RBC CORPORATE CLASS FUNDS Annual Report

Transcription

1 RBC CORPORATE CLASS FUNDS 2017 Annual Report

2 TABLE OF CONTENTS Management Report of Fund Performance FIXED-INCOME FUNDS RBC Short Term Income Class 2 RBC $U.S. Short Term Income Class 9 BlueBay Global Convertible Bond Class (Canada) 16 BlueBay $U.S. Global Convertible Bond Class (Canada) 25 BALANCED FUNDS Phillips, Hager & North Monthly Income Class 32 RBC Balanced Growth & Income Class 40 CANADIAN EQUITY FUNDS RBC Canadian Dividend Class 47 RBC Canadian Equity Class 54 RBC QUBE Low Volatility Canadian Equity Class 61 Phillips, Hager & North Canadian Equity Value Class 68 RBC Canadian Equity Income Class 75 RBC Canadian Mid-Cap Equity Class 83 NORTH AMERICAN EQUITY FUNDS RBC North American Value Class 90 U.S. EQUITY FUNDS RBC U.S. Dividend Class 98 RBC U.S. Equity Class 105 RBC QUBE Low Volatility U.S. Equity Class 112 RBC U.S. Equity Value Class 119 Phillips, Hager & North U.S. Multi-Style All-Cap Equity Class 126 RBC U.S. Mid-Cap Value Equity Class 133 RBC U.S. Small-Cap Core Equity Class 140 INTERNATIONAL EQUITY FUNDS RBC International Equity Class 147 Phillips, Hager & North Overseas Equity Class 154 RBC European Equity Class 162 RBC Emerging Markets Equity Class 169 GLOBAL EQUITY FUNDS RBC Global Equity Class 177 RBC QUBE Low Volatility Global Equity Class 184 RBC Global Resources Class 191 Financial Statements MANAGEMENT S RESPONSIBILITY FOR FINANCIAL REPORTING 199 INDEPENDENT AUDITOR S REPORT 200 FIXED-INCOME FUNDS RBC Short Term Income Class 201 RBC $U.S. Short Term Income Class 207 BlueBay Global Convertible Bond Class (Canada) 213 BlueBay $U.S. Global Convertible Bond Class (Canada) 221 BALANCED FUNDS Phillips, Hager & North Monthly Income Class 228 RBC Balanced Growth & Income Class 236 CANADIAN EQUITY FUNDS RBC Canadian Dividend Class 244 RBC Canadian Equity Class 250 RBC QUBE Low Volatility Canadian Equity Class 256 Phillips, Hager & North Canadian Equity Value Class 262 RBC Canadian Equity Income Class 268 RBC Canadian Mid-Cap Equity Class 276 NORTH AMERICAN EQUITY FUNDS RBC North American Value Class 282 U.S. EQUITY FUNDS RBC U.S. Dividend Class 288 RBC U.S. Equity Class 294 RBC QUBE Low Volatility U.S. Equity Class 300 RBC U.S. Equity Value Class 306 Phillips, Hager & North U.S. Multi-Style All-Cap Equity Class 312 RBC U.S. Mid-Cap Value Equity Class 318 RBC U.S. Small-Cap Core Equity Class 324 INTERNATIONAL EQUITY FUNDS RBC International Equity Class 330 Phillips, Hager & North Overseas Equity Class 336 RBC European Equity Class 343 RBC Emerging Markets Equity Class 350 GLOBAL EQUITY FUNDS RBC Global Equity Class 356 RBC QUBE Low Volatility Global Equity Class 362 RBC Global Resources Class 368 GENERIC NOTES TO FINANCIAL STATEMENTS 374 CONTACT US 380 1

3 FIXED-INCOME FUND RBC SHORT TERM INCOME CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 2

4 RBC SHORT TERM INCOME CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide current income and liquidity consistent with short-term money market rates, and to preserve the value of an investment. To achieve its investment objective, the Fund invests most of its assets in the RBC Canadian Money Market Fund (the underlying fund ), which holds primarily high-quality short-term government and corporate-debt securities with a maximum term of 365 days. The underlying fund s corporate-debt holdings are deemed by major debt-rating agencies to be suitable for conservative investors. The underlying fund also includes short-term debt issued by Canadian chartered banks and promissory notes issued or guaranteed by Canadian governments or their agencies. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value fell to $12 million as of, 2017, from $40 million as of, The reduction was due to net redemptions. Over the past year, the Fund s Series A shares gained 0.4%, which underperformed the 0.5% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. Canadian money-market yields rose slightly during the period, pulled higher by a rise in U.S. yields. However, the increase in moneymarket Canadian yields was much smaller than it was for comparable U.S. yields, as a slow and uneven Canadian economic recovery kept the Bank of Canada (the BOC ) from raising its benchmark interest rate. The Canadian economy continued to deal with the headwinds of tepid trade, lacklustre business investment and Alberta wildfires that crimped oil production. Another brake on the BOC was concern that raising rates would destabilize hot housing markets in Toronto and Vancouver. While Canada s economy struggled, the U.S. was gaining momentum, leading to two rates hikes by the U.S. Federal Reserve (the Fed ) toward the end of the period. Fuelling the brighter U.S. outlook was Donald Trump s election as president and his promises of deregulation, higher government spending and lower taxes. As a result, U.S. money-market yields climbed about 0.55 percentage point, compared with about 0.07 point for similar Canadian securities. Globally, developed economies continued to struggle in their goal to generate growth. With the odds of a BOC rate hike being slim, the portfolio manager kept the Fund s average term to maturity somewhat elevated and used periodic jumps in market yields to lock in higher yields. The Fund favoured higher-yielding asset-backed commercial paper, as commercial-paper issuance was persistently weak. Regulatory liquidity requirements were satisfied through active maturity management and a position in provincial securities. Recent Developments Recent rate hikes by the Fed are at odds with the trend at all other major central banks, which many investors do not expect to raise rates anytime soon. The Fed is wary that relatively low U.S. interest rates will fuel inflation, and the portfolio manager expects two more rate hikes within a year. The portfolio manager believes that the BOC is unlikely to follow the Fed, given uncertainty about whether President Trump will follow through on threats to erect trade barriers and the failure so far of the Canadian economy to substitute trade for the output lost due to the fall in energy prices in recent years. The portfolio manager anticipates that the BOC will keep its benchmark interest rate where it is for the remainder of the year. In the portfolio manager s view, this policy stance, in tandem with the Fed s preference for tighter monetary policy, will likely result in a weaker dollar and spur domestic growth. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, Series H mutual fund shares and Series I mutual fund shares were closed to all investors. 3

5 RBC SHORT TERM INCOME CLASS, 2017 Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 4

6 RBC SHORT TERM INCOME CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.06) Mar. 31, (0.06) Mar. 31, (0.06) Mar. 31, (0.06) Mar. 31, (0.06) Advisor Series Mar. 31, (0.07) Mar. 31, (0.07) Mar. 31, (0.07) Mar. 31, (0.07) Mar. 31, (0.07) Series D Mar. 31, (0.06) Mar. 31, (0.06) Mar. 31, (0.06) Mar. 31, (0.06) Mar. 31, (0.06) Series F Mar. 31, (0.06) Mar. 31, (0.06) Mar. 31, (0.06) Mar. 31, (0.06) Mar. 31, (0.06) Series O Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, (0.01) Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 5

7 RBC SHORT TERM INCOME CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: 6 Breakdown of Services Management Fees Distribution Other* Series A up to 0.75% 33% 67% Advisor Series up to 0.75% 33% 67% Series D up to 0.60% 20% 80% Series F up to 0.50% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit.

8 RBC SHORT TERM INCOME CLASS, 2017 PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: FTSE TMX Canada 91 Day TBill Index Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Series D Benchmark Series F Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Advisor Series, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 1, Inception dates are not provided for series that have been in existence for more than 10 years. INDEX DESCRIPTION FTSE TMX Canada 91 Day TBill Index This index is a measure of the performance of Canadian short-term cash investments. 7

9 RBC SHORT TERM INCOME CLASS, 2017 SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value Commercial Paper 60.4 Bankers Acceptances and Bank Obligations 33.2 Provincial Obligations 6.3 Cash/Other 0.1 Top 25 Holdings* % of Net Asset Value Merit Trust - Senior Notes 1.001% Jun Bank of Nova Scotia 0.989% Sep Province of Manitoba 0.612% Jun Zeus Receivables Trust - Senior Notes 1.088% Jun Enbridge Pipelines Inc % Apr Canadian Master Trust - Series A 0.960% Apr Canadian Imperial Bank of Commerce 0.839% Apr Clarity Trust 1.040% May Bank of Nova Scotia 0.804% Apr Toronto-Dominion Bank 1.042% Aug Canadian Imperial Bank of Commerce 1.290% Apr HSBC Bank Canada 0.822% Apr Toronto-Dominion Bank 1.080% Jun Inter Pipeline Ltd % May Bank of Nova Scotia 1.121% Mar National Bank of Canada 1.113% Jun Bank of Montreal 1.290% Apr Bank of Nova Scotia 0.776% Apr Fusion Trust 1.100% Jul Clarity Trust 0.969% May Banner Trust 1.090% Jul King Street Funding Trust 0.980% May Toronto-Dominion Bank 0.843% Apr Bay Street Funding Trust - Class A 0.980% May Banner Trust 1.040% Apr Top 25 Holdings 46.1 * The Fund invests substantially all of its assets directly in the RBC Canadian Money Market Fund. The above are the Top 25 holdings of the RBC Canadian Money Market Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 8

10 FIXED-INCOME FUND RBC $U.S. SHORT TERM INCOME CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 9

11 RBC $U.S. SHORT TERM INCOME CLASS (IN U.S. DOLLARS), 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide current income and liquidity consistent with short-term U.S. money market rates, to preserve the value of an investment, and to generate U.S. dollar returns, thereby providing investors with potential for currency diversification. To achieve its investment objective, the Fund invests most of its assets in the RBC $U.S. Money Market Fund (the underlying fund ), which holds primarily high-quality, short-term (one year or less) debt securities denominated in U.S. dollars, including treasury bills issued or guaranteed by Canadian or foreign governments or their agencies, bankers acceptances, asset-backed commercial paper and commercial paper issued by Canadian or foreign corporations and supranational agencies such as the World Bank. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value rose to $281,000 as of, 2017, from $150,000 as of, The increase was due to net inflows. Over the past year, the Fund s Series A shares gained 0.7%, which outperformed the 0.3% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broadbased index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. U.S. money-market yields increased, accelerating their ascent after the U.S. Federal Reserve (the Fed ) twice boosted its benchmark interest rate toward the end of the period. The step by the Fed followed steady signs of economic recovery in the U.S. and momentum over the period, as the labour market tightened and consumer and business confidence improved. Fuelling the brighter U.S. economic outlook was Donald Trump s election as president, which was built on promises of deregulation, higher government spending and lower taxes. The appeal of U.S. investments was boosted by decisions at the European Central Bank and the Bank of Japan, the other most important central banks, to keep rates unchanged as growth in these areas lagged and the U.K. s decision to leave the Eurozone temporarily disrupted markets. U.S. yields rose about 0.55 percentage point during the period. The portfolio manager managed the Fund s average term to maturity around times when the Fed was expected to raise rates, maintaining lower holdings of short-dated securities when no hike was expected, and increasing them on the eve of an expected hike. This approach allowed the Fund to capture the immediate increase in rates once a rate hike occurred. Regulatory liquidity requirements were satisfied through active maturity management and a core position in provincial paper. Recent Developments The U.S. labour market is recovering and inflationary pressures are beginning to stir, leaving the Fed to weigh whether expectations of higher government spending will require further rate increases. Market indicators suggest that the Fed will boost rates two more times in the coming 12 months as investors bet that the U.S. central bank will seek to create some room to cut rates in the event of a recession. The portfolio manager anticipates that the Fed will gradually tighten monetary policy and that money-market yields will rise slowly. As a result, the portfolio manager expects to maintain a substantial percentage of the portfolio in assets that mature near the time of a Fed meeting so that the Fund can benefit from any imminent rate hike. In the portfolio manager s view, this approach should result in a steadily increasing yield for the Fund. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. 10

12 RBC $U.S. SHORT TERM INCOME CLASS (IN U.S. DOLLARS), 2017 Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 11

13 RBC $U.S. SHORT TERM INCOME CLASS (IN U.S. DOLLARS), 2017 FINANCIAL HIGHLIGHTS (in USD) The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.06) Mar. 31, Series D Mar. 31, (0.07) Mar. 31, Series F Mar. 31, (0.06) Mar. 31, Series O Mar. 31, (0.05) Mar. 31, Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 3 From October 16, Initial offering net asset value per mutual fund share. 12

14 RBC $U.S. SHORT TERM INCOME CLASS (IN U.S. DOLLARS), 2017 FINANCIAL HIGHLIGHTS (in USD) (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, n/a Series D Mar. 31, Mar. 31, n/a Series F Mar. 31, Mar. 31, n/a Series O Mar. 31, Mar. 31, n/a 1 The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 From October 16, Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A up to 0.85% 29% 71% Series D up to 0.60% 17% 83% Series F up to 0.50% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. 13

15 RBC $U.S. SHORT TERM INCOME CLASS (IN U.S. DOLLARS), 2017 PAST PERFORMANCE (in USD) The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: Citigroup 3-Month TBill Index Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Series D Benchmark Series F Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 25, Inception dates are not provided for series that have been in existence for more than 10 years. INDEX DESCRIPTION Citigroup 3-Month TBill Index The index tracks the performance of short-term U.S. government debt instruments. 14

16 RBC $U.S. SHORT TERM INCOME CLASS (IN U.S. DOLLARS), 2017 SUMMARY OF INVESTMENT PORTFOLIO (in USD) (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value Commercial Paper 78.6 Provincial Obligations 14.7 Bankers Acceptances and Bank Obligations 6.6 Cash/Other 0.1 Top 25 Holdings* % of Net Asset Value Province of British Columbia 0.979% Jul Province of Quebec 0.919% Jun OMERS Realty Corp % Apr Caisse Centrale Desjardins 1.111% Jun Caisse Centrale Desjardins 0.962% May Ridge Trust 1.400% Jul TMX Group Ltd % May Prime Trust - Senior Notes 1.419% Jun BNP Paribas Capital Trust 1.119% Jun Canadian Master Trust - Series A 1.248% May Clarity Trust 1.370% Jun SOUND Trust 1.272% Apr National Bank of Canada 1.051% Jun Banner Trust 1.220% Apr Merit Trust - Senior Notes 1.222% Jun Clarity Trust 1.218% May Fusion Trust 1.419% Jun Zeus Receivables Trust - Senior Notes 1.200% Apr SURE Trust 1.418% Jun Banner Trust 1.278% Apr Banner Trust 1.150% May Merit Trust - Senior Notes 1.419% Jun Canadian Master Trust - Series A 1.418% Jul Bank of Nova Scotia 1.237% Jun Clarity Trust 1.419% Jun Top 25 Holdings 71.7 * The Fund invests substantially all of its assets directly in the RBC $U.S. Money Market Fund. The above are the Top 25 holdings of the RBC $U.S. Money Market Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 15

17 FIXED-INCOME FUND BLUEBAY GLOBAL CONVERTIBLE BOND CLASS (CANADA), 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 16

18 BLUEBAY GLOBAL CONVERTIBLE BOND CLASS (CANADA), 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide total returns consisting of interest income and modest capital appreciation through exposure to global convertible bonds. To achieve the Fund s objectives, the Fund invests most of its assets in the BlueBay Global Convertible Bond Fund (Canada) (the underlying fund ), which holds mainly global convertible bonds issued by entities domiciled or carrying out business activities anywhere in the world. The portfolio manager of the underlying fund conducts detailed credit and equity analysis to identify investment opportunities offering high probabilities of superior rates of return while minimizing the prospect of default. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value fell to $101 million as of, 2017, from $151 million as of, The decrease was due to net redemptions. Over the past year, the Fund s Series A shares gained 6.3%, which underperformed the 6.9% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. Oil prices and global stocks climbed for much of the period after touching lows in early Equity markets largely ignored the U.K. s unexpected decision in June to leave the EU, delivering their best returns in several years amid sustainable U.S. growth and economic-stimulus programs by the European Central Bank and the Bank of England. Donald Trump s election in November as U.S. president boosted the shares of companies in financial services and infrastructure, but biotechnology shares weakened given discussions of drug-price cuts. While European central banks and the Bank of Japan loosened monetary policy, the U.S. Federal Reserve (the Fed ) twice raised its benchmark rate late in the 12-month period. The increases suggested that the Fed was comfortable that the U.S. expansion would continue. Investments that aided the Fund s returns included DISH Network, a U.S. provider of satellite-television services. DISH has accumulated a land bank of highly desirable digital-spectrum bandwidth, making DISH an attractive takeover target in the view of the portfolio manager. The Fund also benefited from holdings in Tesaro, whose shares more than tripled over the period after the company released positive late-stage clinical results for its ovarian-cancer therapy. A robust product pipeline makes Tesaro another attractive takeover target, in the view of the portfolio manager. The portfolio s investments in semiconductor makers produced strong returns as investors sought more cyclically sensitive areas of the market. Notable contributions came from Micron and Microchip Technology in the U.S. and from Semiconductor Manufacturing International of Taiwan. The industry as a whole is benefiting from better returns on investment. An investment in uranium miner Paladin Energy performed poorly after a delay in the closing of the company s agreement to sell a minority stake in its main mine to a Chinese state-backed buyer. As a result, plans to free up money for debt repayments were put off, and the price of the bonds held in the portfolio declined. Recent Developments The portfolio manager believes that global financial markets remain in a sweet spot given continued low interest rates and expectations that the Trump administration will succeed in implementing pro-growth economic policies. Macroeconomic data, especially in the U.S. and Europe, has been strong recently, while major currencies have yet to remain stable despite political concerns and rising anti-trade rhetoric. In this environment, the portfolio manager expects equity markets and non-government debt to extend their strong performance. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. 17

19 BLUEBAY GLOBAL CONVERTIBLE BOND CLASS (CANADA), 2017 Effective June 30, 2016, management fees were reduced as follows: from 1.70% to 1.65% in respect of Series A mutual fund shares, Advisor Series mutual fund shares, Advisor T5 Series mutual fund shares and Series T5 mutual fund shares; from 1.10% to 1.05% in respect of Series D mutual fund shares; and from 0.95% to 0.90% in respect of Series F mutual fund shares and Series FT5 mutual fund shares. Also effective June 30, 2016, Series H mutual fund shares and Series I mutual fund shares were capped and no longer available for purchase by new investors. Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series, Advisor T5 Series, Series T5, Series H and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 18

20 BLUEBAY GLOBAL CONVERTIBLE BOND CLASS (CANADA), 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.20) Mar. 31, (0.20) (0.01) (0.55) (0.70) Mar. 31, (0.20) Mar. 31, (0.04) Advisor Series Mar. 31, (0.20) Mar. 31, (0.21) (0.01) (0.55) (0.71) Mar. 31, (0.20) Mar. 31, (0.04) Advisor T5 Series Mar. 31, (0.17) (0.48) (0.48) 9.42 Mar. 31, (0.19) (0.01) (0.51) (0.65) (0.50) (0.50) 9.33 Mar. 31, (0.18) (0.50) (0.50) Series T5 Mar. 31, (0.17) (0.48) (0.48) 9.42 Mar. 31, (0.19) (0.01) (0.50) (0.64) (0.50) (0.50) 9.33 Mar. 31, (0.18) (0.50) (0.50) Series H Mar. 31, (0.18) Mar. 31, (0.18) (0.01) (0.55) (0.68) Mar. 31, (0.17) Mar. 31, (0.03) Series D Mar. 31, (0.12) Mar. 31, (0.13) (0.01) (0.55) (0.63) Mar. 31, (0.13) Mar. 31, (0.03) Series F Mar. 31, (0.11) Mar. 31, (0.12) (0.01) (0.55) (0.62) Mar. 31, (0.12) Mar. 31, (0.02)

21 BLUEBAY GLOBAL CONVERTIBLE BOND CLASS (CANADA) FINANCIAL HIGHLIGHTS (cont.) Change in Net Assets Per Mutual Fund Share ($) (cont.), 2017 Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series FT5 Mar. 31, (0.10) (0.49) (0.49) 9.67 Mar. 31, (0.11) (0.01) (0.51) (0.57) (0.50) (0.50) 9.50 Mar. 31, (0.10) (0.50) (0.50) Series I Mar. 31, (0.09) Mar. 31, (0.09) (0.01) (0.56) (0.60) Mar. 31, (0.09) Mar. 31, (0.02) Series O Mar. 31, Mar. 31, (0.01) (0.56) (0.51) Mar. 31, Mar. 31, Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 3 From January 20, From April 21, Initial offering net asset value per mutual fund share. Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Mar. 31, Advisor T5 Series Mar. 31, Mar. 31, Mar. 31, Series T5 Mar. 31, Mar. 31, Mar. 31,

22 BLUEBAY GLOBAL CONVERTIBLE BOND CLASS (CANADA), 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data (cont.) Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series H Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series FT5 Mar. 31, Mar. 31, Mar. 31, Series I Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series A 2.07%, Advisor Series 2.09%, Advisor T5 Series 2.06%, Series T5 2.06%, Series D 1.36%, Series F 1.25% and Series FT5 1.24%. 5 From January 20, From April 21,

23 BLUEBAY GLOBAL CONVERTIBLE BOND CLASS (CANADA) FINANCIAL HIGHLIGHTS (cont.) Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.65% 44% 56% Advisor Series 1.65% 44% 56% Advisor T5 Series 1.65% 44% 56% Series T5 1.65% 44% 56% Series H 1.45% 52% 48% Series D 1.05% 14% 86% Series F 0.90% 100% Series FT5 0.90% 100% Series I 0.70% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year.,

24 BLUEBAY GLOBAL CONVERTIBLE BOND CLASS (CANADA), 2017 PAST PERFORMANCE (cont.) Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: Thomson Reuters Convertible Global Focus Index (hedged to CAD) Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Advisor T5 Series Benchmark Series T Benchmark Series H Benchmark Series D Benchmark Series F Benchmark Series FT Benchmark Series I Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Advisor T5 Series, Series T5 and Series FT5 mutual fund shares have been available for sale to shareholders since April 21, 2014, and Series A, Advisor Series, Series H, Series D, Series F, Series I and Series O mutual fund shares since January 20, Inception dates are not provided for series that have been in existence for more than 10 years. INDEX DESCRIPTION Thomson Reuters Convertible Global Focus Index (hedged to CAD) This index is designed to measure the performance of global convertible bonds and focuses on larger convertible securities, with the number of constituents being limited to ensure breadth and manageability. 23

25 BLUEBAY GLOBAL CONVERTIBLE BOND CLASS (CANADA), 2017 SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value United States 31.8 Japan 15.0 China 9.0 Germany 6.1 United Kingdom 5.9 South Africa 3.0 Hong Kong 2.7 Taiwan 2.7 Netherlands 2.3 Norway 2.2 Malaysia 1.7 Singapore 1.3 France 1.2 United Arab Emirates 1.0 Other Countries 6.0 Cash/Other 8.1 Top 25 Holdings* % of Net Asset Value Cash & Cash Equivalents 7.1 DISH Network Corp., Convertible 3.375% Aug Siemens Financieringsmaatschappij N.V., Convertible USD 1.050% Aug Ctrip.com International Ltd., Convertible USD 1.250% Sep Steinhoff Finance Holding GmbH, Convertible EUR 1.250% Oct Citrix Systems Inc., Convertible 0.500% Apr Tesla Inc., Convertible 1.250% Jan Suzuki Motor Corp., Convertible JPY 0.000% Mar Salesforce.com Inc., Convertible 0.250% Apr RAG-Stiftung, Convertible EUR 0.000% Mar Kunlun Energy Co. Ltd., Convertible CNY 1.625% Jul Yamada Denki Co. Ltd., Convertible JPY 0.000% Jun Micron Technology Inc., Convertible 3.000% Nov The Priceline Group Inc., Convertible 1.000% Mar Microchip Technology Inc., Convertible 1.625% Feb Kawasaki Kisen Kaisha Ltd., Convertible JPY 0.000% Sep Kansai Paint Co. Ltd., Convertible JPY 0.000% Jun United Microelectronics Corp., Convertible USD 0.000% May Bagan Capital Ltd., Convertible USD 0.000% Sep Deutsche Wohnen AG, Convertible EUR 0.325% Jul Toray Industries Inc., Convertible JPY 0.000% Aug NXP Semiconductors N.V., Convertible USD 1.000% Dec Ctrip.com International Ltd., Convertible USD 1.990% Jul Aabar Investments PJSC, Convertible EUR 0.500% Mar Intu Jersey 2 Ltd., Convertible GBP 2.875% Nov Top 25 Holdings 43.0 * The Fund invests substantially all of its assets directly in the BlueBay Global Convertible Bond Fund (Canada). The above are the Top 25 holdings of the BlueBay Global Convertible Bond Fund (Canada). The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 24

26 FIXED-INCOME FUND BLUEBAY $U.S. GLOBAL CONVERTIBLE BOND CLASS (CANADA), 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 25

