MANAGEMENT S RESPONSIBILITY FOR FINANCIAL REPORTING

Transcription

1 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 GAM Investment Funds (the Funds ) and approved by the Board of Directors of RBC GAM. 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. Heidi Johnston, CPA, CA Chief Financial Officer RBC GAM Funds March 8, 2018

2 INDEPENDENT AUDITOR S REPORT To the Unitholders of: RBC FUNDS & RBC PRIVATE POOLS RBC Canadian T-Bill Fund RBC Canadian Money Market Fund RBC Premium Money Market Fund RBC $U.S. Money Market Fund RBC Premium $U.S. Money Market Fund RBC Canadian Short-Term Income Fund RBC Monthly Income Bond Fund RBC Canadian Bond Index Fund (formerly, RBC Advisor Canadian Bond Fund) RBC Canadian Government Bond Index Fund RBC Bond Fund RBC Vision Bond Fund (formerly, Phillips, Hager & North Community Values Bond Fund) RBC Global Bond Fund RBC $U.S. Investment Grade Corporate Bond Fund RBC Global Corporate Bond Fund RBC High Yield Bond Fund RBC $U.S. High Yield Bond Fund RBC Global High Yield Bond Fund RBC Strategic Income Bond Fund RBC Emerging Markets Foreign Exchange Fund RBC Emerging Markets Bond Fund RBC Emerging Markets Bond Fund (CAD Hedged) BlueBay Global Monthly Income Bond Fund BlueBay Global Sovereign Bond Fund (Canada) BlueBay Global Investment Grade Corporate Bond Fund (Canada) BlueBay European High Yield Bond Fund (Canada) BlueBay Emerging Markets Corporate Bond Fund BlueBay Global Convertible Bond Fund (Canada) BlueBay $U.S. Global Convertible Bond Fund (Canada) RBC Managed Payout Solution RBC Managed Payout Solution Enhanced RBC Managed Payout Solution Enhanced Plus RBC Monthly Income Fund RBC U.S. Monthly Income Fund RBC Balanced Fund RBC Global Balanced Fund RBC Vision Balanced Fund (formerly, RBC Jantzi Balanced Fund) RBC Conservative Growth & Income Fund RBC Balanced Growth & Income Fund RBC Global Growth & Income Fund RBC Retirement Income Solution RBC Retirement 2020 Portfolio RBC Retirement 2025 Portfolio RBC Retirement 2030 Portfolio RBC Retirement 2035 Portfolio RBC Retirement 2040 Portfolio RBC Retirement 2045 Portfolio RBC Retirement 2050 Portfolio RBC Select Very Conservative Portfolio RBC Select Conservative Portfolio RBC Select Balanced Portfolio RBC Select Growth Portfolio RBC Select Aggressive Growth Portfolio RBC Select Choices Conservative Portfolio RBC Select Choices Balanced Portfolio RBC Select Choices Growth Portfolio RBC Select Choices Aggressive Growth Portfolio RBC Target 2020 Education Fund RBC Target 2025 Education Fund RBC Target 2030 Education Fund RBC Target 2035 Education Fund RBC Canadian Dividend Fund RBC Canadian Equity Fund RBC QUBE Canadian Equity Fund RBC QUBE Low Volatility Canadian Equity Fund RBC Trend Canadian Equity Fund RBC Vision Canadian Equity Fund (formerly, RBC Jantzi Canadian Equity Fund) RBC Canadian Index Fund RBC O Shaughnessy Canadian Equity Fund RBC O Shaughnessy All-Canadian Equity Fund RBC Canadian Equity Income Fund RBC Canadian Small & Mid-Cap Resources Fund RBC North American Value Fund RBC North American Growth Fund RBC U.S. Dividend Fund RBC U.S. Dividend Currency Neutral Fund RBC U.S. Equity Fund RBC U.S. Equity Currency Neutral Fund RBC QUBE U.S. Equity Fund RBC QUBE Low Volatility U.S. Equity Fund RBC QUBE Low Volatility U.S. Equity Currency Neutral Fund RBC U.S. Equity Value Fund RBC U.S. Index Fund RBC U.S. Index Currency Neutral Fund RBC O Shaughnessy U.S. Value Fund RBC U.S. Mid-Cap Growth Equity Fund RBC U.S. Mid-Cap Growth Equity Currency Neutral Fund RBC U.S. Mid-Cap Value Equity Fund RBC U.S. Small-Cap Core Equity Fund RBC