Yankee Certificate of Deposit #4 (CDs)

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Yankee Certificate of Deposit #4 (CDs) Powered By Docstoc
					Royal Bank of Canada | Yankee Certificate of Deposit Program                     June 19, 2009 | U.S. Structured Products Group




                                             Yankee Certificate of Deposit #4 (“CDs”)
                                             Linked to the PIMCO GIS – Global High Yield
                                             Bond Fund, due June 26, 2014




             5 Year                                       100%                                  PIMCO GIS
                                               Principal Protection                           Global High Yield
             Term                                  (if held to maturity)                         Bond Fund

                                                Key Terms
                                 Component      Issuer:                 Royal Bank of Canada, New York Branch
       Referenced Fund
                                  Weight
                                                Issuer’s Senior
       PIMCO GIS – Global High                                          Aaa (Moody’s) / AA- (S&P)
                                                Debt Rating:
       Yield Bond Fund
       (Bloomberg Symbol           100%                                 Certificate of Deposit (“CD”) linked to the performance of
       “PIMGHYB ID”)
                                                Instrument:
                                                                        the Referenced Fund.
                                                                        PIMCO GIS Global High Yield Bond Fund (Bloomberg
                                                Reference Fund:
                                                                        ticker “PIMGHYB ID”).
                                                                        The CDs are the Issuer’s certificates of deposit. The CDs
                                                                        are not insured by the Federal Deposit Insurance Company
                                                Description:
                                                                        or any other governmental agency. They rank pari passu
                                                                        with the Issuer’s Senior Debt.
    CUSIP:                       78009JUA1      Minimum
                                                                        $100,000, and $1,000 increments in excess thereof.
                                                Investment:
                                                Deal Total:             $2,433,000

                                                Minimum
                                                                        100%, if held to maturity.
                                                Redemption:
                                                Term:                   Five (5) years
        U.S. Structured Products Group          Interest                We will not pay you interest during the term of the CD.
                 (866) 609-6009
                                                Participation
                                                                        110%
                                                Rate:
                                                Pricing Date:           June 19, 2009




                                                          Page 1 of 9
Key Terms Continued
Issuance Date:                 June 26, 2009
Maturity Date:                 June 26, 2014
Payment at Maturity            At maturity, subject to the Issuer’s credit risk, the investor will receive the
(if held to Maturity Date):    principal amount invested (the “Principal Amount”) plus an amount equal to
                               the greater of:

                                1. Zero (0%); and
                                2. The Principal Amount multiplied by the Percentage Change multiplied by
                                   the Participation Rate.

Percentage Change:            The Percentage Change is based on the annual average return of the Reference
                              Fund. The Percentage Change is calculated using the following formula:

                                                     Av er ag e Lev el – Initial Lev el
                                                               In itial Level


                              where, the Initial Level is 10.54, which was the Net Asset Value (“NAV”) on
                              the Pricing Date; the Average Level is the arithmetic average of the Net Asset
                              Values on each of the annual Valuation Dates.

Net Asset Value:              The net asset value per share or unit of the Reference Fund, as calculated and
                              published by, or on behalf of, the Fund Manager (or its designee).

Valuation Dates:              June 21, 2010, June 20, 2011, June 19, 2012, June 19, 2013 and June 19, 2014.
                              If any of these dates is not a Trading Day, then the relevant Valuation Date will
                              be the next following Trading Day. If the Calculation Agent determines that a
                              Market Disruption Event occurs or is continuing on any Valuation Date
                              applicable to the CDs, NAV will be determined according to the calculation in
                              “Market Disruption Events” below.

Fund Manager:                 The entity that the Calculation Agent determines to be the manager or
                              investment advisor of the Reference Fund.

Calculation Agent:            Royal Bank of Canada. All determinations made by the Calculation Agent
                              shall be binding upon the Issuer and each holder of the CDs.