27 BLUEBAY $U.S. GLOBAL CONVERTIBLE BOND CLASS (CANADA) (IN U.S. DOLLARS), 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide U.S. dollar total returns comprised of interest income and modest capital appreciation through exposure to global convertible bonds. To achieve the Fund s objectives, the Fund invests most of its assets in the BlueBay $U.S. Global Convertible Bond Fund (Canada) (the underlying fund ), which holds mainly global convertible bonds issued by entities domiciled or carrying out business activities anywhere in the world. The portfolio manager of the underlying fund conducts detailed credit and equity analysis to identify investment opportunities offering high probabilities of superior rates of return while minimizing the prospect of default. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value fell to $213,000 as of, 2017, from $250,000 as of, The decrease was due to net redemptions. Over the past year, the Fund s Series A shares gained 5.5%, which underperformed the 7.0% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. Oil prices and global stocks climbed for much of the period after touching lows in early Equity markets largely ignored the U.K. s unexpected decision in June to leave the EU, delivering their best returns in several years amid sustainable U.S. growth and economic-stimulus programs by the European Central Bank and the Bank of England. Donald Trump s election in November as U.S. president boosted the shares of companies in financial services and infrastructure, but biotechnology shares weakened given discussions of drug-price cuts. While European central banks and the Bank of Japan loosened monetary policy, the U.S. Federal Reserve (the Fed ) twice raised its benchmark rate late in the 12-month period. The increases suggested that the Fed was comfortable that the U.S. expansion would continue. The Fund benefited from holdings in Tesaro, whose shares more than tripled over the period after the company released positive late-stage clinical results for its ovarian-cancer therapy. A robust product pipeline makes Tesaro another attractive takeover target, in the view of the portfolio manager. The portfolio s investments in semiconductor makers produced strong returns as investors sought more cyclically sensitive areas of the market. Notable contributions came from Micron and Microchip Technology in the U.S. and from Semiconductor Manufacturing International of Taiwan. The industry as a whole is benefiting from better returns on investment. Siemens, a big German industrial company and security held in the Fund, also performed well over the period. Performance was driven by improving prospects for sales of capital goods due to continuing strong European economic data. There was also speculation that Siemens would form a holding company for its business lines. The Fund s investment in uranium miner Paladin Energy lagged after a delay in the closing of the company s agreement to sell a minority stake in its main mine to a Chinese state-backed buyer. As a result, plans to free up money for debt repayments were pushed back, and the price of the bonds held in the portfolio declined. Recent Developments The portfolio manager believes that global financial markets remain in a sweet spot given continued low interest rates and expectations that the Trump administration will succeed in implementing pro-growth economic policies. Macroeconomic data, especially in the U.S. and Europe, has been strong recently, while major currencies have yet to remain stable despite political concerns and rising anti-trade rhetoric. In this environment, the portfolio manager expects equity markets and non-government debt to extend their strong performance. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, management fees were reduced as follows: from 1.70% to 1.65% in respect of Series A mutual fund shares and Advisor Series mutual fund shares; from 1.10% to 1.05% in respect of Series D mutual fund shares; and from 0.95% to 0.90% in respect of Series F mutual fund shares. 26

28 BLUEBAY $U.S. GLOBAL CONVERTIBLE BOND CLASS (CANADA) (IN U.S. DOLLARS), 2017 Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 27

29 BLUEBAY $U.S. GLOBAL CONVERTIBLE BOND CLASS (CANADA) (IN U.S. DOLLARS), 2017 FINANCIAL HIGHLIGHTS (in USD) The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.23) Mar. 31, (0.03) Advisor Series Mar. 31, (0.23) Mar. 31, (0.03) Series D Mar. 31, (0.15) Mar. 31, (0.02) Series F Mar. 31, (0.15) Mar. 31, (0.02) Series O Mar. 31, (0.04) Mar. 31, Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 3 From October 16, Initial offering net asset value per mutual fund share. 28

30 BLUEBAY $U.S. GLOBAL CONVERTIBLE BOND CLASS (CANADA) (IN U.S. DOLLARS), 2017 FINANCIAL HIGHLIGHTS (in USD) (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, n/a 0.01 Mar. 31, n/a 0.03 Advisor Series Mar. 31, n/a 0.01 Mar. 31, n/a 0.03 Series D Mar. 31, n/a 0.01 Mar. 31, n/a 0.03 Series F Mar. 31, n/a 0.01 Mar. 31, n/a 0.03 Series O Mar. 31, n/a 0.01 Mar. 31, n/a The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series A 2.06%, Advisor Series 2.06%, Series D 1.38% and Series F 1.25%. 5 From October 16, Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.65% 44% 56% Advisor Series 1.65% 44% 56% Series D 1.05% 14% 86% Series F 0.90% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. 29

31 BLUEBAY $U.S. GLOBAL CONVERTIBLE BOND CLASS (CANADA) (IN U.S. DOLLARS) PAST PERFORMANCE (in USD) The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years., 2017 Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: Thomson Reuters Convertible Global Focus Index (hedged to USD) Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Series D Benchmark Series F Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Advisor Series, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 25, Inception dates are not provided for series that have been in existence for more than 10 years. INDEX DESCRIPTION Thomson Reuters Convertible Global Focus Index (hedged to USD) This index is designed to measure the performance of global convertible bonds and focuses on larger convertible securities, with the number of constituents being limited to ensure breadth and manageability. The index is hedged to U.S. dollars. 30

32 BLUEBAY $U.S. GLOBAL CONVERTIBLE BOND CLASS (CANADA) (IN U.S. DOLLARS), 2017 SUMMARY OF INVESTMENT PORTFOLIO (in USD) (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value United States 25.9 Japan 16.5 China 9.7 Germany 6.9 United Kingdom 5.9 Taiwan 4.5 Hong Kong 3.2 Malaysia 3.2 South Africa 2.9 Norway 1.9 Singapore 1.8 Philippines 1.5 France 1.3 Netherlands 1.3 United Arab Emirates 1.2 Mexico 1.1 Other Countries 3.3 Cash/Other 7.9 Top 25 Holdings* % of Net Asset Value Cash & Cash Equivalents 8.0 Siemens Financieringsmaatschappij N.V., Convertible USD 1.050% Aug Ctrip.com International Ltd., Convertible USD 1.990% Jul Microchip Technology Inc., Convertible 1.625% Feb Steinhoff Finance Holding GmbH, Convertible EUR 1.250% Oct Cahaya Capital Ltd., Convertible USD 0.000% Sep Citrix Systems Inc., Convertible 0.500% Apr Suzuki Motor Corp., Convertible JPY 0.000% Mar Kunlun Energy Co. Ltd., Convertible CNY 1.625% Jul Salesforce.com Inc., Convertible 0.250% Apr AYC Finance Ltd., Convertible USD 0.500% May Tesla Inc., Convertible 1.250% Jan United Microelectronics Corp., Convertible USD 0.000% May RAG-Stiftung, Convertible EUR 0.000% Mar CapitaLand Ltd., Convertible SGD 2.800% Jun Deutsche Wohnen AG, Convertible EUR 0.325% Jul Yamada Denki Co. Ltd., Convertible JPY 0.000% Jun Micron Technology Inc., Convertible 3.000% Nov Bagan Capital Ltd., Convertible USD 0.000% Sep Aabar Investments PJSC, Convertible EUR 0.500% Mar The Priceline Group Inc., Convertible 1.000% Mar Kansai Paint Co. Ltd., Convertible JPY 0.000% Jun Cemex S.A.B. de C.V., Convertible USD 3.750% Mar Toray Industries Inc., Convertible JPY 0.000% Aug BP Capital Markets Plc., Convertible GBP 1.000% Apr Top 25 Holdings 47.4 * The Fund invests substantially all of its assets directly in the BlueBay $U.S. Global Convertible Bond Fund (Canada). The above are the Top 25 holdings of the BlueBay $U.S. Global Convertible Bond Fund (Canada). The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 31

33 BALANCED FUND PHILLIPS, HAGER & NORTH MONTHLY INCOME CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 32

34 PHILLIPS, HAGER & NORTH MONTHLY INCOME CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide monthly income that may consist of dividend income, interest income, realized capital gains and return of capital. The Fund will also have the potential to provide modest capital growth. The Fund primarily invests in a well diversified balanced portfolio of income-producing equity securities, including, but not limited to, common shares of dividend-paying Canadian companies and income trusts. The Fund may also invest in fixed-income securities such as preferred shares, government and corporate bonds, debentures and notes, asset-backed commercial paper, mortgage-backed securities and other income-generating securities. The Fund s target weightings for each asset class are 50% for fixed income and 50% for equities. The target weightings for each asset class may be adjusted based on changes in the market outlook for each asset class. To achieve its investment objective, the Fund invests most of its assets in the Phillips, Hager & North Monthly Income Fund and/or a combination of other mutual funds managed by RBC GAM (underlying funds). The underlying funds invest in income-producing equity securities, fixed-income securities, and may also hold incomegenerating securities such as convertible bonds and convertible preferred shares. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value fell to $122 million as of, 2017, from $135 million as of, The decrease was due to net redemptions. Over the past year, the Fund s Series A shares gained 10.5%, which underperformed the 12.4% rise in the benchmark. The broadbased index rose 1.5%. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. The Canadian equity market, as measured by the S&P/TSX Capped Composite Index, generated strong returns over the period, supported by strength in the Financials sector, which benefited from rising interest rates. A recovery in the resource sectors was helped by improving commodity prices. The Fund s equity positions in Financials contributed to relative performance. Overweight positions in Sun Life Financial and Canadian Imperial Bank of Commerce boosted returns. Holding back relative returns were Energy-sector positions in Crescent Point Energy and Cenovus Energy. In fixed income, government-bond yields climbed after the U.S. election, and ended the period slightly higher than they were at the beginning. Corporate and provincial bonds continued to outperform Government of Canada bonds, as low interest rates fuelled investor demand for yield, while slow-but-persistent economic growth boosted issuer creditworthiness. Within the Fund, allocations to provincial and corporate bonds had a positive impact on relative returns, especially given the extra yield they offered relative to Government of Canada fixed income securities. Recent Developments In the portfolio manager s view, the economic outlook has improved globally. Positive economic data has supported heightened consumer and business confidence, and investors have focused on the potential for a shift from monetary stimulus to fiscal stimulus. However, central banks other than the U.S. Federal Reserve are continuing to rely on monetary stimulus until there is evidence that fiscal spending is ready to take over. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, Series H mutual fund shares were capped and no longer available for purchase by new investors, and Series I mutual fund shares were closed to all investors. 33

35 PHILLIPS, HAGER & NORTH MONTHLY INCOME CLASS, 2017 Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series, Advisor T5 Series, Series T5, Series H and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 34

36 PHILLIPS, HAGER & NORTH MONTHLY INCOME CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.22) (0.10) (0.20) (0.20) Mar. 31, (0.21) (0.41) (0.47) (0.53) (0.27) (0.27) Mar. 31, (0.22) 0.59 (0.59) 0.35 (0.13) (0.13) Mar. 31, (0.07) (0.12) (0.12) Mar. 31, (0.04) (0.01) (0.01) Advisor Series Mar. 31, (0.22) (0.10) (0.20) (0.20) Mar. 31, (0.21) (0.40) (0.47) (0.52) (0.27) (0.27) Mar. 31, (0.22) 0.59 (0.59) 0.35 (0.13) (0.13) Mar. 31, (0.07) (0.13) (0.13) Mar. 31, (0.01) (0.01) (0.01) Advisor T5 Series Mar. 31, (0.18) (0.09) (0.18) (0.30) (0.48) Mar. 31, (0.18) (0.36) (0.41) (0.45) (0.20) (0.31) (0.51) 9.62 Mar. 31, (0.20) 0.56 (0.57) 0.34 (0.17) (0.34) (0.51) Mar. 31, (0.02) (0.18) (0.33) (0.51) Mar. 31, (0.01) (0.07) (0.14) (0.21) Series T5 Mar. 31, (0.19) (0.09) (0.18) (0.30) (0.48) Mar. 31, (0.19) (0.36) (0.42) (0.47) (0.20) (0.31) (0.51) 9.61 Mar. 31, (0.20) 0.56 (0.56) 0.34 (0.17) (0.34) (0.51) Mar. 31, (0.03) (0.18) (0.33) (0.51) Mar. 31, (0.01) (0.07) (0.14) (0.21) Series H Mar. 31, (0.20) (0.10) (0.26) (0.26) Mar. 31, (0.19) (0.40) (0.46) (0.49) (0.30) (0.30) Mar. 31, (0.20) 0.59 (0.59) 0.37 (0.12) (0.12) Mar. 31, (0.04) (0.12) (0.12) Mar. 31, (0.01) (0.01) (0.01) Series D Mar. 31, (0.12) (0.11) (0.27) (0.27) Mar. 31, (0.12) (0.42) (0.49) (0.45) (0.36) (0.36) Mar. 31, (0.12) 0.60 (0.61) 0.46 (0.13) (0.13) Mar. 31, (0.03) (0.12) (0.12) Mar. 31, (0.01) (0.01)

37 PHILLIPS, HAGER & NORTH MONTHLY INCOME CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Change in Net Assets Per Mutual Fund Share ($) (cont.) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series F Mar. 31, (0.09) (0.11) (0.30) (0.30) Mar. 31, (0.09) (0.42) (0.48) (0.41) (0.40) (0.40) Mar. 31, (0.09) 0.57 (0.57) 0.46 (0.11) (0.11) Mar. 31, (0.01) (0.16) (0.16) Mar. 31, (0.01) (0.01) Series FT5 Mar. 31, (0.08) (0.10) (0.19) (0.31) (0.50) Mar. 31, (0.08) (0.37) (0.43) (0.36) (0.19) (0.33) (0.52) 9.99 Mar. 31, (0.09) 0.54 (0.54) 0.43 (0.17) (0.35) (0.52) Mar. 31, (0.18) (0.33) (0.51) Mar. 31, (0.08) (0.13) (0.21) Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 3 From October 31, Initial offering net asset value per mutual fund share. Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Advisor T5 Series Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series T5 Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31,

38 PHILLIPS, HAGER & NORTH MONTHLY INCOME CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data (cont.) Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series H Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series FT5 Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 From October 31, Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.65% 61% 39% Advisor Series 1.65% 61% 39% Advisor T5 Series 1.65% 61% 39% Series T5 1.65% 61% 39% Series H 1.50% 67% 33% Series D 0.90% 28% 72% Series F 0.65% 100% Series FT5 0.65% 100% * Includes all costs related to management, investment advisory services, general administration and profit. 37

39 PHILLIPS, HAGER & NORTH MONTHLY INCOME CLASS PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year.,

40 PHILLIPS, HAGER & NORTH MONTHLY INCOME CLASS, 2017 PAST PERFORMANCE (cont.) Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmarks: The blended benchmark (the Benchmark ) is composed of: 50% S&P/TSX Capped Composite Total Return Index 35% FTSE TMX Canada Universe Bond Index 10% Merrill Lynch Canadian High Yield Index 5% S&P/TSX Preferred Share Total Return Index The broad-based index is the FTSE TMX Canada Universe Bond Index. S&P/TSX Preferred Share Total Return Index This index is composed of preferred stocks trading on the Toronto Stock Exchange that meet criteria relating to minimum size, liquidity, issuer rating and exchange listing. SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value Canadian Equities 50.2 Bonds 32.3 Investment Funds 9.8 Preferred Equities 5.4 Cash/Other 2.3 Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Broad-based index Advisor Series Benchmark Broad-based index Advisor T5 Series Benchmark Broad-based index Series T Benchmark Broad-based index Series H Benchmark Broad-based index Series D Benchmark Broad-based index Series F Benchmark Broad-based index Series FT Benchmark Broad-based index The returns of each series may vary because of differences in management fees and expenses. The Benchmark and broad-based index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark and broad-based index. Series A, Advisor Series, Advisor T5 Series, Series T5, Series H, Series D, Series F and Series FT5 mutual fund shares have been available for sale to shareholders since October 31, Inception dates are not provided for series that have been in existence for more than 10 years. INDEX DESCRIPTIONS S&P/TSX Capped Composite Total Return Index This index is the amended capitalizationweighted index measuring the performance of selected securities listed on the Toronto Stock Exchange, with no individual stock exceeding 10% of the overall weight. FTSE TMX Canada Universe Bond Index This index is designed as a broad measure of the Canadian investment-grade fixed-income market and includes bonds with maturities of at least one year. Merrill Lynch Canadian High Yield Index This index tracks the performance of U.S. dollar- and Canadian dollar-denominated below-investment-grade corporate debt publicly issued by Canadian issuers in the Canadian or U.S. domestic markets. 39 Top 25 Holdings* % of Net Asset Value RBC High Yield Bond Fund 5.6 Toronto-Dominion Bank 4.4 Phillips, Hager & North High Yield Bond Fund 4.2 Bank of Nova Scotia 4.0 Royal Bank of Canada 3.9 Enbridge Inc. 3.5 Brookfield Asset Management Inc., Class A 2.1 Canadian Imperial Bank of Commerce 2.0 Cash & Cash Equivalents 2.0 Province of Ontario 7.600% Jun Manulife Financial Corporation 1.7 Alimentation Couche-Tard Inc. 1.5 Canadian Natural Resources Ltd. 1.5 Cenovus Energy Inc. 1.4 Waste Connections Inc. 1.3 Quebecor Inc., Class B 1.3 Fortis Inc. 1.2 Brookfield Property Partners LP 1.2 Crescent Point Energy Corp. 1.2 Keyera Corp. 1.1 Sun Life Financial Inc. 1.1 Canada Housing Trust No % Jun Stantec Inc. 1.1 Government of Canada 0.500% Mar Province of Ontario 3.500% Jun Top 25 Holdings 52.0 * The Fund invests substantially all of its assets directly in the Phillips, Hager & North Monthly Income Fund. The above are the Top 25 holdings of the Phillips, Hager & North Monthly Income Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at

41 BALANCED FUND RBC BALANCED GROWTH & INCOME CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 40

42 RBC BALANCED GROWTH & INCOME CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide a combination of capital growth and modest income by investing primarily in a diversified portfolio of income-producing equity and fixed-income securities from anywhere around the world. The Fund s target weightings for each asset class are 40% for fixed income and 60% for equities. The target weightings for each class may be adjusted based on changes in the market outlook for each asset class. To achieve its investment objective, the Fund invests up to 100% of its net assets in units of other mutual funds managed by RBC GAM or an affiliate of RBC GAM ( underlying funds ). The underlying funds invest in income-producing equity securities and fixed-income securities from around the world such as dividend-paying common shares, income trusts, preferred shares, government and corporate bonds, high yield bonds, debentures and notes, asset-backed commercial paper, mortgage-backed securities and other income-generating securities. The underlying funds may also invest in emerging-market equity securities and emerging-market government and corporate bonds. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value rose to $133 million as of, 2017, from $101 million as of, The increase was due to a mix of net inflows and investment returns. Over the past year, the Fund s Series A shares gained 12.6%, which outperformed the 11.9% rise in the benchmark. The broadbased index rose 1.5%. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. The global economy firmed over the course of the period, alleviating growth concerns present from early in The U.S. Federal Reserve resumed raising interest rates in December followed by another rate hike in March, reflecting optimism about the pace of the U.S. expansion. However, toward the end of the period longerterm U.S. bond yields fell due to increased concern that President Donald Trump might have trouble winning approval for his proposed economic reforms. The Fund s overweight position in equities and underweight position in fixed income had a positive impact on performance. Major government fixed-income markets posted modest losses during the period, with the exception of the U.K. Benchmark yields in most markets climbed amid optimism about faster global economic growth and inflation, especially after Trump won the U.S. presidency based on promises of deregulation, increased government spending and tax reform. However, investors gravitated to U.K. government debt after the decision by U.K. voters to leave the European Union ( Brexit ) prompted the Bank of England to cut interest rates on fears that economic growth might decelerate. While government bonds declined over the period, non-government bonds posted strong gains. As a result, the Fund s performance benefited from holdings in the RBC Global High Yield Bond Fund, the BlueBay Global Monthly Income Bond Fund and the RBC Global Corporate Bond Fund. Major equity markets posted double-digit gains, led by North America and emerging markets on optimism that economies around the world were gathering momentum. Surprisingly strong economic data, surging consumer and business confidence, and better-than-expected earnings propelled stocks higher. U.K. stocks lagged in Canadian-dollar terms after the Brexit vote. The Fund s returns were aided by holdings in the RBC Emerging Markets Dividend Fund and the RBC European Dividend Fund, as well as exposure to U.S. equities. Recent Developments Leading economic indicators are at their best levels in several years, economic surprises have been overwhelmingly positive and corporate earnings continue to recover from their prior stumbles. As a result, risk assets such as equities and corporate credit have performed well. The portfolio manager expects bond yields to rise, resulting in low or potentially negative fixed-income returns over the years ahead, and therefore the Fund remains underweight bonds. Long-term expected returns for stocks are more attractive, accounting for the Fund s equity overweight. In the near term, however, uncertainty surrounding U.S. public policy and a variety of style and technical factors have led the portfolio manager to reduce the Fund s exposure to stocks, where it remains overweight, but a little less so than before. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. 41

43 RBC BALANCED GROWTH & INCOME CLASS, 2017 Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, Series H mutual fund shares and Series I mutual fund shares were closed to all investors. Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series, Advisor T5 Series and Series T5 mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 42

44 RBC BALANCED GROWTH & INCOME CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.20) (0.04) (0.04) Mar. 31, (0.18) 0.07 (0.40) (0.17) (0.04) (0.04) 9.57 Advisor Series Mar. 31, (0.20) (0.05) (0.05) Mar. 31, (0.18) 0.08 (0.46) (0.17) (0.06) (0.06) 9.56 Advisor T5 Series Mar. 31, (0.19) (0.05) (0.42) (0.47) 9.79 Mar. 31, (0.18) 0.08 (0.46) (0.17) (0.32) (0.17) (0.49) 9.13 Series T5 Mar. 31, (0.19) (0.05) (0.42) (0.47) 9.77 Mar. 31, (0.18) 0.07 (0.37) (0.17) (0.29) (0.20) (0.49) 9.12 Series F Mar. 31, (0.09) (0.07) (0.07) Mar. 31, (0.08) 0.08 (0.42) (0.07) (0.16) (0.16) 9.55 Series FT5 Mar. 31, (0.09) (0.05) (0.42) (0.47) Mar. 31, (0.08) 0.07 (0.40) (0.08) (0.30) (0.19) (0.49) 9.22 Series O Mar. 31, (0.08) (0.08) Mar. 31, (0.01) 0.28 (1.52) 0.04 (0.25) (0.25) Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 3 From April 8, Initial offering net asset value per mutual fund share. 43

45 RBC BALANCED GROWTH & INCOME CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Advisor T5 Series Mar. 31, Mar. 31, Series T5 Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Series FT5 Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 From April 8, Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.75% 57% 43% Advisor Series 1.75% 57% 43% Advisor T5 Series 1.75% 57% 43% Series T5 1.75% 57% 43% Series F 0.75% 100% Series FT5 0.75% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. 44

46 RBC BALANCED GROWTH & INCOME CLASS, 2017 PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. 45

47 RBC BALANCED GROWTH & INCOME CLASS, 2017 PAST PERFORMANCE (cont.) Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmarks: The blended benchmark (the Benchmark ) is composed of: 40% FTSE TMX Canada Universe Bond Index 25% S&P/TSX Capped Composite Total Return Index 20% S&P 500 Total Return Index (CAD) 10% MSCI Emerging Markets Total Return Net Index (CAD) 5% MSCI Europe Total Return Net Index (CAD) The broad-based index is the FTSE TMX Canada Universe Bond Index. Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Broad-based index Advisor Series Benchmark Broad-based index Advisor T5 Series Benchmark Broad-based index Series T Benchmark Broad-based index Series F Benchmark Broad-based index Series FT Benchmark Broad-based index Series O Benchmark Broad-based index The returns of each series may vary because of differences in management fees and expenses. The Benchmark and broad-based index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark and broad-based index. Series A, Advisor Series, Advisor T5 Series, Series T5, Series F, Series FT5 and Series O mutual fund shares have been available for sale to shareholders since April 20, Inception dates are not provided for series that have been in existence for more than 10 years. MSCI Emerging Markets Total Return Net Index (CAD) This index is a broad measure of the Canadian dollar performance of emerging-market equities. As of May 2010, the index consisted of the following 21 emerging-market country indexes: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, South Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand and Turkey. The net total return index reinvests dividends after the deduction of withholding taxes, using (for international indexes) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. MSCI Europe Total Return Net Index (CAD) This index is a broad measure of the Canadian dollar performance of major stock markets in Europe. The net total return index reinvests dividends after the deduction of withholding taxes, using (for international indexes) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value Income Funds 34.1 Canadian Equity Funds 29.3 United States Equity Funds 20.5 International Equity Funds 15.8 Cash/Other 0.3 Top 25 Holdings* % of Net Asset Value RBC Canadian Equity Income Fund 29.2 RBC U.S. Dividend Fund 20.5 Phillips, Hager & North Total Return Bond Fund 12.5 RBC Emerging Markets Dividend Fund 9.6 RBC Global Corporate Bond Fund 8.5 RBC Global High Yield Bond Fund 6.5 BlueBay Global Monthly Income Bond Fund 6.5 RBC European Dividend Fund 6.2 Cash & Cash Equivalents 0.5 Total * The Fund holds fewer than 25 holdings. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying funds are available on SEDAR website at INDEX DESCRIPTIONS FTSE TMX Canada Universe Bond Index This index is designed as a broad measure of the Canadian investment-grade fixed-income market and includes bonds with maturities of at least one year. S&P/TSX Capped Composite Total Return Index This index is the amended capitalization weighted index measuring the performance of selected securities listed on the Toronto Stock Exchange, with no individual stock exceeding 10% of the overall weight. S&P 500 Total Return Index (CAD) This index is a capitalization-weighted index measuring the Canadian dollar performance of 500 widely held common stocks representing all major industries in the United States. The index gives investors a broad measure of the overall performance of the U.S. stock market. 46

