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. Damon G. Williams, FSA, FCIA, CFA Heidi Johnston, CPA, CA Chief Executive Officer Chief Financial Officer RBC Global Asset Management Inc. RBC GAM Funds August 8, 2019 MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING Unaudited Interim Financial Statements The accompanying interim financial statements have not been reviewed by the external auditors of the Funds. The external auditors will be auditing the annual financial statements of the Funds in accordance with Canadian generally accepted auditing standards.
Transcript
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.
Damon G. Williams, FSA, FCIA, CFA Heidi Johnston, CPA, CAChief Executive Officer Chief Financial OfficerRBC Global Asset Management Inc. RBC GAM Funds
August 8, 2019
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING
Unaudited Interim Financial Statements
The accompanying interim financial statements have not been reviewed by the external auditors of the Funds. The external auditors will be
auditing the annual financial statements of the Funds in accordance with Canadian generally accepted auditing standards.
SCHEDULE OF INVESTMENT PORTFOLIO (in $000s)
SCHEDULE OF INVESTMENT PORTFOLIO (unaudited) (in $000s)
2019 INTERIM FINANCIAL STATEMENTS
June 30, 2019
The accompanying notes are an integral part of the financial statements.
RBC U.S. INDEX FUND
Fair % of Net Holdings Security Cost Value Assets
UNITED STATES EQUITIESCommunication Services 24 585 Activision Blizzard Inc. $ 1 319 $ 1 520 9 548 Alphabet Inc., Class A 8 695 13 532 9 773 Alphabet Inc., Class C 5 220 13 834 232 715 AT&T Inc. 9 826 10 208 11 490 CBS Corp. 566 751 31 089 CenturyTel Inc. 999 479 5 468 Charter Communications Inc. 2 070 2 830 144 429 Comcast Corp., Class A 4 035 7 997 5 432 Discovery Inc., Class A 258 218 11 839 Discovery Inc., Class C 286 441 7 571 DISH Network Corp., Class A 591 381 9 359 Electronic Arts Inc. 559 1 241 76 611 Facebook Inc., Class A 9 084 19 363 11 459 Fox Corp., Class A 629 550 5 510 Fox Corp., Class B 296 263 12 733 Interpublic Group of Companies Inc. 332 376 13 942 Netflix Inc. 2 133 6 714 13 249 News Corp., Class A 192 234 5 042 News Corp., Class B 87 92 6 993 Omnicom Group 499 751 3 536 Take-Two Interactive Software Inc. 495 526 55 666 The Walt Disney Company 5 564 10 182 3 548 TripAdvisor Inc. 226 215 23 614 Twitter Inc. 668 1 079 131 877 Verizon Communications Inc. 7 484 9 866 11 578 Viacom Inc. 645 453
62 758 104 096 10.1Consumer Discretionary 2 341 Advance Auto Parts Inc. 494 473 13 187 Amazon.com, Inc. 10 429 32 645 8 141 Aptiv Plc. 533 864 781 Autozone Inc. 381 1 123 7 327 Best Buy Co. Inc. 307 669 1 380 Booking Holdings Inc. 1 727 3 388 6 869 Borg-Warner Automotive Inc. 334 377 5 219 Capri Holdings Ltd. 418 237 5 299 CarMax Inc. 256 602 12 510 Carnival Corp. 655 762 762 Chipotle Mexican Grill Inc., Class A 404 730 10 623 D.R. Horton Inc. 363 600 3 856 Darden Restaurants Inc. 274 615 8 232 Dollar General Corp. 612 1 457 7 448 Dollar Tree Inc. 592 1 047 26 123 eBay Inc. 598 1 351 3 659 Expedia Group Inc. 387 637 3 899 Foot Locker Inc. 315 214 125 574 Ford Motor Company 1 954 1 682 7 538 Gap Inc. 284 177 3 984 Garmin Ltd. 224 416 42 063 General Motors Co. 1 758 2 122
Fair % of Net Holdings Security Cost Value Assets
Consumer Discretionary (cont.) 4 560 Genuine Parts Co. $ 413 $ 618 6 970 H&R Block, Inc. 204 267 12 193 Hanesbrands Inc. 471 275 5 431 Harley-Davidson Inc. 315 255 3 765 Hasbro Inc. 274 521 9 160 Hilton Worldwide Holdings Inc. 859 1 172 35 085 Home Depot Inc. 3 850 9 561 5 490 Kohl's Corp. 352 342 7 817 L Brands Inc. 454 267 4 506 Leggett & Platt Inc. 183 227 8 936 Lennar Corp. 514 567 10 430 LKQ Corp. 425 363 24 965 Lowe's Companies 1 438 3 299 10 322 Macy's Inc. 434 290 8 813 Marriott International Inc., Class A 676 1 619 24 370 McDonald's Corp. 2 774 6 625 15 982 MGM Mirage 666 598 2 025 Mohawk Industries Inc. 360 391 13 209 Newell Brands Inc. 580 267 40 142 Nike Inc. 1 960 4 408 3 832 Nordstrom Inc. 224 160 7 094 Norwegian Cruise Line Holdings Ltd. 493 496 2 532 O'Reilly Automotive Inc. 444 1 225 8 443 Pulte Corp. 163 350 2 542 PVH Corp. 326 315 1 787 Ralph Lauren Corp. 268 266 11 613 Ross Stores Inc. 554 1 507 5 361 Royal Caribbean Cruises Ltd. 567 851 38 622 Starbucks Corp. 1 751 4 240 9 579 Tapestry Inc. 466 398 16 337 Target Corporation 1 177 1 852 3 561 Tiffany and Co. 348 436 38 669 TJX Companies Inc. 1 155 2 677 3 941 Tractor Supply Co. 362 562 1 762 Ulta Salon, Cosmetics & Fragrance, Inc. 510 801 6 665 Under Armour Inc. 59 194 6 440 Under Armour Inc., Class A 383 214 10 495 V.F. Corporation 635 1 202 2 098 Whirlpool Corp. 293 391 3 157 Wynn Resorts Ltd. 506 513 9 870 Yum! Brands, Inc. 702 1 429
51 887 104 199 10.1Consumer Staples 59 810 Altria Group Inc. 2 658 3 710 17 515 Archer Daniels Midland Co. 729 936 5 485 Brown-Forman Corp., Class B 261 399 6 403 Campbell Soup Company 329 336 7 893 Church & Dwight Co. Inc. 508 755 4 005 Clorox Company 464 803 27 565 Colgate-Palmolive Company 1 827 2 586 15 720 Conagra Brands Inc. 611 546
SCHEDULE OF INVESTMENT PORTFOLIO (in $000s)
June 30, 2019
The accompanying notes are an integral part of the financial statements.
