Company Act of 1940, under the Securities Act
of 1933, and under the laws of all states and other domestic and foreign
jurisdictions, including any and all amendments thereto, covering the
registration statement and the sale of shares by the Trust, including all
exhibits and any and all documents required to be filed with respect thereto
with any regulatory authority, including applications for exemptive orders
rulings or filings of proxy materials. Each of the undersigned grants to
each of said attorneys full authority to do every act necessary to be done in
order to effectuate the same as fully, to all intents and purposes, as he
could do if personally present, thereby ratifying all that said
attorneys-in-fact and agents may lawfully do or cause to be done by virtue
hereof.
Each undersigned Trustee and Officer hereby executes this Power of Attorney as
of this 8th day of April, 1999.
- --------------------------- --------------------------
Irwin G. Barnet Maria D. Hummer
Trustee Trustee
/s/ William R. Sweet
- --------------------------- --------------------------
Victor Meschures William R. Sweet
Trustee Trustee
- --------------------------- --------------------------
James R. Wolford Mark Nagle
Trustee President & Chief Executive Officer
- ---------------------------
Kathy Heilig
Controller and Chief Accounting Officer
C-9
<PAGE>
POWER OF ATTORNEY
FOR
SECURITIES AND EXCHANGE COMMISSION
AND RELATED FILINGS
________________________________
Each of the undersigned Trustees and Officers of CNI CHARTER FUNDS (the
"Trust") hereby appoints JULIE ALLECTA, MITCHELL E. NICHTER and JOSEPH M.
O'DONNELL (with full power to each of them to act alone), his or her
attorney-in-fact and agent, in all capacities, to execute and to file any
documents relating to the Registration Statement of the Trust on Forms N-1A
and N-14 under the Investment Company Act of 1940, under the Securities Act
of 1933, and under the laws of all states and other domestic and foreign
jurisdictions, including any and all amendments thereto, covering the
registration statement and the sale of shares by the Trust, including all
exhibits and any and all documents required to be filed with respect thereto
with any regulatory authority, including applications for exemptive orders
rulings or filings of proxy materials. Each of the undersigned grants to
each of said attorneys full authority to do every act necessary to be done in
order to effectuate the same as fully, to all intents and purposes, as he
could do if personally present, thereby ratifying all that said
attorneys-in-fact and agents may lawfully do or cause to be done by virtue
hereof.
Each undersigned Trustee and Officer hereby executes this Power of Attorney
as of this 8th day of April, 1999.
- --------------------------- --------------------------
Irwin G. Barnet Maria D. Hummer
Trustee Trustee
- --------------------------- --------------------------
Victor Meschures William R. Sweet
Trustee Trustee
/s/ James R. Wolford
- --------------------------- --------------------------
James R. Wolford Mark Nagle
Trustee President & Chief Executive Officer
- ---------------------------
Kathy Heilig
Controller and Chief Accounting Officer
C-10
<PAGE>
POWER OF ATTORNEY
FOR
SECURITIES AND EXCHANGE COMMISSION
AND RELATED FILINGS
________________________________
Each of the undersigned Trustees and Officers of CNI CHARTER FUNDS (the
"Trust") hereby appoints JULIE ALLECTA, MITCHELL E. NICHTER and JOSEPH M.
O'DONNELL (with full power to each of them to act alone), his or her
attorney-in-fact and agent, in all capacities, to execute and to file any
documents relating to the Registration Statement of the Trust on Forms N-1A
and N-14 under the Investment Company Act of 1940, under the Securities Act
of 1933, and under the laws of all states and other domestic and foreign
jurisdictions, including any and all amendments thereto, covering the
registration statement and the sale of shares by the Trust, including all
exhibits and any and all documents required to be filed with respect thereto
with any regulatory authority, including applications for exemptive orders
rulings or filings of proxy materials. Each of the undersigned grants to
each of said attorneys full authority to do every act necessary to be done in
order to effectuate the same as fully, to all intents and purposes, as he
could do if personally present, thereby ratifying all that said
attorneys-in-fact and agents may lawfully do or cause to be done by virtue
hereof.
Each undersigned Trustee and Officer hereby executes this Power of Attorney as
of this 8th day of April, 1999.
- --------------------------- --------------------------
Irwin G. Barnet Maria D. Hummer
Trustee Trustee
- --------------------------- --------------------------
Victor Meschures William R. Sweet
Trustee Trustee
/s/ Mark Nagle
- --------------------------- --------------------------
James R. Wolford Mark Nagle
Trustee President & Chief Executive Officer
- ---------------------------
Kathy Heilig
Controller and Chief Accounting Officer
C-11
<PAGE>
POWER OF ATTORNEY
FOR
SECURITIES AND EXCHANGE COMMISSION
AND RELATED FILINGS
________________________________
Each of the undersigned Trustees and Officers of CNI CHARTER FUNDS (the
"Trust") hereby appoints JULIE ALLECTA, MITCHELL E. NICHTER and JOSEPH M.
O'DONNELL (with full power to each of them to act alone), his or her
attorney-in-fact and agent, in all capacities, to execute and to file any
documents relating to the Registration Statement of the Trust on Forms N-1A
and N-14 under the Investment Company Act of 1940, under the Securities Act
of 1933, and under the laws of all states and other domestic and foreign
jurisdictions, including any and all amendments thereto, covering the
registration statement and the sale of shares by the Trust, including all
exhibits and any and all documents required to be filed with respect thereto
with any regulatory authority, including applications for exemptive orders
rulings or filings of proxy materials. Each of the undersigned grants to
each of said attorneys full authority to do every act necessary to be done in
order to effectuate the same as fully, to all intents and purposes, as he
could do if personally present, thereby ratifying all that said
attorneys-in-fact and agents may lawfully do or cause to be done by virtue
hereof.
Each undersigned Trustee and Officer hereby executes this Power of Attorney
as of this 8th day of April, 1999.
- --------------------------- --------------------------
Irwin G. Barnet Maria D. Hummer
Trustee Trustee
- --------------------------- --------------------------
Victor Meschures William R. Sweet
Trustee Trustee
- --------------------------- --------------------------
James R. Wolford Mark Nagle
Trustee President & Chief Executive Officer
/s/ Kathy Heilig
- ---------------------------
Kathy Heilig
Controller and Chief Accounting Officer
C-12
<PAGE>
- --------------------------------------------------------------------------------
Exhibit 23 (a)(2)
Form of Amendment to the
Agreement and Declaration of Trust
- --------------------------------------------------------------------------------
<PAGE>
FORM OF AMENDMENT TO THE
AGREEMENT AND DECLARATION OF TRUST
CNI CHARTER FUNDS
The name of the Trust is hereby amended to be CNI CHARTER FUNDS. In
addition, the Agreement and Declaration of Trust is further amended as follows:
ARTICLE I, SECTION 1. is amended as follows:
SECTION 1. NAME. This Trust shall be known as CNI CHARTER FUNDS, and
the Trustees shall conduct the business of the Trust under that name
or any other name as they may from time to time determine.
ARTICLE VIII, SECTION 9. is amended as follows:
SECTION 9. USE OF THE IDENTIFYING WORDS "CNI CHARTER FUNDS" AND "CITY
NATIONAL BANK". The identifying words "CNI Charter Funds," "City National
Bank," and "CNI Charter" and all rights to the use of such identifying
words belong to City National Bank, the Investment Manager of the Trust.
City National Bank has licensed the Trust to use the identifying words "CNI
Charter Funds" in the Trust's name and to use the identifying words "CNI
Charter" in the name of any series of the Trust. In the event that City
National Bank or an affiliate of City National Bank is not appointed or
ceases to be the Investment Manager of the Trust, the non-exclusive license
may be revoked by City National Bank, and the Trust and any series thereof
shall respectively cease using the identifying words "CNI Charter Funds,"
"City National Bank," and "CNI Charter" unless otherwise consented to by
City National Bank or any successor to City National Bank's interest.
Effective April 26, 1999:
---------------------------------------
1
<PAGE>
- -------------------------------------------------------------------------------
Exhibit 23 (a)(3)
Certificate of Amendment to the
Certificate of Trust
- -------------------------------------------------------------------------------
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF TRUST
OF
BERKELEY FUNDS
This Second Amendment to the Certificate of Trust of BERKELEY FUNDS, a
business trust (hereafter called the "business trust"), executed by the
undersigned trustees and filed under and in accordance with the provisions of
the Delaware Business Trust Act (12 Del. C. Section 3801), et. seq.), sets forth
the following amendments to the Certificate of Trust as filed with the Secretary
of State of the State of Delaware:
AMENDMENTS TO CHANGE THE NAME OF THE BUSINESS TRUST
A. The references to "BERKELEY FUNDS" in the title and first paragraph of the
Certificate of Trust, as amended, of the Business Trust shall, in each case
be amended to read "CNI CHARTER FUNDS."
B. The FIRST Article of the Certificate of Trust of the Business Trust shall
be amended in full to read:
"FIRST: The name of the Business Trust is "CNI CHARTER FUNDS."
IN WITNESS THEREOF, the undersigned, being a trustee of the Business Trust,
has duly executed this Certificate of Amendment this 26th day of April, 1999.
/s/ Irwin G. Barnet
_________________________
Irwin G. Barnet
<PAGE>
- ------------------------------------------------------------------------------
Exhibit 23 (b)(2)
Amendment to the
By-Laws of the Trust
- ------------------------------------------------------------------------------
<PAGE>
Amendment No. 1
to the Bylaws
of
Berkeley Funds
The name of the Trust is hereby amended to be CNI CHARTER FUNDS. In
addition, the Bylaws are further amended as follows:
ARTICLE I, SECTION 1. is amended as follows:
Section 1. PRINCIPAL OFFICE. The Board of Trustees shall fix
and, from time to time, may change the location of the principal
executive office of CNI CHARTER FUNDS (the "Trust") at any place
within or outside the State of Delaware.
Effective April 26, 1999
1
<PAGE>
- ------------------------------------------------------------------------------
Exhibit 23 (d)
Investment Management Agreement
- ------------------------------------------------------------------------------
<PAGE>
FORM OF
INVESTMENT MANAGEMENT AGREEMENT
This INVESTMENT MANAGEMENT AGREEMENT made and effective as of the ___
day of _____________, 1999, by and between CNI CHARTER FUNDS (formerly known as
"Berkeley Funds"), a Delaware business trust (hereinafter called the "Trust"),
on behalf of each series of the Trust listed in APPENDIX A hereto, as such
Appendix may be amended from time to time (each series hereinafter referred to
individually as a "Fund" and collectively as the "Funds") and CITY NATIONAL BANK
(hereinafter called the "Bank"), a federally chartered bank and a wholly-owned
subsidiary of CITY NATIONAL CORPORATION (hereinafter called the "Corporation"),
a bank holding company organized under laws of the State of Delaware.
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company,
registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Bank is a banking institution whose holding company, the
Corporation, is a Delaware corporation; and
WHEREAS, the Trust desires to retain the Bank to render advice and
services to the Funds pursuant to the terms and provisions of this Agreement,
and the Bank is interested in furnishing said advice and service;
NOW, THEREFORE, in consideration of the covenants and the mutual
promises hereinafter set forth, the parties hereto, intending to be legally
bound hereby, mutually agree as follows:
1. APPOINTMENT OF BANK. The Trust hereby employs the Bank, and the
Bank hereby accepts such employment, to render investment advice and management
services with respect to the assets of the Funds for the period and on the terms
set forth in this Agreement, subject to the supervision and direction of the
Trust's Board of Trustees.
2. DUTIES OF BANK.
(a) GENERAL DUTIES. The Bank shall act as investment manager to
the Funds and shall supervise investments of the Funds on behalf of the Funds in
accordance with the investment objectives, programs and restrictions of the
Funds as provided in the Trust's governing documents, including, without
limitation, the Trust's Agreement and Declaration of Trust, By-Laws, Prospectus,
and Statement of Additional Information, and such other limitations as the
Trustees may impose from time to time in writing to the Bank. Without limiting
the generality of the foregoing, the Bank shall: (i) furnish the Funds with
advice and recommendations with respect to the investment of each Fund's assets
and the purchase and sale of portfolio securities for the Funds, including the
taking of such other steps as may be necessary to implement such advice and
recommendations; (ii) furnish the Funds with reports, statements
<PAGE>
and other data on securities, economic conditions and other pertinent
subjects which the Trust's Board of Trustees may reasonably request; (iii)
manage the investments of the Funds, subject to the ultimate supervision and
direction of the Trust's Board of Trustee; (iv) provide persons satisfactory
to the Trust's board of Trustees to act as officers and employees of the
Trust (such officers and employees, as well as certain Trustees, may be
trustees, directors, officers, partners, or employees of the Bank or its
affiliates), but not including personnel to provide administrative services
to the Funds; and (v) render to the Trust's Board of Trustees such periodic
and special reports with respect to each Fund's investment activities as the
Board may reasonably request.
(b) BROKERAGE. The Bank shall place orders for the purchase and
sale of securities either directly with the issuer or with a broker or dealer
selected by the Bank. In placing each Fund's securities trades, it is
recognized that the Bank will give primary consideration to securing the most
favorable price and efficient execution, in a reasonable effort to ensure that
each Fund's total cost or proceeds in each transaction will be the most
favorable under all the circumstances. Within the framework of this policy, the
Bank may consider the financial responsibility, research and investment
information, and other services provided by brokers or dealers who may effect or
be a party to any such transaction or other transactions to which other clients
of the Bank may be a party.
It is also understood that it is desirable for the Funds that the
Bank have access to investment and market research and securities and economic
analyses provided by brokers and others. It is also understood that brokers
providing such services may execute brokerage transactions at a higher cost to
the Funds than might result from the allocation of brokerage to other brokers on
the basis of seeking the most favorable price and efficient execution.
Therefore, the purchase and sale of securities for the Funds may be made with
brokers who provide such research and analysis, subject to review by the Trust's
Board of Trustees from time to time. It is understood by both parties that the
Bank may select broker-dealers for the execution of the Funds' portfolio
transactions who provide research and analysis which the Bank may lawfully and
appropriately use in its investment management and advisory capacities, whether
or not such research and analysis may also be useful to the Bank in connection
with its services to other clients.
