ETF investing made easyBMO Tactical ETF Classes and BMO ETF Portfolios

BMO ETF Class Mutual Funds

The Strength of Mutual Funds and the Simplicity of ETFsExchange Traded Funds (ETFs)

Exchange Traded Funds, or ETFs, are changing how Canadians invest. By 2016 it’s anticipated that the ETF market will have grown by more than three times the amount at the end of 2009. ETF growth is predicted because they provide investors with broad market, asset class and sector diversification that’s easy to use, efficient and cost effective.

However, the rapid growth in the use of ETFs is causing many investors to wonder if they should also be considering ETFs, and if so, how should they be used?

How to Use ETFs?

Traditionally, ETFs have been used by investors and financial professionals looking for low cost and effective exposure to the performance of broad asset classes or indexes. This has typically meant that ETFs focused on a specific asset class (i.e. Junior Gold companies) or Index (i.e. Dow Jones

Industrial Index) and it was up to the investor to determine how to best use the ETF within their portfolio.

Mutual Funds that invest in ETFs

Now, investors have more choices for ETF investing. The innovation of mutual funds that invest in ETFs as the underlying securities allows investors to combine the benefits of individual ETFs with the power of corporate class mutual funds. When these benefits work together in an ETF-based fund, the whole truly becomes greater than the sum of its parts.

ETFs & Asset Allocation

Investing ETFs within a mutual fund goes one step further by allowing managers to easily employ investment strategies for different types of investors. Typically, two main models are used; tactical and strategic asset allocation. Tactical models work in the short term by actively adapting to changes within the market as they happen, while strategic models follow a longer-term allocation that’s regularly rebalanced to maintain a specific target return for a specific amount of risk.

Canada ETF AUM estimated to $105 Billion by 2016

Dec 2009 2010 2011 2012 2013 2014 2015 20160

20

40

60

80

100

120

$32billion

$105billion

Canada ETF AUM estimated to $105 Billion by 2016

Source: Blackrock Inc., Investor Economics Inc., TMX Group Inc (as of December 31, 2009)

Transparency ✔

Potential tax advantage ✔

Cost effectiveness ✔

Professional management ✔

Portfolio diversification ✔

Automatic rebalancing ✔

Key BenefitsMutual Fund of ETFs

BMO ETF Classes and Portfolios

BMO Mutual Funds is proud to offer investors 6 professionally managed and cost-effective mutual funds that invest in ETFs: BMO Tactical ETF Classes and BMO ETF Portfolios.

BMO Tactical ETF Classes

• BMO Canadian Tactical ETF Class

- Tactically managed exposure to Canadian equity and fixed income markets

- Managed by BMO Asset Management Inc. using an allocation model with over two decades of successful results

• BMO Global Tactical ETF Class

- Tactically managed exposure to global equity and fixed income markets

- Managed by Pyrford International Ltd., a global wealth management firm with over 20 years experience

• Corporate class structure for tax-deferred growth and investment flexibility

BMO ETF Class Mutual Funds

BMO ETF Portfolios

• 4 risk differentiated, strategically managed portfolios – Security, Balanced, Growth & Aggressive Growth

• Easy to use, all-in-one managed solutions

• Corporate class structure for tax-deferred growth and investment flexibility

The strength of BMO Financial Group

BMO Financial Group is committed to offering investors the right products and service they need to reach their financial goals. An excellent example of this commitment is BMO Mutual Funds’ new ETF- based mutual fund portfolios. BMO Mutual Funds ETF portfolios and their underlying BMO ETFs are manufactured, managed and serviced within BMO Financial Group. Investing primarily in ETFs, a cost effective investment option, allows BMO Mutual Funds to offer these funds at a lower cost than the average mutual fund in the same category. It’s also important to note that there is no duplication of management fees between the top fund and its underlying ETFs. The only management fee paid by each BMO Mutual Funds ETF Class or Portfolio is the management fee applicable to that fund (Class or Portfolio).

Tactical Allocation Strategic Allocation

Investment time horizon Short-mid term Long-Term

Allocation Model Driver Market events Risk/return optimization

Changes to allocation modelActive – manager decision

Passive – only if model changes

Tactical vs. Strategic Asset Allocation

(07/

10-5

45)

® Registered trade-marks of Bank of Montreal, used under licence.

BMO ETF Class Portfolios are series classes of BMO Global Tax Advantage Funds Inc., offered by BMO Investments Inc., a financial services firm and separate entity from Bank of Montreal. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing and for details on how these funds are structured to allow switches without realization of capital gains. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

• drop by your local BMO Bank of Montreal branch and speak to an investment professional

• call BMO Bank of Montreal Direct Banking at 1 888 771-0123 or BMO Investment Centre at 1 800 665-7700

Visit bmo.com/mutualfunds for more information on investing or: