$2,567,000 Royal Bank of Canada Senior Global Medium-Term Notes, Series C

Transcription

1 Pricing Supplement dated December 11, 2009 to the Product Prospectus Supplement dated February 25, 2009, the Prospectus dated January 5, 2007 and the Prospectus Supplement dated February 28, 2007 $2,567,000 Royal Bank of Canada Senior Global Medium-Term Notes, Series C Redeemable Range Accrual Notes, Due December 16, 2024 Royal Bank of Canada is offering the notes described below. The prospectus dated January 5, 2007, the prospectus supplement dated February 28, 2007 and the product prospectus supplement dated February 25, 2009 describe terms that will apply generally to the notes, including any notes you purchase. Capitalized terms used but not defined in this pricing supplement shall have the meanings given to them in the product prospectus supplement. In the event of any conflict, this pricing supplement will control. Issuer: Royal Bank of Canada ( Royal Bank ). Underwriter: RBC Capital Markets Corporation Principal Amount: $2,567,000 Maturity Date: December 16, 2024 Interest Rate: 6.10% times N/D; Reference Rate: Reference Rate Range: Type of Note: Interest Payment Dates: Redemption: Call Date(s): Survivor s Option: Incorporated risk factors: where N is the total number of calendar days in the applicable interest period on which the reference rate satisfies the reference rate range; and D is the total number of calendar days in the applicable interest period. 3 Month USD Libor 0.00% % Range Accrual Note Quarterly, on the 16 th day of each month of March, June, September, and December, commencing March 16, 2010 and ending on the Maturity Date (whether the Stated Maturity Date or an earlier Redemption Date). Redeemable Quarterly, on the 16 th day of each month of March, June, September, and December, with 10 business days call notice, commencing March 16, 2010 and ending on the Maturity Date (whether the Stated Maturity Date or an earlier Redemption Date). Not Applicable The notes are subject to the risks set forth under the heading Additional Risks Specific to Your Notes in the product prospectus supplement.

2 Minimum Investment: Denomination: Clearance and Settlement: CUSIP No: Currency: Listing: Terms Incorporated In the Master Note: $1,000 (except for certain non-u.s. investors for whom the minimum investment will be higher) $1,000 (except for certain non-u.s. investors for whom the denomination will be higher) DTC global (including through its indirect participants Euroclear and Clearstream, Luxembourg as described under Description of Debt Securities Ownership and Book- Entry Issuance in the accompanying prospectus) HRE2 U.S. dollars. The notes will not be listed on any securities exchange or quotation system. All of the terms appearing above the item captioned Listing on the cover page of this pricing supplement and the terms appearing under the caption General Terms of the Notes in the product supplement with respect to notes dated February 14, Your investment in the notes involves certain risks. See Additional Risk Factors Specific to Your Notes beginning on page PS-1of the product supplement to read about investment risks relating to the notes. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these notes or passed upon the accuracy of this pricing supplement or the accompanying prospectus, prospectus supplement and product prospectus supplement. Any representation to the contrary is a criminal offense. Per note Total Price to public % $2,567, Underwriting discounts and commission % $ 44, Proceeds to Royal Bank % $2,522, We may use this pricing supplement in the initial sale of a note. In addition, RBC Capital Markets Corporation or another of our affiliates may use this pricing supplement in a market-making transaction in a note after its initial sale. Unless we or our agent informs the purchaser otherwise in the confirmation of sale, this pricing supplement is being used in a market-making transaction. The notes will not constitute deposits insured under the Canada Deposit Insurance Corporation or by the U.S. Federal Deposit Insurance Corporation or any other Canadian or U.S. governmental agency or instrumentality.

3 ADDITIONAL TERMS OF YOUR NOTES You should read this pricing supplement together with the accompanying product prospectus supplement, dated February 25, 2009 the accompanying prospectus, dated January 5, 2007 and the accompanying prospectus supplement, dated February 28, The information in the accompanying product supplement, prospectus and prospectus supplement is supplemented by, and to the extent inconsistent therewith replaced and superseded by, the information in this pricing supplement. You should carefully consider, among other things, the matters set forth under Additional Risk Factors in the product prospectus supplement and the matters set forth under Risk Factors in the prospectus supplement dated February 28, We urge you to consult your investment, legal, tax, accounting and other advisors before you invest in the notes. You may access these documents on the SEC website at as follows (or if such address has changed, by reviewing our filings for the relevant date on the SEC website): Prospectus dated January 5, 2007: Prospectus Supplement dated February 28, 2007: Product Prospectus Supplement dated February 25, 2009: Our SEC file number is As used in this pricing supplement, the "Company," "we," "us," or "our" refers to Royal Bank of Canada.

