City National Rochdale High Yield Alternative Strategies Master Fund LLC (the "Master Fund") is a closed-end, non-diversified management investment company that was organized as a limited liability company under the laws of the State of Delaware on September 11, 2006, and serves as a master fund in a master feeder structure. City National Rochdale High Yield Alternative Strategies Fund LLC and City National Rochdale High Yield Alternative Strategies Fund TEI LLC (the “Feeder Funds”) serve as the feeder funds in the master feeder structure. Interests in the Master Fund are issued solely in private placement transactions that do not involve any "public offering" within the meaning of Section 4(a)(2) of the Securities Act of 1933, as amended (the "1933 Act"). Investments in the Master Fund may be made only by U.S. and foreign investment companies, common or commingled trust funds, organizations or trusts described in Sections 401(a) or 501(a) of the Internal Revenue Code of 1986, as amended, or similar organizations or entities that are "accredited investors" within the meaning of Regulation D under the 1933 Act. The Master Fund is an investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”).
City National Rochdale, LLC (the “Manager” or "Adviser") is the investment adviser to the Master Fund. City National Rochdale, LLC is a subsidiary of City National Bank, and each are wholly-owned subsidiaries of RBC USA Holdco Corporation, a wholly-owned indirect subsidiary of Royal Bank of Canada.
The Master Fund seeks to achieve its objective by investing substantially all of its assets in the securities of privately placed investment vehicles, typically referred to as hedge funds (“Investment Funds”) that pursue a variety of high yield income generating strategies.
The Master Fund’s investment objective is to generate income from investments in higher yielding investments with lower credit quality and higher volatility than investment grade fixed income securities. “Lower credit quality” in this objective means investments rated below BBB, and “higher volatility” means the fluctuations in principal will be greater than the fluctuations in price associated with investment grade fixed income securities. Under normal circumstances, at least 80% of the Master Fund's total assets will be invested either directly, or indirectly in Investment Funds, which invest in a variety of high yield income generating investments. The Investment Funds themselves are non-income producing.
City National Rochdale High Yield Alternative Strategies Master Fund LLC
Notes to Financial Statements
March 31, 2019
| 2. | Significant Accounting Policies |
The following is a summary of significant accounting policies followed by the Master Fund.
Basis of Presentation and Use of Estimates
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). The Fund is an investment company and follows accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “Financial Services-Investment Companies”. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Investments Valuation
Investments in Investment Funds are stated and recorded at fair value, as determined in good faith by the Fair Value Committee in accordance with US GAAP using the net asset value (“NAV”) as reported by the management of each respective Investment Fund. FASB guidance provides for the use of NAV as a “practical expedient” for estimating fair value of alternative investments which (a) do not have a readily determinable fair value, and (b) either have the attributes of an investment company or prepare their financial statements consistent with the measurement principles of an investment company. Such values generally represent the Master Fund's proportionate share of the net assets of the Investment Funds as reported by the Investment Fund managers. Accordingly, the value of the investments in Investment Funds is generally increased by additional contributions to the Investment Funds and the Master Fund's share of net earnings from the Investment Funds, and decreased by distributions from the Investment Funds and the Master Fund's share of net losses from the Investment Funds.
City National Rochdale High Yield Alternative Strategies Master Fund LLC
Notes to Financial Statements
March 31, 2019
| 2. | Significant Accounting Policies (continued) |
Investment Valuations (continued)
The Adviser reviews the details of the reported information obtained from the Investment Fund managers and considers: (i) the measurement date of the NAVs provided, (ii) the basis of accounting, and (iii) in instances where the basis of accounting is other than fair value, fair valuation information provided by the Investment Fund managers. The Adviser may make adjustments to the NAVs of various Investment Funds to obtain the best estimate of fair value, which is consistent with the measurement principles of an investment company. Any determinations made by the Adviser will be reviewed and approved by the Fair-Value Committee, which has been designated by the Board to make all necessary fair value determinations.
The Master Fund has not maintained any positions in derivative instruments or directly engaged in hedging activities.
