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) RBC NORTH AMERICAN VALUE FUND, 2017 Fair % of Net Holdings Security Cost Value Assets NORTH AMERICAN EQUITIES Consumer Discretionary 185 000 Best Buy Co. Inc. $ 15 247 $ 15 922 80 000 Charter Communications Inc. 24 166 33 807 600 000 D.R. Horton Inc. 15 326 38 517 187 000 Dollar Tree Inc. 20 235 25 228 1 040 850 Freshii Inc. 8 251 7 640 256 500 Great Canadian Gaming Corp. 8 147 8 667 614 000 Indigo Books & Music Inc. 10 901 11 519 103 000 McDonald's Corp. 23 020 22 302 70 000 Mohawk Industries Inc. 19 600 24 278 150 000 PVH Corp. 21 548 25 871 184 187 Restaurant Brands International Inc. 15 038 14 232 375 000 Ross Stores Inc. 25 013 37 835 206 492 265 818 8.7 Consumer Staples 250 000 Alimentation Couche-Tard Inc. 14 994 16 398 163 800 Conagra Brands Inc. 9 858 7 756 52 100 Estée Lauder Companies Inc., Class A 6 018 8 334 361 600 Jamieson Wellness Inc. 5 695 8 078 428 000 Loblaw Companies Ltd. 24 110 29 198 658 000 Maple Leaf Foods Inc. 12 421 23 570 279 100 Mondelez International Inc. 15 332 15 015 300 000 Saputo Group Inc. 12 376 13 554 111 900 The Procter & Gamble Co. 10 397 12 944 17 560 Walgreens Boots Alliance Inc. 1 883 1 603 119 300 Wal-Mart Stores, Inc. 11 308 14 828 124 392 151 278 4.9 Energy 995 000 ARC Resources Ltd. 25 577 14 676 1 001 100 Canadian Natural Resources Ltd. 34 767 44 969 1 170 000 Crew Energy Inc. 8 462 3 686 622 172 Enbridge Inc. 31 676 30 586 969 739 Enbridge Inc., Restricted April 7, 2018 43 482 46 990 895 700 Enbridge Energy Management LLC 14 723 15 076 1 981 900 Encana Corp. 29 266 33 236 762 179 Husky Energy Inc. 16 232 13 529 743 119 Imperial Oil Ltd. 32 450 29 153 460 000 Kelt Exploration Ltd. 3 086 3 307 351 100 Keyera Corp. 14 213 12 436 456 200 Nuvista Energy Ltd. 2 879 3 659 636 421 Pembina Pipeline Corp. 24 714 28 964 1 429 282 PrairieSky Royalty Ltd. 43 855 45 823 138 606 ShawCor Ltd. 4 520 3 801 686 400 Suncor Energy Inc. 23 150 31 677 748 596 TransCanada Corp. 40 963 45 799 105 000 Tourmaline Oil Corp. 3 063 2 392 397 078 409 759 13.3 The accompanying notes are an integral part of the financial statements. Fair % of Net Holdings Security Cost Value Assets Financials 3 064 200 Acasta Enterprises Inc. $ 30 642 $ 18 355 900 000 Acasta Enterprises Inc., Warrants @ 11.50 September 8, 2020 495 2 100 000 Alignvest Acquisition II Corp. 20 468 20 475 1 050 000 Alignvest Acquisition II Corp., Warrants @ 11.50 July 4, 2022 532 735 171 900 American International Group Inc. 13 967 12 877 854 500 Bank of America Corp. 19 744 31 724 610 000 Bank of Montreal 60 761 61 360 1 453 438 Bank of Nova Scotia 96 302 117 903 187 000 Berkshire Hathaway Inc., Class B 30 224 46 700 1 518 347 Brookfield Asset Management Inc., Class A 51 276 83 084 160 800 Citigroup Inc. 12 642 15 043 1 903 500 ECN Capital Corp. 6 975 7 481 1 387 200 Element Fleet Management Corp. 12 626 13 178 44 286 Fairfax Financial Holdings Ltd. 27 647 29 642 1 439 800 Fairfax India Holdings Corp. 19 986 27 147 338 300 JPMorgan Chase & Co. 30 928 45 586 1 753 077 Manulife Financial Corporation 35 455 45 966 227 000 Morgan Stanley 15 504 14 972 259 260 Onex Corporation 14 999 23 901 451 500 Power Corporation of Canada 13 578 14 615 1 181 155 Royal Bank of Canada* 93 242 121 246 509 700 Sun Life Financial Inc. 26 126 26 443 265 800 The Charles Schwab