4 Historical Information Historically, the reference rate has experienced significant fluctuations. Any historical upward or downward trend in the reference rate level during any period shown below is not an indication that level of the reference rate is more or less likely to increase or decrease at any time during the term of the Notes. The historical reference rate levels do not give an indication of future levels of the reference rate. Royal Bank cannot make any assurance that the future levels of the reference rate will result in holders of the Notes receiving interest payments at the specified coupon. The reference rate on December 11, 2009 was %. The graph below sets forth the historical performance of the reference rate from December 3, 1994 through December 3, Month USD LIBOR 1994 to Present /12/ /12/ /12/ /12/ /12/ /12/ / /12/ /12/ /12/ /12/ /12/ /12/ /12/ /12/ /12/03 Source: Bloomberg L.P. Historical Period Total number of days in the historical period Number of days the Reference Rate was inside the Reference Range Number of days the Reference Rate was outside the Reference Range 5,480 days 4,822 days 658 days The historical performance shown above is not indicative of future performance. The level of the Reference Rate may set outside the Reference Range during the variable interest rate period even if the level has been generally in the range in the past, and may be in the future for extended periods of time. If the reference rate is outside the Reference Range on any day in the coupon period, you will not receive any interest for the related day in that coupon period.

5 RISK FACTORS The notes involve risks not associated with an investment in ordinary floating rate notes. An investment in Redeemable Range Accrual Note entails significant risks not associated with similar investments in a conventional debt security, including, but not limited to, fluctuations in 3 Month USD LIBOR and other events that are difficult to predict and beyond Royal Bank s control. This section describes the most significant risks relating to the notes. For a complete list of risk factors, please see the accompanying product prospectus supplement, prospectus supplement and prospectus. You should carefully consider whether the notes are suited to your particular circumstances before you decide to purchase them. Accordingly, prospective investors should consult their financial and legal advisers as to the risks entailed by an investment in the notes and the suitability of the notes in light of their particular circumstances. The Amount Of Interest Payable On The Notes Is Uncertain And Could Be 0.00%. During the variable interest rate period, the amount of interest payable on the notes in any interest payment period will be dependent on whether 3 Month USD LIBOR remains within the Reference Range of 0.00% to 6.00%. If the Reference Rate sets outside the Reference Range for the entire coupon period, the rate of interest payable for the related interest payment period will be 0%. As a result, the effective yield on the notes may be less than what would be payable on conventional, fixed-rate redeemable notes of Royal Bank of comparable maturity. The interest payments on the notes and return of only the principal amount at maturity may not compensate you for the effects of inflation and other factors relating to the value of money over time. Early Redemption Risk. Royal Bank retains the option to redeem the notes on any interest payment date on or after March 16, It is more likely that Royal Bank will redeem the notes prior to their stated maturity date to the extent that the Reference Rate and future expectations of the Reference Rate during the term of the notes results in an amount of interest payable that is greater than instruments of a comparable maturity and credit rating trading in the market. If the notes are redeemed prior to their stated maturity date, you will receive no further benefit from the enhanced coupon and you may have to re-invest the proceeds in a lower interest rate environment. The Price At Which The Notes May Be Resold Prior To Maturity Will Depend On A Number Of Factors And May Be Substantially Less Than The Amount For Which They Were Originally Purchased. Some of these factors include, but are not limited to: (i) changes in the level of Reference Rate, (ii) volatility in the Reference Rate, (iii) changes in U.S. interest and swap rates, (iv) any actual or anticipated changes in Royal Bank s credit ratings or credit spreads, and (v) time remaining to maturity. Primarily, to the extent that the reference rate is outside the reference range, the market value of the notes may decrease and you are likely to receive substantially less than 100% of the issue price if you wish to sell your notes at such time. Investors Are Subject To Our Credit Risk, And Our Credit Ratings And Credit Spreads May Adversely Affect The Market Value Of The Notes. Investors are dependent on Royal Bank s ability to pay all amounts due on the notes on interest payment dates, redemption dates and at maturity, and, therefore, investors are subject to the credit risk of Royal Bank and to changes in the market s view of Royal Bank s creditworthiness. Any decline in Royal Bank s credit ratings or increase in the credit spreads charged by the market for taking Royal Bank s credit risk is likely to adversely affect the market value of the notes. The Inclusion Of Commissions And Projected Profit From Hedging In The Original Issue Price Is Likely To Adversely Affect Secondary Market Prices. Assuming no change in market conditions or any other relevant factors, the price, if any, at which Royal Bank is willing to purchase notes in secondary market transactions will likely be lower than the Principal Amount, since the Principal Amount will include, and secondary market prices are likely to exclude, commissions paid with respect to the notes, as well as the cost of hedging Royal Bank s obligations under the notes. The cost of hedging includes the projected profit that Royal Bank or its affiliates may realize in consideration for assuming the risks inherent in managing the hedging transactions. In addition, any secondary market prices may differ from values determined by pricing models used by Royal Bank, as a result of dealer discounts, mark-ups or other transaction costs. The Notes Will Not Be Listed On Any Securities Exchange And Secondary Trading May Be Limited. The notes will not be listed on any securities exchange. Therefore, there may be little or no secondary market for the notes. Royal Bank or its affiliates. may, but are not obligated to, make a market in the notes. Even if there is a

