Interim Financial Statements the Accompanying Interim Financial Statements Have Not Been Reviewed by the External Auditors of the Funds

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.

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

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. 2019 INTERIM FINANCIAL STATEMENTS

SCHEDULE OF INVESTMENT PORTFOLIO (unaudited) (in $000s) PHILLIPS, HAGER & NORTH CANADIAN EQUITY UNDERLYING FUND II

June 30, 2019

Fair % of Net Fair % of Net Holdings Security Cost Value Assets Holdings Security Cost Value Assets CANADIAN EQUITIES Industrials Communication Services 2 111 300 Bombardier Inc., Class B $ 9 285 $ 4 645 897 500 Quebecor Inc., Class B $ 20 508 $ 27 993 619 000 Canadian National Railway Co. 63 520 75 023 149 700 Rogers Communications Inc., 138 600 Canadian Pacific Railway Ltd. 37 364 42 748 Class B 9 940 10 494 566 549 Finning International Inc. 12 344 13 524 1 527 400 Shaw Communications Inc., 199 376 Ritchie Bros. Auctioneers Inc. 8 341 8 683 Class B 41 783 40 812 630 500 SNC-Lavalin Group Inc. 30 847 16 696 447 500 TELUS Corp. 20 816 21 663 835 340 Stantec Inc. 27 275 26 255 93 047 100 962 4.6 264 270 Thomson Reuters Corp. 16 313 22 326 Consumer Discretionary 244 000 Waste Connections Inc. 22 312 30 524 1 025 300 Dollarama Inc. 43 772 47 236 227 601 240 424 10.9 502 230 Gildan Activewear Inc., Class A 20 089 25 453 Information Technology 283 000 Restaurant Brands 563 100 CGI Inc. 42 410 56 693 International Inc. 21 667 25 773 17 100 Constellation Software Inc. 16 107 21 106 874 300 The Stars Group Inc 21 350 19 541 695 610 Open Text Corp. 31 900 37 591 106 878 118 003 5.4 90 417 115 390 5.2 Consumer Staples Materials 833 900 Alimentation Couche-Tard Inc. 51 694 68 722 267 070 Agnico Eagle Mines Ltd. 12 230 17 931 51 694 68 722 3.1 451 659 Alamos Gold Inc., Class A 3 505 3 568 Energy 1 934 780 B2Gold Corp. 7 013 7 700 2 755 168 ARC Resources Ltd. 29 046 17 661 988 280 Barrick Gold Corp. 17 978 20 428 350 300 Cameco Corp. 4 526 4 918 192 310 Belo Sun Mining Corp. 154 45 1 427 413 Canadian Natural Resources Ltd. 56 233 50 401 381 800 CCL Industries, Class B 21 426 24 519 1 444 589 Cenovus Energy Inc. 17 709 16 685 370 220 Continental Gold Inc. 1 105 1 403 2 165 300 Enbridge Inc. 103 927 102 419 442 410 Detour Gold Corp. 6 193 7 309 1 222 400 Encana Corp. 11 012 8 215 240 423 Endeavour Mining Corp. 4 925 5 133 628 211 Keyera Corp. 20 060 21 171 1 614 244 First Quantum Minerals Ltd. 23 663 20 081 576 700 Pembina Pipeline Corp. 24 946 28 114 118 660 Franco-Nevada Corp. 9 911 13 189 297 121 PrairieSky Royalty Ltd. 7 366 5 467 435 370 Kinross Gold Corp. 2 270 2 203 1 664 300 Suncor Energy Inc. 75 433 67 987 391 360 Kirkland Lake Gold Ltd. 6 846 22 081 680 274 TC Energy Corp. 38 207 44 163 738 448 Nutrien Ltd. 51 535 51 728 765 599 Tourmaline Oil Corp. 17 320 12 770 798 310 OceanaGold Corp. 3 165 2 858 365 750 Semafo Inc. 1 356 1 887 405 785 379 971 17.3 458 947 Teck Resources Ltd., Class B 14 258 13 869 Financials 273 233 Torex Gold Resources Inc. 3 972 3 678 706 100 Bank of Montreal 67 168 69 847 412 830 Wheaton Precious Metals Corp. 10 985 13 074 1 194 200 Bank of Nova Scotia 88 398 84 000 1 324 000 Brookfield Asset 202 490 232 684 10.6 Management Inc., Class A 64 910 82 949 Real Estate 218 600 Canadian Imperial 1 370 529 Brookfield Property Partners LP 35 386 33 907 Bank of Commerce 24 012 22 511 743 600 First Capital Realty Inc. 15 222 16 255 3 466 200 Element Fleet Management Corp. 28 941 33 137 50 608 50 162 2.3 46 500 Fairfax Financial Holdings Ltd. 28 398 29 888 228 420 Intact Financial Corp. 23 354 27 643 2 836 900 Manulife Financial Corporation 62 794 67 518 1 494 300 Royal Bank of Canada* 132 360 155 512 937 400 Sun Life Financial Inc. 47 586 50 835 1 919 900 Toronto-Dominion Bank 119 193 146 911 687 114 770 751 35.0

The accompanying notes are an integral part of the financial statements. SCHEDULE OF INVESTMENT PORTFOLIO (unaudited) (in $000s) PHILLIPS, HAGER & NORTH CANADIAN EQUITY UNDERLYING FUND II

June 30, 2019

Fair % of Net Holdings Security Cost Value Assets Utilities 315 753 Brookfield Infrastructure Partners LP $ 15 728 $ 17 723 486 147 Fortis Inc. 21 334 25 139 37 062 42 862 1.9 TOTAL CANADIAN EQUITIES 1 952 696 2 119 931 96.3 SHORT-TERM INVESTMENTS† 65 209 65 209 3.0 TOTAL INVESTMENTS $ 2 017 905 2 185 140 99.3 OTHER NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS 14 506 0.7 NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS $ 2 199 646 100.0

* Investment in related party (see note 8 in the generic notes). † Short-term investments, which may be made up of treasury bills, commercial paper, term deposits and discount notes, earn interest at rates ranging from 1.70% to 1.89% and mature between July 2, 2019 and August 2, 2019.

