c1227121424b2.htm
PRICING SUPPLEMENT
Filed Pursuant to Rule 424(b)(2)
Registration Statement No. 333-171806
Dated December 27, 2012
Royal Bank of Canada Contingent Return Optimization Securities
$5,123,570 Securities Linked to the EURO STOXX 50® Index, due on December 31, 2014
Investment Description
Contingent Return Optimization Securities are unconditional, unsecured and unsubordinated debt securities issued by Royal Bank of Canada with returns linked to the performance of the EURO STOXX 50® Index (the “Index”) (each, a “Security” and collectively, the “Securities”). If the Index Ending Level is equal to or greater than the Trigger Level of 75% of the Index Starting Level, Royal Bank of Canada will repay the principal amount at maturity plus pay a return equal to the greater of the Contingent Return of 10% and the Index Return, up to the Maximum Gain of 32.20%. If the Index Ending Level is less than the Trigger Level, you will be fully exposed to the negative Index Return and Royal Bank of Canada will pay less than the full principal amount at maturity, resulting in a loss of principal to investors that is proportionate to the percentage decline in the Index. Investing in the Securities involves significant risks. The Securities do not pay dividends or interest. You may lose some or all of your principal amount, and the Securities will not be listed on any exchange.  The contingent repayment of principal applies only if you hold the Securities to maturity. Any payment on the Securities, including any repayment of principal, is subject to the creditworthiness of Royal Bank of Canada.  If Royal Bank of Canada were to default on its payment obligations, you may not receive any amounts owed to you under the Securities and you could lose your entire investment.
Features
 
Key Dates
q    Contingent Return with Participation Up to the Maximum Gain— At maturity, if the Index Ending Level is equal to or greater than the Trigger Level, Royal Bank of Canada will pay you the principal amount plus a return equal to at least the Contingent Return of 10%, with participation in any positive Index Return above the Contingent Return up to the Maximum Gain of 32.20%. If the Index Ending Level is less than the Trigger Level, investors will be exposed to the negative Index Return at maturity.
 
q    Contingent Repayment of Principal— The contingent return feature also provides for the contingent repayment of principal at maturity.  If the Index Return is negative, but the Index Ending Level is greater than or equal to the Trigger Level, Royal Bank of Canada will repay your principal amount plus the 10% Contingent Return.  If the Index Ending Level is less than the Trigger Level, investors will be exposed to the full downside performance of the Index and Royal Bank of Canada will pay less than the full principal amount at maturity, resulting in a loss of principal to investors that is proportionate to the percentage decline in the Index.  Accordingly, you may lose some or all of the principal amount of the Securities. The contingent repayment of principal applies only at maturity.  Any payment on the Securities, including any repayment of principal, is subject to the creditworthiness of Royal Bank of Canada.
Trade Date                                         December 27, 2012
Settlement Date                              December 31, 2012
Final Valuation Date1                  December 24, 2014
Maturity Date1                                  December 31, 2014
1      Subject to postponement in the event of a market disruption event and as described under “General Terms of the Securities — Market Disruption Events” on page PS- 14 in the accompanying product prospectus supplement CROS-1.
NOTICE TO INVESTORS: THE SECURITIES ARE SIGNIFICANTLY RISKIER THAN CONVENTIONAL DEBT INSTRUMENTS. THE ISSUER IS NOT NECESSARILY OBLIGATED TO REPAY THE FULL PRINCIPAL AMOUNT OF THE SECURITIES AT MATURITY, AND THE SECURITIES CAN HAVE DOWNSIDE MARKET RISK SIMILAR TO THE INDEX. THIS MARKET RISK IS IN ADDITION TO THE CREDIT RISK INHERENT IN PURCHASING A DEBT OBLIGATION OF ROYAL BANK OF CANADA.  YOU SHOULD NOT PURCHASE THE SECURITIES IF YOU DO NOT UNDERSTAND OR ARE NOT COMFORTABLE WITH THE SIGNIFICANT RISKS INVOLVED IN INVESTING IN THE SECURITIES.
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED UNDER ‘‘KEY RISKS’’ BEGINNING ON PAGE 5 OF THIS PRICING SUPPLEMENT AND IN "RISK FACTORS" BEGINNING ON PAGE PS-2 OF PRODUCT PROSPECTUS SUPPLEMENT CROS-1 BEFORE PURCHASING ANY SECURITIES.  EVENTS RELATING TO ANY OF THOSE RISKS, OR OTHER RISKS AND UNCERTAINTIES, COULD ADVERSELY AFFECT THE MARKET VALUE OF, AND THE RETURN ON, YOUR SECURITIES.  YOU COULD LOSE SOME OR ALL OF THE PRINCIPAL AMOUNT OF THE SECURITIES.
Security Offering
We are offering Contingent Return Optimization Securities Linked to the EURO STOXX 50® Index.  The return on the principal amount is subject to, and will not exceed, the predetermined Maximum Gain.  The Securities are offered at a minimum investment of 100 Securities at the Price to Public described below.
Underlying Index
Contingent
Return
Maximum Gain
Index Starting Level
Trigger Level
CUSIP
ISIN
EURO STOXX 50® Index (SX5E)
10%
32.20%
2,659.95
1,994.96, which is 75% of the Index Starting Level
78008W636
US78008W6369
See “Additional Information about Royal Bank of Canada and the Securities” in this pricing supplement. The Securities will have the terms specified in the prospectus dated January 28, 2011, the prospectus supplement dated January 28, 2011, product prospectus supplement no. CROS-1, dated December 3, 2012 and this pricing supplement.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Securities or passed upon the accuracy or the adequacy of this pricing supplement or the accompanying prospectus, prospectus supplement and product prospectus supplement.  Any representation to the contrary is a criminal offense.
 