Fair Value Measurements
The Master Fund follows fair valuation accounting standards which establish an authoritative definition of fair value and set out a hierarchy for measuring fair value. These standards require additional disclosures about the various inputs and valuation techniques used to develop the measurements of fair value, and a discussion of changes in valuation techniques and related inputs during the year. These standards define fair value as 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. The fair value hierarchy is organized into three levels based upon the assumptions (referred to as “inputs”) used in pricing the asset or liability. These standards state that “observable inputs” reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from independent sources, and “unobservable inputs” reflect an entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. These inputs are summarized in the three broad levels listed below:
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the Master Fund has the ability to access.
Level 2 - Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
City National Rochdale High Yield Alternative Strategies Master Fund LLC
Notes to Financial Statements
March 31, 2019
2. Significant Accounting Policies (continued)
Fair Value Measurements (continued)
Level 3 - Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Master Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.
Investments measured using the NAV as a practical expedient are not classified within the fair value hierarchy.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. See Note 3 – Investments.
Investment Income Recognition
Purchases and sales of securities are recorded on a trade-date basis. Realized gains and losses on Investment Funds are recognized using the specific identification method. Interest income is recorded on the accrual basis and dividends are recorded on the ex-dividend date. Realized and unrealized gains and losses are included in the determination of income.
Fund Expenses
The expenses of the Master Fund include, but are not limited to, the following: legal fees; accounting and auditing fees; custodial fees; management fees; costs of computing the Master Fund's NAV; costs of insurance; registration expenses; due diligence expenses; travel and related expenses; expenses of meetings of the Board and officers; all expenses with respect to communications to members; and other types of expenses as may be approved from time to time by the Board.
Income Taxes
The Master Fund’s tax year end is December 31. The Master Fund is treated as a partnership for Federal income tax purposes. Each member is responsible for the tax liability or benefit relating to such member’s distributive share of taxable income or loss. Accordingly, no provision for Federal income taxes is reflected in the accompanying financial statements.
The Master Fund has adopted authoritative guidance on uncertain tax positions. The Master Fund recognizes the effect of tax positions when they are more likely than not of being sustained. Management is not aware of any exposure to uncertain tax positions that could require an accrual or which could affect the Master Fund’s liquidity or future cash flows. As of March 31, 2019, the Master Fund’s tax years 2016 through 2018 remain open and subject to examination by relevant taxing authorities.
City National Rochdale High Yield Alternative Strategies Master Fund LLC
Notes to Financial Statements
March 31, 2019
| 2. | Significant Accounting Policies (continued) |
Subsequent Events
The Master Fund has adopted financial reporting rules regarding subsequent events, which requires an entity to recognize in its financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet. Management has evaluated the Master Fund’s related events and transactions through the date the financial statements were available to be issued and determined that there were no significant subsequent events that would require adjustment to or additional disclosure in these financial statements.
Capital Accounts
Net profits or net losses for each month are allocated to the capital account of each investor (each, a “Member”) as of the last day of each month in accordance with Member’s respective investment percentage of the Master Fund. Net profits or net losses are measured as the net change in the value of the net assets of the Master Fund during a fiscal period, before giving effect to any repurchases of interests in the Master Fund, and excluding the amount of any items to be allocated to the capital accounts of the Members of the Master Fund, other than in accordance with the Members' respective investment percentages.
Prior to the end of each quarter, the Master Fund receives Member contributions with an effective subscription date of the first day of the following month.
The Master Fund, in turn, makes contributions to certain Investment Funds, which have effective subscription dates of the first day of the following month. These amounts are reported as "contributions received in advance" and "investments made in advance", respectively.
City National Rochdale High Yield Alternative Strategies Master Fund LLC
Notes to Financial Statements
March 31, 2019
The following are the classes of investments grouped by the fair value hierarchy for those investments measured at fair value on a recurring basis at March 31, 2019:
| | | Quoted Prices in Active Markets for Identical Assets | | | Significant Other Observable Inputs | | | Significant Unobservable Inputs | | | | |
Description | | (Level 1) | | | (Level 2) | | | (Level 3) | | | Total | |
| | | | | | | | | | | | | |
| Alternative Investment Funds ^ | | $ | - | | | $ | - | | | $ | - | | | $ | 27,248,730 | |
| Short-Term Investment - Money Market Fund | | | 1,972,702 | | | | - | | | | - | | | | 1,972,702 | |
| Total Investments | | $ | 1,972,702 | | | $ | - | | | $ | - | | | $ | 29,221,432 | |
| | | | | | | | | | | | | | | | | |
^ Alternative Investment Funds were valued using the practical expedient and have not been classified in the fair value hierarchy.
