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City National Rochdale Funds – ‘N-CSR’ for 9/30/18

On:  Friday, 12/7/18, at 9:22am ET   ·   Effective:  12/7/18   ·   For:  9/30/18   ·   Accession #:  1398344-18-17613   ·   File #:  811-07923

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

12/07/18  City National Rochdale Funds      N-CSR       9/30/18    4:8.0M                                   FilePoint/FA
          → City National Rochdale California Tax – Exempt Bond Fund ⇒ 2 Classes/Contracts
          → City National Rochdale Corporate Bond Fund ⇒ 2 Classes/Contracts
          → City National Rochdale Equity Income Fund ⇒ Class N (RIMHX)
          → City National Rochdale Fixed Income Opportunities Fund ⇒ Class N (RIMOX)
          → City National Rochdale Government Bond Fund ⇒ 3 Classes/Contracts
          → City National Rochdale Government Money Market Fund ⇒ 3 Classes/Contracts
          → City National Rochdale High Yield Bond Fund ⇒ 3 Classes/Contracts
          → City National Rochdale Intermediate Fixed Income Fund ⇒ Class N (RIMCX) — Institutional Class (CNRIX)
          → City National Rochdale Municipal High Income Fund ⇒ Class N (CNRNX) — Servicing Class (CNRMX)
          → City National Rochdale U.S. Core Equity Fund ⇒ 3 Classes/Contracts

Document/Exhibit                   Description                      Pages   Size 

 1: N-CSR       Certified Annual Shareholder Report by a            HTML   2.73M 
                          Management Investment Company                          
 4: EX-99.906 CERT  Miscellaneous Exhibit                           HTML      8K 
 3: EX-99.CERT  Miscellaneous Exhibit                               HTML     16K 
 2: EX-99.CODE ETH  Miscellaneous Exhibit                           HTML     29K 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Investment Company Act file number 811-07923

City National Rochdale Funds

(Exact name of registrant as specified in charter)

400 North Roxbury Drive

Beverly Hills, CA 90210

(Address of principal executive offices) (Zip code)

Michael Lukaj

400 North Roxbury Drive

Beverly Hills, CA 90210

(Name and address of agent for service)

Registrant’s telephone number, including area code: 1-888-889-0799

Date of fiscal year end: September 30, 2018

Date of reporting period: September 30, 2018

The registrant’s schedules as of the close of the reporting period, as set forth in §§ 210.12-12 through 210.12-14 of Regulation S-X [17 CFR §§ 210-12.12-12.14], are attached hereto.

TABLE OF CONTENTS

The Funds file their complete schedules of portfolio holdings with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q within 60 days after the end of the period. The Funds’ Form N-Q filings are available on the Commission’s website at http://www.sec.gov, and may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The most current Form N-Q filing is also available on the Funds’ website at www.citynationalrochdalefunds.com and without charge, upon request, by calling 1-888-889-0799.

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to the Funds’ portfolio securities, and information on how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ending June 30 is available (1) without charge, upon request, by calling 1-888-889-0799, (2) on the Funds’ website at www.citynationalrochdalefunds.com, and (3) on the Commission’s website at www.sec.gov.

CITY NATIONAL ROCHDALE FUNDS | PAGE 1

Dear Shareholders,

This annual report covers the one-year period ended September 30, 2018. The last several weeks have brought a distinct change in market behavior and character – this shouldn’t be much of a surprise as interest rates have moved higher, financial conditions have tightened, worries about peak growth have increased, trade concerns have grown, global growth has slowed, and Fed uncertainty has risen. As the end of the year approaches, there will likely be more volatility, but at least overly optimistic investor sentiment has eased and U.S. economic growth remains solid, all of which could trigger at least a relief rally off the recent lows.

