BMO Top Performing Portfolio GIC – Investment Terms and ...
[Pages:3]BMO Top Performing Portfolio GIC ? Investment Terms and Conditions
You have invested in the BMO Top Performing Portfolio Guaranteed Investment Certificate ("BMO Top Performing Portfolio GIC") as referred to on the accompanying application form. Between your deposit date and the issue date of the BMO Top Performing Portfolio GIC, your deposit funds will be invested in a BMO Short Term Guaranteed Investment Certificate ("STIC"). This document forms part of your application and, together with your application, sets out the terms and conditions that apply to your investment. In these terms and conditions, "we" "us" and "our" refer to Bank of Montreal Mortgage Corporation, the issuer of the STIC and the BMO Top Performing Portfolio GIC, "you" and "your" refers to the planholder named under the plan on the application form in which the investment is held, "Bank" refers to Bank of Montreal, and "Plan" means the retirement savings plan, locked-in retirement savings plan or locked-in retirement account under which the investment is held. We are a subsidiary of the Bank. Capitalized terms not otherwise defined herein have the meanings attributed to them in the accompanying application form. A Calculation Agent, being the Bank or other third party appointed by us, will make all calculations and determinations in respect of the BMO Top Performing Portfolio GIC and all such calculations and determinations will, absent manifest error, be final and binding.
Issuer. Bank of Montreal Mortgage Corporation
Guarantor. Bank of Montreal
Minimum Investment. You must invest a minimum of $1000.
Issue Date of Series. Your BMO Top Performing Portfolio GIC will be issued to you on the Issue Date of Series set out in the accompanying application form.
Term of Series and Series Maturity Date. Your BMO Top Performing Portfolio GIC has a term that begins on the Issue Date of Series and continues for the period specified as the Term of Series in the accompanying application form. Your BMO Top Performing Portfolio GIC matures on the day on which the Term of Series ends (the "Series Maturity Date").
Payment on Series Maturity Date. We promise to pay BMO Trust Company, as trustee of the Plan, the initial amount you have deposited with us, plus interest accrued on the STIC at the Annual Interest Rate set out in the accompanying application form (the "Issue Amount"). You may also receive a variable rate of return, if any (the "Rate of Return for the Term"), linked to the appreciation of the best performing portfolio of three reference portfolios disclosed in the accompanying application form under "Reference Portfolio of the Series" (the "Reference Portfolios", each a "Reference Portfolio") as described below under "Calculation of Interest Payable on Series Maturity Date".
All Inclusive Annual Fee. We will be entitled to the payment of a fee (the "All Inclusive Annual Fee") at the per annum rate disclosed in the application form. The per annum rate will be accrued daily and paid monthly in arrears, on the notional value of the Reference Portfolios. However, since the amount of interest payable, if any, will be determined by only the best performing of the Reference Portfolios, only the per annum rate of the value of such best performing Reference Portfolio will be attributed to you as fees. The All Inclusive Annual Fee accounts for all fees and expenses applicable to the Reference Portfolios, including management fees paid for indices or to managers of the Mutual Funds (as defined below).
Reference Portfolios and Underlying Mutual Funds. The three Reference Portfolios used to determine the Rate of Return for the Term are described on the accompanying application form. Each Reference Portfolio is a notional portfolio, used simply as a reference for the purpose of measuring the return generated by the shares or units (the "Units") of the underlying mutual funds (the "Mutual Funds") making up each Reference Portfolio. Each Reference Portfolio will consist of Mutual Funds in proportion to the weightings set out in the accompanying application form. The weightings set out in the accompanying application form are weightings applicable as of two business days after the Issue Date of the BMO Top Performing Portfolio GIC. Thereafter, the weightings will vary according to the fluctuations of the net asset value ("NAV") of the Units of the Mutual Funds in the Reference Portfolios.
Total Return Indices. Total Return Indices have been created by the Calculation Agent (the "Total Return Indices", each a "Total Return Index") for each of the Mutual Funds in the Reference Portfolios. The Total Return Indices measure the change in the NAV of the Mutual Funds and all dividends/distributions paid by the Mutual Funds, if any, which are deemed to have been reinvested in the Mutual Funds as of the day they were paid.
The value of the Total Return Indices were initially set at 100 on December 31, 2004, to reflect the closing NAV of the Mutual Funds set by BMO
Investments Inc. ("BMOII"), the manager of the Mutual Funds. From that date going forward, the value of the Total Return Indices will reflect both the change in NAV of the Mutual Funds and all dividends or distributions reinvested at the date they are paid.
