RBC Global Asset Management announces planned changes to RBC ETFs and RBC Index Funds

Leverages the strategic alliance with BlackRock Canada

Changes will streamline and simplify the RBC iShares ETF lineup, with benefits to investors including greater liquidity and efficiency

RBC Global Asset Management Inc. (“RBC GAM Inc.”) announced a number of changes to RBC Index ETFs and RBC Index Funds, including proposed changes to investment objectives, mergers, and terminations. Some of these changes will be subject to unitholder and regulatory approval.

This announcement reflects the opportunities available through the strategic alliance between RBC GAM Inc. and BlackRock Asset Management Canada Limited (“BlackRock Canada”), announced on January 8, 2019.

The proposed changes will streamline and simplify the RBC iShares solution suite, and will result in tangible benefits to unitholders of the RBC Index ETFs including greater liquidity associated with the larger iShares ETFs and historically more favorable spreads on the secondary market, which will ultimately reduce transactional costs for investors. In cases where RBC ETFs are merging with iShares ETFs, the management fees for the continuing iShares ETFs are either the same or lower than those of the merging RBC ETF.

“We are pleased to leverage the RBC iShares alliance for the benefit of investors, applying the expertise of the world’s largest ETF and index manager to RBC Global Asset Management’s line-up of index ETFs and index mutual funds,” said Doug Coulter, President of RBC GAM Inc. “As the world’s largest asset manager, BlackRock is a global leader in index management with expert capabilities across portfolio management, trade execution, and risk management.”

Details of the proposed changes are as follows:

RBC Index ETFs

1. ETF mergers

Subject to unitholder and regulatory approval, effective on or about April 5, 2019, RBC GAM Inc. is proposing to merge the following RBC ETFs with iShares ETFs:

 

Terminating RBC ETF	Mgmt  Fee (%)	Continuing iShares ETF	Mgmt  Fee (%)
RBC Canadian Short Term Bond Index ETF (RSCB)	0.10	iShares Core Canadian Short Term Bond Index ETF (XSB)	0.09
RBC Canadian Bond Index ETF (RCUB)	0.10	iShares Core Canadian Universe Bond Index ETF (XBB)	0.09
RBC Canadian Equity Index ETF (RCAN)	0.05	iShares Core S&P/TSX Capped Composite Index ETF (XIC)	0.05
RBC U.S. Equity Index ETF (RUSA)	0.09	iShares Core S&P 500 Index ETF (XUS)	0.09
RBC International Equity Index ETF (RINT)	0.20	iShares Core MSCI EAFE IMI Index ETF (XEF)	0.20

The Independent Review Committee of the RBC ETFs considered and provided a positive recommendation for the proposed mergers, after determining that the changes achieve a fair and reasonable result for each RBC ETF.

The proposed merger of RBC U.S. Equity Index ETF (RUSA) is expected to occur on a tax-deferred basis and would therefore not be considered a disposition for tax purposes. The other four proposed ETF mergers described above are expected to take place on a taxable basis, would be considered a disposition for tax purposes, and may have tax consequences for unitholders of the terminating RBC ETFs.

Unitholders of each terminating RBC ETF will receive units of the respective continuing iShares ETF based on the continuing iShares ETF’s NAV per unit. Each of the terminating RBC ETFs will be wound down following the mergers. Unitholders will have the right to redeem units of the terminating RBC ETFs up to the close of business on the business day immediately preceding the effective date of the mergers.

2. Investment fund manager change: RBC Global Government Bond (CAD Hedged) Index ETF (RGGB)

Subject to unitholder and regulatory approval, effective on or about April 5, 2019, BlackRock Canada will become the investment fund manager and portfolio advisor for the RBC Global Government Bond (CAD Hedged) Index ETF.

The Independent Review Committee of the RBC ETFs considered and provided a positive recommendation for the proposed change to investment fund manager, after determining that the changes achieve a fair and reasonable result for the ETF.

3. ETF termination: RBC Emerging Markets Equity Index ETF (REEM)

Effective on or about April 5, 2019, the RBC Emerging Markets Equity Index ETF will be terminated.

RBC Index Funds

1. Proposed investment objective and strategy changes

Subject to unitholder approval, effective on or about April 5, 2019, RBC GAM Inc. is proposing to change the investment objectives and strategies of the RBC Index Funds to provide the Funds with the ability to invest in iShares ETFs.

The RBC Index Funds include:

• RBC Canadian Government Bond Index Fund
• RBC Canadian Bond Index Fund*
• RBC Canadian Index Fund
• RBC U.S. Index Fund
• RBC U.S. Index Currency Neutral Fund
• RBC International Index Currency Neutral Fund

In addition, the benchmarks for the RBC Index Funds will be aligned to those of the respective iShares ETF that each Fund will invest in or may invest in at a future date (see benchmark changes below).

The Independent Review Committee of the RBC Funds considered and provided a positive recommendation for the proposed investment objective changes, after determining that the changes achieve a fair and reasonable result for each of the applicable funds.

* Subject to the necessary approvals, we anticipate that the management fee of RBC Canadian Bond Index Fund (Series F units) will be lowered from 0.10% to 0.09%, on or about April 5, 2019, to align with the management fee of the iShares Core Canadian Universe Bond Index ETF.

2. Sub-advisor changes

Effective on or about April 9, 2019, BlackRock Canada will become the sub-advisor of the RBC Canadian Index Fund and the RBC U.S. Index Fund, replacing State Street Global Advisors, Ltd.

3. Benchmark changes

To align with the benchmarks used within the RBC iShares Strategic Alliance, the following table summarizes changes to benchmarks for the RBC Index Funds.

RBC Index Fund	Benchmark change
RBC Canadian Government Bond Index Fund	No change (benchmark is FTSE Canada Federal Bond Index)
RBC Canadian Bond Index Fund	Current: FTSE Canada Universe + Maple Bond Index New: FTSE Canada Universe Bond Index1
RBC Canadian Index Fund	Current: FTSE Canada All Cap Domestic Index New: S&P/TSX Composite Index2
RBC U.S. Index Fund	Current: FTSE USA Index (CAD) New: S&P 500 Index (CAD)2
RBC U.S. Index Currency Neutral Fund	Current: FTSE USA Hedged 100% to CAD Index New: S&P 500 Hedged 100% to CAD Index1
RBC International Index Currency Neutral Fund	Current: FTSE Developed ex North America Hedged 100% to CAD Index New: MSCI EAFE IMI Hedged 100% to CAD Index1

¹ Effective on or about April 5, 2019
² Effective on or about April 9, 2019

Unitholder Approvals

RBC GAM Inc. will seek the required unitholder approvals for the proposed mergers, change in investment fund manager and investment objective changes, as outlined above, at special unitholder meetings to be held on or about March 22, 2019, in Toronto, Ontario.

A Notice-and-Access document which outlines the procedures for accessing the management information circular containing full details of the proposals will be mailed on or about February 15, 2019, to unitholders of record as of February 6, 2019. If the necessary approvals are received, the changes are expected to be effective on or about April 5, 2019.

Commissions, trailing commissions, management fees and expenses all may be associated with investing in mutual funds and exchange-traded funds (ETFs). Please read the relevant prospectus before investing. Mutual Funds and ETFs are not guaranteed, their values change frequently and past performance may not be repeated. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. RBC iShares ETFs are comprised of RBC ETFs managed by RBC Global Asset Management Inc. (a member of the RBC GAM group of companies) and iShares ETFs managed by BlackRock Asset Management Canada Limited.