6 secondary market, it may not provide enough liquidity to allow you to trade or sell the notes easily. Because we do not expect that other broker-dealers will participate significantly in the secondary market for the notes, the price at which you may be able to trade your notes is likely to depend on the price, if any, at which Royal Bank or its affiliates are willing to transact. If at any time Royal Bank or its affiliates were not to make a market in the notes, it is likely that there would be no secondary market for the notes. Accordingly, you should be willing to hold your notes to maturity. Royal Bank Or Its Affiliates Are Market Participants. Royal Bank or one or more of its affiliates may, at present or in the future, publish research reports with respect to movements in interests rates generally or each of the components making up the reference index specifically. This research is modified from time to time without notice and may express opinions or provide recommendations that are inconsistent with purchasing or holding the notes. Any of these activities may affect the market value of the notes. The Historical Performance Of the Reference Rate is Not An Indication Of Their Future Performance. Historical performance of Reference Rate should not be taken as an indication of the future performance during the term of the notes. Changes in the levels of Reference Rate will affect the trading price of the notes, but it is impossible to predict whether such levels will rise or fall. There can be no assurance that the level of the reference index will be positive on any interest determination date during the variable interest rate period. Furthermore, the historical performance of Reference Rate does not reflect the return the notes would have had because it does not take into account the Reference Range or Royal Bank s redemption right. Supplemental Plan of Distribution We expect that delivery of the Notes will be made against payment for the Notes on December 16, 2009, which is the third business day following the Pricing Date (this settlement cycle being referred to as "T+3"). See "Supplemental Plan of Distribution" in the prospectus supplement dated February 28, 2007.

7 Product Prospectus Supplement to the Prospectus dated January 5, 2007 and the Prospectus Supplement dated February 28, 2007 Royal Bank of Canada Senior Global Medium-Term Notes, Series C Accrual Notes Fixed Rate Notes Step Up Notes Range Accrual Notes Non-Inversion Range Accrual Notes Fixed-to-Floating Rate Notes Floating-to-Fixed Rate Notes Floating Rate Notes Leveraged Notes Dual Range Accrual Notes Inverse Floating Rate Notes Leveraged Steepener Notes GENERAL TERMS Royal Bank of Canada may offer and sell accrual notes, fixed rate notes, step up notes, range accrual notes, noninversion range accrual notes, fixed-to-floating rate notes, floating-to-fixed rate notes, floating rate notes, leveraged notes, dual range accrual notes, inverse floating rate notes or leveraged steepener notes (collectively, the notes ) from time to time of any maturity. The prospectus dated January 5, 2007, the prospectus supplement dated February 28, 2007 and this product prospectus supplement describe terms of different kinds of notes and the terms that may apply generally to the notes, including any notes you purchase. A separate pricing supplement will describe terms that apply specifically to your notes, including any changes to the terms specified below. If the terms described in the relevant pricing supplement are inconsistent with those described herein or in the accompanying prospectus supplement or prospectus, the terms described in the relevant pricing supplement shall control. Issuer: Principal Amount: Maturity Date: Interest Rate: Leverage Rate Reference Rate(s): Reference Rate Range(s): Initial Interest Period: Subsequent Interest Period: Type of Note: Interest Payment Dates: Interest Payable: Royal Bank of Canada ( Royal Bank ). As specified in the applicable pricing supplement. As specified in the applicable pricing supplement. As specified in the applicable pricing supplement. As specified in the applicable pricing supplement. As specified in the applicable pricing supplement. As specified in the applicable pricing supplement. As specified in the applicable pricing supplement. As specified in the applicable pricing supplement. As specified in the applicable pricing supplement. On the date or dates specified in the applicable pricing supplement; provided that if any such day is not a business day, that interest payment will be made on the next succeeding business day but no adjustment will be made to the interest period or to any interest payment made on any succeeding business day. The applicable pricing supplement may specify that the interest dates are monthly, quarterly, semi-annually, annually or only at maturity. For any interest payment date (as specified in the applicable pricing supplement), you will

