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OMB APPROVAL
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-8384
RBC Funds, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
90 South Seventh St. Minneapolis, MN 55402
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
BISYS Fund Services, 3435 Stelzer Road, Columbus, OH 43219
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(Name and address of agent for service)
Registrant's telephone number, including area code: 614-470-8000
Date of fiscal year end: APRIL 30, 2003
Date of reporting period: APRIL 30, 2003
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form
N-CSR, and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. Section 3507.
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ITEM 1. REPORTS TO STOCKHOLDERS.
Include a copy of the report transmitted to stockholders pursuant to Rule
30e-1 under the Act (17 CFR 270.30e-1).
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RBC FUNDS
ANNUAL REPORT
APRIL 30, 2003
RBC LARGE CAP EQUITY FUND
RBC MID CAP EQUITY FUND
RBC SMALL CAP EQUITY FUND
RBC GOVERNMENT INCOME FUND
RBC QUALITY INCOME FUND
RBC NORTH CAROLINA TAX-FREE BOND FUND
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TABLE OF CONTENTS
Letter to Shareholders
Page 1
Portfolio Management Commentary
Page 3
Schedules of Portfolio Investments
Page 9
Statements of Assets and Liabilities
Page 21
Statements of Operations
Page 22
Statements of Changes in Net Assets
Page 23
Notes to Financial Statements
Page 25
Financial Highlights
Page 33
Independent Auditors' Report
Page 39
Supplemental Information
Page 40
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DEAR SHAREHOLDERS:
We are pleased to present this RBC Funds annual report for the period ended
April 30, 2003. The 12-month period was characterized by a weak economy,
heightened geopolitical risk and a loss of investor confidence caused by a
series of corporate accounting misdeeds. Those factors led to a great deal of
volatility in the financial markets, lower stock market valuations and higher
bond prices.
Voyageur Asset Management ("Voyageur") assumed management responsibility
for the RBC Funds as of December 30, 2002. Voyageur maintains the RBC Funds'
focus on investing for the long term, emphasizing solid investments selling at
reasonable valuations.
The RBC Funds offer shareholders the ability to diversify among several
different asset classes and investment styles. Market volatility during the 12
months through April 2003 highlighted the benefits of a diversified investment
approach.
EQUITY MARKETS
Stocks generally performed poorly during the period. The Standard & Poor's
500 index lost 13.3% during the 12 months ended April 30, 2003, while the Nasdaq
Composite Index fell 12.8%.
Stocks were hit hardest early in the period. Corporate accounting scandals,
a weak economy and the approaching war with Iraq shook investor confidence. The
S&P 500 fell 15.0% during the first three months of the period. Fears about the
reliability of corporate financial reports faded later in the period, but
investors remained concerned about the economy and the impending war. Stocks
during the second and third fiscal quarters declined 2.4% and 2.9%,
respectively. The resolution of the Iraq war encouraged investors to return
money to stocks, and the S&P 500 gained 7.6% during the final three months of
the period.
Every sector of the S&P 500 declined during the 12-month period. Health
care stocks provided the best relative performance. Companies in that industry
benefited from stable earnings growth and pricing power. Financial services
stocks also outperformed the index, as investors became less worried about the
quality of consumer and business credit. Meanwhile, consumer staples stocks
performed poorly, due to the perception that consumer spending would weaken, and
technology stocks suffered from an ongoing lack of capital spending.
Value stocks slightly outperformed growth shares. That said, the two styles
repeatedly swapped leadership throughout the period, as investors tried to
determine whether the economy would recover.
Shares of large companies provided better performance than small-company
stocks. Small caps during the two years prior to the period had fallen much less
than large caps. That made valuations on large-cap stocks more appealing to
investors. The S&P SmallCap 600 index fell 20.9% during the 12-month period,
while the S&P MidCap 400 index declined 17.5%.
FIXED INCOME MARKETS
Treasury bonds outperformed corporate bonds during the first half of the
period. Investors concerned about the reliability of corporate financial
statements and the potential for weak earnings sold corporate bonds in favor of
Treasuries and government agency bonds. Corporate bonds with low credit quality
fared especially poorly even though interest rates fell to their lowest levels
in 40 years.
The Federal Reserve Board ("Fed") cut short-term interest rates by 0.5
percentage points in early November in an effort to boost economic growth and
restore investor confidence. Yields on short-term government securities, which
are sensitive to Fed action, fell further than yields on longer-term issues,
creating a steep yield curve.
Corporate bonds rebounded dramatically during the second half of the
period. Investors regained confidence in corporate bonds due to
stronger-than-expected earnings and hopes that the worst accounting scandals
were over. Low government bond yields also caused investors to favor
higher-yielding corporate bonds. Lower-quality issues led corporate bonds'
rebound. Corporate bonds slightly outperformed government bonds during the full
12-month period.
1
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Mortgage-backed securities offered strong yields and provided good price
appreciation. Such bonds typically suffer during periods of falling interest
rates, but this period proved an exception. Investors prized the high quality
and relatively high yields of these issues.
LOOKING AHEAD
We believe that the economy will improve moderately during the coming year.
That environment should lead to modest gains in the stock market, and rising
interest rates. We will continue to employ a fundamentals-based, bottom-up stock
selection process to identify promising opportunities in the equity markets, and
we will prepare to position our fixed-income funds more defensively when we see
signs of rising interest rates.
THE FUNDS
The following portfolio manager commentaries provide insight into the ways
market conditions affected each Fund. They also explain the strategies fund
managers employed to manage risk and position their portfolios for future gains.
2
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RBC FUNDS, INC.
AS OF APRIL 30, 2003
[CHART]
RBC LARGE CAP EQUITY FUND
GROWTH OF A $10,000 INVESTMENT*
AVERAGE ANNUAL TOTAL RETURN AS OF 4/30/2003
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
------- -------- --------
Class I (15.34%) (4.43%) 5.92%
Class A (15.53%) (4.68%) 5.58%
Class B without Load*** (16.21%) (5.40%) 4.87%
Class B with Load*** (20.40%) (5.56%) 4.87%
S&P 500 Index (13.30%) (2.42%) 9.66%
Russell 1000 Growth Index+ (14.35%) (5.63%) 7.88%
</Table>
<Table>
<Caption>
RBC LARGE CAP EQUITY S&P 500 RUSSELL 1000
FUND-CLASS I INDEX** GROWTH INDEX**
4/30/1993 $ 10,000 $ 10,000 $ 10,000
4/30/1994 $ 10,478 $ 10,531 $ 10,380
4/30/1995 $ 11,726 $ 12,367 $ 12,414
4/30/1996 $ 14,545 $ 16,100 $ 16,455
4/30/1997 $ 17,049 $ 20,144 $ 20,086
4/30/1998 $ 22,285 $ 28,417 $ 28,540
4/30/1999 $ 26,730 $ 34,620 $ 36,110
4/30/2000 $ 30,708 $ 38,123 $ 46,068
4/30/2001 $ 25,500 $ 33,180 $ 31,211
4/30/2002 $ 20,984 $ 28,994 $ 24,936
4/30/2003 $ 17,765 $ 25,137 $ 21,357
</Table>
PORTFOLIO MANAGER COMMENTARY:
The RBC Large Cap Equity Fund returned -15.53% (Class A shares) during the
12-month period through April 30, 2003, versus a -13.30% return for the S&P
500 index, the Fund's benchmark.
A weak economy and sluggish growth combined to provide a difficult
environment for large-cap stocks, which performed poorly during the period.
However, large-cap stocks outperformed small- and mid-cap stocks, as
investors believed that large-cap stocks offered stability that small- and
mid-cap stocks lacked. We maintained the Fund's bottom-up approach of
investing in attractively-valued shares of large-cap growth stocks.
The Fund benefited from its investment in drug-maker Amgen, whose strong
product pipeline led to good earnings growth during the period. We also found
an attractive opportunity among shares of computer manufacturer Dell. The
firm's position as the low cost producer in its industry has helped it expand
its business and gain market share. We did not find investment opportunities
among the energy, telecommunications or utilities sectors, which were marked
by low levels of revenue and earnings growth. The Fund was hurt by certain
investments in the financial sector, including MBNA, whose stock declined due
to concerns about a soft economic environment and the potential impact on
consumer spending. The Fund's investment in retailer Kohl's also hurt
performance due to concerns about weakening consumer spending.
We are cautiously optimistic that the economy will regain strength during the
coming months. The end of the war has improved investor sentiment, and we
believe new tax cuts will give investors more incentive to invest in the
stock market. We will invest in shares of companies that we believe can
perform well in all markets, but should benefit from a recovering economy. We
will maintain the Fund's disciplined strategy of investing in shares of
companies that we believe offer strong sustainable growth of earnings and
revenue over the long term.
The chart above represents a historical investment of $10,000 in the RBC Large
Cap Equity Fund from 4/93 to 4/03, and represents the reinvestment of dividends
and capital gains in the Fund.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RETURNS. THE INVESTMENT RETURN AND
NAV WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THE ORIGINAL COST.
* Both Class A and Class I shares are sold without a sales load. Class B
shares are closed to new investors.
The inception date for performance purposes is December 31, 1990. The quoted
performance of the RBC Large Cap Equity Fund (formerly Equity Income Fund)
includes performance of certain collective trust funds ("Commingled Accounts")
advised by Centura Bank prior to the establishment of the Fund on October 1,
1996. On that date, the assets of the Commingled Accounts were transferred to
the Fund in connection with it's commencement of operations. The investment
objective, policies, and techniques of the Commingled Accounts were equivalent
in all material aspects to those of the Fund. During that time, the Commingled
Accounts were not registered under the Investment Company Act of 1940 (the "1940
Act"), and therefore were not subject to certain investment restrictions that
are imposed under the 1940 Act. If the Commingled Accounts had been registered
under the 1940 Act, the Commingled Accounts' performance may have been adversely
affected. Because the Commingled Accounts did not charge any expenses, their
performance has been adjusted to reflect the Fund's estimated expenses at the
time of it's inception, which were 1.00%, 1.75%, and 0.75% of average daily net
assets for Class A, Class B, and Class I, respectively. The performance
information for the period subsequent to the Fund's inception also assumes
reinvestment of all net investment income and realized gains and takes into
account actual expenses of the appropriate share class. Prior to November 1,
2001, Class A shares were sold subject to a front-end sales charge.
The total return set forth for Class A and Class B shares reflects the waiver of
a portion of the Fund's fees for certain periods. Without the waiver of fees,
returns would have been lower.
** The S&P 500 INDEX is an unmanaged index generally representative of the
domestic stock market. The RUSSELL 1000 GROWTH INDEX is an unmanaged index
of growth securities issued by the largest 1000 U.S. companies based on
market capitalization.
Securities indexes assume reinvestment of all distributions and interest
payments and do not take in account fees, expenses or taxes. Investors cannot
invest directly in an index, although they can invest in its underlying
securities.
*** Class B shares are subject to a contingent deferred sales charge ("CDSC")
upon redemption; no such CDSC applies after the seventh year of ownership.
As such, no CDSC is applied to this 10 year performance figure.
+ The Fund recently changed it's benchmark to one that reflects the universe
of securities in which it invests.
3
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[CHART]
RBC MID CAP EQUITY FUND
GROWTH OF A $10,000 INVESTMENT*
AVERAGE ANNUAL TOTAL RETURN AS OF 4/30/2003
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
------ ------ -------
Class I (18.46%) 4.06% 11.69%
Class A (18.58%) 3.76% 11.38%
Class B without Load*** (19.26%) 3.00% 10.77%
Class B with Load*** (23.26%) 2.91% 10.77%
S&P MidCap 400 Index (17.51%) 4.35% 12.17%
S&P MidCap 400 Growth Index (17.25%) 4.71% 12.18%
</Table>
<Table>
<Caption>
RBC MID CAP EQUITY S&P MIDCAP S&P MIDCAP 400
FUND-CLASS I 400 INDEX** GROWTH INDEX**
4/30/1993 $ 10,000 $ 10,000 $ 10,000
4/30/1994 $ 10,923 $ 10,981 $ 11,243
4/30/1995 $ 11,982 $ 12,056 $ 12,124
4/30/1996 $ 16,171 $ 15,649 $ 15,888
4/30/1997 $ 18,082 $ 17,234 $ 16,716
4/30/1998 $ 24,753 $ 25,492 $ 25,071
4/30/1999 $ 26,963 $ 27,131 $ 29,638
4/30/2000 $ 32,806 $ 33,513 $ 42,279
4/30/2001 $ 34,831 $ 35,873 $ 38,213
4/30/2002 $ 37,039 $ 38,232 $ 38,142
4/30/2003 $ 30,201 $ 31,538 $ 31,561
</Table>
PORTFOLIO MANAGER COMMENTARY:
The RBC Mid Cap Equity Fund delivered its first fiscal-year loss since
inception, realizing a total return of -18.58% (Class A shares) during the
12-month period through April 30, 2003. The Fund's benchmarks, the S&P MidCap
400 Index and S&P MidCap 400 Growth Index, were also substantially negative,
realizing total returns of -17.51% and -17.25%, respectively, for the same
period.
Shares of mid-sized companies were negatively affected by a weak economy and
a looming war. While equity investors found mid-cap stocks more attractive
than small-cap issues, mid-caps underperformed shares of larger companies
during the period. Mid-cap growth- and value-oriented companies performed
roughly in line with one another, as investors' retreat from stocks was
broad-based. Traditionally defensive sectors, such as consumer staples,
electric and natural-gas utilities and health care, saw relatively stable
earnings during the period. As a result, stocks in these sectors performed
relatively well and the Fund benefited from its investments in these areas.
The Fund also benefited from its underweight position in the technology
sector, which performed poorly during the period.
We believe mid-cap stocks should perform better in the coming months as low
interest rates, low inflation and stimulative fiscal policy will help set the
stage for better economic growth. We have already begun to position the Fund
less defensively for this environment and are investing in companies that
should benefit from rising corporate spending. Not losing sight of our
commitment to shareholders, the Fund continues to provide a well diversified
portfolio using a bottom-up investment approach, seeking growing companies
that are selling for reasonable prices. In addition, as the Fund's low
portfolio turnover rate suggests, we maintain that approaching the stock
market as an investor, not a speculator, is always best.
The chart above represents a historical investment of $10,000 in the RBC Mid Cap
Equity Fund from 4/93 to 4/03, and represents the reinvestment of dividends and
capital gains in the Fund.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RETURNS. THE INVESTMENT RETURN AND
NAV WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THE ORIGINAL COST.
* Both Class A and Class I shares are sold without a sales load. Class B
shares are closed to new investors.
The inception date for performance purposes is December 31, 1990. The quoted
performance of the RBC Mid Cap Equity Fund (formerly Equity Growth Fund)
includes performance of certain collective trust funds ("Commingled Accounts")
advised by Centura Bank prior to the establishment of the Fund on June 1, 1994.
On that date, the assets of the Commingled Accounts were transferred to the Fund
in connection with it's commencement of operations. The investment objective,
policies, and techniques of the Commingled Accounts were equivalent in all
material aspects to those of the Fund. During that time, the Commingled Accounts
were not registered under the Investment Company Act of 1940 (the "1940 Act"),
and therefore were not subject to certain investment restrictions that are
imposed under the 1940 Act. If the Commingled Accounts had been registered under
the 1940 Act, the Commingled Accounts' performance may have been adversely
affected. Because the Commingled Accounts did not charge any expenses, their
performance has been adjusted to reflect the Fund's estimated expenses at the
time of it's inception, which were 1.25%, 2.00%, and 1.00% of average daily net
assets for Class A, Class B, and Class I, respectively. The performance
information for the period subsequent to the Fund's inception also assumes
reinvestment of all net investment income and realized gains and takes into
account actual expenses of the appropriate share class. Prior to November 1,
2001, Class A shares were sold subject to a front-end sales charge.
The total return set forth for Class A and Class B shares reflects the waiver of
a portion of the Fund's fees for certain periods. Without the waiver of fees,
returns would have been lower.
** The S&P MIDCAP 400 INDEX is an unmanaged index generally representative of
the domestically traded common stocks of mid-sized companies. The S&P MIDCAP
400 GROWTH INDEX is an unmanaged index of 400 selected common growth stocks
of mid-sized companies.
Securities indexes assume reinvestment of all distributions and interest
payments and do not take in account fees, expenses or taxes. Investors cannot
invest directly in an index, although they can invest in its underlying
securities.
*** Class B shares are subject to a contingent deferred sales charge ("CDSC")
upon redemption; no such CDSC applies after the seventh year of ownership.
As such, no CDSC is applied to this 10 year performance figure.
4
<Page>
[CHART]
RBC SMALL CAP EQUITY FUND
GROWTH OF A $10,000 INVESTMENT*
AVERAGE ANNUAL TOTAL RETURN AS OF 4/30/2003
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
------ ------ ---------
Class I (17.67%) (0.27%) 10.25%
Class A (17.94%) (0.51%) 9.92%
Class B without Load*** (18.52%) (1.27%) 9.17%
Class B with Load*** (22.60%) (1.40%) 9.17%
S&P SmallCap 600 Index (20.95%) 0.56% 10.37%
Russell 2000 Index (20.76%) (2.47%) 7.22%
Russell 2000 Growth Index+ (23.50%) (7.84%) 2.54%
</Table>
<Table>
<Caption>
RBC SMALL CAP EQUITY S&P SMALLCAP RUSSELL 2000 RUSSELL 2000
FUND-CLASS I 600 INDEX** INDEX** GROWTH INDEX**
1/1/1995 $ 10,000 $ 10,000 $ 10,000 $ 10,000
4/30/1995 $ 10,794 $ 10,707 $ 10,694 $ 10,707
4/30/1996 $ 13,206 $ 14,528 $ 14,222 $ 14,921
4/30/1997 $ 14,128 $ 15,074 $ 14,230 $ 12,900
4/30/1998 $ 22,834 $ 22,121 $ 20,263 $ 18,537
4/30/1999 $ 21,043 $ 18,959 $ 18,388 $ 17,837
4/30/2000 $ 25,302 $ 22,845 $ 21,776 $ 23,436
4/30/2001 $ 25,258 $ 24,694 $ 21,153 $ 17,611
4/30/2002 $ 27,368 $ 28,777 $ 22,566 $ 16,110
4/30/2003 $ 22,532 $ 22,750 $ 17,881 $ 12,324
</Table>
PORTFOLIO MANAGER COMMENTARY:
The RBC Small Cap Equity Fund's total return during the 12-month period
through April 30, 2003 was -17.94% (Class A shares). That compares to a total
return of -20.95% for the S&P SmallCap 600 Index and -23.50% for the Russell
2000 Growth Index, the Fund's benchmarks.
Small-cap stocks performed poorly during the period due to a continuing
sluggish economy, tepid corporate earnings growth and concerns about
geopolitical factors. Investors during the period avoided high-valuation
stocks in favor of more stable, higher-quality investments.
Our individual stock selection among defensive growth companies with stable
revenues and earnings helped the Fund's performance. We found such stocks
primarily in the health care, industrial and consumer discretionary sectors.
The Fund's investments in shares of health care firms Barr Laboratories and
Advance PCS helped performance during the period. The Fund also benefited
from holding underweight positions in the technology and telecommunications
sectors, which were affected by concerns about weak capital spending. The
Fund's underweight position in the financial sector helped avoid losses, as
many companies increased reserves for loan losses and suffered from the
overall effects of a declining stock market.
We believe that low interest rates, low inflation and high liquidity are
creating a favorable environment for a stock market recovery that should
benefit small-cap growth stocks. We will look for attractive opportunities in
the technology sector, as we feel such stocks stand to perform well when the
economy recovers. The Fund continues to focus on high-quality small-cap
growth companies that offer the opportunity for long-term capital
appreciation.
The chart above represents a historical investment of $10,000 in the RBC Small
Cap Equity Fund from 1/95 to 4/03, and represents the reinvestment of dividends
and capital gains in the Fund.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RETURNS. THE INVESTMENT RETURN AND
NAV WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THE ORIGINAL COST.
* Both Class A and Class I shares are sold without a sales load. Class B
shares are closed to new investors.
The inception date for performance purposes is January 1, 1995. The quoted
performance of the RBC Small Cap Equity Fund (formerly Southeast Equity Fund)
includes performance of certain collective trust funds ("Commingled Accounts")
advised by Centura Bank prior to the establishment of the Fund on May 2, 1997.
On that date, the assets of the Commingled Accounts were transferred to the Fund
in connection with it's commencement of operations. The investment objective,
policies, and techniques of the Commingled Accounts were equivalent in all
material aspects to those of the Fund. During that time, the Commingled Accounts
were not registered under the Investment Company Act of 1940 (the "1940 Act"),
and therefore were not subject to certain investment restrictions that are
imposed under the 1940 Act. If the Commingled Accounts had been registered under
the 1940 Act, the Commingled Accounts' performance may have been adversely
affected. Because the Commingled Accounts did not charge any expenses, their
performance has been adjusted to reflect the Fund's estimated expenses at the
time of it's inception, which were 1.50%, 2.25%, and 1.25% of average daily net
assets for Class A, Class B, and Class I, respectively. The performance
information for the period subsequent to the Fund's inception also assumes
reinvestment of all net investment income and realized gains and takes into
account actual expenses of the appropriate share class. Prior to November 1,
2001, Class A shares were sold subject to a front-end sales charge.
The total return set forth for Class A and Class B shares reflects the waiver of
a portion of the Fund's fees for certain periods. Without the waiver of fees,
returns would have been lower.
