CNI CHARTER FUNDS, 485APOS, 2000-06-12

CNI CHARTER FUNDS
485APOS, 2000-06-12

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<PAGE>

As filed with the Securities and Exchange Commission on June 12, 2000
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. 14
and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 15

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 ___________ pursuant to Rule 485(b)
-----
60 days after filing pursuant to Rule 485(a)(1)
-----
X 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.
JACOB M. SIMON, ESQ.
Paul, Hastings, Janofsky & Walker LLP
345 California Street
San Francisco, California 94104
(415) 835-1600

<PAGE>

CNI 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 Institutional Class shares of the CNI
Charter Technology Growth Fund

Part A - Prospectus for the Class A shares of the CNI Charter
Technology Growth Fund

Part B - Statement of Additional Information for the CNI Charter
Technology Growth Fund

Part C - Other Information

Signature Page

Exhibits

<PAGE>

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PART A

PROSPECTUS FOR
INSTITUTIONAL CLASS SHARES OF

CNI CHARTER TECHNOLOGY GROWTH FUND

---------------------------------------------------------------------

<PAGE>
[LOGO]

TECHNOLOGY GROWTH FUND
INSTITUTIONAL CLASS

PROSPECTUS
DATED , 2000

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 FDIC INSURED. MUTUAL FUND SHARES ARE
NOT BANK DEPOSITS, NOR ARE THEY OBLIGATIONS OF, OR GUARANTEED BY,
CITY NATIONAL BANK. INVESTING IN MUTUAL FUNDS INVOLVES RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
<PAGE>
TABLE OF CONTENTS

<TABLE>
<S> <C>
Overview........................................... 2

Management of the Fund............................. 8

Additional Investment Strategies and Related
Risks............................................ 10

Account Policies................................... 12

Understanding Earnings and Taxes................... 13

How to Buy and Sell Shares......................... 15

Important Terms to Know............................ 19

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.

This Prospectus offers Institutional Class shares of the Fund. Only financial
institutions and financial intermediaries may purchase Institutional Class
shares for their own account or on behalf of their customers. 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.

1
<PAGE>
OVERVIEW

OUR GOAL

The Fund seeks to provide long-term capital appreciation by investing
primarily in U.S. corporations and U.S. dollar denominated American
Depository Receipts of foreign corporations with the potential for growth
which engage in technology-focused businesses. The goal of the Fund can
only be changed with shareholder approval.

PRINCIPAL STRATEGY

We purchase a diversified portfolio at least 65% of which consists of
securities of U.S. corporations and U.S. dollar denominated American
Depository Receipts of foreign corporations that are engaged in the
production, distribution and development of products or services based on
technology and which the Fund's investment manager believes should
benefit significantly from advances or improvements in technology. The
investment manager uses a combination of quantitative and fundamental
analysis to select companies with share price growth potential that may
not be recognized by the market at large. The companies generally:

- have or are expected to develop products, processes or services
that should provide significant technological advancements or
improvements, and/or

- rely extensively on technology in connection with their
operations or services.

2
<PAGE>
The Fund will be diversified across a number of sectors and industries
within the technology area, and will not concentrate its investments in
any particular industry or group of related industries. As a result, the
Fund may have more flexibility to invest in companies that the investment
manager believes should benefit from advancements or improvements in
technology in a number of industries. Nevertheless, the Fund may hold a
significant portion of its assets in industries such as electronics, the
Internet, aerospace/defense, biotechnology, computers, office/business
equipment, semiconductors, fiber optics, software, telecommunications,
telecommunications equipment and technology consulting.

The Fund may invest substantially all of its assets in common stocks. The
Fund may also engage in futures and options transactions for hedging and
risk management purposes.

3
<PAGE>
PRINCIPAL RISKS OF INVESTING IN OUR FUND

As with any mutual fund, there are risks to investing. We cannot
guarantee that we will meet our investment goal. The Fund may expose you
to certain risks that could cause you to lose money. Here are the
principal risks to consider:

MARKET RISK -- By investing in stocks, the Fund will expose you to risks
that could cause you to lose money, particularly a sudden decline in a
holding's share price or an overall decline in the stock market. As with
any stock fund, the value of your investment in the Fund will fluctuate
on a day-to-day and a cyclical basis with movements in the stock market,
as well as in response to the activities of individual companies in which
the Fund invests. In addition, individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The Fund is also subject to the risk that its principal
market segment, technology growth stocks, may underperform other equity
market segments or the market as a whole. Foreign stocks tend to be more
volatile than U.S. stocks, and are subject to risks that are not
typically associated with domestic stocks.

TECHNOLOGY RISK -- Companies in the rapidly changing field of technology
face special risks. For example, their products or services may not prove
commercially successful or may become obsolete quickly. Technology
companies may also be subject to rapidly changing and uncertain
governmental regulation and policies which may have a material adverse
effect on these companies. Additionally, companies in this area may be
subject to high research and development expenses and intense competitive
pressures, and are dependent upon consumer and business acceptance of new
technologies. Because of these risks, the value of the Fund's shares may
be susceptible to greater risk and market fluctuation than an investment
in a fund that invests in a broader range of portfolio securities not
concentrated in any particular area. As such, the Fund is not an
appropriate investment for individuals who are not long-term investors
and who, as their primary objective, require safety of principal or
stable income from their investments.

4
<PAGE>
PAST PERFORMANCE

As of the date of this prospectus, Institutional Class shares of the Fund
have not been offered for sale. Returns for the Institutional Class
shares will be presented after January 1, 2002, when the Institutional
Class shares will have been in operation for one complete calendar year
(I.E., January-December).

5
<PAGE>
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
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)

<TABLE>
<S> <C> <C>
Management Fee* 0.85%
Other Expenses
Shareholder Servicing Fee 0.25%
Other Fund Expenses** 0.24%
Total Other Expenses** 0.49%
-----
Total Annual Fund Operating Expenses*** 1.34%
</TABLE>

* The "Management Fee" is an annual fee, payable monthly out of the Fund's
net assets.

** Estimated for the current fiscal year.

*** The "Total Annual Fund Operating Expenses" is an estimate and may be
higher or lower than that outlined above. The investment manager has
voluntarily agreed to limit its fees or reimburse the Fund for expenses
to the extent necessary to keep Total Annual Fund Operating Expenses at
or below 1.20%. Any fee reductions or reimbursements may be repaid to the
investment manager within 3 years after they occur if such repayments can
be achieved within the Fund's then current expense limit, if any, for
that year and if certain other conditions are satisfied.

6
<PAGE>
EXAMPLE

The Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual 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 remain the same. The Example should not be
considered a representation of past or future expenses or performance.
Although your actual costs may be higher or lower, based on these
assumptions your costs would be:

<TABLE>
<CAPTION>
1 Year 3 Years
--------------- -------
<S> <C>
$136 $425
</TABLE>

7
<PAGE>
MANAGEMENT OF THE FUND

INVESTMENT MANAGER

City National Investments ("CNI"), the trust and investment division of
City National Bank ("CNB"), is the Fund's investment manager. As
investment manager, CNI provides the Fund with investment management
services. CNI has provided trust and fiduciary services to individuals
and businesses for over 30 years. CNI currently provides investment
management services to individuals, pension and profit sharing plans,
endowments, and foundations. As of March 31, 2000, CNI had approximately
$14.9 billion in assets under administration, which includes $4.8 billion
in assets under management.

CNB, founded in the early 1950's, is a federally chartered commercial
bank with approximately $8.4 billion in assets as of March 31, 2000. It
is a wholly-owned subsidiary of City National Corporation, a New York
Stock Exchange listed company. CNB's address is City National Center, 400
North Roxbury Drive, Beverly Hills, California 90210.

CNI receives for its investment management services a fee equal to 0.85%
of the Fund's average daily net assets.

PORTFOLIO MANAGEMENT

All investment decisions for the Fund are made by a team of investment
professionals, CNI's Equity Team, all of whom take an active part in the
decisionmaking process.

8
<PAGE>
ADMINISTRATOR, FUND ACCOUNTANT AND TRANSFER AGENT

SEI Investments Mutual Funds Services (the "Administrator") serves as
administrator and fund accountant to the Fund. The Administrator is
located at One Freedom Valley Drive, Oaks, Pennsylvania 19456. Pursuant
to a separate agreement with the Administrator, CNB performs
sub-administration services on behalf of the Fund, for which it receives
a fee paid by the Administrator at the annual rate of up to 0.075% of the
average daily net assets of the Fund. SEI Investments Fund Management
(the "Transfer Agent") serves as transfer agent for the Fund. The
Transfer Agent is located at 530 East Swedesford Road, Wayne,
Pennsylvania 19087. Both 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.

9
<PAGE>
ADDITIONAL INVESTMENT STRATEGIES AND RELATED RISKS

DEFENSIVE INVESTMENTS -- The securities in which the Fund invests and the
strategies described in this Prospectus are those the Fund uses under
normal conditions. At the discretion of the Fund's portfolio manager(s),
we may invest up to 100% of the Fund's assets in cash or cash equivalents
for temporary defensive purposes. The Fund is not required or expected to
take such a defensive posture. But if used, such a stance may help the
Fund minimize or avoid losses during adverse market, economic or
political conditions. During such a period, the Fund may not achieve its
investment objective. For example, should the market for technology
growth stocks advance during this period, the Fund may not participate as
much as it would have if it had been more fully invested in these stocks.

SMALLER CAPITALIZED COMPANIES -- The investment manager believes that
smaller capitalized companies generally have greater earnings and sales
growth potential than larger capitalized companies. The level of risk
will be increased to the extent that the Fund has significant exposure to
smaller capitalized or unseasoned companies (those with less than a
three-year operating history). Investments in smaller capitalized
companies may involve greater risks, such as limited product lines,
markets and financial or managerial resources. In addition, less
frequently-traded securities may be subject to more abrupt price
movements than securities of larger capitalized companies.

FOREIGN SECURITIES -- Foreign investments may be subject to risks that
are not typically associated with investing in U.S. companies or markets.
For example, such investment may be adversely affected by changes in
currency rates and exchange control regulations, political and economic
developments and the possibility of seizure or nationalization of
companies, or the imposition of withholding taxes on income. In addition,
foreign corporations are generally subject to accounting standards which
are different and less rigorous than U.S. standards. Foreign markets also
tend to be more volatile than the U.S. market due to economic and
political instability and regulatory conditions in some countries.
Although the Fund will only invest in U.S. dollar denominated American
Depository Receipts, the securities underlying the Receipts will
generally be denominated in foreign currencies, whose value may decline
against the U.S. dollar.

10
<PAGE>
PORTFOLIO TURNOVER -- We will sell a security when we believe it is
appropriate to do so, regardless of how long the Fund has owned that
security. Buying and selling securities generally involves some expense
to the Fund, such as commissions paid to brokers and other transaction
costs. By selling a security, the Fund may realize taxable capital gains
that it will subsequently distribute to shareholders. Generally speaking,
the higher the Fund's annual portfolio turnover, the greater its
brokerage costs and the greater the likelihood that it will realize
taxable capital gains. Increased brokerage costs may adversely affect the
Fund's performance. Also, unless you are a tax-exempt investor or you
purchase shares through a tax-deferred account, the distribution of
capital gains may affect your after-tax return. Annual portfolio turnover
of 100% or more is considered high. We anticipate typical annual
portfolio turnover of less than 100% for the Fund.

11
<PAGE>
ACCOUNT POLICIES

HOW WE PRICE SHARES -- How and when we calculate the Fund's price or net
asset value ("NAV") determines the price at which you will buy or sell
shares. We calculate the Fund's NAV by dividing the total net value of
its assets by the number of outstanding shares. We base the value of the
Fund's investments on their market value, usually the last price reported
for each security before the close of market that day. A market price may
not be available for securities that trade infrequently. Occasionally, an
event that affects a security's value may occur after the market closes.
In this case, we, subject to the supervision of the Fund's Board of
Trustees, will make a good-faith estimate of the security's "fair value,"
which may be higher or lower than the security's closing price in its
relevant market.

WHEN SHARES ARE PRICED -- We calculate the NAV of the Fund after the
close of trading on the New York Stock Exchange (the "NYSE") every day
the NYSE is open. Shares may be purchased on any day that the New York
Stock Exchange and the Federal Reserve are open for business. Shares,
however, cannot be purchased by Federal Reserve wire on days when either
the New York Stock Exchange or Federal Reserve is closed. The NYSE
usually closes at 4:00 p.m. Eastern time on weekdays, except for
holidays. More details about how we calculate the Fund's NAV are in the
Statement of Additional Information.

SHAREHOLDER SERVICES -- The Fund has adopted a shareholder service plan
that allows the Fund to pay fees for services provided to Institutional
Class shareholders. Because these fees are paid out of the Fund's assets
continuously, over time these fees will increase the cost of your
investment. Shareholder Servicing fees under the plan, as a percentage of
average daily net assets, are 0.25% for Institutional Class shares of the
Fund.

If you have any questions about the Fund, please call the Fund at
1-888-889-0799.

12
<PAGE>
UNDERSTANDING EARNINGS AND TAXES

DIVIDENDS AND DISTRIBUTIONS -- IRS rules require that the Fund distribute
substantially all of its net investment income and capital gains, if any,
to shareholders. You may receive income dividends and capital-gain
distributions for which you will owe taxes even if you choose to reinvest
the dividends and distributions (unless you invest solely through a
tax-advantaged account such as an IRA or a 401(k) plan). Income dividends
and capital-gain distributions are paid to all shareholders who maintain
accounts with the Fund as of each dividend or distribution record date.

