UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-CSR
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-0792
CNI Charter Funds
(Exact name of registrant as specified in charter)
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400 North Roxbury Drive
Beverly Hills, CA 90210
(Address of principal executive offices) (Zip code)
SEI Investments Distributors
530 East Swedesford Road
Wayne, PA 19087
(Name and address of agent for service)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-888-889-0799
DATE OF FISCAL YEAR END: SEPTEMBER 30, 2003
DATE OF REPORTING PERIOD: SEPTEMBER 30, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
CNI CHARTER FUNDS[SM] [LOGO OMITTED][R]
[PHOTO OMITTED]
ANNUAL REPORT
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September 30, 2003
This report and the financial statements contained herein are provided for the
general information of the shareholders of the CNI Charter Funds. This report is
not authorized for distribution to prospective investors in the CNI Charter
Funds unless preceded or accompanied by an effective prospectus. Please remember
that past performance is no guarantee of future results.
Shares of the CNI Charter Funds are not deposits or obligations of any bank, are
not guaranteed by any bank, are not insured by the FDIC or any other agency and
involve investment risks, including the possible loss of the principal amount
invested.
TABLE OF CONTENTS
2003 CNI Charter Funds
02 Letter to Our Shareholders
04 Equity Funds Investment Adviser's Report
06 Equity Funds Overview
10 Fixed Income Funds Investment Adviser's Report
11 Fixed Income Funds Overview
15 Money Market Funds Investment Adviser's Report
16 Statements of Net Assets
51 Statements of Operations
54 Statements of Changes in Net Assets
58 Financial Highlights
61 Notes to Financial Statements
68 Report of Independent Auditors
69 Board Members and Officers
72 Notice to Shareholders
CNI CHARTER FUNDS | PAGE 1
letter to our shareholders
SEPTEMBER 30, 2003
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This annual report covers the CNI Charter Funds for the fiscal year ended
September 30, 2003. On the following pages, you will find the specific details
of each Fund's portfolio and investment performance.
Our unique philosophy and disciplined approach to capital market investment
continued to show well despite the lackluster global economic recovery and the
turnaround in the financial markets since September 2002. Both the equity and
fixed income markets have fared well during this period, with domestic stocks
gaining 24.39% (as measured by the S&P 500), international equities rising
26.01% on average (as measured by the MSCI EAFE Index), and domestic bonds
adding 5.40% (as measured by the Lehman Brothers Aggregate Bond Index). The most
aggressive equity sectors, including emerging international markets and
technology stocks have led the financial pack over these last twelve months. By
adhering strictly to our fundamental investment strategies we were able to
produce highly competitive results in all asset categories.
City National's underlying investment philosophy is to pursue the long-term
goals and objectives specified for each of the Funds. With an active yet
disciplined style, all Funds are managed to achieve competitive rates of return
consistent with their respective, prescribed risk parameters. CNI Charter Funds
follow a disciplined investment process that begins with a thorough assessment
of the macroeconomic environment and the financial markets. Our broad based
research process takes advantage of the most advanced investment technology,
fundamental valuation, and quantitative tools to determine the most attractive
sectors and securities within each Fund's area of concentration. The final step
is to construct and continuously monitor precise portfolios that meet the
objectives of the specific Funds, without being swayed by short-term trends and
fads. This approach continued to serve shareholders well overall during the
economic and financial rebound we encountered in the year ended September 30,
2003.
TWELVE-MONTH MARKET WATCH:
OCTOBER 2002 - SEPTEMBER 2003
Generally speaking, interest rates continued to decline as stock prices
exhibited considerable volatility in the period leading up to the Iraqi
conflict. With the relatively quick end to the first phase of that initiative,
however, investors seemed to look at the equity markets with renewed spirit.
Other markets, including commodities, also reacted to geo-political issues. Oil
prices, in particular, peaked at $37 per barrel earlier in 2003 in reaction to
supply fears, but subsequently settled back down to the high $20's where they
remained at fiscal year end. Gold prices, which have remained virtually dormant
for two decades, benefited from a flight-to-quality that took them up to $380
per ounce, but have since fallen back to the $370 level.
Favorable economic indications, combined with accommodative monetary policy,
stimulative fiscal policy and few signs of inflation set the stage for
significant corporate earnings increases in the second and third quarters of
2003. Both stock and bond investors benefited from this confluence of bullish
factors as the table below illustrates:
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TWELVE-MONTH OCTOBER, 2002 -
INDEX WATCH: SEPTEMBER, 2003
EQUITIES
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S&P 500 Stock Index .......................... +24.39%
NASDAQ ....................................... +53.09%
MSCI EAFE Equity ............................. +26.01%
BONDS
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Lehman Brothers Gov't/Credit Bond Index ...... +6.51%
Lehman Brothers Aggregate Bond Index ......... +5.40%
Lehman Brothers CA Tax-Exempt Bond Index ..... +2.42%
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CNI CHARTER FUNDS | PAGE 2
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CNI CHARTER FUNDS PERFORMANCE AND HIGHLIGHTS
By adhering to our basic investment discipline and maintaining the appropriate
amount of risk control in the various portfolios, the Funds continue to provide
returns that are competitive in their respective investment arenas.
All four of the CNI Charter Equity Funds produced significant gains during
the year ended September 30, 2003. Additionally, and most importantly, these
four Funds produced highly competitive results, as measured against their
respective Lipper peer groups.
Similarly, all four of the CNI Charter Bond Funds showed healthy gains during
this year, led by the CNI CHARTER HIGH YIELD BOND FUND (+19.75% Institutional
Class). The Federal Reserve lowered the Fed Funds rate to 1.00% in June 2003,
which was arguably their last move in that direction for some time. Given the
prospect for economic recovery and higher interest rates down the road, it is
not unusual that fixed-income related funds were relegated to single digit total
returns during the Funds' fiscal year.
Lastly, all three of the CNI Charter Money Market Funds produced steady,
consistent, and competitive returns. These returns were in line with their
respective investment mandates.
Please read the following pages carefully as they contain important
information on the assets and financial condition of the Funds. If you have any
questions about this report or the CNI Charter Funds, please call your
investment professional or (888) 889-0799.
Thank you for choosing the CNI Charter Funds.
Sincerely,
/S/Richard A. Weiss
Richard A. Weiss
PRESIDENT AND CHIEF INVESTMENT OFFICER
CITY NATIONAL ASSET MANAGEMENT, INC.
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cnicharterfunds.com
Visit our website CNICHARTERFUNDS.COM where you will find comprehensive
information about our fund family including:
o Daily, monthly and quarterly performance
o Detailed descriptions on each CNI Charter Fund
o Prospectus and annual report downloads
o Additional information for investment professionals
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CNI CHARTER FUNDS | PAGE 3
investment adviser's report
SEPTEMBER 30, 2003
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EQUITY FUNDS
Our fiscal year ending September 30, 2003 should find equity investors
reassured, with the U.S. equity market once again generating positive returns.
The market, as measured by the S&P 500, returned 24.39% over the past fiscal
year. This was a marked improvement over the prior two fiscal year-ends, where
the market was down over 20% in each time period (-26.60% in fiscal year ending
2001 and -20.49% for fiscal year ending 2002). During the year, investors had to
digest a bleak corporate earnings environment and the prospect of a war with
Iraq. As it turned out, third quarter 2002 earnings releases were better than
expected, causing the market to rally from its early October 2002 lows. The
market held those gains through the first half of January 2003. At that point,
the fear of war with Iraq caused the market to sell off. When the war with Iraq
finally occurred in mid-March, the equity market responded positively, due to
the hope of a quick war and the removal of any economic paralysis caused by the
war's uncertainty. The market rallied into mid-June with signs of improved
economic activity and renewed consumer confidence. In June, the Federal Reserve
continued to provide liquidity to the economic recovery by lowering the
overnight lending rate to 1.00%, the lowest in 45 years. Since June, the market
continued to trade sideways, in a range, preserving its gains. The market
briefly pushed higher in late September, but fell back into the previous trading
range as the fiscal year ended.
For the fiscal year ended September 30, 2003, the CNI CHARTER TECHNOLOGY
GROWTH FUND was our highest performing Equity Fund, returning 54.87%
(Institutional Class). The Fund's investment benchmark, the Russell 3000
Technology Index, returned 61.46% and the Lipper Science & Technology Funds
Index returned 56.30% over the same time period. The Fund's investment in
smaller communication equipment companies hurt the Fund's performance versus the
benchmarks on a relative basis. Larger communication companies, like Cisco
Systems (+86%) (which the Fund holds, but has an underweight versus its
benchmark), outperformed smaller communication companies like Harris (+8%) and
Inter-Tel (+21%). The Fund's best performing stock, Corning, which happens to be
another communication equipment company, produced a 489% return over the past
fiscal year. The prospects for technology stocks remain positive given the
improving economic conditions. With that being said, the technology sector
remains highly volatile and should only be held by investors with a very long
investment horizon.
The CNI CHARTER RCB SMALL CAP VALUE FUND returned 45.55% (Institutional
Class) for the fiscal year ended September 30, 2003. The Russell 2000 Value
Index returned 31.66%, the Russell 2000 Index returned 36.50% and the Lipper
Small Cap Value Index returned 33.80%. While the first quarter 2003, in
retrospect, proved to be an exceptionally attractive entry point for equity
investment; the sharp and rapid rally greatly closed the gap in the Fund's
portfolio between stock prices and the estimate of their intrinsic value.
Individual stock performance was strong across almost all sectors. SBS
Broadcasting which operates advertising-based television and radio stations in
Scandinavian and Eastern European countries, has exhibited exceptional
performance returning +82% since its purchase by the Fund on October 16, 2002.
As mid-year approached, the Fund trimmed or sold outright certain portfolio
holdings in which the stock price greatly exceeded the calculation of intrinsic
value. For example, Gartner Group was a strong performer (sold by the Fund on
June 18, 2003 and returned +36%) as hints of a rebound in their core business,
independent research and consulting specializing in information technology,
became evident. A new small position in
CNI CHARTER FUNDS | PAGE 4
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Coinstar (purchased by the Fund on February 19, 2003) was the Fund's biggest
disappointment (-3%). The stock price fell precipitously after its growth
started to slow early in 2003, creating an excellent value opportunity. The Fund
remains a holder of this company as the recent disappointing news appears to be
a one-time event.
The CNI CHARTER LARGE CAP VALUE EQUITY FUND returned 24.03% (Institutional
Class) for the fiscal year ended September 30, 2003. The S&P 500/BARRA Value
Index returned 26.55% and the Lipper Large Cap Value Index returned 22.65%.
Stocks from the technology sector led the returns among the other equity
holdings in the Fund. EMC-Mass. was a significant contributor to the strong
technology returns, gaining 176% over the past 12 months. Financial stocks also
provided solid returns, with JP Morgan Chase providing a 91% return. Both stocks
benefited from improved corporate earnings. Stocks in the defense/aerospace
industry, like Lockheed Martin (-28%) and Northrop Grumman (-29%), disappointed
over the past year as the prospects for future increases in defense spending
were mitigated by concerns over an expanding federal budget deficit.
The CNI CHARTER LARGE CAP GROWTH EQUITY FUND returned 21.51% (Institutional
Class) for the fiscal year ended September 30, 2003. The S&P 500/BARRA Growth
Index returned 22.43% and the Lipper Large Cap Growth Index returned 20.33%. The
best performing stock in the Fund was in the materials sector: Freeport-McMoRan
Copper & Gold returned (+173%). Freeport is the owner of the world's biggest
gold mine and its stock has benefited from increased production and improving
metal and gold prices. Intel was another strong performer for the Fund, gaining
99%, due to an improved global demand for semiconductors. The consumer staples
sector produced the smallest returns. Kraft Foods, the largest U.S. foodmaker,
fell -17% due to a drop in demand for certain products and increased marketing
costs.
The results in our Equity Funds during this period are indeed a welcome
change from the market performance of the prior two fiscal year-ends. Risks,
though, do remain and could affect the stock market. Political instability in
the world remains a concern and any future terrorist attacks could delay an
economic recovery. An increasing trade deficit is weakening the dollar, making
foreign investments in dollar denominated assets less attractive. Another
concern, the expanding federal budget deficit, could eventually cause interest
rates to dramatically rise, automatically lowering the value of future corporate
wealth. Overall, though, we remain optimistic that increased economic prospects
will continue to propel corporate earnings above expectations, therefore
supporting higher equity prices. As always, the CNI Charter Equity Funds
continue to apply a disciplined investment approach with the goal of providing
superior performance across all market environments.
Sincerely,
/S/Brian L. Garbe
Brian L. Garbe
DIRECTOR OF RESEARCH
CITY NATIONAL ASSET MANAGEMENT, INC.
CNI CHARTER FUNDS | PAGE 5
fund overview
SEPTEMBER 30, 2003
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LARGE CAP VALUE EQUITY FUND
The Fund seeks to provide capital appreciation and moderate income consistent
with current returns available in the market place by investing in large U.S.
corporations and U.S. dollar denominated American Depository Receipts of large
foreign corporations which are undervalued and whose market valuations compare
favorably relative to similar companies.
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Comparison of Change in the Value of a $10,000 Investment in the Large Cap Value
Equity Fund, Institutional Class or Class A Shares, versus the S&P 500/BARRA
Value Index, and the Lipper Large Cap Value Index(*)(1)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CNI Large Cap Value CNI Large Cap S&P 500/BARRA Lipper
Equity Fund, Institutional Value Equity Fund, Value Large Cap
Class Shares Class A Shares Index Value Index
1/31/00 $10,000 $10,000 $10,000 $10,000
9/00 10,530 10,525 10,781 10,823
9/01 8,807 8,769 8,960 9,778
9/02 7,145 7,106 6,966 7,855
9/03 8,861 8,793 8,816 9,629
(*) In order to compare the Fund's performance against its benchmark, the Fund's
performance shown above begins at the month-end after the Fund's inception.
1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
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Ticker 1-Year 3-Year Inception
Shares Symbol Return Return to Date
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Institutional Class (1)^ CNLIX 24.03% (5.59)% (4.29)%
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Class A (2) CVEAX 23.75% (5.82)% (4.49)%+
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(1) Commenced operations on January 14, 2000.
(2) Commenced operations on April 13, 2000.
^ The Fund's Institutional Class Shares are currently offered only to accounts
where City National Bank serves as trustee or in a fiduciary capacity.
+ Class A Shares performance for the period prior to April 13, 2000 reflects
the performance of the Fund's Institutional Shares. The performance of the
Institutional Shares has not been adjusted to reflect the higher Rule 12b-1
Fees and expenses applicable to Class A Shares. If it had, performance would
have been lower than that shown.
Top Ten Holdings*
% OF PORTFOLIO
Citigroup 4.5
Exxon Mobil 3.7
American International Group 3.6
Bank of America 2.5
Wells Fargo 2.3
Home Depot 2.0
SBC Communications 2.0
JP Morgan Chase 1.8
Morgan Stanley 1.7
AOL Time Warner 1.4
*Excludes Cash Equivalents
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Top Sectors
[PIE CHART OMITTED]
Financials 36.3%
Consumer Discretionary 13.8%
Industrials 13.5%
Technology 8.7%
Other 27.7%
CNI CHARTER FUNDS | PAGE 6
fund overview
SEPTEMBER 30, 2003
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LARGE CAP GROWTH EQUITY FUND
The Fund seeks to provide capital appreciation by investing in large U.S.
corporations and U.S. dollar denominated American Depository Receipts of large
foreign corporations with the potential for growth and that possess superior
management, strong market position, consistent records of increased earnings and
a strong operating and financial position.
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Comparison of Change in the Value of a $10,000 Investment in the Large Cap
Growth Equity Fund, Institutional Class or Class A Shares, versus the S&P
500/BARRA Growth Index, and the Lipper Large Cap Growth Index(*)(1)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CNI Large Cap Growth CNI Large Cap S&P 500/BARRA Lipper
Equity Fund, Institutional Growth Equity Fund, Growth Large Cap
Class Shares Class A Shares Index Growth Index
1/31/00 $10,000 $10,000 $10,000 $10,000
9/00 9,873 9,852 10,025 10,643
9/01 6,702 6,670 6,446 6,056
9/02 5,533 5,490 5,198 4,771
9/03 6,723 6,660 6,364 5,784
(*) In order to compare the Fund's performance against its benchmark, the Fund's
performance shown above begins at the month-end after the Fund's inception.
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
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Ticker 1-Year 3-Year Inception
Shares Symbol Return Return to Date
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Institutional Class (1)^ CNGIX 21.51% (12.03)% (11.41)%
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Class A (2) CLEAX 21.31% (12.24)% (11.63)%+
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(1) Commenced operations on January 14, 2000.
(2) Commenced operations on March 28, 2000.
^ The Fund's Institutional Class Shares are currently offered only to accounts
where City National Bank serves as trustee or in a fiduciary capacity.
+ Class A Shares performance for the period prior to March 28, 2000 reflects
the performance of the Fund's Institutional Shares. The performance of the
Institutional Shares has not been adjusted to reflect the higher Rule 12b-1
Fees and expenses applicable to Class A Shares. If it had, performance would
have been lower than that shown.
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Top Ten Holdings
% OF PORTFOLIO
Microsoft 6.5
Wal-Mart Stores 5.8
General Electric 5.5
Intel 4.3
Pfizer 3.7
Johnson & Johnson 3.0
IBM 2.9
Merck 2.6
Dell 2.2
Amgen 2.1
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Top Sectors
[PIE CHART OMITTED]
Technology 26.6%
HealthCare 23.8%
Consumer Staples 20.5%
Industrials 12.0%
Other 17.1%
CNI CHARTER FUNDS | PAGE 7
fund overview
SEPTEMBER 30, 2003
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RCB SMALL CAP VALUE FUND
The Fund seeks to provide capital appreciation by investing primarily in smaller
U.S. corporations which are considered undervalued.
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Comparison of Change in the Value of a $10,000 Investment in the RCB Small Cap
Value Fund, Institutional Class, Class A or Class R Shares, versus the Russell
2000 Index, the Russell 2000 Value Index, and the Lipper Small Cap Value
Index(*)(1)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CNI RCB Small Cap Value CNI RCB Small CNI RCB Small Russell Russell 2000 Lipper
Fund, Institutional Cap Value Fund, Cap Value Fund, 2000 Value Small Cap
Class Shares Class A Shares Class R Shares Index Index Value Index
9/30/98 $10,000 $10,000 $ 9,650 $10,000 $10,000 $10,000
9/99 15,120 15,120 14,591 11,907 10,583 11,410
9/00 16,859 16,859 16,269 14,692 12,209 13,428
9/01 18,395 18,395 17,752 11,576 12,893 14,219
9/02 16,353 16,331 15,740 10,499 12,705 14,229
9/03 23,802 23,714 22,857 14,332 16,728 18,501
(*) In order to compare the Fund's performance against its benchmark, the Fund's
performance shown above begins at the month-end after the Fund's inception.
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund.Please note that one cannot invest directly in an unmanaged
index.
AVERAGE ANNUAL TOTAL RETURNS
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Ticker 1-Year 3-Year 5-Year Inception
Shares Symbol Return Return Return to Date
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Institutional
Class (1)^ RCBIX 45.55% 12.18%+ 18.94%+ 18.94%+
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Class A (2) RCBAX 45.21% 12.05%+ 18.85%+ 18.85%+
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Class R (3) RCBSX 45.21% 12.00% 18.82% 18.82%
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Class R with load RCBSX 40.17% 10.67% 17.98% 17.98%
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(1) Commenced operations on October 3, 2001.
(2) Commenced operations on October 3, 2001.
(3) Commenced operations on September 30, 1998.
^ The Fund's Institutional Class Shares are currently offered only to accounts
where City National Bank serves as trustee or in a fiduciary capacity.
+ The performance of the Institutional Class and Class A Shares for the period
prior to October 3, 2001 reflect the performance of the Class R Shares of a
predecessor mutual fund. The performance of the Class R Shares has not been
adjusted to reflect the Rule 12b-1 Fees and expenses applicable to
Institutional and Class A Shares. Fees for the Institutional Class Shares
are lower than the fees for the Class R Shares; correspondingly, performance
would have been higher than that shown.
Top Ten Holdings*
% OF PORTFOLIO
SBS Broadcasting 6.0
Alleghany 5.1
RH Donnelley 3.8
Smart & Final 3.7
IHOP 3.7
Whitehall Jewellers 3.4
White Mountains Insurance Group 3.3
Fisher Communications 3.2
Fairfax Financial Holdings 3.2
Ralcorp Holdings 3.1
*Excludes Cash Equivalents
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Top Sectors
[PIE CHART OMITTED]
Consumer Discretionary 34.3%
Financial Services 26.8%
Materials & Processing 10.3%
Producer Durables 8.2%
Other 20.4%
CNI CHARTER FUNDS | PAGE 8
fund overview
SEPTEMBER 30, 2003
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TECHNOLOGY GROWTH FUND
The Fund seeks to provide long-term capital appreciation by investing in U.S.
corporations and U.S. dollar denominated American Depository Receipts of foreign
corporations with the potential for growth and that are engaged in the
production, distribution and development of products or services based on
technology and should benefit significantly from advances or improvements in
technology.
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Comparison of Change in the Value of a $10,000 Investment in the Technology
Growth Fund, Institutional Class or Class A Shares, versus the Russell 3000
Technology Index, and the Lipper Science & Technology Funds Index(*)(1)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CNI Technology Growth CNI Technology Russell 3000 Lipper Science
Fund, Institutional Growth Fund, Technology & Technology
Class Shares Class A Shares Index Funds Index
10/31/00 $10,000 $10,000 $10,000 $10,000
9/01 3,530 3,525 3,675 3,474
9/02 2,253 2,241 2,494 2,288
9/03 3,490 3,466 4,026 3,710
(*) In order to compare the Fund's performance against its benchmark, the Fund's
performance shown above begins at the month-end after the Fund's inception.
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
Ticker 1-Year Inception
Shares Symbol Return to Date
- --------------------------------------------------------------------------------
Institutional Class (1)^ CTEIX 54.87% (29.57)%
- --------------------------------------------------------------------------------
Class A (2) CTGAX 54.67% (30.70)%
- --------------------------------------------------------------------------------
(1) Commenced operations on October 3, 2000.
(2) Commenced operations on October 23, 2000.
^ The Fund's Institutional Class Shares are currently offered only to accounts
where City National Bank serves as trustee or in a fiduciary capacity.
Top Ten Holdings
% OF PORTFOLIO
Microsoft 9.0
Intel 6.1
IBM 5.4
Dell 4.6
Cisco Systems 4.4
Oracle 3.5
Hewlett-Packard 3.4
EMC-Mass 3.1
Texas Instruments 2.5
Qualcomm 2.4
- --------------------------------------------------------------------------------
Top Sectors
[PIE CHART OMITTED]
Semi-Conductors 24.0%
Software 22.0%
Computers & Peripherals 16.2%
Communication Equipment 14.6%
Other 23.2%
CNI CHARTER FUNDS | PAGE 9
investment adviser's report
SEPTEMBER 30, 2003
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FIXED INCOME FUNDS
The bond market was somewhat volatile during this past fiscal year while it
shook off deflationary and economic fears during the third quarter of 2003 and
moved interest rates to higher levels. This market action, combined with better
corporate bond pricing relative to Treasuries, caused flat to slightly negative
returns in the fixed income marketplace for the third quarter. The recent
unprecedented volatility of yields appears to be subsiding.
During most of this fiscal year, the steep yield curve has provided some
trading opportunities. The difference in yield between the two-year and ten-year
treasury notes is near its all-time high; an extremely steep yield curve based
on investor expectations of a strong economic recovery followed quickly by
rising interest rates. During the last half of this period, we have employed a
modified barbell strategy in our investment grade bond funds. We did this by
selling some intermediate maturity securities and purchasing shorter and longer
securities which have significantly improved our Funds' portfolio return
prospects without adding interest rate risk.
The CNI CHARTER CORPORATE BOND FUND produced a total return of 6.74%
(Institutional Class) for the past fiscal year. For the same period, the Lehman
Intermediate Corporate Index returned 9.91%. The corporate bond universe is
heavily weighted in lower quality (Baa) rated securities that did well during
this most recent period in tandem with our recent economic recovery. Our Fund
had a higher quality profile than the index and thus did not capture all of the
performance garnered by the lower quality bonds. Our performance compares very
favorably with our peer group where the Lipper Short/Intermediate Investment
Grade Debt Index was up 5.24%.
The CNI CHARTER GOVERNMENT BOND FUND produced a total return of 2.68%
(Institutional Class) for the past fiscal year. For the same period, the Lehman
Intermediate U.S. Government Bond Index returned 3.50% and the Lipper
Short/Intermediate U.S. Government Index was up 3.23%. While our defensive
portfolio structure may have caused some underperformance this past year, we
believe that the Fund is positioned prudently with high rates potentially on the
horizon.
The CNI CHARTER CALIFORNIA TAX EXEMPT BOND FUND produced a total return of
2.63% (Institutional Class) for the past fiscal year. For the same period, the
Lehman CA Intermediate-Short Municipal Index returned 2.94%. We continue to
believe that our modestly defensive strategic posture will prove beneficial in
the near future as interest rate volatility becomes more prevalent. The Fund's
relative performance vis-a-vis its peer group was excellent, where the Lipper CA
Short/Intermediate Municipal Debt Average was up 2.14%.
The CNI CHARTER HIGH YIELD BOND FUND produced a total return of 19.75%
(Institutional Class) for the past fiscal year. For the same period, the
Citigroup High Yield Market Index was up 33.27% and the Lipper High Current
Yield Bond Fund Index was up 26.51%. Absolute performance was very strong for
this sector as lower quality bonds did quite well during this fiscal period.
Relative performance was behind the benchmark comparisons due to our Fund having
less exposure than the indices to Caa and distressed rated debt instruments,
which were the better performing and most volatile instruments of this universe.
STRATEGIC OUTLOOK FOR BOND FUNDS
While this recent period has been a challenging one for fixed income investors,
we believe that our strategy will help bridge the gap between the current low
rate environment and the inevitable higher one in the future. For our investment
grade funds, we will be shifting back and forth from neutral to a defensive
maturity posture in hopes of garnering superior relative returns. Furthermore,
we will be vigilant in our pursuit of both preservation of capital and
competitive returns.
Sincerely,
/S/Rodney J. Olea
Rodney J. Olea
DIRECTOR OF FIXED INCOME
CITY NATIONAL ASSET MANAGEMENT, INC.
CNI CHARTER FUNDS | PAGE 10
fund overview
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
The Fund seeks to provide current income (as the primary component of a total
return, intermediate duration strategy) by investing in a diversified portfolio
of investment grade fixed income securities, primarily corporate bonds issued by
domestic and international companies denominated in U.S. dollars.
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the Corporate Bond
Fund, Institutional Class or Class A Shares, versus the Lehman Intermediate
Corporate Index, and Lipper Short/Intermediate Investment Grade Debt Index(*)(1)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CNI Corporate Bond CNI Corporate Bond Lehman Intermediate Lipper Short/Intermediate
Fund, Institutional Fund, Class A Corporate Investment Grade
Class Shares Shares Index Debt Index
1/31/00 $10,000 $10,000 $10,000 $10,000
9/00 10,595 10,610 10,645 10,592
9/01 11,882 11,892 11,996 11,741
9/02 12,602 12,568 12,854 12,342
9/03 13,451 13,381 14,128 12,894
(*) In order to compare the Fund's performance against its benchmark, the Fund's
performance shown above begins at the month-end after the Fund's inception.
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
Ticker 1-Year 3-Year Inception
Shares Symbol Return Return to Date
- --------------------------------------------------------------------------------
Institutional Class (1)^ CNCIX 6.74% 8.28% 8.26%
- --------------------------------------------------------------------------------
Class A (2) CCBAX 6.47% 8.04% 8.11%+
- --------------------------------------------------------------------------------
(1) Commenced operations on January 14, 2000.
(2) Commenced operations on April 13, 2000.
^ The Fund's Institutional Class Shares are currently offered only to accounts
where City National Bank serves as trustee or in a fiduciary capacity.
+ Class A Shares performance for the period prior to April 13, 2000 reflects
the performance of the Fund's Institutional Shares. The performance of the
Institutional Shares has not been adjusted to reflect the higher Rule 12b-1
Fees and expenses applicable to Class A Shares. If it had, performance would
have been lower than that shown.
Top Ten Holdings
% OF PORTFOLIO
FNMA 6.250%, 02/01/11 4.0
Lehman Brothers Holdings
8.250%, 06/15/07 3.1
Allstate 7.200%, 12/01/09 2.8
AXA Financial
7.750%, 08/01/10 2.8
Citigroup 7.250%, 10/01/10 2.8
WPS Resources
7.000%, 11/01/09 2.7
General Electric Capital, Ser A,
MTN 6.875%, 11/15/10 2.7
AFLAC 6.500%, 04/15/09 2.7
Kohl's 6.300%, 03/01/11 2.7
Kimco Realty, MTN
6.960%, 07/16/07 2.7
- --------------------------------------------------------------------------------
Top Sectors
[PIE CHART OMITTED]
National Commercial Banks 11.4%
Security Brokers & Dealers 9.7%
Personal Credit Institutions 5.9%
Real Estate Investment Trust 5.3%
Other 67.7%
CNI CHARTER FUNDS | PAGE 11
fund overview
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
GOVERNMENT BOND FUND
The Fund seeks to provide current income (as the primary component of a total
return, intermediate duration strategy) by investing primarily in U.S.
government securities either issued or guaranteed by the U.S. government or its
agencies or instrumentalities.