The accompanying notes are an integral part of the financial statements. FINANCIAL STATEMENTS (unaudited) PHILLIPS, HAGER & NORTH CANADIAN EQUITY UNDERLYING FUND II

Statements of Financial Position (unaudited) Statements of Comprehensive Income (unaudited) (in $000s except per unit amounts) (in $000s except per unit amounts)

June 30 December 31 For the periods ended June 30 (see note 2 in the generic notes) 2019 2018 (see note 2 in the generic notes) 2019 2018 ASSETS INCOME (see note 3 in the generic notes) Investments at fair value $ 2 185 140 $ 1 863 483 Dividends $ 31 710 $ 24 301 Cash 1 859 1 757 Interest for distribution purposes 475 193 Due from investment dealers – 150 Income from investment trusts – 220 Subscriptions receivable 9 031 8 Net realized gain (loss) on investments 473 14 692 Dividends receivable, interest accrued Change in unrealized gain (loss) on investments 268 335 (8 856) and other assets 3 833 4 150 TOTAL NET GAIN (LOSS) ON TOTAL ASSETS 2 199 863 1 869 548 INVESTMENTS AND DERIVATIVES 300 993 30 550 LIABILITIES Other income (loss) 1 020 – Redemptions payable 174 120 Securities lending revenue Distributions payable – 10 (see note 7 in the generic notes) 72 64 Accounts payable and accrued expenses 43 37 Net gain (loss) on foreign cash balances (40) 10 TOTAL LIABILITIES EXCLUDING NET ASSETS TOTAL OTHER INCOME (LOSS) 1 052 74 ATTRIBUTABLE TO HOLDERS OF TOTAL INCOME (LOSS) 302 045 30 624 REDEEMABLE UNITS 217 167 EXPENSES (see notes – Fund Specific Information) NET ASSETS ATTRIBUTABLE TO HOLDERS Management fees 8 – OF REDEEMABLE UNITS (“NAV”) $ 2 199 646 $ 1 869 381 Administration fees 211 171 Independent Review Committee costs 1 1 Investments at cost $ 2 017 905 $ 1 964 583 GST/HST 27 22 Transaction costs 904 1 410 NAV TOTAL EXPENSES 1 151 1 604 SERIES F $ 2 715 $ 1 327 INCREASE (DECREASE) IN NAV $ 300 894 $ 29 020 SERIES O $ 2 196 931 $ 1 868 054 INCREASE (DECREASE) IN NAV NAV PER UNIT SERIES F $ 305 $ – SERIES F $ 9.91 $ 8.57 SERIES O $ 300 589 $ 29 020 SERIES O $ 9.84 $ 8.48 INCREASE (DECREASE) IN NAV PER UNIT SERIES F $ 1.11 $ – SERIES O $ 1.36 $ 0.16

The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS (unaudited) PHILLIPS, HAGER & NORTH CANADIAN EQUITY UNDERLYING FUND II

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 ACTIVITIES Increase (decrease) in NAV $ 300 894 $ 29 020 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 (473) (14 692) Change in unrealized loss (gain) on investments (268 335) 8 856 (Increase) decrease in accrued receivables 317 (523) Increase (decrease) in accrued payables 6 – (Increase) decrease in margin accounts – – Cost of investments purchased (1 141 340) (1 467 882) Proceeds from sale and maturity of investments 1 088 641 1 239 204 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (20 290) (206 017) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of redeemable units 51 625 223 788 Cash paid on redemption of redeemable units (31 223) (17 295) Distributions paid to holders of redeemable units (10) – NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES $ 20 392 $ 206 493 Net increase (decrease) in cash for the period 102 476 Cash (bank overdraft), beginning of period 1 757 1 323 CASH (BANK OVERDRAFT), END OF PERIOD $ 1 859 $ 1 799

Interest received (paid) $ 431 $ 178 Income received from investment trusts $ – $ 220 Dividends received, net of withholding taxes $ 32 070 $ 23 792

The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS (unaudited) PHILLIPS, HAGER & NORTH CANADIAN EQUITY UNDERLYING FUND II

Statements of Changes in NAV (unaudited) (in $000s)

For the periods ended June 30 Series F Series O Total (see note 2 in the generic notes) 2019 2018 2019 2018 2019 2018 NAV AT BEGINNING OF PERIOD $ 1 327 $ – $ 1 868 054 $ 1 676 509 $ 1 869 381 $ 1 676 509 INCREASE (DECREASE) IN NAV 305 – 300 589 29 020 300 894 29 020 Early redemption fees – – – – – – Proceeds from redeemable units issued 3 466 – 60 648 222 822 64 114 222 822 Reinvestments of distributions to holders of redeemable units – – – – – – Redemption of redeemable units (2 383) – (32 360) (17 374) (34 743) (17 374) NET INCREASE (DECREASE) FROM REDEEMABLE UNIT TRANSACTIONS 1 083 – 28 288 205 448 29 371 205 448 Distributions from net income – – – – – – Distributions from net gains – – – – – – Distributions from capital – – – – – – TOTAL DISTRIBUTIONS TO HOLDERS OF REDEEMABLE UNITS – – – – – – NET INCREASE (DECREASE) IN NAV 1 388 – 328 877 234 468 330 265 234 468 NAV AT END OF PERIOD $ 2 715 $ – $ 2 196 931 $ 1 910 977 $ 2 199 646 $ 1 910 977

The accompanying notes are an integral part of these financial statements. NOTES TO FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION (unaudited) PHILLIPS, HAGER & NORTH CANADIAN EQUITY UNDERLYING FUND II

June 30, 2019

General information (see note 1 in the generic notes) Fair value hierarchy ($000s except % amounts) The investment objective of the Fund is to provide (see note 3 in the generic notes) significant long-term capital growth by investing primarily The following is a summary of the inputs used as of in a well-diversified portfolio of Canadian common stocks. June 30, 2019 and December 31, 2018. The Fund is expected to be used primarily as an underlying June 30, 2019 Level 1 Level 2 Level 3 Total fund for other mutual funds but may also be sold directly to Equities 2 119 931 – – 2 119 931 other investors. Underlying funds – – – – Fixed-income Series F units were started August 16, 2018. and debt securities – – – – Short-term investments – 65 209 – 65 209 Financial instrument risk and capital management Derivatives – assets – – – – (see note 5 in the generic notes) Derivatives – liabilities – – – – Concentration risk (%) Total financial instruments 2 119 931 65 209 – 2 185 140 The table below summarizes the Fund’s investment exposure % of total portfolio 97.0 3.0 – 100.0 (after consideration of derivative products, if any) as at: December 31, 2018 Level 1 Level 2 Level 3 Total June 30 December 31 Investment mix 2019 2018 Equities 1 840 024 – – 1 840 024 Financials 35.0 36.1 Underlying funds – – – – Energy 17.3 20.5 Fixed-income Industrials 10.9 11.9 and debt securities – – – – Materials 10.6 10.4 Short-term investments – 23 459 – 23 459 Consumer Discretionary 5.4 3.6 Derivatives – assets – – – – Information Technology 5.2 4.0 Derivatives – liabilities – – – – Communication Services 4.6 4.7 Total financial instruments 1 840 024 23 459 – 1 863 483 Consumer Staples 3.1 2.8 % of total portfolio 98.7 1.3 – 100.0 Real Estate 2.3 2.1 For the periods ended June 30, 2019 and December 31, 2018, Utilities 1.9 2.3 Cash/Other 3.7 1.6 there were no transfers of financial instruments between Total 100.0 100.0 Level 1, Level 2 and Level 3.