The Fund did not invest in any Level 3 securities and there were no transfers into or out of Level 1, Level 2 or Level 3 fair value measurements at March 31, 2019, as compared to their classification from the previous annual report.
The following table presents additional information for investments measured using the NAV practical expedient:
Alternative Investment Funds | | Fair Value at March 31, 2019 | | | Unfunded Commitments | | | Redemption Frequency | | | Redemption Notice Period | |
| | | | | | | | | | | | | |
| Structured Credit – CLO | | $ | 5,041,949 | | | | - | | | | * | | | | * | |
| Structured Credit – CLO | | | 14,169,353 | | | | - | | |
| Quarterly | | | | 90 | |
| Structured Credit – CLO | | | 7,442,176 | | | | - | | | | **
|
| | | ** |
|
| Liquidating Positions | | | 595,252 | | | | - | | | | *** |
| | | *** |
|
| Total | | $ | 27,248,730 | | | $ | - | | | | | | | | | |
* This investment is long-term and illiquid.
** SEIX CLO Management LP has a five year re-investment period and a subsequent wind down. This investment is long-term and illiquid.
*** A side pocket investment has been established for GoldenTree Partners LP. This investment is long-term and illiquid.
City National Rochdale High Yield Alternative Strategies Master Fund LLC
Notes to Financial Statements
March 31, 2019
4. Commitments and Other Related Party Transactions
Management Fees
Under the supervision of the Master Fund’s Board and pursuant to an investment management agreement (“Investment Management Agreement”), the Manager, an investment adviser registered under the Investment Advisers Act of 1940, as amended, serves as the investment manager for the Master Fund. The Manager is authorized, subject to the approval of the Master Fund’s Board, to retain one or more other organizations, including its affiliates, to provide any or all of the services required to be provided by the Manager to the Master Fund or to assist in providing those services.
The Master Fund paid the Manager an investment management fee at an annual rate equal to 0.75% of the Master Fund’s net assets, computed at each month-end, including assets attributable to the Manager (or its affiliates) and before giving effect to any repurchases by the Master Fund of Member interests. The investment management fee is accrued monthly and paid to the Manager out of the Master Fund’s assets.
Administration Fee
U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“the Administrator”) acts as the administrator for the Master Fund and the Feeder Funds (collectively, the “Funds”) under an administration agreement. The Administrator prepares various federal and state regulatory filings, reports and returns for the Funds; prepares reports and materials to be supplied to the Members of the Feeder Funds; monitors the activities of the Funds’ custodian, transfer agent and accountants; coordinates the preparation and payment of the Funds’ expenses and reviews the Funds’ expense accruals. For its services, the Administrator receives a monthly fee from the Master Fund at an annual rate of 0.12% for the first $150 million, 0.10% for the next $150 million and 0.08% thereafter of average net assets, with a minimum annual fee of $100,000.
Expense Reimbursement
The Manager has contractually agreed to limit the current operating expenses of each of the Feeder Funds, including the operating expenses allocated to each of the Feeder Funds by the Master Fund, to an annual rate, expressed as a percentage of each Fund’s average annual net assets, of 1.75%. To the extent that the Manager reimburses or absorbs fees and expenses, it may seek payment of such amounts for three years after the year in which the expenses were reimbursed or absorbed. A Feeder Fund will make no such payment, however, if its total annual operating expenses exceed the expense limits in effect at the time the expenses are to be reimbursed or at the time such payments are proposed.
City National Rochdale High Yield Alternative Strategies Master Fund LLC
Notes to Financial Statements
March 31, 2019
| 4. | Commitments and Other Related Party Transactions (continued) |
The following is a schedule of when fees may be recouped by the Manager with respect to the Feeder Funds:
City National Rochdale High Yield Alternative Strategies Fund LLC | | | City National Rochdale High Yield Alternative Strategies Fund TEI LLC | | Expiration |
| $ | 33,547 | | | $ | 38,225 | | March 31, 2020 |
| | 47,504 47,947 | | | | 57,605 50,826 | | March 31, 2021 March 31, 2022 |
| $ | 128,998 | | | $ | 146,656 | | |
| | | | | | | | |
No accrual has been made for such contingent liability because of the uncertainty of the reimbursement from the Feeder Funds.