Price to Public(1)
Fees and Commissions(2)
Proceeds to Us
Offering of Securities to Brokerage Accounts
Total
Per Security
Total
Per Security
Total
Per Security
Securities Linked to the EURO STOXX 50® Index
$5,072,550
$10.00
$101,451
$0.20
$4,971,099
$9.80
 
Price to Public(1)
Fees and Commissions(3)
Proceeds to Us
Offering of Securities to Fee-Based Advisory Accounts
Total
Per Security
Total
Per Security
Total
Per Security
Securities Linked to the EURO STOXX 50® Index
$51,020
$10.00
$0.00
$0.00
$51,020
$9.80
(1) The price to the public includes the cost of hedging our obligations under the Securities through one or more of our affiliates, which includes our affiliates’ expected cost of providing such hedge as well as the profit our affiliates expect to realize in consideration for assuming the risks inherent in providing such hedge.  For additional related information, please see the section “Use of Proceeds and Hedging” on page PS-10 of product prospectus supplement CROS-1.
(2) UBS Financial Services Inc., which we refer to as UBS, will receive a commission of $0.20 per $10 principal amount of the Securities.
(3)  With respect to sales to certain fee-based advisory accounts for which UBS is an investment adviser, UBS will act as placement agent at a purchase price of $9.80 per Security and will not receive a sales commission with respect to such sales. See “Supplemental Plan of Distribution” on page 12 of this pricing supplement.
The Securities will not constitute deposits insured under the Canada Deposit Insurance Corporation Act or by the United States Federal Deposit Insurance Corporation or any other Canadian or United States government agency or instrumentality.
 
UBS Financial Services Inc.
RBC Capital Markets, LLC
 

 
 
Additional Information about Royal Bank of Canada and the Securities
You should read this pricing supplement together with the prospectus dated January 28, 2011, as supplemented by the prospectus supplement dated January 28, 2011, relating to our Series E medium-term notes of which these Securities are a part, and the more detailed information contained in product prospectus supplement UBS-CROS-1 dated December 3, 2012.  This pricing supplement, together with the documents listed below, contains the terms of the Securities 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.  You should carefully consider, among other things, the matters set forth in “Risk Factors” in the product prospectus supplement UBS-CROS-1, as the Securities involve risks not associated with conventional debt securities.
 
If the terms of the prospectus, prospectus supplement and product prospectus supplement no. CROS-1 are inconsistent with the terms discussed herein, the terms discussed in this pricing supplement will control.
 
You may access these on the SEC website at www.sec.gov as follows (or if such address has changed, by reviewing our filing for the relevant date on the SEC website):

 
¨
Product prospectus supplement UBS-CROS-1 dated December 3, 2012: 
 
 
¨
Prospectus supplement dated January 28, 2011:
 
 
¨
Prospectus dated January 28, 2011:
 
As used in this pricing supplement, the “Company,” “we,” “us” or “our” refers to Royal Bank of Canada.
 
 
 
 
 
 
 
2

 

Investor Suitability
The Securities may be suitable for you if, among other considerations:
 
¨    You fully understand the risks inherent in an investment in the Securities, including the risk of loss of your entire initial investment.
 
¨    You can tolerate the loss of all or a substantial portion of the principal amount of the Securities and are willing to make an investment that may have similar downside market risk as a hypothetical investment in the Index.
 
¨    You believe the level of the Index will appreciate over the term of the Securities and that the appreciation is unlikely to exceed the Maximum Gain of 32.20%.
 
¨    You understand and accept that your potential return is limited by the Maximum Gain and you are willing to invest in the Securities based on the Maximum Gain of 32.20%.
 
¨    You can tolerate fluctuations in the price of the Securities prior to maturity that may be similar to or exceed the downside fluctuations in the level of the Index.
 
¨    You do not seek current income from your investment and are willing to forgo dividends paid on the Index stocks.
 
¨    You are willing to hold the Securities to maturity, a term of approximately two years, and accept that there may be little or no secondary market for the Securities.
 
¨    You seek an investment with exposure to companies in the Eurozone.
 
¨    You are willing to assume the credit risk of Royal Bank of Canada for all payments under the Securities, and understand that if Royal Bank of Canada defaults on its obligations, you may not receive any amounts due to you, including any repayment of principal.
 
The Securities may not be suitable for you if, among other considerations:
 
¨    You do not fully understand the risks inherent in an investment in the Securities, including the risk of loss of your entire initial investment.
 
¨    You require an investment designed to provide a full return of principal at maturity.
 
¨    You cannot tolerate the loss of all or a substantial portion of the principal amount of the Securities, and you are not willing to make an investment that may have similar downside market risk as a hypothetical investment in the Index.
 
¨    You believe that the level of the Index will decline below the Trigger Level over the term of the Securities, or you believe the level of Index will appreciate over the term of the Securities by a percentage that exceeds the Maximum Gain of 32.20%.
 
¨    You seek an investment that has unlimited return potential without a cap on appreciation.
 
¨    You cannot tolerate fluctuations in the price of the Securities prior to maturity that may be similar to or exceed the downside fluctuations in the level of the Index.
 
¨    You are unwilling to invest in the Securities based on the Maximum Gain of 32.20%.
 
¨    You seek current income from this investment or prefer to receive the dividends paid on the Index stocks.
 
¨    You do not seek an investment with exposure to companies in the Eurozone.
 
¨    You are unable or unwilling to hold the Securities to maturity, a term of approximately two years, or you seek an investment for which there will be an active secondary market.
 
¨    You are not willing to assume the credit risk of Royal Bank of Canada for all payments under the Securities, including any repayment of principal.
 
