FWP 1 formfwp.htm PRELIM TERM SHEET WFC149 BASK ETF 78015KJV7

Royal Bank of Canada
Market Linked Securities
Filed Pursuant to Rule 433
Registration No. 333-227001

Market Linked Securities – Leveraged Upside Participation to a Cap and Fixed Percentage Buffered Downside Principal at Risk Securities Linked to an ETF Basket
Term Sheet to Preliminary Pricing Supplement No. WFC149 dated April 2, 2020

Summary of terms
Issuer
Royal Bank of Canada
Term
Approximately 3 years
Basket
A basket consisting of the SPDR® Dow Jones® Industrial AverageSM ETF
Trust (50.00%); the SPDR® S&P MidCap 400® ETF Trust (30.00%); and the iShares® Russell 2000 ETF (20.00%)
Pricing Date
April 9, 2020*
Original Issue Date
April 15, 2020*
Principal Amount
$1,000 per security (each security will be offered at an initial public offering price of $1,000)
Payment at Maturity
See “How the maturity payment amount is calculated” on page 3
Maturity Date
April 17, 2023*
Initial Basket Value
100
Final Basket Value
100 x (1+ the sum of the component return of each basket component multiplied by its weighting)
Maximum Maturity
Payment Amount
[$1,300 - $1,400] (to be determined on the pricing date)
Buffer Value
90 (90% of the Initial Basket Value)
Participation Rate
150%
Valuation Date
April 10, 2023*
Calculation Agent
RBC Capital Markets, LLC, a wholly-owned subsidiary of the issuer
Denominations
$1,000 and any integral multiple of $1,000
Underwriting 
Discount and
Commission
Up to 3.7%, of which dealers, including those using the trade name Wells Fargo Advisors (“WFA”), may receive a selling concession of 2.00% and WFA will receive a distribution expense fee of 0.075%
CUSIP
78015KJV7
*
To the extent that the issuer makes any change to the expected pricing date or expected original issue date, the valuation date and maturity date may also be changed in the issuer’s discretion to ensure that the term of the securities remains the same.
Investment description
        Linked to an international basket of exchange traded funds
        Unlike ordinary debt securities, the securities do not pay interest or repay a fixed amount of principal at maturity.  Instead, the securities provide for a payment at maturity that may be greater than, equal to or less than the initial public offering price of the securities, depending on the performance of the Basket from its Initial Basket Value to its Final Basket Value.
The payment at maturity will reflect the following terms:
o If the value of the Basket increases:
You will receive the initial public offering price plus 150% participation in the upside performance of the Basket, subject to a maximum total return at maturity of 30.00% to 40.00% (to be determined on the pricing date) of the initial public offering price
o If the value of the Basket does not change or decreases but the decrease is not more than 10%:
You will be repaid the initial public offering price
o If the value of the Basket decreases by more than 10%:
You will receive less than the initial public offering price and will have 1-to-1 downside exposure to the decrease in the value of the Basket below the Buffer Value
         Investors may lose up to 90% of the initial public offering price
         All payments on the securities are subject to the credit risk of Royal Bank of Canada, and you will have no ability to pursue any basket component or any securities held by a basket component for payment; if Royal Bank of Canada defaults on its obligations, you could lose some or all of your investment
         No periodic interest payments or dividends
         No exchange listing; designed to be held to maturity
 
The issuer’s initial estimated value of the securities as of the pricing date is expected to be between $900 and $933.33 per $1,000 in principal amount, which is less than the public offering price.  The final pricing supplement relating to the securities will set forth the issuer’s estimate of the initial value of the securities as of the pricing date.  The market value of the securities at any time will reflect many factors, cannot be predicted with accuracy, and may be less than this amount.  See “Risk Factors” and “Supplemental Plan of Distribution – Structuring the Securities” in the accompanying preliminary pricing supplement for further information.
The securities are not subject to conversion into our common shares under subsection 39.2(2.3) of the Canada Deposit Insurance Corporation Act. The securities have complex features and investing in the securities involves risks not associated with an investment in conventional debt securities. See “Selected Risk Considerations” in this term sheet and “Risk Factors” in the accompanying preliminary pricing supplement and prospectus supplement.