** The S&P SMALLCAP 600 INDEX is an unmanaged index generally representative of
the domestic stock market of small-sized companies. The RUSSELL 2000 INDEX
is a broad based unmanaged index that represents the general performance of
domestically traded common stocks of small-to mid-sized companies. The
RUSSELL 2000 GROWTH INDEX is an unmanaged index of growth securities issued
by the largest 2000 U.S. companies based on market capitalization.
Securities indexes assume reinvestment of all distributions and interest
payments and do not take in account fees, expenses or taxes. Investors cannot
invest directly in an index, although they can invest in its underlying
securities.
*** Class B shares are subject to a contingent deferred sales charge ("CDSC")
upon redemption; no such CDSC applies after the seventh year of ownership.
As such, no CDSC is applied to this 10 year performance figure.
+ The Fund recently changed it's benchmark to one that reflects the universe
of securities in which it invests.
5
<Page>
[CHART]
RBC GOVERNMENT INCOME FUND
GROWTH OF A $10,000 INVESTMENT*
AVERAGE ANNUAL TOTAL RETURN AS OF 4/30/2003
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
------ ------ --------
Class I 9.34% 6.91% 6.08%
Class A 9.07% 6.65% 5.79%
Class B without Load*** 8.64% 6.14% 5.30%
Class B with Load*** 5.64% 5.99% 5.30%
Lehman Brothers Intermediate
Government Bond Index 9.22% 7.27% 6.57%
</Table>
<Table>
<Caption>
RBC LEHMAN BROTHERS
GOVERNMENT INTERMEDIATE
INCOME GOVERNMENT
FUND-CLASS I BOND INDEX**
4/30/1993 $ 10,000 $ 10,000
4/30/1994 $ 10,091 $ 10,089
4/30/1995 $ 10,622 $ 10,711
4/30/1996 $ 11,307 $ 11,518
4/30/1997 $ 11,910 $ 12,236
4/30/1998 $ 12,920 $ 13,298
4/30/1999 $ 13,649 $ 14,143
4/30/2000 $ 13,920 $ 14,440
4/30/2001 $ 15,491 $ 16,122
4/30/2002 $ 16,505 $ 17,296
4/30/2003 $ 18,046 $ 18,890
</Table>
PORTFOLIO MANAGER COMMENTARY:
The RBC Government Income Fund gained 9.07% (Class A shares) during the
12-month period ended April 30, 2003. That return compared to a 9.22% gain
for the Fund's index, the Lehman Brothers Intermediate Government Bond Index.
A weak economy during the period contributed to higher unemployment as well
as low inflation. The Federal Reserve lowered short-term interest rates in
November to try to stimulate the economy.
Bond yields fell in that environment. Yields on short-term securities fell
farther than yields on longer-term securities, causing the yield curve to
grow steeper. Mortgage-backed securities performed especially well as
investors sought the higher yields offered by those bonds.
We diversified the Fund's holdings to include mortgage-backed securities, a
move which proved beneficial to Fund returns. We also increased the Fund's
allocation to intermediate-term bonds, and decreased its stake in short- and
long-term bonds. That strategy provided additional yield and boosted returns.
The Fund's average maturity rose to neutral with its benchmark. We maintained
the Fund's overweight position in agency issues, because they offer higher
yields than Treasury securities.
We expect interest rates to remain low in the short-term and to rise late in
the year, and we expect the gap between short and long-term yields to narrow.
We probably will maintain a neutral average maturity in that environment, but
we expect to reduce the Fund's allocation to intermediate bonds and increase
its stake in short-and long-term issues. We also will look to increase
slightly the Fund's exposure to mortgage-backed securities, which have
historically benefited from rising interest rates.
The chart above represents a historical investment of $10,000 in the RBC
Government Income Fund from 4/93 to 4/03, and represents the reinvestment of
dividends and capital gains in the Fund.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RETURNS. THE INVESTMENT RETURN AND
NAV WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THE ORIGINAL COST.
* Both Class A and Class I shares are sold without a sales load. Class B
shares are closed to new investors.
The inception date for performance purposes is December 31, 1990. The quoted
performance of the RBC Government Income Fund (formerly Federal Securities Fund)
includes performance of certain collective trust funds ("Commingled Accounts")
advised by Centura Bank prior to the establishment of the Fund on June 1, 1994.
On that date, the assets of the Commingled Accounts were transferred to the Fund
in connection with it's commencement of operations. The investment objective,
policies, and techniques of the Commingled Accounts were equivalent in all
material aspects to those of the Fund. During that time, the Commingled Accounts
were not registered under the Investment Company Act of 1940 (the "1940 Act"),
and therefore were not subject to certain investment restrictions that are
imposed under the 1940 Act. If the Commingled Accounts had been registered under
the 1940 Act, the Commingled Accounts' performance may have been adversely
affected. Because the Commingled Accounts did not charge any expenses, their
performance has been adjusted to reflect the Fund's estimated expenses at the
time of it's inception, which were 0.94%, 1.69%, and 0.69% of average daily net
assets for Class A, Class B, and Class I, respectively. The performance
information for the period subsequent to the Fund's inception also assumes
reinvestment of all net investment income and realized gains and takes into
account actual expenses of the appropriate share class. Prior to November 1,
2001, Class A shares were sold subject to a front-end sales charge.
The total return set forth for Class A and Class B shares reflects the waiver of
a portion of the Fund's fees for certain periods. Without the waiver of fees,
returns would have been lower.
** The LEHMAN BROTHERS INTERMEDIATE GOVERNMENT BOND INDEX is an unmanaged index
generally representative of the intermediate government bond market.
Securities indexes assume reinvestment of all distributions and interest
payments and do not take in account fees, expenses or taxes. Investors
cannot invest directly in an index, although they can invest in its
underlying securities.
*** Class B shares are subject to a contingent deferred sales charge ("CDSC")
upon redemption; no such CDSC applies after the seventh year of ownership.
As such, no CDSC is applied to this 10 year performance figure.
6
<Page>
[CHART]
RBC QUALITY INCOME FUND
GROWTH OF A $10,000 INVESTMENT*
AVERAGE ANNUAL TOTAL RETURN AS OF 4/30/2003
<Table>
<Caption>
SINCE
1 YEAR INCEPTION
------ ---------
Class I 9.33% 6.48%
Class A 9.09% 6.25%
Class B without Load*** 8.54% 7.63%
Class B with Load*** 5.54% 6.71%
Lehman Brothers Aggregate Bond Index 10.47% 7.90%
</Table>
<Table>
<Caption>
RBC QUALITY INCOME LEHMAN BROTHERS
FUND-CLASS I AGGREGATE BOND INDEX**
5/11/1999 $ 10,000 $ 10,000
4/30/2000 $ 10,020 $ 10,126
4/30/2001 $ 11,297 $ 11,380
4/30/2002 $ 11,742 $ 12,272
4/30/2003 $ 12,837 $ 13,556
</Table>
PORTFOLIO MANAGER COMMENTARY:
The RBC Quality Income Fund delivered a total return of 9.09% (Class A
shares) during the 12-month period through April 30, 2003. That compared to a
10.47% return for the Lehman Brothers Aggregate Bond Index.
Interest rates declined sharply due to slow economic growth, weak inflation
and geopolitical instability. The Federal Reserve Board reduced interest
rates by 0.5 percentage points in November in an effort to boost the economy.
Corporate bonds, which lagged government issues early in the period,
rebounded strongly and provided superior performance during the period as a
whole.
During the period, we reduced the Fund's high exposure to the corporate
sector and diversified its holdings into high-quality sectors such as
Treasury issues, mortgage-backed securities, residential agency mortgage
pass-through securities and asset-backed securities. The Fund's average
maturity declined slightly, but stayed close to neutral with the benchmark.
We expect interest rates to rise during the coming period. In the short-term
we expect to keep the Fund's average maturity neutral to the benchmark, but
plan to shorten it once we have a clear sense that rates are set to move
higher. We expect to maintain the Fund's credit quality and continue to look
for opportunities to maintain strong returns while carefully managing
risk.
The chart above represents a historical investment of $10,000 in the RBC Quality
Income Fund from 5/99 to 4/03, and represents the reinvestment of dividends and
capital gains in the Fund.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RETURNS. THE INVESTMENT RETURN AND
NAV WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THE ORIGINAL COST.
* Both Class A and Class I shares are sold without a sales load. Class B
shares are closed to new investors.
The total return set forth for Class A and Class B shares reflects the waiver of
a portion of the Fund's fees for certain periods. Without the waiver of fees,
returns would have been lower.
** The LEHMAN BROTHERS AGGREGATE BOND INDEX is an unmanaged index composed of
the LEHMAN BROTHERS GOVERNMENT/CORPORATE INDEX and the LEHMAN BROTHERS
MORTGAGE-BACKED SECURITIES INDEX and includes treasury issues, agency
issues, corporate bond issues and mortgage backed securities.
Securities indexes assume reinvestment of all distributions and interest
payments and do not take in account fees, expenses or taxes. Investors cannot
invest directly in an index, although they can invest in its underlying
securities.
The inception date for performance purposes is May 11, 1999 for both Class A and
Class I shares, and June 12, 2000 for Class B shares.
*** Class B shares are subject to a contingent deferred sales charge ("CDSC")
upon redemption; no such CDSC applies after the seventh year of ownership.
As such, no CDSC is applied to this 10 year performance figure.
7
<Page>
[CHART]
RBC NORTH CAROLINA TAX-FREE BOND FUND
GROWTH OF A $10,000 INVESTMENT*
AVERAGE ANNUAL TOTAL RETURN AS OF 4/30/2003
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
------ ------ -------
Class I 7.23% 5.30% 5.11%
Class A 6.96% 5.04% 4.82%
Class B without Load*** 6.33% 4.51% 4.36%
Class B with Load*** 3.33% 4.35% 4.36%
Lehman Brothers 5-Year General
Obligation Municipal Bond Index 7.88% 6.09% 5.71%
</Table>
<Table>
<Caption>
LEHMAN BROTHERS
RBC NORTH CAROLINA 5-YEAR GENERAL
TAX-FREE BOND OBLIGATION MUNICIPAL
FUND-CLASS I BOND INDEX**
4/30/1993 $ 10,000 $ 10,000
4/30/1994 $ 10,173 $ 10,299
4/30/1995 $ 10,619 $ 10,862
4/30/1996 $ 11,230 $ 11,607
4/30/1997 $ 11,788 $ 12,147
4/30/1998 $ 12,717 $ 12,964
4/30/1999 $ 13,509 $ 13,804
4/30/2000 $ 13,386 $ 13,855
4/30/2001 $ 14,498 $ 15,114
4/30/2002 $ 15,354 $ 16,153
4/30/2003 $ 16,464 $ 17,427
</Table>
PORTFOLIO MANAGER COMMENTARY:
The RBC North Carolina Tax-Free Bond Fund delivered a total return of 6.96%
(Class A shares) during the 12-month period ended April 30, 2003. That
compared to a 7.88% return for the Fund's benchmark, the Lehman Brothers
5-Year General Obligation Municipal Bond Index.
The economy grew at a weaker-than-expected rate, which led to declines in
interest rates. The Federal Reserve Board in November lowered the Federal
Funds rate from 1.75% to 1.25% in an effort to stimulate the economy, but the
move had little discernable impact. Meanwhile, geopolitical concerns led to
considerable uncertainty in the financial markets. Those factors created a
positive environment for bonds. Municipal bonds slightly under-performed
taxable issues, due to high supply of municipal issues and strong demand for
Treasury bonds. The yield curve was unusually steep during the period.
The Fund maintained a relatively defensive portfolio to guard against a
potential increase in interest rates. The Fund's average maturity declined by
roughly 12 months, to around 6.4 years--near the low end of its target
maturity range of five to ten years, but still relatively high compared to
the benchmark index's maturity range of four to six years. The Fund continued
to invest in North Carolina issues that provide income exempt from state and
federal tax. We maintained the Fund's high credit quality, buying mostly
AAA-rated issues.
We expect interest rates to rise when the economy eventually shows signs of
stronger growth. Thus, the Fund expects to maintain a somewhat defensive
stance, investing in high-quality securities with relatively short average
maturities.
The chart above represents a historical investment of $10,000 in the RBC North
Carolina Tax-Free Bond Fund from 4/93 to 4/03, and represents the reinvestment
of dividends and capital gains in the Fund.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RETURNS. THE INVESTMENT RETURN AND
NAV WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THE ORIGINAL COST.
* Both Class A and Class I shares are sold without a sales load. Class B
shares are closed to new investors.
The inception date for performance purposes is January 31, 1991. The quoted
performance of the RBC North Carolina Tax-Free Bond Fund includes performance of
certain collective trust funds ("Commingled Accounts") advised by Centura Bank
prior to the establishment of the Fund on June 1, 1994. On that date, the assets
of the Commingled Accounts were transferred to the Fund in connection with it's
commencement of operations. The investment objective, policies, and techniques
of the Commingled Accounts were equivalent in all material aspects to those of
the Fund. During that time, the Commingled Accounts were not registered under
the Investment Company Act of 1940 (the "1940 Act"), and therefore were not
subject to certain investment restrictions that are imposed under the 1940 Act.
If the Commingled Accounts had been registered under the 1940 Act, the
Commingled Accounts' performance may have been adversely affected. Because the
Commingled Accounts did not charge any expenses, their performance has been
adjusted to reflect the Fund's estimated expenses at the time of it's inception,
which were 1.04%, 1.79%, and 0.79% of average daily net assets for Class A,
Class B, and Class I, respectively. The performance information for the period
subsequent to the Fund's inception also assumes reinvestment of all net
investment income and realized gains and takes into account actual expenses of
the appropriate share class. Prior to November 1, 2001, Class A shares were sold
subject to a front-end sales charge.
Investing in a regional fund may involve more risk, since the companies are
located within the same geographical area.
The Fund's income may be subject to certain state and local taxes and, depending
on your tax status, the federal alternative minimum tax.
The total return set forth for Class A and Class B shares reflects the waiver of
a portion of the Fund's fees for certain periods. Without the waiver of fees,
returns would have been lower.
** The LEHMAN BROTHERS 5-YEAR GENERAL OBLIGATION MUNICIPAL BOND INDEX is an
unmanaged index of debt obligations issued by municipalities.
Securities indexes assume reinvestment of all distributions and interest
payments and do not take in account fees, expenses or taxes. Investors cannot
invest directly in an index, although they can invest in its underlying
securities.
*** Class B shares are subject to a contingent deferred sales charge ("CDSC")
upon redemption; no such CDSC applies after the seventh year of ownership.
As such, no CDSC is applied to this 10 year performance figure.
8
<Page>
RBC FUNDS, INC. SCHEDULE OF PORTFOLIO INVESTMENTS
RBC LARGE CAP EQUITY FUND APRIL 30, 2003
COMMON STOCKS (97.4%)
<Table>
<Caption>
SHARES VALUE
--------- --------------
ADVERTISING (2.0%)
Omnicom Group, Inc. 14,300 $ 885,170
--------------
BANKING & FINANCIAL SERVICES (6.8%)
Fannie Mae 9,300 673,227
Fifth Third Bancorp 19,700 971,013
MBNA Corp. 44,400 839,160
Mellon Financial Corp. 22,400 592,480
--------------
3,075,880
--------------
COMMERCIAL SERVICES (3.4%)
Fiserv, Inc. (b) 18,300 538,752
Paychex, Inc. 31,500 980,910
--------------
1,519,662
--------------
COMPUTER INDUSTRY (12.3%)
Cisco Systems, Inc. (b) 56,500 849,760
Dell Computer Corp. (b) 40,600 1,173,746
Intel Corp. 46,700 859,280
Intuit, Inc. (b) 25,500 988,890
Microsoft Corp. 41,700 1,066,269
Oracle Corp. (b) 50,100 595,188
--------------
5,533,133
--------------
CONSUMER GOODS & SERVICES (4.1%)
Ecolab, Inc. 36,600 1,869,894
--------------
DISTRIBUTION/WHOLESALE (3.4%)
SYSCO Corp. 54,100 1,554,293
--------------
DIVERSIFIED OPERATIONS (8.0%)
Danaher Corp. 16,700 1,151,966
Illinois Tool Works, Inc. 20,300 1,298,794
United Technologies Corp. 18,900 1,168,209
--------------
3,618,969
--------------
EDUCATION (4.1%)
Apollo Group, Inc.-- Class A (b) 33,800 1,831,926
--------------
ELECTRONIC COMPONENTS/INSTRUMENTS (1.8%)
Jabil Circuit, Inc. (b) 43,500 813,450
--------------
FOOD & BEVERAGES (2.9%)
PepsiCo, Inc. 29,800 1,289,744
--------------
HEALTH CARE (19.3%)
Amgen, Inc. (b) 23,300 1,428,523
Biovail Corp. (b) 31,300 1,131,495
Cardinal Health, Inc. 19,700 1,089,016
Johnson & Johnson 15,400 867,944
Medtronic, Inc. 34,900 1,666,126
Pfizer, Inc. 27,400 842,550
Stryker Corp. 25,700 1,722,157
--------------
8,747,811
--------------
INSURANCE (11.4%)
AFLAC, Inc. 52,200 1,707,462
Ambac Financial Group, Inc. 28,000 1,633,800
American International Group, Inc. 11,300 654,835
Marsh & McLennan Cos., Inc. 24,300 1,158,624
--------------
5,154,721
--------------
LEISURE (2.0%)
Carnival Corp. 33,300 $ 918,747
--------------
MOTORCYCLE MANUFACTURERS (2.5%)
Harley-Davidson, Inc. 24,900 1,106,556
--------------
RETAIL (13.4%)
Bed Bath & Beyond, Inc. (b) 39,900 1,576,449
ebay, Inc. (b) 20,000 1,855,400
Home Depot, Inc. 26,700 751,071
Kohl's Corp. (b) 20,400 1,158,720
Walgreen Co. 22,500 694,350
--------------
6,035,990
--------------
TOTAL COMMON STOCKS
(Cost $45,440,920) 43,955,946
--------------
TOTAL INVESTMENTS
(Cost $45,440,920) (a) -- 97.4% 43,955,946
Other assets in excess of liabilities -- 2.6% 1,194,272
--------------
NET ASSETS -- 100.0% $ 45,150,218
==============
</Table>
- ----------
(a) Represents cost for financial reporting purposes and differs from value by
unrealized appreciation (depreciation) of securities as follows:
<Table>
Unrealized appreciation $ 2,232,245
Unrealized depreciation (3,717,219)
------------
Net unrealized depreciation $ (1,484,974)
============
</Table>
Aggregate cost for federal income tax purposes differs from cost for
financial reporting purposes by less than 5% of net assets and is therefore
considered substantially the same.
