100% Principal Protection (if held to maturity)

Transcription

1 Royal Bank of Canada Yankee Certificate of Deposit Program September 29, 2009 U.S. Structured Products Group Yankee Certificate of Deposit #5 ( CDs ) Linked to a Basket of Mutual Funds Due September 30, Year Term 100% Principal Protection (if held to maturity) Mutual Fund Exposure Reference Funds Component Weight PIMCO Total Return Bond Fund (Bloomberg Symbol PIMTRII ID ) 25% Franklin Templeton Investment Funds - Global Bond Fund (Bloomberg Symbol TEMGIBX LX ) MFS Meridian Funds - Research Bond Fund (Bloomberg Symbol MFMRBAR LX ) JPMorgan Funds - Global Aggregate Bond Fund (Bloomberg Symbol JPGAAAU LX ) 25% 25% 25% Key Terms Issuer: Issuer s Senior Debt Rating: Commission: Instrument: Description: Minimum Investment: Royal Bank of Canada, New York Branch Aaa (Moody s) / AA- (S&P) 3.00% for September business, subject to a 90-day clawback Certificate of Deposit ( CD ) linked to the performance of the Reference Funds. The CDs are the Issuer s certificates of deposit. The CDs are not insured by the Federal Deposit Insurance Company or any other governmental agency. They rank pari passu with the Issuer s Senior Debt. $100,000, and $1,000 increments in excess thereof. Deal Total: $3,680,000 CUSIP: 78009JVD4 Offering Closes: September 23, 2009 Minimum Redemption: Term: Interest Participation Rate: 100%, if held to maturity. Five (5) years We will not pay you interest during the term of the CD. 110% U.S. Structured Products Group (866) Pricing Date: September 28, 2009 Issuance Date: September 30, 2009

2 Key Terms Continued Maturity Date: September 30, 2014 Payment at Maturity (if held to Maturity Date): At maturity, subject to the Issuer s credit risk, the investor will receive the 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 an amount, expressed as a percentage and (rounded to 2 decimal places) equal to the SUM of the weighted return of the Reference Funds. The Percentage Change for each Reference Fund is calculated by using the following formula: Component Weight Average Level Initial Level Initial Level Initial Levels: PIMTRII: TEMGIBX: MFMRBAR: JPGAAAU: Average Level: where, the Initial Level is the closing level of each Reference Fund, which was the Net Asset Value ( NAV ) of a Reference Fund on the Pricing Date; the Average Level is the sum of the arithmetic averages of the Net Asset Values on each of the quarterly Valuation Dates, as more fully described below. The arithmetic average of the levels of each Reference Fund on each of the Valuation Dates, which is calculated as follows: Average Level = (Reference Fund Level 1 + Reference Fund Level 2 + Reference Fund Level LAST ) / 20. Where, Reference Fund Level 1, Reference Fund Level 2 and Reference Fund Level LAST are the closing levels of each Reference Fund on each Valuation Date, respectively. Net Asset Value: Valuation Dates: Fund Manager: Calculation Agent: US Federal Tax: The net asset value per share or unit of each Reference Fund, as calculated and published by, or on behalf of, the Fund Manager (or its designee). The 28th day of December, March, June and September for each of the calendar years of 2009 (commencing on December 28, 2009) through 2014, for a total of twenty (20) quarterly Valuation Dates. 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. The entity that the Calculation Agent determines to be the manager or investment advisor for each Reference Fund. Royal Bank of Canada. All determinations made by the Calculation Agent shall be binding upon the Issuer and each holder of the CDs. 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 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.

3 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: Trading Day: Market Disruption Event: Business Day: Consequences of a Market Disruption Event: 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. Any day on which each Reference Fund permits subscriptions for, and redemptions of, its shares or units, as described in such Reference Fund s prospectus or offering materials. A Market Disruption Event may be deemed by the Calculation Agent to have occurred if a Fund Manager fails to publish a Net Asset Value for a Reference Fund 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. 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. If, on any Valuation Date, a Market Disruption Event occurs or is continuing, with respect to one of the Reference Funds, the Net Asset Value for that date will equal that 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 (8 th ) 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 (8 th ) 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.

4 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 one of the Reference Funds. 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 one of the Reference Funds, or (b) an Insolvency in respect of the Fund Manager or any custodian or other service provider to one of the Reference Funds, 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 such Reference Fund and which the Calculation Agent determines has a similar investment objective to such Reference Fund to replace such Reference Fund (the Replacement Fund ); and (ii) the appropriate date (the Substitution Date ) for the replacement of such Reference Fund with the Replacement Fund. Following any such selection: (1) the Replacement Fund shall replace such Reference Fund on the Substitution Date; (2) references herein to that Reference Fund in particular 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.

5 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 any 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 such Reference Fund, or the rights or remedies of any holders thereof; (ii) the currency denomination of any 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 any Reference Fund or (b) incur a redemption fee to sell of units or shares of the fund; (iv) (1) any Reference Fund and its Fund Managers fail to calculate and publish NAV on three consecutive Trading Days during the term of the CDs; (2) any 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) any 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 any Reference Fund or its Fund Manager by any governmental, legal or regulatory entity with authority over the fund, (y) any Reference Fund or its 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 any Reference Fund or its Fund Manager, or (z) all the assets or substantially all the assets of any 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 any 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;

6 (vii) any Reference Fund, its Fund Managers, 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) any 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) any 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 its Fund Managers, governmental agency or otherwise) for any reason to redeem all or some of the units or shares of such 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 such 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 a Fund Manager as investment manager for such Reference Fund; (xii) any 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 any 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 such 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 such Reference Fund (in each case other than any restriction in existence on the Pricing Date).

7 Fund Merger Event: Fund Merger Date: Insolvency: Correction of Prices: Governing Law: Normalized Historical Performance Graph: Any (i) reclassification or change of any 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 such 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 such 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. 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. 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. 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 any Reference Fund or its Fund Managers and that Price Correction is published on or before the second (2 nd ) 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. 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. The following normalization graph compares how a $100 hypothetical investment in each of the Reference Funds would have performed if an investment in each Reference Fund was made on September 1, (Source: Bloomberg.) $ Comparable Returns JPGAAAU LX MFMRBAR LX TEMGIBX LX PIMTRII ID Closing Investment Value $ $ $75.00 $50.00 $25.00 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09

8 Sample Calculations of the Payment Amount The examples set out below are intended for illustration purposes only. Each example assumes that a holder has purchased the CDs with an aggregate principal amount of $100,000, a Participation Rate of 110%, 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%) = $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. 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 49.50% return on the CDs.

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: The Reference Funds are 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 each 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 each 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.