Bank of Montreal Fiera Global Balanced Principal At Risk Notes, Series 1 (CAD)

Transcription

1 Amended and Restated Pricing Supplement No. 42 (to prospectus supplement no. 1 dated April 27, 2015 and the short form base shelf prospectus dated April 27, 2015) March 31, 2016 Bank of Montreal Fiera Global Balanced Principal At Risk Notes, Series 1 (CAD) Accelerator Due March 30, 2021 Unsecured Investors are buying the Notes, not the Reference Funds, which carry different risks, have a different fee structure, and are subject to a different regulatory regime than the Reference Funds. Investors will not receive any ongoing disclosure regarding the Reference Funds that would be received by investors of the Reference Funds pursuant to National Instrument Investment Fund Continuous Disclosure. This amended and restated pricing supplement (the Pricing Supplement ) relates to the offering of Bank of Montreal Fiera Global Balanced Accelerator Principal At Risk Notes, Series 1 (CAD) (each a Note and collectively the Notes ) issued by Bank of Montreal (the Bank ) and scheduled to mature on March 30, 2021 ( Maturity or the Maturity Date ). The Notes are designed to provide investors with enhanced exposure to the total return of a notional mutual fund portfolio (the Fund Portfolio ) allocated as follows: Reference Funds Fund Weighting Fiera Capital Global Equity Fund (the Equity Fund ) 70% Fiera Capital Bond Fund (the Bond Fund ) 30% Total 100% A holder of Notes ( Holder ) will benefit from 200% Upside Participation in the increase (if any) in the net value of the Fund Portfolio (i.e., net of fees) over the term of the Notes. There is no Cap Level and no Maximum Payment Amount applicable to these Notes. The Principal Amount is not protected under these Notes and a Holder will be fully exposed to any negative performance of the Fund Portfolio, subject to a minimum principal repayment of $1.00 per Note. See Terms of the Offering Suitability for Investment in this Pricing Supplement. The Notes are denominated in Canadian dollars and all payments will be made in Canadian dollars. This Pricing Supplement will be delivered together with the short form base shelf prospectus for Medium Term Notes (Principal At Risk Notes) dated April 27, 2015 (the Base Shelf Prospectus ) establishing the Bank s Principal At Risk Note Program (the MTN Program ) and prospectus supplement no. 1 dated April 27, 2015 (the Product Supplement ), which generally describes the features of enhanced return notes that may be offered by the Bank under the MTN Program. This Pricing Supplement, together with the Base Shelf Prospectus and Product Supplement and each document incorporated by reference therein, constitutes a public offering of the Notes only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such Notes. No securities regulatory authority has expressed an opinion about these Notes and it is an offence to claim otherwise. A Holder s return on the Notes will depend on the total return of the Fund Portfolio over the term of the Notes. Bank of Montreal does not guarantee that Holders will receive any return or repayment of their principal investment in the Notes, subject to a minimum principal repayment of $1.00 per Note. Since the Notes are not protected and the Principal Amount will be at risk, it is possible that a Holder could lose some or substantially all of his or her principal investment in the Notes. See Certain Risk Factors in the Base Shelf Prospectus, Additional Risk Factors Specific to Enhanced Return Notes in the Product Supplement and Terms of the Offering Risk Factors in this Pricing Supplement.

2 The Notes will not constitute deposits insured under the Canada Deposit Insurance Corporation Act. Any capitalized terms used but not defined herein have the meaning ascribed to them in the Product Supplement or Base Shelf Prospectus, as the case may be. A Reference Fund is a Reference Asset, the Fund Portfolio is a Reference Basket and the Portfolio Return is a Basket Return as those terms are used in the Base Shelf Prospectus and the Product Supplement, and when reviewing the information contained in the Base Shelf Prospectus and Product Supplement in conjunction with this Pricing Supplement, those references should be read accordingly. Price: $ Per Note Minimum Subscription: $2, (20 Notes) Price to Public Selling Commissions and Dealers Fee (2)(3) Net Proceeds to the Bank Per Note... $ $3.00 $97.00 Total (1)... $20,000, $600, $19,400, (1) Reflects the maximum offering size. The Bank reserves the right to change the maximum offering size in its sole and absolute discretion. There is no minimum amount of funds that must be raised under this offering. This means that the Bank could complete this offering after raising only a small proportion of the offering amount set out above. (2) A selling concession fee of $3.00 per Note sold is payable to the Dealers for further payment to representatives, including representatives employed by the Dealers, whose clients purchase the Notes. A fee of up to $0.20 per Note sold (or 0.20%) will be payable directly by the Bank to Desjardins Securities Inc. at closing from its own funds for acting as independent agent. (3) Reflects the maximum Dealers fee that may be payable under the offering. The Bank expects the estimated value of the Notes on the Issue Date, based on its internal pricing models, will be $92.06 per $ principal amount, which is less than the issue price. The estimated value is not an indication of actual profit to the Bank or any of its affiliates, nor is it an indication of the price at which BMO Nesbitt Burns Inc. ( BMO Capital Markets ) or any other person may be willing to purchase the Notes. See Terms of the Offering Risk Factors in this Pricing Supplement. Owning the Notes is different from investing directly in units of the Reference Funds. The Fund Portfolio is notional only, meaning that the Reference Funds will be used solely as a reference to calculate the Maturity Payment Amount for the Notes. Holders do not have any ownership or other interest in any units of the Reference Funds or any securities held by the Reference Funds, including, without limitation, voting rights or the right to receive dividends or distributions directly. Holders will only have a right against the Bank to be paid amounts due under the Notes. All actions (e.g., purchases, sales, reinvestment of distributions, etc.) taken in connection with the Fund Portfolio are notional actions only. The Notes do not represent a substitute for a direct investment in units of the Reference Funds. PS42 2

