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
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 )
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
2017 ANNUAL FINANCIAL STATEMENTS SCHEDULE OF INVESTMENT PORTFOLIO (in $000s) BLUEBAY GLOBAL SOVEREIGN BOND FUND (CANADA) Par Value Coupon Fair % of Net (000s) Security Rate % Maturity Cost Value Assets GLOBAL BONDS Australia 60 000 Australia Government AUD 3.250 21-Oct-2018 $ 62 021 $ 59 518 40 000 Australia Government AUD 5.250 15-Mar-2019 42 793 40 802 20 000 Australia Government AUD 2.750 21-Nov-2027 19 689 19 819 124 503 120 139 9.6 Belgium 6 000 Belgium Government EUR 0.800 22-Jun-2027 8 407 9 196 8 407 9 196 0.7 Bulgaria 750 Republic of Bulgaria EUR 2.950 03-Sep-2024 1 149 1 306 1 149 1 306 0.1 Canada 10 000 Government of Canada 0.500 01-Mar-2022 9 677 9 471 5 000 Government of Canada 1.500 01-Jun-2026 4 896 4 798 15 000 Province of New Brunswick 4.500 02-Jun-2020 16 176 15 902 30 749 30 171 2.4 China 11 085 CGNPC International Ltd. USD 3.125 11-Dec-2022 14 010 13 898 14 010 13 898 1.1 Cyprus 3 197 Cyprus Government EUR 4.250 04-Nov-2025 5 412 5 783 5 412 5 783 0.5 France 39 000 France O.A.T. EUR 0.000 25-May-2022 56 088 59 207 40 000 France O.A.T. EUR 1.000 25-May-2027 61 356 62 345 500 000 Renault S.A. JPY 0.750 26-Nov-2018 5 869 5 608 123 313 127 160 10.2 Germany 64 000 Bundesrepublik Deutschland EUR 0.250 15-Feb-2027 96 501 95 637 10 000 Bundesrepublik Deutschland EUR 0.500 15-Aug-2027 15 378 15 190 111 879 110 827 8.9 Hungary 998 440 Hungary Government HUF 3.000 27-Oct-2027 5 148 5 263 5 148 5 263 0.4 Iceland 6 540 Iceland Government EUR 0.500 20-Dec-2022 9 885 9 937 9 885 9 937 0.8 Italy 30 000 Buoni Poliennali Del Tesoro EUR 3.500 01-Jun-2018 46 231 45 986 7 500 Buoni Poliennali Del Tesoro EUR 2.150 15-Dec-2021 11 930 12 042 2 800 Buoni Poliennali Del Tesoro EUR 1.200 01-Apr-2022 4 243 4 324 10 000 Buoni Poliennali Del Tesoro EUR 2.450 01-Sep-2033 14 791 14 774 13 500 Buoni Poliennali Del Tesoro EUR 5.000 01-Sep-2040 24 831 26 582 102 026 103 708 8.3 The accompanying notes are an integral part of the financial statements.
SCHEDULE OF INVESTMENT PORTFOLIO (in $000s) BLUEBAY GLOBAL SOVEREIGN BOND FUND (CANADA) Par Value Coupon Fair % of Net (000s) Security Rate % Maturity Cost Value Assets Japan 1 060 000 Development Bank of Japan Inc. JPY 1.700 20-Sep-2022 $ 13 415 $ 12 750 300 000 Japan Government Two Year JPY 0.100 15-Nov-2018 3 330 3 354 1 700 000 Japan Government Ten Year JPY 0.100 20-Sep-2026 19 882 19 122 3 000 000 Japan Government Twenty Year JPY 0.500 20-Sep-2036 34 164 33 467 100 000 Japan Government Thirty Year JPY 0.300 20-Jun-2046 978 981 3 000 000 Japan Government Thirty Year JPY 0.600 20-Dec-2046 33 536 31 868 2 700 000 Japanese Government CPI Linked JPY 0.100 10-Mar-2026 33 669 32 186 138 974 133 728 10.7 Kazakhstan 7 000 KazAgro National Management Holding JSC EUR 3.255 22-May-2019 10 265 10 784 10 265 10 784 0.9 Macedonia 3 400 Republic of Macedonia EUR 4.875 01-Dec-2020 5 080 5 635 2 350 Republic of Macedonia EUR 3.975 24-Jul-2021 3 359 3 830 4 500 Republic of Macedonia EUR 5.625 26-Jul-2023 7 273 7 853 15 712 17 318 1.4 