The current economic expansion continues to impress. Now over nine years and three months old, it is within striking distance of the record post-World War II expansion of 10 years that occurred in the 1990s. The unemployment rate has fallen from 10.0% to 3.7%, the largest such decrease of all prior expansions. The inflation rate has averaged just 1.6%, one of the lowest of all expansions. This is important. With low price pressures, the Fed can move gradually in returning interest rates to normal levels. This measured pace reduces the risk of a policy mistake – tightening monetary policy too quickly – that has precipitated many past recessions. Employers have been hiring at a consistent rate for a record 103 months, adding 19.7 million people to payrolls and well outpacing the 8.7 million jobs lost during the recession. This has generated greater household income, which has driven consumer spending, the primary propellant of economic growth. Fed projections call for economic growth of 3.1% in 2018, the fastest calendar year growth rate since 2005. However, following this year, the Fed expects growth to slow down as the euphoria of the recent federal stimulus wears off and rising interest rates start to bite into consumer spending. By 2021, GDP growth is expected to fall to 1.8%. By maintaining an unwavering focus on capital preservation and portfolio defense, CNR’s investment team seeks to pursue market and idiosyncratic opportunities only when risk-adjusted return targets meet or exceed our rigorous underwriting standards.

U.S. stocks fended off various challenges in 2018, bolstered by the strength of the domestic economy. International stocks, especially in emerging markets, struggled in the third quarter because of tariff tiffs, currency moves, and political and economic disruptions. Back in the U.S., however, the story was different. The S&P 500 closed at an all-time high on September 20th and spent much of the third quarter in record-high territory (where the index posted a solid +7.4% total return for the quarter). For many investors, the strength of the U.S. economy offered reasons for optimism. Despite the international backdrop, the U.S. economy continued the run it started almost 10 years ago, after the global financial crisis. In terms of Fixed Income markets, despite anxiety over an ever-lengthening credit cycle, contentious trade negotiations, and tightening monetary policy, U.S. credit markets remained resilient over the summer. The most rate-sensitive sectors suffered modest losses as yields pushed higher, while investment-grade credit provided a countering lift in Q3 (after two quarters of losses). The Federal Reserve raised rates one fourth of a percentage point to 2.25% in September, the third rate hike this year, and that’s not the last anticipated move upward given positive economic indicators including low unemployment and increased wage growth. The yield curve remained flat over the period, as the spread between a five-year and 30-year U.S. Treasury waffled between a historically narrow range of 20-30bps. Yields also climbed modestly during the quarter; the 10-year U.S. Treasury yield surpassed 3.0% in late September, a peak it had not crossed since May 2018.

As the credit cycle continues to lengthen, investment-grade U.S. corporate credit was under pressure in the first half of 2018, but given improving U.S. economic data and a combination of lighter issuance with strong demand in July and August, the index delivered positive gains for the third quarter as credit spreads narrowed. With that said, analysts have questioned the underlying fundamentals of the richly priced sector. Corporate leverage ratios sit above historical norms, while increased company cash flows from the recently passed tax reform and overseas earning repatriation have been used for share repurchases rather than strengthening balance sheets (which would bolster credit fundamentals). Interest rates continue to rise, and diminished liquidity coupled with uncertainties surrounding the effects of in-negotiation trade policies have generated more questions than confidence. We are aware that we are late in the cycle, when rates tend to peak. Therefore, CNR continues to be defensive but ready to extend when we think the Fed overshoots. In the meantime, opportunities remain in senior secured loans, CLOs and short-duration EM, but we continue to carefully manage risk as the landscape changes.

The Fed seems to be very pleased with the pace of economic growth, the relatively stable inflation level (which remains around their target level of 2.0%), and their planned future interest rate increases. They expect to hike rates five more times – once in December, three times in 2019, and once in 2020. This tightening of monetary policy has been a relatively calm transformation so far.

CITY NATIONAL ROCHDALE FUNDS | PAGE 2

But it will start to get trickier for the Fed as time goes on. When the Fed began raising interest rates back in December 2015, the median federal funds rate was just 0.125%. Each 25-basis-point hike the Fed made in those early days had little impact on the economy and consumers. Now, the federal funds rate is getting close to the “neutral rate”. This is the level of interest that is neither simulative nor restrictive. Now that we are getting close to that level, the risk of a policy mistake is increasing. We will start to see the different personalities of the FOMC (hawks or doves) arguing their points about future changes. This may cause more uncertainty and thus, some volatility in the market as they try to forecast what the Fed will do.

