Principal Protected ROC Series II Note
FundSERV Code: JHN 304
The Bank of Montreal Faircourt Principal Protected R.O.C. Deposit Notes, Series 2 (the Deposit Notes ) issued by Bank of Montreal will mature on or about December 15, 2014 ( Maturity ). The Deposit Notes are a principal protected product that endeavours to replicate an exposure of up to two times (200%) the monthly distributions and capital appreciation of the Series A units of the Faircourt Pooled Monthly High Income Fund (the Fund ) that could have otherwise been purchased with the net proceeds of the offering of the Deposit Notes.
Within 10 business days of the end of each month prior to Maturity, commencing December, 2005, Bank of Montreal will repay to the holders of Deposit Notes (each, a Holder ) a portion of the principal of the Deposit Notes. The amount of principal repaid each month to a Holder will be equal to such Holder s pro rata share of 75% of all distributions, if any, received on the Equity Portfolio component of the Basket and not yet paid to the Holders or notionally reinvested in the Basket. An amount equal to 25% of all such distributions will be notionally reinvested in the Basket.
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 (as hereinafter defined). 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 on the Equity Portfolio component of the Basket. If a Deposit Note is held to Maturity, the Holder will receive the Payment at Maturity calculated in accordance with the Maturity Payment Formula.