48 CANADIAN EQUITY FUND RBC CANADIAN DIVIDEND CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 47

49 RBC CANADIAN DIVIDEND CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to achieve long-term total returns consisting of regular dividend income, which benefits from the preferential tax treatment given to dividends from Canadian companies, and modest long-term capital growth. To achieve its investment objective, the Fund invests most of its assets in the RBC Private Canadian Dividend Pool and/or the RBC Canadian Dividend Fund (the underlying funds ). The underlying funds invest primarily in common shares with above-average dividend yields and also invest in preferred shares of major Canadian companies. The underlying funds select companies with long-term prospects of growing their dividends and tend to focus on interest-sensitive securities to achieve dividend income, primarily investing in the Financials, Telecommunication Services and Utilities sectors. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value rose to $137 million as of, 2017, from $118 million as of, The increase was due to investment returns. Over the past year, the Fund s Series A shares gained 15.9%, which underperformed the 18.6% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. During the period, the S&P/TSX Composite Index, Canada s equity benchmark, outperformed most other global indexes, as heavyweight sectors Financials, Energy and Materials all strengthened. Crude-oil prices recovered from levels that were well below the marginal cost of production, and increased further following OPEC s announced plans to cut its output. Investors were preoccupied with persistent concerns over the unabated surge in prices for Canadian residential real estate, the failure of manufacturing to take the reins from energy as the driver of Canadian economic growth and expectations that interest-rate increases in Canada are likely to lag the U.S. Financial stocks moved higher in the U.S. on the rise of interest rates and the potential for less regulation. The Canadian Financials sector performed well with Canadian banks gaining 30% over Shares of lumber and copper producers also performed strongly, benefiting from the rise in the underlying commodities. The Fund had underweight exposure to Materials stocks, which appreciated during the second half of the period resulting in a drag on the Fund s returns. Gold stocks as a whole have historically been difficult for dividend investors to own, as the sector has not been a reliable source of dividends. During the period, the Fund benefited from overweight exposure to the Utilities sector. An overweight position in Brookfield Infrastructure Partners aided returns, as the company has benefited from planned infrastructure spending in numerous areas. The Fund also had underweight exposure to the Health Care sector, which was helped by a lack of exposure to Valeant Pharmaceuticals and Concordia International. In the Telecommunication Services sector, the Fund benefited from an underweight position in BCE, which faced pressure amid increased capital expenditures and scrutiny of its acquisition of MTS. Recent Developments Market valuations, although elevated in absolute terms, are not inconsistent with a low-interest-rate, low-inflation environment. That said, the portfolio manager believes earnings acceleration will now be a key focus. In the Financials sector, the success of the Canadian banks non-domestic businesses will likely be a key differentiator of performance. Concurrently, while OPEC s plan to cut output is a positive for the Energy sector, the portfolio manager will be watching the U.S. shale sector for signs of re-acceleration as the year progresses. The portfolio manager continues to believe that large companies with long-life reserves and strong balance sheets will deliver attractive levels of free cash as crude-oil prices stabilize. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, management fees were reduced as follows: from 1.00% to 0.85% in respect of Series D mutual fund shares; and from 0.75% to 0.60% in respect of Series F mutual fund shares. Also effective June 30, 2016, Series H mutual fund shares were closed to all investors, and Series I mutual fund shares were re-designated to Series F mutual fund shares. 48

50 RBC CANADIAN DIVIDEND CLASS, 2017 Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 49

51 RBC CANADIAN DIVIDEND CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.23) (0.25) (0.25) Mar. 31, (0.22) 0.16 (0.60) (0.27) (0.25) (0.25) Mar. 31, (0.23) (0.30) (0.30) Mar. 31, (0.20) (0.22) (0.22) Mar. 31, (0.18) (0.12) (0.12) Advisor Series Mar. 31, (0.23) (0.25) (0.25) Mar. 31, (0.22) 0.16 (0.60) (0.27) (0.25) (0.25) Mar. 31, (0.23) (0.27) (0.27) Mar. 31, (0.20) (0.27) (0.27) Mar. 31, (0.18) (0.11) (0.11) Series D Mar. 31, (0.14) (0.36) (0.36) Mar. 31, (0.15) 0.16 (0.61) (0.20) (0.33) (0.33) Mar. 31, (0.15) (0.30) (0.30) Mar. 31, (0.13) (0.31) (0.31) Mar. 31, (0.13) (0.13) (0.13) Series F Mar. 31, (0.11) (0.41) (0.41) Mar. 31, (0.12) 0.17 (0.61) (0.16) (0.37) (0.37) Mar. 31, (0.12) (0.27) (0.27) Mar. 31, (0.11) (0.26) (0.26) Mar. 31, (0.10) (0.12) (0.12) Series O Mar. 31, (0.52) (0.52) Mar. 31, (0.63) (0.05) (0.50) (0.50) Mar. 31, (0.32) (0.32) Mar. 31, (0.28) (0.28) Mar. 31, (0.01) (0.14) (0.14) Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 50

52 RBC CANADIAN DIVIDEND CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series D 1.04% and Series F 0.79%. 51

53 RBC CANADIAN DIVIDEND CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.50% 67% 33% Advisor Series 1.50% 67% 33% Series D 0.85% 25% 75% Series F 0.60% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. 52

54 RBC CANADIAN DIVIDEND CLASS, 2017 PAST PERFORMANCE (cont.) Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: S&P/TSX Capped Composite Total Return Index Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Series D Benchmark Series F Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Advisor Series, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 1, Inception dates are not provided for series that have been in existence for more than 10 years. All outstanding Series I mutual fund shares were re-designated as Series F mutual fund shares effective June 30, INDEX DESCRIPTION S&P/TSX Capped Composite Total Return Index This index is the amended capitalizationweighted index measuring the performance of selected securities listed on the Toronto Stock Exchange, with no individual stock exceeding 10% of the overall weight. SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value Financials 42.9 Energy 20.8 Industrials 7.3 Utilities 4.6 Consumer Staples 4.2 Materials 3.7 Telecommunication Services 3.6 Real Estate 3.3 Consumer Discretionary 3.1 Health Care 0.4 Information Technology 0.3 Cash/Other 5.8 Top 25 Holdings* % of Net Asset Value Royal Bank of Canada 7.8 Toronto-Dominion Bank 7.2 Bank of Nova Scotia 6.1 Canadian National Railway Co. 4.8 Enbridge Inc. 4.6 Cash & Cash Equivalents 4.2 Brookfield Asset Management Inc., Class A 4.2 Bank of Montreal 3.9 TransCanada Corp. 3.5 Manulife Financial Corporation 2.9 Suncor Energy Inc. 2.7 Canadian Imperial Bank of Commerce 2.6 Canadian Natural Resources Ltd. 2.5 Loblaw Companies Ltd. 2.1 Sun Life Financial Inc. 1.8 Power Corporation of Canada 1.7 Canadian Pacific Railway Ltd. 1.5 Fortis Inc. 1.3 Rogers Communications Inc., Class B 1.2 Imperial Oil Ltd. 1.2 TELUS Corp. 1.2 BCE Inc. 1.2 Thomson Corp. 1.2 Onex Corporation 1.1 Magna International Inc., Class A 1.0 Top 25 Holdings 73.5 * The Fund invests substantially all of its assets directly in the RBC Private Canadian Dividend Pool. The above are the Top 25 holdings of the RBC Private Canadian Dividend Pool. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 53

55 CANADIAN EQUITY FUND RBC CANADIAN EQUITY CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 54

56 RBC CANADIAN EQUITY CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide long-term capital growth by investing primarily in equity securities of major Canadian companies. To achieve its investment objective, the Fund invests most of its assets in the RBC Private Canadian Equity Pool and/or RBC Canadian Equity Fund (the underlying funds ). The underlying funds typically invest in large-cap Canadian companies or income trusts and may take advantage of opportunities in mid-cap companies. The underlying funds diversify across S&P/TSX industry sectors, with minimum and maximum exposures. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value rose to $16 million as of, 2017, from $14 million as of, The increase was due to investment returns. Over the past year, the Fund s Series A shares gained 15.6%, which underperformed the 18.6% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. During the period, the S&P/TSX Composite Index, Canada s equity benchmark, outperformed most other global indexes, as heavyweight sectors Financials, Energy and Materials all strengthened. During the period, crude-oil prices recovered from levels that were well below the marginal cost of production, and increased further following OPEC s announced plans to cut its output. Investors were preoccupied with persistent concerns about the unabated surge in prices for Canadian residential real estate, the failure of manufacturing to take the reins from energy as the driver of Canadian economic growth and expectations that interest-rate increases in Canada are likely to lag the U.S. Financial stocks continued their strong move higher on the rise of interest rates and the potential for less regulation. The Canadian Financials sector was no exception, with banks gaining 25% over the period. Shares of lumber and copper producers also performed strongly, benefiting from the rise in the underlying commodities. The Fund had a below-benchmark allocation to the Materials sector and this detracted from performance. After President Trump s election in November 2016, the market moved its focus to proposals for tax cuts, infrastructure spending and deregulation, which boosted the U.S. dollar and interest rates, while diminishing gold s allure. An overweight position in the Energy sector aided performance. Security selection assisted in this sector with an overweight position in Veresen, which benefited from increased demand for natural gas via the Alliance pipeline. Prices for energy-related commodities were volatile during Crude-oil prices rebounded once the market became more comfortable that production cuts were taking effect and that international demand remained strong. Decisions by OPEC countries to cut production by a total of about 2% drove oil prices to around US$50 a barrel by the end of the period and were expected to accelerate the reduction of global inventories to more normal levels. During the period, the Fund benefited from security selection in the Health Care sector. A lack of exposure to Valeant Pharmaceuticals and Concordia International proved beneficial as the companies debt-financed acquisition models came under scrutiny. Recent Developments Market valuations, although elevated in absolute terms, are not inconsistent with a low-interest-rate, low-inflation environment. That said, the portfolio manager believes earnings acceleration will now be a key focus. In the Financials sector, the success of the banks non-domestic businesses will likely be a key differentiator of performance. Concurrently, while OPEC s plan to cut output is a positive for the Energy sector, the portfolio manager will be watching the U.S. shale sector for signs of re-acceleration as the year progresses. The portfolio manager continues to believe that large companies with long-life reserves and strong balance sheets will deliver attractive levels of free cash as crude prices stabilize. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. 55

57 RBC CANADIAN EQUITY CLASS, 2017 Effective June 30, 2016, management fees were reduced as follows: from 1.75% to 1.60% in respect of Series A mutual fund shares and Advisor Series mutual fund shares; from 1.00% to 0.85% in respect of Series D mutual fund shares; and from 0.75% to 0.60% in respect of Series F mutual fund shares. Also effective June 30, 2016, Series H mutual fund shares were closed to all investors, and Series I mutual fund shares were re-designated to Series F mutual fund shares. Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 56

58 RBC CANADIAN EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.24) (0.20) (0.20) Mar. 31, (0.24) 0.09 (1.04) (0.83) (0.22) (0.22) Mar. 31, (0.26) (0.18) (0.18) Mar. 31, (0.23) (0.27) (0.27) Mar. 31, (0.21) (0.13) (0.13) Advisor Series Mar. 31, (0.24) (0.20) (0.20) Mar. 31, (0.24) 0.09 (1.04) (0.83) (0.22) (0.22) Mar. 31, (0.26) (0.19) (0.19) Mar. 31, (0.23) (0.26) (0.26) Mar. 31, (0.22) (0.14) (0.14) Series D Mar. 31, (0.13) (0.32) (0.32) Mar. 31, (0.14) 0.10 (1.07) (0.74) (0.34) (0.34) Mar. 31, (0.15) (0.19) (0.19) Mar. 31, (0.13) (0.32) (0.32) Mar. 31, (0.13) (0.14) (0.14) Series F Mar. 31, (0.10) (0.37) (0.37) Mar. 31, (0.11) 0.10 (1.10) (0.73) (0.38) (0.38) Mar. 31, (0.12) (0.14) (0.14) Mar. 31, (0.11) (0.25) (0.25) Mar. 31, (0.10) (0.12) (0.12) Series O Mar. 31, (0.01) (0.48) (0.48) Mar. 31, (1.12) (0.64) (0.50) (0.50) Mar. 31, (0.18) (0.18) Mar. 31, (0.01) (0.30) (0.30) Mar. 31, (0.01) (0.13) (0.13) Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 57

59 RBC CANADIAN EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series A 1.94%, Advisor Series 1.93%, Series D 1.03% and Series F 0.78%. 58

60 RBC CANADIAN EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.60% 66% 34% Advisor Series 1.60% 66% 34% Series D 0.85% 25% 75% Series F 0.60% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. 59

61 RBC CANADIAN EQUITY CLASS, 2017 PAST PERFORMANCE (cont.) Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: S&P/TSX Capped Composite Total Return Index Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Series D Benchmark Series F Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Advisor Series, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 1, Inception dates are not provided for series that have been in existence for more than 10 years. All outstanding Series I mutual fund shares were re-designated as Series F mutual fund shares effective June 30, INDEX DESCRIPTION S&P/TSX Capped Composite Total Return Index This index is the amended capitalizationweighted index measuring the performance of selected securities listed on the Toronto Stock Exchange, with no individual stock exceeding 10% of the overall weight. SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value Financials 30.0 Energy 22.4 Industrials 9.3 Materials 6.7 Consumer Staples 5.7 Consumer Discretionary 5.4 Utilities 5.3 Real Estate 3.3 Telecommunication Services 3.1 Information Technology 2.5 Health Care 0.4 Cash/Other 5.9 Top 25 Holdings* % of Net Asset Value Royal Bank of Canada 6.0 Enbridge Inc. 4.8 Toronto-Dominion Bank 4.3 Bank of Nova Scotia 4.0 Suncor Energy Inc. 3.8 Manulife Financial Corporation 3.0 Brookfield Asset Management Inc., Class A 3.0 RBC Canadian Small & Mid-Cap Resources Fund 2.9 Canadian National Railway Co. 2.8 Canadian Natural Resources Ltd. 2.8 Cash & Cash Equivalents 2.7 Bank of Montreal 2.3 Alimentation Couche-Tard Inc. 2.1 Canadian Pacific Railway Ltd. 1.9 TransCanada Corp. 1.8 Sun Life Financial Inc. 1.8 BCE Inc. 1.5 Canadian Imperial Bank of Commerce 1.5 CGI Group Inc., Class A 1.5 Agrium Inc. 1.4 Cenovus Energy Inc. 1.4 Magna International Inc., Class A 1.4 Loblaw Companies Ltd. 1.3 Brookfield Property Partners LP 1.2 Potash Corporation of Saskatchewan Inc. 1.2 Top 25 Holdings 62.4 * The Fund invests substantially all of its assets directly in the RBC Private Canadian Equity Pool. The above are the Top 25 holdings of the RBC Private Canadian Equity Pool. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 60

62 CANADIAN EQUITY FUND RBC QUBE LOW VOLATILITY CANADIAN EQUITY CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 61

63 RBC QUBE LOW VOLATILITY CANADIAN EQUITY CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide long-term capital growth by investing primarily in equity securities of Canadian companies. The Fund uses a quantitative investment approach and seeks to achieve a reduced level of volatility of returns compared with the broader Canadian equity market. To achieve its investment objective, the Fund invests most of its assets in the RBC QUBE Low Volatility Canadian Equity Fund (the underlying fund ). The underlying fund is managed using a quantitative investment model designed to select individual stocks while controlling portfolio-level risk. This involves building a portfolio that maximizes exposure to factors associated with outperformance, while controlling for exposure to risk factors. The portfolio manager of the underlying fund diversifies across industries within the Canadian market. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value rose to $27 million as of, 2017, from $14 million as of, The increase was due mainly to net inflows. Over the past year, the Fund s Series A shares gained 10.2%, which underperformed the 18.6% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. The Canadian equity market, as measured by the S&P/TSX Capped Composite Index, generated strong returns over the year, supported by strength in the Financials sector, which benefited from rising interest rates. A recovery in the resource sectors was helped by improving commodity prices. In the Energy sector, positions in Imperial Oil and Peyto Exploration held back the Fund s returns. The Consumer Staples sector also weighed heavily on performance, with a position in Metro Inc. holding back returns over the year. In the Financials sector, the Fund s overweight position in Bank of Nova Scotia and Royal Bank of Canada added significantly to returns. The Industrials sector also aided performance, with a large contribution from a holding in CAE Inc. Recent Developments The economic outlook has improved globally, in the view of the portfolio manager. Positive economic data has supported heightened consumer and business confidence, and investors have focused on the potential for a shift from monetary stimulus to fiscal stimulus. However, central banks other than the U.S. Federal Reserve are continuing to rely on monetary stimulus until there is evidence that fiscal spending is ready to take over. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, management fees were reduced as follows: from 1.75% to 1.60% in respect of Series A mutual fund shares and Advisor Series mutual fund shares; from 1.00% to 0.85% in respect of Series D mutual fund shares; and from 0.75% to 0.60% in respect of Series F mutual fund shares. Also effective June 30, 2016, Series H mutual fund shares and Series I mutual fund shares were closed to all investors. Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. 62

64 RBC QUBE LOW VOLATILITY CANADIAN EQUITY CLASS Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund.,

65 RBC QUBE LOW VOLATILITY CANADIAN EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.21) (0.17) (0.17) Mar. 31, (0.21) Mar. 31, (0.04) Advisor Series Mar. 31, (0.20) (0.17) (0.17) Mar. 31, (0.19) Mar. 31, (0.04) Series D Mar. 31, (0.11) (0.27) (0.27) Mar. 31, (0.12) (0.07) (0.07) Mar. 31, (0.02) Series F Mar. 31, (0.09) (0.28) (0.28) Mar. 31, (0.09) (0.09) (0.09) Mar. 31, (0.02) Series O Mar. 31, (0.36) (0.36) Mar. 31, (0.18) (0.18) Mar. 31, Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 3 From October 16, Initial offering net asset value per mutual fund share. 64

66 RBC QUBE LOW VOLATILITY CANADIAN EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series A 1.91%, Advisor Series 1.82%, Series D 1.02% and Series F 0.78%. 5 From October 16, Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.60% 57% 43% Advisor Series 1.60% 57% 43% Series D 0.85% 25% 75% Series F 0.60% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. 65

67 RBC QUBE LOW VOLATILITY CANADIAN EQUITY CLASS PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years., 2017 Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: S&P/TSX Capped Composite Total Return Index Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Series D Benchmark Series F Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Advisor Series, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 26, Inception dates are not provided for series that have been in existence for more than 10 years. INDEX DESCRIPTION S&P/TSX Capped Composite Total Return Index This index is the amended capitalizationweighted index measuring the performance of selected securities listed on the Toronto Stock Exchange, with no individual stock exceeding 10% of the overall weight. 66

68 RBC QUBE LOW VOLATILITY CANADIAN EQUITY CLASS, 2017 SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value Financials 28.9 Utilities 13.4 Industrials 13.0 Energy 9.9 Real Estate 9.9 Telecommunication Services 9.4 Consumer Staples 7.7 Consumer Discretionary 4.5 Materials 2.1 Health Care 0.7 Cash/Other 0.5 Top 25 Holdings* % of Net Asset Value Royal Bank of Canada 4.9 Bank of Nova Scotia 4.9 Bank of Montreal 4.8 Toronto-Dominion Bank 4.7 Canadian National Railway Co. 4.0 BCE Inc. 4.0 CAE Inc. 4.0 Intact Financial Corp. 4.0 TELUS Corp. 4.0 Imperial Oil Ltd. 3.9 Fortis Inc. 3.4 George Weston Ltd. 3.3 RioCan Real Estate Investment Trust 3.2 Hydro One Ltd. 3.0 Waste Connections Inc. 2.9 Emera Inc. 2.4 Shaw Communications Inc., Class B 2.3 Keyera Corp. 2.2 Alimentation Couche-Tard Inc. 2.2 Power Financial Corp. 2.1 Peyto Exploration & Development Corp. 2.1 H&R Real Estate Investment Trust 2.0 Canadian Imperial Bank of Commerce 1.9 Cineplex Inc. 1.9 Toromont Industries Ltd. 1.7 Top 25 Holdings 79.8 * The Fund invests substantially all of its assets directly in the RBC QUBE Low Volatility Canadian Equity Fund. The above are the Top 25 holdings of the RBC QUBE Low Volatility Canadian Equity Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 67

69 CANADIAN EQUITY FUND PHILLIPS, HAGER & NORTH CANADIAN EQUITY VALUE CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 68

70 PHILLIPS, HAGER & NORTH CANADIAN EQUITY VALUE CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide long-term capital growth by investing in equity securities of Canadian companies. To achieve its investment objective, the Fund invests most of its assets in the Phillips, Hager & North Canadian Equity Value Fund (the underlying fund ). The underlying fund invests primarily in equities of Canadian companies priced below the portfolio manager s assessment of their true value and offering long-term opportunities for growth. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value rose to $4 million as of, 2017, from $3 million as of, The increase was due to a mix of net inflows and investment returns. Over the past year, the Fund s Series A shares gained 15.3%, which underperformed the 18.6% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. During the period, the S&P/TSX Composite Index, Canada s equity benchmark, outperformed most other global indexes, as heavyweight sectors Financials, Energy and Materials all strengthened. Crude-oil prices recovered from levels that were well below the marginal cost of production, and increased further following OPEC s announced plans to cut its output. Investors were preoccupied with persistent concerns over the unabated surge in prices for Canadian residential real estate, the failure of manufacturing to take the reins from energy as the driver of Canadian economic growth and expectations that interest-rate increases in Canada are likely to lag the U.S. Financials stocks moved higher in the U.S. on the rise of interest rates and the potential for less regulation. The Canadian Financials sector performed well with Canadian banks gaining 30% over Shares of lumber and copper producers also performed strongly, benefiting from the rise in the underlying commodities. The Fund had underweight exposure to more cyclical Materials stocks, which appreciated during the second half of the period, resulting in a drag on returns. During the period, the Fund benefited from an overweight exposure to the Consumer Staples sector. An underweight position in Metro Inc. benefited returns as inflation pressure from food prices subsided. The Fund also benefited from security selection in the Health Care sector. A lack of exposure to Valeant Pharmaceuticals and Concordia International proved beneficial as the companies struggled under greater regulatory scrutiny and higher debt levels. Recent Developments Market valuations, although elevated in absolute terms, are not inconsistent with a low-interest-rate, low-inflation environment. That said, the portfolio manager believes earnings acceleration will now be a key focus. In the Financials sector, the success of the Canadian banks non-domestic businesses will likely be a key differentiator of performance. Concurrently, while OPEC s plan to cut output is a positive for the Energy sector, the portfolio manager will be watching the U.S. shale sector for signs of re-acceleration as the year progresses. The portfolio manager continues to believe that large companies with long-life reserves and strong balance sheets will deliver attractive levels of free cash as crude prices stabilize. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, management fees were reduced as follows: from 1.75% to 1.60% in respect of Series A mutual fund shares and Advisor Series mutual fund shares; from 1.00% to 0.85% in respect of Series D mutual fund shares; and from 0.75% to 0.60% in respect of Series F mutual fund shares. Also effective June 30, 2016, Series H mutual fund shares and Series I mutual fund shares were closed to all investors. 69

71 PHILLIPS, HAGER & NORTH CANADIAN EQUITY VALUE CLASS, 2017 Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 70

72 PHILLIPS, HAGER & NORTH CANADIAN EQUITY VALUE CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.20) (0.16) (0.16) Mar. 31, (0.20) 0.26 (0.39) (0.03) (0.11) (0.11) 9.61 Mar. 31, (0.04) (0.07) (0.11) Advisor Series Mar. 31, (0.20) (0.16) (0.16) Mar. 31, (0.18) 0.19 (0.29) (0.06) (0.12) (0.12) 9.62 Mar. 31, (0.04) (0.11) (0.15) Series D Mar. 31, (0.11) (0.27) (0.27) Mar. 31, (0.11) 0.24 (0.36) 0.05 (0.19) (0.19) 9.63 Mar. 31, (0.02) (0.06) (0.08) Series F Mar. 31, (0.08) (0.32) (0.32) Mar. 31, (0.08) 0.24 (0.36) 0.08 (0.22) (0.22) 9.64 Mar. 31, (0.01) (0.11) (0.12) Series O Mar. 31, (0.34) (0.34) Mar. 31, (0.53) 0.23 (0.31) (0.31) 9.65 Mar. 31, (0.11) (0.11) Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 3 From October 16, Initial offering net asset value per mutual fund share. 71