3 DISTRIBUTION OF THE NOTES BMO Nesbitt Burns Inc. and Desjardins Securities Inc. (together, the Dealers ), as agents of the Bank, have agreed to solicit offers to purchase Notes, on a reasonable best efforts basis, if, as and when such Notes are issued by the Bank, pursuant to the terms and conditions contained in a dealer agreement dated April 27, 2015 between the Bank and a syndicate of dealers, including the Dealers, and subject to the approval of certain legal matters by Torys LLP, as counsel to the Bank, and Stikeman Elliott LLP, as counsel to the Dealers. The Notes may be purchased through the FundSERV settlement system using the code set forth herein. No interest will be paid on account of funds deposited through FundSERV pending closing of the offering or return of such funds if subscriptions are rejected or not fully allotted by Bank. BMO Nesbitt Burns Inc., one of the Dealers, is a wholly-owned subsidiary of the Bank. As a result, the Bank is a related issuer of BMO Nesbitt Burns Inc. for the purpose of National Instrument Underwriting Conflicts. See Plan of Distribution in the Base Shelf Prospectus. Desjardins Securities Inc., as the independent Dealer, has performed due diligence in connection with this offering of Notes but has not participated in the structuring or the pricing of this offering. The Notes will not be listed on any stock exchange. BMO Capital Markets will use reasonable efforts under normal market conditions to provide for a daily secondary market for the sale of the Notes through the order entry system operated by FundSERV Inc. ( FundSERV ) but reserves the right to elect not to do so in the future, in its sole and absolute discretion, without prior notice to Holders. Notes may be resold through the FundSERV network at a price determined at the time of sale by the Calculation Agent, which price may be lower than the Principal Amount of such Notes and will be subject to specified early trading charges, depending on when the Notes are sold. There is no assurance that a secondary market for the Notes will develop or be sustained. See the sections entitled Description of the Notes Secondary Market, Description of the Notes FundSERV and Certain Risk Factors in the Base Shelf Prospectus, Secondary Market, Calculation Agent and Additional Risk Factors Specific to Enhanced Return Notes in the Product Supplement and the description under the heading Terms of the Offering Listing and Secondary Market in this Pricing Supplement. The Notes to be offered hereunder have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the U.S. Securities Act ) and, subject to certain exceptions, may not be offered, sold or delivered, directly or indirectly, in the United States of America, its territories, its possessions and other areas subject to its jurisdiction or to, or for the account or benefit of, a U.S. person (as defined in Regulation S under the U.S. Securities Act). The Notes are based on the Fiera Capital Global Equity Fund and the Fiera Capital Bond Fund (collectively, the Reference Funds ), which are managed by Fiera Capital Corporation ( Fiera ). Neither Fiera nor any of its affiliates or associates makes any assurances, representations or warranties with respect to, nor assumes any responsibility for, the accuracy, reliability or completeness of information herein with respect to the Notes or the Reference Funds or accepts responsibility for the provision to investors of any future information with respect to the Notes or the Reference Funds, or has any duty or obligation to update such information in connection with the Notes or the Reference Funds. Investors shall have no recourse against Fiera or its affiliates or associates in connection with any information herein about and/or relating to the Notes or the Reference Funds. See also Appendix D The Reference Funds Historical Performance and Other Information Concerning the Reference Funds. The Notes are not sponsored, endorsed, sold or promoted by Fiera and Fiera shall not have any liability with respect thereto. Fiera makes no representation regarding the advisability of investing in the Notes. Fiera has not participated in the preparation of this Pricing Supplement, the structuring of the Notes or the selection of the Reference Funds on whose performance the return on the Notes, if any, is based. Fiera makes no representation or warranty, express or implied, to the investors or any member of the public regarding the advisability of investing in securities generally or in the Notes particularly or regarding general stock market performance or any other economic factors or the ability of the Notes to track the performance of the Reference Funds. Fiera, Fiera Capital and the Fiera logo are intellectual property, trade-marks and/or registered marks used by Bank of Montreal with the written permission of Fiera. PS42 3

4 PROSPECTUS FOR NOTES The Notes will be issued under the MTN Program and will be direct, unsubordinated and unsecured debt obligations of the Bank. The Notes are described in three separate documents: (1) the Base Shelf Prospectus, (2) the Product Supplement, and (3) this Pricing Supplement, all of which collectively constitute the prospectus for the Notes. See About this Prospectus in the Product Supplement. DOCUMENTS INCORPORATED BY REFERENCE This Pricing Supplement, together with the Product Supplement, is deemed to be incorporated by reference into the Base Shelf Prospectus solely for the purpose of the MTN Program and the Notes issued hereunder. The following documents, filed by the Bank with the Office of the Superintendent of Financial Institutions Canada and/or the various securities commissions or similar authorities in Canada, are specifically incorporated by reference into and form an integral part of this Pricing Supplement: (a) the Bank s Annual Information Form dated December 1, 2015; (b) the Bank s audited consolidated financial statements as at and for the year ended October 31, 2015 with comparative consolidated financial statements as at and for the year ended October 31, 2014, together with the auditors report thereon and the auditors report on internal control over financial reporting under Standards of the Public Company Accounting Oversight Board (United States); (c) the Bank s Management s Discussion and Analysis for the year ended October 31, 2015; (d) the Bank s unaudited consolidated interim financial statements as at and for the three months ended January 31, 2016; (e) the Bank s Management s Discussion and Analysis for the three months ended January 31, 2016; (f) the Bank s Management Proxy Circular dated February 8, 2016 in connection with the annual meeting of shareholders of the Bank to be held on April 5, 2016; and (g) the Bank s marketing materials titled Bank of Montreal Fiera Global Balanced Accelerator Principal At Risk Notes, Series 1 (CAD), Due March 30, 2021 dated the date hereof. Any statement contained in the Base Shelf Prospectus, the Product Supplement, this Pricing Supplement or in a document incorporated or deemed to be incorporated by reference herein or in the prospectus for the purposes of the offering of the Notes shall be deemed to be modified or superseded for purposes of this Pricing Supplement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein or in the prospectus modifies or supersedes such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement nor include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement is not to be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that was required to be stated or that was necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this Pricing Supplement. Information has been incorporated by reference in the Base Shelf Prospectus from documents filed with the securities commissions or similar regulatory authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Corporate Secretary, Bank of Montreal, 100 King Street West, 1 First Canadian Place, 21st Floor, Toronto, Ontario, M5X 1A1, telephone: (416) and are also available electronically at FORWARD-LOOKING STATEMENTS Certain statements included in this Pricing Supplement constitute forward-looking statements, including those identified by the expressions anticipate, believe, plan, estimate, expect, intend and similar expressions to the extent they relate to the Bank or the Fund Portfolio. The forward-looking statements are not historical facts but reflect the Bank s current expectations regarding future results or events and are based on information currently available to management. Reference is also made to the disclosure relating to forward-looking statements contained in the Bank s most recent Management s Discussion and Analysis. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations PS42 4

5 or a forecast, projection or conclusion in such forward-looking statements, including the matters discussed under Certain Risk Factors in the Base Shelf Prospectus and Additional Risk Factors Specific to Enhanced Return Notes in the Product Supplement. PS42 5

