Bank of Montreal Launches $1.1 Million Trigger Callable Contingent Yield Notes Tied to Russell 2000, S&P 500, and EURO STOXX 50

Overview of the Contingent Yield Notes Structure

Bank of Montreal's Trigger Callable Contingent Yield Notes are structured debt instruments combining fixed income elements with derivative exposure to three major equity indices. These senior unsecured debt securities depend on Bank of Montreal's creditworthiness for all payments. The offering totals $1.1 million with an original issue price of $10.00 per note and a minimum investment of $1,000 (100 notes). The underwriting discount is $0.15 per note, yielding proceeds of $9.85 per note to the issuer.

The notes track the Russell 2000, S&P 500, and EURO STOXX 50 indices. On the trade date, July 20, 2026, initial index levels were 2,942.429 (Russell 2000), 7,443.28 (S&P 500), and 6,227.40 (EURO STOXX 50). The estimated initial note value is $9.94 per note, derived from a fixed-income component valued using Bank of Montreal's internal funding rate and derivative transactions. Actual values may vary significantly over time.

Quarterly Contingent Coupon Payments and Observation Dates

Coupon payments occur quarterly and depend on whether each underlying index's closing value meets or exceeds specified coupon barrier levels on observation dates. Investors receive coupons only if all three indices meet their respective coupon barriers; if any index falls below its barrier, no coupon is paid for that quarter. This all-or-nothing coupon structure means weakness in any single index can eliminate quarterly income.

Coupon barriers are set at 70% of each index's initial value: 2,059.700 for Russell 2000, 5,210.30 for S&P 500, and 4,359.18 for EURO STOXX 50. The Russell 2000 component offers a contingent coupon rate of 10.80% per annum. Bank of Montreal may optionally redeem the notes quarterly, paying principal plus any due coupon, ending further payments.

Principal Repayment and Downside Risk at Maturity

At maturity, if not redeemed early, principal repayment depends on the final index values relative to downside thresholds set at 50% of initial values: 1,471.215 (Russell 2000), 3,721.64 (S&P 500), and 3,113.70 (EURO STOXX 50). Full principal and any final coupon are paid only if all indices meet or exceed these thresholds.

If any index closes below its downside threshold on July 21, 2031, investors incur losses proportional to the negative return of the worst-performing index. This means investors bear full downside exposure to the least performing index, potentially losing a significant portion or all of their initial investment. This risk profile differentiates these notes from traditional fixed-income securities.

Issuer Credit Risk and Obligations

All payments are subject to Bank of Montreal's credit risk. In case of issuer default, investors may lose all amounts due. The notes are unsecured obligations without collateral backing and are not insured by FDIC, Canada Deposit Insurance Corporation, or any government agency.

The notes are not subject to bail-in provisions or mandatory conversion into Bank of Montreal common shares under Canadian regulatory frameworks. Nonetheless, as unsecured debt, default risk remains a critical consideration for investors.

Risk Considerations and Potential Losses

The notes carry higher risk than conventional debt, with potential for substantial or total loss of principal. Investors may receive few or no coupon payments if any index fails to meet coupon barriers. Market risk applies to all three indices simultaneously, with no offsetting effect from one index's performance against another.

Investors do not benefit from index appreciation or dividends. Higher contingent coupon rates correspond to greater risk. Detailed risk factors are available starting on page PS-9 of the pricing supplement and related product documents, which investors should review thoroughly before investing.

Distribution Details and Pricing

The notes were distributed via BMO Capital Markets Corp. and UBS Financial Services Inc. The trade date was July 20, 2026, with settlement on July 27, 2026. The $1.1 million offering incurred $16,500 in underwriting discounts, yielding net proceeds of $1,083,500 to Bank of Montreal. The minimum investment is $1,000 (100 notes), making the notes accessible to both individual and institutional investors.

Observation and optional redemption dates occur quarterly, with the final valuation on July 21, 2031, and maturity on July 28, 2031. These notes are not listed on any securities exchange, potentially limiting liquidity.

Valuation Approach and Investor Guidance

The estimated initial value of $9.94 per note combines a fixed-income debt component and derivative transactions. Actual note values fluctuate based on multiple factors and cannot be precisely predicted. Initial pricing does not guarantee future market value or redemption amounts.

Regulatory authorities, including the SEC and state commissions, have neither approved nor disapproved the notes or verified the pricing supplement's accuracy. These structured notes are suitable only for investors knowledgeable about structured products, equity indices, and capable of bearing total loss of investment.

Regulatory Filings and Documentation

The pricing supplement was filed under Rule 424(b)(2) with registration number 333-285508. The notes are issued under product supplement ELN-1, underlying supplement ELN-1, prospectus supplement, and base prospectus all dated March 25, 2025. This layered documentation provides comprehensive disclosure and complies with Securities Act of 1933 requirements.

Investors are urged to review all related documents, including risk factors and terms, to fully understand the complex nature of these structured notes before investing.