SCHEDULE OF INVESTMENT PORTFOLIO (unaudited) (in $000s)
RBC U.S. INDEX FUND
Fair % of Net Holdings Security Cost Value Assets
Consumer Staples (cont.) 5 374 Constellation Brands Inc. $ 628 $ 1 387 14 042 Costco Wholesale Corp. 2 141 4 858 12 840 Coty Inc. 317 225 7 015 Estée Lauder Companies Inc., Class A 643 1 681 19 248 General Mills Inc. 991 1 325 8 905 Hormel Foods Corp. 258 473 8 129 Kellogg Co. 551 570 11 047 Kimberly-Clark Corp. 1 255 1 929 4 843 Lamb Weston Holdings Inc. 324 402 3 830 McCormick & Co. Inc. 353 777 6 154 Molson Coors Brewing Co., Class B 473 451 46 127 Mondelez International Inc. 1 697 3 256 12 714 Monster Beverage Corp. 587 1 063 44 707 PepsiCo Inc. 4 375 7 672 49 611 Philip Morris International Inc. 4 529 5 101 15 211 Sysco Corp. 700 1 406 122 449 The Coca-Cola Co. 5 602 8 163 4 460 The Hershey Co. 429 782 3 687 The J.M. Smucker Company 427 556 19 960 The Kraft Heinz Co. 1 159 811 26 221 The Kroger Co. 655 745 79 984 The Procter & Gamble Co. 7 461 11 466 9 219 Tyson Foods Inc. 443 974 24 781 Walgreens Boots Alliance Inc. 1 690 1 774 44 605 Walmart Inc. 3 795 6 451
48 870 74 369 7.2Energy 16 079 Anadarko Petroleum Corp. 1 271 1 486 12 280 Apache Corp. 912 466 16 724 Baker Hughes a GE Co. 834 539 13 887 Cabot Oil & Gas Corp. 376 417 60 743 Chevron Corp. 7 274 9 890 3 447 Cimarex Energy Co. 456 268 6 272 Concho Resources Inc. 957 848 36 269 ConocoPhillips 2 315 2 898 13 132 Devon Energy Corporation 708 489 4 834 Diamondback Energy Inc. 699 689 18 588 EOG Resources Inc. 1 644 2 267 134 919 Exxon Mobil Corp. 12 608 13 539 27 266 Halliburton Co. 1 242 812 3 734 Helmerich & Payne 252 247 7 962 Hess Corp. 535 663 5 286 HollyFrontier Corp. 250 320 62 540 Kinder Morgan Inc. 2 338 1 709 26 727 Marathon Oil Corp. 655 497 21 071 Marathon Petroleum Corp. 1 273 1 542 12 740 National Oilwell Varco Inc. 707 371 15 882 Noble Energy Inc. 777 466 24 100 Occidental Petroleum Corp. 1 986 1 586 13 336 ONEOK, Inc. 841 1 202 13 495 Phillips 66 Company 916 1 652 5 472 Pioneer Natural Resources Co. 898 1 102 44 415 Schlumberger Ltd. 3 624 2 311 13 956 TechnipFMC Plc. 449 474 39 008 The Williams Companies Inc. 1 562 1 432 13 460 Valero Energy Corp. 674 1 509
49 033 51 691 5.0
Fair % of Net Holdings Security Cost Value Assets
Financials 1 805 Affiliated Managers Group Inc. $ 370 $ 218 23 536 Aflac Inc. 805 1 689 10 690 Allstate Corp. 698 1 423 21 827 American Express Company 1 811 3 529 27 891 American International Group Inc. 2 021 1 945 4 236 Ameriprise Financial Inc. 384 805 7 700 Aon Plc. 687 1 945 5 749 Arthur J. Gallagher & Co. 412 659 2 073 Assurant Inc. 161 289 281 969 Bank of America Corp. 5 961 10 708 28 243 Bank of New York Mellon Corp. 1 258 1 632 24 554 BB&T Corporation 1 097 1 579 61 802 Berkshire Hathaway Inc., Class B 12 204 17 196 3 795 BlackRock Inc. 1 340 2 330 15 022 Capital One Financial Corp. 1 160 1 785 3 655 CBOE Global Markets Inc. 411 496 14 656 Chubb Ltd. 1 855 2 826 4 738 Cincinnati Financial Corp. 295 643 73 739 Citigroup Inc. 5 071 6 758 14 389 Citizens Financial Group Inc. 460 666 11 436 CME Group Inc., Class A 1 390 2 907 4 752 Comerica Inc. 268 452 10 262 Discover Financial Services 463 1 043 8 038 E*TRADE Financial Corp. 229 469 1 334 Everest Re Group Ltd. 447 431 23 187 Fifth Third Bancorp 605 847 5 142 First Republic Bank 670 656 9 702 Franklin Resources Inc. 457 442 11 798 Hartford Financial Services Inc. 540 860 33 892 Huntington Bancshares 420 613 17 863 Intercontinental Exchange, Inc. 936 2 005 12 418 Invesco Ltd. 397 333 7 376 Jefferies Financial Group Inc. 217 186 103 442 JPMorgan Chase & Co. 7 620 15 141 31 524 KeyCorp 507 733 6 633 Lincoln National Corp. 346 560 8 277 Loews Corp. 388 593 4 328 M&T Bank Corp. 647 964 1 203 MarketAxess Holdings Inc. 506 506 16 305 Marsh & McLennan Companies Inc. 1 035 2 128 30 069 MetLife Inc. 1 485 1 955 5 198 Moody's Corp. 475 1 337 40 768 Morgan Stanley 1 719 2 339 2 636 MSCI Inc. 562 824 6 818 Northern Trust Corp. 556 804 13 231 People's United Financial Inc. 256 291 14 284 PNC Bank Corp. 1 412 2 564 8 371 Principal Financial Group Inc. 431 635 12 827 Prudential Financial Inc. 1 088 1 696 4 156 Raymond James Financial Corp. 436 460 31 822 Regions Financial Corp. 393 622 7 822 S&P Global Inc. 801 2 334 11 819 State Street Corp. 883 868 14 343 Suntrust Banks Inc. 715 1 179 1 715 SVB Financial Group 581 504 20 222 Synchrony Financial 750 917 7 677 T. Rowe Price Group Inc. 640 1 103
SCHEDULE OF INVESTMENT PORTFOLIO (in $000s)SCHEDULE OF INVESTMENT PORTFOLIO (in $000s)
June 30, 2019
The accompanying notes are an integral part of the financial statements.