73 PHILLIPS, HAGER & NORTH CANADIAN EQUITY VALUE CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series A 1.86%, Advisor Series 1.83%, Series D 1.03% and Series F 0.75%. 5 From October 16, Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.60% 57% 43% Advisor Series 1.60% 57% 43% Series D 0.85% 25% 75% Series F 0.60% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. 72

74 PHILLIPS, HAGER & NORTH CANADIAN EQUITY VALUE CLASS PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years., 2017 Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: S&P/TSX Capped Composite Total Return Index Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Series D Benchmark Series F Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Advisor Series, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 26, Inception dates are not provided for series that have been in existence for more than 10 years. INDEX DESCRIPTION S&P/TSX Capped Composite Total Return Index This index is the amended capitalizationweighted index measuring the performance of selected securities listed on the Toronto Stock Exchange, with no individual stock exceeding 10% of the overall weight. 73

75 PHILLIPS, HAGER & NORTH CANADIAN EQUITY VALUE CLASS, 2017 SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value Financials 37.7 Energy 21.9 Materials 9.2 Industrials 8.6 Consumer Discretionary 4.5 Consumer Staples 4.5 Telecommunication Services 3.2 Utilities 2.6 Information Technology 2.4 Real Estate 2.1 Health Care 0.5 Cash/Other 2.8 Top 25 Holdings* % of Net Asset Value Royal Bank of Canada 6.8 Toronto-Dominion Bank 6.5 Bank of Nova Scotia 4.8 Enbridge Inc. 4.6 Canadian National Railway Co. 4.1 Suncor Energy Inc. 3.8 Bank of Montreal 3.6 TransCanada Corp. 3.1 Canadian Natural Resources Ltd. 3.1 Brookfield Asset Management Inc., Class A 3.0 Cash & Cash Equivalents 2.6 Manulife Financial Corporation 2.5 Canadian Imperial Bank of Commerce 2.2 Loblaw Companies Ltd. 1.9 BCE Inc. 1.9 Barrick Gold Corp. 1.7 Power Corporation of Canada 1.6 Waste Connections Inc. 1.5 Sun Life Financial Inc. 1.5 Canadian Pacific Railway Ltd. 1.4 CGI Group Inc., Class A 1.3 Alimentation Couche-Tard Inc. 1.3 Potash Corporation of Saskatchewan Inc. 1.2 Agrium Inc. 1.1 Shaw Communications Inc., Class B 1.0 Top 25 Holdings 68.1 * The Fund invests substantially all of its assets directly in the Phillips, Hager & North Canadian Equity Value Fund. The above are the Top 25 holdings of the Phillips, Hager & North Canadian Equity Value Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 74

76 CANADIAN EQUITY FUND RBC CANADIAN EQUITY INCOME CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 75

77 RBC CANADIAN EQUITY INCOME CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide long-term capital growth by investing primarily in a diversified portfolio of Canadian securities including, but not limited to, common and preferred shares of Canadian companies that pay dividends, real estate investment trusts and income trusts. To achieve its investment objective, the Fund invests most of its assets in the RBC Canadian Equity Income Fund (the underlying fund ). The underlying fund invests primarily in a diversified portfolio of Canadian equity securities including common and preferred shares, real estate investment trusts and income trusts. The underlying fund may also invest in fixed-income securities, such as government and corporate bonds, debentures and notes. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value rose to $194 million as of, 2017, from $182 million as of, The increase was due to investment returns. Over the past year, the Fund s Series A shares gained 17.6%, which underperformed the 18.6% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. During the period, the S&P/TSX Composite Index, Canada s equity benchmark, outperformed most other global indexes, as heavyweight sectors Financials, Energy and Materials all strengthened. During the period, crude-oil prices recovered from levels that were well below the marginal cost of production, and increased further following OPEC s announced plans to cut its output. Investors were preoccupied with persistent concerns about the unabated surge in prices for Canadian residential real estate, the failure of manufacturing to take the reins from energy as the driver of Canadian economic growth and expectations that interest-rate increases in Canada are likely to lag the U.S. Financial stocks continued their strong move higher on the rise of interest rates and the potential for less regulation. The Canadian Financials sector was no exception, with Canadian banks gaining 25% over the period. Shares of lumber and copper producers also performed strongly, benefiting from the rise in the underlying commodities. The Fund had a below-benchmark allocation to the Materials sector and this detracted from performance. Precious-metals prices began 2016 with sharp rallies, offering a safe haven as weak oil prices and concern about the sustainability of economic growth led to one of the worst starts ever for the U.S. stock market. President Trump s proposals for tax cuts, infrastructure spending and deregulation boosted the U.S. dollar and bond yields, diminishing gold s allure. The December and March interest rate hikes by the U.S. Federal Reserve, coupled with expectations that it will continue to raise rates in 2017, further pressured precious metal prices. An overweight position in Energy aided the Fund s performance. Prices for energy-related commodities were volatile during the period. Crude-oil benchmark prices rebounded once the market became more comfortable that production cuts were taking effect and that international demand remained strong. Decisions by OPEC countries to cut production by a total of about 2% drove oil prices around US$50 a barrel by the end of the period and were expected to accelerate the reduction of global inventories to more normal levels. Recent Developments Market valuations, although elevated in absolute terms, are not inconsistent with a low-interest-rate, low-inflation environment. That said, the portfolio manager believes earnings acceleration will now be a key focus. In the Financials sector, the success of the banks non-domestic businesses will likely be a key differentiator of performance. Concurrently, while OPEC s plan to cut output is a positive for the Energy sector, the portfolio manager will be watching the U.S. shale sector for signs of re-acceleration as the year progresses. The portfolio manager continues to believe that large companies with long-life reserves and strong balance sheets will deliver attractive levels of free cash as crude prices rally. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. 76

78 RBC CANADIAN EQUITY INCOME CLASS, 2017 Effective June 30, 2016, management fees were reduced as follows: from 1.75% to 1.60% in respect of Series A mutual fund shares, Advisor Series mutual fund shares, Advisor T5 Series mutual fund shares and Series T5 mutual fund shares; from 1.00% to 0.85% in respect of Series D mutual fund shares; and from 0.75% to 0.60% in respect of Series F mutual fund shares and Series FT5 mutual fund shares. Also effective June 30, 2016, Series H mutual fund shares were re-designated to Series A mutual fund shares and Series I mutual fund shares were re-designated to Series F mutual fund shares. Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series, Advisor T5 Series, Series T5 and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 77

79 RBC CANADIAN EQUITY INCOME CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.26) (0.22) (0.22) Mar. 31, (0.26) 0.07 (1.37) (1.06) (0.26) (0.26) Mar. 31, (0.28) 0.65 (0.33) 0.53 (0.17) (0.17) Mar. 31, (0.24) (0.12) (0.12) Mar. 31, (0.22) (0.02) (0.02) Advisor Series Mar. 31, (0.26) (0.22) (0.22) Mar. 31, (0.26) 0.07 (1.37) (1.06) (0.26) (0.26) Mar. 31, (0.28) 0.65 (0.33) 0.53 (0.18) (0.18) Mar. 31, (0.24) (0.13) (0.13) Mar. 31, (0.22) (0.02) (0.02) Advisor T5 Series Mar. 31, (0.24) (0.24) (0.35) (0.59) Mar. 31, (0.25) 0.08 (1.40) (1.07) (0.38) (0.26) (0.64) Mar. 31, (0.05) 0.11 (0.06) 0.08 (0.11) (0.11) Series T5 Mar. 31, (0.25) (0.23) (0.36) (0.59) Mar. 31, (0.24) 0.08 (1.46) (1.09) (0.44) (0.20) (0.64) Mar. 31, (0.05) 0.11 (0.06) 0.08 (0.11) (0.11) Series D Mar. 31, (0.14) (0.35) (0.35) Mar. 31, (0.15) 0.08 (1.43) (0.98) (0.39) (0.39) Mar. 31, (0.16) 0.67 (0.34) 0.67 (0.16) (0.16) Mar. 31, (0.14) (0.14) (0.14) Mar. 31, (0.13) (0.02) (0.02) Series F Mar. 31, (0.11) (0.38) (0.38) Mar. 31, (0.12) 0.08 (1.43) (0.95) (0.42) (0.42) Mar. 31, (0.13) 0.67 (0.34) 0.70 (0.16) (0.16) Mar. 31, (0.11) (0.13) (0.13) Mar. 31, (0.10) (0.02) (0.02) Series FT5 Mar. 31, (0.11) (0.24) (0.38) (0.62) Mar. 31, (0.11) 0.08 (1.50) (0.99) (0.35) (0.32) (0.67) Mar. 31, (0.02) 0.12 (0.06) 0.13 (0.12) (0.12)

80 RBC CANADIAN EQUITY INCOME CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Change in Net Assets Per Mutual Fund Share ($) (cont.) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series O Mar. 31, (0.52) (0.52) Mar. 31, (1.49) (0.87) (0.55) (0.55) Mar. 31, (0.35) 0.87 (0.31) (0.31) Mar. 31, (0.12) (0.12) Mar. 31, (0.02) (0.02) Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 3 From October 16, Initial offering net asset value per mutual fund share. Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Advisor T5 Series Mar. 31, Mar. 31, Mar. 31, Series T5 Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31,

81 RBC CANADIAN EQUITY INCOME CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data (cont.) Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series F Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series FT5 Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series A 1.92%, Advisor Series 1.94%, Advisor T5 Series 1.90%, Series T5 1.92%, Series D 1.03%, Series F 0.78% and Series FT5 0.80%. 5 From October 16, Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.60% 66% 34% Advisor Series 1.60% 66% 34% Advisor T5 Series 1.60% 66% 34% Series T5 1.60% 66% 34% Series D 0.85% 25% 75% Series F 0.60% 100% Series FT5 0.60% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. 80

82 RBC CANADIAN EQUITY INCOME CLASS, 2017 PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. 81

83 RBC CANADIAN EQUITY INCOME CLASS, 2017 PAST PERFORMANCE (cont.) Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: S&P/TSX Capped Composite Total Return Index Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Advisor T5 Series Benchmark Series T Benchmark Series D Benchmark Series F Benchmark Series FT Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Advisor T5 Series, Series T5 and Series FT5 mutual fund shares have been available for sale to shareholders since January 26, 2015, and Series A, Advisor Series, Series D, Series F and Series O mutual fund shares since January 1, Inception dates are not provided for series that have been in existence for more than 10 years. All outstanding Series H mutual fund shares were re-designated as Series A mutual fund shares and all outstanding Series I mutual fund shares were re-designated as Series F mutual fund shares effective June 30, INDEX DESCRIPTION S&P/TSX Capped Composite Total Return Index This index is the amended capitalizationweighted index measuring the performance of selected securities listed on the Toronto Stock Exchange, with no individual stock exceeding 10% of the overall weight. SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value Financials 31.8 Energy 25.1 Real Estate 11.3 Utilities 9.0 Materials 7.3 Industrials 4.8 Consumer Staples 2.4 Telecommunication Services 2.4 Health Care 1.5 Consumer Discretionary 1.4 Information Technology 0.6 Cash/Other 2.4 Top 25 Holdings* % of Net Asset Value Royal Bank of Canada 6.1 Enbridge Inc. 5.0 Bank of Nova Scotia 4.0 Suncor Energy Inc. 4.0 Brookfield Asset Management Inc., Class A 3.9 Manulife Financial Corporation 3.6 Toronto-Dominion Bank 3.6 Canadian Natural Resources Ltd. 3.3 TransCanada Corp. 2.6 Sun Life Financial Inc. 2.2 Brookfield Property Partners LP 2.2 Canadian Pacific Railway Ltd. 2.0 Cash & Cash Equivalents 1.8 Canadian Imperial Bank of Commerce 1.8 Bank of Montreal 1.5 Brookfield Canada Office Properties 1.4 BCE Inc. 1.4 Loblaw Companies Ltd. 1.3 Intact Financial Corp. 1.3 Potash Corporation of Saskatchewan Inc. 1.2 Emera Inc. 1.2 Keyera Corp. 1.2 TELUS Corp. 1.1 Fortis Inc. 1.0 Thomson Corp. 1.0 Top 25 Holdings 59.7 * The Fund invests substantially all of its assets directly in the RBC Canadian Equity Income Fund. The above are the Top 25 holdings of the RBC Canadian Equity Income Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 82

84 CANADIAN EQUITY FUND RBC CANADIAN MID-CAP EQUITY CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 83

85 RBC CANADIAN MID-CAP EQUITY CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide long-term capital growth by investing primarily in equity securities of mid-sized Canadian companies that offer above-average prospects for growth and may also invest in smaller capitalization companies that have adequate liquidity. To achieve its investment objective, the Fund invests most of its assets in the RBC Private Canadian Mid-Cap Equity Pool (the underlying fund ). The underlying fund focuses on companies with a history of high growth in sales and earnings, with above-average prospects for continued growth. The underlying fund invests in companies with strong management, focused business models and a competitive advantage. The underlying fund typically invests across major industry sectors within minimum and maximum exposures for each sector. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value rose to $11 million as of, 2017, from $8 million as of, The increase was due mainly to investment returns. Over the past year, the Fund s Series A shares gained 22.6%, which outperformed the 19.4% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broadbased index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. During the period, crude-oil prices recovered from levels that were well below the marginal cost of production, and increased further following OPEC s announced plans to cut its output. Investors were preoccupied with persistent concerns about the unabated surge in prices for Canadian residential real estate, the failure of manufacturing to take the reins from energy as the driver of Canadian economic growth and expectations that interest-rate increases in Canada are likely to lag the U.S. Canadian mid-cap stocks outperformed their larger-cap peers during the period. In the Fund, positive relative performance in the Materials, Health Care and Information Technology sectors was offset by weaker relative performance in the Telecommunication Services and Utilities sectors. In the Materials sector, an overweight position in Endeavour Mining aided the Fund s performance, with the shares gaining as the company develops two new mines. A reduction in the position in First Majestic Silver also benefited the Fund s performance as the stock struggled during the second half of the period. In the Energy sector, an overweight position in Seven Generations positively contributed to performance, as the company made attractive acquisitions throughout the period. Underweight exposure to the Industrials sector proved beneficial to the Fund during the period. A lack of exposure to MacDonald, Dettwiler and Associates aided returns as investor concerns regarding the health of the satellite industry weighed on the shares. In the Consumer Discretionary sector, an overweight position in Linamar, an auto-components supplier, hindered returns as investor concerns about the current stage of the auto cycle and the potential for a U.S. border tax were reflected in the stock s performance. As well, a lack of exposure to Amaya hindered returns. Recent Developments Market valuations, although elevated in absolute terms, are not inconsistent with a low-interest-rate, low-inflation environment. That said, the portfolio manager believes earnings acceleration will now be a key focus. While OPEC s plan to cut output is a positive for the Energy sector, the portfolio manager will be watching the U.S. shale industry for signs of re-acceleration as the year progresses. The portfolio manager continues to believe that companies with long-life reserves and strong balance sheets will deliver attractive levels of free cash as crude prices rally. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, Series H mutual fund shares and Series I mutual fund shares were closed to all investors. 84

86 RBC CANADIAN MID-CAP EQUITY CLASS, 2017 Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 85

87 RBC CANADIAN MID-CAP EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.25) (0.09) (0.09) Mar. 31, (0.22) (0.25) (0.88) (1.07) (0.10) (0.10) Mar. 31, (0.25) 1.07 (1.14) (0.07) (0.21) (0.21) Mar. 31, (0.23) (0.16) (0.16) Mar. 31, (0.21) (0.10) (0.10) Advisor Series Mar. 31, (0.26) (0.09) (0.09) Mar. 31, (0.22) (0.25) (0.90) (1.08) (0.11) (0.11) Mar. 31, (0.24) 1.08 (1.14) (0.05) (0.17) (0.17) Mar. 31, (0.22) (0.09) (0.09) Mar. 31, (0.19) (0.04) (0.04) Series D Mar. 31, (0.15) (0.10) (0.10) Mar. 31, (0.13) (0.26) (0.92) (1.01) (0.20) (0.20) Mar. 31, (0.15) 1.11 (1.18) 0.03 (0.29) (0.29) Mar. 31, (0.14) (0.04) (0.04) Mar. 31, (0.13) (0.07) (0.07) Series F Mar. 31, (0.12) (0.15) (0.15) Mar. 31, (0.10) (0.26) (0.92) (0.98) (0.23) (0.23) Mar. 31, (0.11) 1.11 (1.18) 0.07 (0.29) (0.29) Mar. 31, (0.10) (0.20) (0.20) Mar. 31, (0.10) (0.07) (0.07) Series O Mar. 31, (0.01) (0.20) (0.20) Mar. 31, (0.27) (0.95) (0.91) (0.34) (0.34) Mar. 31, (1.20) 0.19 (0.21) (0.21) Mar. 31, (0.01) (0.19) (0.19) Mar. 31, (0.01) (0.09) (0.09) Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 86

88 RBC CANADIAN MID-CAP EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 87

89 RBC CANADIAN MID-CAP EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.75% 66% 34% Advisor Series 1.75% 66% 34% Series D 1.00% 25% 75% Series F 0.75% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. 88

90 RBC CANADIAN MID-CAP EQUITY CLASS, 2017 PAST PERFORMANCE (cont.) Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: S&P/TSX MidCap Index Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Series D Benchmark Series F Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Advisor Series, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 1, Inception dates are not provided for series that have been in existence for more than 10 years. INDEX DESCRIPTION S&P/TSX MidCap Index This is an index of mid-sized Canadian companies, with weights adjusted across economic sectors. SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value Materials 23.2 Energy 20.5 Real Estate 12.3 Industrials 11.7 Utilities 7.3 Financials 5.0 Consumer Discretionary 4.7 Consumer Staples 4.4 Information Technology 3.8 Health Care 2.1 Telecommunication Services 0.4 Cash/Other 4.6 Top 25 Holdings* % of Net Asset Value Cash & Cash Equivalents 4.0 Canadian Utilities Ltd., Class A 2.7 Endeavour Mining Corp. 2.5 B2Gold Corp. 2.4 Lundin Mining Corp. 2.2 Brookfield Property Partners LP 2.2 Parex Resources Inc. 2.1 CCL Industries, Class B 2.0 OceanaGold Corp. 2.0 George Weston Ltd. 1.9 H&R Real Estate Investment Trust 1.8 CAE Inc. 1.8 Canadian Apartment Properties Real Estate Investment Trust 1.7 Industrial Alliance Insurance & Financial Services Inc. 1.7 Torex Gold Resources Inc. 1.6 Methanex Corp. 1.6 Brookfield Renewable Partners LP 1.6 Veresen Inc. 1.6 Interfor Corp. 1.6 Hydro One Ltd. 1.6 Smart Real Estate Investment Trust 1.5 Algonquin Power & Utilities Corp. 1.5 Birchcliff Energy Ltd. 1.5 Canadian Real Estate Investment Trust 1.5 BlackBerry Ltd. 1.4 Top 25 Holdings 48.0 * The Fund invests substantially all of its assets directly in the RBC Private Canadian Mid-Cap Equity Pool. The above are the Top 25 holdings of the RBC Private Canadian Mid-Cap Equity Pool. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 89

91 NORTH AMERICAN EQUITY FUND RBC NORTH AMERICAN VALUE CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 90

92 RBC NORTH AMERICAN VALUE CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide long-term capital growth by investing in equity securities of Canadian and/or U.S. companies priced below their true value and offering long-term opportunities for growth. To achieve its investment objective, the Fund invests most of its assets in the RBC North American Value Fund (the underlying fund ). The underlying fund identifies quality companies that are undervalued based on criteria such as assets, earnings and cash flow. The approach provides for a lower level of volatility than a portfolio of growth companies. The underlying fund may also invest in income trusts. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value rose to $192 million as of, 2017, from $185 million as of, The increase was due to investment returns. Over the past year, the Fund s Series A shares gained 14.4%, which underperformed the 20.0% rise in the S&P 500 Total Return Index in Canadian dollars. The shares underperformed the 18.6% rise in the S&P/TSX Capped Composite Total Return Index. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. During the period, the S&P/TSX Composite Index, Canada s equity benchmark, outperformed most other global indexes, as heavyweight sectors Financials, Energy and Materials all strengthened. Crude-oil prices recovered from levels that were well below the marginal cost of production, and increased further following OPEC s announced plans to cut its output. Investors were preoccupied with persistent concerns over the unabated surge in prices for Canadian residential real estate, the failure of manufacturing to take the reins from energy as the driver of Canadian economic growth and expectations that interest-rate increases in Canada are likely to lag the U.S. Financials stocks moved higher in the U.S. on the rise of interest rates and the potential for less regulation. The Canadian Financials sector performed well with Canadian banks gaining 30% over Shares of lumber and copper producers also performed strongly, benefiting from the rise in the underlying commodities. The S&P 500 also performed well during the period. This strong performance was driven by a recovery in commodity prices, improvement in most global economies, and optimism that President Trump s fiscal-spending policies and vow to cut taxes could improve consumer and corporate confidence. Earnings growth improved during the period as the negative effects of the strong U.S. dollar subsided, along with the improvement and stabilization of oil prices. The start of 2017 has been highlighted by strength in growth over value and a general reversal in sector performance, as the Information Technology and Consumer Discretionary sectors led the way and the Energy and Telecommunication Services sectors lagged the index. The Fund benefited from security selection in the Canadian Health Care sector. A lack of exposure to Valeant Pharmaceuticals and Concordia International proved beneficial as the companies struggled under greater regulatory scrutiny and higher debt levels. Offsetting this, the Fund underperformed in the Industrials sector. In the U.S. Industrials sector, a position in Nielsen detracted from performance. The company reported disappointing results as well as lower forward guidance based on an unexpectedly weak business line. However, the portfolio manager believes the core Nielsen story remains intact. Recent Developments Market valuations, although elevated in absolute terms, are not inconsistent with a low-interest-rate, low-inflation environment. That said, the portfolio manager believes that earnings acceleration will now be a key focus. In the Financials sector, the success of the Canadian banks non-domestic businesses will likely be a key differentiator of performance. Concurrently, while OPEC s plan to cut output is a positive for the Energy sector, the portfolio manager will be watching the U.S. shale sector for signs of re-acceleration as the year progresses. The portfolio manager continues to believe that large companies with long-life reserves and strong balance sheets will deliver attractive levels of free cash as crude prices stabilize. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. 91

93 RBC NORTH AMERICAN VALUE CLASS, 2017 Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, management fees were reduced as follows: from 1.75% to 1.60% in respect of Series A mutual fund shares and Advisor Series mutual fund shares; from 1.00% to 0.85% in respect of Series D mutual fund shares; and from 0.75% to 0.60% in respect of Series F mutual fund shares. Also effective June 30, 2016, Series H mutual fund shares were re-designated to Series A mutual fund shares and Series I mutual fund shares were re-designated to Series F mutual fund shares. Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 92

94 RBC NORTH AMERICAN VALUE CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.31) (0.25) (0.25) Mar. 31, (0.31) 0.43 (0.91) (0.46) (0.29) (0.29) Mar. 31, (0.30) Mar. 31, (0.26) (0.11) (0.11) Mar. 31, (0.23) (0.07) (0.07) Advisor Series Mar. 31, (0.31) (0.24) (0.24) Mar. 31, (0.31) 0.43 (0.91) (0.46) (0.29) (0.29) Mar. 31, (0.31) Mar. 31, (0.27) (0.11) (0.11) Mar. 31, (0.23) (0.07) (0.07) Series D Mar. 31, (0.17) (0.41) (0.41) Mar. 31, (0.18) 0.45 (0.94) (0.33) (0.44) (0.44) Mar. 31, (0.18) Mar. 31, (0.15) (0.11) (0.11) Mar. 31, (0.14) (0.07) (0.07) Series F Mar. 31, (0.13) (0.46) (0.46) Mar. 31, (0.14) 0.45 (0.95) (0.30) (0.48) (0.48) Mar. 31, (0.14) Mar. 31, (0.12) (0.11) (0.11) Mar. 31, (0.10) (0.08) (0.08) Series O Mar. 31, (0.01) (0.62) (0.62) Mar. 31, (0.01) 0.47 (0.98) (0.17) (0.64) (0.64) Mar. 31, Mar. 31, (0.11) (0.11) Mar. 31, (0.01) (0.09) (0.09) Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 93

95 RBC NORTH AMERICAN VALUE CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series A 1.94%, Advisor Series 1.95%, Series D 1.05% and Series F 0.79%. 94

96 RBC NORTH AMERICAN VALUE CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.60% 66% 34% Advisor Series 1.60% 66% 34% Series D 0.85% 25% 75% Series F 0.60% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. 95