Other price risk (% impact on NAV) Management fees and administration fees The table below shows the impact of a 1% change in the (see note 8 in the generic notes) broad-based index (noted below) on the Fund’s NAV, using a Management fees and administration fees of each series 36-month historical correlation of data of the Fund’s return of the Fund are payable to RBC GAM and calculated at the and the index, with all other factors kept constant, as at: following annual percentages, before GST/HST, of the daily NAV of each series of the Fund. June 30 December 31 2019 2018 Management fees Administration fees S&P/TSX Capped Composite Series F 0.60% 0.10% Total Return Index + or - 1.0 + or - 1.0 Series O n/a* 0.02% Since historical correlation may not be representative of * Series O unitholders pay a negotiated management fee directly to RBC GAM for future correlation, actual results could differ from this investment-counselling services. sensitivity analysis and the difference could be material.

Please see the generic notes at the back of the financial statements. NOTES TO FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION (unaudited) PHILLIPS, HAGER & NORTH CANADIAN EQUITY UNDERLYING FUND II

June 30, 2019

Investments by related parties Securities lending revenue ($000s except %) ($000s except unit amounts) (see note 7 in the generic notes) Royal Bank of Canada, or one of its subsidiaries, held the Fair value of securities on loan and collateral received as at: following investments in the Fund as at: June 30 June 30 2019 2018 June 30 December 31 2019 2018 Fair value of securities loaned 173 536 86 912 Units held Fair value of collateral received 177 006 88 650 Series F 155 155 Series O 109 109 The table below provides a reconciliation of the gross revenue Value of all units 3 2 generated from the securities lending transactions of the Fund to the securities lending revenue disclosed in the Statements of Taxes ($000s) (see note 6 in the generic notes) Comprehensive Income. The Fund had no capital or non-capital losses as at June 30 June 30 December 31, 2018. 2019 2018 $ % $ % Redeemable units (000s) Gross revenue 97 100 87 100 There is no limitation on the number of units available for RBC IS (paid) (24) (25) (22) (25) Tax withheld (1) (1) (1) (1) issue. Units are purchased and redeemed at the NAV per unit. Fund revenue 72 74 64 74 For the periods ended June 30 (see note 2 in the generic notes) 2019 2018 Investments by other related investment funds (%) Series F (see note 8 in the generic notes) Opening units 155 – Issued number of units 366 – The table below summarizes, as a percentage, the NAV of the Reinvested number of units – – Fund owned by other related investment funds as at: Redeemed number of units (247) – June 30 December 31 Ending number of units 274 – 2019 2018 Series O RBC Select Aggressive Growth Portfolio 3.3 3.3 Opening units 220 199 172 285 RBC Select Balanced Portfolio 48.1 46.7 Issued number of units 6 413 23 720 RBC Select Conservative Portfolio 24.7 24.8 Reinvested number of units – – RBC Select Growth Portfolio 6.3 6.3 Redeemed number of units (3 423) (1 828) RBC Select Very Conservative Portfolio 9.0 9.1 Ending number of units 223 189 194 177 Total 91.4 90.2

Transaction costs ($000s except %) Transaction costs, including brokerage commissions, in consideration of portfolio transactions for the periods ended:

June 30 June 30 2019 2018 $ % $ % Total transaction costs 904 100 1 410 100 Related-party brokerage commissions* 122 13 157 11 Commission arrangements† 55 6 77 5

* 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 (unaudited) (also see Fund Specific Information)

June 30, 2019

1. The Funds Series I units have no sales charges, have lower fees than The Funds (“Fund” or “Funds”) are open-ended mutual Series F units, Series FT5 units and Series FT8 units and fund trusts governed by the laws of the Province of Ontario are only available to investors who invest and maintain or British Columbia. RBC GAM is the manager and portfolio the required minimum balance and who have accounts manager of the Funds and its head office is located at with dealers who have signed a fee-based agreement with 155 Wellington Street West, 22nd Floor, Toronto, Ontario. RBC GAM. RBC GAM is also the trustee of those Funds governed by the Series N units are only available to related mutual funds. laws of the Province of Ontario. These financial statements were approved for issuance by the Board of Directors of Series O units are only available to large private or RBC GAM on August 8, 2019. institutional investors or dealers. No management fees are payable by the Funds in respect to Series O units. The Funds may issue an unlimited number of units in some Unitholders pay a negotiated fee directly to RBC GAM for or all of Series A, Advisor Series, Advisor T5 Series, Series T5, investment-counselling services. Series T8, Series H, Series D, Series DZ, Series F, Series FT5, Series FT8, Series I, Series N and Series O. 2. Financial period