On occasions when the Bank deems the purchase or sale of a
security to be in the best interest of one or more of the Funds as well as of
other clients, the Bank, to the extent permitted by applicable laws and
regulations, may aggregate the securities to be so purchased or sold in order to
obtain the most favorable price or lower brokerage commissions and the most
efficient execution. In such event, allocation of the securities so purchased
or sold, as well as the expenses incurred in the transaction, will be made by
the Bank in the manner it considers to be the most equitable under the
circumstances and consistent with its fiduciary obligations to the Funds and to
such other clients.
3. BEST EFFORTS AND JUDGMENT. The Bank shall use its best judgment
and efforts in rendering the advice and services to the Funds as contemplated by
this Agreement.
4. INDEPENDENT CONTRACTOR. The Bank shall, for all purposes herein,
be deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust or the Funds in any way, or in any way be deemed an agent for the Trust or
for the Funds. It is expressly understood and
2
<PAGE>
agreed that the services to be rendered by the Bank to the Funds under the
provisions of this Agreement are not to be deemed exclusive, and the Bank
shall be free to render similar or different services to others so long as
its ability to render the services provided for in this Agreement shall be
materially impaired thereby.
5. BANK'S PERSONNEL. The Bank shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Bank shall be deemed
to include persons employed or retained by the Bank to furnish statistical
information, research, and other factual information, advice regarding economic
factors and trends, information with respect to technical and scientific
developments, and such other information, advice and assistance as the Bank or
the Trust's Board of Trustees may desire and reasonably request.
6. REPORTS BY FUNDS TO BANK. Each Fund will from time to time
furnish to the Bank detailed statements of its investments and assets, and
information as to its investment objective or objectives and needs, and will
make available to the Bank such financial reports, proxy statements, legal and
other information relating to its investments as may be in its possession or
available to it, together with such other information as the Bank may reasonably
request.
7. EXPENSES.
(a) With respect to the operation of each Fund, the Bank is
responsible for (i) the compensation of any of the Trust's Trustees, officers,
and employees who are affiliates of the Bank (but not the compensation of
employees performing services in connection with expenses which are the Fund's
responsibility under Subparagraph 7(b) below) and (ii) providing office space
and equipment reasonably necessary for the operation of the Funds.
(b) Each Fund is responsible for and has assumed the obligation
for payment of all of its expenses, other than as stated in Subparagraph 7(a)
above, including but not limited to: fees and expenses incurred in connection
with the issuance, registration and transfer of its shares; brokerage and
commission expenses; all expenses of transfer, receipt, safekeeping, servicing
and accounting for the case, securities and other property of the Trust for the
benefit of the Fund including all fees and expenses of its custodian,
shareholder services agent and accounting services agent; interest charges on
any borrowings; costs and expenses of pricing and calculating its daily net
asset value and of maintaining its books of account required under the 1940 Act;
taxes, if any; expenditures in connection with meetings of each Fund's
Shareholders and the Trust's Board of Trustees that are properly payable by the
Fund; salaries and expenses of officers and fees and expenses of members of the
Trust's Board of Trustees or members of any advisory board or committee who are
not members of, affiliated with or interested persons of the Bank; insurance
premiums on property or personnel of each Fund which inure to its benefit,
including liability and fidelity bond insurance; the cost of preparing and
printing reports, proxy statements, propectuses and statements of additional
information of the fund or other communications for distribution to existing
shareholders; legal, auditing and accounting fees; trade association dues; fees
and expenses (including legal fees) of registering and maintaining
3
<PAGE>
registration of its shares for sale under federal and applicable state and
foreign securities laws; all expenses of maintaining and servicing
shareholder accounts, including all charges for transfer, shareholder
recordkeeping, dividend disbursing, redemption, and other agents for the
benefit of the Funds (including, without limitation, fund accounting and
administration agents), if any; and all other charges and costs of its
operation plus any extraordinary and non-recurring expenses, except as herein
otherwise prescribed.
(c) To the extent the Bank incurs any costs by assuming expenses
which are an obligation of a Fund as set forth herein, such Fund shall promptly
reimburse the Bank for such costs and expenses, except to the extent the Bank
has otherwise agreed to bear such expenses. To the extent the services for
which a Fund is obligated to pay are performed by the Bank, the Bank shall be
entitled to recover from such Fund to the Extent of the Bank's actual costs for
providing such services.
8. INVESTMENT ADVISORY AND MANAGEMENT FEE.
(a) Each Fund shall pay to the Bank, and the Bank agrees to
accept, as full compensation for all investment management and advisory services
furnished or provided to such Fund pursuant to this Agreement, a management fee
as set forth in the Fee Schedule attached hereto as APPENDIX B, as may be
amended in writing from time to time by the Trust and the Bank.
(b) The management fee shall be accrued daily by each Fund and
paid to the Bank monthly.
(c) The initial fee under this Agreement shall be payable
monthly following the effective date of this Agreement and shall be prorated as
set forth below. If this Agreement is terminated prior to the end of the month,
the fee to the Bank shall be prorated for the portion of any month in which this
Agreement is in effect which is not a complete month according to the proportion
which the number of calendar days in the month during which the Agreement is in
effect bears to the number of calendar days in the month, and shall be payable
within ten (10) days after the date of termination.
(d) The Bank voluntarily may reduce any portion of the
compensation or reimbursement of expenses due to it pursuant to this Agreement
and may agree to make payments to limit the expenses which are the
responsibility of a Fund under this Agreement. Any such reduction or payment
shall be applicable only to such specific reduction or payment and shall not
constitute an agreement to reduce any future compensation or reimbursement due
to the Bank hereunder or to continue future payments. Any such reduction will
be agreed upon prior to accrual of the related expense or fee and will be
estimated daily. Any fee withheld shall be voluntarily reduced and any Fund
expense paid by the Bank voluntarily or pursuant to an agreed expense limitation
shall be reimbursed by the appropriate Fund to the Bank in the first, second, or
third (or any combination thereof) fiscal year next succeeding the fiscal year
of the withholding, reduction, or payment to the extent permitted by applicable
law and only if such reimbursements by a Fund (i) are requested by the Bank,
(ii) are approved by the Trust's Board of Trustees, and (iii) can be achieved
within a Fund's then current expense limits, if any, for that succeeding first,
second, or third fiscal year as the case may be; provided that such
4
<PAGE>
reimbursements shall only be paid after a Fund's current expenses of the fiscal
year have been paid and if such reimbursements do not require the Bank to waive
or reduce its fees hereunder or to pay current Fund expenses.
(e) The Bank may agree not to require payment of any portion of
the compensation or reimbursement of expenses otherwise due to it pursuant to
this Agreement prior to the time such compensation or reimbursement has accrued
as a liability of the Fund. Any such agreement shall be applicable only with
respect to the specific items covered thereby and shall not constitute an
agreement not to require payment of any future compensation or reimbursement due
to the Bank hereunder.
9. FUND SHARE ACTIVITIES OF BANK'S OFFICERS AND EMPLOYEES. The Bank
agrees that neither it nor any of its officers or employees shall take any short
position in the shares of the Funds. This prohibition shall not prevent the
purchase of such shares by any of the officers or bona fide employees of the
Bank or any trust, pension, profit-sharing or other benefit plan for such
persons or affiliates thereof, at a price not less than the net asset value
thereof at the time of purchase, as allowed pursuant to rules promulgated under
the 1940 Act.
10. CONFLICTS WITH TRUST'S GOVERNING DOCUMENTS AND APPLICABLE LAWS.
Nothing herein contained shall be deemed to require the Trust or the Funds to
take any action contrary to the Trust's Agreement and Declaration of Trust,
By-Laws, or any applicable statute or regulation, or to relieve or deprive
the Board of Trustees of the Trust of its responsibility for and control of
the conduct of the affairs of the Trust and Funds.
11. BANK'S LIABILITIES.
(a) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Bank, the Bank shall not be subject to liability to the Trust or the
Funds or to any shareholder of the Funds for any act or omission in the course
of, or connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of any security or other asset or
instrument by the Funds.
(b) Each Fund shall severally indemnify and hold harmless the
Bank and the shareholders, directors, officers and employees of the Bank (any
such person, an "Indemnified Party") against any loss, liability, claim, damage
or expense (including the reasonable cost of investigating and defending any
alleged loss, liability, claim, damage or expense and reasonable legal fees
incurred in connection therewith) arising out of the Indemnified Party's
performance or non-performance of any duties under this Agreement, provided,
however, that nothing herein shall be deemed to protect any Indemnified Party
against any liability to which such Indemnified Party would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties hereunder or by reason of reckless disregard of its
obligations and duties under this Agreement.
(c) No provision of this Agreement shall be construed to protect
any Trustee or officer of the Trust, or officer of the Bank, from liability in
violation of Sections 17(h) or (i) of the 1940 Act.
5
<PAGE>
12. NON-EXCLUSIVITY. The Trust's employment of the Bank is not an
exclusive arrangement, and the Trust may from time to time employ other
individuals or entities to furnish it with the services provided for herein. In
the event this Agreement is terminated with respect to any Fund, this Agreement
shall remain in full force and effect with respect to any and all other Funds
listed on APPENDIX A hereto, as the same may be amended.
13. TERM. This Agreement shall become effective as of the date set
forth on the first page of this Agreement, and shall remain in effect for a
period of two (2) years, unless sooner terminated as hereinafter provided. This
Agreement shall continue in effect as to each Fund after such initial two-year
period for additional periods not exceeding one (1) year so long as such
continuation is approved with respect to such Fund at least annually by (i) the
Board of Trustees of the Trust or by the vote of a majority of the outstanding
voting securities of such Fund and (ii) the vote of a majority of the Trustees
of the Trust who are not parties to this Agreement nor interested persons
thereof, cast in person at a meeting called for the purpose of voting on such
approval.
14. TERMINATION. This Agreement may be terminated by the Trust on
behalf of any one or more of the Funds, without payment of any penalty, by the
Board of Trustees of the Trust or by vote of a majority of the outstanding
voting securities of a Fund, upon sixty (60) days' prior written notice to the
Bank, and by the Bank upon sixty (60) days' prior written notice to a Fund.
15. TERMINATION BY ASSIGNMENT. This Agreement shall terminate
automatically in the event of any transfer or assignment thereof, as defined in
the 1940 Act.
16. TRANSFER ASSIGNMENT. This Agreement may not be transferred,
assigned, sold, or in any manner hypothecated or pledged without the affirmative
vote or written consent of the holders of a majority of the outstanding voting
securities of each Fund.
17. SEVERABILITY. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
18. DEFINITIONS. The terms "majority of the outstanding voting
securities" and "interested persons" shall have the meanings as set forth in the
1940 Act.
19. NOTICE OF DECLARATION OF TRUST. The Bank agrees that the Trust's
obligations under this Agreement shall be limited to the Funds and to their
respective assets, and that the Bank shall not seek satisfaction of any such
obligation from the shareholders of the Funds nor from any Trustee, officer,
employee or agent of the Trust or the Funds.
20. CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
21. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California without giving
effect to the conflict of laws principles thereof; provided that nothing herein
shall be construed to preempt, or to be
6
<PAGE>
inconsistent with, any federal law, regulation or rule, including the 1940
Act and the Investment Advisors Act of 1940, as amended, and any rules and
regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested by their duly authorized officers, all on the day
and year first above written.
CNI CHARTER FUNDS CITY NATIONAL BANK
By: ___________________________________ By:_______________________________
Name: Name:
Title: Title:
7
<PAGE>
CNI CHARTER FUNDS
APPENDIX A
to the Investment Management Agreement
The provisions of the Investment Management Agreement between the Trust and the
Bank apply to the following series of the Trust:
1. CNI Charter Money Market Fund.
Dated as of: ____________________.
8
<PAGE>
CNI CHARTER FUNDS
APPENDIX B
to the Investment Management Agreement
Each Fund shall pay to the Bank, as full compensation for all investment
management and advisory services furnished or provided to such Fund pursuant to
the Investment Management Agreement, a management fee based upon each Fund's
average daily net assets at the following per annum rates:
1. CNI Charter Money Market Fund 0.25%
Dated as of: __________________.
<PAGE>
- ------------------------------------------------------------------------------
Exhibit 23 (e)
Form of Distribution Agreement
- ------------------------------------------------------------------------------
<PAGE>
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this _____ day of __________1999, between
CNI CHARTER FUNDS ("the Trust), a Delaware business trust and SEI INVESTMENTS
DISTRIBUTION CO. (the "Distributor"), a Pennsylvania corporation.
WHEREAS, the Trust is registered as an investment company with the
Securities and Exchange Commission (the "SEC") under the Investment Company Act
of 1940, as amended (the "1940 Act"), and its shares are registered with the SEC
under the Securities Act of 1933, as amended (the " 1933 Act"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Trust and Distributor hereby agree as follows:
ARTICLE 1. SALE OF SHARES. The Trust grants to the Distributor the
exclusive right to sell beneficial interests (the "Shares") of the portfolios
(the "Portfolios") of the Trust at the net asset value per Share, plus any
applicable sales charges in accordance with the current prospectus, as agent and
on behalf of the Trust, during the term of this Agreement and subject to the
registration requirements of the 1933 Act, the rules and regulations of the SEC
and the laws governing the sale of securities in the various states ("Blue Sky
Laws").
ARTICLE 2. SOLICITATION OF SALES. In consideration of these rights
granted to the Distributor, the Distributor agrees to use all reasonable
efforts, consistent with its other business, in connection with the distribution
of Shares of the Trust; provided, however, that the Distributor shall not be
prevented from entering into like arrangements with other issuers. The
provisions of this paragraph do not obligate the Distributor to register as a
broker or dealer under the Blue Sky Laws of any jurisdiction when it determines
it would be uneconomical for it to do so or to maintain its registration in any
jurisdiction in which it is now registered nor obligate the Distributor to sell
any particular number of Shares.
ARTICLE 3. AUTHORIZED REPRESENTATIONS. The Distributor is not authorized
by the Trust to give any information or to make any representations other than
those contained in the current registration statements and prospectuses of the
Trust filed with the SEC or contained in Shareholder reports or other material
that may be prepared by or on behalf of the Trust for the Distributor's use.