U.S. Small-Cap Value Equity Fund RBC O Shaughnessy U.S. Growth Fund RBC O Shaughnessy U.S. Growth Fund II RBC Life Science and Technology Fund RBC International Dividend Growth Fund RBC International Equity Fund RBC International Equity Currency Neutral Fund RBC International Index Currency Neutral Fund RBC O Shaughnessy International Equity Fund RBC European Dividend Fund RBC European Equity Fund RBC European Mid-Cap Equity Fund RBC Asian Equity Fund RBC Asia Pacific ex-japan Equity Fund RBC Japanese Equity Fund RBC Emerging Markets Multi-Strategy Equity Fund RBC Emerging Markets Dividend Fund RBC Emerging Markets Equity Fund RBC Emerging Markets Small-Cap Equity Fund RBC Global Dividend Growth Fund RBC Global Dividend Growth Currency Neutral Fund RBC Global Equity Fund RBC Global Equity Focus Fund RBC QUBE Global Equity Fund RBC QUBE Low Volatility Global Equity Fund RBC Vision Global Equity Fund (formerly, RBC Jantzi Global Equity Fund) RBC Vision Fossil Fuel Free Global Equity Fund RBC O Shaughnessy Global Equity Fund RBC QUBE All Country World Equity Fund RBC QUBE Low Volatility All Country World Equity Fund RBC Global Energy Fund RBC Global Precious Metals Fund RBC Global Resources Fund RBC Global Technology Fund RBC Private Short-Term Income Pool RBC Private Canadian Corporate Bond Pool RBC Private Income Pool RBC Private Canadian Dividend Pool RBC Private Canadian Growth and Income Equity Pool RBC Private Canadian Equity Pool RBC Private Canadian Growth Equity Pool RBC Private Canadian Mid-Cap Equity Pool RBC Private U.S. Large-Cap Value Equity Pool RBC Private U.S. Large-Cap Value Equity Currency Neutral Pool RBC Private U.S. Growth Equity Pool RBC Private U.S. Large-Cap Core Equity Pool RBC Private U.S. Large-Cap Core Equity Currency Neutral Pool RBC Private U.S. Small-Cap Equity Pool RBC Private EAFE Equity Pool RBC Private Overseas Equity Pool RBC Private World Equity Pool PHILLIPS, HAGER & NORTH INVESTMENT FUNDS Phillips, Hager & North Canadian Money Market Fund Phillips, Hager & North $U.S. Money Market Fund Phillips, Hager & North Short Term Bond & Mortgage Fund Phillips, Hager & North Bond Fund Phillips, Hager & North Total Return Bond Fund Phillips, Hager & North Inflation-Linked Bond Fund Phillips, Hager & North High Yield Bond Fund Phillips, Hager & North Long Inflation-linked Bond Fund Phillips, Hager & North Monthly Income Fund Phillips, Hager & North Balanced Fund Phillips, Hager & North Dividend Income Fund Phillips, Hager & North Canadian Equity Fund Phillips, Hager & North Canadian Equity Value Fund Phillips, Hager & North Canadian Equity Underlying Fund Phillips, Hager & North Canadian Equity Underlying Fund II Phillips, Hager & North Canadian Growth Fund Phillips, Hager & North Canadian Income Fund Phillips, Hager & North Vintage Fund Phillips, Hager & North U.S. Dividend Income Fund Phillips, Hager & North U.S. Multi-Style All-Cap Equity Fund Phillips, Hager & North U.S. Equity Fund Phillips, Hager & North Currency-Hedged U.S. Equity Fund Phillips, Hager & North U.S. Growth Fund Phillips, Hager & North Overseas Equity Fund Phillips, Hager & North Currency-Hedged Overseas Equity Fund Phillips, Hager & North Global Equity Fund Phillips, Hager & North LifeTime 2015 Fund Phillips, Hager & North LifeTime 2020 Fund Phillips, Hager & North LifeTime 2025 Fund Phillips, Hager & North LifeTime 2030 Fund Phillips, Hager & North LifeTime 2035 Fund Phillips, Hager & North LifeTime 2040 Fund Phillips, Hager & North LifeTime 2045 Fund Phillips, Hager & North LifeTime 2050 Fund (collectively referred to as the Funds )