5. Investment Risks and Uncertainties
Alternative investments consist of non-traditional, not readily marketable investments, some of which may be structured as offshore limited partnerships, venture capital funds, hedge funds, private equity funds and common trust funds. The underlying investments of such funds, whether invested in stock or other securities, are generally not currently traded in a public market and typically are subject to restrictions on resale. Values determined by investment managers and general partners of underlying securities that are thinly traded or not traded in an active market may be based on historical cost, appraisals, a review of the investees’ financial results, financial condition and prospects, together with comparisons to similar companies for which quoted market prices are available, or other estimates that require varying degrees of judgment.
Investments are carried at fair value provided by the respective alternative investment’s management. Because of the inherent uncertainty of valuations, the estimated fair values may differ significantly from the values that would have been used had a ready market for such investments existed or had such investments been liquidated, and those differences could be material.
City National Rochdale High Yield Alternative Strategies Master Fund LLC
Notes to Financial Statements
March 31, 2019
6. Concentration, Liquidity and Off-Balance Sheet Risk
The Master Fund invests primarily in Investment Funds that are not registered under the 1940 Act and that invest in and actively trade securities and other financial instruments using different strategies and investment techniques, including leverage, which may involve significant risks. These Investment Funds may invest a high percentage of their assets in specific sectors of the market in order to achieve a potentially greater investment return. As a result, the Investment Funds may be more susceptible to economic, political, and regulatory developments in a particular sector of the market, positive or negative, and may experience increased volatility.
Various risks are also associated with an investment in the Master Fund, including risks relating to the multi-manager structure of the Master Fund, risks relating to compensation arrangements and risks relating to limited liquidity, as described below.
Redemption restrictions exist for Investment Funds whereby Investment Fund managers may suspend redemptions either in their sole discretion or for other reasons. Such reasons include the magnitude of redemptions requested, portfolio valuation issues or market conditions.
Redemptions are currently restricted for three Investment Funds with a fair value of $13,079,377 at March 31, 2019, as noted in the Schedule of Investments.
In the normal course of business, the Investment Funds in which the Master Fund invests trade various financial instruments and enter into various investment activities with off-balance sheet risk. These include, but are not limited to, short selling activities, writing option contracts, contracts for differences, and interest rate, credit default and total return equity swap contracts. The Master Fund's risk of loss in these Investment Funds is limited to the value of its own investments reported in the financial statements of the Master Fund. The Master Fund itself does not invest directly in securities with off-balance sheet risk.
7. Investment Transactions
For the year ended March 31, 2019 (excluding short-term securities), the aggregate sales of investments were $5,115,080.
City National Rochdale High Yield Alternative Strategies Master Fund LLC
Notes to Financial Statements
March 31, 2019
8. New Accounting Pronouncements
In August 2018, FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The primary focus of ASU 2018-13 is to improve the effectiveness of the disclosure requirements for fair value measurements. The changes affect all companies that are required to include fair value measurement disclosures. In general, the amendments in ASU 2018-13 are effective for all entities for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019. An entity is permitted to early adopt the removed or modified disclosures upon the issuance of ASU 2018-13 and may delay adoption of the additional disclosures, which are required for public companies only, until their effective date. Management is currently evaluating the impact the changes will have on the Feeder Funds’ and the Master Fund’s financial statements and disclosures.