The Total Return Indices are calculated each business day using the following formula:
TRIt = (
NAVt NAVt-1
?
TRIt-1 ) + (
Divt-1
?
NAVt NAVt-1
)
TRIt NAVt NAVt-1 TRIt-1 Divt-1
= the current business day's value of the fund's Total Return Index = the current business day's closing value of the fund = the previous business day's closing value of the fund = the previous business day's value of the fund's Total Return Index = the previous business day's dividend/distribution payment (if any)
Each of the Total Return Indices will be calculated to two decimal places.
Measurement of Performance of the Mutual Funds in the Reference Portfolios. The performance of each of the Mutual Funds comprising each of the Reference Portfolios is determined by measuring the change in the Mutual Fund's Total Return Index, two business days after the Issue Date of Series (the "Index Value at Issue Date"), compared to the Average Closing Value for the Total Return Index. The "Average Closing Value" for each Total Return Index is calculated over a number of consecutive months (the "Final Months") immediately prior to the month in which the Series Maturity Date occurs. The number of Final Months is equal to the number of months set out as "Average Closing Value (number of last months used in calculation)" in the accompanying application form. The Average Closing Value for each Total Return Index is the simple average of the closing values of the Total Return Index for each Final Month. The closing value of each Total Return Index for the last Final Month is determined on the Calculation Date set out in the accompanying application. The closing value of each Total Return Index for the remaining Final Months is determined on the last business day of each such Final Month.
Percentage Growth of the Reference Portfolios. The percentage growth for any Reference Portfolio is the weighted average of the performance of each Mutual Fund within that Reference Portfolio (the "Percentage Growth"), as outlined under "Measurement of Performance of the Mutual Funds in the Reference Portfolios", calculated as a percentage using the weightings set out in the accompanying application form under "Reference Portfolio for the Series".
Participation Rate. The rate by which the Percentage Growth of the Reference Portfolio with the highest Percentage Growth is multiplied to determine your Rate of Return for the Term is the "Participation Rate". If the Participation Rate set out in the accompanying application form is less than 100%, you will not participate fully in the increase in value, if any, of the Reference Portfolio with the highest Percentage Growth.
Rate of Return for the Term. Subject to the occurrence of a market disruption event, the Rate of Return for the Term will be determined based on the percentage increase, if any, in the value of the Reference Portfolio with the highest Percentage Growth from two days after the Issue Date of Series to the Calculation Date set out in the accompanying application form.
The Rate of Return for the Term is calculated as follows:
(i) the Percentage Growth of the Reference Portfolio with the highest Percentage Growth,
(ii) multiplied by the Participation Rate, as set out in the accompanying application form.
The Rate of Return for the Term is not an annual interest rate but represents the total return on the BMO Top Performing Portfolio GIC over the Term of Series. If the Percentage Growth for each Reference Portfolio is a zero or negative number, you will not receive any return (interest) on your investment, and you will receive only the Issue Amount on the Series Maturity Date. The return on your investment cannot be more than 60% per year, which is the maximum allowed by law.
Calculation of Interest Payable on Series Maturity Date. The amount of interest, if any, you will receive on the Series Maturity Date will be equal to the Rate of Return for the Term, if any, multiplied by the Issue Amount ("Variable Interest").
BMO Top Performing Portfolio Index. An index created by the Calculation Agent (the "BMO Top Performing Portfolio Index") will be provided to you as a tool or proxy to help you track the market performance of the then best performing of the Reference Portfolios from time to time. The Opening Index Value for the Series is disclosed in the accompanying application form and
represents the value of the top performing Reference Portfolio, as of market close, two business days after the Issue Date of Series. The value of the BMO Top Performing Portfolio Index at particular dates (the "Current Index Value for the Series") will be disclosed in periodic investment statements, including your maturity notice and will also be available at any branch of the Bank or through the Bank's Online Banking service. The BMO Top Performing Portfolio Index is only a tool to help you track the market performance of the Reference Portfolios and is not, under any circumstances, a representation of the value of the BMO Top Performing Portfolio GIC at any point in time. The final value of the BMO Top Performing Portfolio GIC can only be determined on the Series Maturity Date.
