> Giving the gift of knowledge. Your guide to saving for a child s post-secondary education

Transcription

1 > Giving the gift of knowledge Your guide to saving for a child s post-secondary education

2 TABLE OF CONTENTS 1 > The value of education 2 > The Registered Education Savings Plan (RESP): The foundation of your strategy 6 > RESP choices at RBC Royal Bank 7 > Why not just set money aside in a separate account? 9 > Establishing a formal trust 11 > Options at a glance 13 > Investment solutions 15 > Committing to your child s future 16 > Take the first step

3 > The value of education Of all the factors that can influence a child s future employment status, earning power and level of career satisfaction, few are as significant as a post-secondary education. A university graduate can expect to earn $1 million more during a 43-year career than someone who only completes high school, according to Statistics Canada 1. Postsecondary graduates are also less likely to find themselves out of work 2.7 times less likely, says the Canadian Council on Social Development than are young people who have only a grade-school education 2. Looking ahead, Human Resources and Social Development Canada (HRSDC) anticipates that almost two-thirds of new jobs will require some form of post-secondary education 3. These striking statistics underline the many real-world advantages for people who receive a higher education. Educated workers tend to enjoy greater self-esteem, a more challenging and rewarding career and the peace of mind that comes from having options in today s fast-moving economy. A CHALLENGE WORTH MEETING The demand for post-secondary education can be seen in rapidly increasing enrolment rates across Canada. At the same time, however, costs are increasing even more rapidly. By some estimates, tuition fees have almost tripled over the last 15 years 4. With government support dwindling and costs continuing to spiral upward, HRSDC predicts that by 2019, a four-year undergraduate program away from home could cost more than $100, The challenge for parents and students is clear: The value of education is too great to ignore, yet the costs are too great for most of us to bear without a dedicated savings plan in place. If you want your children to be able to choose the education of their dreams without being hampered by financial concerns, this Guidebook is for you. It explains some of the most effective ways to save and invest, so that you can give your child the truly priceless gift of knowledge. EDUCATION BY THE NUMBERS > 93% Percentage of parents with children aged 18 and under who want their children to achieve a post-secondary education, according to a 2002 Statistics Canada survey 6. > $71,980 Current average cost of a four-year university education away from home (HRSDC) 7. > 50% Percentage of parents who have a savings plan devoted specifically to paying for college or university expenses, according to a 2002 Statistics Canada survey 8. > 5.3% per year Average increase in university tuition costs since 2000 (HRSDC) 9. > $19,500 Average amount owed in government student loans by class of 2000 bachelor degree students when they graduated (Statistics Canada) 10. > $32 billion Total amount Canadian parents have saved for their children s post-secondary education costs, as of October 2002 (Statistics Canada) 11. > 60% Proportion of Canadians in the highest income bracket who possess a post-secondary degree, according to the 2001 Census (Statistics Canada) 12. GIVING THE GIFT OF KNOWLEDGE 1

4 > The Registered Education Savings Plan: The foundation of your strategy Most people s education-savings strategies are likely to be built around a Registered Education Savings Plan (RESP). An RESP combines flexibility, tax-deferred investment growth and direct government assistance to help you reach your education savings goals. Here s how it works. 2 GIVING THE GIFT OF KNOWLEDGE