The Distributor may prepare and distribute sales literature and other material
as it may deem appropriate, provided that such literature and materials have
been prepared in accordance with applicable rules and regulations.
ARTICLE 4. REGISTRATION OF SHARES. The Trust agrees that it will take all
action necessary to register Shares under the federal and state securities laws
so that there will be available for sale the number of Shares the Distributor
may reasonably be expected to sell and to pay all fees associated with said
registration. The Trust shall make available to the
-1-
<PAGE>
Distributor such number of copies of its currently effective prospectus and
statement of additional information as the Distributor may reasonably
request. The Trust shall furnish to the Distributor copies of all
information, financial statements and other papers which the Distributor may
reasonably request for use in connection with the distribution of Shares of
the Trust.
ARTICLE 5. COMPENSATION. As compensation for providing the services under
this Agreement:
(a) The Distributor shall receive from the Trust:
(1) all distribution and service fees, as applicable, at the rate and
under the terms and conditions set forth in each Distribution and
Shareholder Services Plan adopted by the appropriate class of shares
of each of the Portfolios, as such Plans may be amended from time to
time, and subject to any further limitations on such fees as the Board
of Trustees of the Trust may impose;
(2) all contingent deferred sales charges ("CDSCs") applied on
redemptions of CDSC Class Shares of each Portfolio on the terms and
subject to such waivers as are described in the Trust's Registration
Statement and current prospectuses, as amended from time to time, or
as otherwise required pursuant to applicable law; and
(3) all front-end sales charges, if any, on purchases of each
Portfolio sold subject to such charges as described in the Trust's
Registration Statement and current prospectuses, as amended from time
to time. The Distributor, or brokers, dealers and other financial
institutions and intermediaries that have entered into subdistribution
agreements with the Distributor, may collect the gross proceeds
derived from the sale of such Shares, remit the net asset value
thereof to the Trust upon receipt of the proceeds and retain the
applicable sales charge.
(b) The Distributor may reallow any or all of the distribution or service
fees, contingent deferred sales charges and front-end sales charges which
it is paid by the Trust to such brokers, dealers and other financial
institutions and intermediaries as the Distributor may from time to time
determine.
ARTICLE 6. INDEMNIFICATION OF DISTRIBUTOR. The Trust agrees to indemnify
and hold harmless the Distributor and each of its directors and officers and
each person, if any, who controls the Distributor within the meaning of Section
15 of the 1933 Act and the Investment Company Act of 1940 (the "Act") against
any loss, liability, claim, damages or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damages or
expense and reasonable counsel fees and disbursements incurred in connection
therewith), arising by reason of any person acquiring any Shares, based upon the
ground that the registration statement, prospectus, Shareholder reports or other
information filed or made public by the Trust (as from time to time amended)
included an untrue statement of a material fact or omitted to state a material
fact required to be stated or necessary in order to make the
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<PAGE>
statements made not misleading. However, the Trust does not agree to
indemnify the Distributor or hold it harmless to the extent that the
statements or omission was made in reliance upon, and in conformity with,
information furnished to the Trust by or on behalf of the Distributor.
In no case (i) is the indemnity of the Trust to be deemed to protect the
Distributor against any liability to the Trust or its Shareholders to which the
Distributor or such person otherwise would be subject by reason of willful
misfeasance, bad faith, negligence or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under this Agreement, or (ii) is the Trust to be liable to the Distributor under
the indemnity agreement contained in this paragraph with respect to any claim
made against the Distributor or any person indemnified unless the Distributor or
other person shall have notified the Trust in writing of the claim within a
reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the
Distributor or such other person (or after the Distributor or the person shall
have received notice of service on any designated agent). However, failure to
notify the Trust of any claim shall not relieve the Trust from any liability
which it may have to the Distributor or any person against whom such action is
brought otherwise than on account of its indemnity agreement contained in this
paragraph.
The Trust shall be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this indemnity provision. If the Trust elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the Trust and satisfactory to the indemnified defendants in the suit
whose approval shall not be unreasonably withheld. In the event that the Trust
elects to assume the defense of any suit and retain counsel, the indemnified
defendants shall bear the fees and expenses of any additional counsel retained
by them. If the Trust does not elect to assume the defense of a suit, it will
reimburse the indemnified defendants for the reasonable fees and expenses of any
counsel retained by the indemnified defendants.
The Trust agrees to notify the Distributor promptly of the commencement of
any litigation or proceedings against it or any of its officers or Trustees in
connection with the issuance or sale of any of its Shares.
ARTICLE 7. INDEMNIFICATION OF TRUST. The Distributor covenants and agrees
that it will indemnify and hold harmless the Trust and each of its Trustees and
officers against any loss, liability, damages, claim or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
damages, claim or expense and reasonable counsel fees incurred in connection
therewith) based upon the 1933 Act or any other statute or common law and such
loss, liability, damages, claim or expense are caused by the Distributor's
willful misfeasance bad faith or gross negligence in the performance of its
duties under this Agreement. The Distributor shall be entitled to participate,
at its own expense, in the defense or, if it so elects, to assume the defense of
any suit brought to enforce the claim, but if the Distributor elects to assume
the defense, the defense shall be conducted by counsel chosen by the Distributor
and satisfactory to the indemnified defendants whose approval shall not be
unreasonably withheld. In the event that the Distributor elects to assume the
defense of any suit
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<PAGE>
and retain counsel, the defendants in the suit shall bear the fees and
expenses of any additional counsel retained by them. If the Distributor does
not elect to assume the defense of any suit, it will reimburse the
indemnified defendants in the suit for the reasonable fees and expenses of
any counsel retained by them.
The Distributor agrees to notify the Trust promptly of the commencement of
any litigation or proceedings against it in connection with the issue and sale
of any of the Trusts' Shares.
ARTICLE 8. EFFECTIVE DATE. This Agreement shall be effective upon its
execution, and unless terminated as provided, shall continue in force for two
year(s) from the effective date and thereafter from year to year, provided that
such annual continuance is approved by (i) either the vote of a majority of the
Trustees of the Trust, or the vote of a majority of the outstanding voting
securities of the Trust, and (ii) the vote of a majority of those Trustees of
the Trust who are not parties to this Agreement or the Trust's Distribution Plan
or interested persons of any such party ("Qualified Trustees"), cast in person
at a meeting called for the purpose of voting on the approval. This Agreement
shall automatically terminate in the event of its assignment. As used in this
paragraph the terms "vote of a majority of the outstanding voting securities",
"assignment" and "interested person" shall have the respective meanings
specified in the 1940 Act. In addition, this Agreement may at any time be
terminated without penalty by SFS, by a vote of a majority of Qualified Trustees
or by vote of a majority of the outstanding voting securities of the Trust upon
not less than sixty days prior written notice to the other party.
ARTICLE 9. NOTICES. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Trust at ____________________, and if to the Distributor, 1
Freedom Valley Drive, Oaks, Pennsylvania 19456.
ARTICLE 10. LIMITATION OF LIABILITY. A copy of the Certificate of Trust
of the Trust is on file with the Secretary of State of the State of Delaware,
and notice is hereby given that this Agreement is executed on behalf of the
Trustees of the Trust as Trustees and not individually and that the obligations
of this instrument are not binding upon any of the Trustees, officers or
shareholders of the Trust individually but binding only upon the assets and
property of the Trust.
ARTICLE 11. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Delaware and the applicable provisions
of the 1940 Act. To the extent that the applicable laws of the State of
Delaware, or any of the provisions herein, conflict with the applicable
revisions of the 1940 Act the latter
ARTICLE 12. MULTIPLE ORIGINALS. This Agreement may be executed in two or
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
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<PAGE>
IN WITNESS, the Trust and Distributor have each duly executed this
Agreement, as of the day and year above written.
CNI CHARTER FUNDS
By:
Attest:
SEI INVESTMENTS DISTRIBUTION CO.
By:
Attest:
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Exhibit 23 (g)
Form of Custody Agreement
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<PAGE>
CUSTODIAN AGREEMENT
This agreement dated as of the 8th day of January, 1999, by and between
CNI Charter Funds (the "Trust", a business trust duly organized under the laws
of the State of Delaware and First Union National Bank (the "Bank").
WHEREAS, the Trust desires to appoint the Bank to act as Custodian of its
portfolio securities, cash and other property from time to time deposited with
or collected by the Bank for the Trust;
WHEREAS, the Bank is qualified and authorized to act as Custodian for the
Trust and the separate series thereof (each a "Fund" and collectively, the
"Funds"), and is willing to act in such capacity upon the terms and conditions
herein set forth;
NOW THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the parties hereto, intending to be legally bound, do hereby
agree as follows:
SECTION 1. The terms as defined in this Section wherever used in this
Agreement, or in any amendment or supplement hereto, shall have meanings herein
specified unless the context otherwise requires.
CUSTODIAN: The term Custodian shall mean the Bank in its capacity as Custodian
under this Agreement.
DEPOSITORY: The term Depository means any depository service which acts as a
system for the central handling of securities where all securities of any
particular class or series of an issuer deposited within the system are treated
as fungible and may be transferred by bookkeeping entry without physical
delivery.
PROPER INSTRUCTIONS: For purposes of this Agreement, the Custodian shall be
deemed to have received Proper Instructions upon receipt of written (including
instructions received by means of computer terminals of facsimile
transmissions), telephone or telegraphic instructions from a person or persons
authorized from time to time by the Trustees of the Trust to give the particular
class of instructions. Telephone or telegraphic instructions shall be confirmed
in writing by such persons as said Trustees shall have from time to time
authorized to give the particular class of instructions in question. The
Custodian may act upon telephone or telegraphic instructions without awaiting
receipt of written confirmation and, so long as the Custodian reasonably and in
good faith believes such instructions to be genuine and properly authorized,
shall not be liable for the Trust's failure to confirm such instructions in
writing.
SECURITIES: The term Securities means stocks, bonds, rights, warrants and all
other negotiable or non-negotiable paper issued in certificated or book-entry
form commonly known as "Securities" in banking custom or practice.
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SHAREHOLDERS: The term Shareholders shall mean the registered owners from time
to time of the Shares of the Trust in accordance with the registry records
maintained by the Trust or agents on its behalf.
SECTION 2. The Trust hereby appoints the Custodian as Custodian of the Trust's
cash. Securities and other property, to be held by the Custodian as provided in
this Agreement. The Custodian hereby accepts such appointment subject to the
terms and conditions hereinafter provided. The Bank shall open a separate
custodial account in the name of the Trust on the books and records of the Bank
to hold the Securities of the Trust deposited with, transferred to or collected
by the Bank for the account of each Fund of the Trust, and a separate cash
account to which the Bank shall credit monies received by the Bank for the
account of or from each Fund of the Trust. Such cash shall be segregated from
the assets of others and shall be and remain the sole property of the Trust.
SECTION 3. The Trust shall from time to time file with the Custodian a
certified copy of each resolution of its Board of Trustees authorizing the
person or persons to give Proper Instructions and specifying the class of
instructions that may be given by each person to the Custodian under this
Agreement, together with certified signatures of such persons authorized to
sign, which shall constitute conclusive evidence of the authority of the
officers and signatories designated therein to act, and shall be considered in
full force and effect with the Custodian fully protected in acting in reliance
thereon until it receives written notice to the contrary; provided, however,
that if the certifying officer is authorized to give Proper Instructions, the
certification shall be also signed by a second officer of the Trust.
SECTION 4. The Trust will cause to be deposited with the Custodian hereunder
the applicable net asset value of Shares sold from time to time whether
representing initial issue, other stock or reinvestments of dividends and/or
distributions payable to Shareholders.
SECTION 5. The Bank, acting as agent for the Trust, is authorized, directed and
instructed subject to the further provisions of this Agreement.
(a) to hold Securities issued only in bearer from in bearer form;
(b) to register in the name of the nominee of the Bank, the Bank's
Depositories, or sub-custodians, (i) Securities issued only in
registered form, and (ii) Securities issued in both bearer and
registered form, which are freely interchangeable without penalty;
(c) to deposit any securities which are eligible for deposit (i) with any
domestic or foreign Depository on such terms and conditions as such
Depository may require, including provisions for limitation or
exclusion of liability on the part of the Depository; and (ii) with
any sub-custodian which the Bank uses, including
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any subsidiary or affiliate of the Bank;
(d) (i) to credit for the account of the Trust all proceeds received and
payable on or in respect of the assets maintained hereunder.
(ii) to debit the account of the Trust for the cost of acquiring
Securities the Bank has received for the Trust, against delivery
of such Securities to the Bank,
(iii) to present for payment Securities and other obligations
(including coupons) upon maturity, when called for redemption,
and when income payments are due, and
(iv) to make exchanges of Securities which, in the Bank's opinion,
are purely ministerial as, for example, the exchange of
Securities in temporary form for Securities in definitive form
or the mandatory exchange of certificates;
(e) to forward to the Trust, and/or any other person designated by the
Trust, all proxies and proxy materials received by the Bank in
connection with Securities held in the Trust's account, which have
been registered in the name of the Bank's nominee, or are being held
by any Depository, or sub-custodian, on behalf of the Bank;
(f) to sell any fractional interest of any Securities which the Bank has
received resulting from any stock dividend, stock split, distribution,
exchange, conversion or similar activity;
(g) to release the Trust's name, address and aggregate share position to
the issuers of any domestic Securities in the account of the Trust,
provided any such information to any issuer;
(h) to endorse and collect all checks, drafts or other orders for the
payment of money received by the Bank for the account of or from
the Trust;
(i) at the direction of the Trust, to enroll designated Securities
belonging to the Trust and held hereunder in a program for the
automatic reinvestment of all income and capital gains distributions
on those Securities in new shares (an "Automatic Reinvestment
Program"), or instruct any Depository holding such Securities to
enroll those Securities in an Automatic Reinvestment Program;
(j) at the direction of the Trust, to receive, deliver and transfer
Securities and make payments and collections of monies in connection
therewith, enter purchase and sale orders and perform any other acts
incidental or necessary to the performance of the above acts with
brokers, dealers or similar agents selected by the Trust, including
any broker, dealer or similar agent affiliated with the Bank, for the
account and risk of the Trust in accordance with
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accepted industry practice in the relevant market, provided, however,
if it is determined that any certificated Securities transferred to a
Depository or sub-custodian, the Bank, or the Bank's nominee, the
Bank's sole responsibility for such Securities under this Agreement
shall be to safekeep the Securities in accordance with Section 11
hereof; and
(k) to notify the Trust and/or any other person designated by the Trust
upon receipt of notice by the Bank of any call for redemption, tender
offer, subscription rights, merger, consolidation, reorganization or
recapitalization which (i) appears in The Wall Street Journal (New
York edition), The Standard & Poor's Called Bond Record for Preferred
Stocks, Financial Daily Called Bond Service, JJ Kenny Services, any
official notifications from The Depository Trust Company and such
other publications or services to which the Bank may from time to
time subscribe, (ii) requires the Bank to act in response thereto,
and (iii) pertain to Securities belonging to the Trust and held
hereunder which have been registered in the name of the Bank's nominee
or are being held by a Depository or sub-custodian on behalf of the
Bank. Notwithstanding anything contained herein to the contrary, the
Trust shall have the sole responsibility for monitoring the applicable
dates on which Securities with put option features must be exercised.