| | City National Rochdale High Yield Alternative Strategies Master Fund LLC | |
| | | |
| | Financial Highlights | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | |
| | | | March 31, 2019 | | | March 31, 2018 | | | March 31, 2017 | | | March 31, 2016 | | | March 31, 2015 | |
| | | | | | | | | | | | | | | | | |
| | TOTAL RETURN - NET | | | (0.50 | %) | | | 9.41 | % | | | 13.53 | % | | | (6.80 | %) | | | 3.39 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| | RATIOS/SUPPLEMENTAL DATA | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | Net Assets, end of period ($000's) | | $ | 29,084 | | | $ | 35,148 | | | $ | 38,378 | | | $ | 34,641 | | | $ | 36,798 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | Portfolio Turnover | | | 0.00 | % | | | 31.79 | % | | | 31.93 | % | | | 0.15 | % | | | 20.10 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| | Ratio of Net Investment | | | | | | | | | | | | | | | | | | | | |
| | Loss to Average Net Assets | | | (1.35 | %) | | | (1.42 | %) | | | (1.81 | %) | | | (2.01 | %) | | | (1.86 | %) |
| | | | | | | | | | | | | | | | | | | | | | |
| | Ratio of Expenses to | | | | | | | | | | | | | | | | | | | | |
| | Average Net Assets | | | 1.52 | % | | | 1.53 | % | | | 1.86 | % | | | 2.02 | % | | | 1.86 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | Total return is calculated for all Members taken as a whole and an individual Member's return may vary from these Master Fund returns based on the
timing of capital transactions. |
| | | | | | | | | | | | | |
| | Total returns do not include the effect of any sales load. |
| | | | | | | | | | | | | |
| | The ratios of expenses to average net assets do not include expenses of the Investment Funds in which the Master Fund invests. |
| | | | | | | | | | | | | |
| | The expense ratios are calculated for all Members taken as a whole. The computation of such ratios based on the amount of expenses assessed to an
individual Member's capital may vary from these ratios based on the timing of capital transactions. |
| | | | | | | | | | | | | |
| | The ratios above do not include the proportionate share of income or loss from their investments in other funds. |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| The accompanying notes are an integral part of these financial statements. | | | | | | | |
| | | | | | | | | | | | | |
| See Report of Independent Registered Public Accounting Firm. | | | | | | | |
| | | | | | | | | | | | | |
| * * * * * * |
DIRECTORS AND OFFICERS OF THE MASTER FUND
The Directors of the Master Fund, who were elected by the shareholders of the Master Fund, are responsible for the overall management of the Master Fund, including general supervision and review of the investment activities of the Master Fund. The Directors, in turn, elect the officers of the Master Fund, who are responsible for administering the day to day operations of the Master Fund. The current Directors and Officers, their affiliations and principal occupations for the past five years are set forth below. The Statement of Additional Information includes information about the Directors and is available, without charge, by calling 1-866-209-1967.
Independent Board Members
Name, Address, Age | Position with the Master Fund | Term of Office(1) and Length of Time Served | | Principal Occupation for the Past Five Years | # of Funds in Fund Complex(2) Overseen by Board Member | Other Directorships Held by Board Member |
Daniel A. Hanwacker 400 Park Avenue New York, NY 10022 Age: 66 | Director | Since 2013 | | CEO and President, Hanwacker Associates, Inc. (asset management consulting and executive search services) (2001-present). Managing Director - Asset Management, Putnam Lovell Securities (2000-2001). Co-Founding Partner, Constellation Financial Management, Co., LLC (1995-2000). | 17 | |
Jon C. Hunt 400 Park Avenue New York, NY 10022 Age: 67 | Director | Since 2013 | | Retired (March 2013-present). Consultant to Management, Convergent Capital Management, LLC (“CCM”) (July 2012-March 2013). Managing Director and Chief Operating Officer, CCM (1998- June 2012). | 17 | Advisor’s Inner Circle Fund III (February 2014 – present); Winton Series Trust and Winton Diversified Opportunities Fund, Lead Independent Trustee (January 2015 – 2018); Gallery Trust (2016 – present); Schroder Series Trust and Schroder Global Series Trust, Lead Independent Trustee (2017 – present) |
Vernon C. Kozlen 400 Park Avenue New York, NY 10022 Age: 73 | Director Chairman | Since 2007 Since 2016 | | Retired (2007-present). President and Chief Executive Officer, City National Rochdale Funds (2000-2007). Executive Vice President and Director of Asset Management Development, City National Bank “CNB” (1996-2007). Director, Reed, Conner & Birdwell LLC (2000-2007), and Convergent Capital Management, LLC (2003-2007). Chairman of the Board, City National Asset Management, Inc. (2001-2005). Chairman of the Board, City National Securities, Inc. (1999-2005). Director, City National Asset Management, Inc. (2001-2006), and City National Securities, Inc. (1999-2006). | 17 | Windermere Jupiter Fund, LLC (3) |
