BMO LifeStage Retirement Income Portfolio Note Program

Transcription

1 BMO LifeStage Retirement Income Portfolio Note Program Master Information Statement August 4, 2009 No securities regulatory authority has expressed an opinion on the Deposits offered under this Master Information Statement and it is an offence to claim otherwise. This Master Information Statement should be read in conjunction with the Supplement providing specific details about each offering under the BMO LifeStage Retirement Income Portfolio Note Program.

2 TABLE OF CONTENTS A. GENERAL DISCLOSURE 1 Introduction 1 The BMO LifeStage Retirement Income Portfolilo Note Program 2 What is a LifeStage Retirement Income Note? 2 Should I invest in LifeStage Retirement Income Notes? 3 What are the risks of investing in LifeStage Retirement Income Notes? 3 How do I purchase LifeStage Retirement Income Notes? 5 B. DESCRIPTION OF THE LIFESTAGE RETIREMENT INCOME NOTE PROGRAM 5 Introduction 5 How the LifeStage Retirement Income Note Program Works 6 E. YOUR LEGAL RIGHTS 14 F. GENERAL MATTERS RELATING TO LIFESTAGE RETIREMENT INCOME NOTES 14 How capital distributions will be made 14 How the Deposit Balance and any returns will be paid to you at Maturity 15 Notices to investors 15 Amendments and other actions 15 Calculations and decisions 15 Restrictions on sales of LifeStage Retirement Income Notes 15 Trademarks 15 G. GLOSSARY OF TERMS 15 Fees and expenses 9 How we determine the value of LifeStage Retirement Income Notes 9 Selling your LifeStage Retirement Income Notes early 9 Special circumstances 11 C. THE UNDERLYING FUNDS 12 D. CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS 12 Capital distributions 13 Variable return 13 Disposition of LifeStage Retirement Income Notes 13 Eligibility for investment 14

3 A. GENERAL DISCLOSURE Introduction We have prepared this Master Information Statement to help you decide whether to invest in BMO LifeStage Retirement Income Notes ( LifeStage Retirement Income Notes ) issued under the BMO LifeStage Retirement Income Portfolio Note Program (the LifeStage Retirement Income Note Program ). This document describes the main features of LifeStage Retirement Income Notes and explains your rights if you invest in LifeStage Retirement Income Notes. We offer the LifeStage Retirement Income Notes in different series offering a variety of issue dates, maturity dates and payment schedules. Each series may have three versions (Current Pay Version, Deferred 5 Year Version and Deferred 10 Year Version) based on their term to maturity. Each version provides exposure to the performance of a combination of mutual funds referred to as a LifeStage Retirement Income Portfolio. The information in this Master Information Statement applies to all versions and series of LifeStage Retirement Income Notes. For information about a particular version or series of LifeStage Retirement Income Notes, you must also refer to a Supplement containing specific details such as the issue date, maturity date, underlying mutual funds, payments and applicable fees and expenses for that version and series of LifeStage Retirement Income Notes. You may obtain Supplements for any current offering of LifeStage Retirement Income Notes from any BMO Bank of Montreal branch during normal business hours or on our public website at The Master Information Statement and the Supplement contain all the information you should know about a version and series of LifeStage Retirement Income Notes. You should read both this Master Information Statement and the Supplement for the version and series you are interested in purchasing. To make this Master Information Statement easier to understand, we use we, our and us to refer to Bank of Montreal or any of its affiliates, and you and your to refer to the reader of this document as a potential or actual investor in LifeStage Retirement Income Notes. Underlined terms are described in more detail in the Glossary at the end of this document. When we refer to a business day, we mean any day on which BMO Bank of Montreal is open for business in Toronto, except Saturdays, Sundays and holidays in the Province of Ontario. All dollar amounts in this Master Information Statement are in Canadian dollars. This Master Information Statement has seven parts. Part A gives you general information about this document and LifeStage Retirement Income Notes, including information about how to determine if LifeStage Retirement Income Notes are appropriate investments for you, the risks of investing in LifeStage Retirement Income Notes and how to buy LifeStage Retirement Income Notes. Part B describes in detail how LifeStage Retirement Income Notes work, including what payments will be made under LifeStage Retirement Income Notes, how any returns on the LifeStage Retirement Income Notes are calculated and what fees we charge on your investment in LifeStage Retirement Income Notes. It also describes how you may be able to sell your LifeStage Retirement Income Notes before they mature and certain special circumstances that may affect the return you receive on your LifeStage Retirement Income Notes. Part C gives you information about the LifeStage Retirement Income Portfolio that determines the amount of any returns you may earn on your LifeStage Retirement Income Notes. Part D describes certain Canadian federal income tax considerations that an investor in LifeStage Retirement Income Notes should take into account in deciding whether to invest in LifeStage Retirement Income Notes. Part E describes your legal rights as an investor in LifeStage Retirement Income Notes. Part F gives important additional information about LifeStage Retirement Income Notes that are not contained in any other part of this document. Part G is a glossary of some of the important terms we use in this document. 1

