Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-259205
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Pricing Supplement
Dated March 28, 2023
To the Prospectus dated September 14, 2021, the Prospectus Supplement dated September 14, 2021, and the Product Prospectus Supplement dated March 3,
2022
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$615,000
Buffered Enhanced Return Notes Linked to the iShares® China Large-Cap ETF, Due April 2, 2025 Royal Bank of Canada |
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Reference Asset
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Initial Price
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Buffer Price*
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iShares® China Large-Cap ETF ("FXI")
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$29.40
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$22.64, which is 77% of its Initial Price
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If the Final Price of the Reference Asset is greater than the Initial Price, the Notes will pay at maturity a return equal to 130.00% of the Percentage Change, subject to a Maximum Redemption Amount of
130.00% of the principal amount of the Notes.
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If the Final Price is less than or equal to the Initial Price, but greater than or equal to the Buffer Price, the Notes will pay the principal amount at maturity.
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If the Final Price is less than the Buffer Price, investors will lose 1% of the principal amount for each 1% that the Final Price has decreased by more than 23% from the Initial Price.
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Any payments on the Notes are subject to our credit risk.
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The Notes do not pay interest.
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The Notes will not be listed on any securities exchange.
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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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$615,000
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Underwriting discounts and commissions(1)
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3.50%
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$21,525
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Proceeds to Royal Bank of Canada
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96.50%
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$593,475
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Buffered Enhanced Return Notes
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Issuer:
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Royal Bank of Canada (“Royal Bank”)
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Underwriter:
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RBC Capital Markets, LLC (“RBCCM”)
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Reference Asset:
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iShares® China Large-Cap ETF (“FXI”)
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Minimum Investment:
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$1,000 and minimum denominations of $1,000 in excess thereof
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Trade Date (Pricing
Date):
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March 28, 2023
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Issue Date:
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March 31, 2023
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Valuation Date:
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March 28, 2025
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Maturity Date:
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April 2, 2025, subject to extension for market and other disruptions, as described in the product prospectus supplement dated March 3, 2022.
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Payment at Maturity
(if held to maturity):
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If the Final Price is greater than the Initial Price (that is, the Percentage Change is positive), then
the investor will receive an amount per $1,000 principal amount per Note equal to the lesser of:
1. Principal Amount + [Principal Amount x
(Percentage Change x Leverage Factor)] and
2. the Maximum Redemption Amount
If the Final Price is less than or equal to the Initial Price, but is greater than or equal to the Buffer Price (that is, the Percentage Change is
between 0% and -23.00%), then the investor will receive the principal amount only.
If the Final Price is less than the Buffer Price (that is, the Percentage Change is between -23.01% and -100%), then the
investor will receive a cash payment equal to:
Principal Amount + [Principal Amount x (Percentage Change + Buffer Percentage)]
In this case, you will lose some or a significant portion of the principal amount.
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Percentage Change:
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The Percentage Change, expressed as a percentage, is calculated using the following formula:
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Initial Price:
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The closing share price of the Reference Asset on the Trade Date, as set forth on the cover page of this pricing supplement.
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Final Price:
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The closing share price of the Reference Asset on the Valuation Date.
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Leverage Factor:
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130% (subject to the Maximum Redemption Amount)
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Maximum
Redemption Amount:
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130.00% multiplied by the principal amount, or $1,300.00 per $1,000 in principal amount
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Buffer Percentage:
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23%
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Buffer Price:
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77% of the Initial Price, as set forth on the cover page of this pricing supplement
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Buffered Enhanced Return Notes
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Principal at Risk:
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The Notes are NOT principal protected. You may lose a substantial portion of your principal amount at maturity if the Final Price is less than the
Buffer Price.
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Calculation Agent:
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RBCCM
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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 Notes 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 March 3, 2022 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 your Notes prior to maturity may be less than the principal amount of your Notes.
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Listing:
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The Notes will not be listed on any securities exchange.
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Clearance and
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 applicable 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 March 3, 2022, as modified by this pricing supplement.
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Buffered Enhanced Return Notes
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Buffered Enhanced Return Notes
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Example 1 —
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Calculation of the Payment at Maturity where the Percentage Change is positive.