TAX CONSIDERATIONS -- Capital gains may be taxable at different rates
depending upon the length of time the Fund holds its assets. We will
inform you about the character of any dividends and capital gains upon
payment. After the close of each calendar year, we will advise you of the
tax status of distributions. The Fund's distributions, whether received
in cash or reinvested, may be taxable. Any redemption of the Fund's
shares or any exchange of the Fund's shares for another Fund will be
treated as a sale, and any gain on the transaction may be taxable. BE
SURE TO CONSULT YOUR TAX ADVISOR ABOUT THE SPECIFIC TAX IMPLICATIONS OF
YOUR INVESTMENTS. FOR ADDITIONAL INFORMATION REGARDING TAX
CONSIDERATIONS, SEE THE SAI.

DISTRIBUTION OPTIONS -- We will automatically reinvest your dividends in
additional full or fractional Fund shares, unless you instruct us 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 we receive your written notice. To cancel your
election, please send us another written notice. Proceeds from
distributions will normally be wired to your broker-dealer or financial
institution on the business day after distributions are credited to your
account.

13
<PAGE>
DECLARING AND PAYING DIVIDENDS -- We will declare and pay dividends, if
any, on the last business day of each calendar quarter, and pay net
capital gain, if any, in the last quarter of each calendar year.
Following its fiscal year end (October 31), the Fund may make additional
distributions to avoid the imposition of a tax.

BACKUP WITHHOLDING -- You must provide your broker-dealer or 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%.

HOW TO AVOID "BUYING A DIVIDEND" -- If you plan to purchase shares in the
Fund, check if it is planning to make a distribution in the near future.
If you do not check, and you buy shares of the Fund just before a
distribution, you'll pay full price for the shares but receive a portion
of your purchase price back as a taxable distribution. This is called
'buying a dividend.' Unless you hold the Fund in a tax-deferred account,
you will have to include the distribution in your gross income for tax
purposes, even though you may have not participated in the Fund's
appreciation.

14
<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;

- any other approved financial institution; or

- the transfer agent as described below.

ORDERING THROUGH A BROKER-DEALER OR FINANCIAL INSTITUTION (EACH AN
"AUTHORIZED INSTITUTION") -- You may purchase shares through accounts
with Authorized 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 Authorized
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 Authorized
Institution.

ORDERING THROUGH THE TRANSFER AGENT -- Financial institutions and
intermediaries may purchase shares of the Fund by placing orders directly
with the Transfer Agent. Financial institutions and intermediaries should
call the Transfer Agent at 1-888-889-0799 for further information and to
coordinate the establishment of an account directly with the Transfer
Agent.

WHEN ORDERS WILL BE COMPLETED -- You may have to transmit purchase or
exchange requests to your Authorized Institution at an earlier time for
your transaction to become effective that day. This allows the Authorized
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 Authorized Institution, you should contact your Authorized
Institution directly.

15
<PAGE>
If we receive your purchase order by close of trading on the NYSE, we
will execute your purchase order at that day's NAV. If we receive your
purchase order after the close of trading on the NYSE, we will execute
your purchase order at the next day's NAV. Your shares will be bought
only after we receive a properly completed order with full payment.

PURCHASE MINIMUMS -- You may buy shares of the Fund for an initial amount
of $100,000. This is the required minimum account balance. You may buy
additional shares for $1,000 or more.

MINIMUM ACCOUNT BALANCES -- If your account balance in the Fund 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 involuntary redemption
of your shares.

In order to reach or maintain these purchase and account minimums, your
Authorized Institution may aggregate your purchase with the purchases of
its other clients. Further exceptions to the purchase and account
minimums may be made at our discretion. 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 Authorized Institution
about their acceptable methods of payment.

BUYING SHARES

FIRST TIME AND SUBSEQUENT PURCHASES -- If you do not place your order
through the Transfer Agent as explained above, you will have to follow
your Authorized Institution's procedures for transacting with the Fund.
Contact your Authorized Institution for more information.

BY WIRE -- If you order through the Transfer Agent, you may call the Fund
at 1-888-889-0799 to buy shares by wire. Wires must be received by us
through the Federal Reserve wire system before it closes (generally, 4:00
p.m. Eastern time) or we will not be able to process your order that day.
If you buy shares

16
<PAGE>
through your Authorized Institution, your wire may have to be received at
an earlier time to process your order that day and your Authorized
Institution may charge its own wiring fees.

SELLING SHARES

GENERAL INFORMATION -- If you have bought shares through the Transfer
Agent, you may sell those shares by calling the Transfer Agent at
1-888-889-0799. You may also sell your shares through your Authorized
Institution. You will have to follow their procedures. Contact your
Authorized 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 determine how many shares you wish
to sell, we may not execute your order. We will provide you or your
Authorized Institution with notice of any deficiency in your sell request
so that you may correct the deficiency. You will receive the next
calculated NAV once your sell request is corrected.

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, as permitted by federal
securities laws. Please see the SAI for a more detailed discussion.

CONFIRMING AUTHENTICITY -- We will make reasonable efforts to verify that
a telephone 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.

17
<PAGE>
We reserve the right to refuse a telephone order if we cannot reasonably
confirm the authenticity of the instructions. You may, however, redeem
your shares by writing to the Fund or by following your Authorized
Institution's procedures. Contact your Authorized Institution or the Fund
at 1-888-889-0799.

LIABILITY -- We may be liable for losses from unauthorized or fraudulent
orders only if reasonable steps are not taken to verify a telephone
order's authenticity.

EXCHANGING SHARES

You may exchange shares of the Fund for Institutional Class shares of any
other CNI Charter Fund in which you are eligible to invest. You should
contact the Authorized Institution through which you purchased your
shares, or the Transfer Agent, if applicable, and follow its instructions
to place an exchange order. When you exchange shares, you are really
selling your shares and buying other shares, so your sale price and
purchase price will be based on the NAV next calculated after we receive
your exchange request.

18
<PAGE>
IMPORTANT TERMS TO KNOW

"We", "Us" and "Our" means the CNI Charter Funds.

"You" and "Your" means the prospective investor or current shareholder.

19
<PAGE>
FOR MORE INFORMATION

CNI CHARTER TECHNOLOGY GROWTH 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). In the Fund's Annual Report, you will find a
discussion of the market conditions and investment strategies that significantly
affected the Fund's performance during its last fiscal year. Additional
information about the Fund's investments is available in the Fund's Annual and
Semi-Annual Reports to shareholders. To receive a free copy of this Prospectus,
the SAI, or the Annual or Semi-Annual Reports (when available), please contact:

SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
1-888-889-0799

INFORMATION ABOUT THE FUND MAY BE REVIEWED AND COPIED:

- at the SEC's Public Reference Room in Washington, D.C. at 1-202-942-8090;

- on the EDGAR database 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, or by electronic request at
[email protected].

IF YOU HAVE QUESTIONS ABOUT THE FUND, PLEASE CALL 1-888-889-0799.

The Fund's Investment Company Act file number: 811-07923.

[LOGO]

TECHNOLOGY GROWTH FUND
INSTITUTIONAL CLASS

PROSPECTUS
DATED , 2000

CNI-F-000-00
<PAGE>

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PART A

PROSPECTUS FOR
CLASS A SHARES OF

CNI CHARTER TECHNOLOGY GROWTH FUND

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<PAGE>
[LOGO]

TECHNOLOGY GROWTH FUND
CLASS A

PROSPECTUS
DATED , 2000

INVESTMENT MANAGER:
CITY NATIONAL INVESTMENTS
A division of City National Bank

------------------------------------------------------------------------------

<TABLE>
<S> <C>
Overview........................................... 2

Management of the Fund............................. 8

Additional Investment Strategies and Related
Risks............................................ 10

Account Policies................................... 12

Understanding Earnings and Taxes................... 14

How to Buy and Sell Shares......................... 16

Important Terms to Know............................ 19

For More Information ....................... back cover
</TABLE>

This Prospectus offers Class A shares of the Technology Growth Fund (the
"Fund"). Class A shares are intended for individual investors, partnerships,
corporations and other accounts that have diversified investment needs. 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.

1
<PAGE>
OVERVIEW

OUR GOAL

PRINCIPAL STRATEGY

- have or are expected to develop products, processes or services
that should provide significant technological advancements or
improvements, and/or

- rely extensively on technology in connection with their
operations or services.

The Fund may invest substantially all of its assets in common stocks. The
Fund may also engage in futures and options transactions for hedging and
risk management purposes.

3
<PAGE>
PRINCIPAL RISKS OF INVESTING IN OUR FUND

4
<PAGE>
PAST PERFORMANCE

As of the date of this prospectus, Class A shares of the Fund have not
been offered for sale. Returns for the Class A shares will be presented
after January 1, 2002, when the Class A shares will have been in
operation for one complete calendar year (I.E., January-December).

5
<PAGE>
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
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)

<TABLE>
<S> <C> <C>
Management Fee* 0.85%
Distribution (12b-1) Fee 0.30%
Other Expenses
Shareholder Servicing Fee 0.25%
Other Fund Expenses** 0.24%
Total Other Expenses** 0.49%
-----
Total Annual Fund Operating Expenses*** 1.64%
</TABLE>

* The "Management Fee" is an annual fee, payable monthly out of the Fund's
net assets.

** Estimated for the current fiscal year.

*** The "Total Annual Fund Operating Expenses" is an estimate and may be
higher or lower than that outlined above. The investment manager has
voluntarily agreed to limit its fees or reimburse the Fund for expenses
to the extent necessary to keep Total Annual Fund Operating Expenses at
or below 1.50%. Any fee reductions or reimbursements may be repaid to the
investment manager within 3 years after they occur if such repayments can
be achieved within the Fund's then current expense limit, if any, for
that year and if certain other conditions are satisfied.

6
<PAGE>
EXAMPLE

<TABLE>
<CAPTION>
1 Year 3 Years
--------------- -------
<S> <C>
$167 $517
</TABLE>

7
<PAGE>
MANAGEMENT OF THE FUND

INVESTMENT MANAGER

CNI receives for its investment management services a fee equal to 0.85%
of the Fund's average daily net assets.

PORTFOLIO MANAGEMENT

All investment decisions for the Fund are made by a team of investment
professionals, CNI's Equity Team, all of whom take an active part in the
decisionmaking process.

8
<PAGE>
ADMINISTRATOR, FUND ACCOUNTANT AND TRANSFER AGENT

DISTRIBUTOR

9
<PAGE>
ADDITIONAL INVESTMENT STRATEGIES AND RELATED RISKS

11
<PAGE>
ACCOUNT POLICIES

DISTRIBUTION PLAN -- The Fund has adopted a plan (the "Plan") for its
Class A shares under Rule 12b-1 of the Investment Company Act. The Plan
allows the Fund to pay distribution fees of 0.30% of average daily net
assets for the sale and distribution of its shares. Although the Fund
does not have a front-end load, because the distribution fees are paid
out of the Fund's assets on an on-going basis, over time these fees will
increase the cost of your investment and may cost you more than paying
other types of sales charges.

12
<PAGE>
SHAREHOLDER SERVICES -- The Fund has adopted a shareholder service plan
that allows the Fund to pay fees for services provided to Class A
shareholders. Because these fees are paid out of the Fund's assets
continuously, over time these fees will increase the cost of your
investment. Shareholder Servicing fees under the plan, as a percentage of
average daily net assets, are 0.25% for Class A shares of the Fund.

If you have any questions about the Fund, please call the Fund at
1-888-889-0799.

13
<PAGE>
UNDERSTANDING EARNINGS AND TAXES

DECLARING AND PAYING DIVIDENDS -- We will declare and pay dividends, if
any, on the last business day of each calendar quarter, and pay net
capital gain, if any,

14
<PAGE>
in the last quarter of each calendar year. Following its fiscal year end
(October 31), the Fund may make additional distributions to avoid the
imposition of a tax.

HOW TO AVOID "BUYING A DIVIDEND" -- If you plan to purchase shares in the
Fund, check if it is planning to make a distribution in the near future.
If you do not check, and you buy shares of the Fund just before a
distribution, you'll pay full price for the shares but receive a portion
of your purchase price back as a taxable distribution. This is called
"buying a dividend." Unless you hold the Fund in a tax-deferred account,
you will have to include the distribution in your gross income for tax
purposes, even though you may have not participated in the Fund's
appreciation.

15
<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 (EACH AN
"AUTHORIZED INSTITUTION") -- You may purchase shares through accounts
with Authorized 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. Your Authorized
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 Authorized
Institution.

If we receive your purchase order through your Authorized Institution by
close of trading on the NYSE, we will execute your purchase order at that
day's NAV. If we receive your purchase order after close of trading on
the NYSE, we will execute your purchase order at the next day's NAV. Your
shares will be bought only after we receive a properly completed order
with full payment.

16
<PAGE>
PURCHASE MINIMUMS -- You may buy shares of the Fund for an initial amount
of $100,000. This is the required minimum account balance. You may buy
additional shares for $1,000 or more.

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 Authorized Institution about their acceptable methods of payment.

BUYING SHARES

FIRST TIME AND SUBSEQUENT PURCHASES -- You will have to follow your
Authorized Institution's procedures for transacting with the Fund.
Contact your Authorized Institution for more information.

WIRING FEE -- The Authorized Institution placing your order may charge
its own wiring fees.

SELLING SHARES

GENERAL INFORMATION -- You may sell your shares through your Authorized
Institution. You will have to follow their procedures. Contact your
Authorized 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

17
<PAGE>
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 determine how many shares you wish to sell,
we may not execute your order. We will provide you or your Authorized
Institution with notice of any deficiency in your sell request so that
you may correct the deficiency. You will receive the next calculated NAV
after your sell request is corrected.