(b) Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
9
<Page>
RBC FUNDS, INC. SCHEDULE OF PORTFOLIO INVESTMENTS
RBC MID CAP EQUITY FUND APRIL 30, 2003
COMMON STOCKS (94.5%)
<Table>
<Caption>
SHARES VALUE
--------- --------------
ADVERTISING (0.3%)
Catalina Marketing Corp. (b) 25,000 $ 445,750
--------------
AUTO PARTS (1.0%)
Gentex Corp. (b) 25,000 755,000
Lear Corp. (b) 20,000 794,800
--------------
1,549,800
--------------
BANKING & FINANCIAL SERVICES (15.5%)
A.G. Edwards, Inc. 30,000 894,900
Allmerica Financial Corp. (b) 12,000 183,600
Associated Banc-Corp 32,000 1,118,080
Astoria Financial Corp. 34,000 850,680
Banknorth Group, Inc. 50,000 1,194,000
Certegy, Inc. (b) 16,000 399,840
City National Corp. 20,000 823,400
Compass Bancshares, Inc. 45,000 1,517,400
E*Trade Group, Inc. (b) 125,000 687,500
GreenPoint Financial Corp. 30,000 1,432,800
Legg Mason, Inc. 20,000 1,086,000
M&T Bank Corp. 22,000 1,858,340
Mercantile Bankshares Corp. 30,000 1,150,200
National Commerce Financial Corp. 60,000 1,220,400
New York Community Bancorp, Inc. 50,000 1,736,000
North Fork Bancorp, Inc. 45,000 1,456,200
Roslyn Bancorp, Inc. 4,300 82,044
SEI Investments Co. 41,000 1,079,530
Sovereign Bancorp, Inc. 75,000 1,158,750
TCF Financial Corp. 29,000 1,148,400
Waddell & Reed Financial, Inc. 40,000 800,000
Webster Financial Corp. 20,000 750,800
Wilmington Trust Corp. 28,000 753,480
--------------
23,382,344
--------------
BUILDING & CONSTRUCTION (0.2%)
Granite Construction, Inc. 20,000 336,000
--------------
BUILDING PRODUCTS (0.6%)
Valspar Corp. 22,000 950,180
--------------
BUSINESS EQUIPMENT & SERVICES (2.1%)
Acxiom Corp. (b) 25,000 349,000
ChoicePoint, Inc. (b) 37,000 1,305,360
Jack Henry & Associates, Inc. 40,000 521,200
Manpower, Inc. 29,000 953,520
--------------
3,129,080
--------------
CHEMICALS (0.9%)
Cabot Microelectronics Corp. (b) 5,609 242,421
Ferro Corp. 26,000 614,640
FMC Corp. (b) 25,000 453,000
--------------
1,310,061
--------------
COMPUTER INDUSTRY (9.4%)
Activision, Inc. (b) 40,000 612,000
Affiliated Computer Services, Inc. (b) 46,000 2,194,200
Cadence Design Systems, Inc. (b) 85,000 971,550
CheckFree Corp. (b) 42,000 1,157,940
CSG Systems International, Inc. (b) 35,000 368,550
Diebold, Inc. 7,500 $ 299,850
DST Systems, Inc. (b) 52,000 1,596,400
Mentor Graphics Corp. (b) 45,000 468,900
Storage Technology Corp. (b) 15,000 370,800
SunGard Data Systems, Inc. (b) 85,000 1,827,500
Symantec Corp. (b) 58,000 2,549,100
Synopsys, Inc. (b) 35,000 1,702,400
--------------
14,119,190
--------------
CONSUMER GOODS & SERVICES (3.2%)
Blyth, Inc. 28,000 738,640
Callaway Golf Co. 40,000 557,200
Church & Dwight Co., Inc. 20,000 629,400
Dial Corp. 46,000 958,180
Fastenal Co. 37,000 1,279,830
Sonoco Products Co. 30,000 655,500
--------------
4,818,750
--------------
DIVERSIFIED OPERATIONS (2.0%)
SPX Corp. (b) 52,000 1,757,600
Teleflex, Inc. 15,000 575,850
Viad Corp. 31,000 623,410
--------------
2,956,860
--------------
DRUGS (2.9%)
IDEC Pharmaceuticals Corp. (b) 45,000 1,473,750
IVAX Corp. (b) 55,000 883,850
Mylan Laboratories, Inc. 70,500 1,993,035
--------------
4,350,635
--------------
EDUCATION (1.3%)
Career Education Corp. (b) 20,000 1,202,600
DeVry, Inc. (b) 25,000 578,500
Scholastic Corp. (b) 7,000 198,870
--------------
1,979,970
--------------
ELECTRONIC COMPONENTS/INSTRUMENTS (5.3%)
Arrow Electronics, Inc. (b) 24,000 405,120
Atmel Corp. (b) 180,000 331,200
Cypress Semiconductor Corp. (b) 50,000 436,000
Integrated Device Technology, Inc. (b) 40,000 413,200
International Rectifier Corp. (b) 28,000 633,360
L-3 Communications Holdings, Inc. (b) 50,000 2,220,000
Lam Research Corp. (b) 30,000 435,900
Micrel, Inc. (b) 30,000 351,300
Microchip Technology, Inc. 65,000 1,351,350
Semtech Corp. (b) 30,000 477,000
Vishay Intertechnology, Inc. (b) 75,000 937,500
--------------
7,991,930
--------------
ENERGY (6.4%)
Cooper Cameron Corp. (b) 20,000 957,200
Devon Energy Corp. 22,770 1,075,883
ENSCO International, Inc. 45,000 1,143,000
Grant Prideco, Inc. (b) 50,000 570,500
Murphy Oil Corp. 20,000 833,000
Pioneer Natural Resources Co. (b) 40,000 956,800
Smith International, Inc. (b) 35,000 1,244,600
</Table>
10
<Page>
COMMON STOCKS, CONTINUED:
<Table>
<Caption>
SHARES VALUE
--------- --------------
Weatherford International Ltd. (b) 60,000 $ 2,413,800
XTO Energy, Inc. 26,666 519,987
--------------
9,714,770
--------------
ENVIRONMENTAL SERVICES (0.6%)
Republic Services, Inc. -- Class A (b) 45,000 965,700
--------------
FOOD & BEVERAGES (3.2%)
Constellation Brands, Inc. (b) 20,000 536,200
Hormel Foods Corp. 73,000 1,679,730
Smithfield Foods, Inc. (b) 55,000 1,078,000
Tootsie Roll Industries, Inc. 15,450 447,741
Tyson Foods, Inc. -- Class A 110,000 1,059,300
--------------
4,800,971
--------------
HEALTH CARE (16.1%)
AdvancePCS, Inc. (b) 35,000 1,052,100
AmerisourceBergen Corp. 25,000 1,446,250
Apogent Technologies, Inc. (b) 50,000 859,000
Barr Laboratories, Inc. (b) 25,500 1,417,800
Beckman Coulter, Inc. 35,000 1,360,450
Covance, Inc. (b) 30,000 531,900
DENTSPLY International, Inc. 38,500 1,441,825
Edwards Lifesciences Corp. (b) 25,000 721,750
Express Scripts, Inc.-- Class A (b) 40,000 2,358,400
Genzyme Corp. (b) 20,000 805,600
Gilead Sciences, Inc. (b) 75,000 3,460,499
Hillenbrand Industries, Inc. 30,000 1,497,000
King Pharmaceuticals, Inc. (b) 30,000 378,300
Lincare Holdings, Inc. (b) 50,000 1,518,500
Oxford Health Plans, Inc. (b) 20,000 585,400
Quest Diagnostics, Inc. (b) 44,000 2,629,000
STERIS Corp. (b) 40,000 908,000
Universal Health Services, Inc.--
Class B (b) 30,000 1,160,100
--------------
24,131,874
--------------
INSURANCE (1.9%)
Everest Re Group Ltd. 22,000 1,532,300
Protective Life Corp. 24,000 689,520
Radian Group, Inc. 17,000 674,900
--------------
2,896,720
--------------
LEISURE (0.2%)
Park Place Entertainment Corp. (b) 50,000 372,000
--------------
MEDIA (3.4%)
Entercom Communications Corp. (b) 21,000 1,020,390
Hispanic Broadcasting Corp. (b) 30,000 769,500
Media General, Inc.-- Class A 10,000 549,600
Readers Digest Assoc., Inc.--
Class A 25,000 300,000
Washington Post Co.-- Class B 1,900 1,385,100
Westwood One, Inc. (b) 30,000 1,047,000
--------------
5,071,590
--------------
METALS (0.3%)
Precision Castparts Corp. 15,000 415,350
--------------
POLLUTION CONTROL (0.6%)
Donaldson Co., Inc. 22,000 $ 878,240
--------------
RESTAURANTS (1.8%)
Brinker International, Inc. (b) 40,000 1,270,000
Cheesecake Factory, Inc. (b) 17,000 537,030
Outback Steakhouse, Inc. 25,000 893,500
--------------
2,700,530
--------------
RETAIL (8.4%)
99 Cents Only Stores (b) 35,000 1,031,100
Abercrombie & Fitch Co.--
Class A (b) 48,000 1,578,240
American Eagle Outfitters, Inc. (b) 10,000 175,000
Barnes & Noble, Inc. (b) 12,000 236,400
BJ's Wholesale Club, Inc. (b) 25,000 353,000
CDW Computer Centers, Inc. (b) 38,000 1,620,320
Coach, Inc. (b) 50,000 2,175,500
Dollar Tree Stores, Inc. (b) 50,000 1,272,500
Pier 1 Imports, Inc. 45,000 835,200
Ross Stores, Inc. 30,000 1,137,000
Timberland Co.-- Class A (b) 20,000 999,800
Williams-Sonoma, Inc. (b) 50,000 1,294,000
--------------
12,708,060
--------------
TELECOMMUNICATIONS (0.7%)
Price Communications Corp. (b) 20,000 244,200
Telephone & Data Systems, Inc. 20,000 861,800
--------------
1,106,000
--------------
TELECOMMUNICATIONS EQUIPMENT (0.8%)
Advanced Fibre Communications,
Inc. (b) 20,000 306,000
Intersil Corp.-- Class A (b) 35,000 647,500
RF Micro Devices, Inc. (b) 50,000 237,500
--------------
1,191,000
--------------
TRANSPORTATION & SHIPPING (1.9%)
C.H. Robinson Worldwide, Inc. 30,000 1,103,700
Expeditors International of
Washington, Inc. 40,000 1,454,360
GATX Corp. 16,000 301,440
--------------
2,859,500
--------------
UTILITIES (3.5%)
Alliant Energy Corp. 30,000 526,800
DPL, Inc. 40,000 553,600
Energy East Corp. 45,000 819,900
IDACORP, Inc. 16,000 409,440
National Fuel Gas Co. 40,000 938,400
Northeast Utilities 50,000 746,000
Questar Corp. 20,000 604,000
Vectren Corp. 30,000 697,500
--------------
5,295,640
--------------
TOTAL COMMON STOCKS
(Cost $150,285,474) 142,428,495
--------------
</Table>
11
<Page>
INDEX LINKED TRUSTS (3.7%)
<Table>
<Caption>
SHARES VALUE
--------- --------------
Cyclical/Transportation Select
Sector SPDR 30,000 $ 759,000
MidCap 400 SPDR 60,000 4,812,600
--------------
TOTAL INDEX LINKED TRUSTS
(Cost $6,648,638) 5,571,600
--------------
</Table>
INVESTMENT COMPANIES (1.6%)
<Table>
<Caption>
SHARES VALUE
--------- --------------
Goldman Sachs Financial Square
Prime Money Market Fund 1,216,402 $ 1,216,402
Provident Institutional Temporary
Investment Fund 1,216,402 1,216,402
--------------
TOTAL INVESTMENT COMPANIES
(Cost $2,432,804) 2,432,804
--------------
TOTAL INVESTMENTS
(Cost $159,366,916) (a)-- 99.8% 150,432,899
Other assets in excess of liabilities-- 0.2% 261,062
--------------
NET ASSETS-- 100.0% $ 150,693,961
==============
</Table>
- ----------
(a) Represents cost for financial reporting purposes and differs from value by
unrealized appreciation (depreciation) of securities as follows:
<Table>
Unrealized appreciation $ 21,001,153
Unrealized depreciation (29,935,170)
------------
Net unrealized depreciation $ (8,934,017)
============
</Table>
Aggregate cost for federal income tax purposes differs from cost for
financial reporting purposes by less than 5% of net assets and is therefore
considered substantially the same.
(b) Non-income producing security.
SPDR -- Standard & Poor's Depositary Receipt
SEE NOTES TO FINANCIAL STATEMENTS
12
<Page>
RBC FUNDS, INC. SCHEDULE OF PORTFOLIO INVESTMENTS
RBC SMALL CAP EQUITY FUND APRIL 30, 2003
COMMON STOCKS (95.7%)
<Table>
<Caption>
SHARES VALUE
--------- --------------
ADVERTISING (1.2%)
Catalina Marketing Corp. (b) 15,100 $ 269,233
--------------
AEROSPACE/DEFENSE (2.0%)
DRS Technologies, Inc. (b) 16,200 453,762
--------------
AUTO PARTS (2.6%)
Gentex Corp. (b) 20,100 607,020
--------------
BANKING & FINANCIAL SERVICES (4.8%)
Hudson United Bancorp 7,000 233,380
Investors Financial Services Corp. 8,800 191,928
Raymond James Financial, Inc. 14,000 401,520
SEI Investments Co. 10,500 276,465
--------------
1,103,293
--------------
BUILDING PRODUCTS (3.2%)
Simpson Manufacturing Co., Inc. (b) 13,500 474,120
Valspar Corp. 6,100 263,459
--------------
737,579
--------------
BUSINESS EQUIPMENT & SERVICES (4.6%)
Acxiom Corp. (b) 20,500 286,180
American Management Systems, Inc. (b) 18,300 225,090
Global Payments, Inc. 6,900 213,969
Right Management Consultants, Inc. (b) 26,500 331,250
--------------
1,056,489
--------------
CHEMICALS (1.9%)
Spartech Corp. 20,400 441,660
--------------
COMMERCIAL SERVICES (1.4%)
Tetra Tech, Inc. (b) 20,800 322,400
--------------
COMPUTER SOFTWARE (6.9%)
ANSYS, Inc. (b) 15,500 409,975
Autodesk, Inc. 15,900 247,404
Verisity Ltd. (b) 21,100 247,503
Verity, Inc. (b) 36,500 603,345
Wind River Systems, Inc. (b) 26,600 88,046
--------------
1,596,273
--------------
DISTRIBUTION/WHOLESALE (1.0%)
ScanSource, Inc. (b) 11,800 234,938
--------------
DIVERSIFIED OPERATIONS (2.1%)
Teleflex, Inc. 12,800 491,392
--------------
ELECTRONIC COMPONENTS/INSTRUMENTS (4.1%)
Black Box Corp. 4,800 152,400
Zebra Technologies Corp.-- Class A (b) 11,800 786,706
--------------
939,106
--------------
ENERGY (4.0%)
Atwood Oceanics, Inc. (b) 11,000 286,550
Newfield Exploration Co. (b) 12,000 $ 412,680
Patina Oil & Gas Corp. 6,600 227,898
--------------
927,128
--------------
ENVIRONMENTAL SERVICES (2.3%)
Stericycle, Inc. (b) 13,700 538,273
--------------
FOOD & BEVERAGES (2.9%)
United Natural Foods, Inc. (b) 22,700 662,613
--------------
HEALTH CARE (21.2%)
Advanced Neuromodulation
Systems, Inc. (b) 6,300 263,781
AdvancePCS, Inc. (b) 13,600 408,816
ArthroCare Corp. (b) 13,700 209,336
Barr Laboratories, Inc. (b) 8,150 453,140
Cooper Cos., Inc. (The) 16,200 451,980
Exactech, Inc. (b) 24,800 388,120
IDEXX Laboratories, Inc. (b) 9,900 386,100
K-V Pharmaceutical Co.-- Class A (b) 27,300 613,978
Patterson Dental Co. (b) 14,800 594,516
Pharmaceutical Product
Development, Inc. (b) 7,500 196,275
Sunrise Assisted Living, Inc. (b) 15,200 410,400
SurModics, Inc. (b) 5,800 210,772
Young Innovations, Inc. (b) 15,600 347,100
--------------
4,934,314
--------------
INSURANCE (1.8%)
HCC Insurance Holdings, Inc. 14,800 407,000
--------------
REAL ESTATE (1.3%)
Cousins Properties, Inc. 11,600 304,616
--------------
RESTAURANTS (5.1%)
Buca, Inc. (b) 26,500 152,375
RARE Hospitality International, Inc. (b) 20,400 594,252
Sonic Corp. (b) 16,100 434,861
--------------
1,181,488
--------------
RETAIL (11.5%)
Chico's FAS, Inc. (b) 13,200 321,288
Fred's, Inc. 21,700 704,165
Hot Topic, Inc. (b) 13,900 339,855
Tiffany & Co. 22,700 629,698
Whole Foods Market, Inc. (b) 11,300 670,768
--------------
2,665,774
--------------
SEMICONDUCTOR EQUIPMENT (2.4%)
Cymer, Inc. (b) 11,800 336,890
Photronics, Inc. (b) 17,200 216,204
--------------
553,094
--------------
</Table>
13
<Page>
COMMON STOCKS, CONTINUED:
<Table>
<Caption>
SHARES VALUE
--------- --------------
SEMICONDUCTORS (1.1%)
Actel Corp. (b) 9,800 $ 194,138
TriQuint Semiconductor, Inc. (b) 20,200 70,902
--------------
265,040
--------------
TRANSPORTATION & SHIPPING (6.3%)
Expeditors International of
Washington, Inc. 20,600 748,995
Knight Transportation, Inc. (b) 29,700 715,770
--------------
1,464,765
--------------
TOTAL COMMON STOCKS
(Cost $20,356,759) 22,157,250
--------------
</Table>
INVESTMENT COMPANIES (1.6%)
<Table>
<Caption>
SHARES VALUE
--------- --------------
Goldman Sachs Financial Square
Prime Money Market Fund 474,765 $ 474,765
Provident Institutional Temporary
Investment Fund 474,765 474,765
--------------
TOTAL INVESTMENT COMPANIES
(Cost $949,530) 949,530
--------------
TOTAL INVESTMENTS
(Cost $21,306,289) (a)-- 99.8% 23,106,780
Other assets in excess of liabilities-- 0.2% 44,244
--------------
NET ASSETS-- 100.0% $ 23,151,024
==============
</Table>
- ----------
(a) Represents cost for financial reporting purposes and differs from value by
unrealized appreciation (depreciation) of securities as follows:
<Table>
Unrealized appreciation $ 2,694,777
Unrealized depreciation (894,286)
------------
Net unrealized appreciation $ 1,800,491
============
</Table>
Aggregate cost for federal income tax purposes is the same.
(b) Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
14
<Page>
RBC FUNDS, INC. SCHEDULE OF PORTFOLIO INVESTMENTS
RBC GOVERNMENT INCOME FUND APRIL 30, 2003
U.S. GOVERNMENT AGENCY OBLIGATIONS (103.3%)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
------------ ------------
FANNIE MAE (44.5%)
1.17%, 5/19/03 $ 1,400,000 $ 1,399,136
6.50%, 8/15/04 2,415,000 2,576,271
3.88%, 3/15/05 2,000,000 2,087,242
5.25%, 6/15/06 970,000 1,057,980
4.38%, 10/15/06 1,945,000 2,073,668
5.00%, 1/15/07 2,500,000 2,718,817
5.25%, 4/15/07 440,000 483,058
6.13%, 3/15/12 400,000 459,789
4.50%, 3/1/18, TBA 1,000,000 1,014,400
------------
13,870,361
------------
FEDERAL HOME LOAN BANK (25.8%)
4.13%, 11/15/04 4,000,000 4,162,256
2.50%, 3/15/06 1,000,000 1,009,481
5.38%, 5/15/06 2,000,000 2,182,568
5.75%, 5/15/12 400,000 449,524
4.50%, 11/15/12 250,000 255,693
------------
8,059,522
------------
FREDDIE MAC (29.5%)
5.50%, 7/15/06 395,000 434,450
4.88%, 3/15/07 1,000,000 1,084,621
5.75%, 3/15/09 5,000,000 5,639,949
5.00%, 5/3/18, TBA 1,500,000 1,545,938
4.50%, 6/1/18, TBA 500,000 504,375
------------
9,209,333
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (3.5%)
5.28%, 11/16/15 1,000,000 1,082,047
------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost $30,441,999) 32,221,263
------------
</Table>
INVESTMENT COMPANIES (3.2%)
<Table>
<Caption>
SHARES VALUE
------------ ------------
Goldman Financial Square Treasury
Short-Term Money Market Fund 497,401 $ 497,401
Provident Institutional Temporary
Investment Fund 497,400 497,400
------------
TOTAL INVESTMENT COMPANIES
(Cost $994,801) 994,801
------------
TOTAL INVESTMENTS
(Cost $31,436,800) (a)-- 106.5% 33,216,064
------------
Liabilities in excess of other assets-- (6.5)% (2,019,379)
------------
NET ASSETS-- 100.0% $ 31,196,685
============
</Table>
- ----------
(a) Represents cost for financial reporting purposes and differs from value by
unrealized appreciation (depreciation) of securities as follows:
<Table>
Unrealized appreciation $ 1,779,310
Unrealized depreciation (46)
------------
Net unrealized appreciation $ 1,779,264
============
</Table>
Aggregate cost for federal income tax purposes is the same.
TBA -- To be announced.