Corporation 15 403 17 163 24 700 The Goldman Sachs Group Inc. 7 726 7 917 3 255 051 The Westaim Corp. 9 632 10 123 1 452 033 Toronto-Dominion Bank 87 584 106 942 753 969 921 073 30.0 Health Care 84 000 Anthem Inc. 21 260 23 764 145 000 Bristol-Myers Squibb Co. 12 015 11 176 182 300 Danaher Corp. 21 239 21 273 170 000 Eli Lilly & Co. 17 624 18 060 260 000 Medtronic Plc. 18 510 26 402 160 000 UnitedHealth Group Incorporated 13 195 44 400 103 843 145 075 4.7 Industrials 42 000 Boeing Co. 15 332 15 575 442 400 Brookfield Business Partners LP 12 751 19 151 424 000 Canadian National Railway Co. 32 109 43 948 188 000 Canadian Pacific Railway Ltd. 36 200 43 176 80 000 General Dynamics Corp. 18 190 20 473 125 000 Honeywell International Inc. 9 537 24 146 400 000 Masco Corp. 10 160 22 093 406 400 SNC-Lavalin Group Inc. 21 310 23 185 150 000 Stanley Black & Decker Inc. 19 182 32 004 50 000 United Rentals Inc. 7 509 10 805 142 000 United Technologies Corp. 23 174 22 791 205 454 277 347 9.0
SCHEDULE OF INVESTMENT PORTFOLIO (in $000s) RBC NORTH AMERICAN VALUE FUND, 2017 Fair % of Net Holdings Security Cost Value Assets Information Technology 91 900 Activision Blizzard Inc. $ 7 730 $ 7 315 40 134 Alphabet Inc., Class C 36 546 52 789 242 116 Apple Inc. 30 821 51 523 46 800 Broadcom Ltd. 14 250 15 137 327 400 CGI Group Inc., Class A 19 938 22 361 352 908 Cisco Systems Inc. 10 542 17 001 153 100 ebay Inc. 6 780 7 263 321 500 Intel Corp. 13 994 18 665 100 800 Mastercard Inc. 8 465 19 237 449 645 Microsoft Corp. 27 888 48 379 247 112 Oracle Corporation 13 251 14 691 1 502 760 Real Matters Inc. 12 212 15 148 61 900 Salesforce.com Inc. 6 340 7 957 132 800 Texas Instruments Inc. 13 172 17 438 83 900 Xilinx Inc. 6 489 7 110 228 418 322 014 10.5 Materials 264 400 Agnico Eagle Mines Ltd. 16 088 15 346 107 871 Agrium Inc. 12 343 15 596 425 400 Barrick Gold Corp. 9 902 7 734 518 800 Detour Gold Corp. 7 580 7 668 173 300 DowDuPont Inc. 10 037 15 537 1 046 900 First Quantum Minerals Ltd. 15 646 18 436 68 200 Franco-Nevada Corp. 5 737 6 851 350 749 Interfor Corp. 4 467 7 408 603 800 ishares S&P/TSX Global Gold Index Fund 7 895 7 384 870 100 Ivanhoe Mines Ltd., Class A 3 963 3 689 246 700 Kirkland Lake Gold Ltd. 2 907 4 754 1 260 750 Potash Corporation of Saskatchewan Inc. 34 095 32 502 750 800 Teck Resources Ltd., Class B 22 360 24 679 153 020 167 584 5.5 Fair % of Net Holdings Security Cost Value Assets Real Estate 341 400 Allied Properties Real Estate Investment Trust $ 11 466 $ 14 366 112 600 Colliers International Group Inc. 7 010 8 543 2 010 600 Dream Unlimited Corp. 13 845 15 602 161 000 GGP Inc. Real Estate Investment Trust 4 883 4 734 1 402 500 Plaza Retail Real Estate Investment Trust 5 562 5 975 35 300 Simon Property Group Inc. 7 100 7 626 49 866 56 846 1.8 Telecommunication Services 697 000 BCE Inc. 34 830 42 085 423 566 Rogers Communications Inc., Class B 23 677 27 129 297 900 TELUS Corp. 11 815 14 186 853 800 Trilogy International Partners Inc. 4 863 5 353 875 000 Trilogy International Partners Inc., Warrants @ 11.50 February 7, 2022 391 543 75 576 89 296 2.9 Utilities 280 400 Brookfield Infrastructure Partners LP 14 450 15 809 3 098 700 TransAlta Corp. 19 457 23 085 33 907 38 894 1.3 TOTAL NORTH AMERICAN EQUITIES 2 332 015 2 844 984 92.6 The accompanying notes are an integral part of the financial statements.