Mexico 330 000 Petroleos Mexicanos MXN 7.470 12-Nov-2026 20 163 18 641 800 000 United Mexican States JPY 1.510 28-Oct-2020 9 859 9 215 600 000 United Mexican States JPY 1.440 24-Jul-2024 7 126 6 956 3 764 United Mexican States EUR 4.000 15-Mar-2115 4 914 5 472 42 062 40 284 3.2 New Zealand 15 000 New Zealand Government NZD 2.500 20-Sep-2040 14 411 14 779 14 411 14 779 1.2 Panama 500 000 Banco Latinoamericano de Comercio Exterior S.A. JPY 0.460 10-Jun-2019 5 799 5 602 5 799 5 602 0.4 Peru 1 200 Peruvian Government USD 7.350 21-Jul-2025 2 045 1 960 2 045 1 960 0.2 Poland 100 000 Government of Poland JPY 0.670 15-Nov-2018 1 182 1 117 1 200 000 Government of Poland JPY 2.240 18-Feb-2021 15 800 14 085 16 982 15 202 1.2 Portugal 7 400 Caixa Economica Montepio Geral EUR 0.875 17-Oct-2022 10 880 11 225 10 000 Portugal Obrigacoes do Tesouro EUR 2.200 17-Oct-2022 15 700 16 375 5 000 Portugal Obrigacoes do Tesouro EUR 4.125 14-Apr-2027 8 434 8 946 10 000 Portugal Obrigacoes do Tesouro EUR 4.100 15-Apr-2037 16 815 17 994 51 829 54 540 4.4 Russia 1 100 000 Russian Federal Bond - OFZ RUB 7.400 07-Dec-2022 23 464 24 346 23 464 24 346 1.9 Slovakia 15 000 Slovakia Government EUR 3.375 15-Nov-2024 27 153 27 233 6 000 Slovakia Government EUR 1.875 09-Mar-2037 8 318 9 456 35 471 36 689 2.9 Slovenia 8 000 Slovenia Government USD 5.500 26-Oct-2022 12 015 11 393 12 015 11 393 0.9 The accompanying notes are an integral part of the financial statements.
SCHEDULE OF INVESTMENT PORTFOLIO (in $000s) BLUEBAY GLOBAL SOVEREIGN BOND FUND (CANADA) Par Value Coupon Fair % of Net (000s) Security Rate % Maturity Cost Value Assets Spain 7 000 Spain Government EUR 2.750 31-Oct-2024 $ 11 749 $ 11 904 9 640 Spain Government EUR 2.900 31-Oct-2046 14 309 14 718 26 058 26 622 2.1 Supranational 200 000 European Investment Bank JPY 0.000 18-Jan-2033 2 199 2 084 2 199 2 084 0.2 United States 18 000 United States Treasury 1.750 15-Nov-2020 23 138 22 499 43 200 United States Treasury 2.250 15-Aug-2027 54 796 53 562 46 000 United States Treasury 2.875 15-Nov-2046 58 529 59 345 2 189 United States Treasury Inflation Indexed 0.625 15-Jul-2021 2 907 2 805 139 370 138 211 11.1 TOTAL GLOBAL BONDS 1 073 137 1 070 930 85.7 SHORT-TERM INVESTMENTS* 70 000 Government of Canada Treasury Bills 69 611 69 611 TOTAL SHORT-TERM INVESTMENTS 69 611 69 611 5.6 TOTAL INVESTMENTS 1 142 748 1 140 541 91.3 UNREALIZED GAIN ON FUTURES CONTRACTS (SCHEDULE A) 678 0.1 UNREALIZED GAIN ON FOREIGN EXCHANGE CONTRACTS (SCHEDULE B) 9 724 0.8 UNREALIZED LOSS ON FOREIGN EXCHANGE CONTRACTS (SCHEDULE B) (5 380) (0.4) TOTAL PORTFOLIO $ 1 142 748 1 145 563 91.8 CASH 99 375 7.9 OTHER NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS 4 330 0.3 NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS $ 1 249 268 100.0 SCHEDULE A Futures Contracts Unrealized Number of Contracts Contracted Value Gain (89) Euro-Buxl 30-Year Bond Future, March 2018 Contracts at EUR 166.80 per contract $ (22 357) $ 395 (116) Euro-Schatz Future, March 2018 Contracts at EUR 112.12 per contract (19 586) 26 (155) United States 2-Year Note Future, March 2018 Contracts at USD 107.25 per contract (42 507) 76 (14) United States 