Description

This description details the investment objectives and strategy of the BMO Canadian Banks Accelerator ETF, which primarily invests in the BMO Equal Weight Banks Index ETF (symbol: ZEB.TO). The BMO Canadian Banks Accelerator ETF aims to provide investors with both income and an enhanced return profile. It targets roughly double (2x) the positive performance of a specific Reference Index, which tracks a diversified group of Canadian bank equities, up to a predefined ceiling. Conversely, it endeavors to limit potential losses to approximately a single (1x) factor compared to the Reference Index's decline. These performance goals, stated before the deduction of any fees, expenses, or taxes, are set for distinct 'Target Outcome Periods' and are contingent on normal market conditions. The current Reference Index for this strategy is the Solactive Equal Weight Canada Banks Index. It's important to note that during times of heightened market volatility, the Accelerator ETF might not achieve its 2x upside objective, primarily due to regulatory mandates. To fulfill its investment aims, the BMO Canadian Banks Accelerator ETF predominantly allocates capital to the BMO Equal Weight Banks Index ETF (referred to here as the "Reference ETF"). Additionally, it may utilize specialized "Converge Options" that track the price performance of this Reference ETF, forming part of a "target outcome strategy." Such strategies are engineered to produce specific, predetermined investment outcomes based on the Reference ETF's performance over its respective Target Outcome Period. The defined outcomes, including the accelerated return and the pre-set upside cap (both prior to fees, expenses, and taxes), are directly linked to the Reference ETF's returns over these periods. Each Target Outcome Period begins on the first business day of January, April, July, and October, and concludes on the last business day of March, June, September, and December. The BMO Equal Weight Banks Index ETF (ZEB.TO), acting as the aforementioned Reference ETF, endeavors to mirror as closely as possible the performance of an equally weighted diversified Canadian bank index, after accounting for its own expenses. Its standard investment approach involves holding the constituent securities of the Solactive Equal Weight Canada Banks Index in the same proportions as they are represented within that index. The Manager also retains the flexibility to employ a sampling methodology when selecting investments for ZEB.TO to gain exposure to the Solactive Equal Weight Canada Banks Index's performance. Furthermore, as an alternative or in conjunction with direct security holdings, ZEB.TO may invest in or utilize "Other Securities" to achieve exposure to the index's performance. The Solactive Equal Weight Canada Banks Index itself is composed of Canadian exchange-listed securities from the diversified banking sector. Its constituent companies must meet specific minimum market capitalization and liquidity criteria. A key characteristic of this index is that each security is assigned an equal weighting, rather than being weighted proportionally by its market capitalization.