SCHEDULE OF INVESTMENT PORTFOLIO (in $000s) RBC NORTH AMERICAN VALUE FUND, 2017 Par Value Coupon Fair % of Net (000s) Security Rate % Maturity Cost Value Assets BONDS 5 500 Canaccord Genuity Group Inc., Convertible 6.500 31-Dec-2021 $ 5 500 $ 5 500 TOTAL BONDS 5 500 5 500 0.2 SHORT-TERM INVESTMENTS 12 780 Bank of Montreal 12 767 12 767 74 775 Bank of Nova Scotia 74 914 74 918 11 750 Canadian Imperial Bank of Commerce 12 751 12 768 31 740 Enbridge Pipelines Inc. 40 629 39 849 7 388 Government of Canada Treasury Bills 7 367 7 367 11 215 National Bank of Canada 14 246 14 079 7 200 OMERS Realty Corp. 9 179 9 038 7 060 Province of Alberta 8 994 8 862 25 500 Suncor Energy Inc. 32 588 32 013 8 000 Toronto-Dominion Bank 7 990 7 990 TOTAL SHORT-TERM INVESTMENTS 221 425 219 651 7.1 TOTAL INVESTMENTS 2 558 940 3 070 135 99.9 UNREALIZED GAIN ON FOREIGN EXCHANGE CONTRACTS (SCHEDULE A) 6 934 0.2 UNREALIZED LOSS ON FOREIGN EXCHANGE CONTRACTS (SCHEDULE A) (2 673) (0.1) TOTAL PORTFOLIO $ 2 558 940 3 074 396 100.0 OTHER NET ASSETS (LIABILITIES) ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS (1 381) NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS $ 3 073 015 100.0 SCHEDULE A Foreign Exchange Contracts Unrealized Contracts Maturity Date Gain Bought CAD 5 766 Sold USD 4 500 @ 1.2814 11-Jan-2018 $ 111 Bought CAD 17 824 Sold USD 14 000 @ 1.2732 11-Jan-2018 229 Bought CAD 9 566 Sold USD 7 442 @ 1.2854 17-Jan-2018 214 Bought CAD 9 580 Sold USD 7 442 @ 1.2873 17-Jan-2018 228 Bought CAD 14 255 Sold JPY 1 239 799 @ 0.0115 17-Jan-2018 417 Bought USD 14 884 Sold CAD 18 615 @ 0.7996 17-Jan-2018 90 Bought CAD 7 302 Sold USD 5 794 @ 1.2603 30-Jan-2018 23 Bought CAD 16 181 Sold USD 12 600 @ 1.2842 31-Jan-2018 350 Bought CAD 17 632 Sold USD 13 990 @ 1.2603 02-Feb-2018 56 Bought CAD 2 821 Sold USD 2 200 @ 1.2822 07-Feb-2018 57 Bought CAD 4 375 Sold USD 3 395 @ 1.2887 08-Feb-2018 110 Bought CAD 3 506 Sold USD 2 731 @ 1.2837 08-Feb-2018 75 Bought CAD 43 002 Sold USD 33 808 @ 1.2719 09-Feb-2018 530 Bought CAD 12 857 Sold USD 10 000 @ 1.2857 09-Feb-2018 294 Bought CAD 4 754 Sold USD 3 712 @ 1.2807 12-Feb-2018 91 Bought CAD 19 007 Sold USD 14 940 @ 1.2722 12-Feb-2018 239 Bought CAD 12 347 Sold USD 9 740 @ 1.2677 14-Feb-2018 112 Bought CAD 357 Sold USD 280 @ 1.2762 15-Feb-2018 6 Bought CAD 6 420 Sold USD 5 000 @ 1.2840 15-Feb-2018 139 SCHEDULE A (cont.) Foreign Exchange Contracts Unrealized Contracts Maturity Date Gain Bought CAD 10 875 Sold USD 8 592 @ 1.2657 20-Feb-2018 $ 82 Bought CAD 6 346 Sold USD 5 000 @ 1.2692 21-Feb-2018 66 Bought CAD 37 247 Sold USD 29 299 @ 1.2713 22-Feb-2018 446 Bought CAD 3 869 Sold USD 3 020 @ 1.2813 22-Feb-2018 