SEE NOTES TO FINANCIAL STATEMENTS
15
<Page>
RBC FUNDS, INC. SCHEDULE OF PORTFOLIO INVESTMENTS
RBC QUALITY INCOME FUND APRIL 30, 2003
ASSET BACKED SECURITIES (3.8%)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
------------ ------------
BANKING & FINANCIAL SERVICES (2.6%)
CIT RV Trust, Series 1999-A, Class A3,
5.96%, 4/15/11 $ 262,092 $ 266,549
GMAC Commercial Mortgage
Securities, Inc., Series 1998-C1,
Class A1, 6.41%, 5/15/30 780,830 828,702
Green Tree Recreational, Equipment &
Consumer Trust, Series 1997-C,
Class A1, 6.49%, 2/15/18 88,185 88,374
The Money Store Home Equity Trust,
Series 1996-A, Class A7, 7.36%,
3/15/24 58,200 58,380
------------
1,242,005
------------
UTILITIES (1.2%)
Peco Energy Transition Trust, Series 2001-A,
Class A1, 6.52%, 12/31/10 500,000 575,364
------------
TOTAL ASSET BACKED SECURITIES
(Cost $1,781,771) 1,817,369
------------
COLLATERALIZED MORTGAGE OBLIGATIONS (2.3%)
BANKING & FINANCIAL SERVICES (2.3%)
Residential Accredit Loans, Inc.,
Series 2002-QS9, Class A3, 6.50%,
7/25/32 631,885 642,983
Washington Mutual, Inc., Series 2002-AR10,
Class A6, 4.82%, 10/25/32 475,000 490,320
------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost $1,142,005) 1,133,303
------------
COMMERCIAL PAPER (2.1%)
BANKING & FINANCIAL SERVICES (2.1%)
Verizon Network Funding Corp.,
1.22%, 6/12/03 1,000,000 998,543
------------
TOTAL COMMERCIAL PAPER
(Cost $998,577) 998,543
------------
CORPORATE BONDS (54.0%)
AIRLINES (0.9%)
American Airlines, Inc., Series 1999-1,
7.02%, 10/15/09 500,000 419,306
------------
AUTOMOTIVE (0.3%)
Ford Motor Co., 7.45%, 7/16/31 155,000 137,955
------------
BANKING & FINANCIAL SERVICES (23.4%)
American Financial Group, 7.13%,
4/15/09 200,000 189,385
Bank One Corp., 7.60%, 5/1/07 350,000 404,529
Bank One NA Illinois, 5.50%, 3/26/07 280,000 306,676
BankAmerica Corp., 6.38%, 2/15/08 500,000 565,366
BankBoston NA, 7.38%, 9/15/06 200,000 227,562
BB&T Corp., 6.38%, 6/30/05 500,000 543,672
Capital One Bank Co., 6.65%, 3/15/04 200,000 206,086
CitiFinancial Credit Co., 6.75%, 7/1/07 $ 215,000 $ 244,046
Citigroup, Inc., 7.25%, 10/1/10 250,000 296,372
Citigroup, Inc., 6.63%, 6/15/32 105,000 118,550
Countrywide Home Loan, Series K,
MTN, 5.50%, 2/1/07 250,000 269,851
Donaldson, Lufkin & Jenrette, Inc.,
6.88%, 11/1/05 200,000 219,248
European Investment Bank, MTN,
4.88%, 9/6/06 250,000 270,594
Ford Motor Credit Co., 7.38%, 2/1/11 200,000 202,750
General Electric Capital Corp., Series A,
MTN, 6.13%, 2/22/11 250,000 278,311
General Motors Acceptance Corp.,
MTN, 8.38%, 2/22/05 500,000 539,958
Goldman Sachs Group, Inc., Series B,
MTN, 7.35%, 10/1/09 250,000 293,119
Household Financial Corp., 5.75%,
1/30/07 500,000 543,316
International Bank for Reconstruction &
Development, 4.38%, 9/28/06 500,000 531,638
JP Morgan Chase & Co., 7.25%, 6/1/07 250,000 285,240
KeyCorp, 6.75%, 3/15/06 500,000 556,509
KFW International Finance, Inc., 4.75%,
1/24/07, 200,000 214,775
Lehman Brothers Holdings, 7.75%,
1/15/05 500,000 546,649
Mellon Funding Corp., 7.50%, 6/15/05 200,000 223,689
Merrill Lynch & Co., Inc., 6.38%, 10/15/08 500,000 560,478
SunTrust Bank, Inc., 6.38%, 4/1/11 250,000 285,635
Synovus Financial Corp., 7.25%,
12/15/05 500,000 561,853
Tyco Capital Corp., 7.63%, 8/16/05 500,000 546,950
U.S. Bancorp., 8.00%, 7/2/04 500,000 536,198
Wachovia Corp., 7.45%, 7/15/05 500,000 557,830
Washington Mutual, Inc., 5.63%, 1/15/07 200,000 218,332
------------
11,345,167
------------
CABLE (1.9%)
Comcast Corp., 8.88%, 4/1/07 300,000 321,982
Comcast Corp., 5.50%, 3/15/11 150,000 154,737
TCI Communications, Inc., 9.65%,
10/1/03 419,000 419,331
------------
896,050
------------
CHEMICALS (1.2%)
E.I. Du Pont de Nemours & Co.,
8.25%, 9/15/06 500,000 590,719
------------
COMMERCIAL SERVICES (1.1%)
First Data Corp., 4.70%, 11/1/06 500,000 529,802
------------
COMPUTER INDUSTRY (0.6%)
IBM Corp., 4.88%, 10/1/06 250,000 268,936
------------
CONSUMER GOODS & SERVICES (0.6%)
Kimberly-Clark Corp., 5.63%, 2/15/12 250,000 273,797
------------
</Table>
16
<Page>
CORPORATE BONDS, CONTINUED:
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
------------ ------------
ELECTRIC - INTEGRATED (1.4%)
American Electric Power Co., Inc.,
Series A, 6.13%, 5/15/06 $ 135,000 $ 145,800
Constellation Energy Group, 7.60%,
4/1/32 250,000 298,687
Progress Energy, Inc., 5.85%, 10/30/08 200,000 219,011
------------
663,498
------------
ENERGY (1.2%)
BP Canada Energy Co., 6.75%, 2/15/05 200,000 216,499
Kinder Morgan Energy Partners LP,
7.75%, 3/15/32 150,000 183,869
Tosco Corp., 7.80%, 1/1/27 150,000 186,975
------------
587,343
------------
FOOD & BEVERAGES (2.4%)
Coca-Cola Enterprises, 5.38%, 8/15/06 500,000 545,441
Diageo PLC, 7.13%, 9/15/04 250,000 267,740
General Mills, Inc., 5.13%, 2/15/07 300,000 323,111
------------
1,136,292
------------
FOREIGN AGENCIES (1.9%)
Canadian Government, 5.25%, 11/5/08 250,000 278,084
Ontario Province, 5.50%, 10/1/08 250,000 277,436
Republic of Italy, MTN, 6.00%, 2/22/11 300,000 341,165
------------
896,685
------------
HEALTH CARE (0.5%)
Wyeth, 6.25%, 3/15/06 200,000 221,118
------------
INSURANCE (1.1%)
AIG SunAmerica, Inc., MTN, 5.75%,
2/16/09 500,000 537,359
------------
MACHINERY & EQUIPMENT (0.5%)
Caterpillar, Inc., 7.25%, 9/15/09 200,000 238,932
------------
MEDIA (2.0%)
AOL Time Warner, Inc., 8.11%, 8/15/06 400,000 445,378
News America Holdings, Inc., 7.70%,
10/30/25 130,000 146,888
Time Warner Entertainment Co. LP,
8.88%, 10/1/12 180,000 226,585
Time Warner, Inc., 6.95%, 1/15/28 125,000 128,303
------------
947,154
------------
METALS (0.2%)
Inco Ltd., 7.75%, 5/15/12 100,000 115,378
------------
PAPER PRODUCTS (0.4%)
International Paper Co., 6.13%, 11/1/03 200,000 204,577
------------
REAL ESTATE (0.4%)
EOP Operating LP, 6.50%, 6/15/04 200,000 209,680
------------
RESEARCH & DEVELOPMENT (0.9%)
Science Applications International Corp.,
6.25%, 7/1/12 385,000 418,798
------------
RESTAURANTS (1.2%)
Darden Restaurants, Inc., 8.38%, 9/15/05 500,000 564,839
------------
RETAIL (2.5%)
Kroger Co., 7.38%, 3/1/05 $ 200,000 $ 216,181
Safeway, Inc., 7.25%, 9/15/04 200,000 213,268
Target Corp., 7.50%, 2/15/05 500,000 548,958
Wal-Mart Stores, Inc., 6.88%, 8/10/09 250,000 296,039
------------
1,274,446
------------
TELECOMMUNICATIONS (2.6%)
AT&T Wireless Services, Inc., 8.75%,
3/1/31 100,000 124,524
British Telecom PLC, 7.88%, 12/15/05 250,000 283,405
Citizens Communications Co., 9.25%,
5/15/11 75,000 94,794
Deutsche Telekom International Finance,
8.25%, 6/15/05 250,000 277,724
SBC Communications, Inc., 5.88%,
2/1/12 250,000 274,062
Sprint Capital Corp., 6.88%, 11/15/28 250,000 231,250
------------
1,285,759
------------
TEXTILES (1.2%)
VF Corp., 8.10%, 10/1/05 500,000 563,034
------------
TOBACCO (0.4%)
Philip Morris Cos., Inc., 7.00%, 7/15/05 200,000 204,423
------------
TRANSPORTATION & SHIPPING (2.0%)
Atlas Air, Inc., Series 1999-1, Class A1,
7.20%, 1/2/19 222,111 165,832
Burlington Northern Santa Fe Corp.,
Series H, 9.25%, 10/1/06 500,000 578,145
Union Pacific Corp., 5.84%, 5/25/04 220,000 228,562
------------
972,539
------------
UTILITIES (1.2%)
Niagra Mohawk Power Co., 7.75%,
5/15/06 500,000 566,499
------------
TOTAL CORPORATE BONDS
(Cost $24,260,291) 26,070,085
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS (30.3%)
FANNIE MAE (13.4%)
5.38%, 11/15/11 340,000 372,549
4.38%, 9/15/12 325,000 328,833
4.63%, 5/1/13 235,000 236,392
5.00%, 8/1/17 461,444 476,999
5.50%, 8/1/17 874,807 910,659
7.00%, 2/1/26 1,818,294 1,929,810
6.50%, 5/1/29 370,977 387,971
6.63%, 11/15/30 700,000 837,733
5.50%, 6/1/33, TBA 1,000,000 1,023,125
------------
6,504,071
------------
FEDERAL HOME LOAN BANK (0.4%)
3.38%, 2/15/08 200,000 203,753
------------
</Table>
17
<Page>
U.S. GOVERNMENT AGENCY OBLIGATIONS, CONTINUED:
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
------------ ------------
FREDDIE MAC (8.7%)
5.50%, 2/15/26 $ 1,000,000 $ 1,042,400
6.00%, 11/1/32 2,041,257 2,125,642
5.50%, 12/1/32 980,178 1,008,978
------------
4,177,020
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (6.0%)
5.28%, 11/16/15 210,000 227,230
3.31%, 4/16/17 255,206 260,437
4.70%, 12/16/24 500,000 519,588
6.00%, 9/20/31 255,412 266,487
7.00%, 4/15/32 314,494 333,526
7.50%, 7/15/32 602,188 642,820
6.00%, 10/20/32 612,713 639,277
------------
2,889,365
------------
TENNESSEE VALLEY AUTHORITY (1.8%)
6.25%, 12/15/17, Series E 750,000 862,538
------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $14,258,613) 14,636,747
------------
U.S. TREASURY BONDS (3.9%)
5.63%, 5/15/08 225,000 254,083
5.00%, 2/15/11 1,000,000 1,097,031
3.88%, 2/15/13 525,000 525,697
------------
TOTAL U.S. TREASURY NOTES
(Cost $1,846,458) 1,876,811
------------
U.S. TREASURY BONDS (3.8%)
7.88%, 2/15/21 500,000 691,289
6.00%, 2/15/26 70,000 80,861
5.50%, 8/15/28 750,000 815,331
5.38%, 2/15/31 225,000 245,514
------------
TOTAL U.S. TREASURY BONDS
(Cost $1,779,020) 1,832,995
------------
</Table>
INVESTMENT COMPANIES (1.2%)
<Table>
<Caption>
SHARES VALUE
------------ ------------
Goldman Sachs Financial Square Prime
Money Market Fund 292,026 $ 292,026
Provident Institutional Temporary
Investment Fund 292,026 292,026
------------
TOTAL INVESTMENT COMPANIES
(Cost $584,052) 584,052
------------
TOTAL INVESTMENTS
(Cost $46,650,787) (a) 101.4% 48,949,905
Liabilities in excess of other assets-- (1.4)% (677,026)
------------
NET ASSETS-- 100.0% $ 48,272,879
============
</Table>
- ----------
(a) Represents cost for financial reporting purposes and differs from value by
unrealized appreciation (depreciation) of securities as follows:
<Table>
Unrealized appreciation $ 2,453,241
Unrealized depreciation (154,123)
------------
Net unrealized appreciation $ 2,299,118
============
</Table>
Aggregate cost for federal income tax purposes is the same.
MTN -- Medium Term Note
PLC -- Public Limited Co.
TBA -- To be announced.
SEE NOTES TO FINANCIAL STATEMENTS
18
<Page>
RBC FUNDS, INC. SCHEDULE OF PORTFOLIO INVESTMENTS
RBC NORTH CAROLINA TAX-FREE BOND FUND APRIL 30, 2003
NORTH CAROLINA MUNICIPAL OBLIGATIONS (94.7%)
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
------------ ------------
Burlington County GO, 5.20%, 2/1/14,
Callable 2/1/10 @ 102, (AMBAC
Insured) $ 400,000 $ 442,544
Cabarrus County CP, 5.50%, 4/1/15,
Callable 4/1/11 @ 102 500,000 562,865
Cabarrus County GO, 5.30%, 2/1/08,
Callable 2/1/07 @ 100.5, (MBIA
Insured) 935,000 1,036,952
Catawba County Memorial Hospital
Project Revenue, 4.40%, 10/1/08,
(AMBAC Insured) 1,000,000 1,093,600
Centennial Authority Hotel Tax
Revenue, Arena Project, 4.65%,
9/1/06, (FSA Insured) 1,000,000 1,093,320
Charlotte GO, Series A, 4.75%, 2/1/10,
Callable 2/1/08 @ 101 435,000 471,175
Charlotte Water & Sewer System
Revenue, Series A, 4.38%, 7/1/15 250,000 265,395
Charlotte-Mecklenberg Health Care
Systems Revenue, Series A, 4.90%,
1/15/10, Callable 1/15/07 @ 102 1,000,000 1,067,170
Cumberland County CP, Series A, 6.20%,
12/1/07, Prerefunded 12/1/04 @ 102,
(AMBAC Insured) 1,535,000 1,685,323
Cumberland County Hospital Facilities
Revenue, 5.25%, 10/1/10, Callable
10/1/09 @ 101 500,000 546,810
Dare County CP, Series A, 4.50%,
5/1/04, (MBIA Insured) 500,000 516,740
Fayetteville Public Works Commission
Revenue, Series A, 5.25%, 3/1/08,
Callable 3/1/05 @ 102, (AMBAC
Insured) 1,280,000 1,388,723
High Point Water & Sewer System GO,
4.50%, 6/1/16, Callable 6/1/12 @ 101,
(MBIA Insured) 250,000 262,190
Iredell County Memorial Hospital
Revenue, 5.10%, 10/1/11, Callable
10/1/07 @ 101, (AMBAC Insured) 1,000,000 1,095,150
Lincoln County GO, 4.70%, 6/1/17,
Callable 6/1/12 @ 101, (FGIC Insured) 250,000 264,400
New Hanover County Hospital Revenue,
Regional Medical Center Project,
4.25%, 10/1/10, Callable
10/1/09 @ 101, (MBIA Insured) 500,000 534,525
North Carolina Educational Facilities
Finance Agency Revenue, Wake Forest
University Project, 5.00%, 11/1/12,
Callable 11/1/07 @ 102 500,000 548,740
North Carolina Housing Finance Agency
Home Ownership Revenue, Series A1,
4.75%, 1/1/05, AMT $ 500,000 $ 522,960
North Carolina Housing Finance Agency
Home Ownership Revenue, Series 4A,
4.45%, 1/1/07, AMT 240,000 255,264
North Carolina Housing Finance Agency
Home Ownership Revenue, Series 4A,
4.45%, 7/1/07, AMT 240,000 256,742
North Carolina Housing Finance Agency
Home Ownership Revenue, Series 13A,
4.95%, 7/1/14, Callable 7/1/11 @ 100,
AMT 250,000 260,380
North Carolina Medical Care
Community Health Care Facilities
Revenue, Scotland Memorial Hospital
Project, 4.75%, 10/1/05, (Radian
Insured) 500,000 533,290
North Carolina Medical Care
Community Hospital Revenue,
Southeastern Regional Medical Center
Project, 5.75%, 6/1/13, Callable
6/1/09 @ 102 525,000 575,542
North Carolina Medical Care
Community Hospital Revenue, Moore
Regional Hospital Project, 5.20%,
10/1/13, Callable 10/1/03 @ 102 300,000 311,103
North Carolina Municipal Power
Agency #1, Catawba Electric Revenue,
5.25%, 1/1/09, (MBIA-IBC Insured) 1,500,000 1,687,169
North Carolina State GO, Series A,
4.75%, 4/1/14, Callable 4/1/08 @ 102 250,000 266,678
North Carolina State Public School
Building GO, 4.60%, 4/1/13,
Callable 4/1/09 @ 102 250,000 267,888
Pitt County Memorial Hospital
Revenue, 5.38%, 12/1/10, Callable
12/1/05 @ 102, Escrowed to Maturity 1,000,000 1,107,670
Pitt County Public Facilities CP, Series
A, 5.35%, 4/1/07, (MBIA Insured) 625,000 699,781
Raleigh Durham Airport Authority
Revenue, Series A, 5.25%, 11/1/12,
Callable 5/1/11 @ 101, (FGIC Insured) 500,000 561,160
Stanly County GO, 4.60%, 2/1/14,
Callable 2/1/11 @ 101.5 (AMBAC
Insured) 250,000 267,645
Union County Enterprise System
Revenue, 5.35%, 6/1/09, Callable
6/1/06 @ 102, (MBIA Insured) 500,000 560,680
</Table>
19
<Page>
NORTH CAROLINA MUNICIPAL OBLIGATIONS, CONTINUED:
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
------------ ------------
Union County Schools GO, 4.75%,
3/1/13, Callable 3/1/11 @ 101 $ 250,000 $ 270,770
University of North Carolina Greensboro
Revenue, Series A, 4.63%, 4/1/13,
Callable 4/1/11 @ 101, (FSA Insured) 545,000 584,916
Wake County GO, Series A, 4.75%,
2/1/14, Callable 2/1/11 @ 101.5 500,000 542,065
Winston Salem CP, Series A, 5.30%,
6/1/09, Callable 6/1/06 @ 102 1,000,000 1,119,490
Winston Salem State University
Housing & Dining Systems Revenue,
Series B, 4.75%, 1/1/10, Callable
1/1/09 @ 101, (MBIA Insured) 500,000 544,320
Winston Salem State University
Housing & Dining Systems Revenue,
Series B, 4.85%, 1/1/11, Callable
1/1/09 @ 101, (MBIA Insured) 500,000 540,940
------------
TOTAL NORTH CAROLINA MUNICIPAL
OBLIGATIONS
(Cost $22,599,183) 24,612,075
------------
</Table>
INVESTMENT COMPANIES (4.6%)
<Table>
<Caption>
SHARES VALUE
------------ ------------
BlackRock North Carolina
Municipal Money Market
Portfolio-- Institutional Shares 599,953 $ 599,953
Goldman Sachs Institutional Liquid
Assets Tax-Free Money Market Fund 599,953 599,953
------------
TOTAL INVESTMENT COMPANIES
(Cost $1,199,906) 1,199,906
------------
TOTAL INVESTMENTS
(Cost $23,799,089) (a)-- 99.3% 25,811,981
Other assets in excess of liabilities-- 0.7% 182,674
------------
NET ASSETS-- 100.0% $ 25,994,655
============
</Table>
- ----------
(a) Represents cost for financial reporting purposes and differs from value by
unrealized appreciation (depreciation) of securities as follows:
<Table>
Unrealized appreciation $ 2,012,892
Unrealized depreciation --
------------
Net unrealized appreciation $ 2,012,892
============
</Table>
Aggregate cost for federal income tax purposes is the same.
AMBAC AMBAC Indemnity Corp.
AMT -- Alternative Minimum Tax
CP -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Corp.
FSA -- Financial Security Assurance
GO -- General Obligation
MBIA -- MBIA, Inc.
SEE NOTES TO FINANCIAL STATEMENTS
20
<Page>
RBC FUNDS, INC.
APRIL 30, 2003
STATEMENTS OF ASSETS AND LIABILITIES
<Table>
<Caption>
RBC RBC RBC
LARGE CAP MID CAP SMALL CAP
EQUITY FUND EQUITY FUND EQUITY FUND
-------------- -------------- --------------
ASSETS:
Investments, at value
(cost $45,440,920; $159,366,916;
$21,306,289; $31,436,800;
$46,650,787; and $23,799,089,
respectively) $ 43,955,946 $ 150,432,899 $ 23,106,780
Interest and dividends receivable 19,688 91,910 509
Receivable for capital shares issued -- 76,764 59,580
Receivable for investments sold 1,744,081 160,948 --
Prepaid expenses 9,948 17,766 13,144
-------------- -------------- --------------
Total Assets 45,729,663 150,780,287 23,180,013
-------------- -------------- --------------
LIABILITIES:
Payable to custodian 548,491 -- --
Distributions payable -- -- --
Payable for capital shares redeemed -- 1,408 5,000
Payable for investments purchased -- -- --
Accrued expenses and other payables:
Investment advisory fees 2,589 8,552 1,314
Administration fees 555 1,833 282
Distribution fees 3,261 15,380 2,625
Other 24,549 59,153 19,768
-------------- -------------- --------------
Total Liabilities 579,445 86,326 28,989
-------------- -------------- --------------
Net Assets 45,150,218 150,693,961 23,151,024
============== ============== ==============
NET ASSETS CONSIST OF:
Capital 91,520,817 172,743,170 25,023,218
Distributions in excess of net investment
income -- -- --
Accumulated net realized gains (losses)
from investment transactions and futures
contracts (44,885,625) (13,115,192) (3,672,685)
Net unrealized appreciation (depreciation)
on investments (1,484,974) (8,934,017) 1,800,491
-------------- -------------- --------------
Net Assets $ 45,150,218 $ 150,693,961 $ 23,151,024
============== ============== ==============
NET ASSETS:
Class A $ 7,686,218 $ 48,806,125 $ 4,359,037
Class B 2,085,069 7,415,839 2,171,069
Class I 35,378,931 94,471,997 16,620,918
-------------- -------------- --------------
Total $ 45,150,218 $ 150,693,961 $ 23,151,024
============== ============== ==============
SHARES OUTSTANDING:
Class A 922,957 5,160,981 431,096
Class B 260,291 847,906 226,461
Class I 4,222,946 9,817,481 1,621,806
-------------- -------------- --------------
Total 5,406,194 15,826,368 2,279,363
============== ============== ==============
NET ASSET VALUES:
Class A -- Offering and redemption
price per share $ 8.33 $ 9.46 $ 10.11
============== ============== ==============
Class B -- Offering price per share* $ 8.01 $ 8.75 $ 9.59
============== ============== ==============
Class I -- Offering and redemption price
per share $ 8.38 $ 9.62 $ 10.25
============== ============== ==============
<Caption>
RBC
RBC RBC NORTH CAROLINA
GOVERNMENT QUALITY TAX-FREE
INCOME FUND INCOME FUND BOND FUND
-------------- -------------- --------------
ASSETS:
Investments, at value
(cost $45,440,920; $159,366,916;
$21,306,289; $31,436,800;
$46,650,787; and $23,799,089,
respectively) $ 33,216,064 $ 48,949,905 $ 25,811,981
Interest and dividends receivable 311,548 526,391 309,187
Receivable for capital shares issued 2,210 -- --
Receivable for investments sold 815,012 -- --
Prepaid expenses 8,302 9,830 6,162
-------------- -------------- --------------
Total Assets 34,353,136 49,486,126 26,127,330
-------------- -------------- --------------
LIABILITIES:
Payable to custodian -- -- --
Distributions payable 83,080 171,214 76,575
Payable for capital shares redeemed 85 -- 41,295
Payable for investments purchased 3,052,500 1,021,524 --
Accrued expenses and other payables:
Investment advisory fees 768 2,375 748
Administration fees 384 594 278
Distribution fees 1,615 171 1,161
Other 18,019 17,369 12,618
-------------- -------------- --------------
Total Liabilities 3,156,451 1,213,247 132,675
-------------- -------------- --------------
Net Assets 31,196,685 48,272,879 25,994,655
============== ============== ==============
NET ASSETS CONSIST OF:
Capital 30,343,291 45,323,415 23,813,060
Distributions in excess of net investment
income -- (110,040) (19,969)
Accumulated net realized gains (losses)
from investment transactions and futures
contracts (925,870) 760,386 188,672
Net unrealized appreciation (depreciation)
on investments 1,779,264 2,299,118 2,012,892
-------------- -------------- --------------
Net Assets $ 31,196,685 $ 48,272,879 $ 25,994,655
============== ============== ==============
NET ASSETS:
Class A $ 6,232,764 $ 500,583 $ 4,300,837
Class B 589,253 114,026 442,531
Class I 24,374,668 47,658,270 21,251,287
-------------- -------------- --------------
Total $ 31,196,685 $ 48,272,879 $ 25,994,655
============== ============== ==============
SHARES OUTSTANDING:
Class A 576,922 48,728 402,015
Class B 54,585 11,100 41,348
Class I 2,256,460 4,639,655 1,986,516
-------------- -------------- --------------
Total 2,887,967 4,699,483 2,429,879
============== ============== ==============
NET ASSET VALUES:
Class A -- Offering and redemption
price per share $ 10.80 $ 10.27 $ 10.70
============== ============== ==============
Class B-- Offering price per share* $ 10.80 $ 10.27 $ 10.70
============== ============== ==============
Class I -- Offering and redemption price
per share $ 10.80 $ 10.27 $ 10.70
============== ============== ==============
</Table>
- ----------
* Redemption price of Class B shares varies based on length of time held.
