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Bank of Montreal Advantage Y.I.E.L.D.® Five Year Protected Deposit Notes, Series 15
5 Year Term Potential 7.00% Annual Interest 100% Principal Protected Payments if held to Maturity INVESTMENT HIGHLIGHTS REFERENCE PORTFOLIO
Term to Maturity The Reference Portfolio will initially consist of the common shares of 10 5 years issuers. While the securities in the Reference Portfolio had an average dividend Annual Income Potential or distribution yield of 3.50% and an average market capitalization of $23.48 billion CAD as of October 11, 2011, investors in the Deposit Notes Annual interest ranging from 0.0% to 7.00% based on the price must be prepared to waive the aggregate dividend or distribution yield performance of a portfolio of securities of 10 Canadian issuers. provided by the common shares of the issuers, representing The Annual Interest is determined each year on the valuation date and approximately 18.77% over the 5-year term of the Deposit Notes, is equal to the average price return of the portfolio, measured from the assuming the average dividend or distribution yield on such common date of issuance, where any positive performance of each security is shares remains constant at 3.50% each year and assuming dividends deemed to be 7.00% for the purpose of the Interest Rate Formula* and distributions are reinvested in such common shares. If the price performance of a security in the Reference Portfolio measured from the date of issuance to the applicable valuation date is The following provides an industry sector breakdown of the Reference zero or negative, the actual price performance of the security, subject to a Portfolio as well as information on each security, including the TSX ticker lower limit of negative -15%, is used for the purpose of the Interest Rate symbol and the indicated dividend or distribution yield and market Formula. capitalization as at October 12, 2011 (Source: Bloomberg). The information in the following table is not intended to be, nor should it be construed to be, an indication as to the future dividend or distribution 100% principal guaranteed by BMO as issuer if held to maturity yield of the securities.
The Reference Portfolio will not include any dividends or distributions FundSERV JHN951 declared on the securities.
Available until November 25, 2011 *The amount of annual interest paid is unlikely to mirror the price performance of the securities in the Benchmark Portfolio since the return cannot exceed 7.00% of the Deposit Amount. www.bmosp.com
REFERENCE PORTFOLIO SECTOR ALLOCATION
Indicated Market Symbol Gross Communications, 10% Basic Issuer Capitalization (TSX) Dividend Materials, ($ millions) Yield Consumer, 20% Cyclical, Barrick Gold Corporation ABX 0.97% 48,707.88 10% Brookfield Office Properties BPO 3.68% 7,520.71 Cameco Corporation CCO 1.88% 8,375.81 Canadian Imperial Bank of Commerce CM 4.71% 30,468.65 Crescent Point Energy Corp CPG 6.66% 11,734.24 Enbridge Inc. ENB 2.86% 26,640.05
The Jean Coutu Group (PJC) Inc. PJC/A 1.96% 2,746.68 Energy, Power Corporation of Canada POW 4.75% 11,235.30 20% Rogers Communications Inc. RCI/B 3.92% 19,597.16 The Toronto Dominion Bank TD 3.61% 67,793.72 Financials, 40% Source: Bloomberg as of October 11, 2011.
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Bank of Montreal Advantage Y.I.E.L.D.® Five Year Protected Deposit Notes, Series 15
RETURN EXAMPLES
The following examples demonstrate the calculation of interest on each valuation date in accordance with the Interest Rate Formula and are included for illustration purposes only. The examples are based on hypothetical prices and changes in prices of the securities in the Reference Portfolio from the closing date to applicable valuation dates and are not intended as a forecast of future prices of the securities in the Reference Portfolio or as a forecast of any payments of interest that may be payable during the term of the Deposit Notes. Each of the scenarios refers to a Holder holding a single Deposit Note and assumes that no Extraordinary Event or Market Disruption Event has occurred.
Positive Example - Share Returns vs. Actual Interest Paid
Crescent Actual vs. Canadian Point Brookfield The Jean Power Rogers The Toronto Effective Barrick Gold Cameco Bank of Energy Office Coutu Group Corporation Communications Dominion Interest Return Corporation Corporation Commerce Corp Enbridge Properties (PJC) Inc of Canada Inc. Bank Average Paid Actual Year 1 Return 10.00% 5.25% 8.13% 20.00% 18.30% 15.40% 1.25% 0.01% 3.77% 1.25% Effective Return 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% Actual Year 2 Return 3.00% 4.11% -4.86% 6.36% 22.00% 9.87% -2.17% -1.35% 6.66% 1.25% Effective Return 7.00% 7.00% -4.86% 7.00% 7.00% 7.00% -2.17% -1.35% 7.00% 7.00% 4.06% 4.06% Actual Year 3 Return 11.00% 2.33% 5.00% 10.25% 15.65% 0.02% -0.46% -1.54% 3.41% 8.74% Effective Return 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% -0.46% -1.54% 7.00% 7.00% 5.40% 5.40% Actual Year 4 Return 13.00% 3.45% 4.22% 1.00% 17.00% 0.50% -25.00% -2.55% 3.41% 9.24% Effective Return 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% -15.00% -2.55% 7.00% 7.00% 3.85% 3.85% Actual Year 5 Return 14.00% 5.00% 4.78% 1.50% 18.00% 2.00% -27.00% -4.00% 5.00% 6.00% Effective Return 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% -15.00% -4.00% 7.00% 7.00% 3.70% 3.70%
Positive Example – In the example above, for each Deposit Note, an investor would receive annual interest payments of $7.00, $4.06, $5.40, $3.85, and $3.70 over the term of the Deposit Note. This represents a cumulative return of 24.01% of the Deposit Amount, and an annually compounded rate of return of approximately 4.87%. In addition, at Maturity, an investor would receive the Deposit Amount of $100 per Deposit Note. Note that in this example, although the actual returns for certain issuers exceeded 7.00% in several periods, the corresponding effective returns cannot exceed 7.00%.
