Principal At Risk Notes
Bank of Montreal Covered Call Canadian High Dividend Callable Equity Income Principal At Risk Notes, Series 606 (CAD)
|Bank of Montreal|
|BMO Canadian High Dividend Covered Call ETF [ZWC CT EQUITY] |
|June 13, 2018|
|June 13, 2025|
|6.50% Per Annum|
- The Notes offer semi-annual coupon payments for investors while providing contingent protection against a slight to moderate decline in the unit price of the BMO Canadian High Dividend Covered Call ETF (the “Reference ETF”) over the term of the Notes. The Principal Amount is NOT protected under these Notes.
- Issuer: Bank of Montreal.
- Medium Term: 7-year term to maturity (subject to the Notes being automatically called by the Bank).
- Reference ETF: The BMO Canadian High Dividend Covered Call ETF is designed to provide exposure to a dividend focused portfolio, while earning call option premiums. The underlying portfolio is yield-weighted and broadly diversified across sectors. The Reference ETF screens securities for dividend growth, sustainability and option liquidity. The Reference ETF also dynamically writes covered call options. The call options are written out of the money and selected based on analyzing the option’s available premium. The option premium provides limited downside protection. The units of the Reference ETF are listed for trading on the Exchange under the symbol “ZWC”.*
- Contingent Semi-Annual Coupon Payments: Semi-annual Coupons equal to 3.25% (equivalent to 6.50% per annum), provided that the Closing Price of the units of the Reference ETF is equal to or above the Coupon Knock-Out Level (i.e., 65% of the Initial Price) on the applicable Observation Date. If the Closing Price of the units of the Reference ETF is below the Coupon Knock-Out Level on an Observation Date, then no Coupon will be payable to a Holder on the related Coupon Payment Date.
- AutoCall Feature: The Notes will be automatically called by the Bank if the Closing Price of the units of the Reference ETF is equal to or above the AutoCall Level (i.e., 110% of the Initial Price) on any Observation Date. If the AutoCall feature is triggered, Holders will receive the Principal Amount plus the applicable Coupon on the corresponding Coupon Payment Date (in this case, the Call Date). If the Closing Price of the units of the Reference ETF is never equal to or above the AutoCall Level on any Observation Date, the Notes will not be automatically called by the Bank. If the Notes are automatically called by the Bank before Maturity, the Notes will be cancelled and Holders will not be entitled to receive any subsequent payments in respect of the Notes.
- Contingent Protection: If the ETF Return is negative, the Principal Amount will be protected so long as the Final Price is equal to or above the Barrier Level (i.e., 65% of the Initial Price) on the Final Valuation Date. If the Final Price is below the Barrier Level on the Final Valuation Date, the Maturity Payment will be equal to the Principal Amount reduced by the ETF Return (which will be a negative amount equal to the decline in the unit price of the Reference ETF), subject to the Minimum Payment Amount. The calculation and timing of the payments at Maturity may be adjusted upon the occurrence of certain special circumstances.
- Daily Secondary Market: Provided by BMO Capital Markets (may be subject to an early trading charge of up to 3.50% declining to zero over 180 days after the Issue Date and other limitations as described in the Prospectus).
|May 22, 2018|
Bid Price (i) may be subject to an Early Trading Charge (equal to a percentage of the Principal Amount), (ii) on the date of sale may be at a discount from the maturity payment that would be payable if the Principal At Risk Notes were maturing on such date, and (iii) reflects the most recent price available. The Bid Price may fluctuate and/or be adversely affected by a number of factors, including certain factors discussed in the Offering Documents.
Past performance is not indicative of future performance and returns, if any, will fluctuate with any change in value of the reference asset(s). This information should not be construed as an estimate or forecast of the performance of the reference asset(s) or of the return that a holder may realize.
The above summary and the other material on this website is for information purposes only and does not constitute an offer to sell or a solicitation to purchase Principal At Risk Notes. Investors should read the Base Shelf Prospectus and applicable Prospectus Supplement and/or Pricing Supplement (collectively, the “Offering Documents”) which set out the specific terms and risk factors associated with an investment in the Principal At Risk Notes carefully and discuss the suitability of the Principal At Risk Notes with their investment advisor before making any investment decisions. The offering and sale of Principal At Risk Notes may be prohibited or restricted by laws in certain jurisdictions. Principal At Risk Notes may only be purchased where they may be lawfully offered for sale and only through individuals qualified to sell them. For a copy of the applicable Offering Documents, click on the link above.
Amounts, if any, paid to holders of Principal At Risk Notes will depend on the performance of the reference asset(s) described in the applicable Offering Documents. Bank of Montreal does not guarantee that holders will receive an amount equal to the amount invested in the Principal At Risk Notes and does not guarantee that any return or distributions will be paid on the Principal At Risk Notes (other than any minimum amount that may be stipulated in the applicable Offering Documents). Since the principal amount of the Principal At Risk Notes will not be guaranteed and will be at risk, holders may not receive any amount at maturity (other than any minimum amount that may be stipulated in the applicable Offering Documents) and holders could lose substantially all of their investment in the Principal At Risk Notes. Please see the Offering Documents for complete details, including the precise formula for determining the return, if any, on a Principal At Risk Note.