97 RBC NORTH AMERICAN VALUE CLASS, 2017 PAST PERFORMANCE (cont.) Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmarks: Benchmark 1 S&P 500 Total Return Index (CAD) Benchmark 2 S&P/TSX Capped Composite Total Return Index Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Benchmark Advisor Series Benchmark Benchmark Series D Benchmark Benchmark Series F Benchmark Benchmark Series O Benchmark Benchmark SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix Sectors % of Net Asset Value Financials 29.3 Energy 14.1 Information Technology 10.4 Industrials 8.8 Consumer Discretionary 7.4 Health Care 5.8 Consumer Staples 5.1 Materials 5.1 Telecommunication Services 3.1 Real Estate 1.4 Utilities 1.0 Cash/Other 8.5 Investment Mix Countries/Regions % of Net Asset Value Canada 55.8 United States 35.5 Cash/Other 8.7 The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark indexes. Series A, Advisor Series, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 1, Inception dates are not provided for series that have been in existence for more than 10 years. All outstanding Series H mutual fund shares were re-designated as Series A mutual fund shares and all outstanding Series I mutual fund shares were re-designated as Series F mutual fund shares effective June 30, INDEX DESCRIPTIONS S&P 500 Total Return Index (CAD) This index is a capitalization-weighted index measuring the Canadian dollar performance of 500 widely held common stocks representing all major industries in the United States. The index gives investors a broad measure of the overall performance of the U.S. stock market. S&P/TSX Capped Composite Total Return Index This index is the amended capitalizationweighted index measuring the performance of selected securities listed on the Toronto Stock Exchange, with no individual stock exceeding 10% of the overall weight. 96

98 RBC NORTH AMERICAN VALUE CLASS, 2017 SUMMARY OF INVESTMENT PORTFOLIO (cont.) (after consideration of derivative products, if any) As at, 2017 Top 25 Holdings* % of Net Asset Value Cash & Cash Equivalents 8.0 Toronto-Dominion Bank 3.8 Bank of Nova Scotia 3.7 Royal Bank of Canada 3.4 Brookfield Asset Management Inc., Class A 2.9 Enbridge Inc. 2.5 JPMorgan Chase & Co. 2.2 Suncor Energy Inc. 2.2 Canadian National Railway Co. 2.1 Alphabet Inc., Class C 2.0 TransCanada Corp. 1.8 Manulife Financial Corporation 1.8 Canadian Natural Resources Ltd. 1.6 BCE Inc. 1.5 Apple Inc. 1.4 Fairfax India Holdings Corp. 1.3 UnitedHealth Group Incorporated 1.3 Charter Communications Inc. 1.3 Loblaw Companies Ltd. 1.2 Bank of America Corp. 1.2 Microsoft Corp. 1.2 Ross Stores Inc. 1.2 Berkshire Hathaway Inc., Class B 1.2 Acasta Enterprises Inc. 1.1 CSX Corp. 1.0 Top 25 Holdings 52.9 * The Fund invests substantially all of its assets directly in the RBC North American Value Fund. The above are the Top 25 holdings of the RBC North American Value Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 97

99 U.S. EQUITY FUND RBC U.S. DIVIDEND CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 98

100 RBC U.S. DIVIDEND CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide long-term capital growth and regular dividend income by investing primarily in common and preferred shares of major U.S. companies with above-average dividend yields in order to provide targeted exposure to opportunities in U.S. equity markets. Stocks that qualify as investments will generally carry aboveaverage dividend yields and offer the potential for increased payouts. To achieve its investment objective, the Fund invests most of its assets in the RBC U.S. Dividend Fund (the underlying fund ). The underlying fund invests in companies with long-term prospects of growing their dividends or which have the potential for such special events as stock buybacks, takeovers and special dividends. The underlying fund may also invest in government bonds, corporate bonds and treasury bills. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value rose to $122 million as of, 2017, from $111 million as of, The change was due to investment returns. Over the past year, the Fund s Series A shares gained 17.4%, which underperformed the 20.0% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. The S&P 500 generated above-average returns over the past 12 months, rising about 20%. Market returns were driven by a recovery in commodity prices, improvement in most global economies and a rebound in corporate earnings. Some of the performance was attributable to optimism that President Trump will succeed in gaining legislative support for his plan to boost government spending and cut taxes, both of which would likely support economic growth. The Financials and Information Technology sectors were the bestperforming sectors in the Fund year with notable help from the Industrials and Materials sectors, which benefited from higher commodity prices. Dow Chemical led the way in the Materials sector following its agreement to merge with DuPont, and transportation companies Boeing and Union Pacific Railway led Industrials. An underweight position in the Consumer Discretionary sector also aided the Fund s returns, as did stock selection in the Financials, Health Care and Consumer Staples sectors. In the Financials sector, bank profitability improved as the amount charged by banks on loans rose more than the rate they paid for funds. Performance was hurt by the Fund s overweight position in the Health Care sector, where concern that companies could be forced to freeze or lower drug prices had a negative impact on Pfizer and Cardinal Health. The concerns about drug pricing hurt the Fund s position in CVS, the No. 2 drugstore chain. The Fund was also hurt by its positions in biotechnology company Gilead and by medical-device maker Medtronic. Regions Financial and KeyCorp were standouts. In the Health Care sector, leading health insurer UnitedHealth and pharmaceuticals makers Merck and Johnson & Johnson generated solid returns thanks to exceptional cash flows and aggressive buyback programs. Cigarette makers Philip Morris and Altria led the way in the Consumer Staples sector amid consistent high-single-digit earnings growth, high dividend yields and significant buybacks. Other notable performers included Time Warner, which received a takeover bid from AT&T; media company Comcast; and technology companies Apple, Microsoft and Texas Instruments. Recent Developments In the portfolio manager s opinion, recent economic data suggests the global economic growth is reaccelerating, slowly and from a low level. Earnings growth turned positive in the third quarter and the portfolio manager expects profit improvements to drive markets somewhat higher in However, the stock market could come under pressure if further strengthening of the U.S. dollar or implementation of protectionist trade policies called for by Trump have a negative impact on the outlook for earnings. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. 99

101 RBC U.S. DIVIDEND CLASS, 2017 Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, management fees were reduced as follows: from 1.75% to 1.60% in respect of Series A mutual fund shares and Advisor Series mutual fund shares; from 1.00% to 0.85% in respect of Series D mutual fund shares; and from 0.75% to 0.60% in respect of Series F mutual fund shares. Also effective June 30, 2016, Series H mutual fund shares were re-designated to Series A mutual fund shares and Series I mutual fund shares were re-designated to Series F mutual fund shares. Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 100

102 RBC U.S. DIVIDEND CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.37) Mar. 31, (0.37) 1.11 (0.98) Mar. 31, (0.32) Mar. 31, (0.25) Mar. 31, (0.09) Advisor Series Mar. 31, (0.36) Mar. 31, (0.36) 1.11 (0.98) Mar. 31, (0.31) Mar. 31, (0.26) Mar. 31, (0.09) Series D Mar. 31, (0.20) Mar. 31, (0.21) 1.14 (1.01) Mar. 31, (0.18) Mar. 31, (0.14) Mar. 31, (0.06) Series F Mar. 31, (0.15) Mar. 31, (0.17) 1.15 (1.01) Mar. 31, (0.14) Mar. 31, (0.12) Mar. 31, (0.05) Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 3 From October 31, Initial offering net asset value per mutual fund share. 101

103 RBC U.S. DIVIDEND CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series A 1.95%, Advisor Series 1.93%, Series D 1.02% and Series F 0.78%. 5 From October 31, Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.60% 66% 34% Advisor Series 1.60% 66% 34% Series D 0.85% 25% 75% Series F 0.60% 100% * Includes all costs related to management, investment advisory services, general administration and profit. 102

104 RBC U.S. DIVIDEND CLASS, 2017 PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: S&P 500 Total Return Index (CAD) Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Series D Benchmark Series F Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Advisor Series, Series D and Series F mutual fund shares have been available for sale to shareholders since October 31, Inception dates are not provided for series that have been in existence for more than 10 years. All outstanding Series H mutual fund shares were re-designated as Series A mutual fund shares and all outstanding Series I mutual fund shares were re-designated as Series F mutual fund shares effective June 30, INDEX DESCRIPTION S&P 500 Total Return Index (CAD) This index is a capitalization-weighted index measuring the Canadian dollar performance of 500 widely held common stocks representing all major industries in the United States. The index gives investors a broad measure of the overall performance of the U.S. stock market. 103

105 RBC U.S. DIVIDEND CLASS, 2017 SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value Information Technology 17.1 Financials 16.8 Health Care 14.8 Consumer Staples 13.2 Industrials 11.1 Consumer Discretionary 9.9 Energy 6.6 Utilities 3.5 Materials 2.8 Telecommunication Services 2.4 Real Estate 0.5 Cash/Other 1.3 Top 25 Holdings* % of Net Asset Value Apple Inc. 3.9 JPMorgan Chase & Co. 3.3 Microsoft Corp. 3.2 Johnson & Johnson 3.0 Philip Morris International Inc. 2.8 Pfizer Inc. 2.7 Altria Group Inc. 2.7 Bank of America Corp. 2.6 PepsiCo Inc. 2.5 CVS Health Corp. 2.5 Merck & Co. Inc. 2.4 Chevron Corp. 2.3 Cardinal Health Inc. 1.9 Broadcom Ltd. 1.8 McDonald s Corp. 1.7 Boeing Co. 1.7 UnitedHealth Group Incorporated 1.6 Cisco Systems Inc. 1.6 Comcast Corp., Class A 1.5 Delphi Automotive Plc. 1.5 Raytheon Company 1.5 Dow Chemical Company 1.4 Microchip Technology Inc. 1.4 TJX Companies Inc. 1.4 LyondellBasell Industries N.V. 1.4 Top 25 Holdings 54.3 * The Fund invests substantially all of its assets directly in the RBC U.S. Dividend Fund. The above are the Top 25 holdings of the RBC U.S. Dividend Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 104

106 U.S. EQUITY FUND RBC U.S. EQUITY CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 105

107 RBC U.S. EQUITY CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide long-term capital growth by investing primarily in equity securities of major U.S. companies. To achieve its investment objective, the Fund invests most of its assets in the RBC U.S. Equity Fund (the underlying fund ). The underlying fund diversifies across industries and invests in companies with strong management, focused business models and the potential for growth in earnings and cash flow. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value rose to $28 million as of, 2017, from $25 million as of, The increase was due to investment returns. Over the past year, the Fund s Series A shares gained 16.4%, which underperformed the 20.0% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. The S&P 500 generated above-average returns over the past 12 months, rising about 20%. Market returns were driven by a recovery in commodity prices, improvement in most global economies and a rebound in corporate earnings. Some of the performance was attributable to optimism that President Trump will succeed in gaining legislative support for his plan to boost government spending and cut taxes, both of which would likely support economic growth. Performance was hurt by the Fund s underweight positions in the Industrials and Financials sectors. Stock selection in the Consumer Discretionary sector hurt performance as bricks-and-mortar retailers Nordstrom and Dollar General continued to face fierce competition from internet retailers. The Fund was also hurt by its positions in Blackstone, which manages alternative investments, and credit-card company Synchrony Financial. The Energy and Health Care sectors were the best-performing sectors in the Fund with notable help from Materials, a sector that benefited from higher commodity prices in response to improving economic activity. Dow Chemical led the way in the Materials sector following its agreement to merge with DuPont, and an underweight position in the Consumer Staples sector also aided returns. Strong stock selection in the Energy, Materials and Consumer Discretionary sectors also contributed to returns. An underweight position in the Energy sector was a positive, as was lower-than-benchmark exposure to ExxonMobil. In the Financials sector, bank profitability improved as the amount charged by banks on loans rose more than the rate they paid for funds. Bank of America, Goldman Sachs and Lincoln National were standouts. In the Materials sector, steelmaker Steel Dynamics generated outsized returns as economic activity picked up. Other notable performers in the portfolio included the technology companies Apple, Microsoft and Texas Instruments. Recent Developments In the portfolio manager s opinion, recent economic data suggests global economy growth is reaccelerating, slowly and from a low level. Earnings growth turned positive in the third quarter and the portfolio manager expects profit improvements to drive markets somewhat higher in However, the stock market could come under pressure if further strengthening of the U.S. dollar or implementation of protectionist trade policies called for by Trump have a negative impact on the outlook for earnings. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, management fees were reduced as follows: from 1.75% to 1.60% in respect of Series A mutual fund shares and Advisor Series mutual fund shares; from 1.00% to 0.85% in respect of Series D mutual fund shares; and from 0.75% to 0.60% in respect of Series F mutual fund shares. Also effective June 30, 2016, Series H mutual fund shares were closed to all investors, and Series I mutual fund shares were re-designated to Series F mutual fund shares. 106

108 RBC U.S. EQUITY CLASS, 2017 Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 107

109 RBC U.S. EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.38) Mar. 31, (0.38) 1.87 (1.96) (0.16) Mar. 31, (0.34) Mar. 31, (0.28) Mar. 31, (0.23) Advisor Series Mar. 31, (0.38) Mar. 31, (0.38) 1.88 (1.97) (0.16) Mar. 31, (0.33) Mar. 31, (0.28) Mar. 31, (0.23) Series D Mar. 31, (0.20) Mar. 31, (0.21) 1.94 (2.03) Mar. 31, (0.18) Mar. 31, (0.15) Mar. 31, (0.13) Series F Mar. 31, (0.16) Mar. 31, (0.17) 1.96 (2.05) Mar. 31, (0.15) Mar. 31, (0.13) Mar. 31, (0.10) Series O Mar. 31, (0.01) Mar. 31, (0.01) 2.01 (2.10) Mar. 31, (0.01) Mar. 31, (0.01) Mar. 31, (0.01) Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 108

110 RBC U.S. EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series A 1.97%, Advisor Series 1.96%, Series D 1.00% and Series F 0.77%. 109

111 RBC U.S. EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.60% 66% 34% Advisor Series 1.60% 66% 34% Series D 0.85% 25% 75% Series F 0.60% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. 110

112 RBC U.S. EQUITY CLASS, 2017 PAST PERFORMANCE (cont.) Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: S&P 500 Total Return Index (CAD) Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Series D Benchmark Series F Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Advisor Series, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 1, Inception dates are not provided for series that have been in existence for more than 10 years. All outstanding Series I mutual fund shares were re-designated as Series F mutual fund shares effective June 30, INDEX DESCRIPTION S&P 500 Total Return Index (CAD) This index is a capitalization-weighted index measuring the Canadian dollar performance of 500 widely held common stocks representing all major industries in the United States. The index gives investors a broad measure of the overall performance of the U.S. stock market. SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value Information Technology 21.0 Financials 13.8 Health Care 12.3 Consumer Discretionary 10.7 Industrials 8.8 Consumer Staples 7.8 Energy 7.3 Utilities 2.9 Telecommunication Services 2.3 Materials 1.7 Real Estate 0.4 Cash/Other 11.0 Top 25 Holdings* % of Net Asset Value RBC U.S. Mid-Cap Value Equity Fund 4.1 RBC U.S. Mid-Cap Equity Fund 4.0 Apple Inc. 3.9 Microsoft Corp. 3.0 Alphabet Inc., Class A 2.6 Johnson & Johnson 2.2 JPMorgan Chase & Co. 2.0 Bank of America Corp. 1.9 Cash & Cash Equivalents 1.9 Amazon.com, Inc. 1.8 Facebook Inc., Class A 1.7 Pfizer Inc. 1.6 Berkshire Hathaway Inc., Class B 1.6 Chevron Corp. 1.6 Merck & Co. Inc. 1.5 UnitedHealth Group Incorporated 1.4 Comcast Corp., Class A 1.4 PepsiCo Inc. 1.3 AT&T Inc. 1.3 Home Depot Inc. 1.2 The Procter & Gamble Co. 1.2 Boeing Co. 1.1 Philip Morris International Inc. 1.1 RBC U.S. Small-Cap Core Equity Fund USD 1.1 Cisco Systems Inc. 1.0 Top 25 Holdings 47.5 * The Fund invests substantially all of its assets directly in the RBC U.S. Equity Fund. The above are the Top 25 holdings of the RBC U.S. Equity Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 111

113 U.S. EQUITY FUND RBC QUBE LOW VOLATILITY U.S. EQUITY CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 112

114 RBC QUBE LOW VOLATILITY U.S. EQUITY CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide long-term capital growth by investing primarily in equity securities of U.S. companies. The Fund uses a quantitative approach and seeks to achieve a reduced level of volatility of returns compared with the broader U.S. equity market. To achieve its investment objective, the Fund invests most of its assets in the RBC QUBE Low Volatility U.S. Equity Fund (the underlying fund ). The underlying fund is managed using a quantitative investment model designed to select individual stocks while controlling portfolio-level risk. This involves building a portfolio that maximizes exposure to factors associated with outperformance, while controlling for exposure to risk factors. The portfolio manager of the underlying fund will diversify across industries within the U.S. equity market. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value rose to $35 million as of, 2017, from $14 million as of, The increase was due to mainly to net inflows. Over the past year, the Fund s Series A shares gained 13.4%, which underperformed the 20.0% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. The election of Donald Trump in November as U.S. president led to optimism that he would be able to enact tax cuts, fiscal spending and economic deregulation, and market gains accelerated after his victory. Within the Fund, stocks in the Materials sector posted robust results as commodity prices continued to climb. Newmont Mining and Royal Gold were among the biggest gainers in the Fund s portfolio. The Financials sector was another area of strength for the Fund, as bank stocks benefited given prospects for higher interest rates. PNC Financial Services, American Financial Group and U.S. Bancorp contributed to the Fund s performance. Returns were hurt by positions in Telecommunication Services. Allocations to Comtech Telecommunications and Verizon detracted from performance. The Consumer Discretionary sector also weighed heavily on performance, with a position in AutoZone holding back returns. Recent Developments The economic outlook has improved globally, in the view of the portfolio manager. Positive economic data has supported heightened consumer and business confidence, and investors have focused on the potential for a shift from monetary stimulus to fiscal stimulus. However, central banks other than the U.S. Federal Reserve are continuing to rely on monetary stimulus until there is evidence that fiscal spending is ready to take over. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, management fees were reduced as follows: from 1.75% to 1.60% in respect of Series A mutual fund shares and Advisor Series mutual fund shares; from 1.00% to 0.85% in respect of Series D mutual fund shares; and from 0.75% to 0.60% in respect of Series F mutual fund shares. Also effective June 30, 2016, Series H mutual fund shares were re-designated to Series A mutual fund shares, and Series I mutual fund shares were closed to all investors. Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. 113

115 RBC QUBE LOW VOLATILITY U.S. EQUITY CLASS, 2017 Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 114

116 RBC QUBE LOW VOLATILITY U.S. EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.21) Mar. 31, (0.21) Mar. 31, (0.04) Advisor Series Mar. 31, (0.21) Mar. 31, (0.21) Mar. 31, (0.04) Series D Mar. 31, (0.12) Mar. 31, (0.13) Mar. 31, (0.02) Series F Mar. 31, (0.09) Mar. 31, (0.10) Mar. 31, (0.02) Series O Mar. 31, Mar. 31, Mar. 31, Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 3 From October 16, Initial offering net asset value per mutual fund share. 115

117 RBC QUBE LOW VOLATILITY U.S. EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series A 1.87%, Advisor Series 1.87%, Series D 1.05% and Series F 0.77%. 5 From October 16, Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.60% 57% 43% Advisor Series 1.60% 57% 43% Series D 0.85% 25% 75% Series F 0.60% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. 116

118 RBC QUBE LOW VOLATILITY U.S. EQUITY CLASS, 2017 PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: S&P 500 Total Return Index (CAD) Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Series D Benchmark Series F Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Advisor Series, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 26, Inception dates are not provided for series that have been in existence for more than 10 years. All outstanding Series H mutual fund shares were re-designated as Series A mutual fund shares effective June 30, INDEX DESCRIPTION S&P 500 Total Return Index (CAD) This index is a capitalization-weighted index measuring the Canadian dollar performance of 500 widely held common stocks representing all major industries in the United States. The index gives investors a broad measure of the overall performance of the U.S. stock market. 117

119 RBC QUBE LOW VOLATILITY U.S. EQUITY CLASS, 2017 SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value Information Technology 20.2 Utilities 18.0 Consumer Staples 13.9 Financials 13.7 Industrials 10.4 Consumer Discretionary 7.3 Health Care 7.3 Real Estate 3.8 Telecommunication Services 3.1 Energy 1.8 Materials 0.3 Cash/Other 0.2 Top 25 Holdings* % of Net Asset Value Xcel Energy Inc. 3.0 PepsiCo Inc. 3.0 Republic Services Inc. 3.0 Johnson & Johnson 3.0 The Coca-Cola Co. 3.0 Alphabet Inc., Class C 3.0 U.S. Bancorp 2.9 DTE Energy Company 2.8 TJX Companies Inc. 2.7 PNC Bank Corp. 2.6 Consolidated Edison Inc M Co. 2.6 American Electric Power 2.5 Berkshire Hathaway Inc., Class B 2.4 Home Depot Inc. 2.3 Intel Corp. 2.3 Honeywell International Inc. 2.1 Atmos Energy Corp. 2.0 Wells Fargo & Company 2.0 Fiserv Inc. 1.9 Philip Morris International Inc. 1.8 American Financial Group Inc. 1.8 Cisco Systems Inc. 1.8 Exxon Mobil Corp. 1.7 Public Service Enterprise Group 1.7 Top 25 Holdings 60.5 * The Fund invests substantially all of its assets directly in the RBC QUBE Low Volatility U.S. Equity Fund. The above are the Top 25 holdings of the RBC QUBE Low Volatility U.S. Equity Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 118

120 U.S. EQUITY FUND RBC U.S. EQUITY VALUE CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 119

121 RBC U.S. EQUITY VALUE CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide long-term capital growth by investing primarily in equity securities of U.S. companies in order to provide broad exposure to economic growth through the U.S. stock market. To achieve its investment objective, the Fund invests most of its assets in the RBC U.S. Equity Value Fund (the underlying fund ). The underlying fund diversifies across industries and selects companies with strong management, focused business models and the potential for growth in earnings and cash flow. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value rose to $725,000 as of, 2017, from $688,000 as of, The increase was due to investment returns. Over the past year, the Fund s Series A shares gained 15.9%, which underperformed the 20.0% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. The S&P 500 performed well during the period. This strong performance was driven by a recovery in commodity prices, improvement in most global economies, and optimism that President Trump s fiscal-spending policies and vow to cut taxes could improve consumer and corporate confidence. Earnings growth improved during the period as the negative effects of the strong U.S. dollar subsided, along with the improvement and stabilization of oil prices. The start of 2017 was highlighted by strength in growth over value and a general reversal in sector performance, as the Information Technology and Consumer Discretionary sectors led the way and the Energy and Telecommunication Services sectors lagged the index. The Fund s underperformance was due primarily to portfolio positioning in the Industrials sector. Underweight exposure to Union Pacific was a negative, as the stock rose on anticipation of improving rail traffic. An overweight position in Rockwell Collins also hindered performance. Portfolio positioning in the Health Care sector was a positive for the Fund s performance, with overweight exposure to equipment and supplies companies combined with underweight exposure to biotechnology companies proving beneficial. The drug-pricing debate continued to dominate headlines, negatively impacting biotechnology. Below-benchmark exposure to the Consumer Discretionary sector held back the Fund s returns. A lack of exposure to Time Warner was a negative for the Fund s performance as the stock benefited from the company s agreement to be purchased by AT&T during the second half of Recent Developments The portfolio manager remains generally optimistic about prospects for U.S. stocks. The economic backdrop, both globally and in the U.S., has been improving as seen in the global manufacturing purchasing managers index at a 2 1/2-year high. If oil prices continue to rise and the yield curve to steepen, earnings estimates for the Energy and Financials sectors will likely be raised, and this dynamic should support the continued rotation from stocks exhibiting stable growth to those considered to represent cyclical value. Nevertheless, the portfolio manager is mindful that higher interest rates and a higher U.S. dollar could emerge as headwinds to the economy and corporate profits. In addition, the market must remain wary of possible protectionist moves by U.S. President Trump, as such measures could ultimately crimp the profitability of many of the market s largest companies. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, management fees were reduced as follows: from 1.75% to 1.60% in respect of Series A mutual fund shares and Advisor Series mutual fund shares; from 1.00% to 0.85% in respect of Series D mutual fund shares; and from 0.75% to 0.60% in respect of Series F mutual fund shares. Also effective June 30, 2016, Series H mutual fund shares and Series I mutual fund shares were closed to all investors. 120

122 RBC U.S. EQUITY VALUE CLASS, 2017 Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 121

123 RBC U.S. EQUITY VALUE CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.23) Mar. 31, (0.22) 0.67 (0.93) (0.20) Mar. 31, (0.04) Advisor Series Mar. 31, (0.22) Mar. 31, (0.20) 0.61 (0.84) (0.18) Mar. 31, (0.04) Series D Mar. 31, (0.13) Mar. 31, (0.12) 0.69 (0.95) (0.10) Mar. 31, (0.02) Series F Mar. 31, (0.11) Mar. 31, (0.10) 0.60 (0.83) (0.08) Mar. 31, (0.01) Series O Mar. 31, (0.02) Mar. 31, (1.21) Mar. 31, Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 3 From October 16, Initial offering net asset value per mutual fund share. 122

124 RBC U.S. EQUITY VALUE CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series A 1.92%, Advisor Series 1.83%, Series D 1.04% and Series F 0.79%. 5 From October 16, Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.60% 57% 43% Advisor Series 1.60% 57% 43% Series D 0.85% 25% 75% Series F 0.60% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. 123