Moderate U.S. economic growth and fundamentals continues to support equities:

As the investment landscape, while still positive, continues to evolve and grow more challenging – management will seek to adjust towards more typical late-stage expansion conditions. As we navigate these global crosscurrents with a steady hand, our unwavering focus on risk management and downside protection continues to serve us well, as capital preservation will always be of paramount importance within all of the investment strategies that we manage.

As always, we thank you for your trust and confidence in our abilities to continue to serve you well through your investment in the City National Rochdale Funds.

Sincerely,

Garrett R. D’Alessandro

President and Chief Executive Officer
City National Rochdale Funds

Past performance is no guarantee of future results. Certain shareholders may be subject to the Alternative Minimum Tax (AMT). Federal income tax rules apply to any capital gain distributions.

This information must be preceded or accompanied by a current prospectus. Please read the prospectus carefully before investing.

City National Rochdale Funds do not generally accept investments by non-U.S. persons and may not be available in all states.

Bloomberg Barclays U.S. 1-5 Year Government Bond Index is an index of all investment grade bonds with maturities of more than one year and less than five years. The index is a market value weighted performance benchmark.

Bloomberg Barclays 1-5 Year U.S. Corporate A3 or Higher, 2% Issuer Constrained Index includes U.S. dollar-denominated, investment-grade, fixed-rate, taxable securities issued by industrial, utility, and financial companies, with maturities between one and five years.

S&P Municipal Yield Index is an unmanaged index which measures the performance of high-yield and investment-grade municipal bonds with weights determined by credit rating.

The S&P 500 Index is a market capitalization value weighted composite index of 500 large capitalization U.S. companies and reflects the reinvestment of dividends.

Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market.

Citigroup High Yield Market Capped Index is a U.S. Dollar-denominated index which measures the performance of high-yield debt issued by corporations domiciled in the United States or Canada. Recognized as a broad measure of the North American high-yield market amongst all Citigroup's fixed income indices, it includes cashpay and deferred-interest securities. All the bonds are publically placed, have a fixed coupon, and are non-convertible. Bonds issued under Rule 144A are included in their unregistered form.

Bloomberg Barclays Intermediate U.S. Government/Credit Index consists of publicly issued, dollar-denominated U.S. Government, agency, or investment grade corporate fixed income securities with maturities from one to ten years. The comparative market index is not directly investable and is not adjusted to reflect expenses that the SEC requires to be reflected in the fund’s performance.

Credit Suisse Leveraged Loan Index is designed to mirror the investible universe of the U.S.-denominated leverage loan market.

Bloomberg Barclays Intermediate-Short California Municipal Bond Index measures the performance of California municipal bonds.

CITY NATIONAL ROCHDALE FUNDS | PAGE 3

GOVERNMENT BOND FUND – CNBIX

The Servicing Class Shares of the Fund posted a return of 0.00% for Q3, which slightly underperformed the Bloomberg Barclays U.S. 1-5 Year Government Bond Index’s 0.06% return. Calendar year to date, as of September 30, 2018, the Fund is underperforming the benchmark’s return of -0.21% by 26 basis points with a return of -0.47%. For the fiscal year ended September 30, 2018, the Fund has returned -0.98% and the benchmark has delivered a return of -0.61%. YTD performance has been challenged due to yield differential compared to the benchmark. As of the most recent quarter, the portfolio has a lower duration positioning relative to the benchmark (which has been a positive contributor towards the Fund’s performance). Floating rate note allocations have been a positive contributor as well. Due to its capital preservation style, consistent performance since inception, and the high credit quality of its holdings, we believe the Fund is an attractive investment in a conservative space.