5 OPENING AN RESP An RESP can be set up for anyone, including your children, grandchildren, nieces, nephews or family friends. The subscriber to the plan is the individual who opens the plan and makes contributions to it. The beneficiary of the plan is the individual or individuals who are designated to receive the funds for the purpose of pursuing post-secondary education. The beneficiary must be a Canadian resident and have a Social Insurance Number (SIN). There are two types of RESPs: > Family Plans allow the subscriber to name one or more beneficiaries in the same plan. These plans require that each beneficiary be a child, grandchild or sibling of the subscriber (either by blood or adoption). One of the main advantages of this type of plan is that the funds in the plan do not have to be shared equally among the beneficiaries, giving you more flexibility when it comes to making withdrawals. > Individual Plans can have only one beneficiary. The beneficiary can be anyone at all your child, grandchild, niece, nephew, family friend, you or your spouse. CONTRIBUTING TO AN RESP Any subscriber can contribute to an RESP, subject to a lifetime limit established for the beneficiaries. Although you cannot deduct the contributions made to an RESP from your taxable income, the subsequent investment earnings on RESP contributions are tax-deferred. Qualifying investments include savings deposits, Guaranteed Investment Certificates (GICs) and mutual funds. If the plan earnings are ultimately withdrawn to cover qualifying post-secondary education expenses, they are taxable to the beneficiary, not to the subscriber. There are no limits on the number of plans subscribers can establish, or the number of RESPs a beneficiary may have. However, the limit on lifetime contributions for any one beneficiary is $50,000. Overcontributions are subject to a penalty of 1% per month. Note that the lifetime limit applies to the total contributions, by all subscribers, to all plans in the name of the beneficiary. As a result, if you contribute to a plan for your child, and his or her grandparents also contribute to a plan for the child, you will need to co-ordinate your contributions so as not to exceed the $50,000 maximum. You can make lump-sum contributions at any time, or set up regular contributions on a weekly, biweekly or monthly basis. One convenient way to contribute is through the RESP-Matic program, which automatically transfers funds from your bank account into an RESP account using an amount and schedule that suits your budget. You may make contributions to an RESP for up to 21 years. The plan can remain open for up to 25 years in total. A POTENTIAL 20% RETURN ON INVESTMENT Perhaps the biggest advantage to contributing to an RESP is the Canada Education Savings Grant (CESG) a powerful incentive from the federal government. With the basic CESG, for an eligible beneficiary under the age of 18, the government will add 20% annually to the first $2,500 contributed to an RESP. That adds up to $500 per year. The maximum CESG over the life of the plan is $7,200 per beneficiary. The grant proceeds are invested along with your contributions, further enhancing the benefits of tax-deferred, compound-investment growth within your plan. If you don t contribute enough to warrant the maximum grant in a given year, the unused entitlement can be carried forward to the next year. The maximum payable in any one year, however, is $1,000. Special rules apply when the beneficiary is 16 or 17 years old. In order to receive the CESG, contributions to all RESPs for the child must have totalled at least $2,000 before the year in which the child turns 16, or there must have been contributions of at least $100 a year in any four years before the year in which the child turns 16. ADDITIONAL GOVERNMENT INCENTIVES Besides the basic CESG for those eligible beneficiaries, there are additional government incentives available for lower- and middle-income Canadian families to ease the burden of saving for eduction: > If your net family income is below $37,178 in 2007 (the threshold is adjusted every year), the first $500 of annual RESP contributions will receive a CESG of 40%. For families with income above that level but below $74,357 in 2007 (again, adjusted annually), the CESG is 30% on the first $500 contributed annually to an RESP. > A $500 Canada Learning Bond (CLB) is provided for children of families who are entitled to the National Child Benefit supplement and who are born after December 31, These children also qualify for CLB GIVING THE GIFT OF KNOWLEDGE 3

6 instalments of $100 per year until age 15, as long as they continue to receive the National Child Benefit Supplement. The total maximum CLB payable per child is $2,000. CLBs are allocated to a specific child and, unlike CESGs, they cannot be shared with other beneficiaries. > The Alberta Centennial Education Savings (ACES) Plan will contribute $500 to the RESP of any child born after December 31, 2004, to an Alberta resident. An additional grant of $100 will be paid when the child reaches 8, 11 and 14 years old, provided he or she is still in school. The total ACES grant is $800, and can be shared among siblings. These programs are all designed to give parents an incentive to start planning and saving for their children s post-secondary education as early as possible. GOVERNMENT RESOURCES ONLINE > The HRSDC site has information on saving for education, including publications about the CESG and the CLB: > To download a form to apply for a SIN for your child, go to Service Canada: > For more information about RESPs, download the Canada Revenue Agency (CRA) guide on RESPs: menu-e.html EVEN SMALL CONTRIBUTIONS ADD UP QUICKLY WITH RESP-MATIC The RBC RESP-Matic program is one way to make sure that your child s RESP savings never take a back seat. As this chart * illustrates, even small monthly RESP-Matic contributions add up quickly over periods of 10, 15 and 21 years when they are supplemented by the CESG. $161,542 $107,642 $132,663 $71,510 $77,764 $5,141 $10,282 $42,840 $9,358 $18,717 $16,528 $33, years 15 years 21 years Annual Plan Increase = $25 monthly RESP contribution plus $60 CESG** per year plus cumulative growth. Annual Plan Increase = $50 monthly RESP contribution plus $120 CESG per year plus cumulative growth. Annual Plan Increase = $208 monthly RESP contribution plus $500 CESG per year plus cumulative growth. Annual*** Plan Increase = $375 monthly RESP contribution plus $500 CESG per year plus cumulative growth. * Calculations are for illustrative purposes only, and are not intended to reflect future values or returns on investment from any mutual fund investment. Based on 7% annual return for contributions made at the beginning of each month. These calculations also assume that the contributions are made at the beginning of every month, up to a lifetime maximum of $50,000 per child. ** The Canada Education Savings Grant (CESG). Under the CESG program, the federal government will match 20% of the first $2,500 contributed annually to an RESP for a beneficiary under the age of 18. If you don t contribute enough to get the maximum $500 grant in a given year, the unused entitlement can be carried forward to the next year. The maximum CESG payment in any year is $1,000. The maximum cumulative grant over the life of the RESP is $7,200. *** Under this scenario, above calculations assume lifetime contribution maximum of $50,000 will be reached early in the 11 th year ($375/month x 12 months x 11.1 years = $50,000). Once this limit is reached, contributions and CESG payments will stop, with the annual increase in plan assets driven by 7% annual return assumption. 4 GIVING THE GIFT OF KNOWLEDGE