6 TERMS OF THE OFFERING The principal terms of the Notes set out below should be read in conjunction with the Base Shelf Prospectus and the Product Supplement, and are incorporated by reference into the Base Shelf Prospectus. Capitalized terms not defined herein have the meanings given to them in the Product Supplement or the Base Shelf Prospectus, as the case may be. A Reference Fund is a Reference Asset, the Fund Portfolio is a Reference Basket and the Portfolio Return is a Basket Return as those terms are used in the Base Shelf Prospectus and the Product Supplement. The Notes are denominated in Canadian dollars and in this Pricing Supplement, $ refer to Canadian dollars, unless otherwise specified. Issue: Issuer: Principal Amount: Minimum Subscription: Issue Size: Bank of Montreal Fiera Global Balanced Accelerator Principal At Risk Notes, Series 1 (CAD), Due March 30, Bank of Montreal. $ per Note. $2, (20 Notes). Maximum $20,000, of Notes. The Bank reserves the right to change the maximum issue size in its sole and absolute discretion. Issue Date: On or about April 6, Final Valuation Date: Three (3) Business Days prior to the Maturity Date. Maturity Date: March 30, Term: Fund Portfolio: Approximately five (5) years. The total return of the Reference Funds in the Fund Portfolio will determine the Maturity Payment Amount on the Notes. The Fund Portfolio will be allocated as follows: Reference Funds Fund Weighting Fiera Capital Global Equity Fund 70% Fiera Capital Bond Fund 30% Total 100% The total return of a Reference Fund will reflect the actual performance of Class A units of such Reference Fund that would otherwise occur if the management expense ratio (MER) on such units was nil, and all distributions payable on a Class A unit of that Reference Fund during the term of the Notes were reinvested in additional Class A units of that same Reference Fund, less an annual program fee equal to 2.95% of the net asset value of the Fund Portfolio. See Appendix D The Reference Funds for further information on the Reference Funds. Owning the Notes is different from investing directly in units of the Reference Funds. The Fund Portfolio is notional only, meaning that the Reference Funds will be used solely as a reference to calculate the Maturity Payment Amount for the Notes. Holders do not have any ownership or other interest in any units of the Reference Funds or any securities held by the Reference Funds, including, without limitation, voting rights or the right to receive dividends or distributions directly. Holders will only have a right against the Bank to be paid any amounts due under the Notes. All actions (e.g., purchases, sales, reinvestment of distributions, etc.) taken in connection with the Fund Portfolio are notional actions only. The Notes do not represent a substitute for a direct investment in units of the Reference Funds. See Appendix C Suitability for Investment for a comparison between investing in the Notes and a direct investment in units of the Reference Funds. For more information on the Reference Funds, investors should consult the current simplified prospectus, annual information form and other information about the Reference Funds which can PS42 6

7 be obtained at and See also Appendix D The Reference Funds Historical Performance and Other Information Concerning the Reference Funds. Payment at Maturity: The amount payable on the Notes at Maturity (the Maturity Payment Amount ) will be determined as follows: (i) If the Portfolio Return is positive on the Final Valuation Date, the Maturity Payment Amount will equal: $100 + ($100 x Portfolio Return x Upside Participation) (ii) If the Portfolio Return is negative on the Final Valuation Date, the Maturity Payment Amount will equal: $100 + ($100 x Portfolio Return x Downside Participation) See Appendix A Return Profile and Appendix B Sample Calculations of Maturity Payment Amount for further discussion of the return payout calculations for the Notes under different hypothetical scenarios. Upside Participation: Downside Participation: Portfolio Return: Fund Return: 200% participation (or 2.0 times the Portfolio Return) where the Portfolio Return is positive. There is no Cap Level or Maximum Payment Amount applicable to the Notes. 100% participation (or 1.0 times the Portfolio Return) where the Portfolio Return is negative. There is no protection on the Notes and a Holder could lose some or substantially all of his or her investment in the Notes. The sum of the weighted Fund Returns for the Reference Funds in the Fund Portfolio, calculated as follows: [Fund Return1 x Fund Weighting1] + [Fund Return2 x Fund Weighting2] The percentage change (which may be positive or negative) in the Unit Value for a Reference Fund measured from the Issue Date to the Final Valuation Date, calculated as follows: (Final Value Initial Value) Initial Value Initial Value: Final Value: Unit Value: Fund Weighting: The Unit Value of each Reference Fund on the Issue Date. The Unit Value of each Reference Fund on the Final Valuation Date. The value for a Class A unit of a Reference Fund as determined by the Calculation Agent at the end of each day reflecting the performance of an actual Class A unit of that Reference Fund that would otherwise occur if the management expense ratio (MER) on such units were nil and all distributions payable on a Class A unit of a Reference Fund during the term of the Notes were reinvested in additional Class A units of that same Reference Fund, less the applicable Program Fee. There will be no duplication of management fees payable on Class A units of the Reference Funds under the Notes. Reference Fund Fund Weighting Fiera Capital Global Equity Fund 70% Fiera Capital Bond Fund 30% Total 100% PS42 7

8 Minimum Payment Amount: Fund Manager: Fees and Expenses of the Fund Portfolio: Fees and Expenses of the Offering: Status/Rank: Credit Rating: Listing and Secondary Market: Early Trading Charge: Special Circumstances: $1.00 per Note. Fiera Capital Corporation is the manager of the Reference Funds (the Fund Manager ) and is a leading publicly-traded, independent investment firm with over $100 billion in assets under management as at December 31, 2015, including approximately $5.0 billion in alternative strategies. Fiera is one of only a handful of full service, multi-product investment firms in Canada, offering clients a proven top tier track record in equity and fixed income management as well as depth and expertise in asset allocation and alternative investments. An annual fee equal to 2.95% of the net asset value of the Fund Portfolio will be payable on the Notes (the Program Fee ). The Program Fee includes all fees and expenses applicable to the Reference Funds, including management fees for the management services provided by the Fund Manager and any management expense ratio applicable to units of the Reference Funds. There is no duplication of management fees payable on units of the Reference Funds under the Notes. The Program Fee will be calculated and accrued daily. The Program Fee is reflected in the Unit Value of a Reference Fund and will reduce the Portfolio Return and Maturity Payment Amount under the Notes. In order for a Holder to benefit from the Upside Participation at Maturity, the total return on the Fund Portfolio must exceed the aggregate fees and expenses paid on the Notes. An upfront selling concession fee of $3.00 per Note (or 3.00% of the Principal Amount) is payable to the Dealers for further payment to representatives, including representatives employed by the Dealers, whose clients purchase the Notes. A fee of up to $0.20 per Note sold (or 0.20%) will be payable directly by the Bank to Desjardins Securities Inc. at closing from its own funds for acting as independent agent. The Notes will be issued on an unsecured and unsubordinated basis and will rank equally, as among themselves, and with all other outstanding direct, unsecured and unsubordinated, present and future obligations of the Bank (except as otherwise prescribed by law), and will be payable ratably without any preference or priority. The Notes have not been and will not be rated by any credit rating organization. As of the date of this Pricing Supplement, the deposit liabilities of the Bank with a term to maturity of more than one year were rated Aa3 by Moody s Investors Service Inc., A+ by Standard & Poor s and AA by DBRS Limited. There is no assurance that, if the Notes were rated by such rating agencies, they would have the same rating as the other deposit liabilities of the Bank. A rating is not a recommendation to buy, sell or hold investments, and may be subject to revision or withdrawal at any time by the relevant rating agency. The Notes will not be listed on any exchange or marketplace. BMO Nesbitt Burns Inc. ( BMO Capital Markets ) will use reasonable efforts under normal market conditions to provide a daily secondary market for the sale of the Notes by Holders through the FundSERV network but reserves the right to elect not to do so in the future, in its sole and absolute discretion, without prior notice to Holders. See Secondary Market in the Product Supplement and Description of the Notes FundSERV in the Base Shelf Prospectus. If a Note is sold within the first 360 days after the Issue Date, the proceeds from the sale of the Note will be reduced by an Early Trading Charge equal to a percentage of the Principal Amount determined as follows: If Notes sold within: Early Trading Charge 0-90 days after Issue Date 4.50% days after Issue Date 3.30% days after Issue Date 2.10% days after Issue Date 1.10% Thereafter See Appendix E Special Circumstances for a description of certain special circumstances, including a Market Disruption Event and an Extraordinary Event, which may result in an Nil PS42 8

9 adjustment to the calculation or timing of payments due on the Notes. Calculation Agent: Dealers: Book-Entry Only System: Eligibility for Investment: Additional Tax Information: Continuous Disclosure: FundSERV Code: Suitability for Investment: BMO Capital Markets. BMO Nesbitt Burns Inc. and Desjardins Securities Inc. Book-entry only through CDS. See Description of the Notes Form of Notes and Transfer in the Base Shelf Prospectus. Eligible for trusts governed by RRSPs, RRIFs, RESPs, RDSPs, TFSAs and DPSPs (other than a trust governed by a DPSP to which contributions are made by the Bank or by an employer with which the Bank does not deal at arm s length within the meaning of the Tax Act). For additional information about the Canadian federal income tax considerations associated with an investment in the Notes and the eligibility of the Notes for investment for certain registered plans, see Certain Canadian Federal Income Tax Considerations and Eligibility for Investment in the Product Supplement. While the matter is not free from doubt, a disposition or deemed disposition of a Note by an Initial Holder, other than to the Bank, prior to October 1, 2016 and prior to an Extraordinary Event Notification Date should give rise to a capital gain (or capital loss) to the extent that the proceeds of disposition exceed (or are less than) the aggregate of the Initial Holder s adjusted cost base of the Note and any reasonable costs of disposition. An Initial Holder who disposes of a Note prior to October 1, 2016 should consult his or her tax advisor with respect to his or her particular circumstances. The federal Budget released on March 22, 2016 proposes to amend the Tax Act, which will change the federal income tax consequences described in Certain Canadian Federal Income Tax Considerations in the Product Supplement where an Initial Holder transfers or assigns a Note (other than to the Bank) after September 30, Pursuant to the proposed amendments, if enacted as currently proposed, on such a transfer or assignment, the Initial Holder will be required to include in income as accrued interest the amount, if any, by which the price for which the Note was assigned or transferred exceeds the Principal Amount. An Initial Holder may realize a capital loss on such disposition or deemed disposition to the extent that the price for which the Note was assigned or transferred is less than the Principal Amount. Ongoing information about the performance of the Notes will be available to Holders on the Bank s structured products website ( For additional information with respect to continuous disclosure, please refer to Description of the Notes Continuous Disclosure in the Product Supplement. JHN8339 Investors should independently determine, with their own advisors, whether an investment in the Notes is suitable for them having regard to their own investment objectives and expectations. The Notes may be suitable for: investors who are seeking a medium-term investment in a balanced fund portfolio consistent with the features of the Notes; investors comfortable with the risks associated with foreign equity securities and Canadian fixed income securities; investors who are comfortable with the total return of the Fund Portfolio measured at issuance and maturity only, and an investment time horizon similar to the Notes; investors who are comfortable with the non-linear sensitivity of the secondary trading price for the Notes; investors who are comfortable with no principal protection (other than the Minimum Payment Amount) on an investment in the Notes; and investors who have considered all of the risks associated with an investment in the Notes. An investment in the Notes is not suitable for investors seeking a guaranteed return or who cannot PS42 9

10 withstand to lose some or substantially all of their investment. Owning the Notes is different than investing directly in the Reference Funds. See Appendix C Suitability for Investment for information concerning the differences between investing in the Notes and investing in Class A units of the Reference Funds. The Notes do not represent a substitute for a direct investment in units of the Reference Funds. Investors should independently determine, with their own advisors, whether an investment in the Notes is suitable for them having regard to their own investment objectives and expectations. Risk Factors: Risk factors relating to the Notes include, but are not limited to, the following: Risks Relating to the Notes the return on the Notes is calculated using the total return of the Fund Portfolio. Accordingly, any distributions made on units of the Reference Funds will be reflected in the value of the Notes. However, Holders will not have any ownership rights in units of the Reference Funds; there is no principal protection provided by these Notes. As a result, a Holder will be fully exposed to the downside risks associated with an investment in the constituent securities of the Reference Funds. If the Portfolio Return is negative at Maturity, then a Holder will receive less than the Principal Amount he or she invested in the Notes and could lose some or substantially all of his or her principal investment in the Notes; there will be no interest or other payments made during the term of the Notes and there can be no assurance that the Portfolio Return will be positive at Maturity; the Bank s estimated value of the Notes on the Issue Date is only an estimate, and based on a number of factors. The estimated value was determined on the pricing date using the Bank s internal pricing models, which take into account a number of variables and assumptions about future events that may prove to be incorrect, including expectations as to distributions that may be payable on the Reference Funds, volatility, interest rates and the Bank s internal funding rates. The Bank s internal funding rates may differ from the market rates for the Bank s conventional debt securities. The use of different pricing models and assumptions could result in materially different values as compared to the Bank s estimated value. An estimated value calculated on the Issue Date may differ from the current estimate, and the actual value of the Notes at any time will reflect many factors and cannot be predicted with accuracy; the initial offering price of the Notes exceeds the estimated value of the Notes. The difference between the initial offering price and the estimated value of the Notes results from several factors, including any fees to be paid to the Dealers, the estimated profit (including a portion of the Program Fee retained by the Bank) that the Bank and its affiliates expect to earn (which may or may not be realized) for assuming the risks in hedging the Bank s obligations under the Notes, and the estimated cost of hedging these obligations. The Bank has adopted written policies and procedures for determining the estimated value of the Notes which include: (i) the methodologies used for valuing each type of component embedded in the Notes, (ii) the methods by which the Bank will review and test valuations to assess the quality of the prices obtained as well as the general functioning of the valuation process, and (iii) conflicts of interest; the estimated value of the Notes is not an indication or prediction of the price at which BMO Capital Markets or any other person may be willing to purchase or sell the Notes in the secondary market. The value of the Notes after the date of this Pricing Supplement will vary based on many factors, including changes in market conditions, and cannot be predicted with accuracy. As a result, the actual value that a Holder would receive upon selling the Notes in the secondary market, if any, should be expected to differ materially from the initial estimated value of the Notes. See Additional Risk Factors Specific to Enhanced Return Notes General Risks Relating to Principal At Risk Notes Secondary Trading of the Notes in the Product Supplement and Secondary Market Sale Prior to Maturity in the Product Supplement for more information concerning the value of the Notes in the daily secondary market; PS42 10