All solicitation fees payable to the Bank as agent in connection
herewith will be retained by the Bank unless expressly agreed to the
contrary in writing by the Bank.
Notwithstanding anything in this Section to the contrary, the Bank is authorized
to hold Securities for the Trust which have transfer limitations imposed upon
them by the Securities Act of 1993, as amended, or represent shares of mutual
funds (i) in the name of the Trust, (ii) in the name of the Bank's nominee, or
(iii) with any Depository or sub-custodian.
SECTION 6. The Custodian's compensation shall be as set forth in Schedule A
hereto attached, or as shall be set forth in amendments to such schedule
approved by the Trust and to the extent such compensation relates to services
provided hereunder to such Fund. All expenses and taxes payable with respect to
the Securities in the account of the Trust including, without limitation,
commission charges on purchases and sales and the amount of any loss or
liability for stockholders= assessments or otherwise, claimed or asserted
against the bank or against the Bank=s nominee by reason of any registration
hereunder shall be charged to the Trust.
SECTION 7. In connection with its functions under this Agreement, the Custodian
shall:
(a) render to the Trust a daily report of all monies received or paid on
behalf of the Trust; and
(b) create, maintain and retain all records relating to its activities and
obligations under this Agreement in such manner as will meet the
obligations of the Trust with respect to said Custodian's activities
in accordance with generally
4
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accepted accounting principles. All records maintained by the
Custodian in connection with the performance of its duties under
this Agreement will remain the property of the Trust and in the event
of termination of this Agreement will be relinquished to the Trust.
SECTION 8. Any Securities deposited with any Depository or with any
sub-custodian will be represented in accounts in the name of the Bank which
include only property held by the Bank as Custodian for customers in which
the Bank acts in a fiduciary or agency capacity.
Should any Securities which are forwarded to the Bank by the Trust, and which
are subsequently deposited to the Bank's account in any Depository or with any
sub-custodian, or which the Trust may arrange to deposit in the Bank's account
in any Depository or with any sub-custodian, not be deemed acceptable for
deposit by such Depository or sub-custodian, for any reason, and as a result
thereof there is a short position in the account of the Bank with the Depository
for such Security, the Trust agrees to furnish the Bank immediately with like
Securities in acceptable form.
SECTION 9. The Trust represents and warrants that: (i) it has the legal right,
power and authority to execute, deliver and perform this Agreement and to carry
out all of the transactions contemplated hereby; (ii) it has obtained all
necessary authorizations; (iii) the execution, delivery and performance of this
Agreement and the carrying out of any of the transactions contemplated hereby
will not be in conflict with, result in a breach of or constitute a default
under any agreement or other instrument to which the Trust is a party or which
is otherwise known to the Trust; (iv) it does not require the consent or
approval of any governmental agency or instrumentality, except any such consents
and approvals which the Trust has obtained; (v) the execution and delivery of
this Agreement by the Trust will not violate any law, regulation, charter,
by-law, order of any court or governmental agency or judgment applicable to
the Trust; and (vi) all persons executing this Agreement on behalf of the
Trust and carrying out the transactions contemplated hereby on behalf of the
Trust are duly authorized to do so.
In the event any of the foregoing representations should become untrue,
incorrect or misleading, the Trust agrees to notify the Bank immediately in
writing thereof.
SECTION 10. The Bank represents and warrants that: (i) it has the legal
right, power and authority to execute, deliver and perform this Agreement and
to carry out all of the transactions contemplated hereby; (ii) it has
obtained all necessary authorizations; (iii) the execution, delivery and
performance of this Agreement and the carrying out of any of the transactions
contemplated hereby will not be in conflict with, result in a breach of or
constitute a default under any agreement or other instrument to which the
Bank is a party or which is otherwise known to the Bank; (iv) it does not
require the consent or approval of any governmental agency or
instrumentality, except any such consents and approvals which the Bank has
obtained; (v) the execution and delivery of this Agreement by the Bank will
not violate any law, regulation, charter, by-law, order of any court or
governmental agency or judgment
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<PAGE>
applicable to the Bank; and (vi) all persons executing this Agreement on
behalf of the Bank and carrying out the transactions contemplated hereby on
behalf of the Bank are duly authorized to do so. In the event that any of
the foregoing representations should become untrue, incorrect or misleading,
the Bank agrees to notify the Trust immediately in writing thereof.
SECTION 11. All cash and Securities held by the Bank hereunder shall be kept
with the care exercised as to the Bank's own similar property. The Bank may at
its option insure itself against loss from any cause but shall be under no
obligation to insure for the benefit of the Trust.
SECTION 12. No liability of any kind shall be attached to or incurred by the
Custodian by reason of its custody of the Trust's assets held by it from time to
time under this Agreement, or otherwise by reason of its position as Custodian
hereunder except only for its own negligence, bad faith, or willful misconduct
in the performance of its duties as specifically set forth in the Custodian
Agreement. Without limiting the generality of the foregoing sentence, the
Custodian:
(a) may rely upon the advice of counsel for the Trust; and for any action
taken or suffered in good faith based upon such advice or statements
the Custodian shall not be liable to anyone;
(b) shall not be liable for anything done or suffered to be done in good
faith in accordance with any request or advice of, or based upon
information furnished by, the Trust or its authorized officers or
agents;
(c) is authorized to accept a certificate of the Secretary or Assistant
Secretary of the Trust, or Proper Instructions, to the effect that a
resolution in the form submitted has been duly adopted by its Board of
Trustees or by the Shareholders, as conclusive evidence that such
resolution has been duly adopted and is in full force and effect; and
(d) may rely and shall be protected in acting upon any signature, written
(including telegraph or other mechanical) instructions, request,
letter of transmittal, certificate, opinion of counsel, statement,
instrument, report, notice, consent, order, or other paper or document
reasonably believed by it to be genuine and to have been signed,
forwarded or presented by the purchaser, Trust or other proper party
or parties.
SECTION 13. The Trust, its successors and assigns do hereby fully indemnify and
hold harmless the Custodian its successors and assigns, from any and all loss,
liability, claims, demand, actions, suits and expenses of any nature as the same
may arise from the failure of the Trust to comply with any law, rule regulation
or order of the United States, any state or any other jurisdiction, governmental
authority, body, or board relating to the sale, registration, qualification
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<PAGE>
of units of beneficial interest in the Trust, or from the failure of the
Trust to perform any duty or obligation under this Agreement.
Upon written request of the Custodian, the Trust shall assume the entire defense
of any claim subject to the foregoing indemnity, or the joint defense with the
Custodian of such claim, as the Custodian shall request. The indemnities and
defense provisions of this Section 13 shall indefinitely survive termination of
this Agreement.
SECTION 14. This Agreement may be amended from time to time without notice to
or approval of the Shareholders by a supplemental agreement executed by the
Trust and the Bank and amending and supplementing this Agreement in the manner
mutually agreed.
SECTION 15. Either the Trust or the Custodian may give ninety (90) days written
notice to the other of the termination of this Agreement, such termination to
take effect at the time specified in the notice. In case such notice of
termination is given either by the Trust or by the Custodian, the Trustees of
the Trust shall, by resolution duly adopted, promptly appoint a successor
Custodian (the "Successor Custodian") which Successor Custodian shall be a bank,
trust company, or a bank and trust company in good standing, with legal capacity
to accept custody of the cash and Securities of a mutual fund. Upon receipt of
written notice from the Trust of the appointment of such Successor Custodian and
upon receipt of Proper Instructions, the Custodian shall deliver such cash and
Securities as it may then be holding hereunder directly and only to the
Successor Custodian. Unless or until a Successor Custodian has been appointed
as above provided, the Custodian then acting shall continue to act as Custodian
under this Agreement.
Every Successor Custodian appointed hereunder shall execute and deliver an
appropriate written acceptance of its appointment and shall thereupon become
vested with the rights, powers, obligations and custody of its predecessor
Custodian. The Custodian ceasing to act shall nevertheless, upon request of the
Trust and the Successor Custodian and upon payment of its charges and
disbursements, execute and instrument in form approved by its counsel
transferring to the Successor Custodian all the predecessor Custodian's rights,
duties, obligations and custody.
Subject to the provisions of Section 21 hereof, in case the Custodian shall
consolidate with or merge into any other corporation, the corporation remaining
after or resulting from such consolidation or merger shall ipso facto without
the execution of filing of any papers or other
documents, succeed to and be substituted for the Custodian with like effect as
though originally named as such, PROVIDED, HOWEVER, in every case that said
Successor corporation maintains the qualifications set out in Section 17(f) of
the Investment Company Act of 1940, as amended.
SECTION 16. This Agreement shall take effect when assets of the Trust are first
delivered to the Custodian.
SECTION 17. This Agreement may be executed in two or more counterparts, each of
which when so executed shall be deemed to be an original, but such counterparts
shall together
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constitute but one and the same instrument.
SECTION 18. A copy of the Certificate of Trust of the Trust is on file with the
Secretary of State of Delaware, and notice is hereby given that this instrument
is executed on behalf of the Trustees of the Trust as Trustees and not
individually and that the obligations of this instrument are not binding upon
any of the Trustees, officers or Shareholders of the Trust individually, but
binding only upon the assets and property of the Trust. No Fund of the Trust
shall be liable for the obligations of any other Fund of the Trust.
SECTION 19. The Custodian shall create and maintain all records relating to its
activities and obligations under this Agreement in such manner as will meet the
obligations of the Trust under the Investment Company Act of 1940, as amended,
with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, applicable Federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the Trust.
Subject to security requirements of the Custodian applicable to its own
employees having access to similar records within the Custodian, the books and
records of the Custodian pertaining to this Agreement shall be open to
inspection and audit at any reasonable times by officers of, attorneys for, and
auditors employed by, the Trust.
SECTION 20. Any sub-custodian appointed hereunder shall be qualified under
Section 17(f) of the 1940 Act and will perform its duties in accordance with the
requirements of this Agreement.
SECTION 21. Nothing contained in this Agreement is intended to or shall require
the Custodian in any capacity hereunder to perform any functions or duties on
any holiday or other day of special observance on which the Custodian is closed.
Functions or duties normally scheduled to be performed on such days shall be
performed on, and as of, the next business day the Custodian is open.
SECTION 22. This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided , however,
that this Agreement shall not be assignable by the Trust without the written
consent of the Custodian, or by the Custodian without
the written consent of the Trust, authorized or approved by a resolution of its
Board of Trustees.
SECTION 23. All communications (other than Proper instructions which are to be
furnished hereunder to either party, or under any amendment hereto, shall be
sent by mail to the address listed below, provided that in the event that the
Bank, in its sole discretion, shall determine that an emergency exists, the Bank
may use such other means of communications as the Bank deems advisable.
To the Trust: CNI Charter Funds
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co: SEI Investments
1 Freedom Valley Drive
Oaks, PA 19456
To the Bank: First Union National Bank
530 Walnut St.
Philadelphia PA, 19101-7618
SECTION 24. This Agreement, and any amendments hereto, shall be governed,
construed and interpreted in accordance with the laws of The Commonwealth of
Pennsylvania applicable to agreements made and to be performed entirely within
such Commonwealth.
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IN WITNESS WHEREOF, the Trust and the Custodian have caused this Agreement to be
signed by their respective officers as of the day and year first above written.
By: CNI CHARTER FUNDS
_________________________________
Name:
Title:
By: FIRST UNION NATIONAL BANK
_________________________________
Name: Paul T. Cahill
Title: Vice President
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Fee Schedule
CUSTODY ADMINISTRATIVE FEES:
1.00 basis points in first $2.5 billion
.75 basis points on the next $2.5 billion
.50 basis points on the next $5.0 billion
.40 basis points on the remainder
TRANSACTION FEES:
$4.00 per trade and maturity through Depository Trust Company.
$10.00 per trade and maturity clearing book entry through Federal Reserve.
$30.00 per transaction for GIC contracts / Physical Securities.
$10.00 per trade and maturity clearing through Participants Trust Company.
$15.00 per option.
$4.00 paydowns on mortgage backed securities.
$5.50 Fed wire charge on Repo collacteral in / out.
$5.50/$7.50 cash wire transfers in/out.
$5.50 dividend reinvestment.
$2.50 Fed charge for sale/return of collateral.
$8.00 futures contracts.
11
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Exhibit 23 (h)(1)
Form of Administrative Services Agreement
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<PAGE>
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this ___ day of ____________ 1999, by and
between CNI CHARTER FUNDS, a Delaware business trust (the "Trust"), on behalf of
the CNI Charter Money Market Fund, and SEI INVESTMENTS MUTUAL FUNDS SERVICES
(the "Administrator"), a Delaware business trust.