CORPORATE BOND FUND – CNCIX

The Servicing Class Shares of the Fund posted a return of 0.55% for Q3, slightly underperforming the Bloomberg Barclays 1-5 Year U.S Corporate A3 or Higher U.S. Corporate Index’s return of 0.61%. Calendar year to date, as of September 30, 2018, the Fund is underperforming its benchmark by 26 basis points (-0.17% for the Fund versus 0.09% for the benchmark). For the fiscal year ended September 30, 2018, the Fund has underperformed its benchmark’s return by 17 basis points (-0.22% for the Fund versus -0.05% for the benchmark). The Fund’s shorter duration and exposure to asset-backed securities, repurchase agreements, and floating rate corporate bonds have added to the Fund’s performance. An opportunistic allocation to taxable municipal bonds detracted from the Fund’s performance, given purchase timing. The ongoing push to move "up in credit quality" and diversify away from plain vanilla corporate bonds is serving the Fund’s returns well, as some of that overweight allocation has been reinvested in asset-backed securities and taxable muni bonds, which tend to exhibit similar returns and less volatility with higher credit ratings. In addition to adding non-corporate exposure to the strategy, we have also increased our allocation to corporate bonds with floating rate coupons, which exhibit less interest rate sensitivity and higher coupons as short-term rates increase. Looking ahead, we will continue to favor higher-quality corporate names, floating rate corporate bonds, structured products, and taxable municipal bonds. This diversification we believe should allow the Fund to maintain a high level of income while reducing return volatility.

CALIFORNIA TAX EXEMPT BOND FUND – CNTIX

The Servicing Class Shares of the Fund posted a return of -0.18% for Q3, slightly underperforming the Bloomberg Barclays Intermediate-Short California Municipal Bond Index’s return of -0.10%. Calendar year to date, as of September 30, 2018, the Fund returned -0.32% versus the benchmark return of 0.34%. For the fiscal year ended September 30, 2018, the Fund returned -0.53%, underperforming the benchmark’s return of -0.07%. For the majority of the year, the Fund’s duration was slightly less than that of the benchmark. This has proved beneficial for the Fund, as rates have risen. The Fund has maintained between 5% and 10% in cash equivalents that have seen yields rise steadily as the Fed has increased short-term rates.

MUNICIPAL HIGH INCOME BOND FUND – CNRMX

The Servicing Class Shares of the Fund posted a return of -0.18% for Q3, underperforming the S&P Municipal Yield Index benchmark’s return of 1.07%. Calendar year to date, as of September 30, 2018, the Fund’s return of 0.47% underperformed the benchmark’s return of 5.44%. For the fiscal year ended September 30, 2018, the Fund returned 1.89%, lagging the benchmark’s return of 5.28%. The lag in the Fund’s performance is partly due to Puerto Rico bonds rising in price due to a belief that the outlook on the island is improving. Muni High Yield credit remains strong. Defaults are down from the past few years and credit fundamentals are stable. New issue supply is down year-over-year (15% YTD lower supply). Demand has been steady through the year with positive fund flows YTD, though recently there has been weaker demand with rising rates. In this environment, we continue to be highly selective in terms of yield and credit quality. The Fund continues to focus on providing a high level of tax-exempt income through high levels of diversification and a highly disciplined credit approach.

CITY NATIONAL ROCHDALE FUNDS | PAGE 4

HIGH YIELD BOND FUND – CHYIX

The Servicing Class Shares of the Fund posted a return of 1.74% for Q3, lagging the Citigroup High Yield Market Capped Index’s return of 2.36%. Calendar year to date, as of September 30, 2018, the Fund’s return of 0.78% is trailing the benchmark’s return of 2.70%. For the fiscal year ended September 30, 2018, the Servicing Class Shares of the Fund returned 1.65%, underperforming the benchmark’s return of 3.24%. For the month of September, the strategy slightly underperformed the benchmark (0.41% versus the benchmark’s 0.59%). The Fund underperformed its benchmark in nearly all situations because of asset class exposure and risk weights. As of September 30, 2018, the Fund had 91% exposure to high yield bonds and 9% exposure to higher quality assets, such as bank loans (5%) and cash (2%). The manager has maintained a similar average credit quality of the overall portfolio over the course of the last year relative to the benchmark. Similar credit risk, with lower interest rate risk from bank loan exposure is intended to help insulate against elevated volatility that has affected credit markets over the past few years. The Fund’s allocation to bank loans has also been a constructive hedge against downside risk, as senior secured paper has performed relatively well during periods of market stress (as evidenced by loans having outperformed high yield bonds over the past year).