This introductory term sheet does not provide all of the information that an investor should consider prior to making an investment decision.
Investors should carefully review the accompanying preliminary pricing supplement, prospectus supplement and prospectus before making a decision to invest in the securities.
NOT A BANK DEPOSIT AND NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY


Hypothetical payout profile
The profile to the right is based on a hypothetical maximum maturity payment amount of 135.00% or $1,350.00 per $1,000 security (the midpoint of the specified range for the maximum maturity payment amount), a participation rate of 150% and a Buffer Value equal to 90% of the Initial Basket Value.
This graph has been prepared for purposes of illustration only.  Your actual return will depend on the actual Final Basket Value, maximum maturity payment amount, and whether you hold your securities to maturity.

Hypothetical returns
Hypothetical
Final Basket Value
 
Hypothetical Percentage Change
from the Initial Basket Value to
the Hypothetical
Final Basket Value
 
Hypothetical Maturity
Payment Amount per
Security(1)
 
Hypothetical Pre-Tax
Total Rate of Return
on the Securities
0.00
   
-100.00%
 
$100.00
 
-90.00%
10.00
   
-90.00%
 
$200.00
 
-80.00%
25.00
   
-75.00%
 
$350.00
 
-65.00%
50.00
   
-50.00%
 
$600.00
 
-40.00%
55.00
   
-45.00%
 
$650.00
 
-35.00%
60.00
   
-40.00%
 
$700.00
 
-30.00%
65.00
   
-35.00%
 
$750.00
 
-25.00%
70.00
   
-30.00%
 
$800.00
 
-20.00%
75.00
   
-25.00%
 
$850.00
 
-15.00%
80.00
   
-20.00%
 
$900.00
 
-10.00%
90.00
(2)
 
-10.00%
 
$1,000.00
 
0.00%
95.00
   
-5.00%
 
$1,000.00
 
0.00%
100.00
(3)
 
0.00%
 
$1,000.00
 
0.00%
105.00
   
5.00%
 
$1,075.00
 
7.50%
110.00
   
10.00%
 
$1,150.00
 
15.00%
120.00
   
20.00%
 
$1,300.00
 
30.00%
123.34
   
23.34%
 
$1,350.00
 
35.00%
130.00
   
30.00%
 
$1,350.00
 
35.00%
140.00
   
40.00%
 
$1,350.00
 
35.00%
145.00
   
45.00%
 
$1,350.00
 
35.00%
150.00
   
50.00%
 
$1,350.00
 
35.00%



(1)
Based on a hypothetical maximum maturity payment amount of $1,350.00 (the mid-point of the range of maximum maturity payment amounts set forth in this pricing supplement).
(2)
This is the Buffer Value.
(3)
This is the Initial Basket Value.

2

How the maturity payment amount is calculated
The maturity payment amount will be determined as follows:

If the Final Basket Value is greater than the Initial Basket Value, the maturity payment amount per security will equal the lesser of:

(i)

(ii)
the maximum maturity payment amount
If the Final Basket Value is equal to or less than the Initial Basket Value but greater than or equal to the Buffer Value, the maturity payment amount per security will equal the issue price of $1,000.00
If the Final Basket Value is less than the Buffer Value, the maturity payment amount per security will equal:
In such a case, you will lose up to 90% of your principal.
Hypothetical Historical Basket Values*
*The graph above sets forth the hypothetical historical daily values of the Basket for the period from January 1, 2015 to March 31, 2020, assuming that the Basket was constructed on January 1, 2015 with a starting value of 100 and that each of the basket components had the applicable weighting as of that day. The hypothetical historical performance of the Basket is not an indication of its future performance during the term of the securities.
Selected risk considerations

The risks set forth below are discussed in detail in the “Risk Factors” section in the accompanying preliminary pricing supplement.  Please review those risk disclosures carefully.