The suitability considerations identified above are not exhaustive. Whether or not the Securities are a suitable investment for you will depend on your individual circumstances, and you should reach an investment decision only after you and your investment, legal, tax, accounting, and other advisers have carefully considered the suitability of an investment in the Securities in light of your particular circumstances. You should also review carefully the “Key Risks” beginning on page 5 of this pricing supplement and “Risk Factors” in the product prospectus supplement UBS-CROS-1 for risks related to an investment in the Securities.
 
 
3

 
 
Final Terms of the Securities1
Issuer:
 
Royal Bank of Canada
 
Issue Price:
 
$10 per Security for brokerage account holders; $9.80 per Security for advisory account holders (both subject to a minimum purchase of 100 Securities).
 
Principal Amount:
 
$10 per Security.  The payment at maturity will be based on the principal amount.
 
Term:
 
Approximately two years
 
Index:
 
EURO STOXX 50® Index
 
Contingent Return:
 
10%
 
Maximum Gain:
 
32.20%
 
Payment at Maturity
(per $10 Security):
 
If the Index Ending Level is greater than or equal to the Trigger Level: Royal Bank of Canada will pay you:
 
$10 + $10 × [(the greater of: (a) the Contingent Return and (b) the Index Return), subject to the Maximum Gain];
 
If the Index Ending Level is less than the Trigger Level, Royal Bank of Canada will pay you:
 
$10 + ($10 x Index Return)
 
In this scenario, you will lose some or all of the principal amount of the Securities in an amount proportionate to the negative Index Return.
 
Index Return:
 
Index Ending Level – Index Starting Level
Index Starting Level
 
Trigger Level:
 
1,994.96, which is 75% of the Index Starting Level
 
Index Starting Level:
 
2,659.95, which was the Index Closing Level on the Trade Date.
 
Index Ending Level:
 
The Index Closing Level on the Final Valuation Date.
 
                                                    
 
Investment Timeline
 
 
Trade Date:
 
 
The Maximum Gain was set. The Index Starting Level and Trigger Level were determined.
 
   
 
Maturity Date:
 
The Index Ending Level and Index Return are determined.
 
If the Index Ending Level is equal to or greater than the Trigger Level, Royal Bank of Canada will pay you a cash payment per $10.00 Security that provides you with your principal amount plus a return equal to the greater of the Contingent Return and the Index Return, subject to the Maximum Gain. Your payment at maturity per $10.00 Security will be equal to:
 
$10 + $10 × [(the greater of: (a) the Contingent Return and (b) the Index Return), subject to the Maximum Gain];
 
If the Index Ending Level is less than the Trigger Level, Royal Bank of Canada will pay you a cash payment that is less than the principal amount of $10.00 per Security, resulting in a loss of principal that is proportionate to the percentage decline in the Index, and equal to:
 
$10.00 + ($10.00 x Index Return)
 
In this scenario, you will lose some or all of the principal amount of the Securities in an amount proportionate to the negative Index Return.
 
 
 
INVESTING IN THE SECURITIES INVOLVES SIGNIFICANT RISKS. YOU MAY LOSE SOME OR ALL OF THE PRINCIPAL AMOUNT.  ANY PAYMENT ON THE SECURITIES, INCLUDING ANY REPAYMENT OF PRINCIPAL, IS SUBJECT TO THE CREDITWORTHINESS OF ROYAL BANK OF CANADA.  IF ROYAL BANK OF CANADA WERE TO DEFAULT ON ITS PAYMENT OBLIGATIONS, YOU MAY NOT RECEIVE ANY AMOUNTS OWED TO YOU UNDER THE SECURITIES AND YOU COULD LOSE YOUR ENTIRE INVESTMENT.
 
 
4

 
 
Key Risks
An investment in the Securities involves significant risks. Investing in the Securities is not equivalent to investing directly in any of the component securities of the Index. These risks are explained in more detail in the “Risk Factors” section of the accompanying product prospectus supplement UBS-CROS-1.  We also urge you to consult your investment, legal, tax, accounting and other advisors before investing in the Securities.
¨
Your Investment in the Securities May Result in a Loss of Principal – The Securities differ from ordinary debt securities in that Royal Bank of Canada is not necessarily obligated to repay the full principal amount of the Securities at maturity. The return on the Securities at maturity is linked to the performance of the Index and will depend on whether, and the extent to which, the Index Return is positive or negative. If the Index Return is negative and the Index Ending Level is less than the Trigger Level, you will be fully exposed to any negative Index Return and Royal Bank of Canada will pay you less than your principal amount at maturity, resulting in a loss of principal that is proportionate to the percentage decline in the Index.  Accordingly, you could lose the entire principal amount of the Securities.
 
¨
The Contingent Return Applies Only if You Hold the Securities to Maturity – You should be willing to hold the Securities to maturity.  If you are able to sell your Securities in the secondary market, the return you realize will likely not reflect the full effect of the Contingent Return or the Securities themselves, and may be less than the return of the Index at the time of sale, even if that return is positive and less than the Maximum Gain.
 
¨
The Contingent Repayment of Principal Applies Only if You Hold the Securities to Maturity - The contingent repayment of principal is only available at maturity.  If you are able to sell your Securities prior to maturity in the secondary market, you may have to sell them at a loss, even if the level of the Index is above the Trigger Level at the time of sale.
 
¨
The Appreciation Potential of the Securities Is Limited by the Maximum Gain – If the Index Return is positive, Royal Bank of Canada will pay you $10 per Security at maturity plus an additional return that will not exceed the Maximum Gain, regardless of the appreciation in the Index, which may be significant.  Therefore, your return on the Securities may be less than your return would be on a hypothetical direct investment in the Index or in the component stocks of the Index.
 
¨
No Interest Payments – Royal Bank of Canada will not pay any interest with respect to the Securities.
 