3 INDEPENDENT AUDITOR S REPORT We have audited the accompanying financial statements of each of the Funds, which comprise the statements of financial position, comprehensive income, cash flows and changes in net assets attributable to holders of redeemable units as at and for the periods indicated in note 2, and the related notes, which comprise a summary of significant accounting policies and other explanatory information. Management s responsibility for the financial statements Management is responsible for the preparation and fair presentation of the financial statements of each of the Funds in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s responsibility Our responsibility is to express an opinion on the financial statements of each of the Funds based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained in each of our audits is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements of each of the Funds present fairly, in all material respects, the financial position, financial performance and cash flows of each of the Funds as at and for the periods indicated in note 2, in accordance with International Financial Reporting Standards. Chartered Professional Accountants, Licensed Public Accountants Toronto, Ontario March 8, 2018

4 2017 ANNUAL FINANCIAL STATEMENTS SCHEDULE OF INVESTMENT PORTFOLIO (in USD000s), 2017 Fair % of Net Holdings Security Cost Value Assets COMMON EQUITIES Consumer Discretionary Aptiv Plc. $ $ Comcast Corp., Class A Dollar General Corp General Motors Co Home Depot Inc McDonald's Corp Starbucks Corp The Walt Disney Company Consumer Staples Altria Group Inc CVS Health Corp PepsiCo Inc Philip Morris International Inc The Procter & Gamble Co Wal-Mart Stores, Inc Energy Chevron Corp ConocoPhillips Exxon Mobil Corp Marathon Petroleum Corp Occidental Petroleum Corp Phillips 66 Company Valero Energy Corp Financials Aflac Inc Bank of America Corp Citigroup Inc Citizens Financial Group Inc Financial Select Sector SPDR Fund ishares Dow Jones US Real Estate Index Fund JPMorgan Chase & Co MetLife Inc Morgan Stanley PNC Bank Corp SPDR KBW Regional Banking Fund Suntrust Banks Inc The Goldman Sachs Group Inc The Progressive Corp Health Care AbbVie Inc Aetna Inc Allergan plc AmerisourceBergen Corp Amgen Inc Bristol-Myers Squibb Co Humana Inc The accompanying notes are an integral part of the financial statements. Fair % of Net Holdings Security Cost Value Assets Health Care (cont.) Johnson & Johnson $ $ Medtronic Plc Merck & Co. Inc Pfizer Inc UnitedHealth Group Incorporated Industrials M Co Boeing Co Caterpillar Inc Cummins Engine Inc Delta Air Lines Inc FedEx Corporation General Electric Company Honeywell International Inc Hubbell Inc Illinois Tool Works Inc Northrop Grumman Corp Parker Hannifin Corp Raytheon Company Southwest Airlines Union Pacific Corp Information Technology Accenture Plc., Class A Analog Devices Inc Apple Inc Broadcom Ltd Cisco Systems Inc Intel Corp International Business Machines Microchip Technology Inc Microsoft Corp Nvidia Corp Oracle Corporation Texas Instruments Inc Materials DowDuPont Inc Eastman Chemical Company LyondellBasell Industries N.V Telecommunication Services AT&T Inc Verizon Communications Inc Utilities American Electric Power Exelon Corp NextEra Energy Inc TOTAL COMMON EQUITIES

5 SCHEDULE OF INVESTMENT PORTFOLIO (in USD000s), 2017 Number Fair % of Net of Units Security Cost Value Assets MUTUAL FUND UNITS RBC Emerging Markets Bond Fund USD* $ $ RBC $U.S. High Yield Bond Fund* TOTAL MUTUAL FUND UNITS Par Value Coupon Fair % of Net (000s) Security Rate % Maturity Cost Value Assets BONDS Canada 410 Agrium Inc. USD Oct-2022 $ 412 $ Alimentation Couche-Tard Inc. USD Jul Alimentation Couche-Tard Inc. USD Jul Bank of Montreal USD Jan Bank of Nova Scotia USD Jun Bank of Nova Scotia USD Sep Barrick PD Australia Finance Pty Ltd. USD Oct Canadian Pacific Railway Co. USD Mar Enbridge Inc. USD Jun Fairfax Financial Holdings Ltd. USD May Goldcorp Inc. USD Jun Goldcorp Inc. USD Mar Great-West Life & Annuity Insurance Co. USD May Potash Corporation of Saskatchewan Inc. USD Apr Rogers Communications Inc. USD Aug Rogers Communications Inc. USD Aug Suncor Energy Inc. USD Jun Thomson Reuters Corp. USD May Thomson Reuters Corp. USD Aug Toronto-Dominion Bank USD Nov TransCanada PipeLines Ltd. USD Oct TransCanada PipeLines Ltd. USD Jun France BPCE S.A. USD Jul Orange S.A. USD Feb Orange S.A. USD Sep Total Capital International S.A. USD Jan Germany 500 Deutsche Telekom International Finance BV USD Jul Deutsche Telekom International Finance BV USD Sep Siemens Financieringsmaatschappij N.V. USD May Luxembourg 600 Schlumberger Investment S.A. USD Dec Netherlands 500 ING Groep N.V. USD Mar ING Bank N.V. USD Nov LYB International Finance BV USD Mar Shell International Finance BV USD Dec The accompanying notes are an integral part of the financial statements.

6 SCHEDULE OF INVESTMENT PORTFOLIO (in USD000s), 2017 Par Value Coupon Fair % of Net (000s) Security Rate % Maturity Cost Value Assets Switzerland 350 Novartis Capital Corp Sep-2022 $ 356 $ Novartis Capital Corp May Novartis Capital Corp May Tyco Electronics Group S.A. USD Feb UBS AG USD Mar United Kingdom 350 BP Capital Markets Plc. USD Feb BP Capital Markets Plc. USD May Diageo Capital Plc. USD Apr Diageo Investment Corp. USD May Diageo Investment Corp. USD May HSBC Holdings Plc. USD Apr Lloyds Banking Group Plc. USD Jan Vodafone Group Plc. USD Sep United States 505 Abbott Laboratories Nov Abbott Laboratories Nov AbbVie Inc May AbbVie Inc Nov AbbVie Inc May Actavis Funding SCS USD Mar Alabama Power Co Aug Altria Group Inc Jan Amazon.com Inc Aug Amazon.com Inc Aug American Electric Power Co. Inc Dec American Express Co Dec American Honda Finance Corp Feb American International Group Inc Jun AmerisourceBergen Corp May Anheuser-Busch InBev Finance Inc Feb Anheuser-Busch InBev Finance Inc Jan Anheuser-Busch InBev Worldwide Inc Jan Apache Corp Feb Apple Inc Aug Aptiv Plc Oct AT&T Inc Mar AT&T Inc Feb AT&T Inc Jan AT&T Inc Sep AT&T Inc Mar Avery Dennison Corp Apr Bank of America Corp Jun Bank of America Corp Jan Bio-Rad Laboratories Inc Dec Cardinal Health Inc Nov Cardinal Health Inc Nov Cardinal Health Inc Nov Caterpillar Financial Services Corp Aug Caterpillar Financial Services Corp Aug Caterpillar Inc Aug CC Holdings GS V LLC Apr Charter Communications Operating LLC Jul Charter Communications Operating LLC Jul The accompanying notes are an integral part of the financial statements.

