BRGO Bergio International Inc (PK)

 

Diversified Fund		Core Fund
Index Risk –The performance of the portion of the Diversified Fund designed by CNR to replicate the S&P 500 Index may not exactly match the performance of the Index. That portion of the Diversified Fund does not hold every stock contained in the Index and the performance of the stocks held in the Diversified Fund may not track exactly the performance of the stocks held in the Index. Furthermore, unlike the Index, the Diversified Fund incurs management fees, 12b-1 fees (for Class N shares only), administrative expenses and transaction costs in trading stocks.		Investment Style – CNR primarily uses a core equity style to select investments for the Fund and will often choose equities that it considers to be “growth at a reasonable price” (GARP). These styles may fall out of favor, may underperform other styles and may cause volatility in the Core Fund’s share price.
Foreign Investments (American Depositary Receipts) – Foreign investments tend to be more volatile than domestic securities, and are subject to risks that are not typically associated with domestic securities (e.g., unfavorable political and economic developments and the possibility of seizure or nationalization of companies, or the imposition of withholding taxes on income). The Diversified Fund invests in U.S. dollar denominated American Depositary Receipts of foreign companies (“ADRs”) which are sponsored by the foreign issuers. ADRs are subject to the risks of changes in currency or exchange rates (which affect the value of the issuer even though ADRs are denominated in U.S. dollars) and the risks of investing in foreign securities.

	Diversified Fund		Core Fund		Pro Forma Core Fund
	Class N Shares	Institutional Class Shares	Class N Shares	Institutional Class Shares	Class N Shares	Institutional Class Shares
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
Management Fee	0.75%	0.75%	0.40%	0.40%	0.40%	0.40%
Distribution (12b-1) Fee	0.25%	None	0.25%	None	0.25%	None
Other Expenses
Shareholder Servicing Fee	0.25%	None	0.25%	None	0.25%	None
Other Fund Expenses †	0.09%	0.09%	0.09%	0.09%	0.14%	0.14%
Total Other Expenses	0.34%	0.09%	0.34%	0.09%	0.39%	0.14%
Total Annual Fund Operating Expenses	1.34%	0.84%	0.99%	0.49%	1.04%	0.54%
Fee Waiver and/or Expense Reimbursement*	(0.20)%	(0.10)%	N/A	N/A	N/A	N/A
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement.	1.14%	0.74%	N/A	N/A	N/A	N/A

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Institutional Class	1 Year	3 Years	5 Years	10 Years
Diversified Fund:	$76	$258	$456	$1,028
Core Fund:	$50	$157	$274	$616
Pro Forma Combined Core Fund:	$55	$173	$302	$677

Class N	1 Year	3 Years	5 Years	10 Years
Diversified Fund:	$116	$405	$715	$1,595
Core Fund:	$101	$315	$547	$1,213
Pro Forma Combined Core Fund:	$106	$331	$574	$1,271

Comparison of Investment Restrictions

The fundamental and non-fundamental limitations of each Fund are subject are set forth in the following table.  The fundamental limitations may only be amended with shareholder approval.

 

Diversified Fund		Core Fund
Fundamental Limitations   The Diversified Fund may not purchase a security, other than government securities, if as a result of such purchase more than 5% of the value of the Diversified Fund’s assets would be invested in the securities of any one issuer, or the Diversified Fund would own more than 10% of the voting securities, or of any class of securities, of any one issuer, except that all of the investable assets of the Diversified Fund may be invested in another registered investment company having the same investment objective and substantially the same investment policies as the Diversified Fund. For purposes of this restriction, all outstanding indebtedness of an issuer is deemed to be a single class.		Fundamental Limitations   The Core Fund may not, with respect to 75% of its total assets, (i) purchase the securities of any issuer (except securities issued or guaranteed by the United States Government, its agencies or instrumentalities) if, as a result, more than 5% of its total assets would be invested in the securities of such issuer; or (ii) acquire more than 10% of the outstanding voting securities of any one issuer.

 

The Diversified Fund may not purchase a security, other than government securities, if as a result of such purchase 25% or more of the value of the Diversified Fund’s total assets would be invested in the securities of issuers in any one industry or group of industries, except that all of the investable assets of the Diversified Fund may be invested in another registered investment company having the same investment objective and substantially the same investment policies as the Diversified Fund.		The Core Fund may not purchase any securities which the Core Fund would cause 25% or more of the total assets of the Fund to be invested in the securities of one or more issuers conducting their principal business activities in the same industry or group of industries, provided that this limitation does not apply to investments in obligations issued or guaranteed by the United States Government, its agencies or instrumentalities.
The Diversified Fund may not make loans of money or securities, except through the purchase of permitted investments (including repurchase and reverse repurchase agreements) and through the loan of securities (in an amount not exceeding one-third of total assets) by any Diversified Fund.		The Core Fund may not make loans if, as a result, more than 33 1/3% of its total assets would be loaned to other parties, except that the Core Fund may (i) purchase or hold debt instruments in accordance with its investment objective and policies; (ii) enter into repurchase agreements; and (iii) lend its securities.

 

 

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The Diversified Fund may not purchase or sell real estate or interests therein, or purchase oil, gas or other mineral leases, rights or royalty contracts or development programs, except that the Diversified Fund may invest in the securities of issuers engaged in the foregoing activities and may invest in securities secured by real estate or interests therein.   The Diversified Fund may not purchase or sell commodities or commodity contracts, except that the Fund may purchase and sell financial futures contracts and options on such contracts and may enter into forward foreign currency contracts and engage in the purchase and sale of foreign currency options and futures.		The Core Fund may not purchase or sell real estate, physical commodities, or commodities contracts, except that the Core Fund may purchase (i) marketable securities issued by companies which own or invest in real estate (including real estate investment trusts), commodities, or commodities contracts; and (ii) commodities contracts relating to financial instruments, such as financial futures contracts and options on such contracts.
The Diversified Fund may not issue senior securities as defined in the 1940 Act or borrow money, except that the Diversified Fund may borrow from banks for temporary or emergency purposes (but not for investment) in an amount up to 10% of the value of its total assets (including the amount borrowed) less liabilities (not including the amount borrowed) at the time the borrowing was made. While any such borrowings exist for the Diversified Fund, it will not purchase securities. However, the Diversified Fund may lend securities, enter into repurchase agreements and reverse repurchase agreements in an amount not exceeding 10% of its total assets, purchase securities on a when-issued or delayed delivery basis and enter into forward foreign currency contracts.		The Core Fund may not issue senior securities (as defined in the 1940 Act) except as permitted by rule, regulation or order of the SEC.   The Core Fund may not borrow money in an amount exceeding 33 1/3% of the value of its total assets, provided that, for purposes of this limitation, investment strategies which either obligate the Core Fund to purchase securities or require the Core Fund to segregate assets are not considered to be borrowings. To the extent that the Core Fund’s borrowings exceed 5% of its total assets, (i) all borrowings will be repaid before making additional investments and any interest paid on such borrowing will reduce income; and (ii) asset coverage of at least 300% is required.

 

The Diversified Fund may not engage in the underwriting of securities except insofar as the Diversified Fund may be deemed an underwriter under the 1933 Act in disposing of a security and except that all of the investable assets of the Diversified Fund may be invested in another registered investment company having the same investment objective and substantially the same investment policies as the Diversified Fund.		The Core Fund may not act as an underwriter of securities of other issuers except as it may be deemed an underwriter in selling a portfolio security.
The Diversified Fund does not have a corresponding fundamental limitation.		The Core Fund may not invest in interests in oil, gas, or other mineral exploration or development programs and oil, gas or mineral leases.

 

 

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The Diversified Fund may not purchase the securities (other than government securities) of an issuer having a record, together with predecessors, of less than three years’ continuous operations, if as a result of such purchase more than 5% of the value of the Diversified Fund’s total assets would be invested in such securities, except that this shall not prohibit the Diversified Fund from investing all of its investable assets in another registered investment company having the same investment objective and substantially the same investment policies as the Diversified Fund.		The Core Fund does not have a corresponding fundamental limitation.
The Fund may not make short sales of securities or purchase securities on margin, except for such short-term loans as are necessary for the clearance of purchases of securities.		The Core Fund does not have a corresponding fundamental limitation.
The Diversified Fund may not invest more than 5% of the value of the Diversified Fund’s total assets in warrants, including not more than 2% of such assets in warrants not listed on a U.S. stock exchange. (Rights and warrants attached to, received in exchange for, or as a distribution on, other securities are not subject to this restriction.)		The Core Fund does not have a corresponding fundamental limitation.

 

The Diversified Fund may not hypothecate, mortgage or otherwise encumber its assets, except as necessary to secure permitted borrowings. (Collateral arrangements and initial margin with respect to permitted options on securities, financial futures contracts and related options, and arrangements incident to other permitted practices, are not deemed to be subject to this restriction.)		The Core Fund does not have a corresponding fundamental limitation, but does have a similar non-fundamental limitation.
Non-Fundamental Limitations		Non-Fundamental Limitations
The Diversified Fund may not purchase or acquire securities that are illiquid or are otherwise not readily marketable ( i.e. , securities that cannot be disposed of for their approximate carrying value in seven days or less, which term includes repurchase agreements and time deposits maturing in more than seven days) if, in the aggregate, more than 15% of its net assets would be invested in illiquid securities. (As a matter of non-fundamental policy, repurchase agreements maturing in more than seven days, certain time deposits and over-the-counter options are considered to be illiquid.)		The Core Fund may not purchase or acquire securities that are illiquid or are otherwise not readily marketable ( i.e. , securities that cannot be disposed of for their approximate carrying value in seven days or less, which term includes repurchase agreements and time deposits maturing in more than seven days) if, in the aggregate, more than 15% of its net assets would be invested in illiquid securities.

 

 

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The Diversified Fund may not invest for the purpose of exercising control or management of another company except that all the investable assets of a Fund may be invested in another registered investment company having the same investment objective and substantially the same investment policies as the Diversified Fund.		The Core Fund may not invest in companies for the purpose of exercising control.
The Diversified Fund may not purchase the stock or bonds of companies identified by the tobacco service of the Risk Metrics Group Social Issues Services. This service identifies those companies engaged in growing, processing or otherwise handling tobacco. If the Diversified Fund holds any such securities of an issuer which is subsequently identified by Risk Metrics as engaged in such activities, the securities will be sold within a reasonable time period, consistent with prudent investment practice.		The Core Fund may not purchase the stock or bonds of companies identified by the tobacco service of MSCI ESG Research. This service identifies those companies engaged in growing, processing or otherwise handling tobacco. If the Core Fund holds any such securities of an issuer which is subsequently identified by MSCI as engaged in such activities, the securities will be sold within a reasonable time period, consistent with prudent investment practice.
The Diversified Fund may not invest, under normal circumstances, less than 80% of the value of its net assets (plus borrowings for investment purposes) in a particular type of investment that is suggested by the Diversified Fund’s name. The Diversified Fund will notify its shareholders at least 60 days prior to any change in such policy.		The Core Fund may not invest, under normal circumstances, less than 80% of the value of its net assets (plus borrowings for investment purposes) in a particular type of investment that is suggested by the Core Fund’s name. The Core Fund will notify its shareholders at least 60 days prior to any change in such policy.

 

The Diversified Fund may not borrow money in an amount exceeding 10% of its total assets. The Diversified Fund will not borrow money for leverage purposes. For the purpose of this investment restriction, the use of options and futures transactions and the purchase of securities on a when-issued or delayed delivery basis shall not be deemed the borrowing of money. The Diversified Fund will not make additional investments while its borrowings exceed 5% of total assets.		The Fund does not have a corresponding non-fundamental limitation.
The Diversified Fund does not have a corresponding non-fundamental limitation.		The Core Fund may not purchase securities on margin or effect short sales, except that the Core Fund may (i) obtain short-term credits as necessary for the clearance of security transactions; (ii) provide initial and variation margin payments in connection with transactions involving futures contracts and options on such contracts; and (iii) make short sales “against the box” or in compliance with the SEC’s position regarding the asset segregation requirements imposed by Section 18 of the 1940 Act.
The Diversified Fund does not have a corresponding non-fundamental limitation.		The Core Fund may not invest its assets in securities of any investment company, except as permitted by the 1940 Act or an order of exemption therefrom.
The Diversified Fund does not have a corresponding non-fundamental limitation.		The Core Fund may not pledge, mortgage or hypothecate assets except to secure borrowings permitted by the Fund’s fundamental limitation on borrowing.

 

 

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PROPOSED REORGANIZATION

The Board of Trustees of the Trust has approved a plan to reorganize the Diversified Fund into the Core Fund.  To proceed, we need the approval of the shareholders of the Diversified Fund.  The following pages outline the important details of the proposed Reorganization.

 

Why Do We Want to Reorganize the Funds?

 

CNR proposed the Reorganization to the Board, and the Board is recommending the Reorganization to you, because, among other reasons, CNR does not expect significant future in-flows to the Diversified Fund and anticipates the assets of the Diversified Fund may decrease significantly in the future.  After considering the viability of the Diversified Fund in light of its current size and the limited prospects for future asset growth, CNR and the Board believe that maintaining the status quo would not be in shareholders’ best interests.

 

The Core Fund has significantly more assets than the Diversified Fund and a significantly lower annual expense ratio than the Diversified Fund.

 

Because CNR’s investment advisory fee with respect to the Core Fund (0.40% of average net assets) is less than its fee with respect to the Diversified Fund (0.75% of average net assets, reduced to 0.65% pursuant an agreement to waive a portion of this fee which expires on January 31, 2015, and because certain operating expenses of the Core Fund are shared across a larger pool of assets), CNR and the Board anticipate that if the Reorganization is approved, shareholders of the Diversified Fund will bear lower expense ratios as shareholders of the Core Fund than they did as shareholders of the Diversified Fund.  Further, CNR has voluntarily agreed to limit its fees or reimburse the Core Fund for expenses to the extent necessary to keep the Class N and Institutional Class total annual fund operating expenses at or below 1.05% and 0.55%, respectively, which are lower than CNR’s expense limits of 1.10% and 0.85% for the Class N and Institutional Class shares of the Diversified Fund.