¨
Credit Risk of Royal Bank of Canada – The Securities are unsubordinated, unsecured debt obligations of the issuer, Royal Bank of Canada, and are not, either directly or indirectly, an obligation of any third party.  Any payment to be made on the Securities, including any repayment of principal at maturity, depends on the ability of Royal Bank of Canada to satisfy its obligations as they come due.  As a result, the actual and perceived creditworthiness of Royal Bank of Canada may affect the market value of the Securities and, in the event Royal Bank of Canada were to default on its obligations, you may not receive any amounts owed to you under the terms of the Securities and you could lose your entire initial investment.
 
¨
Your Return on the Securities May Be Lower than the Return on a Conventional Debt Security of Comparable Maturity – The return that you will receive on the Securities, 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 could earn if you bought a conventional senior interest bearing debt security of Royal Bank of Canada with the same maturity date or if you were able to invest directly in the Index or the securities included in the Index.  Your investment may not reflect the full opportunity cost to you when you take into account factors that affect the time value of money.
 
¨
Certain Built-In Costs Are Likely to Adversely Affect the Value of the Securities Prior to Maturity – While the payment at maturity for the Securities is based on the full principal amount of the Securities, the original issue price of the Securities includes the estimated cost of hedging our obligations under the Securities through one or more of our affiliates and, for brokerage account holders, the issue price also includes the agents’ commission. As a result, the price, if any, at which Royal Bank of Canada or our affiliates will be willing to purchase the Securities from you prior to maturity in secondary market transactions, if at all, will likely be lower than the original issue price, and any sale prior to the maturity date could result in a substantial loss to you. The Securities are not designed to be short-term trading instruments. Accordingly, you should be willing and able to hold your Securities to maturity.
 
¨
Lack of Liquidity – The Securities will not be listed on any securities exchange.  RBC Capital Markets, LLC (“RBCCM”) intends to offer to purchase the Securities in the secondary market, but is not required to do so.  Even if there is a secondary market, it may not provide enough liquidity to allow you to trade or sell the Securities easily.  Because other dealers are not likely to make a secondary market for the Securities, the price at which you may be able to trade your Securities is likely to depend on the price, if any, at which RBCCM is willing to buy the Securities.
 
¨
The Index Return Will Not Be Adjusted for Changes in Exchange Rates Relative to the U.S. Dollar Even Though the Index Components are Traded in a Foreign Currency and the Securities are Denominated in U.S. Dollars. The value of your Securities will not be adjusted for exchange rate fluctuations between the U.S. dollar and the currencies in which the Index Components are based. Therefore, if the applicable currencies appreciate or depreciate relative to the U.S. dollar over the term of the Securities, you will not receive any additional payment or incur any reduction in your return, if any, at maturity.
 
¨
Non-U.S. Securities Markets Risks. Because foreign companies or foreign equity securities held by the Index may be publicly traded in the applicable foreign countries and are denominated in currencies other than U.S. dollars, investments in the Securities involve particular risks. For example, the foreign securities markets may be more volatile than the U.S. securities markets, and market developments may affect these markets differently from the United States or other securities markets. Direct or indirect government intervention to stabilize the securities markets outside the United States, 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 United States reporting companies.
 
Securities prices generally are subject to political, economic, financial and social factors that apply to the markets in which they trade and, to a lesser extent, foreign markets. Securities prices outside the United States are subject to political, economic, financial and social factors that apply in foreign countries. These factors, which could negatively affect foreign securities markets, include the possibility of changes in a foreign government’s economic and fiscal policies, the possible imposition of, or changes in, currency exchange laws or other laws or restrictions applicable to foreign companies or investments in foreign equity securities and the possibility of fluctuations in the rate of exchange between currencies. Moreover, foreign economies may differ favorably or unfavorably from the United States economy in important respects such as growth of gross national product, rate of inflation, capital reinvestment, resources and self-sufficiency.
 
Specifically, the stocks included in the Index are issued by companies located within the Eurozone, which is and has been undergoing severe financial stress, and the political, legal and regulatory ramifications are impossible to predict. Changes within the Eurozone could have a material adverse effect on the performance of the Index and, consequently, on the value of the Securities.
 
 
5

 
 
¨
No Dividend Payments or Voting Rights – Investing in the Securities is not equivalent to investing directly in any of the component securities of the Index. As a holder of the Securities, you will not have voting rights or rights to receive cash dividends or other distributions or other rights that holders of the equity securities underlying the Index would have.
 
¨
Changes Affecting the Index – The policies of STOXX Limited (“STOXX” or the “Index sponsor”) concerning additions, deletions and substitutions of the stocks included in the Index and the manner in which the Index sponsor takes account of certain changes affecting those stocks included in the Index may adversely affect the level of the Index.  The policies of the Index sponsor with respect to the calculation of the Index could also adversely affect the level of the Index.  The Index sponsor may discontinue or suspend calculation or dissemination of the Index and has no obligation to consider your interests in the Securities when taking any action regarding the Index.  Any such actions could have an adverse effect the value of the Securities.
 
¨
Potential Conflicts – We and our affiliates play a variety of roles in connection with the issuance of the Securities, including hedging our obligations under the Securities.  In performing these duties, the economic interests of the calculation agent and other affiliates of ours are potentially adverse to your interests as an investor in the Securities.
 
¨
Potentially Inconsistent Research, Opinions or Recommendations by RBCCM, UBS or Their Affiliates – RBCCM, UBS or their affiliates may publish research, express opinions or provide recommendations that are inconsistent with investing in or holding the Securities, and which may be revised at any time. Any such research, opinions or recommendations could affect the value of the Index or the equity securities included in the Index, and therefore, the market value of the Securities.
 
¨
Uncertain Tax Treatment – Significant aspects of the tax treatment of the Securities are uncertain.  You should consult your tax adviser about your tax situation.
 