Market Disruption and Other Special Circumstances. There is always the possibility of a market disruption or other events beyond our or the Bank's reasonable control that may have a material effect on the Calculation Agent's ability to calculate a rate of return on your investment, to manage the related risk, or otherwise perform our obligations. If a market disruption event occurs on a day for which the value of the Reference Portfolio is to be determined, determination of the value of the Reference Portfolio may be delayed. Determination and payment of the amount of any interest payable may be delayed beyond the Series Maturity Date in certain circumstances. Fluctuations in the value of the Units of the Mutual Funds may occur in the interim. In certain unusual circumstances, the Calculation Agent may estimate the value of the Units of the Mutual Funds, replace an existing Mutual Fund with a new Mutual Fund or a Canadian stock market index, and/or determine the amount of interest, if any, that may be payable in an alternate manner. However, in no event will the Issue Amount or any returns of the BMO Top Performing Portfolio GIC be paid prior to the Series Maturity Date.
A market disruption event may affect the manner in which the interest payable, if any, is calculated.
The Calculation Agent has the right to replace the Mutual Funds within the Reference Portfolios with another mutual fund managed by BMOII or Canadian stock market indices or Canadian securities, which it will exercise in certain circumstances, including if a Mutual Fund within the Reference Portfolios becomes closed to additional purchases, discontinued or otherwise wound-up or that it will merge into, consolidate with or be combined with any other mutual fund or where there is a suspension or limitation of the sale or redemption of the Units of a Mutual Fund, or where the cost or ability of any dealer to hedge our obligation under your investment is materially adversely affected by circumstances beyond its control.
In the event that a market disruption event materially affects our cost or ability to hedge our obligation under your investment, no further returns will be calculated, determined or earned for the remaining term of the BMO Top Performing Portfolio GIC. The Issue Amount and any returns earned up to the date of such market disruption event will be paid at, but not prior to, the Series Maturity Date. If such a market disruption event occurs, the possibility of your investment earning any Variable Interest is significantly reduced.
Reinvestment. At the Series Maturity Date, if you have not provided us with the Maturity Instructions (as described below), the Issue Amount and your Variable Interest, if any, will be automatically reinvested in a non-redeemable BMO Guaranteed Investment Certificate issued by us, and fully guaranteed by the Bank, having a one-year term to maturity at the annual interest rate then applicable to the new investment and with interest compounded annually.
Maturity Instructions. If, at the Series Maturity Date you do not wish the Issue Amount and your Variable Interest, if any, to be automatically reinvested as provided for above, you must complete a Maturity Option Change Request, available at the Bank, and deliver the completed Maturity Option Change Request to the Bank at least 20 days prior to the end of the Term of Series. A Maturity Option Change Request is not available through the Bank's Online Banking service.
Confirmation. At the time of issue of the BMO Top Performing Portfolio GIC, we will provide you with written confirmation of the Series #, Issue Amount, Issue Date of Series, Term of Series, Participation Rate, Reference Portfolios, All Inclusive Annual Fees and any other information we consider to be necessary.
Statements. We will issue statements semi-annually, showing the Issue Amount, the Opening Index Value for the Series, the Current Index Value for the Series in respect of each Reference Portfolio, the Participation Rate, and any other information we consider to be necessary. The value of your investment in the BMO Top Performing Portfolio GIC will not change over the period of your investment, until the Series Maturity Date, when the total return on your investment will be known.
Currency. All amounts will be deposited, calculated and paid in Canadian dollars.
Certificate. A certificate representing your investment is not available.
Restrictions on Sale. Your BMO Top Performing Portfolio GIC is only available for sale within Canada and may only be held by Canadian residents. Your BMO Top Performing Portfolio GIC may be subject to further restrictions within any relevant province or territory. Your BMO Top Performing Portfolio GIC has not been and will not be registered under the United States Securities Act of 1933, as amended, or any State securities laws and may not be offered, sold or delivered within the United States or to United States persons (as such expressions are defined in the United States Internal Revenue Code and regulations thereunder).
Transfer. Your investment in the STIC and BMO Top Performing Portfolio GIC is not transferable.
Early Redemption. You may not redeem your investment prior to its Maturity Date or Series Maturity Date. However, we may redeem your investment without penalty prior to the Maturity Date or Series Maturity Date in the event of your death.
Ownership Status. We are not obligated to inquire into your interest in the BMO Top Performing Portfolio GIC, or to advise as to tax considerations.
CDIC Deposit Insurance. Only deposits held in Canadian currency, having a term of 5 years or less and payable in Canada are insurable under the Canada Deposit Insurance Corporation Act.