INTERMEDIATE FIXED INCOME FUND – RIMCX

The Class N Shares of the Fund posted a return of 0.31% for Q3, outperforming the Bloomberg Barclays Intermediate U.S. Government/Credit Index’s return of 0.06%. Calendar year to date, as of September 30, 2018, the Fund is outperforming the benchmark’s return of -1.85% by 84 basis points with a return of -1.01%. For the fiscal year ended September 30, 2018, the Class N Shares of the Fund returned -1.18%, underperforming the benchmark’s return of -0.96% by 19 basis points. The Fund has outperformed its benchmark YTD, due primarily to its shorter duration and lack of exposure to U.S. Treasuries, which have declined 1.2% over the period. Structured products like asset-backed securities and floating rate corporate bonds added to relative performance, while government-related securities (i.e., agency obligations and taxable municipal bonds) and the Fund’s overweight allocation to corporate bonds detracted from the Fund’s performance. The ongoing push to move "up in credit quality" and diversify away from plain vanilla corporate bonds is serving the Fund’s returns well, as approximately 8% of that overweight allocation has been reinvested in asset-backed securities and taxable municipal bonds, which tend to exhibit similar returns and less volatility. In addition to adding non-corporate exposure to the strategy, we have also increased the Fund’s allocation to bonds with floating rate coupons roughly 13% of the portfolio, which exhibit less interest rate sensitivity and higher coupons as short-term rates increase. Looking ahead, we will continue to favor higher-quality names, floating rate corporate bonds, structured products, and taxable municipal bonds. This diversification should allow the Fund to maintain a high level of income while reducing return volatility.

FIXED INCOME OPPORTUNITIES FUND – RIMOX

The Fund posted a return of 1.36% for Q3, outperforming the Bloomberg Barclays Aggregate Bond Index’s return of 0.02%. Calendar year to date, as of September 30, 2018, the Fund is outperforming the Bloomberg Barclays U.S. Aggregate Bond Index's return of -1.60% by 176 basis points with a return of 0.16%. For the fiscal year ended September 30, 2018, the Fund returned 1.09%, outperforming the Bloomberg Barclays Aggregate Bond Index's return of -1.22% by 231 basis points. Emerging market (“EM”) debt is surely the main story here and the Fund’s managers point to a small segment of the market (i.e. Turkey) causing large amounts of damage, despite positive news in many segments of EM. The 10% exposure to EM foreign currencies has had a very large impact on Fund performance this year, while underlying debt remains stable in the EM local currency sovereign. The currency impact on the broad EM market has been approximately -8.5% YTD. US high yield debt and all flavors of loans (collateralized loan obligations, US leveraged loans and EU leveraged loans) have performed well and helped to offset the year to date negative returns out of the Fund’s EM allocation. RIMOX continues to generate materially more income than core fixed strategies (Fund’s 30 Day Sec yield = 5.68%). Principal volatility is expected to continue in the near to intermediate term.

CITY NATIONAL ROCHDALE FUNDS | PAGE 5

This material represents the managers’ assessment of the portfolios and market environment at a specific point in time and should not be relied upon by the reader as research or investment advice.

Performance data quoted represents past performance and does not guarantee similar future results. The investment performance and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost, and current performance may be lower or higher than the performance quoted. For performance data current to the most recent month end, please call 1-888-889-0799.

Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index.

Mutual fund investing involves risk, including loss of principal. Bonds and bond funds are subject to interest rate risk and will decline in value as interest rates rise. High yield bonds involve greater risks of default or downgrade and are more volatile than investment grade securities, due to the speculative nature of their investments.

The California Tax Exempt Bond Fund invests primarily in California securities and may be more volatile and susceptible to a single adverse economic or regulatory occurrence affecting those obligations than a fund investing in obligations of a number of states.