SCHEDULE OF INVESTMENT PORTFOLIO (unaudited) (in $000s)
RBC U.S. INDEX FUND
Fair % of Net Holdings Security Cost Value Assets
Financials (cont.) 38 035 The Charles Schwab Corporation $ 1 318 $ 2 003 10 792 The Goldman Sachs Group Inc. 2 102 2 890 3 783 The Nasdaq Stock Market Inc. 218 476 18 725 The Progressive Corp. 733 1 960 3 346 Torchmark Corp. 172 392 8 257 Travelers Cos. Inc. 784 1 617 47 464 U.S. Bancorp 2 075 3 254 7 180 Unum Group 261 315 128 982 Wells Fargo & Company 6 273 7 990 4 120 Willis Towers Watson Plc. 752 1 033 5 478 Zions Bancorporation 197 330
84 617 133 682 13.0Health Care 56 255 Abbott Laboratories 2 979 6 175 47 140 AbbVie Inc. 2 891 4 489 1 471 Abiomed Inc. 705 502 9 936 Agilent Technologies Inc. 607 971 7 242 Alexion Pharmaceuticals Inc. 1 106 1 242 2 272 Align Technology Inc. 472 814 9 796 Allergan plc 2 599 2 152 5 066 AmerisourceBergen Corp. 299 566 19 449 Amgen Inc. 2 675 4 693 8 212 Anthem Inc. 1 110 3 033 14 939 Baxter International Inc. 717 1 602 8 607 Becton Dickinson & Co. 1 597 2 839 6 177 Biogen Inc. 1 543 1 892 44 373 Boston Scientific Corp. 957 2 497 52 159 Bristol-Myers Squibb Co. 3 021 3 096 9 666 Cardinal Health Inc. 698 596 22 489 Celgene Corp. 1 879 2 722 12 915 Centene Corp. 681 887 10 573 Cerner Corp. 643 1 014 12 161 Cigna Corp. 1 915 2 510 1 543 Cooper Co. Inc. 412 680 41 457 CVS Health Corp. 3 178 2 959 20 090 Danaher Corp. 1 525 3 759 4 266 DaVita Inc. 245 315 7 699 Dentsply Sirona Inc. 511 588 6 677 Edwards Lifesciences Corp. 561 1 618 27 552 Eli Lilly & Co. 2 207 3 997 40 716 Gilead Sciences Inc. 2 692 3 602 8 597 HCA Healthcare Inc. 855 1 522 4 950 Henry Schein Inc. 444 453 8 694 Hologic Inc. 421 546 4 303 Humana Inc. 662 1 495 2 690 IDEXX Laboratories Inc. 465 970 4 711 Illumina Inc. 1 234 2 271 5 553 Incyte Corporation Ltd. 904 618 3 681 Intuitive Surgical Inc. 1 065 2 529 4 951 IQVIA Holdings Inc. 646 1 042 84 663 Johnson & Johnson 9 089 15 420 3 079 Laboratory Corp. of America Holdings 389 697 6 000 McKesson Corp. 850 1 056 42 751 Medtronic Plc. 3 448 5 452
Fair % of Net Holdings Security Cost Value Assets
Health Care (cont.) 82 120 Merck & Co. Inc. $ 5 160 $ 9 019 776 Mettler-Toledo International Inc. 485 853 16 996 Mylan N.V. 713 424 5 885 Nektar Therapeutics 275 274 3 629 PerkinElmer Inc. 471 458 4 262 Perrigo Company Plc. 576 266 177 033 Pfizer Inc. 6 414 10 047 4 353 Quest Diagnostics Inc. 328 580 2 552 Regeneron Pharmaceutical 958 1 046 4 481 Resmed Inc. 468 716 9 897 Stryker Corp. 1 072 2 664 1 486 Teleflex Inc. 522 644 12 725 Thermo Fisher Scientific Inc. 1 870 4 893 30 304 UnitedHealth Group Incorporated 3 798 9 682 2 737 Universal Health Services Inc., Class B 376 467 2 955 Varian Medical Systems Inc. 256 527 8 202 Vertex Pharmaceuticals Inc. 1 043 1 970 2 161 Waters Corp. 251 609 1 616 WellCare Health Plans Inc. 628 603 6 651 Zimmer Biomet Holdings, Inc. 763 1 025 15 335 Zoetis Inc. 826 2 276
88 150 144 924 14.0Industrials 18 381 3M Co. 2 863 4 172 4 096 Alaska Airgroup Inc. 326 343 3 100 Allegion Plc. 210 449 12 974 American Airlines Group Inc. 664 554 7 102 Ametek Inc. 450 845 12 732 Arconic Inc. 550 430 16 721 Boeing Co. 2 773 7 973 4 466 C.H. Robinson Worldwide Inc. 345 493 18 151 Caterpillar Inc. 1 946 3 241 2 647 Cintas Corp. 238 823 6 491 Copart Inc. 455 635 24 397 CSX Corp. 849 2 472 4 528 Cummins Engine Inc. 553 1 016 10 013 Deere & Co. 1 096 2 173 18 996 Delta Air Lines Inc. 1 244 1 412 4 694 Dover Corp. 269 616 13 642 Eaton Corp Plc. 915 1 489 19 752 Emerson Electric Co. 1 251 1 726 3 778 Equifax Inc. 345 669 5 577 Expeditors International of Washington, Inc. 308 554 17 881 Fastenal Co. 444 763 7 717 FedEx Corporation 1 209 1 660 4 406 Flowserve Corp. 236 304 9 598 Fortive Corp. 456 1 025 4 679 Fortune Brands Home & Security Inc. 337 350 8 690 General Dynamics Corp. 1 147 2 068 278 084 General Electric Company 7 788 3 824 1 467 Grainger (W.W.) Inc. 385 515 3 845 Harris Corp. 391 953 23 232 Honeywell International Inc. 2 527 5 313 1 370 Huntington Ingalls Industries Inc. 449 404
SCHEDULE OF INVESTMENT PORTFOLIO (in $000s)SCHEDULE OF INVESTMENT PORTFOLIO (in $000s)
June 30, 2019
The accompanying notes are an integral part of the financial statements.