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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 130%)] = $1,000 + $26.00 = $1,026.00
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On a $1,000 investment, a 2% Percentage Change results in a Payment at Maturity of $1,026.00, a 2.6% return on the Notes.
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Example 2 —
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Calculation of the Payment at Maturity where the Percentage Change is positive (and the Payment at Maturity is subject to the Maximum Redemption Amount).
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Percentage Change:
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25%
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Payment at Maturity:
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$1,000 + [$1,000 x (25% x 130%)] = $1,000 + $325 = $1,325
However, the Maximum Redemption Amount is $1,300.00. Accordingly, you will receive a payment at maturity equal to $1,300.00 per $1,000 in principal amount of the Notes.
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On a $1,000 investment, a 25% Percentage Change results in a Payment at Maturity of $1,300.00, a 30.00% return on the Notes.
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Example 3 —
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Calculation of the Payment at Maturity where the Percentage Change is negative (but not by more than the Buffer Percentage).
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Percentage Change:
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-8%
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Payment at Maturity:
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At maturity, if the Percentage Change is negative BUT not by more than the Buffer Percentage, then the Payment at Maturity will equal the principal amount.
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On a $1,000 investment, a -8% Percentage Change results in a Payment at Maturity of $1,000, a 0% return on the Notes.
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Example 4 —
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Calculation of the Payment at Maturity where the Percentage Change is negative (by more than the Buffer Percentage).
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Percentage Change:
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-35%
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Payment at Maturity:
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$1,000 + [$1,000 x (-35% + 23%)] = $1,000 - $120 = $880
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On a $1,000 investment, a -35% Percentage Change results in a Payment at Maturity of $880, a -12% return on the Notes.
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Buffered Enhanced Return Notes
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Hypothetical Percentage
Change |
Redemption Amount as
Percentage of Principal Amount
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Redemption Amount
per $1,000 in Principal
Amount
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40.00%
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130.00%
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$1,300.00
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30.00%
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130.00%
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$1,300.00
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23.077%
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130.00%
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$1,300.00
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20.00%
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126.00%
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$1,260.00
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15.00%
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119.50%
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$1,195.00
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10.00%
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113.00%
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$1,130.00
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5.00%
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106.50%
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$1,065.00
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2.00%
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102.60%
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$1,026.00
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0.00%
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100.00%
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$1,000.00
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-5.00%
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100.00%
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$1,000.00
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-10.00%
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100.00%
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$1,000.00
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-20.00%
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100.00%
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$1,000.00
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-23.00%
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100.00%
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$1,000.00
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-23.01%
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99.99%
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$999.90
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-30.00%
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93.00%
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$930.00
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-40.00%
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83.00%
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$830.00
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-50.00%
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73.00%
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$730.00
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-60.00%
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63.00%
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$630.00
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-70.00%
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53.00%
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$530.00
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-80.00%
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43.00%
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$430.00
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-90.00%
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33.00%
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$330.00
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-100.00%
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23.00%
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$230.00
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Buffered Enhanced Return Notes
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You May Receive Less Than the Principal Amount at Maturity — Investors in the Notes could lose a substantial portion of their principal amount if there is a decline in
the share price of the Reference Asset. You will lose 1% of the principal amount of the Notes for each 1% that the Final Price is less than the Initial Price by more than 23%.
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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 — There will be no periodic 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, your 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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Your Potential Payment at Maturity Is Limited — The Notes will provide less opportunity to participate in the appreciation of the Reference Asset than an investment in
a security linked to the Reference Asset providing full participation in the appreciation, because the payment at maturity will not exceed the Maximum Redemption Amount. Accordingly, your return on the Notes may be less than your return
would be if you made an investment in a security directly linked to the positive performance of 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 amount due on the maturity date is dependent upon our ability to repay our obligations at that time. This will be the case even if the share price of the Reference Asset
increases 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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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 Price will not reflect any dividends paid on the securities included in the Reference Asset, and
accordingly, any positive return on the Notes may be less than the potential positive return on those securities.
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Payments on the Notes Are Subject to Postponement Due to Market Disruption Events and Adjustments — The payment at maturity 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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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 your Notes in any secondary market could be substantial.