4 The BMO LifeStage Retirement Income Portfolio Note Program BMO LifeStage Retirement Income Portfolio Note Program (the LifeStage Retirement Income Note Program ) provides a comprehensive and integrated way to address the evolving challenges and objectives of investors approaching or entering their retirement years. LifeStage Retirement Income Notes issued under the LifeStage Retirement Income Note Program provide exposure to equity and fixed income mutual funds managed by BMO Investments Inc. (the manager ). We refer to these mutual funds as the underlying funds, and we refer to your notional investment in the underlying funds as the LifeStage Retirement Income Portfolio. The underlying funds and the composition of the LifeStage Retirement Income Portfolio will be described in the Supplement for each version and series of LifeStage Retirement Income Notes. The LifeStage Retirement Income Portfolio will be systematically rebalanced to become more conservative over time. LifeStage Retirement Income Notes also provide investors with a predictable and reliable inflation-adjusted stream of payments to meet ongoing spending needs. Since these payments are a return to you of the principal amount you invested, you will not pay any income tax on these payments, and you will pay no tax on your LifeStage Retirement Income Notes until they mature or you sell them. We refer to the repayments of principal made on your LifeStage Retirement Income Notes before their maturity as capital distributions. You can find detailed information about the LifeStage Retirement Income Note Program and LifeStage Retirement Income Notes in Part B under the heading How the LifeStage Retirement Income Note Program Works. What is a LifeStage Retirement Income Note? A LifeStage Retirement Income Note is a deposit liability of Bank of Montreal. A LifeStage Retirement Income Note is an unsecured and unsubordinated debt obligation owed to its holder by Bank of Montreal with the following features: LifeStage Retirement Income Notes rank equally with our other deposit liabilities. That means we must repay amounts owing on LifeStage Retirement Income Notes and on other deposit liabilities on an equal basis without giving preference to one or the other. A LifeStage Retirement Income Note is not eligible to be insured by the Canada Deposit Insurance Corporation or any other entity. The return, if any, that you receive on your LifeStage Retirement Income Note is based on the performance of the underlying funds. It is not based on a fixed, floating or other specified interest rate. While you will receive the full principal amount you invest in a LifeStage Retirement Income Note if you hold it until maturity, it is possible that you will not receive any return on the amount you deposit with us. A LifeStage Retirement Income Note is not designed to be repaid in full on demand at any time. Other than the regularly scheduled capital distributions that we make to you, you will not be able to withdraw the amount invested in a LifeStage Retirement Income Note until it matures. However, you may be able to sell your LifeStage Retirement Income Notes prior to maturity to BMO Nesbitt Burns Inc. (referred to as BMO Capital Markets ), as described in Part B under the heading Selling your LifeStage Retirement Income Notes early. On the date of this Master Information Statement, amounts deposited with Bank of Montreal that mature more than one year after they were issued had received the following credit ratings: Ratings Agency Credit Rating DBRS Limited AA Standard & Poor s Ratings Services A+ Moody s Investors Service Inc. Aa1 The credit ratings above are evaluations by the ratings agencies of our ability to repay our deposit liabilities with a term of more than one year when they become payable. These credit ratings indicate that the ratings agencies consider that we generally have a strong ability to repay these deposit liabilities. You should be aware, however, that no ratings agency has specifically rated the LifeStage Retirement Income Notes offered under this Master Information Statement. Even if the LifeStage Retirement Income Notes were rated, there is no guarantee that they would receive the same ratings as our other deposit liabilities. Just because a ratings agency provides a credit rating for our deposit liabilities does not mean that the ratings agency is recommending that you buy, sell or hold these deposit liabilities. A ratings agency may change or withdraw its credit rating at any time. 2