 

Based upon their evaluation of the relevant information presented to them, and in light of their fiduciary duties under federal and state law, the Board has determined that the Reorganization is in the best interests of shareholders of the Diversified Fund and the Core Fund.  In approving the Reorganization, the Board considered the terms and conditions of a proposed Agreement and Plan of Reorganization between the Trust on behalf of the Diversified Fund and the Trust on behalf of the Core Fund (the “Reorganization Agreement”) and the following factors, among others:

 

(1)           The assets of the Diversified Fund are small ($47.7 million as of June 30, 2013) and its prospects for further growth are not good.  CNR expects that after the consummation of the Reorganization, the combined Core Fund will be better positioned for growth than the Diversified Fund is on its own.

 

(2)           CNR expects that the total operating expenses of the Diversified Fund (as a percentage of the Fund’s average net assets) will increase as fixed costs are spread over a shrinking asset base.   Because the Core Fund’s investment advisory fee will be lower and certain operating expenses at the combined Funds will be shared across a larger pool of assets, CNR expects that as a result of the Reorganization shareholders of the Diversified Fund will bear lower expense ratios as shareholders of the Core Fund.

 

 

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(3)           The investment objectives, policies and strategies of the Core Fund are similar to those of the Diversified Fund, and accordingly the reorganization will provide shareholders of the City National Rochdale Diversified Equity Fund with the continued opportunity to utilize the services of CNR as manager of their equity portfolios.

 

(4)           The interests of the Diversified Fund’s shareholders will not be diluted as a result of the Reorganization.  The assets and liabilities of the Diversified Fund will be transferred to the Core Fund in exchange for shares of beneficial interest of the Core Fund having a total value equal to the value of the assets the Diversified Fund transferred to the Core Fund (net of any liabilities). However, all known liabilities of the Diversified Fund will be paid before the closing of the Reorganization, and it is therefore anticipated that no liabilities of the Diversified Fund will be transferred to the Core Fund.  The exchange will take place at net asset value and there will be no sales charge or other charge imposed as a result of the Reorganization.  The Diversified Fund and the Core Fund are subject to the same pricing and valuation procedures.

 

(5)           The shareholders of the Diversified Fund will incur transaction and tax costs in connection with the sale of all of its investment portfolio prior to its Reorganization.  However, similar costs would be incurred in connection with the liquidation of the Diversified Fund.  CNR will pay the Funds’ Reorganization expenses.

 

(6)           The Core Fund and the Diversified Fund are managed by the same investment adviser, CNR.  Furthermore, the other services and privileges available to the shareholders of the Core Fund will be the same as those available to Diversified Fund shareholders.

 

(7)           CNR will bear the costs of the Reorganization other than transaction costs associated with the sale of the Diversified Fund’s investment portfolio, including legal, accounting and transfer agent costs.

 

After consideration of the factors mentioned above and other relevant information, at a meeting held on September 17, 2013 the Board determined that the Reorganization is in the best interests of the Funds and their shareholders, and that the interests of the Diversified shareholders will not be diluted as a result of the Reorganization, and unanimously approved the Reorganization Agreement and directed that it be submitted to shareholders for approval.   The Board unanimously recommends that shareholders vote “FOR” approval of the Reorganization.

 

How Will We Accomplish the Reorganization?

 

The Reorganization Agreement, a copy of which is attached to this Prospectus/Proxy Statement as Exhibit A, spells out the terms and conditions of the Reorganization.  If the shareholders of the Diversified Fund approve the Reorganization, the Reorganization essentially will involve the following steps, which will occur substantially simultaneously:

 

·

First, the Diversified Fund will liquidate all of its securities holdings to cash.

 

 

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·

Second, the Diversified Fund will transfer all of its assets and liabilities to the Core Fund.

 

·

Third, in exchange for the assets transferred to the Core Fund, the Diversified Fund will receive shares of beneficial interest of the Core Fund having a total value equal to the value of the assets the Diversified Fund transferred to the Core Fund (net of any liabilities).

 

·

Fourth, the Diversified Fund will distribute the shares of the Core Fund which it receives to its shareholders and the Diversified Fund will dissolve.

 

·

Fifth, the Core Fund will open an account for each shareholder of the Diversified Fund and will credit the shareholder with shares of the Core Fund of the same class and having the same total value as the Diversified Fund shares that he or she owned on the date of the Reorganization.  Share certificates will not be issued.

 

Pursuant to the Reorganization Agreement, the number of Core Fund shares to be issued to the Diversified Fund will be computed as of 4:00 PM Eastern time on the date preceding the closing date of the Reorganization in accordance with the regular practice of the Funds.  The effectiveness of the Reorganization is contingent upon, among other things, obtaining approval of the shareholders of the Diversified Fund.

 

CNR will bear the Funds’ costs of the proposed Reorganization, including legal, accounting and transfer agent costs.  These costs will not be borne by the shareholders of either Fund.

 

If the Reorganization is approved by the Diversified Fund’s shareholders, it will take place as soon as feasible.  Management of the Trust believes this should be accomplished in the first quarter of 2014.  However, at any time before the closing the Board may decide not to proceed with the Reorganization if, in the judgment of the Board, termination of the Reorganization would not have a material adverse effect on the shareholders of the Diversified Fund or the Core Fund.  At any time prior to or after approval of the Reorganization by the Diversified Fund’s shareholders, with Board approval, the President of the Trust may by written agreement amend any provision of the Reorganization Agreement, including substantive as well as ministerial changes, without the approval of shareholders, so long as such approval is not required by law and any such amendment will not have a material adverse effect on the benefits intended under the Reorganization Agreement to the shareholders of the Diversified Fund or the Core Fund.  Similarly, any of the terms or conditions of the Reorganization Agreement may be waived by the Board if, in its judgment such action or waiver will not have a material adverse effect on the benefits intended under the Reorganization Agreement to the shareholders of the Diversified Fund or the Core Fund.  In approving any such amendment, granting any such waiver or terminating the Reorganization, the Board will be subject to its fiduciary duties to, and will consider the best interests of, the Funds’ shareholders.

 

Federal Income Tax Consequences of the Reorganization

 

The Reorganization is intended to be a taxable transaction.  When shareholders of the Diversified Fund become shareholders of the Core Fund pursuant to the Reorganization, each shareholder is expected to recognize a gain or loss for federal income tax purposes.  The amount of such gain or loss recognized by a Diversified Fund shareholder is expected to equal the difference between (a) the fair market value of the Core Fund shares received by the shareholder in connection with the Reorganization plus any cash received by the shareholder in certain distributions made in advance of the Reorganization and (b) the tax basis of the Diversified Fund shares surrendered in exchange therefor.  Such gain or loss will be a capital gain or loss to the extent that the shareholder in question held the Diversified Fund shares as a capital asset.  For noncorporate taxpayers, the applicable tax rate on such capital gain or loss will generally depend on the shareholder ’ s holding period of the Diversified Fund shares.

 

 

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The Diversified Fund will, when it reduces its assets to cash, recognize gain or loss to the extent of any appreciation or depreciation inherent in such assets.  As of the date hereof, based on the Diversified Fund ’ s available capital loss carryforwards and current realized and unrealized gains, it is estimated that there will not be net capital gains to distribute to shareholders of the Diversified Fund in connection with the Reorganization.  As of January 15, 2014, the Diversified Fund may have an ordinary income distribution of approximately $14,677, which is approximately $0.005 per share.  Conditions, such as a change in ownership or results from holding and/or liquidating the Diversified Fund assets prior to the reorganization, could limit the Diversified Fund ’ s ability to offset capital losses with current period capital gain and hence create a distribution requirement.

 

Immediately prior to the Reorganization, the Diversified Fund will pay a dividend or dividends that, together with previous dividends, will exhaust all of the Diversified Fund ’ s investment company taxable income for taxable years ending on or prior to the effective time of the Reorganization (computed without regard to any deduction for dividends paid) and all of its net capital gains, if any, realized in taxable years ending on or prior to the effective time, including any net gains recognized when the Diversified Fund reduces its assets to cash (after reduction for any available capital loss carryforward, if any).  The proceeds from any such distribution will be automatically reinvested in shares of the Core Fund, unless the shareholders have previously elected to receive payment for dividends and capital gains in cash.  For tax purposes, the Diversified Fund intends to report any such dividends as distributions in liquidation of Diversified Fund shares.  Such distributions generally are not taxable to a shareholder, except to the extent the distributions received by a shareholder exceed the shareholder ’ s basis in his or her shares.  Any such distributions received by a shareholder in excess of the shareholder ’ s basis are generally treated as a gain on the sale or exchange of shares.

 

The Funds intend to treat the Reorganization as a taxable liquidation of the Diversified Fund in which each shareholder will recognize gain or loss equal to the difference between the value of the Core Fund shares received, and the shareholder ’ s basis in his or her Diversified Fund shares, and following which each Diversified Fund shareholder will have a basis in the combined Fund shares equal to the fair market value of those shares at the time of the Reorganization and a holding period that begins on the date of the Reorganization.  The gain or loss that a Diversified Fund shareholder recognizes on the exchange of his or her Diversified Fund shares for Core Fund shares will be long-term capital gain if the Diversified Fund shares were held for longer than one year and otherwise will be short-term capital gain.  After the Reorganization, the combined Fund will not be able to offset its capital gains with any capital loss carryforwards of the Diversified Fund or any capital losses recognized when the Diversified Fund reduces its assets to cash.  It is expected that approximately $8,240,000 of the Diversified Fund ’ s capital loss carryforwards will be eliminated as a result of the Reorganization, although a regulated investment company ’ s ability to use capital losses to offset gains also depends on other factors, such as the future realization of capital gains or losses.

 

 

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The Funds have not obtained a ruling with respect to the tax treatment of the Reorganization, and the Internal Revenue Service might disagree with the Funds ’ tax treatment of the Reorganization.  If the Internal Revenue Service were to treat the Reorganization as a “ reorganization ” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “ Code ” ), rather than as a liquidation, then the Funds and the Diversified Fund shareholders generally would not be subject to the treatment described above.  In such a case, Diversified Fund shareholders would not recognize gain or loss on the Reorganization, and distributions declared prior to the Reorganization would generally be taxable as ordinary dividends, qualified dividend income, and capital gain dividends, depending on the composition of the Fund ’ s income.  Moreover, each Diversified Fund shareholder would generally have a basis in the shares in the combined Fund equal to the shareholder ’ s basis in the Diversified Fund shares exchanged therefor, and each Diversified Fund shareholder ’ s holding period in the combined Fund shares would include the period during which the shareholder held the Diversified Fund shares.

 

This discussion assumes that a shareholder holds the shares of the Diversified Fund as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment).  This discussion does not address all aspects of federal income tax that may be relevant to the shareholder in light of its particular circumstances, or that may apply to a shareholder that is subject to special treatment under the federal income tax laws (including, for example, insurance companies, dealers in securities or foreign currencies, traders in securities who elect the mark-to market method of accounting for their securities, holders subject to the alternative minimum tax, persons that have a functional currency other than the U.S. dollar, tax-exempt organizations, financial institutions, regulated investment companies, partnerships or other pass-through entities for federal income tax purposes, controlled foreign corporations, passive foreign investment companies, certain persons subject to the rules applicable to expatriates, corporations that accumulate earnings to avoid federal income tax, and shareholders who hold shares through a tax-qualified employee benefit plan or retirement account).  In addition, this discussion does not address any tax considerations under state, local or foreign tax laws, or federal laws other than those pertaining to the federal income tax that may apply to shareholders.  Each shareholder should consult his or her own tax adviser regarding the tax consequences of the Reorganization.

 

How Will the Capitalization of the New Fund Compare with the Corresponding Existing Funds?

 

The following table sets forth as of December 31, 2013:  (i) the capitalization of each Fund and (ii) the pro forma capitalization of the Core Fund, as adjusted to give effect to the Reorganization.

 

Diversified Fund	Class N Shares	Institutional Class Shares	Total of All Class Shares
Aggregate Net Assets	$3,139,698	$51,134,291	$54,273,989
Shares Outstanding	175,997	2,875,062	3,051,059
Net Asset Value Per Share	$17.8395	$17.7855	$17.7886

 

 

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Core Fund	Class N Shares	Institutional Class Shares	Servicing Class Shares	Total of All Class Shares
Aggregate Net Assets	$79,680,623	$136	$82,355,666	$162,032,425
Shares Outstanding	6,051,595	10	6,248,790	12,300,395
Net Asset Value Per Share	$13.1669	$13.2564*	$13.1795	$13.1733

Combined Pro forma Core Fund	Class N Shares	Institutional Class Shares	Servicing Class Shares	Total of All Class Shares
Aggregate Net Assets	$82,820,321	$51,134,427	$82,355,666	$216,310,414
Shares Outstanding	6,290,049	3,857,329	6,248,790	16,396,168
Net Asset Value Per Share	$13.1669	$13.2564	$13.1795	$13.1927

 

Description of the Securities to be Issued

 

The Trust is registered with the SEC as an open-end management investment company and its Trustees are authorized to issue an unlimited number of shares of beneficial interest in each separate series, including the Core Fund. Shares of each series of the Trust represent equal proportionate interests in the assets of that series only and have identical voting, dividend, redemption, liquidation, and other rights.  All shares issued are fully paid and non-assessable, and shareholders have no preemptive or other rights to subscribe to any additional shares.

 

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*	Net assets divided by shares do not calculate to the stated net asset value per share because net assets and shares amounts are shown rounded.

 

 

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VOTING AND MEETING PROCEDURES

 

How to Vote

 

This proxy is being solicited by the Board of Trustees of the Trust.  You can vote by mail or in person at the Meeting.

 

To vote by mail, sign and send us the enclosed Proxy voting card in the postage paid return envelope provided.  If you vote by Proxy, you can revoke your Proxy by notifying the Secretary of the Trust in writing, or by returning a Proxy with a later date.  You also can revoke a Proxy by voting in person at the Meeting.  Even if you plan to attend the Meeting and vote in person, please return the enclosed Proxy card.  This will help us ensure that an adequate number of shares are present at the Meeting.

 

THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT YOU VOTE “ FOR ” THE PROPOSED REORGANIZATION.

 

Proxy Solicitation

 

In addition to the solicitation of proxies by mail, officers and employees of the Trust and CNR, without additional compensation, may solicit proxies in person or by telephone.  CNR will reimburse banks, brokerage houses and other custodians, nominees and fiduciaries for the costs of forwarding soliciting materials to beneficial owners of shares entitled to vote at the Meeting.