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the Government Bond
Fund, Institutional Class or Class A Shares, versus the Lehman Intermediate U.S.
Government Bond Index, and the Lipper Short/Intermediate U.S. Government
Index(*)(1)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CNI Government Bond CNI Government Bond Lehman Intermediate Lipper Short/Intermediate
Fund, Institutional Fund, Class A U.S. Government U.S. Government
Class Shares Shares Bond Index Index
1/31/00 $10,000 $10,000 $10,000 $10,000
9/00 10,594 10,566 10,661 10,574
9/01 11,831 11,755 12,034 11,756
9/02 12,721 12,633 13,048 12,543
9/03 13,062 12,975 13,505 12,858
(*) In order to compare the Fund's performance against its benchmark, the Fund's
performance shown above begins at the month-end after the Fund's inception.
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
Ticker 1-Year 3-Year Inception
Shares Symbol Return Return to Date
- --------------------------------------------------------------------------------
Institutional Class (1)^ CNBIX 2.68% 7.23% 7.38%
- --------------------------------------------------------------------------------
Class A (2) CGBAX 2.71% 7.09% 7.18%+
- --------------------------------------------------------------------------------
(1) Commenced operations on January 14, 2000.
(2) Commenced operations on April 13, 2000.
^ The Fund's Institutional Class Shares are currently offered only to accounts
where City National Bank serves as trustee or in a fiduciary capacity.
+ Class A Shares performance for the period prior to April 13, 2000 reflects
the performance of the Fund's Institutional Shares. The performance of the
Institutional Shares has not been adjusted to reflect the higher Rule 12b-1
Fees and expenses applicable to Class A Shares. If it had, performance would
have been lower than that shown.
- --------------------------------------------------------------------------------
Top Ten Holdings
% OF PORTFOLIO
U.S. Treasury Notes
1.625%, 04/30/05 13.6
FNMA 4.375%, 03/15/13 12.9
U.S. Treasury Notes
7.250%, 05/15/04 11.4
FHLB 7.250%, 05/13/05 9.8
U.S. Treasury Notes
5.750%, 11/15/05 8.1
FHLMC 5.125%, 07/15/12 4.4
U.S. Treasury Notes
6.125%, 08/15/07 4.2
FNMA MTN
5.300%, 10/28/08 4.2
FNMA 6.250%, 02/01/11 3.6
FNMA 2.020%, 02/28/05 3.6
- --------------------------------------------------------------------------------
Top Sectors
[PIE CHART OMITTED]
U.S. Government Agency 54.1%
U.S. Treasury Instruments 44.9%
Money Market Instruments 1.0%
CNI CHARTER FUNDS | PAGE 12
fund overview
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT BOND FUND
The Fund seeks to provide current income exempt from Federal and California
state income tax (as the primary component of a total return strategy) by
investing primarily in investment grade California municipal bonds and notes.
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the California Tax
Exempt Bond Fund, Institutional Class or Class A Shares, versus the Lehman CA
Intermediate-Short Municipal Index, and the Lipper CA Short/Intermediate
Municipal Debt Index(*)(1)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CNI California CNI California Lehman CA Lipper CA Short/
Tax-Exempt Bond Tax-Exempt Bond Intermediate-Short Intermediate
Fund, Institutional Fund, Class A Municipal Municipal Debt
Class Shares Shares Index Index
1/31/00 $10,000 $10,000 $10,000 $10,000
9/00 10,506 10,493 10,490 10,427
9/01 11,263 11,236 11,344 11,129
9/02 12,117 12,067 12,209 11,813
9/03 12,436 12,353 12,568 12,065
(*) In order to compare the Fund's performance against its benchmark, the Fund's
performance shown above begins at the month-end after the Fund's inception.
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
Ticker 1-Year 3-Year Inception
Shares Symbol Return Return to Date
- --------------------------------------------------------------------------------
Institutional Class (1)^ CNTIX 2.63% 5.78% 6.15%
- --------------------------------------------------------------------------------
Class A (2) CCTEX 2.37% 5.59% 5.96%+
- --------------------------------------------------------------------------------
(1) Commenced operations on January 14, 2000.
(2) Commenced operations on April 13, 2000.
^ The Fund's Institutional Class Shares are currently offered only to accounts
where City National Bank serves as trustee or in a fiduciary capacity.
+ Class A Shares performance for the period prior to April 13, 2000 reflects
the performance of the Fund's Institutional Shares. The performance of the
Institutional Shares has not been adjusted to reflect the higher Rule 12b-1
Fees and expenses applicable to Class A Shares. If it had, performance would
have been lower than that shown.
Top Ten Holdings
% OF PORTFOLIO
Saddleback, Community College
District, 1996 Capital Improvement
Financing Project, COP, MBIA
Callable 06/01/06 @ 102
5.500%, 06/01/15 3.7
San Francisco (City & County),
Building Authority, Department of
General Services & Leasing, Ser A,
RB 5.000%, 10/01/13 2.9
San Mateo County,
Transit District Authority,
Ser A, RB, MBIA
Callable 06/01/08 @ 101
5.000%, 06/01/04 2.9
Miami-Dade County, Expressway
Authority, RB, FGIC Pre-Refunded
@ 101 6.375%, 07/01/10 2.9
New York City, Transitional Finance
Authority, Future Tax Secured
Project, Ser B, RB, MBIA
Callable 05/15/08 @ 101
4.600%, 11/15/12 2.8
East Bay-Delta, Housing & Finance
Authority, Pass Thru-Lease
Purchase Program, Ser A, RB, MBIA
4.250%, 06/01/05 2.8
San Francisco (City & County),
Public Utility Authority, Ser A,
RB, MBIA Callable 11/01/06
@ 101.5 5.000%, 11/01/17 2.7
California State, Educational
Facilities Authority, University of
Southern California Project, Ser A,
RB Callable 10/01/07 @ 102
5.700%, 10/01/15 2.7
Sacramento, City Financing
Authority, Solid Waste &
Redevelopment Project, RB,
AMBAC Callable 12/01/09 @ 102
5.250%, 12/01/13 2.6
Central, School District,
Ser B, GO, FSA
7.000%, 08/01/07 2.6
- --------------------------------------------------------------------------------
Top Sectors
[PIE CHART OMITTE]
Utilities - Water, Power, Sewer 22.6%
General Obligations - Cty/City/School District 15.6%
General Revenue 15.5%
Transportation Revenue 13.3%
Other 33.0%
CNI CHARTER FUNDS | PAGE 13
fund overview
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
The Fund seeks to maximize total return by investing primarily in fixed income
securities rated below investment grade including corporate bonds and
debentures, convertible and preferred securities, and zero coupon obligations.
The Fund may also invest in fixed income securities rated below investment grade
issued by governments and agencies, both U.S. and foreign, and in equity
securities. The Fund seeks to invest in securities that offer a high current
yield as well as total return potential and diversifies across issuers,
industries and sectors to control risks.
- --------------------------------------------------------------------------------
Comparison of Change in the Value of a $10,000 Investment in the High Yield Bond
Fund, Institutional Class or Class A Shares, versus the Citigroup High Yield
Market Index and the Lipper High Current Yield Bond Fund Index(*)(1)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CNI High Yield Bond CNI High Yield Bond CitiGroup High Lipper High Current
Fund, Institutional Fund, Class Yield Market Yield Bond Fund
Class Shares A Shares Index Index
1/31/00 $10,000 $10,000 $10,000 $10,000
9/00 10,412 10,386 10,016 9,912
9/01 10,157 10,102 9,413 9,019
9/02 10,644 10,555 9,098 8,835
9/03 12,747 12,602 12,124 11,040
(*) In order to compare the Fund's performance against its benchmark, the Fund's
performance shown above begins at the month-end after the Fund's inception.
(1) The performance in the above graph does not reflect the deduction of taxes
the shareholder will pay on Fund distributions or the redemptions of Fund
shares.
Past performance is no indication of future performance.
The Fund's comparative benchmarks do not include the annual operating expenses
incurred by the Fund. Please note that one cannot invest directly in an
unmanaged index.
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
Ticker 1-Year 3-Year Inception
Shares Symbol Return Return to Date
- --------------------------------------------------------------------------------
Institutional Class (1)^ CHYIX 19.75% 6.98% 6.78%
- --------------------------------------------------------------------------------
Class A (1) CHBAX 19.39% 6.66% 6.45%
- --------------------------------------------------------------------------------
(1) Commenced operations on January 14, 2000.
^ The Fund's Institutional Class Shares are currently offered only to accounts
where City National Bank serves as trustee or in a fiduciary capacity.
Top Ten Holdings*
% OF PORTFOLIO
Nextel Communications
7.375%, 08/01/15 0.8
Swift
12.500%, 01/01/10 0.7
GulfTerra Energy, Ser B
8.500%, 06/01/10 0.7
Beverly Enterprises
9.625%, 04/15/09 0.7
Hard Rock Hotel
8.875%, 06/01/13 0.7
Tyco International Group
6.125%, 11/01/08 0.7
MTR Gaming Group, Ser B
9.750%, 04/01/10 0.7
United Industries, Ser D
9.875%, 04/01/09 0.7
Majestic Star Casino
9.500%, 10/15/10 0.7
CSC Holdings
7.875%, 12/15/07 0.7
* Excludes Cash Equivalents
- --------------------------------------------------------------------------------
Top Sectors
[PIE CHART OMITTED]
Gaming 10.2%
Healthcare Facilities/Supples 5.3%
Consumer Products 5.1%
Utilities 5.0%
Other 74.4%
CNI CHARTER FUNDS | PAGE 14
fund overview
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
MONEY MARKET FUNDS
CNI Charter Money Market Funds were a good barometer for investor sentiment in
the year ended September 30, 2003. With the changing tide of the financial
markets, there was increased flow into and out of money market funds.
Additionally, the Funds' low yield levels underscored investor uncertainty with
regard to the timing of the economic rebound.
The Federal Open Market Committee (FOMC) cut the Federal Funds rate twice
this past fiscal year - from 1.75% to 1.00%. Additionally, their assessment of
risk remained "Balanced" with regard to growth prospects. However, they moved
their assessment on future prices from conditions of "Deflation" to that of
"Disinflation" at the August 12, 2003 meeting. As measured by Federal Funds
futures contracts at fiscal year end, there is currently a 0.00% probability of
further rate reductions over the next few months.
The CNI CHARTER PRIME MONEY MARKET FUND continued to emphasize quality and
liquidity in these uncertain times. With tight relative credit spreads during
the past year, the Fund remained focused on top tier commercial paper,
government securities as well as repurchase agreements. Additionally, our
maturity allocation positions the Fund to perform competitively as we approach
2004. At our fiscal year end, our Fund has employed a temporary strategy of
having a heavier concentration in overnight repo's coupled with one year
government agency notes to seek to produce higher yields than found in
commercial paper and corporate bonds. We plan on moving back into prime
commercial paper and corporate securities as yields in those sectors become more
attractive than our repo and government holdings.
The CNI CHARTER GOVERNMENT MONEY MARKET FUND continued to be well positioned
from both a sector as well as maturity perspective. The maturity profile
incorporated a barbell strategy for most of the past fiscal year. This strategy
has been beneficial, as the longer-term yields have declined over the past year.
This should also position the Fund to add value as short maturities start to
climb in 2004. The Fund's yield continued to be enhanced by the concentration of
Government Agency securities over Treasury instruments.
Our objective for the CNI CHARTER CALIFORNIA TAX EXEMPT MONEY MARKET FUND has
always been safety and liquidity. With the increasing budgetary challenges in
California and its municipalities, this objective took on an even more important
directive. Our stringent credit research effort helped to stay on top of a very
fluid political/economic situation in Sacramento over the past fiscal year.
STRATEGIC OUTLOOK
Our outlook continues to be constructive for money market investments. While
short rates may hold steady in the last few months of 2003 and early in 2004, it
is clear that we are coming to an end in this current interest rate cycle. While
an expanding economy is often synonymous with rising rates that in turn may
cause dislocations in financial markets, it can also provide opportunities for
higher yields and sector allocation shifts for money market funds.
Sincerely,
/S/Rodney J. Olea
Rodney J. Olea
DIRECTOR OF FIXED INCOME
CITY NATIONAL ASSET MANAGEMENT, INC.
Top Sectors
Prime Money Market Fund
[PIE CHART OMITTED]
U.S. Government Agency 43.4%
Repurchase Agreements 41.8%
U.S. Treasury Instruments 6.6%
Commercial Paper 5.9%
Other 2.3%
Government Money Market Fund
[PIE CHART OMITTED]
U.S. Government Agency 51.3%
Repurchase Agreements 45.0%
U.S. Treasury Instruments 3.7%
California Tax Exempt Money Market Fund
[PIE CHART OMITTED]
Housing-Multi Family 22.6%
Annual Appropriation 17.3%
Cash Flow 11.7%
Not for Profit 8.0%
Other 40.4%
CNI CHARTER FUNDS | PAGE 15
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
LARGE CAP VALUE EQUITY FUND
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------------
COMMON STOCK [97.4%]
AEROSPACE & DEFENSE [2.7%]
Boeing 11,100 $ 381
Raytheon 3,900 109
United Technologies 5,900 456
--------------------------------------------------------
TOTAL AEROSPACE & DEFENSE 946
========================================================
ALUMINUM [0.5%]
Alcoa 6,800 178
========================================================
AUTOMOTIVE [1.7%]
General Motors 8,250 338
Johnson Controls 2,500 236
--------------------------------------------------------
TOTAL AUTOMOTIVE 574
========================================================
BANKS [15.3%]
Bank of America 11,027 861
Bank of New York 11,600 338
BB&T 3,100 111
Charter One Financial 5,512 169
Comerica 2,500 116
FleetBoston Financial 11,100 335
Golden West Financial 3,100 277
JP Morgan Chase 17,905 615
Keycorp 6,600 169
National City 7,300 215
PNC Financial Services Group 1,700 81
SouthTrust 6,000 176
SunTrust Banks 3,000 181
Wachovia 8,100 334
Washington Mutual 10,500 413
Wells Fargo 15,730 810
Zions Bancorporation 2,400 134
--------------------------------------------------------
TOTAL BANKS 5,335
========================================================
BUILDING & CONSTRUCTION [0.5%]
Centex 2,400 187
========================================================
BUSINESS SERVICES [1.4%]
Cendant* 17,000 318
Fiserv* 4,700 170
--------------------------------------------------------
TOTAL BUSINESS SERVICES 488
========================================================
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------------
CHEMICALS [2.3%]
Air Products & Chemicals 7,400 $ 334
Eastman Chemical 6,200 208
EI Du Pont de Nemours 6,400 256
--------------------------------------------------------
TOTAL CHEMICALS 798
========================================================
CIRCUIT BOARDS [1.5%]
Jabil Circuit* 9,800 255
Sanmina-SCI* 15,000 146
Solectron* 22,000 129
--------------------------------------------------------
TOTAL CIRCUIT BOARDS 530
========================================================
COMMUNICATIONS EQUIPMENT [0.9%]
Corning* 18,000 170
Motorola 12,300 147
--------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT 317
========================================================
COMPUTER STORAGE DEVICES [1.2%]
EMC-Mass* 32,200 407
========================================================
COMPUTER SYSTEM DESIGN & SERVICES [0.2%]
Sun Microsystems* 21,000 70
========================================================
COMPUTERS & PERIPHERALS [1.2%]
Hewlett-Packard 21,800 422
========================================================
DIVERSIFIED MANUFACTURING [3.1%]
Caterpillar 4,900 337
Danaher 2,100 155
Illinois Tool Works 3,300 219
ITT Industries 4,300 257
Textron 2,400 95
--------------------------------------------------------
TOTAL DIVERSIFIED MANUFACTURING 1,063
========================================================
DRUGS [0.2%]
Merck 1,550 78
========================================================
ELECTRICAL PRODUCTS [0.2%]
General Electric 2,700 80
========================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 16
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
LARGE CAP VALUE EQUITY FUND (CONTINUED)
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------------
ELECTRICAL SERVICES [4.6%]
American Electric Power 5,600 $ 168
Constellation Energy Group 6,100 218
DTE Energy 2,500 92
Entergy 4,600 249
Exelon 5,000 318
FirstEnergy 9,700 310
PPL 3,400 139
Progress Energy 2,200 98
--------------------------------------------------------
TOTAL ELECTRICAL SERVICES 1,592
========================================================
ENTERTAINMENT [1.0%]
Carnival 10,000 329
========================================================
FINANCIAL SERVICES [9.1%]
Capital One Financial 1,900 108
Citigroup 34,386 1,565
Countrywide Credit Industry 5,600 438
Freddie Mac 8,330 436
MBNA 16,910 386
State Street 5,300 239
--------------------------------------------------------
TOTAL FINANCIAL SERVICES 3,172
========================================================
FOOD & BEVERAGE [1.3%]
Archer-Daniels-Midland 16,900 221
Coca-Cola Enterprises 12,100 231
--------------------------------------------------------
TOTAL FOOD & BEVERAGE 452
========================================================
GAS/NATURAL GAS [1.3%]
KeySpan 5,600 196
Sempra Energy 8,600 253
--------------------------------------------------------
TOTAL GAS/NATURAL GAS 449
========================================================
HEALTHCARE PRODUCTS & SERVICES [2.7%]
AmerisourceBergen 2,900 157
Cardinal Health 5,950 347
HCA 4,800 177
McKesson 8,000 266
--------------------------------------------------------
TOTAL HEALTHCARE PRODUCTS & SERVICES 947
========================================================
HOUSEHOLD PRODUCTS [1.0%]
Black & Decker 4,500 182
Fortune Brands 2,600 148
--------------------------------------------------------
TOTAL HOUSEHOLD PRODUCTS 330
========================================================
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------------
INSURANCE [6.1%]
Allstate 4,200 $ 153
American International Group 21,800 1,258
Hartford Financial Services Group 4,800 253
Principal Financial Group 5,100 158
Progressive 3,300 228
Prudential Financial 2,400 90
--------------------------------------------------------
TOTAL INSURANCE 2,140
========================================================
INVESTMENT BANKER/BROKER DEALER [4.8%]
Bear Stearns 2,200 165
Goldman Sachs Group 5,200 436
Lehman Brothers Holdings 4,200 290
Merrill Lynch 3,300 177
Morgan Stanley 11,800 595
--------------------------------------------------------
TOTAL INVESTMENT BANKER/BROKER DEALER 1,663
========================================================
MACHINERY [1.1%]
Cummins 3,700 164
Ingersoll-Rand, Cl A 4,200 225
--------------------------------------------------------
TOTAL MACHINERY 389
========================================================
MEDIA [3.9%]
AOL Time Warner* 33,000 499
Clear Channel Communications 8,300 318
Gannett 1,025 79
Tribune 4,900 225
Viacom, Cl B 6,405 245
--------------------------------------------------------
TOTAL MEDIA 1,366
========================================================
MEDICAL PRODUCTS & SERVICES [0.6%]
Aetna 3,600 220
========================================================
METALS & MINING [0.3%]
Newmont Mining 2,800 109
========================================================
PETROLEUM & FUEL PRODUCTS [1.6%]
Anadarko Petroleum 2,098 88
Apache 3,003 208
Occidental Petroleum 7,200 254
--------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS 550
========================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 17
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
LARGE CAP VALUE EQUITY FUND (CONCLUDED)
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------------
PETROLEUM REFINING [6.0%]
ChevronTexaco 4,320 $ 309
ConocoPhillips 1,440 79
Exxon Mobil 35,560 1,301
Marathon Oil 8,500 242
Sunoco 4,200 169
--------------------------------------------------------
TOTAL PETROLEUM REFINING 2,100
========================================================
PREPACKAGING SOFTWARE [0.2%]
Compuware* 15,000 80
========================================================
PRINTING & PUBLISHING [0.3%]
RR Donnelley & Sons 4,500 112
========================================================
RAILROADS [2.5%]
Burlington Northern Santa Fe 8,900 257
CSX 7,000 205
Norfolk Southern 7,700 142
Union Pacific 4,500 262
--------------------------------------------------------
TOTAL RAILROADS 866
========================================================
RETAIL [5.5%]
Darden Restaurants 8,550 162
Federated Department Stores 2,375 100
Home Depot 22,200 707
JC Penney 9,100 194
Lowe's 3,800 197
McDonald's 9,500 224
Staples* 7,500 178
Target 3,800 143
--------------------------------------------------------
TOTAL RETAIL 1,905
========================================================
SEMI-CONDUCTORS/INSTRUMENTS [2.8%]
Applied Materials* 10,300 187
Intel 11,150 307
Texas Instruments 20,400 465
--------------------------------------------------------
TOTAL SEMI-CONDUCTORS/INSTRUMENTS 959
========================================================
TELEPHONES & TELECOMMUNICATIONS [5.5%]
Alltel 5,900 274
AT&T 2,700 58
BellSouth 8,200 194
SBC Communications 31,100 692
Sprint-FON Group 17,300 261
Verizon Communications 13,009 422
--------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS 1,901
========================================================
TRANSPORTATION SERVICES [1.5%]
FedEx 4,700 303
Ryder System 7,200 211
--------------------------------------------------------
TOTAL TRANSPORTATION SERVICES 514
========================================================
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------------
WASTE DISPOSAL [0.8%]
Waste Management 10,400 $ 272
--------------------------------------------------------
TOTAL COMMON STOCK
(Cost $29,186) 33,890
====================================================
CASH EQUIVALENTS [2.6%]
Fidelity Institutional Domestic
Money Market Portfolio, Cl I 830,451 830
SEI Daily Income Trust Prime
Obligation Fund, Cl A 82,490 82
--------------------------------------------------------
TOTAL CASH EQUIVALENTS
(Cost $912) 912
====================================================
TOTAL INVESTMENTS [100.0%]
(Cost $30,098) 34,802
====================================================
OTHER ASSETS AND LIABILITIES [0.0%]
Investment Advisory Fees Payable (19)
Shareholder Servicing Fees Payable (7)
Administration Fees Payable (3)
Other Assets and Liabilities, Net 35
--------------------------------------------------------
OTHER ASSETS AND LIABILITIES 6
====================================================
NET ASSETS:
Paid-in-Capital -- Institutional Class
(unlimited authorization -- $0.01
par value) based on 4,452,696
outstanding shares of beneficial
interest 28,498
Paid-in-Capital -- Class A
(unlimited authorization -- $0.01 par value)
based on 241,765 outstanding shares of
beneficial interest 1,963
Accumulated net realized loss on investments (357)
Net unrealized appreciation on investments 4,704
--------------------------------------------------------
TOTAL NET ASSETS [100.0%] $ 34,808
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class
($33,016,022 / 4,452,696 shares) $7.41
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A
($1,791,798 / 241,765 shares) $7.41
========================================================
* NON-INCOME PRODUCING SECURITY
CL -- CLASS
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 18
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
LARGE CAP GROWTH EQUITY FUND
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------------
COMMON STOCK [96.3%]
AEROSPACE & DEFENSE [1.7%]
Alliant Techsystems* 2,000 $ 96
General Dynamics 400 31
United Technologies 3,700 286
--------------------------------------------------------
TOTAL AEROSPACE & DEFENSE 413
========================================================
AUTOMOTIVE [0.8%]
Harley-Davidson 3,900 188
========================================================
BANKS [1.1%]
Fifth Third Bancorp 4,800 266
========================================================
BIOMEDICAL RESEARCH & PRODUCTS [0.7%]
Applera - Applied
Biosystems Group 7,100 158
========================================================
BIOTECHNOLOGY [2.5%]
Amgen* 7,888 509
Medimmune* 3,300 109
--------------------------------------------------------
TOTAL BIOTECHNOLOGY 618
========================================================
BUSINESS SERVICES [6.3%]
Automatic Data Processing 2,900 104
Avery Dennison 2,700 136
Deluxe 2,900 116
eBay* 5,500 294
Equifax 5,700 127
First Data 6,600 264
Fiserv* 3,400 123
H&R Block 5,400 233
Monster Worldwide* 5,100 129
--------------------------------------------------------
TOTAL BUSINESS SERVICES 1,526
========================================================
CHEMICALS [0.4%]
International Flavors &
Fragrances 2,800 93
========================================================
COMMUNICATIONS EQUIPMENT [3.2%]
Cisco Systems* 24,050 470
Qualcomm 4,000 167
Rockwell Collins 5,800 146
--------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT 783
========================================================
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------------
COMPUTERS & PERIPHERALS [6.5%]
Dell* 16,265 $ 543
IBM 7,900 698
International Game Technology 6,300 177
Lexmark International* 2,500 158
--------------------------------------------------------
TOTAL COMPUTERS & PERIPHERALS 1,576
========================================================
DIVERSIFIED MANUFACTURING [1.0%]
ITT Industries 4,000 239
========================================================
DRUGS [13.8%]
Abbott Laboratories 1,895 81
Eli Lilly 7,430 441
Forest Laboratories* 5,200 268
Johnson & Johnson 14,764 731
Merck 12,255 620
Pfizer 29,708 903
Wyeth 6,250 288
--------------------------------------------------------
TOTAL DRUGS 3,332
========================================================
EDUCATIONAL SERVICES [1.2%]
Apollo Group, Cl A* 4,400 290
========================================================
ELECTRICAL PRODUCTS [5.4%]
General Electric 44,175 1,317
========================================================
FINANCIAL SERVICES [3.1%]
Citigroup 2,700 123
Fannie Mae 6,200 435
MBNA 8,800 201
--------------------------------------------------------
TOTAL FINANCIAL SERVICES 759
========================================================
FOOD & BEVERAGE [6.9%]
Coca-Cola 6,500 279
General Mills 6,500 306
Kraft Foods, Cl A 3,000 88
Pepsi Bottling Group 8,400 173
PepsiCo 8,500 390
Sara Lee 8,700 160
Sysco 8,100 265
--------------------------------------------------------
TOTAL FOOD & BEVERAGE 1,661
========================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 19
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
LARGE CAP GROWTH EQUITY FUND (CONTINUED)
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------------
HEALTHCARE PRODUCTS & SERVICES [2.2%]
AmerisourceBergen 1,100 $ 60
Cardinal Health 4,500 263
UnitedHealth Group 4,400 221
--------------------------------------------------------
TOTAL HEALTHCARE PRODUCTS & SERVICES 544
========================================================
HOUSEHOLD PRODUCTS [2.8%]
Kimberly-Clark 5,400 277
Procter & Gamble 3,300 306
Tupperware 7,400 99
--------------------------------------------------------
TOTAL HOUSEHOLD PRODUCTS 682
========================================================
INSURANCE [0.8%]
Progressive 2,700 187
========================================================
LABORATORY EQUIPMENT [0.8%]
Beckman Coulter 2,600 118
Waters* 2,400 66
--------------------------------------------------------
TOTAL LABORATORY EQUIPMENT 184
========================================================
MEDIA [0.8%]
Omnicom Group 2,600 187
========================================================
MEDICAL PRODUCTS & SERVICES [3.8%]
Baxter International 8,000 232
Becton Dickinson 500 18
Boston Scientific* 4,900 313
Guidant 4,100 192
Stryker 2,200 166
--------------------------------------------------------
TOTAL MEDICAL PRODUCTS & SERVICES 921
========================================================
METALS & MINING [1.2%]
Freeport-McMoRan Copper
& Gold, Cl B 5,700 189
Newmont Mining 2,800 109
--------------------------------------------------------
TOTAL METALS & MINING 298
========================================================
PREPACKAGING SOFTWARE [10.3%]
Adobe Systems 3,800 149
Electronic Arts* 2,100 194
Intuit* 3,600 174
Microsoft 56,730 1,576
Oracle* 34,760 390
--------------------------------------------------------
TOTAL PREPACKAGING SOFTWARE 2,483
========================================================
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------------
RETAIL [10.4%]
Bed Bath & Beyond* 1,500 $ 57
CVS 3,100 96
Gap 7,100 122
Home Depot 5,900 188
Kohl's* 3,800 203
Lowe's 5,900 306
NBTY* 3,500 82
Target 1,800 68
Wal-Mart Stores 25,275 1,412
--------------------------------------------------------
TOTAL RETAIL 2,534
========================================================
SEMI-CONDUCTORS/INSTRUMENTS [5.6%]
Intel 37,550 1,033
KLA-Tencor* 2,175 112
Maxim Integrated Products 2,200 87
Nvidia* 7,600 121
--------------------------------------------------------
TOTAL SEMI-CONDUCTORS/INSTRUMENTS 1,353
========================================================
TELEPHONES & TELECOMMUNICATIONS [1.1%]
SBC Communications 3,000 67
Verizon Communications 6,200 201
--------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS 268
========================================================
TRANSPORTATION SERVICES [1.9%]
United Parcel Service, Cl B 7,400 472
========================================================
TOTAL COMMON STOCK
(Cost $23,804) 23,332
====================================================
CASH EQUIVALENTS [3.4%]
Fidelity Institutional Domestic
Money Market Portfolio, Cl I 444,080 444
SEI Daily Income Trust Prime
Obligation Fund, Cl A 370,800 371
--------------------------------------------------------
TOTAL CASH EQUIVALENTS
(Cost $815) 815
====================================================
TOTAL INVESTMENTS [99.7%]
(Cost $24,619) 24,147
====================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 20
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
LARGE CAP GROWTH EQUITY FUND (CONCLUDED)
DESCRIPTION VALUE (000)
- -------------------------------------------------------------
OTHER ASSETS AND LIABILITIES [0.3%]
Investment Advisory Fees Payable $ (14)
Shareholder Servicing Fees Payable (5)
Administration Fees Payable (2)
Other Assets and Liabilities, Net 88
--------------------------------------------------------
OTHER ASSETS AND LIABILITIES 67
====================================================
NET ASSETS:
Paid-in-Capital -- Institutional Class
(unlimited authorization -- $0.01
par value) based on 3,492,585
outstanding shares of beneficial interest 27,455
Paid-in-Capital -- Class A
(unlimited authorization -- $0.01 par value)
based on 310,911 outstanding shares of
beneficial interest 2,286
Accumulated net realized loss on investments (5,055)
Net unrealized depreciation on investments (472)
--------------------------------------------------------
TOTAL NET ASSETS [100.0%] $ 24,214
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class
($22,249,281 / 3,492,585 shares) $6.37
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A
($1,965,092 / 310,911 shares) $6.32
========================================================
* NON-INCOME PRODUCING SECURITY
CL -- CLASS
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 21
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
RCB SMALL CAP VALUE FUND
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------------
COMMON STOCK [85.5%]
AUTOMOTIVE [1.9%]
Superior Industries International 11,000 $ 446
========================================================
BROADCASTING, NEWSPAPERS & ADVERTISING [9.2%]
Fisher Communications* 15,500 731
SBS Broadcasting* 55,000 1,368
--------------------------------------------------------
TOTAL BROADCASTING, NEWSPAPERS
& ADVERTISING 2,099
========================================================
BUSINESS SERVICES [8.2%]
Arbitron* 6,500 230
Coinstar* 30,800 414
Deluxe 9,450 379
RH Donnelley* 21,300 861
--------------------------------------------------------
TOTAL BUSINESS SERVICES 1,884
========================================================
CHEMICALS [2.5%]
Celanese* 17,100 565
========================================================
COMMUNICATIONS EQUIPMENT [2.0%]
Viasat* 26,000 463
========================================================
CONSUMER PRODUCTS & SERVICES [2.1%]
Central Garden & Pet* 18,100 473
========================================================
CONSUMER SERVICES [1.8%]
Angelica 22,000 418
========================================================
DATA PROCESSING [4.7%]
Certegy 21,700 697
CSG Systems International* 25,100 371
--------------------------------------------------------
TOTAL DATA PROCESSING 1,068
========================================================
ELECTRICAL PRODUCTS [4.7%]
GrafTech International* 56,000 448
Littelfuse* 27,100 623
--------------------------------------------------------
TOTAL ELECTRICAL PRODUCTS 1,071
========================================================
ENTERTAINMENT [3.0%]
Intrawest 49,100 687
========================================================
FOOD, BEVERAGE & TOBACCO [3.1%]
Ralcorp Holdings* 26,000 720
========================================================
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------------
INSURANCE [14.6%]
Alleghany* 5,942 $ 1,160
Conseco* 24,200 437
Fairfax Financial Holdings 4,600 721
Markel* 1,000 267
White Mountains Insurance Group 1,900 754
--------------------------------------------------------
TOTAL INSURANCE 3,339
========================================================
MACHINERY [4.4%]
Ametek 7,300 313
Franklin Electric 5,800 323
IDEX 10,000 364
--------------------------------------------------------
TOTAL MACHINERY 1,000
========================================================
MEDICAL PRODUCTS & SERVICES [2.3%]
VCA Antech* 22,100 521
========================================================
METALS [1.4%]
Ameron International 10,000 330
========================================================
PAPER & PAPER PRODUCTS [3.1%]
Rayonier 17,200 698
========================================================
PETROLEUM & FUEL PRODUCTS [1.8%]
Petroquest Energy* 200,000 418
========================================================
PREPACKAGING SOFTWARE [1.1%]
Tripos* 30,000 254
========================================================
REAL ESTATE INVESTMENT TRUST [3.0%]
Price Legacy* 193,635 678
========================================================
RETAIL [10.6%]
IHOP 25,350 833
Smart & Final* 133,700 835
Whitehall Jewellers* 68,600 769
--------------------------------------------------------
TOTAL RETAIL 2,437
========================================================
TOTAL COMMON STOCK
(Cost $14,644) 19,569
====================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 22
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
RCB SMALL CAP VALUE FUND (CONCLUDED)
DESCRIPTION SHARES/FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
PREFERRED STOCK [4.6%]
ENTERTAINMENT [1.3%]
Six Flags 15,000 $ 294
========================================================
HOTELS & LODGING [2.4%]
Innkeepers USA Trust, Ser A 22,000 552
========================================================
REAL ESTATE INVESTMENT TRUST [0.9%]
Price Legacy 12,500 201
--------------------------------------------------------
TOTAL PREFERRED STOCK
(Cost $1,019) 1,047
====================================================
REPURCHASE AGREEMENT [9.3%]
Morgan Stanley
0.800%, dated 09/30/03,
repurchased on 10/01/03,
repurchase price $2,133,877
(collateralized by U.S Treasury
Bills, par value $2,179,821,
1.800% (A), 10/02/03; with
total market value
$2,179,677) $ 2,134 2,134
------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $2,134) 2,134
====================================================
TOTAL INVESTMENTS [99.4%]
(Cost $17,797) 22,750
====================================================
OTHER ASSETS AND LIABILITIES [0.6%]
Investment Advisory Fees Payable (17)
Shareholder Servicing Fees Payable (16)
Administration Fees Payable (2)
Other Assets and Liabilities, Net 172
--------------------------------------------------------
OTHER ASSETS AND LIABILITIES 137
====================================================
DESCRIPTION VALUE (000)
- --------------------------------------------------------------
NET ASSETS:
Paid-in-Capital -- Institutional Class
(unlimited authorization -- $0.01
par value) based on 284,475 outstanding
shares of beneficial interest $ 5,289
Paid-in-Capital -- Class A
(unlimited authorization -- $0.01 par value)
based on 109,206 outstanding shares of
beneficial interest 2,104
Paid-in-Capital -- Class R
(unlimited authorization -- $0.01 par value)
based on 654,188 outstanding shares of
beneficial interest 10,512
Accumulated net realized gain on investments 29
Net unrealized appreciation on investments 4,953
--------------------------------------------------------
TOTAL NET ASSETS [100.0%] $ 22,887
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class
($6,236,068 / 284,475 shares) $21.92
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A
($2,384,525 / 109,206 shares) $21.84
========================================================
Net Asset Value and Redemption
Price Per Share -- Class R
($14,266,885 / 654,188 shares) $21.81
========================================================
Maximum Offering Price Per Share --
Class R Shares ($21.81 / 96.50%) $22.60
========================================================
* NON-INCOME PRODUCING SECURITY
(A) THE RATE REPORTED IS THE EFFECTIVE YIELD AT THE TIME OF PURCHASE.