US Federal Tax:               Although there is no authority directly on point, we intend to characterize and
                              treat the CDs as “contingent payment debt instruments” for United States
                              federal income tax purposes. If you are a taxable U.S. person, regardless of
                              your method of accounting, you generally will be required to accrue interest
                              over the term of the CDs based on their “comparable yield,” as determined by
                              us, even though you will not receive any payments from us until maturity. Any
                              gain you may recognize on the sale or retirement of the CDs will be taxed as
                              ordinary interest income. You should consult your tax adviser regarding an
                              investment in the CDs, including but not limited to, special rules that may
                              apply if, during the term of the CDs, the likelihood that the CDs will pay more
                              than the Principal Amount becomes remote. You may obtain the comparable
                              yield and projected payment schedule for the CDs by contacting the Structured
                              Notes desk at 866-609-6009. The comparable yield and the projected
                              payment amount are used to determine accruals of interest FOR U.S.
                              FEDERAL INCOME TAX PURPOSES ONLY and are not assurances or
                              predictions by the Issuer with respect to the actual yield of, or payment to
                              be made in respect of, the CDs.




                                       Page 2 of 9
                           To ensure compliance with Treasury Department Circular 230, you are
                           hereby notified that (a) any discussion of U.S. federal tax issues in this term
                           sheet is not intended or written to be relied upon, and cannot be relied upon
                           by you for the purpose of avoiding penalties that may be imposed on you
                           under the Internal Revenue Code of 1986, as amended, (b) this discussion is
                           included herein by us in connection with the promotion or marketing (within
                           the meaning of Circular 230) by the Issuer and RBC Capital Markets
                           Corporation of the transactions or matters addressed herein, and (c) you
                           should seek advice based on your particular circumstances from an
                           independent tax advisor.

Secondary Market:          RBC Capital Markets Corporation (or one of its affiliates), though not
                           obligated to do so, plans to maintain a secondary market in the CDs after the
                           Settlement Date, but may cease to do so at any time. No assurances can be
                           given that there will be any secondary market for the CDs. The amount that
                           an investor may receive upon the sale of their CDs prior to maturity may be
                           less than the Principal Amount.

Trading Day:               Any day on which the Reference Fund permits subscriptions for, and
                           redemptions of, its shares or units, as described in the Reference Fund’s
                           prospectus or offering materials.

Market Disruption Event:   A Market Disruption Event may be deemed by the Calculation Agent to have
                           occurred if the Fund Manager fails to publish a Net Asset Value within
                           twelve (12) hours after the close of business in London, England, on a
                           Valuation Date; provided, however, that if an event occurs that constitutes
                           both a Market Disruption Event and an Extraordinary Event (as defined
                           below), that event shall constitute an Extraordinary Event and not a Market
                           Disruption Event.

Business Day:              Any day other than a Saturday, Sunday or a day on which banks are required
                           or permitted to be closed in London or the State of New York, or in any
                           jurisdiction where payments on the CDs are payable. Any payment on the
                           CDs that would otherwise be due on a day that is not a Business Day may
                           instead be paid on the next day that is a Business Day, with the same effect as
                           if paid on the original due date.

Consequences of a Market   If, on any Valuation Date, a Market Disruption Event occurs or is continuing,
Disruption Event:          the Net Asset Value for that date will equal the Reference Fund’s Net Asset
                           Value on the first Trading Day following the Valuation Date on which the
                           Calculation Agent determines that a Market Disruption Event is not
                           continuing. If a Market Disruption Event occurs or is continuing on each
                           Trading Day to and including the eighth (8th) Trading Day following the
                           Valuation Date, then the Net Asset Value will be determined (or, if not
                           determinable, estimated by the Calculation Agent in a manner which is
                           considered commercially reasonable under the circumstances) by the
                           Calculation Agent on that eighth (8th) trading day, regardless of the
                           occurrence or continuation of a Market Disruption Event on that day. In such
                           an event, the Calculation Agent will make a good faith estimate in its sole
                           discretion of the Net Asset Value that would have prevailed in the absence of
                           the Market Disruption Event.




                                    Page 3 of 9
                               If the final Valuation Date is postponed due to a Market Disruption Event,
                               then the Maturity Date will be postponed by the same number of Trading
                               Days as the final Valuation Date. No interest will accrue past the Maturity
                               Date specified above.

Potential Adjustment Events:   A “Potential Adjustment Event” is any event that, in the opinion of the
                               Calculation Agent, may have a dilutive or concentrative effect on the value of
                               the shares or units of the Reference Fund.

                               If the Calculation Agent has determined that a Potential Adjustment Event
                               has occurred, then the Calculation Agent shall make such adjustments as it
                               determines in its sole and absolute discretion to be appropriate, if any, to the
                               Payment at Maturity and/or any variable, calculation methodology, valuation,
                               settlement, payment terms or any other terms and conditions in respect of the
                               CDs to account for that dilutive or concentrative effect and will determine the
                               effective date(s) of such adjustment(s).