EXCHANGING SHARES

You may exchange shares of the Fund for Class A shares of any other CNI
Charter Fund in which you are eligible to invest. You should contact the
Authorized Institution through which you purchased your shares, or the
Transfer Agent, if applicable, and follow its instructions to place an
exchange order. When you exchange shares, you are really selling your
shares and buying other shares, so your sale price and purchase price
will be based on the NAV next calculated after we receive your exchange
request.

18
<PAGE>
IMPORTANT TERMS TO KNOW

"We", "Us" and "Our" means the CNI Charter Funds.

"You" and "Your" means the prospective investor or current shareholder.

19
<PAGE>
FOR MORE INFORMATION

CNI CHARTER TECHNOLOGY GROWTH FUND

SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
1-888-889-0799

INFORMATION ABOUT THE FUND MAY BE REVIEWED AND COPIED:

- at the SEC's Public Reference Room in Washington, D.C. at 1-202-942-8090;

- on the EDGAR database 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, or by electronic request at
[email protected].

IF YOU HAVE QUESTIONS ABOUT THE FUND, PLEASE CALL 1-888-889-0799.

The Fund's Investment Company Act file number: 811-07923.

[LOGO]

TECHNOLOGY GROWTH FUND
CLASS A

PROSPECTUS
DATED , 2000

CNI-F-000-00
<PAGE>

---------------------------------------------------------------------

PART B

STATEMENT OF ADDITIONAL INFORMATION

CNI CHARTER TECHNOLOGY GROWTH FUND

---------------------------------------------------------------------

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

CNI CHARTER FUNDS
400 North Roxbury Drive, Beverly Hills, California 90210

TECHNOLOGY GROWTH FUND

__________, 2000

This Statement of Additional Information ("SAI") is not a prospectus. It
should be read in conjunction with the Prospectuses for the Fund dated
____________, 2000, which may be amended from time to time, for the CNI
Charter Technology Growth Fund (the "Fund"). The Fund is a diversified
investment portfolio of the CNI Charter Funds (the "Trust"), an open-end,
management investment company. City National Bank serves as Investment
Manager to the Fund.

To obtain a free copy of the above-referenced prospectuses, please contact SEI
Investments Fund Management (the "Transfer Agent") at 1-888-889-0799.

<PAGE>

PAGE
----

INVESTMENT TECHNIQUES..........................................................1

INVESTMENT RESTRICTIONS........................................................9

RISK CONSIDERATIONS...........................................................11

MANAGEMENT OF THE TRUST.......................................................14

PORTFOLIO TRANSACTIONS AND TURNOVER...........................................19

DISTRIBUTIONS AND TAXES.......................................................20

SHARE PRICE CALCULATION.......................................................23

DISTRIBUTION PLAN.............................................................25

SHAREHOLDER SERVICE AGREEMENTS................................................25

EXPENSES......................................................................26

GENERAL INFORMATION...........................................................26

PERFORMANCE INFORMATION.......................................................27

PURCHASE AND REDEMPTION OF SHARES.............................................29

OTHER INFORMATION.............................................................30

FINANCIAL STATEMENTS..........................................................30

APPENDIX - RATINGS OF INVESTMENT SECURITIES..................................A-1

-i-
<PAGE>

INVESTMENT TECHNIQUES

The prospectuses of the Fund show the principal strategy and risks of
investing in the Fund. This Statement of Additional Information shows
additional strategies and risks of the Fund that an investor should also
consider.

EQUITY SECURITIES - The Fund will purchase equity securities. Equity securities
include common stock, preferred stock, warrants or rights to subscribe to common
stock and, in general, any security that is convertible into or exchangeable for
common stock.

Equity securities represent ownership interests in a company or corporation, and
include common stock, preferred stock, and warrants and other rights to acquire
such instruments. Investments in equity securities in general are subject to
market risks that may cause their prices to fluctuate over time. The value of
convertible equity securities is also affected by prevailing interest rates, the
credit quality of the issuer and any call provisions. Fluctuations in the value
of equity securities in which the Fund invests will cause the net asset value of
the Fund to fluctuate.

Investments in small or middle capitalization companies involve greater risk
than is customarily associated with larger, more established companies due to
the greater business risks of small size, limited markets and financial
resources, narrow product lines and the frequent lack of depth of management.
The securities of small or medium-sized companies are often traded
over-the-counter, and may not be traded in volumes typical of securities traded
on a national securities exchange. Consequently, the securities of smaller
companies may have limited market stability and may be subject to more abrupt or
erratic market movements than securities of larger, more established companies
or the market averages in general.

DEPOSITARY RECEIPTS, CONVERTIBLE SECURITIES AND SECURITIES WARRANTS. The Fund
may invest in the securities of foreign issuers in the form of American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("GDRs"), and other similar global instruments available in
emerging markets, or other securities convertible into securities of eligible
issuers. These securities may not necessarily be denominated in the same
currency as the securities for which they may be exchanged. Generally, ADRs in
registered form are designed for use in U.S. securities markets, and EDRs and
other similar global instruments in bearer form are designed for use in European
securities markets. For purposes of the Fund's investment policies, the Fund's
investments in ADRs, EDRs and similar instruments will be deemed to be
investments in the equity securities representing the securities of foreign
issuers into which they may be converted.

INVESTMENT COMPANY SHARES. The Fund will invest in shares of other investment
companies, to the extent permitted by applicable law and subject to certain
restrictions set forth in this SAI. These investment companies typically incur
fees that are separate from those fees incurred directly by the Fund. The Fund's
purchase of such investment company securities results in the layering of
expenses, such that shareholders would indirectly bear a proportionate share of
the operating expenses of such investment companies, including advisory fees, in
addition to paying Fund expenses. Under applicable regulations, the Fund is
prohibited from acquiring the securities of another investment company if, as a
result of such acquisition: (1) the Fund owns more than 3% of the total voting
stock of another company; (2) securities issued by any one investment company
represent more than 5% of the Fund's total assets; or (3) securities (other than
treasury stock) issued by all investment companies represent more than 10% of
the total assets of the Fund.

-1-
<PAGE>

HIGHLY LIQUID INVESTMENTS. The Fund will invest in cash and cash equivalents.
The Fund may invest in bank notes, which are unsecured promissory notes
representing debt obligations that are issued by banks in large denominations.
The Fund may invest in Bankers' acceptances. Bankers' acceptances are bills of
exchange or time drafts drawn on and accepted by a commercial bank. Bankers'
acceptances are issued by corporations to finance the shipment and storage of
goods. Maturities are generally six months or less. The Fund may invest in
certificates of deposit. Certificates of deposit are interest-bearing
instruments with specific maturities. They are issued by banks and savings and
loan institutions in exchange for the deposit of funds and normally can be
traded in the secondary market prior to maturity. Certificates of deposit with
penalties for early withdrawal will be considered illiquid.

FIXED INCOME SECURITIES. The Fund may invest in fixed income securities. Fixed
income securities are debt obligations issued by corporations, municipalities
and other borrowers. The market value of the Fund's fixed income investments
will change in response to interest rate changes and other factors. During
periods of falling interest rates, the values of outstanding fixed income
securities generally rise. Conversely, during periods of rising interest rates,
the values of such securities generally decline. Changes by recognized rating
agencies in the rating of any fixed income security and in the ability of an
issuer to make payments of interest and principal also affect the value of these
investments. Changes in the value of portfolio securities will not necessarily
affect cash income derived from these securities, but will affect the Fund's net
asset value.

VARIABLE AND FLOATING RATE INSTRUMENTS. The Fund may invest in variable and
floating rate instruments. Certain of the obligations purchased by the Fund may
carry variable or floating rates of interest and may involve a conditional or
unconditional demand feature. Such obligations may include variable amount
master demand notes. Such instruments bear interest at rates which are not
fixed, but which vary with changes in specified market rates or indices. The
interest rates on these securities may be reset daily, weekly, quarterly or at
some other interval, and may have a floor or ceiling on interest rate changes.
There is a risk that the current interest rate on such obligations may not
accurately reflect existing market interest rates. A demand instrument with a
demand notice period exceeding seven days may be considered illiquid if there is
no secondary market for such security.

FOREIGN SECURITIES. The Fund may invest in foreign securities. 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.

FUTURES AND OPTIONS ON FUTURES. The Fund may engage in futures and options on
futures. Futures contracts provide for the future sale by one party and purchase
by another party of a specified amount of a specific security at a specified
future time at a specified price. An option on a futures contract gives the
purchaser the right, in exchange for a premium, to assume a position in a
futures contract at a specified exercise price during the term of the option.
The Fund may use futures contracts and related options for bona fide hedging
purposes, to offset changes in

-2-
<PAGE>

the value of securities held or expected to be acquired or be disposed of, to
minimize fluctuations in foreign currencies, or to gain exposure to a particular
market or instrument. The Fund will minimize the risk that it will be unable to
close out a futures contract by only entering into futures contracts that are
traded on national futures exchanges.

An index futures contract is a bilateral agreement pursuant to which two parties
agree to take or make delivery of an amount of cash equal to a specified dollar
amount times the difference between the index value at the close of trading of
the contract and the price at which the futures contract is originally struck.
No physical delivery of the securities comprising the index is made: generally
contracts are closed out prior to the expiration date of the contract.

In order to avoid leveraging and related risks, when the Fund invests in futures
contracts, the Fund will cover positions by depositing an amount of cash or
liquid securities equal to the market value of the futures positions held, less
margin deposits, in a segregated account and that amount will be
marked-to-market on a daily basis.

The Fund may enter into futures contracts and options on futures contracts
traded on an exchange regulated by the Commodities Futures Trading Commission
("CFTC"), so long as, to the extent that such transactions are not for "bona
fide hedging purposes," the aggregate initial margin and premiums on such
positions (excluding the amount by which such options are in the money) do not
exceed 5% of the Fund's net assets.

There are risks associated with these activities, including the following: (1)
the success of a hedging strategy may depend on an ability to predict movements
in the prices of individual securities, fluctuations in markets and movements in
interest rates, (2) there may be an imperfect or no correlation between the
changes in market value of the securities held and the prices of futures and
options on futures, (3) there may not be a liquid secondary market for a futures
contract or option, (4) trading restrictions or limitations may be imposed by an
exchange and (5) government regulations may restrict trading in futures
contracts and options on futures.

The Fund may buy and sell futures contracts and related options to manage
exposure to changing interest rates and securities prices. Some strategies
reduce the Fund's exposure to price fluctuations, while others tend to increase
market exposure. Futures and options on futures can be volatile instruments and
involve certain risks that could negatively impact the Fund's return. No price
is paid upon entering into futures contracts. Instead, the Fund would be
required to deposit an amount of cash or U.S. Treasury securities known as
"initial margin." Subsequent payments, called "variation margin," to and from
the broker, would be made on a daily basis as the value of the future position
varies (a process known as "marked to market"). The margin is in the nature of
performance bond or good-faith deposit on a futures contract. Futures and
options on futures are taxable instruments.

FORWARD FOREIGN CURRENCY CONTRACTS - A forward contract involves an obligation
to purchase or sell a specific currency amount at a future date, agreed upon by
the parties, at a price set at the time of the contract. The Fund may enter into
a contract to sell, for a fixed amount of U.S. dollars or other appropriate
currency, the amount of foreign currency approximately the value of some or all
of the Fund's securities denominated in such foreign currency.

By entering into forward foreign currency contracts, the Fund will seek to
protect the value of its investment securities against a decline in the value of
a currency. However, these forward foreign currency contracts will not eliminate
fluctuations in the underlying prices of the securities. Rather, they simply
establish a rate of exchange which one can obtain at some future

-3-
<PAGE>

point in time. Although such contracts tend to minimize the risk of loss due to
a decline in the value of the hedged currency, they also tend to limit any
potential gain which might result should the value of such currency increase. At
the maturity of a forward contract, the Fund may either sell a portfolio
security and make delivery of the foreign currency, or it may retain the
security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the same currency trader,
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency. The Fund may realize a gain or loss from currency
transactions. The Fund will place assets in a segregated account to assure that
its obligations under forward foreign currency contracts are covered.

ZERO COUPON BONDS. The Fund may invest in zero coupon securities, which are
debt securities issued or sold at a discount from their face value and do not
entitle the holder to any periodic payment of interest prior to maturity, a
specified redemption date or a cash payment date. The amount of the discount
varies depending on the time remaining until maturity or cash payment date,
prevailing interest rates, liquidity of the security and perceived credit
quality of the issuer. Zero coupon securities also may take the form of debt
securities that have been stripped of their unmatured interest coupons, the
coupons themselves and receipts or certificates representing interests in
such stripped debt obligations and coupons. The market prices of zero coupon
securities are generally more volatile than the market prices of
interest-bearing securities and respond more to changes in interest rates
than interest-bearing securities with similar maturities and credit
qualities. The "original issue discount" on the zero coupon bonds must be
included ratably in the income of the Fund as the income accrues even though
payment has not been received. The Fund nevertheless intends to distribute an
amount of cash equal to the currently accrued original issue discount, and
this may require liquidating securities at times they might not otherwise do
so and may result in capital loss.

PRIVATIZATIONS. The Fund may invest in privatizations. Foreign governmental
programs of selling interests in government-owned or -controlled enterprises may
represent opportunities for significant capital appreciation. The ability of
U.S. entities, such as the Fund, to participate in privatizations may be limited
by local law, or the terms for participation may be less advantageous than for
local investors. There can be no assurance that privatization programs will be
successful.

SPECIAL SITUATIONS. The Fund may invest in special situations. The Fund believes
that carefully selected investments in joint ventures, cooperatives,
partnerships, private placements, unlisted securities and similar vehicles
(collectively, "special situations") could enhance their capital appreciation
potential. The Fund also may invest in certain types of vehicles or derivative
securities that represent indirect investments in foreign markets or securities
in which it is impracticable for the Fund to invest directly. Investments in
special situations may be illiquid, as determined by the Investment Manager
based on criteria reviewed by the Board.