Jay C. Nadel 400 Park Avenue New York, NY 10022 Age: 60 | Director | Since 2013 | | Financial Services Consultant (2005-present). Executive Vice President, Bank of New York Broker-Dealer and Member of the Operating Committee (2002-2004). Weiss, Peck & Greer, Partner, Managing Director and Chair of the Operations Committee (1986-2001). | 17 | Advisor’s Inner Circle Fund III (2016 – present); Winton Series Trust and Winton Diversified Opportunities Fund (2016 – 2018); Gallery Trust (2016 – present); Schroder Series Trust, Independent Trustee (2017 – present) |
James Wolford 400 Park Avenue New York, NY 10022 Age: 63 | Director | Since 1999 | | Chief Executive Officer of Corinthian Development Company (December 2013 - present). President, Chief Operating Officer and Chief Financial Officer, Thompson National Properties (March 2011-December 2013). Chief Financial Officer, Pacific Office Properties, a real estate investment trust (April 2010-March 2011). Chief Financial Officer, Bixby Land Company, a real estate company (2004-March 2010). Regional Financial Officer, AIMCO, a real estate investment trust (2004). Chief Financial Officer, DBM Group, a direct mail marketing company (2001-2004). Senior Vice President and Chief Operating Officer, Forecast Commercial Real Estate Service, Inc. (2000-2001). Senior Vice President and Chief Financial Officer, Bixby Ranch Company (1985-2000). | 17 | |
Interested Board Member
Andrew S Clare (4) 400 Park Avenue New York, NY 10022 Age: 72 | Director | Since 2013 | Attorney and partner, Loeb & Loeb LLP, a law firm (1972-present). | 17 | None |
| (1) | The Directors serve for terms of office as follows: |
Name of Director
| | |
| Vernon C. Kozlen | December 31, 2020* | |
| James Wolford | March 29, 2023 | |
| Andrew S. Clare | December 31, 2020* | |
| Daniel A. Hanwacker | March 29, 2023 | |
| Jon C. Hunt | March 29, 2023 | |
| Jay C. Nadel | March 29, 2023 | |
* Subject to extension by the Board for up to two years.
| (2) | “Fund complex” is defined as two or more registered investment companies that hold themselves out to investors as related companies or have a common investment adviser or affiliated investment advisers and in this case includes series of City National Rochdale Funds as well as the following registered closed-end funds: City National Rochdale High Yield Alternative Strategies Fund LLC, City National Rochdale High Yield Alternative Strategies Fund TEI LLC, City National Rochdale Structured Claims Fixed Income Fund LLC, City National Rochdale Select Strategies Fund, and City National Rochdale Strategic Credit Fund. |
| (3) | Convergent Wealth Advisors, LLC, which is under common control with CNB, serves as investment adviser to Windermere Jupiter Fund, LLC, which is a private investment fund. |
| (4) | Mr. Clare is an “interested person” of the Trust, as defined in the 1940 Act, by virtue of the provision of significant legal services by him and his law firm to CNB. |
Officers of the Master Fund
Name, Address, Age | | Position(s) with the Master Fund | | Term of Office(1) and Length of Time Served | Principal Occupation for the Past Five Years |
Garrett R. D’Alessandro City National Rochdale, LLC 400 N. Roxbury Drive Beverly Hills, California 90210 Age: 61 | | President and Chief Executive Officer | | Since Inception | Chief Executive Officer, City National Rochdale (1986-present); Chief Investment Officer, City National Rochdale (April 2016-March 2018). |
Don Andrews City National Rochdale, LLC 400 N. Roxbury Drive Beverly Hills, California 90210 Age: 60 | | Vice President; Chief Compliance Officer (“CCO”); Anti-Money Laundering Officer & Identity Theft Program Officer | | Since 2019 | Chief Compliance Officer for City National Bank Wealth Management Division (2019-present); Global Practice Leader for Risk and Compliance, Smith Reed (2017-2019); Co-Head Risk and Compliance, Venable (2015-2017); CCO and CRO, Bessemer Trust (2002-2015) |
Mitchell Cepler City National Rochdale, LLC 400 N. Roxbury Drive Beverly Hills, California 90210 Age: 36 | | Treasurer and Chief Financial Officer | | Since 2015 | Group Finance Manager, City National Rochdale (2011-present). |
Kurt Hawkesworth City National Rochdale, LLC 400 N. Roxbury Drive Beverly Hills, California 90210 Age: 47 | | Secretary | | Since 2010 | Chief Operating Officer, City National Rochdale (2003-present). |
Anthony Sozio City National Rochdale, LLC 400 N. Roxbury Drive Beverly Hills, California 90210 Age: 47 |
|
Assistant Secretary | |
Since 2013 |
Assistant Vice President of Registered Fund Operations, City National Rochdale (1998-present). |
| (1) | Each officer serves until removed by the Board or the principal executive officer of the Trust, or until such officer resigns. |
Additional Information
Proxy Voting Policies and Procedures
A description of the policies and procedures that the Master Fund uses to determine how to vote proxies relating to portfolio securities, as well as information relating to how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, will be available (i) without charge, upon request, by calling 1-800-245-9888; and (ii) on the SEC’s website at www.sec.gov.