SER -- SERIES
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 23
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
TECHNOLOGY GROWTH FUND
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------------
COMMON STOCK [97.1%]
AEROSPACE & DEFENSE [1.8%]
General Dynamics 275 $ 21
L-3 Communications Holdings* 300 13
--------------------------------------------------------
TOTAL AEROSPACE & DEFENSE 34
========================================================
BIOMEDICAL RESEARCH & PRODUCTS [0.9%]
Applera - Applied Biosystems Group 700 16
========================================================
BIOTECHNOLOGY [0.7%]
Genentech* 160 13
========================================================
CIRCUIT BOARDS [3.0%]
Benchmark Electronics* 200 8
Flextronics International* 950 14
Jabil Circuit* 850 22
Vishay Intertechnology* 700 12
--------------------------------------------------------
TOTAL CIRCUIT BOARDS 56
========================================================
COMMUNICATIONS EQUIPMENT [14.2%]
Cisco Systems* 4,205 82
Comverse Technology* 1,325 20
Corning* 3,000 28
Harris 300 11
Inter-Tel 250 6
Lucent Technologies* 4,500 10
Motorola 3,000 36
Nokia, ADR 950 15
Qualcomm 1,075 45
Utstarcom* 350 11
--------------------------------------------------------
TOTAL COMMUNICATIONS EQUIPMENT 264
========================================================
COMPUTER RELATED SERVICES [1.2%]
Check Point Software Technologies* 450 7
VeriSign* 550 7
WebEx Communications* 400 8
--------------------------------------------------------
TOTAL COMPUTER RELATED SERVICES 22
========================================================
COMPUTER STORAGE DEVICES [4.9%]
Advanced Digital Information* 700 10
EMC-Mass* 4,505 57
Storage Technology* 400 10
Western Digital* 1,200 15
--------------------------------------------------------
TOTAL COMPUTER STORAGE DEVICES 92
========================================================
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------------
COMPUTER SYSTEM DESIGN & SERVICES [7.6%]
Avid Technology* 200 $ 10
Black Box 250 10
Cadence Design Systems* 900 12
Cerner* 200 6
Intergraph* 325 8
National Instruments 300 12
NetScreen Technologies* 600 13
Reynolds & Reynolds, Cl A 300 8
Sun Microsystems* 5,375 18
Synopsys* 600 18
Tier Technologies, Cl B* 700 6
Unisys* 1,550 21
--------------------------------------------------------
TOTAL COMPUTER SYSTEM DESIGN & SERVICES 142
========================================================
COMPUTERS & PERIPHERALS [15.7%]
Dell* 2,575 86
Hewlett-Packard 3,323 64
IBM 1,125 100
Imation 500 16
Network Appliance* 575 12
Scansource* 400 15
--------------------------------------------------------
TOTAL COMPUTERS & PERIPHERALS 293
========================================================
DATA PROCESSING [2.0%]
Acxiom* 500 8
American Management Systems* 400 5
CSG Systems International* 650 10
Electronic Data Systems 450 9
Perot Systems, Cl A* 600 6
--------------------------------------------------------
TOTAL DATA PROCESSING 38
========================================================
ELECTRICAL PRODUCTS [0.3%]
Invision Technologies* 200 5
========================================================
PREPACKAGING SOFTWARE [21.4%]
Adobe Systems 300 12
BMC Software* 400 5
Citrix Systems* 1,125 25
Computer Associates International 500 13
Electronic Arts* 260 24
Intuit* 575 28
Microsoft 6,000 167
NetIQ* 1,300 15
Oracle* 5,815 65
Peoplesoft* 600 11
Progress Software* 600 13
Veritas Software* 675 21
--------------------------------------------------------
TOTAL PREPACKAGING SOFTWARE 399
========================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 24
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
TECHNOLOGY GROWTH FUND (CONCLUDED)
DESCRIPTION SHARES VALUE (000)
- --------------------------------------------------------------
SEMI-CONDUCTORS/INSTRUMENTS [23.4%]
Altera* 525 $ 10
Analog Devices* 625 24
Artisan Components* 500 8
Broadcom, Cl A* 275 7
Intel 4,150 114
Intersil, Cl A* 930 22
JDS Uniphase* 2,500 9
Linear Technology 375 13
LSI Logic* 1,617 15
Maxim Integrated Products 900 36
Microchip Technology 500 12
Micron Technology* 700 9
National Semiconductor* 550 18
Nvidia* 750 12
Omnivision Technologies* 200 9
QLogic* 300 14
Rambus* 700 12
Silicon Laboratories* 200 9
Standard Microsystems* 400 11
Texas Instruments 2,025 46
Xilinx* 600 17
Zoran* 400 8
--------------------------------------------------------
TOTAL SEMI-CONDUCTORS/INSTRUMENTS 435
========================================================
TOTAL COMMON STOCK
(Cost $2,193) 1,809
====================================================
CASH EQUIVALENTS [3.0%]
Fidelity Institutional Domestic
Money Market Portfolio, Cl I 38,900 39
SEI Daily Income Trust Prime
Obligation Fund, Cl A 15,887 16
--------------------------------------------------------
TOTAL CASH EQUIVALENTS
(Cost $55) 55
====================================================
TOTAL INVESTMENTS [100.1%]
(Cost $2,248) 1,864
====================================================
OTHER ASSETS AND LIABILITIES [-0.1%]
Investment Advisory Fees Payable (1)
Shareholder Servicing Fees Payable (1)
Other Assets and Liabilities, Net 1
--------------------------------------------------------
OTHER ASSETS AND LIABILITIES (1)
====================================================
DESCRIPTION VALUE (000)
- --------------------------------------------------------------
NET ASSETS:
Paid-in-Capital -- Institutional Class
(unlimited authorization -- $0.01
par value) based on 260,645
outstanding shares of beneficial
interest $ 2,332
Paid-in-Capital -- Class A
(unlimited authorization -- $0.01 par value)
based on 273,320 outstanding shares of
beneficial interest 1,321
Accumulated net realized loss on investments (1,406)
Net unrealized depreciation on investments (384)
--------------------------------------------------------
TOTAL NET ASSETS [100.0%] $ 1,863
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class
($913,196 / 260,645 shares) $3.50
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A
($949,856 / 273,320 shares) $3.48
========================================================
* NON-INCOME PRODUCING SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
CL -- CLASS
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 25
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
CORPORATE BOND FUND
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATION [3.9%]
FNMA
6.250%, 02/01/11 $1,500 $ 1,686
--------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATION
(Cost $1,697) 1,686
========================================================
U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATION [0.0%]
FHLMC REMIC, Ser 2068, Cl CA
6.500%, 03/15/26 1 1
--------------------------------------------------------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED OBLIGATION
(Cost $1) 1
========================================================
CORPORATE BONDS [88.4%]
AGRICULTURE [2.6%]
Cargill, MTN (A)
6.150%, 02/25/08 1,000 1,109
========================================================
AIR TRANSPORTATION [0.9%]
Federal Express, Ser A2
7.890%, 09/23/08 347 392
========================================================
AUTOMOTIVE [1.0%]
DaimlerChrysler N.A. Holdings
4.750%, 01/15/08 435 445
========================================================
BANKS [12.4%]
Bank of America
7.500%, 09/15/06 500 572
7.125%, 09/15/06 500 568
Bank One
7.625%, 08/01/05 1,000 1,105
Bankers Trust
7.250%, 10/15/11 500 584
Deutsche Bank
7.500%, 04/25/09 500 592
Fleet National Bank
8.625%, 02/15/05 100 109
US Bancorp
6.875%, 09/15/07 350 401
US Bank N.A.
6.300%, 07/15/08 300 341
Wachovia
7.125%, 10/15/06 100 115
6.875%, 09/15/05 500 548
Wells Fargo
7.250%, 08/24/05 250 276
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
Wells Fargo, Ser F, MTN
6.500%, 06/01/05 $ 125 $ 135
--------------------------------------------------------
TOTAL BANKS 5,346
========================================================
BEAUTY PRODUCTS [2.2%]
Avon Products
7.150%, 11/15/09 800 949
========================================================
CHEMICALS [1.7%]
Eastman Chemical
7.000%, 04/15/12 435 492
Praxair
6.625%, 10/15/07 200 225
--------------------------------------------------------
TOTAL CHEMICALS 717
========================================================
ELECTRICAL PRODUCTS [0.2%]
Emerson Electric
6.300%, 11/01/05 100 109
========================================================
ELECTRICAL SERVICES [7.1%]
American Electric Power
5.250%, 06/01/15 435 426
Consolidated Edison, Ser 92B
7.625%, 03/01/04 100 102
Entergy Mississippi
6.450%, 04/01/08 1,000 1,027
Iowa Electric Light & Power
6.000%, 10/01/08 200 217
Wisconsin Power & Light, Ser Y
7.600%, 07/01/05 100 109
WPS Resources
7.000%, 11/01/09 1,000 1,168
--------------------------------------------------------
TOTAL ELECTRICAL SERVICES 3,049
========================================================
FINANCIAL SERVICES [18.9%]
American General Finance,
Ser H, MTN
5.375%, 10/01/12 1,000 1,036
Caterpillar Finance, Ser F, MTN
4.690%, 04/25/05 310 326
Citigroup
7.250%, 10/01/10 1,000 1,185
Countrywide Home Loans
5.625%, 07/15/09 155 168
Equity Residential Properties
7.250%, 06/15/05 1,000 1,085
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 26
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
CORPORATE BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- --------------------------------------------------------------
General Electric Capital,
Ser A, MTN
6.875%, 11/15/10 $1,000 $ 1,163
Household Finance
6.375%, 11/27/12 855 949
Kimco Realty, MTN
6.960%, 07/16/07 1,000 1,131
Kimco Realty, Ser B, MTN
7.860%, 11/01/07 67 78
MBNA
4.625%, 09/15/08 410 431
Wells Fargo Financial
6.125%, 02/15/06 550 599
--------------------------------------------------------
TOTAL FINANCIAL SERVICES 8,151
========================================================
INSURANCE [8.2%]
AFLAC
6.500%, 04/15/09 1,000 1,140
Allstate
7.200%, 12/01/09 1,015 1,203
AXA Financial
7.750%, 08/01/10 1,000 1,197
--------------------------------------------------------
TOTAL INSURANCE 3,540
========================================================
INVESTMENT BANKER/BROKER DEALER [11.7%]
Donaldson, Lufkin, Jenrette
6.500%, 06/01/08 750 844
Goldman Sachs Group
6.875%, 01/15/11 900 1,035
JP Morgan Chase
5.750%, 01/02/13 775 828
Legg Mason
6.500%, 02/15/06 950 1,031
Lehman Brothers Holdings
8.250%, 06/15/07 1,100 1,301
--------------------------------------------------------
TOTAL INVESTMENT BANKER/BROKER DEALER 5,039
========================================================
MACHINERY [1.7%]
Caterpillar
9.000%, 04/15/06 620 720
========================================================
MEDIA [3.6%]
AOL Time Warner
6.750%, 04/15/11 395 441
Viacom
7.750%, 06/01/05 1,000 1,098
--------------------------------------------------------
TOTAL MEDIA 1,539
========================================================
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
PERSONAL CREDIT INSTITUTIONS [1.3%]
General Motors Acceptance
7.750%, 01/19/10 $ 500 $ 550
========================================================
PETROLEUM & FUEL PRODUCTS [3.6%]
ChevronTexaco
8.625%, 06/30/10 200 256
ConocoPhillips
6.375%, 03/30/09 305 347
Union Oil of California,
Ser C, MTN
7.900%, 04/18/08 800 930
--------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS 1,533
========================================================
RETAIL [4.4%]
Kohl's
6.300%, 03/01/11 1,000 1,134
McDonald's, Ser E, MTN
4.240%, 12/13/06 750 774
--------------------------------------------------------
TOTAL RETAIL 1,908
========================================================
TELEPHONES & TELECOMMUNICATIONS [5.9%]
AT&T Wireless Services
8.125%, 05/01/12 400 475
Comcast Cable
Communications Holdings
8.375%, 03/15/13 400 496
Deutsche Telekom
International Finance
5.250%, 07/22/13 435 440
GTE Florida, Ser D
6.250%, 11/15/05 200 217
New York Telephone
6.500%, 03/01/05 50 53
Pacific Bell
6.250%, 03/01/05 200 213
Verizon Virginia, Ser A
4.625%, 03/15/13 675 664
--------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS 2,558
========================================================
WASTE DISPOSAL [1.0%]
Waste Management
6.875%, 05/15/09 375 425
========================================================
TOTAL CORPORATE BONDS
(Cost $35,953) 38,079
====================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 27
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
CORPORATE BOND FUND (CONCLUDED)
DESCRIPTION FACE AMOUNT (000)/SHARES VALUE (000)
- -------------------------------------------------------------
MORTGAGE RELATED [2.3%]
Residential Asset Mortgage
Products, Ser 2003-RS6, Cl AI3
3.080%, 12/25/28 $ 975 $ 983
--------------------------------------------------------
TOTAL MORTGAGE RELATED
(Cost $975) 983
====================================================
ASSET-BACKED SECURITIES [2.2%]
Capital Auto Receivable
Asset Trust, Ser 2003-2, Cl A4A
1.960%, 01/15/09 975 958
--------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost $975) 958
====================================================
CASH EQUIVALENT [2.0%]
Fidelity Institutional Domestic
Money Market Portfolio, Cl I 856,130 856
--------------------------------------------------------
TOTAL CASH EQUIVALENT
(Cost $856) 856
====================================================
TOTAL INVESTMENTS [98.8%]
(Cost $40,457) 42,563
====================================================
OTHER ASSETS AND LIABILITIES [1.2%]
Investment Advisory Fees Payable (13)
Shareholder Servicing Fees Payable (9)
Administration Fees Payable (3)
Other Assets and Liabilities, Net 548
--------------------------------------------------------
OTHER ASSETS AND LIABILITIES 523
====================================================
DESCRIPTION VALUE (000)
- -------------------------------------------------------------
NET ASSETS:
Paid-in-Capital -- Institutional Class
(unlimited authorization -- $0.01
par value) based on 3,881,474
outstanding shares of beneficial
interest $39,810
Paid-in-Capital -- Class A
(unlimited authorization -- $0.01 par
value) based on 76,171 outstanding shares
of beneficial interest 795
Accumulated net realized gain on investments 375
Net unrealized appreciation on investments 2,106
--------------------------------------------------------
TOTAL NET ASSETS [100.0%] $43,086
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class
($42,255,973 / 3,881,474 shares) $10.89
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A
($829,614 / 76,171 shares) $10.89
========================================================
(A) SECURITY SOLD WITHIN THE TERMS OF A PRIVATE PLACEMENT MEMORANDUM, EXEMPT
FROM REGISTRATION UNDER SECTION 144A OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY BE SOLD ONLY TO DEALERS IN THAT PROGRAM OR OTHER "ACCREDITED
INVESTORS."
CL -- CLASS
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
MTN -- MEDIUM TERM NOTE
REMIC -- REAL ESTATE MORTGAGE INVESTMENT CONDUIT
SER -- SERIES
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 28
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
GOVERNMENT BOND FUND
DESCRIPTION FACE AMOUNT (000)/SHARES VALUE (000)
- -------------------------------------------------------------
U.S. TREASURY OBLIGATIONS [45.4%]
U.S. Treasury Notes
7.250%, 05/15/04 $1,700 $1,765
6.875%, 05/15/06 300 339
6.250%, 02/15/07 450 511
6.125%, 08/15/07 575 655
5.750%, 11/15/05 1,150 1,251
5.500%, 02/15/08 380 426
3.500%, 11/15/06 25 26
1.625%, 04/30/05 2,100 2,112
--------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $6,936) 7,085
====================================================
U.S. GOVERNMENT AGENCY OBLIGATIONS [53.1%]
FFCB
5.120%, 04/26/05 400 423
FHLB
7.250%, 05/13/05 1,400 1,530
6.625%, 11/15/10 440 511
6.500%, 11/15/05 100 110
5.790%, 04/27/09 350 393
5.570%, 04/07/04 100 102
4.875%, 08/15/05 500 531
FHLMC
6.990%, 07/26/06 150 170
5.125%, 07/15/12 650 691
FHLMC, Ser 2544, Cl PG
4.500%, 08/15/16 45 46
FNMA
6.250%, 02/01/11 500 562
4.375%, 03/15/13 2,000 2,007
2.020%, 02/28/05 560 562
FNMA MTN
5.300%, 10/28/08 600 655
--------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $7,997) 8,293
====================================================
CASH EQUIVALENT [1.0%]
Fidelity Institutional Domestic
Money Market Portfolio, Cl I 160,360 160
--------------------------------------------------------
TOTAL CASH EQUIVALENT
(Cost $160) 160
====================================================
TOTAL INVESTMENTS [99.5%]
(Cost $15,093) 15,538
====================================================
DESCRIPTION VALUE (000)
- -------------------------------------------------------------
OTHER ASSETS AND LIABILITIES [0.5%]
Investment Advisory Fees Payable $ (4)
Shareholder Servicing Fees Payable (3)
Administration Fees Payable (1)
Other Assets and Liabilities, Net 84
--------------------------------------------------------
OTHER ASSETS AND LIABILITIES 76
====================================================
NET ASSETS:
Paid-in-Capital -- Institutional Class
(unlimited authorization -- $0.01
par value) based on 1,427,345 outstanding
shares of beneficial interest 14,939
Paid-in-Capital -- Class A
(unlimited authorization -- $0.01 par value)
based on 1,691 outstanding
shares of beneficial interest 19
Accumulated net realized gain on investments 211
Net unrealized appreciation on investments 445
--------------------------------------------------------
TOTAL NET ASSETS [100.0%] $ 15,614
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class
($15,595,773 / 1,427,345 shares) $10.93
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A
($18,513 / 1,691 shares) $10.95
========================================================
CL -- CLASS
FFCB -- FEDERAL FARM CREDIT BANK
FHLB -- FEDERAL HOME LOAN BANK
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
MTN -- MEDIUM TERM NOTE
SER -- SERIES
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 29
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT BOND FUND
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
MUNICIPAL BONDS [96.7%]
CALIFORNIA [75.8%]
Anaheim, Public Finance Authority,
Convention Center Project,
Ser A, RB, ABMAC
5.500%, 08/01/12 $150 $ 173
Anaheim, Public Finance Authority,
Electric System Distribution
Facilities, RB, AMBAC
4.625%, 10/01/27 230 244
Berkeley, Ser C, GO, MBIA
Callable 09/01/05 @ 102
5.000%, 09/01/10 95 104
Beverly Hills, Unified School
District Authority, Ser B, GO
Callable 06/01/08 @ 101
4.700%, 06/01/13 50 53
California State, Educational
Facilities Authority, Pooled
College & University Projects,
Ser A, RB
4.300%, 04/01/09 100 107
California State, Educational
Facilities Authority, University
of Southern California Project,
Ser A, RB
Callable 10/01/07 @ 102
5.700%, 10/01/15 350 400
California State, GO
5.750%, 10/01/08 100 114
California State, GO
Pre-Refunded @ 101 (A)
5.750%, 03/01/05 100 108
California State, Infrastructure
& Economic Development,
Clean Water Fund, RB
5.000%, 10/01/07 260 293
California State, Water Resource
Center, Ser T, RB
Callable 12/01/08 @ 101
5.125%, 12/01/12 200 220
California Statewide, Community
Development Authority,
Sherman Oaks Project, Ser A,
RB, AMBAC
Callable 08/01/08 @ 103
5.500%, 08/01/11 150 169
Central, School District, Ser B,
GO, FSA Insured
7.000%, 08/01/07 325 388
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
Coachella Valley, Water District
Authority, Flood Control Project,
COP, AMBAC
Callable 10/01/07 @ 102
5.000%, 10/01/11 $250 $ 275
Culver City, Redevelopment Finance
Authority, TA, AMBAC
5.500%, 11/01/14 75 87
East Bay-Delta, Housing & Finance
Authority, Pass Thru-Lease Purchase
Program, Ser A, RB, MBIA
4.250%, 06/01/05 400 421
Evergreen School District,
Ser C, GO, FGIC Insured
Callable 09/01/08 @ 101
5.250%, 09/01/13 200 222
Foothill, Eastern Corridor Toll Road,
RB, MBIA
4.600%, 01/15/09 150 167
Fresno, Power Finance Authority,
RB, AMBAC
4.400%, 08/01/09 100 110
Hemet, Unified School District,
Nutrition Center Project, COP,
FSA Insured
Callable 04/01/07 @ 102
5.750%, 04/01/17 250 282
Imperial District, Public Electric, RB
4.250%, 11/01/06 250 271
Kings River, Conservation District,
Ser F, RB
4.400%, 01/01/09 100 110
Lancaster, Financing Authority,
TA, MBIA
5.000%, 02/01/12 200 223
Los Angeles County, Public Works
Finance Authority,
Ser A, RB, MBIA
Callable 09/01/06 @ 102
5.250%, 09/01/11 180 201
Los Angeles County, Public
Works Finance Authority,
Ser B, RB, MBIA
Callable 09/01/06 @ 102
5.250%, 09/01/14 200 221
Los Angeles County, Transportation
Commission Sales Tax Authority,
Property Second Senior Project,
Ser A, RB, MBIA
6.500%, 07/01/07 200 234
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 30
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
Los Angeles, Harbour Development
Project, Ser C, RB
Callable 11/01/06 @ 101
5.125%, 11/01/11 $180 $ 198
Los Angeles, Parking Authority,
Ser A, RB, AMBAC
4.100%, 05/01/08 100 109
Los Angeles, Police Emergency
Special Tax, RB
5.000%, 09/01/07 300 337
Los Angeles, Ser A, GO
5.000%, 04/01/10 200 226
Los Angeles, Ser A, GO, MBIA
3.000%, 09/01/05 250 259
M-S-R Public Power,
Ser G, RB, MBIA
Callable 07/01/07 @ 101
5.250%, 07/01/11 100 111
Modesto, Irrigation District
Financing Authority,
Domestic Water Project,
Ser D, RB, AMBAC
Callable 09/01/08 @ 101
5.000%, 09/01/12 100 108
Oceanside, Unified School
District Authority,
Election of 2000 Project,
Ser B, GO, MBIA
6.000%, 08/01/07 300 348
Orange County, Recovery
Certificate Authority, Ser A,
COP, MBIA
6.000%, 07/01/06 250 281
Pasadena, Electric Improvements
Authority, RB, FSA Insured
4.500%, 06/01/07 160 176
Pinole, Redevelopment Agency
Project, TA, FSA Insured
Callable 08/01/09 @ 101
5.250%, 08/01/14 100 111
Poway, Redevelopment Agency
Project, TA, AMBAC
Callable 12/15/11 @ 101
5.500%, 12/15/14 150 169
Riverside, Electric Authority,
RB, FSA Insured
Callable 10/01/11 @ 101
5.000%, 10/01/12 250 278
Riverside, Water Authority, RB
Callable 10/01/08 @ 101
5.375%, 10/01/12 100 112
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
Sacramento, City Financing
Authority, Solid Waste &
Redevelopment Project,
RB, AMBAC
Callable 12/01/09 @ 102
5.250%, 12/01/13 $350 $ 388
Sacramento, Municipal Utilities
Distribution Authority,
Ser I, RB, MBIA
Callable 01/01/04 @ 102
5.500%, 01/01/05 15 15
Sacramento, Municipal Utilities
Distribution Authority,
Ser I, RB, MBIA
Pre-Refunded @ 102 (A)
5.500%, 01/01/04 85 88
Saddleback, Community College
District, 1996 Capital
Improvement Financing
Project, COP, MBIA
Callable 06/01/06 @ 102
5.500%, 06/01/15 500 553
San Diego County,
North County Regional
Center for Expansion,
COP, AMBAC
Callable 11/15/06 @ 102
5.250%, 11/15/14 100 111
San Diego, Metropolitan
Transportation Development
Authority, Regional Fare
Collection System Project,
COP, MBIA
2.500%, 12/01/07 200 206
San Francisco (City & County),
Building Authority, Department
of General Services & Leasing,
Ser A, RB
5.000%, 10/01/13 400 433
San Francisco (City & County),
Public Utility Authority,
Ser A, RB, MBIA
Callable 11/01/06 @ 101.5
5.000%, 11/01/17 375 400
San Jose, Redevelopment
Authority, Merged Area
Redevelopment Project,
TA, MBIA
6.000%, 08/01/07 250 289
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 31
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
San Juan, Unified School
District, COP, MBIA
Callable 06/01/07 @ 102
5.000%, 06/01/08 $250 $ 281
San Mateo County, Transit
District Authority,
Ser A, RB, MBIA
Callable 06/01/08 @ 101
5.000%, 06/01/14 400 433
Santa Monica, Public Safety
Facilities Project, RB
Callable 07/01/09 @ 101
5.250%, 07/01/14 100 110
Turlock, Irrigation District,
Ser A, RB, MBIA
4.000%, 01/01/09 110 119
Wiseburn, School District,
Ser A, GO, FGIC Insured
4.200%, 08/01/07 125 137
--------------------------------------------------------
TOTAL CALIFORNIA 11,583
========================================================
DISTRICT OF COLUMBIA [1.3%]
District of Columbia, Ser A,
GO, MBIA
Pre-Refunded @ 101 (A)
5.250%, 06/01/08 170 195
========================================================
FLORIDA [4.4%]
Dade County, Water & Sewer
System, RB, FGIC Insured
Callable 10/01/07 @ 102
5.375%, 10/01/16 215 240
Miami-Dade County,
Expressway Authority,
RB, FGIC Insured
Pre-Refunded @ 101 (A)
6.375%, 07/01/10 350 428
--------------------------------------------------------
TOTAL FLORIDA 668
========================================================
NEW JERSEY [2.2%]
New Jersey State, Transportation
Authority, COP, AMBAC
5.000%, 09/15/06 300 330
========================================================
NEW YORK [5.0%]
New York City, Transitional
Finance Authority, Future
Tax Secured Project,
Ser B, RB, MBIA
Callable 05/15/08 @ 101
4.600%, 11/15/12 400 422
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
New York State, Dormitory
Authority, Mount Sinai School
of Medicine, RB, MBIA
5.000%, 07/01/08 $300 $ 336
--------------------------------------------------------
TOTAL NEW YORK 758
========================================================
NEVADA [1.3%]
Clark County, Ser B, GO
Callable 12/01/10 @ 101
6.000%, 12/01/12 175 207
========================================================
WASHINGTON [1.1%]
Klickitat County, Public Utility
District No. 001, Ser B, RB
Callable 12/01/11 @ 100
5.250%, 12/01/14 150 166
========================================================
PUERTO RICO [5.6%]
Puerto Rico, Electric Power
Authority, Power Project,
Ser CC, RB, MBIA
Callable 07/01/07 @ 101.5
5.250%, 07/01/09 100 113
Puerto Rico, Electric Power
Authority, Power Project,
Ser DD, RB, FSA Insured
5.000%, 07/01/05 200 214
Puerto Rico, Electric Power
Authority, Power Project,
Ser X, RB
Pre-Refunded @ 102 (A)
6.000%, 07/01/05 350 386
Puerto Rico, Municipal Finance
Agency, Ser A, RB, FSA Insured
Callable 07/01/07 @ 101.5
5.250%, 07/01/10 130 147
--------------------------------------------------------
TOTAL PUERTO RICO 860
========================================================
TOTAL MUNICIPAL BONDS
(Cost $14,309) 14,767
====================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 32
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT BOND FUND (CONCLUDED)
DESCRIPTION SHARES VALUE (000)
- -------------------------------------------------------------
CASH EQUIVALENT [0.9%]
SEI Tax Exempt Trust California
Tax Exempt Fund, Cl A 139,893 $ 140
--------------------------------------------------------
TOTAL CASH EQUIVALENT
(Cost $140) 140
====================================================
TOTAL INVESTMENTS [97.6%]
(Cost $14,449) 14,907
====================================================
OTHER ASSETS AND LIABILITIES [2.4%]
Investment Advisory Fees Payable (2)
Shareholder Servicing Fees Payable (3)
Administration Fees Payable (1)
Other Assets and Liabilities, Net 377
--------------------------------------------------------
OTHER ASSETS AND LIABILITIES 371
====================================================
NET ASSETS:
Paid-in-Capital -- Institutional Class
(unlimited authorization -- $0.01 par
value) based on 1,372,598 outstanding
shares of beneficial
interest 13,885
Paid-in-Capital -- Class A
(unlimited authorization -- $0.01par value)
based on 68,941 outstanding shares of
beneficial interest 737
Accumulated net realized gain on investments 198
Net unrealized appreciation on investments 458
--------------------------------------------------------
TOTAL NET ASSETS [100.0%] $ 15,278
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class
($14,546,087 / 1,372,598 shares) $10.60
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A
($732,309 / 68,941 shares) $10.62
========================================================
(A) PRE-REFUNDED SECURITY - THE MATURITY DATE SHOWN IS THE PRE-REFUNDED DATE.