76 Bought CAD 2 436 Sold USD 1 900 @ 1.2821 22-Feb-2018 49 Bought CAD 27 132 Sold USD 21 260 @ 1.2762 23-Feb-2018 428 Bought CAD 17 363 Sold USD 13 550 @ 1.2814 23-Feb-2018 344 Bought CAD 4 547 Sold USD 3 547 @ 1.2821 23-Feb-2018 92 Bought CAD 3 854 Sold USD 3 000 @ 1.2845 26-Feb-2018 86 Bought CAD 11 482 Sold USD 8 945 @ 1.2836 28-Feb-2018 247 Bought CAD 11 874 Sold USD 9 300 @ 1.2768 05-Mar-2018 194 Bought CAD 5 634 Sold USD 4 403 @ 1.2796 06-Mar-2018 104 Bought CAD 4 773 Sold USD 3 720 @ 1.2830 06-Mar-2018 101 Bought CAD 18 181 Sold USD 14 375 @ 1.2648 07-Mar-2018 128 Bought CAD 8 199 Sold USD 6 389 @ 1.2833 12-Mar-2018 176 Bought CAD 15 175 Sold USD 11 801 @ 1.2859 13-Mar-2018 355 Bought CAD 30 817 Sold USD 24 298 @ 1.2683 14-Mar-2018 304 Bought CAD 6 472 Sold USD 5 040 @ 1.2841 19-Mar-2018 143 Bought CAD 6 326 Sold USD 4 924 @ 1.2846 23-Mar-2018 142 $ 6 934 The accompanying notes are an integral part of the financial statements.
SCHEDULE OF INVESTMENT PORTFOLIO (in $000s) RBC NORTH AMERICAN VALUE FUND, 2017 SCHEDULE A (cont.) Foreign Exchange Contracts Unrealized Contracts Maturity Date Loss Bought NOK 91 839 Sold CAD 14 113 @ 6.5073 05-Jan-2018 $ (53) Bought CAD 34 033 Sold USD 27 612 @ 1.2326 08-Jan-2018 (672) Bought CAD 7 151 Sold USD 5 700 @ 1.2546 08-Jan-2018 (13) Bought USD 5 900 Sold CAD 7 514 @ 0.7852 08-Jan-2018 (99) Bought CAD 5 423 Sold USD 4 400 @ 1.2324 10-Jan-2018 (107) Bought CAD 22 529 Sold USD 18 050 @ 1.2481 12-Jan-2018 (157) Bought CAD 8 860 Sold USD 7 100 @ 1.2480 16-Jan-2018 (62) Bought CAD 32 267 Sold USD 25 810 @ 1.2502 17-Jan-2018 (168) Bought JPY 1 239 799 Sold CAD 13 966 @ 88.7705 17-Jan-2018 (128) Bought CAD 22 324 Sold USD 17 884 @ 1.2483 18-Jan-2018 (150) Bought CAD 18 855 Sold USD 15 116 @ 1.2474 19-Jan-2018 (140) Bought CAD 3 761 Sold USD 3 000 @ 1.2538 25-Jan-2018 (8) Bought CAD 43 952 Sold USD 35 247 @ 1.2470 26-Jan-2018 (335) Bought USD 9 000 Sold CAD 11 498 @ 0.7828 26-Jan-2018 (190) Bought CAD 1 618 Sold USD 1 291 @ 1.2534 01-Feb-2018 (4) Bought USD 4 517 Sold CAD 5 744 @ 0.7864 02-Feb-2018 (69) Bought USD 3 500 Sold CAD 4 472 @ 0.7827 06-Feb-2018 (75) Bought USD 1 990 Sold CAD 2 561 @ 0.7770 12-Feb-2018 (61) Bought USD 3 200 Sold CAD 4 121 @ 0.7766 26-Feb-2018 (101) Bought USD 4 532 Sold CAD 5 774 @ 0.7849 13-Mar-2018 (81) $ (2 673) TOTAL FOREIGN EXCHANGE $ 4 261 All counterparties have a credit rating of at least A. * 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, and are grouped by issuer, earn interest at rates ranging from 0.90% to 1.62% and mature between January 2, 2018 and April 19, 2018. The accompanying notes are an integral part of the financial statements.