The credit quality breakdown depicts the credit quality ratings of the Fund’s portfolio securities that are rated by one or both of two major nationally recognized statistical rating organizations (“NRSROs”). The two NRSROs currently utilized for this purpose are Standard & Poor’s (S&P) and Moody’s. When a bond is rated by S&P that rating is utilized. If it is not rated by S&P, the Moody’s rating is utilized. When a security is rated by neither, it is classified as “Not Rated”. For bonds, these credit quality ratings are shown without regard to gradations within a given rating category. For example, securities rated “AA-” or “AA+” have been included in the “AA” rated category. Long term ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest).

Duration is a measure of a bond's sensitivity to interest rate changes. The higher the bond's duration, the greater its sensitivity to the change.

CITY NATIONAL ROCHDALE FUNDS | PAGE 6

The Fund seeks to provide current income (as the primary component of a total return intermediate duration strategy) by investing primarily in U.S. Government securities.

Comparison of Change in the Value of a $10,000 Investment in the City National Rochdale Government Bond Fund, Servicing Class Shares, versus the Bloomberg Barclays U.S. 1-5 Year Government Bond Index⁽¹⁾

Past performance is no indication of future performance.

The Fund’s comparative benchmark does not include the annual operating expenses incurred by the Fund. Please note that one cannot invest directly in an unmanaged index.

CITY NATIONAL ROCHDALE FUNDS | PAGE 7

The Fund seeks to provide current income (as the primary component of a total return intermediate duration strategy) by investing in a diversified portfolio of fixed income securities.

Comparison of Change in the Value of a $10,000 Investment in the City National Rochdale Corporate Bond Fund, Servicing Class Shares, versus the Bloomberg Barclays 1-5 Year U.S. Corporate A3 or Higher, 2% Issuer Constrained Index⁽¹⁾

Past performance is no indication of future performance.

The Fund’s comparative benchmark does not include the annual operating expenses incurred by the Fund. Please note that one cannot invest directly in an unmanaged index.

CITY NATIONAL ROCHDALE FUNDS | PAGE 8

The Fund seeks to provide current income exempt from federal and California state income tax (as the primary component of a total return strategy) by investing primarily in California municipal bonds.

Comparison of Change in the Value of a $10,000 Investment in the City National Rochdale California Tax Exempt Bond Fund, Servicing Class Shares, versus the Bloomberg Barclays California Intermediate-Short Municipal Index⁽¹⁾

Past performance is no indication of future performance.

The Fund’s comparative benchmark does not include the annual operating expenses incurred by the Fund. Please note that one cannot invest directly in an unmanaged index.

CITY NATIONAL ROCHDALE FUNDS | PAGE 9

The Fund seeks to provide a high level of current income that is not subject to federal income tax.

Comparison of Change in the Value of a $10,000 Investment in the City National Rochdale Municipal High Income Fund, Servicing Class Shares, versus the Bloomberg Barclays High Yield Municipal Index⁽¹⁾ and the S&P Municipal Yield Index⁽²⁾

Past performance is no indication of future performance.

The Fund’s comparative benchmark does not include the annual operating expenses incurred by the Fund. Please note that one cannot invest directly in an unmanaged index.

CITY NATIONAL ROCHDALE FUNDS | PAGE 10

The Fund seeks to maximize total return by investing primarily in fixed income securities rated below investment grade (i.e., "junk bonds").

Comparison of Change in the Value of a $10,000 Investment in the City National Rochdale High Yield Bond Fund, Servicing Class Shares, versus the Citigroup High Yield Market Capped Index⁽¹⁾

Past performance is no indication of future performance.

The Fund’s comparative benchmark does not include the annual operating expenses incurred by the Fund. Please note that one cannot invest directly in an unmanaged index.

CITY NATIONAL ROCHDALE FUNDS | PAGE 11

The Fund seeks current income and, to the extent consistent with this goal, capital appreciation.