5 Should I invest in LifeStage Retirement Income Notes? This section will help you to decide whether an investment in LifeStage Retirement Income Notes is right for you. You should invest in LifeStage Retirement Income Notes only after carefully considering the following questions with an investment professional at any BMO Bank of Montreal branch: what are your investment goals? will LifeStage Retirement Income Notes help you to achieve those goals? what investments do you already hold? how long are you prepared to invest? what risks are you prepared to accept? LifeStage Retirement Income Notes may be the right investment for you if: you are prepared to invest for the long-term you are preparing for or entering your retirement years you are willing to accept greater risk in the early years of the LifeStage Retirement Income Note and reduce risk in a disciplined and systematic manner over the longterm you want to receive inflation-adjusted capital distributions for some or all of the term of your LifeStage Retirement Income Notes without paying income tax on these distributions you want to ensure that you receive at least the amount you invested in LifeStage Retirement Income Notes if you hold them until maturity you are prepared to wait until your LifeStage Retirement Income Notes mature to receive any amount you invested that is not paid as a regular capital distribution before maturity you are prepared to receive a return that is based on the performance of the underlying funds, which will be uncertain until the LifeStage Retirement Income Notes mature and may be zero you are prepared to assume the risks described under the heading What are the risks of investing in LifeStage Retirement Income Notes? What are the risks of investing in LifeStage Retirement Income Notes? You should carefully consider the following risks of holding LifeStage Retirement Income Notes before deciding to invest in LifeStage Retirement Income Notes. Risks relating to LifeStage Retirement Income Notes Suitability LifeStage Retirement Income Notes may not be an appropriate investment for you. You should invest in LifeStage Retirement Income Notes only after carefully considering your investment goals, how long you want to invest and what risks you are prepared to take. You should then discuss these factors with an investment professional at any BMO Bank of Montreal branch to determine whether LifeStage Retirement Income Notes are the right investment for you. Considerations you should take into account in deciding whether to invest in the LifeStage Retirement Income Notes are set out above under the heading Should I invest in LifeStage Retirement Income Notes?. LifeStage Retirement Income Notes differ from conventional fixed income investments LifeStage Retirement Income Notes differ from conventional fixedincome investments as they do not provide you with a return or income stream that is based on a fixed, floating or other specified rate of interest. The return, if any, is based on the performance of the underlying funds. An investment in LifeStage Retirement Income Notes is not suitable for you if you require or expect a guaranteed return on your investment and are not prepared to assume the risks associated with a long-term investment whose return is based on the performance of the underlying funds. Selling your LifeStage Retirement Income Notes Early There is currently no market for investors to sell LifeStage Retirement Income Notes and we do not intend to have them listed on any exchange. BMO Capital Markets, one of our affiliates, will use reasonable efforts under normal market conditions to create a secondary market where investors can sell LifeStage Retirement Income Notes before they mature. There are a number of factors that will affect the price at which LifeStage Retirement Income Notes could be bought or sold in that market, which are described in Part B under the heading Selling your LifeStage Retirement Income Notes early. It is also not possible for us to predict whether such a market will exist. 3

6 Effect of capital distributions and fees on the LifeStage Retirement Income Portfolio Capital distributions will reduce the value of the LifeStage Retirement Income Portfolio resulting in the LifeStage Retirement Income Notes having less exposure to the underlying funds. Aggregate fees paid under the LifeStage Retirement Income Note Program will reduce and may eliminate any return you would otherwise have received when your LifeStage Retirement Income Notes mature. During the term of your LifeStage Retirement Income Notes, you will receive no payments (including interest payments) other than those described in this Master Information Statement and the relevant Supplement. No deposit insurance LifeStage Retirement Income Notes are not insured by the Canada Deposit Insurance Corporation or insured or guaranteed by any other organization. That means that if we experience financial difficulties in paying amounts we owe, you will not be able to look to any other person or organization for payment of amounts owed on your LifeStage Retirement Income Notes. Special circumstances If certain events occur, the LifeStage Retirement Income Notes will no longer have exposure to the performance of the underlying funds. In that case, you will not receive the return that you would have received if that exposure had continued. These events are described under the heading Special circumstances. Valuation of the LifeStage Retirement Income Notes The value of LifeStage Retirement Income Notes is based on the value of the underlying funds. To value the LifeStage Retirement Income Notes, we, or someone appointed by us to value the LifeStage Retirement Income Notes, will rely on information reported by the underlying funds and will assume that they have valued their assets fairly. This value will usually not be audited. There may not be readily available market prices or quotations for interests in the underlying funds, and we may not be able to obtain information about an underlying fund s investments in order to verify its fair