¨
Potential Royal Bank of Canada and UBS Impact on Price – Trading or other transactions by Royal Bank of Canada, UBS and our respective affiliates in the equity securities included in the Index or in futures, options, exchange-traded funds or other derivative products on the equity securities included in the Index may adversely affect the market value of the equity securities underlying the Index, the level of the Index and therefore, the market value of the Securities.
 
¨
Many Economic and Market Factors Will Impact the Value of the Securities – In addition to the level of the Index on any trading day, the value of the Securities will be affected by a number of economic and market factors that may either offset or magnify each other, including:
 
 
¨
the actual or expected volatility of the Index;
 
 
¨
the time remaining to maturity of the Securities;
 
 
¨
the dividend rate on the equity securities included in the Index;
 
 
¨
interest and yield rates in the market generally, as well as in each of the markets of the equity securities included in the Index;
 
 
¨
a variety of economic, financial, political, regulatory or judicial events; and
 
 
¨
our creditworthiness, including actual or anticipated downgrades in our credit ratings.
 
 
6

 

Hypothetical Examples and Return Table at Maturity
The following table and hypothetical examples below illustrate the payment at maturity per $10.00 Security for a hypothetical range of Index Returns from -100.00% to +100.00% and reflects the Contingent Return of 10%, the Index Starting Level of 2,659.95, the Trigger Level of 1,994.96, and the Maximum Gain of 32.20%. The hypothetical Payment at Maturity examples set forth below are for illustrative purposes only and may not be the actual returns applicable to a purchaser of the Securities. The actual payment at maturity will be determined based on the Index Ending Level on the Final Valuation Date. You should consider carefully whether the Securities are suitable to your investment goals. The numbers appearing in the table below have been rounded for ease of analysis.
 
Example 1 – On the Final Valuation Date, the Index closes 40% above the Index Starting Level. Because the Index Ending Level is greater than the Trigger Level, Royal Bank of Canada will pay you at maturity an amount based upon the greater of the Contingent Return of 10% and the Index Return, subject to the Maximum Gain.  Since the Index Return of 40% is greater than the Maximum Gain of 32.20%, the payment at maturity will be $13.22 per $10 principal amount Security.
 
Example 2 – On the Final Valuation Date, the Index closes 20% above the Index Starting Level. Because the Index Ending Level is greater than the Trigger Level, Royal Bank of Canada will pay you at maturity an amount based upon the greater of the Contingent Return of 10% and the Index Return, subject to the Maximum Gain.  Since the Index Return of 20% is greater than the Contingent Return but less than the Maximum Gain, the payment at maturity per $10 principal amount Security will be calculated as follows:
 
$10 + ($10 x 20%) = $10 + $2 = $12.00
 
Example 3 – On the Final Valuation Date, the Index closes 2% above the Index Starting Level. Because the Index Ending Level is greater than the Trigger Level, Royal Bank of Canada will pay you an amount based upon the greater of the Contingent Return of 10% and the Index Return, subject to the Maximum Gain.  Since the Index Return of 2% is less than the Contingent Return, the payment at maturity per $10 principal amount Security will be calculated as follows:
 
$10 + ($10 x 10%) = $10 + $1.00 = $11.00
 
Example 4 – On the Final Valuation Date, the Index closes 10% below the Index Starting Level. Because the Index Ending Level is greater than the Trigger Level, Royal Bank of Canada will pay you at maturity an amount based upon the greater of the Contingent Return of 10% and the Index Return, subject to the Maximum Gain. Since the Index Return of -10% is less than the Contingent Return, the payment at maturity per $10 principal amount Security will be calculated as follows:
 
$10 + ($10 x 10%) = $10 + $1.00 = $11.00
 
Example 5 – On the Final Valuation Date, the Index closes 40% below the Index Starting Level. Because the Index Ending Level is less than the Trigger Level, you will be fully exposed to the negative Index Return, and Royal Bank of Canada will pay you at maturity a cash payment of $6 per $10 principal amount Security (a 40% loss on the principal amount), calculated as follows:
 
$10 + ($10 x -40%) = $10 - $4 = $6
 
Hypothetical
Index Ending Level
Hypothetical Index
Return1
Hypothetical Payment
at Maturity ($)
Hypothetical Total
Return on Securities per
 $10.00 Issue Price (%)2
Hypothetical Total Return
on Securities per $9.80
Issue Price (%)3
5,319.90
100.00%
 
$13.22
 
32.20%
 
34.90%
 
4,654.91
75.00%
 
$13.22
 
32.20%
 
34.90%
 
3,989.93
50.00%
 
$13.22
 
32.20%
 
34.90%
 
3,723.93
40.00%
 
$13.22
 
32.20%
 
34.90%
 
3,516.45
32.20%
 
$13.22
 
32.20%
 
34.90%
 
3,457.94
30.00%
 
$13.00
 
30.00%
 
32.65%
 
3,191.94
20.00%
 
$12.00
 
20.00%
 
22.45%
 
2,925.95
10.00%
 
$11.00
 
10.00%
 
12.24%
 
2,792.95
5.00%
 
$11.00
 
10.00%
 
12.24%
 
2,739.75
3.00%
 
$11.00
 
10.00%
 
12.24%
 
2,659.95
0.00%
 
$11.00
 
10.00%
 
12.24%
 
2,526.95
-5.00%
 
$11.00
 
10.00%
 
12.24%
 
2,393.96
-10.00%
 
$11.00
 
10.00%
 
12.24%
 
2,127.96
-20.00%
 
$11.00
 
10.00%
 
12.24%
 
1,994.96
-25.00%
 
$11.00
 
10.00%
 
12.24%
 
1,861.97
-30.00%
 
$7.00
 
-30.00%
 
-28.57%
 
1,728.97
-35.00%
 
$6.50
 
-35.00%
 
33.67%
 
1,595.97
-40.00%
 
$6.00
 
-40.00%
 
-38.78%
 
1,329.98
-50.00%
 
$5.00
 
-50.00%
 
-48.98%
 
664.99
-75.00%
 
$2.50
 
-75.00%
 
-74.49%
 
0.00
-100.00%
 
$0.00
 
-100.00%
 
-100.00%
 
1 The Index Return excludes any cash dividend payments.
2 The “total return” is the number, expressed as a percentage, that results from comparing the payment at maturity per $10 principal amount Security to the purchase price of $10 per Security for all brokerage account holders.
3 The “total return” is the number, expressed as a percentage, that results from comparing the payment at maturity per $10 principal amount Security to the purchase price of $9.80 per Security, which is the purchase price for investors in advisory accounts. See “Supplemental Plan of Distribution” on page 12 of this pricing supplement.

