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For Broker/Dealer use only BMO Guardian LifeStage Class Advisor Series 1
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For Broker/Dealer use only 1 What are Lifecycle Funds? Lifecycle funds are a rapidly growing investment category also commonly known as target-date, target-year or target-maturity funds. They are multi–asset class funds that adjust their asset allocation as time progresses toward a target date, generally an identified year such as 2015 or 2030. The adjustment to the asset allocation has come to be known as a ‘glidepath’ and can be thought of as a reduction in the allocation from higher-return/higher-risk assets (and a corresponding increase in lower-return/lower-risk assets) as the target date approaches.
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For Broker/Dealer use only 2 Lifecycle funds are gaining in popularity Developed by Fidelity in the early 1990s, they have gained significant momentum since 2003 when investors re-entered the market following the 2000 tech collapse. Their growth has accelerated as U.S. federal regulations introduced in 2006 made them an eligible default option for 401(k) defined contribution pension plans. Significant Asset Growth → AUM: $12B 2001 vs $164B 2008* According to Financial Research Corporation (FRC), by 2010 life cycle fund assets will reach $325 billion and net sales of close to $50 billion annually** Forecasts made before the recent market downturn estimated asset growth to exceed $1trillion by 2013*** *FRC Quarterly Report on Life Cycle Funds – March 13, 2006 ** Cerulli Quantitative Update: Retirement Markets 2008, Cerulli Associates, 2008, page 82. *** Prudential Whitepaper: Strengthening Target-Date Funds with Guarantees to Enhance Retirement Security, May 2009 Marketplace - U.S.
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For Broker/Dealer use only 3 Source: ici.org, Research Fundamentals, August 2009 Vol.18, No.5-Q1. Components may not add to total because of rounding. Lifecycle Fund Asset Growth in the U.S. Market ($bil) Marketplace - U.S.
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For Broker/Dealer use only 4 Marketplace - U.S. Key Lifecycle Fund firms in the U.S. Fidelity ($68.4 billion)*, Vanguard ($53.2 billion)*, T. Rowe Price ($25.1 billion)* Target-date ranges from –2010 to 2050 Fund target dates are normally 5 years apart, however there are some with ranges of 2 years to 10 years apart Sales starting to trend into longer-term maturities *Source; Morningstar - US$ AUM as of December 31st, 2008
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For Broker/Dealer use only 5 Source: Morningstar, all data as July 31, 2009 Marketplace - Canada Lifecycle Mutual Fund Growth in Canada
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For Broker/Dealer use only 6 Marketplace - Canada In Canada, there are two main target-date product types: –managed portfolio products –guaranteed maturity amount products The two product types are differentiated by their asset allocation models, most commonly ; Glidepath (non-guaranteed) and Dynamic Allocation (guaranteed maturity amount) BMO Guardian offers investors both types of target-date products: BMO Guardian LifeStage Plus (guaranteed maturity amount) and BMO Guardian LifeStage Class (non-guaranteed)
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For Broker/Dealer use only 7 LifeStage Class vs LifeStage Plus
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For Broker/Dealer use only 8 BMO Guardian LifeStage Class Advisor Series Six target-date funds with different time horizons –2017, 2020, 2025, 2030, 2035 and 2040 Asset allocation strategy automatically reduces risk as the target date approaches by shifting assets from equities to fixed income Each Advisor Series Class portfolio contains 10 to 13 carefully selected and optimized BMO Guardian Funds or BMO Mutual Funds Corporate class structure for tax-deferred accumulation 2 High Net Worth (Series H) pricing option provides a 0.25% management fee reduction without a reduction in trailer fee compensation on accounts over $250,000
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For Broker/Dealer use only 9 LifeStage Class Advisor Series Portfolios Zero Coupon Bonds LifeStage 2017Class Current TargetAsset Allocation
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For Broker/Dealer use only 10 LifeStage Class Asset Allocation Glidepath More Conservative
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For Broker/Dealer use only 11 Zero Coupon Bonds LifeStage Class Advisor Series Portfolios LifeStage 2020 Class Current Target Asset Allocation Equity61.5% BMO Equity Fund21.9% BMO US Equity Fund13.1% BMO European Fund8.5% BMO Emerging Markets Fund7.3% BMO Guardian Asian Growth & Income Fund4.6% BMO Guardian Monthly High Income Fund II3.8% BMO Special Equity Fund1.2% BMO Guardian Global Small Cap Fund1.2% Fixed Income32.7% BMO Bond Fund18.8% BMO Global High Yield Bond Fund8.8% BMO World Bond Fund5.0% Short Term Fixed Income5.8% BMO Mortgage and Short-Term Income Fund5.8%
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For Broker/Dealer use only 12 LifeStage Class Asset Allocation Glidepath More Conservative
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For Broker/Dealer use only 13 Zero Coupon Bonds LifeStage Class Advisor Series Portfolios LifeStage 2025 Class Current Target Asset Allocation Equity68.3% BMO Equity Fund23.5% BMO US Equity Fund14.0% BMO European Fund9.2% BMO Emerging Markets Fund8.7% BMO Guardian Asian Growth & Income Fund4.8% BMO Special Equity Fund3.1% BMO Guardian Global Small Cap Fund3.1% BMO Guardian Monthly High Income Fund II1.9% Fixed Income28.8% BMO Bond Fund16.9% BMO Global High Yield Bond Fund6.9% BMO World Bond Fund5.0% Short Term Fixed Income2.9% BMO Mortgage and Short-Term Income Fund2.9%