SCHEDULE OF INVESTMENT PORTFOLIO (unaudited) (in $000s)
RBC U.S. INDEX FUND
Fair % of Net Holdings Security Cost Value Assets
Industrials (cont.) 11 359 IHS Markit Ltd. $ 712 $ 948 9 478 Illinois Tool Works Inc. 925 1 871 7 568 Ingersoll-Rand Plc., Class A 536 1 255 2 893 J.B. Hunt Transport Services Inc. 325 346 3 471 Jacobs Engineering Group Inc. 222 383 25 375 Johnson Controls International Plc. 1 237 1 373 3 290 Kansas City Southern Industries Inc. 405 525 2 479 L3 Technologies Inc. 345 798 7 848 Lockheed Martin Corporation 1 571 3 735 9 618 Masco Corp. 245 494 11 776 Nielsen Holdings Plc. 526 348 8 410 Norfolk Southern Corp. 864 2 193 5 438 Northrop Grumman Corp. 975 2 300 10 842 Paccar Inc. 676 1 017 4 045 Parker Hannifin Corp. 495 901 5 358 Pentair Plc. 317 261 4 823 Quanta Services Inc. 251 241 8 873 Raytheon Company 969 2 021 6 736 Republic Services Inc. 295 764 3 996 Robert Half International Inc. 204 298 3 735 Rockwell Automation Inc. 419 801 5 019 Rollins Inc. 270 236 3 332 Roper Technologies Inc. 639 1 600 4 777 Smith (A.O.) Corp. 344 295 1 833 Snap-On Inc. 234 397 15 559 Southwest Airlines 918 1 035 4 738 Stanley Black & Decker Inc. 508 897 7 643 Textron Inc. 321 531 1 588 TransDigm Group Inc. 612 1 006 22 571 Union Pacific Corp. 2 103 4 999 7 015 United Continental Holdings Inc. 726 804 22 245 United Parcel Service Inc. 2 404 3 008 2 610 United Rentals Inc. 361 453 25 865 United Technologies Corp. 2 987 4 408 5 112 Verisk Analytics Inc. 607 980 5 256 Wabtec Corp. 511 494 12 512 Waste Management Inc. 746 1 891 5 806 Xylem Inc. 275 636
60 099 95 807 9.3Information Technology 20 339 Accenture Plc., Class A 2 259 4 920 15 560 Adobe Inc. 1 658 6 004 28 561 Advanced Micro Devices Inc. 575 1 136 5 302 Akamai Technologies Inc. 314 556 1 538 Alliance Data Systems Corp. 434 282 9 653 Amphenol Corp., Class A 566 1 212 11 833 Analog Devices Inc. 975 1 747 2 624 Ansys Inc. 451 704 139 381 Apple Inc. 14 491 36 126 29 771 Applied Materials Inc. 824 1 751 1 698 Arista Networks Inc. 438 577 7 048 Autodesk Inc. 631 1 504 13 920 Automatic Data Processing Inc. 1 287 3 014 12 630 Broadcom Inc. 2 653 4 761 3 737 Broadridge Financial Solutions Inc. 422 625 8 779 Cadence Design Systems Inc. 478 814
Fair % of Net Holdings Security Cost Value Assets
Information Technology (cont.) 136 502 Cisco Systems Inc. $ 4 605 $ 9 765 4 072 Citrix Systems Inc. 347 523 18 013 Cognizant Technology Solutions Corp., Class A 1 009 1 495 24 624 Corning Inc. 588 1 072 8 680 DXC Technology Co. 717 627 1 968 F5 Networks Inc. 260 375 10 377 Fidelity National Information Services Inc. 748 1 667 12 604 Fiserv Inc. 456 1 505 2 801 FleetCor Technologies Inc. 590 1 030 4 534 Flir Systems Inc. 293 321 4 743 Fortinet Inc. 527 477 2 902 Gartner Inc. 452 611 4 927 Global Payments Inc. 529 1 033 42 702 Hewlett Packard Enterprise Co. 681 837 47 967 HP Inc. 1 641 1 306 143 078 Intel Corp. 5 511 8 969 28 362 International Business Machines 5 156 5 123 8 284 Intuit Inc. 1 031 2 835 1 222 IPG Photonics Corp. 365 247 2 527 Jack Henry & Associates Inc. 478 443 11 456 Juniper Networks Inc. 319 400 5 881 Keysight Technologies Inc. 354 692 5 154 KLA-Tencor Corp. 444 798 4 769 Lam Research Corp. 400 1 173 28 714 Mastercard Inc. 2 827 9 945 8 550 Maxim Integrated Products 539 670 7 768 Microchip Technology Inc. 533 882 35 135 Micron Technology Inc. 1 091 1 776 244 348 Microsoft Corp. 15 737 42 865 5 313 Motorola Solutions Inc. 510 1 160 7 715 NetApp Inc. 381 623 19 419 Nvidia Corp. 1 864 4 175 77 376 Oracle Corporation 3 377 5 760 10 346 Paychex Inc. 573 1 115 37 466 PayPal Holdings Inc. 1 890 5 615 3 602 Qorvo Inc. 366 314 38 766 QUALCOMM Inc. 2 640 3 861 5 694 Red Hat Inc. 506 1 400 24 762 Salesforce.com Inc. 2 412 4 914 8 358 Seagate Technology 371 516 5 648 Skyworks Solutions Inc. 659 572 19 215 Symantec Corp. 485 548 4 683 SynOpsys Inc. 465 790 10 598 TE Connectivity Ltd. 657 1 329 29 931 Texas Instruments Inc. 1 887 4 491 14 421 The Western Union Co. 302 376 5 089 Total System Services Inc. 242 856 3 295 Verisign Inc. 302 903 55 452 Visa Inc., Class A 3 946 12 539 9 501 Western Digital Corp. 670 592 5 807 Xerox Corp. 300 269 8 194 Xilinx Inc. 505 1 265
101 994 219 178 21.2
SCHEDULE OF INVESTMENT PORTFOLIO (in $000s)SCHEDULE OF INVESTMENT PORTFOLIO (in $000s)
June 30, 2019
The accompanying notes are an integral part of the financial statements.
SCHEDULE OF INVESTMENT PORTFOLIO (unaudited) (in $000s)
RBC U.S. INDEX FUND
Fair % of Net Holdings Security Cost Value Assets
Materials 7 043 Air Products & Chemicals Inc. $ 1 044 $ 2 087 3 526 Albemarle Corp. 372 325 52 935 Amcor Plc. 786 795 2 766 Avery Dennison Corp. 202 419 10 458 Ball Corp. 407 959 4 154 Celanese Corp. 565 586 7 298 CF Industries Holdings Inc. 318 446 24 038 Corteva Inc. 877 930 24 170 Dow Inc. 1 722 1 558 24 067 DuPont de Nemours Inc. 4 588 2 365 4 581 Eastman Chemical Company 343 467 8 123 Ecolab Inc. 895 2 094 4 019 FMC Corp. 253 437 45 362 Freeport-McMoRan Inc. 1 079 690 3 167 International Flavors & Fragrances Inc. 385 602 12 492 International Paper Co. 637 709 17 307 Linde Plc. 2 978 4 551 9 520 LyondellBasell Industries N.V. 730 1 074 2 022 Martin Marietta Materials 359 609 26 409 Newmont Goldcorp Corporation 1 097 1 330 9 551 Nucor Corp. 499 689 3 118 Packaging Corp. of America 420 389 7 645 PPG Industries Inc. 633 1 168 5 218 Sealed Air Corp. 220 292 2 624 Sherwin-Williams Co. 667 1 573 11 733 The Mosaic Co. 578 385 4 119 Vulcan Materials Co. 356 740 8 416 WestRock Co. 546 401
23 556 28 670 2.8Real Estate 3 522 Alexandria Real Estate Equities Inc. 547 650 14 095 American Tower Corp. Real Estate Investment Trust 1 620 3 772 4 558 Apartment Investment & Management Co. Real Estate Investment Trust 307 299 4 480 AvalonBay Communities Inc. Real Estate Investment Trust 811 1 192 4 831 Boston Properties Inc. 642 816 9 772 CBRE Group Inc. 370 656 13 306 Crown Castle International Corp. Real Estate Investment Trust 1 323 2 270 6 758 Digital Realty Trust Inc. 898 1 042 11 716 Duke Realty Corporation Real Estate Investment Trust 417 485 2 681 Equinix Inc. Real Estate Investment Trust 1 091 1 770 11 813 Equity Residential Properties Trust 841 1 174 2 054 Essex Property Trust Inc. 498 784 3 977 Extra Space Storage Inc. Real Estate Investment Trust 498 553 2 440 Federal Realty Investment Trust 473 411
