Microsectors FANG+ 3x Leveraged ETNs Stock Price, News & Analysis

MicroSectors FANG+ 3x Leveraged ETNs due February 17, 2045 (FNGU) represent exchange-traded notes ("ETNs") issued by Bank of Montreal ("BMO"). According to BMO, these ETNs are designed to provide exposure to a 3× leveraged long performance of the gross total return version of the NYSE FANG+ Index (the "Index") on a daily basis, before the negative effect of fees and charges. The ETNs are senior, unsecured obligations of BMO and are subject to BMO's credit risk.

BMO has announced that it is reusing the ticker symbol FNGU for its MicroSectors FANG+ 3× Leveraged ETNs after a required "cooling off" period under NYSE Arca guidelines. In the related disclosure, BMO states that the ETNs are listed on NYSE Arca under a different ticker and are expected to trade under FNGU following a symbol change. The ETNs have a stated maturity date of February 17, 2045, as described in the ETN prospectus and related offering documents filed with the U.S. Securities and Exchange Commission ("SEC").

The NYSE FANG+ Index referenced by the ETNs is described in BMO's news release as a product of ICE Data Indices, LLC ("ICE Data") and is used with permission. ICE and NYSE are identified as registered trademarks of ICE Data and NYSE Group, Inc., respectively. BMO notes that ICE Data and its third-party suppliers do not accept liability in connection with the use of the NYSE FANG+ Index or related marks and refers investors to the applicable ETN prospectus for the full disclaimer.

According to BMO's disclosures, the MicroSectors FANG+ 3× Leveraged ETNs are not intended to be "buy and hold" investments and are not intended to be held to maturity. Instead, BMO describes them as daily trading tools intended for sophisticated investors who use them to manage daily trading risks as part of a diversified portfolio. The ETNs are designed to achieve their stated investment objective on a daily basis, and BMO emphasizes that performance over periods longer than one day can differ significantly from three times the return on a direct long investment in the Index.

BMO further explains that, due to daily resetting of leverage, the returns on the ETNs over time may differ, and most likely will differ, from three times the cumulative return of the Index over the same period. The ETNs are described as very sensitive to changes in the level of the Index, and BMO notes that returns can be negatively impacted in complex ways by Index volatility on a daily or intraday basis. BMO cautions that investors may suffer significant losses in the ETNs even if the long-term performance of the Index is positive, and that the ETNs may experience significant losses, up to the entire amount invested, in a short period of time.

In its disclosures, BMO states that the ETNs are suitable only for sophisticated investors who understand and can bear the potential risks and consequences of daily leveraged exposure to the Index. BMO advises that investors should actively and continuously monitor their ETN positions on an intraday basis, and that any decision to hold the ETNs for more than one day should be made with great care and only as the result of a series of daily (or more frequent) investment decisions.

The ETNs are issued under a registration statement and related prospectus materials that BMO has filed with the SEC, including a pricing supplement, prospectus supplement and base prospectus. In recent Form 6-K filings, BMO has indicated that information contained in those reports and exhibits is incorporated by reference into certain registration statements on Form F-3 and Form S-8, which provide the framework for offerings such as the MicroSectors FANG+ 3× Leveraged ETNs. BMO identifies itself in those filings as a foreign issuer filing under Form 40-F.

Bank of Montreal describes itself in the same news release as part of BMO Financial Group, which it states is the seventh largest bank in North America by assets, serving customers in Canada, the United States and select global markets. Within that broader context, the MicroSectors FANG+ 3× Leveraged ETNs are one of the exchange-traded products for which BMO has filed offering documents and related disclosures with the SEC.

Investors interested in FNGU are directed by BMO to review the ETN prospectus, including the pricing supplement and related documents filed on EDGAR, for a detailed discussion of the terms, risk factors, Index methodology and other considerations relevant to these ETNs.

Key characteristics

• Issuer: Bank of Montreal (BMO), as disclosed in SEC filings and BMO news releases.
• Product type: Exchange-traded notes (ETNs) that are senior, unsecured obligations of the issuer.
• Reference index: Gross total return version of the NYSE FANG+ Index, as described in BMO's news release.
• Leverage profile: Designed to provide 3× leveraged long exposure to the daily performance of the Index, before fees and charges.
• Maturity date: February 17, 2045, as stated in the ETN title.
• Listing venue: NYSE Arca, Inc., according to BMO's ticker symbol change announcement.
• Ticker symbol: FNGU, with BMO indicating that this symbol is being reused for these ETNs following a cooling-off period under NYSE Arca guidelines.

Risk profile and investor considerations

In its public disclosures, BMO highlights that the MicroSectors FANG+ 3× Leveraged ETNs involve substantial risks. The ETNs are described as considerably riskier than securities with intermediate- or long-term investment objectives and are not suitable for investors who plan to hold them for more than one day or who follow a "buy and hold" strategy. BMO notes that investors could lose a significant portion, or all, of their investment in a short period of time due to the leveraged and daily resetting nature of the product.

BMO also emphasizes that investment suitability must be determined individually for each investor and that the information provided in its news releases and filings is not intended as accounting, legal, regulatory or tax advice. Investors are encouraged by BMO to consult their own financial advisors and to review the ETN prospectus and related filings carefully before making any investment decision regarding the MicroSectors FANG+ 3× Leveraged ETNs.

Regulatory filings and documentation

The MicroSectors FANG+ 3× Leveraged ETNs are supported by a registration statement filed by Bank of Montreal with the SEC, as referenced in multiple Form 6-K filings. BMO has indicated that certain Form 6-K reports, including exhibits such as opinions of counsel, annual reports to shareholders, earnings coverage ratios and consolidated capitalization information, are incorporated by reference into registration statements on Form F-3. These filings provide legal and financial context for BMO's securities offerings, including ETNs such as FNGU.

Through these filings, BMO makes available information on its capitalization, earnings coverage and other matters that may be relevant to assessing the credit risk associated with its senior, unsecured obligations, which include the MicroSectors FANG+ 3× Leveraged ETNs.

Relationship with REX Shares and index providers

In the news release describing the ticker symbol change, BMO notes that the MicroSectors brand is associated with REX Shares ("REX"), which is described there as a provider of exchange-traded products. The release clarifies that MicroSectors and REX are trademarks of REX and that these trademarks and the indices have been licensed for certain uses. It also states that the ETNs are not sponsored, endorsed, sold or promoted by REX or its affiliates, and that REX and related parties make no representation or warranty to ETN owners regarding the advisability of investing in the ETNs or the ability of the indices to track general stock market performance.

Similarly, BMO's disclosure notes that the NYSE FANG+ Index is a product of ICE Data and that ICE Data and its third-party suppliers accept no liability in connection with the use of the Index or related marks. Investors are referred to the ETN prospectus for the full text of the applicable index disclaimers.

How FNGU is positioned within BMO's offerings

Within BMO's broader capital markets and structured products activity, the MicroSectors FANG+ 3× Leveraged ETNs represent a specific structured note linked to an equity index. BMO's Form 6-K filings reference registration statements that enable the bank to issue various securities, and the MicroSectors FANG+ 3× Leveraged ETNs are one of the products offered under these frameworks. The ETNs combine BMO's role as issuer with index licensing arrangements and branding relationships described in BMO's public disclosures.

According to BMO, investors considering FNGU should review the ETN prospectus available on the SEC's EDGAR system for comprehensive information on product terms, risk factors, index methodology and the legal structure of the notes.