Substitution:                  Upon the occurrence (as determined by the Calculation Agent) of (a) any
                               Insolvency, Extraordinary Event or Fund Merger Event (each as defined
                               below) in respect of the Reference Fund, or (b) an Insolvency in respect of the
                               Fund Manager or any custodian or other service provider to the Reference
                               Fund, the Calculation Agent shall either (A)(1) make adjustments to any
                               variable, calculation methodology, valuation, settlement, payment terms or
                               any other terms and conditions of the CDs, as the Calculation Agent
                               determines appropriate, so as to account for the economic effect on the CDs
                               of such Fund Insolvency, Extraordinary Event or Fund Merger Event, and (2)
                               determine the effective date of the relevant adjustments, or (B) if the
                               Calculation Agent determines that no adjustment under (A) would produce a
                               commercially reasonable result, then the Calculation Agent shall select:

                               (i) an alternative investment fund which is denominated in the same currency
                               as the Reference Fund and which the Calculation Agent determines has a
                               similar investment objective to the Reference Fund to replace the Reference
                               Fund (the “Replacement Fund”); and

                               (ii) the appropriate date (the “Substitution Date”) for the replacement of the
                               Reference Fund with the Replacement Fund.

                               Following any such selection:

                               (1) the Replacement Fund shall replace the Reference Fund on the
                               Substitution Date;

                               (2) references herein to the “Reference Fund” shall be deemed to be
                               references to the Replacement Fund with effect from the Substitution Date;
                               and

                               (3) the Calculation Agent shall, in good faith, make such adjustment(s) that it
                               determines to be appropriate to any variable, calculation methodology,
                               valuation, settlement, payment terms or any other terms in respect of the CDs
                               to account for this substitution.




                                        Page 4 of 9
Extraordinary Event:   The occurrence of any of the following events, if the Calculation Agent
                       determines that occurrence to be material, shall constitute an “Extraordinary
                       Event” hereunder
                       (i) any material amendment, breach or violation of, or deviation from, any
                       strategy or investment guidelines stated in the prospectus or offering
                       materials of the Reference Fund (as in effect as of the Pricing Date or the
                       Substitution Date, as the case may be) and that is reasonably likely, as
                       determined by the Calculation Agent in its sole discretion, to affect the value
                       of the shares or units of the Reference Fund, or the rights or remedies of any
                       holders thereof;

                       (ii) the currency denomination of the Reference Fund is changed so that, on
                       any Trading Day during the term of the CDs, NAV is no longer calculated in
                       the same currency as it was on the Pricing Date (or the Substitution Date, as
                       the case may be);

                       (iii) the Issuer, its affiliates or any hedging counterparty thereof, in order to
                       hedge their market risk in connection with these CDs, would (a) be required
                       to pay a subscription fee to purchase units or shares of the Reference Fund or
                       (b) incur a redemption fee to sell of units or shares of the fund;
                       (iv) (1) the Reference Fund and the Fund Manager fail to calculate and
                       publish NAV on three consecutive Trading Days during the term of the CDs;
                       (2) the Reference Fund makes any change to the methodology used for
                       calculating NAV (as in effect on the Pricing Date or the Substitution Date, as
                       the case may be) that the Calculation Agent deems, in its sole discretion, to be
                       material; or (3) the Reference Fund makes any change to the frequency with
                       which, or the dates on which, it publishes NAV (as in effect on the Pricing
                       Date or the Substitution Date, as the case may be);

                       (v) (i) (x) the cancellation, suspension or revocation of the registration or
                       approval of the Reference Fund or the Fund Manager by any governmental,
                       legal or regulatory entity with authority over the fund, (y) the Reference Fund
                       or the Fund Manager becoming subject to any investigation, proceeding or
                       litigation by any relevant governmental, legal or regulatory authority
                       involving the alleged violation of applicable law for any activities relating to
                       or resulting from the operation of the Reference Fund or the Fund Manager,
                       or (z) all the assets or substantially all the assets of the Reference Fund being
                       nationalized, expropriated or otherwise required to be transferred to any
                       governmental agency, authority or entity, and (ii) the occurrence of any of the
                       events set out in (i)(x), (y) or (z) is likely, as determined by the Calculation
                       Agent is its sole discretion, to have a material adverse effect on the Reference
                       Fund;