8 receive: If your note is an accrual note, you will receive at maturity an amount equal to the fixed rate of interest (or other financial measure) specified in the applicable pricing supplement times the actual number of calendar days from and including the date of issue of the fixed rate note to but excluding the maturity date, assuming a calendar of twelve thirty day months, divided by 360 and compounded on the basis specified in the applicable pricing supplement. If your note is a fixed rate note, you will receive on each payment date (as specified in the applicable pricing supplement) an amount equal to the fixed rate of interest (or other financial measure) specified in the applicable pricing supplement times the actual number of calendar days from and including the last interest payment date (or the date of issue of the fixed rate note for the initial interest period) to but excluding the next interest payment date or the maturity date, as the case may be, in each case assuming a calendar of twelve thirty day months, divided by 360. If your note is a step up note, you will receive on each payment date (as specified in the applicable pricing supplement) an amount equal to the applicable fixed rate of interest (or other financial measure) specified in the applicable pricing supplement for that period times the actual number of calendar days from and including the last interest payment date (or the date of issue of the step up note for the initial interest period) to but excluding the next interest payment date or the maturity date, as the case may be, in each case assuming a calendar of twelve thirty day months, divided by 360. If your note is a fixed-to-floating rate note, the return on your note during the initial interest period will be the fixed rate of interest (or other financial measure), and during the subsequent interest period, the floating rate of interest (or other financial measure), all as specified in the applicable pricing supplement. During each period, you will receive on each payment date (as specified in the applicable pricing supplement) an amount equal to the fixed or floating rate of interest (or other financial measure), as applicable, times the actual number of calendar days from and including the last interest payment date (or the date of issue of the fixed-to-floating rate note for the initial interest period) to but excluding the next interest payment date or the maturity date, as the case may be, in each case assuming a calendar of twelve thirty day months, divided by 360. If your note is a floating-to-fixed rate note, the return on your note during the initial interest period will be the floating rate of interest (or other financial measure), and during the subsequent interest period, the fixed rate of interest (or other financial measure), all as specified in the applicable pricing supplement. During each period, you will receive on each payment date (as specified in the applicable pricing supplement) an amount equal to the floating or fixed rate of interest (or other financial measure), as applicable, times the actual number of calendar days from and including the last interest payment date (or the date of issue of the floating-to-fixed rate note for the initial interest period) to but excluding the next interest payment date or the maturity date, as the case may be, in each case assuming a calendar of twelve thirty day months, divided by 360. If your note is a floating rate note, you will receive on each payment date (as specified in the applicable pricing supplement) an amount equal to the floating rate of interest (or other financial measure) specified in the applicable pricing supplement times the actual number of calendar days from and including the last interest payment date (or the date of issue of the floating rate note for the initial interest period) to but excluding the next interest payment date or the maturity date, as the case may be, in each case assuming a calendar of twelve thirty day months, divided by 360. If your note is a leveraged note, you will receive on each interest payment date (as specified in the applicable pricing supplement) an amount equal to the fixed or floating rate of interest (or other financial measure) times the leverage rate, each as specified in the applicable pricing

9 supplement, times the actual number of calendar days from and including the last interest payment date (or the date of issue of the leveraged note for the initial interest period) to but excluding the next interest payment date or the maturity date, as the case may be, in each case assuming a calendar of twelve thirty day months, divided by 360. If your note is a range accrual note, you will receive on each interest payment date a fixed or floating rate of interest (or other financial measure) specified in the applicable pricing supplement times a fraction, the numerator of which is the number of calendar days in the applicable interest period on which the reference rate satisfies the reference rate range, and the denominator of which is the total number of calendar days in the applicable interest period, in each case assuming a calendar of twelve thirty day months, divided by 360. The reference rate on any non-business day will be equal to the rate on the immediately preceding business day, and for the last four business days before each interest payment date, the reference rate will be determined by reference to its level on the fifth business day before such interest payment date. If your note is a dual range accrual note, you will receive on each interest payment date the fixed or floating rate of interest (or other financial measure) specified in the applicable pricing supplement, times a fraction, the numerator of which is the number of calendar days in the applicable interest period on which both reference rates satisfy the reference rate range(s), and the denominator of which is the total number of calendar days in the applicable interest period, in each case assuming a calendar of twelve thirty day months, divided by 360. The reference rates on any non-business day will be equal to the rates on the immediately preceding business day, and for the last four business days before each interest payment date, the reference rates will be determined by reference to their level on the fifth business day before such interest payment date. If your note is an inverse floating rate note, you will receive on each payment date (as specified in the applicable pricing supplement) an amount equal to a fixed rate of interest less the floating rate of interest (or other financial measure), each as specified in the applicable pricing supplement, times the actual number of calendar days from and including the last interest payment date (or the date of issue of the inverse floating rate note for the initial interest period) to but excluding the next interest payment date or the maturity date, as the case may be, in each case assuming a calendar of twelve thirty day months, divided by 360. If your note is a non-inversion range accrual note, you will receive on each interest payment date a fixed or floating rate of interest (or other financial measure) specified in the applicable pricing supplement times a fraction, the numerator of which is the number of calendar days in the applicable interest period on which the high side reference rate exceeded the low-side reference rate by an amount equal to or above the minimum spread level specified in the applicable pricing supplement, and the denominator of which is the total number of calendar days in the applicable interest period, in each case assuming a calendar of twelve thirty day months, divided by 360. The reference rate on any non-business day will be equal to the rate on the immediately preceding business day and, for the last four business days before each interest payment date, the low side reference rate and the high side reference rate will be determined by reference to their levels on the fifth business day (or, if not a business day, the immediately preceding business day) before such interest payment date. If your note is a leveraged steepener note, you will receive on each payment date (as specified in the applicable pricing supplement) an amount equal to, during the initial interest period (if the applicable pricing supplement provides for an initial interest period), the initial rate of interest (or other financial measure) specified in the applicable pricing supplement (which will be a fixed rate), times the actual number of calendar days from and including the last interest payment date (or the date of issue of the leveraged steepener note for the initial interest period) to but excluding the next interest payment date or the maturity date, as the case may be, in each case assuming a calendar of twelve thirty day months, divided by 360. During the subsequent interest period (or, if the applicable pricing supplement does not