 
7

 
 
What Are the Tax Consequences of the Securities?
U.S. Federal Income Tax Consequences
 
Set forth below is a summary of the material U.S. federal income tax consequences relating to an investment in the Securities.  The following summary is not complete and is qualified in its entirety by the discussion under the section entitled “Supplemental Discussion of U.S. Federal Income Tax Consequences” in the product prospectus supplement, the section entitled “Certain Income Tax Consequences” in the accompanying prospectus supplement, and the section entitled “Tax Consequences” in the accompanying prospectus, which you should carefully review prior to investing in the Securities.
 
In the opinion of our counsel, Morrison & Foerster LLP, it would generally be reasonable to treat a note with terms described in this pricing supplement as a pre-paid cash-settled derivative contract in respect of the Index for U.S. federal income tax purposes, and the terms of the Securities require a holder and us (in the absence of a change in law or an administrative or judicial ruling to the contrary) to treat the Securities for all tax purposes in accordance with such characterization.  If the Securities are so treated, a holder should generally recognize capital gain or loss upon the sale or maturity of the Securities in an amount equal to the difference between the amount a holder receives at such time and the holder’s tax basis in the Securities.  Alternative tax treatments are also possible and the Internal Revenue Service might assert that a treatment other than that described above is more appropriate.  In addition, the Internal Revenue Service has released a notice that may affect the taxation of holders of the Securities.  According to the notice, the Internal Revenue Service and the Treasury Department are actively considering whether the holder of an instrument such as the Securities should be required to accrue ordinary income on a current basis, and they are seeking taxpayer comments on the subject. It is not possible to determine what guidance they will ultimately issue, if any.  It is possible, however, that under such guidance, holders of the Securities will ultimately be required to accrue income currently and this could be applied on a retroactive basis.  The Internal Revenue Service and the Treasury Department are also considering other relevant issues, including whether additional gain or loss from such instruments should be treated as ordinary or capital and whether the special "constructive ownership rules" of Section 1260 of the Internal Revenue Code might be applied to such instruments.  Holders are urged to consult their tax advisors concerning the significance, and the potential impact, of the above considerations.
 
Individual holders that own “specified foreign financial assets” may be required to include certain information with respect to such assets with their U.S. federal income tax return. You are urged to consult your own tax advisor regarding such requirements with respect to the Securities.
 
A “dividend equivalent” payment is treated as a dividend from sources within the U.S. and such payments generally would be subject to a 30% U.S. withholding tax if paid to a Non-U.S. Holder (as defined in the product prospectus supplement).  Under proposed U.S. Treasury Department regulations, certain payments that are contingent upon or determined by reference to U.S. source dividends, including payments reflecting adjustments for extraordinary dividends, with respect to equity-linked instruments, including the Securities, may be treated as dividend equivalents.  If enacted in their current form, the regulations may impose a withholding tax on payments made on the Securities on or after January 1, 2014 that are treated as dividend equivalents.  In that case, we (or the applicable paying agent) would be entitled to withhold taxes without being required to pay any additional amounts with respect to amounts so withheld.  Further, Non-U.S. Holders may be required to provide certifications prior to, or upon the sale, redemption or maturity of the Securities in order to minimize or avoid U.S. withholding taxes.
 
Please see the discussion under the section entitled “Supplemental Discussion of U.S. Federal Income Tax Consequences” on page PS-20 in the accompanying product prospectus supplement for a further discussion of the U.S. federal income tax consequences of an investment in the Notes.
 
Canadian Federal Income Tax Consequences
 
In the opinion of Norton Rose Canada LLP, our Canadian tax counsel, interest on a Security (including amounts deemed for purposes of the Income Tax Act (Canada) (“ITA”) to be interest) that is paid or credited, or deemed for purposes of the ITA to be paid or credited, to a Non-resident Holder (as that term is defined in the section entitled “Tax Consequences - Canadian Taxation” in the accompanying prospectus) will not be subject to Canadian non-resident withholding tax provided the Index is not a proxy for the profit of Royal Bank of Canada, as described in and subject to the qualifications set out in the section entitled “Tax consequences – Canadian Taxation” in the accompanying prospectus.
 
For a further discussion of the material Canadian federal income tax consequences relating to an investment in the Securities, please see the section entitled “Supplemental Discussion of Canadian Tax Consequences” in the product prospectus supplement UBS-CROS-1, the section entitled “Certain Income Tax Consequences” in the accompanying prospectus supplement, and the section entitled “Tax Consequences” in the accompanying prospectus, which you should carefully review prior to investing in the Securities.
 
 
8

 
 
The EURO STOXX 50® Index
We have derived all information contained in this pricing supplement regarding the Index, including, without limitation, its make up, method of calculation, and changes in its components, from publicly available sources. The information reflects the policies of, and is subject to change by, the Index sponsor. The Index sponsor, which owns the copyright and all other rights to the Index, has no obligation to continue to publish, and may discontinue publication of, the Index. The consequences of the Index sponsor discontinuing publication of the Index are discussed in the section entitled “General Terms of the Securities—Discontinuation of the Index; Alteration of Method of Calculation” in the product prospectus supplement CROS-1. None of us, UBS or RBCCM accepts any responsibility for the calculation, maintenance or publication of the Index or any successor index.
 