5-Year Note Future, March 2018 Contracts at USD 116.57 per contract (2 086) 7 (255) United States 10-Year Note Future, March 2018 Contracts at USD 124.59 per contract (40 619) 174 TOTAL FUTURES $ (127 155) $ 678 $1 600 Government of Canada Treasury Bills are held as collateral by counterparties with respect to the above futures contracts. SCHEDULE B Foreign Exchange Contracts Unrealized Contracts Maturity Date Gain Bought SEK 118 454 Sold CAD 18 000 @ 6.5808 08-Feb-2018 $ 186 Bought RUB 280 880 Sold CAD 6 000 @ 46.8133 22-Feb-2018 63 Bought RUB 292 084 Sold CAD 6 250 @ 46.7334 22-Feb-2018 55 Bought NOK 82 223 Sold CAD 12 500 @ 6.5779 28-Feb-2018 99 Bought CAD 90 569 Sold USD 70 725 @ 1.2806 22-Mar-2018 1 762 Bought CAD 51 482 Sold NOK 333 982 @ 0.1541 22-Mar-2018 289 Bought CAD 56 735 Sold JPY 5 000 000 @ 0.0113 22-Mar-2018 779 Bought CAD 90 559 Sold USD 70 725 @ 1.2804 22-Mar-2018 1 752 Bought CAD 151 713 Sold EUR 100 000 @ 1.5171 22-Mar-2018 305 Bought CAD 56 752 Sold JPY 5 000 000 @ 0.0114 22-Mar-2018 795 Bought CAD 151 729 Sold EUR 100 000 @ 1.5173 22-Mar-2018 321 Bought CAD 67 181 Sold JPY 5 912 131 @ 0.0114 22-Mar-2018 1 016 Bought CAD 174 228 Sold EUR 114 798 @ 1.5177 22-Mar-2018 415 Bought CAD 20 099 Sold MXN 304 084 @ 0.0661 22-Mar-2018 961 Bought CAD 48 823 Sold EUR 32 000 @ 1.5257 22-Mar-2018 372 Bought CAD 10 692 Sold EUR 7 000 @ 1.5274 22-Mar-2018 95 Bought ZAR 344 000 Sold CAD 34 034 @ 10.1077 22-Mar-2018 459 $ 9 724 The accompanying notes are an integral part of the financial statements.
SCHEDULE OF INVESTMENT PORTFOLIO (in $000s) BLUEBAY GLOBAL SOVEREIGN BOND FUND (CANADA) SCHEDULE B (cont.) Foreign Exchange Contracts Unrealized Contracts Maturity Date Loss Bought NOK 115 672 Sold CAD 18 000 @ 6.4262 08-Feb-2018 $ (281) Bought CAD 12 282 Sold RUB 572 964 @ 0.0214 22-Feb-2018 (85) Bought CAD 24 064 Sold RUB 1 119 844 @ 0.0215 27-Feb-2018 (89) Bought EUR 2 100 Sold CAD 3 218 @ 0.6526 27-Feb-2018 (42) Bought NOK 39 620 Sold CAD 6 150 @ 6.4422 27-Feb-2018 (79) Bought NOK 80 000 Sold CAD 12 366 @ 6.4695 28-Feb-2018 (107) Bought SEK 50 000 Sold CAD 7 742 @ 6.4579 01-Mar-2018 (59) Bought CAD 12 720 Sold NZD 14 321 @ 0.8882 22-Mar-2018 (11) Bought CAD 33 346 Sold ZAR 360 235 @ 0.0926 22-Mar-2018 (2 775) Bought CAD 119 883 Sold AUD 123 662 @ 0.9694 22-Mar-2018 (1 252) Bought CAD 4 338 Sold HUF 899 310 @ 0.0048 22-Mar-2018 (40) Bought CAD 875 Sold HUF 180 200 @ 0.0049 22-Mar-2018 (2) Bought EUR 7 700 Sold CAD 11 754 @ 0.6551 22-Mar-2018 (96) Bought MXN 17 000 Sold CAD 1 127 @ 15.0891 22-Mar-2018 (57) Bought NOK 335 000 Sold CAD 51 579 @ 6.4949 22-Mar-2018 (230) Bought USD 1 300 Sold CAD 1 669 @ 0.7788 22-Mar-2018 (37) Bought USD 4 500 Sold CAD 5 778 @ 0.7788 22-Mar-2018 (128) Bought ZAR 15 400 Sold CAD 1 555 @ 9.9049 22-Mar-2018 (10) $ (5 380) TOTAL FOREIGN EXCHANGE $ 4 344 All counterparties have a credit rating of at least A. * Short-term investments, which may be made up of treasury bills, commercial paper, term deposits and discount notes, and are grouped by issuer, earn interest at a rate of 1.13% and mature on April 5, 2018. The accompanying notes are an integral part of the financial statements.