Fair % of Net Holdings Security Cost Value Assets
Real Estate (cont.) 14 940 HCP Inc. Real Estate Investment Trust $ 635 $ 625 23 147 Host Marriott Corp. 504 552 9 434 Iron Mountain Inc. Real Estate Investment Trust 379 387 13 992 Kimco Realty Corp. 356 338 3 694 Mid-America Apartment Communities Inc. Real Estate Investment Trust 453 570 20 202 ProLogis Inc. Trust 1 157 2 118 4 828 Public Storage Inc. Real Estate Investment Trust 943 1 506 9 500 Realty Income Corp. Real Estate Investment Trust 659 858 5 462 Regency Centers Corp. Real Estate Investment Trust 488 477 3 658 SBA Communications Corp., Class A Real Estate Investment Trust 733 1 077 9 901 Simon Property Group Inc. 1 727 2 071 2 798 SL Green Realty Corp. Real Estate Investment Trust 443 294 3 751 The Macerich Company 265 164 8 986 UDR Inc. Real Estate Investment Trust 436 528 11 780 Ventas Inc. Real Estate Investment Trust 852 1 054 5 654 Vornado Realty Trust 568 474 12 913 Welltower Inc. Real Estate Investment Trust 1 004 1 379 23 384 Weyerhaeuser Company Ltd. 773 806
22 711 31 152 3.0Utilities 21 629 AES Corp. 426 475 7 697 Alliant Energy Corp. 406 495 7 647 Ameren Corporation 405 752 15 832 American Electric Power 995 1 824 5 650 American Water Works Co. Inc. 552 858 3 804 Atmos Energy Corp. 517 526 16 196 Centerpoint Energy Inc. 464 607 9 128 CMS Energy Corp. 373 692 10 430 Consolidated Edison Inc. 790 1 198 25 585 Dominion Energy Inc. 1 966 2 590 5 927 DTE Energy Company 557 992 23 256 Duke Energy Corp. 1 998 2 687 10 172 Edison International 637 898 5 928 Entergy Corp. 518 799 7 707 Evergy Inc. 557 607 10 316 Eversource Energy 570 1 023 31 093 Exelon Corp. 1 357 1 952 15 749 FirstEnergy Corporation 708 883 15 272 NextEra Energy Inc. 1 848 4 097 12 181 NiSource Inc. 381 459 8 341 NRG Energy Inc. 259 383
SCHEDULE OF INVESTMENT PORTFOLIO (in $000s)SCHEDULE OF INVESTMENT PORTFOLIO (in $000s)
June 30, 2019
The accompanying notes are an integral part of the financial statements.
SCHEDULE OF INVESTMENT PORTFOLIO (unaudited) (in $000s)
RBC U.S. INDEX FUND
Fair % of Net Holdings Security Cost Value Assets
Utilities (cont.) 3 667 Pinnacle West Capital Corp. $ 265 $ 452 22 533 PPL Corporation 797 915 16 312 Public Service Enterprise Group 725 1 256 8 812 Sempra Energy 927 1 586 33 190 Southern Co. 1 748 2 402 10 231 WEC Energy Group Inc. 586 1 117 16 596 Xcel Energy Inc. 662 1 293
TOTAL UNDERLYING FUNDS 9 111 9 085 0.9TOTAL INVESTMENTS $ 624 780 1 030 671 99.9OTHER NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS 1 171 0.1NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS $ 1 031 842 100.0
FINANCIAL STATEMENTS (unaudited)
The accompanying notes are an integral part of these financial statements.
RBC U.S. INDEX FUND
Statements of Financial Position (unaudited) (in $000s except per unit amounts)
(see note 2 in the generic notes)June 30
2019December 31
2018
ASSETSInvestments at fair value $ 1 030 671 $ 870 798Cash 867 3 519Subscriptions receivable 1 202 1 122Dividends receivable, interest accrued and other assets 721 881TOTAL ASSETS 1 033 461 876 320LIABILITIESDue to investment dealers 509 –Redemptions payable 588 531Accounts payable and accrued expenses 522 471TOTAL LIABILITIES EXCLUDING NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS 1 619 1 002NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS (“NAV”) $ 1 031 842 $ 875 318
Investments at cost $ 624 780 $ 564 733
NAV SERIES A $ 935 564 $ 809 725 SERIES F $ 96 277 $ 65 593 SERIES O $ 1 $ –NAV PER UNIT SERIES A $ 23.90 $ 21.11 SERIES F $ 14.18 $ 12.50 SERIES O $ 9.76 $ –
Statements of Comprehensive Income (unaudited) (in $000s except per unit amounts)
For the periods ended June 30 (see note 2 in the generic notes) 2019 2018
INCOME (see note 3 in the generic notes)Dividends $ 13 617 $ 8 274Interest for distribution purposes 22 5Income from investment trusts 686 391Derivative income 6 –Net realized gain (loss) on investments 7 733 5 731Change in unrealized gain (loss) on investments 99 826 45 836TOTAL NET GAIN (LOSS) ON INVESTMENTS AND DERIVATIVES 121 890 60 237Securities lending revenue (see note 7 in the generic notes) 38 33Net gain (loss) on foreign cash balances (150) 304TOTAL OTHER INCOME (LOSS) (112) 337TOTAL INCOME (LOSS) 121 778 60 574EXPENSES (see notes – Fund Specific Information)Management fees 2 256 2 008Administration fees 484 417Independent Review Committee costs 1 1GST/HST 281 251Transaction costs 12 4Withholding tax 1 937 1 616TOTAL EXPENSES 4 971 4 297INCREASE (DECREASE) IN NAV $ 116 807 $ 56 277INCREASE (DECREASE) IN NAV SERIES A $ 107 382 $ 53 452 SERIES F $ 9 425 $ 2 825 SERIES O $ – $ –INCREASE (DECREASE) IN NAV PER UNIT SERIES A $ 2.77 $ 1.43 SERIES F $ 1.58 $ 0.87 SERIES O $ (0.24) $ –
FINANCIAL STATEMENTS (unaudited)
The accompanying notes are an integral part of these financial statements.
RBC U.S. INDEX FUND
Statements of Cash Flow (unaudited) (in $000s)
For the periods ended June 30 (see note 2 in the generic notes) 2019 2018
CASH FLOWS FROM OPERATING ACTIVITIESIncrease (decrease) in NAV $ 116 807 $ 56 277ADJUSTMENTS TO RECONCILE NET CASH PROVIDED BY (USED IN) OPERATIONSInterest for distribution purposes – –Non-cash distributions from underlying funds – –Net realized loss (gain) on investments (7 733) (5 731)Change in unrealized loss (gain) on investments (99 826) (45 836)(Increase) decrease in accrued receivables 160 59Increase (decrease) in accrued payables 51 10(Increase) decrease in margin accounts – –Cost of investments purchased (146 094) (48 703)Proceeds from sale and maturity of investments 94 289 14 599NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (42 346) (29 325)CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issue of redeemable units 125 718 96 685Cash paid on redemption of redeemable units (86 024) (69 221)Distributions paid to holders of redeemable units – (1)NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES $ 39 694 $ 27 463Net increase (decrease) in cash for the period (2 652) (1 862)Cash (bank overdraft), beginning of period 3 519 3 496CASH (BANK OVERDRAFT), END OF PERIOD $ 867 $ 1 634
Interest received (paid) $ 22 $ 5Income received from investment trusts $ 614 $ 391Dividends received, net of withholding taxes $ 11 912 $ 6 717
FINANCIAL STATEMENTS (unaudited)
The accompanying notes are an integral part of these financial statements.