7 SCHEDULE OF INVESTMENT PORTFOLIO (in USD000s), 2017 Par Value Coupon Fair % of Net (000s) Security Rate % Maturity Cost Value Assets United States (cont.) 250 Church & Dwight Co. Inc Aug-2022 $ 249 $ Church & Dwight Co. Inc Oct Cintas Corp. No Jun Cintas Corp. No Apr Cisco Systems Inc Sep Cisco Systems Inc Feb Citigroup Inc Jan Citigroup Inc May Columbia Pipeline Group Inc Jun Comcast Corp Jan Comcast Corp Mar ConocoPhillips Co Nov ConocoPhillips Co Mar ConocoPhillips Co Mar ConocoPhillips Holding Co Apr Consolidated Edison Company of New York Inc Apr Consolidated Edison Company of New York Inc Feb Constellation Brands Inc May Constellation Brands Inc May Cox Communications Inc Mar CSX Corp Mar CVS Health Corp May D.R. Horton Inc Feb D.R. Horton Inc Aug Delphi Corp Mar Diamond 1 Finance Corp Jun Diamond 1 Finance Corp Jul Dominion Energy Inc Aug Dominion Energy Inc Aug Dominion Energy Inc Sep Domtar Corp Apr Energy Transfer Partners LP Feb Enterprise Products Operating LLC Feb Everest Reinsurance Holdings Inc May Exelon Generation Co. LLC Oct Expedia Inc Aug Exxon Mobil Corp Mar Exxon Mobil Corp Mar Exxon Mobil Corp Mar Federal Realty Investment Trust Jun Fidelity National Information Services Inc Oct Fidelity National Information Services Inc Aug Flex Ltd. USD Feb Ford Motor Credit Co. LLC Mar Ford Motor Credit Co. LLC Jul GE Capital Corp Jan General Mills Inc Dec Georgia-Pacific LLC Nov GlaxoSmithKline Capital Inc May Halliburton Co Sep Halliburton Co Nov Hasbro Inc Mar Host Hotels & Resorts LP Jun Indiana Michigan Power Co Mar International Paper Co Nov ITC Holdings Corp Jun John Deere Capital Corp Mar The accompanying notes are an integral part of the financial statements.

8 SCHEDULE OF INVESTMENT PORTFOLIO (in USD000s), 2017 Par Value Coupon Fair % of Net (000s) Security Rate % Maturity Cost Value Assets United States (cont.) 600 John Deere Capital Corp Jun-2026 $ 578 $ Johnson & Johnson Mar Johnson & Johnson Mar Johnson Controls International Plc Jul Johnson Controls International Plc Jul JPMorgan Chase & Co Mar JPMorgan Chase & Co Jan JPMorgan Chase & Co May Kimberly-Clark Corp Feb Kimberly-Clark Corp Aug Kinder Morgan Energy Partners LP Aug Kinder Morgan Inc Nov KLA-Tencor Corp Nov Kraft Heinz Foods Co Jul Kraft Heinz Foods Co Feb Kraft Heinz Foods Co Jun L-3 Communications Corp Jul L-3 Communications Corp Feb Lear Corp Mar Lear Corp Jan Lear Corp Sep Liberty Mutual Group Inc Jun Liberty Mutual Group Inc May Liberty Mutual Group Inc Jun Lincoln National Corp Apr Lockheed Martin Corp Nov Lockheed Martin Corp Jan LyondellBasell Industries N.V Apr Masco Corp Apr McDonald's Corp Oct McKesson Corp Feb Medtronic Inc Mar Medtronic Inc Mar Merck & Co. Inc Feb MetLife Inc Feb MetLife Inc Jun Microsoft Corp Aug Microsoft Corp Aug Microsoft Corp Nov MidAmerican Energy Co Dec MidAmerican Energy Co Sep Mohawk Industries Inc Feb Morgan Stanley Jul MPLX LP Feb MPLX LP Dec MPLX LP Jun Nevada Power Co May NewMarket Corp Dec NVIDIA Corp Sep Oracle Corp Sep Oracle Corp May Owens Corning Dec PepsiCo Inc Mar PepsiCo Inc Apr Pfizer Inc Dec Pfizer Inc May The accompanying notes are an integral part of the financial statements.

