|
Subject to Completion
Dated July 29, 2024 |
August 2024
Preliminary Pricing Supplement
dated August , 2024
Registration Statement No.
333-275898
Filed Pursuant to Rule 424(b)(2) |
STRUCTURED INVESTMENTS
Opportunities in
International Equities
Trigger PLUS Based on the Performance of the TOPIX®
Index due September 3, 2027
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
Unlike conventional debt securities, the Trigger Performance Leveraged
Upside SecuritiesSM (the “Trigger PLUS”) do not pay interest and do not guarantee any return of principal at maturity.
At maturity, if the final underlier value is greater than the initial underlier value, investors will receive the stated principal
amount of their investment plus a return reflecting the leveraged upside performance of the underlier. If the final underlier value is
less than or equal to the initial underlier value but greater than or equal to the trigger value, which is equal to 80% of the initial
underlier value, at maturity investors will receive the stated principal amount. However, if the final underlier value is less than
the trigger value, investors will lose 1% of the stated principal amount for every 1% that the final underlier value is less than
the initial underlier value. Under these circumstances, the payment at maturity will be less than 80% of the stated principal amount
and could be zero. Investors in the Trigger Plus must be willing to accept the risk of losing their entire principal. The Trigger
PLUS are for investors who seek an equity index-based return and who are willing to risk their principal and forgo current income in
exchange for the leverage feature and the limited protection against loss, which applies only if the final underlier value is greater
than or equal to the trigger value. The Trigger PLUS are senior unsecured debt securities issued as part of Royal Bank of Canada’s
Senior Global Medium-Term Notes, Series J program. All payments on the Trigger PLUS are subject to the credit risk of Royal Bank of Canada.
SUMMARY TERMS |
Issuer: |
Royal Bank of
Canada |
Underlier: |
The TOPIX® Index (Bloomberg
symbol: “TPX Index”) |
Aggregate principal amount: |
$ |
Stated principal amount: |
$1,000 per Trigger PLUS |
Pricing date: |
August 14, 2024 |
Original issue date: |
August 19, 2024 |
Valuation date:* |
August 31, 2027 |
Maturity date:* |
September 3,
2027 |
Payment at maturity: |
You will receive on the maturity date a cash payment per Trigger PLUS
determined as follows:
· If
the final underlier value is greater than the initial underlier value:
$1,000 + ($1,000 × leverage factor ×
underlier return)
· If
the final underlier value is less than or equal to the initial underlier value but greater than or equal to the trigger value:
$1,000
· If
the final underlier value is less than the trigger value:
$1,000 + ($1,000 × underlier return)
Under these circumstances, the payment at maturity will be less
than 80% of the stated principal amount. You will lose at least 20% and possibly all of the stated principal amount if the final
underlier value is less than the trigger value. |
Leverage factor: |
185% |
Underlier return: |
(final underlier value – initial underlier
value) / initial underlier value |
Trigger value: |
,
which is equal to 80% of the initial underlier value (rounded to two decimal places) |
Initial underlier value: |
,
which was the closing value of the underlier on the pricing date |
Final underlier value: |
The closing value of the underlier on the
valuation date |
CUSIP / ISIN: |
78017GFF3 / US78017GFF37 |
Listing: |
The Trigger PLUS will not be listed on any
securities exchange. |
Agent: |
RBC Capital Markets, LLC (“RBCCM”) |
Commissions and
issue price: |
Price
to public |
Agent’s
commissions |
Proceeds
to issuer |
Per Trigger
PLUS |
$1,000.00 |
$25.00 (1)
$5.00(2) |
$970.00 |
Total |
$ |
$ |
$ |
(1) RBCCM, acting as agent
for Royal Bank of Canada, will receive a fee of $30.00 per Trigger PLUS and will pay to Morgan Stanley Wealth Management (“MSWM”)
a fixed sales commission of $25.00 for each Trigger PLUS. See “Supplemental Plan of Distribution (Conflicts of Interest)”
below.
(2) Of the amount received
by RBCCM, acting as agent for Royal Bank of Canada, RBCCM will pay MSWM a structuring fee of $5.00 for each Trigger PLUS.
* Subject to postponement. See “General
Terms of the Notes—Postponement of a Determination Date” and “General Terms of the Notes—Postponement of a Payment
Date” in the accompanying product supplement.
The initial estimated value of the Trigger PLUS determined by us
as of the pricing date, which we refer to as the initial estimated value, is expected to be between $905.85 and $955.85 per Trigger PLUS
and will be less than the public offering price of the Trigger PLUS. The final pricing supplement relating to the Trigger PLUS will set
forth the initial estimated value. The market value of the Trigger PLUS at any time will reflect many factors, cannot be predicted with
accuracy and may be less than this amount. We describe the determination of the initial estimated value in more detail below.