7 GOING TO SCHOOL Once the student is enrolled in a qualifying post-secondary education or training program, the funds within the RESP can be paid out as Educational Assistance Payments (EAPs) at the discretion of the subscriber. These funds may be used for any education-related expenses, such as books, housing and tuition at a qualifying school. Most Canadian universities, colleges and other educational institutions qualify for the purpose of EAPs. In fact, many institutions outside of Canada also qualify. Part-time students can access up to $2,500 in EAPs for each 13-week semester of study, provided they spend at least 12 hours a month on courses and the courses last at least three consecutive weeks. You can consult your local CRA office to find out if a specific institution qualifies. If you have a Family Plan, you can decide how to allocate the RESP funds among more than one beneficiary. This way, you can direct more to a beneficiary whose educational expenses are higher. The maximum CESG that can be received by any one beneficiary is $7,200. To elect an EAP, the subscriber must sign a withdrawal form, and the beneficiary must provide proof of enrolment in a qualifying program. The funds must be used to cover the beneficiary s education expenses, and HRSDC may request supporting information for EAPs of unusually large amounts. All EAPs are taxable in the hands of the plan s beneficiary. Usually, this results in little or no tax payable by the student. WHAT HAPPENS IF A CHILD DOESN T PURSUE POST-SECONDARY EDUCATION? If the child who is named as beneficiary of the RESP decides not to pursue post-secondary education, you have several options: > If you have a Family Plan, you can designate another beneficiary to receive the contributions, government grants (to a maximum of $7,200 per beneficiary) and earnings. > If you have an Individual Plan, you may be able to name an alternate beneficiary. > If the beneficiary is 21 and the plan is at least 10 years old, the earnings can be withdrawn by the subscriber, subject to a penalty tax; the amounts will also enter into taxable income. > It may be possible to transfer up to $50,000 of the plan s growth (or earnings) tax-free into your own or a spousal Retirement Savings Plan (RSP). You must have available RSP contribution room to do this. The initial contribution can be withdrawn by the subscriber with no tax consequences, since these are tax-paid dollars. In all instances, the original principal contributed will be returned to you tax-free. Any CESG paid into the plan that cannot be transferred to an alternate beneficiary must be returned to the government. However, interest or investment growth earned on grant money does not have to be paid to the government. GIVING THE GIFT OF KNOWLEDGE 5

8 > RESP choices at RBC Royal Bank At RBC Royal Bank, we offer a full range of investment options for Individual and Family Plan RESPs. You can select the types of investments that match your objectives, including the following: Savings deposits. A standard savings deposit can be designated for RESP savings, providing all the convenience and flexibility of your regular banking account. However, you are likely to earn a very modest rate of return compared with other investment options. GICs. An RESP allows you to invest in GICs that pay a predetermined rate of interest. The rate of return on this type of investment is fully guaranteed. Mutual funds. Mutual funds can accommodate a wide variety of investment objectives and styles, depending on your needs. In most cases, investors are best served by diversifying their investments among a variety of investment types and asset classes. With mutual funds, there is the potential to earn a higher rate of return compared with most guaranteed investments over the long term. For more information on how to effectively manage the investments within your RESP account, please see Investment Solutions on Page 13. AN EXTREMELY THOUGHTFUL GIFT RESPs are an effective way to contribute to a child s postsecondary education. Ask your RBC investment specialist how easy it can be to help give a gift of education that could last a lifetime. 6 GIVING THE GIFT OF KNOWLEDGE