FINANCIAL STATEMENTS BLUEBAY GLOBAL SOVEREIGN BOND FUND (CANADA) Statements of Financial Position (in $000s except per unit amounts) (see note 2 in the generic notes) 2017 2016 ASSETS Investments at fair value $ 1 140 541 $ 110 744 Cash 103 845 5 245 Subscriptions receivable 112 2 520 Unrealized gain on futures contracts 678 Unrealized gain on foreign exchange contracts 9 724 1 143 Dividends receivable, interest accrued and other assets 5 864 510 TOTAL ASSETS 1 260 764 120 162 LIABILITIES Redemptions payable 97 Futures contracts margin payable 5 961 644 Unrealized loss on foreign exchange contracts 5 380 200 Distributions payable 4 Accounts payable and accrued expenses 58 4 TOTAL LIABILITIES EXCLUDING NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS 11 496 852 NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS ( NAV ) $ 1 249 268 $ 119 310 Investments at cost $ 1 142 748 $ 111 064 NAV SERIES A $ 15 $ 1 ADVISOR SERIES $ 80 $ 1 SERIES D $ 133 $ 1 SERIES F $ 566 $ 1 SERIES O $ 1 248 474 $ 119 306 NAV PER UNIT SERIES A $ 10.08 $ 10.03 ADVISOR SERIES $ 10.09 $ 10.03 SERIES D $ 10.11 $ 10.04 SERIES F $ 10.10 $ 10.04 SERIES O $ 10.10 $ 10.03 Statements of Comprehensive Income (in $000s except per unit amounts) For the periods ended (see note 2 in the generic notes) 2017 2016 INCOME (see note 3 in the generic notes) Interest for distribution purposes $ 22 037 $ 136 Net gain (loss) from futures contracts 832 Other derivatives (27) Net realized gain (loss) on investments 7 480 (33) Net gain (loss) on foreign currencies and other net assets 4 032 (191) Change in unrealized gain (loss) on investments 1 514 623 TOTAL INCOME (LOSS) 35 868 535 EXPENSES (see notes Fund Specific Information) Management fees 2 Administration fees 457 4 Independent Review Committee costs 3 1 GST/HST 47 1 Withholding tax 62 Expenses reimbursed by manager (1) TOTAL EXPENSES 571 5 INCREASE (DECREASE) IN NAV $ 35 297 $ 530 INCREASE (DECREASE) IN NAV SERIES A $ $ ADVISOR SERIES $ 1 $ SERIES D $ 1 $ SERIES F $ 5 $ SERIES O $ 35 290 $ 530 INCREASE (DECREASE) IN NAV PER UNIT SERIES A $ 0.25 $ 0.03 ADVISOR SERIES $ 0.34 $ 0.03 SERIES D $ 0.31 $ 0.04 SERIES F $ 0.32 $ 0.04 SERIES O $ 0.39 $ 0.05 The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENTS BLUEBAY GLOBAL SOVEREIGN BOND FUND (CANADA) Statements of Cash Flow (in $000s) For the periods ended (see note 2 in the generic notes) 2017 2016 CASH FLOWS FROM OPERATING ACTIVITIES Increase (decrease) in NAV $ 35 297 $ 530 ADJUSTMENTS TO RECONCILE NET CASH PROVIDED BY (USED IN) OPERATIONS Interest for distribution purposes (743) (3) Non-cash distributions from underlying funds Net realized loss (gain) on investments (7 482) 33 Change in unrealized loss (gain) on investments (1 514) (623) (Increase) decrease in accrued receivables (6 032) (510) Increase (decrease) in accrued payables 54 4 (Increase) decrease in margin accounts 5 317 644 Cost of investments purchased (2 185 517) (125 599) Proceeds from sale and maturity of investments 1 162 058 14 505 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (998 562) (111 019) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of redeemable units 1 113 742 116 264 Cash paid on redemption of redeemable units (14 666) Distributions paid to holders of redeemable units (1 914) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES $ 1 097 162 $ 116 264 Net increase (decrease) in cash for the period 98 600 5 245 Cash (bank overdraft), beginning of period 5 245 CASH (BANK OVERDRAFT), END OF PERIOD $ 103 845 $ 5 245 Interest received (paid) $ 15 940 $ (377) Dividends received, net of withholding taxes $ (62) $ The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENTS BLUEBAY GLOBAL SOVEREIGN BOND FUND (CANADA) Statements of Changes in NAV (in $000s) For the periods ended (see note 2 in the generic notes) Series A Advisor Series Series D Series F 2017 2016 2017 2016 2017 2016 2017 2016 NAV AT BEGINNING OF PERIOD $ 1 $ $ 1 $ $ 1 $ $ 1 $ INCREASE (DECREASE) IN NAV 1 1 5 Early redemption fees Proceeds from redeemable units issued 20 1 79 1 155 1 1 473 1 Reinvestments of distributions to holders of redeemable units 