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For Broker/Dealer use only 14 LifeStage Class Asset Allocation Glidepath More Conservative
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For Broker/Dealer use only 15 Zero Coupon Bonds LifeStage Class Advisor Series Portfolios LifeStage 2030 Class Current Target Asset Allocation Equity75.0% BMO Equity Fund25.0% BMO US Equity Fund15.0% BMO Emerging Markets Fund10.0% BMO European Fund10.0% BMO Special Equity Fund5.0% BMO Guardian Asian Growth & Income Fund5.0% BMO Guardian Global Small Cap Fund5.0% Fixed Income25.0% BMO Bond Fund15.0% BMO Global High Yield Bond Fund5.0% BMO World Bond Fund5.0%
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For Broker/Dealer use only 16 LifeStage Class Asset Allocation Glidepath More Conservative
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For Broker/Dealer use only 17 Zero Coupon Bonds LifeStage Class Advisor Series Portfolios LifeStage 2035 Class Current Target Asset Allocation Equity81.7% BMO Equity Fund25.3% BMO US Equity Fund13.5% BMO Emerging Markets Fund11.8% BMO European Fund9.0% BMO Special Equity Fund5.9% BMO Guardian Global Small Cap Fund5.9% BMO Guardian Global Equity Fund5.7% BMO Guardian Asian Growth & Income Fund4.5% Fixed Income18.3% BMO Bond Fund8.3% BMO Global High Yield Bond Fund5.0% BMO World Bond Fund5.0%
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For Broker/Dealer use only 18 LifeStage Class Asset Allocation Glidepath More Conservative
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For Broker/Dealer use only 19 Zero Coupon Bonds LifeStage Class Advisor Series Portfolios LifeStage 2040 Class Current Target Asset Allocation Equity85.0% BMO Equity Fund25.5% BMO Emerging Markets Fund12.8% BMO US Equity Fund12.8% BMO European Fund8.5% BMO Guardian Global Equity Fund8.5% BMO Special Equity Fund6.4% BMO Guardian Global Small Cap Fund6.4% BMO Guardian Asian Growth & Income Fund4.3% Fixed Income15.0% BMO Bond Fund5.0% BMO Global High Yield Bond Fund5.0% BMO World Bond Fund5.0%
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For Broker/Dealer use only 20 LifeStage Class Asset Allocation Glidepath More Conservative
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For Broker/Dealer use only 21 Why consider BMO Guardian LifeStage Class Advisor Series? Complete investment management solution Automatic asset allocation strategy helps to reduce portfolio risk as target date approaches Can be used as the core portfolio holding in a “core and explore strategy” along with tactical overlays which provide specific regional or sector exposure Powerful corporate class structure allows clients to switch among other classes without realizing immediate capital gains Competitive compensation
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For Broker/Dealer use only 22 Appendix : Management and trailer fees Advisor Series LifeStage Class 2017 LifeStage Class 2020 LifeStage Class 2025 LifeStage Class 2030 LifeStage Class 2035 LifeStage Class 2040 Management Fee1.85%1.90% 1.95% 2.00% Front End trailer1.00% DSC trailer0.50% Low Load trailer1.00% Series H Management Fee1.60%1.65% 1.70% 1.75% Trailer1.00%
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For Broker/Dealer use only 23 Appendix : Fund Codes Advisor Series LifeStage Class 2017 LifeStage Class 2020 LifeStage Class 2025 LifeStage Class 2030 LifeStage Class 2035 LifeStage Class 2040 Front End997379942599427994289942999430 DSC974259742697427974289742997430 Low Load984259842698427984289842998430 Series H964259642696427964289642996430
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For Broker/Dealer use only 24 Disclaimer This presentation is for informational purposes and advisor use only. No part of this presentation may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, recording or otherwise, without the written permission of BMO Investments Inc. (BMOII). For greater certainty, no part of this presentation may be provided to investors and/or potential investors without the written permission of BMOII. The information contained herein is not, and should not be construed as, investment advice to any party. Investments should be evaluated relative to the individual’s investment objectives and professional advice should be obtained with respect to any circumstance. The statistics provided in this presentation are based on information believed to be reliable, but BMOII cannot guarantee they are accurate or complete. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus of the mutual fund before investing. Mutual funds are not guaranteed or covered by the Canada Deposit Insurance Corporation, the Régie de l’assurance-dépôts du Québec or by any other government deposit insurer. The value of mutual funds changes frequently and past performance may not be repeated. 1 BMO Guardian LifeStage Class Advisor Series are a series of BMO LifeStage Class, a share class of BMO Global Tax Advantage Funds Inc., a mutual fund corporation. 2 For details on how BMO Guardian LifeStage Class Advisor Series are structured to allow transfers without the realization of capital gains, please read the prospectus. TM/® Trade-marks/registered trade-marks of Bank of Montreal, used under licence.
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