                       (vi) a determination by the Calculation Agent that any payments received or
                       paid by the Issuer or its affiliates in connection with the hedging of our
                       obligations under these CDs are or will become subject to United States
                       federal withholding tax under any current or future section of the Internal
                       Revenue Code or the Treasury regulations promulgated thereunder, which
                       withholding tax cannot be avoided without a material increase in the cost of
                       hedging ;




                                Page 5 of 9
(vii) the Reference Fund, the Fund Manager, any custodian of the fund or any
other service provider to the fund, becomes party to any litigation or dispute
which is likely, as determined by the Calculation Agent in its sole discretion,
to have a material adverse effect on the fund;
(viii) (1)(a) the Reference Fund restricts purchases or redemptions of its units
or shares, whether due to its determination that the party attempting to
purchase additional shares units or redeem shares has engaged in excessive
trading of such units or shares or otherwise; or (b) the Reference Fund’s
prospectus or offering documents in effect as of the Pricing Date provides for
or is amended to provide for either (i) restrictions on purchases of units or
shares or (ii) the imposition of additional fees on redemptions or purchases of
the units or shares; and (2) the Calculation Agent determines, in its sole
discretion, that any event described in clause (1)(a) or (1)(b) above materially
interferes with the ability of the Issuer or its affiliates or hedging
counterparties to unwind or adjust all or a material portion of a hedge position
in the units or shares, or the cost to any of them of any such unwind or
adjustment, with respect to the CDs;

(ix) the Issuer, its affiliates or any hedging counterparty is required (whether
by the Fund Manager, governmental agency or otherwise) for any reason to
redeem all or some of the units or shares of the Reference Fund that it may be
holding as part of its hedging activities in respect of the CDs;

(x) the Issuer deems it necessary or appropriate, in order to comply with any
applicable legal and/or regulatory limits on the number of units or shares of
the Reference Fund that it may be allowed to hold, to redeem all or some of
the units or shares of the fund that it may be holding as part of its hedging
activities in respect of the CDs;

(xi) there is a change of the Fund Manager as investment manager for the
Reference Fund;

(xii) the Reference Fund amends its organizational materials, and that
amendment, in the reasonable determination of the Calculation Agent, would
adversely affect the Issuer, its affiliates or its hedging counterparties in
relation to their hedging activities in respect of the CDs; and

(xiii) the Issuer, its affiliates or a hedging counterparty is unable, or it is
impractical for any of them, after using commercially reasonable efforts, to (i)
acquire, establish, re-establish, substitute, maintain, unwind or dispose of any
transaction or asset it deems necessary or appropriate to hedge (x) the price
risk relating to the units or shares of the Reference Fund or (y) its entering
into and performing its obligations with respect to the CDs, or (ii) realize,
recover or remit the proceeds of any such transaction or asset, including,
without limitation, where such inability or impracticability has arisen by
reason of (A) any restrictions or increase in charges or fees imposed by the
Reference Fund on any investor’s ability to redeem units or shares in the
fund, in whole or in part, or any existing or new investor’s ability to make
new or additional investments in the fund, or (B) any mandatory redemption,
in whole or in part, of units or shares imposed by the Reference Fund (in each
case other than any restriction in existence on the Pricing Date).




         Page 6 of 9
Fund Merger Event:                                        Any (i) reclassification or change of the Reference Fund that results in a
                                                          transfer of, or an irrevocable commitment to transfer, all of the outstanding
                                                          units or shares of the fund, (ii) consolidation, amalgamation or merger of the
                                                          Reference Fund with or into another entity (other than a consolidation,
                                                          amalgamation or merger pursuant to which the fund is the continuing entity
                                                          and which does not result in any such reclassification or change), or (iii)
                                                          takeover offer, tender offer, exchange offer, solicitation, proposal or other
                                                          event by any person or entity to purchase or otherwise obtain 100% of the
                                                          outstanding units or shares of the Reference Fund that results in a transfer of
                                                          or, an irrevocable commitment to transfer, all of the outstanding units or
                                                          shares of the fund (other than the units or shares of owned or controlled by
                                                          the Issuer, its affiliates or its hedge counterparty), in each case if the Fund
                                                          Merger Date (as defined below) is on or before the final Valuation Date.

Fund Merger Date:                                         The closing date of a Fund Merger Event or, where a closing date cannot be
                                                          determined under applicable law, such other date as determined by the
                                                          Calculation Agent.