11 Risks Relating to the Reference Funds the historical performance of the Reference Funds should not be interpreted as an indication of future performance of the Reference Funds and the return on the Notes will not reflect a direct or indirect investment in the Reference Funds or their holdings; the success of the Reference Funds depends on the skill and acumen of the management and portfolio management teams of the Fund Manager or any portfolio sub-advisor appointed by the Fund Manager from time to time. There can be no assurance that: (a) the investment objectives of the Reference Funds will be realized; (b) the investment strategies of the Reference Funds will prove successful; (c) the Reference Funds can avoid losses; or (d) the Fund Manager s management of the Reference Funds will generate positive returns for the Reference Funds; the Fund Manager has no obligations with respect to the Notes, and may make changes to the Reference Funds that could affect amounts payable on the Notes and the value of the Notes in any secondary market; the Reference Funds may be replaced with successor funds or other similar reference assets in certain circumstances; it is impossible to know whether the net asset value of the Reference Funds at any time will rise or fall. The net asset value of the Reference Funds will be influenced by the demand for and supply of the securities in which the Reference Funds invest and by general economic, industry and market trends; the trading prices of the securities in which the Fund Manager may invest a Reference Fund's assets from time to time will determine the net asset value of the Reference Funds. Trading prices of such securities will be influenced by complex and inter-related political, economic, financial and other factors that can affect the capital markets generally or the markets on which such securities are trading. The securities in which the Fund Manager may invest a Reference Fund s assets can be subject to sudden, unexpected and substantial price movements and other risks; none of the Bank, the Dealers or any of their respective affiliates or associates, has any obligation or responsibility for the provision of future information in respect of the Reference Funds or any issuers of securities held by the Reference Funds, and investors shall have no recourse against the Bank, the Fund Manager, the Dealers or any of their respective affiliates or associates in connection with any information relating to the Reference Funds, or any issuers of securities held by the Reference Funds; risks relating to the securities held by the Reference Funds are also applicable to an investment in the Notes; Risks Relating to the Bank the Notes have not been rated and will not be insured by the Canada Deposit Insurance Corporation or any other entity and therefore the payments to Holders will be dependent upon the financial health and creditworthiness of the Bank; and subsidiaries of the Bank (including BMO Capital Markets) and the Dealers have published, and in the future expect to publish, research reports with respect to the Reference Funds or their holdings, which research may express opinions or provide recommendations that are inconsistent with purchasing or holding the Notes, and the Bank (including BMO Capital Markets) and the Dealers may engage in transactions that affect the total performance of the Reference Funds or their holdings. Investors should carefully consider with their advisors all of the information set out in the prospectus for any potential investment in the Notes. In particular, investors should evaluate the key risks highlighted above as well as the risks under Certain Risk Factors in the Base Shelf Prospectus and under the heading Additional Risk Factors Specific to Enhanced Return Notes in the Product Supplement. PS42 11

12 APPENDIX A RETURN PROFILE The return profile below is provided for illustration purposes only. This graph demonstrates the payment on the Notes based on a specific total return on the Fund Portfolio. There can be no assurance that any specific return will be achieved on the Notes. All examples assume that a Holder has purchased Notes with an aggregate Principal Amount of $100.00, that a Holder holds the Notes until Maturity and that no Extraordinary Event has occurred during the term of the Notes. The centre horizontal line represents the range of possible returns that could be generated by the Fund Portfolio over the term of the Notes. If the Portfolio Return is positive on the Final Valuation Date, a Holder will benefit from 200% Upside Participation in any positive Portfolio Return. There is no Cap Level and no Maximum Payment Amount applicable to the Notes. If the Portfolio Return is negative on the Final Valuation Date, a Holder will suffer a loss on the Notes equal to the actual Portfolio Return (a negative number). There is no principal protection provided by these Notes so a Holder could lose some or substantially all of his or her principal investment in the Notes (subject to a Minimum Payment Amount of $1.00 per Note). The Portfolio Return will be calculated net of fees, so the total return of the Reference Funds must exceed the aggregate fees and expenses payable during the term in order to benefit from the enhanced upside participation on the Notes. PS42 12

13 The table below shows the Maturity Payment Amount that a Holder would receive on the Notes based on various hypothetical Portfolio Returns: Portfolio Return Note Return Maturity Payment Amount Compounded Annual Return % % $ % 90.00% % $ % 80.00% % $ % 70.00% % $ % 60.00% % $ % 50.00% % $ % 40.00% 80.00% $ % 30.00% 60.00% $ % 20.00% 40.00% $ % 10.00% 20.00% $ % 0.00% 0.00% $ % % % $ % % % $ % % % $ % % % $ % % % $ % % % $ % % % $ % % % $ % % % $ % % % $ % The Portfolio Return will be calculated based on the total return of the Fund Portfolio. As shown above, if the Portfolio Return is positive on the Final Valuation Date, a Holder will benefit from 200% participation (or 2.0 times) in the appreciation of the Reference Funds in the Fund Portfolio. There is no Cap Level and no Maximum Payment Amount applicable to the Notes. If the Portfolio Return is negative, a Holder will suffer a loss on the Notes resulting from the decline of the Reference Funds in the Fund Portfolio, based on the performance and weighting of the respective Reference Funds. There is no principal protection provided by these Notes so a Holder could lose some or substantially all of his or her principal investment in the Notes (subject to a Minimum Payment Amount of $1.00 per Note). PS42 13

