RBC to price direct investment notes linked to KBSH 2008 Top 20 Resource Portfolio

By Angela McDaniels

Tacoma, Wash., Sept. 29 - Royal Bank of Canada plans to price 0% direct investment notes due Oct. 30, 2009 linked to the KBSH 2008 Top 20 Resource Portfolio, according to a 424B5 filing with the Securities and Exchange Commission.

The equally weighted portfolio includes the common stocks or American Depositary Shares of Agnico-Eagle Mines Ltd., Agrium Inc., Apache Corp., BHP Billiton Ltd., Canadian Natural Resources Ltd., Chesapeake Energy Corp., Companhia Vale do Rio Doce SA, Devon Energy Corp., EnCana Corp., Exxon Mobil Corp., Goldcorp, Inc., Kinross Gold Corp., Nexen Inc., Petroleo Brasileiro SA, Peabody Energy Corp., Potash Corp. of Saskatchewan, Rio Tinto plc, Suncor Energy, Inc., Transocean Inc. and Yamana Gold Inc.

The portfolio components were selected by KBSH Capital Management Inc. - a subsidiary of Toronto-based CI Financial Income Fund that researches and manages investments in Canadian, U.S., European and Pacific Basin markets - from a universe of common equity securities that are listed on the New York Stock Exchange, classified under either the materials or energy industry sectors and have a minimum market capitalization of $1 billion.

This universe of 225 securities was reduced to 20 stocks through the application of a quantitative model, which looked at incremental return on invested capital, free cash flow growth, financial strength, earnings purity and potential for volumetric growth over the next three to five years; the franchise quality filter, which considered barriers to entry, management strength, the balance sheet and margin stability, among other factors; the valuation filter, which considered price/earnings, price/cash flow, price/book and KBSH discounted cash flow valuation; and the fundamental equity analysis, a valuation model based on discounted cash flow.

The payout at maturity will be 97% of par plus the sum of the basket return and the weighted dividends of the basket stocks.

The notes are expected to price on Oct. 28 and settle on Oct. 31.

RBC Capital Markets Corp. will be the underwriter.

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