Mini-Case A: (7 marks - .5 marks each) - Micheline

Micheline's uncle, Joe spends a lot of time online researching and told her he thought her first mutual fund called RBC U.S.Equity Fund would be a good investment for her. She therefore went to the same investment advisor as her uncle and opened an investment account.

Go to the Assessments tab for the Fund Facts mutual fund RBC U.S. Equity Fund (June 26, 2020) to help you respond to the following questions. Note that June 26, 2020 is the latest issue of Fund Facts for this mutual fund as Fund Facts are only filed annually or updated in the event of a material change that affects the content of the Fund Facts (e.g., a change in investment objectives etc.).

a)Micheline has just purchased the mutual fund RBC U.S. Equity Fund. What is the annual Management Expense Ratio (MER) for this fund that Micheline must pay? (.5 mark)b)How long has this fund been trading (i.e. date series started)? (.5 mark)

c)What is the minimum amount needed to get into this fund, and what is the minimum needed if Micheline wishes to invest additional funds? (.5 mark)

d)Micheline is looking to keep this mutual fund for a long time and has therefore chosen the Deferred Sales Charge option. Micheline has $10,000 CDN to invest in this fund, the Net Asset Value (NAV) is $37 CDN, how many mutual fund units could she buy? (.5 mark)

e)What is the risk rating assigned to this fund? (.5 mark)

f)Micheline's uncle Joe is a retired professor and has decided to travel the world despite the COVID-19 restrictions. Micheline was surprised that her uncle was selling his mutual fund holdings in RBC U.S. Equity Fund as he had suggested her to buy the mutual fund based on its objectives. Her uncle let her know that he thought it would be a good start for her as a new investor and that he was selling his units in this fund only because he needed the money for travelling. Micheline is wondering if this "tip" from her uncle to buy was considered Insider Information. Advise Micheline if you believe this to be Insider Information. (.5 mark)

g)Joe sold his holdings in RBC U.S. Equity Fund on the same day that Micheline bought her funds at $37 CDN. Joe had 389 units. He has held these funds for 2.5 years and at the time of purchase had chosen the Deferred Sales Charge option. How much money will Joe receive (i.e. net proceeds)? (.5 mark)

h)What is Joe's capital gain if he bought them when the RBC U.S. Equity Fund's Net Asset Value (NAV) was at $15 CDN? (Hint: Use the net proceeds in g) to determine the capital gain).

(.5 mark)

i)Name the top 2 investment holdings in this fund as of May 31, 2020? (.5 mark)

To help you respond to the following questions on Exchange Traded Funds (ETFs), you will need to go to the Assessments tab for the Fund Facts Exchange Traded Funds RBC US Index Fund - Series A (June 26, 2020).

j)Micheline was not sure why she had been so nervous to start investing and was happy that her uncle had guided her. It was easier than she thought to open an investment account. After Micheline did her research, she now decided to start investing in Exchange Traded Funds (ETFs). What are Exchange Traded Funds (ETFs)? (.5 marks)

k)What are the advantages of Exchange Traded Funds (ETFs)? (.5 mark)

l)Micheline is wondering what the Management Expense Ratios (MER) is in the Exchange Traded Fund called RBC US Index Fund - Series A? (.5 mark)

m)Name the top 3 investment holdings in this fund (RBC US Index Fund - Series A) as of May 31, 2020? (.5 mark)

n)What does the fund invest in and what is the S&P 500? (.5 mark-.25 marks each)

Solve this question H