WHEN-ISSUED SECURITIES. The Fund may invest in when-issued securities. These
securities involve the purchase of debt obligations on a when-issued basis, in
which case delivery and payment normally take place within 45 days after the
date of commitment to purchase. These securities are subject to market
fluctuation due to changes in market interest rates, and it is possible that the
market value at the time of settlement could be higher or lower than the
purchase price if the general level of interest rates has changed. Delivery of
and payment for these securities may occur a month or more after the date of the
purchase commitment. The Fund will maintain with the custodian a separate
account with liquid securities or cash in an amount at least equal to these
commitments. The interest rate realized on these securities is fixed as of the
purchase date, and no interest accrues to the Fund before settlement. Although
the Fund generally purchases securities on a when-issued or forward commitment
basis with the intention

-4-
<PAGE>

of actually acquiring securities for their portfolios, the Fund may dispose of a
when-issued security or forward commitment prior to settlement if the Investment
Manager deems it appropriate to do so.

The when-issued securities are subject to market fluctuation, and no interest
accrues to the purchaser during this period. The payment obligation and the
interest rate that will be received on the securities are each fixed at the time
the purchaser enters into the commitment. Purchasing obligations on a
when-issued basis is a form of leveraging and can involve a risk that the yields
available in the market when the delivery takes place may actually be higher
than those obtained in the transaction itself. In that case there could be an
unrealized loss at the time of delivery.

OPTIONS ON SECURITIES, SECURITIES INDICES AND CURRENCIES. The Fund may purchase
put and call options on securities in which it has invested, on foreign
currencies represented in its portfolio and on any securities index based in
whole or in part on securities in which the Fund may invest. The Fund also may
enter into closing sales transactions in order to realize gains or minimize
losses on options they have purchased.

The Fund normally will purchase call options in anticipation of an increase in
the market value of securities of the type in which it may invest or a positive
change in the currency in which such securities are denominated. The purchase of
a call option would entitle the Fund, in return for the premium paid, to
purchase specified securities or a specified amount of a foreign currency at a
specified price during the option period.

The Fund may purchase and sell options traded on U.S. and foreign exchanges.
Although the Fund will generally purchase only those options for which there
appears to be an active secondary market, there can be no assurance that a
liquid secondary market on an exchange will exist for any particular option or
at any particular time. For some options, no secondary market on an exchange may
exist. In such event, it might not be possible to effect closing transactions in
particular options, with the result that the Fund would have to exercise its
options in order to realize any profit and would incur transaction costs upon
the purchase or sale of the underlying securities.

Secondary markets on an exchange may not exist or may not be liquid for a
variety of reasons including: (1) insufficient trading interest in certain
options; (2) restrictions on opening transactions or closing transactions
imposed by an exchange; (3) trading halts, suspensions or other restrictions may
be imposed with respect to particular classes or series of options; (4) unusual
or unforeseen circumstances which interrupt normal operations on an exchange;
(5) inadequate facilities of an exchange or the Options Clearing Corporation to
handle current trading volume at all times; or (6) discontinuance in the future
by one or more exchanges for economic or other reasons, of trading of options
(or of a particular class or series of options), in which event the secondary
market on that exchange (or in that class or series of options) would cease to
exist, although outstanding options on that exchange that had been issued by the
Options Clearing Corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms.

The Fund may write (I.E., sell) covered put and call options on securities,
securities indices and currencies in which it may invest. A covered call option
involves the Fund's giving another party, in return for a premium, the right to
buy specified securities owned by the Fund at a specified future date and price
set at the time of the contract. A covered call option serves as a partial hedge
against a price decline of the underlying security. However, by writing a
covered call option, the Fund gives up the opportunity, while the option is in
effect, to realize gain from any price increase (above the option exercise
price) in the underlying security. In addition, the Fund's

-5-
<PAGE>

ability to sell the underlying security is limited while the option is in effect
unless the Fund effects a closing purchase transaction.

The Fund also may write covered put options that give the holder of the option
the right to sell the underlying security to the Fund at the stated exercise
price. The Fund will receive a premium for writing a put option but will be
obligated for as long as the option is outstanding to purchase the underlying
security at a price that may be higher than the market value of that security at
the time of exercise. In order to "cover" put options it has written, the Fund
will cause its custodian to segregate cash, cash equivalents, U.S. Government
securities or other liquid equity or debt securities with at least the value of
the exercise price of the put options. The Fund does not intend to write put
options if the aggregate value of the obligations underlying the put options
exceeds 25% of the Fund's total assets.

There is no assurance that higher than anticipated trading activity or other
unforeseen events might not, at times, render certain of the facilities of the
Options Clearing Corporation inadequate, and result in the institution by an
exchange of special procedures that may interfere with the timely execution of
the Fund's orders.

REPURCHASE AGREEMENTS. The Fund may engage in repurchase agreements. Repurchase
agreements are agreements under which securities are acquired from a securities
dealer or bank subject to resale on an agreed upon date and at an agreed upon
price which includes principal and interest. The Fund or its agents will have
actual or constructive possession of the securities held as collateral for the
repurchase agreement. The Fund bears a risk of loss in the event the other party
defaults on its obligations and the Fund is delayed or prevented from exercising
its right to dispose of the collateral securities, or if the Fund realizes a
loss on the sale of the collateral securities. The Investment Manager will enter
into repurchase agreements on behalf of the Fund only with financial
institutions deemed to present minimal risk of bankruptcy during the term of the
agreement based on guidelines established and periodically reviewed by the Board
of Trustees. These guidelines currently permit the Fund to enter into repurchase
agreements with any bank the Investment Manager may recommend if it determines
such bank to be creditworthy. Repurchase agreements are considered to be loans
collateralized by the underlying security. Repurchase agreements entered into by
the Fund will provide that the underlying security at all times shall have a
value at least equal to 102% of the price stated in the agreement. This
underlying security will be marked to market daily. The Investment Manager will
monitor compliance with this requirement. Under all repurchase agreements
entered into by the Fund, the Custodian or its agent must take possession of the
underlying collateral. However, if the seller defaults, the Fund could realize a
loss on the sale of the underlying security to the extent the proceeds of the
sale are less than the resale price. In addition, even though the Bankruptcy
Code provides protection for most repurchase agreements, if the seller should be
involved in bankruptcy or insolvency proceedings, the Fund may incur delays and
costs in selling the security and may suffer a loss of principal and interest if
the Fund is treated as an unsecured creditor. Repurchase agreements, in some
circumstances, may not be tax exempt.

RESTRICTED AND RULE 144A SECURITIES. The Fund may purchase restricted and Rule
144A securities. Restricted securities are securities that may not be sold
freely to the public absent registration under the Securities Act of 1933, as
amended (the "1933 Act"), or an exemption from registration. Section 4(2)
commercial paper is issued in reliance on an exemption from registration under
Section 4(2) of the 1933 Act, and is generally sold to institutional investors
who purchase for investment. Any resale of such commercial paper must be in an
exempt transaction, usually to an institutional investor through the issuer or
investment dealers who make a market on such commercial paper.

-6-
<PAGE>

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 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 has delegated 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: (1) the frequency
of trades for the security, (2) the number of dealers willing and ready to
purchase and sell the security, (3) whether any dealers have agreed to make a
market in the security, (4) the number of other potential purchasers for the
security, and (5) the nature of the securities and the nature of the marketplace
trades. To the extent the Investment Manager according to the 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.

LENDING OF PORTFOLIO SECURITIES. The Fund may lend its portfolio securities in
order to generate additional income. Such loans may be made to broker-dealers or
other financial institutions whose creditworthiness is acceptable to the
Investment Manager. These loans would be required to be secured continuously by
collateral, including cash, cash equivalents, irrevocable letters of credit,
U.S. Government securities, or other high-grade liquid debt securities,
maintained on a current basis (I.E., marked to market daily) at an amount at
least equal to 100% of the market value of the securities loaned plus accrued
interest. The Fund may pay reasonable administrative and custodial fees in
connection with a loan and may pay a negotiated portion of the income earned on
the cash to the borrower or placing broker. Loans are subject to termination at
the option of the Fund or the borrower at any time. Upon such termination, the
Fund is entitled to obtain the return of the securities loaned within five
business days.

For the duration of the loan, the Fund will continue to receive the equivalent
of the interest or dividends paid by the issuer on the securities loaned, will
receive proceeds from the investment of the collateral and will continue to
retain any voting rights with respect to those securities. As with other
extensions of credit, there are risks of delay in recovery or even losses of
rights in the securities loaned should the borrower of the securities fail
financially. However, the loans will be made only to borrowers deemed by the
Investment Manager to be creditworthy, and when, in the judgment of the
Investment Manager, the income which can be earned currently from such loans
justifies the attendant risk.

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

-7-
<PAGE>

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.

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 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 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 Board, will monitor the Fund's investments in these securities,
focusing on such important factors as, among others, valuation, liquidity, and
availability of information.

U.S. GOVERNMENT AGENCY OBLIGATIONS. The Fund may invest in U.S. agency
obligations. Various agencies of the U.S. Government issue obligations,
including the Export/Import Bank of the United States, Farmers Home
Administration, Federal Farm Credit Bank, Federal Housing Administration,
Government National Mortgage Association ("GNMA"), Maritime Administration,
Small Business Administration, and the Tennessee Valley Authority. The Fund may
purchase securities guaranteed by GNMA, which represent participation in
Veterans Administration and Federal Housing Administration backed mortgage
pools. Obligations of instrumentalities of the U.S. Government include
securities issued by, among others, Federal Home Loan Banks, Federal Home Loan
Mortgage Corporation, Federal Intermediate Credit Banks, Federal Land Banks,
Federal National Mortgage Association, and the U.S. Postal Service. Some of
these securities are supported by the full faith and credit of the U.S. Treasury
(i.e., GNMA), and others are supported by the right of the issuer to borrow from
the Treasury. The agencies or instrumentalities of the U.S. Government may
guarantee the payment of principal at the maturity of an obligation. Thus, in
the event of a default prior to maturity, there might not be a market and thus
no means of realizing the value of the obligation prior to maturity.

INDEX-BASED INVESTMENTS. The Fund may invest in index-based investments.
Index-Based Investments, such as Standard & Poor's Depository Receipts
("SPDRs"), NASDAQ-100 Index Tracking Stock ("NASDAQ 100s") and Dow Jones
DIAMONDS ("Diamonds"), are interests in a unit investment trust ("UIT") that may
be obtained from the UIT or purchased in the secondary market. SPDRs, NASDAQ
100s and DIAMONDS are listed on the American Stock Exchange.

A UIT will generally issue Index-Based Investments in aggregations of 50,000
known as "Creation Units" in exchange for a "Portfolio Deposit" consisting of
(1) a portfolio of securities substantially similar to the component securities
("Index Securities") of the applicable index (the

-8-
<PAGE>

"Index"), (2) a cash payment equal to a pro rata portion of the dividends
accrued on the UIT's portfolio securities since the last dividend payment by the
UIT, net of expenses and liabilities, and (3) a cash payment or credit
("Balancing Amount") designed to equalize the net asset value of the Index and
the net asset value of a Portfolio Deposit.

Index-Based Investments are not individually redeemable, except upon termination
of the UIT. To redeem, the portfolio must accumulate enough Index-Based
Investments to reconstitute a Creation Unit (large aggregations of a particular
Index-Based Investment). The liquidity of small holdings of Index-Based
Investments, therefore, will depend upon the existence of a secondary market.
Upon redemption of a Creation Unit, the portfolio will receive Index Securities
and cash identical to the Portfolio Deposit required of an investor wishing to
purchase a Creation Unit that day.

The price of Index-Based Investments is derived and based upon the securities
held by the UIT. Accordingly, the level of risk involved in the purchase or sale
of Index-Based Investments is similar to the risk involved in the purchase or
sale of traditional common stock, with the exception that the pricing mechanism
for Index-Based Investments is based on a basket of stocks. Disruptions in the
markets for the securities underlying Index-Based Investments purchased or sold
by the Portfolio could result in losses on Index-Based Investments. Trading in
Index-Based Investments involves risks similar to those risks, described above
under "Options and Futures on Options" involved in the writing of options on
securities.

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 the Fund's 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.

INVESTMENT RESTRICTIONS

FUNDAMENTAL POLICIES

The Fund may not:

1. With respect to 75% of its assets, (i) purchase the securities of any
issuer (except securities issued or guaranteed by the United States Government,
its agencies or instrumentalities) if, as a result, more than 5% of its total
assets would be invested in the securities of such issuer; or (ii) acquire more
than 10% of the outstanding voting securities of any one issuer.

2. Purchase any securities which would cause 25% or more of the total assets
of the Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that this
limitation does not apply to investments in obligations issued or guaranteed by
the United States Government, its agencies or instrumentalities. For purposes of
this restriction, the Fund generally relies on the U.S. Office of Management and
Budget's Standard Industrial Classifications.

-9-
<PAGE>

3. Borrow money in an amount exceeding 33 1/3% of the value of its total
assets, provided that, for purposes of this limitation, investment strategies
which either obligate the Fund to purchase securities or require the Fund to
segregate assets are not considered to be borrowings. To the extent that its
borrowings exceed 5% of its assets, (i) all borrowings will be repaid before
making additional investments and any interest paid on such borrowing will
reduce income; and (ii) asset coverage of at least 300% is required.

4. Make loans if, as a result, more than 33 1/3% of its total assets would
be loaned to other parties, except that the Fund may (i) purchase or hold debt
instruments in accordance with its investment objective and policies; (ii) enter
into repurchase agreements; and (iii) lend its securities.

