FundSERV Code: JHN 302
The Faircourt Principal Protected R.O.C. Deposit Notes, Series 1 (the “Deposit Notes”) issued by Bank of Montreal will mature on or about August 5, 2014 (“Maturity”). The Deposit Notes have been developed to provide investors with a principal protected product that provides up to 200% of exposure to the distributions and capital appreciation of a portfolio of income trust and income fund units that could have otherwise been purchased with the net proceeds of the offering of the Deposit Notes.
Each month prior to Maturity commencing in September, 2005, a portion of the Initial Deposit Amount for each Deposit Note will be repaid to each Holder (each a “Deposit Repayment Amount”). The amount of the Deposit Repayment Amount each month will be equal to the Holder’s pro rata share of 75% of the Distributions, if any, made on the Units and not previously distributed to Holders or notionally reinvested in the Basket. The remaining 25% of such Distributions made on the Units comprising the Basket will be notionally reinvested in the Basket at the end of the month.
Over the term of each Deposit Note held to Maturity, Bank of Montreal will repay to each Holder at least the amount deposited of $100 per Deposit Note. This repayment will be made up of the monthly repayments of principal described above plus a portion of the Payment at Maturity calculated in accordance with the Maturity Payment Formula . The amount, if any, which a Holder receives at Maturity in excess of the unpaid principal balance of the Deposit Note will depend upon the performance of the Basket, including the amount of distributions made by the Units in the Income Trust Portfolio.