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
CL -- CLASS
COP -- CERTIFICATE OF PARTICIPATION
FGIC -- FINANCIAL GUARANTY INSURANCE COMPANY
FSA -- FINANCIAL SECURITY ASSISTANCE
GO -- GENERAL OBLIGATION
MBIA -- MUNICIPAL BOND INSURANCE ASSOCIATION
RB -- REVENUE BOND
SER -- SERIES
TA -- TAX ALLOCATION
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 33
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND
DESCRIPTION SHARES/FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
COMMON STOCK [0.1%]
PETROLEUM REFINING [0.1%]
Southwest Royalties, Cl A (C) (D)* 784 $ 12
========================================================
TOTAL COMMON STOCK
(Cost $16) 12
====================================================
CORPORATE BONDS [96.2%]
AEROSPACE & DEFENSE [1.2%]
Esterline Technologies (A)
7.750%, 06/15/13 $100 106
Sequa, Ser B
8.875%, 04/01/08 150 160
TD Funding (A)
8.375%, 07/15/11 100 108
--------------------------------------------------------
TOTAL AEROSPACE & DEFENSE 374
========================================================
AIRLINES [0.4%]
American Airlines, Ser 2001-2
7.800%, 04/01/08 150 111
========================================================
APPAREL/TEXTILES [0.6%]
Levi Strauss
7.000%, 11/01/06 100 78
Warnaco (A)
8.875%, 06/15/13 100 107
--------------------------------------------------------
TOTAL APPAREL/TEXTILES 185
========================================================
AUTO RENT & LEASE [0.3%]
Rent-Way (A)
11.875%, 06/15/10 100 104
========================================================
AUTOPARTS [1.9%]
American Axle & Manufacturing
9.750%, 03/01/09 100 108
CSK Auto
12.000%, 06/15/06 100 112
Collins & Aikman Products
10.750%, 12/31/11 100 86
Tenneco Automotive (A)
10.250%, 07/15/13 100 108
TRW Automotive (A)
11.000%, 02/15/13 150 175
--------------------------------------------------------
TOTAL AUTOPARTS 589
========================================================
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
BROADCASTING, NEWSPAPERS & ADVERTISING [6.5%]
Adelphia Communications,
Ser B (E)
10.500%, 07/15/04 $100 $ 69
Advanstar Communications (A)
10.750%, 08/15/10 100 103
CSC Holdings
9.875%, 02/15/13 50 52
7.875%, 12/15/07 200 205
7.625%, 07/15/18 100 96
Century Communications,
Ser B (E)
11.170%, 01/15/08 100 42
Charter Communication
Holdings
10.000%, 05/15/11 100 76
Entravision Communications
8.125%, 03/15/09 100 105
Frontier Vision Holdings (E)
11.875%, 09/15/07 100 89
Gray Television
9.250%, 12/15/11 100 110
Insight Communications (B)
4.292%, 02/15/11 200 147
Interep National Radio Sales,
Ser B
10.000%, 07/01/08 100 91
Mediacom Capital
7.875%, 02/15/11 200 182
Nexstar Finance Holdings (B)
9.523%, 04/01/13 200 140
Olympus Communications,
Ser B (E)
10.625%, 11/15/06 100 100
Paxson Communications (B)
11.386%, 01/15/09 100 79
Salem Communication
Holdings, Ser B
9.000%, 07/01/11 100 108
Vivendi Universal (A)
9.250%, 04/15/10 150 172
--------------------------------------------------------
TOTAL BROADCASTING, NEWSPAPERS
& ADVERTISING 1,966
========================================================
BUILDING & CONSTRUCTION [2.5%]
Beazer Homes USA
8.375%, 04/15/12 100 108
Brand Services
12.000%, 10/15/12 150 166
Dayton Superior
13.000%, 06/15/09 150 133
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 34
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
International Utility Structures (E)
10.750%, 02/01/08 $100 $ 22
Nortek, Ser B
9.875%, 06/15/11 100 106
Texas Industries (A)
10.250%, 06/15/11 100 109
William Lyon Homes
10.750%, 04/01/13 100 109
--------------------------------------------------------
TOTAL BUILDING & CONSTRUCTION 753
========================================================
BUSINESS SERVICES [0.9%]
Corrections (A)
7.500%, 05/01/11 100 103
Wackenhut Corrections (A)
8.250%, 07/15/13 150 156
--------------------------------------------------------
TOTAL BUSINESS SERVICES 259
========================================================
CHEMICALS [4.7%]
Acetex
10.875%, 08/01/09 150 166
Equistar Chemical (A)
10.625%, 05/01/11 150 148
FMC
10.250%, 11/01/09 100 114
Huntsman ICI Chemicals
10.125%, 07/01/09 100 95
IMC Global (A)
10.875%, 08/01/13 100 103
IMC Global, Ser B
11.250%, 06/01/11 100 104
Lyondell Chemical
11.125%, 07/15/12 100 98
10.500%, 06/01/13 100 96
Rockwood Specialties Group (A)
10.625%, 05/15/11 100 107
Scotts
8.625%, 01/15/09 100 106
Terra Capital
11.500%, 06/01/10 100 92
United Industries, Ser D
9.875%, 04/01/09 200 206
--------------------------------------------------------
TOTAL CHEMICALS 1,435
========================================================
COMMERCIAL SERVICES [1.2%]
Brickman Group, Ser B
11.750%, 12/15/09 100 113
Iron Mountain
8.625%, 04/01/13 100 106
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
Salton
12.250%, 04/15/08 $150 $ 147
--------------------------------------------------------
TOTAL COMMERCIAL SERVICES 366
========================================================
COMPUTER SYSTEM DESIGN & SERVICES [0.7%]
Diva Systems, Ser B (E)
12.625%, 03/01/08 200 16
Unisys
7.875%, 04/01/08 100 104
Xerox
7.625%, 06/15/13 100 99
--------------------------------------------------------
TOTAL COMPUTER SYSTEM DESIGN & SERVICES 219
========================================================
CONSUMER PRODUCTS & SERVICES [3.0%]
Armkel Finance
9.500%, 08/15/09 100 110
Johnsondiversey Holdings (A) (B)
10.504%, 05/15/13 100 69
Johnsondiversey, Ser B
9.625%, 05/15/12 150 163
Jostens
12.750%, 05/01/10 100 116
NBTY, Ser B
8.625%, 09/15/07 100 103
Playtex Products
9.375%, 06/01/11 200 192
Revlon Consumer Products
12.000%, 12/01/05 150 150
--------------------------------------------------------
TOTAL CONSUMER PRODUCTS & SERVICES 903
========================================================
CONTAINERS & PACKAGING [2.2%]
Berry Plastics
10.750%, 07/15/12 100 111
Four M, Ser B
12.000%, 06/01/06 100 101
Owens-Illinois
8.100%, 05/15/07 100 103
Plastipak Holdings
10.750%, 09/01/11 100 109
Pliant
13.000%, 06/01/10 100 93
U.S. Can (A)
10.875%, 07/15/10 150 152
--------------------------------------------------------
TOTAL CONTAINERS & PACKAGING 669
========================================================
DAY CARE [0.2%]
La Petite Acadamy, Ser B
10.000%, 05/15/08 100 60
========================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 35
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
DIVERSIFIED OPERATIONS [3.6%]
Concentra Operating (A)
9.500%, 08/15/10 $100 $ 104
Grey Wolf
8.875%, 07/01/07 34 35
Jacuzzi Brands (A)
9.625%, 07/01/10 150 156
Jordan Industries, Ser B
10.375%, 08/01/07 100 50
Kansas City Southern
9.500%, 10/01/08 100 110
National Waterworks, Ser B
10.500%, 12/01/12 100 109
Reddy Ice Group (A)
8.875%, 08/01/11 100 105
Tekni-Plex, Ser B
12.750%, 06/15/10 100 98
Tyco International Group
6.125%, 11/01/08 200 209
Werner Holdings, Ser A
10.000%, 11/15/07 100 101
--------------------------------------------------------
TOTAL DIVERSIFIED OPERATIONS 1,077
========================================================
ELECTRICAL PRODUCTS [5.2%]
AES
9.375%, 09/15/10 19 19
AES (A)
9.000%, 05/15/15 100 106
CMS Energy
7.500%, 01/15/09 100 99
Calpine
8.500%, 02/15/11 100 71
Calpine (A)
8.500%, 07/15/10 150 138
Cogentrix Energy, Ser B
8.750%, 10/15/08 150 124
Edison Mission Energy
7.730%, 06/15/09 150 122
L-3 Communications
6.125%, 07/15/13 100 99
Mirant Americas (E)
7.625%, 05/01/06 150 119
Motors & Gears, Ser D
10.750%, 11/15/06 150 114
PSEG Energy Holdings
7.750%, 04/16/07 100 100
Reliant Resources (A)
9.500%, 07/15/13 100 90
Sanmina-SCI
10.375%, 01/15/10 100 117
Sierra Pacific Resources
8.750%, 05/15/05 150 140
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
TNP Enterprises, Ser B
10.250%, 04/01/10 $100 $ 103
--------------------------------------------------------
TOTAL ELECTRICAL PRODUCTS 1,561
========================================================
ENTERTAINMENT [15.3%]
AMC Entertainment
9.875%, 02/01/12 100 109
9.500%, 02/01/11 100 105
Ameristar Casinos
10.750%, 02/15/09 100 114
Argosy Gaming
10.750%, 06/01/09 150 164
Aztar
9.000%, 08/15/11 100 108
8.875%, 05/15/07 100 105
Bluegreen, Ser B
10.500%, 04/01/08 150 155
Boca Resorts
9.875%, 04/15/09 150 160
Cinemark USA
9.000%, 02/01/13 100 107
Coast Hotels & Casinos
9.500%, 04/01/09 100 107
HMH Properties, Ser B
7.875%, 08/01/08 150 154
Hard Rock Hotel (A)
8.875%, 06/01/13 200 211
Hockey
11.250%, 04/15/09 100 113
Horseshoe Gaming Holdings,
Ser B
8.625%, 05/15/09 100 107
Imax
7.875%, 12/01/05 150 149
Intrawest
10.500%, 02/01/10 100 110
Isle of Capri Casinos
8.750%, 04/15/09 100 106
John Q Hammons Hotels, Ser B
8.875%, 05/15/12 100 108
Kerzner International
8.875%, 08/15/11 150 163
Majestic Star Casino (A)
9.500%, 10/15/10 200 205
Majestic Star Casino, Ser B
10.875%, 07/01/06 100 105
Mandalay Resort Group
6.450%, 02/01/06 60 62
Mandalay Resort Group, Ser B
10.250%, 08/01/07 100 115
MGM Mirage
9.750%, 06/01/07 150 170
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 36
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
Mohegan Tribal Gaming
8.375%, 07/01/11 $100 $ 109
MTR Gaming Group, Ser B
9.750%, 04/01/10 200 208
Muzak
9.875%, 03/15/09 100 95
Old Evangeline Downs
13.000%, 03/01/10 150 153
Park Place Entertainment
9.375%, 02/15/07 150 166
Peninsula Gaming, Ser B
12.250%, 07/01/06 100 104
Penn National Gaming
8.875%, 03/15/10 100 108
Scientific Games, Ser B
12.500%, 08/15/10 100 117
Six Flags (A)
9.750%, 04/15/13 150 141
Speedway Motorsports (A)
6.750%, 06/01/13 100 101
Waterford Gaming (A)
8.625%, 09/15/12 148 155
Windsor Woodmount Black
Hawk, Ser B (E)
13.000%, 03/15/05 100 65
--------------------------------------------------------
TOTAL ENTERTAINMENT 4,634
========================================================
FINANCIAL SERVICES [2.2%]
Caithness Coso Fund, Ser B
9.050%, 12/15/09 89 96
Chukchansi Economic
Development Authority (A)
14.500%, 06/15/09 100 123
ESI Tractebel Acquisitions, Ser B
7.990%, 12/30/11 71 71
Gemstone Investor (A)
7.710%, 10/31/04 100 99
Labranche
9.500%, 08/15/04 100 105
Majestic Investor
11.653%, 11/30/07 150 163
--------------------------------------------------------
TOTAL FINANCIAL SERVICES 657
========================================================
FOOD & BEVERAGE [5.5%]
Aurora Foods, Ser B (E)
9.875%, 02/15/07 100 57
Del Monte
9.250%, 05/15/11 150 165
Del Monte (A)
8.625%, 12/15/12 50 55
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
Dimon, Ser B
9.625%, 10/15/11 $100 $ 111
Dole Foods
8.875%, 03/15/11 100 106
Great Atlantic & Pacific Tea
9.125%, 12/15/11 100 94
Herbalife International
11.750%, 07/15/10 100 113
Land O' Lakes
8.750%, 11/15/11 100 84
Le-Natures (A)
9.000%, 06/15/13 150 157
Merisant (A)
9.500%, 07/15/13 100 107
National Wine & Spirits
10.125%, 01/15/09 100 87
Pantry
10.250%, 10/15/07 100 103
Pilgrim's Pride
9.625%, 09/15/11 100 108
Premier International Foods PLC
12.000%, 09/01/09 100 110
Swift (A)
12.500%, 01/01/10 200 221
--------------------------------------------------------
TOTAL FOOD & BEVERAGE 1,678
========================================================
FORESTRY [0.3%]
Tembec Industries
7.750%, 03/15/12 100 94
========================================================
HOUSEHOLD FURNITURE & FIXTURES [0.3%]
Sealy Mattress, Ser B
9.875%, 12/15/07 100 100
========================================================
MACHINERY [4.3%]
AK Steel
7.875%, 02/15/09 150 107
Briggs & Stratton
8.875%, 03/15/11 150 168
Building Materials, Ser B
8.000%, 10/15/07 50 49
7.750%, 07/15/05 200 203
Case New Holland (A)
9.250%, 08/01/11 100 107
Cummins (A)
9.500%, 12/01/10 100 114
Grant Prideco Escrow
9.000%, 12/15/09 136 147
Intermet
9.750%, 06/15/09 100 98
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 37
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
Mail-Well I
9.625%, 03/15/12 $100 $ 108
Resolution Performance Products
13.500%, 11/15/10 100 90
Trimas
9.875%, 06/15/12 100 102
--------------------------------------------------------
TOTAL MACHINERY 1,293
========================================================
MEDICAL [4.7%]
Alpharma (A)
8.625%, 05/01/11 100 100
Ardent Health Services (A)
10.000%, 08/15/13 100 105
Beverly Enterprises
9.625%, 04/15/09 200 212
Bio-Rad Laboratories (A)
7.500%, 08/15/13 100 105
Biovail
7.875%, 04/01/10 100 104
Extendicare Health Services
9.350%, 12/15/07 100 103
HCA
6.910%, 06/15/05 150 158
Magellan Health Services (E)
9.000%, 02/15/08 150 83
Pacificare Health Systems
10.750%, 06/01/09 100 115
Triad Hospital Holdings, Ser B
11.000%, 05/15/09 100 110
Triad Hospitals, Ser B
8.750%, 05/01/09 100 109
Vanguard Health Systems
9.750%, 08/01/11 100 107
--------------------------------------------------------
TOTAL MEDICAL 1,411
========================================================
OFFICE FURNITURE & FIXTURES [0.2%]
Xerox
7.125%, 06/15/10 50 50
========================================================
PAPER & PAPER PRODUCTS [2.0%]
Appleton Papers, Ser B
12.500%, 12/15/08 100 109
Bowater (A)
6.500%, 06/15/13 200 187
Buckeye Technologies
8.500%, 12/15/05 100 101
Georgia-Pacific
7.700%, 06/15/15 100 98
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
JSG Funding
9.625%, 10/01/12 $100 $ 110
--------------------------------------------------------
TOTAL PAPER & PAPER PRODUCTS 605
========================================================
PETROLEUM & FUEL PRODUCTS [6.8%]
Chesapeake Energy
8.125%, 04/01/11 100 108
Dynegy Holdings (A)
10.125%, 07/15/13 150 158
El Paso
7.000%, 05/15/11 200 165
El Paso Natural Gas (A)
7.625%, 08/01/10 150 145
El Paso Production Holding (A)
7.750%, 06/01/13 150 143
Forest Oil
8.000%, 06/15/08 150 159
Frontier Escrow (A)
8.000%, 04/15/13 150 152
GulfTerra Energy, Ser B
8.500%, 06/01/10 200 216
Plains Exploration & Production,
Ser B
8.750%, 07/01/12 150 161
Pride International
9.375%, 05/01/07 54 55
Southwest Royalties
11.500%, 06/30/04 52 52
Swift Energy
9.375%, 05/01/12 100 108
Vintage Petroleum
7.875%, 05/15/11 100 104
Williams Companies
9.250%, 03/15/04 100 102
6.500%, 08/01/06 100 100
Wiser Oil
9.500%, 05/15/07 150 142
--------------------------------------------------------
TOTAL PETROLEUM & FUEL PRODUCTS 2,070
========================================================
PRINTING & PUBLISHING [3.7%]
American Color Graphics (A)
10.000%, 06/15/10 100 106
Canwest Media
10.625%, 05/15/11 100 113
Day International Group, Ser B
11.125%, 06/01/05 150 152
Dex Media East
9.875%, 11/15/09 100 113
Dex Media West (A)
8.500%, 08/15/10 100 109
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 38
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
Garden State Newspapers
8.625%, 07/01/11 $100 $ 105
Haights Cross Operating (A)
11.750%, 08/15/11 100 102
Hollinger (A)
11.875%, 03/01/11 100 111
Moore North America
Finance (A)
7.875%, 01/15/11 100 106
Primedia (A)
8.000%, 05/15/13 100 101
--------------------------------------------------------
TOTAL PRINTING & PUBLISHING 1,118
========================================================
RETAIL [4.4%]
Amerigas Partner
8.875%, 05/20/11 100 107
Asbury Automotive Group
9.000%, 06/15/12 100 100
Autonation
9.000%, 08/01/08 100 112
CKE Restaurants
9.125%, 05/01/09 100 100
Cole National Group
8.875%, 05/15/12 100 98
Dominos (A)
8.250%, 07/01/11 100 106
Friendly Ice Cream
10.500%, 12/01/07 75 77
Group 1 Automotive (A)
8.250%, 08/15/13 100 108
JC Penney, Ser A, MTN
7.050%, 05/23/05 100 104
Pep Boys
7.000%, 06/01/05 150 152
Rite Aid (A)
8.125%, 05/01/10 100 107
United Auto Group
9.625%, 03/15/12 150 164
--------------------------------------------------------
TOTAL RETAIL 1,335
========================================================
RUBBER & PLASTIC [0.9%]
Applied Extrusion Technologies, Ser B
10.750%, 07/01/11 100 79
Norampac (A)
6.750%, 06/01/13 100 102
Radnor Holdings (A)
11.000%, 03/15/10 100 84
--------------------------------------------------------
TOTAL RUBBER & PLASTIC 265
========================================================
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
SEMI-CONDUCTORS/INSTRUMENTS [0.5%]
Fisher Scientific (A)
8.000%, 09/01/13 $150 $ 159
========================================================
STEEL & STEEL WORKS [0.3%]
Gerdau Ameristeel (A)
10.375%, 07/15/11 100 101
========================================================
TELEPHONES & TELECOMMUNICATIONS [7.1%]
Alamosa Holdings (B)
3.763%, 02/15/10 150 118
Centennial Cellular Operating (A)
10.125%, 06/15/13 100 103
GCI
9.750%, 08/01/07 150 152
Insight Midwest
9.750%, 10/01/09 150 151
Level 3 Communications (B)
3.401%, 12/01/08 150 126
Lucent Technologies
7.250%, 07/15/06 150 144
Nextel Communications
7.375%, 08/01/15 250 252
Nextel Partners (A)
8.125%, 07/01/11 150 146
Primus Telecommunications
Group
11.250%, 01/15/09 100 104
Qwest
5.625%, 11/15/08 100 98
RCN
10.125%, 01/15/10 100 46
Rogers Wireless
9.625%, 05/01/11 100 115
Rural Cellular
9.750%, 01/15/10 100 91
Telecorp PCS
10.625%, 07/15/10 65 77
Time Warner Telecommunications
10.125%, 02/01/11 100 100
Triton PCS
8.500%, 06/01/13 150 161
Western Wireless (A)
9.250%, 07/15/13 150 153
--------------------------------------------------------
TOTAL TELEPHONES & TELECOMMUNICATIONS 2,137
========================================================
WASTE DISPOSAL [0.7%]
Allied Waste North America, Ser B
10.000%, 08/01/09 100 108
IESI
10.250%, 06/15/12 100 109
--------------------------------------------------------
TOTAL WASTE DISPOSAL 217
========================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 39
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
HIGH YIELD BOND FUND (CONCLUDED)
DESCRIPTION FACE AMOUNT (000)/SHARES VALUE (000)
- -------------------------------------------------------------
WHOLESALE [1.9%]
Alaris Medical
7.250%, 07/01/11 $100 $ 100
B&G Foods, Ser D
9.625%, 08/01/07 100 102
Collins & Aikman Floor Cover,
Ser B
9.750%, 02/15/10 100 106
National Beef Packing (A)
10.500%, 08/01/11 150 163
Nebraska Book
8.750%, 02/15/08 100 104
--------------------------------------------------------
TOTAL WHOLESALE 575
========================================================
TOTAL CORPORATE BONDS
(Cost $28,310) 29,130
====================================================
CONVERTIBLE BOND [0.3%]
Key Energy Services,
Convertible to 25.9740 Shares
5.000%, 09/15/04 100 99
--------------------------------------------------------
TOTAL CONVERTIBLE BOND
(Cost $95) 99
====================================================
CASH EQUIVALENT [1.6%]
Fidelity Institutional Domestic
Money Market Portfolio, Cl I 493,254 493
--------------------------------------------------------
TOTAL CASH EQUIVALENT
(Cost $493) 493
====================================================
WARRANTS [0.0%]
Dayton Superior,
Expires 06/15/09 (A) 100 --
Diva Systems,
Expires 03/01/08 (A) 600 --
Pliant,
Expires 06/01/10 (A) 100 --
--------------------------------------------------------
TOTAL WARRANTS
(Cost $0) --
====================================================
TOTAL INVESTMENTS [98.2%]
(Cost $28,914) 29,734
====================================================
VALUE (000)
- -------------------------------------------------------------
OTHER ASSETS AND LIABILITIES [1.8%]
Investment Advisory Fees Payable $ (15)
Shareholder Servicing Fees Payable (10)
Administration Fees Payable (2)
Other Assets and Liabilities, Net 558
--------------------------------------------------------
OTHER ASSETS AND LIABILITIES 531
====================================================
NET ASSETS:
Paid-in-Capital -- Institutional Class
(unlimited authorization -- $0.01
par value) based on 1,495,654
outstanding shares of beneficial
interest 14,328
Paid-in-Capital -- Class A
(unlimited authorization -- $0.01 par value)
based on 1,886,032 outstanding shares of
beneficial interest 16,793
Distribution in excess of net investment income (14)
Accumulated net realized loss on investments (1,662)
Net unrealized appreciation on investments 820
--------------------------------------------------------
TOTAL NET ASSETS [100.0%] $ 30,265
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class
($13,387,092 / 1,495,654 shares) $8.95
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A
($16,877,469 / 1,886,032 shares) $8.95
========================================================
* NON-INCOME PRODUCING SECURITY
(A) SECURITY SOLD WITHIN THE TERMS OF A PRIVATE PLACEMENT MEMORANDUM, EXEMPT
FROM REGISTRATION UNDER SECTION 144A OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY BE SOLD ONLY TO DEALERS IN THAT PROGRAM OR OTHER
"ACCREDITED INVESTORS."