RBC U.S. INDEX FUND
Statements of Changes in NAV (unaudited) (in $000s)
For the periods ended June 30 (see note 2 in the generic notes)
Series A Series F Series O Total2019 2018 2019 2018 2019 2018 2019 2018
NAV AT BEGINNING OF PERIOD $ 809 725 $ 769 088 $ 65 593 $ 31 414 $ – $ – $ 875 318 $ 800 502INCREASE (DECREASE) IN NAV 107 382 53 452 9 425 2 825 – – 116 807 56 277Early redemption fees 1 1 – – – – 1 1Proceeds from redeemable units issued 108 049 87 779 29 448 19 670 1 – 137 498 107 449Reinvestments of distributions to holders of redeemable units – – – (1) – – – (1)Redemption of redeemable units (89 593) (75 733) (8 189) (4 468) – – (97 782) (80 201)NET INCREASE (DECREASE) FROM REDEEMABLE UNIT TRANSACTIONS 18 457 12 047 21 259 15 201 1 – 39 717 27 248Distributions from net income – – – – – – – –Distributions from net gains – – – – – – – –Distributions from capital – – – – – – – –TOTAL DISTRIBUTIONS TO HOLDERS OF REDEEMABLE UNITS – – – – – – – –NET INCREASE (DECREASE) IN NAV 125 839 65 499 30 684 18 026 1 – 156 524 83 525NAV AT END OF PERIOD $ 935 564 $ 834 587 $ 96 277 $ 49 440 $ 1 $ – $ 1 031 842 $ 884 027
NOTES TO FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION (unaudited)
Please see the generic notes at the back of the financial statements.
June 30, 2019
RBC U.S. INDEX FUND
General information (see note 1 in the generic notes)
The investment objective of the Fund is to provide long-term
capital growth by tracking the performance of the S&P 500
Total Return Index.
Series O units were started April 26, 2019.
Financial instrument risk and capital management (see note 5 in the generic notes)
Concentration risk (%)
The table below summarizes the Fund’s investment exposure
(after consideration of derivative products, if any) as at:
Investment mixJune 30
2019December 31
2018
Information Technology 21.4 20.6 Health Care 14.1 15.0 Financials 13.1 13.5 Communication Services 10.2 10.0 Consumer Discretionary 10.2 10.3 Industrials 9.4 8.8 Consumer Staples 7.3 7.2 Energy 5.1 5.2 Utilities 3.3 3.3 Real Estate 3.0 2.9 Materials 2.8 2.7 Cash/Other 0.1 0.5 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:
CurrencyJune 30
2019December 31
2018
United States dollar 100.0 100.0Total 100.0 100.0
As at June 30, 2019, 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 5.0%
(December 31, 2018 – 5.0%). 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:
June 30 2019
December 31 2018
S&P 500 Total Return Index (CAD) + or - 1.0 + or - 1.0
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
For the periods ended June 30, 2019 and December 31, 2018,
there were no transfers of financial instruments between
Level 1, Level 2 and Level 3.
Management fees and administration fees (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 Administration fees
Series A 0.50% 0.10%Series F 0.09% 0.10%Series O n/a* 0.02%
* Series O unitholders pay a negotiated management fee directly to RBC GAM for investment-counselling services.
NOTES TO FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION (unaudited)
Please see the generic notes at the back of the financial statements.
June 30, 2019
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:
June 30 2019
December 31 2018
Units held Series F 105 105 Series O 100 –Value of all units 2 1
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”).
June 30 2019
December 31 2018
NAV Ownership NAV Ownership
iShares Core S&P 500 ETF 0.9 – – –
Taxes ($000s) (see note 6 in the generic notes)
The non-capital and capital losses as at December 31, 2018
for the Fund were approximately:
Capital losses 21 020Non-capital losses –
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 June 30 (see note 2 in the generic notes) 2019 2018
Series AOpening units 38 355 37 021Issued number of units 4 675 4 090Reinvested number of units – – Redeemed number of units (3 888) (3 525)Ending number of units 39 142 37 586
Series FOpening units 5 248 2 553Issued number of units 2 136 1 546Reinvested number of units – – Redeemed number of units (595) (349)Ending number of units 6 789 3 750
RBC U.S. INDEX FUND
For the periods ended June 30 (see note 2 in the generic notes) 2019 2018
Series OOpening units – –Issued number of units – –Reinvested number of units – –Redeemed number of units – –Ending number of units – –
Transaction costs ($000s except %)
Transaction costs, including brokerage commissions, in
consideration of portfolio transactions for the periods ended:
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 and preferred shares 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.
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 – Options give the purchaser the right, but not the obligation, to buy (call) or sell (put) an underlying security or financial instrument at an agreed exercise or strike price during the specified period or on a specified date.
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.
Options purchased and options written (sold) are recorded as investments in the Statements of Financial Position. These investments are reported at fair value in the Statements of Financial Position, and unrealized gain or loss at the close of business on each valuation date is recorded in “Change in unrealized gain (loss) on investments” in the Statements of Comprehensive Income.
When an option is exercised and the underlying securities are acquired or delivered, the acquisition cost or sale proceeds are adjusted by the amount of the premium. When an option is closed the Fund will realize a gain or loss equal to the difference between the premium and the cost to close the position. When an option expires, gains or losses are realized equivalent to the amount of premiums received or paid, respectively. The net realized gains (losses) on written and purchased options are included in the Statements of Comprehensive Income in “Net realized gain (loss) on investments.”
GENERIC NOTES TO FINANCIAL STATEMENTS (unaudited)
June 30, 2019
(also see Fund Specific Information)
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. The receivable/payable on forward contracts is recorded separately in the Statements of Financial Position. Any unrealized gain or loss at the close of business on each valuation date is recorded as “Change in unrealized gain (loss) on investments” and realized gain or loss on foreign exchange contracts is included in “Derivative income” 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 “Derivative income” 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, as applicable. 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 “Derivative income” in the Statements
of Comprehensive Income. The receivable/payable on
futures contracts is recorded separately in the Statements of
Financial Position.
Credit Default Swap Contracts – Credit default swaps are
agreements between a protection buyer and protection
seller. The protection buyer pays a periodic fee in exchange
for a payment by the protection seller contingent on the
occurrence of a credit event, such as a default, bankruptcy
or restructuring, with respect to a referenced entity.
Periodic fees paid or received are recorded as “Interest for
distribution purposes” in the Statements of Comprehensive
Income. When the contract is terminated or expires, the
payments received or paid are recorded as “Derivative
income” in the Statements of Comprehensive Income.
Credit default swap contracts are valued based on quotations
from independent sources.
Underlying Funds – Underlying funds that are mutual funds are
valued at their respective NAV per unit from fund companies
on the relevant valuation dates and underlying funds that
are exchange-traded funds are valued at market close 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. Procedures are 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.