9 > Why not just set money aside in a separate account? Parents sometimes simply choose to set up a separate savings or investment account of their own and earmark it for education. While this is easy, and allows you maximum control and flexibility, it has a number of drawbacks: > All investment income is taxable in your hands. Therefore, there are no tax benefits to this approach to education savings. > You will not receive the CESG or any other form of government assistance. You may be forfeiting thousands of dollars worth of grants over a period of years. > It can be easier to put off contributions to a regular savings or investment account, or to make withdrawals for any number of emergencies that might come along. If you are willing to forgo tax benefits and government grants to have this control and flexibility, it s important to be disciplined and resist the temptation to use the money for anything other than its original purpose: your child s education. SAVINGS TIP Your child may be eligible for a scholarship. Check out some of the programs available at Scholarships Canada ( and Canadian and International Scholarships Programs ( GIVING THE GIFT OF KNOWLEDGE 7

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11 > Establishing a formal trust In certain situations, it may be appropriate to consider an irrevocable living, or inter vivos, trust. This is a formal trust arrangement in which the person settling the trust the settlor transfers at least one asset into a trust and provides one or more trustees with instructions as to how the assets of the trust are to be used for the trust s beneficiaries. If the trust terms allow, other individuals besides the settlor may contribute assets to the trust. They are referred to as contributors. Formal trusts are becoming increasingly popular with grandparents who want to help their grandchildren financially, but also want to have a say in how the money is ultimately spent. You can establish a living trust for the benefit of anyone, including your children, grandchildren, nieces, nephews or family friends. The main advantages of the formal trust structure are control, certainty of terms and the ability to deal with changing circumstances (such as the death of a trustee or beneficiary). The trust document can stipulate that the money is to be paid out only for specific purposes, such as post-secondary education, or it may set out a distribution schedule that can span several years. Investments in the trust are managed by the trustee(s). For large trust accounts, appointing a corporate trustee (such as Royal Trust Corporation of Canada) ensures professional management and continuity for as long as the trust exists. As the name suggests, an irrevocable trust cannot be changed or cancelled once you have set it up. While inter vivos trusts can be revocable, only irrevocable trusts benefit from advantageous tax treatment. Investment income earned by the trust and distributed to beneficiaries over the age of 18 will be taxable to them. When the beneficiary who receives distributions from the trust is younger than 18, realized capital gains and secondgeneration income will be taxable to him or her. Any other type of investment income will be attributed to the contributor of the trust. Investment income that is retained within the trust is taxed at the highest marginal tax rate. Inter vivos trusts do not have graduated rates. All income is taxed at the highest personal marginal tax rate. The trust agreement that you draw up can permit many types of assets to be held within the trust, including cash, bank accounts, real estate, stocks, mutual funds, bonds and even shares in your business. If you intend to transfer existing assets into the trust, the transfer will be considered a disposition for tax purposes. As a result, if the investment has appreciated in value since your initial purchase, the transfer may trigger a taxable capital gain attributable to you. Setting up a living trust involves some legal and administrative costs, and can be complicated compared to RESPs. For example, the trust must file a tax return every year. However, as described, inter vivos trusts offer a high degree of flexibility, control and some tax benefits to enhance your savings. Where significant sums are involved, or where control is a key concern, an inter vivos trust can be a good choice. A MATTER OF DISCRETION A living trust can be non-discretionary or discretionary. If it is non-discretionary, the terms of the trust direct the trustee when to pay out income or capital. This allows you to arrange for the beneficiary to receive a regular income over a given period of time such as while he or she is enrolled in school. If it is discretionary, the trustee makes some or all of these decisions. GIVING THE GIFT OF KNOWLEDGE 9