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Buffered Enhanced Return Notes
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The Initial Estimated Value of the Notes Is Less than the Price to the Public — The initial estimated value of the Notes 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 share price 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 your 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 or the hedging costs relating to the Notes. In addition to bid-ask spreads, the value of the Notes determined 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 initial estimated value. As a result, the secondary price will be less than if the internal funding rate was used. The Notes are not designed to be short-term trading instruments.
Accordingly, you should be able and willing to hold your Notes to maturity.
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The Initial Estimated Value of the Notes that Is Set Forth 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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An Investment in the Notes Is Subject to Risks Relating to Non-U.S. Securities Markets — Because foreign companies or foreign equity securities held by FXI are
publicly traded outside the U.S., an investment in the Notes involves particular risks. For example, the non-U.S. securities markets may be more volatile than the U.S. securities markets, and market developments may affect these markets
differently from the U.S. or other securities markets. Direct or indirect government intervention to stabilize the securities markets outside the U.S., as well as cross-shareholdings in certain companies, may affect trading prices and
trading volumes in those markets. Also, the public availability of information concerning the foreign issuers may vary depending on their home jurisdiction and the reporting requirements imposed by their respective regulators. In
addition, the foreign issuers may be subject to accounting, auditing and financial reporting standards and requirements that differ from those applicable to U.S. reporting companies.
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An Investment in the Notes Is Subject to Risks Associated with Emerging Markets — Investments in securities linked directly or indirectly to emerging market equity
securities, such as the securities held by the FXI, involve many risks, including, but not limited to: economic, social, political, financial and military conditions in the emerging market; regulation by national, provincial, and local
governments; less liquidity and smaller market capitalizations than exist in the case of many large U.S. companies; different accounting and disclosure standards; and political uncertainties. Stock prices of emerging market companies
may be more volatile and may be affected by market developments differently than U.S. companies. Government intervention to stabilize securities markets and cross-shareholdings may affect prices and volume of trading of the securities
of emerging
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Buffered Enhanced Return Notes
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The Notes Are Subject to Exchange Rate Risk —The share price of FXI will fluctuate based in large part upon its respective net asset value, which will in turn depend in
part upon changes in the value of the Hong Kong dollar, which is the currency in which the stocks held by the FXI are traded. Accordingly, investors in the Note will be exposed to currency exchange rate risk with respect to each of the
currencies in which the stocks held by FXI are traded. An investor's net exposure will depend on the extent to which this currency strengthens or weakens against the U.S. dollar. If the U.S. dollar strengthens against this currency, the
net asset value and the price of the FXI will be adversely affected and, consequently, the market value of the Notes may decrease.
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Governmental regulatory actions, such as sanctions, could adversely affect your investment in the Notes — Governmental regulatory actions, including, without
limitation, sanctions-related actions by the U.S. or a foreign government, could prohibit or otherwise restrict persons from holding the Notes or securities included in the Underlying Index, or engaging in transactions in them, and any
such action could adversely affect the value of the FXI. These regulatory actions could result in restrictions on the Notes and could result in the loss of a significant portion of your initial investment in the Notes, including if you
are forced to divest the Notes due to the government mandates, especially if such divestment must be made at a time when the value of the Notes has declined.
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The Reference Asset and its Underlying Index Are Different — The performance of the Reference Asset may not exactly replicate the performance of its underlying index,
because the Reference Asset will reflect transaction costs and fees that are not included in the calculation of its underlying index. It is also possible that the performance of the Reference Asset may not fully replicate or may in
certain circumstances diverge significantly from the performance of its underlying index due to the temporary unavailability of certain securities in the secondary market, the performance of any derivative instruments contained in the
Reference Asset, or due to other circumstances. The Reference Asset may use futures contracts, options, swap agreements, currency forwards and repurchase agreements in seeking performance that corresponds to its underlying index and in
managing cash flows.
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Management Risk — The Reference Asset is not managed according to
traditional methods of ‘‘active’’ investment management, which involve the buying and selling of securities based on economic financial and market analysis and investment judgment. Instead, the Reference Asset, utilizing a ‘‘passive’’
or indexing investment approach, attempts to approximate the investment performance of its Underlying Index by investing in a portfolio of securities that generally replicate its Underlying Index. Therefore, unless a specific security
is removed from its Underlying Index, the Reference Asset generally would not sell a security because the security’s issuer was in financial trouble. In addition, the Reference Asset is subject to the risk that the investment strategy
of its investment advisor may not produce the intended results.