An investment in the Trigger PLUS involves certain risks. See “Risk
Factors” beginning on page 5 of this document and “Risk Factors” in the accompanying prospectus, prospectus supplement
and product supplement.
You should read this document together with the documents listed
below, each of which can be accessed via the hyperlinks below, before you decide to invest. Please also see “Additional Information
about the Trigger PLUS” in this document.
None of the Securities and Exchange Commission
(the “SEC”), any state securities commission or any other regulatory body has approved or disapproved of the Trigger PLUS
or passed upon the adequacy or accuracy of this document. Any representation to the contrary is a criminal offense. The Trigger PLUS
will not constitute deposits insured by the Canada Deposit Insurance Corporation, the U.S. Federal Deposit Insurance Corporation or any
other Canadian or U.S. governmental agency or instrumentality. The Trigger PLUS are not bail-inable notes and are not subject to conversion
into our common shares under subsection 39.2(2.3) of the Canada Deposit Insurance Corporation Act.
Trigger PLUS Based on the Performance of the TOPIX® Index due September 3, 2027
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
Investment Summary
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
The Trigger PLUS Based on the Performance of the TOPIX®
Index due September 3, 2027 (the “Trigger PLUS”) can be used:
| § | As
an alternative to direct exposure to the underlier that enhances returns for any positive
performance of the underlier |
| § | To
enhance returns and outperform the underlier in a bullish scenario |
| § | To
achieve similar levels of upside exposure to the underlier as a direct investment, while
using fewer dollars by taking advantage of the leverage factor |
| § | To
avoid a loss of principal in the event of a decline of the underlier from the pricing date
to the valuation date, but only if the final underlier value is greater than or equal to
the trigger value |
If the final underlier value is less than the trigger value, the Trigger
PLUS are exposed on a 1:1 basis to the negative performance of the underlier.
Maturity: |
Approximately 36 months |
Leverage factor: |
185% |
Trigger value: |
80% of the initial underlier value |
Minimum payment at maturity: |
None. Investors may lose their entire initial investment in the Trigger PLUS. |
Interest: |
None |
Key Investment Rationale
Investors may lose their entire investment. The Trigger PLUS
are for investors who seek an equity index-based return and who are willing to risk their principal and forgo current income in exchange
for the leverage feature and the limited protection against loss, which applies only if the final underlier value is greater than or
equal to the trigger value. Investors may lose their entire investment in the Trigger PLUS.
Leveraged
Performance |
The Trigger PLUS
offer investors an opportunity to capture enhanced returns for any positive performance of the underlier relative to a direct investment
in the underlier. |
Trigger
Feature |
At maturity, even if the value of the underlier
has declined over the term of the Trigger PLUS, investors will receive their stated principal amount, but only if the final underlier
value is greater than or equal to the trigger value. |
Upside
Scenario |
The final underlier value is
greater than the initial underlier value. In this case, at maturity, we will pay the stated principal amount of $1,000 plus a return
equal to 185% of the underlier return. |
Par
Scenario |
The final underlier value is
less than or equal to the initial underlier value but greater than or equal to the trigger value. In this case, at maturity, we will
pay the stated principal amount of $1,000 per Trigger PLUS even though the value of the underlier has declined. |
Downside
Scenario |
The final underlier value is
less than the trigger value. In this case, at maturity, we will pay less than 80% of the stated principal amount and the percentage
loss of the stated principal amount will be equal to the percentage decrease from the initial underlier value to the final underlier
value. Investors will lose a significant portion, and may lose all, of their principal amount. |
Trigger PLUS Based on the Performance of the TOPIX® Index due September 3, 2027
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
Additional Information
You should read this document together with the prospectus dated December
20, 2023, as supplemented by the prospectus supplement dated December 20, 2023, relating to our Senior Global Medium-Term Notes, Series
J, of which the Trigger PLUS are a part, the underlying supplement no. 1A dated May 16, 2024 and the product supplement no. 1A dated
May 16, 2024. This document, together with these documents, contains the terms of the Trigger PLUS and supersedes all other prior or
contemporaneous oral statements as well as any other written materials, including preliminary or indicative pricing terms, correspondence,
trade ideas, structures for implementation, sample structures, fact sheets, brochures or other educational materials of ours.
We have not authorized anyone to provide any information or to make
any representations other than those contained or incorporated by reference in this document and the documents listed below. We take
no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. These documents
are an offer to sell only the Trigger PLUS offered hereby, but only under circumstances and in jurisdictions where it is lawful to do
so. The information contained in each such document is current only as of its date.
If the information in this document differs from the information contained
in the documents listed below, you should rely on the information in this document.
You should carefully consider, among other things, the matters set
forth in “Risk Factors” in this document and the documents listed below, as the Trigger PLUS involve risks not associated
with conventional debt securities. We urge you to consult your investment, legal, tax, accounting and other advisers before you invest
in the Trigger PLUS.