2 6 Redemption of redeemable units (6) (24) (911) NET INCREASE (DECREASE) FROM REDEEMABLE UNIT TRANSACTIONS 14 1 79 1 133 1 568 1 Distributions from net income (1) (3) Distributions from net gains (1) (1) (5) Distributions from capital TOTAL DISTRIBUTIONS TO HOLDERS OF REDEEMABLE UNITS (1) (2) (8) NET INCREASE (DECREASE) IN NAV 14 1 79 1 132 1 565 1 NAV AT END OF PERIOD $ 15 $ 1 $ 80 $ 1 $ 133 $ 1 $ 566 $ 1 For the periods ended (see note 2 in the generic notes) Series O Total 2017 2016 2017 2016 NAV AT BEGINNING OF PERIOD $ 119 306 $ $ 119 310 $ INCREASE (DECREASE) IN NAV 35 290 530 35 297 530 Early redemption fees Proceeds from redeemable units issued 1 110 642 118 780 1 112 369 118 784 Reinvestments of distributions to holders of redeemable units 30 172 198 30 180 198 Redemption of redeemable units (14 857) (15 798) NET INCREASE (DECREASE) FROM REDEEMABLE UNIT TRANSACTIONS 1 125 957 118 978 1 126 751 118 982 Distributions from net income (19 204) (202) (19 208) (202) Distributions from net gains (12 875) (12 882) Distributions from capital TOTAL DISTRIBUTIONS TO HOLDERS OF REDEEMABLE UNITS (32 079) (202) (32 090) (202) NET INCREASE (DECREASE) IN NAV 1 129 168 119 306 1 129 958 119 310 NAV AT END OF PERIOD $ 1 248 474 $ 119 306 $ 1 249 268 $ 119 310 The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS FUND SPECIFIC INFORMATION BLUEBAY GLOBAL SOVEREIGN BOND FUND (CANADA) General information (see note 1 in the generic notes) The investment objective of the Fund is to provide total returns comprised of interest income and modest capital appreciation by investing primarily in fixed-income securities issued by sovereign governments and entities (including emerging-market countries) anywhere in the world. The Fund may also invest in corporate debt securities globally. The Fund was started November 1, 2016. Financial instrument risk and capital management (see note 5 in the generic notes) Credit risk (%) The table below summarizes the Fund s credit risk exposure grouped by credit ratings as at: Rating 2017 Please see the generic notes at the back of the financial statements. 2016 AAA 47.2 51.9 AA 0.9 4.3 A 26.2 18.5 BBB 20.1 15.9 BB 3.2 9.4 Unrated 2.4 Total 100.0 100.0 Concentration risk (%) The table below summarizes the Fund s investment portfolio (after consideration of derivative products, if any) as at: Investment mix 2017 2016 United States 11.1 12.1 Japan 10.7 12.6 Australia 9.6 7.5 Germany 8.9 12.5 Italy 8.3 6.9 Mexico 3.2 2.8 Spain 2.1 4.8 Macedonia 1.4 3.1 New Zealand 1.2 3.2 Supranational 0.2 7.7 United Kingdom 3.8 Indonesia 2.4 Other Countries 29.0 5.9 Cash/Other 14.3 14.7 Total 100.0 100.0 Interest rate risk (%) The table below summarizes the Fund s exposure to interest rate risk by remaining term to maturity as at: Term to maturity 2017 2016 Less than 1 year 10.8 1 5 years 29.5 43.2 5 10 years 35.1 36.3 > 10 years 24.6 20.5 Total 100.0 100.0 As at, 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 6.6% (, 2016 6.2%). In practice, actual results could differ from this sensitivity analysis and the difference could be material. Currency risk (% of NAV) Since the currency risk of the Fund has been hedged using foreign exchange contracts, the Fund has minimal sensitivity to changes in foreign exchange rates. Fair value hierarchy ($000s except % amounts) (see note 3 in the generic notes) The following is a summary of the inputs used as of and 2016. Level 1 Level 2 Level 3 Total Equities Mutual fund units Fixed-income and debt securities 1 070 930 1 070 930 Short-term investments 69 611 69 611 Derivatives assets 678 9 724 10 402 Derivatives liabilities (5 380) (5 380) Total financial instruments 678 1 144 885 1 145 563 % of total portfolio 0.1 99.9 100.0, 2016 Level 1 Level 2 Level 3 Total Equities Mutual fund units Fixed-income and debt securities 101 766 101 766 Short-term investments 8 978 8 978 Derivatives assets 1 143 1 143 Derivatives liabilities (200) (200) Total financial instruments 111 687 111 687 % of total portfolio 100.0 100.0 For the periods ended and 2016, there were no transfers of financial instruments between Level 1, Level 2 and Level 3.