Series A units have no sales charges and are available to all The information provided in these financial statements and investors through authorized dealers. notes thereto is as at June 30, 2019 and December 31, 2018, as applicable, and for the six-month periods ended June 30, 2019 Advisor Series units and Advisor T5 Series units are available and June 30, 2018, as applicable, except for Funds or series to all investors through authorized dealers with an initial established during either period, in which case the information sales charge or low-load sales charge option. For certain of for the Fund, or series, is provided for the period from the start the Funds, Advisor Series units and Advisor T5 Series units are date as described in the Notes to Financial Statements – Fund available with a deferred sales charge option. Under the initial Specific Information of the Fund. sales charge option, investors pay a sales charge ranging from 0% to 5% of the amount invested. Under the deferred sales 3. Summary of significant accounting policies charge or low-load sales charge option, sales charges may be These financial statements have been prepared in applicable, as described in the Simplified Prospectus. compliance with International Financial Reporting Standards (“IFRS”) and in accordance with International Accounting Series T5 units and Series T8 units have no sales charges and Standard (“IAS”) 34 – Interim Financial Reporting, as issued are available to all investors through authorized dealers. by the International Accounting Standards Board (“IASB”). Series H units have no sales charges, have lower fees than The significant accounting policies of the Funds, which are Series A units and are only available to investors who invest investment entities, are as follows: and maintain the required minimum balance through Adoption of New Accounting Standards Effective authorized dealers. January 1, 2018, the Funds adopted IFRS 9 Financial Series D units and Series DZ units have no sales charges Instruments. The new standard requires financial assets to and have lower fees than Series A units. Series D units and be classified as amortized cost and fair value, with changes Series DZ units may be available to investors who have in fair value through profit and loss (“FVTPL”) or fair value accounts with RBC Direct Investing Inc., Phillips, Hager & through other comprehensive income (“FVOCI”) based on North Investment Funds Ltd. (“PH&N IF”) or certain other the entity’s business model for managing financial assets authorized dealers (primarily discount brokers). and the contractual cash flow characteristics of the financial Series F units, Series FT5 units and Series FT8 units have no assets. Assessment and decision on the business model sales charges and have lower fees than Series A units. Series F approach used is an accounting judgment. IFRS 9 also units, Series FT5 units and Series FT8 units are only available introduces a new expected credit loss impairment model. to investors who have fee-based accounts with their dealer. The adoption of IFRS 9 has been applied retrospectively without the use of hindsight and did not result in a change to the measurement of financial instruments, in either the current or comparative period. The Funds’ financial assets GENERIC NOTES TO FINANCIAL STATEMENTS (unaudited) (also see Fund Specific Information)

June 30, 2019 previously designated at FVTPL under IAS 39 Financial Classification of Redeemable Units The Funds have multiple Instruments are now mandatorily classified and measured at features across the different series of the Funds. Consequently, FVTPL. The Funds’ financial assets and liabilities previously the Funds’ outstanding redeemable units are classified as classified as FVTPL under the held for trading category financial liabilities in accordance with the requirements of continue to be classified as held for trading and measured at IAS 32 Financial Instruments: Presentation. FVTPL. Other financial assets and liabilities will continue to Unconsolidated Structured Entities The Funds may invest in be measured at amortized cost. There was no material impact other Funds and exchange-traded funds (“ETFs”) managed on the adoption of the new impairment model. by the manager or an affiliate of the manager (“sponsored In addition, certain comparative figures in the Statements funds”) and may invest in other funds and ETFs managed of Comprehensive Income have been revised to meet the by unaffiliated entities (“unsponsored funds”); collectively, disclosure requirements on initial application of IFRS 9. “underlying funds.” The underlying funds are determined to Amounts previously recorded as “Net gain (loss) on foreign be unconsolidated structured entities, as decision making currencies and other net assets,” “Other derivatives” and in the underlying fund is not governed by the voting rights “Net gain (loss) from futures contracts” are now recorded or other similar rights held by the Fund. The investments as “Derivative income.” And certain amounts previously in underlying funds are subject to the terms and conditions recorded as “Other income (loss)” are now recorded as of the offering documents of the respective underlying “Income from investment trusts.” funds and are susceptible to market price risk arising from uncertainties about future values of those underlying funds. Classification and Measurement of Financial Assets, The underlying funds’ objectives are generally to achieve Liabilities and Derivatives Each of the Funds classify long-term capital appreciation and/or current income by their investment portfolio based on the business model investing in a portfolio of securities and other funds in line for managing the portfolio and the contractual cash flow with each of their documented investment strategies. The characteristics. The investment portfolio of financial assets underlying funds apply various investment strategies to and liabilities is managed and performance is evaluated on accomplish their respective investment objectives. a fair value basis. The contractual cash flows of the Funds’ debt securities that are solely principal and interest are The underlying funds finance their operations by issuing neither held for the purpose of collecting contractual cash redeemable units which are puttable at the unitholder’s flows nor held both for collecting contractual cash flows option, and entitle the unitholder to a proportional stake in and for sale. The collection of contractual cash flows is only the respective underlying funds’ NAV. incidental to achieving the Funds’ business model objectives. The Funds do not consolidate their investment in underlying Consequently, all investments are measured at FVTPL. funds but account for these investments at fair value. The Derivative assets and liabilities are also measured at FVTPL. manager has determined that the Funds are investment The Funds’ obligation for net assets attributable to holders entities in accordance with IFRS 10 Consolidated Financial of redeemable units represents a financial liability and is Statements, since the Funds meet the following criteria: measured at the redemption amount, which approximates (i) The Funds obtain capital from one or more investors for fair value as of the reporting date. All other financial assets the purpose of providing those investors with investment and liabilities are measured at amortized cost. management services, Offsetting Financial Assets and Liabilities In the normal (ii) The Funds commit to their investors that their business course of business, the Funds may enter into various purpose is to invest funds solely for the returns from International Swaps and Derivatives Association master capital appreciation, investment income or both, and netting agreements or other similar arrangements with certain counterparties that allow for related amounts to (iii) The Funds measure and evaluate the performance of be offset in certain circumstances, such as bankruptcy or substantially all of their investments on a fair value basis. termination of contracts. Offsetting information, where applicable, is presented in the Notes to Financial Statements – Fund Specific Information. GENERIC NOTES TO FINANCIAL STATEMENTS (unaudited) (also see Fund Specific Information)