You may access these documents on the SEC website at www.sec.gov as
follows (or if such address has changed, by reviewing our filings for the relevant date on the SEC website):
| · | Prospectus
dated December 20, 2023: |
https://www.sec.gov/Archives/edgar/data/1000275/000119312523299520/d645671d424b3.htm
| · | Prospectus
Supplement dated December 20, 2023: |
https://www.sec.gov/Archives/edgar/data/1000275/000119312523299523/d638227d424b3.htm
| · | Underlying
Supplement No. 1A dated May 16, 2024: |
https://www.sec.gov/Archives/edgar/data/1000275/000095010324006773/dp211259_424b2-us1a.htm
| · | Product
Supplement No. 1A dated May 16, 2024: |
https://www.sec.gov/Archives/edgar/data/1000275/000095010324006777/dp211286_424b2-ps1a.htm
Our Central Index Key, or CIK, on the SEC website is 1000275. As used
in this document, “Royal Bank of Canada,” the “Bank,” “we,” “our” and “us”
mean only Royal Bank of Canada.
Trigger PLUS Based on the Performance of the TOPIX® Index due September 3, 2027
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
How the Trigger PLUS Work
Payoff Diagram
The payoff diagram below illustrates the payment at maturity on the
Trigger PLUS based on the following terms:
Stated principal amount: |
$1,000 per Trigger PLUS |
Leverage factor: |
185% |
Trigger value: |
80% of the initial underlier value |
Minimum payment at maturity: |
None |
Trigger PLUS Payoff
Diagram |
|
n
The Trigger PLUS |
n
The Underlier |
Scenario Analysis
| § | Upside
Scenario. If the final underlier value is greater than the initial underlier value,
then at maturity investors would receive the $1,000 stated principal amount plus a return
reflecting 185% of the appreciation of the underlier from the initial underlier value to
the final underlier value. |
| § | If
the underlier appreciates 3%, at maturity investors would receive a return of 5.55%, or $1,055.50
per Trigger PLUS, or 105.55% of the stated principal amount. |
| § | Par
Scenario. If the final underlier value is less than or equal to the initial underlier
value but greater than or equal to the trigger value, at maturity investors would receive
the stated principal amount of $1,000 per Trigger PLUS. |
| § | For
example, if the underlier depreciates by 5%, at maturity investors would receive the $1,000
stated principal amount per Trigger PLUS. |
| § | Downside
Scenario. If the final underlier value is less than the trigger value, at maturity
investors would receive an amount that is less than 80% of the $1,000 stated principal amount
and that reflects a 1% loss of principal for each 1% decline in the underlier. Investors
may lose their entire initial investment in the Trigger PLUS. |
| § | If
the underlier depreciates 50%, at maturity investors would lose 50% of their principal and
receive only $500.00 per Trigger PLUS, or 50% of the stated principal amount. |
Trigger PLUS Based on the Performance of the TOPIX® Index due September 3, 2027
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
Risk Factors
An investment in the Trigger PLUS involves significant risks. We
urge you to consult your investment, legal, tax, accounting and other advisers before you invest in the Trigger PLUS. Some of the risks
that apply to an investment in the Trigger PLUS are summarized below, but we urge you to read also the “Risk Factors” sections
of the accompanying prospectus, prospectus supplement and product supplement. You should not purchase the Trigger PLUS unless you understand
and can bear the risks of investing in the Trigger PLUS.
Risks Relating to the Terms
and Structure of the Trigger PLUS
| § | The
Trigger PLUS do not pay interest or guarantee return of principal. The terms of the Trigger
PLUS differ from those of ordinary debt securities in that the Trigger PLUS do not pay interest
or guarantee payment of the stated principal amount at maturity. Instead, if the final underlier
value is less than the trigger value, which is 80% of the initial underlier value, the payment
at maturity will be an amount in cash that is less than the $1,000 stated principal amount
of each Trigger PLUS by a percentage equal to the percentage decrease from the initial underlier
value to the final underlier value. There is no minimum payment at maturity on the Trigger
PLUS, and, accordingly, you could lose your entire initial investment in the Trigger PLUS.
|
| § | The
potential contingent repayment of principal represented by the trigger value applies only
at maturity. You should be willing to hold the securities until maturity. If you are
able to sell the securities prior to maturity, you may have to sell them for a loss relative
to the principal amount, even if the value of the underlier is at or above the trigger value. |
| § | Your
return on the PLUS may be lower than the return on a conventional debt security of comparable
maturity. The return that you will receive on the PLUS, which could be negative, may
be less than the return you could earn on other investments. Your investment may not reflect
the full opportunity cost to you when you take into account factors that affect the time
value of money, such as inflation. |
| § | Payments
on the Trigger PLUS are subject to our credit risk, and market perceptions about our creditworthiness
may adversely affect the market value of the Trigger PLUS. The Trigger PLUS are our senior
unsecured debt securities, and your receipt of any amounts due on the Trigger PLUS is dependent
upon our ability to pay our obligations as they come due. If we were to default on our payment
obligations, you may not receive any amounts owed to you under the Trigger PLUS and you could
lose your entire investment. In addition, any negative changes in market perceptions about
our creditworthiness may adversely affect the market value of the Trigger PLUS. |
| § | Any
payment on the Trigger PLUS will be determined based on the closing values of the underlier
on the dates specified. Any payment on the Trigger PLUS will be determined based on the
closing values of the underlier on the dates specified. You will not benefit from any more
favorable value of the underlier determined at any other time. |
| § | The
U.S. federal income tax consequences of an investment in the Trigger PLUS are uncertain.