125 RBC U.S. EQUITY VALUE CLASS, 2017 PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: S&P 500 Total Return Index (CAD) Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Series D Benchmark Series F Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Advisor Series, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 26, Inception dates are not provided for series that have been in existence for more than 10 years. INDEX DESCRIPTION S&P 500 Total Return Index (CAD) This index is a capitalization-weighted index measuring the Canadian dollar performance of 500 widely held common stocks representing all major industries in the United States. The index gives investors a broad measure of the overall performance of the U.S. stock market. 124

126 RBC U.S. EQUITY VALUE CLASS, 2017 SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value Information Technology 20.5 Financials 14.0 Health Care 12.8 Industrials 11.4 Consumer Discretionary 10.5 Consumer Staples 7.9 Energy 5.8 Real Estate 2.2 Materials 2.1 Telecommunication Services 2.1 Utilities 2.1 Cash/Other 8.6 Top 25 Holdings* % of Net Asset Value Cash & Cash Equivalents 7.9 Apple Inc. 3.7 Microsoft Corp. 3.0 Alphabet Inc., Class A 2.9 JPMorgan Chase & Co. 2.1 Berkshire Hathaway Inc., Class B 2.0 Bank of America Corp. 1.7 Pfizer Inc. 1.7 Chevron Corp. 1.6 Johnson & Johnson 1.5 Exxon Mobil Corp. 1.5 Facebook Inc., Class A 1.5 UnitedHealth Group Incorporated 1.5 Comcast Corp., Class A 1.3 Cisco Systems Inc. 1.2 General Electric Company 1.2 Citigroup Inc. 1.2 Home Depot Inc. 1.2 PepsiCo Inc. 1.1 AT&T Inc. 1.1 Medtronic Plc. 1.1 Eli Lilly & Co. 1.1 The Procter & Gamble Co. 1.1 ishares Nasdaq Biotechnology Index Fund 1.0 Aetna Inc. 0.9 Top 25 Holdings 46.1 * The Fund invests substantially all of its assets directly in the RBC U.S. Equity Value Fund. The above are the Top 25 holdings of the RBC U.S. Equity Value Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 125

127 U.S. EQUITY FUND PHILLIPS, HAGER & NORTH U.S. MULTI-STYLE ALL-CAP EQUITY CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 126

128 PHILLIPS, HAGER & NORTH U.S. MULTI-STYLE ALL-CAP EQUITY CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide long-term capital growth by investing primarily in a well-diversified portfolio of U.S. equity securities. To achieve its investment objective, the Fund invests most of its assets in the Phillips, Hager & North U.S. Multi-Style All-Cap Equity Fund (the underlying fund ). The underlying fund invests in U.S. equity securities with the objective of building a portfolio that encompasses multiple investment styles. The underlying fund s portfolio will be comprised of the following investment styles, which are managed by RBC GAM s sub-advisors as separate portfolios within the underlying fund: U.S. Large Cap Growth, U.S. Mid Cap Growth, U.S. Large Cap Value, U.S. Mid Cap Value and U.S. Small Cap Core. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value fell to $33 million as of, 2017, from $38 million as of, The decrease was due to net redemptions. Over the past year, the Fund s Series A shares gained 17.3%, which underperformed the 20.9% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. U.S. equity markets generated above-average returns over the past 12 months, driven by a recovery in commodity prices, improvement in most global economies and a rebound in corporate earnings. Some of the performance was attributable to optimism that President Trump will succeed in gaining legislative support for his plan to boost government spending and cut taxes, both of which would likely support economic growth. In March, the U.S. Federal Reserve boosted its benchmark interest rate for the second time in three months, reflecting optimism about the expansion. The Large Cap Value strategy underperformed its benchmark, the Russell Top 200 Value Index, due primarily to poor sector-allocation bets. An overweight position in the Utilities sector and an underweight position in the Financials sector weighed heavily on the portfolio s performance. Overall stock selection was also a drag on performance. Adverse stock picks within the Consumer Discretionary and Health Care sectors detracted from returns. However, favourable stock selection within the Information Technology and Telecommunication Services sectors had a positive impact on the Fund s performance. The QUBE Large Cap Growth sleeve outperformed versus its Russell Large Cap Growth benchmark during the period. Both sectorallocation and security-selection decisions contributed positively to the Fund s returns. An underweight position in the Consumer Discretionary sector had a negative impact on performance, while an underweight position in the Consumer Staples sector aided returns. From a security-selection standpoint, favourable stock picks within the Health Care and Information Technology sectors bolstered the Fund s performance. The QUBE Large Cap Value component underperformed versus its Russell Large Cap Value benchmark, driven largely by adverse sector-allocation bets. However, favourable stock selection, primarily within the Financials sector, aided returns. From a sector-allocation standpoint, a sizeable overweight position within the Consumer Discretionary sector detracted from performance, while a significant underweight position in the Energy sector benefited the portfolio. Recent Developments Recent economic data suggests global economic growth is reaccelerating, albeit slowly and from a low level. Leading economic indicators are at their best levels in several years, economic surprises have been overwhelmingly positive and profits continue to recover. The portfolio manager expects profit improvements in the U.S. to continue to drive markets higher in While there are risks that some of Trump s protectionist policies could have a negative impact on earnings, the portfolio manager believes that significant gains are also possible if large-scale corporate-tax cuts materialize and the economy accelerates. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. 127 Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC.

129 PHILLIPS, HAGER & NORTH U.S. MULTI-STYLE ALL-CAP EQUITY CLASS, 2017 Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, management fees were reduced as follows: from 1.75% to 1.60% in respect of Series A mutual fund shares and Advisor Series mutual fund shares; from 1.00% to 0.85% in respect of Series D mutual fund shares; and from 0.75% to 0.60% in respect of Series F mutual fund shares. Also effective June 30, 2016, Series H mutual fund shares were re-designated to Series A mutual fund shares and Series I mutual fund shares were re-designated to Series F mutual fund shares. Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related- Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 128

130 PHILLIPS, HAGER & NORTH U.S. MULTI-STYLE ALL-CAP EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.37) Mar. 31, (0.38) 2.16 (2.27) (0.21) Mar. 31, (0.33) Mar. 31, (0.27) (0.28) (0.28) Mar. 31, (0.22) Advisor Series Mar. 31, (0.37) Mar. 31, (0.37) 2.17 (2.27) (0.19) Mar. 31, (0.32) Mar. 31, (0.26) (0.28) (0.28) Mar. 31, (0.22) Series D Mar. 31, (0.21) Mar. 31, (0.22) 2.22 (2.34) (0.06) Mar. 31, (0.19) Mar. 31, (0.15) (0.28) (0.28) Mar. 31, (0.13) Series F Mar. 31, (0.17) Mar. 31, (0.18) 2.25 (2.36) Mar. 31, (0.15) Mar. 31, (0.12) (0.28) (0.28) Mar. 31, (0.11) Series O Mar. 31, (0.01) Mar. 31, (0.01) 2.25 (2.37) Mar. 31, (0.01) Mar. 31, (0.01) (0.28) (0.28) Mar. 31, (0.01) Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 129

131 PHILLIPS, HAGER & NORTH U.S. MULTI-STYLE ALL-CAP EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series A 1.89%, Advisor Series 1.89%, Series D 1.03% and Series F 0.81%. 130

132 PHILLIPS, HAGER & NORTH U.S. MULTI-STYLE ALL-CAP EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.60% 57% 43% Advisor Series 1.60% 57% 43% Series D 0.85% 25% 75% Series F 0.60% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. 131

133 PHILLIPS, HAGER & NORTH U.S. MULTI-STYLE ALL-CAP EQUITY CLASS, 2017 PAST PERFORMANCE (cont.) Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: Russell 3000 Total Return Index (CAD) Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Series D Benchmark Series F Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Advisor Series, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 1, Inception dates are not provided for series that have been in existence for more than 10 years. All outstanding Series H mutual fund shares were re-designated as Series A mutual fund shares and all outstanding Series I mutual fund shares were re-designated as Series F mutual fund shares effective June 30, INDEX DESCRIPTION Russell 3000 Total Return Index (CAD) This index measures the Canadian dollar performance of the largest 3000 U.S. companies representing approximately 98% of the U.S. equity market. The index provides a broader barometer of the equity market than the S&P 500 Index. SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value Information Technology 22.7 Financials 15.2 Health Care 13.7 Consumer Discretionary 12.3 Industrials 10.5 Consumer Staples 8.2 Energy 5.2 Utilities 4.0 Materials 2.4 Real Estate 2.4 Telecommunication Services 2.3 Cash/Other 1.1 Top 25 Holdings* % of Net Asset Value Apple Inc. 2.7 Microsoft Corp. 2.3 Johnson & Johnson 1.9 Amazon.com, Inc. 1.8 Cisco Systems Inc. 1.3 Bank of America Corp. 1.3 Facebook Inc., Class A 1.3 International Business Machines 1.2 Wal-Mart Stores, Inc. 1.2 Exxon Mobil Corp. 1.2 JPMorgan Chase & Co. 1.2 Citigroup Inc. 1.2 Amgen Inc. 1.1 Home Depot Inc. 1.1 Cash & Cash Equivalents 1.0 AT&T Inc. 1.0 UnitedHealth Group Incorporated 0.9 Verizon Communications Inc. 0.9 Alphabet Inc., Class C 0.9 Accenture Plc., Class A 0.8 Applied Materials Inc. 0.8 Boeing Co. 0.8 Intel Corp. 0.8 The Procter & Gamble Co. 0.7 Comcast Corp., Class A 0.7 Top 25 Holdings 30.1 * The Fund invests substantially all of its assets directly in the Phillips, Hager & North U.S. Multi-Style All-Cap Equity Fund. The above are the Top 25 holdings of the Phillips, Hager & North U.S. Multi-Style All-Cap Equity Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 132

134 U.S. EQUITY FUND RBC U.S. MID-CAP VALUE EQUITY CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 133

135 RBC U.S. MID-CAP VALUE EQUITY CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide long-term capital growth by investing primarily in equity securities of U.S. mid-cap companies that are deemed to be undervalued in order to provide broad exposure to economic growth opportunities in the equity markets. To achieve its investment objective, the Fund invests most of its assets in the RBC U.S. Mid-Cap Value Equity Fund (the underlying fund ). The underlying fund s investment process is based primarily on fundamental research, although the portfolio manager will also consider quantitative and technical factors. Stock selection decisions are ultimately based on an understanding of the company, its business and its outlook. The portfolio manager diversifies the underlying fund across industries in the U.S. market and selects companies based on strong management, focused business models and the potential for future growth in earnings and cash flow. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value rose to $6 million as of, 2017, from $4 million as of, The increase was due to a mix of investment returns and net inflows. Over the past year, the Fund s Series A shares gained 18.0%, which underperformed the 22.7% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. The Fund s underperformance was due to the negative impact of stock selection and sector allocation. Relative returns were held back by stock selection in the Health Care and Financials sectors, offset somewhat by the positive impact of stock selection in the Consumer Discretionary sector. Overweight exposure to both the Consumer Discretionary and Health Care sectors had a significant negative impact on relative returns. Individual stocks that held back returns included Endo International, a pharmaceuticals company that issued a disappointing earnings outlook, and AmTrust Financial, a property and casualty insurer. Stocks that had a positive impact on performance included ILG Inc., a seller of vacation timeshares and holiday packages, after the company acquired a business from Starwood Hotels & Resorts. Recent Developments Small-cap and value stocks, which generally benefit from the kind of pro-growth policies espoused by President Trump, have been underperforming. This shift to large-cap and growth stocks can be partially attributed to the realization that measures implementing deregulation, tax cuts and increased government spending may be harder to pass than had been expected, and may not come to fruition at all. However, stocks continue to rise, indicating that the economy continues to improve without such changes. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, management fees were reduced as follows: from 1.85% to 1.75% in respect of Series A mutual fund shares and Advisor Series mutual fund shares; from 1.10% to 1.00% in respect of Series D mutual fund shares; and from 0.85% to 0.75% in respect of Series F mutual fund shares. Also effective June 30, 2016, Series H mutual fund shares and Series I mutual fund shares were closed to all investors. Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. 134

136 RBC U.S. MID-CAP VALUE EQUITY CLASS, 2017 Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 135

137 RBC U.S. MID-CAP VALUE EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.22) (0.02) Mar. 31, (0.22) 0.95 (2.79) (1.93) 9.78 Mar. 31, (0.04) Advisor Series Mar. 31, (0.22) (0.02) Mar. 31, (0.21) 1.01 (2.95) (2.01) 9.79 Mar. 31, (0.04) Series D Mar. 31, (0.14) (0.02) Mar. 31, (0.14) 1.17 (3.43) (2.24) 9.88 Mar. 31, (0.03) Series F Mar. 31, (0.11) (0.02) Mar. 31, (0.10) 0.63 (1.84) (1.22) 9.91 Mar. 31, (0.02) Series O Mar. 31, (0.02) Mar. 31, (5.54) (3.40) Mar. 31, Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 3 From October 16, Initial offering net asset value per mutual fund share. 136

138 RBC U.S. MID-CAP VALUE EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series A 2.15%, Advisor Series 2.09%, Series D 1.31% and Series F 1.04%. 5 From October 16, Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.75% 54% 46% Advisor Series 1.75% 54% 46% Series D 1.00% 23% 77% Series F 0.75% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. 137

139 RBC U.S. MID-CAP VALUE EQUITY CLASS, 2017 PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: Russell Midcap Value Index (CAD) Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Series D Benchmark Series F Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Advisor Series, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 26, Inception dates are not provided for series that have been in existence for more than 10 years. INDEX DESCRIPTION Russell Midcap Value Index (CAD) This index measures the performance of the mid-cap value segment of the U.S. equity universe. 138

140 RBC U.S. MID-CAP VALUE EQUITY CLASS, 2017 SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value Financials 17.5 Consumer Discretionary 16.8 Energy 15.9 Information Technology 15.0 Health Care 11.0 Utilities 6.4 Real Estate 5.6 Materials 5.4 Industrials 5.0 Consumer Staples 0.5 Cash/Other 0.9 Top 25 Holdings* % of Net Asset Value Jazz Pharmaceuticals Plc. 4.7 AmTrust Financial Services Inc. 3.5 Western Digital Corp. 3.2 National General Holdings Corp. 3.1 Mallinckrodt Plc. 3.0 Lam Research Corp. 2.7 Synchrony Financial 2.7 Parsley Energy Inc. 2.6 Range Resources Corp. 2.4 Tesoro Petroleum Corp. 2.4 Steel Dynamics Inc. 2.2 ILG Inc. 2.2 ON Semiconductor Corporation 2.2 Brunswick Corp. 2.1 Envision Healthcare Corp. 2.1 Foot Locker Inc. 2.0 CMS Energy Corp. 2.0 Newell Brands Inc. 1.9 Microsemi Corp. 1.9 WestRock Co. 1.8 DTE Energy Company 1.8 SVB Financial Group 1.8 Signature Bank 1.7 Mohawk Industries Inc. 1.7 Alaska Airgroup Inc. 1.6 Top 25 Holdings 59.3 * The Fund invests substantially all of its assets directly in the RBC U.S. Mid-Cap Value Equity Fund. The above are the Top 25 holdings of the RBC U.S. Mid-Cap Value Equity Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 139

141 U.S. EQUITY FUND RBC U.S. SMALL-CAP CORE EQUITY CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 140

142 RBC U.S. SMALL-CAP CORE EQUITY CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide long-term capital growth by investing primarily in equity securities of U.S. small-cap companies in order to provide broad exposure to economic growth opportunities in the equity markets. To achieve its investment objective, the Fund invests most of its assets in the RBC U.S. Small-Cap Core Equity Fund (the underlying fund ). The underlying fund s investment process is based primarily on fundamental research, although the portfolio manager will also consider quantitative and technical factors. Stock selection decisions are ultimately based on an understanding of the company, its business and its outlook. The portfolio manager diversifies the underlying fund across industries in the U.S. market and selects companies based on strong management, focused business models and the potential for future growth in earnings and cash flow. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value rose to $2 million as of, 2017, from $788,000 as of, The increase was due to a mix of net inflows and investment returns. Over the past year, the Fund s Series A shares gained 25.6%, which underperformed the 29.2% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. The Fund underperformed its benchmark during the period due to sector-allocation decisions, while stock selection was positive overall. Stock selection had a negative impact on returns in the Information Technology and Financials sectors but was offset by favourable stock selection in the Industrials sector. Individual stocks that had a negative impact on returns included San Jose, California-based Synaptics, which makes computer-interface products, and AmTrust Financial Services, a property and casualty insurer based in New York. A significant overweight position in the Consumer Discretionary sector and underweight exposure to Information Technology held back returns. Stocks in the Industrials sector that had a positive impact on the Fund s performance included Patrick Industries, a manufacturer of components for recreational vehicles and manufactured housing, and Columbus McKinnon, which makes hoisting devices and other components used to move things. The stock rallied after Trump s election boosted the potential for infrastructure investment. Recent Developments Investors have recently been moving investments away from small-cap and value stocks, which generally benefit from the pro-growth economic policies espoused by President Trump. This shift to large-cap and growth stocks can be partially attributed to the realization that measures implementing deregulation, tax cuts and increased government spending may be harder to pass than had been expected, and may not come to fruition at all. However, stocks continue to rise, indicating that the economy continues to improve without such changes. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, management fees were reduced as follows: from 1.85% to 1.75% in respect of Series A mutual fund shares and Advisor Series mutual fund shares; from 1.10% to 1.00% in respect of Series D mutual fund shares; and from 0.85% to 0.75% in respect of Series F mutual fund shares. Also effective June 30, 2016, Series H mutual fund shares and Series I mutual fund shares were closed to all investors. 141

143 RBC U.S. SMALL-CAP CORE EQUITY CLASS, 2017 Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 142

144 RBC U.S. SMALL-CAP CORE EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.24) Mar. 31, (0.22) (0.24) (0.82) (1.15) 9.74 Mar. 31, (0.04) Advisor Series Mar. 31, (0.25) Mar. 31, (0.22) (0.27) (0.91) (1.25) 9.74 Mar. 31, (0.04) Series D Mar. 31, (0.16) Mar. 31, (0.14) (0.26) (0.87) (1.13) 9.84 Mar. 31, (0.02) Series F Mar. 31, (0.12) Mar. 31, (0.09) (0.27) (0.91) (1.12) 9.89 Mar. 31, (0.02) Series O Mar. 31, (0.02) Mar. 31, (0.24) (0.81) (0.92) 9.99 Mar. 31, Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 3 From October 16, Initial offering net asset value per mutual fund share. 143

145 RBC U.S. SMALL-CAP CORE EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series A 2.14%, Advisor Series 2.19%, Series D 1.31% and Series F 1.01%. 5 From October 16, Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.75% 54% 46% Advisor Series 1.75% 54% 46% Series D 1.00% 23% 77% Series F 0.75% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. 144

146 RBC U.S. SMALL-CAP CORE EQUITY CLASS, 2017 PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: Russell 2000 Index (CAD) Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Series D Benchmark Series F Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Advisor Series, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 26, Inception dates are not provided for series that have been in existence for more than 10 years. INDEX DESCRIPTION Russell 2000 Index (CAD) This index measures the Canadian dollar performance of the small-cap segment of the U.S. equity universe and includes 2000 of the smallest securities based on market capitalization. 145

147 RBC U.S. SMALL-CAP CORE EQUITY CLASS, 2017 SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value Industrials 25.3 Financials 21.9 Consumer Discretionary 16.7 Information Technology 13.1 Health Care 6.6 Materials 4.8 Energy 3.6 Real Estate 2.2 Utilities 1.1 Telecommunication Services 0.8 Consumer Staples 0.4 Cash/Other 3.5 Top 25 Holdings* % of Net Asset Value Patrick Industries Inc. 4.0 Cash & Cash Equivalents 3.5 Universal Electronics Inc. 3.2 Compass Diversified Holdings 3.1 ACCO Brands Corp. 2.7 EnerSys 2.7 InterDigital Inc. 2.6 Grand Canyon Education Inc. 2.6 West Pharmaceutical Services Inc. 2.6 MKS Instruments Inc. 2.5 Amerisafe Inc. 2.2 LCI Industries 2.1 Tyler Technologies Inc. 2.0 AZZ Inc. 1.9 United Community Banks Inc. 1.8 Insteel Industries Inc. 1.8 Columbus McKinnon Corp. 1.8 Chemical Financial Corp. 1.7 Pacific Premier Bancorp Inc. 1.7 Take-Two Interactive Software Inc. 1.7 NN Inc. 1.6 Texas Capital Bancshares Inc. 1.6 Lydall Inc. 1.6 Astronics Corp. 1.5 The Greenbrier Co. Inc. 1.5 Top 25 Holdings 56.0 * The Fund invests substantially all of its assets directly in the RBC U.S. Small-Cap Core Equity Fund. The above are the Top 25 holdings of the RBC U.S. Small-Cap Core Equity Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 146

148 INTERNATIONAL EQUITY FUND RBC INTERNATIONAL EQUITY CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 147

149 RBC INTERNATIONAL EQUITY CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide long-term capital growth by investing in stocks of companies outside of North America in order to provide exposure to economies that may be at different stages of the business cycle or offer growth opportunities unavailable in U.S. and Canadian markets. To achieve its investment objective, the Fund invests most of its assets in the RBC International Equity Fund (the underlying fund ). The underlying fund focuses on companies that are primarily in Europe, Australasia and the Far East. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value rose to $5 million as of, 2017, from $4 million as of, The increase was due to a mix of investment returns and net inflows. Over the past year, the Fund s Series A shares gained 4.8%, which underperformed the 15.1% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. Politics in Europe dominated market discussions in the Eurozone and the U.K. during the period. Britons decided in June to leave the European Union ( Brexit ), and by the end of the period, Prime Minister Theresa May had formally started the two-year negotiating period for removing the U.K. from the single market. Investors also watched France and Italy for signs of populist strength in Europe. In Asia, the sustainability of Chinese economic growth and Japan s efforts to stoke inflation were among the issues that preoccupied investors. One of the results of this uncertainty was that the European Central Bank and the Bank of Japan maintained policies conducive to economic growth and faster inflation. Toward the end of the period, however, investors began to consider whether government spending would at least partially replace monetary policy as a more important driver of economic growth, especially following the election in November of Donald Trump as U.S. president. In Asia, the largest contributor to the Fund s returns came from holdings in Japan and China, primarily in the Information Technology sector. The top contributor to relative performance in Asia during the period was Japanese telecom operator SoftBank, while Japan Tobacco had a negative impact. In Europe, the stock that contributed the most to returns was ARM Holdings, the British semiconductor and software-design company that was taken over by SoftBank in July. The stock that had the most negative impact on returns was Novo Nordisk, which faces mounting competition in the market for diabetes drugs. Recent Developments In the portfolio manager s view, investors will continue to pay less attention to politics in Europe as long as the outlook for corporate earnings and economic growth appears to be brightening. While the potential for political disruptions persists, particularly in France and Italy, the portfolio manager will retain a focus on the merits of individual companies. The portfolio manager is increasingly cautious regarding Asia given the uncertainty surrounding Trump s trade policy. Countries that have large trade surpluses with the U.S. would have the most to lose, primarily industrial exporters in northern Asia. While the more domestically driven economies of South Asia would theoretically be harmed less, they too would likely be hit by the broad impact of any protectionist policies that emerge. The portfolio manager expects Trump to direct much of his energy to trade policy with China, but there is no guarantee that Japan will escape unscathed. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, management fees were reduced as follows: from 1.85% to 1.75% in respect of Series A mutual fund shares and Advisor Series mutual fund shares. Also effective June 30, 2016, Series H mutual fund shares and Series I mutual fund shares were closed to all investors. 148

150 RBC INTERNATIONAL EQUITY CLASS, 2017 Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 149

151 RBC INTERNATIONAL EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.23) (0.04) Mar. 31, (0.24) 0.04 (0.37) (0.35) Mar. 31, (0.04) Advisor Series Mar. 31, (0.21) (0.04) Mar. 31, (0.23) 0.05 (0.49) (0.38) Mar. 31, (0.04) Series D Mar. 31, (0.14) (0.04) Mar. 31, (0.14) 0.04 (0.40) (0.26) Mar. 31, (0.02) Series F Mar. 31, (0.11) (0.04) Mar. 31, (0.11) 0.04 (0.36) (0.22) Mar. 31, (0.01) Series O Mar. 31, (0.04) Mar. 31, (0.65) (0.20) Mar. 31, Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 3 From October 16, Initial offering net asset value per mutual fund share. 150

152 RBC INTERNATIONAL EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series A 2.14% and Advisor Series 2.02%. 5 From October 16, Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.75% 54% 46% Advisor Series 1.75% 54% 46% Series D 1.00% 25% 75% Series F 0.75% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. 151

153 RBC INTERNATIONAL EQUITY CLASS, 2017 PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: MSCI EAFE Total Return Net Index (CAD) Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Series D Benchmark Series F Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Advisor Series, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 26, Inception dates are not provided for series that have been in existence for more than 10 years. INDEX DESCRIPTION MSCI EAFE Total Return Net Index (CAD) This index is a broad measure of the Canadian dollar performance of stocks from developed equity markets covering countries in Europe, Australasia and the Far East. The net total return index reinvests dividends after the deduction of withholding taxes, using (for international indexes) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. 152