10 provide for an initial interest period, on each interest payment date during the term of the notes), you will receive an amount equal to the leverage factor times the difference between the high side reference rate and the low-side reference rate (all as specified in the applicable pricing supplement), times the actual number of calendar days from and including the last interest payment date (or the date of issue of the leveraged steepener note for the initial interest period) to but excluding the next interest payment date or the maturity date, as the case may be, in each case assuming a calendar of twelve thirty day months, divided by 360; provided, however, that the interest rate can never be less than 0.00% and that the interest rate on any non-business day will be equal to the interest rate on the immediately preceding business day. Maturity Payment: Redemption: Cap: Survivor s Option: Clearance and Settlement: Listing: Calculation agent: On the Maturity Date you will receive the principal amount of your notes plus any accrued and unpaid interest. If the applicable pricing supplement specifies that the notes are Redeemable, your notes will be redeemable by the issuer at a price equal to 100% of the principal amount plus accrued and unpaid interest to the redemption date on any payment date on or after the Call Effective Date specified in the applicable pricing supplement. If the applicable pricing supplement specifies that the notes are Not Redeemable, then your notes may not be redeemed before maturity by the issuer. If the applicable pricing supplement specifies that the notes are Capped, the interest rate payable on your notes during any interest period will be the lesser of the interest rate and the Cap specified in the applicable pricing supplement. If the applicable pricing supplement specifies that the survivor s option applies to your notes, then upon the death of the beneficial owner of a note, a valid exercise of the survivor s option and the proper tender of that note for repayment, we will repay the note, in whole or in part, at a price equal to 100% of the principal amount of that note plus any accrued and unpaid interest to the payment date, subject to significant limitations. See General Terms of the Notes Survivor s Option below. DTC global (including through its indirect participants Euroclear and Clearstream, Luxembourg as described under Description of Debt Securities Ownership and Book- Entry Issuance in the accompanying prospectus). The notes will not be listed on any securities exchange or quotation system. The Bank of New York. Your investment in the notes involves certain risks. See Additional Risk Factors Specific to Your Notes beginning on page PS-1 to read about investment risks relating to the notes. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these notes or passed upon the accuracy of this product prospectus supplement or the accompanying prospectus and prospectus supplement. Any representation to the contrary is a criminal offense. We may use this product prospectus supplement in the initial sale of notes. In addition, RBC Capital Markets Corporation or another of our affiliates may use this product prospectus supplement in a market-making transaction in notes after their initial sale. Unless we or our agent informs the purchaser otherwise in the confirmation of sale, this product prospectus supplement is being used in a market-making transaction. The notes will not constitute deposits insured under the Canada Deposit Insurance Corporation or by the U.S. Federal Deposit Insurance Corporation or any other Canadian or U.S. governmental agency or instrumentality. RBC Capital Markets Corporation Product Prospectus Supplement dated February 25, 2009.

11 In this product prospectus supplement, when we refer to the notes, including your notes, we mean the notes described in this product prospectus supplement unless the context requires otherwise. Also, references to the accompanying prospectus mean the accompanying prospectus, dated January 5, 2007, as supplemented by the accompanying prospectus supplement, dated February 28, 2007, of Royal Bank of Canada. References to the relevant pricing supplement or the applicable pricing supplement mean the pricing supplement that describes the specific terms of your notes. The Notes Are Part of a Series The notes, including your notes, are part of a series of senior debt securities entitled Senior Global Medium-Term Notes, Series C, that we may issue under our senior indenture, dated as of October 23, 2003, between Royal Bank of Canada and The Bank of New York, as successor to the corporate trust business of JPMorgan Chase Bank, N.A., as trustee, as amended from time to time (the indenture ). This product prospectus supplement summarizes financial and other terms that apply generally to the notes, including your notes. We describe terms that apply generally to all Series C medium-term notes in Description of the Notes We May Offer in the accompanying prospectus supplement. The terms described here supplement those described in the accompanying prospectus and prospectus supplement and, if the terms described here are inconsistent with those described there, the terms described here are controlling. Specific Terms Will Be Described in Pricing Supplements The specific terms of your notes will be described in the relevant pricing supplement accompanying this product prospectus supplement. The terms described there supplement those described here and in the accompanying prospectus or prospectus supplement. If the terms described in the relevant pricing supplement are inconsistent with those described here or in the accompanying prospectus or prospectus supplement, the terms described in the relevant pricing supplement are controlling. i