There is no direct legal authority regarding the proper U.S. federal income tax treatment
of the Trigger PLUS, and significant aspects of the tax treatment of the Trigger PLUS are
uncertain. You should review carefully the section entitled “United States Federal
Income Tax Considerations” herein, in combination with the section entitled “United
States Federal Income Tax Considerations” in the accompanying product supplement, and
consult your tax adviser regarding the U.S. federal income tax consequences of an investment
in the Trigger PLUS. |
Risks Relating to the Initial
Estimated Value of the Trigger PLUS and the Secondary Market for the Trigger PLUS
| § | There
may not be an active trading market for the Trigger PLUS; sales in the secondary market may
result in significant losses. There may be little or no secondary market for the Trigger
PLUS. The Trigger PLUS will not be listed on any securities exchange. RBCCM and our other
affiliates may make a market for the Trigger PLUS; however, they are not required to do so
and, if they choose to do so, may stop any market-making activities at any time. Because
other dealers are not likely to make a secondary market for the Trigger PLUS, the price at
which you may be able to trade your Trigger PLUS is likely to depend on the price, if any,
at which RBCCM or any of our other affiliates is willing to buy the Trigger PLUS. Even if
a secondary market for the Trigger PLUS develops, it may not provide enough liquidity to
allow you to easily trade or sell the Trigger PLUS. We expect that transaction costs in any
secondary market would be high. As a result, the difference between bid and ask prices for
your Trigger PLUS in any |
Trigger PLUS Based on the Performance of the TOPIX® Index due September 3, 2027
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
secondary market could be substantial.
If you sell your Trigger PLUS before maturity, you may have to do so at a substantial discount from the price that you paid for them,
and as a result, you may suffer significant losses. The Trigger PLUS are not designed to be short-term trading instruments. Accordingly,
you should be able and willing to hold your Trigger PLUS to maturity.
| § | The
initial estimated value of the Trigger PLUS will be less than the public offering price.
The initial estimated value of the Trigger PLUS will be less than the public offering
price of the Trigger PLUS and does not represent a minimum price at which we, RBCCM or any
of our other affiliates would be willing to purchase the Trigger PLUS in any secondary market
(if any exists) at any time. If you attempt to sell the Trigger PLUS 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 value of the underlier, the internal funding
rate we pay to issue securities of this kind (which is lower than the rate at which we borrow
funds by issuing conventional fixed rate debt) and the inclusion in the public offering price
of the agent’s commissions, our estimated profit and the estimated costs relating to
our hedging of the Trigger PLUS. These factors, together with various credit, market and
economic factors over the term of the Trigger PLUS, are expected to reduce the price at which
you may be able to sell the Trigger PLUS in any secondary market and will affect the value
of the Trigger PLUS 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 Trigger
PLUS prior to maturity may be less than your original purchase price, as any such sale price
would not be expected to include the agent’s commissions, our estimated profit or the
hedging costs relating to the Trigger PLUS. In addition, any price at which you may sell
the Trigger PLUS is likely to reflect customary bid-ask spreads for similar trades. In addition
to bid-ask spreads, the value of the Trigger PLUS determined for any secondary market price
is expected to be based on a secondary market rate rather than the internal funding rate
used to price the Trigger PLUS and determine the initial estimated value. As a result, the
secondary market price will be less than if the internal funding rate were used. |
| § | The
initial estimated value of the Trigger PLUS is only an estimate, calculated as of the pricing
date. The initial estimated value of the Trigger PLUS is based on the value of our obligation
to make the payments on the Trigger PLUS, together with the mid-market value of the derivative
embedded in the terms of the Trigger PLUS. See “Structuring the Trigger PLUS”
below. Our estimate is based on a variety of assumptions, including our internal funding
rate (which represents a discount from our credit spreads), expectations as to dividends,
interest rates and volatility and the expected term of the Trigger PLUS. These assumptions
are based on certain forecasts about future events, which may prove to be incorrect. Other
entities may value the Trigger PLUS or similar securities at a price that is significantly
different than we do. |
The value of the Trigger PLUS at any time
after the pricing date will vary based on many factors, including changes in market conditions, and cannot be predicted with accuracy.