value. We, or someone appointed by us, are responsible for valuing the LifeStage Retirement Income Notes and for making certain important decisions about the LifeStage Retirement Income Note Program. We will not hire an independent person to make or to confirm these calculations and decisions. No ownership in underlying funds Owning LifeStage Retirement Income Notes does not give you any rights in the underlying funds, any units of the underlying funds or any investments that they make. An owner of LifeStage Retirement Income Notes will not have the rights of a unitholder of an underlying fund or an owner of any of an underlying fund s investments, including any right to receive distributions or dividends or to vote at or attend meetings of unitholders or owners of the mutual fund investments. Investing in LifeStage Retirement Income Notes is not the same as investing directly in the underlying funds. Investing in LifeStage Retirement Income Notes allows you to participate in any increase in value, net of portfolio fees, of the underlying funds while ensuring that you receive at least the amount you invested over the term of the LifeStage Retirement Income Notes. Risks relating to Bank of Montreal Conflicts of interest The Bank of Montreal and/or the manager or portfolio advisor of an underlying fund (or any of their affiliates) may carry on business activities that compete with the business of one or more of the underlying funds or with LifeStage Retirement Income Notes. The investment goals and policies of other entities and activities that the manager or portfolio advisor is involved with may not match the investment goals and strategies of the underlying funds. In addition, the manager or portfolio advisor may be one of our affiliates and we could be in a position to influence its activities. Because of these factors, the manager or portfolio advisor and companies related to them may have conflicts of interest in dividing their time and activities between the underlying funds and other entities and activities. As part of our normal business operations, we and our affiliates may have investments linked to an underlying fund or may carry on business dealings, including hedging arrangements to reduce our exposure to our obligations under the LifeStage Retirement Income Notes, with an underlying fund, with the manager or portfolio advisor of an underlying fund or with a company that has issued a security in which an underlying fund invests. We will take part in these activities according to normal market practices. These practices may include the payment of fees to us or to other parties. We may not take into account the effect these activities may have on any return on LifeStage Retirement Income Notes. Credit rating The LifeStage Retirement Income Notes will not be rated by any ratings agency. Even if they were rated, there is no guarantee that they would receive the same ratings as our other deposit liabilities. 4

7 Credit risk The likelihood that holders of LifeStage Retirement Income Notes will receive the payments owing to them depends on our financial health and creditworthiness. Risks relating to the underlying funds Risks of exposure to the performance of the underlying funds The amount of the return, if any, payable on the LifeStage Retirement Income Notes is based on the performance of the underlying funds. That means that certain risk factors that apply to a direct investment in the underlying funds also apply to an investment in LifeStage Retirement Income Notes. You should review each underlying fund s simplified prospectus publicly filed at for a complete description of the risk factors that apply to each underlying fund. These public documents can also be found at Valuation of underlying funds The trading prices of the investments of each underlying fund determines its value, which, in turn, indirectly determines the value of your LifeStage Retirement Income Notes. You should be aware that it is impossible to know whether the value of an underlying fund s investments will rise or fall and whether the investment decisions of the manager of an underlying fund and its advisors will be successful. The trading prices of an underlying fund s investments are affected by complex and related political, economic, financial and other factors that affect the financial markets in general or the markets on which the underlying fund s investments trade in particular. You should become familiar with the basic features of each underlying fund, including how the value of its units is calculated, by referring to the underlying fund s simplified prospectus and other information that it files publicly. This information is available at and at Management of the underlying funds The manager of an underlying fund and any portfolio advisor it appoints have complete discretion and authority to manage and control what that underlying fund invests in and their decisions will affect the overall performance of that underlying fund. There is no guarantee that an underlying fund will meet its investment objectives, that its investment strategies will be successful, or that it can avoid losses and produce a positive return. The past performance of an underlying fund has no effect on, and is not indicative of, its future performance. Legal risks Changes in laws, regulations or administrative practices Changes to laws and regulations or the administrative practices of government agencies, including with respect to