14 APPENDIX B SAMPLE CALCULATIONS OF MATURITY PAYMENT AMOUNT The following examples show how the Portfolio Return and Maturity Payment Amount would be calculated based on certain hypothetical values and assumptions set out below. Unit Values used to determine the Initial Value and Final Value of each Reference Fund will reflect the actual performance of Class A units of such Reference Fund that would otherwise occur if the management expense ratio (MER) on such units was nil, and all distributions payable on a Class A unit of a Reference Fund during the term of the Notes were reinvested in additional units of that same Reference Fund, less an annual program fee equal to 2.95% of the net asset value of the Fund Portfolio. These examples are for illustrative purposes only and should not be construed as an estimate or forecast of the performance of the Fund Portfolio or any of the Reference Funds, or the return that a Holder might realize on the Notes. The Portfolio Return will be calculated based on the weighted Fund Returns. For purposes of these examples, the Initial Value of the Equity Fund is assumed to be and the Initial Value of the Bond Fund is assumed to be Initial Value (Equity Fund) = Initial Value (Bond Fund) = Upside Participation = 200% There is no Cap Level and no Maximum Payment Amount applicable to the Notes. Minimum Payment Amount = $1.00 per Note Example #1 Negative Portfolio Return Step 1 - Calculating the Portfolio Return If the Final Value of the Equity Fund was and the Final Value of the Bond Fund was 7.50, the Fund Returns for the Equity Fund and the Bond Fund would be % and %, respectively, as illustrated in the graph below. The Fund Returns and the Portfolio Return would be calculated as follows: Fund Return (Equity) = (Final Value Initial Value) = = % Initial Value Fund Return (Bond) = (Final Value Initial Value) = = % Initial Value Portfolio Return = [Fund Return (Equity) x Fund Weighting (Equity)] + [Fund Return (Bond) x Fund Weighting (Bond)] = (-45.00% x 70%) + (-40.00% x 30%) = (-31.50%) + (-12.00%) = % Step 2 - Calculating the Maturity Payment Amount As there is no principal protection on the Notes, a Holder will have 100% participation in any negative Portfolio Return, subject to a Minimum Payment Amount of $1.00 per Note. In this example, the Maturity Payment Amount would be calculated as follows: Maturity Payment Amount = $ ($ x Portfolio Return x Downside Participation) = $ ($ x (-43.50%) x 100%) = $56.50 per Note Accordingly, a Holder would receive payment of $56.50 for each $ Note on the Maturity Date (which is equivalent to a compounded annual loss of 10.79% on the Notes). PS42 14

15 Fund Return 0% -10% -20% -30% -40% -50% Yr 1 Yr 2 Yr 3 Yr 4 Maturity Term to Maturity (Years) Bond Fund Return Equity Fund Return -40% -45% Example #2 Neutral Portfolio Return Step 1 - Calculating the Portfolio Return If the Final Value of the Equity Fund was and the Final Value of the Bond Fund was 7.50, the Fund Returns for the Equity Fund and the Bond Fund would be 20.00% and %, respectively, as illustrated in the graph below. The Fund Returns and the Portfolio Return would be calculated as follows: Fund Return (Equity) = (Final Value Initial Value) = = 20.00% Initial Value Fund Return (Bond) = (Final Value Initial Value) = = % Initial Value Portfolio Return = [Fund Return (Equity) x Fund Weighting (Equity)] + [Fund Return (Bond) x Fund Weighting (Bond)] = (20.00% x 70%) + (-40.00% x 30%) = (14.00%) + (-12.00%) = 2.00% Step 2 - Calculating the Maturity Payment Amount A Holder will have 200% participation in any positive Portfolio Return. In this example, the Maturity Payment Amount would be calculated as follows: Maturity Payment Amount = $ ($ x Portfolio Return x Upside Participation) = $ ($ x 2% x 200%) = $ per Note Accordingly, a Holder would receive payment of $ for each $ Note on the Maturity Date (which is equivalent to a compounded annual return of 0.79% on the Notes). PS42 15

16 Fund Return 40% 20% +20% 0% -20% -40% -40% -60% Yr 1 Yr 2 Yr 3 Yr 4 Maturity Term to Maturity (Years) Bond Fund Return Equity Fund Return Example #3 Enhanced Portfolio Return Step 1 - Calculating the Portfolio Return If the Final Value of the Equity Fund was and the Final Value of the Bond Fund was 17.50, the Fund Returns for the Equity Fund and the Bond Fund would be 30.00% and 40.00%, respectively, as illustrated in the graph below. The Fund Returns and the Portfolio Return would be calculated as follows: Fund Return (Equity) = (Final Value Initial Value) = = 30.00% Initial Value Fund Return (Bond) = (Final Value Initial Value) = = 40.00% Initial Value Portfolio Return = [Fund Return (Equity) x Fund Weighting (Equity)] + [Fund Return (Bond) x Fund Weighting (Bond)] = (30.00% x 70%) + (40.00% x 30%) = (21.00%) + (12.00%) = 33.00% Step 2 - Calculating the Maturity Payment Amount A Holder will have 200% participation in any positive Portfolio Return. In this example, the Maturity Payment Amount would be calculated as follows: Maturity Payment Amount = $ ($ x Portfolio Return x Upside Participation) = $ ($ x 33% x 200%) = $ per Note Accordingly, a Holder would receive payment of $ for each $ Note on the Maturity Date (which is equivalent to a compounded annual return of 10.66% on the Notes). PS42 16

17 Fund Return 50% 40% +40% 30% +30% 20% 10% 0% Yr 1 Yr 2 Yr 3 Yr 4 Maturity Term to Maturity (Years) Bond Fund Return Equity Fund Return PS42 17

18 APPENDIX C SUITABILITY FOR INVESTMENT The Notes differ from conventional debt and fixed income investments because they are not principal protected, and the return at Maturity is not calculated by reference to a fixed or floating rate of interest that is determinable prior to Maturity. Investors could lose some or substantially all of their investment in the Notes and are only guaranteed to receive a minimum payment of $1.00 per Note at Maturity. See Description of the Notes Payments at Maturity in the Product Supplement. The Notes are not suitable for investors who expect or require a guaranteed or predictable return or who cannot withstand a loss of some or substantially all of their investment. The Notes are designed for investors who are prepared to hold the Notes to Maturity and who are willing to assume risks with respect to a return linked to the Reference Funds, including the risk that the Maturity Payment Amount determined on the Final Valuation Date may be negative. A summary of certain characteristics of the Reference Funds is provided below for comparison purposes only. Potential investors are urged to refer to the prospectus of the Reference Funds for all information relating to the Reference Funds. In particular, information concerning the tax treatment of an investment in Class A units of the Reference Funds is based upon the disclosure in that prospectus. Owning the Notes is different from investing directly in units of the Reference Funds. A direct investment in the Reference Funds differs from an investment in the Notes for a number of reasons, including: Accelerator Notes The Notes provide 200% upside participation (2 times) and 100% downside participation (1 times) in the total return of the weighted Fund Portfolio over the term of the Notes. The weighted allocation to each Fund within the notional Fund Portfolio will remain static throughout the term of the Notes and weightings will not change with fund performance and market conditions. An investor will not receive any distributions during the term of the Notes. Any distributions paid on units of the Reference Funds will be automatically notionally reinvested in additional units of the same fund within the Fund Portfolio. If the Notes are held to the Maturity Date, the amount, if any, by which the Maturity Payment Amount exceeds the Principal Amount of the Notes will be included in the investor s income for the taxation year which includes the Maturity Date. On a disposition of Notes prior to an Extraordinary Event Notification Date and prior to October 1, 2016, while the matter is not free from doubt, an investor who holds the Notes as capital property should realize a capital gain or capital loss, as the case may be. If proposed amendments are enacted, where an investor disposes of a Note after September 30, 2016, the investor will be required to include in income as accrued interest the amount, if any, by which the price for which the Note was disposed of exceeds the Principal vs. vs. vs. vs. PS42 18 Reference Funds Investors will fully participate in any increase or decrease in the net asset value (total return) of Class A units of the Reference Funds. Investors will be able to adjust their holdings of the Reference Funds at their discretion, although there may be tax consequences to these adjustments. An investor would generally receive taxable cash distributions consisting of net income and net realized capital gains. Specifically, the Equity Fund distributes income twice a year, in June and December, and distributes capital gains each December. The Bond Fund distributes income twice a year, in June and December, and distributes capital gains each December. If a unitholder of a Reference Fund disposes of his or her units, whether by switch, redemption or otherwise, a unitholder will realize a capital gain (or a capital loss) to the extent that the proceeds of disposition, less any costs of disposition, are greater (or less) than the adjusted cost base of the units.