 

Quorum Requirements

 

The presence in person or by proxy of one third of the outstanding shares of the Diversified Fund entitled to vote will constitute a quorum for the Meeting.  If a quorum is not present, sufficient votes are not received by the date of the Meeting, or the holders of shares present in person or by proxy determine to adjourn the Meeting for any other reason, a person named as proxy may propose one or more adjournments from time to time to permit further solicitation of proxies.  The Fund will count all shares represented by proxies that reflect abstentions and “broker non-votes” (i.e., shares held by brokers or nominees as to which instructions have not been received from the beneficial owners or the person entitled to vote, and the broker or nominee does not have discretionary voting power on the matter) as shares that are present and entitled to vote for purposes of determining a quorum.  A majority of shares represented at the meeting can adjourn the meeting.  The persons named as proxies will vote “FOR” adjournment with respect to a proposal those proxies which they are entitled to vote in favor of the proposal, and will vote those proxies they are required to vote against the proposal “AGAINST” such an adjournment.  Abstentions and “broker non-votes” will have no effect on the outcome of a vote on adjournment.

 

Vote Required

 

Approval of the Reorganization requires the affirmative vote of the lesser of (i) 67% or more of the Diversified Fund shares present or represented at the meeting, if shareholders of more than 50% of all shares of the Diversified Fund are present or represented by proxy, or (ii) more than 50% of all shares of the Diversified Fund.

 

The Fund will count the number of votes cast “for” approval of the Reorganization to determine whether sufficient affirmative votes have been cast.  Assuming the presence of a quorum, abstentions and broker non-votes have the effect of negative votes.

 

If the shareholders of the Diversified Fund do not approve the Reorganization or the Reorganization is not completed for any other reason, the Diversified Fund will continue its current form of operation until the Board determines what further action, if any, to recommend to the shareholders of the Fund.

 

 

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Shareholders Entitled to Vote

 

Shareholders of the Funds at the close of business on January 9, 2014 will be entitled to be present and vote at the Meeting.  Shareholders are entitled to one vote for each share held and fractional votes for fractional shares held.  As of that date, 3,039,049 shares of the Diversified Fund (175,288  Class N shares and 2,863,761 Institutional Class shares) were outstanding.

As of December 31, 2013, National Financial Services LLC may be deemed to control the Diversified Fund by virtue of owning 85.46% of the outstanding shares of the Diversified Fund.  As of that date, National Financial Services, FEBO LLC on behalf of City National Bank (“CNB”), which is affiliated with CNR, owned of record 47.04% of the outstanding shares of the Core Fund.  CNB is a national banking association located at 400 North Roxbury Drive, Beverly Hills, California 90210 and is a wholly-owned subsidiary of City National Corporation.  These control relationships will continue to exist until such time as each of the above-described share ownerships represents 25% or less of the outstanding shares of the respective Fund.  Through the exercise of voting rights with respect to shares of the Fund, the controlling person set forth above may be able to determine the outcome of shareholder voting on matters for which approval of shareholders is required.

 

The following table shows, to the knowledge of management of the Trust, the percentage of the total shares of each class of the Diversified Fund and the Core Fund owned of record at the close of business of December 31, 2013 by persons owning of record more than 5% of the outstanding shares of the respective class.  The table also shows each such shareholder’s estimated percentage ownership of the same class of the combined Core Fund, as adjusted to give effect to the Reorganization, based on such shareholder’s present holdings.

 

Diversified Fund Shareholder	Class	Percentage of Outstanding Shares in Class	Percentage of Outstanding Shares in Class of Combined Fund
National Financial Services LLC 1 World Financial Center 200 Liberty Street New York, NY  10281-1003	I	87.66%	87.66%
Wells Fargo Bank NA FBO Dearborn County P.O. Box 1533 Minneapolis, MN  55480	I	12.34%	12.34%
National Financial Services LLC	N	49.55%	1.40%
William Greene & Nancy Greene JTWROS	N	12.08%	0.34%

 

 

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Core Fund Shareholder	Class	Percentage of Outstanding Shares in Class	Percentage of Outstanding Shares in Class of Combined Fund
SEI Corporation C/O SEI Escrow PO Box 110 Oaks, PA 19456-1100	I	100%	0%
Assetmark Trust Company FBO Assetmark Inc. and Mutual Clients and FBO Other Custodial Clients	N	6.23%	6.05%

 

The Trustees and officers of the Trust as a group owned beneficially less than 1% of each of the Diversified Fund’s and the Core Fund’s outstanding shares as of December 31, 2013.

 

GENERAL INFORMATION

 

The persons named in the accompanying Proxy will vote in each case as directed in the Proxy, but in the event an executed Proxy without instructions is received by the Trust, they intend to vote FOR the proposed Reorganization and may vote in their discretion with respect to other matters that may be presented to the Meeting.

 

Litigation

 

Neither the Diversified Fund nor the Core Fund is involved in any litigation or proceeding that management believes is  likely to have any material adverse financial effect upon the ability of CNR to provide investment advisory services or any material adverse effect upon either the Diversified Fund or the Core Fund.

 

Other Matters to Come Before the Meeting

 

Management of the Trust does not know of any matters to be presented at the Meeting other than those described in this Prospectus/Proxy Statement.  If other business should properly come before the Meeting, the Proxy holders will vote on them in accordance with their best judgment.

 

Shareholder Proposals

 

The Meeting is a special meeting of shareholders of the Diversified Fund.  The Trust is not required, nor does it intend, to hold regular annual meetings of the Fund’s shareholders.  If such a meeting is called, any shareholder who wishes to submit a proposal for consideration at the meeting should submit the proposal promptly to the Secretary of the Trust.  Any proposal to be considered for submission to shareholders must comply with applicable federal and state laws.

 

 

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FINANCIAL HIGHLIGHTS AND FINANCIAL STATEMENTS

 

The audited annual financial statements and financial highlights of the Diversified Fund and Core Fund for the year ended September 30, 2013 are incorporated by reference into the Statement of Additional Information to this Combined Prospectus and Proxy Statement.  The audited annual financial statements and financial highlights of the Diversified Fund and Core Fund have been audited by KPMG LLP, independent registered public accountants, to the extent indicated in their report thereon, and have been incorporated by reference in reliance upon such report given upon the authority of such firm as an expert in accounting and auditing.

 

INFORMATION FILED WITH THE

SECURITIES AND EXCHANGE COMMISSION

 

Additional information about the Diversified Fund and the Core Fund is included in their Prospectus and Statement of Additional Information, both dated January 31, 2014, which are incorporated by reference herein.  The Commission file numbers for the Trust’s registration statement containing the Funds’ current Prospectus and Statement of Additional Information dated January 31, 2014, are Registration No. 811-07923 and Registration No. 333-16093.  Additional information about the Funds may also be obtained from the Trust’s Annual Report for the fiscal year ended September 30, 2013, which has been filed with the SEC.  Copies of the Prospectus, Statement of Additional Information, and Annual Report for the Funds may be obtained without charge by writing to the Funds at 400 North Roxbury Drive, Beverly Hills, California, 90210, by calling the Funds at 1-888-889-0799, or on the Funds’ website, www.citynationalrochdalefunds.com.  The Funds are subject to certain informational requirements of the Securities Exchange Act of 1934 and the 1940 Act, and in accordance with such requirements file reports, proxy statements, and other information with the SEC.  Once available, these materials may be inspected and copied:

 

•           At the Public Reference Facilities maintained by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549;

 

•           At the SEC's Regional Offices at 233 Broadway, New York, New York, 10279, and 175 W. Jackson Boulevard, Suite 900, Chicago, Illinois 60604;

 

•           By e-mail request to publicinfo@sec.gov (for a duplicating fee); and

 

•           On the SEC’s EDGAR database on the SEC’s Internet Web site at http://www.sec.gov .

 

*****

SHAREHOLDERS ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.

 

 

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APPENDIX A

AGREEMENT AND PLAN OF REORGANIZATION

 

This Agreement and Plan of Reorganization (this “Agreement”) is made as of this [ ] day of [________], by and among City National Rochdale Funds, a Delaware statutory trust (the “Trust”), on behalf of the City National Rochdale U.S. Core Equity Fund, a separate series thereof (the “Core Fund”), the Trust, on behalf of the City National Rochdale Diversified Equity Fund, a separate series thereof (the “Diversified Fund”), and, solely for purposes of Section 4.4, City National Rochdale, LLC (“CNR”).

 

WHEREAS, the parties wish to effect a reorganization (the “Reorganization”) which will consist of the transfer of all of the assets of the Diversified Fund to the Core Fund in exchange for the assumption by the Core Fund of all of the liabilities of the Diversified Fund and the issuance by the Core Fund of the number of shares of the Core Fund (the “Shares”) described in Section 1.1, and the distribution of the Shares by the Diversified Fund to its shareholders in complete liquidation and dissolution of the Diversified Fund, all as more fully set forth in this Agreement.

 

WHEREAS, the Board of Trustees of the Trust, including a majority of the Trustees who are not “interested persons” of the Trust, as defined in the Investment Company Act of 1940, as amended (the “1940 Act”), has determined that the Reorganization is in the best interests of the shareholders of the Diversified Fund and the Core Fund, respectively, and that their interests would not be diluted as a result of the transactions contemplated thereby.

 

NOW THEREFORE, in consideration of the agreements contained in this Agreement, the parties agree as follows;

 

Article 1

Transfer of Assets and Liabilities

 

1.1         Transfer of Assets and Liabilities.   Subject to the terms and conditions set forth herein, on the Closing Date (as hereafter defined) the Diversified Fund shall transfer all of its assets to the Core Fund.  In exchange therefor, the Core Fund shall assume all of the liabilities of the Diversified Fund and deliver to the Diversified Fund a number of Class N and Institutional Class Shares which is equal to (i) the aggregate net asset value attributable to each such Class of shares of the Diversified Fund at the close of business on the business day preceding the Closing Date, divided by (ii) the net asset value per share of such Class of shares of the Core Fund outstanding at the close of business on the business day preceding the Closing Date.

 

1.2         Liquidation of Diversified Fund.   Subject to the terms and conditions set forth herein, on the Closing Date the Diversified Fund shall liquidate and shall distribute pro rata to each Class of its shareholders of record in proportion to their respective numbers of shares of each Class held by such shareholders, determined as of the close of business on the business day preceding the Closing Date, the same Class of Shares received by the Diversified Fund pursuant to Section 1.1.

 

1.3         No Issuance of Share Certificates. The Diversified Fund shall accomplish the liquidation and distribution provided for herein by opening accounts on the books of the Core Fund in the names of its shareholders and transferring to its shareholders the Shares credited to the account of the Diversified Fund on the books of the Core Fund.  No certificates evidencing Shares shall be issued.

 

 

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1.4             Time and Date of Valuation.   The number of Shares to be issued by the Core Fund to the Diversified Fund shall be computed as of 4:00 p.m. (Eastern time) on the business day preceding the Closing Date in accordance with the regular practices of the Diversified Fund, the Core Fund and the Trust.

 

1.5             Closing Time and Place. The Closing Date shall be February 28, 2014 , or such later date as the parties may mutually agree.  All acts taking place on the Closing Date shall be deemed to be taking place simultaneously as of the commencement of business on the Closing Date, unless otherwise provided.  The closing of the Reorganization (the “Closing”) shall be held at 5:00 PM (Eastern Time) at the offices of CNR, 570 Lexington Avenue, New York, New York 10022, or such other time and/or place as the parties may mutually agree.

 

1.6             Delay of Valuation.   If on the business day preceding the Closing Date (a) the primary trading market for portfolio securities of either party is closed to trading or trading thereon is restricted, or (b) trading or the reporting of trading is disrupted so that an accurate appraisal of the value of the net assets of either party and an accurate calculation of the number of shares held by each shareholder is impracticable, the Closing Date shall be postponed until the first business day after the day when trading shall have been fully resumed and reporting shall have been restored.

 

1.7             Termination of Diversified Fund.   As promptly as practicable after the Closing, and in any event no later than 12 months following the Closing, the Diversified Fund shall dissolve.

 

Article 2

Conditions Precedent to the Effectiveness of the Reorganization

 

The respective obligation of each party to effect the reorganization contemplated by this Agreement is subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions:

 

2.1             Shareholder Approval. On or prior to the Closing Date, the shareholders of the Diversified Fund shall have approved the transactions contemplated by this Agreement in accordance with the provisions of Delaware law and the 1940 Act.

 

2.2             No Injunctions or Restraints.   On the Closing Date, no action, suit or other proceeding shall be pending before any court or government agency which seeks to restrain or prohibit or obtain damages or other relief in connection with this Agreement or the transactions contemplated hereby.

 

2.3             Consents.   All consents of the other party and all other consents, orders and permits of Federal, state and local regulatory authorities deemed necessary by the Trust to permit consummation, in all material respects, of the transactions contemplated herein shall have been obtained, except where failure to obtain any such consent, order or permit would not involve a risk of a material adverse effect on the assets or properties of either party or the Trust.

 

 

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2.4             Effective Registration Statement.   The Form N-1A Registration Statement of the Trust and the Form N-14 Registration Statement of the Trust with respect to the Shares shall continue to be effective and no stop orders suspending the effectiveness thereof shall have been issued and, to the best knowledge of the parties hereto, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated.

 

2.5             Covenants, Representations and Warranties.   Each party shall have performed all of its covenants set forth in Article 4, and its representations and warranties set forth in Article 3 shall be true and correct in all material respects on and as of the Closing Date as if made on such date, and the President of the Trust shall have executed a certificate to such effect.

 

2.6             Statement of Assets and Liabilities.   The Diversified Fund shall have delivered to the Trust on the Closing Date a statement of its assets and liabilities, prepared in accordance with generally accepted accounting principles consistently applied, and all of the assets of the Diversified Fund as of the Closing Date shall consist of cash.

 

Article 3

Representations and Warranties

 

The parties represent and warrant as follows:

 

3.1             Structure and Standing.   Each party represents and warrants that it is duly organized as a series of a statutory trust, validly existing and in good standing under the laws of the State of Delaware, and has the power to own all of its properties and assets and conduct its business.