SEE NOTES TO FINANCIAL STATEMENTS
21
<Page>
RBC FUNDS, INC.
FOR THE YEAR ENDED APRIL 30, 2003
STATEMENTS OF OPERATIONS
<Table>
<Caption>
RBC RBC RBC
LARGE CAP MID CAP SMALL CAP
EQUITY FUND EQUITY FUND EQUITY FUND
-------------- -------------- --------------
INVESTMENT INCOME:
Interest income -- $ 57,285 $ 1,283
Dividend income $ 770,477 1,552,869 136,409
-------------- -------------- --------------
Total Investment Income 770,477 1,610,154 137,692
-------------- -------------- --------------
EXPENSES:
Investment advisory fees 383,705 1,087,728 166,499
Administration fees 82,223 233,085 35,678
Distribution fees -- Class A 39,525 230,855 23,562
Distribution fees -- Class B 26,553 100,829 25,405
Accounting fees 35,710 56,109 37,943
Custodian fees 13,707 38,846 5,946
Insurance fees 6,749 11,625 1,760
Legal and Audit fees 35,565 87,169 20,753
Registration and filing fees 12,985 28,196 14,584
Shareholder reports 14,553 45,091 7,161
Transfer agent fees 62,870 160,543 45,936
Directors' fees 12,581 34,678 5,370
Other fees 3,395 9,119 2,352
-------------- -------------- --------------
Total expenses before voluntary fee
reductions 730,121 2,123,873 392,949
Expenses voluntarily reduced by:
Administrator -- -- --
Distributor (19,763) (115,428) (11,780)
-------------- -------------- --------------
Net Expenses 710,358 2,008,445 381,169
-------------- -------------- --------------
NET INVESTMENT INCOME (LOSS) 60,119 (398,291) (243,477)
-------------- -------------- --------------
REALIZED/UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS:
Net realized gains (losses) from investment
transactions and other dispositions (27,566,941) (11,194,364) (3,444,713)
Net realized losses from futures contracts -- (964,999) --
Change in unrealized appreciation
(depreciation) on investments 16,236,068 (22,484,146) (1,538,562)
-------------- -------------- --------------
Net realized/unrealized gains (losses) from
investments and futures contracts (11,330,873) (34,643,509) (4,983,275)
-------------- -------------- --------------
Change in net assets resulting from
operations $ (11,270,754) $ (35,041,800) $ (5,226,752)
============== ============== ==============
<Caption>
RBC
RBC RBC NORTH CAROLINA
GOVERNMENT QUALITY TAX-FREE
INCOME FUND INCOME FUND BOND FUND
-------------- -------------- --------------
INVESTMENT INCOME:
Interest income $ 1,508,187 $ 2,886,520 $ 1,260,083
Dividend income 6,988 13,265 9,822
-------------- -------------- --------------
Total Investment Income 1,515,175 2,899,785 1,269,905
-------------- -------------- --------------
EXPENSES:
Investment advisory fees 97,719 325,048 98,205
Administration fees 48,860 81,262 42,088
Distribution fees--Class A 28,760 2,435 22,309
Distribution fees--Class B 5,395 1,135 4,322
Accounting fees 32,830 46,496 37,174
Custodian fees 8,143 13,543 7,014
Insurance fees 2,249 4,655 2,026
Legal and Audit fees 25,008 36,238 23,206
Registration and filing fees 10,410 10,044 8,953
Shareholder reports 8,663 13,861 7,557
Transfer agent fees 27,097 24,040 13,054
Directors' fees 7,485 12,502 6,466
Other fees 2,966 4,139 2,646
-------------- -------------- --------------
Total expenses before voluntary fee
reductions 305,585 575,398 275,020
Expenses voluntarily reduced by:
Administrator -- -- (5,611)
Distributor (15,729) (1,501) (12,235)
-------------- -------------- --------------
Net Expenses 289,856 573,897 257,174
-------------- -------------- --------------
NET INVESTMENT INCOME (LOSS) 1,225,319 2,325,888 1,012,731
-------------- -------------- --------------
REALIZED/UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS:
Net realized gains (losses) from investment
transactions and other dispositions 1,061,545 916,167 276,307
Net realized losses from futures contracts -- -- --
Change in unrealized appreciation
(depreciation) on investments 569,204 1,645,732 662,001
-------------- -------------- --------------
Net realized/unrealized gains (losses) from
investments and futures contracts 1,630,749 2,561,899 938,308
-------------- -------------- --------------
Change in net assets resulting from
operations $ 2,856,068 $ 4,887,787 $ 1,951,039
============== ============== ==============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS
22
<Page>
RBC FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
RBC LARGE CAP EQUITY FUND RBC MID CAP EQUITY FUND
------------------------------ ------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30, APRIL 30, APRIL 30,
2003 2002 2003 2002
-------------- -------------- -------------- --------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net investment income (loss) $ 60,119 $ 87,387 $ (398,291) $ (76,946)
Net realized gains (losses) from investment
transactions and other dispositions (27,566,941) (8,854,106) (11,194,364) 4,696,059
Net realized gains (losses) from futures
contracts -- -- (964,999) 1,492,500
Change in unrealized appreciation
(depreciation) on investments 16,236,068 (18,261,287) (22,484,146) 3,423,971
-------------- -------------- -------------- --------------
Change in net assets from operations (11,270,754) (27,028,006) (35,041,800) 9,535,584
-------------- -------------- -------------- --------------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income (7,430) (1,637) -- (12,356)
From return of capital -- (1,372) -- --
From net realized gains from investment
transactions and futures contracts -- -- (431,775) (2,035,424)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income (84) -- -- --
From net realized gains from investment
transactions and futures contracts -- -- (91,773) (1,192,491)
DISTRIBUTIONS TO CLASS I SHAREHOLDERS:
From net investment income (102,196) (85,750) -- (145,048)
From return of capital -- (71,879) -- --
From net realized gains from investment
transactions and futures contracts -- -- (911,429) (9,260,305)
-------------- -------------- -------------- --------------
Change in net assets from shareholder
distributions (109,710) (160,638) (1,434,977) (12,645,624)
-------------- -------------- -------------- --------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 11,064,718 31,076,117 61,900,000 102,401,321
Dividends reinvested 42,295 75,731 1,432,835 12,446,329
Cost of shares redeemed (32,862,438) (95,631,899) (60,955,952) (92,611,842)
-------------- -------------- -------------- --------------
Change in net assets from capital transactions (21,755,425) (64,480,051) 2,376,883 22,235,808
-------------- -------------- -------------- --------------
Change in net assets (33,135,889) (91,668,695) (34,099,894) 19,125,768
NET ASSETS:
Beginning of year 78,286,107 169,954,802 184,793,855 165,668,087
-------------- -------------- -------------- --------------
End of year $ 45,150,218 $ 78,286,107 $ 150,693,961 $ 184,793,855
============== ============== ============== ==============
SHARE TRANSACTIONS:
Issued 1,337,028 2,909,205 6,443,976 8,804,054
Reinvested 4,865 6,853 153,085 1,129,994
Redeemed (3,849,492) (9,106,251) (6,461,774) (8,023,185)
-------------- -------------- -------------- --------------
Change in shares transactions (2,507,599) (6,190,193) 135,287 1,910,863
============== ============== ============== ==============
<Caption>
RBC SMALL CAP EQUITY FUND
------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
2003 2002
-------------- --------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net investment income (loss) $ (243,477) $ (271,396)
Net realized gains (losses) from investment
transactions and other dispositions (3,444,713) 1,643,257
Net realized gains (losses) from futures
contracts -- --
Change in unrealized appreciation
(depreciation) on investments (1,538,562) 902,863
-------------- --------------
Change in net assets from operations (5,226,752) 2,274,724
-------------- --------------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income -- --
From return of capital -- --
From net realized gains from investment
transactions and futures contracts -- (78,683)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income -- --
From net realized gains from investment
transactions and futures contracts -- (54,038)
DISTRIBUTIONS TO CLASS I SHAREHOLDERS:
From net investment income -- --
From return of capital -- --
From net realized gains from investment
transactions and futures contracts -- (319,843)
-------------- --------------
Change in net assets from shareholder
distributions -- (452,564)
-------------- --------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 11,572,346 8,855,547
Dividends reinvested -- 451,077
Cost of shares redeemed (11,858,931) (15,370,830)
-------------- --------------
Change in net assets from capital transactions (286,585) (6,064,206)
-------------- --------------
Change in net assets (5,513,337) (4,242,046)
NET ASSETS:
Beginning of year 28,664,361 32,906,407
-------------- --------------
End of year $ 23,151,024 $ 28,664,361
============== ==============
SHARE TRANSACTIONS:
Issued 1,151,705 756,814
Reinvested -- 40,239
Redeemed (1,195,656) (1,317,503)
-------------- --------------
Change in shares transactions (43,951) (520,450)
============== ==============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS
23
<Page>
<Table>
<Caption>
RBC RBC
GOVERNMENT QUALITY
INCOME FUND INCOME FUND
------------------------------ ------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30, APRIL 30, APRIL 30,
2003 2002 2003 2002
-------------- -------------- -------------- --------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net investment income $ 1,225,319 $ 2,069,404 $ 2,325,888 $ 4,331,930
Net realized gains from investment transactions
and other dispositions 1,061,545 686,800 916,167 247,716
Net change in unrealized appreciation
(depreciation) on investment transactions 569,204 (353,343) 1,645,732 (1,637,565)
-------------- -------------- -------------- --------------
Change in net assets from operations 2,856,068 2,402,861 4,887,787 2,942,081
-------------- -------------- -------------- --------------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income (204,394) (258,425) (21,149) (24,138)
From net realized gains from investment
transactions -- -- (517) (3,533)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income (16,464) (17,189) (4,338) (4,292)
From net realized gains from investment
transactions -- -- (128) (692)
DISTRIBUTIONS TO CLASS I SHAREHOLDERS:
From net investment income (1,004,461) (1,793,790) (2,445,484) (4,393,079)
From net realized gains from investment
transactions -- -- (61,931) (550,831)
-------------- -------------- -------------- --------------
Change in net assets from shareholder
distributions (1,225,319) (2,069,404) (2,533,547) (4,976,565)
-------------- -------------- -------------- --------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 18,519,228 22,172,192 14,829,282 37,676,462
Dividends reinvested 640,450 1,434,425 802,986 2,259,846
Cost of shares redeemed (19,436,211) (33,418,521) (35,226,442) (50,564,296)
-------------- -------------- -------------- --------------
Change in net assets from capital transactions (276,533) (9,811,904) (19,594,174) (10,627,988)
-------------- -------------- -------------- --------------
Change in net assets 1,354,216 (9,478,447) (17,239,934) (12,662,472)
NET ASSETS:
Beginning of year 29,842,469 39,320,916 65,512,813 78,175,285
-------------- -------------- -------------- --------------
End of year $ 31,196,685 $ 29,842,469 $ 48,272,879 $ 65,512,813
============== ============== ============== ==============
SHARE TRANSACTIONS:
Issued 1,749,231 2,158,219 1,475,219 3,724,661
Reinvested 60,389 139,621 79,935 223,736
Redeemed (1,829,882) (3,268,250) (3,512,536) (5,060,494)
-------------- -------------- -------------- --------------
Change in shares transactions (20,262) (970,410) (1,957,382) (1,112,097)
============== ============== ============== ==============
</Table>
<Table>
<Caption>
RBC
NORTH CAROLINA
TAX-FREE BOND FUND
------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
2003 2002
-------------- --------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net investment income $ 1,012,731 $ 1,153,357
Net realized gains from investment transactions
and other dispositions 276,307 233,761
Net change in unrealized appreciation
(depreciation) on investment transactions 662,001 398,676
-------------- --------------
Change in net assets from operations 1,951,039 1,785,794
-------------- --------------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net investment income (152,357) (159,966)
From net realized gains from investment
transactions (17,628) (45,676)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS:
From net investment income (12,581) (14,049)
From net realized gains from investment
transactions (1,713) (4,648)
DISTRIBUTIONS TO CLASS I SHAREHOLDERS:
From net investment income (847,793) (979,342)
From net realized gains from investment
transactions (91,581) (231,890)
-------------- --------------
Change in net assets from shareholder
distributions (1,123,653) (1,435,571)
-------------- --------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued 3,005,523 7,462,373
Dividends reinvested 279,172 459,345
Cost of shares redeemed (9,055,257) (11,220,437)
-------------- --------------
Change in net assets from capital transactions (5,770,562) (3,298,719)
-------------- --------------
Change in net assets (4,943,176) (2,948,496)
NET ASSETS:
Beginning of year 30,937,831 33,886,327
-------------- --------------
End of year $ 25,994,655 $ 30,937,831
============== ==============
SHARE TRANSACTIONS:
Issued 283,408 719,956
Reinvested 26,293 44,551
Redeemed (856,700) (1,077,477)
-------------- --------------
Change in shares transactions (546,999) (312,970)
============== ==============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS
24
<Page>
RBC FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 30,2003
1. ORGANIZATION
RBC Funds, Inc. (the "Company") is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company. The
Company was organized as a Maryland corporation on March 1, 1994. At April
30, 2003 the Company consisted of six separate investment portfolios: RBC
Large Cap Equity Fund, RBC Mid Cap Equity Fund, RBC Small Cap Equity Fund,
RBC Government Income Fund, RBC Quality Income Fund, and the RBC North
Carolina Tax-Free Bond Fund (individually, a "Fund", and collectively, the
"Funds").
The Funds offer three classes of shares: Class A, Class B, and Class I
shares. Class A shares are offered with no maximum front-end sales charge.
Effective November 1, 2001, offerings of Class B shares were closed to new
investors. Class B shares are offered to existing Class B shareholders for
reinvestment of dividends and in exchange for Class B shares of other Funds.
Class B shares are so offered at net asset value but are subject to a
contingent deferred sales charge ("CDSC"). In addition, Class A and Class B
shares pay ongoing distribution fees. Class B shares will convert
automatically to Class A shares on the first business day of the month
following the seventh anniversary of their purchase date. Class I shares are
offered to trust or institutional clients of the Funds' Investment Advisor as
well as accounts of brokers and other financial intermediaries affiliated
with RBC Financial Group.
The Funds' investment objectives are as follows:
RBC LARGE CAP EQUITY FUND -- Long-term capital appreciation. The Fund
normally invests at least 80% of its net assets, plus any borrowings for
investment purposes, in common stocks of large U.S. companies each having $5
billion or more in market capitalization at the time of purchase by the Fund.
Investments may include securities of non-U.S. companies, and the Fund may
engage in certain hedging strategies.
RBC MID CAP EQUITY FUND -- Long-term capital appreciation. The Fund normally
invests at least 80% of its net assets, plus any borrowings for investment
purposes, in common stocks of mid-sized companies that fall within the market
capitalization range of companies in the Standard and Poor's ("S&P") MidCap
400 Composite Stock Price Index at the time of purchase by the Fund.
Investments may include securities of non-U.S. companies, and the Fund may
engage in certain hedging strategies.
RBC SMALL CAP EQUITY FUND -- Long-term capital appreciation. The Fund
normally invests at least 80% of its net assets, plus any borrowings for
investment purposes, in common stocks of small companies. Small
capitalization companies are defined by the Fund as companies with a market
capitalization of less than $2.0 billion at the time of purchase by the Fund.
RBC GOVERNMENT INCOME FUND -- Relatively high current income consistent with
relative stability of principal and safety. The Fund normally invests at
least 80% of its net assets, plus any borrowings for investment purposes, in
U.S. Government obligations (those that are issued or guaranteed by the U.S.
Government or its agencies or instrumentalities). The Fund's investments in
securities guaranteed by U.S. Government agencies are primarily mortgage
backed securities. In general, its investments will have maximum maturities
of ten years.
RBC QUALITY INCOME FUND -- Current income and capital appreciation. The Fund
normally invests at least 80% of its net assets, plus any borrowings for
investment purposes, in U.S. Government obligations (those that are issued or
guaranteed by the U.S. Government or its agencies or instrumentalities) and
investment grade corporate debt obligations as well as other fixed income
securities such as asset backed securities, mortgage backed securities and
bank obligations. At least 70% of the Fund's total assets will be invested in
securities rated at the time of purchase in one of the three highest
categories by nationally recognized statistical rating organizations or
unrated securities of comparable quality. The Fund's other investments may
include securities rated BBB by S&P or Baa by Moody's Investors Service (or
deemed of comparable quality), preferred stocks, zero coupon obligations and
convertible securities, and the Fund may invest in certain derivatives in
order to lengthen or shorten its average portfolio maturity.
RBC NORTH CAROLINA TAX-FREE BOND FUND -- High current income that is free
from both federal income tax and North Carolina personal income tax, together
with relative safety of principal. The Fund must normally invest at least 80%
of its net assets, plus any borrowings for investment purposes, in municipal
obligations issued by the State of North Carolina, its political
subdivisions, and at least 80% of its total assets in bonds, although the
Fund expects generally to have a higher percentage of its assets so invested.
None of the Fund's securities will have a remaining maturity of more than
fifteen years.
25
<Page>
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements. The policies are in
conformity with accounting principles generally accepted in the United States
of America ("GAAP"). The preparation of financial statements requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of income and expenses for the period. Actual results could
differ from those estimates.
SECURITY VALUATION:
Bonds and other fixed income securities (other than short-term obligations
but including listed issues) are valued on the basis of valuations furnished
by a pricing service, the use of which has been approved by the Funds' Board
of Directors (the "Board"). In making such valuations, the pricing service
utilizes both dealer-supplied valuations and electronic data processing
techniques which take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics other than
market data and without exclusive reliance upon quoted prices or exchanges or
over-the-counter prices, since such valuations are believed to reflect more
accurately the fair value of such securities. Short-term debt obligations are
valued at amortized cost, which approximates market value, as approved by the
Board.
The value of each equity security is based either on the last sale price on a
national securities exchange, or in the absence of recorded sales, at the
closing bid prices on such exchanges, or at the quoted bid price in the
over-the-counter market. Securities traded on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") are valued at the
official closing price as reported by NASDAQ. Securities or other assets for
which market quotations are not readily available are valued at fair market
value as determined in good faith by or at the direction of the Board.
INVESTMENT TRANSACTIONS:
Security transactions in the Funds are accounted for on the date the security
is purchased or sold ("trade date"). Interest income is recognized on the
accrual basis and includes, where applicable, the amortization of premium or
discount. Dividend income is recorded on the ex-dividend date. Securities
gains and losses are calculated on the identified cost basis.
ALLOCATION OF EXPENSES:
Expenses directly attributable to a Fund are charged to that Fund; other
expenses are allocated proportionately among each Fund within the Company in
relation to the net assets of each Fund or on another reasonable basis.
Expenses specific to a class are charged to that class.