19 Amount. An investor who disposes of a Note prior to Maturity should consult his or her tax advisor with respect to his or her particular circumstances. The daily bid price for the Notes will have a nonlinear sensitivity to the increases and decreases in the net asset value of the Fund Portfolio, and may be significantly affected by changes in interest rates, volatility and time remaining to maturity. The return on the Notes will be reduced by a Program Fee of 2.95% per annum. The Program Fee accounts for all fees and expenses applicable to the Notes, including management fees for the management services provided by the Fund Manager and any MER applicable to units of the Reference Funds. An upfront selling concession and an independent agent fee will be payable on the Notes. The return payable at Maturity will be calculated using a formula based on the $100 Principal Amount per Note. An investor has no direct or beneficial ownership rights in units of the Reference Funds. Investors have a right against the Bank to be paid amounts owing under the Notes. Investors are subject to certain market risks of the Reference Funds, and credit risks of the Bank. Daily secondary market provided by BMO Capital Markets (subject to availability). vs. vs. vs. vs. vs. vs. The daily NAV for Class A units of the Reference Funds will be determined by the Fund Manager and will be directly affected by political, economic, financial and other factors in the markets affecting the securities held by the Reference Funds. As of June 30, 2015, the MER payable on Class A units of the Equity Fund was 2.90% and the MER payable on Class A units of the Bond Fund was 1.30%. The management fee for Class A units of the Equity Fund is 2.25% and for the Bond Fund is 1.00%. Additional portfolio level service fees may be payable to broker/dealers. An upfront sales commission and trailer fees would be payable on Class A units of the Reference Funds. For purchases of Class A Units of the Reference Funds, if another dealer is used, the investor may pay from 0 to 5% of the total purchase order. A trailer fee of 1.00% applies to the Class A units of the Equity Fund and 0.50% for the Bond Fund. There is no applicable independent agent fee. An investor has direct ownership of units. Investors are subject to certain market risks of the Reference Funds. Units can be redeemed at NAV to the issuer at the end of each business day. Early trading charge if sold in first year. vs. There is no redemption fee unless units are redeemed that have been owned for less than 90 days or if a unitholder engages in frequent switching or redemptions, that is within 30 days of purchasing units. A deferred sales charge will apply to the redemption of Class A units purchased using the low load option. A prospective investor should reach a decision to invest in the Notes only after carefully considering, with his or her own advisors, the suitability of the Notes in light of his or her investment objectives and the information set out in this Pricing Supplement, the Product Supplement and the Prospectus. The Notes are not suitable for an investor who does not understand the terms of the Notes or the risks involved in holding the Notes. None of the Bank, the Dealers or any of their respective affiliates or associates makes any recommendation as to the suitability of the Notes for any particular investor. For more information, see Terms of the Offering Risk Factors in this Pricing Supplement. PS42 19

20 APPENDIX D THE REFERENCE FUNDS FIERA CAPITAL GLOBAL EQUITY FUND Quick Facts About the Equity Fund Fund code: SIC 304 Date class started: April 30, 2009 Total value of the Fund on June 30, 2015: $120,991,382 Management expense ratio (MER): 2.90% Fund manager: Fiera Capital Corporation Portfolio manager: Fiera Capital Corporation Distributions: Semi-annually in June and December Minimum investment: $5,000 (initial), $1,000 (subsequent) Equity Fund Investment Objective The investment objective of the Equity Fund is to achieve over the longer term the highest possible return that is consistent with a fundamental investment philosophy through investment primarily in foreign equity securities and to provide long-term capital appreciation through a portfolio of broadly diversified securities, by region and industry, invested primarily in the U.S. and international markets. For information about the investment strategies employed by the Equity Fund s manager to achieve this objective, see What Does the Fund Invest In? Investment Strategies in the Equity Fund s simplified prospectus dated August 27, 2015 (the simplified prospectus ). Equity Fund Holdings The following investments represent the top 10 holdings of the Equity Fund as at January 31, The Equity Fund s investments will change from time to time. Top 10 Holdings % of Net Assets 1. Moody s Corporation Becton, Dickinson and Co Johnson & Johnson US Bancorp Wells Fargo & Co Nestle SA TJX Companies Inc InterContinental Hotels Group PLC M Company Nike Inc. 2.9 (Source: Fiera) Total % of Net Assets 33.3 PS42 20

21 The following charts provide an industry sector breakdown and geographic breakdown of the holdings of the Equity Fund as at January 31, These breakdowns will change from time to time. Sector Allocation (As of January 31, 2016) Geographic Allocation (As of January 31, 2016) (Source: Fiera) Historical Performance of the Equity Fund This section, reproduced from the Equity Fund s Fund Facts filing dated August 27, 2015 (the Fund Facts ) illustrates how Class A units of the fund have performed over the 5 years presented. Returns are after expenses have been deducted. These expenses reduce the fund s returns. Year-by-Year Returns This chart shows how Class A units of the Equity Fund performed in each of the 5 years presented. The Equity Fund dropped in value in 0 of the 5 years. The range of returns and change from year to year can help unitholders of the Equity Fund assess how risky the fund has been in the past. It does not tell unitholders how the fund will perform in the future. PS42 21