June 30, 2019

Therefore, the fair value of investments in the underlying Equities – Common shares and preferred shares are valued at funds is included in the Schedule of Investment Portfolio the closing price recorded by the security exchange on which and included in “Investments at fair value” in the Funds’ the security is principally traded. In circumstances where the Statements of Financial Position. The change in fair value closing price is not within the bid-ask spread, management will of the investment held in the underlying funds is included determine the points within the bid-ask spread that are most in “Change in unrealized gain (loss) on investments” in the representative of the fair value. Statements of Comprehensive Income. Fixed-Income and Debt Securities – Bonds, mortgage-backed Certain Funds may invest in mortgage-related or other securities, loans and debentures are valued at the closing asset-backed securities. These securities include commercial price quoted by major dealers or independent pricing vendors mortgage-backed securities, asset-backed securities, in such securities. collateralized debt obligations and other securities that NHA-approved mortgages are valued at an amount, which directly or indirectly represent a participation in, or are produces a yield equivalent to the prevailing rate of return on securitized by and payable from, mortgage loans on real mortgages of similar type and term. property. Mortgage-related securities are created from pools of residential or commercial mortgage loans while Short-Term Investments – Short-term investments are valued at asset-backed securities are created from many types of fair value, which is approximated at cost plus accrued interest. assets, including auto loans, credit card receivables, home Options – Options give the purchaser the right, but not the equity loans and student loans. The Funds account for these obligation, to buy (call) or sell (put) an underlying security investments at fair value. The fair value of such securities, as or financial instrument at an agreed exercise or strike price disclosed in the Schedule of Investment Portfolio, represents during the specified period or on a specified date. the maximum exposure to losses at that date. Listed options are valued at the closing price on the recognized Determination of Fair Value The fair value of a financial exchange on which the option is traded. In circumstances instrument is the amount at which the financial instrument where the closing price is not within the bid-ask spread, could be exchanged in an arm’s-length transaction between management will determine the points within the knowledgeable and willing parties under no compulsion to bid-ask spread that are most representative of the fair value. act. In determining fair value, a three-tier hierarchy based on Options purchased and options written (sold) are recorded inputs is used to value the Funds’ financial instruments. as investments in the Statements of Financial Position. These The hierarchy of inputs is summarized below: investments are reported at fair value in the Statements of Level 1 – quoted prices (unadjusted) in active markets for Financial Position, and unrealized gain or loss at the close identical assets or liabilities; of business on each valuation date is recorded in “Change in unrealized gain (loss) on investments” in the Statements of Level 2 – inputs other than quoted prices included in Comprehensive Income. Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices), When an option is exercised and the underlying securities including broker quotes, vendor prices and vendor fair value are acquired or delivered, the acquisition cost or sale factors; and proceeds are adjusted by the amount of the premium. When an option is closed the Fund will realize a gain or Level 3 – inputs for the asset or liability that are not based on loss equal to the difference between the premium and the observable market data (unobservable inputs). cost to close the position. When an option expires, gains or Changes in valuation methods may result in transfers into or losses are realized equivalent to the amount of premiums out of an investment’s assigned level. received or paid, respectively. The net realized gains (losses) on written and purchased options are included in the The three-tier hierarchy of investments and derivatives is Statements of Comprehensive Income in “Net realized gain included in Notes to Financial Statements – Fund Specific (loss) on investments.” Information.

Investments and derivatives are recorded at fair value, which is determined as follows: GENERIC NOTES TO FINANCIAL STATEMENTS (unaudited) (also see Fund Specific Information)

June 30, 2019

Warrants – Warrants are valued using a recognized option Credit Default Swap Contracts – Credit default swaps are pricing model, which includes factors such as the terms of agreements between a protection buyer and protection the warrant, time value of money and volatility inputs that are seller. The protection buyer pays a periodic fee in exchange significant to such valuation. for a payment by the protection seller contingent on the occurrence of a credit event, such as a default, bankruptcy Forward Contracts – Forward contracts are valued at the gain or or restructuring, with respect to a referenced entity. loss that would arise as a result of closing the position at the Periodic fees paid or received are recorded as “Interest for valuation date. The receivable/payable on forward contracts is recorded separately in the Statements of Financial Position. distribution purposes” in the Statements of Comprehensive Any unrealized gain or loss at the close of business on each Income. When the contract is terminated or expires, the valuation date is recorded as “Change in unrealized gain (loss) payments received or paid are recorded as “Derivative on investments” and realized gain or loss on foreign exchange income” in the Statements of Comprehensive Income. contracts is included in “Derivative income” in the Statements Credit default swap contracts are valued based on quotations of Comprehensive Income. from independent sources.

Total Return Swaps – A total return swap is an agreement by Underlying Funds – Underlying funds that are mutual funds are which one party makes payments based on a set rate, either valued at their respective NAV per unit from fund companies fixed or variable, while the other party makes payments based on the relevant valuation dates and underlying funds that on the return of an underlying asset, which includes both the are exchange-traded funds are valued at market close on the income it generates and any capital gains. Total return swap relevant valuation dates. contracts are marked to market daily based upon quotations Fair Valuation of Investments – The Funds have procedures from the market makers and the change in value, if any, is to determine the fair value of securities and other financial recorded in “Change in unrealized gain (loss) on investments” instruments for which market prices are not readily available in the Statements of Comprehensive Income. When the swap or which may not be reliably priced. Procedures are in place contract is terminated early, the Fund records a realized to determine the fair value of foreign securities traded in gain or loss equal to the difference between the current net countries outside of North America daily to avoid stale prices present value and the executed net present value in “Derivative and to take into account, among other things, any significant income” in the Statements of Comprehensive Income. events occurring after the close of a foreign market. Unrealized gains and losses are recorded as “Receivable on open swap contracts” or “Payable on open swap contracts” Management also has procedures where the Funds primarily in the Statements of Financial Position, as applicable. The employ a market-based approach, which may use related risks of total return swap contracts include changes in market or comparable assets or liabilities, NAV per unit (for conditions and the possible inability of the counterparty to exchange-traded funds), recent transactions, market fulfill its obligations under the agreement. multiples, book values and other relevant information for the investment to determine its fair value. The Funds may Futures Contracts – Futures contracts entered into by the also use an income-based valuation approach in which Funds are financial agreements to purchase or sell a financial the anticipated future cash flows of the investment are instrument at a contracted price on a specified future date. discounted to calculate fair value. Discounts may also be However, the Funds do not intend to purchase or sell the applied due to the nature or duration of any restrictions financial instrument on the settlement date; rather, they on the disposition of the investments, but only if they arise intend to close out each futures contract before settlement as a feature of the instrument itself. Due to the inherent by entering into equal, but offsetting, futures contracts. uncertainty of valuations of such investments, the fair values Futures contracts are valued at the gain or loss that would may differ significantly from the values that would have been arise as a result of closing the position at the valuation date. used had an active market existed. Any gain or loss at the close of business on each valuation date is recorded as “Derivative income” in the Statements All security valuation techniques are periodically reviewed of Comprehensive Income. The receivable/payable on by the Valuation Committee (“VC”) of the manager and are futures contracts is recorded separately in the Statements of approved by the manager. The VC provides oversight of the Financial Position. Funds’ valuation policies and procedures. GENERIC NOTES TO FINANCIAL STATEMENTS (unaudited) (also see Fund Specific Information)