5. Purchase or sell real estate, physical commodities, or commodities
contracts, except that the Fund may purchase (i) marketable securities issued by
companies which own or invest in real estate (including real estate investment
trusts), commodities, or commodities contracts; and (ii) commodities contracts
relating to financial instruments, such as financial futures contracts and
options on such contracts.

6. Issue senior securities (as defined in the 1940 Act) except as permitted
by rule, regulation or order of the Securities and Exchange Commission (the
"SEC").

7. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.

8. Invest in interests in oil, gas, or other mineral exploration or
development programs and oil, gas or mineral leases.

The foregoing percentages (other than the limitation on borrowing) will apply at
the time of the purchase of a security and shall not be considered violated
unless an excess or deficiency occurs immediately after or as a result of a
purchase of such security. These investment limitations are fundamental policies
of the Trust and may not be changed without shareholder approval.

NON-FUNDAMENTAL POLICIES

The Fund may not:

1. Pledge, mortgage or hypothecate assets except to secure borrowings
permitted by the Fund's fundamental limitation on borrowing.

2. Invest in companies for the purpose of exercising control.

3. Purchase securities on margin or effect short sales, except that the Fund
may (i) obtain short-term credits as necessary for the clearance of security
transactions; (ii) provide initial and variation margin payments in connection
with transactions involving futures contracts and options on such contracts; and
(iii) make short sales "against the box" or in compliance with the SEC's
position regarding the asset segregation requirements imposed by Section 18 of
the 1940 Act.

4. Invest its assets in securities of any investment company, except as
permitted by the 1940 Act or an order of exemption therefrom.

-10-
<PAGE>

5. Purchase or hold securities that are illiquid, or are otherwise not
readily marketable, i.e., securities that cannot be disposed of for their
approximate carrying value in seven days or less (which term includes repurchase
agreements and time deposits maturing in more than seven days) if, in the
aggregate, more than 15% of its net assets would be invested in illiquid
securities.

Each of the foregoing percentage limitations (except with respect to the
limitation on investing in illiquid and not readily marketable securities) apply
at the time of purchase. If, subsequent to the Fund's purchase of an illiquid
security, more than 15% of the Fund's net assets are invested in illiquid
securities because of changes in valuations, the Fund will, within a reasonable
time, dispose of a portion of such holding so that the above set-forth limit
will not be exceeded. These limitations are non-fundamental and may be changed
by the Board without a vote of shareholders.

RISK CONSIDERATIONS

TECHNOLOGY COMPANIES

The Fund invests primarily in equity securities which, by definition, entail
risk of loss of capital. Investments in equity securities are subject to
inherent market risks and fluctuation in value due to earnings, economic
conditions and other factors beyond the control of the Investment Manager.
Securities in the Fund's portfolio may not increase as much as the market as a
whole and some undervalued securities may continue to be undervalued for long
periods of time. Some securities may be inactively traded, and thus may not be
readily bought or sold. Although profits in some Fund holdings may be realized
quickly, it is not expected that most investments will appreciate rapidly.

To the extent the Fund concentrates its investments in industries generally
associated with technology, its share value may be more volatile than that of
more-diversified mutual funds. The Fund's share value will reflect trends
specific to technology industries, which may be subject to greater changes in
governmental policies and regulation than many other industries. Additionally,
technology companies can be particularly affected by such specific risks as:
aggressive product prices due to competitive pressure from numerous market
entrants, short product cycles, rapid rate of change, and product obsolescence
at a more frequent rate than other types of companies caused by rapid
technological advances; and risks that new products will fail to meet
expectations or even reach the marketplace, among others. In addition, these
companies tend to be capital intensive and, as a result, may not be able to
recover all capital investment costs.

The Fund may, from time to time, invest a substantial portion of its assets in
small capitalization companies. While smaller companies often have potential for
rapid growth, investment in them frequently involves greater risks because they
lack the management experience, financial resources, product diversification and
competitive strengths of larger corporations. In addition, in many instances,
the securities of smaller companies are traded only over-the-counter or on a
regional securities exchange, and the frequency and volume of their trading is
substantially less than is typical of larger companies. Therefore, the
securities of smaller companies may be subject to wider price fluctuations. When
making large sales of securities of smaller companies, the Fund may have to sell
portfolio holdings at discounts from quoted prices or may have to make a series
of small sales over an extended period of time.

-11-
<PAGE>

FOREIGN SECURITIES

The Fund may purchase securities issued by governments of foreign countries and
companies domiciled in, or deriving a significant portion of their revenue or
income from, foreign countries. Accordingly, shareholders should consider
carefully the substantial additional risks involved in investing in these
securities. Foreign investments involve the possibility of taxation of income
earned in foreign nations (including, for example, withholding taxes on interest
and dividends) or other taxes imposed with respect to investments in foreign
nations; foreign exchange controls (which may include suspension of the ability
to transfer currency from a given country and repatriation of investments);
default in foreign government securities, and political or social instability or
diplomatic developments that could adversely affect investments. In addition,
there is often less publicly available information about foreign issuers than
those in the United States. Further, the Fund may encounter difficulties in
pursuing legal remedies or in obtaining judgments in foreign courts.

Brokerage commissions, fees for custodial services and other costs relating to
investments by the Fund in other countries are generally greater than in the
United States. Foreign markets have different clearance and settlement
procedures from those in the United States, and certain markets have experienced
times when settlements did not keep pace with the volume of securities
transactions, which resulted in settlement difficulty. The inability of the Fund
to make intended security purchases due to settlement difficulties could cause
it to miss attractive investment opportunities. Any delay in selling a portfolio
security due to settlement problems could result in loss to the Fund if the
value of the portfolio security declined, or result in claims against the Fund
if it had entered into a contract to sell the security. The securities markets
of many of the countries in which the Fund may invest may also be smaller, less
liquid and subject to greater price volatility than those in the United States.

Because certain securities may be denominated in foreign currencies, the value
of which will be affected by changes in currency exchange rates and exchange
control regulations, and costs will be incurred in connection with conversions
between currencies. A change in the value of a foreign currency against the U.S.
dollar will result in a corresponding change in the U.S. dollar value of the
Fund's securities denominated in the currency. Such changes also affect the
Fund's income and distributions to shareholders. The Fund may be affected either
favorably or unfavorably by changes in the relative rates of exchange among the
currencies of different nations, and the Fund may therefore engage in foreign
currency hedging strategies. Such strategies, however, involve certain
transaction costs and investment risks, including dependence upon the Investment
Manager's ability to predict movements in exchange rates.

Some countries in which the Fund may invest may also have fixed or managed
currencies that are not freely convertible at market rates into the U.S. dollar.
Certain currencies may not be internationally traded. A number of these
currencies have experienced steady devaluation relative to the U.S. dollar, and
such devaluations in the currencies may have a detrimental impact on the Fund.
Many countries in which the Fund may invest have experienced substantial, and in
some periods extremely high, rates of inflation for many years. Inflation and
rapid fluctuation in inflation rates may have negative effects on certain
economies and securities markets. Moreover, the economies of some countries may
differ favorably or unfavorably from the U.S. economy in such respects as the
rate of growth of gross domestic product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments. Certain
countries also limit the amount of foreign capital that can be invested in their
markets and local companies, creating a "foreign premium" on capital investments
available to foreign investors such as the Fund. The

-12-
<PAGE>

Fund may pay a "foreign premium" to establish an investment position which it
cannot later recoup because of changes in that country's foreign investment
laws.

EXCHANGE RATES AND POLICIES

The Fund may endeavor to buy and sell foreign currencies on favorable terms.
Some price spreads on currency exchange (to cover service charges) may be
incurred, particularly when the Fund changes investments from one country to
another or when proceeds from the sale of shares in U.S. dollars are used for
the purchase of securities in foreign countries. Also, some countries may adopt
policies which would prevent the Fund from repatriating invested capital and
dividends, withhold portions of interest and dividends at the source, or impose
other taxes, with respect to the Fund's investments in securities of issuers of
that country. There also is the possibility of expropriation, nationalization,
confiscatory or other taxation, foreign exchange controls (which may include
suspension of the ability to transfer currency from a given country), default in
foreign government securities, political or social instability, or diplomatic
developments that could adversely affect investments in securities of issuers in
those nations.

The Fund may be affected either favorably or unfavorably by fluctuations in the
relative rates of exchange between the currencies of different nations, exchange
control regulations and indigenous economic and political developments.

The Investment Manager considers at least annually the likelihood of the
imposition by any foreign government of exchange control restrictions that would
affect the liquidity of the Fund's assets maintained with custodians in foreign
countries, as well as the degree of risk from political acts of foreign
governments to which such assets may be exposed. The Investment Manager also
considers the degree of risk attendant to holding portfolio securities in
domestic and foreign securities depositories.

DEBT

The market value of debt securities that are interest rate sensitive is
inversely related to changes in interest rates. That is, an interest rate
decline produces an increase in a security's market value and an interest rate
increase produces a decrease in value. The longer the remaining maturity of a
security, the greater the effect of interest rate changes. Changes in the
ability of an issuer to make payments of interest and principal and in the
market's perception of its creditworthiness also affect the market value of that
issuer's debt securities. Investors also should recognize that, in periods of
declining interest rates, the Fund's returns will tend to be somewhat higher
than prevailing market rates, and in periods of rising interest rates, the
Fund's returns 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 the portfolios, thereby reducing the Fund's current returns.
In periods of rising interest rates, the opposite can be expected to occur.

The value of commercial paper and other securities in the Fund's portfolios 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.

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

-13-
<PAGE>

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.

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 are
as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION WITH PRINCIPAL OCCUPATION FOR THE
THE TRUST PAST FIVE YEARS
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Irwin G. Barnet, Esq. 61 Trustee An attorney and a principal of
Sanders, Barnet, Goldman, Simons Sanders, Barnet, Goldman, 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

Victor Meschures, CPA 61 Trustee A Certified Public Accountant with
Meschures, Campeas, Thompson & Meschures, Campeas, Thompson &
Snyder, LLP Snyder, LLP, an accounting firm.
760 North La Cienega Boulevard
Los Angeles, California 90069

William R. Sweet 61 Trustee Retired; formerly, Executive Vice
81 Tiburon Road President, The Bank of California
Tiburon, California 94920 (1985-1996).

James R. Wolford 45 Trustee Senior Vice President and Chief
Forecast Commercial Real Estate Operating Officer (2000-present);
Service, Inc. Senior Vice President and Chief
3602 Inland Empire Blvd. Financial Officer, Bixby Ranch
Suite A-105 Company, a real estate company.
Ontario, CA 91764

-14-
<PAGE>

<CAPTION>
NAME AGE POSITION WITH PRINCIPAL OCCUPATION FOR THE
THE TRUST PAST FIVE YEARS
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Vernon C. Kozlen* 56 President and Executive Vice President and Division
City National Bank Chief Executive Manager of the Investment Manager
400 N. Roxbury Drive Officer (1996-Present); First Interstate
Beverly Hills, CA 90210 Bank, Executive Vice President of
Trust and Private Client Services
(1985-1986).

Jeffrey Fries* [__] Controller and Director, Fund Accounting and
SEI Investments Chief Administration, of the Administrator
One Freedom Valley Drive Operating (1997-Present), Vice President, Smith
Oaks, Pennsylvania 19456 Officer Barney Corporate Trust Company
(1991-1997)

Lydia A. Gavalis, Esq.* 34 Vice President Vice President and Assistant
SEI Investments and Assistant Secretary of the Administrator and
One Freedom Valley Drive Secretary the Distributor (1998-Present);
Oaks, Pennsylvania 19456 Assistant General Counsel and
Director of Arbitration, Philadelphia
Stock Exchange (1989-1998).

Richard A. Weiss* 40 Vice President Senior Vice President and Chief
City National Bank and Assistant Investment Officer of the Investment
400 N. Roxbury Drive Secretary Manager (1999-Present); Sanwa Bank
Beverly Hills, CA 90210 California, Executive Vice President
and Chief Investment Officer
(1994-1999).

Timothy D. Barto* 32 Vice President Vice President and Assistant
SEI Investments and Assistant Secretary of the Administrator
One Freedom Valley Drive Secretary (1999-Present), Associate, Dechert,
Oaks, Pennsylvania 19456 Price & Rhoads (1997-1999),
Associate, Richter, Miller & Finn
(1994-1997).

James R. Foggo, Esq.* 35 Vice President Vice President and Assistant
SEI Investments and Assistant Secretary of the Administrator and
One Freedom Valley Drive Secretary Distributor (1998-Present);
Oaks, Pennsylvania 19456 Associate, Paul Weiss, Rifkind,
Wharton & Garrison (1998); Associate,
Baker & McKenzie (1995-1998); Associate,
Battle Fowler LLP (1993-1995).

-15-
<PAGE>

<CAPTION>
NAME AGE POSITION WITH PRINCIPAL OCCUPATION FOR THE
THE TRUST PAST FIVE YEARS
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Christine M. McCullough* 40 Vice President Vice President and Assistant
SEI Investments and Assistant Secretary of the Administrator and
One Freedom Valley Drive Secretary the Distributor (1995-Present).
Oaks, Pennsylvania 19456

Rodney J. Olea* 35 Vice President Senior Vice President and Director of
City National Bank and Assistant Fixed Income of the Investment
400 N. Roxbury Drive Secretary Manager (1994-Present).
Beverly Hills, CA 90210

Todd Cipperman* 34 Vice President Senior Vice President, General
SEI Investments and Assistant Counsel and Assistant Secretary of
One Freedom Valley Drive Secretary the Administrator and the Distributor
Oaks, Pennsylvania 19456 (2000-Present), Vice President and
Assistant Secretary of the
Administrator and Distributor
(1995-2000); Associate, Dewey
Ballantine (1994-1995).
</TABLE>

*This individual is considered an interested person of the Trust as defined in
Section 2(a)(19) of the 1940 Act.