taxation, could impact you, including changes, if any, as a result of current review by the CRA of its administrative practice in relations to the relevance of a secondary market for debt obligations such as the LifeStage Retirement Income Notes in determining whether there is a deemed accrual of interest in such debt obligations. How do I purchase LifeStage Retirement Income Notes? The minimum purchase for any version and series of LifeStage Retirement Income Notes is $5,000. Each available version of the most recent series of LifeStage Retirement Income Notes offered for sale may be purchased up to 4:00 p.m. (Toronto time) at any BMO Bank of Montreal branch during the selling period set out in the Supplement for that version and series. We may accept orders to buy LifeStage Retirement Income Notes in whole or in part. We also have the right to stop taking orders at any time without notice and may decide not to proceed with the issuance of any version and series of LifeStage Retirement Income Notes before they are issued. If you have given us an order to purchase LifeStage Retirement Income Notes or you have purchased LifeStage Retirement Income Notes, your funds will be placed in a non-interest bearing account until the date on which the LifeStage Retirement Income Notes are issued. You may be able to cancel your order or purchase if you do so shortly after placing or making it. This right is described in Part E, YOUR LEGAL RIGHTS. B. DESCRIPTION OF THE LIFESTAGE RETIREMENT INCOME NOTE PROGRAM Introduction LifeStage Retirement Income Notes provide exposure to the performance of a combination of equity and fixed income mutual funds referred to as the underlying funds. The blend of underlying funds will be systematically rebalanced to become more conservative over time. LifeStage Retirement Income Notes also provide investors with a regular stream of inflation-adjusted payments. We refer to these payments, which are a return to you of a portion of the principal amount you invested in LifeStage Retirement Income Notes, as capital distributions. 5

8 The following two sections describe how LifeStage Retirement Income Notes obtain exposure to the underlying funds, how the allocation of underlying funds is rebalanced over time, how capital distributions are determined and when they are made to you. How the LifeStage Retirement Income Note Program Works The LifeStage Retirement Income Portfolio The amount you invest in LifeStage Retirement Income Notes is notionally invested in a portfolio of underlying funds. We refer to this investment as the LifeStage Retirement Income Portfolio. The LifeStage Retirement Income Portfolio contains notional units (referred to as portfolio units ) of the underlying funds, and the performance of the LifeStage Retirement Income Notes is based on the performance of those portfolio units from the day the LifeStage Retirement Income Notes are issued until the third business day before they mature (referred to as the final valuation date ). We use the term notional because although your return is based on the performance of the underlying funds, you will not have any rights of ownership in the units of the underlying funds. The performance of the portfolio units is calculated as if: the management expenses charged on the actual units of the underlying funds are not charged on the portfolio units so that there is no duplication of management fees under the LifeStage Retirement Income Note Program the amount of any distributions on the actual units are credited to the LifeStage Retirement Income Portfolio and notionally reinvested in more portfolio units of the relevant underlying fund for the LifeStage Retirement Income Portfolio. The underlying funds for a particular version and series of LifeStage Retirement Income Notes are described in the Supplement for that version and series. Part C under the heading THE UNDERLYING FUNDS describes what information the Supplement contains about the underlying funds. Composition of the LifeStage Retirement Income Portfolios The LifeStage Retirement Income Portfolio is divided into two parts: an equity component and a fixed income component. The equity component and the fixed income component of the LifeStage Retirement Income Portfolio will each be made up of portfolio units of different underlying funds. The underlying funds and allocations to each component will be specified in the Supplement for each LifeStage Retirement Income Note. The exposure of the LifeStage Retirement Income Portfolio to the underlying funds will be allowed to fluctuate with market conditions. Over time, we will rebalance the LifeStage Retirement Income Portfolio to a more conservative position in order to gradually reduce its overall risk. We will accomplish this by systematically reducing the exposure to the equity component and increasing the exposure to the fixed income component. The rebalancing of the LifeStage Retirement Income Portfolio will be carried out as described in the Supplement and does not require you to take any action. Details of the exposure to each underlying fund within your particular LifeStage Retirement Income Portfolio will be available on our public website at Rebalancing the LifeStage Retirement Income Portfolio between the equity component and the fixed income component When a version and series of LifeStage Retirement Income Notes is issued, proceeds will initially be allocated to portfolio units of the underlying funds in the equity