June 30, 2019

Cash Cash is comprised of cash and deposits with banks and Valuation of Series A different NAV is calculated for each is recorded at amortized cost. The carrying amount of cash series of units of a Fund. The NAV of a particular series of approximates its fair value because it is short term in nature. units is computed by calculating the value of the series’ proportionate share of the assets and liabilities of the Fund Foreign Exchange The value of investments and other common to all series less the liabilities of the Fund attributable assets and liabilities in foreign currencies is translated into only to that series. Expenses directly attributable to a series Canadian dollars (U.S. dollars in the case of the Phillips, are charged to that series. Other expenses are allocated Hager & North $U.S. Money Market Fund, RBC $U.S. Money proportionately to each series based upon the relative NAV of Market Fund, RBC Premium $U.S. Money Market Fund, each series. Expenses are accrued daily. RBC $U.S. Short-Term Corporate Bond Fund, RBC $U.S. Investment Grade Corporate Bond Fund, RBC $U.S. High Investment Transactions Investment transactions are Yield Bond Fund, RBC $U.S. Strategic Income Bond Fund, accounted for as of the trade date. Transaction costs, such as BlueBay Emerging Markets Bond Fund (Canada), BlueBay brokerage commissions, incurred by the Funds are recorded Emerging Markets Local Currency Bond Fund (Canada), in the Statements of Comprehensive Income for the period. BlueBay Emerging Markets Corporate Bond Fund, The unrealized gain and loss on investments is the difference BlueBay $U.S. Global Convertible Bond Fund (Canada) and between fair value and average cost for the period. The basis RBC U.S. Monthly Income Fund) at the rate of exchange on of determining the cost of portfolio assets, and realized each valuation date. Gains/losses on foreign cash balances and unrealized gains and losses on investments, is average are included in “Net gain (loss) on foreign cash balances” cost which does not include amortization of premiums or in the Statements of Comprehensive Income. Purchases discounts on fixed-income and debt securities with the and sales of investments, income and expenses are exception of zero coupon bonds. translated at the rate of exchange prevailing on the Income Recognition Dividend income is recognized on the respective dates of such transactions. Realized foreign ex-dividend date and interest for distribution purposes is exchange gains/losses on spot and forward currency coupon interest recognized on an accrual basis and/or contracts are included in “Derivative income” in the imputed interest on zero coupon bonds. “Income from Statements of Comprehensive Income. investment trusts” includes income from underlying funds Functional Currency The Funds, with the exceptions below, and other trusts. Any premiums paid or discounts received have their subscriptions, redemptions and performance on the purchase of zero coupon bonds are amortized. Interest denominated in Canadian dollars and, consequently, the payments made by the Funds to counterparties on the Canadian dollar is the functional currency for the Funds. payable leg of derivative contracts are recorded as “Interest Phillips, Hager & North $U.S. Money Market Fund, expense” in the Statements of Comprehensive Income. RBC $U.S. Money Market Fund, RBC Premium $U.S. Money Increase (Decrease) in NAV per Unit Increase (decrease) in Market Fund, RBC $U.S. Short-Term Corporate Bond NAV per unit in the Statements of Comprehensive Income Fund, RBC $U.S. Investment Grade Corporate Bond Fund, represents the increase (decrease) in net assets attributable to RBC $U.S. High Yield Bond Fund, RBC $U.S. Strategic Income holders of redeemable units by series, divided by the average Bond Fund, BlueBay Emerging Markets Bond Fund (Canada), units outstanding per series during the period. BlueBay Emerging Markets Local Currency Bond Fund (Canada), BlueBay Emerging Markets Corporate Bond Fund, Early Redemption Fees Early redemption fees (short-term BlueBay $U.S. Global Convertible Bond Fund (Canada) and trading fees) are paid directly to a Fund and are designed RBC U.S. Monthly Income Fund have their subscriptions, to deter excessive trading and its associated costs. With the redemptions and performance denominated in U.S. dollars exception of money market funds, a Fund may apply a fee and, consequently, the U.S. dollar is the functional currency of 2% of the current value of units if the unitholder redeems for these Funds. or switches out units within seven days of purchasing or previously switching into a Fund. These amounts are included in the Statements of Changes in NAV. GENERIC NOTES TO FINANCIAL STATEMENTS (unaudited) (also see Fund Specific Information)

June 30, 2019

Foreign Currencies The following is a list of abbreviations investment portfolio within the constraints of its investment used in the Schedule of Investment Portfolio: objectives and, in some cases, periodically hedging certain risk exposures through the use of derivatives. To assist in managing ARS – Argentinian peso KRW – South Korean won AUD – Australian dollar MXN – Mexican peso risks, RBC GAM also uses internal guidelines, maintains a BRL – Brazilian real MYR – Malaysian ringgit governance structure that oversees each Fund’s investment CAD – Canadian dollar NGN – Nigerian naira activities and monitors compliance with the Fund’s investment CHF – Swiss franc NOK – Norwegian krone CLP – Chilean peso NZD – New Zealand dollar strategies, internal guidelines and securities regulations. CNY – Chinese renminbi PEN – Peruvian nuevo sol Financial instrument risk, as applicable to a Fund, is disclosed COP – Colombian peso PHP – Philippine peso CZK – Czech koruna PLN – Polish zloty in its Notes to Financial Statements – Fund Specific Information. DKK – Danish krone RON – Romanian leu These risks include a Fund’s direct risks and pro rata exposure to DOP – Dominican peso RUB – Russian ruble the risks of underlying funds, as applicable. EGP – Egyptian pound SEK – Swedish krona EUR – Euro SGD – Singapore dollar Liquidity risk GBP – Pound sterling THB – Thailand baht HKD – Hong Kong dollar TRY – Turkish new lira Liquidity risk is the possibility that investments in a Fund HUF – Hungarian forint TWD – New Taiwan dollar cannot be readily converted into cash when required. A Fund IDR – Indonesian rupiah UAH – Ukranian hryvnia is exposed to daily cash redemptions of redeemable units. ILS – Israeli new shekel USD – United States dollar INR – Indian rupee UYU – Uruguay peso Liquidity risk is managed by investing the majority of a Fund’s JPY – Japanese yen ZAR – South African rand assets in investments that are traded in an active market and that can be readily disposed. In accordance with securities 4. Critical accounting judgments and estimates regulations, a Fund must maintain at least 90% of its assets in The preparation of financial statements requires the use liquid investments. In addition, a Fund aims to retain sufficient of judgment in applying the Funds’ accounting policies cash and cash equivalent positions to maintain liquidity, and and making estimates and assumptions about the future. has the ability to borrow up to 5% of its NAV for the purpose The following discusses the most significant accounting of funding redemptions. All non-derivative financial liabilities, judgments and estimates that management has made in other than redeemable units, are due within 90 days. preparing the financial statements. Credit risk Fair value measurement of securities not quoted in an active market Credit risk is the risk that a loss could arise from a security The Funds have established policies and control procedures issuer or counterparty not being able to meet its financial that are intended to ensure these estimates are well obligations. The carrying amount of investments and other controlled, independently reviewed and consistently applied assets represents the maximum credit risk exposure as from period to period. The estimates of the value of the disclosed in a Fund’s Statements of Financial Position. The Funds’ assets and liabilities are believed to be appropriate as Funds measure credit risk and expected credit losses using at the reporting date. probability of default, exposure at default and loss given The Funds may hold financial instruments that are not quoted default. Management considers both historical analysis and in active markets. Note 3 discusses the policies used by forward-looking information in determining any expected management for the estimates used in determining fair value. credit loss. All other receivables, amounts due from brokers, cash and short-term deposits are held with counterparties 5. Financial instrument risk and capital management with a credit rating of AA/Aa or higher. Management RBC GAM is responsible for managing each Fund’s considers the probability of default to be close to zero as capital, which is its NAV and consists primarily of the counterparties have a strong capacity to meet their its financial instruments. contractual obligations in the near term. As a result, no loss allowance has been recognized based on 12-month A Fund’s investment activities expose it to a variety of expected credit losses as any such impairment would be financial risks. RBC GAM seeks to minimize potential adverse wholly insignificant to the Funds. The fair value of fixed- effects of these risks on a Fund’s performance by employing income and debt securities includes a consideration of the professional, experienced portfolio managers, daily monitoring of the Fund’s holdings and market events, diversifying its GENERIC NOTES TO FINANCIAL STATEMENTS (unaudited) (also see Fund Specific Information)