FINANCIAL STATEMENTS RBC NORTH AMERICAN VALUE FUND Statements of Financial Position (in $000s except per unit amounts) (see note 2 in the generic notes) 2017 2016 ASSETS Investments at fair value $ 3 070 135 $ 2 534 248 Cash 1 344 1 440 Due from investment dealers 7 621 16 516 Subscriptions receivable 2 472 2 974 Unrealized gain on foreign exchange contracts 6 934 747 Dividends receivable, interest accrued and other assets 4 386 3 915 TOTAL ASSETS 3 092 892 2 559 840 LIABILITIES Due to investment dealers 10 788 40 699 Redemptions payable 2 276 1 635 Unrealized loss on foreign exchange contracts 2 673 3 353 Distributions payable 40 14 Accounts payable and accrued expenses 4 100 3 456 TOTAL LIABILITIES EXCLUDING NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS 19 877 49 157 NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS ( NAV ) $ 3 073 015 $ 2 510 683 Investments at cost $ 2 558 940 $ 2 146 084 NAV SERIES A $ 1 740 366 $ 1 496 612 ADVISOR SERIES $ 524 722 $ 484 432 ADVISOR T5 SERIES $ 3 478 $ 1 734 SERIES T5 $ 1 931 $ 997 SERIES H $ $ SERIES D $ 102 003 $ 79 474 SERIES F $ 464 161 $ 246 363 SERIES FT5 $ 6 354 $ 1 462 SERIES I $ $ SERIES O $ 230 000 $ 199 609 NAV PER UNIT SERIES A $ 24.54 $ 22.83 ADVISOR SERIES $ 25.07 $ 23.30 ADVISOR T5 SERIES $ 22.83 $ 21.56 SERIES T5 $ 22.81 $ 21.53 SERIES H $ $ SERIES D $ 26.26 $ 24.31 SERIES F $ 28.34 $ 26.21 SERIES FT5 $ 26.43 $ 24.89 SERIES I $ $ SERIES O $ 26.35 $ 24.30 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) Dividends $ 54 024 $ 56 150 Interest for distribution purposes 2 464 1 458 Other income (loss) 857 (74) Securities lending revenue (see note 7 in the generic notes) 1 793 180 Net realized gain (loss) on investments 141 248 103 637 Net gain (loss) on foreign currencies and other net assets 29 598 (3 426) Change in unrealized gain (loss) on investments 129 898 173 425 TOTAL INCOME (LOSS) 359 882 331 350 EXPENSES (see notes Fund Specific Information) Management fees 37 258 33 731 Administration fees 3 465 2 913 Independent Review Committee costs 3 2 GST/HST 4 242 3 819 Transaction costs 2 624 2 323 Withholding tax 2 078 2 246 TOTAL EXPENSES 49 670 45 034 INCREASE (DECREASE) IN NAV $ 310 212 $ 286 316 INCREASE (DECREASE) IN NAV SERIES A $ 174 094 $ 170 853 ADVISOR SERIES $ 53 716 $ 54 583 ADVISOR T5 SERIES $ 276 $ 190 SERIES T5 $ 175 $ 90 SERIES H $ $ 458 SERIES D $ 10 374 $ 9 186 SERIES F $ 43 944 $ 24 191 SERIES FT5 $ 479 $ 107 SERIES I $ $ 243 SERIES O $ 27 154 $ 26 415 INCREASE (DECREASE) IN NAV PER UNIT SERIES A $ 2.54 $ 2.54 ADVISOR SERIES $ 2.60 $ 2.60 ADVISOR T5 SERIES $ 2.43 $ 2.76 SERIES T5 $ 2.36 $ 2.55 SERIES H $ $ 0.53 SERIES D $ 2.96 $ 2.91 SERIES F $ 3.37 $ 3.43 SERIES FT5 $ 3.18 $ 3.06 SERIES I $ $ 0.92 SERIES O $ 3.22 $ 3.14 The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENTS RBC NORTH AMERICAN VALUE FUND 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 $ 310 212 $ 286 316 ADJUSTMENTS TO RECONCILE NET CASH PROVIDED BY (USED IN) OPERATIONS Interest for distribution purposes Non-cash distributions from underlying funds Net realized loss (gain) on investments (138 833) (101 329) Change in unrealized loss (gain) on investments (129 898) (173 425) (Increase) decrease in accrued receivables (471) 282 Increase (decrease) in accrued payables 644 (216) (Increase) decrease in margin accounts Cost of investments purchased (5 525 319) (3 980 622) Proceeds from sale and maturity of investments 5 230 280 4 127 967 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (253 385) 158 973 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of redeemable units 646 655 416 503 Cash paid on redemption of redeemable units (385 501) (571 155) Distributions paid to holders of redeemable units (7 865) (3 209) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES $ 253 289 $ (157 861) Net increase (decrease) in cash for the period (96) 1 112 Cash (bank overdraft), beginning of period 1 440 328 CASH (BANK OVERDRAFT), END OF PERIOD $ 1 344 $ 1 440 Interest received (paid) $ 2 358 $ 1 477 Dividends received, net of withholding taxes $ 52 438 $ 54 093 The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENTS RBC NORTH AMERICAN VALUE FUND Statements of Changes in NAV (in $000s) For the periods ended (see note 2 in the generic notes) Series A Advisor Series Advisor T5 Series Series T5 2017 2016 2017 2016 2017 2016 2017 2016 NAV AT BEGINNING OF PERIOD $ 1 496 612 $ 1 462 301 $ 484 432 $ 464 488 $ 1 734 $ 1 048 $ 997 $ 630 INCREASE (DECREASE) IN NAV 174 094 170 853 53 716 54 583 276 190 175 90 Early redemption fees 1 2 Proceeds from redeemable units issued 375 551 198 397 97 032 61 240 1 836 881 1 133 471 Reinvestments of distributions to holders of redeemable units 56 536 26 337 16 268 8 087 11 3 17 11 Redemption of redeemable units (304 446) (334 197) (109 585) (95 375) (253) (317) (311) (169) NET INCREASE (DECREASE) FROM REDEEMABLE UNIT TRANSACTIONS 127 642 (109 461) 3 715 (26 048) 1 594 567 839 313 Distributions from net income (1 930) (612) (3) (1) Distributions from net gains (57 982) (25 151) (17 141) (7 979) (112) (28) (63) (16) Distributions from capital (14) (40) (17) (19) TOTAL DISTRIBUTIONS TO HOLDERS OF REDEEMABLE UNITS (57 982) (27 081) (17 141) (8 591) (126) (71) (80) (36) NET INCREASE (DECREASE) IN NAV 243 754 34 311 40 290 19 944 1 744 686 934 367 NAV AT END OF PERIOD $ 1 740 366 $ 1 496 612 $ 524 722 $ 484 432 $ 3 478 $ 1 734 $ 1 931 $ 997 For the periods ended (see note 2 in the generic notes) Series H Series D Series F Series FT5 2017 2016 2017 2016 2017 2016 2017 2016 NAV AT BEGINNING OF PERIOD $ $ 18 786 $ 79 474 $ 73 657 $ 246 363 $ 149 803 $ 1 462 $ 717 INCREASE (DECREASE) IN NAV 458 10 374 9 186 43 944 24 191 479 107 Early redemption fees Proceeds from redeemable units issued 1 285 29 398 17 447 252 256 121 292 5 167 852 Reinvestments of distributions to holders of redeemable units 3 672 2 021 12 776 5 253 82 6 Redemption of redeemable units (20 529) (17 153) (20 757) (73 328) (47 161) (583) (178) NET INCREASE (DECREASE) FROM REDEEMABLE UNIT TRANSACTIONS (19 244) 15 917 (1 289) 191 704 79 384 4 666 680 Distributions from net income (428) (778) (2 594) (3 094) (47) (10) Distributions from net gains (3 334) (1 302) (15 256) (3 921) (206) (22) Distributions from capital (10) TOTAL DISTRIBUTIONS TO HOLDERS OF REDEEMABLE UNITS (3 762) (2 080) (17 850) (7 015) (253) (42) NET INCREASE (DECREASE) IN NAV (18 786) 22 529 5 817 217 798 96 560 4 892 745 NAV AT END OF PERIOD $ $ $ 102 003 $ 79 474 $ 464 161 $ 246 363 $ 6 354 $ 1 462 The accompanying notes are an integral part of these financial statements.