As a result, the actual value you would receive if you sold the Trigger PLUS in any secondary market, if any, should be expected to differ
materially from the initial estimated value of the Trigger PLUS.
Risks Relating to Conflicts
of Interest and Our Trading Activities
| § | Hedging
and trading activity by us and our affiliates could potentially adversely affect the value
of the Trigger PLUS. One or more of our affiliates and/or third-party dealers expect
to carry out hedging activities related to the Trigger PLUS (and possibly to other instruments
linked to the underlier or the securities it represents), including trading in those securities
as well as in other related instruments. Some of our affiliates also may conduct trading
activities relating to the underlier on a regular basis as part of their general broker-dealer
and other businesses. Any of these hedging or trading activities on or prior to the pricing
date could potentially affect the initial underlier value and, therefore, could increase
the value at or above which the underlier must close on the valuation date so that investors
do not suffer a loss on their initial investment in the Trigger PLUS. Additionally, such
hedging or trading activities during the term of the Trigger PLUS, including on the valuation
date, could adversely affect the closing value of the underlier on the valuation date and,
accordingly, the amount of cash an investor will receive at maturity, if any. |
| § | Our
and our affiliates’ business and trading activities may create conflicts of interest.
You should make your own independent investigation of the merits of investing in the
Trigger PLUS. Our and our affiliates’ economic interests are potentially adverse to
your interests as an investor in the Trigger PLUS due to our and our affiliates’ business
and trading activities, and we and our affiliates have no obligation to consider your interests
in taking any actions that might affect the value of the Trigger PLUS. Trading by us and
our affiliates may adversely affect the value of the underlier and the market value of the
Trigger PLUS. See “Risk Factors—Risks Relating to Conflicts of Interest”
in the accompanying product supplement. |
Trigger PLUS Based on the Performance of the TOPIX® Index due September 3, 2027
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
| § | RBCCM’s
role as calculation agent may create conflicts of interest. As calculation agent, our
affiliate, RBCCM, will determine any values of the underlier and make any other determinations
necessary to calculate any payments on the Trigger PLUS. In making these determinations,
the calculation agent may be required to make discretionary judgments, including those described
under “— Risks Relating to the Underlier” below. In making these discretionary
judgments, the economic interests of the calculation agent are potentially adverse to your
interests as an investor in the Trigger PLUS, and any of these determinations may adversely
affect any payments on the Trigger PLUS. The calculation agent will have no obligation to
consider your interests as an investor in the Trigger PLUS in making any determinations with
respect to the Trigger PLUS. |
Risks Relating to the Underlier
| § | You
will not have any rights to the securities included in the underlier. As an investor
in the Trigger PLUS, you will not have voting rights or rights to receive dividends or other
distributions or any other rights with respect to the securities included in the underlier.
The underlier is a price return index and its return does not reflect regular cash dividends
paid by its components. |
| § | The
Trigger PLUS are subject to risks relating to non-U.S. securities markets. The equity
securities composing the underlier are issued by non-U.S. companies in non-U.S. securities
markets. Investments in securities linked to the value of such non-U.S. equity securities
involve risks associated with the securities markets in the home countries of the issuers
of those non-U.S. equity securities, including risks of volatility in those markets, governmental
intervention in those markets and cross shareholdings in companies in certain countries.
Also, there is generally less publicly available information about companies in some of these
jurisdictions than there is about U.S. companies that are subject to the reporting requirements
of the SEC, and generally non-U.S. companies are subject to accounting, auditing and financial
reporting standards and requirements and securities trading rules different from those applicable
to U.S. reporting companies. The prices of securities in non-U.S. markets may be affected
by political, economic, financial and social factors in those countries, or global regions,
including changes in government, economic and fiscal policies and currency exchange laws. |
| § | The
Trigger PLUS do not provide direct exposure to fluctuations in exchange rates between the
U.S. dollar and the yen. The underlier is composed of non-U.S. securities denominated
in yen. Because the value of the underlier is also calculated in yen (and not in U.S. dollars),
the performance of the underlier will not be adjusted for exchange rate fluctuations between
the U.S. dollar and the yen. In addition, any payments on the Trigger PLUS determined based
in part on the performance of the underlier will not be adjusted for exchange rate fluctuations
between the U.S. dollar and the yen. Therefore, holders of the Trigger PLUS will not benefit
from any appreciation of the yen relative to the U.S. dollar. |
| § | We
may accelerate the Trigger PLUS if a change-in-law event occurs. Upon the occurrence
of legal or regulatory changes that may, among other things, prohibit or otherwise materially
restrict persons from holding the Trigger PLUS or the underlier or its components, or engaging
in transactions in them, the calculation agent may determine that a change-in-law-event has
occurred and accelerate the maturity date for a payment determined by the calculation agent
in its sole discretion. Any amount payable upon acceleration could be significantly less
than any amount that would be due on the Trigger PLUS if they were not accelerated. However,
if the calculation agent elects not to accelerate the Trigger PLUS, the value of, and any
amount payable on, the Trigger PLUS could be adversely affected, perhaps significantly, by
the occurrence of such legal or regulatory changes. See “General Terms of Notes—Change-in-Law
Events” in the accompanying product supplement. |
| § | Any
payment on the Trigger PLUS may be postponed and adversely affected by the occurrence of
a market disruption event. The timing and amount of any payment on the Trigger PLUS is
subject to adjustment upon the occurrence of a market disruption event affecting the underlier.