June 30, 2019 creditworthiness of the debt issuer. Credit risk exposure 6. Taxes to over-the-counter derivative instruments is based on a The Funds qualify as open-ended mutual fund trusts or unit Fund’s unrealized gain on the contractual obligations with trusts under the Income Tax Act (Canada). In general, the the counterparty. Credit risk exposure is mitigated for those Funds are subject to income tax; however, no income tax Funds participating in a securities lending program (see is payable on net income and/or net realized capital gains note 7). RBC GAM monitors each Fund’s credit exposure and which are distributed to unitholders. Since the Funds do counterparty ratings daily. not record income taxes, the tax benefit of capital and Concentration risk non-capital losses has not been reflected in the Statements of Financial Position as a deferred income tax asset. In Concentration risk arises as a result of net financial addition, for mutual fund trusts, income taxes payable on net instrument exposures to the same category, such as realized capital gains are refundable on a formula basis when geographical region, asset type, industry sector or market units of the Funds are redeemed. segment. Financial instruments in the same category have similar characteristics and may be affected similarly by Capital losses are available to be carried forward indefinitely changes in economic or other conditions. and applied against future capital gains. Non-capital losses may be carried forward to reduce future taxable income for Interest rate risk up to 20 years. Interest rate risk is the risk that the fair value of a Fund’s interest-bearing investments will fluctuate due to changes 7. Securities lending revenue in market interest rates. The value of fixed-income and debt Certain of the Funds lend portfolio securities from time securities, such as bonds, debentures, mortgages or other to time in order to earn additional income. Income income-producing securities, is affected by interest rates. from securities lending is included in the Statements of Generally, the value of these securities increases if interest Comprehensive Income of a Fund. Each such Fund will have rates fall and decreases if interest rates rise. entered into a securities lending program with its custodian, Currency risk RBC Investor Services Trust (“RBC IS”). The aggregate market value of all securities loaned by a Fund cannot exceed 50% Currency risk is the risk that the value of investments of the assets of a Fund. The Fund receives collateral, with an denominated in currencies, other than the functional approved credit rating of at least A, of at least 102% of the currency of a Fund, will fluctuate due to changes in foreign value of securities on loan. The Fund is indemnified by RBC IS exchange rates. The value of investments denominated in a for any collateral credit or market loss. As such, the credit risk currency other than the functional currency is affected by associated with securities lending is considered minimal. changes in the value of the functional currency in relation to the value of the currency in which the investment is 8. Administrative and other denominated. When the value of the functional currency falls related-party transactions in relation to foreign currencies, then the value of the foreign Manager and Portfolio Manager investments rises. When the value of the functional currency RBC GAM is an indirect wholly owned subsidiary of rises, the value of the foreign investments falls. Royal Bank of Canada (“Royal Bank”). RBC GAM is the Other price risk manager and portfolio manager of the Funds. RBC GAM is Other price risk is the risk that the value of financial responsible for the Funds’ day-to-day operations, provides instruments will fluctuate as a result of changes in market investment advice and portfolio management services to the prices (other than those arising from interest rate or currency Funds and appoints distributors for the Funds. RBC GAM risk), whether caused by factors specific to an individual is paid a management fee by the Funds as compensation investment, its issuer, or all factors affecting all instruments for its services. The management fee is calculated and traded in a market or market segment. 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) (also see Fund Specific Information)