FINANCIAL STATEMENTS RBC NORTH AMERICAN VALUE FUND Statements of Changes in NAV (cont.) (in $000s) For the periods ended (see note 2 in the generic notes) Series I Series O Total 2017 2016 2017 2016 2017 2016 NAV AT BEGINNING OF PERIOD $ $ 6 061 $ 199 609 $ 202 868 $ 2 510 683 $ 2 380 359 INCREASE (DECREASE) IN NAV 243 27 154 26 415 310 212 286 316 Early redemption fees 1 2 Proceeds from redeemable units issued 890 19 506 14 878 781 879 417 633 Reinvestments of distributions to holders of redeemable units 9 863 7 261 99 225 48 979 Redemption of redeemable units (7 194) (16 210) (44 536) (521 869) (570 413) NET INCREASE (DECREASE) FROM REDEEMABLE UNIT TRANSACTIONS (6 304) 13 159 (22 397) 359 236 (103 799) Distributions from net income (2 251) (4 034) (5 320) (10 462) Distributions from net gains (7 671) (3 243) (101 765) (41 662) Distributions from capital (31) (69) TOTAL DISTRIBUTIONS TO HOLDERS OF REDEEMABLE UNITS (9 922) (7 277) (107 116) (52 193) NET INCREASE (DECREASE) IN NAV (6 061) 30 391 (3 259) 562 332 130 324 NAV AT END OF PERIOD $ $ $ 230 000 $ 199 609 $ 3 073 015 $ 2 510 683 The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS FUND SPECIFIC INFORMATION RBC NORTH AMERICAN VALUE FUND, 2017 General information (see note 1 in the generic notes) The investment objective of the Fund is to provide long-term capital growth by investing primarily in equity securities of Canadian and U.S. companies that are priced below their true value. All outstanding Series H units were re-designated as Series A units effective June 30, 2016. All outstanding Series I units were re-designated as Series F units effective June 30, 2016. Financial instrument risk and capital management (see note 5 in the generic notes) Concentration risk (%) The table below summarizes the Fund s investment portfolio (after consideration of derivative products, if any) as at: Investment mix 2017 2016 Financials 30.0 30.8 Energy 13.3 15.1 Information Technology 10.5 8.2 Industrials 9.0 7.8 Consumer Discretionary 8.7 5.2 Investment Funds 7.1 2.6 Materials 5.5 4.8 Consumer Staples 4.9 6.0 Health Care 4.7 4.5 Telecommunication Services 2.9 2.5 Real Estate 1.8 1.6 Utilities 1.3 2.6 Bonds 0.2 0.2 Cash/Other 0.1 8.1 Total 100.0 100.0 Currency risk (% of NAV) The table below summarizes the Fund s net exposure (after hedging, if any) to currency risk as at: Currency 2017 2016 United States dollar 21.9 17.4 Norwegian krone 0.5 Other currencies 0.2 Total 22.4 17.6 As at, 2017, if the Canadian dollar had strengthened or weakened by 5% in relation to the above currencies, with all other factors kept constant, the Fund s NAV may have decreased or increased, respectively, by approximately 1.1% (, 2016 1.0%). 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: 2017 2016 S&P/TSX Capped Composite Total Return Index + or - 0.8 + or - 0.7 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 ($000s 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 2 797 994 46 990 2 844 984 Mutual fund units Fixed-income and debt securities 5 500 5 500 Short-term investments 219 651 219 651 Derivatives assets 6 934 6 934 Derivatives liabilities (2 673) (2 673) Total financial instruments 2 797 994 276 402 3 074 396 % of total portfolio 91.0 9.0 100.0, 2016 Level 1 Level 2 Level 3 Total Equities 2 278 737 23 479 2 302 216 Mutual fund units Fixed-income and debt securities 5 500 5 500 Short-term investments 226 532 226 532 Derivatives assets 747 747 Derivatives liabilities (3 353) (3 353) Total financial instruments 2 278 737 252 905 2 531 642 % of total portfolio 90.0 10.0 100.0 For the periods ended, 2017 and 2016, there were no transfers of financial instruments between Level 1, Level 2 and Level 3. Please see the generic notes at the back of the financial statements.