Insolvency:                                               Any voluntary or involuntary liquidation, bankruptcy, insolvency, dissolution
                                                          or winding-up of or any analogous proceeding affecting an entity, or any
                                                          termination, loss of regulatory approval or registration in respect of an entity.

Correction of Prices:                                     In the event that any NAV used by the Calculation Agent to make any
                                                          calculations, valuations or payments in respect of the CDs is subsequently
                                                          corrected (a “Price Correction”) by the Reference Fund or the Fund Manager
                                                          and that Price Correction is published on or before the second (2nd) Business
                                                          Day prior to the Maturity Date, then the Calculation Agent may, if
                                                          practicable, adjust or correct any value or amount in respect of the CDs
                                                          (including, without limitation, the Payment at Maturity) to take account of
                                                          that Price Correction, if it is deemed to be material by the Calculation Agent.

Governing Law:                                            These CDs shall be governed by, and construed in accordance with, the laws
                                                          of the State of New York, applicable to agreements made and to be performed
                                                          wholly within such jurisdiction.

Normalized Historical                                     The following is a historical graph of the Reference Fund’s net asset value
Performance Graph:                                        from September 12, 2006 to June 12, 2009. (Source: Bloomberg.)


                                                 PIMCO Global High Yield Bond Fund (PIMGHYB)

                                        14


                                        12


                                        10
              Closing Price per Share




                                         8


                                         6


                                         4


                                         2


                                        0
                                        Sep-06             Sep-07                           Sep-08




                                                                    Page 7 of 9
Sample Calculations of the Payment Amount  
The examples set out below are included for illustration purposes only. All examples assume that a holder has purchased
the CDs with an aggregate principal amount of $100,000 and that no Extraordinary Event, Market Disruption Event,
Insolvency or Fund Merger Event has occurred during their term.



Example 1— Calculation of the Payment at Maturity where the Percentage Change is less than 0%.

Percentage Change:        -25%
Payment at Maturity:      $100,000 + ($100,000 x 0% x 110%) = $100,000 + $0 = $100,000

On a $100,000 investment, a -25% Percentage Change results in a Payment at Maturity of $100,000, a 0% return on the
CDs (an annualized percentage yield of 0.00%).




Example 2— Calculation of the Payment at Maturity where the Percentage Change is greater than 0%.

Percentage Change:        45%
Payment at Maturity:      $100,000 + ($100,000 x 45% x 110%) = $100,000 + $49,500 = $149,500

On a $100,000 investment, a 45% percentage change results in a payment at maturity of $149,500, a 49.5% return on the
CDs (an annualized percentage yield of approximately 8.37%).




                                                      Page 8 of 9
RISK FACTORS
     An investment in the CDs is subject to a variety of risks, including, but not limited to, the following:

 •   The CDs are not insured by any U.S. or Canadian governmental agency. As a result, your receipt of any
     amounts due on the maturity date is subject to the Issuer’s credit risk. Financial information relating to the
     Issuer is available at: http://www.rbc.com/investorrelations/index.html.

 •   The Reference Fund is not currently subject to the reporting regulations of the U.S. Securities Exchange Act of
     1934, as amended (the “Exchange Act”), or the Investment Company Act of 1940, as amended. As a result,
     information available about the Reference Fund is likely to be substantially less than the information that is
     available for an issuer or fund that is subject to these statutes. You must make your own investigation into the
     business and affairs of the Reference Fund in order to make an investment in the CDs.

 •   The CDs are not securities, and will not be listed on any securities exchange. Accordingly, none of the
     provisions of the Securities Exchange Act of 1933, as amended (the “Securities Act”), the Exchange Act or the
     Trust Indenture Act of 1939, as amended, will apply to the CDs. This term sheet does not include all of the
     disclosures that would be set forth in a prospectus governed by the Securities Act. By investing in the CDs, you
     acknowledge that you or your representatives have the necessary experience in instruments such as the CDs in
     order for you to evaluate the merits of an investment therein.

 •   Payment at Maturity may not exceed the principal amount of the CDs. Because that payment will be based
     upon the average of the NAV on the Valuation Dates, in determining the amount payable on the CDs, high
     levels of the NAV on one or more Valuation Dates may be offset by lower levels of the NAV on one or more
     other Valuation Dates.

 •   You may be obligated to pay taxes on income prior to your receipt of cash payments on the CDs.




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