FINANCIAL INSTRUMENTS:
FUTURES CONTRACTS
A Fund may enter into certain futures contracts, including for most Funds,
futures contracts based on a specific security, class of securities, foreign
currency or an index, purchase or sell options on any such futures contracts
and engage in related closing transactions. A futures contract on a
securities index is an agreement obligating either party to pay, and
entitling the other party to receive, while the contract is outstanding, cash
payments based on the level of a specified securities index. The Funds may
enter into futures contracts in an effort to hedge against market risks. The
acquisition of put and call options on futures contracts will give the
Company the right (but not the obligation), for a specified price, to sell or
to purchase the underlying futures contract, upon exercise of the option, at
any time during the option period. Futures transactions involve brokerage
costs and require the Company to segregate assets to cover contracts that
would require it to purchase securities or currencies. A Fund may lose the
expected benefit of futures transactions if interest rates, exchange rates or
securities prices change in an unanticipated manner. Such unanticipated
changes may also result in lower overall performance than if the Fund had not
entered into any futures transactions. In addition, the value of a Fund's
futures positions may not prove to be perfectly or even highly correlated
with the value of its portfolio securities or foreign currencies, limiting a
Fund's ability to hedge effectively against interest rate, exchange rate
and/or market risk and giving rise to additional risks. There is no assurance
of liquidity in the secondary market for purposes of closing out futures
positions.
Upon entering into a futures contract, the Funds are required to pledge to
the broker an amount of cash, U.S. government securities, or other assets,
equal to a certain percentage of the contract amount. This is known as the
initial margin deposit. Subsequent payments, known as variation margin, are
made or received by the Funds each day, depending on the daily fluctuations
in fair value of the underlying index. The Funds recognize a gain or loss
equal to the variation margin.
26
<Page>
WHEN-ISSUED TRANSACTIONS
The Funds may engage in when-issued (to be announced) transactions. The Funds
record when-issued securities on the trade date and maintain security
positions such that sufficient liquid assets will be available to make
payment for the securities purchased. Securities purchased on a when-issued
or delayed delivery basis are valued daily and begin earning interest on the
settlement date.
DISTRIBUTIONS TO SHAREHOLDERS:
The RBC Large Cap Equity Fund, RBC Mid Cap Equity Fund, and RBC Small Cap
Equity Fund declare and pay dividends of substantially all of their net
investment income monthly. The RBC Government Income Fund, RBC Quality Income
Fund, and RBC North Carolina Tax-Free Bond Fund declare dividends of
substantially all of their net investment income daily and pay those
dividends monthly. Each Fund will distribute, at least annually,
substantially all net capital gains, if any, earned by such Fund.
Distributions to shareholders are recorded on the ex-dividend date. The
amount of dividends and distributions are determined in accordance with
federal income tax regulations, which may differ from GAAP. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are
reclassified within the capital accounts based on their federal tax basis
treatment; temporary differences do not require reclassification.
3. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
On December 18, 2002, the shareholders of the RBC Funds, Inc. met and
approved Voyageur Asset Management Inc. ("Voyageur" or "Advisor") as the
Company's investment advisor effective December 30, 2002. Voyageur replaced
Glenwood Capital Management, Inc., each an indirect wholly-owned subsidiary
of the Royal Bank of Canada. The new advisory contracts did not change the
rate of advisory fees paid by the Funds. Pursuant to the advisory contracts,
the Advisor manages the investments of the Funds and continuously reviews,
supervises and administers the Funds' investments. The Advisor is responsible
for placing orders for the purchase and sale of investment securities
directly with brokers and dealers selected at its discretion. Under the terms
of the advisory contracts the Advisor is entitled to receive fees based on a
percentage of the average daily net assets of each of the Funds as follows:
0.70% for the RBC Large Cap Equity Fund, RBC Mid Cap Equity Fund, and the RBC
Small Cap Equity Fund, 0.30% for the RBC Government Income Fund, 0.60% for
the RBC Quality Income Fund, and 0.35% for the RBC North Carolina Tax-Free
Bond Fund.
For furnishing custodial services, RBC Centura Bank was paid a monthly fee
with respect to the Funds at an annual rate based on 0.025% of average daily
net assets. Effective May 12, 2003, Wells Fargo Bank Minnesota, N.A. replaced
RBC Centura Bank as the Funds custodian.
BISYS Fund Services Ohio, Inc. ("BISYS") serves as the Funds' administrator
(the "Administrator"), transfer agent, and fund accounting agent. Services
provided under the administrative services contract include providing
day-to-day administration of matters related to the corporate existence of
the Company, maintenance of its records and the preparation of reports.
Services provided under the transfer agency agreement include providing
personnel and facilities to perform shareholder servicing and transfer agency
related services. Under the terms of the administrative services contract,
the Administrator receives a fee based on an annual percentage of 0.15% of
each Fund's the average daily net assets. The fund accounting fees for the
Funds are computed at the annual rate percentage of 0.03% of each Fund's
average daily net assets subject to a $30,000 per Fund annual minimum fee.
The transfer agency agreement provides for a per account fee in connection
with shareholder servicing. Certain officers of the Funds are employed by
BISYS. Such individuals are not paid any fees directly by the Funds for
serving as officers of the Funds.
Each of the Funds has adopted a Master Distribution 12b-1 Plan (the "Plan")
with respect to its Class A and Class B shares, in which Centura Funds
Distributor, Inc. (the "Distributor") acts as the Funds' distributor. The
Distributor is an affiliate of the Funds' Administrator and was formed
specifically to distribute shares of the Funds. The Plan provides that Class
A and B shares of each Fund will pay the Distributor a fee for its costs
incurred in financing certain distribution and shareholder service activities
related to that class.
The Plan provides for payments by each Fund to the Distributor at an annual
rate not to exceed 0.50% and 1.00% of the Fund's average daily net assets
attributable to its Class A shares and Class B shares, respectively. Such
fees may include a service fee totaling up to 0.25% of the average daily net
assets attributable to a Fund's Class A shares and Class B shares,
respectively. Service fees are paid to securities dealers and other financial
institutions for maintaining shareholder accounts and providing related
services to shareholders. Currently, the Distributor has voluntarily
undertaken to limit 12b-1 fees to 0.25% for Class A shares for each Fund and
0.75% for Class B shares of the RBC Government Income Fund, RBC Quality
Income Fund, and RBC North Carolina Tax-Free Bond Fund.
27
<Page>
In addition, the Distributor also receives the proceeds of any CDSC imposed
on redemptions of Class B shares. The following is a summary of the dealer
commissions paid to the Distributor, and re-allowed to RBC Centura
Securities, Inc., and RBC Dain Rauscher Corp. for Class B shares for the year
ended April 30, 2003:
<Table>
<Caption>
RBC CENTURA RBC DAIN
DISTRIBUTOR SECURITIES, INC. RAUSCHER CORP.
------------------ ------------------ ------------------
RBC Large Cap Equity Fund $ 161 $ 2,559 $ 372
RBC Mid Cap Equity Fund 146 2,547 1,120
RBC Small Cap Equity Fund -- 1,057 374
RBC Government Income Fund -- 270 182
RBC Quality Income Fund -- -- 166
RBC North Carolina Tax-Free Bond Fund -- -- 110
</Table>
4. CONCENTRATION OF CREDIT RISK
The RBC North Carolina Tax-Free Bond Fund invests substantially all of its
assets in a portfolio of tax-exempt debt obligations issued by the state of
North Carolina and its authorities and agencies. The issuers' abilities to
meet their obligations may be affected by economic or political developments
in the state of North Carolina.
5. SECURITIES TRANSACTIONS
The cost of securities purchased and proceeds from securities sold (excluding
short-term securities) for the year ended April 30, 2003 were as follows:
<Table>
<Caption>
PURCHASES SALES
-------------- --------------
RBC Large Cap Equity Fund $ 49,075,387 $ 69,767,707
RBC Mid Cap Equity Fund 71,088,780 40,264,494
RBC Small Cap Equity Fund 27,615,071 27,193,894
RBC Government Income Fund 22,750,281 21,065,961
RBC Quality Income Fund 41,743,662 59,860,561
RBC North Carolina Tax-Free Bond Fund 495,308 5,054,177
</Table>
28
<Page>
6. CAPITAL SHARE TRANSACTIONS
The Company is authorized to issue 1.05 billion shares of capital stock with
a par value of $0.001. Transactions in shares of the Funds are summarized
below:
<Table>
<Caption>
RBC LARGE CAP EQUITY RBC MID CAP EQUITY RBC SMALL CAP EQUITY
FUND FUND FUND
---------------------------- -------------------------- -------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30, APRIL 30, APRIL 30, APRIL 30, APRIL 30,
2003 2002 2003 2002 2003 2002
------------- ------------- ------------ ------------ ----------- ------------
CAPITAL TRANSACTIONS:
CLASS A
Proceeds from shares issued $ 1,538,621 $ 2,075,222 $ 16,476,708 $ 34,016,623 $ 1,636,622 $ 1,237,879
Dividends reinvested 7,313 2,972 431,044 2,040,965 -- 78,582
Cost of shares redeemed (2,281,945) (3,800,512) (12,374,155) (8,918,883) (2,189,243) (1,462,784)
------------- ------------- ------------ ------------ ----------- ------------
Change in Class A $ (736,011) $ (1,722,318) $ 4,533,597 $ 27,138,705 $ (552,621) $ (146,323)
------------- ------------- ------------ ------------ ----------- ------------
CLASS B
Proceeds from shares issued $ 9,035 $ 111,179 $ 101,052 $ 571,782 $ 60,044 $ 52,395
Dividends reinvested 83 -- 90,507 1,178,159 -- 52,652
Cost of shares redeemed (1,176,765) (1,233,497) (4,386,652) (3,056,916) (726,987) (953,061)
------------- ------------- ------------ ------------ ----------- ------------
Change in Class B $ (1,167,647) $ (1,122,318) $ (4,195,093) $ (1,306,975) $ (666,943) $ (848,014)
------------- ------------- ------------ ------------ ----------- ------------
CLASS I
Proceeds from shares issued $ 9,517,062 $ 28,889,716 $ 45,322,240 $ 67,812,916 $ 9,875,680 $ 7,565,273
Dividends reinvested 34,899 72,759 911,284 9,227,205 -- 319,843
Cost of shares redeemed (29,403,728) (90,597,890) (44,195,145) (80,636,043) (8,942,701) (12,954,985)
------------- ------------- ------------ ------------ ----------- ------------
Change in Class I $ (19,851,767) $ (61,635,415) $ 2,038,379 $ (3,595,922) $932,979 $ (5,069,869)
------------- ------------- ------------ ------------ ----------- ------------
Net change from capital transactions $ (21,755,425) $ (64,480,051) $ 2,376,883 $ 22,235,808 $ (286,585) $ (6,064,206)
============= ============= ============ ============ =========== ============
SHARE TRANSACTIONS:
CLASS A
Issued 185,996 189,594 1,732,854 2,930,030 161,020 107,613
Reinvested 840 248 46,444 185,951 -- 7,022
Redeemed (267,940) (360,820) (1,317,376) (778,062) (222,587) (129,678)
------------- ------------- ------------ ------------ ----------- ------------
Change in Class A (81,104) (170,978) 461,922 2,337,919 (61,567) (15,043)
------------- ------------- ------------ ------------ ----------- ------------
CLASS B
Issued 897 10,312 10,344 51,997 5,709 4,862
Reinvested 10 -- 10,494 114,830 -- 4,912
Redeemed (144,837) (116,636) (507,839) (290,435) (75,173) (87,275)
------------- ------------- ------------ ------------ ----------- ------------
Change in Class B (143,930) (106,324) (487,001) (123,608) (69,464) (77,501)
------------- ------------- ------------ ------------ ----------- ------------
CLASS I
Issued 1,150,135 2,709,299 4,700,778 5,822,027 984,976 644,339
Reinvested 4,015 6,605 96,147 829,213 -- 28,305
Redeemed (3,436,715) (8,628,795) (4,636,559) (6,954,688) (897,896) (1,100,550)
------------- ------------- ------------ ------------ ----------- ------------
Change in Class I (2,282,565) (5,912,891) 160,366 (303,448) 87,080 (427,906)
------------- ------------- ------------ ------------ ----------- ------------
Net change from share transactions (2,507,599) (6,190,193) 135,287 1,910,863 (43,951) (520,450)
============= ============= ============ ============ =========== ============
</Table>
29
<Page>
<Table>
<Caption>
RBC GOVERNMENT INCOME RBC QUALITY INCOME
FUND FUND
------------------------- --------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30, APRIL 30, APRIL 30,
2003 2002 2003 2002
----------- ----------- ------------ ------------
CAPITAL TRANSACTIONS:
CLASS A
Proceeds from shares issued $ 3,854,740 $ 2,450,977 $ 263,717 $ 399,960
Dividends reinvested 198,234 268,757 21,580 26,891
Cost of shares redeemed (3,207,198) (2,817,276) (297,858) (243,131)
------------- ------------- ------------- -------------
Change in Class A $ 845,776 $ (97,542) $ (12,561) $ 183,720
------------- ------------- ------------- -------------
CLASS B
Proceeds from shares issued $ 291,402 $ 148,112 $ 3,599 $ 65,205
Dividends reinvested 11,104 12,296 4,513 4,780
Cost of shares redeemed (160,401) (63,145) (6,601) (2,792)
------------- ------------- ------------- -------------
Change in Class B $ 142,105 $ 97,263 $ 1,511 $ 67,193
------------- ------------- ------------- -------------
CLASS I
Proceeds from shares issued $ 14,373,086 $ 19,573,103 $ 14,561,966 $ 37,211,297
Dividends reinvested 431,112 1,153,372 776,893 2,228,175
Cost of shares redeemed (16,068,612) (30,538,100) (34,921,983) (50,318,373)
------------- ------------- ------------- -------------
Change in Class I $ (1,264,414) $ (9,811,625) $ (19,583,124) $ (10,878,901)
------------- ------------- ------------- -------------
Net change from capital transactions $ (276,533) $ (9,811,904) (19,594,174) $ (10,627,988)
============= ============= ============= =============
SHARE TRANSACTIONS:
CLASS A
Issued 362,476 238,497 26,116 38,980
Reinvested 18,678 26,155 2,146 2,658
Redeemed (302,503) (273,369) (29,621) (23,732)
------------- ------------- ------------- -------------
Change in Class A 78,651 (8,717) (1,359) 17,906
------------- ------------- ------------- -------------
CLASS B
Issued 27,471 14,159 354 6,401
Reinvested 1,046 1,196 449 473
Redeemed (15,032) (6,103) (644) (276)
------------- ------------- ------------- -------------
Change in Class B 13,485 9,252 159 6,598
------------- ------------- ------------- -------------
CLASS I
Issued 1,359,284 1,905,563 1,448,749 3,679,280
Reinvested 40,665 112,270 77,340 220,605
Redeemed (1,512,347) (2,988,778) (3,482,271) (5,036,486)
------------- ------------- ------------- -------------
Change in Class I (112,398) (970,945) (1,956,182) (1,136,601)
------------- ------------- ------------- -------------
Net change from share transactions (20,262) (970,410) (1,957,382) (1,112,097)
============= ============= ============= =============
<Caption>
RBC NORTH CAROLINA
TAX-FREE
BOND FUND
-----------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
2003 2002
------------- -------------
CAPITAL TRANSACTIONS:
CLASS A
Proceeds from shares issued $ 54,693 $ 375,802
Dividends reinvested 157,897 196,026
Cost of shares redeemed (551,453) (326,061)
------------- -------------
Change in Class A $ (338,863) $ 245,767
------------- -------------
CLASS B
Proceeds from shares issued $ 31,404 $ 16,560
Dividends reinvested 11,314 15,681
Cost of shares redeemed (36,614) (50,545)
------------- -------------
Change in Class B $ 6,104 $ (18,304)
------------- -------------
CLASS I
Proceeds from shares issued $ 2,919,426 $ 7,070,011
Dividends reinvested 109,961 247,638
Cost of shares redeemed (8,467,190) (10,843,831)
------------- -------------
Change in Class I $ (5,437,803) $ (3,526,182)
------------- -------------
Net change from capital transactions $ (5,770,562) $ (3,298,719)
============= =============
SHARE TRANSACTIONS:
CLASS A
Issued 5,152 36,028
Reinvested 14,895 18,889
Redeemed (51,739) (31,350)
------------- -------------
Change in Class A (31,692) 23,567
------------- -------------
CLASS B
Issued 2,908 1,589
Reinvested 1,067 1,511
Redeemed (3,482) (4,850)
------------- -------------
Change in Class B 493 (1,750)
------------- -------------
CLASS I
Issued 275,348 682,339
Reinvested 10,331 24,151
Redeemed (801,479) (1,041,277)
------------- -------------
Change in Class I (515,800) (334,787)
------------- -------------
Net change from share transactions (546,999) (312,970)
============= =============
</Table>
30
<Page>
7. FEDERAL INCOME TAXES
It is the policy of each Fund to qualify or continue to qualify as a
regulated investment company by complying with the provisions available to
certain investment companies, as defined in applicable section of the
Internal Revenue Code, and to make distributions of net investment income and
net realized capital gain sufficient to relieve it from all, or substantially
all federal income taxes.
The tax character of distributions during the fiscal year ended April 30,
2003 was as follows (amounts in thousands):
<Table>
<Caption>
DISTRIBUTION PAID FROM
-------------------------------
NET TOTAL
INVESTMENT NET LONG TERM TOTAL TAXABLE TAX EXEMPT DISTRIBUTIONS
INCOME CAPITAL GAINS DISTRIBUTIONS DISTRIBUTIONS PAID
-------------- -------------- -------------- -------------- --------------
RBC Large Cap Equity Fund $ 110 $ -- $ 110 $ -- $ 110
RBC Mid Cap Equity Fund -- 1,435 1,435 -- 1,435
RBC Small Cap Equity Fund -- -- -- -- --
RBC Government Income Fund 1,254 -- 1,254 -- 1,254*
RBC Quality Income Fund 2,586 63 2,649 -- 2,649*
RBC North Carolina Tax-Free Bond
Fund 20 93 113 1,021 1,134*
</Table>
* Total distributions paid differ from Statement of Changes in Net Assets
because for tax purposes dividends are recognized when actually paid.
As of April 30, 2003 the components of accumulated earnings/(deficit) on a
tax basis was as follows (amounts in thousands):
<Table>
<Caption>
ACCUMULATED
UNDISTRIBUTED UNDISTRIBUTED CAPITAL AND
ORDINARY LONG-TERM ACCUMULATED DISTRIBUTION OTHER
INCOME CAPITAL GAINS EARNINGS PAYABLE LOSSES*
-------------- ------------- ------------- ------------- -------------
RBC Large Cap Equity Fund $ -- $ -- $ -- $ -- $ (43,051)
RBC Mid Cap Equity Fund -- -- -- -- (12,210)
RBC Small Cap Equity Fund -- -- -- -- (3,673)
RBC Government Income Fund 83 -- 83 (83) (926)
RBC Quality Income Fund 333 492 825 (171) --
<Caption>
TOTAL
UNREALIZED ACCUMULATED
APPRECIATION/ EARNINGS/
DEPRECIATION** (DEFICIT)
-------------- -------------
RBC Large Cap Equity Fund $ (3,319) $ (46,370)
RBC Mid Cap Equity Fund (9,839) (22,049)
RBC Small Cap Equity Fund 1,800 (1,873)
RBC Government Income Fund 1,779 853
RBC Quality Income Fund 2,299 2,953
<Caption>
ACCUMULATED
UNDISTRIBUTED UNDISTRIBUTED CAPITAL AND
TAX EXEMPT LONG-TERM ACCUMULATED DISTRIBUTION OTHER
INCOME CAPITAL GAINS EARNINGS PAYABLE LOSSES*
-------------- ------------- ------------- ------------- -------------
RBC North Carolina Tax-Free
Bond Fund $ 57 $ 189 $ 246 $ (77) $ --
</Table>
<Table>
<Caption>
TOTAL
UNREALIZED ACCUMULATED
APPRECIATION/ EARNINGS/
DEPRECIATION** (DEFICIT)
-------------- -------------
RBC North Carolina Tax-Free $ 2,013 $ 2,182
Bond Fund
</Table>
* On April 30, 2003, the RBC Large Cap Equity Fund, RBC Mid Cap Equity Fund,
RBC Small Cap Equity Fund, and RBC Government Income Fund had net capital
loss carryforwards of approximately $25,083,595, $7,722,531, $3,143,023,
and $925,869, respectively, of which $1,206,935, $7,648,740, and
$16,227,920 will expire on April 30, 2009, April 30, 2010, and April 30,
2011, respectively, for the RBC Large Cap Equity Fund; $7,722,531 will
expire on April 30, 2011 for the RBC Mid Cap Equity Fund; $115,924 and
$3,027,099 will expire on April 30, 2010 and April 30, 2011, respectively
for the RBC Small Cap Equity Fund; and $925,869 will expire on April 30,
2009 for the RBC Government Income Fund. To the extent future capital
gains are offset by capital loss carryforwards, such gains will not be
distributed. Net Capital losses incurred after October 31, and within the
taxable year are deemed to arise on the first business day the Fund's next
taxable year. For the year ended April 30, 2003, the RBC Large Cap Equity
Fund, RBC Mid Cap Equity Fund, and RBC Small Cap Equity Fund deferred to
May 1, 2003, post October capital losses of $17,967,525, $4,487,833, and
$529,663, respectively.
** The differences between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable primarily to the tax deferral
of losses on wash sales for the RBC Large Cap Equity Fund, and RBC Mid Cap
Equity Fund.