Management also has procedures where the Funds primarily
employ a market-based approach, which may use related
or comparable assets or liabilities, NAV per unit (for
of the Fund’s holdings and market events, diversifying its
investment portfolio within the constraints of its investment
objectives and, in some cases, periodically hedging certain risk
exposures through the use of derivatives. To assist in managing
risks, RBC GAM also uses internal guidelines, maintains a
governance structure that oversees each Fund’s investment
activities and monitors compliance with the Fund’s investment
strategies, internal guidelines and securities regulations.
Financial instrument risk, as applicable to a Fund, is disclosed
in its Notes to Financial Statements – Fund Specific Information.
These risks include a Fund’s direct risks and pro rata exposure to
the risks of underlying funds, as applicable.
Liquidity risk
Liquidity risk is the possibility that investments in a Fund
cannot be readily converted into cash when required. A Fund
is exposed to daily cash redemptions of redeemable units.
Liquidity risk is managed by investing the majority of a Fund’s
assets in investments that are traded in an active market and
that can be readily disposed. In accordance with securities
regulations, a Fund must maintain at least 90% of its assets in
liquid investments. In addition, a Fund aims to retain sufficient
cash and cash equivalent positions to maintain liquidity, and
has the ability to borrow up to 5% of its NAV for the purpose
of funding redemptions. All non-derivative financial liabilities,
other than redeemable units, are due within 90 days.
Credit risk
Credit risk is the risk that a loss could arise from a security
issuer or counterparty not being able to meet its financial
obligations. The carrying amount of investments and other
assets represents the maximum credit risk exposure as
disclosed in a Fund’s Statements of Financial Position. The
Funds measure credit risk and expected credit losses using
probability of default, exposure at default and loss given
default. Management considers both historical analysis and
forward-looking information in determining any expected
credit loss. All other receivables, amounts due from brokers,
cash and short-term deposits are held with counterparties
with a credit rating of AA/Aa or higher. Management
considers the probability of default to be close to zero as
the counterparties have a strong capacity to meet their
contractual obligations in the near term. As a result, no
loss allowance has been recognized based on 12-month
expected credit losses as any such impairment would be
wholly insignificant to the Funds. The fair value of fixed-
income and debt securities includes a consideration of the
GENERIC NOTES TO FINANCIAL STATEMENTS (unaudited)
June 30, 2019
(also see Fund Specific Information)
creditworthiness of the debt issuer. Credit risk exposure
to over-the-counter derivative instruments is based on a
Fund’s unrealized gain on the contractual obligations with
the counterparty. Credit risk exposure is mitigated for those
Funds participating in a securities lending program (see
note 7). RBC GAM monitors each Fund’s credit exposure and
counterparty ratings daily.
Concentration risk
Concentration risk arises as a result of net financial
instrument exposures to the same category, such as
geographical region, asset type, industry sector or market
segment. Financial instruments in the same category have
similar characteristics and may be affected similarly by
changes in economic or other conditions.
Interest rate risk
Interest rate risk is the risk that the fair value of a Fund’s
interest-bearing investments will fluctuate due to changes
in market interest rates. The value of fixed-income and debt
securities, such as bonds, debentures, mortgages or other
income-producing securities, is affected by interest rates.
Generally, the value of these securities increases if interest
rates fall and decreases if interest rates rise.
Currency risk
Currency risk is the risk that the value of investments
denominated in currencies, other than the functional
currency of a Fund, will fluctuate due to changes in foreign
exchange rates. The value of investments denominated in a
currency other than the functional currency is affected by
changes in the value of the functional currency in relation
to the value of the currency in which the investment is
denominated. When the value of the functional currency falls
in relation to foreign currencies, then the value of the foreign
investments rises. When the value of the functional currency
rises, the value of the foreign investments falls.
Other price risk
Other price risk is the risk that the value of financial
instruments will fluctuate as a result of changes in market
prices (other than those arising from interest rate or currency
risk), whether caused by factors specific to an individual
investment, its issuer, or all factors affecting all instruments
traded in a market or market segment.
6. Taxes
The Funds qualify as open-ended mutual fund trusts or unit
trusts under the Income Tax Act (Canada). In general, the
Funds are subject to income tax; however, no income tax
is payable on net income and/or net realized capital gains
which are distributed to unitholders. Since the Funds do
not record income taxes, the tax benefit of capital and
non-capital losses has not been reflected in the Statements
of Financial Position as a deferred income tax asset. In
addition, for mutual fund trusts, income taxes payable on net
realized capital gains are refundable on a formula basis when
units of the Funds are redeemed.
Capital losses are available to be carried forward indefinitely
and applied against future capital gains. Non-capital losses
may be carried forward to reduce future taxable income for
up to 20 years.
7. Securities lending revenueCertain of the Funds lend portfolio securities from time to time in order to earn additional income. Income from securities lending is included in the Statements of Comprehensive Income of a Fund. Each such Fund will have entered into a securities lending program with its custodian, RBC Investor Services Trust (“RBC IS”). The aggregate market value of all securities loaned by a Fund cannot exceed 50% of the assets of a Fund. The Fund receives collateral, with an approved credit rating of at least A, of at least 102% of the value of securities on loan. The Fund is indemnified by RBC IS for any collateral credit or market loss. As such, the credit risk associated with securities lending is considered minimal.
8. Administrative and other related-party transactions
Manager and Portfolio Manager
RBC GAM is an indirect wholly owned subsidiary of
Royal Bank of Canada (“Royal Bank”). RBC GAM is the
manager and portfolio manager of the Funds. RBC GAM is
responsible for the Funds’ day-to-day operations, provides
investment advice and portfolio management services to the
Funds and appoints distributors for the Funds. RBC GAM
is paid a management fee by the Funds as compensation
for its services. The management fee is calculated and
accrued daily as a percentage of the NAV of each series
of units of the Funds. No management fees are paid by
the Funds with respect to Series O units. Unitholders of
Series O units pay a negotiated fee directly to RBC GAM for
investment-counselling services.
GENERIC NOTES TO FINANCIAL STATEMENTS (unaudited)
June 30, 2019
(also see Fund Specific Information)
The Funds pay a fixed administration fee to RBC GAM. The
fixed administration fee is calculated and accrued daily as a
percentage of the NAV of each series of units of the Funds.
RBC GAM in turn pays certain operating expenses of the
Funds. These expenses include regulatory filing fees and
other day-to-day operating expenses including, but not
limited to, recordkeeping, accounting and fund valuation
costs, custody fees, audit and legal fees and the costs of
preparing and distributing annual and interim reports,
prospectuses, statements and investor communications.
Notwithstanding the fixed administration fee, the Funds
also pay certain operating expenses directly, including
the costs related to the Independent Review Committee
of the Funds, and the cost of any new government or
regulatory requirements introduced and any borrowing costs
(collectively, “other fund costs”), and taxes (including, but not
limited to, GST/HST). Effective January 1, 2020, RBC GAM,
not the Funds, will be responsible for the costs related to
the Independent Review Committee. Other fund costs will
be allocated proportionately to each series based upon the
relative NAV of each series. RBC GAM may, in some years
and in certain cases, absorb a portion of operating expenses.