NOTES TO FINANCIAL STATEMENTS FUND SPECIFIC INFORMATION RBC NORTH AMERICAN VALUE FUND, 2017 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 1.60% 0.15% Advisor Series 1.60% 0.10% Advisor T5 Series 1.60% 0.10% Series T5 1.60% 0.10% Series H 1.65% 0.10% Series D 0.85% 0.10% Series F 0.60% 0.10% Series FT5 0.60% 0.10% Series I 0.60% 0.10% Series O n/a 0.02% * Effective June 30, 2016, the management fees for Series A, Advisor Series, Advisor T5 Series and Series T5 units were reduced to 1.60% from 1.75%; for Series D units were reduced to 0.85% from 1.00%; and for Series F and Series FT5 units were reduced to 0.60% from 0.75%. 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 Advisor T5 Series 57 54 Series T5 57 54 Series F 48 46 Series FT5 51 48 Series O 40 38 Value of all units 6 6 Unconsolidated structured entities (%) (see note 3 in the generic notes) 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 ). 2017 2016 NAV Ownership NAV Ownership ishares S&P/TSX 60 Index Fund 1.0 0.2 ishares S&P/TSX Global Gold Index Fund 0.2 0.9 0.8 2.8 SPDR S&P 500 ETF Trust 1.0 VanEck Vectors Oil Services Fund 0.5 0.8 Taxes ($000s) (see note 6 in the generic notes) The Fund had no capital or non-capital losses as at, 2017. 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 65 553 70 829 Issued number of units 15 826 9 255 Reinvested number of units 2 299 1 145 Redeemed number of units (12 755) (15 676) Ending number of units 70 923 65 553 Advisor Series Opening units 20 791 22 062 Issued number of units 4 002 2 812 Reinvested number of units 647 345 Redeemed number of units (4 511) (4 428) Ending number of units 20 929 20 791 Advisor T5 Series Opening units 80 52 Issued number of units 82 43 Reinvested number of units 1 Redeemed number of units (11) (15) Ending number of units 152 80 Series T5 Opening units 46 31 Issued number of units 52 23 Reinvested number of units 1 1 Redeemed number of units (14) (9) Ending number of units 85 46 Series H Opening units 892 Issued number of units 63 Reinvested number of units Redeemed number of units (955) Ending number of units Please see the generic notes at the back of the financial statements.
NOTES TO FINANCIAL STATEMENTS FUND SPECIFIC INFORMATION RBC NORTH AMERICAN VALUE FUND, 2017 For the periods ended (see note 2 in the generic notes) 2017 2016 Series D Opening units 3 269 3 352 Issued number of units 1 150 756 Reinvested number of units 140 83 Redeemed number of units (675) (922) Ending number of units 3 884 3 269 Series F Opening units 9 400 6 326 Issued number of units 9 168 4 802 Reinvested number of units 450 199 Redeemed number of units (2 640) (1 927) Ending number of units 16 378 9 400 Series FT5 Opening units 59 31 Issued number of units 200 36 Reinvested number of units 3 Redeemed number of units (22) (8) Ending number of units 240 59 Series I Opening units 255 Issued number of units 40 Reinvested number of units Redeemed number of units (295) Ending number of units Series O Opening units 8 216 9 242 Issued number of units 767 656 Reinvested number of units 374 297 Redeemed number of units (629) (1 979) Ending number of units 8 728 8 216 Securities lending revenue ($000s except %) (see note 7 in the generic notes) Fair value of securities on loan and collateral received as at: 2017 2016 Fair value of securities loaned 123 742 173 672 Fair value of collateral received 126 217 177 146 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. 2017 2016 $ % $ % Gross revenue 2 508 100 303 100 RBC IS (paid) (635) (25) (106) (35) Tax withheld (80) (3) (17) (6) Fund revenue 1 793 72 180 59 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 North American Value Class 6.5 7.4 Transaction costs ($000s except %) Transaction costs, including brokerage commissions, in consideration of portfolio transactions for the periods ended: 2017 2016 $ % $ % Total transaction costs 2 624 100 2 323 100 Related-party brokerage commissions* 295 11 195 8 Commission arrangements 184 7 154 7 * 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.
GENERIC NOTES TO FINANCIAL STATEMENTS (also see Fund Specific Information), 2017 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, 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.
GENERIC NOTES TO FINANCIAL STATEMENTS (also see Fund Specific Information), 2017 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), 2017 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