Portfolio Holdings Disclosure
The Master Fund will file its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q will be available on the SEC’s website at www.sec.gov, and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-732-0330. By April 30, 2020, the Master Fund will begin submitting its complete schedule of portfolio holdings on Form N-PORT with the SEC for each month in a fiscal quarter within 60 days after the end of that fiscal quarter, and the Master Fund will no longer utilize Form N-Q.
NOTICE OF PRIVACY PRINCIPLES
The City National Rochdale funds and their affiliates know our shareholders expect and rely upon us to maintain the confidentiality and privacy of all of the information about them in our possession and control. Maintaining the trust and confidence of our shareholders is our highest priority. The funds have adopted a Privacy Policy to guide our conduct when we collect, use, maintain or release nonpublic personal information from our shareholders and prospective shareholders. Certain information regarding the Privacy Policy is summarized below.
We will obey all applicable laws respecting the privacy of nonpublic personal information and will comply with the obligations of the law respecting nonpublic personal information provided to us. A fund may obtain nonpublic personal information from and about its shareholders and prospective shareholders from different sources, including the following: (i) information we receive from shareholders and prospective shareholders directly or through their financial intermediaries, on subscription agreements, forms or other documents; (ii) information about shareholder transactions with the fund, its affiliates, or others; (iii) information about a shareholder’s transactions with nonaffiliated third parties; (iv) information from or about a shareholder collected online; and (v) information we receive from a consumer reporting agency. We collect, use and retain the information, including nonpublic personal information, about our shareholders and prospective shareholders that we believe is necessary for us to, among other things, understand and better meet their financial needs and requests, administer and maintain their accounts, provide them with our products and services, anticipate their future needs, protect them and us from fraud or unauthorized transactions, and meet legal requirements.
We may share information regarding our shareholders with our affiliates as permitted by law because some of our products and services are delivered through or in conjunction with our affiliates. We instruct our colleagues and applicable affiliates to limit the availability of all shareholder information within their respective organizations to those colleagues responsible for servicing the needs of the shareholder and those colleagues who reasonably need such information to perform their duties and as required or permitted by law.
We do provide shareholder information, including nonpublic personal information, to our vendors and other outside service providers whom we use when appropriate or necessary to perform and enhance our shareholder services. When we provide shareholder information to anyone outside our organization, we only do so as required or permitted by law. We require all of our vendors and service providers who receive shareholder information from us to agree to maintain the information in confidence, to limit the use and dissemination of the information to the purpose for which it is provided and to abide by the law. To the extent permitted by law, we undertake to advise a shareholder of any government or other legal process served on us requiring disclosure of information about that shareholder.
We generally limit our disclosure of nonpublic personal information to third parties to the following circumstances: (i) when requested to do so by the shareholder; (ii) when necessary, in our opinion, to effect, administer, or enforce a shareholder initiated transaction or a shareholder request for a product or service; and (iii) when required or permitted to do so by law or regulation, including authorized requests from government agencies and if we are the victim of fraud or otherwise suffer loss caused by the unlawful act of the shareholder.
We maintain physical, electronic, and procedural safeguards that are designed to guard all shareholder information. In addition, we educate all our colleagues about the Privacy Policy and their obligations to maintain confidentiality and privacy of shareholder information as summarized in this Notice and we take appropriate disciplinary measures to enforce these obligations.
A full copy of the funds’ Privacy Policy is available upon request from the fund. Should you have any questions regarding the Privacy Policy, please contact your investment professional or the funds at (888) 889-0799.