NOTES TO FINANCIAL STATEMENTS FUND SPECIFIC INFORMATION BLUEBAY GLOBAL SOVEREIGN BOND FUND (CANADA) 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 1.35% 0.05% Advisor Series 1.35% 0.05% Series D 0.85% 0.05% Series F 0.60% 0.05% Series O n/a* 0.05% * Series O unitholders pay a negotiated management fee directly to RBC GAM for investment-counselling services Investments by related parties ($000s except unit amounts) Royal Bank of Canada, or one of its subsidiaries, held the following investments in the Fund as at: 2017 2016 Units held Series A 102 100 Advisor Series 101 100 Series D 102 100 Series F 102 100 Series O 14 625 Value of all units 4 151 Taxes ($000s) (see note 6 in the generic notes) 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) 2017 2016 Series A Opening units Issued number of units 2 Reinvested number of units Redeemed number of units (1) Ending number of units 1 Advisor Series Opening units Issued number of units 8 Reinvested number of units Redeemed number of units Ending number of units 8 For the periods ended (see note 2 in the generic notes) 2017 2016 Series D Opening units Issued number of units 15 Reinvested number of units Redeemed number of units (2) Ending number of units 13 Series F Opening units Issued number of units 144 Reinvested number of units 1 Redeemed number of units (89) Ending number of units 56 Series O Opening units 11 896 Issued number of units 110 189 11 876 Reinvested number of units 2 991 20 Redeemed number of units (1 460) Ending number of units 123 616 11 896 Investments by other related investment funds (%) (see note 8 in the generic notes) The table below summarizes, as a percentage, the NAV of the Fund owned by other related investment funds as at: 2017 2016 RBC Retirement 2020 Portfolio 0.1 RBC Retirement 2025 Portfolio 0.1 RBC Retirement 2030 Portfolio 0.1 RBC Retirement 2035 Portfolio 0.1 RBC Retirement 2040 Portfolio RBC Retirement 2045 Portfolio RBC Retirement 2050 Portfolio RBC Retirement Income Solution RBC Select Balanced Portfolio 26.3 50.5 RBC Select Conservative Portfolio 36.9 26.9 RBC Select Growth Portfolio 8.6 13.0 RBC Select Very Conservative Portfolio 14.2 9.3 Total 86.4 99.7 Please see the generic notes at the back of the financial statements.
GENERIC NOTES TO FINANCIAL STATEMENTS (also see Fund Specific Information) 1. 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, 2018. 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 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.
GENERIC NOTES TO FINANCIAL STATEMENTS (also see Fund Specific Information) Unconsolidated Structured Entities The Funds may invest in other Funds and exchange-traded funds ( ETFs ) managed by the manager or an affiliate of the manager ( sponsored funds ) and may invest in other funds and ETFs managed by unaffiliated entities ( unsponsored funds ); collectively, underlying funds. The underlying funds are determined to be unconsolidated structured entities, as decision making in the underlying fund is not governed by the voting rights or other similar rights held by the Fund. The investments in underlying funds are subject to the terms and conditions of the offering documents of the respective underlying funds and are susceptible to market price risk arising from uncertainties about future values of those underlying funds. The underlying funds objectives are generally to achieve long-term capital appreciation and/or current income by investing in a portfolio of securities and other funds in line with each of their documented investment strategies. The underlying funds apply various investment strategies to accomplish their respective investment objectives. The underlying funds finance their operations by issuing redeemable units which are puttable at the unitholder s option, and entitle the unitholder to a proportional stake in the respective underlying funds NAV. The Funds do not consolidate their investment in underlying funds but account for these investments at fair value. The manager has determined that the Funds are investment entities in accordance with IFRS 10 Consolidated Financial Statements, since the Funds meet the following criteria: (i) The Funds obtain capital from one or more investors for the purpose of providing those investors with investment management services, (ii) The Funds commit to their investors that their business purpose is to invest funds solely for the returns from capital appreciation, investment income or both, and (iii) The Funds measure and evaluate the performance of substantially all of their investments on a fair value basis. Therefore, the fair value of investments in the underlying funds is included in the Schedule of Investment Portfolio and included in Investments at fair value in the Funds Statements of Financial Position. The change in fair value of the investment held in the underlying funds is included in Change in unrealized gain (loss) on investments in the Statements of Comprehensive Income. Certain Funds may invest in mortgage-related or other asset-backed securities. These securities include commercial mortgage-backed securities, asset-backed securities, collateralized debt obligations and other securities that directly or indirectly represent a participation in, or are securitized by and payable from, mortgage loans on real property. Mortgage-related securities are created from pools of residential or commercial mortgage loans while asset-backed securities are created from many types of assets, including