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.