12 TABLE OF CONTENTS Product Prospectus Supplement Additional Risk Factors Specific to Your Notes... PS-1 General Terms of the Notes... PS-6 Use of Proceeds And Hedging... PS-21 Supplemental Discussion of Canadian Tax Consequences... PS-23 Supplemental Discussion Of U.S. Federal Income Tax Consequences... PS-24 Employee Retirement Income Security Act... PS-31 Supplemental Plan of Distribution... PS-32 Prospectus Supplement dated February 28, 2007 About This Prospectus Supplement... S-1 Risk Factors... S-1 Use of Proceeds... S-4 Description of the Notes We May Offer... S-5 Certain Income Tax Consequences...S-24 Supplemental Plan of Distribution...S-25 Documents Filed As Part of the Registration Statement...S-30 Prospectus dated January 5, 2007 Documents Incorporated by Reference...2 Where You Can Find More Information...3 Further Information...3 About This Prospectus...4 Presentation of Financial Information...5 Caution Regarding Forward-Looking Information...5 Royal Bank of Canada...6 Risk Factors...6 Use of Proceeds...6 Consolidated Ratios of Earnings to Fixed Charges...7 Consolidated Capitalization and Indebtedness...8 Description of Debt Securities...9 Tax Consequences...26 Plan of Distribution...38 Benefit Plan Investor Considerations...40 Limitations on Enforcement of U.S. Laws Against the Bank, Our Management and Others...41 Validity of Securities...41 Experts...41 Supplemental Financial Statement Schedule...42 Other Expenses of Issuance and Distribution...45 ii

13 ADDITIONAL RISK FACTORS SPECIFIC TO YOUR NOTES An investment in your notes is subject to the risks described below, as well as the risks described under Risk Factors in the accompanying prospectus, dated January 5, 2007, and the accompanying prospectus supplement, dated February 28, Your notes are not secured debt and are riskier than ordinary unsecured debt securities. This product prospectus supplement should be read together with the accompanying prospectus, dated January 5, 2007, the accompanying prospectus supplement, dated February 28, 2007, and any relevant pricing supplement. The information in the accompanying prospectus and prospectus supplement is supplemented by, and to the extent inconsistent therewith replaced and superseded by, the information in this product prospectus supplement and any relevant pricing supplement. This section describes the most significant risks relating to an investment in the notes. We urge you to read the following information about these risks, together with the other information in this product prospectus supplement and the accompanying prospectus and prospectus supplement, before investing in the notes. The Interest Rate of Fixed-to-Floating Rate Notes, Floating-to-Fixed Rate Notes, Floating Rate Notes, Inverse Floating Rate Notes, Range Accrual Notes, Dual Range Accrual Notes, Leveraged Steepener Notes and Non- Inversion Range Accrual Notes Is Uncertain and Could Be 0.0%. If your notes are fixed-to-floating rate notes, floating-to-fixed rate notes, floating rate notes, inverse floating rate notes, range accrual notes, dual range accrual notes, leveraged steepener notes or non-inversion range accrual notes, the reference rate(s) is (are) floating interest rate(s) (or other financial measure(s)). No interest will accrue on the notes with respect to any day on which the reference rate(s) is (are) outside the reference rate range(s) (or, for leveraged steepener notes, where the low-side reference rate exceeds the high side reference rate) (or, for inverse floating rate notes, where the reference rate is above the Fixed Rate), (or for floating rate notes, where the reference rate is equal to zero). For every day on which the reference rate(s) is (are) outside the reference rate range(s), the effective interest rate for the applicable interest period will be reduced, and if the reference rate(s) remain(s) outside the reference rate range(s) for the entire period,(or, for fixed-to-floating rate notes, floating-tofixed rate notes, floating rate notes, inverse floating rate notes and leveraged steepener notes) on the fifth business day prior to the beginning of the coupon period, holders of the notes will receive no interest for that interest period. If the applicable pricing supplement provides that the interest period is the entire term of the note and the reference rate(s) has (have) been outside the reference rate range(s) (or, for leveraged steepener notes, if the low-side reference rate has exceeded the high side reference rate), (or, for inverse floating rate notes, where the reference rate is above the Fixed Rate), (or for floating rate notes, where the reference rate is equal to zero) on the fifth business day prior to the beginning of the coupon period, you will not receive any interest on your notes. If the reference rate(s) remain(s) outside the reference rate range(s) for range accrual notes, dual range accrual notes or non-inversion range accrual notes for a substantial number of days during an interest period, the effective yield on the notes for such interest period may be less than what would be payable on conventional, fixedrate notes of comparable maturity. For fixed-to-floating rate notes, floating-to-fixed rate notes, floating rate notes, inverse floating rate notes and leveraged steepener notes that specify an initial interest rate, because the interest payable on such note is set on each reset date, but does not vary during the interest period between reset dates, the effective yield on the notes for such interest period may be less than what would be payable on conventional, fixedrate notes of comparable maturity. Even if your yield is positive, your yield may be less than the yield you would earn if you bought a standard senior non-callable debt security of Royal Bank with the same maturity date. The return on your investment may not compensate you for the opportunity cost when you take into account factors that affect the time value of money. You should, therefore, be prepared to realize no return at maturity over the principal amount of your notes. The interest payments on the notes and return of only the principal amount at maturity or redemption may not compensate you for the effects of inflation (unless your notes are linked to a measure of inflation) and other factors relating to the value of money over time. PS-1