22 Best and Worst Three-Month Returns This table shows the best and worst returns for Class A units of the Equity Fund in a three-month period over the 5 years presented. The best and worst three-month returns could be higher or lower in the future. Unitholders of the Equity Fund should consider how much of a loss they can afford to take in a short period of time. Return 3 months ending If a unitholder of the Reference Fund invested $1,000 at the beginning of the period: Best return 15.22% February 28, 2013 the unitholder s investment would rise to $1, Worst return % June 30, 2010 the unitholder s investment would drop to $ Average Return The annual compounded return of Class A units of the Equity Fund was 14.66% since inception. If a unitholder of the Equity Fund had invested $1,000 in the fund at inception, the investment would be worth $2,273 at August 27, Performance Graph The following graph illustrates the performance of $10,000 invested in Class A units of the Equity Fund for the period beginning on April 30, 2009 and ending November 30, 2015, assuming the reinvestment of all distributions, but not taking into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder. Past performance of the Equity Fund is not indicative of future performance. Fiera Capital Global Equity Fund Historical Performance of Class A Units from April 30, 2009 to November 30, 2015 (Source: Morningstar) Expenses Unitholders of the Equity Fund do not pay these expenses directly. They affect unitholders because they reduce the fund s returns. The Equity Fund s annual management fee is 2.25% of the fund s value. As of December 31, 2014, the Equity Fund s expenses were 3.05% of its value. This equals $30.50 for every $1,000 invested. Management expense ratio (MER) This is the total of the fund s management fee (including the trailing commission) and operating expenses. Fiera Capital Corporation has waived some of the Fund s expenses. If it had not done so, the MER would have been higher. PS42 22 Annual rate (as a % of the fund s value) 2.90%

23 Trading expense ratio (TER) 0.15% These are the fund s trading costs. Fund expenses 3.05% Risk Rating of the Equity Fund This section, reproduced from the Fund Facts for the Equity Fund, addresses that fund s risk rating. One way to gauge risk is to look at how much a fund s returns change over time. This is called volatility. In general, funds with higher volatility will have returns that change more over time. They typically have a greater chance of losing money and may have a greater chance of higher returns. Funds with lower volatility tend to have returns that change less over time. They typically have lower returns and may have a lower chance of losing money. Fiera has rated the volatility of the Equity Fund as medium. This rating is based on how much the fund s returns have changed from year to year. It does not tell unitholders of the Equity Fund how volatile the fund will be in the future. The rating can change over time. A fund with a low risk rating can still lose money. For more information about the risk rating and specific risks that can affect the Equity Fund s returns, see the Investment Risks section of the Equity Fund s simplified prospectus. PS42 23

24 FIERA CAPITAL BOND FUND Quick Facts About the Bond Fund Fund code: SIC 302 Date class started: April 30, 2009 Total value of the Fund on June 30, 2015: $50,426,022 Management expense ratio (MER): 1.30% Fund manager: Portfolio manager: Distributions: Minimum investment: Fiera Capital Corporation Fiera Capital Corporation Semi-annually in June and December $5,000 (initial), $1,000 (subsequent) Bond Fund Investment Objective The investment objective of the Bond Fund is to provide safety of capital and high current income primarily through investment in Canadian income securities. The Bond Fund primarily invests in short and long-term debt securities issued or guaranteed by federal, provincial, and municipal governments, as well as those issued by Canadian companies. For information about the investment strategies employed by the Bond Fund s manager to achieve this objective, see What Does the Fund Invest In? Investment Strategies in the Bond Fund s simplified prospectus dated August 27, 2015 (the simplified prospectus ). Bond Fund Holdings The following investments represent the top 10 holdings of the Bond Fund as at January 31, The Bond Fund s investments will change from time to time. Top 10 Holdings % of Net Assets 1. Canada Govt 3.500% 01-Dec Canada Treasury Bills 24-Mar Royal Office Finance 5.209% 12-Nov Canada Treasury Bills 03-Feb Toronto Comm Housing 4.877% 11-May Quebec Prov 4.250% 01-Dec TD Capital Trust 9.523% 30-Jun Quebec Prov 4.500% 01-Dec Ontario Prov 3.500% 02-Jun Brookfield Office Pro 3.244% 09-Jan (Source: Fiera) Total % of Net Assets 45.4 PS42 24

25 The following charts provide a breakdown of the holdings of the Bond Fund as at January 31, This breakdown will change from time to time. Asset Allocation (As of January 31, 2016) Bond Type (As of January 31, 2016) (Source: Fiera) Historical Performance of the Bond Fund This section, reproduced from the Bond Fund s Fund Facts filing dated August 27, 2015 (the Fund Facts ) illustrates how Class A units of the fund have performed over the 5 years presented. Returns are after expenses have been deducted. These expenses reduce the fund s returns. Year-by-Year Returns This chart shows how Class A units of the Bond Fund performed in each of the 5 years presented. The Bond Fund dropped in value in 1 of the 5 years. The range of returns and change from year to year can help unitholders of the Reference Fund assess how risky the fund has been in the past. It does not tell unitholders how the fund will perform in the future. Best and Worst Three-Month Returns This table shows the best and worst returns for Class A units of the Bond Fund in a three-month period over the 5 years presented. The best and worst three-month returns could be higher or lower in the future. Unitholders of the Bond Fund should consider how much of a loss they can afford to take in a short period of time. PS42 25

26 Return 3 months ending If unitholders of the Reference Fund invested $1,000 at the beginning of the period: Best return 6.19% January 31, 2015 the unitholder s investment would rise to $1, Worst return -4.15% July 31, 2013 the unitholder s investment would drop to $ Average Return The annual compounded return of Class A units of the Bond Fund was 4.77% since inception. If a unitholder of the Bond Fund had invested $1,000 in the fund at its inception, the investment would be worth $1,322 at August 27, Performance Graph The following graph illustrates the performance of $10,000 invested in Class A units of the Bond Fund for the period beginning on April 30, 2009 and ending November 30, 2015, assuming the reinvestment of all distributions, but not taking into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder. Past performance of the Bond Fund is not indicative of future performance. Fiera Capital Bond Fund Historical Performance of Class A Units from April 30, 2009 to November 30, 2015 (Source: Morningstar) Expenses Unitholders of the Bond Fund do not pay these expenses directly. They affect unitholders because they reduce the fund s returns. As of December 31, 2014, Bond Fund s expenses were 1.30% of its value. This equals $13.00 for every $1,000 invested. Annual rate (as a % of the fund s value) Management expense ratio (MER) 1.30% This is the total of the fund s management fee (including the trailing commission) and operating expenses. Fiera Capital Corporation has waived some of the Fund s expenses. If it had not done so, the MER would have been higher. Trading expense ratio (TER) 0.00% These are the fund s trading costs. Fund expenses 1.30% PS42 26