WHEREAS, the Trust is an open-end diversified management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), currently consisting of one series of shares of beneficial interest; and
WHEREAS, the Trust desires the Administrator to provide, and the
Administrator is willing to provide, management, shareholder servicing and
administrative services to such portfolios of the Trust as the Trust and the
Administrator may agree on ("Portfolios") and as listed on the schedules
attached hereto ("Schedules") and made a part of this Agreement, on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Administrator hereby agree as follows:
ARTICLE 1. RETENTION OF THE ADMINISTRATOR. The Trust hereby retains the
Administrator to act as the administrator of the Portfolios and to furnish the
Portfolios with the management and administrative services as set forth in
Article 2 below. The Administrator hereby accepts such employment to perform
the duties set forth below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trust in any way and shall
not be deemed an agent of the Trust.
ARTICLE 2. ADMINISTRATIVE AND ACCOUNTING SERVICES. The Administrator
shall perform or supervise the performance by others of other administrative
services in connection with the operations of the Portfolios, and, on behalf of
the Trust, will investigate, assist in the selection of and conduct relations
with custodians, depositories, accountants, legal counsel, underwriters, brokers
and dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Portfolios' operations.
The Administrator shall provide the Trustees of the Trust with such reports
regarding investment performance and compliance with investment policies and
applicable laws, rules and regulations as they may reasonably request but shall
have no responsibility for supervising the performance by any investment adviser
or sub-adviser of its responsibilities. The Administrator may appoint a
sub-administrator to perform certain of the services to be performed by the
Administrator hereunder.
The Administrator shall provide the Trust with administrative services,
regulatory reporting, fund Accounting and related portfolio accounting services,
all necessary office space, equipment, personnel, compensation and facilities
(including facilities for Shareholders' and
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Trustees' meetings) for handling the affairs of the Portfolios and such other
services as the Trustees may, from time to time, reasonably request and the
Administrator shall, from time to time, reasonably determine to be necessary
to perform its obligations under this Agreement. In addition, at the request
of the Trust's Board of Trustees (the "Trustees"), the Administrator shall
make reports to the Trustees concerning the performance of its obligations
hereunder.
Without limiting the generality of the foregoing, the Administrator shall:
(A) calculate contractual Trust expenses and control all disbursements for
the Trust, and as appropriate compute the Trust's yields, total return,
expense ratios, portfolio turnover rate and, if required, portfolio average
dollar-weighed maturity;
(B) assist Trust counsel with the preparation of prospectuses, statements
of additional information, registration statements, and proxy materials;
(C) prepare such reports, applications and documents (including reports
regarding the sale and redemption of Shares as may be required in order to
comply with Federal and state securities law) as may be necessary or
desirable to register the Trust's shares with state securities authorities,
monitor sale of Trust shares for compliance with state securities laws, and
file with the appropriate state securities authorities the registration
statements and reports for the Trust and the Trust's shares and all
amendments thereto, as may be necessary or convenient to register and keep
effective the Trust and the Trusts shares with state securities authorities
to enable the Trust to make a continuous offering of its shares;
(D) develop and prepare communications to shareholders, including the
annual report to shareholders, coordinate mailing prospectuses, notices,
proxy statements, proxies and other reports to Trust shareholders, and
supervise and facilitate the solicitation of proxies solicited by the Trust
for all shareholder meetings, including tabulation process for shareholder
meetings;
(E) coordinate with Trust counsel the preparation and negotiation of, and
administer contracts on behalf of the Trust with, among others, the Trust's
investment adviser, distributor, custodian, and transfer agent;
(F) maintain the Trust's general ledger and prepare the Trust's financial
statements, including expense accruals and payments, determine the net
asset value of the Trust's assets and of the Trust's shares, and supervise
the Trust's transfer agent with respect to the payment of dividends and
other distributions to shareholders;
(G) calculate performance data of the Trust and its portfolios for
dissemination to information services covering the investment company
industry;
(H) coordinate and supervise the preparation and filing of the Trust's tax
returns;
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(1) examine and review the operations and performance of the various
organizations providing services to the Trust or any Portfolio of the
Trust, including, without limitation, the Trust's investment adviser,
distributor, custodian, transfer agent, outside legal counsel and
independent public accountants, and at the request of the Trustees, report
to the Trustees on the performance of organizations;
(J) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and printing of the
Trust's semi-annual and annual reports to shareholders;
(K) provide internal legal and administrative services as requested by the
Trust from time to time;
(L) assist with the design, development, and operation of the Trust,
including new portfolio and class investment objectives, policies and
structure;
(M) provide individuals acceptable to the Trustees for nomination,
appointment, or election as officers of the Trust, who will be responsible
for the management of certain of the Trust's affairs as determined by the
Trustees;
(N) advise the Trust and its Trustees on matters concerning the Trust and
its affairs;
(O) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Trust in
accordance with the requirements of Rules 17g-1 and 17d-1(7) under the 1940
Act as such bonds and policies are approved by the Trust's Board of
Trustees;
(P) monitor and advise the Trust and its Portfolios on their registered
investment company status under the Internal Revenue Code of 1986, as
amended;
(Q) perform all administrative services and functions of the Trust and
each Portfolio to the extent administrative services and functions are not
provided to the Trust or such Portfolio pursuant to the Trust's or such
Portfolio's investment advisory agreement, distribution agreement,
custodian agreement and transfer agent agreement;
(R) furnish advice and recommendations with respect to other aspects of
the business and affairs of the Portfolios as the Trust and the
Administrator shall determine desirable; and
(S) prepare and file with the SEC the semi-annual report for the Trust on
Form N-SAR and all required notices pursuant to Rule 24f-2.
Also, the Administrator will perform other services for the Trust as agreed
from time to time, including, but not limited to performing internal audit
examinations; mailing the annual reports of the Portfolios; preparing an
annual list of shareholders; and mailing notices of shareholders'
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meetings, proxies and proxy statements, for all of which the Trust will pay
the Administrator's out-of-pocket expenses.
ARTICLE 3. Allocation of Charges and Expenses.
(A) THE ADMINISTRATOR. The Administrator shall furnish at its own expense
the executive, supervisory and clerical personnel necessary to perform its
obligations under this Agreement. The Administrator shall also provide the
items which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Trust as well as all Trustees of the
Trust who are affiliated persons of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Trust retained by the Trustees of the Trust
to perform services on behalf of the Trust.
(B) THE TRUST. The Trust assumes and shall pay or cause to be paid all
other expenses of the Trust not otherwise allocated herein, including, without
limitation, organizational costs, taxes, expenses for legal and auditing
services, the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing Shareholders, all expenses
incurred in connection with issuing and redeeming Shares, the costs of pricing
services, the costs of custodial services, the cost of initial and ongoing
registration of the Shares under Federal and state securities laws, fees and
out-of-pocket expenses of Trustees who are not affiliated persons of the
Administrator or the investment adviser to the Trust or any affiliated
corporation of the Administrator or the investment Adviser, the costs of
Trustees' meetings, insurance, interest, brokerage costs, litigation and other
extraordinary or nonrecurring expenses, and all fees and charges of investment
advisers to the Trust.
ARTICLE 4. Compensation of the Administrator.
(A) ADMINISTRATION FEE. For the services to be rendered, the facilities
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Trust shall pay to the Administrator compensation at an annual
rate specified in the Schedules. Such compensation shall be calculated and
accrued daily, and paid to the Administrator monthly. The Trust shall also
reimburse the Administrator for its reasonable out-of-pocket expenses, including
the travel and lodging expenses incurred by its officers and employees in
connection with attendance at meetings of the Trust's Board of Trustees.
If this Agreement becomes effective subsequent to the first day of a month
or terminates before the last day of a month, the Administrator's compensation
for that part of the month in which this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees as set forth
above. Payment of the Administrator's compensation for the preceding month
shall be made promptly.
(B) COMPENSATION FROM TRANSACTIONS. The Trust hereby authorizes any
entity or person associated with the Administrator which is a member of a
national securities exchange to effect any transaction on the exchange for the
account of the Trust which is permitted by
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Section 11 (a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T)
thereunder, and the Trust hereby consents to the retention of compensation
for such transactions in accordance with Rule 11a2-2(T) (a) (2) (iv).
(C) SURVIVAL OF COMPENSATION RATES. All rights of compensation under this
Agreement for services performed as of the termination date shall survive the
termination of this Agreement.
ARTICLE 5. LIMITATION OF LIABILITY OF THE ADMINISTRATOR. The duties of
the Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and duties
hereunder, except as may otherwise be provided under provisions of applicable
law which cannot be waived or modified hereby. (As used in this Article 5, the
term "Administrator" shall include directors, officers, employees and other
agents of the Administrator as well as that corporation itself.)
So long as the Administrator, or its agents, acts in good faith, with due
diligence and is not otherwise negligent in the performance of its duties, the
Trust assumes full responsibility and shall indemnify the Administrator and hold
it harmless from and against any and all actions, suits and claims, whether
groundless or otherwise, and from and against any and all losses, damages,
costs, charges, reasonable counsel fees and disbursements, payments, expenses
and liabilities (including reasonable investigation expenses) arising directly
or indirectly out-of said administration, transfer agency, and dividend
disbursing relationships to the Trust or any other service rendered to the Trust
hereunder. The indemnity and defense provisions set forth herein shall
indefinitely survive the termination of this Agreement.
The Administrator shall indemnify and hold the Trust harmless from and
against any and all actions, suits and claims, whether groundless or otherwise,
and from and against any and all losses, damages, costs, charges, reasonable
counsel fees and disbursements, payments, expenses and liabilities (including
reasonable investigation expenses and attorney's fees) arising directly or
indirectly out of losses, liabilities or damages resulting from the willful
misfeasance, bad faith or gross negligence of the Administrator of said
administrative relationship to the Trust or any other service rendered to the
Trust hereunder. The indemnity and defense provisions set forth herein shall
indefinitely survive the termination of this Agreement.
In order that the indemnification provision contained herein shall apply,
however, it is understood that if in any case an indemnifying party (the
"Indemnifying Party") may be asked to indemnity or hold an indemnified party
(the "Indemnified Party") harmless, the Indemnifying Party shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the Indemnified Party will use all reasonable
care to identify and notify the Indemnifying Party promptly concerning any
situation which presents or appears likely to present the probability of such a
claim for indemnification
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<PAGE>
against the Indemnified Party, but failure to do so in good faith shall not
effect the rights hereunder.
An Indemnifying Party shall be entitled to participate at its own expense
or, if it so elects, to assume the defense of any suit brought to enforce any
claims subject to this indemnity provision. If an Indemnifying Party elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by an Indemnifying Party and satisfactory to the Indemnified Party, whose
approval shall not be unreasonably withheld. In the event that an Indemnifying
Party elects to assume the defense of any suit and retain counsel, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it. If an Indemnifying Party does not elect to assume the defense
of a suit, it will reimburse the Indemnified Party for the reasonable fees and
expenses of any counsel retained by the Indemnified Party.
The Administrator may apply to the Trust at any time for instructions and
may consult counsel for the Trust or its own counsel and with accountants and
other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. Nor shall the Administrator be held to have
notice of any change of authority of any officers, employee or agent of the
Trust until receipt of written notice thereof from the Trust.
ARTICLE 6. ACTIVITIES OF THE ADMINISTRATOR. The services of the
Administrator rendered to the Trust are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that Trustees, officers, employees
and Shareholders of the Trust are or may be or become interested in the
Administrator, as directors, officers, employees and shareholders or otherwise
and that directors, officers, employees and shareholders of the Administrator
and its counsel are or may be or become similarly interested in the Trust, and
that the Administrator may be or become interested in the Trust as a Shareholder
or otherwise.
ARTICLE 7. CONFIDENTIALITY. The Administrator agrees on behalf of itself
and its employees to treat confidentially all records and other information
relative to the Trust and its prior, present or potential Shareholders and
relative to the Adviser and its prior, present or potential customers, except,
after prior notification to and approval in writing by the Trust, which approval
shall not be unreasonably withheld and may not be withheld where the
Administrator may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
ARTICLE 8. EQUIPMENT FAILURES. In the event of equipment failures beyond
the Administrator's control, the Administrator shall, at no additional expense
to the Trust, take reasonable steps to minimize service interruptions but shall
have no liability with respect
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thereto. The Administrator shall develop and maintain a plan for recovery
from equipment failures which may include contractual arrangements with
appropriate parties making reasonable provision for emergency use of
electronic data processing equipment to the extent appropriate equipment is
available.
ARTICLE 9. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS. The
Administrator undertakes to comply with all applicable requirements of the 1933
Act, the 1934 Act, the 1940 Act and any laws, rules and regulations of
governmental authorities having jurisdiction with respect to the duties to be
performed by the Administrator hereunder.
ARTICLE 10. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement
shall become effective on the date set forth in the Schedules and shall remain
in effect for the initial term of the Agreement (the "Initial Term") and each
renewal term thereof (each, a "Renewal Term"), each as set forth in the
Schedules, unless terminated in accordance with the provisions of this Article
10. This Agreement may be terminated only: (a) by the mutual written agreement
of the parties; (b) by either party hereto on 60 days' written notice, as of the
end of the Initial Term or the end of any Renewal Term; (c) by either party
hereto on such date as is specified in written notice given by the terminating
party, in the event of a material breach of this Agreement by the other party,
provided the terminating party has notified the other party of such breach at
least 45 days prior to the specified date of termination and the breaching party
has not remedied such breach by the specified date; (d) effective upon the
liquidation of the Administrator; or (e) as to any Portfolio or the Trust,
effective upon the liquidation of such Portfolio or the Trust as the case may
be. For purposes of this Article 10, the term "liquidation" shall mean a
transaction in which the assets of the Administrator, the Trust or a Portfolio
are sold or otherwise disposed of and proceeds therefrom are distributed in cash
to the shareholders in complete liquidation of the interests of such
shareholders in the entity.
This Agreement shall not be assignable by the Administrator, without the
prior written consent of the Trust, except to an entity that is controlled by,
or under common control, with, the Administrator.
ARTICLE 11. AMENDMENTS. This Agreement or any part hereof may be changed
or waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
ARTICLE 12. CERTAIN RECORDS. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the
Administrator on behalf of the Trust shall be prepared and maintained at the
expense of the Administrator, but shall be the property of the Trust and will
be made available to or surrendered promptly to the Trust on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Trust and follow the Trust's
instructions as to permitting or refusing such inspection; provided that the
Administrator may exhibit such records to any person in any case where it is
advised by its counsel that it may be held liable for failure to do
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so, unless (in cases involving potential exposure only to civil liability)
the Trust has agreed to indemnify the Administrator against such liability.