Your investment may result in a loss of up to 90% of your principal
You will not receive interest payments on the securities
Your yield may be lower than the yield on a standard debt security of comparable maturity
Your return is limited and will not reflect the return of owning the shares of the basket components or the common stocks held by the basket components
Owning the securities is not the same as owning the shares of the basket components or the common stocks held by the basket components

3

There may not be an active trading market for the securities
Changes in the prices of the basket components may offset each other
The amount to be paid at maturity is not linked to the prices of the basket components at any time other than the valuation date
Many factors affect the market value of the securities
An investment in securities linked to IWM is subject to risks associated with an investment in stocks with a small market capitalization.
The correlation between the performance of a basket component and the performance of its Underlying Index may be imperfect
The securities will be debt obligations of Royal Bank of Canada.  No other company or entity will be responsible for payments under the securities
The policies of the investment advisers of the basket components and changes that affect the Underlying Indices could affect the amount payable on the securities and their market value
We have no affiliation with the Index Sponsors and will not be responsible for any actions taken by the Index Sponsors
Historical prices of the basket components should not be taken as an indication of their future prices during the term of the securities
Hedging transactions may affect the return on the securities
Our initial estimated value of the securities will be less than the initial public offering price
The price, if any, at which you may be able to sell your securities prior to maturity may be less than the initial public offering price and our initial estimated value
The initial estimated value of the securities will be an estimate only, calculated as of the time the terms of the securities are set
Potential conflicts of interest could arise
The calculation agent may postpone the valuation date and, therefore, determination of the Final Basket Value and the maturity date if a market disruption event occurs on the valuation date
There are potential conflicts of interest between you and the calculation agent
The tax treatment of the securities is uncertain and gain on the securities may be treated as ordinary income under the constructive ownership rules

Not suitable for all investors
Investment suitability must be determined individually for each investor. The securities described herein are not a suitable investment for all investors. In particular, no investor should purchase the securities unless they understand and are able to bear the associated market, liquidity and yield risks. Unless market conditions and other relevant factors change significantly in your favor, a sale of the securities prior to maturity is likely to result in sale proceeds that are substantially less than the initial public offering price per security. Royal Bank of Canada, Wells Fargo Securities, LLC and their respective affiliates are not obligated to purchase the securities from you at any time prior to maturity.

The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates.  Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering.  You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov.  Alternatively, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling your financial advisor or by calling Royal Bank of Canada at 1-877-688-2301.
 
Consult your tax advisor
Investors should review carefully the accompanying preliminary pricing supplement, prospectus supplement and prospectus and consult their tax advisors regarding the application of the U.S. federal income tax laws to their particular circumstances, as well as any tax consequences arising under the laws of any state, local or foreign jurisdiction.
 
SPDR® and S&P 500® are trademarks of Standard & Poor’s Financial Services LLC (“S&P Financial”). The securities are not sponsored, endorsed, sold or promoted by the SPDR® Dow Jones® Industrial AverageSM ETF Trust (the “DJA Trust”), the SPDR® S&P MidCap 400® ETF Trust (the “MDY Trust”) or S&P Financial. Neither the DJA Trust, MDY Trust nor S&P Financial makes any representations or warranties to the holders of the securities or any member of the public regarding the advisability of investing in the securities. Neither the DJA Trust, MDY Trust nor S&P Financial will have any obligation or liability in connection with the registration, operation, marketing, trading or sale of the securities or in connection with our use of information about the DJA Trust or MDY Trust.
 
“iShares®” and “BlackRock®” are registered trademarks of BlackRock, Inc. (BlackRock) or its subsidiaries. The securities are not sponsored, endorsed, sold, or promoted by BlackRock, or by any of the iShares Funds. Neither BlackRock nor the iShares Funds make any representations or warranties to the owners of the securities or any member of the public regarding the advisability of investing in the securities. Neither BlackRock nor the iShares Funds shall have any obligation or liability in connection with the registration, operation, marketing, trading, or sale of the securities or in connection with our use of information about its Underlying Index or any of the iShares Funds.


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