 

3.2             Power.   Each party  represents and warrants that it has full power and authority to enter into and perform its obligations under this Agreement; the execution, delivery and performance of this Agreement has been duly authorized by all necessary action of the Board of Trustees of the Trust; this Agreement does not violate, and its performance will not result in violation of, any provision of the Declaration of Trust of the Trust, or any agreement, instrument or other undertaking to which it is a party or by which it is bound; and this Agreement constitutes its valid and binding contract enforceable in accordance with its terms, subject to the effects of bankruptcy, moratorium, fraudulent conveyance and similar laws relating to or affecting creditors’ rights generally and court decisions with respect thereto.

 

3.3             Litigation.   Each party represents and warrants that no litigation or administrative proceeding or investigation of or before any court or governmental body is currently pending against it and, to the best of its knowledge, none is threatened against it or any of its properties or assets, which, if adversely determined, would materially and adversely affect its financial condition or the conduct of its business; it knows of no facts which might form the basis for the institution of such proceedings; and it is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects its business or its ability to consummate the transactions herein contemplated.

 

3.4             Fund Assets.   The Diversified Fund represents and warrants that on the Closing Date the assets received by the Core Fund from the Diversified Fund will be delivered to the Core Fund as provided in Section 1.1 free and clear of all liens, pledges, security interests, charges or other encumbrances of any nature whatsoever created by the Diversified Fund and without any restriction upon the transfer thereof, except for such liabilities assumed as provided in Section 1.1.

 

 

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3.5             The Shares.   The   Core Fund represents and warrants that on the Closing Date (a) the Shares to be delivered to the Diversified Fund as contemplated in this Agreement will be duly authorized, validly issued, fully paid and nonassessable; (b) no shareholder of the Core Fund or any other series of the Trust has any preemptive right to subscription or purchase in respect thereof;   (c) the Diversified Fund will acquire the Shares free and clear of all liens pledges, security interests, charges or other encumbrances of any nature whatsoever created by the Trust and without any restriction on the transfer thereof; and (d) the Shares will be duly qualified for offering to the public in all of the states of the United States in which such qualification is required or an exemption from such requirement shall have been obtained.

 

3.6             Tax Status and Filings.   Each party represents and warrants that it is treated as a corporation separate from the other series of the Trust under Section 851(g) of the Code; it has satisfied the requirements of Subchapter M of the Code for treatment as a regulated investment company for each taxable year since its formation and has elected to be treated as such; it has filed or furnished all federal, state, and other tax returns and reports required by law to have been filed or furnished, and it has paid or made provision for payment of, so far as due, all federal, state and other taxes, interest and penalties; that no such return is currently being audited; and that no assessment has been asserted with respect to any such returns or reports.

 

3.7             Accuracy of Information.   Each party represents and warrants that all information furnished by it to the other party for use in any documents which may be necessary in connection with the transactions contemplated by this Agreement will be accurate and complete and will comply in all material respects with federal securities and other laws and regulations applicable thereto.

 

3.8             Acquisition of the Shares.   The Diversified Fund represents and warrants that the Shares it acquires pursuant to this Agreement are not being acquired for the purpose of making any distribution thereof, except in accordance with the terms of this Agreement.

 

3.9             Financial Statements.   Each party represents and warrants that its Statement of Assets and Liabilities as of September 30, 2013 provided to the other party has been prepared in accordance with generally accepted accounting principles consistently applied, and fairly reflects the financial condition of such party as of such date, and there are no known contingent liabilities of such party as of such date not disclosed therein.

 

3.10           No Adverse Changes.   Each party represents and warrants that since September 30, 2013, there has not been any material adverse change in its financial condition, assets, liabilities or business other than changes occurring in the ordinary course of business except as otherwise disclosed in writing to and accepted by the other party (for the purposes of this paragraph, a decline in net asset value per share of a party shall not constitute a material adverse change).

 

3.11           Proxy Statement.   Each party represents and warrants that the Combined Proxy Statement and Prospectus contained in the Registration Statement on Form N-14 to be used in connection with the transaction contemplated hereby (only insofar as it relates to such party) will, on its effective date and on the Closing Date, not contain any untrue statement of material fact with respect to such party or omit to state a material fact required to be stated therein with respect to such party or necessary to make the statements therein with respect to such party, in light of the circumstances under which such statements were made, not materially misleading.

 

 

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3.12           Tax Distribution.   The Diversified Fund shall have distributed to its shareholders, in a distribution or distributions qualifying for the deduction for dividends paid under Section 561 of the Code, all of the Full Maturity Fund’s investment company taxable income (as defined in Section 852(b)(2) of the Code determined without regard to Section 852(b)(2)(D) of the Code) for its taxable year ending on the Closing Date, all of the excess of (i) its interest income excludable from gross income under Section 103(a) of the Code over (ii) its deductions disallowed under Sections 265 and 171(a)(2) of the Code for its taxable year ending on the Closing Date, and all of its net capital gain (as such term is used in Sections 852(b)(3)(A) and (C) of the Code), after reduction by any available capital loss carryforwards, for its taxable year ending on the Closing Date.

 

Article 4

Covenants

 

4.1             Conduct of Business.   During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Closing Date, each party shall operate its business in the ordinary course except as contemplated by this Agreement.

 

4.2             Shareholder Meeting.   The Diversified Fund shall call a special meeting of its shareholders as soon as possible for the purpose of considering the reorganization contemplated by this Agreement.

 

4.3             Preparation of Combined Prospectus and Proxy Statement.   As soon as reasonably practicable after the execution of this Agreement, the Core Fund shall prepare and file a combined prospectus and proxy statement with respect to the reorganization with the United States Securities and Exchange Commission in form and substance satisfactory to both parties, and shall use its best efforts to provide that the combined prospectus and proxy statement can be distributed to the shareholders of the Diversified Fund as promptly as thereafter as practicable.  As soon a reasonably practicable, the parties shall also prepare and file any other related filings required under applicable state securities laws.

 

4.4             Fees and Expenses.   Whether or not this Agreement is consummated, CNR shall bear the costs and expenses of the Core Fund and the Diversified Fund incurred in connection with this Agreement and the transactions contemplated hereby; provided , however , that the Diversified Fund shall bear the costs and expenses associated with the liquidation of its investment portfolio.

 

4.5             Provision of Documents.   Each party agrees that it will, from time to time as and when reasonably requested by the other party, provide or cause to be provided to the other party such information, execute and deliver or cause to be executed and delivered to the other party such documents, and take or cause to be taken such further action, as the other party may deem necessary in order to carry out the intent of this Agreement.

 

4.6             Diversified Fund Liabilities.   The Diversified Fund will use its best efforts to liquidate its investment portfolio and discharge all of its financial liabilities and obligations prior to the Closing Date.

 

 

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4.7         Tax Treatment.   The Diversified Fund and the Core Fund hereby adopt this Agreement as a plan of complete liquidation of the Diversified Fund within the meaning of Section  331 of the Code.  The transactions contemplated by this Agreement are intended to effect a taxable liquidation of the Diversified Fund consisting of the reduction of the Diversified Fund’s assets to cash as contemplated by Section 2.6, the discharge by the Diversified Fund of its financial liabilities and obligations pursuant to Section 4.6, the assumption of any remaining liabilities of the Diversified Fund by the Core Fund pursuant to Section 1.1, the distribution of the Shares pursuant to Section 1.2, and the termination of the Diversified Fund pursuant to Section 1.7, all as set forth in this Agreement.  The Trust, on behalf of the Diversified Fund and the Core Fund, agrees to report the tax consequences of the transactions contemplated by this Agreement in conformity with this Section 4.7.

 

Article 5

Termination, Amendment and Waiver

 

5.1         Termination.   This Agreement may be terminated by resolution of the Board of Trustees of the Trust at any time prior to the Closing Date, if

 

(a)

either party shall have breached any material provision of this Agreement; or

 

(b)

circumstances develop that, in the opinion of such Board, make proceeding with the Reorganization inadvisable; or

 

(c)

any governmental body shall have issued an order, decree or ruling having the effect of permanently enjoining, restraining or otherwise prohibiting the consummation of this Agreement.

 

5.2         Effect of Termination.   In the event of any termination pursuant to Section 5.1, there shall be no liability for damage on the part of either party to the other party.

 

5.3         Amendment.   This Agreement contains the entire agreement of the parties with respect to the Reorganization and may be amended prior to the Closing Date by the parties in writing at any time; provided, however, that there shall not be any amendment that by law requires approval by the shareholders of a party without obtaining such approval.

 

5.4         Waiver.   At any time prior to the Closing Date, any of the terms or conditions of this Agreement may be waived by the Board of Trustees of the Trust if, in its judgment after consultation with legal counsel, such action or waiver will not have a material adverse effect on the benefits intended under this Agreement to the shareholders of the Diversified Fund or the Core Fund, respectively.

 

Article 6

General Provisions

 

6.1         Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.

 

6.2         Assignment.   This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by either party without the written consent of the other party.  Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person other than the parties hereto and their respective successors and assigns any rights or remedies under or by reason of this Agreement.

 

 

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6.3         Recourse.   All persons dealing with the Core Fund or the Diversified Fund must look solely to the property of the Core Fund or the Diversified Fund for the enforcement of any claims against the Core Fund or the Diversified Fund, respectively, as neither the trustees, officers, agents nor shareholders of the Trust, the Core Fund or the Diversified Fund assume any personal liability for obligations entered into on behalf of the Core Fund or the Diversified Fund, respectively.

 

6.4         Notices.   Any notice, report, statement or demand required or permitted by any provisions of this Agreement shall be in writing and shall be given by prepaid telegraph, telecopy or certified mail addressed to either party at:

 

City National Rochdale Funds

400 North Roxbury Drive

Beverly Hills, CA 90210

Attn: Garrett R. D’Alessandro

 

with a copy to:

 

Bingham McCutchen LLP

355 S. Grand Avenue, Suite 4400

Los Angeles, CA 90071

Attn: Michael Glazer

 

*** Signature Page Follows***

 

 

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IN WITNESS WHEREOF, each party has caused this Agreement to be executed and attested on its behalf by its duly authorized representatives as of the date first above written.

 

	CITY NATIONAL ROCHDALE FUNDS, on behalf of the City National Rochdale U.S. Core Equity Fund
	By:
		Garrett R. D’Alessandro
		President & Chief Executive Officer
	CITY NATIONAL ROCHDALE FUNDS, on behalf of the City National Rochdale Diversified Equity Fund
	By:
		Garrett R. D’Alessandro
		President & Chief Executive Officer
	Solely for purposes of Section 4.4
	CITY NATIONAL ROCHDALE, LLC
	By:

 

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CITY NATIONAL ROCHDALE FUNDS

 

City National Rochdale U.S. Core Equity Fund

400 North Roxbury Drive

Beverly Hills, California 90210

(Toll free) 1-888-889-0799

 

Relating to the Acquisition of the Assets and Liabilities of

 

City National Rochdale Diversified Equity Fund

 

STATEMENT OF ADDITIONAL INFORMATION

 

February [__], 2014

 

This Statement of Additional Information is not a prospectus and should be read in conjunction with the Prospectus/Proxy Statement dated February [__], 2014 (the “Prospectus/Proxy Statement”), which relates to the shares of the City National Rochdale U.S. Core Equity Fund (the “Core Fund”), a separate series of the City National Rochdale Funds (the “Trust”), to be issued in exchange for shares of the City National Rochdale Diversified Equity Fund (the “Diversified Fund” and, together with the Core Fund, the “Funds”), also a separate series of the Trust.  At a Special Meeting of Shareholders of the Trust to be held on February 26, 2014 at 10:00 a.m. Eastern Time, shareholders of the Diversified Fund will be asked to approve the reorganization of the Diversified Fund into the Core Fund, as described in the Prospectus/Proxy Statement (the “Reorganization”).

 

Unless otherwise indicated, capitalized terms used herein and not otherwise defined have the same meanings as are given to them in the Prospectus/Proxy Statement.

 

To obtain a copy of the Prospectus/Proxy Statement, free of charge, please write to the Trust at the address shown above or call the number shown above.

 

This Statement of Additional Information consists of this cover page and the documents listed below, each of which was filed electronically with the Securities and Exchange Commission (the “SEC”) and is incorporated herein by reference.

 

 

 

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DOCUMENTS INCORPORATED BY REFERENCE

 

1.	The Funds’ Statement of Additional Information, dated January 31, 2014 (File No. 333-16093), as filed with the SEC on January 28, 2014 (Accession No. 0001398344-14-000418) is incorporated herein by reference.
2.	The Funds’ Annual Report for the year ended September 30, 2013 (File No. 811-07923), as filed with the SEC on December 9, 2013 (Accession No. 0001398344-13-005775) is incorporated herein by reference.

 

Pro forma financial statements reflecting the consummation of the Reorganization are included below.

Please retain this Statement of Additional Information for further reference.