9 SCHEDULE OF INVESTMENT PORTFOLIO (in USD000s), 2017 Par Value Coupon Fair % of Net (000s) Security Rate % Maturity Cost Value Assets United States (cont.) Pioneer Natural Resources Co Jan-2021 $ $ Progress Energy Inc Apr Progress Energy Inc Dec Prudential Financial Inc Aug PSEG Power LLC Apr Quest Diagnostics Inc Mar Raytheon Co Dec Raytheon Co Dec Regency Centers LP Apr Republic Services Inc Nov Republic Services Inc May Sabine Pass Liquefaction LLC Mar Southern California Edison Co Feb Sprint Spectrum Co. LLC Sep Target Corp Jul The Dow Chemical Co May The Goldman Sachs Group Inc Jan The Kroger Co Jan The Kroger Co Oct Thermo Fisher Scientific Inc Aug Time Warner Cable Inc Jan Time Warner Inc Jan Toyota Motor Credit Corp Sep Tyson Foods Inc Jun Tyson Foods Inc Aug United Parcel Service Inc Apr United Parcel Service Inc Oct United States Treasury Apr United States Treasury Jan United States Treasury May United States Treasury Nov United States Treasury Feb United States Treasury Feb United States Treasury Feb United States Treasury Feb United Technologies Corp Nov United Technologies Corp Nov United Technologies Corp Apr Verizon Communications Inc Aug Verizon Communications Inc Sep Volkswagen Group of America Finance LLC May Wal-Mart Stores Inc Apr Waste Management Inc Mar Waste Management Inc Mar Wells Fargo & Co Mar Wells Fargo & Co Apr Wells Fargo & Co Apr Whirlpool Corp Mar TOTAL BONDS The accompanying notes are an integral part of the financial statements.

10 SCHEDULE OF INVESTMENT PORTFOLIO (in USD000s), 2017 Par Value Coupon Fair % of Net (000s) Security Rate % Maturity Cost Value Assets MORTGAGE-BACKED SECURITIES 2 Fannie Mae Pool Aug-2018 $ 2 $ 2 2 Fannie Mae Pool Jan Fannie Mae Pool Oct Fannie Mae Pool May Fannie Mae Pool Nov Fannie Mae Pool Aug Fannie Mae Pool May Fannie Mae Pool Jul Fannie Mae Pool Sep Fannie Mae Pool Oct Fannie Mae Pool Nov Fannie Mae Pool Aug Fannie Mae Pool Oct Fannie Mae Pool Aug Fannie Mae Pool Sep Fannie Mae Pool Oct Fannie Mae Pool Dec Fannie Mae Pool Dec Fannie Mae Pool May Fannie Mae Pool Dec Fannie Mae Pool Jan Fannie Mae Pool May Fannie Mae Pool Sep Fannie Mae Pool Oct Fannie Mae Pool Dec Fannie Mae Pool Apr Fannie Mae Pool May Fannie Mae Pool Oct Freddie Mac Gold Pool Dec Freddie Mac Gold Pool May Freddie Mac Gold Pool Nov Freddie Mac Gold Pool Feb Freddie Mac Gold Pool Nov Freddie Mac Gold Pool Apr Freddie Mac Gold Pool Mar Freddie Mac Gold Pool Feb Freddie Mac Gold Pool Mar Freddie Mac Gold Pool Dec Freddie Mac Gold Pool Jan Freddie Mac Gold Pool Sep Freddie Mac Gold Pool Dec Freddie Mac Gold Pool Feb Freddie Mac Gold Pool Sep Freddie Mac Gold Pool Feb Freddie Mac Gold Pool Apr Freddie Mac Gold Pool Aug Freddie Mac Gold Pool Aug Freddie Mac Gold Pool Jun Freddie Mac Gold Pool Jun Freddie Mac Gold Pool Nov Freddie Mac Gold Pool Feb Freddie Mac Gold Pool Mar Freddie Mac Gold Pool May Freddie Mac Gold Pool Nov Ginnie Mae I Pool May Ginnie Mae I Pool Nov The accompanying notes are an integral part of the financial statements.

11 SCHEDULE OF INVESTMENT PORTFOLIO (in USD000s), 2017 Par Value Coupon Fair % of Net (000s) Security Rate % Maturity Cost Value Assets MORTGAGE-BACKED SECURITIES (cont.) 53 Ginnie Mae I Pool Nov-2034 $ 54 $ Ginnie Mae I Pool Mar Ginnie Mae II Pool Sep Ginnie Mae II Pool Jul Ginnie Mae II Pool Aug TOTAL MORTGAGE-BACKED SECURITIES SHORT-TERM INVESTMENTS TOTAL INVESTMENTS $ OTHER NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS $ * Investment in related party (see note 8 in the generic notes). Short-term investments, which may be made up of treasury bills, commercial paper, term deposits and discount notes, earn interest at a rate of 1.40% and mature on January 2, The accompanying notes are an integral part of the financial statements.