COMPENSATION TABLE

<TABLE>
<CAPTION>
Name of Person, Aggregate Pension or Estimated Annual Total Compensation
Position Compensation from Retirement Benefits Upon From Fund and Fund
the Trust Benefits Accrued Retirement Complex Paid to
As Part of Fund Trustees
Expenses
<S> <C> <C> <C> <C>
Irwin G. Barnet $9,000 N/A N/A $9,000
Trustee

Maria D. Hummer $9,000 N/A N/A $9,000
Trustee

Victor Meschures $9,000 N/A N/A $9,000
Trustee

William R. Sweet $9,000 N/A N/A $9,000
Trustee

-16-
<PAGE>

<CAPTION>
Name of Person, Aggregate Pension or Estimated Annual Total Compensation
Position Compensation from Retirement Benefits Upon From Fund and Fund
the Trust Benefits Accrued Retirement Complex Paid to
As Part of Fund Trustees
Expenses
<S> <C> <C> <C> <C>
James R. Wolford $9,000 N/A N/A $9,000
Trustee
</TABLE>

INVESTMENT MANAGER

The Trust and City National Bank (The "Manager" or "Investment Manager") entered
into an Investment Management Agreement (the "Management Agreement") as of
April 1, 1999 regarding the three existing series of the Trust at that time. As
of the date of this SAI, the Board had approved the amendment of the Management
Agreement to include the Fund, and the Board expects that the Trust and the
Manager will enter into such an amendment prior to the start of the Fund's
operations. The Investment Manager provides a continuous investment program of
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.

Effective May 2001, divisions of banks which advise registered investment
companies will be required to register as investment advisers with the SEC,
as is currently required of non-bank entities. City National Bank intends to
register with the SEC either City National Investments, as the division of
City National Bank advising the Trust, or an entity separate from City
National Bank formed by City National Bank to advise the Trust, before May
2001.

The Management Agreement provides that the Investment Manager shall not be
liable for any error of judgement or mistake of law or for any loss suffered by
the Trust in connection with the matters to which the Management Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Investment Manager in the performance of its
duties or from reckless disregard of its duties and obligations thereunder.

The continuance of the Management Agreement with respect to the Fund must be
specifically approved at least annually (1) by the vote of a majority of the
Trustees or by the vote of a majority of the outstanding voting securities of
the Fund, and (2) by the vote of a majority of the Trustees who are not parties
to the Management Agreement or an "interested person" (as that term is defined
in the 1940 Act) of any party thereto, cast in person at a meeting called for
the purpose of voting on such approval. The Management Agreement is terminable,
without penalty, at any time as to the Fund by the Trustees, by a vote of a
majority of the outstanding shares of the Fund or by the Investment Manager on
not less than 30 days' nor more than 60 days' written notice. This Management
Agreement shall not be assignable by either party without the written consent of
the other party.

The Investment Manager provides the Fund with investment management services.
The Investment Manager is obligated under the Management Agreement to pay the
excess of the Fund's operating expenses as disclosed in the applicable
Prospectus. The Investment Manager will not be required to bear expenses of any
Fund to an extent which would result in the Fund's

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<PAGE>

inability to qualify as a regulated investment company under provisions of the
Internal Revenue Code. The term "expenses" is defined in such laws or
regulations, and generally excludes brokerage commissions, distribution
expenses, taxes, interest and extraordinary expenses.

Any reductions made by the Investment Manager in its fees are subject to
reimbursement by the Fund within the following three years provided the Fund is
able to effect such reimbursement and remain in compliance with the foregoing
expense limitations. The Investment Manager generally intends to seek
reimbursement for the oldest reductions and waivers before payment by the Fund
for fees and expenses for the current year.

The Management Agreement was approved with respect to the Fund by the Board at a
duly called in-person meeting. In considering the Management Agreement, the
Trustees specifically considered the provision that permits the Investment
Manager to seek reimbursement of any reduction made to its management fee within
the three-year period. The Investment Manager's ability to request reimbursement
is subject to various conditions. First, any reimbursement is subject to the
Fund's ability to effect such reimbursement and remain in compliance with
applicable expense limitations in place at that time. Second, the Investment
Manager must specifically request the reimbursement from the Board. Third, the
Board must approve such reimbursement as appropriate and not inconsistent with
the best interests of the Fund and the shareholders at the time such
reimbursement is requested. Because of these substantial contingencies, the
potential reimbursements will be accounted for as contingent liabilities that
are not recordable on the balance sheet of the Fund until collection is
probable; but the full amount of the potential liability will appear in a
footnote to the Fund's financial statements. At such time as it appears probable
that the Fund is able to effect such reimbursement, that the Investment Manager
intends to seek such reimbursement and that the Board of Trustees has or is
likely to approve the payment of such reimbursement, the amount of the
reimbursement will be accrued as an expense of the Fund for that current period.

The Investment Manager also may act as an investment adviser or administrator to
other persons, entities, and corporations, including other investment companies.
Please refer to the table above, which indicates officers and trustees who are
affiliated persons of the Trusts and who are also affiliated persons of the
Investment Manager.

The use of the name "CNI Charter" by the Trust and by the Fund is pursuant to
the consent of the Investment Manager, which may be withdrawn if the Investment
Manager ceases to be the Investment Manager of the Fund.

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 Distribution 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

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<PAGE>

Pursuant to a Transfer Agency Agreement, SEI Investments Fund Management,
located at 530 East Swedesford Road, Wayne, Pennsylvania 19087 (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 the Fund's shares.
It furnishes such office space and equipment, telephone facilities, personnel,
and informational literature distribution as is necessary or appropriate in
providing transfer agency information and services.

CUSTODIAN

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 portfolios.

INDEPENDENT ACCOUNTANTS AND REPORTS TO SHAREHOLDERS

The Trust's independent accountants, KPMG LLP, audit and report on the annual
financial statements of the Fund and review the Fund's federal income tax
returns. KPMG LLP may also perform other professional accounting, auditing, tax,
and advisory services when engaged to do so by the Trust. Shareholders will be
sent audited annual and unaudited semi-annual financial statements. The address
of KPMG LLP is 355 South Grand Avenue, Los Angeles, California 90071.

LEGAL COUNSEL

The validity of the shares of beneficial interest offered hereby will be passed
upon by Paul, Hastings, Janofsy & Walker LLP, 345 California Street, Suite 2900,
San Francisco, California 94104.

PORTFOLIO TRANSACTIONS AND TURNOVER

PORTFOLIO TRANSACTIONS

Portfolio transactions are undertaken principally to: pursue the objectives of
the Fund; invest money obtained from the sale of the Fund's shares; reinvest
proceeds from maturing, or the sale of portfolio securities; and meet
redemptions of the Fund's shares. Portfolio transactions may increase or
decrease the return 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, 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.

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<PAGE>

The Trust expects that purchases and sales of portfolio securities will usually
be principal transactions, though agency trades are permissible. 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

We anticipate annual portfolio turnover of less than 100% for the Fund.

DISTRIBUTIONS AND TAXES

DISTRIBUTIONS

The Fund receives income in the form of dividends and interest earned on its
investments in securities. This income, less the expenses incurred in its
operations, is the Fund's net investment income, substantially all of which will
be declared as dividends and paid to the Fund's shareholders.

The amount of ordinary income dividend payments by the Fund is dependent upon
the amount of net investment income received by the Fund from its portfolio
holdings, is not guaranteed and is subject to the discretion of the Board. The
Fund does not pay "interest" or guarantee any fixed or minimum rate of return on
an investment in its shares.

The Fund also may derive capital gains or losses in connection with sales or
other dispositions of its portfolio securities. Any net gain the Fund may
realize from transactions involving investments held less than the period
required for long-term capital gain or loss recognition or otherwise producing
short-term capital gains and losses (taking into account any carryover of
capital losses from the [eight] previous taxable years), although a distribution
from capital gains, will be distributed to shareholders with and as a part of
dividends giving rise to ordinary income. If during any year the Fund realizes a
net gain on transactions involving investments held for the period required for
long-term capital gain or loss recognition or otherwise producing long-term
capital gains and losses, the Fund will have a net long-term capital gain. After
deduction of the amount of any net short-term capital loss, the balance (to the
extent not offset by any capital losses carried over from the [eight] previous
taxable years) will be distributed and treated as long-

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<PAGE>

term capital gains in the hands of the shareholders regardless of the length of
time the Fund's shares may have been held by the shareholders.

The maximum long-term federal capital gains rate for individuals is [20%] with
respect to capital assets held for more than [12 months]. The maximum capital
gains rate for corporate shareholders is the same as the maximum tax rate for
ordinary income.

Any dividend or distribution per share paid by the Fund reduces the Fund's net
asset value per share on the date paid by the amount of the dividend or
distribution per share. Accordingly, a dividend or distribution paid shortly
after a purchase of shares by a shareholder would represent, in substance, a
partial return of capital (to the extent it is paid on the shares so purchased),
even though it would be subject to income taxes (except for distributions from
the Tax Exempt Fund to the extent they are not subject to income taxes).

Dividends and other distributions will be reinvested in additional shares of the
applicable Fund unless the shareholder has otherwise indicated. Investors have
the right to change their elections with respect to the reinvestment of
dividends and distributions by notifying the Transfer Agent in writing, but any
such change will be effective only as to dividends and other distributions for
which the record date is seven or more business days after the Transfer Agent
has received the written request.

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 they are 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
years (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 other
regulated investment companies) or of two or more issuers that the 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 they
distribute to shareholders, provided that the Fund meets certain minimum
distribution requirements. To comply with these requirements, the Fund must
distribute annually at least (1) 90% of "investment company taxable income" (as
that term is defined in the Code), and (2) 90% of the excess of (i) tax exempt
interest income over (ii) certain

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<PAGE>

deductions attributable to that income (with certain exceptions), for its
taxable years. 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 (1) ordinary income for
such year; and (2) 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 undistributed ordinary income or capital gain 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.

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 Fund 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 qualifying as a regulated investment company.

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.

Distributions of net investment income and net realized capital gains by the
Fund will be taxable to shareholders whether made in cash or reinvested in
shares. In determining amounts of net realized capital gains to be distributed,
any capital loss carryovers from the eight prior taxable years will be applied
against capital gains. Shareholders receiving distributions in the form of
additional shares will have a cost basis for federal income tax purposes in each
share so received equal to the net asset value of a share of the Fund on the
reinvestment date. Fund distributions also will be included in individual and
corporate shareholders' income on which the alternative minimum tax may be
imposed.

The Fund may receive dividend distributions from U.S. corporations. To the
extent that the Fund receives such dividends and distributes them to its
shareholders, and meets certain other requirements of the Code, corporate
shareholders of the Fund may be entitled to the "dividends received" deduction.
Availability of the deduction is subject to certain holding period and
debt-financing limitations.

If more than 50% in value of the total assets of the Fund at the end of its
fiscal year is invested in stock or other securities of foreign corporations,
the Fund may elect to pass through to its shareholders the pro rata share of all
foreign income taxes paid by the Fund. If this election is made, shareholders
will be (i) required to include in their gross income their pro rata share of
any

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<PAGE>

foreign income taxes paid by the Fund, and (ii) entitled either to deduct their
share of such foreign taxes in computing their taxable income or to claim a
credit for such taxes against their U.S. income tax, subject to certain
limitations under the Code, including certain holding period requirements. In
this case, shareholders will be informed in writing by the Fund at the end of
each calendar year regarding the availability of any credits on and the amount
of foreign source income (including or excluding foreign income taxes paid by
the Fund) to be included in their income tax returns. If 50% or less in value of
the Fund's total assets at the end of its fiscal year are invested in stock or
other securities of foreign corporations, the Fund will not be entitled under
the Code to pass through to its shareholders their pro rata share of the foreign
income taxes paid by the Fund. In this case, these taxes will be taken as a
deduction by the Fund.

The Fund may be subject to foreign withholding taxes on dividends and interest
earned with respect to securities of foreign corporations. The Fund may invest
up to 10% of its total assets in the stock of foreign investment companies. Such
companies are likely to be treated as "passive foreign investment companies"
("PFICs") under the Code. Certain other foreign corporations, not operated as
investment companies, may nevertheless satisfy the PFIC definition. A portion of
the income and gains that the Fund derives from PFIC stock may be subject to a
non-deductible federal income tax at the Fund level. In some cases, the Fund may
be able to avoid this tax by electing to be taxed currently on its share of the
PFIC's income, whether or not such income is actually distributed by the PFIC.
The Fund will endeavor to limit its exposure to the PFIC tax by investing in
PFICs only where the election to be taxed currently will be made. Because it is
not always possible to identify a foreign issuer as a PFIC in advance of making
the investment, the Fund may incur the PFIC tax in some instances.

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, 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.

SHARE PRICE CALCULATION

The net asset value per share of the Fund is calculated as follows: all
liabilities incurred or accrued are deducted from the valuation of total assets,
which includes accrued but undistributed income; the resulting net assets are
divided by the number of shares of the Fund outstanding at the time of the
valuation and the result (adjusted to the nearest cent) is the net asset value
per share.

In general, securities for which market quotations are readily available are
valued at current market value, and all other securities are valued at fair
value as determined in good faith by the Board of Trustees.

Securities listed on a securities exchange or an automated quotation system for
which quotations are readily available, including securities traded over the
counter, are valued at the last quoted

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<PAGE>

sale price on the principal exchange on which they are traded on the valuation
date. If there is no such reported sale on the valuation date, securities are
valued at the most recent quoted bid price. Prices for securities traded on a
securities exchange are provided daily by recognized independent pricing agents.
The reliability of the valuations provided by the independent, third-party
pricing agents are reviewed daily by the Administrator.