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13 > Options at a glance Finding the best education savings strategy depends on your personal and family circumstances. Here is an overview of some of your options. RESP NON-REGISTERED SAVINGS OR INVESTMENT ACCOUNT FORMAL TRUST Contribution limits $50,000 lifetime per beneficiary. No restrictions No restrictions Eligible investments Cash, Canada Savings Bonds (CSBs), GICs, mutual funds, savings accounts. Savings account cash. Investment account cash, CSBs, GICs, mutual funds. Eligibility of investments will be outlined within the trust agreement, but the following are often eligible: cash, CSBs, GICs, stocks, bonds, mutual funds, real estate, shares in a business. CESG available? Yes No No Age restrictions Family Plans require the beneficiary to be under age 21 when plan opened. No additional contributions for beneficiaries over age 20. No restrictions Age restrictions set by trust agreement. Who can contribute? Subscriber Anyone Anyone Tax treatment Investment growth tax-deferred; earnings taxable to student upon withdrawal. Interest, dividends and capital gains taxable to account holder. Income retained in the trust is taxed at the highest marginal rate; distributions to beneficiaries over 18 are taxable to them; if the beneficiary is younger than 18, realized capital gains distributed will be taxable to him or her, but all other distributed investment income will be taxable to the contributor. Use of funds Plan earnings must be withdrawn to pay educational expenses, or tax penalties may apply. No restrictions No restrictions (except those specified in the trust agreement). Termination The end of the 25 th year following the year the plan was opened. No restrictions Perpetuity period of the trust, generally 21 years from commencement. Deemed disposition after 21 years, but there is no requirement to wind up the trust unless required by the trust document. Please note: This chart is for illustrative/comparative purposes only and may not contain all the information necessary for you to make your education investment decision. Please consult your own legal or financial advisor. GIVING THE GIFT OF KNOWLEDGE 11

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15 > Investment solutions Whether you re investing inside or outside of a registered plan, working with an investment specialist is the key to optimizing performance and ensuring that your child has sufficient funds to pay for post-secondary education. These are some time-tested investment fundamentals that should guide your decisions. BENEFITS OF DIVERSIFICATION Diversification means spreading your investment dollars among a variety of investment types and asset classes cash, fixed income and equity. Since each of these asset classes will perform differently at different times, broad diversification tends to smooth out the bumps in the market. The way you diversify your investments depends on your tolerance for risk and your investment objectives. If you are contributing to an RESP for a newborn child, you may wish to place a significant portion of your savings in equity-oriented mutual funds. This is because you can take advantage of their long-term growth potential, without having to worry too much about year-to-year fluctuations in value. On the other hand, if you are saving for a child who is expected to need the funds in seven years or less, it may be more prudent to stick with fixed-income investments, or other guaranteed investments such as GICs in your portfolio, to reduce the risk of an unexpected loss in market value too close to the time at which the funds will be required. Ideally, the asset mix of your portfolio should change as your child grows, focusing on growth in the early years, and shifting toward capital preservation as the goal date nears. In general, the more time you have to save, the more growth-oriented your portfolio can be. CONSIDER MUTUAL FUNDS One of the easiest and most cost-effective ways to implement a diversification strategy is to take advantage of the professional money management offered by mutual funds. You can build a portfolio using a variety of individual mutual funds, or you can select a single fund that holds the appropriate mix of assets that corresponds to your risk tolerance and investment objectives. The benefits of investing in mutual funds include: > Diversification Your money is spread across many different investments. > Professional management Your money is invested by experts. > Affordability Invest as little as $25 per month*. > Flexibility You can buy or sell units on any business day. Professionally managed mutual funds can help you build a diversified portfolio with confidence. And with the added boost of a tax-deferred RESP account, they can also help you meet the challenge of rising education costs. SIMPLIFY EDUCATION SAVINGS WITH THE RBC TARGET EDUCATION FUNDS Deciding how to invest your child s education fund is a big responsibility, and the RBC Target Education Funds can make your job a lot easier. These funds are specifically designed to fund post-secondary education that starts around 2010, 2015, 2020 or You can simply select the Fund that is closest to your child s target education date to start saving. Their asset mix evolves over time, becoming more conservative as your child s target education date approaches. The advantage? You get investments that provide the potential for growth up front to help cover the rising cost of education and, as the target date approaches, each fund becomes more conservative, with less volatility and less potential for negative returns. * Initial minimum investment amount applies. GIVING THE GIFT OF KNOWLEDGE 13