The Index was created by STOXX, a joint venture between Deutsche Börse AG and SIX Group AG.  Publication of the Index began in February 1998, based on an initial Index level of 1,000 at December 31, 1991. On March 1, 2010, STOXX announced the removal of the “Dow Jones” prefix from all of its indices, including the Index.
 
Composition and Maintenance. The Index is composed of 50 component stocks of market sector leaders from within the 19 EURO STOXX® Supersector indices, which represent the Eurozone portion of the STOXX Europe 600® Supersector indices.  Set forth below are the country weightings and market sector weightings of the securities included in the Index as of November 30, 2012:
   
Country Weightings
Sector Weightings
   
France
35.5%
Banks
15.0%
       
Germany
32.2%
Chemicals
9.8%
       
Spain
12.0%
Oil & Gas
9.6%
       
Italy
8.0%
Insurance
8.8%
       
Netherlands
7.1%
Food & Beverage
8.2%
       
Belgium
3.3%
Industrial Goods & Services
7.5%
       
Ireland
0.7%
Utilities
6.6%
       
Luxembourg
0.7%
Health Care
6.4%
       
Finland
0.6%
Technology
5.4%
       
   
Automobiles & Parts
5.4%
       
   
Telecommunications
5.3%
       
   
Personal & Household Goods
4.0%
       
   
Construction & Materials
2.7%
       
   
Retail
2.2%
       
   
Media
1.4%
       
   
Real Estate
1.1%
       
   
Basic Resources
0.7%
 
The composition of the Index is reviewed annually, based on the closing stock data on the last trading day in August.  The component stocks are announced on the first trading day in September.  Changes to the component stocks are implemented on the third Friday in September and are effective the following trading day.  Changes in the composition of the Index are made to ensure that the Index includes the 50 market sector leaders from within the Index.
 
The free float factors for each component stock used to calculate the Index, as described below, are reviewed, calculated, and implemented on a quarterly basis and are fixed until the next quarterly review.
 
The Index is also reviewed on an ongoing basis.  Corporate actions (including initial public offerings, mergers and takeovers, spin-offs, delistings, and bankruptcy) that affect the Index composition are immediately reviewed.  Any changes are announced, implemented, and effective in line with the type of corporate action and the magnitude of the effect.
 
Calculation of the Index. The Index is calculated with the “Laspeyres formula,” which measures the aggregate price changes in the component stocks against a fixed base quantity weight.  The formula for calculating the Index value can be expressed as follows:
 
Index =
Free float market capitalization of the index
x 1,000
Adjusted base date market capitalization of the index
 
The “free float market capitalization of the Index” is equal to the sum of the products of the closing price, market capitalization, and free float factor for each component stock as of the time the Index is being calculated.
 
The Index is also subject to a divisor, which is adjusted to maintain the continuity of the Index values across changes due to corporate actions, such as the deletion and addition of stocks, the substitution of stocks, stock dividends, and stock splits.

 
9

 
 
License Agreement
 
We have entered into a non-exclusive license agreement with STOXX providing for the license to us and certain of our affiliated or subsidiary companies, in exchange for a fee, of the right to use indices owned and published by STOXX (including the Index) in connection with certain securities, including the Securities offered hereby.
 
The license agreement between us and STOXX requires that the following language be stated in this document:
 
STOXX has no relationship to us, other than the licensing of the Index and the related trademarks for use in connection with the Securities.  STOXX does not:
 
 
·
sponsor, endorse, sell, or promote the Securities;
 
 
·
recommend that any person invest in the Securities offered hereby or any other securities;
 
 
·
have any responsibility or liability for or make any decisions about the timing, amount, or pricing of the Securities;
 
 
·
have any responsibility or liability for the administration, management, or marketing of the Securities; or
 
 
·
consider the needs of the Securities or the holders of the Securities in determining, composing, or calculating the Index, or have any obligation to do so.
 
STOXX will not have any liability in connection with the Securities.  Specifically:
 
 
·
STOXX does not make any warranty, express or implied, and disclaims any and all warranty concerning:
 
 
·
the results to be obtained by the Securities, the holders of the Securities or any other person in connection with the use of the Index and the data included in the Index;
 
 
·
the accuracy or completeness of the Index and its data;
 
 
·
the merchantability and the fitness for a particular purpose or use of the Index and its data;
 
 
·
STOXX will have no liability for any errors, omissions, or interruptions in the Index or its data; and
 
 
·
Under no circumstances will STOXX be liable for any lost profits or indirect, punitive, special, or consequential damages or losses, even if STOXX knows that they might occur.
 
The licensing agreement between us and STOXX is solely for their benefit and our benefit, and not for the benefit of the holders of the Securities or any other third parties.
 
 
 
 
 
 
 
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Historical Information
 
The following table sets forth the quarterly intra-day high, intra-day low and period-end closing levels of the Index, as reported by Bloomberg Financial Markets.  The closing level of the Index on December 27, 2012 was 2,659.95. The historical values of the Index should not be taken as an indication of future performance. We cannot give you assurance that the performance of the Index will result in the return of any of your initial investment.