If a market disruption event persists for a sustained period, the calculation agent may make
a determination of the closing value of the underlier. See “General Terms of the Notes—Indices—Market
Disruption Events,” “General Terms of the Notes—Postponement of a Determination
Date” and “General Terms of the Notes—Postponement of a Payment Date”
in the accompanying product supplement. |
| § | Adjustments
to the underlier could adversely affect any payments on the Trigger PLUS. The sponsor
of the underlier may add, delete, substitute or adjust the securities composing the underlier
or make other methodological changes to the underlier that could affect its performance.
The calculation agent will calculate the value to be used as the closing value of the underlier
in the event of certain material changes in, or modifications to, the underlier. In addition,
the sponsor of the underlier may also discontinue or suspend calculation or publication of
the underlier at |
Trigger PLUS Based on the Performance of the TOPIX® Index due September 3, 2027
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
any time. Under these circumstances, the
calculation agent may select a successor index that the calculation agent determines to be comparable to the underlier or, if no successor
index is available, the calculation agent will determine the value to be used as the closing value of the underlier. Any of these actions
could adversely affect the value of the underlier and, consequently, the value of the Trigger PLUS. See “General Terms of the Notes—Indices—Discontinuation
of, or Adjustments to, an Index” in the accompanying product supplement.
| § | Governmental
regulatory actions, such as sanctions, could adversely affect your investment in the Trigger
PLUS. 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 Trigger PLUS or securities included in the underlier, or engaging in transactions
in them, and any such action could adversely affect the value of the underlier. These regulatory
actions could result in restrictions on the Trigger PLUS and could result in the loss of
a significant portion of your initial investment in the Trigger PLUS, including if you are
forced to divest the Trigger PLUS due to the government mandates, especially if such divestment
must be made at a time when the value of the Trigger PLUS has declined. |
Trigger PLUS Based on the Performance of the TOPIX® Index due September 3, 2027
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
Information about the Underlier
The underlier is a capped free float-adjusted market capitalization-weighted
index of common stocks listed on the Tokyo Stock Exchange covering an extensive portion of the Japanese stock market. For more information
about the underlier, see “Indices—The TOPIX® Index” in the accompanying underlying supplement.
The table below sets forth the published high and low closing values
of the underlier for each quarter in the period from January 1, 2019 through July 25, 2024. The graph below sets forth the daily closing
values of the underlier for that period. We obtained the information in the table and graph below from Bloomberg Financial Services,
without independent verification. You should not take the historical performance of the underlier as an indication of its future performance,
and no assurance can be given as to the value of the underlier on the valuation date.
Information as of market close on July 25, 2024:
Bloomberg
Ticker Symbol: |
TPX
Index |
52
Weeks Ago: |
2,285.38 |
Current
Underlier Value: |
2,709.86 |
52
Week High: |
2,929.17 |
|
|
52
Week Low: |
2,218.89 |
The
TOPIX® Index |
High |
Low |
2019 |
|
|
First Quarter |
1,627.59 |
1,471.16 |
Second Quarter |
1,630.68 |
1,498.96 |
Third Quarter |
1,623.27 |
1,478.03 |
Fourth Quarter |
1,747.20 |
1,568.87 |
2020 |
|
|
First Quarter |
1,744.16 |
1,236.34 |
Second Quarter |
1,630.72 |
1,325.13 |
Third Quarter |
1,661.93 |
1,496.06 |
Fourth Quarter |
1,819.18 |
1,579.33 |
2021 |
|
|
First Quarter |
2,012.21 |
1,791.22 |
Second Quarter |
1,983.54 |
1,849.04 |
Third Quarter |
2,118.87 |
1,880.68 |
Fourth Quarter |
2,055.56 |
1,926.37 |
2022 |
|
|
First Quarter |
2,039.27 |
1,758.89 |
Second Quarter |
1,969.98 |
1,818.94 |
Third Quarter |
2,006.99 |
1,835.94 |
Fourth Quarter |
2,018.80 |
1,847.58 |
2023 |
|
|
First Quarter |
2,071.09 |
1,868.15 |
Second Quarter |
2,300.36 |
1,961.28 |
Third Quarter |
2,430.30 |
2,221.48 |
Fourth Quarter |
2,391.05 |
2,218.89 |
2024 |
|
|
First Quarter |
2,813.22 |
2,378.79 |
Second Quarter |
2,809.63 |
2,626.32 |
Third Quarter (through July
25, 2024) |
2,929.17 |
2,709.86 |
Trigger PLUS Based on the Performance of the TOPIX® Index due September 3, 2027
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
The
TOPIX® Index – Historical Closing Values
January 1, 2019 to July 25, 2024 |
|
The red solid line in the
graph above indicates a hypothetical trigger value based on the closing value of the underlier on July 25, 2024.