(B) STEP BOND -- THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS IS THE
EFFECTIVE YIELD AT TIME OF PURCHASE. THE COUPON ON A STEP BOND CHANGES ON A
SPECIFIC DATE.
(C) SECURITY IS VALUED AT FAIR VALUE AS DETERMINED IN GOOD FAITH BY THE BOARD OF
TRUSTEES OF THE TRUST.
(D) SECURITY CONSIDERED ILLIQUID
(E) DEFAULTED SECURITY. IN DEFAULT ON INTEREST PAYMENTS
CL -- CLASS
MTN -- MEDIUM TERM NOTE
PLC -- PUBLIC LIMITED COMPANY
SER -- SERIES
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 40
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
PRIME MONEY MARKET FUND
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS [50.0%]
FHLB
1.420%, 04/21/04 $ 5,000 $ 5,000
FHLB (A)
0.981%, 10/02/03 15,000 15,000
1.001%, 10/15/03 30,000 29,988
1.125%, 05/07/04 30,000 29,797
FHLB, Ser 7R04
5.605%, 04/08/04 5,310 5,431
FHLMC
1.185%, 08/06/04 30,000 30,000
1.400%, 09/13/04 50,000 50,000
FHLMC (A)
1.003%, 10/09/03 15,098 15,095
1.042%, 10/30/03 25,390 25,369
0.904%, 11/21/03 20,000 19,974
FNMA (A)
1.001%, 10/06/03 25,000 24,997
1.000%, 10/07/03 40,000 39,993
TIGER (A)
1.482%, 11/15/03 15,000 14,973
--------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $305,617) 305,617
====================================================
COMMERCIAL PAPER [5.8%]
BANKS [5.8%]
Barton Capital (A)
1.062%, 11/06/03 18,000 17,981
Societe Generale (A)
1.051%, 11/04/03 18,000 17,982
--------------------------------------------------------
TOTAL BANKS 35,963
====================================================
TOTAL COMMERCIAL PAPER
(Cost $35,963) 35,963
====================================================
CORPORATE OBLIGATIONS [2.1%]
BANKS [0.2%]
Bank One
7.250%, 08/15/04 1,170 1,229
========================================================
FINANCIAL SERVICES [0.2%]
CoreStates Capital
5.875%, 10/15/03 1,525 1,527
========================================================
DESCRIPTION FACE AMOUNT (000)/SHARES VALUE (000)
- -------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO [1.7%]
Pepsi Bottling Holdings (B)
5.375%, 02/17/04 $10,000 $10,158
========================================================
TOTAL CORPORATE OBLIGATIONS
(Cost $12,914) 12,914
====================================================
CASH EQUIVALENT [0.2%]
Fidelity Institutional Domestic
Money Market Portfolio, Cl I 956,592 957
--------------------------------------------------------
TOTAL CASH EQUIVALENT
(Cost $957) 957
====================================================
REPURCHASE AGREEMENTS [41.9%]
Bank of America
1.120%, dated 09/30/03,
repurchased on 10/01/03,
repurchase price $50,001,556
(collateralized by U.S. Government
Obligations, par value $63,689,632,
5.500%, 12/01/32; with total
market value $51,000,000)(C) $50,000 50,000
Bank One Capital Markets
1.100%, dated 09/30/03,
repurchased on 10/01/03,
repurchase price $55,001,681
(collateralized by U.S. Government
Obligations, par value $73,605,000,
5.500%, 03/01/18; with total
market value $56,100,081)(C) 55,000 55,000
Credit Suisse First Boston
1.120%, dated 09/30/03,
repurchased on 10/01/03,
repurchase price $75,002,333
(collateralized by various U.S.
Government Obligations, ranging
in par value $2,172-$7,151,992,
4.000%-10.000%, 04/01/13-
10/01/33; with total market
value $76,503,924)(C) 75,000 75,000
Goldman Sachs Group
1.080%, dated 09/30/03,
repurchased on 10/01/03,
repurchase price $25,000,750
(collateralized by U.S. Government
Obligations, par value $26,428,294,
4.500%, 09/01/33; with total
market value $25,500,000)(C) 25,000 25,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 41
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
PRIME MONEY MARKET FUND (CONCLUDED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
Lehman Brothers
1.100%, dated 09/30/03,
repurchased on 10/01/03,
repurchase price $50,601,546
(collateralized by various U.S.
Government Obligations,
ranging in par value
$13,911,718-$47,966,553,
5.000%-7.000%, 04/01/18-
06/01/33; with total market
value $51,610,080)(C) $50,600 $50,600
--------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $255,600) 255,600
====================================================
TOTAL INVESTMENTS [100.0%]
(Cost $611,051) 611,051
====================================================
OTHER ASSETS AND LIABILITIES [0.0%]
Investment Advisory Fees Payable (130)
Shareholder Servicing Fees Payable (212)
Administration Fees Payable (46)
Other Assets and Liabilities, Net 239
--------------------------------------------------------
OTHER ASSETS AND LIABILITIES (149)
====================================================
VALUE (000)
- -------------------------------------------------------------
NET ASSETS:
Paid-in-Capital -- Institutional Class
(unlimited authorization -- $0.01
par value) based on 287,219,463
outstanding shares of beneficial interest $287,160
Paid-in-Capital -- Class A
(unlimited authorization -- $0.01 par
value) based on 205,459,125 outstanding
shares of beneficial interest 205,435
Paid-in-Capital -- Class S
(unlimited authorization -- $0.01 par
value) based on 118,712,242 outstanding
shares of beneficial interest 118,703
Undistributed net investment income 11
Accumulated net realized loss on investments (407)
--------------------------------------------------------
TOTAL NET ASSETS [100.0%] $610,902
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class $1.00
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A $1.00
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class S $1.00
========================================================
(A) THE RATE REPORTED IS THE EFFECTIVE YIELD AT TIME OF PURCHASE.
(B) SECURITY SOLD WITHIN THE TERMS OF A PRIVATE PLACEMENT MEMORANDUM, EXEMPT
FROM REGISTRATION UNDER SECTION 144A OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY BE SOLD ONLY TO DEALERS IN THAT PROGRAM OR OTHER
"ACCREDITED INVESTORS."
(C) TRI-PARTY REPURCHASE AGREEMENT
CL -- CLASS
FHLB -- FEDERAL HOME LOAN BANK
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
SER -- SERIES
TIGER -- TREASURY INVESTORS GROWTH RECEIPT
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 42
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
GOVERNMENT MONEY MARKET FUND
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS [55.1%]
FHLB
6.375%, 11/14/03 $25,000 $ 25,152
1.550%, 12/01/03 7,000 6,999
5.375%, 01/05/04 15,300 15,458
3.750%, 02/13/04 47,000 47,405
FHLB (A)
0.981%, 10/02/03 35,000 34,999
1.001%, 10/03/03 17,000 16,999
1.001%, 10/15/03 70,000 69,973
1.112%, 05/07/04 10,000 9,933
FHLMC
3.750%, 04/15/04 8,743 8,857
1.185%, 08/06/04 70,000 70,000
1.400%, 09/13/04 74,400 74,400
FHLMC (A)
1.021%, 10/07/03 50,000 49,991
1.011%, 10/09/03 22,043 22,038
1.105%, 10/22/03 50,000 49,968
1.105%, 10/24/03 50,000 49,965
1.106%, 11/25/03 25,000 24,958
1.345%, 01/29/04 47,509 47,299
2.478%, 02/26/04 20,000 19,899
1.255%, 03/25/04 20,000 19,879
FNMA
4.750%, 11/14/03 14,500 14,554
5.125%, 02/13/04 5,920 6,001
1.350%, 10/22/04 50,400 50,400
FNMA (A)
2.013%, 10/01/03 94,670 94,670
2.021%, 10/06/03 100,000 99,986
1.000%, 10/07/03 110,000 109,982
1.011%, 10/08/03 32,491 32,485
1.125%, 10/29/03 50,000 49,956
1.347%, 12/12/03 70,000 69,814
1.264%, 02/06/04 20,000 19,911
2.482%, 03/05/04 35,000 34,814
1.286%, 04/02/04 25,000 24,838
--------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $1,271,583) 1,271,583
====================================================
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
REPURCHASE AGREEMENTS [44.9%]
Bank of America
1.120%, dated 09/30/03,
repurchased on 10/01/03,
repurchase price $225,007,000
(collateralized by various
U.S. Government Obligations,
ranging in par value $19,779,765-
$76,922,639, 5.000%-7.500%,
04/01/16-09/01/33; with
total market value
$229,500,000)(B) $225,000 $225,000
Bank One Capital Markets
1.100%, dated 09/30/03,
repurchased on 10/01/03,
repurchase price $225,006,875
(collateralized by various
U.S. Government Obligations,
ranging in par value $5,000-
$49,000,000, 1.061% (A)
-6.500%, 01/22/04-09/01/33;
with total market value
$229,500,793)(B) 225,000 225,000
Credit Suisse First Boston
1.120%, dated 09/30/03,
repurchased on 10/01/03,
repurchase price $25,000,778
(collateralized by various
U.S. Government Obligations,
ranging in par value $1,217-
$43,135,000, 3.500%-7.500%,
04/01/13-09/01/33; with total
market value
$25,500,629)(B) 25,000 25,000
Goldman Sachs Group
1.080%, dated 09/30/03,
repurchased on 10/01/03,
repurchase price $145,004,350
(collateralized by various
U.S. Government Obligations,
ranging in par value $7,061,601-
$81,182,022, 5.500%-6.000%,
11/01/32-10/01/33; with total
market value
$147,900,000)(B) 145,000 145,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 43
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
GOVERNMENT MONEY MARKET FUND (CONCLUDED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
JP Morgan Chase
1.100%, dated 09/30/03,
repurchased on 10/01/03,
repurchase price $75,002,292
(collateralized by various
U.S. Government Obligations,
ranging in par value $6,977,423-
$20,315,000, 3.000%-5.500%,
04/20/32-08/15/37; with
total market value
$76,503,167)(B) $ 75,000 $ 75,000
Lehman Brothers
1.100%, dated 09/30/03,
repurchased on 10/01/03,
repurchase price $243,007,425
(collateralized by various
U.S. Government Obligations,
ranging in par value $17,730,000-
$50,000,000, 4.000%-7.500%,
09/01/18-06/01/33; with
total market value
$247,843,275)(B) 243,000 243,000
UBS Paine Webber
1.100%, dated 09/30/03,
repurchased on 10/01/03,
repurchase price $100,003,056
(collateralized by various
U.S. Government Obligations,
ranging in par value $1,285,000-
$72,119,280, 5.500%-8.000%,
06/01/32-09/01/33; with
total market value
$102,001,083)(B) 100,000 100,000
--------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $1,038,000) 1,038,000
====================================================
TOTAL INVESTMENTS [100.0%]
(Cost $2,309,583) 2,309,583
====================================================
OTHER ASSETS AND LIABILITIES [0.0%]
Investment Advisory Fees Payable (506)
Shareholder Servicing Fees Payable (942)
Administration Fees Payable (176)
Other Assets and Liabilities, Net 1,281
--------------------------------------------------------
OTHER ASSETS AND LIABILITIES (343)
====================================================
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
NET ASSETS:
Paid-in-Capital -- Institutional Class
(unlimited authorization -- $0.01
par value) based on 56,842,845 outstanding
shares of beneficial interest $ 56,843
Paid-in-Capital -- Class A
(unlimited authorization -- $0.01 par
value) based on 2,060,861,777
outstanding shares of beneficial interest 2,060,862
Paid-in-Capital -- Class S
(unlimited authorization -- $0.01 par
value) based on 191,539,042 outstanding
shares of beneficial interest 191,539
Accumulated net realized loss on investments (4)
--------------------------------------------------------
TOTAL NET ASSETS [100.0%] $2,309,240
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class $1.00
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A $1.00
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class S $1.00
========================================================
(A) THE RATE REPORTED IS THE EFFECTIVE YIELD AT TIME OF PURCHASE.
(B) TRI-PARTY REPURCHASE AGREEMENT
FHLB -- FEDERAL HOME LOAN BANK
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 44
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
MUNICIPAL BONDS [104.1%]
CALIFORNIA [99.7%]
ABAG, Finance Authority for
Non-Profit Corporations,
Hamlin School Project,
Ser A, GO (A) (B) (C)
1.100%, 08/01/32 $ 1,500 $ 1,500
ABAG, Finance Authority for
Non-Profit Corporations,
Jackson Labs, RB (A) (B) (C)
1.080%, 07/01/32 4,900 4,900
ABAG, Finance Authority for
Non-Profit Corporations,
Public Policy Institute,
Ser A, RB (A) (B) (C)
1.100%, 11/01/31 3,045 3,045
ABAG, Finance Authority for
Non-Profit Corporations,
School of the Sacred
Heart, Ser B, RB (A) (B) (C)
1.200%, 06/01/30 8,700 8,700
ABAG, Finance Authority for
Non-Profit Corporations,
Ser C, COP (A) (B) (C)
1.200%, 10/01/27 700 700
Alameda-Contra Costa,
School Finance Authority,
Capital Improvement
Financing Project,
Ser F, COP (A) (B) (C)
1.130%, 08/01/23 1,100 1,100
Alvord, Unified School District,
GO, MBIA (A) (B)
1.110%, 08/01/19 9,165 9,165
Anaheim, Multi-Family Housing
Authority, Heritage Village
Apartments Project,
Ser A, RB (A) (B) (D)
1.080%, 07/15/33 4,505 4,505
California State, Community
Development Authority,
Covenant Retirement
Communities Project,
COP (A) (B) (C)
1.050%, 12/01/22 7,605 7,605
California State, Community
Development Authority,
Fremont-Rideout Project,
Ser A, RB, AMBAC (A) (B)
1.150%, 01/01/31 5,500 5,500
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
California State, Community
Development Authority,
Motion Picture & Television
Project, Ser A, RB (A) (B) (C)
1.070%, 03/01/31 $ 7,500 $ 7,500
California State, Department
of Water Resources,
Ser 764, RB,
FSA Insured (A) (B)
1.080%, 05/01/12 14,000 14,000
California State, Department
of Water Resources,
Ser B-1, RB (A) (B) (C)
1.200%, 05/01/22 13,700 13,700
California State, Economic
Development Financing
Authority, KQED Project,
RB (A) (B) (C)
1.050%, 04/01/20 1,600 1,600
California State, Economic
Development Financing
Authority, Volk Enterprises
Project, RB (A) (B) (C)
1.100%, 06/01/21 900 900
California State, Educational
Facilities Authority,
Chapman University Project,
RB (A) (B) (C)
1.200%, 12/01/30 1,000 1,000
California State, Educational
Facilities Authority,
Life Chiropractic College
Project, RB (A) (B) (C)
1.040%, 01/01/25 6,500 6,500
California State, Educational
Facilities Authority,
Point Loma Nazarene
University Project, RB
(A) (B) (C)
1.300%, 10/01/29 2,150 2,150
California State, Educational
Facilities Authority, University
of Southern California,
Ser C, RB (A) (B)
1.050%, 10/01/33 10,000 10,000
California State, Health Facilities
Finance Authority,
Catholic Healthcare Project,
Ser C, RB, MBIA (A) (B)
1.100%, 07/01/20 7,000 7,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 45
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
California State, Health Facilities
Finance Authority, Scripps
Health Project, Ser A, RB
(A) (B) (C)
1.050%, 10/01/23 $12,900 $ 12,900
California State, Health Facilities
Finance Authority,
Sutter Health Facility,
Ser B, RB, AMBAC (A) (B)
1.150%, 07/01/12 9,100 9,100
California State, Infrastructure
& Economic Development
Authority, Recreational Facility
Project, J. Paul Getty Trust,
Ser B, RB (A) (B)
1.000%, 04/01/33 17,000 17,000
California State, Infrastructure
& Economic Development
Authority, Recreational Facility
Project, J. Paul Getty Trust,
Ser C, RB (A) (B)
1.000%, 04/01/33 2,000 2,000
California State, School Cash
Reserve Program Authority,
Ser A, RB
2.000%, 07/06/04 6,500 6,554
California State, Ser A,
GO (A) (B) (C)
1.090%, 10/01/29 10,000 10,000
California State, Ser A, RAN
2.000%, 06/16/04 15,000 15,095
California Statewide,
Communities Development
Authority, Center for Early
Education Project,
RB (A) (B) (C)
1.100%, 09/01/31 1,000 1,000
California Statewide,
Communities Development
Authority, Concordia University
Irvine Project, Ser A,
RB (A) (B) (C)
1.210%, 10/01/31 7,200 7,200
California Statewide,
Communities Development
Authority, More than Shelter
Project, Ser A, RB (A) (B) (D)
1.100%, 01/15/31 6,460 6,460
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
Carlsbad, Unified School District
Authority, School Facilities
Bridge Funding Project,
COP, FSA Insured (A) (B)
1.100%, 09/01/30 $ 2,900 $ 2,900
1.100%, 09/01/32 7,000 7,000
Compton, Community College,
BAN
2.000%, 02/03/04 5,000 5,016
Contra Costa County, Multi-Family
Mortgage Authority, Bay
Apartment Communities
Project, Ser B, RB (A) (B) (D)
1.100%, 11/15/22 2,400 2,400
Contra Costa County, Putters,
Ser 154z, COP, MBIA (A) (B)
1.100%, 11/01/07 5,995 5,995
Corona, Multi-Family Housing
Authority, County Hills
Apartment Project 1995
B, RB (A) (B) (D)
1.060%, 02/01/25 6,955 6,955
Fremont, Building &
Equipment Financing Project,
COP (A) (B) (C)
1.100%, 07/01/15 4,500 4,500
Fremont, Multi-Family Housing
Authority, Mission Wells Project,
RB (A) (B) (C)
1.150%, 09/01/14 5,700 5,700
Fresno, Unified School District,
GO, MBIA (A) (B)
1.110%, 08/01/21 8,390 8,390
Golden Empire, School Financing
Authority, Kern High School
District Project, RB (A) (B) (C)
1.030%, 08/01/31 1,000 1,000
Huntington Park, Public Financing
Authority, Parking Project,
Ser A, RB (A) (B) (C)
1.250%, 09/01/19 3,695 3,695
Kings County, Multi-Family
Housing Authority, Edgewater
Isle Apartments Project,
Ser A, RB (A) (B) (D)
1.110%, 02/15/31 15,710 15,710
Los Angeles County, Community
Development Authority,
Willowbrook Project, COP
(A) (B) (C)
1.070%, 11/01/15 1,000 1,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 46
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
Los Angeles County, Multi-Family
Housing Authority,
Crescent Gardens Project,
Ser A, RB (A) (B) (C)
1.100%, 07/01/14 $10,700 $ 10,700
Los Angeles County, Multi-Family
Housing Authority, Malibu
Canyon Apartments Project,
Ser B, RB (A) (B) (C)
1.100%, 06/01/10 7,900 7,900
Los Angeles County, Samuel A
Fryer Vavney, Ser A,
COP (A) (B) (C)
1.050%, 08/01/21 7,000 7,000
Los Angeles, Community
Redevelopment Authority,
CMC Medical Plaza Partner
Project, COP (A) (B) (C)
1.050%, 12/01/05 1,000 1,000
Los Angeles, Corporate Lease
Authority, RB, MBIA (A) (B)
1.110%, 12/01/09 20,660 20,660
Los Angeles, GO, MBIA (A) (B)
1.110%, 03/01/10 5,370 5,370
Los Angeles, Multi-Family
Housing Authority,
Canyon Creek Apartments
Project, RB (A) (B) (C)
1.130%, 12/01/10 8,800 8,800
Los Angeles, Multi-Family
Housing Authority,
Meadowridge Apartments
Project, RB (A) (B) (D)
1.000%, 09/01/18 3,890 3,890
Los Angeles, Ser A, TRAN
1.750%, 06/30/04 3,000 3,018
Los Angeles, United School
District, Ser B12,
GO, MBIA (A) (B)
1.090%, 01/01/27 4,000 4,000
Los Angeles, Wastewater System
Authority, Ser C, RB,
FGIC (A) (B)
1.250%, 12/01/31 6,000 6,000
Newport Beach, Hoag
Memorial Hospital,
Ser A, RB (A) (B)
1.230%, 10/01/26 2,000 2,000
Newport Beach, Hoag
Memorial Hospital,
Ser C, RB (A) (B)
1.230%, 10/01/26 4,500 4,500
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
Oakland, Capital Equipment
Project, COP (A) (B) (C)
1.030%, 12/01/15 $ 4,690 $ 4,690
Oakland, Joint Powers Financing
Authority, Ser A-2,
RB, FSA Insured (A) (B)
1.050%, 08/01/21 19,390 19,390
Oakland, Liquidity Facilities
Authority, RB, ABAG
(A) (B) (C)
1.100%, 12/01/09 1,315 1,315
Ontario, Multi-Family
Housing Authority,
Park Centre Partners,
Ser A, RB (A) (B) (C)
1.050%, 08/01/07 2,450 2,450
Orange County, Apartment
Development Authority,
Harbor Pointe - Issue D
Project, RB (A) (B)
1.100%, 12/01/06 1,900 1,900
Orange County, Sanitation
District Authority, Ser A,
COP (A) (B)
1.200%, 08/01/29 4,300 4,300
Pajaro Valley, School District
Authority, Bridge Funding
Project, COP,
FSA Insured (A) (B)
1.100%, 09/01/14 390 390
Pasadena, Rose Bowl
Improvements Project,
COP (A) (B) (C)
1.050%, 12/01/11 3,100 3,100
Pico Rivera, Redevelopment
Agency, Crossroads Plaza
Project, RB (A) (B) (C)
1.100%, 12/01/10 7,200 7,200
Redwood City, City Hall
Project, COP (A) (B) (C)
1.100%, 07/01/21 1,800 1,800
Riverside County, Housing
Authority, De Anza Villas
Project, RB (A) (B) (C)
1.050%, 12/01/16 2,450 2,450
Riverside County, Ser C,
COP (A) (B) (C)
1.000%, 12/01/15 18,200 18,200
Sacramento County,
Sanitation District Finance
Authority, RB (A) (B)
1.080%, 12/01/27 1,000 1,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 47
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
Sacramento, City Unified
School District, TRAN
2.000%, 12/17/03 $20,000 $ 20,032
Sacramento, Multi-Family
Housing Authority,
Peter P. Bollinger Investment,
Ser C, RB (A) (B) (D)
1.100%, 07/15/29 5,600 5,600
San Bernardino County,
Housing Authority,
Alta Loma Heritage Project,
Ser A, RB (A) (B) (C)
1.000%, 02/01/23 1,354 1,354
San Bernardino County,
Housing Authority,
Indian Knoll Apartment Project,
Ser A, RB (A) (B) (D)
0.990%, 06/01/05 3,580 3,580
San Bernardino County,
Housing Authority,
Reche Canyon Apartment
Project, Ser B, RB (A) (B) (E)
0.990%, 06/01/05 1,500 1,500
San Bernardino County,
Multi-Family Housing
Authority, Mountain View
Project, RB (A) (B) (C)
1.100%, 03/01/27 2,210 2,210
San Bernardino County,
Multi-Family Housing
Authority, Parkview Plaza
Project, Western Land Properties,
Ser A, RB (A) (B) (C)
1.100%, 03/01/27 5,220 5,220
San Bernardino County,
Multi-Family Housing
Authority, Rosewood Apartment
Project, Ser A, RB (A) (B) (D)
1.100%, 05/15/29 1,225 1,225
San Diego, County & School
District, Ser B, RAN
1.750%, 06/30/04 12,000 12,073
San Diego, Museum of Art
Project, COP (A) (B) (C)
1.200%, 09/01/30 1,400 1,400
San Diego, Water Authority,
Ser I, MBIA, COP (A) (B)
1.130%, 11/01/10 5,993 5,993
San Diego, Water Improvement
Authority, RB,
FGIC Insured (A) (B)
1.110%, 08/01/08 7,085 7,085
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
San Francisco (City & County),
Community Facilities
District No. 4, RB (A) (B) (C)
1.100%, 08/01/31 $ 8,560 $ 8,560
San Francisco (City & County),
Housing Authority,
Bayside Village Project D,
Ser A, RB (A) (B) (C)
1.080%, 12/01/05 20,500 20,500
San Francisco (City & County),
Housing Authority,
Bayside Village Project D,
Ser B, RB (A) (B) (C)
1.080%, 12/01/05 1,000 1,000
San Francisco (City & County),
Public Utilities Authority,
Ser B20, RB, MBIA (A) (B)
1.090%, 10/01/22 8,100 8,100
San Francisco, Bay Area
Toll Authority, Ser C, RB,
AMBAC (A) (B)
1.050%, 04/01/25 5,650 5,650
San Jose, Evergreen Community
College District, Ser J, GO,
MBIA (A) (B)
1.130%, 03/01/11 8,300 8,300
San Marcos, Industrial
Development Authority,
Amistar Project, RB
(A) (B) (C)
0.850%, 12/01/05 2,675 2,675
Santa Clara County, East Side
United High School District,
TRAN
1.400%, 06/30/04 10,000 10,032
Santa Clara County, Financing
Authority, VMC Facility
Replacement Project, Ser B,
RB (A) (B)
1.080%, 11/15/25 11,200 11,200
Santa Clara County,
Unified School District,
TRAN
1.400%, 06/30/04 10,500 10,536
Simi Valley, Industrial &
Economic Development
Authority, Wambold Furniture
Project, RB (A) (B) (C)
1.000%, 12/01/14 1,750 1,750
Simi Valley, Multi-Family Housing
Authority, Lincoln Wood
Ranch Project, RB (A) (B) (D)
1.100%, 06/01/10 12,800 12,800
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 48
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND (CONTINUED)
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
Simi Valley, Multi-Family
Housing Authority,
Ser A, RB (A) (B)
1.100%, 07/01/23 $ 7,100 $ 7,100
Southern California,
Metropolitan Water District
Authority, Ser C-2, RB (A) (B)
1.100%, 07/01/36 4,540 4,540
Stockton, Multi-Family
Housing Authority,
Mariners Pointe Project,
Ser A, RB (A) (B) (C)
1.100%, 09/01/18 2,100 2,100
Sunnyvale, Government Center
Site Acquisition Project,
Ser A, COP, AMBAC (A) (B)
1.050%, 04/01/31 4,700 4,700
Three Valleys, Municipal
Water District Authority,
Miramar Water Treatment
Project, COP (A) (B) (C)
1.000%, 11/01/14 4,700 4,700
Upland, Community
Redevelopment Authority,
Sunset Ridge & Village
Apartments Project, RB
(A) (B) (C)
1.100%, 12/01/29 6,700 6,700
Val Verde, Unified School District,
Ser C, COP (A) (B) (C)
1.250%, 10/01/22 1,900 1,900
Westminster, Civic Center
Refinancing Program, Ser A,
COP, AMBAC (A) (B)
1.100%, 06/01/22 3,500 3,500
Westminster, Redevelopment
Agency, Commercial
Redevelopment Project,
TA, AMBAC (A) (B)
1.100%, 08/01/27 13,045 13,045
Yolo County, Multi-Family
Housing Authority,
Primero Grove Project,
Ser A, RB (A) (B) (C)
1.000%, 11/01/27 10,735 10,735
--------------------------------------------------------
TOTAL CALIFORNIA 649,058
========================================================
DESCRIPTION FACE AMOUNT (000) VALUE (000)
- -------------------------------------------------------------
PUERTO RICO [3.5%]
Puerto Rico, Electric Power
Authority, RB, MBIA (A) (B)
1.080%, 07/01/20 $10,030 $ 10,030
Puerto Rico, Electric Power
Authority, Ser A-40, RB,
MBIA (A) (B)
1.080%, 07/01/23 2,000 2,000
Puerto Rico, GO (A) (B)
1.070%, 07/01/17 4,495 4,495
Puerto Rico, Highway &
Transportation Authority,
RB, MBIA (A) (B)
1.060%, 01/01/08 6,000 6,000
--------------------------------------------------------
TOTAL PUERTO RICO 22,525
========================================================
VARIOUS STATES [0.9%]
GAF, Tax Exempt Bond Grantor
Trust, RB (A) (B) (C)
1.500%, 10/01/12 5,885 5,885
========================================================
TOTAL MUNICIPAL BONDS
(Cost $677,468) 677,468
====================================================
TOTAL INVESTMENTS [104.1%]
(Cost $677,468) 677,468
====================================================
OTHER ASSETS AND LIABILITIES [-4.1%]
Investment Advisory Fees Payable (111)
Shareholder Servicing Fees Payable (329)
Administration Fees Payable (54)
Other Assets and Liabilities, Net (25,970)
--------------------------------------------------------
OTHER ASSETS AND LIABILITIES (26,464)
====================================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 49
statement of net assets
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT MONEY MARKET FUND (CONCLUDED)
DESCRIPTION VALUE (000)
- -------------------------------------------------------------
ET ASSETS:
Fund Shares -- Institutional Class
(unlimited authorization -- $0.01 par
value) based on 87,819,825 outstanding
shares of beneficial interest $ 87,820
Fund Shares -- Class A
(unlimited authorization -- $0.01 par
value) based on 539,181,452 outstanding
shares of beneficial interest 539,181
Fund Shares -- Class S
(unlimited authorization -- $0.01 par
value) based on 24,001,774 outstanding
shares of beneficial interest 24,002
Accumulated net realized gain
on investments 1
--------------------------------------------------------
TOTAL NET ASSETS [100.0%] $651,004
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Class $1.00
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class A $1.00
========================================================
Net Asset Value, Offering and Redemption
Price Per Share -- Class S $1.00
========================================================
(A) FLOATING RATE SECURITY -- THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON SEPTEMBER 30, 2003.