auto loans, credit card receivables, home equity loans and student loans. The Funds account for these investments at fair value. The fair value of such securities, as disclosed in the Schedule of Investment Portfolio, represents the maximum exposure to losses at that date. Determination of Fair Value The fair value of a financial instrument is the amount at which the financial instrument could be exchanged in an arm s-length transaction between knowledgeable and willing parties under no compulsion to act. In determining fair value, a three-tier hierarchy based on inputs is used to value the Funds financial instruments. The hierarchy of inputs is summarized below: Level 1 quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices), including broker quotes, vendor prices and vendor fair value factors; and Level 3 inputs for the asset or liability that are not based on observable market data (unobservable inputs). Changes in valuation methods may result in transfers into or out of an investment s assigned level. The three-tier hierarchy of investments and derivatives is included in Notes to Financial Statements Fund Specific Information. Investments and derivatives are recorded at fair value, which is determined as follows: Equities Common shares, preferred shares and exchangetraded funds are valued at the closing price recorded by the security exchange on which the security is principally traded. In circumstances where the closing price is not within the bid-ask spread, management will determine the points within the bid-ask spread that are most representative of the fair value.
GENERIC NOTES TO FINANCIAL STATEMENTS (also see Fund Specific Information) Fixed-Income and Debt Securities Bonds, mortgage-backed securities, loans and debentures are valued at the closing price quoted by major dealers or independent pricing vendors in such securities. NHA-approved mortgages are valued at an amount, which produces a yield equivalent to the prevailing rate of return on mortgages of similar type and term. Short-Term Investments Short-term investments are valued at fair value, which is approximated at cost plus accrued interest. Options Listed options are valued at the closing price on the recognized exchange on which the option is traded. In circumstances where the closing price is not within the bid-ask spread, management will determine the points within the bid-ask spread that are most representative of the fair value. The premium received for written options is recorded as a liability in the Schedule of Investment Portfolio and adjusted daily to the fair value of the written option. Warrants Warrants are valued using a recognized option pricing model, which includes factors such as the terms of the warrant, time value of money and volatility inputs that are significant to such valuation. Forward Contracts Forward contracts are valued at the gain or loss that would arise as a result of closing the position at the valuation date. Any unrealized gain or loss at the close of business on each valuation date is recorded as Change in unrealized gain (loss) on investments in the Statements of Comprehensive Income. The receivable/payable on forward contracts is recorded separately in the Statements of Financial Position. Realized gain (loss) on foreign exchange contracts is included in Net gain (loss) on foreign currencies and other net assets in the Statements of Comprehensive Income. Total Return Swaps A total return swap is an agreement by which one party makes payments based on a set rate, either fixed or variable, while the other party makes payments based on the return of an underlying asset, which includes both the income it generates and any capital gains. Total return swap contracts are marked to market daily based upon quotations from the market makers and the change in value, if any, is recorded in Change in unrealized gain (loss) on investments in the Statements of Comprehensive Income. When the swap contract is terminated early, the Fund records a realized gain or loss equal to the difference between the current net present value and the executed net present value in Other derivatives in the Statements of Comprehensive Income. Unrealized gains and losses are recorded as Receivable on open swap contracts or Payable on open swap contracts in the Statements of Financial Position. The risks of total return swap contracts include changes in market conditions and the possible inability of the counterparty to fulfill its obligations under the agreement. Futures Contracts Futures contracts entered into by the Funds are financial agreements to purchase or sell a financial instrument at a contracted price on a specified future date. However, the Funds do not intend to purchase or sell the financial instrument on the settlement date; rather, they intend to close out each futures contract before settlement by entering into equal, but offsetting, futures contracts. Futures contracts are valued at the gain or loss that would arise as a result of closing the position at the valuation date. Any gain or loss at the close of business on each valuation date is recorded as Net gain (loss) from futures contracts in the Statements of Comprehensive Income. The receivable/ payable on futures contracts is recorded separately in the Statements of Financial Position. Mutual Fund Unit Valuation Units of Funds are valued at their respective NAV per unit from fund companies on the relevant valuation dates. Fair Valuation of Investments The Funds