Trigger PLUS Based on the Performance of the TOPIX® Index due September 3, 2027
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
Additional Information about the Trigger PLUS
Please read this information in conjunction with the summary terms
on the front cover of this document.
Additional Provisions: |
Minimum ticketing size: |
$1,000 / 1 Trigger PLUS |
Trustee: |
The Bank of New York Mellon |
Use of proceeds and hedging: |
The net proceeds from the sale of the Trigger PLUS will be used as described under “Use of Proceeds”
in the accompanying prospectus supplement and prospectus and to hedge market risks of Royal Bank of Canada associated with its obligation
to make the payment at maturity on the Trigger PLUS. The initial public offering price of the Trigger PLUS includes the underwriting
discount and commission and the estimated cost of hedging our obligations under the Trigger PLUS. |
United States Federal Income Tax Considerations
You should review carefully the section in the accompanying product
supplement entitled “United States Federal Income Tax Considerations.” The following discussion, when read in combination
with that section, constitutes the full opinion of our counsel, Davis Polk & Wardwell LLP, regarding the material U.S. federal income
tax consequences of owning and disposing of the Trigger PLUS.
Generally, this discussion assumes that you purchased the Trigger PLUS
for cash in the original issuance at the stated issue price and does not address other circumstances specific to you, including consequences
that may arise due to any other investments relating to the underlier. You should consult your tax adviser regarding the effect any such
circumstances may have on the U.S. federal income tax consequences of your ownership of a Trigger PLUS.
In the opinion of our counsel, which is based on current market conditions,
it is reasonable to treat the Trigger PLUS for U.S. federal income tax purposes as prepaid financial contracts that are “open transactions,”
as described in the section entitled “United States Federal Income Tax Considerations—Tax Consequences to U.S. Holders—Notes
Treated as Prepaid Financial Contracts that are Open Transactions” in the accompanying product supplement. There is uncertainty
regarding this treatment, and the Internal Revenue Service (the “IRS”) or a court might not agree with it. Moreover, because
this treatment of the Trigger PLUS and our counsel’s opinion are based on market conditions as of the date of this preliminary
pricing supplement, each is subject to confirmation on the Trade Date. A different tax treatment could be adverse to you. Generally,
if this treatment is respected, (i) you should not recognize taxable income or loss prior to the taxable disposition of your Trigger
PLUS (including upon maturity or an earlier redemption, if applicable) and (ii) the gain or loss on your Trigger PLUS should be treated
as short-term capital gain or loss unless you have held the Trigger PLUS for more than one year, in which case your gain or loss should
be treated as long-term capital gain or loss.
We do not plan to request a ruling from the IRS regarding the treatment
of the Trigger PLUS. An alternative characterization of the Trigger PLUS could materially and adversely affect the tax consequences of
ownership and disposition of the Trigger PLUS, including the timing and character of income recognized. In addition, the U.S. Treasury
Department and the IRS have requested comments on various issues regarding the U.S. federal income tax treatment of “prepaid forward
contracts” and similar financial instruments and have indicated that such transactions may be the subject of future regulations
or other guidance. Furthermore, members of Congress have proposed legislative changes to the tax treatment of derivative contracts. Any
legislation, Treasury regulations or other guidance promulgated after consideration of these issues could materially and adversely affect
the tax consequences of an investment in the Trigger PLUS, possibly with retroactive effect.
Non-U.S. Holders. As discussed under “United States Federal
Income Tax Considerations—Tax Consequences to Non-U.S. Holders—Dividend Equivalents under Section 871(m) of the Code”
in the accompanying product supplement, Section 871(m) of the Internal Revenue Code and Treasury regulations promulgated thereunder (“Section
871(m)”) generally impose a 30% withholding tax on dividend equivalents paid or deemed paid to Non-U.S. Holders with respect to
certain financial instruments linked to U.S. equities or indices that include U.S. equities. The Treasury regulations, as modified by
an IRS notice, exempt financial instruments issued prior to January 1, 2027 that do not have a “delta” of one. Based on certain
determinations made by us, we expect that Section 871(m) will not apply to the Trigger PLUS with regard to Non-U.S. Holders. Our determination
is not binding on the IRS, and the IRS may disagree with this determination. If necessary, further information regarding the potential
application of Section 871(m) will be provided in the final pricing supplement for the Trigger PLUS.
We will not be required to pay any additional amounts with respect
to U.S. federal withholding taxes.