14 For Notes Subject to a Reference Range (Range Accrual Notes, Dual Range Accrual Notes and Non-Inversion Range Accrual Notes), the Applicable Reference Rate(s) for the Last Four Business Days of an Interest Period Will Be the Reference Rate(s) on the Applicable Business Day Immediately Preceding Those Four Days. Because the applicable reference rate(s) for the last five business days of an interest period will be the reference rate(s) on the ending reference rate date, with respect to range accrual notes, dual range accrual notes and non-inversion range accrual notes, if the reference rate(s) on that date is (are) outside the reference rate range(s), you will not receive any interest in respect of those five days even if the reference rate(s) as actually calculated on any of those days satisf(ies)(y) the reference rate range(s). Even For Notes not Subject to a Reference Rate Range, Unless the Interest Rate on Such Notes is fixed, the Amount of Interest Payable on Such Notes is Uncertain and May be 0.00% Even where the interest rate on your note during any interest period is not subject to the satisfaction of a reference rate range, unless the applicable pricing supplement specifies that the interest rate during any interest period will be a fixed rate of interest, the interest rate will be floating and may decrease, potentially to zero. If this is true during every interest period, the interest paid on the notes will be 0.00%. Even if the interest rate on your notes is linked to the Consumer Price Index ( CPI ), the level of the CPI may decrease during periods of little or no inflation (and will decrease during periods of deflation), in which case the interest rate on your notes during any such period may be reduced, potentially to 0.00%. There May Not Be an Active Trading Market for the Notes Sales in the Secondary Market May Result in Significant Losses. There may be little or no secondary market for the notes. The notes will not be listed or displayed on any securities exchange, the NASDAQ Global Market System or any electronic communications network. RBC Capital Markets Corporation and other affiliates of Royal Bank currently intend to make a market for the notes, although they are not required to do so. RBC Capital Markets Corporation or any other affiliate of Royal Bank may stop any such market-making activities at any time. Even if a secondary market for the notes develops, it may not provide significant liquidity or trade at prices advantageous to you. We expect that transaction costs in any secondary market would be high. As a result, the difference between bid and asked prices for your notes in any secondary market could be substantial. If you sell your notes before maturity, you may have to do so at a substantial discount from the issue price and as a result you may suffer substantial losses. The notes have not been designated for trading in the PORTAL system. The Market Value of Your Notes May Be Influenced by Many Unpredictable Factors. The following factors, which are beyond our control, may influence the market value of your notes: Changes in the level of the reference rate(s). For example, if you purchase Range Accrual Notes, an increase in the level of the reference rate could cause a decrease in the market value of the notes because no interest will be payable on the notes if the reference rate is outside the reference rate range. Conversely, a decrease in the level of the reference rate for any of the notes could cause an increase in the market value of the notes because interest will be payable (provided that the reference rate does not decrease below the lower end of the reference rate range). However, if the level of the reference rate decreases and remains low, the likelihood of the notes being redeemed (if the notes are redeemable) would increase. The level of the reference rate itself will be influenced by complex and interrelated political, economic, financial and other factors that can affect the money markets generally and the London interbank market in particular. PS-2