31
<Page>
DIVIDEND RECEIVED DEDUCTION (UNAUDITED)
For corporate shareholders the following percentage of the total ordinary
income distributions paid during the tax year ended April 30, 2003, qualify
for the corporate dividend received deduction for the following Funds:
<Table>
RBC Large Cap Equity Fund 100.00%
</Table>
END OF NOTES TO FINANCIAL STATEMENTS
32
<Page>
RBC FUNDS, INC.
RBC LARGE CAP EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the period indicated)
<Table>
<Caption>
INVESTMENT ACTIVITIES DISTRIBUTIONS
---------------------------------------- --------------------------------------------------
NET ASSET NET NET REALIZED
VALUE, INVESTMENT AND UNREALIZED TOTAL FROM NET NET
BEGINNING INCOME GAINS(LOSSES) INVESTMENT INVESTMENT RETURN REALIZED TOTAL
OF YEAR (LOSS) ON INVESTMENTS ACTIVITIES INCOME OF CAPITAL GAINS DISTRIBUTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
Year Ended April 30, 2003 $ 9.87 -- (1.53) (1.53) (0.01) -- -- (0.01)
Year Ended April 30, 2002 12.02 (0.02) (2.13) (2.15) (a) (a) -- --
Year Ended April 30, 2001 15.56 (0.04) (2.55) (2.59) -- -- (0.95) (0.95)
Year Ended April 30, 2000 13.81 (0.02) 2.03 2.01 (0.01) -- (0.25) (0.26)
Year Ended April 30, 1999 12.60 0.10 2.19 2.29 (0.10) -- (0.98) (1.08)
CLASS B
Year Ended April 30, 2003 $ 9.56 (0.08) (1.47) (1.55) (a) -- -- --
Year Ended April 30, 2002 11.73 (0.10) (2.07) (2.17) -- -- -- --
Year Ended April 30, 2001 15.32 (0.14) (2.50) (2.64) -- -- (0.95) (0.95)
Year Ended April 30, 2000 13.70 (0.11) 1.98 1.87 -- -- (0.25) (0.25)
Year Ended April 30, 1999 12.55 (0.01) 2.20 2.19 (0.06) -- (0.98) (1.04)
CLASS I
Year Ended April 30, 2003 $ 9.92 0.03 (1.55) (1.52) (0.02) -- -- (0.02)
Year Ended April 30, 2002 12.07 0.02 (2.15) (2.13) (0.01) (0.01) -- (0.02)
Year Ended April 30, 2001 15.57 -- (2.55) (2.55) (a) -- (0.95) (0.95)
Year Ended April 30, 2000 13.80 0.01 2.03 2.04 (0.02) -- (0.25) (0.27)
Year Ended April 30, 1999 12.58 0.12 2.21 2.33 (0.13) -- (0.98) (1.11)
<Caption>
RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------
RATIO OF NET
NET ASSET RATIO OF INVESTMENT RATIO OF
VALUE, NET ASSETS, EXPENSES TO INCOME (LOSS) EXPENSES TO
END OF TOTAL END OF YEAR AVERAGE TO AVERAGE AVERAGE PORTFOLIO
YEAR RETURN* (000'S) NET ASSETS NET ASSETS NET ASSETS** TURNOVER***
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A
Year Ended April 30, 2003 $ 8.33 (15.53%) $ 7,686 1.46% (0.07%) 1.71% 90%
Year Ended April 30, 2002 9.87 (17.87%) 9,906 1.34% (0.14%) 1.59% 33%
Year Ended April 30, 2001 12.02 (17.24%) 14,126 1.25% (0.28%) 1.50% 31%
Year Ended April 30, 2000 15.56 14.63% 19,044 1.25% (0.22%) 1.50% 63%
Year Ended April 30, 1999 13.81 19.58% 2,335 1.14% 0.72% 1.51% 114%
CLASS B
Year Ended April 30, 2003 $ 8.01 (16.21%) $ 2,085 2.21% (0.80%) (b) 90%
Year Ended April 30, 2002 9.56 (18.50%) 3,865 2.09% (0.89%) (b) 33%
Year Ended April 30, 2001 11.73 (17.85%) 5,990 2.00% (1.03%) (b) 31%
Year Ended April 30, 2000 15.32 13.72% 7,703 2.00% (0.94%) (b) 63%
Year Ended April 30, 1999 13.70 18.76% 4,138 1.90% (0.09%) 2.01% 114%
CLASS C
Year Ended April 30, 2003 $ 8.38 (15.34%) $ 35,379 1.21% 0.20% (b) 90%
Year Ended April 30, 2002 9.92 (17.71%) 64,516 1.09% 0.11% (b) 33%
Year Ended April 30, 2001 12.07 (16.96%) 149,839 1.00% (0.03%) (b) 31%
Year Ended April 30, 2000 15.57 14.88% 194,157 1.00% 0.09% (b) 63%
Year Ended April 30, 1999 13.80 19.94% 139,857 0.92% 0.82% 1.02% 114%
</Table>
* Excludes contingent deferred sales charge for class B.
** During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratio would have been as indicated.
*** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Less than $0.01 per share.
(b) There were no waivers or reimbursements during the year.
SEE NOTES TO FINANCIAL STATEMENTS
33
<Page>
RBC FUNDS, INC.
RBC MID CAP EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the period indicated)
<Table>
<Caption>
INVESTMENT ACTIVITIES DISTRIBUTIONS
---------------------------------------- --------------------------------------------------
NET ASSET NET NET REALIZED NET ASSET
VALUE, INVESTMENT AND UNREALIZED TOTAL FROM NET NET VALUE
BEGINNING INCOME GAINS(LOSSES) INVESTMENT INVESTMENT REALIZED TOTAL END OF
OF YEAR (LOSS) ON INVESTMENTS ACTIVITIES INCOME GAINS DISTRIBUTIONS YEAR
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
Year Ended April 30, 2003 $ 11.73 (0.03) (2.15) (2.18) -- (0.09) (0.09) $ 9.46
Year Ended April 30, 2002 11.99 (0.01) 0.67 0.66 (0.01) (0.91) (0.92) 11.73
Year Ended April 30, 2001 14.02 0.01 0.98 0.99 (0.01) (3.01) (3.02) 11.99
Year Ended April 30, 2000 15.33 (0.02) 2.69 2.67 -- (3.98) (3.98) 14.02
Year Ended April 30, 1999 16.14 0.03 1.15 1.18 (0.04) (1.95) (1.99) 15.33
CLASS B
Year Ended April 30, 2003 $ 10.95 (0.13) (1.98) (2.11) -- (0.09) (0.09) $ 8.75
Year Ended April 30, 2002 11.32 (0.10) 0.64 0.54 -- (0.91) (0.91) 10.95
Year Ended April 30, 2001 13.47 (0.08) 0.94 0.86 -- (3.01) (3.01) 11.32
Year Ended April 30, 2000 14.97 (0.13) 2.61 2.48 -- (3.98) (3.98) 13.47
Year Ended April 30, 1999 15.88 (0.07) 1.12 1.05 (0.01) (1.95) (1.96) 14.97
CLASS I
Year Ended April 30, 2003 $ 11.91 (0.01) (2.19) (2.20) -- (0.09) (0.09) $ 9.62
Year Ended April 30, 2002 12.13 0.01 0.69 0.70 (0.01) (0.91) (0.92) 11.91
Year Ended April 30, 2001 14.14 0.04 0.99 1.03 (0.03) (3.01) (3.04) 12.13
Year Ended April 30, 2000 15.37 0.01 2.74 2.75 (a) (3.98) (3.98) 14.14
Year Ended April 30, 1999 16.16 0.07 1.15 1.22 (0.06) (1.95) (2.01) 15.37
<Caption>
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------------------
RATIO OF NET
RATIO OF INVESTMENT RATIO OF
NET ASSETS, EXPENSES TO INCOME (LOSS) EXPENSES TO
TOTAL END OF YEAR AVERAGE TO AVERAGE AVERAGE PORTFOLIO
RETURN* (000'S) NET ASSETS NET ASSETS NET ASSETS** TURNOVER***
- ----------------------------------------------------------------------------------------------------------------------
CLASS A
Year Ended April 30, 2003 (18.58%) $ 48,806 1.40% (0.37%) 1.65% 28%
Year Ended April 30, 2002 5.99% 55,143 1.37% (0.22%) 1.62% 19%
Year Ended April 30, 2001 5.92% 28,312 1.31% 0.09% 1.56% 66%
Year Ended April 30, 2000 21.15% 30,374 1.31% (0.17%) 1.56% 61%
Year Ended April 30, 1999 8.59% 14,034 1.28% 0.20% 1.53% 142%
CLASS B
Year Ended April 30, 2003 (19.26%) $ 7,416 2.15% (1.12%) (b) 28%
Year Ended April 30, 2002 5.31% 14,619 2.12% (0.90%) (b) 19%
Year Ended April 30, 2001 5.12% 16,514 2.06% (0.66%) (b) 66%
Year Ended April 30, 2000 20.31% 17,209 2.06% (0.90%) (b) 61%
Year Ended April 30, 1999 7.83% 19,269 2.04% (0.55%) (b) 142%
CLASS I
Year Ended April 30, 2003 (18.46%) $ 94,472 1.15% (0.12%) (b) 28%
Year Ended April 30, 2002 6.34% 115,032 1.12% 0.10% (b) 19%
Year Ended April 30, 2001 6.17% 120,842 1.06% 0.35% (b) 66%
Year Ended April 30, 2000 21.67% 84,905 1.06% 0.10% (b) 61%
Year Ended April 30, 1999 8.93% 138,897 1.03% 0.46% (b) 142%
</Table>
* Excludes contingent deferred sales charge for class B.
** During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratio would have been as indicated.
*** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) Less than $0.01 per share.
(b) There were no waivers or reimbursements during the year.
SEE NOTES TO FINANCIAL STATEMENTS
34
<Page>
RBC FUNDS, INC.
RBC SMALL CAP EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the period indicated)
<Table>
<Caption>
INVESTMENT ACTIVITIES DISTRIBUTIONS
----------------------------------------- -------------------------------------------
NET ASSET NET REALIZED
VALUE, NET AND UNREALIZED TOTAL FROM NET NET
BEGINNING INVESTMENT GAINS (LOSSES) INVESTMENT INVESTMENT REALIZED TOTAL
OF YEAR LOSS ON INVESTMENTS ACTIVITIES INCOME GAINS DISTRIBUTIONS
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A
Year Ended April 30, 2003 $ 12.32 (0.12) (2.09) (2.21) -- -- --
Year Ended April 30, 2002 11.56 (0.11) 1.04 0.93 -- (0.17) (0.17)
Year Ended April 30, 2001 12.50 (0.11) 0.08 (0.03) -- (0.91) (0.91)
Year Ended April 30, 2000 12.69 (0.09) 2.31 2.22 -- (2.41) (2.41)
Year Ended April 30, 1999 14.99 (0.06) (1.20) (1.26) -- (1.04) (1.04)
CLASS B
Year Ended April 30, 2003 $ 11.77 (0.21) (1.97) (2.18) -- -- --
Year Ended April 30, 2002 11.14 (0.19) 0.99 0.80 -- (0.17) (0.17)
Year Ended April 30, 2001 12.17 (0.19) 0.07 (0.12) -- (0.91) (0.91)
Year Ended April 30, 2000 12.50 (0.20) 2.28 2.08 -- (2.41) (2.41)
Year Ended April 30, 1999 14.90 (0.14) (1.22) (1.36) -- (1.04) (1.04)
CLASS I
Year Ended April 30, 2003 $ 12.45 (0.09) (2.11) (2.20) -- -- --
Year Ended April 30, 2002 11.66 (0.07) 1.03 0.96 -- (0.17) (0.17)
Year Ended April 30, 2001 12.57 (0.06) 0.06 -- -- (0.91) (0.91)
Year Ended April 30, 2000 12.72 (0.07) 2.33 2.26 -- (2.41) (2.41)
Year Ended April 30, 1999 14.99 (0.02) (1.21) (1.23) -- (1.04) (1.04)
<Caption>
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------------
RATIO OF NET
NET ASSET RATIO OF INVESTMENT RATIO OF
VALUE, NET ASSETS, EXPENSES TO LOSS EXPENSES TO
END OF TOTAL END OF YEAR AVERAGE TO AVERAGE AVERAGE PORTFOLIO
YEAR RETURN* (000's) NET ASSETS NET ASSETS NET ASSETS** TURNOVER***
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A
Year Ended April 30, 2003 $ 10.11 (17.94%) $ 4,359 1.70% (1.12%) 1.95% 120%
Year Ended April 30, 2002 12.32 8.17% 6,069 1.61% (0.99%) 1.86% 31%
Year Ended April 30, 2001 11.56 (0.43%) 5,870 1.49% (0.85%) 1.74% 71%
Year Ended April 30, 2000 12.50 19.97% 6,881 1.46% (0.80%) 1.71% 258%
Year Ended April 30, 1999 12.69 (8.05%) 3,046 1.48% (0.43%) 1.73% 130%
CLASS B
Year Ended April 30, 2003 $ 9.59 (18.52%) $ 2,171 2.45% (1.87%) (a) 120%
Year Ended April 30, 2002 11.77 7.30% 3,483 2.36% (1.73%) (a) 31%
Year Ended April 30, 2001 11.14 (1.20%) 4,159 2.24% (1.60%) (a) 71%
Year Ended April 30, 2000 12.17 19.09% 4,578 2.21% (1.53%) (a) 258%
Year Ended April 30, 1999 12.50 (8.79%) 5,108 2.23% (1.19%) (a) 130%
CLASS I
Year Ended April 30, 2003 $ 10.25 (17.67%) $ 16,621 1.45% (0.87%) (a) 120%
Year Ended April 30, 2002 12.45 8.36% 19,113 1.36% (0.72%) (a) 31%
Year Ended April 30, 2001 11.66 (0.17%) 22,877 1.24% (0.60%) (a) 71%
Year Ended April 30, 2000 12.57 20.24% 20,645 1.21% (0.51%) (a) 258%
Year Ended April 30, 1999 12.72 (7.84%) 30,057 1.23% (0.19%) (a) 130%
</Table>
* Excludes contingent deferred sales charge for class B.
** During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratio would have been as indicated.
*** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) There were no waivers or reimbursements during the year
SEE NOTES TO FINANCIAL STATEMENTS
35
<Page>
RBC FUNDS, INC.
RBC GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the period indicated)
<Table>
<Caption>
INVESTMENT ACTIVITIES DISTRIBUTIONS
----------------------------------------- -----------------------------------------
NET ASSET NET REALIZED
VALUE, NET AND UNREALIZED TOTAL FROM NET NET
BEGINNING INVESTMENT GAINS (LOSSES) INVESTMENT INVESTMENT REALIZED TOTAL
OF YEAR INCOME ON INVESTMENTS ACTIVITIES INCOME GAINS DISTRIBUTIONS
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A
Year Ended April 30, 2003 $ 10.26 0.38 0.54 0.92 (0.38) -- (0.38)
Year Ended April 30, 2002 10.14 0.51 0.12 0.63 (0.51) -- (0.51)
Year Ended April 30, 2001 9.66 0.56 0.48 1.04 (0.56) -- (0.56)
Year Ended April 30, 2000 10.03 0.50 (0.33) 0.17 (0.50) (0.04) (0.54)
Year Ended April 30, 1999 10.19 0.50 0.04 0.54 (0.50) (0.20) (0.70)
CLASS B
Year Ended April 30, 2003 $ 10.25 0.33 0.55 0.88 (0.33) -- (0.33)
Year Ended April 30, 2002 10.13 0.46 0.12 0.58 (0.46) -- (0.46)
Year Ended April 30, 2001 9.66 0.51 0.47 0.98 (0.51) -- (0.51)
Year Ended April 30, 2000 10.03 0.45 (0.33) 0.12 (0.45) (0.04) (0.49)
Year Ended April 30, 1999 10.18 0.45 0.05 0.50 (0.45) (0.20) (0.65)
CLASS I
Year Ended April 30, 2003 $ 10.26 0.40 0.54 0.94 (0.40) -- (0.40)
Year Ended April 30, 2002 10.14 0.53 0.12 0.65 (0.53) -- (0.53)
Year Ended April 30, 2001 9.66 0.58 0.48 1.06 (0.58) -- (0.58)
Year Ended April 30, 2000 10.03 0.53 (0.33) 0.20 (0.53) (0.04) (0.57)
Year Ended April 30, 1999 10.19 0.52 0.04 0.56 (0.52) (0.20) (0.72)
<Caption>
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------------
RATIO OF NET
NET ASSET RATIO OF INVESTMENT RATIO OF
VALUE NET ASSETS, EXPENSES TO INCOME EXPENSES TO
END OF TOTAL END OF YEAR AVERAGE TO AVERAGE AVERAGE PORTFOLIO
YEAR RETURN* (000's) NET ASSETS NET ASSETS NET ASSETS** TURNOVER***
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A
Year Ended April 30, 2003 $ 10.80 9.07% $ 6,233 1.08% 3.55% 1.33% 67%
Year Ended April 30, 2002 10.26 6.28% 5,113 1.04% 4.93% 1.29% 35%
Year Ended April 30, 2001 10.14 11.01% 5,139 0.93% 5.61% 1.18% 103%
Year Ended April 30, 2000 9.66 1.73% 4,493 0.88% 5.13% 1.13% 60%
Year Ended April 30, 1999 10.03 5.38% 678 0.84% 4.85% 1.09% 104%
CLASS B
Year Ended April 30, 2003 $ 10.80 8.64% $ 589 1.58% 3.05% 1.83% 67%
Year Ended April 30, 2002 10.25 5.76% 421 1.54% 4.42% 1.79% 35%
Year Ended April 30, 2001 10.13 10.36% 323 1.43% 5.13% 1.68% 103%
Year Ended April 30, 2000 9.66 1.23% 232 1.38% 4.63% 1.63% 60%
Year Ended April 30, 1999 10.03 4.96% 195 1.35% 4.32% 1.60% 104%
CLASS I
Year Ended April 30, 2003 $ 10.80 9.34% $ 24,375 0.83% 3.82% (a) 67%
Year Ended April 30, 2002 10.26 6.55% 24,308 0.79% 5.19% (a) 35%
Year Ended April 30, 2001 10.14 11.29% 33,859 0.68% 5.87% (a) 103%
Year Ended April 30, 2000 9.66 1.99% 43,486 0.63% 5.31% (a) 60%
Year Ended April 30, 1999 10.03 5.64% 118,640 0.59% 5.11% (a) 104%
</Table>
* Excludes contingent deferred sales charge for class B.
** During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratio would have been as indicated.
*** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) There were no waivers or reimbursements during the year.
SEE NOTES TO FINANCIAL STATEMENTS
36
<Page>
RBC FUNDS, INC.
RBC QUALITY INCOME FUND
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the period indicated)
<Table>
<Caption>
INVESTMENT ACTIVITIES DISTRIBUTIONS
----------------------------------------- ----------------------------------------------
NET ASSET NET REALIZED
VALUE, NET AND UNREALIZED TOTAL FROM NET NET
BEGINNING INVESTMENT GAINS (LOSSES) INVESTMENT INVESTMENT REALIZED TOTAL
OF PERIOD INCOME ON INVESTMENTS ACTIVITIES INCOME GAINS DISTRIBUTIONS
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A
Year Ended April 30, 2003 $ 9.84 0.41 0.47 0.88 (0.44) (0.01) (0.45)
Year Ended April 30, 2002 10.06 0.51 (0.15) 0.36 (0.52) (0.06) (0.58)
Year Ended April 30, 2001 9.50 0.58 0.58 1.16 (0.58) (0.02) (0.60)
Period Ended April 30, 2000 (a) 10.00 0.50 (0.50) -- (0.50) -- (0.50)
CLASS B
Year Ended April 30, 2003 $ 9.84 0.36 0.47 0.83 (0.39) (0.01) (0.40)
Year Ended April 30, 2002 10.06 0.47 (0.15) 0.32 (0.48) (0.06) (0.54)
Period Ended April 30, 2001 (b) 9.55 0.54 0.53 1.07 (0.54) (0.02) (0.56)
CLASS I
Year Ended April 30, 2003 $ 9.84 0.42 0.48 0.90 (0.46) (0.01) (0.47)
Year Ended April 30, 2002 10.06 0.54 (0.15) 0.39 (0.55) (0.06) (0.61)
Year Ended April 30, 2001 9.50 0.60 0.58 1.18 (0.60) (0.02) (0.62)
Period Ended April 30, 2000 (a) 10.00 0.52 (0.50) 0.02 (0.52) -- (0.52)
<Caption>
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------
RATIO OF NET
NET ASSET RATIO OF INVESTMENT RATIO OF
VALUE, NET ASSETS, EXPENSES TO INCOME EXPENSES TO
END OF TOTAL END OF PERIOD AVERAGE TO AVERAGE AVERAGE PORTFOLIO
PERIOD RETURN* (000's) NET ASSETS NET ASSETS NET ASSETS** TURNOVER***
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
Year Ended April 30, 2003 $ 10.27 9.09% $ 501 1.31% 4.03% 1.56% 79%
Year Ended April 30, 2002 9.84 3.67% 493 1.22% 5.03% 1.47% 88%
Year Ended April 30, 2001 10.06 12.46% 324 1.16% 5.88% 1.41% 130%
Period Ended April 30, 2000 (a) 9.50 0.03%(c) 240 1.34%(d) 5.50%(d) 1.59%(d) 314%
CLASS B
Year Ended April 30, 2003 $ 10.27 8.54% $ 114 1.81% 3.52% 2.06% 79%
Year Ended April 30, 2002 9.84 3.17% 108 1.72% 4.50% 1.97% 88%
Period Ended April 30, 2001 (b) 10.06 10.37%(c) 44 1.68%(d) 5.25%(d) 1.90%(d) 130%
CLASS I
Year Ended April 30, 2003 $ 10.27 9.33% $ 47,658 1.06% 4.30% (e) 79%
Year Ended April 30, 2002 9.84 3.93% 64,912 0.97% 5.34% (e) 88%
Year Ended April 30, 2001 10.06 12.74% 77,808 0.91% 6.10% (e) 130%
Period Ended April 30, 2000 (a) 9.50 0.20%(c) 69,558 1.09%(d) 5.65%(d) 1.11%(d) 314%
</Table>
* Excludes contingent deferred sales charge for class B.