12 FINANCIAL STATEMENTS (IN U.S. DOLLARS) Statements of Financial Position (in $000s except per unit amounts) (see note 2 in the generic notes) ASSETS Investments at fair value $ $ Cash Subscriptions receivable Dividends receivable, interest accrued and other assets TOTAL ASSETS LIABILITIES Redemptions payable Distributions payable Accounts payable and accrued expenses TOTAL LIABILITIES EXCLUDING NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS ( NAV ) $ $ Investments at cost $ $ NAV SERIES A $ $ ADVISOR SERIES $ $ SERIES H $ $ SERIES D $ $ SERIES F $ $ SERIES I $ $ NAV PER UNIT SERIES A $ $ ADVISOR SERIES $ $ SERIES H $ $ SERIES D $ $ SERIES F $ $ SERIES I $ $ Statements of Comprehensive Income (in $000s except per unit amounts) For the periods ended (see note 2 in the generic notes) INCOME (see note 3 in the generic notes) Dividends $ $ Interest for distribution purposes Other income received from underlying funds Securities lending revenue (see note 7 in the generic notes) Capital gains received from underlying funds Net realized gain (loss) on investments Net gain (loss) on foreign currencies and other net assets Change in unrealized gain (loss) on investments TOTAL INCOME (LOSS) EXPENSES (see notes Fund Specific Information) Management fees Administration fees Independent Review Committee costs 2 2 GST/HST Transaction costs Withholding tax TOTAL EXPENSES INCREASE (DECREASE) IN NAV $ $ INCREASE (DECREASE) IN NAV SERIES A $ $ ADVISOR SERIES $ $ SERIES H $ $ SERIES D $ $ SERIES F $ $ SERIES I $ $ INCREASE (DECREASE) IN NAV PER UNIT SERIES A $ 0.99 $ 0.63 ADVISOR SERIES $ 1.01 $ 0.64 SERIES H $ $ 0.42 SERIES D $ 1.16 $ 0.75 SERIES F $ 1.14 $ 0.77 SERIES I $ 1.17 $ 0.80 The accompanying notes are an integral part of these financial statements.

13 FINANCIAL STATEMENTS (IN U.S. DOLLARS) Statements of Cash Flow (in $000s) For the periods ended (see note 2 in the generic notes) CASH FLOWS FROM OPERATING ACTIVITIES Increase (decrease) in NAV $ $ ADJUSTMENTS TO RECONCILE NET CASH PROVIDED BY (USED IN) OPERATIONS Interest for distribution purposes Non-cash distributions from underlying funds (3 581) (3 302) Net realized loss (gain) on investments (32 684) (14 957) Change in unrealized loss (gain) on investments (67 271) (35 081) (Increase) decrease in accrued receivables Increase (decrease) in accrued payables 365 (270) (Increase) decrease in margin accounts Cost of investments purchased ( ) ( ) Proceeds from sale and maturity of investments NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ( ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of redeemable units Cash paid on redemption of redeemable units ( ) ( ) Distributions paid to holders of redeemable units (7 274) (6 911) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES $ $ ( ) Net increase (decrease) in cash for the period Cash (bank overdraft), beginning of period 159 CASH (BANK OVERDRAFT), END OF PERIOD $ $ 159 Interest received (paid) $ $ Dividends received, net of withholding taxes $ $ The accompanying notes are an integral part of these financial statements.

14 FINANCIAL STATEMENTS (IN U.S. DOLLARS) Statements of Changes in NAV (in $000s) For the periods ended (see note 2 in the generic notes) Series A Advisor Series Series H Series D NAV AT BEGINNING OF PERIOD $ $ $ $ $ $ $ $ INCREASE (DECREASE) IN NAV Early redemption fees Proceeds from redeemable units issued Reinvestments of distributions to holders of redeemable units Redemption of redeemable units ( ) ( ) (14 588) (23 565) (30 698) (10 590) (12 234) NET INCREASE (DECREASE) FROM REDEEMABLE UNIT TRANSACTIONS (97 299) (3 839) (11 833) (27 535) (1 062) Distributions from net income (13 513) (14 747) (722) (918) (206) (507) (557) Distributions from net gains (12 090) (11 856) (646) (738) (166) (454) (448) Distributions from capital (5 333) (1 822) (285) (113) (25) (200) (69) TOTAL DISTRIBUTIONS TO HOLDERS OF REDEEMABLE UNITS (30 936) (28 425) (1 653) (1 769) (397) (1 161) (1 074) NET INCREASE (DECREASE) IN NAV (70 565) (332) (10 109) (26 863) NAV AT END OF PERIOD $ $ $ $ $ $ $ $ For the periods ended (see note 2 in the generic notes) Series F Series I Total NAV AT BEGINNING OF PERIOD $ $ $ $ $ $ INCREASE (DECREASE) IN NAV Early redemption fees Proceeds from redeemable units issued Reinvestments of distributions to holders of redeemable units Redemption of redeemable units (40 572) (23 686) (10 276) (27 580) ( ) ( ) NET INCREASE (DECREASE) FROM REDEEMABLE UNIT TRANSACTIONS (879) (315) ( ) Distributions from net income (973) (614) (680) (957) (16 395) (17 999) Distributions from net gains (870) (494) (609) (769) (14 669) (14 471) Distributions from capital (384) (76) (268) (118) (6 470) (2 223) TOTAL DISTRIBUTIONS TO HOLDERS OF REDEEMABLE UNITS (2 227) (1 184) (1 557) (1 844) (37 534) (34 693) NET INCREASE (DECREASE) IN NAV (88 165) NAV AT END OF PERIOD $ $ $ $ $ $ The accompanying notes are an integral part of these financial statements.