15 Changes in U.S. interest rates. In general, if U.S. interest rates increase, the market value of the notes may decrease, and if U.S. interest rates decrease, the market value of the notes may increase. Volatility of the reference rate. If the size and frequency of fluctuations of the reference rate increases, the market value of the notes may decrease. These factors may influence the market value of your notes if you sell your notes before maturity. Our creditworthiness, as represented by our credit ratings or as otherwise perceived in the market will also affect the market value of your notes. If you sell your notes prior to maturity, you may receive less than the principal amount of your notes. The CPI Itself and the Way the Bureau of Labor Statistics of the U.S. Bureau of Labor Statistics ( BLS ) Calculates the CPI May Change In the Future. If the interest rate on your notes is linked to the CPI, there can be no assurance that the BLS will not change the method by which it calculates the CPI, and thereby affect the level of the CPI used to calculate any interest rate (or, if applicable, determine any satisfaction of any reference rate range) applicable to your notes. In particular, changes in the way the CPI is calculated could reduce the level of the CPI, which, if the interest rate on your notes is a floating rate of interest linked to the CPI, will result in lower interest payments during the applicable interest period(s), and in turn reduce the market value of the notes. For Fixed-to-Floating, Floating-to-Fixed, Range Accrual Notes, Floating Rate Notes, Non-Inversion Notes Inverse Floating Rate Notes, Dual Range Accrual Notes and Leveraged Steepener Notes, the Interest Rate Payable During the Initial Interest Period May Not Be Indicative of the Interest Rate Payable During the Subsequent Interest Period. The interest rate of fixed-to-floating rate notes, floating-to-fixed rate notes, range accrual notes, dual range accrual notes, floating rate notes, non-inversion notes and leveraged steepener notes may be based on a different rate of interest during the Initial Interest Period and the Subsequent Interest Period. In particular, during the interest period(s) where a fixed rate of interest (or other financial measure) applies, this fixed rate of interest (or other financial measure) may be higher than the floating rate of interest (or other financial measure) that will be applicable during the other interest period(s). As noted above, the interest rate during the any interest period where a floating rate of interest is applicable is uncertain and could be 0.0%. The Interest Rate on the Notes, if the Notes are Capped, Will be Limited. If the applicable pricing supplement specifies that your notes are Capped, the interest rate payable on your notes during any period will be the lesser of the interest rate and the Cap specified in the applicable pricing supplement. Therefore, the return you receive during any interest period may be less than what you would have received had you invested in a security linked to the reference rate but not subject to the Cap. Trading Activities by Royal Bank or its Affiliates May Adversely Affect the Market Value of the Notes. As described below under Use of Proceeds and Hedging on page PS-21, we or one or more affiliates may hedge our obligations under the notes by purchasing securities, futures, options or other derivative instruments with returns linked or related to changes in the level of the reference rate, and we may adjust these hedges by, among other things, purchasing or selling securities, futures, options or other derivative instruments at any time. It is possible that we or one or more of our affiliates could receive substantial returns from these hedging activities while the market value of the notes declines. We or one or more of our affiliates may also issue or underwrite other securities or financial or derivative instruments with returns linked or related to changes in the performance of the reference rate for your notes. By introducing competing products into the marketplace in this manner, we or one or more of our affiliates could adversely affect the market value of the notes. PS-3

16 Historical Levels of the Reference Rate(s) Should Not Be Taken as an Indication of the Future Levels of Such Rate(s). The historical performance of the reference rate(s), which will be included in the applicable pricing supplement, should not be taken as an indication of the future performance of the reference rate(s) during the term of the notes. Changes in the level of the reference rate(s) will affect the trading price of the notes, but it is impossible to predict whether the level of the reference rate(s) will rise or fall. The Business Activities of Royal Bank or its Affiliates May Create Conflicts of Interest. As noted above, we and our affiliates expect to engage in trading activities related to the reference rate(s) that are not for the account of holders of the notes or on their behalf. These trading activities may present a conflict between the holders interest in the notes and the interests we and our affiliates will have in their proprietary accounts, in facilitating transactions, including options and other derivatives transactions, for their customers and in accounts under their management. These trading activities could be adverse to the interests of the holders of the notes. There Are Potential Conflicts of Interest Between You and the Calculation Agent. The calculation agent will, among other things, decide the amount of your payment for any interest payment date on the notes. We may change the calculation agent after the original issue date without notice to you. For a fuller description of the calculation agent s role, see General Terms of the Notes Role of Calculation Agent. The calculation agent will exercise its judgment when performing its functions and may take into consideration Royal Bank s ability to unwind any related hedges. Since this determination by the calculation agent will affect payments on the notes, the calculation agent may have a conflict of interest if it needs to make any such decision. Significant Aspects of the Tax treatment of the Notes May Be Uncertain. The tax treatment of the notes may be uncertain. Specifically, for U.S. federal income tax purposes, the tax treatment of range accrual notes, dual range accrual notes, non-inversion range accrual notes, floating rate notes, leveraged steepener notes and leveraged notes, with a term of one year or less is uncertain because there are no rules that specifically govern short-term contingent debt. We do not plan to request a ruling from the Internal Revenue Service or from any Canadian authorities regarding the tax treatment of the notes, and the Internal Revenue Service or a court may not agree with the tax treatment described in this product prospectus supplement. In addition, because the tax disclosure in this product prospectus supplement has been prepared without regard to any particular offering of notes, the tax disclosure does not take into account the terms of any particular note. The U.S. federal income tax consequences of a note with terms that are not consistent with the assumptions made in the tax disclosure may be significantly different from the anticipated tax treatment discussed in this document. You should therefore not rely on the disclosure in this product prospectus supplement or the disclosure under Tax Consequences United States Taxation in the Prospectus or Certain Income Tax Consequences United States Taxation in the Prospectus Supplement, with regard to an investment in any particular note because it does not take into account the terms of any particular note or the tax consequences of investing in or holding any particular note unless the pricing supplement applicable to your notes indicates that you may so rely. There may also be other features or terms of any specific offering of notes that will cause the tax section in this product prospectus supplement to be inapplicable to any specific offering of notes. Please read carefully the sections entitled Supplemental Discussion of U.S. Federal Income Tax Consequences in this product prospectus supplement, the section Tax Consequences in the accompanying prospectus and the section entitled Certain Income Tax Consequences in the accompanying prospectus supplement. You should consult your tax advisor about your own tax situation. PS-4