These third-party pricing agents may employ methodologies, primarily regarding
debt securities, that utilize actual market transactions, broker-dealer supplied
valuations or other electronic data processing techniques. These techniques
generally consider such factors as security prices, yields, maturities, call
features, ratings and developments relating to specific securities in arriving
at valuations. Debt obligations with remaining maturities of sixty days or less
may be valued at their amortized cost that approximates fair market value.

`If a security price cannot be obtained from an independent, third-party pricing
agent, the Administrator obtains a bid price from an independent broker who
makes a market in the security. The Investment Manager supplies the
Administrator with the appropriate broker contact, and to ensure independence
the Administrator obtains the quote directly from the broker each day.

Foreign securities owned in the Trust are valued at the closing prices (as
determined prior to the Fund's determination of NAV) on the principal exchange
on which they trade. The prices for foreign securities are reported in local
currency and converted to U.S. dollars using currency exchange rates. Exchange
rates are provided daily by recognized independent pricing agents.

Financial futures are valued at the settlement price established each day by the
board of exchange on which they are traded. Foreign currency forward contracts
are valued at the current day's interpolated foreign exchange rate, as
calculated using the current day's exchange rate, and the thirty, sixty, ninety
and one-hundred eighty day forward rates.

Valuation corrections are required where variations in NAV are the result of
mathematical mistakes, the misapplication of accounting principles, misjudgments
in the use of fact, and failure to reflect market information that was known or
should have been known. Valuation corrections require prospective actions, and
may require retroactive actions if the NAV variation is material. Valuation
corrections that require retroactive action will be reported to the Board of
Trustees.

In its role as the Administrator, SEI Investments Mutual Fund Services has
primary operational responsibility for the operation of the valuation process.
The Administrator uses several systems to monitor the pricing data supplied by
various sources. These reports are reviewed daily. Any identified discrepancies
are researched and resolved in accordance with these procedures. All
discrepancies identified by the price flagging systems, and the resolution and
verification steps taken by the Administrator, are documented and retained as
part of the Trust's daily records.

To ensure that the independent broker continues to supply a reliable valuation,
at least once per week the Administrator provides the broker supplied value to
the Investment Manager for review and approval. In addition, the Investment
Manager will consult with the Administrator in the event of a pricing problem,
participate on the Fair Value Committee of the Board of Trustees, and shall
notify the Administrator in the event it discovers a pricing discrepancy. Under
no circumstances may the Investment Manager determine the value of a portfolio
security outside of the established pricing framework.

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<PAGE>

If the value for a security cannot be determined pursuant to these procedures,
the Trust's Fair Value Committee will determine the security's value using Fair
Value Procedures established by the Board of Trustees.

DISTRIBUTION PLAN

The Trust has adopted a Distribution Plan (the "Plan") for the Class A shares of
the Fund in accordance with Rule 12b-1 under the 1940 Act, which regulates
circumstances under which an investment company may directly or indirectly bear
expenses relating to the distribution of its shares. In this regard, the Board
has determined that the Plan is in the best interests of the shareholders.
Continuance of the Plan must be approved annually by a majority of the Trustees
and by a majority of the Trustees who are not "interested persons" of the Trust
as that term is defined in the 1940 Act, and who have no direct or indirect
financial interest in the operation of the Plan or in any agreements related
thereto ("Qualified Trustees"). The Plan may not be amended to increase
materially the amount that may be spent thereunder without approval by a
majority of the outstanding shares of the Fund or class affected. All material
amendments to the Plan will require approval by a majority of the Trustees and
of the Qualified Trustees.

The Plan adopted for the Class A shares provides that the Trust will pay the
Distributor a fee of up to 0.30% of the average daily net assets of the Fund's
Class A shares, respectively, that the Distributor can use to compensate
broker-dealers and service providers, including the Investment Manager and its
affiliates, that provide distribution-related services to the Class A
shareholders or to their customers who beneficially own the Class A shares.

Payments may be made under the Plan for distribution services, including
reviewing of purchase and redemption orders, assisting in processing purchase,
exchange and redemption requests from customers, providing certain shareholder
communications requested by the Distributor, forwarding sales literature and
advertisements provided by the Distributor, and arranging for bank wires.

The Investment Manager receives distribution fees from the Distributor in
return for providing certain distribution related services respecting Class A
shares of the Fund. The Investment Manager also benefits from the
distribution plan because of increased management fees resulting from any
increase in the net assets of the Fund due to distribution efforts pursuant
to the distribution plan. Other than these payments, no interested person of
the Trust or any Trustee who is not an interested person of the Trust has or
had a direct or indirect financial interest in the operation of the
distribution plan or related agreements.

Although banking laws and regulations prohibit banks from distributing shares of
open-end investment companies such as the Trust, according to an opinion issued
to the staff of the SEC by the Office of the Comptroller of the Currency,
financial institutions are not prohibited from acting in other capacities for
investment companies, such as providing shareholder services. Should future
legislative, judicial or administrative action prohibit or restrict the
activities of financial institutions in connection with providing shareholder
services, the Trust may be required to alter materially or discontinue its
arrangements with such financial institutions.

SHAREHOLDER SERVICE AGREEMENTS

The Investment Manager has entered into a Shareholder Services Agreement with
the Trust. 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.

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<PAGE>

As compensation for the provision of such services, the Fund will pay the
Investment Manager a fee of 0.25% of the Fund's average daily net assets on an
annual basis, payable monthly. The Investment Manager will 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 its 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.
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.

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. The Trust is an
open-end management investment company registered under the 1940 Act. The Trust
currently offers shares of beneficial interest, $0.01 par value per share, in
various series. Each series offers two classes of shares (Class A and
Institutional Class), other than the Prime Money Market Fund, Government Money
Market Fund and California Tax Exempt Money Market Fund, which offer three
classes of shares. Currently, the Trust offers shares of ten series - the Fund
and the Large Cap Growth Equity Fund, Large Cap Value Equity

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<PAGE>

Fund, Corporate Bond Fund, Government Bond Fund, California Tax Exempt Bond
Fund, High Yield Bond Fund, Prime Money Market Fund, Government Money Market
Fund and California Tax Exempt Money Market Fund, which have their own
Prospectuses and Statements of Additional Information. The Board 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 of the Trust (the
"Declaration") and the Bylaws of the Trust (the "Bylaws"), shareholder meetings
may be called by the Trustees for the purpose as may be prescribed by law, the
Declaration 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 (1) 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 (2) if, as a result of a vacancy in the
Board, 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 Declaration 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
Declaration, and except that where any provision of law, of the Declaration, or
of the Bylaws permits or requires that (1) 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 (2) 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 Prospectuses 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.

PERFORMANCE INFORMATION

As noted in the Prospectus, the Fund may, from time to time, quote various
performance figures in advertisements and other communications to illustrate its
past performance. Performance figures will be calculated separately for
different classes of shares.

-27-
<PAGE>

YIELD QUOTATION. The Fund's 30-day yield figure described in the Prospectus is
calculated according to a formula prescribed by the SEC, expressed as follows:

6
YIELD = 2[(1+[a-b]/cd) - 1]

Where: a = dividends and interest earned during the
period.

b = expenses accrued for the period (net of
reimbursement).

c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends.
d = the maximum offering price per share on the
last day of the period.

For the purpose of determining the interest earned (variable "a" in the formula)
on debt obligations that were purchased by the Fund at a discount or premium,
the formula generally calls for amortization of the discount or premium; the
amortization schedule will be adjusted monthly to reflect changes in the market
values of the debt obligations.

Investors should recognize that, in periods of declining interest rates, the
Fund's yields will tend to be somewhat higher than prevailing market rates and,
in periods of rising interest rates, will tend to be somewhat lower. In
addition, when interest rates are falling, monies received by the Fund from the
continuous sale of its shares will likely be invested in instruments producing
lower yields than the balance of its portfolio of securities, thereby reducing
the current yield of the Fund. In periods of rising interest rates, the opposite
result can be expected to occur.

AVERAGE ANNUAL TOTAL RETURN. Total return may be stated for any relevant period
as specified in the advertisement or communication. Any statements of total
return for the Fund will be accompanied by information on the Fund's average
annual compounded rate of return over the most recent four calendar quarters and
the period from the Fund's inception of operations. The Fund may also advertise
aggregate and average total return information over different periods of time.
The Fund's "average annual total return" figures are computed according to a
formula prescribed by the SEC expressed as follows:

n
P(1 + T) = ERV

Where: P = a hypothetical initial payment of $1,000.

T = average annual total return.

n = number of years.

ERV = Ending Redeemable Value of a hypothetical
$1,000 investment made at the beginning of a
1-, 5- or 10-year period at the end of each
respective period (or fractional portion
thereof), assuming reinvestment of all
dividends and distributions and complete
redemption of the hypothetical investment at
the end of the measuring period.

-28-
<PAGE>

AGGREGATE TOTAL RETURN. The Fund's "aggregate total return" figures represent
the cumulative change in the value of an investment in the Fund for the
specified period and are computed by the following formula:

ERV - P

Where: P = a hypothetical initial payment of $1,000.

ERV = Ending Redeemable Value of a hypothetical
$1,000 investment made at the beginning of a
l-, 5- or 10-year period at the end of a l-,
5- or 10-year period (or fractional portion
thereof), assuming reinvestment of all
dividends and distributions and complete
redemption of the hypothetical investment at
the end of the measuring period.

The Fund's performance will vary from time to time depending upon market
conditions, the composition of its portfolio and its operating expenses.
Consequently, any given performance quotation should not be considered
representative of the Fund's performance for any specified period in the future.
In addition, because performance will fluctuate, it may not provide a basis for
comparing an investment in the Fund with certain bank deposits or other
investments that pay a fixed yield for a stated period of time. Investors
comparing the Fund's performance with that of other investment companies should
give consideration to the quality and maturity of the respective investment
companies' portfolio securities.

Investors should note that the investment results of the Fund will fluctuate
over time, and any presentation of the Fund's yield or total return for any
period should not be considered as a representation of what an investment may
earn or what an investor's yield or total return may be in any future period.

PURCHASE AND REDEMPTION OF SHARES

The Fund's minimum initial investment is $100,000. 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 values. 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: (1) $250,000, or (2) 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.

-29-
<PAGE>

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 within seven days.

The Trust reserves the right in its sole discretion to (1) suspend the continued
offering of the Fund's shares, and (2) reject purchase orders in whole or in
part when in the judgment of the Investment Manager or the Distributor such
suspension or rejection is in the best interest of the Fund.

Payments to shareholders for shares of the Fund redeemed directly from the Fund
will be made as promptly as possible but no later than three days after receipt
by the Transfer Agent of the written request in proper form, with the
appropriate documentation as stated in the Prospectus, except that the Fund may
suspend the right of redemption or postpone the date of payment during any
period when (1) trading on the New York Stock Exchange ("NYSE") is restricted as
determined by the SEC or the NYSE is closed for other than weekends and
holidays; (2) an emergency exists as determined by the SEC (upon application by
the Fund pursuant to Section 22(e) of the Investment Company Act) making
disposal of portfolio securities or valuation of net assets of the Fund not
reasonably practicable; or (3) for such other period as the SEC may permit for
the protection of the Fund's shareholders.

OTHER INFORMATION

The Prospectuses of the Fund and this SAI 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
Prospectuses. Certain portions of the Registration Statement have been omitted
from the Prospectuses and this SAI 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, D.C. Copies of the Registration
Statements may be obtained from the SEC upon payment of the prescribed fee.

Statements contained in the Prospectuses or in this SAI 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 Prospectuses and
this SAI form a part, each such statement being qualified in all respects by
such reference.

FINANCIAL STATEMENTS

There are no audited financial statements for the Fund because the Fund has been
in operation for less than one year.

-30-
<PAGE>

APPENDIX - RATINGS OF INVESTMENT SECURITIES

Description ratings for Standard & Poor's Ratings Group ("S&P"); Moody's
Investors Service, Inc., ("Moody's") and Fitch Investors Service, L.P.
("Fitch").

STANDARD & POOR'S RATING GROUP

BOND RATINGS

AAA Bonds rated AAA have the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.

AA Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in
small degree.

A Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than obligations in higher-rated categories.

BBB Bonds rated BBB are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for bonds in this
category than for bonds in higher rated categories.

BB Bonds rated BB have less near-term vulnerability to default than
other speculative grade debt. However, they face major ongoing
uncertainties or exposure to adverse business, financial or
economic conditions which could lead to inadequate capacity to
meet timely interest and principal payments.

B Bonds rated B have a greater vulnerability to default but
presently have the capacity to meet interest payments and
principal repayments. Adverse business, financial or economic
conditions would likely impair capacity or willingness to pay
interest and repay principal.

CCC Bonds rated CCC have a current identifiable vulnerability to
default and are dependent upon favorable business, financial and
economic conditions to meet timely payments of interest and
repayment of principal. In the event of adverse business,
financial or economic conditions, they are not likely to have the
capacity to pay interest and repay principal.

CC The rating CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC rating.

C The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating.

D Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.

A-1
<PAGE>

S&P's letter ratings may be modified by the addition of a plus
(+) or a minus (-) sign designation, which is used to show relative
standing within the major rating categories, except in the AAA (Prime
Grade) category.

COMMERCIAL PAPER RATINGS

An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no
more than 365 days. Issues assigned an A rating are regarded as having
the greatest capacity for timely payment. Issues in this category are
delineated with the numbers 1, 2 and 3 to indicate the relative degree
of safety.

A-1 This designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics
are denoted with a plus (+) designation.

A-2 Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as
for issues designated A-1.