 

 

 

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Pro Forma Schedule of Investments (Unaudited)

City National Rochdale

U.S. Core Equity Fund and Diversified Equity Fund

September 30, 2013

 

			City National Rochdale U.S. Core Equity Fund							City National Rochdale Diversified Equity Fund††							Proforma Combined
Description			Shares			Value (000)				Shares			Value (000)				Shares			Value (000)
Common Stock - 96.8%
Aerospace & Defense - 3.2%
Boeing			-			$	-			1,811			$	213			1,811			$	213
General Dynamics			-				-			281				25			281				25
Hexcel *			36,430				1,413			-				-			36,430				1,413
Honeywell International			-				-			1,314				109			1,314				109
L-3 Communications Holdings, Cl 3			-				-			76				7			76				7
Lockheed Martin			-				-			440				56			440				56
Northrop Grumman			-				-			194				18			194				18
Precision Castparts			-				-			267				61			267				61
Raytheon			-				-			5,271				406			5,271				406
Rockwell Collins			-				-			226				15			226				15
Textron			48,925				1,351			239				7			49,164				1,358
United Technologies			19,670				2,121			713				77			20,383				2,198
Total Aerospace & Defense							4,885							994							5,879
Air Freight & Logistics - 0.1%
CH Robinson Worldwide			-				-			276				17			276				17
Expeditors International of Washington			-				-			344				15			344				15
FedEx			-				-			252				29			252				29
United Parcel Service, Cl B			-				-			1,252				114			1,252				114
Total Air Freight & Logistics							-							175							175
Airlines - 0.0%
Delta Air Lines			-				-			1,298				30			1,298				30
Southwest Airlines			-				-			1,839				27			1,839				27
Total Airlines							-							57							57
Auto Components - 1.4%
BorgWarner			-				-			296				30			296				30
Delphi Automotive			-				-			726				42			726				42
Goodyear Tire & Rubber			-				-			211				5			211				5
Johnson Controls			-				-			14,881				618			14,881				618
Magna International			22,695				1,874			-				-			22,695				1,874
Total Auto Components							1,874							695							2,569
Automobiles - 0.4%
Ford Motor			-				-			37,646				635			37,646				635
General Motors *			-				-			1,165				42			1,165				42
Harley-Davidson			-				-			421				27			421				27
Total Automobiles							-							704							704
Beverages -0.7%
Beam			-				-			136				9			136				9
Brown-Forman, Cl B			-				-			421				29			421				29
Coca-Cola			-				-			9,775				370			9,775				370
Coca-Cola Enterprises			-				-			470				19			470				19
Constellation Brands, Cl A *			-				-			430				25			430				25
Dr Pepper Snapple Group			-				-			527				24			527				24
Molson Coors Brewing, Cl B			-				-			133				7			133				7
Monster Beverage *			-				-			348				18			348				18
PepsiCo			-				-			10,790				858			10,790				858
Total Beverages							-							1,359							1,359

 

 

 

---

 

 

Biotechnology - 4.4%
Alexion Pharmaceuticals *			-				-			507				59			507				59
Amgen			-				-			1,946				218			1,946				218
Biogen Idec *			-				-			608				146			608				146
Celgene *			26,655				4,103			1,070				165			27,725				4,268
Gilead Sciences *			49,655				3,120			3,982				250			53,637				3,370
Regeneron Pharmaceuticals *			-				-			200				63			200				63
Vertex Pharmaceuticals *			-				-			600				45			600				45
Total Biotechnology							7,223							946							8,169
Building Products - 0.3%
Masco			-				-			918				19			918				19
Owens Corning *			-				-			12,600				479			12,600				479
Total Building Products							-							498							498
Capital Markets - 2.4%
Affiliated Managers Group *			8,010				1,463			-				-			8,010				1,463
Ameriprise Financial			-				-			509				46			509				46
Bank of New York Mellon			-				-			1,983				60			1,983				60
BlackRock, Cl A			-				-			236				64			236				64
Charles Schwab			-				-			1,002				21			1,002				21
E*Trade Financial *			-				-			244				4			244				4
Franklin Resources			-				-			1,045				53			1,045				53
Goldman Sachs Group			-				-			353				56			353				56
Invesco			-				-			873				28			873				28
Legg Mason			-				-			92				3			92				3
Morgan Stanley			-				-			1,183				32			1,183				32
Northern Trust			-				-			191				11			191				11
State Street			38,935				2,560			376				25			39,311				2,585
T Rowe Price Group			-				-			667				48			667				48
Total Capital Markets							4,023							451							4,474
Chemicals - 0.6%
Air Products & Chemicals			-				-			177				19			177				19
Airgas			-				-			121				13			121				13
CF Industries Holdings			-				-			148				31			148				31
Dow Chemical			-				-			1,022				39			1,022				39
Eastman Chemical			-				-			396				31			396				31
Ecolab			-				-			707				70			707				70
EI du Pont de Nemours			-				-			1,576				92			1,576				92
FMC *			-				-			352				25			352				25
International Flavors & Fragrances			-				-			153				13			153				13
LyondellBasell Industries, Cl A			-				-			5,478				401			5,478				401
Monsanto			-				-			1,385				145			1,385				145
Mosaic			-				-			886				38			886				38
PPG Industries			-				-			371				62			371				62
Praxair			-				-			541				65			541				65
Sherwin-Williams			-				-			226				41			226				41
Sigma-Aldrich			-				-			224				19			224				19
Total Chemicals							-							1,104							1,104
Commercial Banks - 3.3%
BB&T			-				-			17,790				600			17,790				600
CIT Group			-				-			11,500				561			11,500				561
Comerica			-				-			299				12			299				12
Fifth Third Bancorp			-				-			746				13			746				13
Huntington Bancshares			-				-			2,134				18			2,134				18
KeyCorp			-				-			1,566				18			1,566				18
M&T Bank			16,345				1,829			257				29			16,602				1,858
PNC Financial Services Group			-				-			446				32			446				32
Regions Financial			-				-			2,332				22			2,332				22
SunTrust Banks			-				-			451				15			451				15
US Bancorp			-				-			4,724				173			4,724				173
Wells Fargo			63,605				2,628			4,074				168			67,679				2,796

 

 

 

---

 

 

Zions Bancorporation			-				-			473				13			473				13
Total Commercial Banks							4,457							1,674							6,131
Commercial Services & Supplies - 0.3%
ADT			-				-			375				15			375				15
Cintas			-				-			266				14			266				14
Iron Mountain			-				-			293				8			293				8
Pitney Bowes			-				-			172				3			172				3
Republic Services, Cl A			-				-			229				8			229				8
Stericycle *			-				-			220				25			220				25
Tyco International			-				-			12,542				439			12,542				439
Waste Management			-				-			368				15			368				15
Total Commercial Services & Supplies							-							527							527
Communications Equipment - 4.3%
Ciena *			56,525				1,412			-				-			56,525				1,412
Cisco Systems			74,220				1,738			41,260				966			115,480				2,704
F5 Networks *			-				-			196				17			196				17
Harris			-				-			193				11			193				11
JDS Uniphase *			-				-			604				9			604				9
Juniper Networks *			-				-			421				8			421				8
Motorola Solutions			-				-			198				12			198				12
Qualcomm			49,865				3,359			4,452				300			54,317				3,659
Total Communications Equipment							6,509							1,323							7,832
Computers & Peripherals - 4.6%
Apple			10,720				5,111			2,354				1,122			13,074				6,233
Dell			-				-			1,238				17			1,238				17
EMC			75,360				1,926			5,371				137			80,731				2,063
Hewlett-Packard			-				-			1,617				34			1,617				34
NetApp			-				-			660				28			660				28
SanDisk			-				-			205				12			205				12
Seagate Technology			-				-			799				35			799				35
Western Digital			-				-			181				12			181				12
Total Computers & Peripherals							7,037							1,397							8,434
Construction & Engineering - 2.2%
Chicago Bridge & Iron			33,730				2,286			-				-			33,730				2,286
Fluor			-				-			139				10			139				10
Jacobs Engineering Group *			-				-			111				7			111				7
Quanta Services *			62,150				1,710			551				15			62,701				1,725
Total Construction & Engineering							3,996							32							4,028
Consumer Finance - 2.0%
American Express			33,630				2,540			6,786				512			40,416				3,052
Capital One Financial			-				-			8,196				563			8,196				563
Discover Financial Services			-				-			1,244				63			1,244				63
SLM			-				-			1,124				28			1,124				28
Total Consumer Finance							2,540							1,166							3,706
Construction Materials - 0.0%
Vulcan Materials			-				-			264				14			264				14
Containers & Packaging - 0.2%
Avery Dennison			-				-			83				4			83				4
Ball			-				-			379				17			379				17
Bemis			-				-			162				7			162				7
MeadWestvaco			-				-			150				5			150				5
Owens-Illinois *			-				-			141				4			141				4
Sealed Air			-				-			13,122				357			13,122				357
Total Containers & Packaging							-							394							394

 

 

 

---

 

 

Distributors - 0.0%
Genuine Parts			-				-			130				11			130				11
Diversified Consumer Services - 0.0%
H&R Block			-				-			438				12			438				12
Diversified Financial Services - 4.3%
Bank of America			-				-			63,767				880			63,767				880
Berkshire Hathaway, Cl B *			-				-			7,638				867			7,638				867
Citigroup			49,245				2,389			2,544				123			51,789				2,512
CME Group, Cl A			-				-			263				19			263				19
IntercontinentalExchange *			-				-			141				26			141				26
JPMorgan Chase			63,605				3,288			3,178				164			66,783				3,452
Leucadia National			-				-			266				7			266				7
McGraw-Hill			-				-			545				36			545				36
Moody's			-				-			502				35			502				35
Nasdaq Stock Market			-				-			98				3			98				3
NYSE Euronext			-				-			206				9			206				9
			-				-
Total Diversified Financial Services							5,677							2,169							7,846
Diversified Telecommunication Services - 1.4%
AT&T			-				-			10,477				354			10,477				354
CenturyLink			-				-			505				16			505				16
Frontier Communications			-				-			851				3			851				3
Verizon Communications			36,745				1,715			9,757				455			46,502				2,170
Windstream Holdings			-				-			501				4			501				4
Total Diversified Telecommunication Services							1,715							832							2,547
Electric Utilities - 0.3%
American Electric Power			-				-			409				18			409				18
Duke Energy			-				-			595				40			595				40
Edison International			-				-			274				13			274				13
Entergy			-				-			149				9			149				9
Exelon			-				-			722				21			722				21
FirstEnergy			-				-			348				13			348				13
NextEra Energy			-				-			358				29			358				29
Northeast Utilities			-				-			10,264				423			10,264				423
Pepco Holdings			-				-			209				4			209				4
Pinnacle West Capital			-				-			92				5			92				5
PPL			-				-			532				16			532				16
Southern			-				-			733				30			733				30
Xcel Energy			-				-			417				11			417				11
Total Electric Utilities							-							632							632
Electrical Equipment - 0.1%
AMETEK			-				-			635				29			635				29
Eaton			-				-			803				55			803				55
Emerson Electric			-				-			1,174				76			1,174				76
Rockwell Automation			-				-			275				30			275				30
Roper Industries			-				-			256				34			256				34
Total Electrical Equipment							-							224							224
Electronic Equipment, Instruments & Components - 0.8%
Amphenol, Cl A			-				-			413				32			413				32
Arrow Electronics *			-				-			16,800				815			16,800				815
Corning			-				-			35,529				518			35,529				518
FLIR Systems			-				-			122				4			122				4
Jabil Circuit			-				-			154				3			154				3
Molex			-				-			241				9			241				9
TE Connectivity			-				-			671				35			671				35

 

 

 

---

 

 

Total Electronic Equipment, Instruments & Components							-							1,416							1,416
Energy Equipment & Services - 4.6%
Baker Hughes										374				18			374				18
Cameron International *			28,625				1,671			403				24			29,028				1,695
Diamond Offshore Drilling			-				-			57				4			57				4
Ensco, Cl A			-				-			196				11			196				11
FMC Technologies *			-				-			386				21			386				21
Halliburton			-				-			1,350				65			1,350				65
Helmerich & Payne			-				-			89				6			89				6
Nabors Industries			-				-			221				4			221				4
National Oilwell Varco			36,745				2,870			362				28			37,107				2,898
Noble			-				-			6,111				231			6,111				231
Rowan, Cl A *			-				-			104				4			104				4
Schlumberger			33,210				2,934			2,535				224			35,745				3,158
Transocean			-				-			6,900				307			6,900				307
Total Energy Equipment & Services							7,475							947							8,422
Food & Staples Retailing - 3.8%
Casey's General Stores			25,815				1,897										25,815				1,897
Costco Wholesale			19,465				2,241			698				80			20,163				2,321
CVS			44,240				2,511			1,036				59			45,276				2,570
Kroger			-				-			439				18			439				18
Safeway			-				-			205				6			205				6
SYSCO			-				-			497				16			497				16
Walgreen			-				-			725				39			725				39
Wal-Mart Stores			-				-			1,373				101			1,373				101
Whole Foods Market			-				-			976				57			976				57
Total Food & Staples Retailing							6,649							376							7,025
Food Products - 1.8%
Archer-Daniels-Midland			-				-			558				20			558				20
Campbell Soup			-				-			311				13			311				13
ConAgra Foods			35,705				1,083			356				11			36,061				1,094
General Mills			-				-			1,045				50			1,045				50
Hershey			-				-			387				36			387				36
Hormel Foods			-				-			114				5			114				5
JM Smucker			-				-			183				19			183				19
Kellogg Company			-				-			453				26			453				26
Kraft Foods Group			-				-			496				26			496				26
McCormick			-				-			341				22			341				22
Mead Johnson Nutrition, Cl A			-				-			356				26			356				26
Mondelez International, Cl A			-				-			1,517				48			1,517				48
Tyson Foods, Cl A			-				-			232				7			232				7
WhiteWave Foods, Cl A			95,703				1,911			-				-			95,703				1,911
Total Food Products							2,994							309							3,303
Gas Utilities - 0.0%
AGL Resources			-				-			100				5			100				5
ONEOK			-				-			174				9			174				9
Total Gas Utilities							-							14							14
Health Care Equipment & Supplies - 2.7%
Abbott Laboratories			-				-			3,014				100			3,014				100
Bard (C.R.)			-				-			153				18			153				18
Baxter International			-				-			7,809				513			7,809				513
Becton Dickinson			-				-			332				33			332				33
Boston Scientific *			-				-			2,130				25			2,130				25
CareFusion *			-				-			180				7			180				7
Covidien			26,755				1,630			11,040				673			37,795				2,303
DENTSPLY International			-				-			273				12			273				12
Edwards Lifesciences *			-				-			290				20			290				20

 

 

 

---

 

 