Negative Example - Share Returns vs. Actual Interest Paid
Crescent Actual vs. Point Brookfield Power Rogers Effective Barrick Gold Cameco Canadian Bank Energy Office The Jean Coutu Corporation Communication The Toronto Interest Return Corporation Corporation of Commerce Corp Enbridge Properties Group (PJC) Inc of Canada s Inc. Dominion Bank Average Paid Actual Year 1 Return -10.00% 5.25% -28.00% 20.00% 18.30% 15.40% -6.03% -6.00% -20.00% 4.87% Effective Return -10.00% 7.00% -15.00% 7.00% 7.00% 7.00% -6.03% -6.00% -15.00% 7.00% -1.70% 0.00% Actual Year 2 Return 3.00% 4.11% -32.00% 6.36% -9.00% -4.56% -7.19% -15.00% 1.25% 10.21% Effective Return 7.00% 7.00% -15.00% 7.00% -9.00% -4.56% -7.19% -15.00% 7.00% 7.00% -1.58% 0.00% Actual Year 3 Return -0.20% 2.33% -19.00% -40.00% -6.33% 0.52% -0.45% -3.41% 8.74% -10.00% Effective Return -0.20% 7.00% -15.00% -15.00% -6.33% 7.00% -0.45% -3.41% 7.00% -10.00% -2.94% 0.00% Actual Year 4 Return 1.20% 4.40% -21.00% -42.00% -7.00% 2.85% -8.70% -4.00% 9.36% -11.00% Effective Return 7.00% 7.00% -15.00% -15.00% -7.00% 7.00% -8.70% -4.00% 7.00% -11.00% -3.27% 0.00% Actual Year 5 Return 2.00% 5.00% -22.00% -41.00% -9.00% 3.00% -11.00% -6.00% 11.44% -13.00% Effective Return 7.00% 7.00% -15.00% -15.00% -9.00% 7.00% -11.00% -6.00% 7.00% -13.00% -4.10% 0.00%
Negative Example – In the example above, for each Deposit Note, an investor would not receive any annual interest payments. However, at Maturity, an investor would receive the Deposit Amount of $100 per Deposit Note. BMO Investor Solutions Group | Principal Protected Solutions
Bank of Montreal Advantage Y.I.E.L.D.® Five Year Protected Deposit Notes, Series 15
Portfolio Description
Barrick Gold Corporation is an international gold company with The Jean Coutu Group Inc. distributes and retails operating mines and development projects in the United States, pharmaceutical and parapharmaceutical products in North Canada, South America, Australia and Africa. America.
Brookfield Office Properties, Inc. owns, develops, and manages Power Corporation of Canada is a diversified management office properties. and holding company.
Cameco Corporation explores for, develops, mines, refines, Rogers Communications, Inc. is a diversified Canadian converts, and fabricates uranium for sale as fuel for generating communications and media company. electricity in nuclear power reactors in Canada and other countries. The Toronto-Dominion Bank conducts a general banking business through banking branches and offices located Canadian Imperial Bank of Commerce provides banking and throughout Canada and overseas. financial services to consumers, individuals, and corporate clients in Canada and around the world.
Crescent Point Energy Corp is an oil and gas exploration and production company.
Enbridge Inc. provides energy transportation, distribution, and related services in North America and internationally. The company operates a crude oil and liquids pipeline system, is involved in international energy projects, and is involved in natural gas transmission and midstream businesses. Enbridge also distributes natural gas and electricity, and provides retail energy products.
Source: Bloomberg BMO Investor Solutions Group | Principal Protected Solutions
Bank of Montreal Advantage Y.I.E.L.D.® Five Year Protected Deposit Notes, Series 15
TERMS OF THE OFFERING Issuer Bank of Montreal (the “Bank”). Rating As of the date of the Information Statement, the deposit liabilities of the Bank with a term to maturity of more than one year are rated “AA” by DBRS, “A+” by Standard & Poor’s and “Aa2” by Moody’s. The Deposit Notes have not been rated and there is no assurance that, if the Deposit Notes were specifically rated by such rating agencies, they would have the same rating as the conventional deposit liabilities of the Bank. The Deposit Notes will not constitute deposits insured under the Canada Deposit Insurance Corporation Act or any other deposit insurance regime designed to ensure the payment of all or a portion of a deposit upon the insolvency of the deposit taking financial institution.
