Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-259205
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Pricing Supplement
Dated June 24, 2022
To the Product Prospectus Supplement ERN-EI-1, the Prospectus Supplement and the Prospectus, Each Dated September 14, 2021
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$1,790,000
Barrier Absolute Return Notes Linked to the S&P 500®
Index, Due December 29, 2023
Royal Bank of Canada
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Reference Asset
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Initial Level
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Barrier Level*
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S&P 500® Index (“SPX”)
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3,911.74
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2,738.22, which is 70% of the Initial Level
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* Rounded to two decimal places.
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Issuer:
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Royal Bank of Canada
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Stock Exchange Listing:
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None
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Trade Date:
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June 24, 2022
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Principal Amount:
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$1,000 per Note
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Issue Date:
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June 29, 2022
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Maturity Date:
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December 29, 2023
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Valuation Date:
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December 26, 2023
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Participation Rate:
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41%
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Final Level:
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The closing level of the Reference Asset on the Valuation Date.
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Payment at Maturity:
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If the Final Level is greater than the Initial Level, then the investor will receive a return equal to the principal amount multiplied by the Percentage Change (as defined below) and the Participation Rate.
If the Final Level is less than or equal to the Initial Level, but greater than or equal to the Barrier Level, then the investor will receive a one-for-one positive return equal to the absolute value of the
Percentage Change.
If the Final Level is less than the Barrier Level, the Notes will provide a negative return that is equal to the percentage decrease of the Reference Asset. An investor
could lose some or all of the principal amount of the Notes.
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Interest Payments:
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None.
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CUSIP:
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78016FMV3
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Per Note
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Total
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Price to public(1)
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100.00%
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$1,790,000
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Underwriting discounts and commissions(1)
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2.25%
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$40,275
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Proceeds to Royal Bank of Canada
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97.75%
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$1,749,725
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Barrier Absolute Return Notes
Royal Bank of Canada
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General:
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This pricing supplement relates to an offering of Barrier Absolute Return Notes linked to the Reference Asset (the “Notes”).
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Issuer:
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Royal Bank of Canada (“Royal Bank”)
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Trade Date (Pricing
Date):
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June 24, 2022
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Issue Date:
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June 29, 2022
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Valuation Date:
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December 26, 2023
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Maturity Date:
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December 29, 2023
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Denominations:
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Minimum denomination of $1,000, and integral multiples of $1,000 thereafter.
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Initial Level:
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The closing level of the Reference Asset on the Trade Date, as set forth on the cover page of this pricing supplement.
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Final Level:
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The closing level of the Reference Asset on the Valuation Date.
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Barrier Level:
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70% of the Initial Level, as set forth on the cover page of this pricing supplement.
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Participation Rate:
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41%
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Payment at Maturity (if
held to maturity):
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On the Valuation Date, we will pay you at maturity an amount based on the Final Level:
If the Final Level is greater than the Initial Level, then the investor will receive an amount per $1,000 principal amount per Note equal to:
$1,000 + ($1,000 x Percentage Change x Participation Rate)
If the Final Level is less than or equal to the Initial Level, but greater than or equal to the Barrier Level, the investor will
receive, for each $1,000 in principal amount of the Notes, a one-for-one positive return equal to the absolute value of the Percentage Change, calculated as follows:
$1,000 + [-1 x ($1,000 x Percentage Change)]
In this case, you will receive a positive return on the Notes if the Percentage Change is negative.
If the Final Level is less than the Barrier Level, then the investor will receive, for each $1,000 in principal amount of the
Notes:
$1,000 + [$1,000 x (Percentage Change)]
In this case, you will lose all or a substantial portion of the principal amount.
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Percentage Change:
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Final Level – Initial Level
Initial Level
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Calculation Agent:
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RBC Capital Markets, LLC (“RBCCM”)
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Barrier Absolute Return Notes
Royal Bank of Canada
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U.S. Tax Treatment:
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By purchasing a Note, each holder agrees (in the absence of a change in law, an administrative determination or a judicial ruling to the contrary) to
treat the Note as a pre-paid cash-settled derivative contract for U.S. federal income tax purposes. However, the U.S. federal income tax consequences of your investment in the Notes are uncertain and the Internal Revenue Service could
assert that the Notes should be taxed in a manner that is different from that described in the preceding sentence. Please see the section below, “Supplemental Discussion of U.S. Federal Income Tax Consequences,” and the discussion
(including the opinion of Ashurst LLP, our special U.S. tax counsel) in the product prospectus supplement dated September 14, 2021 under “Supplemental Discussion of U.S. Federal Income Tax Consequences,” which apply to the Notes.
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Secondary Market:
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RBCCM (or one of its affiliates), though not obligated to do so, may maintain a secondary market in the Notes after the issue date. The amount that
you may receive upon sale of the Notes prior to maturity may be less than the principal amount.
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Listing:
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The Notes will not be listed on any securities exchange.
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Settlement:
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DTC global (including through its indirect participants Euroclear and Clearstream, Luxembourg as described under “Ownership and Book-Entry Issuance”
in the prospectus dated September 14, 2021).
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Terms Incorporated in
the Master Note:
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All of the terms appearing on the cover page and above the item captioned “Secondary Market” on pages P-2 and P-3 of this pricing supplement, and the terms appearing under the
captions “General Terms of the Notes” and “Supplemental Discussion of U.S. Federal Income Tax Consequences” in the product prospectus supplement dated September 14, 2021, as modified by this pricing supplement.
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Barrier Absolute Return Notes
Royal Bank of Canada
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Barrier Absolute Return Notes
Royal Bank of Canada
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Example 1 —
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Calculation of the Payment at Maturity where the Percentage Change is 2%.
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Percentage Change:
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2%
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Payment at Maturity:
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$1,000 + ($1,000 x 2% x 41%) = $1,000 + $8.20 = $1,008.20
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In this case, on a $1,000 investment, a 2% Percentage Change results in a Payment at Maturity of $1,008.20, a 0.82% return on the Notes. Because the Participation Rate is less than 100%, the return on the
Notes will be less than the return represented by the Percentage Change.
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Example 2 —
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Calculation of the Payment at Maturity where the Percentage Change is negative, but the Final Level is greater than the Barrier Level.
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Percentage Change:
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-10%
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Payment at Maturity:
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$1,000 + [-1 x ($1,000 x -10%)] = $1,000 + $100 = $1,100
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In this case, on a $1,000 investment, a -10% Percentage Change results in a Payment at Maturity of $1,100, a 10% return on the Notes.
In this case, even though the Percentage Change is negative, you will receive a positive return equal to the absolute value of the Percentage Change.
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Example 3 —
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Calculation of the Payment at Maturity where the Percentage Change is negative, and the Final Level is less than the Barrier Level.
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Percentage Change:
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-50%
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Payment at Maturity:
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$1,000 + ($1,000 x -50%) = $1,000 - $500 = $500
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In this case, on a $1,000 investment, a -50% Percentage Change results in a Payment at Maturity of $500, a -50% return on the Notes.
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Barrier Absolute Return Notes
Royal Bank of Canada
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You May Not Receive the Full Principal Amount at Maturity – Investors in the Notes will lose all or a substantial portion of their principal amount if the Final Level
is less than the Barrier Level. In such a case, you will lose 1% of the principal amount of the Notes for each 1% that the Final Level is less than the Initial Level.
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The Notes Do Not Pay Interest and Your Return May Be Lower than the Return on a Conventional Debt Security of Comparable Maturity – You will not receive any interest
payments on the Notes as there would be on a conventional fixed-rate or floating-rate debt security having the same maturity. The return that you will receive on the Notes, which could be negative, may be less than the return you could
earn on other investments. Even if your return is positive, the return may be less than the return you would earn if you purchased one of our conventional senior interest bearing debt securities.
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The Participation Rate Is Less than 100% – The Participation Rate is less than 100%, and will be determined on the Trade Date. Accordingly, any positive return on the
Notes if the level of the Reference Asset increases will be less than the return represented by the Percentage Change, and in such a case, will be less than the return that you would have received if you invested directly in the
securities represented by the Reference Asset.
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Payments on the Notes Are Subject to Our Credit Risk, and Changes in Our Credit Ratings Are Expected to Affect the Market Value of the Notes – The Notes are our senior
unsecured debt securities. As a result, your receipt of the Redemption Amount is dependent upon our ability to repay our obligations at that time. This will be the case even if the level of the Reference Asset increases or decreases
after the Trade Date. No assurance can be given as to what our financial condition will be at the maturity of the Notes.
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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 on any securities exchange. RBCCM and our other affiliates may make a market for the Notes; however, they are not required to do so. RBCCM or any
of our other affiliates may stop any 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 the Notes in any secondary market could be substantial.
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The Initial Estimated Value of the Notes Is Less than the Price to the Public — The initial estimated value that is set forth
on the cover page of this pricing supplement does not represent a minimum price at which we, RBCCM or any of our affiliates would be willing to purchase the Notes in any secondary market (if any exists) at any time. If you attempt to
sell the Notes prior to maturity, their market value may be lower than the price you paid for them and the initial estimated value. This is due to, among other things, changes in the level of the Reference Asset, the borrowing rate we
pay to issue securities of this kind, and the inclusion in the price to the public of the underwriting discount and the estimated costs relating to our hedging of the Notes. These factors, together with various credit, market and
economic factors over the term of the Notes, are expected to reduce the price at which you may be able to sell the Notes in any secondary market and will affect the value of the Notes in complex and unpredictable ways. Assuming no
change in market conditions or any other relevant factors, the price, if any, at which you may be able to sell the Notes prior to maturity may be less than your original purchase price, as any such sale price would not be expected to
include the underwriting discount and the hedging costs relating to the Notes. In addition to bid-ask spreads, the value of the Notes determined by RBCCM for any secondary market price is expected to be based on the secondary rate
rather than the internal funding rate used to price the Notes and determine the
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Barrier Absolute Return Notes
Royal Bank of Canada
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The Initial Estimated Value of the Notes on the Cover Page of This Pricing Supplement Is an Estimate Only, Calculated as of the Time the Terms of the Notes Were Set —
The initial estimated value of the Notes is based on the value of our obligation to make the payments on the Notes, together with the mid-market value of the derivative embedded in the terms of the Notes. See “Structuring the Notes”
below. Our estimate is based on a variety of assumptions, including our credit spreads, expectations as to dividends, interest rates and volatility, and the expected term of the Notes. These assumptions are based on certain forecasts
about future events, which may prove to be incorrect. Other entities may value the Notes or similar securities at a price that is significantly different than we do.
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Our Business Activities May Create Conflicts of Interest — We and our affiliates expect to engage in trading activities related to the Reference Asset 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’ interests 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, if they influence the level of the Reference Asset, could be adverse
to the interests of the holders of the Notes. We and one or more of our affiliates may, at present or in the future, engage in business with companies included in the Reference Asset, including making loans to or providing advisory
services. These services could include investment banking and merger and acquisition advisory services. These activities may present a conflict between our or one or more of our affiliates’ obligations and your interests as a holder of
the Notes. Moreover, we, and our affiliates may have published, and in the future expect to publish, research reports with respect to the Reference Asset. 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 by us or one or more of our affiliates may affect the level of the Reference Asset, and, therefore, the market value
of the Notes.
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You Will Not Have Any Rights to the Securities Included in the Reference Asset — As a holder of the Notes, you will not have voting rights or rights to receive cash
dividends or other distributions or other rights that holders of securities included in the Reference Asset would have. The Final Level will not reflect any dividends paid on the securities included in the Reference Asset. In addition,
the Participation Rate is less than 100%. Accordingly, any positive return on the Notes will be less than the potential positive return on those securities.
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The Payments on the Notes Are Subject to Market Disruption Events and Adjustments – The Redemption Amount and the Valuation Date are subject to adjustment as
described in the product prospectus supplement. For a description of what constitutes a market disruption event as well as the consequences of that market disruption event, see “General Terms of the Notes—Market Disruption Events”
in the product prospectus supplement.
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Barrier Absolute Return Notes
Royal Bank of Canada
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Barrier Absolute Return Notes
Royal Bank of Canada
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Barrier Absolute Return Notes
Royal Bank of Canada
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Barrier Absolute Return Notes
Royal Bank of Canada
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PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
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Barrier Absolute Return Notes
Royal Bank of Canada
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Barrier Absolute Return Notes
Royal Bank of Canada
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Barrier Absolute Return Notes
Royal Bank of Canada
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