Comparison of Change in the Value of a $10,000 Investment in the City National Rochdale Intermediate Fixed Income Fund, Class N Shares, versus the Bloomberg Barclays Intermediate U.S. Government/Credit Index⁽¹⁾

Past performance is no indication of future performance.

The Fund’s comparative benchmark does not include the annual operating expenses incurred by the Fund. Please note that one cannot invest directly in an unmanaged index.

CITY NATIONAL ROCHDALE FUNDS | PAGE 12

The Fund seeks a high level of current income.

Comparison of Change in the Value of a $10,000 Investment in the City National Rochdale Fixed Income Opportunities Fund, Class N Shares, versus the Credit Suisse Leveraged Loan Index, the Bloomberg Barclays U.S. Aggregate Bond Index and the Bloomberg Barclays U.S. Corporate High Yield Bond Index⁽¹⁾

Past performance is no indication of future performance.

The Fund’s comparative benchmarks do not include the annual operating expenses incurred by the Fund. Please note that one cannot invest directly in an unmanaged index.

CITY NATIONAL ROCHDALE FUNDS | PAGE 13

DIVIDEND & INCOME FUND – RIMHX

The Fund posted a return of 3.58% in Q3 2018, outperforming the return (1.82%) of the Fund’s blended benchmark (made up of 60% Dow Jones Select Dividend Index (DJDVP), 25% ICE BofAML Core Fixed Rate Index, and 15% MSCI U.S. REIT Index) and the 3.00% return of DVY. After a difficult period through the end of April, the Fund’s strategy has performed well, up 3.3% through October 15th compared to 1.2% for the blended benchmark (and 1.7% for just the DJDVP component). The S&P 500 Value Index was up 2.3% for this period. The Fund’s strategy has returned a Compound Annual Growth Rate of 8.5% for 3 years, 8.3% for 5 years, 10.6% for 10 years, and 9.9% for 15 years. The Fund’s strategy focus we believe puts it in a good position to perform well in down markets by providing income during volatile environments. The Fund’s current distribution yield of roughly 4.5% with actual dividend growth of 7.2% year-over-year. For the fiscal year ended September 30, 2018, the Class N Shares of the Fund generated a 3.10% return, underperforming the benchmark's return of 7.08%.

U.S. Core Equity Fund – CNRUX

The Fund posted a return of 6.12% for Q3, underperforming the S&P 500 Index’s return of 7.71%. Calendar year to date, as of September 30, 2018, the Fund is underperforming the S&P 500 Index’s return of 10.56% by 75 basis points with a return of 9.81%. For the fiscal year ended September 30, 2018, the Institutional Share Class of the Fund returned 17.71%, slightly underperforming the S&P 500 Index’s return of 17.91% by 20 basis points. Following a very strong first half to 2018, the Fund’s strategy lagged during the third quarter. Stock selection hurt the Fund’s relative performance – as did not owning AMZN and NFLX, which detracted 150 basis. We believe the Fund’s portfolio is well positioned for the period of macro uncertainty due to the fundamental strength of the portfolio. Reflecting the length of the bull market, our risk metrics are conservative with a strong tilt towards investing in high quality companies.

This material represents the managers’ assessment of the portfolios and market environment at a specific point in time and should not be relied upon by the reader as research or investment advice.

As of September 30, 2018, the total return for City National Rochdale Dividend & Income Fund was 3.10% (1 year), 7.78% (5 year annualized), and 8.50% (10 years annualized). The gross expense ratio for the City National Rochdale Dividend & Income Fund is 1.15%.

Performance data quoted represents past performance and does not guarantee similar future results. The investment performance and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost, and current performance may be lower or higher than the performance quoted. For performance data current to the most recent month end, please call 1-888-889-0799.

Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index.

Mutual fund investing involves risk including loss of principal. The securities of mid-cap companies may have greater price volatility and less liquidity than the securities of larger capitalized companies.

Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer than one year (distribution yield is the weighted average of the income yields of the underlying investments in the Fund).

CITY NATIONAL ROCHDALE FUNDS | PAGE 14

The Fund seeks to provide significant income and, as a secondary focus, long-term capital appreciation.