** During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratio would have been as indicated.
*** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
(a) For the period from May 11, 1999 (commencement of operations) to April 30,
2000.
(b) For the period from June 12, 2000 (commencement of operations) to April 30,
2001.
(c) Not annualized
(d) Annualized
(e) There were no waivers or reimbursements during the year.
SEE NOTES TO FINANCIAL STATEMENTS
37
<Page>
RBC FUNDS, INC.
RBC NORTH CAROLINA TAX-FREE BOND FUND
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the period indicated)
<Table>
<Caption>
INVESTMENT ACTIVITIES DISTRIBUTIONS
----------------------------------------- -------------------------------------------
NET ASSET NET REALIZED
VALUE, NET AND UNREALIZED TOTAL FROM NET NET
BEGINNING INVESTMENT GAINS (LOSSES) INVESTMENT INVESTMENT REALIZED TOTAL
OF YEAR INCOME ON INVESTMENTS ACTIVITIES INCOME GAINS DISTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A
Year Ended April 30, 2003 $ 10.39 0.36 0.35 0.71 (0.36) (0.04) (0.40)
Year Ended April 30, 2002 10.30 0.38 0.19 0.57 (0.38) (0.10) (0.48)
Year Ended April 30, 2001 9.91 0.40 0.39 0.79 (0.40) -- (0.40)
Year Ended April 30, 2000 10.45 0.38 (0.51) (0.13) (0.39) (0.02) (0.41)
Year Ended April 30, 1999 10.30 0.41 0.20 0.61 (0.41) (0.05) (0.46)
CLASS B
Year Ended April 30, 2003 $ 10.40 0.31 0.34 0.65 (0.31) (0.04) (0.35)
Year Ended April 30, 2002 10.30 0.32 0.20 0.52 (0.32) (0.10) (0.42)
Year Ended April 30, 2001 9.92 0.34 0.38 0.72 (0.34) -- (0.34)
Year Ended April 30, 2000 10.46 0.33 (0.51) (0.18) (0.34) (0.02) (0.36)
Year Ended April 30, 1999 10.30 0.36 0.21 0.57 (0.36) (0.05) (0.41)
CLASS I
Year Ended April 30, 2003 $ 10.39 0.39 0.35 0.74 (0.39) (0.04) (0.43)
Year Ended April 30, 2002 10.30 0.40 0.19 0.59 (0.40) (0.10) (0.50)
Year Ended April 30, 2001 9.91 0.42 0.39 0.81 (0.42) -- (0.42)
Year Ended April 30, 2000 10.45 0.41 (0.51) (0.10) (0.42) (0.02) (0.44)
Year Ended April 30, 1999 10.30 0.43 0.20 0.63 (0.43) (0.05) (0.48)
<Caption>
RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------
RATIO OF NET
NET ASSET RATIO OF INVESTMENT RATIO OF
VALUE, NET ASSETS, EXPENSES TO INCOME EXPENSES TO
END OF TOTAL END OF YEAR AVERAGE TO AVERAGE AVERAGE PORTFOLIO
YEAR RETURN* (000's) NET ASSETS NET ASSETS NET ASSETS** TURNOVER***
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A
Year Ended April 30, 2003 $ 10.70 6.96% $ 4,301 1.12% 3.41% $ 1.39% 2%
Year Ended April 30, 2002 10.39 5.64% 4,507 1.10% 3.61% 1.37% 7%
Year Ended April 30, 2001 10.30 8.04% 4,225 1.00% 3.88% 1.28% 13%
Year Ended April 30, 2000 9.91 (1.15%) 4,554 0.98% 3.85% 1.26% 14%
Year Ended April 30, 1999 10.45 5.96% 4,870 0.82% 3.89% 1.26% 11%
CLASS B
Year Ended April 30, 2003 $ 10.70 6.33% $ 443 1.62% 2.91% $ 1.89% 2%
Year Ended April 30, 2002 10.40 5.21% 425 1.60% 3.11% 1.87% 7%
Year Ended April 30, 2001 10.30 7.39% 439 1.50% 3.38% 1.77% 13%
Year Ended April 30, 2000 9.92 (1.64%) 449 1.48% 3.34% 1.76% 14%
Year Ended April 30, 1999 10.46 5.53% 570 1.32% 3.38% 1.76% 11%
CLASS I
Year Ended April 30, 2003 $ 10.70 7.23% $ 21,251 0.87% 3.66% $ 0.89% 2%
Year Ended April 30, 2002 10.39 5.90% 26,006 0.85% 3.86% 0.87% 7%
Year Ended April 30, 2001 10.30 8.31% 29,223 0.75% 4.13% 0.77% 13%
Year Ended April 30, 2000 9.91 (0.90%) 32,461 0.73% 4.09% 0.76% 14%
Year Ended April 30, 1999 10.45 6.22% 39,519 0.56% 4.15% 0.76% 11%
</Table>
- ----------
* Excludes contingent deferred sales charge for class B.
** During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratio would have been as indicated.
*** Portfolio turnover is calculated on the basis of the fund as a whole without
distinguishing between the classes of shares issued.
SEE NOTES TO FINANCIAL STATEMENTS
38
<Page>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of the RBC Funds, Inc.
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of portfolio investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the RBC Large Cap Equity Fund, RBC
Mid Cap Equity Fund, RBC Small Cap Equity Fund, RBC Government Income Fund, RBC
Quality Income Fund, and the RBC North Carolina Tax-Free Bond Fund (six series
of RBC Funds, Inc., hereafter referred to as the "Funds") at April 30, 2003, the
results of their operations, changes in their net assets and the financial
highlights for the year then ended in conformity with accounting principles
generally accepted in the United States of America. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audit of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit, which included confirmation of securities at April
30, 2003 by correspondence with the custodian and brokers, provides a reasonable
basis for our opinion. The statements of changes in net assets and financial
highlights of the Funds for the year ended April 30, 2002, were audited by other
auditors, whose report dated June 24, 2002 expressed an unqualified opinion on
those financial statements and financial highlights. The financial highlights of
the Funds for the periods ended April 30, 2001, were audited by other auditors,
whose report dated June 22, 2001 expressed an unqualified opinion on those
financial highlights.
PricewaterhouseCoopers LLP
Columbus, Ohio
June 17, 2003
39
<Page>
RBC FUNDS, INC.
SUPPLEMENTAL INFORMATION (UNAUDITED)
<Table>
<Caption>
POSITION, LENGTH OF PRINCIPAL OCCUPATION(S) NUMBER OF
TIME SERVED WITH THE DURING PAST 5 YEARS, PORTFOLIOS IN FUND
COMPANY, AND TERM AND OTHER DIRECTORSHIPS COMPLEX OVERSEEN
NAME, DATE OF BIRTH, AND ADDRESS OF OFFICE HELD BY DIRECTOR BY DIRECTOR
DIRECTORS**
Lucy Hancock Bode Director since 4/26/94, Lobbyist. 6
(Date of Birth: 8/27/51) Indefinite
P.O. Box 6338
Raleigh, NC 27628
J. Franklin Martin* Director since 1/24/96, President of LandCraft Properties (1978-present). 6
(Date of Birth: 11/14/44) Indefinite
227 W. Trade Street
Suite 2730
Charlotte, NC 28202
Leslie H. Garner, Jr. Director since 4/26/94, President, Cornell College 6
(Date of Birth: 8/29/50) Indefinite
600 First Street
West Mount Vernon, IA
52314-1098
James H. Speed, Jr. Director since 4/26/94, Retired; Formerly Vice President & Controller
(Date of Birth: 6/13/53) Indefinite Hardee's Food Systems, Inc. (1991-2000);
11032 Brass Kettle Deloitte & Touche -- Senior Audit Manager
Raleigh, NC 27614 (1979-1991). 6
R. William Shauman Director since 7/20/99, Banking Consultant; President, First of America
(Date of Birth: 12/13/37) Indefinite Insurance Co. (1997-1998); Executive Vice
3131 Woodham Ave President, First of America Bank Corp.
Portage, MI 49002 (1993-1997). 6
EXECUTIVE OFFICERS
Walter B. Grimm (1) President since BISYS -- Senior Vice President and Client Services
(Date of Birth: 6/3/45) 7/13/99, Indefinite Executive of Client Services (1992-present).
Nadeem Yousaf (1) Treasurer since BISYS -- Vice President (1999-present); previously,
(Date of Birth: 1/26/69) 5/24/00, Indefinite Director, Investors Bank & Trust (1997-1999).
Curtis Barnes (1) Secretary since BISYS -- Vice President (1995-present).
(Date of Birth: 9/24/53) 7/13/99, Indefinite
Lara Bocskey (1) Vice President since BISYS -- Client Services Manager (1998-present);
(Date of Birth: 5/7/70) 5/16/01, Indefinite First of America Bank Corporation, Product Manager
(1997-1998); Marketing Specialist (1995-1997).
</Table>
- ----------
(1) Address is 3435 Stelzer Road, Columbus, Ohio 43219.
* Directors deemed to be "interested persons" of the Company for purposes of
the 1940 Act.
** Additional disclosures can be found in the Statement of Additional
Information, which can be obtained by calling 1-800-442-3688.
CHANGE IN AUDITORS
During the Funds fiscal year, Ernst & Young LLP resigned as the Funds
independent auditors on the basis it was no longer "independent" of the Funds
within the meaning of their professional standards. On November 4, 2002, the
Board approved the decision to change independent auditors and engage
PricewaterhouseCoopers LLP as its new independent auditors as of that date
for the remainder of the fiscal year ending April 30, 2003.
40
<Page>
SHAREHOLDER VOTING RESULTS (UNAUDITED)
On December 18, 2002, a special meeting of shareholders of the RBC Funds, Inc.
was held for the following purposes:
PROPOSAL 1: To approve or disapprove a new master investment advisory agreement,
including an investment advisory contract supplement with respect to each Fund,
between the Company, on behalf of each Fund, and Voyageur Asset Management Inc.:
<Table>
<Caption>
NO. OF SHARES % OF OUTSTANDING SHARES % OF SHARES VOTED
RBC LARGE CAP EQUITY FUND
FOR: 4,577,275.866 72.519% 99.981%
AGAINST: 0.000 0.000% 0.000%
ABSTAIN: 859.384 0.13% 0.019%
TOTAL: 4,578,135.250 72.532% 100.000%
RBC MID CAP EQUITY FUND
FOR: 9,213,352.664 57.188% 99.902%
AGAINST: 1,046.977 0.006% 0.012%
ABSTAIN: 7,953.958 0.050% 0.086%
TOTAL: 9,222,353.599 57.244% 100.000%
RBC SMALL CAP EQUITY FUND
FOR: 1,501,168.182 62.597% 99.962%
AGAINST: 0.000 0.000% 0.000%
ABSTAIN: 578.000 0.024% 0.038%
TOTAL: 1,501,746.182 62.621% 100.000%
RBC GOVERNMENT INCOME FUND
FOR: 2,251,102.002 72.344% 100.000%
AGAINST: 0.000 0.000% 0.000%
ABSTAIN: 0.000 0.000% 0.000%
TOTAL: 2,251,102.002 72.344% 100.000%
RBC QUALITY INCOME FUND
FOR: 4,636,881.043 83.567% 100.000%
AGAINST: 0.000 0.000% 0.000%
ABSTAIN: 0.000 0.000% 0.000%
TOTAL: 4,636,881.043 83.567% 100.000%
RBC NORTH CAROLINA TAX-FREE BOND FUND
FOR: 2,555,162.755 97.219% 100.000%
AGAINST: 0.000 0.000% 0.000%
ABSTAIN: 0.000 0.000% 0.000%
TOTAL: 2,555,162.755 91.219% 100.000%
</Table>
PROPOSAL 2: To elect the following five nominees as Directors of the Company,
each of whom will serve until his or her successor is elected and qualified:
<Table>
<Caption>
NO. OF SHARES % OF OUTSTANDING SHARES % OF SHARES VOTED
LESLIE H. GARNER, JR.
FOR: 24,730,372.240 68.487% 99.939%
WITHHELD: 15,008.591 0.042% 0.061%
TOTAL: 24,745,380.831 68.529% 100.000%
JAMES H. SPEED, JR.
FOR: 24,732,750.138 68.494% 99.949%
WITHHELD: 12,630.693 0.035% 0.051%
TOTAL: 24,745,380.831 68.529% 100.000%
R. WILLIAM SHAUMAN
FOR: 24,730,372.240 68.487% 99.939%
WITHHELD: 15,008.591 0.042% 0.061%
TOTAL: 24,745,380.831 68.529% 100.000%
LUCY HANCOCK BODE
FOR: 24,732,750.138 68.494% 99.949%
WITHHELD: 12,630.693 0.035% 0.051%
TOTAL: 24,745,380.831 68.529% 100.000%
J. FRANKLIN MARTIN
FOR: 24,732,750.138 68.494% 99.949%
WITHHELD: 12,630.693 0.035% 0.051%
TOTAL: 24,745,380.831 68.529% 100.000%
</Table>
41
<Page>
PROPOSAL 3: To approve the selection of PricewaterhouseCoopers LLP as the
independent accountants for each Fund:
<Table>
<Caption>
NO. OF SHARES % OF OUTSTANDING SHARES % OF SHARES VOTED
RBC LARGE CAP EQUITY FUND
FOR: 4,577,804.866 72.527% 99.993%
AGAINST: 0.000 0.000% 0.000%
ABSTAIN: 330.384 0.005% 0.007%
TOTAL: 4,578,135.250 72.532% 100.00%
RBC MID CAP EQUITY FUND
FOR: 9,216,923.664 57.210% 99.941%
AGAINST: 193.977 0.001% 0.002%
ABSTAIN: 5,235.958 0.033% 0.057%
TOTAL: 9,222,353.599 57.244% 100.000%
RBC SMALL CAP EQUITY FUND
FOR: 1,501,746.182 62.621% 100.000%
AGAINST: 0.000 0.000% 0.000%
ABSTAIN: 0.000 0.000% 0.000%
TOTAL: 1,501,746.182 62.621% 100.000%
RBC GOVERNMENT INCOME FUND
FOR: 2,251,102.002 72.344% 100.000%
AGAINST: 0.000 0.000% 0.000%
ABSTAIN: 0.000 0.000% 0.000%
TOTAL: 2,251,102.002 72.344% 100.000%
RBC QUALITY INCOME FUND
FOR: 4,636,881.043 83.567% 100.000%
AGAINST: 0.000 0.000% 0.000%
ABSTAIN: 0.000 0.000% 0.000%
TOTAL: 4,636,881.043 83.567% 100.000%
RBC NORTH CAROLINA TAX-FREE BOND FUND
FOR: 2,555,162.755 97.219% 100.000%
AGAINST: 0.000 0.000% 0.000%
ABSTAIN: 0.000 0.000% 0.000%
TOTAL: 2,555,162.755 91.219% 100.000%
</Table>
42
<Page>
RBC FUNDS
FOR ADDITIONAL INFORMATION ON THE
RBC FUNDS, CALL
1-800-442-3688
INVESTMENT ADVISOR
VOYAGEUR ASSET MANAGEMENT INC.
90 SOUTH SEVENTH ST., SUITE 4300
MINNEAPOLIS, MN 55402
CUSTODIAN
WELLS FARGO BANK MINNESOTA, N.A.
733 MARQUETTE AVE.
MINNEAPOLIS, MN 55479
ADMINISTRATOR AND SPONSOR
BISYS FUND SERVICES, INC.
3435 STELZER ROAD
COLUMBUS, OH 43219
DISTRIBUTOR
CENTURA FUNDS DISTRIBUTOR, INC.
3435 STELZER ROAD
COLUMBUS, OH 43219
LEGAL COUNSEL
DECHERT
TEN POST OFFICE SQUARE
BOSTON, MA 02109
INDEPENDENT AUDITORS
PRICEWATERHOUSECOOPERS LLP
100 EAST BROAD STREET, SUITE 2100
COLUMBUS, OH 43215
THIS REPORT IS FOR THE INFORMATION OF THE SHAREHOLDERS OF RBC FUNDS. ITS USE IN
CONNECTION WITH ANY OFFERING OF THE FUNDS' SHARES IS AUTHORIZED ONLY IN CASE OF
A CONCURRENT OR PRIOR DELIVERY OF THE FUNDS' CURRENT PROSPECTUS.
INVESTMENTS IN MUTUAL FUNDS INVOLVE RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
RBC FUNDS ARE NOT DEPOSITS, GUARANTEED BY OR OBLIGATIONS OF RBC CENTURA BANK OR
ITS AFFILIATES AND ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY
OTHER GOVERNMENT AGENCY.
6/03
<Page>
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report,
the registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party. If the registrant has not adopted such a code
of ethics, explain why it has not done so. NOT APPLICABLE - ONLY EFFECTIVE
FOR ANNUAL REPORTS WITH PERIODS ENDING ON OR AFTER JULY 15, 2003.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of directors has
determined that the registrant either:
(i) Has at least one audit committee financial expert serving
on its audit committee; or
(ii) Does not have an audit committee financial expert serving
on its audit committee.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit
committee financial expert and whether that person is "independent."
In order to be considered "independent" for purposes of this Item, a
member of an audit committee may not, other than in his or her
capacity as a member of the audit committee, the board of directors,
or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or
other compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as
defined in Section 2(a)(19) of the Act (15 U.S.C. 80a-
2(a)(19)).
(3) If the registrant provides the disclosure required by paragraph
(a)(1)(ii) of this Item, it must explain why it does not have an
audit committee financial expert.
NOT APPLICABLE - ONLY EFFECTIVE FOR ANNUAL REPORTS WITH PERIODS ENDING
ON OR AFTER JULY 15, 2003.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed
for each of the last two fiscal years for professional services rendered by the
principal accountant for the audit of the registrant's annual financial
statements or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those fiscal
years.
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees
billed in each of the last two fiscal years for assurance and related services
by the principal accountant that are reasonably related to the performance of
the audit of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in
each of the last two fiscal years for professional services rendered by the
principal accountant for tax compliance, tax advice, and tax planning.
Registrants shall describe the nature of the services comprising the fees
disclosed under this category.
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees
billed in each of the last two fiscal years for products and services provided
by the principal accountant, other than the services reported in paragraphs (a)
through (c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
(e) (1) Disclose the audit committee's pre-approval policies and
procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
(2) Disclose the percentage of services described in each of
paragraphs (b) through (d) of this Item that were approved by the audit
committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) If greater than 50 percent, disclose the percentage of hours
expended on the principal accountant's engagement to audit the registrant's
financial statements for the most recent fiscal year that were attributed to
work performed by persons other than the principal accountant's full-time,
permanent employees.
<Page>
(g) Disclose the aggregate non-audit fees billed by the registrant's
accountant for services rendered to the registrant, and rendered to the
registrant's investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant for
each of the last two fiscal years of the registrant.
(h) Disclose whether the registrant's audit committee of the board of
directors has considered whether the provision of nonaudit services that were
rendered to the registrant's investment adviser (not including any subadviser
whose role is primarily portfolio management and is subcontracted with or
overseen by another investment adviser), and any entity controlling, controlled
by, or under common control with the investment adviser that provides ongoing
services to the registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the
principal accountant's independence.
NOT APPLICABLE - ONLY EFFECTIVE FOR ANNUAL REPORTS WITH PERIODS ENDING ON OR
AFTER DECEMBER 15, 2003.
ITEMS 5-6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual
report on this Form N-CSR must, unless it invests exclusively in non-voting
securities, describe the policies and procedures that it uses to determine how
to vote proxies relating to portfolio securities, including the procedures that
the company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
NOT APPLICABLE.
<Page>
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) - The certifying officers, whose certifications are included
herewith, have evaluated the registrant's disclosure controls and procedures
within 90 days of the filing date of this report. In their opinion, based on
their evaluation, the registrant's disclosure controls and procedures are
adequately designed, and are operating effectively to ensure, that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to them by others within those entities, particularly during the
period in which this report is being prepared. Further, in their opinion, the
registrant's disclosure controls and procedures are adequately designed, and are
operating effectively to ensure, that information required to be disclosed by
the registrant in the reports it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms.
(b) - There are no significant deficiencies or material weaknesses in
the registrant's internal controls as of the date of their most recent
evaluation, and there have been no significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their most recent evaluation.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number
the exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2 under
the Act (17 CFR 270.30a-2).
<Page>
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) RBC Funds, Inc
--------------------------------------------------------------------
By (Signature and Title)* /s/ Nadeem Yousaf, Treasurer
-------------------------------------------------------
Date 6/26/03
-----------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Walter B. Grimm, President
-------------------------------------------------------
Date 6/27/03
-----------------------------------------
By (Signature and Title)* /s/ Nadeem Yousaf, Treasurer
-------------------------------------------------------
Date 6/26/03
-----------------------------------------
* Print the name and title of each signing officer under his or her signature.