ARTICLE 13. DEFINITIONS OF CERTAIN TERMS. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 14. NOTICE. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Trust, at _______________________ and if to the Administrator
at 1 Freedom Valley Drive, Oaks, Pennsylvania, 19456.
ARTICLE 15. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Delaware and the applicable provisions
of the 1940 Act. To the extent that the applicable laws of the State of
Delaware, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
ARTICLE 16. MULTIPLE ORIGINALS. This Agreement may be executed in two or
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
ARTICLE 17. LIMITATION OF LIABILITY. The Administrator is hereby
expressly put on notice of the limitation of liability as set forth in the
Trust's Certificate of Trust and agrees that the obligations pursuant to this
Agreement of a particular Portfolio and of the Trust with respect to that
Portfolio shall be limited solely to the assets of that Portfolio, and the
Administrator shall not seek satisfaction of any such obligation from any other
Portfolio, the shareholders of any Portfolio, the Trustees, officers, employees
or agents of the Trust, or any of them.
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<PAGE>
ARTICLE 18. BINDING AGREEMENT. This Agreement and the rights and
obligations of the parties and the Portfolios hereunder, shall be binding on,
and inure to the benefit of, the parties and the Portfolios and the respective
successors and assigns of each of them.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
CNI CHARTER FUNDS
By:__________________________________
Attest:______________________________
SEI INVESTMENTS MUTUAL FUNDS SERVICES
By:__________________________________
Attest:______________________________
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SCHEDULE
TO THE ADMINISTRATION AGREEMENT
DATED AS OF APRIL 1, 1999
BETWEEN
CNI CHARTER FUNDS
AND
SEI INVESTMENTS MUTUAL FUNDS SERVICES
Portfolios: This Agreement shall apply to all Portfolios of the CNI Charter
Money Market Fund (collectively, the "Portfolios"), either now in
existence or in the future created.
Fees: Pursuant to Article 4, Section A, and subject to a minimum fee of
$90,000 for each separate series of shares, the Trust shall pay
the Administrator compensation for services rendered to the
Portfolios at an annual rate, which is calculated daily and paid
monthly according to the following schedule:
CNI Charter Money Market Fund 15 bps
CNI Charter California Tax Exempt Fund 10.1 bps
CNI Charter Government Fund 15.5 bps
Term: This Agreement shall become effective on April 1, 1999 and shall
remain in effect for an Initial Term of three (3) years from such
date and, thereafter, for successive Renewal Terms of two (2)
years each, unless and until this Agreement is terminated in
accordance with the provisions of Article 10 hereof.
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Exhibit 23 (h)(2)
Form of Transfer Agent Agreement
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<PAGE>
TRANSFER AGENT AGREEMENT
THIS AGREEMENT is made as of this ___ day of ___________ 1999, by and
between CNI CHARTER FUNDS (the "Trust"), a Delaware business trust, and
SEI INVESTMENTS FUND MANAGEMENT (the "Transfer Agent" or "SEI"), a Delaware
business trust.
WHEREAS, the Trust is an open-end diversified management investment company
registered under the Investment Company Act of 1940, as amended (the " 1940
Act"); and
WHEREAS, the Transfer Agent is a transfer agent registered under the
Securities Exchange Act of- 1934; and
WHEREAS, the Transfer Agent and the Trust are parties to an Administration
Agreement dated ______ 1999 (the "Administration Agreement")
WHEREAS, the Trust desires the Transfer Agent to provide, and the Transfer
Agent is willing to provide, in addition to the services provided under the
Administration Agreement, transfer agent services to Shareholders of the Trust's
portfolios listed in Schedule A which is attached hereto and made a part of this
Agreement, and such other portfolios, or classes of portfolios, as the Trust and
the Transfer Agent may agree on ("Portfolios"), on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Transfer Agent hereby agree as follows:
ARTICLE 1. RETENTION OF THE TRANSFER AGENT. The Trust hereby retains the
Transfer Agent to act as the Transfer Agent of the Portfolios and to furnish the
Portfolios with the transfer agent services as set forth below. The Transfer
Agent hereby accepts such employment to perform the duties set forth below.
The Transfer Agent shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trust in any way and shall
not be deemed an agent of the Trust. All of the Transfer Agent's duties shall
be subject always to the objectives, policies and restrictions contained in the
Trust's current registration statement under the 1940 Act, to the Trust's
Declaration of Trust and Bylaws, to the provisions of the 1940 Act, and to any
other guidelines that may be established by the Trust's Trustees and which are
furnished to the Transfer Agent by the Trust.
The Trust warrants that it has or shall deliver to the Transfer Agent:
(a) a copy of the Declaration of Trust of the Trust, incorporating all
amendments thereto, certified by the Secretary or Assistant Secretary
of the Trust;
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(b) an opinion of counsel to the Trust with respect to (i) the legality
and continuing existence of the Trust, (ii) the legality of its
outstanding Shares of beneficial interest, and (iii) the number of
Shares authorized for issuance and stating that upon issuance they
will be validly issued and nonassessable; and
(c) the Trust's Secretary's or Assistant Secretary's certificate as to the
authorized outstanding Shares of the Trust, its address to which
notices may be sent the names and specimen signatures of its officers
who are authorized to sign instructions or requests to the Transfer
Agent on behalf of the Trust, and the name and address of legal
counsel to the Trust. In the event of any future amendment or change
in respect of any of the foregoing, prompt written notification of
such change shall be given by the Trust to the Transfer Agent
together with copies of all relevant resolutions, instruments or
other documents, specimen signatures, certificates, opinions or the
like as the Transfer Agent may deem necessary or appropriate.
ARTICLE 2. TRANSFER AGENT SERVICES. The Transfer Agent will act as
Transfer Agent for the Portfolios' accounts and, as such, will record in an
account (the "Account") the total number of units of beneficial interest
("Shares") of each Portfolio issued and outstanding from time to time and will
maintain Share transfer records in which it will note the names and registered
addresses of Shareholders, and the number of Shares from time to time owned by
each of them. Each Shareholder will be assigned one or more account numbers.
The Transfer Agent is authorized to set up accounts for shareholders and
record transactions in the accounts on the basis of instructions received from
Shareholders when accompanied by remittance in an appropriate amount and form as
provided in the Trust's then current prospectus. The Trust will not issue
certificates representing its Shares. Whenever Shares are purchased or issued,
the Transfer Agent shall credit the Account with the Shares issued, and credit
the proper number of Shares to the appropriate Shareholder.
Likewise, whenever the Transfer Agent has occasion to redeem Shares owned
by a Shareholder, the Trust authorizes the Transfer Agent to process the
transaction by making appropriate entries in its Share transfer records and
debiting the Account.
Upon notification by the Trust's Custodian of the receipt of funds through
the Federal Reserve wire system or conversion into Federal funds of funds
transmitted by other means for the purchase of Shares in accordance with the
Trust's current prospectus, the Transfer Agent shall notify the Trust of such
deposits on a daily basis.
The Transfer Agent shall credit each Shareholder's account with the number
of units Purchased according to the price of the Shares in effect for such
purchases determined in the manner set forth in the Trust's then current
prospectus. The Transfer Agent shall process each order for the redemption of
Shares from or on behalf of a Shareholder, and shall cause cash proceeds to be
wired in Federal funds.
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The requirements as to instruments of transfer and other documentation, the
applicable redemption price and the time of payment shall be as provided for in
the then current prospectus, subject to such supplemental requirements
consistent with such prospectus as may be established by mutual agreement
between the Trust and the Transfer Agent.
If the Transfer Agent or the Trust's Distributor determines that a request
for redemption does not comply with the requirements for redemption, the
Transfer Agent shall promptly so notify the Shareholder, together with the
reason therefor, and shall effect such redemption at the price next determined
after receipt of documents complying with said standards.
The Transfer Agent shall produce a confirmation statement reflecting each
purchase or redemption transaction and each dividend posting. Confirmation
statements will be mailed or transmitted on the Business Day following the
transaction.
On each day that the Trust's Custodian and the New York Stock Exchange are
open for business ("Business Day"), the Transfer Agent shall notify the
Custodian of the amount of cash or other assets required to meet payments made
pursuant to the provisions of this Article 2, and the Trust shall instruct the
Custodian to make available from time to time sufficient funds or other asset
therefor.
The authority of the Transfer Agent to perform its responsibilities as to
purchases and redemptions shall be suspended upon receipt by it of notification
from the Securities and Exchange Commission or the Trustees of the suspension of
the determination of the Trust's net asset value.
In registering transfers, the Transfer Agent may rely upon the opinion of
counsel in not requiring complete documentation, in registering transfers
without inquiry into adverse claims, in delaying registration for purposes of
such inquiry, or in refusing registration where in its judgment an adverse claim
requires such refusal.
ARTICLE 3. COMPENSATION OF THE TRANSFER AGENT.
(A) TRANSFER AGENT. For the services to be rendered, the facilities
furnished and the expenses assumed by the Transfer Agent pursuant to
this Agreement, the Trust shall pay to the Transfer Agent compensation
at an annual rate specified in the Schedule B which is attached hereto
and made a part of this Agreement. Such compensation shall be
accrued daily, and paid to the Transfer Agent monthly.
If this Agreement becomes effective subsequent to the first day of a
month or terminates before the last day of a month, the Transfer
Agent's compensation for that part of the month in which this
Agreement is in effect shall be prorated in a manner consistent with
the calculation of the fees as set forth above. Payment of the
Transfer Agent's compensation for the preceding month shall be made
promptly.
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(B) SURVIVAL OF COMPENSATION RIGHTS. All rights of compensation under
this Agreement for services performed as of the termination date shall
survive the termination of this Agreement.
ARTICLE 4. LIMITATION OF LIABILITY OF THE TRANSFER AGENT; INDEMNIFICATION
PROVISIONS. The duties of the Transfer Agent shall be confined to those
expressly set forth herein, and no implied duties are assumed by or may be
asserted against the Transfer Agent hereunder. The Transfer Agent shall not be
liable for any error of judgment or mistake of law or for any act or omission in
carrying out its duties hereunder, except a loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of reckless disregard of its obligations and duties hereunder, except
as may otherwise be provided under provisions of applicable state law which
cannot be waived or modified hereby. (As used in this Article 4, the term
"Transfer Agent" shall include directors, officers, employees, sub-contracts and
other corporate agents of the Transfer Agent as well as that corporation
itself).
So long as the Transfer Agent does not violate the standard of care set
forth herein and is not otherwise negligent in the performance of its duties,
the Trust assumes full responsibility and shall indemnify the Transfer Agent and
hold it harmless from and against any and all actions, suits and claims, whether
groundless or otherwise, and from and against any and all losses, damages,
costs, charges, reasonable counsel fees and disbursements, payments, expenses
and liabilities (including reasonable investigation expenses and attorney's
fees) arising directly or indirectly out of said administration, and dividend
disbursing relationships to the Trust or any other service rendered to the Trust
hereunder. The indemnity and defense provisions set forth herein shall
indefinitely survive the termination of this Agreement.
The Transfer Agent shall indemnify and hold the Trust harmless from and
against any and all actions, suits and claims, whether groundless or otherwise,
and from and against any and all losses, damages, costs, charges, reasonable
counsel fees and disbursements, payments, expenses and liabilities (including
reasonable investigation expenses and attorney's fees) arising directly or
indirectly out of losses, liabilities or damages resulting from the willful
misfeasance, bad faith or gross negligence of the Transfer Agent of said
transfer agency relationships to the Trust or any other service rendered to the
Trust hereunder. The indemnity and defense provisions set forth herein shall
indefinitely survive the termination of this Agreement.
In order that the indemnification provision contained herein shall apply,
however, it is understood that if in any case an indemnifying party (the
"Indemnifying Party") may be asked to indemnify or hold an indemnified party
(the "Indemnified Party") harmless, the Indemnifying Party shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the Indemnified Party will use all reasonable
care to identify and notify the Indemnifying Party promptly concerning any
situation which presents or appears likely to present the probability of such a
claim for indemnification against the Indemnified Party, but failure to do so in
good faith shall not effect the rights hereunder.
The Transfer Agent may apply to the Trust at any time for instructions and
may consult counsel for the Trust or its own counsel and with accountants and
other experts with respect to
-4-
<PAGE>
any matter arising in connection with the Transfer Agent's duties, and the
Transfer Agent shall not be liable or accountable for any action taken or
omitted by it in good faith in accordance with such instruction or with the
opinion of such counsel, accountants or other experts.
The Transfer Agent shall be protected in acting upon any document which it
reasonably believes to be genuine and to have been signed or presented by the
proper person or persons. Nor shall the Transfer Agent be held to have notice
of any change of authority of any officers, employee or agent of the Trust until
receipt of written notice thereof from the Trust.
ARTICLE 5. ACTIVITIES OF THE TRANSFER AGENT. The services of the Transfer
Agent rendered to the Trust are not to be deemed to be exclusive. The Transfer
Agent is free to render such services to others and to have other businesses and
interests. It is understood that Trustees, officers, employees and Shareholders
of the Trust are or may be or become interested in the Transfer Agent, as
directors, officers, employees and shareholders or otherwise and that directors,
officers, employees and shareholders of the Transfer Agent and its counsel are
or may be or become .similarly interested in the Trust and that the Transfer
Agent may be or become interested in the Trust as a Shareholder or otherwise.
ARTICLE 6. TERM OF THIS AGREEMENT. This Agreement shall remain in effect
for 3 years after the date of the Agreement and shall continue in effect
thereafter, for periods of two years so long as such continuance is specifically
approved by the vote of a majority of the Trustees of the Trust. SEI reserves
the right to terminate this Agreement if the Administration Agreement is
terminated for any reason. Upon termination of this Agreement all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Trust.
In the event of a material breach of this Agreement by either party, the
non-breaching party shall notify the breaching party in writing of such breach
and upon receipt of such notice, the breaching party shall have 45 days to
remedy the breach or the non-breaching party may terminate this Agreement
immediately.
This Agreement shall not be assignable by either party without the written
consent of the other party.