component and fixed income component in the proportions set out in the Supplement describing each version and series of LifeStage Retirement Income Notes. The graphs on the next page illustrate the concept of rebalancing the LifeStage Retirement Income Portfolio. Using the graph for the Deferred 10 Year Version as an example, 80% of the LifeStage Retirement Income Portfolio is allocated to the equity component and 20% is allocated to the fixed income component. When the LifeStage Retirement Income Note matures 25 years later, 35% of the LifeStage Retirement Income Portfolio is allocated to the equity component and 65% is allocated to the fixed income component. The graphs on the next page are only examples of rebalancing. The issue date and maturity allocations between the components, as well as the term and the rebalancing schedule for a particular version and series of LifeStage Retirement Income Notes will be set out in the Supplement for that version and series, and may differ from what is illustrated in the graphs. 6

9 Versions of LifeStage Retirement Income Notes Each series of LifeStage Retirement Income Notes may be offered in up to three versions: Current Pay Version has a 15-year term made up entirely of a de-accumulation phase. (The investment phases of the LifeStage Retirement Income Notes are described below.) 100% 80% 60% 40% 20% 0% Current Pay Deferred 5 Year Version has a 20-year term made up of an initial 5-year accumulation phase followed by a 15- year de-accumulation phase. 100% 80% 60% 40% 20% 0% Year Fixed Income Component Equity Component Deferred 5 Year Year Fixed Income Component Equity Component Deferred 10 Year Version has a 25-year term made up of an initial 10-year accumulation phase followed by a 15- year de-accumulation phase. 100% 80% 60% 40% 20% 0% Deferred 10 Year Year Fixed Income Component Equity Component Investment phases of the LifeStage Retirement Income Notes Accumulation phase The accumulation phase begins on the issue date of the applicable version and series of LifeStage Retirement Income Notes and continues until we make the first capital distribution to you on the LifeStage Retirement Income Notes. During the accumulation phase, there will be no payments made to you. The purpose of the accumulation phase is to give your investment a chance to grow without any immediate tax consequences to you. De-accumulation phase The de-accumulation phase begins on the date on which we make the first capital distribution on your LifeStage Retirement Income Notes to you. This date is referred to as the first payment date. The de-accumulation phase continues until the LifeStage Retirement Income Notes mature. During the de-accumulation phase we will make regular capital distributions to you. The Supplement for each LifeStage Retirement Income Note will set out the amount, frequency and payment dates of these capital distributions to you. Each capital distribution will be made to you in the manner described in the Supplement. Payments during the de-accumulation phase We will make regular capital distributions to you during the de-accumulation phase, beginning on the first payment date and continuing until the LifeStage Retirement Income Notes mature or until we have paid you $99 of the original $100 principal amount of each LifeStage Retirement Income Note, whichever happens first. These capital distributions are a return to you of a portion of the principal amount you invested in LifeStage Retirement Income Notes. As your principal amount invested is reduced, so is the adjusted cost base of your investment (see example on the next page). As a result, you will not have to pay any income tax until your LifeStage Retirement Income Notes mature or you sell them. The tax consequences of owning or selling LifeStage Retirement Income Notes are set out in Part D under the heading CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS. Any of the principal amount invested that is not paid during the term of the LifeStage Retirement Income Notes will be repaid to you when the LifeStage Retirement Income Notes mature. We refer to this amount as the Deposit Balance. The following example illustrates the effect of capital distributions on the principal balance and adjusted cost base of your LifeStage Retirement Income Note: 7

10 Example: Capital Distributions This hypothetical example assumes that capital distributions are 6.0% per year and that three years of the de-accumulation phase of your LifeStage Retirement Income Notes have passed. By this time, assuming no inflation adjustments were made, you would have received capital distributions totalling $18.00 per LifeStage Retirement Income Note each year as shown below. Deposit Amount: $ Aggregate Yearly Capital Distributions Year 1: $ 6.00 Year 2: $ 6.00 Year 3: $ 6.00 Deposit Balance: $82.00 Adjusted Cost Base: $82.00 Each capital distribution is a repayment of a portion of your principal investment in your LifeStage Retirement Income Notes and, as such, is not taxable. The Deposit Balance that will be repaid to you when a LifeStage Note matures will decrease by an amount equal to the capital distributions you have received, and so will the adjusted cost base of your investment in the LifeStage Note. The adjusted cost base is used to calculate your gain (or loss) if you dispose of your LifeStage Retirement Income Notes at or before maturity. Please note that the capital distribution will vary with each series of LifeStage Retirement