Intuitive Surgical *			4,515				1,699			103				39			4,618				1,738
Medtronic			-				-			1,696				90			1,696				90
St. Jude Medical			-				-			241				13			241				13
Stryker			-				-			527				35			527				35
Varian Medical Systems *			-				-			215				16			215				16
Zimmer Holdings			-				-			355				29			355				29
Total Health Care Equipment & Supplies							3,329							1,623							4,952
Health Care Providers & Services - 2.4%
Aetna			-				-			316				20			316				20
AmerisourceBergen, Cl A			-				-			194				12			194				12
Cardinal Health			-				-			285				15			285				15
Cigna			-				-			239				18			239				18
DaVita *			-				-			455				26			455				26
Express Scripts Holding *			-				-			1,449				90			1,449				90
Humana			-				-			133				12			133				12
Laboratory Corp of America Holdings *			-				-			6,976				691			6,976				691
McKesson			-				-			5,952				764			5,952				764
Patterson			-				-			11,070				445			11,070				445
Quest Diagnostics			-				-			128				8			128				8
Tenet Healthcare *			-				-			85				4			85				4
UnitedHealth Group			29,880				2,140			860				62			30,740				2,202
WellPoint			-				-			254				21			254				21
Total Health Care Providers & Services							2,140							2,188							4,328
Health Care Technology - 0.0%
Cerner *			-				-			766				40			766				40
Hotels, Restaurants & Leisure - 1.4%
Carnival			-				-			345				11			345				11
Chipotle Mexican Grill, Cl A *			-				-			63				27			63				27
Darden Restaurants			-				-			110				5			110				5
International Game Technology			-				-			221				4			221				4
Marriott International, Cl A			-				-			417				18			417				18
McDonald's			-				-			1,763				170			1,763				170
Starbucks			26,755				2,059			1,950				150			28,705				2,209
Starwood Hotels & Resorts Worldwide			-				-			370				25			370				25
Wyndham Worldwide			-				-			343				21			343				21
Wynn Resorts			-				-			211				33			211				33
Yum! Brands			-				-			884				63			884				63
Total Hotels, Restaurants & Leisure							2,059							527							2,586
Household Durables - 0.9%
DR Horton			-				-			729				14			729				14
Garmin			-				-			104				5			104				5
Harman International Industries			-				-			58				4			58				4
Leggett & Platt			-				-			370				11			370				11
Lennar, Cl A			-				-			430				15			430				15
Newell Rubbermaid			-				-			742				20			742				20
PulteGroup			91,915				1,517			899				15			92,814				1,532
Whirlpool			-				-			68				10			68				10
Total Household Durables							1,517							94							1,611
Household Products - 0.3%
Clorox			-				-			238				19			238				19
Colgate-Palmolive			-				-			1,698				101			1,698				101
Kimberly-Clark			-				-			711				67			711				67
Procter & Gamble			-				-			4,657				352			4,657				352
Total Household Products							-							539							539

 

 

 

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Independent Power Producers & Energy Traders - 0.0%
AES			-				-			517				7			517				7
NRG Energy			-				-			272				8			272				8
Total Independent Power Producers & Energy Traders							-							15							15
Industrial Conglomerates - 0.2%
3M			-				-			1,201				143			1,201				143
Danaher			-				-			1,129				78			1,129				78
General Electric			-				-			8,626				206			8,626				206
Total Industrial Conglomerates							-							427							427
Insurance - 5.2%
ACE			16,345				1,529			286				27			16,631				1,556
Aflac			-				-			393				24			393				24
Allstate			-				-			389				20			389				20
American International Group			-				-			18,255				888			18,255				888
Aon			-				-			592				44			592				44
Assurant			-				-			63				3			63				3
Chubb			-				-			216				19			216				19
Cincinnati Financial			-				-			126				6			126				6
Genworth Financial, Cl A *			-				-			44,923				575			44,923				575
Hartford Financial Services Group			-				-			390				12			390				12
HCC Insurance Holdings			-				-			10,300				451			10,300				451
Lincoln National			-				-			223				9			223				9
Loews			-				-			258				12			258				12
Marsh & McLennan			-				-			954				41			954				41
MetLife			-				-			17,638				828			17,638				828
Principal Financial Group			-				-			232				10			232				10
Progressive			-				-			466				13			466				13
Prudential Financial			40,910				3,190			765				60			41,675				3,250
Torchmark			-				-			77				6			77				6
Travelers			20,920				1,774			315				27			21,235				1,801
Unum Group			-				-			224				7			224				7
XL Group, Cl A			-				-			240				7			240				7
Total Insurance							6,493							3,089							9,582
Internet & Catalog Retail - 0.3%
Amazon.com *			-				-			950				297			950				297
Expedia			-				-			215				11			215				11
Netflix *			-				-			148				46			148				46
priceline.com *			-				-			132				133			132				133
TripAdvisor			-				-			288				22			288				22
Total Internet & Catalog Retail							-							509							509
Internet Software & Services - 4.6%
Akamai Technologies *			-				-			458				24			458				24
eBay *			21,960				1,225			3,021				169			24,981				1,394
Facebook, Cl A *			66,100				3,321			-				-			66,100				3,321
Google, Cl A *			3,535				3,097			718				629			4,253				3,726
VeriSign *			-				-			347				18			347				18
Yahoo! *			-				-			2,448				81			2,448				81
Total Internet Software & Services							7,643							921							8,564
IT Services - 3.5%
Accenture, Cl A			15,505				1,142			1,268				93			16,773				1,235
Automatic Data Processing			-				-			886				64			886				64
Cognizant Technology Solutions, Cl A *			-				-			781				64			781				64
Computer Sciences			-				-			285				15			285				15
Fidelity National Information Services			-				-			603				28			603				28
Fiserv *			-				-			335				34			335				34

 

 

 

---

 

 

IBM			-				-			1,813				336			1,813				336
Mastercard, Cl A			3,225				2,170			267				180			3,492				2,350
Paychex			-				-			596				24			596				24
Teradata *			-				-			413				23			413				23
Total System Services			-				-			281				8			281				8
Visa, Cl A			10,830				2,069			1,326				253			12,156				2,322
Western Union										463				9			463				9
Total IT Services							5,381							1,131							6,512
Leisure Equipment & Products - 1.3%
Hasbro			-				-			97				5			97				5
Mattel			-				-			889				37			889				37
Polaris Industries			18,635				2,407			-				-			18,635				2,407
Total Leisure Equipment & Products							2,407							42							2,449
Life Sciences Tools & Services - 1.3%
Agilent Technologies			-				-			852				44			852				44
Life Technologies *			-				-			448				33			448				33
PerkinElmer			-				-			288				11			288				11
Thermo Fisher Scientific			24,775				2,283			732				67			25,507				2,350
Waters *			-				-			161				17			161				17
Total Life Sciences Tools & Services							2,283							172							2,455
Machinery - 3.3%
Caterpillar			-				-			535				45			535				45
Cummins			17,280				2,296			448				59			17,728				2,355
Deere			-				-			782				64			782				64
Dover			-				-			310				28			310				28
Flowserve			-				-			272				17			272				17
Illinois Tool Works			-				-			1,071				82			1,071				82
Ingersoll-Rand			-				-			504				33			504				33
Joy Global			-				-			91				5			91				5
Paccar			-				-			13,411				747			13,411				747
Pall			-				-			198				15			198				15
Parker Hannifin			-				-			128				14			128				14
Pentair			-				-			346				22			346				22
Snap-on			-				-			149				15			149				15
Stanley Black & Decker			-				-			136				12			136				12
Titan International			-				-			19,300				282			19,300				282
Wabtec			37,475				2,356			-				-			37,475				2,356
Xylem			-				-			306				8			306				8
Total Machinery							4,652							1,448							6,100
Media - 3.4%
Cablevision Systems, Cl A			-				-			181				3			181				3
CBS, Cl B			-				-			1,466				81			1,466				81
Comcast, Cl A			51,420				2,322			6,791				307			58,211				2,629
DIRECTV *			36,015				2,152			1,321				79			37,336				2,231
Discovery Communications, Cl A *			-				-			592				50			592				50
Gannett			-				-			377				10			377				10
Interpublic Group			-				-			672				12			672				12
News *			-				-			821				13			821				13
Omnicom Group			-				-			459				29			459				29
Scripps Networks Interactive, Cl A			-				-			283				22			283				22
Starz *			-				-			19,700				554			19,700				554
Time Warner			-				-			2,370				156			2,370				156
Time Warner Cable, Cl A			-				-			738				82			738				82
Twenty-First Century Fox			-				-			5,148				172			5,148				172
Viacom, Cl B			-				-			796				67			796				67
Walt Disney			-				-			3,438				222			3,438				222
Washington Post, Cl B			-				-			4				2			4				2
Total Media							4,474							1,861							6,335

 

 

 

---

 

 

Metals & Mining - 0.0%
Alcoa			-				-			910				7			910				7
Allegheny Technologies			-				-			91				3			91				3
Cliffs Natural Resources			-				-			131				3			131				3
Freeport-McMoRan Copper & Gold, Cl B			-				-			882				29			882				29
Newmont Mining			-				-			419				12			419				12
Nucor			-				-			536				26			536				26
United States Steel			-				-			125				2			125				2
Total Metals & Mining							-							82							82
Multiline Retail - 0.1%
Dollar General *			-				-			601				34			601				34
Dollar Tree *			-				-			578				33			578				33
Family Dollar Stores			-				-			250				18			250				18
JC Penney *			-				-			157				1			157				1
Kohl's			-				-			174				9			174				9
Macy's			-				-			316				14			316				14
Nordstrom			-				-			375				21			375				21
Target			-				-			531				34			531				34
Total Multiline Retail							-							164							164
Multi-Utilities - 0.1%
Ameren			-				-			205				7			205				7
CenterPoint Energy			-				-			361				9			361				9
CMS Energy			-				-			224				6			224				6
Consolidated Edison			-				-			245				13			245				13
Dominion Resources			-				-			484				30			484				30
DTE Energy			-				-			147				10			147				10
Integrys Energy Group			-				-			67				4			67				4
NiSource			-				-			263				8			263				8
PG&E			-				-			375				15			375				15
Public Service Enterprise Group			-				-			427				14			427				14
SCANA			-				-			119				5			119				5
Sempra Energy			-				-			393				34			393				34
TECO Energy			-				-			171				3			171				3
Wisconsin Energy			-				-			192				8			192				8
Total Multi-Utilities							-							166							166
Office Electronics - 0.4%
Xerox			-				-			62,493				643			62,493				643
Oil, Gas & Consumable Fuels - 5.5%
Anadarko Petroleum			-				-			875				81			875				81
Apache			-				-			341				29			341				29
Cabot Oil & Gas			-				-			793				30			793				30
Chesapeake Energy			-				-			427				11			427				11
Chevron			-				-			1,630				198			1,630				198
ConocoPhillips			-				-			4,336				302			4,336				302
Consol Energy			-				-			190				6			190				6
Continental Resources *			21,860				2,345			-				-			21,860				2,345
Denbury Resources *			-				-			20,768				382			20,768				382
Devon Energy			-				-			322				19			322				19
EOG Resources			-				-			711				120			711				120
EQT			-				-			248				22			248				22
Exxon Mobil			22,595				1,944			7,860				676			30,455				2,620
Hess			-				-			243				19			243				19
Kinder Morgan			-				-			569				20			569				20
Marathon Oil			-				-			598				21			598				21
Marathon Petroleum			-				-			515				33			515				33
Murphy Oil			-				-			149				9			149				9
Newfield Exploration *			-				-			115				3			115				3
Noble Energy			-				-			929				62			929				62
Occidental Petroleum			21,240				1,987			681				64			21,921				2,051

 

 

 

---

 

 

Peabody Energy			-				-			225				4			225				4
Phillips 66			-				-			4,467				258			4,467				258
Pioneer Natural Resources			-				-			360				68			360				68
QEP Resources			-				-			150				4			150				4
Range Resources			-				-			304				23			304				23
Southwestern Energy *			-				-			18,917				688			18,917				688
Spectra Energy			-				-			563				19			563				19
Tesoro			-				-			351				16			351				16
Valero Energy			-				-			7,160				245			7,160				245
Whiting Petroleum *			-				-			7,000				419			7,000				419
Williams			-				-			1,164				42			1,164				42
WPX Energy			-				-			167				3			167				3
Total Oil, Gas & Consumable Fuels							6,276							3,896							10,172
Paper & Related Products - 0.9%
International Paper			35,075				1,571			377				17			35,452				1,588
Personal Products - 0.2%
Avon Products			-				-			363				7			363				7
Elizabeth Arden *			-				-			10,100				373			10,100				373
Estee Lauder, Cl A			-				-			487				34			487				34
Total Personal Products							-							414							414
Pharmaceuticals - 3.5%
AbbVie			-				-			16,879				755			16,879				755
Actavis *			-				-			349				50			349				50
Allergan			20,920				1,892			577				52			21,497				1,944
Bristol-Myers Squibb			-				-			2,996				139			2,996				139
Eli Lilly			-				-			2,548				128			2,548				128
Forest Laboratories *			-				-			199				9			199				9
Hospira *			-				-			6,139				241			6,139				241
Johnson & Johnson			-				-			4,970				431			4,970				431
Merck			-				-			7,584				361			7,584				361
Mylan *			49,345				1,884			981				37			50,326				1,921
Perrigo			-				-			243				30			243				30
Pfizer			-				-			12,426				357			12,426				357
Zoetis, Cl A			-				-			1,276				40			1,276				40
Total Pharmaceuticals							3,776							2,630							6,406
Professional Services - 0.8%
Dun & Bradstreet			-				-			67				7			67				7
Equifax			-				-			310				19			310				19
Nielsen Holdings			-				-			309				11			309				11
Robert Half International			-				-			266				10			266				10
Verisk Analytics, Cl A *			20,610				1,339			-				-			20,610				1,339
Total Professional Services							1,339							47							1,386
Real Estate Investment Trusts (REITs) - 0.3%
American Tower, Cl A			-				-			1,025				76			1,025				76
Apartment Investment & Management, Cl A			-				-			259				7			259				7
AvalonBay Communities			-				-			212				27			212				27
Boston Properties			-				-			273				29			273				29
Equity Residential			-				-			590				32			590				32
HCP			-				-			829				34			829				34
Health Care			-				-			744				46			744				46
Host Hotels & Resorts			-				-			630				11			630				11
Kimco Realty			-				-			721				15			721				15
Macerich			-				-			226				13			226				13
Plum Creek Timber			-				-			289				14			289				14
ProLogis			-				-			419				16			419				16
Public Storage			-				-			258				41			258				41
Simon Property Group			-				-			604				90			604				90

 

 

 

---

 

 