You should consult your tax adviser regarding the U.S. federal income
tax consequences of an investment in the Trigger PLUS, including possible alternative treatments, as well as tax consequences arising
under the laws of any state, local or non-U.S. taxing jurisdiction.
Canadian Federal Income Tax Consequences
You should read carefully the description of material Canadian federal
income tax considerations relevant to a Non-resident Holder owning debt securities under “Supplemental Discussion of Canadian Tax
Consequences” in the accompanying product supplement.
Trigger PLUS Based on the Performance of the TOPIX® Index due September 3, 2027
Trigger Performance Leveraged Upside SecuritiesSM
Principal at Risk Securities
Supplemental Plan of Distribution (Conflicts of Interest)
Pursuant to the terms of a distribution agreement, RBCCM, an affiliate
of Royal Bank of Canada, will purchase the Trigger PLUS from Royal Bank of Canada for distribution to MSWM. RBCCM will act as agent for
the Trigger PLUS and will receive the fee specified on the front cover of this document and will pay to MSWM a fixed sales commission
for each of the Trigger PLUS they sell as specified on the front cover of this document. Of the fee received by RBCCM, RBCCM will pay
MSWM a structuring fee for each Trigger PLUS as specified on the front cover of this document. The costs included in the original issue
price of the Trigger PLUS will include a fee paid by RBCCM to LFT Securities, LLC, an entity in which an affiliate of MSWM has an ownership
interest, for providing certain electronic platform services with respect to this offering.
MSWM may reclaim selling concessions allowed to individual brokers
within MSWM in connection with the offering if, within 30 days of the offering, Royal Bank of Canada repurchases the Trigger PLUS distributed
by such brokers.
The value of the Trigger PLUS shown on your account statement may be
based on RBCCM’s estimate of the value of the Trigger PLUS if RBCCM or another of our affiliates were to make a market in the Trigger
PLUS (which it is not obligated to do). That estimate will be based on the price that RBCCM may pay for the Trigger PLUS in light of
then-prevailing market conditions, our creditworthiness and transaction costs. For an initial period of approximately eighteen months
after the original issue date, the value of the Trigger PLUS that may be shown on your account statement is expected to be higher than
RBCCM’s estimated value of the Trigger PLUS at that time. This is because the estimated value of the Trigger PLUS will not include
the agent’s commission and our hedging costs and profits; however, the value of the Trigger PLUS shown on your account statement
during that period is initially expected to be a higher amount, reflecting the addition of the agent’s commission and our estimated
costs and profits from hedging the Trigger PLUS. This excess is expected to decrease over time until the end of this period, and we reserve
the right to shorten this period. After this period, if RBCCM repurchases your Trigger PLUS, it expects to do so at prices that reflect
its estimated value.
RBCCM or another of its affiliates or agents may use this document
in market-making transactions after the initial sale of the Trigger PLUS, but is under no obligation to do so and may discontinue any
market-making activities at any time without notice. Unless RBCCM or its agent informs the purchaser otherwise in the confirmation of
sale, this document is being used in a market-making transaction.
For additional information about the settlement cycle of the Trigger
PLUS, see “Plan of Distribution” in the accompanying prospectus. For additional information as to the relationship between
us and RBCCM, see the section “Plan of Distribution—Conflicts of Interest” in the accompanying prospectus.
Structuring the Trigger PLUS
The Trigger PLUS are our debt securities. As is the case for all of
our debt securities, including our structured notes, the economic terms of the Trigger PLUS reflect our actual or perceived creditworthiness.
In addition, because structured notes result in increased operational, funding and liability management costs to us, we typically borrow
the funds under structured notes at a rate that is lower than the rate that we might pay for a conventional fixed or floating rate debt
security of comparable maturity. The lower internal funding rate, the agent’s commission and the hedging-related costs relating
to the Trigger PLUS reduce the economic terms of the Trigger PLUS to you and result in the initial estimated value for the Trigger PLUS
being less than their public offering price. Unlike the initial estimated value, any value of the Trigger PLUS determined for purposes
of a secondary market transaction may be based on a second market rate, which may result in a lower value for the Trigger PLUS than if
our initial internal funding rate were used.
In order to satisfy our payment obligations under the Trigger PLUS,
we may choose to enter into certain hedging arrangements (which may include call options, put options or other derivatives) with RBCCM
and/or one of our other subsidiaries. The terms of these hedging arrangements take into account a number of factors, including our creditworthiness,
interest rate movements, volatility and the tenor of the Trigger PLUS. The economic terms of the Trigger PLUS and the initial estimated
value depend in part on the terms of these hedging arrangements.
See “Risk Factors—Risks Relating to the Initial Estimated
Value of the Trigger PLUS and the Secondary Market for the Trigger PLUS—The initial estimated value of the Trigger PLUS will be
less than the public offering price” above.
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