Comparison of Change in the Value of a $10,000 Investment in the City National Rochdale Dividend & Income Fund, Class N Shares, versus the S&P 500 Index and the 60/25/15 Hybrid of the following 3 Indexes: Dow Jones U.S. Select Dividend Index, BofA ML Core Fixed Rate Preferred Securities Index and MSCI U.S. REIT Index⁽¹⁾

Past performance is no indication of future performance.

The Fund’s comparative benchmarks do not include the annual operating expenses incurred by the Fund. Please note that one cannot invest directly in an unmanaged index.

CITY NATIONAL ROCHDALE FUNDS | PAGE 15

The Fund seeks to provide long-term capital appreciation.

Comparison of Change in the Value of a $10,000 Investment in the City National Rochdale U.S. Core Equity Fund, Servicing Class Shares, versus the S&P 500 Index⁽¹⁾

Past performance is no indication of future performance.

The Fund’s comparative benchmark does not include the annual operating expenses incurred by the Fund. Please note that one cannot invest directly in an unmanaged index.

CITY NATIONAL ROCHDALE FUNDS | PAGE 16

See accompanying notes to financial statements.

CITY NATIONAL ROCHDALE FUNDS | PAGE 17

Percentages are based on Net Assets of $5,008,045 (000).

DN — Discount Note

FAMC — Federal Agriculture Mortgage Corporation

FFCB — Federal Farm Credit Bank

FHLB — Federal Home Loan Bank

ICE — Intercontinental Exchange

LIBOR — London Interbank Offered Rates

MTN — Medium Term Note

VAR — Variable

USD — U.S. Dollar

The following is a list of the inputs used as of September 30, 2018, in valuing the Fund’s investments carried at value (000):

For the year ended September 30, 2018, there have been no transfers between any of the fair value hierarchy levels. Transfers between Levels are recognized at period end.

Amounts designated as “—” are either $0 or have been rounded to $0.

For more information on valuation inputs, see Note 2 – Significant Accounting Policies in the Notes to Financial Statements.

See accompanying notes to financial statements.

CITY NATIONAL ROCHDALE FUNDS | PAGE 18

Percentages are based on Net Assets of $55,730 (000).

ARM — Adjustable Rate Mortgage

Cl — Class

FFCB — Federal Farm Credit Bank

FHLB — Federal Home Loan Bank

FHLMC — Federal Home Loan Mortgage Corporation

FNMA — Federal National Mortgage Association

See accompanying notes to financial statements.

CITY NATIONAL ROCHDALE FUNDS | PAGE 19

GNMA — Government National Mortgage Association

ICE — Intercontinental Exchange

LIBOR — London Interbank Offered Rates

REMIC — Real Estate Mortgage Investment Conduit

Ser — Series

USD — United States Dollar

VAR — Variable

The following is a list of the inputs used as of September 30, 2018 in valuing the Fund’s investments carried at value (000):

For the year ended September 30, 2018, there have been no transfers between any of the fair value hierarchy levels. Transfers between Levels are recognized at period end.

Amounts designated as “—” are $0 or have been rounded to $0.

For more information on valuation inputs, see Note 2 – Significant Accounting Policies in the Note to Financial Statements.

See accompanying notes to financial statements.

CITY NATIONAL ROCHDALE FUNDS | PAGE 20

See accompanying notes to financial statements.

CITY NATIONAL ROCHDALE FUNDS | PAGE 21

See accompanying notes to financial statements.

CITY NATIONAL ROCHDALE FUNDS | PAGE 22

See accompanying notes to financial statements.

CITY NATIONAL ROCHDALE FUNDS | PAGE 23

Percentages are based on Net Assets of $139,597 (000).

Cl — Class

GO — General Obligation

ICE— Intercontinental Exchange

LIBOR — London Interbank Offered Rates

MTN — Medium Term Note

RB — Revenue Bond

Ser — Series

USD — United States Dollar

VAR — Variable Rate

The following is a list of the inputs used as of September 30, 2018 in valuing the Fund’s investments carried at value (000):