have procedures to determine the fair value of securities and other financial instruments for which market prices are not readily available or which may not be reliably priced. Under these fair valuation procedures, the Funds primarily employ a market-based approach, which may use related or comparable assets or liabilities, NAV per unit (for exchange-traded funds), recent transactions, market multiples, book values and other relevant information for the investment to determine its fair value. Management also has procedures in place to determine the fair value of foreign securities traded in countries outside of North America daily to avoid stale prices and to take into account, among other things, any significant events occurring after the close of a foreign market. The Funds may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments, but only
GENERIC NOTES TO FINANCIAL STATEMENTS (also see Fund Specific Information) if they arise as a feature of the instrument itself. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. All security valuation techniques are periodically reviewed by the Valuation Committee ( VC ) of the manager and are approved by the manager. The VC provides oversight of the Funds valuation policies and procedures. Cash Cash is comprised of cash and deposits with banks and is recorded at fair value. The carrying amount of cash approximates its fair value because it is short-term in nature. Foreign Exchange The value of investments and other assets and liabilities in foreign currencies is translated into Canadian dollars (U.S. dollars in the case of the Phillips, Hager & North $U.S. Money Market Fund, RBC $U.S. Money Market Fund, RBC Premium $U.S. Money Market Fund, RBC $U.S. Investment Grade Corporate Bond Fund, RBC $U.S. High Yield Bond Fund, BlueBay Emerging Markets Corporate Bond Fund, BlueBay $U.S. Global Convertible Bond Fund (Canada) and RBC U.S. Monthly Income Fund) at the rate of exchange on each valuation date. Purchases and sales of investments, income and expenses are translated at the rate of exchange prevailing on the respective dates of such transactions. Realized foreign exchange gains/losses are included in Net gain (loss) on foreign currencies and other net assets in the Statements of Comprehensive Income. Functional Currency The Funds, with the exceptions below, have their subscriptions, redemptions and performance denominated in Canadian dollars and, consequently, the Canadian dollar is the functional currency for the Funds. Phillips, Hager & North $U.S. Money Market Fund, RBC $U.S. Money Market Fund, RBC Premium $U.S. Money Market Fund, RBC $U.S. Investment Grade Corporate Bond Fund, RBC $U.S. High Yield Bond Fund, BlueBay Emerging Markets Corporate Bond Fund, BlueBay $U.S. Global Convertible Bond Fund (Canada) and RBC U.S. Monthly Income Fund have their subscriptions, redemptions and performance denominated in U.S. dollars and, consequently, the U.S. dollar is the functional currency for these Funds. Valuation of Series A different NAV is calculated for each series of units of a Fund. The NAV of a particular series of units is computed by calculating the value of the series proportionate share of the assets and liabilities of the Fund common to all series less the liabilities of the Fund attributable only to that series. Expenses directly attributable to a series are charged to that series. Other expenses are allocated proportionately to each series based upon the relative NAV of each series. Expenses are accrued daily. Investment Transactions Investment transactions are accounted for as of the trade date. Transaction costs, such as brokerage commissions, incurred by the Funds are recorded in the Statements of Comprehensive Income for the period. The unrealized gain and loss on investments is the difference between fair value and average cost for the period. The basis of determining the cost of portfolio assets, and realized and unrealized gains and losses on investments, is average cost which does not include amortization of premiums or discounts on fixed-income and debt securities with the exception of zero coupon bonds. Income Recognition Dividend income is recognized on the ex-dividend date and interest for distribution purposes is coupon interest recognized on an accrual basis and/or imputed interest on zero coupon bonds. Other income (loss) includes income from income trusts. Distributions received from income trusts are recognized based on the nature of the underlying components, such as income, capital gains and return of capital. Other income received from underlying funds includes income earned by a Fund from investments in underlying funds. Any premiums paid or discounts received on the purchase of zero coupon bonds are amortized. Increase (Decrease) in NAV per Unit Increase (decrease) in NAV per unit in the Statements of Comprehensive Income represents the increase (decrease) in net assets attributable to holders of redeemable units by series, divided by the average units outstanding per series during the period. Early Redemption Fees Early redemption fees (short-term trading fees) are paid directly to a Fund and are designed to deter excessive trading and its associated costs. With the exception of money market funds, a Fund may apply a fee of 2% of the current value of units if the unitholder redeems or switches out units within seven days of purchasing or previously switching into a Fund. These amounts are included in the Statements of Changes in NAV.