Ventas			-				-			591				36			591				36
Vornado Realty Trust			-				-			298				25			298				25
Weyerhaeuser			-				-			1,132				32			1,132				32
Total Real Estate Investment Trusts (REITs)							-							544							544
Real Estate Management & Development - 0.9%
Brookfield Asset Management, Cl A			-				-			16,900				632			16,900				632
CBRE Group, Cl A *			-				-			521				12			521				12
Jones Lang LaSalle			11,140				972			-				-			11,140				972
Total Real Estate Management & Development							972							644							1,616
Road & Rail - 2.0%
CSX			-				-			858				22			858				22
Hertz Global Holdings *			78,800				1,746			-				-			78,800				1,746
Kansas City Southern			-				-			210				23			210				23
Norfolk Southern			-				-			263				20			263				20
Ryder System			-				-			44				3			44				3
Union Pacific			10,830				1,682			1,197				186			12,027				1,868
Total Road & Rail							3,428							254							3,682
Semiconductors & Semiconductor Equipment - 0.4%
Altera			-				-			570				21			570				21
Analog Devices			-				-			624				29			624				29
Applied Materials			-				-			3,194				56			3,194				56
Broadcom, Cl A			-				-			1,416				37			1,416				37
First Solar *			-				-			58				2			58				2
Intel			-				-			12,930				296			12,930				296
KLA-Tencor			-				-			430				26			430				26
Lam Research *			-				-			309				16			309				16
Linear Technology			-				-			471				19			471				19
LSI			-				-			1,408				11			1,408				11
Microchip Technology			-				-			385				15			385				15
Micron Technology *			-				-			1,636				29			1,636				29
NVIDIA			-				-			485				8			485				8
Teradyne *			-				-			496				8			496				8
Texas Instruments			-				-			2,102				85			2,102				85
Xilinx			-				-			510				24			510				24
Total Semiconductors & Semiconductor Equipment							-							682							682
Software - 0.8%
Adobe Systems *			-				-			1,202				63			1,202				63
Autodesk *			-				-			442				18			442				18
CA			-				-			277				8			277				8
Citrix Systems *			-				-			341				24			341				24
Electronic Arts *			-				-			261				7			261				7
Intuit			-				-			769				51			769				51
Microsoft			-				-			28,275				942			28,275				942
Oracle			-				-			9,231				306			9,231				306
Red Hat *			-				-			469				22			469				22
Salesforce.com *			-				-			1,409				73			1,409				73
Symantec			-				-			1,328				33			1,328				33
Total Software							-							1,547							1,547
Specialty Retail - 1.1%
Abercrombie & Fitch, Cl A			-				-			64				2			64				2
AutoNation *			-				-			104				5			104				5
AutoZone *			-				-			91				38			91				38
Bed Bath & Beyond *			-				-			376				29			376				29

 

 

 

---

 

 

Best Buy			-				-			226				8			226				8
CarMax *			-				-			434				21			434				21
GameStop, Cl A			-				-			101				5			101				5
Gap			-				-			709				29			709				29
Home Depot			16,865				1,279			3,696				280			20,561				1,559
L Brands			-				-			632				39			632				39
Lowe's			-				-			2,725				130			2,725				130
O'Reilly Automotive *			-				-			279				36			279				36
PetSmart			-				-			270				21			270				21
Ross Stores			-				-			562				41			562				41
Staples			-				-			562				8			562				8
Tiffany			-				-			186				14			186				14
TJX			-				-			1,854				105			1,854				105
Urban Outfitters *			-				-			280				10			280				10
Total Specialty Retail							1,279							821							2,100
Textiles, Apparel & Luxury Goods - 0.3%
Coach			-				-			5,227				285			5,227				285
Fossil *			-				-			130				15			130				15
Nike, Cl B			-				-			1,383				100			1,383				100
PVH			-				-			208				25			208				25
Ralph Lauren, Cl A			-				-			156				26			156				26
VF			-				-			226				45			226				45
Total Textiles, Apparel & Luxury Goods							-							496							496
Thrifts & Mortgage Finance - 0.0%
Hudson City Bancorp			-				-			402				4			402				4
People's United Financial			-				-			271				4			271				4
Total Thrifts & Mortgage Finance							-							8							8
Trading Companies & Distributors - 0.0%
Fastenal			-				-			706				36			706				36
WW Grainger			-				-			120				31			120				31
Total Trading Companies & Distributors							-							67							67
Water Utilities - 0.9%
American Water Works			41,960				1,732			-				-			41,960				1,732
Wireless Telecommunication Services - 0.3%
Crown Castle International *			-				-			763				56			763				56
Vodafone Group ADR			-				-			12,100				426			12,100				426
Total Wireless Telecommunication Services							-							482							482
Total Common Stock							129,805							48,682							178,487
Short-Term Investments - 3.3%
City National Rochdale Government Money Market Fund, 0.010%**†			-				-			567,564				567			567,564				567
City National Rochdale Prime Money Market Fund, Institutional Class, 0.010%**†			2,495,068				2,495			-				-			2,495,068				2,495
SEI Daily Income Trust Government Fund, Cl A, 0.020%**			-				-			567,564				567			567,564				567
SEI Daily Income Trust, Prime Obligation Fund, Cl A, 0.010%**			2,495,068				2,495			-				-			2,495,068				2,495
Total Short-Term Investments							4,990							1,134							6,124

 

 

 

---

 

 

Total Investments - 100.1%						$	134,795						$	49,816						$	184,611
Other Liabilities in Excess of Assets - (0.01)%							269							(419	)						(150	)
Net Assets - 100.0%						$	135,064						$	49,397						$	184,461

 

*	Non-income producing security.

**	The rate reported is the 7-day effective yield as of September 30, 2013.

†	Investment in Affiliate.

††	The investments of the City National Rochdale Diversified Equity Fund will be liquidated prior to the merger.

ADR — American Depositary Receipt   

Cl — Class   

 

 

---

 

 

City National Rochdale

U.S. Core Equity Fund and Diversified Equity Fund

Pro Forma Statement of Assets and Liabilities (000) (Unaudited)

September 30, 2013

 

		City National Rochdale  U.S. Core Equity  Fund					City National Rochdale  Diversified Equity  Fund				Proforma Adjustments				Pro Forma Combined
ASSETS
Cost of securities		$	115,973				$	41,401			$	(41,401	) *		$	115,973
Investments in securities, at value		$	132,300				$	49,249			$	(49,249	) *		$	132,300
Affiliated investments, at value			2,495					567				(567	) *			2,495
Cash			-					-				49,816	*			49,816
Receivable for investment securities sold			-					173								173
Receivable for capital shares sold			342					-								342
Dividend and income receivable			89					43								132
Other assets (prepaid expenses)			3					2								5
TOTAL ASSETS			135,229					50,034				-				185,263
LIABILITIES
Payable for capital shares redeemed			56					88								144
Investment adviser fees payable			44					26								70
Shareholder servicing and distribution fees payable			44					4								48
Administrative fees payable			3					1								4
Payable for investment securities purchased			-					510								510
Other accrued expenses			18					8								26
TOTAL LIABILITIES			165					637								802
NET ASSETS		$	135,064				$	49,397							$	184,461
Institutional Class Shares:
Net Assets ($Dollars)		$	122				$	46,411,791							$	46,411,913
Total  shares outstanding at end of period			10					2,871,147				955,052				3,826,209
Net asset value, offering and redemption price per share
(net assets ÷ shares outstanding)		$	12.13		^		$	16.16							$	12.13
Class N Shares:
Net Assets ($Dollars)		$	66,144,930				$	2,984,984							$	69,129,914
Total  shares outstanding at end of period			5,477,415					184,096				63,005				5,724,516
Net asset value, offering and redemption price per share
(net assets ÷ shares outstanding)		$	12.08				$	16.21							$	12.08
Servicing Class Shares:
Net Assets ($Dollars)		$	68,918,580				$	-							$	68,918,580
Total  shares outstanding at end of period			5,702,084					-								5,702,084
Net asset value, offering and redemption price per share
(net assets ÷ shares outstanding)		$	12.09				$	-							$	12.09

 

^	Net assets divided by shares do not calculate to the stated net asset value because net assets amount is shown rounded.

*	The City National Rochdale Diversified Equity Fund's investments will be liquidated to cash prior to merger.

 

 

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Pro Forma Combining Statement of Operations (000) (Unaudited)

For the Period Ended September 30, 2013

 

		City National				City National
		Rochdale				Rochdale
		U.S. Core				Diversified								Pro Forma					Pro Forma
		Equity Fund*				Equity Fund				Combined				Adjustments					Combined
Investment Income:
Dividends		$	1,368			$	861			$	2,229			$	-				$	2,229
Interest			2				-				2				-					2
Less Foreign Taxes Withheld			(6	)			(11	)			(17	)			-					(17	)
TOTAL INCOME			1,364				850				2,214				-					2,214
Expenses:
Investment advisory fees			365				347				712				(194	)	(a)			518
Shareholder servicing fees - Class N (2)			227				18				245				-					245
Shareholder servicing fees - Servicing Class			114				-				114				-					114
Administration fees			35				18				53				(2	)	(b)			51
Trustees fees			6				3				9				-					9
Professional fees			16				6				22				-					22
Printing fees			6				2				8				(3	)	(c)			5
Transfer Agent fees			10				25				35				(11	)	(d)			24
Custodian fees			6				3				9				-					9
Registration and filing fees			1				2				3				-					3
Insurance and other expenses			6				5				11				(1	)	(e)			10
Total expenses			792				429				429				(211	)				1,010
Less:
Waiver of investment advisory fees			-				(46	)			(46	)			46		(f)			-
Waiver of shareholder servicing fees - Class N			-				(9	)			(9	)			-					(9	)
Net expenses			792				374				374				(165	)				1,001
Net investment income			572				476				1,840				165					1,213
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized gain/loss on investments			2,022				3,453				5,475				-					5,475
Net change in unrealized appreciation
on investments			18,822				3,831				22,653				-					22,653
Net urealized and unrealized gain			20,844				7,284				28,128				-					28,128
Net increase in net assets
resulting from operations		$	21,416			$	7,760			$	29,968			$	165				$	29,341

 

*	Commenced operations on December 3, 2012.

 

 

 

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Notes to Pro Forma Financial Statements

The City National Rochdale

U.S. Core Equity Fund and Diversified Equity Fund

For the period ended September 30, 2013 (Unaudited)

1. Organization:

City National Rochdale Funds (the "Trust") is organized as a Delaware business trust pursuant to a Certificate of Trust dated October 25, 1996, as amended. The Trust is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company with 17 funds.

City National Rochdale Diversified Equity Fund (the “Target Fund”) is a series of the Trust. The Target Fund’s investment objective is to provide long-term capital growth. The Target Fund offers two classes of shares:  Institutional Class and Class N.

The financial statements herein are those of the City National Rochdale U.S. Core Equity Fund series of the Trust (the “Acquiring Fund”). The Acquiring Fund’s investment objective is to seek long-term capital appreciation. The Acquiring Fund offers three classes of shares:  Institutional Class, Class N and Servicing Class.

For the purposes of these Pro Forma Financial Statements, the financial information covers the period from December 3, 2012 (commencement of operations) to September 30, 2013 of the Acquiring Fund and the year ended September 30, 2013 for the Target Fund.

2.  Basis of Combination:

The accompanying unaudited Pro Forma Financial Statements Combining Schedules of Investments, Statements of Assets and Liabilities and Statements of Operations (“Pro Forma Financial Statements”) reflect the accounts of the Target Fund and the Acquiring Fund for the period ended September 30, 2013.  These statements have been derived from the books and records utilized in calculating daily net asset values at September 30, 2013.

The Pro Forma Financial Statements should be read in conjunction with the historical financial statements of the Target Fund and the Acquiring Fund, which have been incorporated by reference in the Statement of Additional Information.  The Target Fund and the Acquiring Fund each follow U.S. generally accepted accounting principles (“GAAP”) applicable to management investment companies which are disclosed in the historical financial statements.

The Pro Forma Financial Statements give effect to the proposed exchange of assets of the Institutional Class Shares and Class N Shares of the Target Fund for Institutional Class Shares and Class N Shares, respectively, of the Acquiring Fund.  Under generally accepted accounting principles, the Acquiring Fund will be the surviving entity for accounting purposes.

 

 

 

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The Pro Forma Financial Statements have been adjusted to reflect the anticipated advisory fee arrangement for the Acquiring Fund.  Certain other operating costs have also been adjusted to reflect anticipated expenses of the combined entity.  Other costs which may change as a result of the reorganization are currently undeterminable.

All fees and expenses incurred directly in connection with the consummation of the Reorganization and the transactions contemplated by the Agreement and Plan of Reorganization will be borne by the investment adviser to the Acquiring Fund and the Target Fund, without regard to whether the Reorganization is consummated.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

3. Security Valuation:

For purposes of calculating their daily net asset values (“NAV”), the Target Fund and the Acquiring Fund (collectively, the “Funds”) each generally values its investments as follows:

Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded, or, if   there is no such reported sale, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. Debt securities are priced based upon valuations provided by independent, third-party pricing agents, if available. Such values generally reflect the last reported sales price if the security is actively traded. The third-party pricing agents may also value debt securities at an evaluated bid price by employing methodologies that utilize actual market transactions, broker-supplied valuations, or other methodologies designed to identify the market value for such securities. Debt obligations with remaining maturities of sixty days or less may be valued at their amortized cost, which approximates market value. The prices for foreign securities are reported in local currency and converted to U.S. dollars using currency exchange rates. Prices for most securities held in the Funds are provided daily by recognized independent pricing agents. If a security price cannot be obtained from an independent, third-party pricing agent, the Funds seek to obtain a bid price from at least one independent broker.

Securities for which market prices are not "readily available" are valued in accordance with Fair Value Procedures established by the Funds' Board of Trustees (the "Board"). The Funds' Fair Value Procedures are implemented through a Fair Value Committee (the "Committee") designated by the Board. Some of the more common reasons that may necessitate that a security be valued using Fair Value Procedures include: the security's trading has been halted or suspended; the security has been de-listed from a national exchange; the security's primary trading market is temporarily closed at a time when under normal conditions it would be open; the security has not been traded for an extended period of time; the security's primary pricing source is not able or willing to provide a price; or trading of the security is subject to local government-imposed restrictions. When a security is valued in accordance with the Fair Value Procedures, the Committee will determine the value after taking into consideration relevant information reasonably available to the Committee. As of September 30, 2013, there were no fair valued securities.

 

 

 

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In accordance with GAAP, the objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

• Level 1 — Unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that the Funds have the ability to access at the measurement date;

• Level 2 — Quoted prices in inactive markets, or inputs that are observable (either directly or indirectly) for substantially the full term of the asset or liability; and

• Level 3 — Prices, inputs or exotic modeling techniques which are both significant to the fair value measurement and unobservable (supported by little or no market activity).

Investments are classified within the level of the lowest significant input considered in determining fair value. Investments classified within Level 3 whose fair value measurement considers several inputs may include Level 1 or Level 2 inputs as components of the overall fair value measurement.

As of September 30, 2013, all investments of the Funds are considered Level 1 investments.

For the year ended September 30, 2013, there have been no transfers between Level 1 and Level 2 assets and liabilities. Transfers between Levels are recognized at period end. For the year ended September 30, 2013, there have been no changes to the Funds’ fair valuation methodologies.