STIC Terms & Conditions. Between the date you deposit funds with us (the "Purchase Date", as set out in the accompanying application form) and the Issue Date of Series, your deposit funds will be invested in a STIC, a fixed return short-term deposit issued by us. The Purchase Amount of the STIC set out in the accompanying application form and interest payable on the Purchase Amount is unconditionally guaranteed by the Bank. At the Maturity Date of the STIC set out in the accompanying application form the Purchase Amount and the interest accrued on the Purchase Amount, at the Annual Interest Rate set out in the accompanying application form, for the period from the Purchase Date to the Maturity Date will be the Issue Amount automatically reinvested in the BMO Top Performing Portfolio GIC.
Risk Factors. An investment in the BMO Top Performing Portfolio GIC is subject to certain risk factors that you should carefully consider before acquiring a BMO Top Performing Portfolio GIC, including the following factors:
No Assurance of Returns. There is no assurance that the Reference Portfolios will be able to generate positive returns. Therefore, a BMO Top Performing Portfolio GIC is not a suitable investment for you if you need or expect to receive any return or a specific return on investment. The BMO Top Performing Portfolio GIC is designed for investors with a long-term investment horizon who are prepared to hold the BMO Top Performing Portfolio GIC to the Series Maturity Date and are prepared to assume risks with respect to a return tied to the performance of the Reference Portfolios.
Calculation of the Rate of Return for the Term and Variable Interest. The Variable Interest, if any, payable on your BMO Top Performing Portfolio GIC is based in part on the Average Closing Value of the Total Return Indices within the highest performing Reference Portfolio over a number of months prior to the Series Maturity Date. This Average Closing Value may be higher or lower than the closing value of the Total Return Indices on the Series Maturity Date. As a result, the Rate of Return for the Term on your BMO Top Performing Portfolio GIC may not be the same as, and may be lower than, a rate of return that is based on the closing value of the Total Return Indices on the Series Maturity Date.
The Variable Interest, if any, payable on your BMO Top Performing Portfolio GIC is also based on your Participation Rate. If the Participation Rate is less than 100%, you will not participate fully in the increase in value, if any, of the Reference Portfolio with the highest Percentage Growth.
Non-Conventional Indebtedness. The BMO Top Performing Portfolio GIC has certain characteristics that differ from conventional forms of indebtedness in that it does not provide you with a return or income stream prior to the Series Maturity Date, or a return on the Series Maturity Date, calculated by reference to a fixed or floating rate of interest that is determinable prior to the Series Maturity Date. You will not have an opportunity to reinvest any income generated by the BMO Top Performing Portfolio GIC prior to Series Maturity Date; nor will you be able, prior to the Series Maturity Date, to determine the amount of the return, if any, that you will receive on your BMO Top Performing Portfolio GIC on the Series Maturity Date.
No Secondary Market. The BMO Top Performing Portfolio GIC is designed for investors who are prepared to hold their investment to the Series Maturity Date. Your BMO Top Performing Portfolio GIC will not be listed on any exchange and there will be no market through which the BMO Top Performing Portfolio GIC may be sold. Also, the BMO Top Performing Portfolio GIC is not transferable. As a result, you will not be able to redeem or sell your BMO Top Performing Portfolio GIC prior to the Series Maturity
Date, and the Issue Amount and the Variable Interest, if any, are payable only at the Series Maturity Date.
Risks Relating to the Reference Portfolios. There can be no assurance that the BMO Top Performing Portfolio GICs will show any return. The Rate of Return for the Term will be based on the market price of the Units of the Mutual Funds comprising a Reference Portfolio at the relevant date of valuation. The market price of the Units of the Mutual Funds is unpredictable and will be influenced by factors that are beyond our control. Market prices of the Units of the Mutual Funds will be influenced by both the complex and interrelated political, economic, financial and other factors that can affect markets generally, and by various circumstances that can influence the value of -a particular Mutual Fund.. Historical prices of the Units of the Mutual Funds comprising the Reference Portfolios should not be considered any indication of the future performance of the Units of the Mutual Funds and the Reference Portfolios.
No Ownership of the Units of the Mutual Funds in the Reference Portfolios. Owning the BMO Top Performing Portfolio GICs is different from owning the Units of the Mutual Funds in the Reference Portfolios. The BMO Top Performing Portfolio GICs do not represent a direct substitute for an investment in the Mutual Funds. The BMO Top Performing Portfolio GICs will not entitle you to any direct or indirect ownership of or entitlement to any Units of the Mutual Funds held by the Reference Portfolios. As such, you will not be entitled to the rights and benefits of a unitholder, including any right to receive distributions or dividends or to vote at or attend meetings of unitholders.