(B) PUT AND DEMAND FEATURE -- THE DATE REPORTED ON THE STATEMENT OF NET ASSETS
IS THE FINAL MATURITY, NOT THE NEXT RESET OR PUt DATE.
(C) SECURITIES ARE HELD IN CONJUNCTION WITH A LETTER OF CREDIT FROM A MAJOR BANK
OR FINANCIAL INSTITUTION.
(D) SECURITIES ARE COLLATERALIZED UNDER AN AGREEMENT FROM FHLMC/FNMA.
(E) SECURITY DERIVES FROM A GUARANTEED AGREEMENT.
ABAG -- ASSOCIATION OF BAY AREA GOVERNMENTS
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
BAN -- BOND ANTICIPATION NOTE
COP -- CERTIFICATE OF PARTICIPATION
FGIC -- FINANCIAL GUARANTY INSURANCE COMPANY
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
FSA -- FINANCIAL SECURITY ASSISTANCE
GO -- GENERAL OBLIGATION
MBIA -- MUNICIPAL BOND INSURANCE ASSOCIATION
RAN -- REVENUE ANTICIPATION NOTE
RB -- REVENUE BOND
SER -- SERIES
TA -- TAX ALLOCATION
TRAN -- TAX & REVENUE ANTICIPATION NOTE
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 50
statements of operations
FOR THE YEAR ENDED SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
Large Cap Value Large Cap Growth RCB Small Cap Technology
Equity Fund Equity Fund Value Fund Growth Fund
(000) (000) (000) (000)
-------------------------------------------------------------------------
INVESTMENT INCOME:
Dividend $633 $235 $145 $ 5
Interest 9 7 32 1
Less: Foreign tax withheld -- -- (3) --
- -------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 642 242 174 6
- -------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment Advisory Fees 188 130 138 13
Shareholder Servicing Fees--Institutional Class 73 47 9 2
Shareholder Servicing Fees--Class A(1) 5 6 6 4
Shareholder Servicing Fees--Class R(1) -- -- 56 --
Administrative Fees 28 19 15 1
Transfer Agent Fees 3 2 1 --
Custodian Fees 2 2 3 1
Professional Fees 2 1 1 --
Printing Fees 1 1 1 --
Registration and Filing Fees 1 1 -- 1
Insurance and Other Fees 2 1 1 --
- -------------------------------------------------------------------------------------------------------------------------------
Total Expenses 305 210 231 22
- -------------------------------------------------------------------------------------------------------------------------------
Recapture of Investment Advisory Fees Waived(2) 4 5 3 --
Less, Waiver of:
Investment Advisory Fees -- -- -- (2)
Transfer Agent Fees (3) (2) (1) --
- -------------------------------------------------------------------------------------------------------------------------------
Net Expenses 306 213 233 20
- -------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 336 29 (59) (14)
- -------------------------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) From Security Transactions (230) (274) 97 (330)
Net Change in Unrealized Appreciation
on Investments 6,334 4,023 5,967 934
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $6,440 $3,778 $6,005 $ 590
===============================================================================================================================
<FN>
(1) INCLUDES CLASS SPECIFIC DISTRIBUTION EXPENSES.
(2) SEE NOTE 4 FOR ADVISORY FEES RECAPTURED.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
</FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 51
statements of operations
FOR THE YEAR ENDED SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
California
Corporate Government Tax Exempt High Yield
Bond Fund Bond Fund Bond Fund Bond Fund
(000) (000) (000) (000)
----------------------------------------------------------------------
INVESTMENT INCOME:
Interest $2,166 $ 616 $ 513 $2,259
- -----------------------------------------------------------------------------------------------------------------------------
Total Investment Income 2,166 616 513 2,259
- -----------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment Advisory Fees 171 67 41 173
Shareholder Servicing Fees--Institutional Class 105 38 37 29
Shareholder Servicing Fees--Class A(1) 4 3 2 64
Administrative Fees 40 14 14 21
Transfer Agent Fees 4 1 1 2
Custodian Fees 3 1 2 2
Professional Fees 3 1 1 1
Printing Fees 2 -- -- 1
Registration and Filing Fees 1 -- -- 1
Insurance and Other Fees 2 1 1 2
- -----------------------------------------------------------------------------------------------------------------------------
Total Expenses 335 126 99 296
- -----------------------------------------------------------------------------------------------------------------------------
Less, Waiver of:
Investment Advisory Fees (8) (15) (22) (28)
Transfer Agent Fees (4) (1) (1) (2)
- -----------------------------------------------------------------------------------------------------------------------------
Net Expenses 323 110 76 266
- -----------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,843 506 437 1,993
- -----------------------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) From Security Transactions 764 225 209 (234)
Net Change in Unrealized Appreciation (Depreciation)
on Investments 212 (337) (261) 2,298
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $2,819 $ 394 $ 385 $4,057
- -----------------------------------------------------------------------------------------------------------------------------
<FN>
(1) INCLUDES CLASS SPECIFIC DISTRIBUTION EXPENSES.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
</FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 52
statements of operations
FOR THE YEAR ENDED SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
California
Prime Government Tax Exempt
Money Money Money
Market Fund Market Fund Market Fund
(000) (000) (000)
------------------------------------------------------------------
INVESTMENT INCOME:
Interest $8,190 $32,000 $ 8,177
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 8,190 32,000 8,177
- ------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment Advisory Fees 1,559 6,249 1,896
Shareholder Servicing Fees--Institutional Class 705 137 205
Shareholder Servicing Fees--Class A(1) 1,630 16,022 4,418
Shareholder Servicing Fees--Class S(1) 929 1,593 233
Administrative Fees 578 2,229 651
Transfer Agent Fees 52 201 59
Custodian Fees 37 115 51
Professional Fees 65 189 72
Printing Fees 36 159 44
Trustee Fees 11 40 12
Organizational Fees 11 -- --
Registration and Filing Fees 10 37 13
Insurance and Other Fees 41 146 33
- ------------------------------------------------------------------------------------------------------------------------------
Total Expenses 5,664 27,117 7,687
- ------------------------------------------------------------------------------------------------------------------------------
Recapture of Investment Advisory Fees Waived(2) 21 -- --
Less, Waiver of:
Investment Advisory Fees -- (23) (636)
Administrative Fees (4) (8) (27)
Shareholder Servicing Fees--Class A(1) (608) (5,988) (1,732)
Shareholder Servicing Fees--Class S(1) (126) (217) (49)
Transfer Agent Fees (52) (201) (59)
- ------------------------------------------------------------------------------------------------------------------------------
Net Expenses 4,895 20,680 5,184
- ------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 3,295 11,320 2,993
- ------------------------------------------------------------------------------------------------------------------------------
Net Realized Gain From Security Transactions 77 61 20
- ------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $3,372 $11,381 $ 3,013
==============================================================================================================================
<FN>
(1) INCLUDES CLASS SPECIFIC DISTRIBUTION EXPENSES.
(2) SEE NOTE 4 FOR ADVISORY FEES RECAPTURED.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
</FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 53
statements of changes in net assets
FOR THE YEARS ENDED SEPTEMBER 30,
- --------------------------------------------------------------------------------
Large Cap Value Large Cap Growth
Equity Fund (000) Equity Fund (000)
--------------------------------- ----------------------------------
2003 2002 2003 2002
- ----------------------------------------------------------------------------------------- ----------------------------------
OPERATIONS:
Net Investment Income (Loss) $ 336 $ 272 $ 29 $ (10)
Net Realized Gain (Loss) from
Security Transactions (230) (62) (274) (1,722)
Net Change in Unrealized Appreciation
(Depreciation) on Investments 6,334 (5,943) 4,023 (1,567)
- ----------------------------------------------------------------------------------------- ----------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 6,440 (5,733) 3,778 (3,299)
- ----------------------------------------------------------------------------------------- ----------------------------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net Investment Income:
INSTITUTIONAL CLASS (326) (266) (29) --
CLASS A (10) (6) -- --
Realized Capital Gains:
INSTITUTIONAL CLASS -- (469) -- --
CLASS A -- (11) -- --
- ----------------------------------------------------------------------------------------- ----------------------------------
Total Dividends and Distributions (336) (752) (29) --
- ----------------------------------------------------------------------------------------- ----------------------------------
CAPITAL SHARE TRANSACTIONS:(1)
INSTITUTIONAL CLASS:
Shares Issued 9,863 7,801 9,131 6,430
Shares Issued in Lieu of Dividends and Distributions 75 197 9 --
Shares Redeemed (6,133) (5,682) (4,620) (4,685)
- ----------------------------------------------------------------------------------------- ----------------------------------
Increase (Decrease) in Net Assets from
Institutional Class Share Transactions 3,805 2,316 4,520 1,745
- ----------------------------------------------------------------------------------------- ----------------------------------
CLASS A:
Shares Issued 949 388 1,028 443
Shares Issued in Lieu of Dividends and Distributions 8 14 -- --
Shares Redeemed (152) (136) (76) (82)
- ----------------------------------------------------------------------------------------- ----------------------------------
Increase in Net Assets from
Class A Share Transactions 805 266 952 361
- ----------------------------------------------------------------------------------------- ----------------------------------
CLASS R:
Shares Issued -- -- -- --
Shares Issued in Lieu of Dividends and Distributions -- -- -- --
Shares Redeemed -- -- -- --
- ----------------------------------------------------------------------------------------- ----------------------------------
Increase (Decrease) in Net Assets from
Class R Share Transactions -- -- -- --
- ----------------------------------------------------------------------------------------- ----------------------------------
Net Increase in Net Assets from
Share Transactions 4,610 2,582 5,472 2,106
- ----------------------------------------------------------------------------------------- ----------------------------------
Total Increase (Decrease) in Net Assets 10,714 (3,903) 9,221 (1,193)
- ----------------------------------------------------------------------------------------- ----------------------------------
NET ASSETS:
Beginning of year 24,094 27,997 14,993 16,186
- ----------------------------------------------------------------------------------------- ----------------------------------
End of year $34,808 $24,094 $24,214 $14,993
========================================================================================= ==================================
RCB Small Cap Technology Growth Corporate Bond
Value Fund (000) Fund (000) Fund (000)
--------------------- --------------------- --------------------
2003 2002 2003 2002 2003 2002
- -------------------------------------------------------------------------------- --------------------- --------------------
OPERATIONS:
Net Investment Income (Loss) $ (59) $ (87) $ (14) $ (15) $1,843 $1,845
Net Realized Gain (Loss) from
Security Transactions 97 (35) (330) (645) 764 (235)
Net Change in Unrealized Appreciation
(Depreciation) on Investments 5,967 (2,396) 934 72 212 648
- -------------------------------------------------------------------------------- --------------------- --------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 6,005 (2,518) 590 (588) 2,819 2,258
- -------------------------------------------------------------------------------- --------------------- --------------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net Investment Income:
INSTITUTIONAL CLASS -- -- -- -- (1,814) (1,835)
CLASS A -- -- -- -- (29) (10)
Realized Capital Gains:
INSTITUTIONAL CLASS -- -- -- -- -- (509)
CLASS A -- -- -- -- -- (1)
- -------------------------------------------------------------------------------- --------------------- --------------------
Total Dividends and Distributions -- -- -- -- (1,843) (2,355)
- -------------------------------------------------------------------------------- --------------------- --------------------
CAPITAL SHARE TRANSACTIONS:(1)
INSTITUTIONAL CLASS:
Shares Issued 3,658 2,990 447 89 11,836 14,207
Shares Issued in Lieu of Dividends and Distributions -- -- -- -- 327 473
Shares Redeemed (609) (721) (418) (95) (11,675) (6,568)
- -------------------------------------------------------------------------------- --------------------- --------------------
Increase (Decrease) in Net Assets from
Institutional Class Share Transactions 3,049 2,269 29 (6) 488 8,112
- -------------------------------------------------------------------------------- --------------------- --------------------
CLASS A:
Shares Issued 1,739 518 249 218 467 436
Shares Issued in Lieu of Dividends and Distributions -- -- -- -- 14 7
Shares Redeemed (137) (7) (2) (15) (210) --
- -------------------------------------------------------------------------------- --------------------- --------------------
Increase in Net Assets from
Class A Share Transactions 1,602 511 247 203 271 443
- -------------------------------------------------------------------------------- --------------------- --------------------
CLASS R:
Shares Issued 1,791 6,522 -- -- -- --
Shares Issued in Lieu of Dividends and Distributions -- -- -- -- -- --
Shares Redeemed (1,912) (2,554) -- -- -- --
- -------------------------------------------------------------------------------- --------------------- --------------------
Increase (Decrease) in Net Assets from
Class R Share Transactions (121) 3,968 -- -- -- --
- -------------------------------------------------------------------------------- --------------------- --------------------
Net Increase in Net Assets from
Share Transactions 4,530 6,748 276 197 759 8,555
- -------------------------------------------------------------------------------- --------------------- --------------------
Total Increase (Decrease) in Net Assets 10,535 4,230 866 (391) 1,735 8,458
- -------------------------------------------------------------------------------- --------------------- --------------------
NET ASSETS:
Beginning of year 12,352 8,122 997 1,388 41,351 32,893
- -------------------------------------------------------------------------------- --------------------- --------------------
End of year $22,887 $12,352 $1,863 $ 997 $43,086 $41,351
================================================================================ ===================== ====================
<FN>
(1) SEE NOTE 8 FOR SHARES ISSUED AND REDEEMED.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
</FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGES 54 & 55
statements of changes in net assets
FOR THE YEARS ENDED SEPTEMBER 30,
- --------------------------------------------------------------------------------
Government California Tax Exempt
Bond Fund (000) Bond Fund (000)
------------------------------ -------------------------------
2003 2002 2003 2002
- ---------------------------------------------------------------------------------------- -------------------------------
OPERATIONS:
Net Investment Income $ 506 $ 525 $ 437 $ 529
Net Realized Gain (Loss) from
Security Transactions 225 158 209 294
Net Change in Unrealized Appreciation
(Depreciation) on Investments (337) 291 (261) 329
- ---------------------------------------------------------------------------------------- -------------------------------
Net Increase in Net Assets
Resulting from Operations 394 974 385 1,152
- ---------------------------------------------------------------------------------------- -------------------------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net Investment Income:
INSTITUTIONAL CLASS (502) (522) (440) (532)
CLASS A (17) (3) (10) --
CLASS S -- -- -- --
Realized Capital Gains:
INSTITUTIONAL CLASS (20) (137) (275) (134)
CLASS A (1) -- (3) --
CLASS S -- -- -- --
- ---------------------------------------------------------------------------------------- -------------------------------
Total Dividends and Distributions (540) (662) (728) (666)
- ---------------------------------------------------------------------------------------- -------------------------------
CAPITAL SHARE TRANSACTIONS:(1)
INSTITUTIONAL CLASS:
Shares Issued 6,897 5,516 2,552 3,504
Shares Issued in Lieu of Dividends and Distributions 111 129 84 75
Shares Redeemed (5,779) (4,094) (3,900) (3,443)
- ---------------------------------------------------------------------------------------- -------------------------------
Increase (Decrease) in Net Assets from
Institutional Class Share Transactions 1,229 1,551 (1,264) 136
- ---------------------------------------------------------------------------------------- -------------------------------
CLASS A:
Shares Issued 332 513 805 14
Shares Issued in Lieu of Dividends and Distributions 4 2 5 --
Shares Redeemed (832) (3) (85) (8)
- ---------------------------------------------------------------------------------------- -------------------------------
Increase (Decrease) in Net Assets from
Class A Share Transactions (496) 512 725 6
- ---------------------------------------------------------------------------------------- -------------------------------
CLASS S:
Shares Issued -- -- -- --
Shares Issued in Lieu of Dividends and Distributions -- -- -- --
Shares Redeemed -- -- -- --
- ---------------------------------------------------------------------------------------- -------------------------------
Increase (Decrease) in Net Assets from
Class S Share Transactions -- -- -- --
- ---------------------------------------------------------------------------------------- -------------------------------
Net Increase (Decrease) in Net Assets from
Share Transactions 733 2,063 (539) 142
- ---------------------------------------------------------------------------------------- -------------------------------
Total Increase (Decrease) in Net Assets 587 2,375 (882) 628
- ---------------------------------------------------------------------------------------- -------------------------------
NET ASSETS:
Beginning of year 15,027 12,652 16,160 15,532
- ---------------------------------------------------------------------------------------- -------------------------------
End of year $15,614 $15,027 $15,278 $16,160
======================================================================================== ===============================
High Yield Prime Money
Bond Fund (000) Market Fund (000)
----------------------------- ---------------------------
2003 2002 2003 2002
- ------------------------------------------------------- ----------------------------- ---------------------------
OPERATIONS:
Net Investment Income $ 1,993 $ 1,515 $ 3,295 $ 8,146
Net Realized Gain (Loss) from
Security Transactions (234) (964) 77 435
Net Change in Unrealized Appreciation
(Depreciation) on Investments 2,298 (154) -- --
- ------------------------------------------------------- ----------------------------- ---------------------------
Net Increase in Net Assets
Resulting from Operations 4,057 397 3,372 8,581
- ------------------------------------------------------- ----------------------------- ---------------------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net Investment Income:
INSTITUTIONAL CLASS (1,009) (970) (1,920) (4,030)
CLASS A (981) (562) (1,024) (2,981)
CLASS S -- -- (366) (1,168)
Realized Capital Gains:
INSTITUTIONAL CLASS -- -- -- --
CLASS A -- -- -- --
CLASS S -- -- -- --
- ------------------------------------------------------- ----------------------------- ---------------------------
Total Dividends and Distributions (1,990) (1,532) (3,310) (8,179)
- ------------------------------------------------------- ----------------------------- ---------------------------
CAPITAL SHARE TRANSACTIONS:(1)
INSTITUTIONAL CLASS:
Shares Issued 3,212 1,821 854,421 1,489,084
Shares Issued in Lieu of Dividends and Distributions 596 619 407 744
Shares Redeemed (1,489) (1,190) (858,546) (1,503,930)
- ------------------------------------------------------- ----------------------------- ---------------------------
Increase (Decrease) in Net Assets from
Institutional Class Share Transactions 2,319 1,250 (3,718) (14,102)
- ------------------------------------------------------- ----------------------------- ---------------------------
CLASS A:
Shares Issued 10,988 7,073 617,388 731,533
Shares Issued in Lieu of Dividends and Distributions 640 435 276 896
Shares Redeemed (5,166) (1,489) (641,303) (747,116)
- ------------------------------------------------------- ----------------------------- ---------------------------
Increase (Decrease) in Net Assets from
Class A Share Transactions 6,462 6,019 (23,639) (14,687)
- ------------------------------------------------------- ----------------------------- ---------------------------
CLASS S:
Shares Issued -- -- 381,285 368,121
Shares Issued in Lieu of Dividends and Distributions -- -- -- --
Shares Redeemed -- -- (391,853) (365,288)
- ------------------------------------------------------- ----------------------------- ---------------------------
Increase (Decrease) in Net Assets from
Class S Share Transactions -- -- (10,568) 2,833
- ------------------------------------------------------- ----------------------------- ---------------------------
Net Increase (Decrease) in Net Assets from
Share Transactions 8,781 7,269 (37,925) (25,956)
- ------------------------------------------------------- ----------------------------- ---------------------------
Total Increase (Decrease) in Net Assets 10,848 6,134 (37,863) (25,554)
- ------------------------------------------------------- ----------------------------- ---------------------------
NET ASSETS:
Beginning of year 19,417 13,283 648,765 674,319
- ------------------------------------------------------- ----------------------------- ---------------------------
End of year $30,265 $19,417 $ 610,902 $ 648,765
======================================================= ============================= ===========================
Government Money California Tax Exempt
Market Fund (000) Money Market Fund (000)
----------------------------- --------------------------------
2003 2002 2003 2002
- -------------------------------------------------------- ----------------------------- --------------------------------
OPERATIONS:
Net Investment Income $ 11,320 $ 29,972 $ 2,993 $ 5,058
Net Realized Gain (Loss) from
Security Transactions 61 (65) 20 --
Net Change in Unrealized Appreciation
(Depreciation) on Investments -- -- -- --
- -------------------------------------------------------- ----------------------------- --------------------------------
Net Increase in Net Assets
Resulting from Operations 11,381 29,907 3,013 5,058
- -------------------------------------------------------- ----------------------------- --------------------------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net Investment Income:
INSTITUTIONAL CLASS (375) (969) (488) (566)
CLASS A (10,315) (27,322) (2,422) (4,354)
CLASS S (666) (1,688) (83) (138)
Realized Capital Gains:
INSTITUTIONAL CLASS -- -- -- --
CLASS A -- -- -- --
CLASS S -- -- -- --
- -------------------------------------------------------- ----------------------------- --------------------------------
Total Dividends and Distributions (11,356) (29,979) (2,993) (5,058)
- -------------------------------------------------------- ----------------------------- --------------------------------
CAPITAL SHARE TRANSACTIONS:(1)
INSTITUTIONAL CLASS:
Shares Issued 619,561 491,363 724,038 548,010
Shares Issued in Lieu of Dividends and Distributions -- -- -- --
Shares Redeemed (614,704) (516,178) (695,143) (539,630)
- -------------------------------------------------------- ----------------------------- --------------------------------
Increase (Decrease) in Net Assets from
Institutional Class Share Transactions 4,857 (24,815) 28,895 8,380
- -------------------------------------------------------- ----------------------------- --------------------------------
CLASS A:
Shares Issued 4,182,886 4,730,497 1,144,275 1,171,543
Shares Issued in Lieu of Dividends and Distributions 7,038 18,614 2,108 3,699
Shares Redeemed (4,278,238) (5,131,395) (1,126,487) (1,294,419)
- -------------------------------------------------------- ----------------------------- --------------------------------
Increase (Decrease) in Net Assets from
Class A Share Transactions (88,314) (382,284) 19,896 (119,177)
- -------------------------------------------------------- ----------------------------- --------------------------------
CLASS S:
Shares Issued 601,546 711,343 145,218 122,665
Shares Issued in Lieu of Dividends and Distributions -- -- -- --
Shares Redeemed (629,397) (638,986) (150,843) (109,890)
- -------------------------------------------------------- ----------------------------- --------------------------------
Increase (Decrease) in Net Assets from
Class S Share Transactions (27,851) 72,357 (5,625) 12,775
- -------------------------------------------------------- ----------------------------- --------------------------------
Net Increase (Decrease) in Net Assets from
Share Transactions (111,308) (334,742) 43,166 (98,022)
- -------------------------------------------------------- ----------------------------- --------------------------------
Total Increase (Decrease) in Net Assets (111,283) (334,814) 43,186 (98,022)
- -------------------------------------------------------- ----------------------------- --------------------------------
NET ASSETS:
Beginning of year 2,420,523 2,755,337 607,818 705,840
- -------------------------------------------------------- ----------------------------- --------------------------------
End of year $ 2,309,240 $ 2,420,523 $ 651,004 $ 607,818
======================================================== ============================= ================================
<FN>
(1) SEE NOTE 8 FOR SHARES ISSUED AND REDEEMED.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
</FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGES 56 & 57
financial highlights
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FOR THE YEAR OR PERIOD ENDED SEPTEMBER 30,
- --------------------------------------------------------------------------------
NET
NET REALIZED AND DISTRIBUTIONS NET NET
ASSET NET UNREALIZED DIVIDENDS FROM ASSET ASSETS RATIO
VALUE INVESTMENT GAINS (LOSSES) FROM NET RETURN REALIZED VALUE END OF EXPENSES
BEGINNING INCOME ON INVESTMENT OF CAPITAL END TOTAL OF PERIOD TO AVERAGE
OF PERIOD (LOSS) SECURITIES INCOME CAPITAL GAINS OF PERIOD RETURN+++ (000) NET ASSETS(1)
- -----------------------------------------------------------------------------------------------------------------------
Large Cap Value Equity Fund
Institutional Class (commenced operations on January 14, 2000)
2003 $ 6.04 $ 0.07 $ 1.37 $(0.07) $ -- $ -- $ 7.41 24.03% $33,016 1.00%
2002 7.63 0.07 (1.47) (0.07) -- (0.12) 6.04 (18.88) 23,325 1.00
2001 10.04 0.07 (1.57) (0.07) -- (0.84) 7.63 (16.36) 27,293 1.00
2000 10.00 0.06 0.04 (0.06) -- -- 10.04 0.99 29,344 1.00
Class A (commenced operations on April 13, 2000)
2003 $ 6.04 $ 0.06 $ 1.37 $(0.06) $ -- $ -- $ 7.41 23.75% $ 1,792 1.25%
2002 7.62 0.05 (1.46) (0.05) -- (0.12) 6.04 (18.97) 769 1.25
2001 10.04 0.04 (1.58) (0.04) -- (0.84) 7.62 (16.68) 704 1.25
2000 9.55 0.03 0.49 (0.03) -- -- 10.04 5.48 732 1.25
- -----------------------------------------------------------------------------------------------------------------------
Large Cap Growth Equity Fund
Institutional Class (commenced operations on January 14, 2000)
2003^ $ 5.25 $ 0.01 $ 1.12 $(0.01) $ -- $ -- $ 6.37 21.51% $22,249 1.05%
2002 6.36 -- (1.11) -- -- -- 5.25 (17.45) 14,195 1.05
2001 9.37 (0.02) (2.99) -- -- -- 6.36 (32.12) 15,550 1.05
2000 10.00 (0.02) (0.61) -- -- -- 9.37 (6.30) 21,639 1.05
Class A (commenced operations on March 28, 2000)
2003^ $ 5.21 $(0.01) $ 1.12 $ -- $ -- $ -- $ 6.32 21.31% $ 1,965 1.30%
2002 6.33 (0.02) (1.10) -- -- -- 5.21 (17.69) 798 1.30
2001 9.35 (0.03) (2.99) -- -- -- 6.33 (32.30) 636 1.30
2000 10.70 (0.01) (1.34) -- -- -- 9.35 (12.62) 592 1.30
- -----------------------------------------------------------------------------------------------------------------------
RCB Small Cap Value Fund
Institutional Class (commenced operations on October 3, 2001)
2003^ $15.06 $(0.04) $ 6.90 $ -- $ -- $ -- $21.92 45.55% $ 6,236 1.24%
2002 17.11 (0.07) (1.98) -- -- -- 15.06 (11.98) 1,768 1.24
Class A (commenced operations on October 3, 2001)
2003^ $15.04 $(0.08) $ 6.88 $ -- $ -- $ -- $21.84 45.21% $ 2,384 1.49%
2002 17.11 (0.05) (2.02) -- -- -- 15.04 (12.10) 410 1.49
Class R (commenced operations on September 30, 1998)(2)
2003^ $15.02 $(0.07) $ 6.86 $ -- $ -- $ -- $21.81 45.21% $14,267 1.49%
2002 16.94 (0.12) (1.80) -- -- -- 15.02 (11.33) 10,174 1.49
2001* 18.84 (0.02) (1.88) -- -- -- 16.94 (10.08) 8,122 1.26
2001+ 15.80 (0.09) 3.85 -- (0.35) (0.37) 18.84 24.34 8,869 1.49
2000+ 15.93 (0.06) 0.52 -- -- (0.59) 15.80 3.28 5,193 1.49
1999+ 10.00 (0.02) 5.95 -- -- -- 15.93 59.30 3,156 1.49
- -----------------------------------------------------------------------------------------------------------------------
Technology Growth Fund
Institutional Class (commenced operations on October 3, 2000)
2003 $ 2.26 $(0.02) $ 1.26 $ -- $ -- $ -- $ 3.50 54.87% $ 913 1.20%
2002 3.54 (0.03) (1.25) -- -- -- 2.26 (36.16) 565 1.20
2001 10.00 (0.02) (6.43) (0.01) -- -- 3.54 (64.56) 907 1.20
Class A (commenced operations on October 23, 2000)
2003 $ 2.25 $(0.03) $ 1.26 $ -- $ -- $ -- $ 3.48 54.67% $ 950 1.50%
2002 3.54 (0.04) (1.25) -- -- -- 2.25 (36.44) 432 1.50
2001 10.31 (0.03) (6.73) (0.01) -- -- 3.54 (65.37) 481 1.50
RATIO RATIO
OF NET OF EXPENSES
INVESTMENT TO AVERAGE
INCOME (LOSS) NET ASSETS PORTFOLIO
TO AVERAGE (EXCLUDING TURNOVER
NET ASSETS(1) WAIVERS)(1) RATE
- ---------------------------------------------------------------
Large Cap Value Equity Fund
Institutional Class (commenced operations on January 14, 2000)
2003 1.12% 1.00% 39%
2002 0.90 1.05 42
2001 0.74 1.09 51
2000 0.87 1.12 38
Class A (commenced operations on April 13, 2000)
2003 0.84% 1.25% 39%
2002 0.65 1.30 42
2001 0.49 1.34 51
2000 0.62 1.37 38
- ---------------------------------------------------------------
Large Cap Growth Equity Fund
Institutional Class (commenced operations on January 14, 2000)
2003^ 0.16% 1.03% 43%
2002 (0.04) 1.09 31
2001 (0.22) 1.13 58
2000 (0.31) 1.16 51
Class A (commenced operations on March 28, 2000)
2003^ (0.09)% 1.29% 43%
2002 (0.29) 1.34 31
2001 (0.47) 1.38 58
2000 (0.56) 1.41 51
- ---------------------------------------------------------------
RCB Small Cap Value Fund
Institutional Class (commenced operations on October 3, 2001)
2003^ (0.20)% 1.24% 65%
2002 (0.46) 1.28 39
Class A (commenced operations on October 3, 2001)
2003^ (0.45)% 1.49% 65%
2002 (0.74) 1.53 39
Class R (commenced operations on September 30, 1998)(2)
2003^ (0.41)% 1.49% 65%
2002 (0.70) 1.53 39
2001* (0.51) 2.63 5
2001+ (0.69) 2.85 43
2000+ (0.50) 3.49 60
1999+ (0.33) 7.76 36
- ---------------------------------------------------------------
Technology Growth Fund
Institutional Class (commenced operations on October 3, 2000)
2003 (0.78)% 1.36% 29%
2002 (0.88) 1.37 24
2001 (0.38)++ 1.41 23
Class A (commenced operations on October 23, 2000)
2003 (1.08)% 1.66% 29%
2002 (1.18) 1.67 24
2001 (1.04)++ 1.71 23
* FOR THE THREE MONTH PERIOD ENDING SEPTEMBER 30, 2001.