4.  Shares of Beneficial Interest

The Pro Forma Institutional Class shares and Class N shares net asset values per share assume the issuance of 3,826,199 Institutional Class Shares and 247,101 Class N shares of the Acquiring Fund, in exchange for 2,871,147 Institutional Class shares and 184,096 Class N shares of the Target Fund, respectively, which would have been outstanding at September 30, 2013 in connection with the proposed reorganization, assuming the Target Fund and the Acquiring Fund had been combined as of such date.

5.  Federal Income Taxes

Each of the Target Fund and the Acquiring Fund intends to continue to qualify as a regulated investment company for Federal income tax purposes by complying with the appropriate provisions of Subchapter M of the Internal Revenue Code of 1986, as amended, and to distribute substantially all of its income to its shareholders. Accordingly, no provision for Federal income taxes has been made in the Pro Forma financial statements.

 

 

 

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Management has analyzed the Acquiring Fund’s tax positions taken on federal income tax returns for all open tax years   and has concluded that as of September 30, 2013, no provision for income tax would be required in the Acquiring Fund’s financial statements. The Acquiring Fund’s Federal and state income and Federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.

6.  Pro Forma Adjustments

(a)          An adjustment to the combined investment advisory fees reflects the fee structure of the Acquiring Fund and is calculated using the Acquiring Fund’s average net assets for the period ended September 30, 2013 in combination with the Target Fund’s average net assets for the same period.

(b)         An adjustment to the combined administration fees reflects the fee structure of the Acquiring Fund and is calculated using the Acquiring Fund’s average net assets for the period ended September 30, 2013 in combination with the Target Fund’s average net assets for the same period.

(c)         Adjustment to reflect proforma printing fees due to the combining of the Funds into one and based upon the expense structure for the Acquiring Fund.

(d)         Adjustment to reflect proforma transfer agent fees due to the combining of the Funds into one and based upon the current expense structure of the Acquiring Fund.

(e)         Adjustment to reflect proforma insurance and other expenses due to the combining of the Funds into one and based upon the current expense structure for the Acquiring Fund.

(f)         Adjustment to reflect proforma investment advisory fees waiver based upon the current expense structure of the Acquiring Fund.

 

 

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PART C

 

Item 15.

Indemnification

 

Please see Article VI of the Amended and Restated By-Laws of the City National Rochdale Funds (the “Registrant”), which have been filed as an exhibit to this registration statement. In addition, each trustee of the Registrant has entered into an Indemnification Agreement with the Registrant whereby the Registrant indemnifies and holds harmless each trustee against any costs, disbursements or expenses customarily incurred in any legal proceeding arising out of or in connection with the trustee’s service to the Registrant, to the fullest extent permitted by law, subject to certain conditions.  Pursuant to Rule 484 under the Securities Act of 1933, as amended (the “Securities Act”), the Registrant furnishes the following undertaking:

 

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer, or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

 

Notwithstanding the provisions contained in the Registrant’s Amended and Restated By-Laws, in the absence of authorization by the appropriate court on the merits pursuant to Sections 4 and 5 of Article VI of said Amended and Restated By-Laws, any indemnification under said Article shall be made by Registrant only if authorized in the manner provided in either subsection (a) or (b) of Section 6 of said Article VI.

 

Item 16.

Exhibits

1)	Charter Documents:

a.

Certificate of Trust dated October 25, 1996 and amendments thereto dated February 11, 1998 and April 2, 1999. (I)

(i)

Certificate of Amendment dated August 15, 2013 to the Certificate of Trust dated October 25, 1996, as amended. (L)

b.

Agreement and Declaration of Trust dated October 25, 1996. (A)

(i)

Amendment dated April 26, 1999, to the Agreement and Declaration of Trust dated October 25, 1996. (B)

(ii)

Amendment dated December 4, 2012, to the Agreement and Declaration of Trust dated October 25, 1996 as amended April 26, 1999. (J)

(iii)

Amendment dated August 15, 2013, to the Agreement and Declaration of Trust dated October 25, 1996 as amended April 26, 1999. (L)

 

 

1

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2)

By-Laws:

a.

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

b.

Amendment dated April 26, 1999, to the By-Laws dated October 25, 1996. (B)

c.

Amended and Restated By-Laws dated February 26, 2009. (I)

d.

Amendment dated August 29, 2013 to the Amended and Restated By-Laws dated February 26, 2009. (L)

3)	Not applicable.

4)	Agreement and Plan of Reorganization:

a.

Form of Agreement and Plan of Reorganization. (C)

5)	Not applicable.

6)	Investment Management Agreements:

a.

Investment Management Agreement dated April 1, 1999 between the Registrant and City National Asset Management, Inc. (now City National Rochdale, LLC) with respect to the City National Rochdale U.S. Core Equity Fund (the “U.S. Core Equity Fund”). (F)

b.

Amended Appendices, dated December 4, 2013, to the Investment Management Agreement dated April 1, 1999 between the Registrant and City National Asset Management, Inc. (now City National Rochdale, LLC) with respect to the U.S. Core Equity Fund. (M)

c.

Amendment dated December 3, 2013 to the Investment Management Agreement dated April 1, 1999, as amended, between the Registrant and City National Rochdale, LLC with respect to the U.S. Core Equity Fund. (N)

d.

Investment Management Agreement dated October 1, 2005 between the Registrant and City National Asset Management, Inc. (now City National Rochdale, LLC) with respect to the City National Rochdale Diversified Equity Fund (the “Diversified Equity Fund”). (G)

e.

Amendment dated December 3, 2013 to the Investment Management Agreement dated October 1, 2005, as amended, between the Registrant and City National Rochdale, LLC with respect to the Diversified Equity Fund. (N)

f.

Investment Manager Agreement dated May 16, 2011 between City National Asset Management, Inc. (now City National Rochdale, LLC) and SKBA Capital Management, LLC with respect to the Diversified Equity Fund. (H)

 

g.

Acknowledgement of Assignment and Assumption dated September 10, 2013 between the Registrant and City National Rochdale, LLC. (N)

 

 

2

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h.

Consent to Assignment and Assumption effective September 10, 2013, between the Registrant and City National Asset Management, Inc. with respect to the U.S. Core Equity Fund and Diversified Equity Fund. (N)

 

7)	Distribution Agreements:

a.

Distribution Agreement dated April 1, 1999 between the Registrant and SEI Investments Distribution Co. (J)

b.

AML Amendment dated March 13/14, 2006 to the Distribution Agreement between the Registrant and SEI Investments Distribution Co. dated April 1, 1999. (J)

c.

Form of Sub-Distribution and Servicing Agreement. (F)

8)	Not applicable.

9)	Custody Agreements:

a.

Custody Agreement dated August 1, 2011 between the Registrant and U.S. Bank National Association. (E)

b.

First Amendment, dated January 1, 2012, to the Custody Agreement dated August 1, 2011 between the Registrant and U.S. Bank National Association. (J)

c.

Second Amendment, dated November 20, 2012, to the Custody Agreement dated August 1, 2011 between the Registrant and U.S. Bank National Association. (N)

 

d.

Third Amendment and revised Exhibit C, dated November 19, 2013, to the Custody Agreement dated August 1, 2011 between the Registrant and U.S. Bank National Association. (M)

 

10)	Distribution Plan and Rule 18f-3 Plan:

a.

Rule 12b-1 Distribution Plan dated January 28, 2013. (I)

(i)

Revised Schedules A and B, dated December 4, 2013, to the Rule 12b-1 Distribution Plan dated January 28, 2013. (M)

b.

Amended and Restated Multiple Class Plan dated February 19, 2013.  (K)

(i)

Revised Appendix A dated December 4, 2013 to the Amended and Restated Multiple Class Plan dated February 19, 2013. (M)

11)	Opinion of Counsel:

a.

Opinion and consent of counsel as to the legality of the securities being registered. (L)

12)	Not applicable.

13)	Other Material Contracts:

a.

Amended and Restated Administration Agreement dated January 1, 2013 between the Registrant and SEI Investments Global Funds Services. (J)

(i)

Revised Schedule I, dated December 4, 2013, to the Amended and Restated Administration Agreement dated January 1, 2013 between the Registrant and SEI Investments Global Funds Services. (M)

 

 

3

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(ii)

Amendment No. 1, dated October 2, 2013, to the Amended and Restated Administration Agreement dated January 1, 2013 between the Registrant and SEI Investments Global Funds Services. (N)

(iii)

Amendment No. 2, dated December 4, 2013, to the Amended and Restated Administration Agreement dated January 1, 2013, as amended, between the Registrant and SEI Investment Global Funds Services. (N)

 

b.

Transfer Agent Servicing Agreement dated January 1, 2013 between the Registrant and U.S. Bancorp Fund Services, LLC. (J)

c.

Amended and Restated Shareholder Services Agreement dated June 1, 2001 between the Registrant and City National Bank. (F)

(i)

Amended Exhibit A, dated December 4, 2013, to the Amended and Restated Shareholder Services Agreement dated June 1, 2001 between the Registrant and City National Bank. (M)

d.

Shareholder Services Fee Limitation Agreement dated January 28, 2014 between the Registrant and City National Rochdale, LLC, relating to the Diversified Equity Fund. (N)

e.

Form of Shareholder Service Provider Agreement between City National Bank and RIM Securities, LLC. (D)

f.

Expense Limitation and Reimbursement Agreement dated December 30, 2013 between the Registrant and City National Rochdale, LLC relating to the Diversified Equity Fund. (N)

g.

Fee Waiver Agreement dated December 30, 2013 between the Registrant and City National Rochdale, LLC relating to the Diversified Equity Fund. (N)

 

14)	Other Opinions:

a.

Consent of Independent Registered Certified Public Accounting Firm, KPMG LLP - filed herewith.

15)	Not applicable.

16)	Powers of Attorney:

a.

Power of Attorney. (L)

17)	Additional Exhibits:

a.

Form of Proxy Card. (L)

b.

The U.S. Core Equity Fund’s and Diversified Equity Fund’s Statement of Additional Information, dated January 31, 2014.  (N)

c.

The U.S. Core Equity Fund’s and Diversified Equity Fund’s Annual Report for the year ended September 30, 2013. (K)

All Exhibits filed previously are herein incorporated by reference as follows:

 

A.

Previously filed as an exhibit to Registrant’s Registration Statement on Form N-1A (File No. 333-16093) on November 14, 1996 and incorporated herein by reference.

 

B.

Previously filed as an exhibit to Post-Effective Amendment No. 8 to Registrant’s Registration Statement on Form N-1A (File No. 333-16093) on May 3, 1999 and incorporated herein by reference.

 

C.

Filed as Appendix A to Part A of this Registration Statement on Form N-14.

 

D.

Previously filed as an exhibit to Post-Effective Amendment No. 54 to Registrant’s Registration Statement on Form N-1A (File No. 333-16093) on November 21, 2012, and incorporated herein by reference.

 

 

4

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E.

Previously filed as an exhibit to Post-Effective Amendment No. 44 to Registrant’s Registration Statement on Form N-1A (File No. 333-16093) on September 14, 2011, and incorporated herein by reference.

 

F.

Previously filed as an exhibit to Post-Effective Amendment No. 32 to Registrant’s Registration Statement on Form N-1A (File No. 333-16093) on June 27, 2007 and incorporated herein by reference.

  

G.

Previously filed as an exhibit to Post-Effective Amendment No. 41 to Registrant’s Registration Statement on Form N-1A (File No. 333-16093) on January 28, 2011, and incorporated herein by reference.

  

H.

Previously filed as an exhibit to Post-Effective Amendment No. 48 to Registrant’s Registration Statement on Form N-1A (File No. 333-16093) on December 16, 2011, and incorporated herein by reference.

 

	I	Previously filed as an exhibit to Registrant’s Registration Statement on Form N-14 (File No. 333-186096)on January 28, 2013, and incorporated herein by reference
	J.	Previously filed as an exhibit to Registrant’s Post-Effective Amendment No. 62 (333-16093) on April 30, 2013 and incorporated herein by reference.
	K.	Previously filed on December 9, 2013 (File No. 811-07923) and incorporated herein by reference.
	L.	Previously filed on October 4, 2013 (File No. 333-191583) and incorporated herein by reference.
	M.	Previously filed on December 30, 2013 (File No. 811-07923) and incorporated herein by reference.
	N.	Previously filed on January 28, 2014 (File No. 811-07923) and incorporated herein by reference.

 

Item 17.

Undertakings

 

1.

The undersigned registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of the registration statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act, the reoffering prospectus will contain the information called for by the applicable registration form for reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.

 

2.

The undersigned registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the 1933 Act, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them.

 

 

5

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SIGNATURES

 

As required by the Securities Act of 1933, this registration statement has been signed on behalf of the Registrant, in the City of Beverly Hills, and State of California, on the ­­30th day of January, 2014.

 

	CITY NATIONAL ROCHDALE FUNDS
	By:	/s/ Garrett D’Alessandro
		Garrett D’Alessandro
		President, Chief Executive Officer

As required by the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature		Title	Date
/s/ Garrett D’Alessandro		President & Chief	January 30, 2014
Garrett D’Alessandro		Executive Officer
/s/ Eric Kleinschmidt		Controller & Chief	January 30, 2014
Eric Kleinschmidt		Operating Officer
Irwin G. Barnet*		Trustee	January 30, 2014
Irwin G. Barnet
Vernon C. Kozlen*		Trustee	January 30, 2014
Vernon C. Kozlen
William R. Sweet*		Trustee	January 30, 2014
William R. Sweet
James R. Wolford*		Trustee	January 30, 2014
James R. Wolford
Daniel A. Hanwacker*		Trustee	January 30, 2014
Daniel A. Hanwacker
Jay C. Nadel*		Trustee	January 30, 2014
Jay C. Nadel
Andrew S. Clare*		Trustee	January 30, 2014
Andrew S. Clare
Jon C. Hunt*		Trustee	January 30, 2014
Jon C. Hunt

* By:	/s/ Garrett D’Alessandro
	Garrett D’Alessandro
	Attorney-in-Fact, pursuant to Power of Attorney

 

 

6

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EXHIBIT INDEX

Exhibit Number	Exhibit
14	Consent of Independent Registered Certified Public Accounting Firm, KPMG LLP.

 

7