15 NOTES TO FINANCIAL STATEMENTS FUND SPECIFIC INFORMATION, 2017 Series I units have been capped and are no longer available for purchase by new investors effective June 30, Existing investors who hold Series I units of the Fund can continue to make additional investments into this series. In addition, RBC GAM may maintain capacity for certain investors, including other related funds, that may invest in this series. General information (see note 1 in the generic notes) The investment objective of the Fund is to provide regular U.S. dollar monthly income and modest capital growth. All outstanding Series H units were re-designated as Series A units effective June 30, Financial instrument risk and capital management (see note 5 in the generic notes) Credit risk (%) Credit-exposed securities, excluding short-term investments, comprise 48.2% (, %) of the NAV of the Fund. The table below summarizes the Fund s credit risk exposure grouped by credit ratings as at: Rating AAA AA A BBB BB B CCC Unrated Total Concentration risk (%) The table below summarizes the Fund s investment portfolio (after consideration of derivative products, if any) as at: Investment mix Equities Bonds Mortgage-Backed Securities Cash/Other Total Interest rate risk (%) Fixed-income and debt securities, excluding short-term investments, comprise 45.7% (, %) of the NAV of the Fund. The table below summarizes the Fund s exposure to interest rate risk by remaining term to maturity as at: Term to maturity Less than 1 year years years > 10 years Total As at, 2017, had prevailing interest rates risen or lowered by 1%, with all other factors kept constant, the Fund s NAV may have decreased or increased, respectively, by approximately 4.1% (, %). In practice, actual results could differ from this sensitivity analysis and the difference could be material. Other price risk (% impact on NAV) The table below shows the impact of a 1% change in the broad-based index (noted below) on the Fund s NAV, using a 36-month historical correlation of data of the Fund s return and the index, with all other factors kept constant, as at: S&P 500 Total Return Index (USD) + or or Since historical correlation may not be representative of future correlation, actual results could differ from this sensitivity analysis and the difference could be material. Fair value hierarchy (USD000s except % amounts) (see note 3 in the generic notes) The following is a summary of the inputs used as of, 2017 and 2016., 2017 Level 1 Level 2 Level 3 Total Equities Mutual fund units Fixed-income and debt securities Short-term investments Derivatives assets Derivatives liabilities Total financial instruments % of total portfolio Please see the generic notes at the back of the financial statements.

16 NOTES TO FINANCIAL STATEMENTS FUND SPECIFIC INFORMATION, 2017, 2016 Level 1 Level 2 Level 3 Total Equities Mutual fund units Fixed-income and debt securities Short-term investments Derivatives assets Derivatives liabilities Total financial instruments % of total portfolio For the periods ended, 2017 and 2016, there were no transfers of financial instruments between Level 1, Level 2 and Level 3. Management fees and operating expenses (see note 8 in the generic notes) Management fees and administration fees of each series of the Fund are payable to RBC GAM and calculated at the following annual percentages, before GST/HST, of the daily NAV of each series of the Fund. Management fees* Operating expenses Series A 1.40% 0.10% Advisor Series 1.40% 0.05% Series H 1.40% 0.05% Series D 0.80% 0.05% Series F 0.65% 0.05% Series I 0.60% 0.05% * Effective June 30, 2016, the management fees for Series A and Advisor Series units were reduced to 1.40% from 1.50%; for Series D units were reduced to 0.80% from 0.90%; and for Series F units were reduced to 0.65% from 0.75%. Investments by related parties (USD000s except unit amounts) Royal Bank of Canada, or one of its subsidiaries, held the following investments in the Fund as at: Units held Series A Series I Value of all units 3 2 Unconsolidated structured entities (%) (see note 3 in the generic notes) The table below summarizes the Fund s interest in the sponsored funds as a percentage of NAV, and the Fund s ownership interest as a percentage of NAV of the sponsored funds ( Ownership ). All sponsored funds are established and conduct business in Canada NAV Ownership NAV Ownership RBC Emerging Markets Bond Fund RBC $U.S. High Yield Bond Fund The table below summarizes the Fund s interest in the unsponsored funds as a percentage of NAV, and the Fund s ownership interest as a percentage of NAV of the unsponsored funds ( Ownership ) NAV Ownership NAV Ownership Financial Select Sector SPDR Fund 0.9 ishares Dow Jones US Real Estate Index Fund SPDR KBW Regional Banking Fund Taxes (CAD000s) (see note 6 in the generic notes) The Fund prepares its financial statements in U.S. dollars but is taxable on its income and net realized capital gains (including gains from foreign exchange movements) calculated on a Canadian dollar basis. The Fund had no capital or non-capital losses as at, Redeemable units (000s) There is no limitation on the number of units available for issue. Units are purchased and redeemed at the NAV per unit. For the periods ended (see note 2 in the generic notes) Series A Opening units Issued number of units Reinvested number of units Redeemed number of units (19 424) (35 901) Ending number of units Please see the generic notes at the back of the financial statements.