June 30, 2019

The Funds pay a fixed administration fee to RBC GAM. The RBC GAM or its affiliates may earn a foreign exchange fixed administration fee is calculated and accrued daily as a spread when unitholders switch between series of funds percentage of the NAV of each series of units of the Funds. denominated in different currencies. The Funds also RBC GAM in turn pays certain operating expenses of the maintain bank accounts and overdraft provisions with Royal Funds. These expenses include regulatory filing fees and Bank for which Royal Bank may earn a fee. Affiliates of other day-to-day operating expenses including, but not RBC GAM that provide services to the Funds in the course limited to, recordkeeping, accounting and fund valuation of their normal business, all of which are wholly owned costs, custody fees, audit and legal fees and the costs of subsidiaries of Royal Bank of Canada, are discussed below. preparing and distributing annual and interim reports, Sub-Advisors prospectuses, statements and investor communications. RBC Global Asset Management (U.S.) Inc. is the sub-advisor Notwithstanding the fixed administration fee, the Funds for the RBC $U.S. Investment Grade Corporate Bond Fund, also pay certain operating expenses directly, including RBC U.S. Mid-Cap Growth Equity Fund, RBC U.S. Mid-Cap the costs related to the Independent Review Committee Growth Equity Currency Neutral Fund, RBC U.S. Mid-Cap of the Funds, and the cost of any new government or Value Equity Fund, RBC U.S. Small-Cap Core Equity Fund, regulatory requirements introduced and any borrowing costs RBC U.S. Small-Cap Value Equity Fund and Phillips, (collectively, “other fund costs”), and taxes (including, but not Hager & North U.S. Multi-Style All-Cap Equity Fund (for a limited to, GST/HST). Effective January 1, 2020, RBC GAM, portion of the Fund). RBC Global Asset Management (UK) not the Funds, will be responsible for the costs related to Limited is the sub-advisor for the RBC Global Bond Fund the Independent Review Committee. Other fund costs will (for a portion of the Fund), RBC Global Corporate Bond be allocated proportionately to each series based upon the Fund (for a portion of the Fund), RBC U.S. Monthly Income relative NAV of each series. RBC GAM may, in some years Fund (for a portion of the Fund), RBC Balanced Fund (for and in certain cases, absorb a portion of operating expenses. the European equity portion of the Fund), RBC Global The decision to absorb the operating expenses is reviewed Balanced Fund (for the European equity portion of the Fund), annually and determined at the discretion of RBC GAM, RBC International Dividend Growth Fund, RBC International without notice to unitholders. Equity Fund (for the European equity portion of the Fund), RBC European Dividend Fund, RBC European Equity Certain Funds may invest in units of other Funds managed Fund, RBC European Mid-Cap Equity Fund, RBC Emerging by RBC GAM or its affiliates (“underlying mutual funds”). Markets Dividend Fund, RBC Emerging Markets Equity Fund, A Fund will not invest in units of an underlying mutual fund RBC Emerging Markets Equity Focus Fund, RBC Emerging if the Fund would be required to pay any management or Markets Small-Cap Equity Fund, RBC Global Dividend Growth incentive fees in respect of that investment that a reasonable Fund, RBC Global Dividend Growth Currency Neutral Fund, person would believe duplicates a fee payable by the RBC Global Equity Fund, RBC Global Equity Focus Fund, underlying mutual fund for the same service. To the extent RBC Vision Global Equity Fund, RBC Vision Fossil Fuel a Fund invests in underlying funds managed by RBC GAM Free Global Equity Fund, Phillips, Hager & North Overseas or its affiliates, the fees and expenses payable by the Equity Fund and Phillips, Hager & North Global Equity underlying funds are in addition to the fees and expenses Fund. RBC Investment Management (Asia) Limited is the payable by the Fund. However, a Fund may only invest in sub-advisor for the RBC Balanced Fund (for the Asian equity one or more underlying funds provided that no management portion of the Fund), RBC Global Balanced Fund (for the fees or incentive fees are payable that would duplicate a Asian equity portion of the Fund), RBC Vision Balanced Fund fee payable by the underlying fund for the same service. (for the Asian equity portion of the Fund), RBC International The Fund’s ownership interest in underlying mutual funds Dividend Growth Fund (for the Asian equity portion of the is disclosed in the Notes to Financial Statements – Fund Fund), RBC International Equity Fund (for the Asian equity Specific Information. portion of the Fund), RBC Asian Equity Fund, RBC Asia RBC GAM or its affiliates may earn fees and spreads in Pacific Ex-Japan Equity Fund and RBC Japanese Equity Fund. connection with various services provided to, or transactions BlueBay Asset Management LLP is the sub-advisor of the with, the Funds, such as banking, brokerage, securities BlueBay Global Monthly Income Bond Fund, BlueBay Global lending, foreign exchange and derivatives transactions. Sovereign Bond Fund (Canada), BlueBay Global Investment GENERIC NOTES TO FINANCIAL STATEMENTS (unaudited) (also see Fund Specific Information)

June 30, 2019

Grade Corporate Bond Fund (Canada), BlueBay European Securities Lending Agent High Yield Bond Fund (Canada), BlueBay Emerging Markets To the extent a Fund may engage in securities lending Bond Fund (Canada), BlueBay Emerging Markets Local transactions, RBC IS may act as the Fund’s securities lending Currency Bond Fund (Canada), BlueBay Emerging Markets agent. Any revenue earned on such securities lending is split Corporate Bond Fund, BlueBay Global Convertible Bond between the Fund and the securities lending agent. Fund (Canada) and BlueBay $U.S. Global Convertible Bond Other Related-Party Transactions Fund (Canada). Pursuant to applicable securities legislation, the Funds The sub-advisors earn a fee which is calculated and accrued relied on the standing instructions from the Independent daily as a percentage of the NAV of each series of units of the Review Committee with respect to one or more of the Funds. The sub-advisors are paid by the manager from the following transactions: management fee paid by the Funds. Related-Party Trading Activities Trustee (a) trades in securities of Royal Bank; RBC GAM is the trustee for the Funds governed by the laws (b) investments in the securities of issuers for which of the Province of Ontario. RBC IS is the trustee for the Funds a related-party dealer acted as an underwriter during governed by the laws of the Province of British Columbia. The trustee holds title to the Funds’ property on behalf of the distribution of such securities and the 60-day period the unitholders. The trustee earns a fee, which is paid by the following the conclusion of such distribution of the manager from the fixed administration fee paid by the Funds. underwritten securities to the public;

Distributors (c) purchases of equity and debt securities from or sales of equity or debt securities to a related-party dealer, where it RBC GAM, Royal Mutual Funds Inc., RBC Direct Investing Inc., acted as principal; and RBC Dominion Securities Inc. and PH&N IF are principal distributors of, or may distribute certain series of units of, the Inter-Fund Trading Funds. Dealers receive an ongoing commission based on (d) purchases or sales of securities of an issuer from or to the total value of their clients’ Series A, Advisor Series, another investment fund or managed account managed Advisor T5 Series, Series T5, Series T8, Series H and by RBC GAM. Series D units. The applicable standing instructions require that Related-Party Custodian Trading Activities and Inter-Fund Trading be conducted in RBC IS is the custodian and holds the assets of the Funds. accordance with RBC GAM policy and that RBC GAM advise RBC IS earns a fee as the custodian, which is paid by the the Independent Review Committee of a material breach manager from the fixed administration fee paid by the Funds. of any standing instruction. RBC GAM policy requires that an investment decision in respect of Related-Party Trading Registrars Activities (i) is made free from any influence of Royal Bank RBC GAM, RBC IS or Royal Bank (or a combination thereof) or its associates or affiliates and without taking into account are the registrars of the Funds and keep records of who owns any consideration relevant to Royal Bank or its affiliates the units of the Funds. The registrars also process orders and or associates, (ii) represents the business judgment of the issue account statements. The registrars earn a fee, which is portfolio manager, uninfluenced by considerations other paid by the manager from the fixed administration fee paid than the best interests of the Funds, (iii) is in compliance with by the Funds. RBC GAM policies and procedures, and (iv) achieves a fair and Brokers and Dealers reasonable result for the Funds. RBC GAM policy requires that The Funds have established or may establish standard an investment decision in respect of Inter-Fund Trading is in brokerage agreements and dealing agreements at the best interests of each Fund. 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.