+ FOR THE YEARS ENDING JUNE 30.
++ RATIOS REFLECT THE IMPACT OF THE INITIAL LOW LEVEL OF AVERAGE NET ASSETS
ASSOCIATED WITH COMMENCEMENT OF OPERATIONS AND THE EFFECTS OF ANNUALIZATION.
+++ RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED. FEE
WAIVERS ARE IN EFFECT; IF THEY HAD NOT BEEN IN EFFECT, PERFORMANCE WOULD
HAVE BEEN LOWER. TOTAL RETURN FIGURES DO NOT INCLUDE APPLICABLE SALES LOADS.
RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD
PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
^ PER SHARE DATA IS BASED ON AVERAGE SHARES METHOD.
(1) ANNUALIZED.
(2) ON OCTOBER 3, 2001, THE RCB SMALL CAP FUND EXCHANGED ALL OF ITS ASSETS AND
LIABILITIES FOR SHARES OF THE CNI CHARTER RCB SMALL CAP VALUE FUND. THE CNI
CHARTER RCB SMALL CAP VALUE FUND IS THE ACCOUNTING SURVIVOR IN THIS
TRANSACTION, AND AS A RESULT, ITS BASIS OF ACCOUNTING FOR ASSETS AND
LIABILITIES AND ITS OPERATING RESULTS FOR THE PERIODS PRIOR TO OCTOBER 3,
2001 HAVE BEEN CARRIED FORWARD IN THESE FINANCIAL HIGHLIGHTS.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 58
NET
NET REALIZED AND DISTRIBUTIONS NET NET
ASSET UNREALIZED DIVIDENDS FROM ASSET ASSETS RATIO
VALUE NET GAINS (LOSSES) FROM NET REALIZED VALUE END OF EXPENSES
BEGINNING INVESTMENT ON INVESTMENT CAPITAL END TOTAL OF PERIOD TO AVERAGE
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD RETURN+++ (000) NET ASSETS(1)
- -----------------------------------------------------------------------------------------------------------------------------
Corporate Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2003 $10.65 $0.46 $ 0.24 $(0.46) $ -- $10.89 6.74% $ 42,256 0.75%
2002 10.72 0.53 0.09 (0.53) (0.16) 10.65 6.06 40,807 0.75
2001 10.14 0.60 0.60 (0.60) (0.02) 10.72 12.14 32,800 0.75
2000 10.00 0.42 0.14 (0.42) -- 10.14 5.76 22,711 0.75
Class A (commenced operations on April 13, 2000)
2003 $10.65 $0.44 $ 0.23 $(0.43) $ -- $10.89 6.47% $ 830 1.00%
2002 10.73 0.50 0.08 (0.50) (0.16) 10.65 5.69 544 1.00
2001 10.13 0.57 0.62 (0.57) (0.02) 10.73 12.08 93 1.00
2000 10.06 0.31 0.07 (0.31) -- 10.13 3.81 424 1.00
- -----------------------------------------------------------------------------------------------------------------------------
Government Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2003++ $11.02 $0.36 $(0.07) $(0.37) $(0.01) $10.93 2.68%* $ 15,596 0.70%
2002 10.80 0.44 0.34 (0.44) (0.12) 11.02 7.53 14,502 0.70
2001 10.17 0.53 0.63 (0.53) -- 10.80 11.67 12,648 0.70
2000 10.00 0.38 0.17 (0.38) -- 10.17 5.64 11,233 0.70
Class A (commenced operations on April 13, 2000)
2003++ $11.01 $0.33 $(0.04) $(0.34) $(0.01) $10.95 2.71%* $ 18 0.95%
2002 10.77 0.43 0.34 (0.41) (0.12) 11.01 7.47 525 0.95
2001 10.16 0.49 0.63 (0.51) -- 10.77 11.25 4 0.95
2000 10.06 0.23 0.10 (0.23) -- 10.16 3.37 49 0.95
- -----------------------------------------------------------------------------------------------------------------------------
California Tax Exempt Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2003 $10.83 $0.31 $(0.04) $(0.31) $(0.19) $10.60 2.63% $ 14,546 0.50%
2002 10.50 0.36 0.41 (0.35) (0.09) 10.83 7.58 16,147 0.50
2001 10.22 0.43 0.30 (0.43) (0.02) 10.50 7.21 15,526 0.50
2000 10.00 0.32 0.22 (0.32) -- 10.22 5.43 11,638 0.50
Class A (commenced operations on April 13, 2000)
2003 $10.85 $0.27 $(0.02) $(0.29) $(0.19) $10.62 2.37% $ 732 0.75%
2002 10.51 0.33 0.43 (0.33) (0.09) 10.85 7.40 13 0.75
2001 10.22 0.41 0.30 (0.40) (0.02) 10.51 7.08 6 0.75
2000 10.10 0.20 0.12 (0.20) -- 10.22 3.20 1 0.75
- -----------------------------------------------------------------------------------------------------------------------------
High Yield Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2003 $ 8.16 $0.76 $ 0.79 $(0.76) $ -- $ 8.95 19.75% $ 13,387 1.00%
2002 8.57 0.83 (0.40) (0.84) -- 8.16 4.80 10,020 1.00
2001 9.76 0.98 (1.18) (0.98) (0.01) 8.57 (2.45) 9,310 1.00
2000 10.00 0.64 (0.24) (0.64) -- 9.76 4.21 9,877 1.00
Class A (commenced operations on January 14, 2000)
2003 $ 8.16 $0.74 $ 0.78 $(0.73) $ -- $ 8.95 19.39% $ 16,878 1.30%
2002 8.57 0.81 (0.40) (0.82) -- 8.16 4.49 9,397 1.30
2001 9.76 0.95 (1.18) (0.95) (0.01) 8.57 (2.74) 3,973 1.30
2000 10.00 0.62 (0.24) (0.62) -- 9.76 3.94 1,043 1.30
RATIO RATIO
OF NET OF EXPENSES
INVESTMENT TO AVERAGE
INCOME NET ASSETS PORTFOLIO
TO AVERAGE (EXCLUDING TURNOVER
NET ASSETS(1) WAIVERS)(1) RATE
- --------------------------------------------------------------
Corporate Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2003 4.30% 0.78% 66%
2002 5.04 0.82 55
2001 5.71+ 0.86 83
2000 6.09 0.91 6
Class A (commenced operations on April 13, 2000)
2003 4.00% 1.03% 66%
2002 4.71 1.07 55
2001 5.67+ 1.11 83
2000 5.84 1.16 6
- --------------------------------------------------------------
Government Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2003++ 3.26% 0.81% 54%
2002 4.11+ 0.86 70
2001 5.04+ 0.91 126
2000 5.49 0.97 21
Class A (commenced operations on April 13, 2000)
2003++ 3.00% 1.06% 54%
2002 3.70 1.11 70
2001 5.03+ 1.16 126
2000 5.24 1.22 21
- --------------------------------------------------------------
California Tax Exempt Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2003 2.91% 0.65% 68%
2002 3.33 0.70 90
2001 4.11 0.75 56
2000 4.50 0.79 49
Class A (commenced operations on April 13, 2000)
2003 2.62% 0.90% 68%
2002 3.05 0.95 90
2001 3.82 1.00 56
2000 4.25 1.04 49
- --------------------------------------------------------------
High Yield Bond Fund
Institutional Class (commenced operations on January 14, 2000)
2003 8.84% 1.13% 36%
2002 9.48 1.18 30
2001 10.52 1.23 12
2000 9.41 1.31 5
Class A (commenced operations on January 14, 2000)
2003 8.44% 1.43% 36%
2002 9.03 1.48 30
2001 10.14 1.53 12
2000 9.11 1.61 5
+ RATIOS REFLECT THE IMPACT OF SIGNIFICANT CHANGES IN AVERAGE NET ASSETS AND
THE EFFECTS OF ANNUALIZATION.
++ PER SHARE DATA IS BASED ON THE AVERAGE SHARES METHOD.
+++ RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED. FEE
WAIVERS ARE IN EFFECT; IF THEY HAD NOT BEEN IN EFFECT,PERFORMANCE WOULD HAVE
BEEN LOWER. RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES THAT A
SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND
SHARES.
* TOTAL RETURN FOR CLASS A OF THE GOVERNMENT BOND FUND IS GREATER THAN THE
INSTITUTIONAL CLASS'S DUE TO A LARGE REDEMPTION DURING THE YEAR.
(1) ANNUALIZED.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
CNI CHARTER FUNDS | PAGE 59
financial highlights
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FOR THE YEAR OR PERIOD ENDED SEPTEMBER 30, OR PERIOD ENDED OCTOBER 31,
- --------------------------------------------------------------------------------
RATIO RATIO
NET NET NET OF NET OF EXPENSES
ASSET DIVIDENDS ASSET ASSETS RATIO INVESTMENT TO AVERAGE
VALUE NET FROM NET VALUE END OF EXPENSES INCOME NET ASSETS
BEGINNING INVESTMENT INVESTMENT END TOTAL OF PERIOD TO AVERAGE TO AVERAGE (EXCLUDING
OF PERIOD INCOME INCOME OF PERIOD RETURN+++ (000) NET ASSETS(1) NET ASSETS(1) WAIVERS)(1)
- ----------------------------------------------------------------------------------------------------------------------------------
Prime Money Market Fund
Institutional Class (commenced operations on March 23, 1998)
2003 $1.00 $0.007 $(0.007) $1.00 0.68% $ 287,087 0.63% 0.68% 0.64%
2002 1.00 0.014 (0.014) 1.00 1.37 290,778 0.63 1.37 0.67
2001 1.00 0.046 (0.046) 1.00 4.65 304,698 0.63 4.42++ 0.71
2000* 1.00 0.051 (0.051) 1.00 5.24 201,688 0.63 5.62+ 0.71
1999 1.00 0.045 (0.045) 1.00 4.61 137,659 0.63 4.51 0.79
1998 1.00 0.029 (0.029) 1.00 3.11 133,428 0.63 4.99 0.78
Class A (commenced operations on October 18, 1999)
2003 $1.00 $0.005 $(0.005) $1.00 0.46% $ 205,191 0.85% 0.47% 1.14%
2002 1.00 0.011 (0.011) 1.00 1.15 228,807 0.85 1.15 1.17
2001 1.00 0.043 (0.043) 1.00 4.42 243,340 0.85 4.39++ 1.21
2000* 1.00 0.049 (0.049) 1.00 5.03 251,225 0.85 5.61+ 1.21
1999 1.00 0.002 (0.002) 1.00 0.18 4,942 0.85 4.62 1.30
Class S (commenced operations on October 26, 1999)
2003 $1.00 $0.003 $(0.003) $1.00 0.29% $ 118,624 1.03% 0.29% 1.14%
2002 1.00 0.009 (0.009) 1.00 0.95 129,180 1.05 0.95 1.17
2001 1.00 0.041 (0.041) 1.00 4.21 126,281 1.05 4.12++ 1.21
2000* 1.00 0.047 (0.047) 1.00 4.83 72,287 1.05 5.47+ 1.21
1999 1.00 0.001 (0.001) 1.00 0.07 562 1.05 4.42 1.30
- ----------------------------------------------------------------------------------------------------------------------------------
Government Money Market Fund
Institutional Class (commenced operations on April 3, 2000)
2003 $1.00 $0.007 $(0.007) $1.00 0.70% $ 56,841 0.63% 0.68% 0.64%
2002 1.00 0.014 (0.014) 1.00 1.38 51,985 0.63 1.43 0.66
2001 1.00 0.046 (0.046) 1.00 4.70 76,802 0.63 3.97++ 0.66
2000* 1.00 0.029 (0.029) 1.00 2.90 27,849 0.63 5.84 0.68
Class A (commenced operations on June 21, 1999)
2003 $1.00 $0.005 $(0.005) $1.00 0.48% $2,060,860 0.85% 0.48% 1.14%
2002 1.00 0.012 (0.012) 1.00 1.16 2,149,151 0.85 1.18 1.16
2001 1.00 0.044 (0.044) 1.00 4.47 2,531,500 0.85 4.27++ 1.16
2000* 1.00 0.049 (0.049) 1.00 4.96 1,887,860 0.85 5.32 1.18
1999 1.00 0.016 (0.016) 1.00 1.58 1,512,137 0.85 4.33 1.15
Class S (commenced operations on October 6, 1999)
2003 $1.00 $0.003 $(0.003) $1.00 0.30% $ 191,539 1.03% 0.31% 1.14%
2002 1.00 0.010 (0.010) 1.00 0.96 219,387 1.05 0.93 1.16
2001 1.00 0.042 (0.042) 1.00 4.26 147,035 1.05 3.62++ 1.16
2000* 1.00 0.047 (0.047) 1.00 4.77 41,593 1.05 5.39 1.18
1999 1.00 0.003 (0.003) 1.00 0.30 911 1.05 4.30 1.15
- ----------------------------------------------------------------------------------------------------------------------------------
California Tax Exempt Money Market Fund
Institutional Class (commenced operations on April 3, 2000)
2003 $1.00 $0.006 $(0.006) $1.00 0.62% $ 87,820 0.55% 0.59% 0.65%
2002 1.00 0.010 (0.010) 1.00 0.98 58,923 0.55 0.96 0.69
2001 1.00 0.025 (0.025) 1.00 2.51 50,543 0.55 2.12++ 0.72
2000* 1.00 0.016 (0.016) 1.00 1.64 6,825 0.55 3.29 0.74
Class A (comMenced operations on June 21, 1999)
2003 $1.00 $0.004 $(0.004) $1.00 0.41% $ 539,182 0.76% 0.41% 1.15%
2002 1.00 0.007 (0.007) 1.00 0.75 519,269 0.78 0.75 1.19
2001 1.00 0.023 (0.023) 1.00 2.28 638,446 0.78 2.22++ 1.22
2000* 1.00 0.025 (0.025) 1.00 2.55 549,237 0.78 2.74 1.24
1999 1.00 0.008 (0.008) 1.00 0.79 533,244 0.78 2.17 1.21
Class S (commenced operations on November 12, 1999)
2003 $1.00 $0.003 $(0.003) $1.00 0.27% $ 24,002 0.89% 0.27% 1.15%
2002 1.00 0.005 (0.005) 1.00 0.55 29,626 0.98 0.53 1.19
2001 1.00 0.021 (0.021) 1.00 2.08 16,851 0.98 1.96++ 1.22
2000* 1.00 0.023 (0.023) 1.00 2.30 7,723 0.98 2.69 1.24
<FN>
* THE FUND'S YEAR-END CHANGED FROM OCTOBER 31 TO SEPTEMBER 30.
+ RATIOS REFLECT THE IMPACT OF THE INITIAL LOW LEVEL OF AVERAGE NET ASSETS
ASSOCIATED WITH COMMENCEMENT OF OPERATIONS AND THE EFFECTS OF ANNUALIZATION.
++ RATIOS REFLECT THE IMPACT OF SIGNIFICANT CHANGES IN AVERAGE NET ASSETS AND
THE EFFECTS OF ANNUALIZATION.
+++ RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED. FEE
WAIVERS ARE IN EFFECT; IF THEY HAD NOT BEEN IN EFFECT, PERFORMANCE WOULD
HAVE BEEN LOWER. RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES THAT A
SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND
SHARES.
(1) ANNUALIZED.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</FN>
CNI CHARTER FUNDS | PAGE 60
notes to financial statements
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
1. ORGANIZATION:
The CNI Charter Funds, a Delaware statutory trust (the "Trust"), is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company with eleven portfolios. The financial statements included
herein are those of the Large Cap Value Equity Fund, Large Cap Growth Equity
Fund, RCB Small Cap Value Fund, Technology Growth Fund (collectively, the
"Equity Funds"); Corporate Bond Fund, Government Bond Fund, California Tax
Exempt Bond Fund, High Yield Bond Fund (collectively, the "Fixed Income Funds");
Prime Money Market Fund, Government Money Market Fund, California Tax Exempt
Money Market Fund (collectively, the "Money Market Funds"); (each a "Fund",
collectively, the "Funds"). The Equity and Fixed Income Funds are registered to
offer Institutional and Class A Shares; in addition, the RCB Small Cap Value
Fund is registered to offer Class R shares. The Money Market Funds are
registered to offer Institutional, Class A and Class S Shares. The assets of
each Fund are segregated, and a shareholder's interest is limited to the Fund in
which shares are held. The Funds' prospectuses provide a description of each
Fund's investment objectives, policies and strategies.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Funds.
USE OF ESTIMATES -The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
income and expenses during the reporting period. Actual results could differ
from those estimates.
SECURITY VALUATION - Investment securities of the Money Market Funds are stated
at amortized cost, which approximates market value. Under this valuation method,
purchase discounts and premiums are accreted and amortized ratably to maturity
and are included in interest income.
Investment securities of the Equity and Fixed Income Funds, which are listed on
a securities exchange for which market quotations are available, are valued by
independent pricing services at the last quoted sales price for such securities
on each business day. If there is no such reported sale, those securities are
valued at the mean between last available bid and ask price. Investment
securities of the Equity funds, which are quoted on a national market system,
are valued at the official closing price, or if there is none, at the last sales
price. Unlisted securities for which market quotations are not readily available
are valued at fair value as determined in good faith by or under the direction
of the Trust's Board of Trustees. Debt obligations with sixty days or less
remaining until maturity may be valued at their amortized cost.
SECURITY TRANSACTIONS AND RELATED INCOME - Security transactions are accounted
for on the trade date of the security purchase or sale. Costs used in
determining net realized capital gains and losses on the sale of securities are
those of the specific securities sold. Interest income is recognized on the
accrual basis and dividend income is recognized on the ex-dividend date.
Purchase discounts and premiums on securities held by the Funds are accreted and
amortized to maturity using the scientific interest method, which approximates
the effective interest method.
REPURCHASE AGREEMENTS - Securities pledged as collateral for repurchase
agreements are held by each Fund's custodian bank until maturity of the
repurchase agreements. Provisions of the agreements and procedures adopted by
the investment adviser ensure that the market value of the collateral, including
accrued interest thereon, is sufficient in the event of default by the
counterparty. The Funds also invest in tri-party repurchase agreements.
Securities held as collateral for tri-party repurchase agreements are maintained
by the broker's custodian bank in a segregated account until maturity of the
repurchase agreement. Provisions of the agreements ensure that the market value
of the collateral, including accrued interest thereon, is sufficient in the
event of default. If the counterparty defaults and the value of the collateral
declines or if the counterparty enters into an insolvency proceeding,
realization of the collateral by the Fund may be delayed or limited.
TBA TRANSACTIONS -The Funds may engage in "to be announced" ("TBA") security
transactions. Such transactions involve a commitment by the Funds to purchase or
sell securities for a predetermined price or yield, with payment and delivery
taking place beyond the customary settlement period. The Funds record
TBAsecurities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payments for the securities
purchased. As of September 30, 2003, the Funds did not hold any TBA securities.
CLASSES - Class-specific expenses are borne by that class. Income, non
class-specific expenses, and realized and unrealized gains/losses are allocated
to the respective class on the basis of relative net asset value each day.
CNI CHARTER FUNDS | PAGE 61
notes to financial statements
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends from net investment
income are declared daily and paid to shareholders monthly for the Fixed Income
and Money Market Funds. Dividends from net investment income are declared and
paid quarterly for the Large Cap Value Equity, Large Cap Growth Equity, and
Technology Growth Funds. For the RCB Small Cap Value Fund, dividends from net
investment income are declared and paid annually. Distributions from net
realized capital gains are distributed to shareholders at least annually.
ORGANIZATIONAL COSTS -Organizational costs of the Prime Money Market Fund have
been capitalized and amortized over a period of sixty months. Such amortization
ceased on March 23, 2003.
3. ADMINISTRATION, TRANSFER AGENT, DISTRIBUTION AND SHAREHOLDER SERVICES
AGREEMENTS:
Pursuant to an administration agreement (the "Agreement"), SEI Investments
Global Funds Services (the "Administrator"), a wholly owned subsidiary of
SEIInvestments Company, acts as the Trust's Administrator. Under the terms of
the Agreement dated April 1, 2002, the Administrator is entitled to receive an
annual fee of 0.10% of aggregate average daily net assets of the Trust not
exceeding $2.5 billion, 0.08% of aggregate average daily net assets of the Trust
exceeding $2.5 billion but not exceeding $5 billion, and 0.06% of aggregate
average daily net assets of the Trust exceeding $5 billion. Each Fund is subject
to a minimum annual fee of $90,000, which may be reduced at the sole discretion
of the Administrator.
The Trust has adopted a Rule 12b-1 Distribution Plan ("the Plan") with respect
to Class A, S and R Shares that allows each Fund to pay distribution and
servicing fees. SEI Investments Distribution Company (the "Distributor"), as
compensation for its services under the Plan, receives a distribution fee,
computed daily and paid monthly, at the annual rate of 0.50% of the average
daily net assets of the Class A Shares and Class S Shares of the Money Market
Funds and 0.25% of the Class A Shares of the Equity and Fixed Income Funds and
the Class R Shares of the RCB Small Cap Value Fund, with the exception of 0.30%
charged to the Class A Shares of the Technology Growth and High Yield Bond
Funds, which may be used by the Distributor to provide compensation for sales
support and distribution-related activities. The Distributor has voluntarily
agreed to waive up to 0.50% of distribution fees and up to 0.25% of shareholder
servicing fees, discussed below, for the Class A shares of the California Tax
Exempt Money Market Fund beginning December 11, 2002 and for the Class S shares
of the Prime Money Market Fund beginning June 17, 2003, for the Government Money
Market Fund beginning June 4, 2003, and for the California Tax Exempt Money
Market Fund beginning December 4, 2002. These waivers are voluntary and may be
terminated at any time.
The Trust and the Distributor are parties to a Distribution Agreement dated
April 8, 1999. The Distributor receives no fees for its distribution services
under this agreement.
SEI Investments Fund Management serves as Transfer Agent for the Trust whereby
they provide services at an annual rate of $15,000 per share class. The Transfer
Agent has voluntarily agreed to waive these fees.
Wachovia Bank, N.A. serves as Custodian for the Trust. The Custodian plays no
role in determining the investment policies of the Trust or which securities are
to be purchased or sold by the Trust.
The Trust has also adopted a Shareholder Servicing Agreement that permits
payment of compensation to service providers, that may include City National
Bank ("CNB"), that have agreed to provide certain shareholder support for their
customers who own Institutional Class, Class A, Class S or Class R Shares. In
consideration for such services, a shareholder servicing fee is charged at the
annual rate of up to 0.25% of each Fund's average daily net assets. For the
period ended September 30, 2003, CNB received Shareholder Servicing fees from
the Trust in the amount of approximately $7,514,000.
Certain officers of the Trust are also officers of City National Asset
Management, Inc. ("CNAM", the "Adviser"), the Administrator and/or the
Distributor. Such officers are paid no fees by the Trust for serving as officers
of the Trust.
4. INVESTMENT ADVISORY FEES AND OTHER AGREEMENTS:
Effective May 10, 2001, CNAM, a wholly owned subsidiary of CNB, assumed the role
of Investment Manager from CNB. Under the terms of the current agreements, the
Adviser receives an annual fee equal to 0.62% of the average daily net assets of
the Large Cap Value Equity Fund, 0.65% of the average daily net assets of the
Large Cap Growth Equity Fund, 0.85% of the average net assets of the RCBSmall
Cap Value Fund, 0.85% of the average daily net assets of the
CNI CHARTER FUNDS | PAGE 62
- --------------------------------------------------------------------------------
Technology Growth Fund, 0.40% of the average daily net assets of the Corporate
Bond Fund, 0.43% of the average daily net assets of the Government Bond Fund,
0.27% of the average daily net assets of the California Tax Exempt Bond Fund,
0.75% of the average daily net assets of the High Yield Bond Fund, 0.25% of the
average daily net assets of the Prime Money Market Fund, 0.26% of the average
daily net assets of the Government Money Market Fund, and 0.27% of the average
daily net assets of the California Tax Exempt Money Market Fund.
REED, CONNER & BIRDWELL, LLC acts as the Investment Sub-Adviser on behalf of the
RCB Small Cap Value Fund.
CREDIT SUISSE ASSET MANAGEMENT, LLC acts as the Investment Sub-Adviser on behalf
of the High Yield Bond Fund.
WELLINGTON MANAGEMENT COMPANY, LLC served as the Investment Sub-Adviser for the
Government Money Market Fund through May 1, 2003. This agreement was terminated
as of May 1, 2003.
WEISS, PECK, &GREER, LLC acts as the Investment Sub-Adviser on behalf of the
California Tax Exempt Money Market Fund.
The Adviser has voluntarily agreed to limit its fees or reimburse expenses to
the extent necessary to keep operating expenses at or below certain percentages
of the respective average daily net assets. The Adviser has voluntarily agreed
to maintain this limitation until further notice to the Trust. The voluntary
expense limitations (expressed as a percentage of average daily net assets) are
as follows:
Large Cap Large Cap RCB
Value Growth Small Cap Technology
Equity Equity Value Growth
Fund Fund Fund Fund
- -------------------------------------------------------------------
Institutional Class 1.00% 1.05% 1.24% 1.20%
Class A 1.25% 1.30% 1.49% 1.50%
Class R -- -- 1.49% --
- -------------------------------------------------------------------
California
Corporate Government Tax Exempt High Yield
Bond Bond Bond Bond
Fund Fund Fund Fund
- -------------------------------------------------------------------
Institutional Class 0.75% 0.70% 0.50% 1.00%
Class A 1.00% 0.95% 0.75% 1.30%
- -------------------------------------------------------------------
Prime California
Money Government Tax Exempt
Market Money Market Money Market
Fund Fund Fund
- ------------------------------------------------------------
Institutional Class 0.63% 0.63% 0.55%
Class A 0.85% 0.85% 0.78%
Class S 1.05% 1.05% 0.98%
- ------------------------------------------------------------
Any fee reductions or expense reimbursements may be repaid to the Adviser within
three years after occurrence, subject to certain restrictions and only if such
repayments do not cause the Funds' expense ratios, at the time of repayment, to
exceed the amounts shown above.
During the year ended September 30, 2003, the Board of Trustees approved the
reimbursement of previously waived fees by the Adviser for the prior fiscal year
in the amount of $3,602, $5,351, $2,538, $20,625 and $26,227 for the Large Cap
Value Equity Fund, Large Cap Growth Equity Fund, RCB Small Cap Value Fund, Prime
Money Market Fund and Government Money Market Fund, respectively.
As of September 30, 2003, fees which were previously waived by the Adviser which
may be subject to possible future reimbursement to the Adviser were as follows:
(000)
- ------------------------------------------------------------
Large Cap Value Equity Fund $ 59
Large Cap Growth Equity Fund 35
RCB Small Cap Value Fund 234
Technology Growth Fund 9
Corporate Bond Fund 88
Government Bond Fund 80
California Tax Exempt Bond Fund 107
High Yield Bond Fund 97
Prime Money Market Fund 963
Government Money Market Fund 2,295
California Tax Exempt Money Market Fund 3,621
- ------------------------------------------------------------
5. INVESTMENT TRANSACTIONS:
The cost of security purchases and proceeds from the sale of securities, other
than temporary investments in short-term securities for the fiscal year ended
September 30, 2003, were as follows for the Equity and Fixed Income Funds:
Purchases Sales
- -------------------------------------------------------------
U.S. Gov`t Other U.S. Gov`t Other
(000) (000) (000) (000)
- -------------------------------------------------------------
Large Cap Value Equity
Fund $ -- $15,212 $ -- $11,413
Large Cap Growth Equity
Fund -- 13,276 -- 8,276
RCB Small Cap Value Fund -- 12,239 -- 10,092
Technology Growth Fund -- 648 -- 406
Corporate Bond Fund 8,255 20,574 7,715 19,188
Government Bond Fund 10,107 -- 7,947 --
California Tax Exempt
Bond Fund -- 10,080 -- 10,913
High Yield Bond Fund -- 16,514 -- 7,955
- -------------------------------------------------------------
CNI CHARTER FUNDS | PAGE 63
notes to financial statements
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
6. FEDERAL TAX INFORMATION:
It is each Fund's intention to continue to qualify as a regulated investment
company for Federal income tax purposes and distribute all of its taxable income
and net capital gains. Accordingly, no provisions for Federal income taxes are
required.