154 RBC INTERNATIONAL EQUITY CLASS, 2017 SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value United Kingdom 24.6 Japan 20.0 Germany 8.0 Australia 7.9 Switzerland 6.9 Ireland 5.3 Sweden 4.8 Netherlands 4.2 Denmark 3.8 France 2.7 Finland 1.8 Other Countries 8.6 Cash/Other 1.4 Top 25 Holdings* % of Net Asset Value Roche Holdings AG Genusscheine 3.2 Unilever Plc. 3.1 Mitsubishi UFJ Financial Group Inc. 2.9 CSL Ltd. 2.8 SoftBank Group Corp. 2.6 Relx N.V. 2.5 Burberry Group Plc. 2.1 Christian Dior SE 1.9 Henkel KGaA, Preferred Non-Voting 1.9 Japan Tobacco Inc. 1.9 Diageo Plc. 1.9 Tencent Holdings Ltd. 1.8 Royal Dutch Shell Plc., A Shares 1.8 Bridgestone Corp. 1.8 Sika AG 1.8 Sampo OYJ 1.8 Bayer AG 1.8 Schroders Plc. 1.7 Taiwan Semiconductor Manufacturing Co. Ltd. 1.7 Novo Nordisk A/S 1.7 Ryanair Holdings Plc. ADR 1.6 PT Hanjaya Mandala Sampoerna Tbk 1.6 CRH Plc. 1.6 Paddy Power Betfair Plc. 1.6 Nitori Co. Ltd. 1.5 Top 25 Holdings 50.6 * The Fund invests substantially all of its assets directly in the RBC International Equity Fund. The above are the Top 25 holdings of the RBC International Equity Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 153

155 INTERNATIONAL EQUITY FUND PHILLIPS, HAGER & NORTH OVERSEAS EQUITY CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 154

156 PHILLIPS, HAGER & NORTH OVERSEAS EQUITY CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide long-term capital growth by investing in a diversified portfolio of common stocks in companies in the world s largest industrialized countries outside North America, including countries in Europe and the Far East, including Japan and Australia. To achieve its investment objective, the Fund will invest most of its assets in the Phillips, Hager & North Overseas Equity Fund (the underlying fund ). The underlying fund invests in companies that are attractively valued, possess sound fundamentals and have a strong market position. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value was unchanged at $52 million as of, 2017, from a year earlier. Over the past year, the Fund s Series A shares gained 6.0%, which underperformed the 15.1% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. Political events had a significant impact on financial markets during the period given the U.K. s decision in June to leave the European Union ( Brexit ) and the election in November of Donald Trump as U.S. president. The general agreement that Brexit would be negative for U.K. growth over the long term was more than offset by improvement in shorter-term global growth trends and the positive economic impact of a weaker British pound. Trump s promises of lower taxes, financial reform and infrastructure spending resulted in a rally driven by the Energy, Financials and Materials sectors. Companies in these sectors do not usually fit the Fund s investment criteria, and their absence was therefore negative for relative performance. The Fund s returns were held back most by Danish pharmaceutical company Novo Nordisk, which faces mounting competition in the market for diabetes drugs, and Anglo-Irish bookmaker Paddy Power, which recorded higher-than-expected costs linked to its takeover of rival Betfair. The Fund benefited the most from exposure to Nidec, a Japanese manufacturer of precision motors, and ASML, a Dutch company that supplies equipment used to make semiconductors. Recent Developments The stock market s strong performance indicates that investors are anticipating good economic news, and there are some signs from the data that this view may be justified, in the opinion of the portfolio manager. While the growth outlook is improving, it is questionable whether such performance can continue. There are some obvious roadblocks ahead, including increasing doubts that the Trump administration will be able to legislate as radically or as quickly as initially thought; the fact that China must still grapple with loose monetary policy and the potential for a property bubble; and European political uncertainty following Brexit and Eurozone elections. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, management fees were reduced as follows: from 1.85% to 1.75% in respect of Series A mutual fund shares and Advisor Series mutual fund shares; from 1.10% to 1.00% in respect of Series D mutual fund shares; and from 0.85% to 0.75% in respect of Series F mutual fund shares. Also effective June 30, 2016, Series H mutual fund shares were re-designated to Series A mutual fund shares and Series I mutual fund shares were re-designated to Series F mutual fund shares. Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. 155

157 PHILLIPS, HAGER & NORTH OVERSEAS EQUITY CLASS Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund.,

158 PHILLIPS, HAGER & NORTH OVERSEAS EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.34) Mar. 31, (0.36) 0.26 (0.92) (0.64) Mar. 31, (0.32) Mar. 31, (0.29) Mar. 31, (0.24) (0.02) Advisor Series Mar. 31, (0.33) Mar. 31, (0.35) 0.25 (0.91) (0.63) Mar. 31, (0.31) Mar. 31, (0.26) Mar. 31, (0.25) (0.01) Series D Mar. 31, (0.20) Mar. 31, (0.22) 0.26 (0.95) (0.52) Mar. 31, (0.19) Mar. 31, (0.16) Mar. 31, (0.15) (0.02) Series F Mar. 31, (0.16) Mar. 31, (0.18) 0.26 (0.95) (0.48) Mar. 31, (0.16) Mar. 31, (0.13) Mar. 31, (0.12) (0.02) Series O Mar. 31, (0.01) Mar. 31, (0.01) 0.27 (0.98) (0.32) Mar. 31, (0.01) Mar. 31, (0.01) Mar. 31, (0.01) (0.02) Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 157

159 PHILLIPS, HAGER & NORTH OVERSEAS EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series A 2.14%, Advisor Series 2.11%, Series D 1.24% and Series F 1.02%. 158

160 PHILLIPS, HAGER & NORTH OVERSEAS EQUITY CLASS FINANCIAL HIGHLIGHTS (cont.) Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.75% 54% 46% Advisor Series 1.75% 54% 46% Series D 1.00% 23% 77% Series F 0.75% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year.,

161 PHILLIPS, HAGER & NORTH OVERSEAS EQUITY CLASS, 2017 PAST PERFORMANCE (cont.) Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: MSCI EAFE Total Return Net Index (CAD) Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Series D Benchmark Series F Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Advisor Series, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 1, Inception dates are not provided for series that have been in existence for more than 10 years. All outstanding Series H mutual fund shares were re-designated as Series A mutual fund shares and all outstanding Series I mutual fund shares were re-designated as Series F mutual fund shares effective June 30, SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix Sectors % of Net Asset Value Financials 22.5 Industrials 18.0 Consumer Discretionary 16.0 Consumer Staples 11.4 Information Technology 9.2 Health Care 8.2 Energy 5.9 Materials 4.8 Telecommunication Services 2.1 Utilities 1.5 Cash/Other 0.4 Investment Mix Countries/Regions % of Net Asset Value Europe ex. United Kingdom Equities 42.9 Japan Equities 19.9 Pacific ex. Japan Equities 15.9 United Kingdom Equities 12.0 India Equities 4.4 Middle East & Africa Equities 4.3 Cash/Other 0.6 INDEX DESCRIPTION MSCI EAFE Total Return Net Index (CAD) This index is a broad measure of the Canadian dollar performance of stocks from developed equity markets covering countries in Europe, Australasia and the Far East. The net total return index reinvests dividends after the deduction of withholding taxes, using (for international indexes) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. 160

162 PHILLIPS, HAGER & NORTH OVERSEAS EQUITY CLASS, 2017 SUMMARY OF INVESTMENT PORTFOLIO (cont.) (after consideration of derivative products, if any) As at, 2017 Top 25 Holdings* % of Net Asset Value Deutsche Post AG 4.7 ASML Holding N.V. 4.6 Taiwan Semiconductor Manufacturing Co. Ltd. ADR 4.6 Pernod-Ricard S.A. 4.4 Naspers Ltd. 4.3 Nidec Corp. 4.3 InterContinental Hotels Group Plc. 4.2 Anheuser-Busch InBev S.A./N.V. 3.8 AIA Group Ltd. 3.8 Roche Holdings AG Genusscheine 3.7 Kubota Corp. 3.2 Oil Search Ltd. 3.2 UBS Group AG 2.9 Oriental Land Co. Ltd. 2.8 St James s Place Plc. 2.8 Royal Dutch Shell Plc., B Shares 2.7 Paddy Power Betfair Plc. 2.6 Astellas Pharma Inc. 2.5 ING Groep N.V. 2.5 Komatsu Ltd. 2.5 Lloyds TSB Group Plc. 2.4 Partners Group Holding AG 2.2 HDFC Bank Ltd. 2.2 HDFC Bank Ltd. ADR 2.2 Nippon Telegraph & Telephone Corp. 2.1 Top 25 Holdings 81.2 * The Fund invests substantially all of its assets directly in the Phillips, Hager & North Overseas Equity Fund. The above are the Top 25 holdings of the Phillips, Hager & North Overseas Equity Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 161

163 INTERNATIONAL EQUITY FUND RBC EUROPEAN EQUITY CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 162

164 RBC EUROPEAN EQUITY CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide long-term capital growth by investing primarily in European stocks in order to provide exposure to growth opportunities in the European economy and diversification benefits beyond North America. To achieve its investment objective, the Fund invests most of its assets in the RBC European Equity Fund (the underlying fund ). The portfolio manager of the underlying fund reviews the economic outlook for Europe and then selects stocks based on fundamental, technical and quantitative inputs. The underlying fund is managed to limit risk by spreading investments across different industries. The underlying fund may also invest in debt securities issued or guaranteed by European governments and international agencies. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value fell to $30 million as of, 2017, from $36 million as of, The decrease was due to net redemptions. Over the past year, the Fund s Series A shares gained 1.0%, which underperformed the 13.2% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. Politics in Europe dominated market discussions in the Eurozone and the U.K. during the period. Britons decided in June to leave the European Union ( Brexit ), and by the end of the period, Prime Minister Theresa May had formally started the two-year negotiating period for removing the U.K. from the single market. In the Netherlands, Dutch voters rejected the bid of a populist politician but investors also watched France for signs of populist strength in Europe. The European Central Bank maintained policies conducive to economic growth and faster inflation. Toward the end of the period, however, investors began to consider whether government spending would at least partially replace monetary policy as a more important driver of economic growth. The negative impact of the Brexit vote on Europe s equity markets was short-lived. Continued global growth and the election of Donald Trump as U.S. president late in 2016 were among the factors that extended the stock rally that lasted through the first quarter of Countries in the European equity benchmark posted gains with the exception of Denmark, which was hurt by the impact of a few large companies including Novo Nordisk. Materials, Energy and Financials were the best-performing sectors, whereas Utilities, Real Estate and Telecommunication Services lagged, with the latter being the only sector to record an overall loss. The Fund s underweight position in the Energy sector held back returns the most. On the positive side, a complete lack of holdings in the Real Estate sector aided the Fund s returns. The stock that contributed the most to returns was ARM Holdings, the British semiconductor and software-design company that was taken over by SoftBank in July. The stock that had the most negative impact on returns was Novo Nordisk, which faces mounting competition in the market for diabetes drugs. Recent Developments The portfolio manager believes the rally in higher-risk companies is likely coming to an end. More generally, companies that benefit from domestic growth present investing opportunities where they have a tradition of stable or improving earnings growth and trade at attractive valuations. In the view of the portfolio manager, investors will continue to pay less attention to politics as long as the outlook for corporate earnings and economic growth appears to be brightening. While the potential for political disruptions persists, particularly in France and Italy, the portfolio manager will retain a focus on the merits of individual companies. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. 163

165 RBC EUROPEAN EQUITY CLASS, 2017 Effective June 30, 2016, management fees were reduced as follows: from 1.85% to 1.75% in respect of Series A mutual fund shares and Advisor Series mutual fund shares. Also effective June 30, 2016, Series H mutual fund shares were closed to all investors, and Series I mutual funds shares were capped and no longer available for purchase by new investors. Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 164

166 RBC EUROPEAN EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.22) (0.25) 0.23 (0.05) Mar. 31, (0.24) (0.15) (1.71) (1.35) Mar. 31, (0.04) Advisor Series Mar. 31, (0.22) (0.27) Mar. 31, (0.24) (0.09) (1.02) (0.90) Mar. 31, (0.04) Series D Mar. 31, (0.13) (0.26) Mar. 31, (0.14) (0.15) (1.80) (1.30) Mar. 31, (0.02) Series F Mar. 31, (0.10) (0.26) Mar. 31, (0.11) (0.06) (0.73) (0.58) Mar. 31, (0.02) Series I Mar. 31, (0.08) (0.26) 0.11 (0.04) Mar. 31, (0.08) (0.05) (0.55) (0.44) Mar. 31, (0.01) Series O Mar. 31, (0.27) Mar. 31, (0.01) (0.38) (4.52) (2.93) Mar. 31, Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 3 From October 16, Initial offering net asset value per mutual fund share. 165

167 RBC EUROPEAN EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Series I Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series A 2.12% and Advisor Series 2.14%. 5 From October 16, Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.75% 54% 46% Advisor Series 1.75% 54% 46% Series D 1.00% 25% 75% Series F 0.75% 100% Series I 0.60% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. 166

168 RBC EUROPEAN EQUITY CLASS, 2017 PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. 167

169 RBC EUROPEAN EQUITY CLASS, 2017 PAST PERFORMANCE (cont.) Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: MSCI Europe Total Return Net Index (CAD) Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Series D Benchmark Series F Benchmark Series I Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Advisor Series, Series D, Series F, Series I and Series O mutual fund shares have been available for sale to shareholders since January 26, Inception dates are not provided for series that have been in existence for more than 10 years. INDEX DESCRIPTION MSCI Europe Total Return Net Index (CAD) This index is a broad measure of the Canadian dollar performance of major stock markets in Europe. The net total return index reinvests dividends after the deduction of withholding taxes, using (for international indexes) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value United Kingdom 37.4 Germany 12.2 Switzerland 11.3 Ireland 8.7 Sweden 7.3 Netherlands 6.8 Denmark 6.4 France 4.5 Finland 2.9 Italy 2.0 Spain 0.2 Cash/Other 0.3 Top 25 Holdings* % of Net Asset Value Roche Holdings AG Genusscheine 5.2 Unilever Plc. 4.9 Relx N.V. 4.0 Burberry Group Plc. 3.5 Christian Dior SE 3.1 Henkel KGaA, Preferred Non-Voting 3.0 Diageo Plc. 3.0 Royal Dutch Shell Plc., A Shares 2.9 Sampo OYJ 2.9 Schroders Plc. 2.8 Sika AG 2.8 Bayer AG 2.8 Ryanair Holdings Plc. ADR 2.6 Paddy Power Betfair Plc. 2.6 Novo Nordisk A/S 2.6 CRH Plc. 2.5 Heineken N.V. 2.5 Nordbanken Holding AB 2.4 London Stock Exchange Group Plc. 2.4 SAP SE 2.3 Continental AG 2.2 British American Tobacco Plc. 2.2 Novozymes A/S 2.1 Luxottica Group S.p.A. 2.0 HSBC Holdings Plc. (U.K. Reg.) 1.9 Top 25 Holdings 71.2 * The Fund invests substantially all of its assets directly in the RBC European Equity Fund. The above are the Top 25 holdings of the RBC European Equity Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 168

170 INTERNATIONAL EQUITY FUND RBC EMERGING MARKETS EQUITY CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 169

171 RBC EMERGING MARKETS EQUITY CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide long-term capital growth by investing primarily in equity securities of companies located in or active in emerging markets. To achieve its investment objective, the Fund invests most of its assets in the RBC Emerging Markets Equity Fund (the underlying fund ). The underlying fund invests in securities of companies located or active in emerging-market countries, including, but not limited to: China, Brazil, South Korea, Taiwan, India, South Africa, Russia, Mexico, Israel, Malaysia, Indonesia, Turkey, Chile, Thailand and Poland. The portfolio is diversified by sector and emerging-market country to help reduce risk. Individual stocks are selected based on the intrinsic value of each company, liquidity and overall portfolio risk. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value rose to $102 million as of, 2017, from $76 million as of, The increase was due to a mix of investment returns and net inflows. Over the past year, the Fund s Series A shares gained 15.2%, which underperformed the 20.9% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. After years of underperformance, emerging markets began the period on a positive note, reflecting an improving outlook for the global economy. However, the election of Donald Trump as U.S. president in November and, to a lesser extent, the U.K. s decision to leave the EU in June, had a negative impact on emerging markets. Trump s victory led to concerns that his administration would seek to impose protectionist trade policies, and many emerging markets depend on exports to the U.S. for a significant portion of their trade. Another negative was the strength of the U.S. dollar versus emergingmarket currencies, notably the Mexican peso. By the end of the period, conviction in the administration s ability to impose trade sanctions had faded, aiding emerging-market equities. The U.S. Federal Reserve also appeared to be somewhat less certain about pressing ahead with interest-rate hikes, further bolstering the performance of emergingmarket equities relative to developed markets. The Fund s underweight positon in the Energy sector had a significantly negative impact on returns, as did stock selection in the Information Technology sector. At the stock level, Dr. Reddy s, an Indian pharmaceuticals company, had a notably negative impact on returns amid compliance questions at several manufacturing plants. Antofagasta, a London-based copper producer with mines in Chile, had a positive impact on the Fund s returns, benefiting from rising metal prices. Recent Developments Several factors should continue to support emerging-market equity performance over the medium term, in the opinion of the portfolio manager. First, emerging-market currencies are undervalued versus the U.S. dollar, and any appreciation in emerging-market currencies would be positive for emerging-market equities. Second, the earnings outlook for emerging markets relative to developed markets is improving, and relatively fast growth in emerging markets is a positive sign for their stock markets especially given improved productivity and economic reforms. Finally, valuations for emerging markets remain attractive relative to developed markets following the significant underperformance of emerging markets over the past six years. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, Series H mutual fund shares and Series I mutual fund shares were closed to all investors. Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. 170

172 RBC EMERGING MARKETS EQUITY CLASS, 2017 Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 171

173 RBC EMERGING MARKETS EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.33) Mar. 31, (0.32) 0.18 (1.64) (1.36) Mar. 31, (0.30) Mar. 31, (0.26) Mar. 31, (0.24) Advisor Series Mar. 31, (0.33) Mar. 31, (0.32) 0.18 (1.64) (1.36) Mar. 31, (0.30) Mar. 31, (0.26) Mar. 31, (0.25) Series D Mar. 31, (0.19) Mar. 31, (0.19) 0.19 (1.71) (1.27) Mar. 31, (0.17) Mar. 31, (0.15) Mar. 31, (0.14) Series F Mar. 31, (0.16) Mar. 31, (0.15) 0.19 (1.70) (1.22) Mar. 31, (0.14) Mar. 31, (0.11) Mar. 31, (0.11) Series O Mar. 31, (0.01) Mar. 31, (0.01) 0.20 (1.78) (1.13) Mar. 31, Mar. 31, (0.01) Mar. 31, (0.01) Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 172

174 RBC EMERGING MARKETS EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 173

175 RBC EMERGING MARKETS EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.85% 54% 46% Advisor Series 1.85% 54% 46% Series D 1.00% 25% 75% Series F 0.75% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. 174

176 RBC EMERGING MARKETS EQUITY CLASS, 2017 PAST PERFORMANCE (cont.) Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: MSCI Emerging Markets Total Return Net Index (CAD) Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Series D Benchmark Series F Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Advisor Series, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 1, Inception dates are not provided for series that have been in existence for more than 10 years. SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value India 13.8 China 13.2 South Korea 10.9 South Africa 10.8 Taiwan 9.8 Brazil 6.5 Hong Kong 5.3 Indonesia 3.1 Thailand 3.0 Philippines 2.9 Peru 2.4 Turkey 1.8 Malaysia 1.4 Chile 1.3 Mexico 1.3 Other Countries 9.9 Cash/Other 2.6 INDEX DESCRIPTION MSCI Emerging Markets Total Return Net Index (CAD) This index is a broad measure of the Canadian dollar performance of emerging-market equities. As of May 2010, the index consisted of the following 21 emerging-market country indexes: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, South Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand and Turkey. The net total return index reinvests dividends after the deduction of withholding taxes, using (for international indexes) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. 175

177 RBC EMERGING MARKETS EQUITY CLASS, 2017 SUMMARY OF INVESTMENT PORTFOLIO (cont.) (after consideration of derivative products, if any) As at, 2017 Top 25 Holdings* % of Net Asset Value Housing Development Finance Corp. 4.9 Samsung Electronics Co. Ltd. 4.8 Naspers Ltd. 4.6 Taiwan Semiconductor Manufacturing Co. Ltd. 4.2 AIA Group Ltd. 3.3 Dr. Reddy s Laboratories Ltd. ADR 3.3 Unilever Plc. 3.2 Antofagasta Plc. 3.0 SM Investments Corp. 2.9 Banco Bradesco S.A. ADR 2.9 Shinhan Financial Group Co. Ltd. 2.6 Cash & Cash Equivalents 2.4 Credicorp Ltd. 2.4 China Mobile (Hong Kong) Ltd. 2.3 Alibaba Group Holding Ltd. ADR 2.3 Fuyao Glass Industry Group Co. Ltd. 2.3 Delta Electronics Thailand PCL 2.1 Mondi Ltd. 2.0 Samsonite International S.A. 2.0 Clicks Group Ltd. 1.9 Standard Foods Corp. 1.9 Infosys Technologies Ltd. ADR 1.9 ENKA Insaat ve Sanayi A.S. 1.8 FirstRand Ltd. 1.7 Hangzhou Hikvision Digital Technology Co. Ltd. 1.7 Top 25 Holdings 68.4 * The Fund invests substantially all of its assets directly in the RBC Emerging Markets Equity Fund. The above are the Top 25 holdings of the RBC Emerging Markets Equity Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 176

178 GLOBAL EQUITY FUND RBC GLOBAL EQUITY CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 177

179 RBC GLOBAL EQUITY CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide long-term capital growth by investing primarily in equity securities of a diversified mix of companies operating around the world and across a range of sectors. To achieve its investment objective, the Fund invests most of its assets in the RBC Global Equity Fund (the underlying fund ). The portfolio manager of the underlying fund uses primarily fundamental research to assess the economic outlook for regions around the world, including expected growth, market valuations and economic trends. The underlying fund may invest in American Depositary Receipts and may invest as much as 10% of its assets in units of other mutual funds managed by RBC GAM or an affiliate. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value was unchanged at $4 million on, 2017, from a year earlier. Over the past year, the Fund s Series A shares gained 13.1%, which underperformed the 18.3% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. Political events had a significant impact on financial markets during the period. especially the U.K. s decision in June to leave the European Union ( Brexit ) and the election in November of Donald Trump as U.S. president. A general agreement that Brexit would be negative for U.K. growth over the long term was more than offset by improvement in shorter-term global growth trends and the positive economic impact of a weaker British pound. Trump s promises of lower taxes, financial reform and increased infrastructure spending resulted in a rally driven by the Energy, Financials and Materials sectors. Companies in these sectors do not usually fit the Fund s investment criteria, and their absence was therefore negative for relative performance. The Fund s returns were held back most by Danish pharmaceutical company Novo Nordisk, which faces mounting competition in the market for diabetes drugs, and U.S. cosmetics company Estée Lauder, which lowered earnings forecasts as sales growth slowed. First Republic, a U.S. bank that focuses on wealthy clients, was the biggest positive for returns, and Amazon, the U.S. retailer, was the second-biggest contributor to returns. The Fund sold its stake in Novo Nordisk during the period. Recent Developments The stock market s strong performance indicates that investors are anticipating good economic news, and there are some signs from the data that this view may be justified, in the opinion of the portfolio manager. While the growth outlook is improving, it is questionable whether such performance can continue. There are some obvious roadblocks ahead, including increasing doubts that the Trump administration will be able to legislate as radically or as quickly as initially thought; the fact that China must still grapple with loose monetary policy and the potential for a property bubble; and European political uncertainty following Brexit and Eurozone elections. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, management fees were reduced as follows: from 1.85% to 1.75% in respect of Series A mutual fund shares and Advisor Series mutual fund shares; from 1.10% to 1.00% in respect of Series D mutual fund shares; and from 0.85% to 0.75% in respect of Series F mutual fund shares. Also effective June 30, 2016, Series H mutual fund shares and Series I mutual fund shares were closed to all investors. 178

180 RBC GLOBAL EQUITY CLASS, 2017 Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 179

181 RBC GLOBAL EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.22) Mar. 31, (0.22) 0.16 (0.77) (0.65) Mar. 31, (0.04) Advisor Series Mar. 31, (0.23) Mar. 31, (0.23) 0.14 (0.65) (0.59) Mar. 31, (0.04) Series D Mar. 31, (0.14) Mar. 31, (0.15) 0.14 (0.66) (0.52) Mar. 31, (0.03) Series F Mar. 31, (0.11) Mar. 31, (0.12) 0.12 (0.56) (0.43) Mar. 31, (0.02) Series O Mar. 31, Mar. 31, (1.00) (0.56) Mar. 31, Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 3 From October 16, Initial offering net asset value per mutual fund share. 180

182 RBC GLOBAL EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series A 2.01%, Advisor Series 2.11%, Series D 1.27% and Series F 1.02%. 5 From October 16, Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.75% 54% 46% Advisor Series 1.75% 54% 46% Series D 1.00% 23% 77% Series F 0.75% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. 181