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Buffered Enhanced Return Notes
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Adjustments to the Reference Asset Could Adversely Affect the Notes — The Advisor of the Reference Asset is responsible for calculating and maintaining the Reference
Asset. The Advisor can add, delete or substitute the stocks comprising the Reference Asset. The Advisor may make other methodological changes that could change the share price of the Reference Asset at any time. If one or more of these
events occurs, the calculation of the amount payable at maturity may be adjusted to reflect such event or events. Consequently, any of these actions could adversely affect the amount payable at maturity and/or the market value of the
Notes.
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Changes that Affect the Underlying Index Will Affect the Market Value of the Notes and the Amount You Will Receive at Maturity — The policies of the sponsor of the
Underlying Index (the “Index Sponsor”), concerning the calculation of the Underlying Index, additions, deletions or substitutions of the components of the Underlying Index and the manner in which changes affecting those components, such
as stock dividends, reorganizations or mergers, may be reflected in the Underlying Index and, therefore, could affect the share price of the Reference Asset, the amount payable on the Notes at maturity, and the market value of the Notes
prior to maturity. The amount payable on the Notes and their market value could also be affected if the Index Sponsor changes these policies, for example, by changing the manner in which it calculates the Underlying Index, or if the
sponsor discontinues or suspends the calculation or publication of the Underlying Index.
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We Have No Affiliation with the Index Sponsor and Will Not Be Responsible for Any Actions Taken by the Index Sponsor — The
Index Sponsor is not our affiliate and will not be involved in the offering of the Notes in any way. Consequently, we have no control over the actions of the Index Sponsor, including any actions of the type that would require the
calculation agent to adjust the payment to you at maturity. The Index Sponsor has no obligation of any sort with respect to the Notes. Thus, the Index Sponsor has no obligation to take your interests into consideration for any reason,
including in taking any actions that might affect the value of the Notes. None of our proceeds from the issuance of the Notes will be delivered to the Index Sponsor.
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We and Our Affiliates Do Not Have Any Affiliation with the Advisor and Are Not Responsible for its Public Disclosure of Information — We and our affiliates are not
affiliated with Advisor in any way and have no ability to control or predict its actions, including any errors in or discontinuance of disclosure regarding its methods or policies relating to the Reference Asset. The Advisor is not
involved in the offering of the Notes in any way and has no obligation to consider your interests as an owner of the Notes in taking any actions relating to the Reference Asset that might affect the value of the Notes. Neither we nor
any of our affiliates has independently verified the adequacy or accuracy of the information about the Advisor or the Reference Asset contained in any public disclosure of information. You, as an investor in the Notes, should make your
own investigation into the Reference Asset.
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The Correlation Between the Performance of the Reference Asset and the Performance of the Underlying Index May Be Imperfect — The
performance of the Reference Asset is linked principally to the performance of the Underlying Index. However, because of the potential discrepancies identified in more detail in the product prospectus supplement, the return on the
Reference Asset may correlate imperfectly with the return on the Underlying Index.
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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 or the
securities held by 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 prices 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 the issuers of the securities
held by 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
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Buffered Enhanced Return Notes
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Buffered Enhanced Return Notes
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The company is incorporated outside the PRC; and
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The company is listed on the HKSE; and
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Over 55 per cent of the revenue or assets of the company are derived from the PRC; and
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The actual controller of the company (if available) is a Chinese state entity; or
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Buffered Enhanced Return Notes
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• |
The company is controlled by Chinese state entities, i.e. the government, provinces or municipalities, through strategic holdings
which, in aggregate, total more than 30 per cent of its voting rights (when there is no actual controller reported).
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The company is incorporated outside the PRC; and
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The company is listed on the HKSE; and
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Over 55 per cent of the revenue or assets of the company are derived from the PRC; and
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The company is controlled by mainland Chinese companies or individuals and its establishment and origin are in mainland China.
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Buffered Enhanced Return Notes
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Buffered Enhanced Return Notes
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Buffered Enhanced Return Notes
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Buffered Enhanced Return Notes
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Buffered Enhanced Return Notes
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Buffered Enhanced Return Notes
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