16 A PORTFOLIO THAT EVOLVES AS YOUR CHILD S NEEDS CHANGE RBC Target Education Funds will change over time, to meet the needs of a child who is approaching university age. in 2007 Age 5. Congratulations! You ve started to invest for your child s education. While college or university may be years away, it s never too early to start saving. Your money will have time to grow, which will help you deal with the rising costs of post-secondary education. Fixed-income funds 39.0% Equity funds 61.0% Asset Mix* for RBC Target 2020 Education Fund in 2012 Age 10. While it s too early to start deciding which college or university your child will attend, your portfolio continues to work for you. You now have a balanced portfolio that is starting to become more conservative. Fixed-income funds 54.0% Equity funds 46.0% in 2016 Age 14. Your child is now in high school and is one step closer to college or university. As you approach your child s target education date, you ll see the portfolio become more and more conservative. Money market funds 3.0% Fixed-income funds 76.0% Equity funds 21.0% in 2018 Age 16. Your child has just started to drive and is now just two years away from college or university. Your portfolio continues to become more conservative. Money market funds 15.0% Fixed-income funds 80.0% Equity funds 5.0% in 2020 Age 18. Congratulations! You ve reached the finish line. Your portfolio is now 100% in money market funds, ready for you to write your first tuition cheque. Money market funds 100.0% * Target weightings for each asset class. The allocation to an asset class in any year may not be more than 10% above or below target weightings. 14 GIVING THE GIFT OF KNOWLEDGE

17 > Committing to your child s future With mortgage payments, household bills, RSP contributions and other financial obligations, it may seem difficult to come up with the savings you need for your child s education. One of the most effective ways to reach your goals and ensure that your child s education savings receive the priority they deserve is to commit to a regular, periodic investment plan. There are three key benefits to this approach: > It allows you to invest smaller amounts of money on an ongoing basis, which is typically easier on your budget. > It gets your money working for you right away to maximize your opportunity for returns. > With dollar-cost averaging, you don t need to worry about the right time to contribute because you re always investing. ENCOURAGE YOUR KIDS TO HELP Encourage your children to save their earnings and cash gifts from relatives in a special savings account. Not only will they help accelerate their savings this way, they will also learn a valuable lesson about the power of long-term investment growth. ONLINE MONTHLY PURCHASE PLAN CALCULATOR The Monthly Purchase Plan Calculator enables you to determine how much you need to save on a regular basis to meet your investment goals, and to estimate the future value of regular contributions made over a specified period of time. You ll find a link to the calculator in the Learning Centre at GIVING THE GIFT OF KNOWLEDGE 15

18 > Take the first step Whether you re investing inside or outside of an RESP, at RBC Royal Bank, we offer a wide range of education savings options. Our investment specialists can help you design a strategy that leads to success for you and your children. 16 GIVING THE GIFT OF KNOWLEDGE

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20 For more information about how we can help you build an education savings portfolio for a young learner in your life, please speak with your RBC investment specialist. 1 Statistics Canada, 2001 Census. 2 Canadian Council on Social Development, Labour Force Status by Education, Human Resources and Social Development Canada, Looking Ahead: A ten-year outlook for the Canadian labour market, (October 2004). 4 Statistics Canada, University Tuition Fees, Sept. 2, Calculation is based on the Human Resources and Social Development Canada (HRSDC) 2008/2009 estimated cost of $74,139 for a four-year university education away from home adjusted by HRSDC estimates of a 3% increase per year. (HRSDC/CanLearn 2005) 6 Statistics Canada, Survey of Approaches to Educational Planning, Nov. 20, HRSDC/CanLearn 2005, op.cit. 8 Survey of Approaches to Educational Planning, op.cit. 9 Looking Ahead: A ten-year outlook for the Canadian labour market, (October 2004). 10 Statistics Canada, National Graduates Survey, April 26, 2004 (Report # MIE , Survey #5012). 11 Survey of Approaches to Educational Planning, op.cit Census, op.cit. The material in this Guidebook is intended as a general source of information only, and should not be construed as offering specific tax, legal, financial or investment advice. Every effort has been made to ensure that the material is correct at time of publication, but we cannot guarantee its accuracy or completeness. Interest rates, market conditions, tax rulings and other investment factors are subject to rapid change. Individuals should consult with their personal tax advisor, accountant or legal professional before taking any action based upon the information contained in this Guidebook. Financial planning services and investment advice are provided by Royal Mutual Funds Inc., a member company under RBC Financial Group. Royal Mutual Funds Inc., RBC Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada and The Royal Trust Company are separate corporate entities, which are affiliated. Royal Mutual Funds Inc. is licensed as a financial services firm in the province of Quebec. RBC Funds are offered by RBC Asset Management Inc. and distributed through authorized dealers. Please read the prospectus before investing. There may be commissions, trailing commissions, management fees and expenses associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Registered trademark of Royal Bank of Canada. RBC and Royal Bank are registered trademarks of Royal Bank of Canada. Used under licence. Trademark of Royal Bank of Canada. Royal Bank of Canada, (08/07)