Quarter Begin
Quarter End
Quarterly Intra-Day 
High
Quarterly Intra-Day
Low
Quarterly
Period-End Close
1/1/2008
3/31/2008
4,411.59
3,417.25
3,628.06
4/1/2008
6/30/2008
3,900.30
3,298.05
3,352.81
7/1/2008
9/30/2008
3,456.81
2,924.13
3,038.20
10/1/2008
12/31/2008
3,130.25
2,128.29
2,447.62
1/1/2009
3/31/2009
2,608.15
1,765.49
2,071.13
4/1/2009
6/30/2009
2,549.32
2,021.53
2,401.69
7/1/2009
9/30/2009
2,915.71
2,258.60
2,872.63
10/1/2009
12/31/2009
3,001.56
2,693.80
2,964.96
1/1/2010
3/31/2010
3,044.37
2,617.77
2,931.16
4/1/2010
6/30/2010
3,027.14
2,448.10
2,573.32
7/1/2010
9/30/2010
2,849.45
2,502.50
2,747.90
10/1/2010
12/31/2010
2,902.80
2,635.08
2,792.82
1/1/2011
3/31/2011
3,077.24
2,717.74
2,910.91
4/1/2011
6/30/2011
3,029.68
2,692.95
2,848.53
7/1/2011
9/30/2011
2,887.30
1,935.89
2,179.66
10/1/2011
12/31/2011
2,506.22
2,054.98
2,316.55
1/1/2012
3/31/2012
2,611.42
2,279.73
2,477.28
4/1/2012
6/30/2012
2,509.93
2,050.16
2,264.72
7/1/2012
9/30/2012
2,604.77
2,142.46
2,454.26
10/1/2012
12/27/2012*
2,668.23
2,427.32
2,659.95
 
 
*
As of the date of this pricing supplement, available information for the fourth calendar quarter of 2012 includes data for the period from October 1, 2012 through December 27, 2012. Accordingly, the “Quarterly Intra-Day High,” “Quarterly Intra-Day Low” and “Quarterly Period-End Close” data indicated are for this shortened period only and do not reflect complete data for the fourth calendar quarter of 2012.
 
The graph below illustrates the performance of the Index from December 27, 2007 to December 27, 2012, based on the initial level of 2,659.95, which was the closing level of the Index on December 27, 2012.
 
HISTORIC PERFORMANCE IS NOT AN INDICATION OF FUTURE PERFORMANCE
Source: Bloomberg L.P.  We make no representation or warranty as to the accuracy or completeness of information obtained from Bloomberg Financial Markets.
 
 
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Supplemental Plan of Distribution
We have agreed to indemnify UBS and RBCCM against liabilities under the Securities Act of 1933, as amended, or to contribute payments that UBS and RBCCM may be required to make relating to these liabilities as described in the prospectus supplement and the prospectus. We have agreed that UBS may sell all or a part of the Securities that it will purchase from us to its affiliates at the price indicated on the cover of this pricing supplement.
 
The price to the public for all purchases of Securities in brokerage accounts is $10.00 per Security. UBS may allow a concession not in excess of the underwriting discount set forth on the cover of this pricing supplement to its affiliates for distribution of the Securities to such brokerage accounts. With respect to sales to certain fee-based advisory accounts for which UBS is an investment adviser, UBS will act as placement agent at a purchase price of $9.80 per Security and will not receive a sales commission with respect to such sales.
 
Subject to regulatory constraints and market conditions, RBCCM intends to offer to purchase the Securities in the secondary market, but it is not required to do so.
 
We or our affiliate may enter into swap agreements or related hedge transactions with one of our other affiliates or unaffiliated counterparties in connection with the sale of the Securities and RBCCM and/or an affiliate may earn additional income as a result of payments pursuant to the swap or related hedge transactions.  See “Use of Proceeds and Hedging” beginning on page PS-10 of the accompanying product prospectus supplement no. UBS-CROS-1.
Terms Incorporated in Master Note
The terms appearing above und er the caption “Final Terms of the Securities” and the provisions in the accompanying product prospectus supplement no. UBS-CROS-1 dated December 3, 2013 under the caption “General Terms of the Securities”, are incorporated into the master note issued to DTC, the registered holder of the Securities.
Validity of the Securities
In the opinion of Norton Rose Canada LLP, the issue and sale of the Securities has been duly authorized by all necessary corporate action of the Bank in conformity with the Indenture, and when the Securities have been duly executed, authenticated and issued in accordance with the Indenture, the Securities will be validly issued and, to the extent validity of the Securities is a matter governed by the laws of the Province of Ontario or Québec, or the laws of Canada applicable therein, and will be valid obligations of the Bank, subject to applicable bankruptcy, insolvency and other laws of general application affecting creditors’ rights, equitable principles, and subject to limitations as to the currency in which judgments in Canada may be rendered, as prescribed by the Currency Act (Canada). This opinion is given as of the date hereof and is limited to the laws of the Provinces of Ontario and Quebec and the federal laws of Canada applicable thereto. In addition, this opinion is subject to customary assumptions about the Trustee’s authorization, execution and delivery of the Indenture and the genuineness of signatures and certain factual matters, all as stated in the letter of such counsel dated March 6, 2012, which has been filed as Exhibit 5.1 to Royal Bank’s Form 6-K filed with the SEC on March 6, 2012.
 
In the opinion of Morrison & Foerster LLP, when the Securities have been duly completed in accordance with the Indenture and issued and sold as contemplated by the prospectus supplement and the prospectus, the Securities will be valid, binding and enforceable obligations of Royal Bank, entitled to the benefits of the Indenture, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, concepts of reasonableness and equitable principles of general applicability (including, without limitation, concepts of good faith, fair dealing and the lack of bad faith). This opinion is given as of the date hereof and is limited to the laws of the State of New York. This opinion is subject to customary assumptions about the Trustee’s authorization, execution and delivery of the Indenture and the genuineness of signatures and to such counsel’s reliance on the Bank and other sources as to certain factual matters, all as stated in the legal opinion dated March 6, 2012, which has been filed as Exhibit 5.2 to the Bank’s Form 6-K dated March 6, 2012.

 
12