No Independent Calculation. The Calculation Agent will be solely responsible for computing the Rate of Return for the Term based on the performance of the Reference Portfolio for the Series. No independent calculation agent will be retained to confirm any determinations and any calculations made.
Conflicts of Interest. We, the Bank and our respective affiliates may, from time to time in the course of normal business operations, hold interests in or hold securities of (including under hedging arrangements related to the BMO Top Performing Portfolio GIC), extend credit to or enter into other business dealings with, one or more of the entities whose securities are held in, or make up the Mutual Funds comprising, the Reference Portfolio. Such actions shall be based on normal commercial criteria in the particular circumstances, which may include payment of trailer fees to us, the Bank or our affiliates, and may not take into account the effect, if any, of such actions on the amount of Variable Interest that may be payable on BMO Top Performing Portfolio GICs.
Credit Risk. Because the obligation to make payments to you under the terms and conditions of the BMO Top Performing Portfolio GIC is an obligation of us and the Bank, the likelihood that you will receive the payments owing to you in connection with the BMO Top Performing Portfolio GICs will be dependent upon the financial health and creditworthiness of us and the Bank.
Right of Rescission for Telephone Sales. If you purchased your BMO Top Performing Portfolio GIC via the telephone, you may cancel it within 48 hours of receiving these Terms and Conditions.
Related Party Transactions. The current portfolio managers of the Mutual Funds are Jones Heward Investment Counsel Inc. ("Jones") and Capital Guardian Trust Company ("Capital"), and the manager of the Mutual Funds is BMOII. BMOII and Jones are subsidiaries of the Bank. BMOII, Jones and Capital are separate legal entities from the Bank. As manager and portfolio managers of the Mutual Funds, BMOII, Jones and Capital receive compensation from the Mutual Funds for services rendered. Management fees paid to BMOII by the Mutual Funds are set out in the prospectus for the respective Mutual Funds. Jones and Capital are paid for portfolio management services from the management fees paid to BMOII. Other BMO
Financial Group entities may receive payments for administering this product. The Bank or any of its affiliates, including BMMC, may hold interests linked to the Units of the Mutual Funds, including under hedging arrangements related to the BMO Top Performing Portfolio GIC. All actions in respect of such holdings shall be based on normal commercial criteria in the particular circumstances, which may include payment of trailer fees to the Bank or any of its affiliates, and may not take into account the effect, if any, of such actions on the BMO Top Performing Portfolio GIC.
Plan Withdrawal Fees. A $25 fee applies to a withdrawal of the investment from the Plan.
PRIVACY DISCLOSURE & CONSENT
Your Personal Information
What is Personal Information?
Personal Information is information that identifies you as an individual. It includes not only your name and address, age and gender, but also your personal financial records, identification numbers including your social insurance number (SIN), personal references and employment records.
Why Does the Bank Ask You For Your Personal Information? There are some purposes for using your personal information which are self-evident, such as asking for information concerning your credit history to help determine your credit worthiness if you are applying for a loan or mortgage. Self-evident purposes should be clear, but if you have any questions, just ask us. We also ask you for your personal information for the following purposes: ? to verify your identity and protect against fraud, ? to understand your financial service requirements, ? to determine the suitability of products and services for you, ? to determine your eligibility for certain of our products and services, or
those of others, and offer them to you, ? to set up and manage products and services you have requested, and ? to comply with laws and securities regulations.
Sharing Your Personal Information
Your personal information is shared, to the extent permitted by law, within BMO Financial Group (that is the Bank and its subsidiaries and affiliates) which provides deposit, loan, investment, securities, brokerage, insurance, trust and other products and services. With this more comprehensive understanding, we are better able to meet your needs as they grow and change.
Your Choices If you would prefer not to receive our direct marketing service and/or not have your personal information shared with a member of BMO Financial Group, you can have your name deleted form our direct marketing and/or shared information lists. All you have to do is ask us. Please note that you cannot opt out of sharing your personal information where you have requested a product or service which is jointly offered by us and a member of BMO Financial Group.
Also, if you would prefer not to have us use your SIN for administrative purposes, just ask us. This option does not apply where we are required to use your SIN for income tax reporting purposes.
For complete details on our commitment to respect and protect the privacy and confidentiality of personal information of individuals, please refer to our Privacy code, which is available at any branch of the Bank of Montreal, by visiting our website at privacy/ or by calling 1-800-363-9992.
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