Issue Price $100 per Deposit Note (the “Deposit Amount”). Selling Period Until November 25, 2011. Issue Date On or about November 30, 2011. Maturity Date/Term The Deposit Notes will mature on November 30, 2016 (“Maturity” or “Maturity Date”), resulting in a term to maturity of approximately 5 years.
Minimum Purchase $2,000 (20 Deposit Notes). Interest Payments Annual interest, if any, on the Deposit Notes will be payable on or about November 30, 2012, December 2, 2013, December 1, 2014 and November 30, 2015 and at maturity. The annual interest amount, if any, will not exceed 7.00% of the Deposit Amount and will be based on a simple average of the effective return of each security in the Reference Portfolio. The effective return of each security in the Reference Portfolio depends on its price performance (adjusted as indicated below) measured from the closing date to the date approximately three business days before the interest payment date. If the price performance of a security is positive, then the effective return of the security for the purpose of the Interest Rate Formula is deemed to be 7.00% regardless of the actual price performance of the security. If the price performance of a security is zero or negative, the effective return of the security is its actual price performance, subject to a lower limit of negative 15%, for the purpose of the Interest Rate Formula. If the effective rate of one or more of the securities in the Reference Portfolio is negative, this will offset positive effective returns of other securities in the Reference Portfolio, potentially resulting in no annual interest being payable. While the securities in the Reference Portfolio have an average dividend or distribution yield of 3.50% and an average market capitalization of $23.48 billion as at October 12, 2011 (Source: Bloomberg), the amount of interest paid will not reflect any dividends or distributions declared on those securities.
Payment at Maturity Subject to the occurrence of certain special circumstances, for each Deposit Note a Holder holds at Maturity, the Holder will receive (i) the Deposit Amount, and (ii) interest, if any, at the interest rate determined by applying the Interest Rate Formula as described under “Interest Payments”, above.
Fees and Expenses of Expenses of this offering of $2.25 (2.25%) per Deposit Note will be paid out of the proceeds of this offering to BMO Nesbitt Burns Inc. the Offering for its services as selling agent. The selling agent will pay all or a portion of this amount to qualified selling members for selling the Deposit Notes.
FundSERV Code JHN 951 Secondary Market The Deposit Notes will not be listed on any stock exchange. Moreover, the Bank does not have the right to redeem the Deposit Notes prior to Maturity and a Holder may not require the Bank to redeem the Deposit Notes prior to Maturity. However, BMO Capital Markets, will use reasonable efforts, subject to normal market conditions, to arrange for a secondary market for the sale of Deposit Notes but reserves the right not to do so in the future, without providing prior notice to Holders. Secondary market “redemption” orders and settlements can be made using the FundSERV network. Sale of a Deposit Note prior to Maturity may result in a loss even if the performance of the securities in the Reference Portfolio has been positive.
Early Trading Charge An Early Trading Charge will apply to secondary market redemption orders for Deposit Notes placed using the FundSERV network within the first 360 days from the Closing Date, determined as a percentage of the Deposit Amount as follows:
If sold within 0-60 days 61-120 days 121-180 days 181-240 days 241-300 days 301-360 days Thereafter Early Trading Charge 3.25% 2.75% 2.25% 1.75% 1.25% 0.75% Nil
No CDIC The Deposit Notes are not insured under the Canada Deposit Insurance Corporation Act.
The Deposit Notes are issued by and constitute direct, unconditional obligations of Bank of Montreal. This summary is issued for discussion purposes only to provide an overview of the proposed Deposit Notes and does not constitute investment advice or an offer to sell or a solicitation to purchase. Details of certain risks of investing in the Deposit Notes, as well as complete disclosure of how interest on the Deposit Notes is calculated are contained in the related Information Statement which will be available through your financial advisor or at www.bmosp.com. You should read the Information Statement carefully before investing and discuss all the key features, of the Deposit Notes, including their suitability for you with your financial advisor. The Deposit Notes may not be suitable for all types of investors. The prices and value of the Deposit Notes may fluctuate and/or be adversely affected by a number of factors. The fluctuation of the performance of the underlying securities will directly impact the interest payable, if any, on the Deposit Notes on each interest payment date. The Deposit Notes will not be listed on any stock exchange. You do not have the right to require Bank of Montreal to redeem the Deposit Notes prior to maturity
Bank of Montreal makes no recommendations concerning equity investments as asset classes or the suitability of investing in securities generally or Deposit Notes in particular. No person has been authorized to give any information or to make any representation not contained in the Information Statement relating to the Deposit Notes and Bank of Montreal does not accept any responsibility for any information not contained in the Information Statement.
“BMO (M-bar roundel symbol)” and “BMO Capital Markets” are registered trade-marks of Bank of Montreal. “Nesbitt Burns” and “Advantage Y.I.E.L.D.” are registered trade-marks of BMO Nesbitt Burns Corporation Limited used under license.