ARTICLE 7. AMENDMENTS. This Agreement may be amended by the parties
hereto only if such amendment is specifically approved (i) by the vote of a
majority of the Trustees of the Trust, and (ii) by the vote of a majority of the
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a Board of Trustees meeting called
for the purpose of voting on such approval.
For special cases, the parties hereto may amend such procedures set forth
herein as may be appropriate or practical under the circumstances, and the
Transfer Agent may conclusively assume that any special procedure which has been
approved by the Trust does not conflict with or violate any requirements of its
Declaration of Trust, By-Laws or prospectus, or any rule, regulation or
requirement of any regulatory body.
-5-
<PAGE>
ARTICLE 8. TRUSTEES' LIABILITY. A copy of the Certificate of Trust of
the Trust is on file with the Secretary of State of the State of Delaware,
and notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees,
officers or Shareholders of the Trust individually, but binding only upon the
assets and property of the Trust.
ARTICLE 9. CERTAIN RECORDS. The Transfer Agent shall maintain
customary records in connection with its duties as specified in this
Agreement. Any records required to be maintained and preserved pursuant to
Rules 3la-1 and 3la-2 under the 1940 Act which are prepared or maintained by
the Transfer Agent on behalf of the Trust shall be prepared and maintained at
the expense of the Transfer Agent, but shall be the property of the Trust and
will be made available to or surrendered promptly to the Trust on request.
In case of any request or demand for the inspection of such records by
another party, the Transfer Agent shall notify the Trust and follow the
Trust's instructions as to permitting or refusing such inspection; provided
that the Transfer Agent may exhibit such records to any person in any case
where it is advised by its counsel that it may be held liable for failure to
do so, unless (in cases involving potential exposure only to civil liability)
the Trust has agreed to indemnify the Transfer Agent against such liability.
ARTICLE 10. DEFINITIONS OF CERTAIN TERMS. The terms "interested
person" and "affiliated person", when used in this Agreement, shall have the
respective meanings specified in the 1940 Act and the rules and regulations
thereunder, subject to such exemptions as may be granted by the Securities
and Exchange Commission.
ARTICLE 11. NOTICE. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party
giving notice: if to the Trust, at 530 East Swedesford Road, Wayne, PA, and
if to the Transfer Agent at 530 East Swedesford Road, Wayne, PA.
-6-
<PAGE>
ARTICLE 12. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Delaware and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the
State of Delaware, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
ARTICLE 13. MULTIPLE ORIGINALS. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
CNI CHARTER FUNDS
BY: _____________________________________
SEI INVESTMENTS FUND MANAGEMENT
BY: _____________________________________
-7-
<PAGE>
SCHEDULE A
TO THE TRANSFER AGENT AGREEMENT
DATED ______________ 1999
BETWEEN
CNI CHARTER FUNDS
AND
SEI INVESTMENTS FUND MANAGEMENT
Pursuant to the Preamble, the Transfer Agent shall provide
services to the following Portfolios:
CNI Charter Money Market Fund*
* The Trust is authorized to issue separate classes of shares of beneficial
interest representing interests in separate investment portfolios. The parties
intend that each portfolio established by the Trust, now or in the future, be
covered by the terms and conditions of this agreement.
-8-
<PAGE>
SCHEDULE B
TO
THE TRANSFER AGENT AGREEMENT DATED _____________1999
BETWEEN
CNI CHARTER FUNDS
AND
SEI INVESTMENTS FUND MANAGEMENT
Pursuant to Article 6, Section A, the Trust shall pay the Transfer Agent
compensation as follows:
SEI will provide transfer and dividend disbursing agent services on the
Portfolios starting in approximately April 1, 1999.
Fees are billable on a monthly basis at the rate of 1/12 of the annual fee,
which is $15,000 a year per CUSIP.
This annual charge includes:
Omnibus transactions processing and reconciliation
Transaction reconciliation with custodian
Transmission monitoring and processing
System accessibility
On-going support
Production and maintenance of system reports
"Help Desk" for bank systems users
Processing of incoming and outgoing interfaces (bank and custodian)
NAV and dividend rate nightly updates
Month end dividend processing
Capital gains processing, if needed
Production of confirms and statements
Transmission of print files to bank
Production, printing and storage of system reports
Maintenance of system security records and passwords
Maintenance of all system tables
Maintenance of all dealer files
Production of monthly 12(b)- I
OUT-OF-POCKET EXPENSES
Out-of'-pocket expenses will include but are not limited to confirmation
production, postage, forms, stationery, offsite storage, voice response system,
telephone, microfilm, microfiche, shareholder telephone calls, shareholder
letters, proxy solicitations, and expenses incurred at the specific direction of
the Trust such as custom programming.
-9-
<PAGE>
- ------------------------------------------------------------------------------
Exhibit 23 (m)(1)
Rule 12b-1 Plan
- ------------------------------------------------------------------------------
<PAGE>
CNI CHARTER FUNDS
FORM OF
RULE 12B-1 DISTRIBUTION PLAN
This Rule 12b-1 Distribution Plan (the "Plan") is adopted in accordance
with Rule 12b-1 (the "Rule") under the Investment Company Act of 1940, as
amended (the "1940 Act"), by CNI CHARTER FUNDS, a Delaware business trust (the
"Trust"), with respect to each series of its shares, and each class of shares of
such series (if separate classes shall be designated) identified on SCHEDULE A
attached hereto and incorporated herein (each such series covered by this Plan,
a "Fund" and each such class, a "Class"). The Plan has been approved by a
majority of the Trust's Board of Trustees, including a majority of the Trustees
who are not interested persons of the Trust and who have no direct or indirect
financial interest in the operation of the Plan (the "independent Trustees"),
cast in person at a meeting called for the purpose of voting on the Plan and by
a majority of the shareholders of each Fund or of each Class as required by the
1940 Act.
In reviewing the Plan, the Board of Trustees considered the terms of the
Underwriting Agreement between the Trust on behalf of each Fund and SEI
Investments Distribution Co. (the "Principal Underwriter"), and the
compensation, if any, the Principal Underwriter receives from the Trust
thereunder, and the nature and amount of other payments, fees, and commissions,
if any, that may be paid to the Principal Underwriter, its affiliates, and other
agents of the Trust. The Board of Trustees, including the independent Trustees,
concluded that the proposed overall compensation of the Principal Underwriter
and its affiliates was fair and not excessive.
In its considerations, the Board of Trustees also recognized that
uncertainty may exist from time to time with respect to whether payments to be
made by the Trust to the Principal Underwriter, as the initial "Distribution
Coordinator," or to other firms under agreements with respect to a Fund or
Class, may be deemed to constitute impermissible distribution expenses. As a
general rule, an investment company may not finance any activity primarily
intended to result in the sale of its shares, except pursuant to the Rule.
Accordingly, the Board of Trustees determined that the Plan also should provide
that payments by the Trust and expenditures made by others out of monies
received from the Trust which are later deemed to be for the financing of any
activity primarily intended to result in the sale of Fund shares shall be deemed
to have been made pursuant to the Plan.
The approval of the Board of Trustees included a determination that in the
exercise of the Trustees' reasonable business judgment and in light of their
fiduciary duties, there is a reasonable likelihood that the Plan will benefit
the Trust, each Fund, each Class, and the shareholders of each. The Plan also
has been approved by a vote of at least a majority of the outstanding voting
securities of each Fund or Class, as defined in the 1940 Act, to the extent
required by the 1940 Act.
The provisions of the Plan are:
1. ANNUAL FEE. The Trust will pay to the Principal Underwriter, as the
Funds' Distribution Coordinator, an annual fee for the Principal Underwriter's
services in such capacity
1
<PAGE>
including its expenses in connection with the promotion and distribution of
each Fund's or Class's shares (the "Distribution Expenses"). The annual fee
paid to the Principal Underwriter under the Plan will be calculated daily and
paid monthly by each Fund or Class on the first day of each month based on
the average daily net assets of each Fund or Class, as set forth on SCHEDULE B
hereto. The fees are not tied exclusively to actual distribution and service
expenses, and the fee may exceed the expenses actually incurred.
2. EXPENSES COVERED BY THE PLAN. The fees paid under Section 1 of the
Plan may be used to pay for any expenses primarily intended to result in the
sale of shares of the Funds and Classes ("distribution services"), including,
but not limited to: (a) costs of payments, including incentive compensation,
made to agents for and consultants to the Principal Underwriter, any affiliate
of the Principal Underwriter or the Trust, including pension administration
firms that provide distribution and shareholder related services and
broker-dealers that engage in the distribution of the shares of the Funds and
Classes; (b) payments made to, and expenses of, persons who provide support
services in connection with the distribution of shares of a Fund or a Class and
servicing of shareholders of a Fund or a Class, including, but not limited to,
personnel of the Principal Underwriter and its affiliates, office space and
equipment, telephone facilities, answering routine inquiries regarding the
Funds, processing shareholder transactions and providing any other shareholder
services not otherwise provided by the Trust's transfer agency or other
servicing arrangements; (c) all payments made pursuant to any dealer agreements
between the Principal Underwriter and certain broker-dealers, financial
institutions and other service providers; (d) costs relating to the formulation
and implementation of marketing and promotional activities, including, but not
limited to, direct mail promotions and television, radio, newspaper, magazine
and other mass media advertising; (e) costs of printing and distributing
prospectuses, statements of additional information and reports of the Funds to
prospective shareholders of the Funds; (f) costs involved in preparing, printing
and distributing sales literature pertaining to the Funds; and (g) costs
involved in obtaining whatever information, analyses and reports with respect to
marketing and promotional activities that the Trust may, from time to time, deem
advisable. Such expenses shall be deemed incurred whether paid directly by the
Principal Underwriter as Distribution Coordinator or by a third party to the
extent reimbursed therefor by the Principal Underwriter.
3. WRITTEN REPORTS . The Principal Underwriter shall furnish to the
Board of Trustees of the Trust, for its review, on at least a quarterly basis, a
written report of the monies paid to it under the Plan with respect to each Fund
and each Class, and shall furnish the Board of Trustees of the Trust with such
other information as the Board of Trustees may reasonably request in connection
with the payments made under the Plan in order to enable the Board of Trustees
to make an informed determination of whether the Plan should be continued as to
each Fund or Class.
4. TERMINATION. The Plan may be terminated as to any Fund or Class at
any time, without penalty, by vote of a majority of the outstanding voting
securities of the Fund or Class or by vote of a majority of the independent
Trustees, and any dealer agreement under the Plan may be likewise terminated on
not more than sixty (60) days' written notice. The Plan will also terminate
automatically in the event of its assignment, as that term is defined in the
1940 Act. Once terminated, no further payments shall be made under the Plan.
2
<PAGE>
5. AMENDMENTS. The Plan and any dealer agreement may not be amended to
increase materially the amount to be spent for distribution and servicing of
shares of a Fund or a Class pursuant to Section 1 hereof without approval by a
majority of the outstanding voting securities of the Fund or Class. All
material amendments to the Plan and any dealer agreement entered into with third
parties shall be approved by the independent Trustees cast in person at a
meeting called for the purpose of voting on any such amendment and by the
Trust's Board of Trustees, as required by Rule 12b-1.
6. SELECTION OF INDEPENDENT TRUSTEES. So long as the Plan is in effect,
the selection and nomination of the Trust's independent Trustees shall be
committed to the discretion of such independent Trustees.
7. EFFECTIVE DATE OF PLAN. The Plan shall take effect as to a Fund or
Class at such time as it has received requisite Trustee and shareholder approval
with respect to such Fund or Class and, unless sooner terminated, shall continue
in effect for such Fund or Class for a period of more than one year from such
date of its effectiveness only so long as such continuance is specifically
approved at least annually by the Board of Trustees of the Trust, including the
independent Trustees, cast in person at a meeting called for the purpose of
voting on such continuance.
8. PRESERVATION OF MATERIALS. The Trust will preserve copies of the
Plan, any agreements relating to the Plan and any report made pursuant to
Section 3 above, for a period of not less than six years (the first two years in
an easily accessible place) from the date of the Plan, agreement or report.
9. MEANINGS OF CERTAIN TERMS. As used in the Plan, the terms
"assignment," "interested person," and "majority of the outstanding voting
securities" will be deemed to have the same meaning that those terms have under
the 1940 Act and the rules and regulations under the 1940 Act, subject to any
exemption that may be granted to the Trust under the 1940 Act by the Securities
and Exchange Commission.
This Plan and the terms and provisions thereof are hereby accepted and
agreed to by the Trust and the Principal Underwriter, as Distribution
Coordinator, as evidenced by their execution hereof, as of this ____ day of
______________, 1999.
CNI CHARTER FUNDS
By: ___________________________________________
CNI Charter Funds
By: ___________________________________________
SEI Investments Distribution Co.<PAGE>
3
<PAGE>
SCHEDULE A
TO THE RULE 12B-1 DISTRIBUTION PLAN
OF
CNI CHARTER FUNDS
The 12b-1 Distribution and Servicing Plan shall be applicable to the
following series and classes of shares (if separate classes of shares of such
series have been designated) of CNI Charter Funds:
<TABLE>
<CAPTION>
Fund Classes
- ---------------------------------------------------------
<S> <C>
1. CNI Charter Money Market Fund A and S
2. CNI Charter Government Fund A and S
3. CNI Charter California Tax-Exempt Fund A and S
</TABLE>
4
<PAGE>
SCHEDULE B
TO THE RULE 12B-1 DISTRIBUTION PLAN
OF
CNI CHARTER FUNDS
<TABLE>
<CAPTION>
Fund Class Annual Fee
- -----------------------------------------------------------------
<S> <C> <C>
CNI Charter Money Market Fund A up to 0.50%
CNI Charter Money Market Fund S up to 0.50%
CNI Charter Government Fund A up to 0.50%
CNI Charter Government Fund S up to 0.50%
CNI Charter California Tax-Exempt Fund A up to 0.50%
CNI Charter California Tax-Exempt Fund S up to 0.50%
</TABLE>
5
<PAGE>
- ------------------------------------------------------------------------------
Exhibit 23 (m)(2)
Form of
Share Marketing Agreement
- ------------------------------------------------------------------------------
<PAGE>
CNI CHARTER FUNDS
FORM OF
SHARE MARKETING AGREEMENT
EXHIBIT ONLY
___________________________________
___________________________________
___________________________________
___________________________________
Ladies and Gentlemen:
This Share Marketing Agreement has been adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended (the "1940 Act"), by CNI
CHARTER FUNDS, a Delaware business trust (the "Trust"), on behalf of various
classes of the series of the Trust (each series, a "Fund"), as governed by the
terms of a Rule 12b-1 Distribution Plan (the "Plan").