The decision to absorb the operating expenses is reviewed
annually and determined at the discretion of RBC GAM,
without notice to unitholders.
Certain Funds may invest in units of other Funds managed
by RBC GAM or its affiliates (“underlying mutual funds”).
A Fund will not invest in units of an underlying mutual fund
if the Fund would be required to pay any management or
incentive fees in respect of that investment that a reasonable
person would believe duplicates a fee payable by the
underlying mutual fund for the same service. To the extent
a Fund invests in underlying funds managed by RBC GAM
or its affiliates, the fees and expenses payable by the
underlying funds are in addition to the fees and expenses
payable by the Fund. However, a Fund may only invest in
one or more underlying funds provided that no management
fees or incentive fees are payable that would duplicate a
fee payable by the underlying fund for the same service.
The Fund’s ownership interest in underlying mutual funds
is disclosed in the Notes to Financial Statements – Fund
Specific Information.
RBC GAM or its affiliates may earn fees and spreads in connection with various services provided to, or transactions with, the Funds, such as banking, brokerage, securities lending, foreign exchange and derivatives transactions.
RBC GAM or its affiliates may earn a foreign exchange spread when unitholders switch between series of funds denominated in different currencies. The Funds also maintain bank accounts and overdraft provisions with Royal Bank for which Royal Bank may earn a fee. Affiliates of RBC GAM that provide services to the Funds in the course of their normal business, all of which are wholly owned subsidiaries of Royal Bank of Canada, are discussed below.
Sub-Advisors
RBC Global Asset Management (U.S.) Inc. is the sub-advisor
for the RBC $U.S. Investment Grade Corporate Bond 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 and Phillips,
Hager & North U.S. Multi-Style All-Cap Equity Fund (for a
portion of the Fund). RBC Global Asset Management (UK)
Limited is the sub-advisor for the RBC Global Bond Fund
(for a portion of the Fund), RBC Global Corporate Bond
Fund (for a portion of the Fund), RBC U.S. Monthly Income
Fund (for a portion of the Fund), RBC Balanced Fund (for
the European equity portion of the Fund), RBC Global
Balanced Fund (for the European equity portion of the Fund),
RBC International Dividend Growth Fund, RBC International
Equity Fund (for the European equity portion of the Fund),
RBC European Dividend Fund, RBC European Equity
Fund, RBC European Mid-Cap 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 Vision Global Equity Fund, RBC Vision Fossil Fuel
Free Global Equity Fund, Phillips, Hager & North Overseas
Equity Fund and Phillips, Hager & North Global Equity
Fund. RBC Investment Management (Asia) Limited is the
sub-advisor for the RBC Balanced Fund (for the Asian equity
portion of the Fund), RBC Global Balanced Fund (for the
Asian equity portion of the Fund), RBC Vision Balanced Fund
(for the Asian equity portion of the Fund), RBC International
Dividend Growth Fund (for the Asian equity portion of the
Fund), RBC International Equity Fund (for the Asian equity
portion of the Fund), RBC Asian Equity Fund, RBC Asia
Pacific Ex-Japan Equity Fund and RBC Japanese Equity Fund.
BlueBay Asset Management LLP is the sub-advisor of the
BlueBay Global Monthly Income Bond Fund, BlueBay Global
Sovereign Bond Fund (Canada), BlueBay Global Investment
GENERIC NOTES TO FINANCIAL STATEMENTS (unaudited)
June 30, 2019
(also see Fund Specific Information)
Grade Corporate Bond Fund (Canada), BlueBay European
High Yield Bond Fund (Canada), BlueBay Emerging Markets
Bond Fund (Canada), BlueBay Emerging Markets Local
Currency Bond Fund (Canada), BlueBay Emerging Markets
Corporate Bond Fund, BlueBay Global Convertible Bond
Fund (Canada) and BlueBay $U.S. Global Convertible Bond
Fund (Canada).
The sub-advisors earn a fee which is calculated and accrued
daily as a percentage of the NAV of each series of units of the
Funds. The sub-advisors are paid by the manager from the
management fee paid by the Funds.
Trustee
RBC GAM is the trustee for the Funds governed by the laws of the Province of Ontario. RBC IS is the trustee for the Funds governed by the laws of the Province of British Columbia. The trustee holds title to the Funds’ property on behalf of the unitholders. The trustee earns a fee, which is paid by the manager from the fixed administration fee paid by the Funds.
Distributors
RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., RBC Dominion Securities Inc. and PH&N IF are principal distributors of, or may distribute certain series of units of, the Funds. Dealers receive an ongoing commission based on the total value of their clients’ Series A, Advisor Series, Advisor T5 Series, Series T5, Series T8, Series H and Series D units.
Custodian
RBC IS is the custodian and holds the assets of the Funds.
RBC IS earns a fee as the custodian, which is paid by the
manager from the fixed administration fee paid by the Funds.
Registrars
RBC GAM, RBC IS or Royal Bank (or a combination thereof)
are the registrars of the Funds and keep records of who owns
the units of the Funds. The registrars also process orders and
issue account statements. The registrars earn a fee, which is
paid by the manager from the fixed administration fee paid
by the Funds.
Brokers and Dealers
The Funds have established or may establish standard
brokerage agreements and dealing agreements at
market rates with related parties such as RBC Dominion
Securities Inc., RBC Capital Markets, LLC, RBC Europe
Limited, NBC Securities Inc. and Royal Bank of Canada.
Securities Lending Agent
To the extent a Fund may engage in securities lending
transactions, RBC IS may act as the Fund’s securities lending
agent. Any revenue earned on such securities lending is split
between the Fund and the securities lending agent.
Other Related-Party Transactions
Pursuant to applicable securities legislation, the Funds
relied on the standing instructions from the Independent
Review Committee with respect to one or more of the
following transactions:
Related-Party Trading Activities(a) trades in securities of Royal Bank;
(b) investments in the securities of issuers for which
a related-party dealer acted as an underwriter during
the distribution of such securities and the 60-day period
following the conclusion of such distribution of the
underwritten securities to the public;
(c) purchases of equity and debt securities from or sales of
equity or debt securities to a related-party dealer, where it
acted as principal; and
Inter-Fund Trading(d) purchases or sales of securities of an issuer from or to
another investment fund or managed account managed
by RBC GAM.
The applicable standing instructions require that Related-Party
Trading Activities and Inter-Fund Trading be conducted in
accordance with RBC GAM policy and that RBC GAM advise
the Independent Review Committee of a material breach
of any standing instruction. RBC GAM policy requires that
an investment decision in respect of Related-Party Trading
Activities (i) is made free from any influence of Royal Bank
or its associates or affiliates and without taking into account
any consideration relevant to Royal Bank or its affiliates
or associates, (ii) represents the business judgment of the
portfolio manager, uninfluenced by considerations other
than the best interests of the Funds, (iii) is in compliance with
RBC GAM policies and procedures, and (iv) achieves a fair and
reasonable result for the Funds. RBC GAM policy requires that
an investment decision in respect of Inter-Fund Trading is in