183 RBC GLOBAL EQUITY CLASS, 2017 PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: MSCI World Total Return Net Index (CAD) Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Series D Benchmark Series F Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Advisor Series, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 26, Inception dates are not provided for series that have been in existence for more than 10 years. INDEX DESCRIPTION MSCI World Total Return Net Index (CAD) This index is the capitalization-weighted index measuring the Canadian dollar performance of selected companies listed on stock exchanges in countries around the world. The net total return index reinvests dividends after the deduction of withholding taxes, using (for international indexes) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. 182

184 RBC GLOBAL EQUITY CLASS, 2017 SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value United States 57.8 Japan 5.9 Netherlands 4.3 United Kingdom 4.1 Switzerland 3.6 France 3.5 Taiwan 3.2 South Africa 2.7 India 2.6 Germany 2.5 Belgium 2.3 Other Countries 6.6 Cash/Other 0.9 Top 25 Holdings* % of Net Asset Value UnitedHealth Group Incorporated 3.6 Alphabet Inc., Class A 3.5 Danaher Corp. 3.3 Amazon.com, Inc. 3.3 Taiwan Semiconductor Manufacturing Co. Ltd. ADR 3.2 EOG Resources Inc. 3.1 First Republic Bank 3.1 Intuit Inc. 3.1 TJX Companies Inc. 3.0 Estée Lauder Companies Inc., Class A 3.0 Activision Blizzard Inc. 2.9 ASML Holding N.V. 2.8 Fortive Corp. 2.7 Naspers Ltd. 2.7 InterContinental Hotels Group Plc. 2.6 Gartner Inc. 2.6 Deutsche Post AG 2.5 Pernod-Ricard S.A. 2.4 Blackstone Group LP 2.4 SVB Financial Group 2.3 Anheuser-Busch InBev S.A./N.V. 2.3 Roche Holdings AG Genusscheine 2.3 Nidec Corp. 2.1 CF Industries Holdings Inc. 1.9 Sempra Energy 1.8 Top 25 Holdings 68.5 * The Fund invests substantially all of its assets directly in the RBC Global Equity Fund. The above are the Top 25 holdings of the RBC Global Equity Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 183

185 GLOBAL EQUITY FUND RBC QUBE LOW VOLATILITY GLOBAL EQUITY CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 184

186 RBC QUBE LOW VOLATILITY GLOBAL EQUITY CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide long-term capital growth by investing primarily in equity securities of global companies. The Fund uses a quantitative approach and seeks to achieve a reduced level of volatility of returns compared with the broader global equity market. To achieve its investment objective, the Fund invests most of its assets in the RBC QUBE Low Volatility Global Equity Fund (the underlying fund ). The underlying fund is managed using a quantitative investment model designed to select individual stocks while controlling portfoliolevel risk. This involves building a portfolio that maximizes exposure to factors associated with outperformance, while controlling for exposure to risk factors. The portfolio manager of the underlying fund will diversify across industries within the global market. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value rose to $48 million as of, 2017, from $30 million as of, The increase was due mainly to net inflows. Over the past year, the Fund s Series A shares gained 9.1%, which underperformed the 18.3% rise in the benchmark. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. Global stock markets rose in 2016, with the gains accelerating late in the year and into 2017 after Donald Trump won the U.S. presidency. Trump s election led to optimism that he would be able to enact tax cuts, fiscal spending and economic deregulation. Holdings in the Financials sector that aided the Fund s returns included Mizrahi-Tefahot Bank and Toronto-Dominion. Banks were boosted by hopes that rising interest rates would lead to higher profits from lending. The Health Care sector also contributed to the Fund s returns, as did holdings in pharmaceuticals companies. Returns were hurt by a lack of exposure to the Information Technology and Consumer Discretionary sectors. Meagre allocations to Apple and Amazon also detracted from performance. The Materials sector also weighed heavily against performance. A position in Randgold Resources was the biggest detractor. Recent Developments The economic outlook has improved globally, in the view of the portfolio manager. Positive economic data has supported heightened consumer and business confidence, and investors have focused on the potential for a shift from monetary stimulus to fiscal stimulus. However, central banks other than the U.S. Federal Reserve are continuing to rely on monetary stimulus until there is evidence that fiscal spending is ready to take over. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, management fees were reduced as follows: from 1.85% to 1.75% in respect of Series A mutual fund shares and Advisor Series mutual fund shares; from 1.10% to 1.00% in respect of Series D mutual fund shares; and from 0.85% to 0.75% in respect of Series F mutual fund shares. Also effective June 30, 2016, Series H mutual fund shares and Series I mutual fund shares were closed to all investors. Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. 185

187 RBC QUBE LOW VOLATILITY GLOBAL EQUITY CLASS Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund.,

188 RBC QUBE LOW VOLATILITY GLOBAL EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.23) (0.01) (0.01) Mar. 31, (0.23) Mar. 31, (0.04) Advisor Series Mar. 31, (0.24) (0.01) (0.01) Mar. 31, (0.24) Mar. 31, (0.04) Series D Mar. 31, (0.14) (0.01) (0.01) Mar. 31, (0.14) Mar. 31, (0.03) Series F Mar. 31, (0.11) (0.02) (0.02) Mar. 31, (0.12) (0.01) (0.01) Mar. 31, (0.02) Series O Mar. 31, (0.03) (0.03) Mar. 31, (0.04) (0.04) Mar. 31, Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 3 From October 16, Initial offering net asset value per mutual fund share. 187

189 RBC QUBE LOW VOLATILITY GLOBAL EQUITY CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series A 2.06%, Advisor Series 2.12%, Series D 1.24% and Series F 1.00%. 5 From October 16, Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.75% 54% 46% Advisor Series 1.75% 54% 46% Series D 1.00% 23% 77% Series F 0.75% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. 188

190 RBC QUBE LOW VOLATILITY GLOBAL EQUITY CLASS PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years., 2017 Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmark: MSCI World Total Return Net Index (CAD) Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Advisor Series Benchmark Series D Benchmark Series F Benchmark Series O Benchmark The returns of each series may vary because of differences in management fees and expenses. The Benchmark index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark index. Series A, Advisor Series, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 26, Inception dates are not provided for series that have been in existence for more than 10 years. INDEX DESCRIPTION MSCI World Total Return Net Index (CAD) This index is the capitalization-weighted index measuring the Canadian dollar performance of selected companies listed on stock exchanges in countries around the world. The net total return index reinvests dividends after the deduction of withholding taxes, using (for international indexes) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. 189

191 RBC QUBE LOW VOLATILITY GLOBAL EQUITY CLASS, 2017 SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix % of Net Asset Value United States 56.2 Japan 13.5 Canada 7.1 Switzerland 4.6 Hong Kong 4.3 Belgium 3.5 Israel 3.5 Singapore 1.9 United Kingdom 1.5 Other Countries 3.6 Cash/Other 0.3 Top 25 Holdings* % of Net Asset Value BCE Inc. 3.0 PepsiCo Inc. 3.0 Johnson & Johnson 3.0 The Procter & Gamble Co. 3.0 Republic Services Inc. 3.0 The Coca-Cola Co. 2.9 Bank of Montreal 2.7 Colruyt S.A. 2.7 Danaher Corp. 2.5 CLP Holdings Ltd. 2.4 Consolidated Edison Inc. 2.4 Loews Corp. 1.9 Xcel Energy Inc. 1.9 Philip Morris International Inc. 1.8 Mitsubishi Tanabe Pharma Corp. 1.6 NTT DoCoMo Inc. 1.6 Alphabet Inc., Class C 1.6 Comcast Corp., Class A 1.5 American Electric Power 1.5 Merck & Co. Inc. 1.5 Ansys Inc. 1.4 Duke Energy Corp. 1.3 Mizrahi Tefahot Bank Ltd. 1.3 Kuehne + Nagel International AG 1.3 Nippon Telegraph & Telephone Corp. 1.3 Top 25 Holdings 52.1 * The Fund invests substantially all of its assets directly in the RBC QUBE Low Volatility Global Equity Fund. The above are the Top 25 holdings of the RBC QUBE Low Volatility Global Equity Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 190

192 GLOBAL EQUITY FUND RBC GLOBAL RESOURCES CLASS, 2017 Portfolio Manager RBC Global Asset Management Inc. ( RBC GAM ) The Board of Directors of RBC Corporate Class Inc. approved this annual management report of fund performance on May 11, A Note on Forward-looking Statements This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made in relation to the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility. This annual management report of fund performance ( MRFP ) contains financial highlights but does not contain the complete annual financial statements of the Fund. You can get a copy of the financial statements at your request, and at no cost, by calling FUND (3863), by writing to us at RBC Global Asset Management Inc., P.O. Box 7500, Station A, Toronto, Ontario M5W 1P9, or by visiting our website at or SEDAR at Security holders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 191

193 RBC GLOBAL RESOURCES CLASS, 2017 MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund seeks to provide long-term capital growth by investing in equity securities of companies around the world in any or all of the Energy, Materials, Industrials and Utilities sectors. To achieve its investment objective, the Fund invests most of its assets in the RBC Global Resources Fund (the underlying fund ). The underlying fund pursues global companies with a leading market position, high and sustainable profitability, sound finances and attractive valuations relative to peers and the market. The Fund will focus on mid- to large-cap stocks, but will also invest in smaller companies. Risk There were no significant changes to the investment objective and strategies that affected the Fund s overall level of risk during the reporting period. The risks of investing in the Fund and the suitability of the Fund for investors remain as discussed in the Simplified Prospectus. Results of Operations The Fund s net asset value was unchanged at $3 million as of, 2017, from a year earlier. Over the past year, the Fund s Series A shares gained 24.3%, which outperformed the 22.1% rise in the benchmark. The broadbased index rose 18.3%. The Fund s return is after the deduction of fees and expenses, while the benchmark and broad-based index returns do not include any costs of investing. See the Financial Highlights section for the management expense ratios and the Past Performance section for the returns of any other series, which may vary because of differences in management fees and expenses. Prices for energy-related commodities were generally strong during the 12-month period after having fallen to their lowest in a decade in the first quarter of The rebound strengthened as investors became more comfortable that global production cuts would reduce supply and that international demand would remain robust. Decisions by both OPEC and non-opec countries to cut production by a total of about 2% drove the price of crude to over US$50 per barrel by the end of U.S. natural-gas prices also recovered during the period as demand increased and inventories declined, and cold weather in some markets stimulated demand. Precious-metals prices were volatile, but generally ended the period just slightly higher than where they had started. Initially, President Trump s proposals for tax cuts, infrastructure spending and deregulation boosted the U.S. dollar and bond yields and diminished gold s allure, but prices recovered in 2017 as the market became skeptical that the policies would be implemented in their intended forms. Prices of industrial metals rose significantly during the period, with copper and zinc rising 25% and 50%, respectively, as supply/demand balances tightened. Overweight positions that contributed to relative returns included base-metal companies Ivanhoe Mines, Teck Resources and Rio Tinto, which benefited from strong commodity prices, and energy companies including Continental Resources and Seven Generations Energy. A significant underweight position in ExxonMobil, also aided relative return as the stock underperformed. Recent Developments OPEC officials will meet in May to determine whether to extend the production-cut agreement for a second six-month period if needed to keep supply in balance with demand. An extension would have the potential to drive oil prices higher, thereby boosting U.S. exploration and production budgets. While demand for zinc continues to exceed supply, some investors are concerned that prices could decline if producers respond next year by increasing output. Copper markets are relatively balanced with disruptions offsetting supply coming into the market in the near term. Copper prices could strengthen in the near term, as production declines and global demand growth continues. We expect mergers and acquisitions among agricultural companies that deal in fertilizer, crop protection and seeds as companies seek to boost share and profit margins. Precious-metals reserves and spending on exploration are in decline, which could lead to increased merger and acquisition activity in The Fund holds junior mining companies with attractive assets and is positioned to take advantage of this trend as larger companies compete to bolster reserves. On December 15, 2016, the Canadian government enacted new tax rules that eliminate the ability of investors to switch among different classes of RBC Corporate Class Funds on a tax-deferred basis. The new rules do not apply to switches between different series of the same fund. Effective December 1, 2016, Mr. Lloyd R. McGinnis retired and Ms. Élaine Cousineau was appointed as Chair of the Independent Review Committee (the IRC ). Mr. Charles F. Macfarlane was appointed as Vice Chair of the IRC. Effective January 1, 2017, Ms. Suromitra Sanatani and Ms. Catherine Kloepfer were appointed as members of the IRC. Effective July 1, 2016, Deloitte LLP resigned and PricewaterhouseCoopers LLP was appointed as auditors of the Fund. Effective June 30, 2016, management fees were reduced as follows: from 1.85% to 1.75% in respect of Series A mutual fund shares and Advisor Series mutual fund shares. Also effective June 30, 2016, Series H mutual fund shares and Series I mutual fund shares were closed to all investors. 192

194 RBC GLOBAL RESOURCES CLASS, 2017 Related-Party Transactions Manager and Portfolio Manager RBC GAM is an indirect, wholly owned subsidiary of Royal Bank of Canada ( Royal Bank ) and is the manager and portfolio manager of the Fund. RBC GAM is responsible for the Fund s day-to-day operations, provides investment advice and portfolio management services to the Fund and appoints distributors for the Fund. RBC GAM is paid a management fee by the Fund as compensation for its services. The Fund pays a fixed administration fee to RBC GAM, which, in turn, pays certain operating expenses of the Fund. Affiliates of RBC GAM that provide services to the Fund in the course of their normal businesses are discussed below. Distributors RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and Phillips, Hager & North Investment Funds Ltd. are the principal distributors of, or distribute certain series of the mutual fund shares of, the Fund. Dealers receive an ongoing commission based on the total value of their clients Series A, Advisor Series and Series D mutual fund shares. Custodian RBC Investor Services Trust ( RBC IS ) is the custodian and holds the assets of the Fund. Registrars Royal Bank, RBC IS and RBC GAM are the registrars of the Fund and keep records of who owns the mutual fund shares of the Fund. Other Related-Party Transactions Pursuant to applicable securities legislation, the Fund relied on the standing instructions from the Independent Review Committee with respect to one or more of the following transactions: Related-Party Trading Activities (a) trades in securities of Royal Bank; (b) investments in the securities of issuers for which a related-party dealer acted as an underwriter during the distribution of such securities and the 60-day period following the conclusion of such distribution of the underwritten securities to the public; (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it acted as principal; and Inter-Fund Trading (d) purchases or sales of securities of an issuer from or to another investment fund or managed account managed by RBC GAM. The applicable standing instructions require that Related-Party Trading Activities and Inter-Fund Trading be conducted in accordance with RBC GAM policy and that RBC GAM advise the Independent Review Committee of a material breach of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Activities (i) is made free from any influence of Royal Bank or its associates or affiliates and without taking into account any consideration relevant to Royal Bank or its affiliates or associates, (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, (iii) is in compliance with RBC GAM policies and procedures, and (iv) achieves a fair and reasonable result for the Fund. RBC GAM policy requires that an investment decision in respect of Inter-Fund Trading is in the best interests of each Fund. 193

195 RBC GLOBAL RESOURCES CLASS, 2017 FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five years or for the periods since inception. This information is derived from the Fund s audited annual financial statements. For financial years beginning on or after April 1, 2014, financial highlight information is derived from financial statements prepared in compliance with International Financial Reporting Standards ( IFRS ). For financial years prior to April 1, 2014, financial highlight information is derived from financial statements prepared in accordance with Canadian generally accepted accounting principles ( GAAP ). Net Assets, for the periods prior to April 1, 2014, are calculated in accordance with GAAP, and Net Asset Value is derived from the valuation method disclosed in the RBC Corporate Class Funds Annual Information Form and is used for transactional purposes (see Ratios and Supplemental Data). All other calculations for the purposes of this MRFP are made using Net Asset Value. There is no significant difference between Net Assets and Net Asset Value under IFRS. Change in Net Assets Per Mutual Fund Share ($) Annual Distributions2 Increase (Decrease) from Operations1 From Total Realized Unrealized Income From Net Assets For the Year/ Net Assets Revenue Total Gains Gains (Excluding From Capital Return End of Period Ended Beginning of Year/Period (Loss) Expenses (Losses) (Losses) Total Dividends) Dividends Gains of Capital Total Year/Period Series A Mar. 31, (0.21) Mar. 31, (0.19) (0.23) (0.82) (1.24) 8.03 Mar. 31, (0.22) 0.24 (0.49) (0.47) 9.24 Mar. 31, (0.22) Mar. 31, (0.22) (0.66) 0.05 (0.83) 8.88 Advisor Series Mar. 31, (0.21) Mar. 31, (0.18) (0.23) (0.82) (1.23) 8.04 Mar. 31, (0.21) 0.23 (0.47) (0.45) 9.25 Mar. 31, (0.23) Mar. 31, (0.22) (0.70) 0.05 (0.87) 8.88 Series D Mar. 31, (0.13) Mar. 31, (0.11) (0.24) (0.85) (1.20) 8.38 Mar. 31, (0.12) 0.24 (0.50) (0.38) 9.55 Mar. 31, (0.13) Mar. 31, (0.14) (0.66) 0.05 (0.75) 8.99 Series F Mar. 31, (0.10) Mar. 31, (0.08) (0.24) (0.85) (1.17) 8.49 Mar. 31, (0.09) 0.25 (0.51) (0.35) 9.64 Mar. 31, (0.11) Mar. 31, (0.10) (0.52) 0.04 (0.58) 9.02 Series O Mar. 31, (0.01) Mar. 31, (0.25) (0.90) (1.15) 8.82 Mar. 31, (0.52) (0.27) 9.93 Mar. 31, (0.03) Mar. 31, (0.03) (0.65) 0.05 (0.63) Net assets and distributions are based on the actual number of mutual fund shares outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of mutual fund shares outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per mutual fund share. 2 Distributions are reinvested in additional mutual fund shares of the Fund or paid in cash. 194

196 RBC GLOBAL RESOURCES CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Ratios and Supplemental Data Number of Net Asset Value Net Asset Value Mutual Fund Shares Management MER Before Portfolio Trading As at Per Mutual Fund Share ($) ($000s) Outstanding (000s) Expense Ratio (%)1 Absorption (%)1 Turnover Rate (%)2 Expense Ratio (%)3 Series A Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Advisor Series Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series D Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series F Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Series O Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, The management expense ratio ( MER ) is based on expenses for the stated period, excluding commissions and other portfolio transaction costs, and is expressed as an annualized percentage of the daily average net asset value during the period. RBC GAM may, at its discretion and without notice to shareholders, waive or absorb certain operating expenses. MER includes the waiver or absorption by RBC GAM of certain operating expenses, while the MER before absorption shows the MER prior to operating expenses being waived or absorbed by RBC GAM. 2 The Fund s portfolio turnover rate gives an indication of the level of activity employed by the portfolio manager. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. The trading expense ratio is not applicable to fixed-income transactions. 4 Effective June 30, 2016, the management fee was changed in respect of certain series of the Fund. If the change to the management fee would have been in effect throughout 2016, the adjusted MER for each series of the Fund would be: Series A 2.19% and Advisor Series 2.17%. 195

197 RBC GLOBAL RESOURCES CLASS, 2017 FINANCIAL HIGHLIGHTS (cont.) Management Fees RBC GAM is the manager and portfolio manager of the Fund. Management fees of each series of the Fund are calculated at the annual percentages, before GST/HST, of the daily net asset value of each series of the Fund. The breakdown of the services received in consideration of the management fees for each series, as a percentage of the management fees, is as follows: Breakdown of Services Management Fees Distribution Other* Series A 1.75% 62% 38% Advisor Series 1.75% 62% 38% Series D 1.00% 25% 75% Series F 0.75% 100% Series O no management fees are paid by the Fund with respect to Series O mutual fund shares. Series O shareholders pay a negotiated fee directly to RBC GAM for investment-counselling services. * Includes all costs related to management, investment advisory services, general administration and profit. PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional shares of the Fund and would be lower if distributions were not reinvested. The performance information does not take into account sales, redemption, distribution, optional charges or income taxes payable that would have reduced returns or performance. Past performance does not necessarily indicate how the Fund may perform in the future. A fund with more than 10 years of performance history is only permitted to disclose the past 10 years. Year-by-Year Returns (%) The bar chart indicates the Fund s performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year. The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by the end of the financial year. 196

198 RBC GLOBAL RESOURCES CLASS, 2017 PAST PERFORMANCE (cont.) Annual Compound Returns (%) The table shows the annual compound returns for each series of the Fund and for each of the periods indicated ended on, 2017, compared with the following benchmarks: The blended benchmark (the Benchmark ) is composed of: 65% MSCI World Index Energy (CAD) 35% MSCI World Index Materials (CAD) The broad-based index is the MSCI World Total Return Net Index (CAD). Past Past Past Past Since Year 3 Years 5 Years 10 Years Inception Series A Benchmark Broad-based index Advisor Series Benchmark Broad-based index Series D Benchmark Broad-based index Series F Benchmark Broad-based index Series O Benchmark Broad-based index SUMMARY OF INVESTMENT PORTFOLIO (after consideration of derivative products, if any) As at, 2017 Investment Mix Sectors % of Net Asset Value Oil, Gas and Consumable Fuels 40.1 Metals and Mining 28.7 Energy Equipment and Services 10.5 Chemicals 7.6 Paper and Forest Products 5.5 Construction Materials 3.8 Containers and Packaging 2.1 Cash/Other 1.7 Investment Mix Countries/Regions % of Net Asset Value United States 43.1 Canada 36.5 United Kingdom 7.3 Other Countries 11.4 Cash/Other 1.7 The returns of each series may vary because of differences in management fees and expenses. The Benchmark and broad-based index returns do not include any costs of investing. See Management Discussion of Fund Performance for a discussion of performance relative to the Benchmark and broad-based index. Series A, Advisor Series, Series D, Series F and Series O mutual fund shares have been available for sale to shareholders since January 1, Inception dates are not provided for series that have been in existence for more than 10 years. INDEX DESCRIPTIONS MSCI World Index Energy (CAD) This sub-index is a measure of the Canadian dollar performance of the stocks in the Energy sector in the MSCI World Index. MSCI World Index Materials (CAD) This sub-index is a measure of the Canadian dollar performance of stocks in the Materials sector in the MSCI World Index. MSCI World Total Return Net Index (CAD) This index is the capitalization-weighted index measuring the Canadian dollar performance of selected companies listed on stock exchanges in countries around the world. The net total return index reinvests dividends after the deduction of withholding taxes, using (for international indexes) a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. 197

199 RBC GLOBAL RESOURCES CLASS, 2017 SUMMARY OF INVESTMENT PORTFOLIO (cont.) (after consideration of derivative products, if any) As at, 2017 Top 25 Holdings* % of Net Asset Value Rio Tinto Plc. 4.8 BHP Billiton Plc. 3.4 Concho Resources Inc. 3.4 Parex Resources Inc. 3.3 EOG Resources Inc. 3.2 Anadarko Petroleum Corp. 3.1 Pioneer Natural Resources Co. 3.0 Halliburton Co. 3.0 Cimarex Energy Co. 2.9 HeidelbergCement AG 2.7 Dow Chemical Company 2.5 Diamondback Energy Inc. 2.2 Baker Hughes Inc. 2.0 Interfor Corp. 2.0 Laredo Petroleum Inc. 1.9 Patterson-UTI Energy Inc. 1.9 First Quantum Minerals Ltd. 1.8 Cash & Cash Equivalents 1.8 Devon Energy Corporation 1.7 Seven Generations Energy Ltd. 1.7 Canadian Natural Resources Ltd. 1.6 Kirkland Lake Gold Ltd. 1.5 Continental Resources Inc. 1.5 Akzo Nobel N.V. 1.5 US Silica Holdings Inc. 1.5 Top 25 Holdings 59.9 * The Fund invests substantially all of its assets directly in the RBC Global Resources Fund. The above are the Top 25 holdings of the RBC Global Resources Fund. The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund and a quarterly update is available at The Simplified Prospectus and other information about the underlying fund are available on SEDAR website at 198

200 MANAGEMENT S RESPONSIBILITY FOR FINANCIAL REPORTING The accompanying financial statements have been prepared by RBC Global Asset Management Inc. ( RBC GAM ) as manager of the RBC Corporate Class Funds (the Funds ) and approved by the Board of Directors of RBC Corporate Class Inc. We are responsible for the information contained within the financial statements. We have maintained appropriate procedures and controls to ensure that timely and reliable financial information is produced. The financial statements have been prepared in compliance with International Financial Reporting Standards ( IFRS ) (and they include certain amounts that are based on estimates and judgments). The significant accounting policies, which we believe are appropriate for the Funds, are described in Note 3 to the financial statements. PricewaterhouseCoopers LLP, Chartered Professional Accountants, Licensed Public Accountants, have performed an independent audit of the financial statements in accordance with IFRS. Their report is set out on the next page. Damon G. Williams, FSA, FCIA, CFA Chief Executive Officer RBC Global Asset Management Inc. Frank Lippa, CPA, CA Chief Financial Officer and Chief Operating Officer RBC Global Asset Management Inc. May 11,