The Plan has been approved by a majority of the Trustees who are not
interested persons of the Trust or the Funds and who have no direct or indirect
financial interest in the operation of the Plan (the "independent Trustees"),
cast in person at a meeting called for the purpose of voting on such Plan. Such
approval included a determination that in the exercise of the reasonable
business judgment of the Board of Trustees and in light of the Trustees'
fiduciary duties, there is a reasonable likelihood that the Plan will benefit
each class of each Fund and its shareholders. The Plan also has been approved
by a vote of at least a majority of the outstanding voting securities of each
applicable class of each applicable Fund, as defined in the 1940 Act.
1. To the extent you provide eligible shareholder services of the type
identified in the Plan to the Funds and a class (a "Class") of those Funds
identified in the attached Schedule (the "Schedule"), we shall pay you a monthly
fee based on the average net asset value of Class shares during any month which
are attributable to customers of your firm, at the rate set forth on the
Schedule.
2. In no event may the aggregate annual fee paid to you pursuant to the
Schedule exceed _______ percent of the value of the net assets of each Class of
each Fund held in your customers' accounts which are eligible for payment
pursuant to this Agreement (determined in the same manner that a Class uses to
compute its net assets as set forth in its then effective
6
<PAGE>
Prospectus), without approval by a majority of the outstanding shares of each
Class of each Fund.
3. You shall furnish us and the Trust with such information as shall
reasonably be requested by the Trust's Board of Trustees with respect to the
services performed by you and the fees paid to you pursuant to the Schedule.
4. We shall furnish to the Board of Trustees of the Trust, for their
review, on a quarterly basis, a written report of the amounts expended under the
Plan by us with respect to each Class of each Fund and the purposes for which
such expenditures were made.
5. You agree to make shares of each Class of each Fund available only (a)
to your customers or entities that you service, at the net asset value per share
next determined after receipt of the relevant purchase instruction or (b) to
each such Fund itself at the redemption price for shares of the Class, as
described in each Fund's then-effective Prospectus.
6. No person is authorized to make any representations concerning a Fund
or shares of a Fund except those contained in each Fund's then-effective
Prospectus or Statement of Additional Information and any such information as
may be released by a Fund as information supplemental to such Prospectus or
Statement of Additional Information.
7. Additional copies of each such Prospectus or Statement of Additional
Information and any printed information issued as supplemental to each such
Prospectus or Statement of Additional Information will be supplied by each Fund
to you in reasonable quantities upon request.
8. In no transaction shall you have any authority whatever to act as
agent of the Funds and nothing in this Agreement shall constitute you or the
Fund the agent of the other. You are not authorized to act as an underwriter of
shares of the Funds or as a dealer in shares of the Funds.
9. All communications to the Funds shall be sent to: SEI Investments
Distribution Co., as Distribution Coordinator for the Funds. Any notice to you
shall be duly given if mailed or telegraphed to you at your address as indicated
in this Agreement.
10. This Agreement may be terminated by you or by us, by the vote of a
majority of the Trustees of the Trust who are independent Trustees, or by a vote
of a majority of the outstanding shares of a Class of a Fund, on sixty (60)
days' written notice, all without payment of any penalty. It shall also be
terminated automatically by any act that terminates the Plan.
11. The provisions of the Plan between the Trust and us, insofar as they
relate to you, are incorporated herein by reference.
This Agreement shall take effect on the date indicated below, and the terms
and provisions thereof are hereby accepted and agreed to by us as evidenced by
our execution hereof.
7
<PAGE>
SEI Investments Distribution, Co.
Distribution Coordinator
By: EXHIBIT ONLY
__________________________
Authorized Officer
Dated: ________________________
Agreed and Accepted:
______________________________
(Name)
By: ___________________________
(Authorized Officer)
CNI CHARTER FUNDS
SCHEDULE TO SHARE MARKETING AGREEMENT
BETWEEN SEI INVESTMENTS DISTRIBUTION, CO.,
AS DISTRIBUTION COORDINATOR
AND
(Name)
Pursuant to the provisions of the Share Marketing Agreement between the
above parties with respect to CNI Charter Funds, SEI Investments Distribution,
Co., as Distribution Coordinator, shall pay a monthly fee to the above-named
party based on the average net asset value of shares of each Class of each Fund
during the previous calendar month the sales of which are attributable to the
above-named party, as follows:
FUND CLASS FEE
____ _____ ___
8
<PAGE>
- ------------------------------------------------------------------------------
Exhibit 23 (0)
Rule 18f-3 Plan
- ------------------------------------------------------------------------------
<PAGE>
CNI CHARTER FUNDS
MULTIPLE CLASS PLAN
This Multiple Class Plan (this "Plan"), dated ___________________, 1999, is
required by Securities and Exchange Commission Rule 18f-3 promulgated under the
Investment Company Act of 1940, as amended (the "1940 Act").
This Plan shall govern the terms and conditions under which CNI Charter
Funds (the "Trust") may issue separate classes of shares representing interests
in the series of the Trust (each a "Fund" and together the "Funds") listed on
APPENDIX A. To the extent that a subject matter herein is covered by the
Trust's Agreement and Declaration of Trust or Bylaws, the Agreement and
Declaration of Trust and Bylaws will control in the event of any inconsistencies
with the descriptions herein.
SECTION 1. RIGHTS AND OBLIGATIONS.
Except as set forth herein, all classes of shares issued by a Fund shall
have identical voting, dividend, liquidation and other rights, preferences,
powers, restrictions, limitations, qualifications, designations, and terms and
conditions. The only differences among the various classes of shares relate
solely to the following: (a) each class may be subject to different class
expenses and sales charges as discussed under Section 3 of this Plan; (b) each
class may bear a different identifying designation; (c) each class has exclusive
voting rights with respect to matters solely affecting such class (except as set
forth in Section 6 below); (d) each class may have different exchange
privileges; and (e) each class may provide for the automatic conversion of that
class into another class.
SECTION 2. CLASSES OF SHARES AND DESIGNATION THEREOF.
Each Fund may offer any or all of the following classes of shares:
(a) CLASS A SHARES. "Class A Shares" will be offered with no sales
charges or transactions fees. Class A Shares will be subject to a Rule
12b-1 distribution fee of up to an annual rate of 0.50% and an ongoing
shareholder servicing fee of up to an annual rate of 0.25 % of average
daily net assets attributable to the Class A Shares. Class A Shares do not
automatically convert into shares of any other class.
(b) CLASS S SHARES. "Class S Shares" will be offered with no sales
charges or transactions fees. Class S Shares will be subject to a Rule
12b-1 distribution fee of up to an annual rate of 0.50% and an ongoing
shareholder servicing fee of up to an annual rate of 0.25 % of average
daily net assets attributable to the Class S Shares. Class S Shares do not
automatically convert into shares of any other class.
1
<PAGE>
(c) INSTITUTIONAL CLASS SHARES. "Institutional Class Shares" will be
offered with no sales charges or transactions fees. Institutional Class
Shares will not be subject to a Rule 12b-1 distribution fee but will be
subject to a shareholder servicing fee of up to an annual rate of 0.25% of
average daily net assets attributable to the Institutional Class Shares.
Institutional Class Shares do not automatically convert into shares of any
other class.
SECTION 3. ALLOCATION OF EXPENSES.
(a) CLASS EXPENSES. Each class of shares may be subject to different
class expenses consisting of: (1) front-end sales charges or contingent
deferred sales charges; (2) Rule 12b-1 plan distribution fees and
shareholder service fees, if applicable to a particular class; (3) transfer
agency and other recordkeeping costs to the extent allocated to a
particular class; (4) Securities and Exchange Commission ("SEC") and blue
sky registration fees incurred separately by a particular class; (5)
litigation or other legal expenses relating solely to a particular class;
(6) printing and postage expenses related to the preparation and
distribution of class-specific materials such as shareholder reports,
prospectuses and proxies to shareholders of a particular class; (7)
expenses of administrative personnel and services as required to support
the shareholders of a particular class; (8) audit or accounting fees or
expenses relating solely to a particular class; (9) Trustee fees and
expenses incurred as a result of issues relating solely to a particular
class and (10) any other expenses subsequently identified that should be
properly allocated to a particular class, which shall be approved by the
Board of Trustees; (collectively, the "Class Expenses").
(b) OTHER EXPENSES. Except for the Class Expenses discussed above (which
will be allocated to the appropriate class), all expenses incurred by each
Fund will be allocated to each class of shares on the basis of the net
asset value of each class to the net asset value of the Trust or the Fund,
as the case may be.
(c) WAIVERS AND REIMBURSEMENTS OF EXPENSES. City National Bank (the
"Manager") and any provider of services to the Funds may waive or reimburse
the expenses of a particular class or classes, provided, however, that such
waiver shall not result in cross-subsidization between classes.
SECTION 4. ALLOCATION OF INCOME.
The Funds will allocate income and realized and unrealized capital gains
and losses based on the relative net assets of each class of shares.
SECTION 5. EXCHANGE PRIVILEGES.
2
<PAGE>
A class of shares of a Fund may be exchanged only for the same class of
shares of another Fund. All exchanges will be subject to such conditions as may
be imposed from time to time as disclosed in APPENDIX B.
SECTION 6. AUTOMATIC CONVERSIONS.
At this time, no class of shares will convert automatically into any other
class of shares. Any future implementation of this conversion feature is
subject to the continuing availability of a ruling or regulations of the
Internal Revenue Service, or of an opinion of counsel or tax adviser, stating
that the conversion of one class of shares to another does not constitute a
taxable event under federal income tax law. The conversion feature may be
suspended if such a ruling, regulation or opinion is not available.
SECTION 7. EFFECTIVE WHEN APPROVED.
This Plan shall not take effect until a majority of the Trustees of the
Trust, including a majority of the Trustees who are not interested persons of
the Trust, find that the Plan, as proposed and including the expense
allocations, is in the best interests of each class individually and the Trust
as a whole.
SECTION 8. AMENDMENTS.
This Plan may not be amended to materially change the provisions of this
Plan unless such amendment is approved in the manner specified in Section 7
above.
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APPENDIX A TO
MULTIPLE CLASS PLAN
OF
CNI CHARTER FUNDS
MULTIPLE CLASS FUNDS
FUNDS
CNI Charter Money Market Fund
CNI Charter Government Fund
CNI Charter California Tax-Exempt Fund
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APPENDIX B TO
MULTIPLE CLASS PLAN
OF
CNI CHARTER FUNDS
EXCHANGE PRIVILEGES
SECTION 1. TERMS AND CONDITIONS OF EXCHANGES.
Shareholders of the Funds discussed herein may participate in exchanges as
described below. An exchange is permitted only in the following circumstances:
(a) if two Funds offer more than one class of shares, the exchange must be
between the same class of shares (E.G., Class A Shares of one Fund cannot
be exchanged for Class S Shares of another Fund, nor can Class A Shares of
one Fund be exchanged for Class S Shares of that same Fund);
(b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the Fund acquired through
such exchange;
(c) the shares of the Fund acquired through exchange must be qualified for
sale in the state in which the shareholder resides;
(d) the exchange must be made between accounts having identical
registrations and addresses;
(e) the full amount of the purchase price for the shares being exchanged
must have already been received by the Fund;
(f) the account from which shares have been exchanged must be coded as
having a certified taxpayer identification number on file or, in the
alternative, an appropriate IRS Form W-8 (certificate of foreign status) or
Form W-9 (certifying exempt status) must have been received by the Fund;
(g) newly acquired shares (through either an initial or subsequent
investment) are held in an account for at least ten days, and all other
shares are held in an account for at least one day, prior to the exchange;
and
(h) certificates (if any) representing shares must be returned before
shares can be exchanged.
Because excessive exchanges can harm a Fund's performance, the Funds
reserve the right to terminate, either temporarily or permanently, exchange
privileges of any shareholder who makes more than four exchanges out of any one
Fund during a twelve-month period and to
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refuse an exchange into a Fund from which a shareholder has redeemed shares
within the previous 90 days (accounts under common ownership or control and
accounts with the same taxpayer identification number will be counted
together. This limit may be modified for accounts in certain institutional
retirement plans to conform to plan exchange limits and U.S. Department of
Labor regulations (for those limits, see plan materials). The Funds reserve
the right to refuse exchanges by any person or group if, in the Manager's
judgment, a Fund would be unable effectively to invest the money in
accordance with its investment objective and policies, or would otherwise be
potentially adversely affected. A shareholder's exchanges may be restricted
or refused if a Fund receives, or the Manager anticipates, simultaneous
orders affecting significant portions of that Fund's assets and, in
particular, a pattern of exchanges coinciding with a "market timing"
strategy. Although the Funds attempt to provide prior notice to affected
shareholders when it is reasonable to do so, they may impose these
restrictions at any time. The Funds reserve the right to terminate or modify
the exchange privileges of Fund shareholders in the future.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY SUCH FUNDS OR BY THE MANAGER OR DISTRIBUTOR AT
ANY TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares to be exchanged will be redeemed at their net asset value as
determined at the close of business on the day that an exchange request in
proper form is received, as described in the applicable prospectus. Exchange
requests received after the required time will result in the redemption of
shares at their net asset value as determined at the close of business on the
next business day.
In the event of unusual market conditions, a Fund reserves the right to
reject any exchange request if, in the judgment of the Manager, the number of
requests or the total value of the shares that are the subject of the exchange
are likely to place a material burden on a Fund. For example, the number of
exchanges by investment managers making market-timing exchanges may be limited.
SECTION 2. FEES.
There is no fee for exchanges among the Funds.
SEE THE APPLICABLE PROSPECTUS FOR MORE INFORMATION ABOUT SHARE EXCHANGES.
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