17 NOTES TO FINANCIAL STATEMENTS FUND SPECIFIC INFORMATION, 2017 For the periods ended (see note 2 in the generic notes) Advisor Series Opening units Issued number of units Reinvested number of units Redeemed number of units (1 387) (2 379) Ending number of units Series H Opening units Issued number of units 290 Reinvested number of units 30 Redeemed number of units (3 078) Ending number of units Series D Opening units Issued number of units Reinvested number of units Redeemed number of units (936) (1 151) Ending number of units Series F Opening units Issued number of units Reinvested number of units Redeemed number of units (3 670) (2 302) Ending number of units Series I Opening units Issued number of units Reinvested number of units Redeemed number of units (945) (2 634) Ending number of units Securities lending revenue (USD000s except %) (see note 7 in the generic notes) Fair value of securities on loan and collateral received as at: Fair value of securities loaned Fair value of collateral received The table below provides a reconciliation of the gross revenue generated from the securities lending transactions of the Fund to the securities lending revenue disclosed in the Statements of Comprehensive Income $ % $ % Gross revenue RBC IS (paid) (39) (27) (32) (35) Tax withheld (5) (3) (3) (4) Fund revenue Transaction costs (USD000s except %) Transaction costs, including brokerage commissions, in consideration of portfolio transactions for the periods ended: $ % $ % Total transaction costs Related-party brokerage commissions* Commission arrangements * See note 8 in the generic notes. Commission arrangements are part of commission amounts paid to dealers. The Fund uses commission arrangements (formerly known as soft dollars ) for research and/or order execution goods and services. Please see the generic notes at the back of the financial statements.

18 GENERIC NOTES TO FINANCIAL STATEMENTS (also see Fund Specific Information), The Funds The Funds ( Fund or Funds ) are open-ended mutual fund trusts governed by the laws of the Province of Ontario or British Columbia. RBC GAM is the manager and portfolio manager of the Funds and its head office is located at 155 Wellington Street West, 22nd Floor, Toronto, Ontario. RBC GAM is also the trustee of those Funds governed by the laws of the Province of Ontario. These financial statements were approved for issuance by the Board of Directors of RBC GAM on March 8, The Funds may issue an unlimited number of units in some or all of Series A, Advisor Series, Advisor T5 Series, Series T5, Series T8, Series H, Series D, Series DZ, Series F, Series FT5, Series FT8, Series I and Series O. Series A units have no sales charges and are available to all investors through authorized dealers. Advisor Series units and Advisor T5 Series units are available to all investors through authorized dealers with an initial sales charge or low-load sales charge option. For certain of the Funds, Advisor Series units and Advisor T5 Series units are available with a deferred sales charge option. Under the initial sales charge option, investors pay a sales charge ranging from 0% to 5% of the amount invested. Under the deferred sales charge or low-load sales charge option, sales charges may be applicable, as described in the Simplified Prospectus. Series T5 units and Series T8 units have no sales charges and are available to all investors through authorized dealers. Series H units have no sales charges, have lower fees than Series A units and are only available to investors who invest and maintain the required minimum balance through authorized dealers. Series D units and Series DZ units have no sales charges and have lower fees than Series A units. Series D units and Series DZ units may be available to investors who have accounts with RBC Direct Investing Inc., Phillips, Hager & North Investment Funds Ltd. ( PH&N IF ) or certain other authorized dealers (primarily discount brokers). Series F units, Series FT5 units and Series FT8 units have no sales charges and have lower fees than Series A units. Series F units, Series FT5 units and Series FT8 units are only available to investors who have fee-based accounts with their dealer. Series I units have no sales charges, have lower fees than Series F units, Series FT5 units and Series FT8 units and are only available to investors who invest and maintain the required minimum balance and who have accounts with dealers who have signed a fee-based agreement with RBC GAM. Series O units are only available to large private or institutional investors or dealers. No management fees are payable by the Funds in respect to Series O units. Unitholders pay a negotiated fee directly to RBC GAM for investment-counselling services. 2. Financial year/period The information provided in these financial statements and notes thereto is for the 12-month periods ended or as at, 2017 and 2016, as applicable. In the year a Fund or series is established, period represents the period from inception to of that fiscal year. 3. Summary of significant accounting policies These financial statements have been prepared in compliance with International Financial Reporting Standards ( IFRS ). The significant accounting policies of the Funds, which are investment entities, are as follows: Classification of Financial Assets and Liabilities The Funds financial assets and financial liabilities, other than derivatives, are designated at fair value through profit or loss at inception, as those financial assets and liabilities are managed together and their performance evaluated on a fair value basis in accordance with the Funds documented investment strategy. Derivatives are classified as held for trading and measured at fair value through profit or loss. Redemption units are measured at their respective redemption values. All other assets and liabilities are measured at amortized cost. Realized gains arising on derivatives during a period are included in the Statements of Comprehensive Income in Net gain (loss) from futures contracts, Other derivatives and Net gain (loss) on foreign currencies and other net assets, where applicable. Classification of Redeemable Units The Funds have multiple features across the different series of the Funds. Consequently, the Funds outstanding redeemable units are classified as financial liabilities in accordance with the requirements of IAS 32 Financial Instruments: Presentation.