A-3 Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to
the adverse effects of changes in circumstances than obligations
carrying the higher designations.

B Issues carrying this designation are regarded as having only
speculative capacity for timely payment.

C This designation is assigned to short-term obligations with
doubtful capacity for payment.

D Issues carrying this designation are in default, and payment of
interest and/or repayment of principal is in arrears.

MOODY'S INVESTORS SERVICE, INC.

BOND RATINGS

Aaa Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and generally
are referred to as "gilt edge." Interest payments are protected
by a large or by an exceptionally 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 such issues.

Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what
generally are known as high-grade bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger
than in Aaa securities.

A-2
<PAGE>

A Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest
are considered adequate, but elements may be present which
suggest a susceptibility to impairment sometime in the future.

Baa Bonds which are rated Baa are considered as medium-grade
obligations, I.E., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and,
in fact, have speculative characteristics as well.

Ba Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very
moderate and, therefore, not well safeguarded during both good
and bad times in the future. Uncertainty of position
characterizes bonds in this class.

B Bonds which are rated B generally lack the characteristics of a
desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over
any long period of time may be small.

Caa Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with
respect to principal or interest.

Ca Bonds which are rated Ca present obligations which are
speculative in a high degree. Such issues are often in default or
have other marked shortcomings.

C Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.

Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category
and in the categories below B. The modifier 1 indicates a ranking for
the security in the higher end of a rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates a ranking
in the lower end of a rating category.

COMMERCIAL PAPER RATINGS

The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity
for repayment of short-term promissory obligations, and ordinarily will
be evidenced by leading market positions in well established
industries, high rates of return on funds employed, conservative
capitalization structures with moderate reliance on debt and ample
asset protection, broad margins in earnings coverage of fixed financial
charges and high internal cash generation, and well established access
to a range of financial markets and assured sources of alternate
liquidity.

Issuers (or related supporting institutions) rated Prime-2 (P-2) have a
strong capacity for repayment of short-term promissory obligations.
This ordinarily will be evidenced by

A-3
<PAGE>

many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity
is maintained.

Issuers (or related supporting institutions) rated Prime-3 (P-3) have
an acceptable capacity for repayment of short-term promissory
obligations. The effect of industry characteristics and market
composition may be more pronounced. Variability in earnings and
profitability may result in changes in the level of debt protection
measurements and the requirements for relatively high financial
leverage. Adequate alternate liquidity is maintained.

Issuers (or related supporting institutions) rated Not Prime do not
fall within any of the Prime rating categories.

FITCH INVESTORS SERVICE, L.P.

BOND RATINGS

The ratings represent Fitch's assessment of the issuer's ability to
meet the obligations of a specific debt issue or class of debt. The
ratings take into consideration special features of the issue, its
relationship to other obligations of the issuer, the current financial
condition and operative performance of the issuer and of any guarantor,
as well as the political and economic environment that might affect the
issuer's future financial strength and credit quality.

AAA Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong
ability to pay interest and repay principal, which is unlikely to
be affected by reasonably foreseeable events.

AA Bonds rated AA are considered to be investment grade and of very
high credit quality. The obligor's ability to pay interest and
repay principal is very strong, although not quite as strong as
bonds rated AAA. Because bonds rated in the AAA and AA categories
are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated
F-1+.

A Bonds rated A are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more vulnerable
to adverse changes in economic conditions and circumstances than
bonds with higher ratings.

BBB Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay
interest and repay principal is considered to be adequate.
Adverse changes in economic conditions and circumstances,
however, are more likely to have an adverse impact on these bonds
and, therefore, impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher
than for bonds with higher ratings.

BB Bonds rated BB are considered speculative. The obligor's ability
to pay interest and repay principal may be affected over time by
adverse economic changes.

A-4
<PAGE>

However, business and financial alternatives can be identified
which could assist the obligor in satisfying its debt service
requirements.

B Bonds rated B are considered highly speculative. While bonds in
this class are currently meeting debt service requirements, the
probability of continued timely payment of principal and interest
reflects the obligor's limited margin of safety and the need for
reasonable business and economic activity throughout the life of
the issue.

CCC Bonds rated CCC have certain identifiable characteristics, which,
if not remedied, may lead to default. The ability to meet
obligations requires an advantageous business and economic
environment.

CC Bonds rated CC are minimally protected. Default in payment of
interest and/or principal seems probable over time.

C Bonds rated C are in imminent default in payment of interest or
principal.

DDD, DD AND D Bonds rated DDD, DD and D are in actual default of
interest and/or principal payments. Such bonds are extremely
speculative and should be valued on the basis of their ultimate
recovery value in liquidation or reorganization of the obligor.
DDD represents the highest potential for recovery on these bonds
and D represents the lowest potential for recovery.

Plus (+) and minus (-) signs are used with a rating symbol to indicate
the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category covering 12-36
months.

SHORT-TERM RATINGS

Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and
municipal and investment notes.

Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond
ratings on the existence of liquidity necessary to meet the issuer's
obligations in a timely manner.

F-1+ Exceptionally strong credit quality. Issues assigned this rating
are regarded as having the strongest degree of assurance for
timely payment.

F-1 Very strong credit quality. Issues assigned this rating reflect
an assurance of timely payment only slightly less in degree than
issues rated F-1+.

F-2 Good credit quality. Issues carrying this rating have a
satisfactory degree of assurance for timely payments, but the
margin of safety is not as great as the F-l+ and F-1 categories.

F-3 Fair credit quality. Issues assigned this rating have
characteristics suggesting that the degree of assurance for
timely payment is adequate; however, near-term adverse changes
could cause these securities to be rated below investment grade.

A-5
<PAGE>

F-S Weak credit quality. Issues assigned this rating have
characteristics suggesting a minimal degree of assurance for
timely payment and are vulnerable to near-term adverse changes in
financial and economic conditions.

D Default. Issues assigned this rating are in actual or imminent
payment default.

A-6
<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.(B)

(3) Certificate of Amendment to the Certificate of Trust.(B)

(b) By-Laws:

(1) By-Laws dated October 25, 1996.(A)

(2) Amendment to the By-Laws of the Trust.(B)

(d) Form of Investment Management Agreement.(B)

(e) Form of Distribution Agreement.(B)

(f) Bonus or Profit Sharing Contracts - not applicable.

(g) Form of Custody Agreement.(B)

(h) Other Material Contracts:

(1) Form of Administrative Services Agreement.(B)

(2) Form of Transfer Agent Agreement.(B)

(i) Opinion of Counsel as to legality of shares.(C)

(j) Other Opinions - Independent Auditors' Consent.(C)

(k) Omitted Financial Statements - not applicable.

(l) Initial Capital Agreement.(A)

(m) Distribution Plans.

(1) Form of Rule 12b-1 Plan.(B)

(2) Form of Share Marketing Agreement.(B)

(n) Financial Data Schedule - not applicable.

--------------------------------
(A) Previously filed as an exhibit to Registrant's Registration Statement on
Form N1-A on November 14, 1996.
(B) Previously filed as an exhibit to Registrant's Post-Effective Amendment
No. 8 on May 3, 1999.
(C) Previously filed as an exhibit to Registrant's Post-Effective Amendment
No. 13 on February 28, 2000.

<PAGE>

(o) Rule 18f-3 Plan.(B)

(p) Codes of Ethics - filed herewith.

(1) CNI Charter Funds

(2) City National Investments

(3) SEI Investments Distribution Co.

(4) Weiss, Peck & Greer, LLC

(5) Wellington Management Company, LLP

(6) Credit Suisse Asset Management, LLC

(q) Powers of Attorney- filed herewith.

Item 24. Persons Controlled by or Under Common Control with the Funds

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

City National Bank, of which the Investment Adviser is a division, offers a
range of financial products and services, including commercial banking services,
personal and private banking services, cash management services, deposit and
lending products, investment and trust services and international banking
services. Please see Parts A and B of this Registration Statement for additional
discussion of the Investment Adviser.

Item 27. Principal Underwriter

(a) The Registrant's distributor, SEI Investments Distribution Co.
("SIDCO"), acts as distributor for the following funds pursuant
to distribution agreements dated as of the date shown:

SEI Daily Income Trust July 15, 1982

SEI Liquid Asset Trust November 29, 1982

SEI Tax Exempt Trust December 3, 1982

<PAGE>

SEI Index Funds July 10, 1985

SEI Institutional Managed Trust January 22, 1987

SEI Institutional International Trust August 30, 1988

The Advisors' Inner Circle Fund November 14, 1991

The Pillar Funds February 28, 1992

CUFUND May 1, 1992

STI Classic Funds May 29, 1992

First American Funds, Inc. November 1, 1992

First American Investment Funds, Inc. November 1, 1992

The Arbor Fund January 28, 1993

Boston 1784 Funds-Registered Trademark- June 1, 1993

The PBHG Funds, Inc. July 16, 1993

The Achievement Funds Trust December 27, 1994

Bishop Street Funds January 27, 1995

STI Classic Variable Trust August 18, 1995

ARK Funds November 1, 1995

Huntington Funds January 11, 1996

SEI Asset Allocation Trust April 1, 1996

TIP Funds April 28, 1996

SEI Institutional Investments Trust June 14, 1996

First American Strategy Funds, Inc. October 1, 1996

HighMark Funds February 15, 1997

Armada Funds March 8, 1997

PBHG Insurance Series Fund, Inc. April 1, 1997

The Expedition Funds June 9, 1997

Alpha Select Funds January 1, 1998

Oak Associates Funds February 27, 1998

The Nevis Fund, Inc. June 29, 1998

The Parkstone Group of Funds September 14, 1998

The Armada Advantage Fund May 1, 1999

Amerindo Funds Inc. July 13, 1999

<PAGE>

Huntington VA Funds October 15, 1999

Friends Ivory Funds December 16, 1999

SEI Insurance Products Trust March 29, 2000

SIDCO provides numerous financial services to investment managers, pension plan
sponsors and bank trust departments. These services include portfolio
evaluation, performance measurement and consulting services ("Funds
Evaluation"), and automated execution, clearing and settlement of securities
transactions ("MarketLink").

(b) The following are the directors and officers of SIDCO. Unless
otherwise noted, the business address of each director or
officer is One Freedom Valley Drive, Oaks, Pennsylvania 19456.

<TABLE>
<CAPTION>
Position and Position and
Offices with Offices with
Name Underwriter Registrant
---- ----------- ----------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman of the Board --
of Directors
Richard B. Lieb Director, Executive Vice --
President
Carmen V. Romeo Director --
Mark J. Held President & Chief Operating --
Officer
Gilbert L. Beebower Executive Vice President --
Dennis J. McGonigle Executive Vice President --
Robert M. Silvestri Chief Financial Officer & --
Treasurer
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Jack May Senior Vice President --
Hartland J. McKeown Senior Vice President --
Kevin P. Robins Senior Vice President --
Patrick K. Walsh Senior Vice President --
Timothy D. Barto Vice President & Assistant Vice President & Assistant
Secretary Secretary
Robert Crudup Vice President & Managing --
Director
Richard A. Deak Vice President & Assistant --
Secretary
Barbara Doyne Vice President --
Jeff Drennen Vice President --
James R. Foggo Vice President & Assistant Vice President & Assistant
Secretary Secretary

<PAGE>

<CAPTION>
Position and Position and
Offices with Offices with
Name Underwriter Registrant
---- ----------- ----------
<S> <C> <C>
Victor Galef Vice President & Managing --
Director
Kim Kirk Vice President & Managing --
Director
Christine M. McCollough Vice President & Assistant Vice President & Assistant
Secretary Secretary
Carolyn McLaurin Vice President & Managing --
Director
John Krzeminski Vice President & Managing --
Director
Jeff Jacobs Vice President --
Wayne M. Withrow Vice President & Managing --
Director
Robert Aller Vice President --
Todd Cipperman Senior Vice President & General Vice President & Assistant
Counsel Secretary
Kathy Heilig Vice President --
Samuel King Vice President --
Mark Nagle Vice President --
Joanne Nelson Vice President --
Cynthia M. Parrish Vice President & Assistant --
Secretary
Rob Redican Vice President --
Maria Rinehart Vice President --
Steve Smith Vice President --
Kathryn L. Stanton Vice President & Assistant --
Secretary
Lori L. White Vice President & Assistant --
Secretary
Daniel Spaventa Vice President --
S. Courtney E. Collier Vice President & Assistant --
Secretary
Lydia A. Gavalis Vice President & Assistant Vice President & Assistant
Secretary Secretary
Greg Gettinger Vice President & Assistant --

<PAGE>

<CAPTION>
<S> <C> <C>
Secretary
Lynda J. Striegel Vice President & Assistant --
Secretary
</TABLE>

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) 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.

<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
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 12th day of June, 2000.

THE CNI CHARTER FUNDS

By: /s/ Vernon C. Kozlen*
---------------------
Vernon C. Kozlen
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/ Vernon C. Kozlen* President & June 12, 2000
--------------------- Chief Executive Officer
Vernon C. Kozlen

/s/ Jeffrey Fries* Controller & June 12, 2000
------------------ Chief Operating Officer
Jeffrey Fries

/s/ Irwin G. Barnet* Trustee June 12, 2000
--------------------
Irwin G. Barnet

/s/ Trustee June 12, 2000
--------------------
Maria D. Hummer

/s/ James R. Wolford* Trustee June 12, 2000
---------------------
James R. Wolford

/s/ William R. Sweet* Trustee June 12, 2000
---------------------
William R. Sweet

/s/ Victor Meschures* Trustee June 12, 2000
---------------------
Victor Meschures

* By: /s/ Mitchell E. Nichter
-----------------------
Mitchell E. Nichter, Attorney-in-Fact
pursuant to Powers of Attorney