The Funds may be subject to taxes imposed by countries in which they invest,
with respect to their investments, in issuers existing or operating in such
countries. Such taxes are generally based on income earned. The Funds accrue
such taxes when the related income is earned.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with Federal tax
regulations, which may differ from accounting principles generally accepted in
the United States of America. As a result, net investment income (loss) and net
realized gain (loss) on investment transactions for a reporting period may
differ significantly from distributions during such period. These book/tax
differences may be temporary or permanent. To the extent these differences are
permanent in nature, they are charged or credited to paid-in-capital,
undistributed net investment income (loss), or accumulated net realized gain
(loss), as appropriate, in the period that the differences arise.
Accordingly, the following permanent differences, primarily attributable to net
operating losses, paydown reclasses and nondeductible organizational costs, have
been reclassified to/from the following accounts:
Increase Decrease
Undistributed Accumulated Decrease
Net Investment Net Realized Paid in
Income Gain Capital
(000) (000) (000)
- ---------------------------------------------------------------------
RCB Small Cap Value Fund $59 $-- $(59)
Technology Growth Fund 14 -- (14)
Government Bond Fund 13 (13) --
Prime Money Market Fund 9 -- (9)
- ---------------------------------------------------------------------
The tax character of dividends and distributions paid during the years ended
September 30, 2003 and September 30, 2002 were as follows:
Tax
Exempt Ordinary Long-term
Income Income Capital Gain Total
(000) (000) (000) (000)
- -------------------------------------------------------------
Large Cap Value Equity Fund
2003 $ -- $ 336 $ -- $ 336
2002 -- 271 481 752
Large Cap Growth Equity Fund
2003 -- 29 -- 29
2002 -- -- -- --
Corporate Bond Fund
2003 -- 1,843 -- 1,843
2002 -- 2,165 190 2,355
Government Bond Fund
2003 -- 519 21 540
2002 -- 627 35 662
California Tax Exempt Bond Fund
2003 450 60 218 728
2002 522 83 61 666
High Yield Bond Fund
2003 -- 1,990 -- 1,990
2002 -- 1,532 -- 1,532
Prime Money Market Fund
2003 -- 3,310 -- 3,310
2002 -- 8,179 -- 8,179
Government Money Market Fund
2003 -- 11,356 -- 11,356
2002 -- 29,979 -- 29,979
California Tax Exempt Money Market Fund
2003 2,993 -- -- 2,993
2002 5,058 -- -- 5,058
As of September 30, 2003, the components of Distributable Earnings/(Accumulated
Losses) on a tax basis were as follows:
Undistributed Undistributed Undistributed Capital
Tax-Exempt Ordinary Long-term Loss
Income Income Capital Gain Carryforwards
(000) (000) (000) (000)
- ------------------------------------------------------------------------------------------
Large Cap Value Equity Fund $-- $ 91 $-- $ (333)
Large Cap Growth Equity Fund -- 12 -- (4,771)
RCB Small Cap Value Fund -- -- 88 --
Technology Growth Fund -- -- -- (1,050)
Corporate Bond Fund -- 336 180 --
Government Bond Fund -- 44 205 --
California Tax Exempt Bond Fund 34 59 139 --
High Yield Bond Fund -- 189 -- (1,413)
Prime Money Market Fund -- 180 -- (407)
Government Money Market Fund -- 471 -- (4)
California Tax Exempt Money
Market Fund 131 -- 1 --
Unrealized Other Total
Post-October Appreciation Temporary Distributable Earnings
Losses (Depreciation) Differences (Accumulated Losses)
(000) (000) (000) (000)
- -----------------------------------------------------------------------------------------------
Large Cap Value Equity Fund $ (24) $4,704 $ (91) $ 4,347
Large Cap Growth Equity Fund (284) (472) (12) (5,527)
RCB Small Cap Value Fund -- 4,894 -- 4,982
Technology Growth Fund (315) (425) -- (1,790)
Corporate Bond Fund -- 2,106 (141) 2,481
Government Bond Fund -- 445 (38) 656
California Tax Exempt Bond Fund -- 458 (34) 656
High Yield Bond Fund (249) 820 (203) (856)
Prime Money Market Fund -- -- (169) (396)
Government Money Market Fund -- -- (471) (4)
California Tax Exempt Money
Market Fund -- -- (131) 1
CNI CHARTER FUNDS | PAGE 64
- --------------------------------------------------------------------------------
For tax purposes, the losses in the Funds can be carried forward for a maximum
of eight years to offset any future net realized capital gains. At September 30,
2003, the breakdown of capital loss carryforwards is as follows:
Expiring September 30,
----------------------------------
2008 2010 2011
(000) (000) (000)
- ------------------------------------------------------------
Large Cap Value Equity Fund $-- $ 18 $ 315
Large Cap Growth Equity Fund 11 3,244 1,516
Technology Growth Fund -- 392 658
High Yield Bond Fund -- 481 932
Prime Money Market Fund -- 407 --
Government Money Market
Fund -- -- 4
- ------------------------------------------------------------
During the year ended September 30, 2003, the RCBSmall Cap Value Fund, Prime
Money Market Fund and California Tax Exempt Money Market Fund had utilized
capital loss carryforwards of $21,786, $76,610 and $18,500, respectively to
offset capital gains.
Post-October losses represent losses realized on investments and foreign
currency transactions from November 1, 2002 through September 30, 2003 that, in
accordance with Federal income tax regulations, the Funds have elected to defer
and treat as having arisen in the following fiscal year.
At September 30, 2003, the total cost of securities and the net realized gains
or losses on securities sold for Federal income tax purposes were not materially
different from the amounts reported for financial reporting purposes.
Based on cost for Federal income tax purposes, the aggregate gross unrealized
appreciation on securities, the aggregate gross unrealized depreciation on
securities and the net unrealized appreciation/(depreciation) at September 30,
2003 for each of the Equity and Fixed Income Funds were as follows:
Aggregate Aggregate Net
Federal Gross Gross Unrealized
Tax Unrealized Unrealized Appreciation
Cost Appreciation Depreciation (Depreciation)
(000) (000) (000) (000)
- -----------------------------------------------------------------------
Large Cap Value
Equity Fund $30,098 $6,453 $(1,749) $4,704
Large Cap Growth
Equity Fund 24,619 2,142 (2,614) (472)
RCB Small Cap
Value Fund 17,856 5,050 (156) 4,894
Technology Growth
Fund 2,289 145 (570) (425)
Corporate Bond
Fund 40,457 2,229 (123) 2,106
Government Bond
Fund 15,093 450 (5) 445
California Tax Exempt
Bond Fund 14,449 468 (10) 458
High Yield Bond
Fund 28,914 1,631 (811) 820
- -----------------------------------------------------------------------
7. CONCENTRATION OF CREDIT RISK:
CALIFORNIA TAX EXEMPT FUNDS - SPECIFIC RISKS
The ability of issuers to pay interest on, and repay principal of, California
municipal securities may be affected by economic and political developments in
the State of California.
Certain securities are backed by letters of credit from various financial
institutions and financial guaranty assurance agencies. These letters of credit
enhance the credit quality of the individual securities; however, if any of the
financial institutions or financial guaranty assurance agencies' credit quality
should deteriorate, it could cause the individual security's credit quality to
change. Additionally, if any of the Funds concentrate their letters of credit in
any one financial institution, the risk of credit quality deterioration
increases.
CNI CHARTER FUNDS | PAGE 65
notes to financial statements
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
8. CAPITAL SHARES ISSUED AND REDEEMED:
Capital share activity for the years ended September 30, 2003 and September 30,
2002 was as follows:
Large Cap Value Large Cap Growth RCB Small Cap Technology
Equity Fund (000) Equity Fund (000) Value Fund (000) Growth Fund (000)
-------------------- -------------------- ------------------- ---------------------
2003 2002 2003 2002 2003 2002 2003 2002
- -------------------------------------------------------- -------------------- ------------------- ---------------------
CAPITAL SHARES ISSUED AND REDEEMED:
INSTITUTIONAL CLASS:
Shares Issued 1,481 1,015 1,559 986 201 162 148 22
Shares Issued in Lieu of
Dividends and Distributions 11 25 2 -- -- -- -- --
Shares Redeemed (899) (759) (774) (726) (34) (45) (137) (28)
- -------------------------------------------------------- -------------------- ------------------- ---------------------
Net Institutional
Class Transactions 593 281 787 260 167 117 11 (6)
======================================================== ==================== =================== =====================
CLASS A:
Shares Issued 136 50 172 66 90 27 82 60
Shares Issued in Lieu of
Dividends and Distributions 1 2 -- -- -- -- -- --
Shares Redeemed (23) (17) (14) (13) (8) -- (1) (4)
- -------------------------------------------------------- -------------------- ------------------- ---------------------
Net Class A Transactions 114 35 158 53 82 27 81 56
======================================================== ==================== =================== =====================
CLASS R:
Shares Issued -- -- -- -- 92 349 -- --
Shares Issued in Lieu of
Dividends and Distributions -- -- -- -- -- -- -- --
Shares Redeemed -- -- -- -- (115) (152) -- --
- -------------------------------------------------------- -------------------- ------------------- ---------------------
Net Class R Transactions -- -- -- -- (23) 197 -- --
======================================================== ==================== =================== =====================
California High Yield
Corporate Bond Government Bond Tax Exempt Bond Bond
Fund (000) Fund (000) Fund (000) Fund (000)
-------------------- -------------------- ------------------- ---------------------
2003 2002 2003 2002 2003 2002 2003 2002
- -------------------------------------------------------- -------------------- ------------------- ---------------------
CAPITAL SHARES ISSUED AND REDEEMED:
INSTITUTIONAL CLASS:
Shares Issued 1,107 1,356 630 514 242 334 373 208
Shares Issued in Lieu of
Dividends and Distributions 30 45 10 12 8 7 69 71
Shares Redeemed (1,088) (627) (528) (382) (369) (329) (174) (137)
- -------------------------------------------------------- -------------------- ------------------- ---------------------
Net Institutional
Class Transactions 49 774 112 144 (119) 12 268 142
======================================================== ==================== =================== =====================
CLASS A:
Shares Issued 43 42 30 48 75 1 1,266 807
Shares Issued in Lieu of
Dividends and Distributions 1 -- -- -- 1 -- 74 50
Shares Redeemed (19) -- (76) -- (8) -- (606) (168)
- -------------------------------------------------------- -------------------- ------------------- ---------------------
Net Class A Transactions 25 42 (46) 48 68 1 734 689
======================================================== ==================== =================== =====================
AMOUNTS DESIGNATED AS "--" ARE EITHER 0 OR HAVE BEEN ROUNDED TO 0.
CNI CHARTER FUNDS | PAGE 66
- --------------------------------------------------------------------------------
California
Prime Government Tax Exempt
Money Market Money Market Money Market
Fund (000) Fund (000) Fund (000)
------------------------ ------------------------ ------------------------
2003 2002 2003 2002 2003 2002
- --------------------------------------------------------------------- ------------------------ ------------------------
CAPITAL SHARES ISSUED AND REDEEMED:
INSTITUTIONAL CLASS:
Shares Issued 854,421 1,489,084 619,561 491,362 724,038 548,010
Shares Issued in Lieu of
Dividends and Distributions 407 744 -- -- -- --
Shares Redeemed (858,546) (1,503,930) (614,704) (516,178) (695,143) (539,630)
- --------------------------------------------------------------------- ------------------------ ------------------------
Net Institutional
Class Transactions (3,718) (14,102) 4,857 (24,816) 28,895 8,380
===================================================================== ======================== ========================
CLASS A:
Shares Issued 617,388 731,533 4,182,886 4,730,497 1,144,274 1,171,542
Shares Issued in Lieu of
Dividends and Distributions 276 896 7,038 18,614 2,108 3,699
Shares Redeemed (641,303) (747,116) (4,278,238) (5,131,395) (1,126,487) (1,294,419)
- --------------------------------------------------------------------- ------------------------ ------------------------
Net Class A Transactions (23,639) (14,687) (88,314) (382,284) 19,895 (119,178)
===================================================================== ======================== ========================
CLASS S:
Shares Issued 381,285 368,121 601,546 711,343 145,219 122,665
Shares Issued in Lieu of
Dividends and Distributions -- -- -- -- -- --
Shares Redeemed (391,853) (365,288) (629,397) (638,986) (150,843) (109,890)
- --------------------------------------------------------------------- ------------------------ ------------------------
Net Class S Transactions (10,568) 2,833 (27,851) 72,357 (5,624) 12,775
===================================================================== ======================== ========================
AMOUNTS DESIGNATED AS "--" ARE EITHER 0 OR HAVE BEEN ROUNDED TO 0.
CNI CHARTER FUNDS | PAGE 67
report of independent auditors
SEPTEMBER 30, 2002
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
CNICHARTER FUNDS:
We have audited the accompanying statements of net assets of the CNI Charter
Funds, comprised of the Large Cap Value Equity Fund, the Large Cap Growth Equity
Fund, the RCB Small Cap Value Fund, the Technology Growth Fund, the Corporate
Bond Fund, the Government Bond Fund, the California Tax Exempt Bond Fund, the
High Yield Bond Fund, the Prime Money Market Fund, the Government Money Market
Fund, and the California Tax Exempt Money Market Fund (collectively, "the
Funds") as of September 30, 2003, and the related statements of operations for
the year then ended, the statements of changes in net assets for each of the
years or periods in the two-year period then ended, and the financial highlights
for each of the years or periods indicated herein ending on or after October 31,
1999. These financial statements and financial highlights are the responsibility
of the Funds' management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits. For the
Prime Money Market Fund, the financial highlights for the period from March 23,
1998 (commencement of operations) through October 31, 1998 were audited by other
auditors whose report thereon dated December 11, 1998 expressed an unqualified
opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of September 30, 2003, by correspondence with the custodian
and other appropriate audit procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights which were
audited by us and referred to above present fairly, in all material respects,
the financial position of each of the aforementioned Funds of the CNI Charter
Funds as of September 30, 2003, the results of their operations, the changes in
their net assets, and their financial highlights for the periods indicated
herein, in conformity with accounting principles generally accepted in the
United States of America.
/S/KPMG LLP
LOS ANGELES, CALIFORNIA
NOVEMBER 7, 2003
CNI CHARTER FUNDS | PAGE 68
board members and officers (UNAUDITED)
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
Information pertaining to the Trustees and Officers of the Trust is set forth
below. Trustees who are not deemed to be "interested persons" of the Trust as
defined in the 1940 Act are referred to as "Independent Board Members." Trustees
who are deemed to be "interested persons" of the Trust are referred to as
"Interested Board Members."
- ------------------------------------------------------------------------------------------------------------------------------------
TERM OF NUMBER OF
OFFICE PORTFOLIOS IN
AND CNI CHARTER OTHER
NAME POSITION(S) LENGTH OF FUNDS COMPLEX DIRECTORSHIPS
ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
AND AGE (1) TRUST SERVED (2) DURING PAST FIVE YEARS BOARD MEMBER (3) TRUSTEE (4)
- ------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT
BOARD MEMBERS
- -------------
Irwin G. Barnet Trustee Since 1999 An attorney and a principal of Crosby, Heafey, 11 None
Age: 65 Roach & May, a law firm (September 2000-
present); an attorney and principal of
Sanders, Barnet, Goldman, Simons &
Mosk, a law firm prior to September, 2000.
- ------------------------------------------------------------------------------------------------------------------------------------
Victor Meschures Trustee Since 1999 A Certified Public Accountant with Meschures, 11 None
Age: 65 Campeas, Thompson, Snyder and Pariser, LLP,
an accounting firm.
- ------------------------------------------------------------------------------------------------------------------------------------
William R. Sweet Trustee Since 1999 Retired; Executive Vice President, Union 11 Director, Banner
Age: 66 Bank of California (1985-1996). Central Finance
Company; Director,
Hispanic Express, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
James R. Wolford Trustee Since 1999 Chief Financial Officer, DBM Group (2000- 11 None
Age: 49 present); Senior Vice President and Chief
Operating Officer, Forecast Commercial Real
Estate Service, Inc. (2000); Senior Vice President
and Chief Financial Officer, Bixby Ranch Company,
a real estate company (1994-2000).
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED
BOARD MEMBER (5)
Maria D. Hummer Trustee Since 1999 An attorney with Manatt, Phelps & Phillips 11 Director, Westwood
Age: 59 and Chair of the Land Use Section of that One; seven charitable
law firm. boards.
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS
- --------
Timothy D. Barto Vice President Since 2000 Employed by SEI Investments since October N/A N/A
One Freedom and Assistant 1999. Vice President and Assistant Secretary
Valley Drive Secretary of the Administrator and Distributor since
Oaks, PA 19456 December 1999. Associate at Dechert, Price
Age: 35 & Rhoads (1997-1999).
- ------------------------------------------------------------------------------------------------------------------------------------
Todd B. Cipperman Vice President Since 2000 Senior Vice President and General Counsel N/A N/A
One Freedom and Assistant of SEI Investments; Senior Vice President,
Valley Drive Secretary General Counsel and Secretary of the
Oaks, PA 19456 Administrator and the Distributor since
Age: 37 2000. Vice President and Assistant
Secretary of SEI
Investments, the
Administrator and the
Distributor, 1995-2000.
- ------------------------------------------------------------------------------------------------------------------------------------
Cori Daggett Vice President Since 2003 Employed by SEI Investments N/A N/A
One Freedom and Assistant since 2003; Associate at Drinker Biddle &
Valley Drive Secretary Reath (1998-2003).
Oaks, PA 19456
Age: 40
CNI CHARTER FUNDS | PAGE 69
board members and officers (UNAUDITED)
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
Information pertaining to the Trustees and Officers of the Trust is set forth
below. Trustees who are not deemed to be "interested persons" of the Trust as
defined in the 1940 Act are referred to as "Independent Board Members." Trustees
who are deemed to be "interested persons" of the Trust are referred to as
"Interested Board Members."
- ------------------------------------------------------------------------------------------------------------------------------------
TERM OF NUMBER OF
OFFICE PORTFOLIOS IN
AND CNI CHARTER OTHER
NAME POSITION(S) LENGTH OF FUNDS COMPLEX DIRECTORSHIPS
ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
AND AGE (1) TRUST SERVED (2) DURING PAST FIVE YEARS BOARD MEMBER (3) TRUSTEE (4)
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS
- --------
Lydia A. Gavalis Vice President Since 1999 Vice President and Assistant Secretary of SEI N/A N/A
One Freedom and Assistant Investments, the Administrator and the
Valley Drive Secretary Distributor since 1998. Assistant General
Oaks, PA 19456 Counsel and Director of Arbitration,
Age: 39 Philadelphia Stock Exchange (1989-1998).
- ------------------------------------------------------------------------------------------------------------------------------------
Vernon C. Kozlen President Since 2000 Chairman, City National Asset Management, N/A N/A
City National Bank and Chief Inc. (2001-Present); Executive
400 N. Roxbury Dr. Executive Vice President, City National Bank
Beverly Hills, CA Officer (1996-Present).
90210
Age: 59
- ------------------------------------------------------------------------------------------------------------------------------------
Christine M. Vice President Since 2000 Employed by SEI Investments since N/A N/A
McCullough and Assistant November 1, 1999. Vice President and
One Freedom Secretary Assistant Secretary of the Administrator and
Valley Drive the Distributor since December 1999.
Oaks, PA 19456 Associate at White and Williams LLP,
Age: 42 1991-1999.
- ------------------------------------------------------------------------------------------------------------------------------------
John C. Munch Vice President Since 2002 Employed by SEI Investments since N/A N/A
One Freedom and Secretary November 2001. Vice President and
Valley Drive Assistant Secretary of the Administrator and
Oaks, PA 19456 Distributor since November 2001. Associate
Age: 32 at Howard Rice Nemorvoski Canady Falk &
Rabkin (1998-2001). Associate at Seward &
Kissel (1996-1998).
- ------------------------------------------------------------------------------------------------------------------------------------
Rodney J. Olea Vice President Since 2000 Senior Vice President, City National Asset N/A N/A
City National Bank Management, Inc. (2001-Present); Senior Vice
400 N. Roxbury Dr. President and Director of Fixed Income of
Beverly Hills, CA City National Bank (1994-Present).
90210
Age: 38
- ------------------------------------------------------------------------------------------------------------------------------------
Sherry Kajdan Vice President Since 2001 Employed by SEI Investments since January N/A N/A
Vetterlein and Assistant 2001. Vice President and Assistant
One Freedom Secretary Secretary of the Administrator and
Valley Drive Distributor since January 2001.
Oaks, PA 19456 Shareholder/Partner, Buchanan Ingersoll
Age: 41 Professional Corporation
(law firm) (1992-2000).
CNI CHARTER FUNDS | PAGE 70
- ------------------------------------------------------------------------------------------------------------------------------------
TERM OF NUMBER OF
OFFICE PORTFOLIOS IN
AND CNI CHARTER OTHER
NAME POSITION(S) LENGTH OF FUNDS COMPLEX DIRECTORSHIPS
ADDRESS, HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
AND AGE (1) TRUST SERVED (2) DURING PAST FIVE YEARS BOARD MEMBER (3) TRUSTEE (4)
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS
- --------
Richard A. Weiss Vice President Since 2000 President, City National Asset Management, Inc. N/A N/A
City National Bank and Assistant (2001-Present); Senior Vice President and
400 N. Roxbury Dr., Secretary Chief Investment Officer of the City National
Beverly Hills, CA Bank (1999-Present); Sanwa Bank California,
90210 Executive Vice President and Chief Investment
Age: 43 Officer (1994-1999).
- ------------------------------------------------------------------------------------------------------------------------------------
Peter A. Rodriguez Controller and Since 2003 Director, Funds Accounting, SEI Investments N/A N/A
One Freedom Chief Global Funds Services since September 2002
Valley Drive Operating (and 1997-2002); Vice President, Fund
Oaks, PA 19456 Officer Administration, BlackRock Financial Management
Age: 41 (April 2002 to September 2002).
- ------------------------------------------------------------------------------------------------------------------------------------
William E. Vice President Since 2000 Employed by SEI Investments since August N/A N/A
Zitelli, Jr. and Assistant 2000. Vice President and Assistant Secretary
One Freedom Secretary of the Administrator and Distributor since
Valley Drive September 2000. Vice President, Merrill
Oaks, PA 19456 Lynch & Co. Asset Management Group (1998-
Age: 35 2000). Associate at Pepper
Hamilton LLP (1997-1998).
<FN>
- ------------------------
1 Each trustee may be contacted by writing to the Trustee c/o CNI Charter
Funds, One Freedom Valley Drive, Oaks, PA 19456.
2 Each trustee shall hold office during the lifetime of this Trust until he or
she dies, resigns, is declared bankrupt or incompetent by a court of
appropriate jurisdiction, or is removed, or, if sooner, until the next
meeting of shareholders called for the purpose of electing trustees and
until the election and qualification of his or her successor in accordance
with the Trust's Declaration of Trust. The president, treasurer and
secretary shall hold office until their respective successors are chosen or
qualified, or until their removal or resignation, or in each case until he
or she sooner dies, resigns, is removed, or becomes disqualified in
accordance with the Trust's by-laws.
3 The "CNI Charter Funds Complex" consists of all registered investment
companies for which City National Asset Management, Inc. serves as
investment adviser. As of September 30, 2003, the CNI Charter Funds Complex
consisted of 11 Funds.
4 Directorships of companies required to report to the Securities and Exchange
Commission under the Securities Exchange Act of 1934 (i.e., "public
companies") or other investment companies registered under the 1940 Act.
5 Ms. Hummer is considered an interested person of the Trust as defined in
Section 2(a)(19) of the Investment Company Act of 1940. Ms. Hummer resigned
from the CNI Charter Funds Board of Trustees on August 14, 2003.
</FN>
CNI CHARTER FUNDS | PAGE 71
notice to shareholders (UNAUDITED)
SEPTEMBER 30, 2003
- --------------------------------------------------------------------------------
For shareholders that do not have a September 30, 2003 taxable year end, this
notice is for informational purposes only. For shareholders with a September 30,
2003 taxable year end, please consult your tax advisor as to the pertinence of
this notice.
For California income tax purposes, for the fiscal year ended September 30,
2003, California Tax Exempt Bond Fund and California Tax Exempt Money Market
Fund designate 100% and 86.036%, respectively, of their distributions paid from
net investment income as exempt-interest dividends under Section 17145 of the
California Revenue and Taxation Code.
For Federal income tax purposes, for the fiscal year ended September 30, 2003
each Fund is designating the following items with regard to distributions paid
during the year:
(C)** (D)***
(A)* DIVIDENDS QUALIFYING
LONG TERM (B)* QUALIFYING DIVIDEND
(20% RATE) ORDINARY FOR CORPORATE INCOME
CAPITAL GAIN INCOME TAX EXEMPT TOTAL DIVIDENDS REC. (15% RATE
DISTRIBUTIONS DISTRIBUTIONS INTEREST DISTRIBUTIONS DEDUCTION (1) FOR QDI) (2)
- ---------------------------------------------------------------------------------------------------------------------------------
Large Cap Value
Equity Fund 0% 100% 0% 100% 100% 100%
Large Cap Growth
Equity Fund 0% 100% 0% 100% 100% 100%
RCB Small Cap
Value Fund 0% 0% 0% 0% 0% 0%
Technology Growth
Fund 0% 0% 0% 0% 0% 0%
Corporate Bond
Fund 0% 100% 0% 100% 0% 0%
Government Bond
Fund 4% 96% 0% 100% 0% 0%
California Tax Exempt
Bond Fund 30% 8% 62% 100% 0% 0%
High Yield Bond Fund 0% 100% 0% 100% 0% 0%
Prime Money Market
Fund 0% 100% 0% 100% 0% 0%
Government Money
Market Fund 0% 100% 0% 100% 0% 0%
California Tax Exempt
Money Market Fund 0% 0% 100% 100% 0% 0%
- ---------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) QUALIFYING DIVIDENDS REPRESENT DIVIDENDS WHICH QUALIFY FOR THE CORPORATE
DIVIDENDS RECEIVED DEDUCTION.
(2) THE PERCENTAGE IN THIS COLUMN REPRESENTS THE AMOUNT OF "QUALIFYING DIVIDEND
INCOME" AS CREATED BY THE JOBS AND GROWTH TAX RELIEF RECONCILIATION ACT OF
2003. IT IS THE INTENTION OF EACH OF THE AFOREMENTIONED FUNDS TO DESIGNATE
THE MAXIMUM AMOUNT PERMITTED BY THE LAW.
* ITEMS (A) AND (B) ARE BASED ON THE PERCENTAGE OF EACH FUND'S TOTAL
DISTRIBUTION.
** ITEM (C) IS BASED ON THE PERCENTAGE OF ORDINARY INCOME DISTRIBUTIONS OF EACH
FUND.
*** ITEM (D) IS BASED ON THE PERCENTAGE OF ORDINARY INCOME DISTRIBUTIONS PAID
OUT AFTER JANUARY 1, 2003.
</FN>
CNI CHARTER FUNDS | PAGE 72
THANK YOU
for your investment with CNI Charter Funds. We value the trust you have placed
in us to help you achieve your financial goals.
For more information on CNI Charter Funds, including charges and expenses,
please call 1-888-889-0799 for a free prospectus. Read it carefully before you
invest or send money.
CNI CHARTER FUNDS[SM] [LOGO][R]
CNI-AR-001-0200
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer and principal
accounting officer.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The registrant's board of trustees has determined that the registrant has
at least one audit committee financial expert serving on the audit committee.
(a)(2) The audit committee financial experts are William R. Sweet and James R.
Wolford. Messrs. Sweet and Wolford are independent as defined in Form N-CSR Item
3(a)(2).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable - only effective for annual reports for periods ending on or
after December 15, 2003.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. (RESERVED)
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. (RESERVED)
ITEM 9. CONTROLS AND PROCEDURES.
(a) The certifying officers, whose certifications are included herewith, have
evaluated the registrant's disclosure controls and procedures within 90 days of
the filing date of this report. In their opinion, based on their evaluation, the
registrant's disclosure controls and procedures are adequately designed, and are
operating effectively to ensure, that information required to be disclosed by
the registrant in the reports it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms.
(b) There were no significant changes in the registrant's internal control over
financial reporting that occurred during the registrant's last fiscal half-year
that has materially affected, or is reasonably likely to materially affect, the
registrants internal control over financial reporting.
ITEMS 10. EXHIBITS.
(a)(1) Code of Ethics attached hereto.
(a)(2) A separate certification for the principal executive officer and the
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(a)), are filed
herewith.
(b) Officer certifications as required by Rule 30a-2(b) under the Investment
Company Act of 1940, as amended (17 CFR 270.30a-2(b)) also accompany this filing
as an Exhibit.
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SIGNATURES
Pursuant to the requirements of the securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) CNI Charter Funds
By (Signature and Title)* s/ Vern Kozlen
----------------------------
Vern Kozlen, President & CEO
Date 11/25/03
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Vern Kozlen
----------------------------
Vern Kozlen, President & CEO
Date 11/25/03
By (Signature and Title)* /s/ Peter A. Rodriguez
----------------------------
Peter A. Rodriguez, Controller and COO
Date 11/25/03
* Print the name and title of each signing officer under his or her signature.