Income Notes and could be more or less than the 6% assumed for purposes of this hypothetical example. Please refer the relevant Supplement for details on the specific capital distribution for your LifeStage Retirement Income Notes. Inflation adjustments to capital distributions The amount of each capital distribution made to you during the de-accumulation phase may be adjusted each year to reflect the rate of inflation in Canada, as measured by increases in the level of Canada s consumer price index or CPI. For the Deferred 5 Year and Deferred 10 Year Versions of the LifeStage Retirement Income Notes, we will adjust the first capital distribution by the percentage change in the CPI level from the month just before the month in which your LifeStage Retirement Income Notes are issued (referred to as the adjustment month ) to the same month five years later or ten years later, as the case may be. For the Current Pay Version of the LifeStage Retirement Income Notes, the first capital distribution will not be adjusted. For all versions of LifeStage Retirement Income Notes, we will compare the percentage change in the CPI level in each adjustment month during the accumulation period compared to the CPI level in the adjustment month in the previous year and adjust capital distributions in the following year by the same percentage change, if any. However, if an event described under the heading Special circumstances occurs, we will no longer adjust the amount of each capital distribution for inflation after that event occurs, even though we will continue making capital distributions to you on the regularly scheduled payment dates. In such circumstances, the capital distributions will be the same as the last capital distribution paid before the special circumstance occurred. For the Deferred 5 Year and Deferred 10 Year Versions of the LifeStage Retirement Income Notes, if the special circumstance occurs before we begin paying capital distributions, we will adjust the first capital distribution by the percentage change in the CPI from the month just before the issue date of your LifeStage Retirement Income Notes to the month just before the month in which the special circumstances occurred, and capital distributions will not be adjusted thereafter. Effect of capital distributions on the LifeStage Retirement Income Portfolio Regular capital distributions made to you will reduce the value of the LifeStage Retirement Income Portfolio resulting in the LifeStage Retirement Income Notes having less exposure to the underlying funds. During the term of your LifeStage Retirement Income Notes, you will receive no payments (including interest payments) other than those described above. Payments at Maturity When LifeStage Retirement Income Notes mature you will receive an amount equal to the principal amount you invested ($100 per LifeStage Retirement Income Note) minus any capital distributions you received during the de-accumulation phase. This is the Deposit Balance on the maturity date. You may also receive a return based on the performance of the LifeStage Retirement Income Portfolio. This return will 8

11 be equal to the amount, if any, by which the Deposit Value exceeds the Deposit Balance when the LifeStage Retirement Income Note matures. If the Deposit Value is equal to or less than the Deposit Balance then you will not receive any return on your LifeStage Retirement Income Notes. The calculation of the Deposit Value is described under the heading How we determine the value of LifeStage Retirement Income Notes. Fees and expenses We will charge you an Annual LifeStage Retirement Income Portfolio Fee under the LifeStage Retirement Income Note Program. The fee applicable to each version and series of LifeStage Retirement Income Notes are set out in the relevant Supplement. The Annual LifeStage Retirement Income Portfolio Fee is the only fee or expense that will be deducted from the LifeStage Retirement Income Portfolio under the LifeStage Retirement Income Note Program. We will calculate and accrue Annual LifeStage Retirement Income Portfolio Fees daily and will receive them monthly. These fees will reduce the value of the LifeStage Retirement Income Portfolio and will therefore affect the return, if any, paid to investors when LifeStage Retirement Income Notes mature. Since we will deduct all fees and expenses of the LifeStage Retirement Income Note Program from the value of the LifeStage Retirement Income Portfolio, the LifeStage Retirement Income Portfolio must generate a return that exceeds the Annual LifeStage Retirement Income Portfolio Fee in order for you to receive a return when the LifeStage Retirement Income Notes mature. How we determine the value of LifeStage Retirement Income Notes Calculating Deposit Value On any day, the value of a LifeStage Retirement Income Note (referred to as the Deposit Value ) will be the value on that day of the LifeStage Retirement Income Portfolio for the relevant version and series of LifeStage Retirement Income Notes divided by the number of LifeStage Retirement Income Notes for that version and series outstanding on that day. The value of the LifeStage Retirement Income Portfolio on any day is the value of its portfolio units on that day less the Annual LifeStage Retirement Income Portfolio Fees that are owed on that day but have not been paid yet. It is important for an investor to realize that while investors will be entitled to receive the Deposit Value of their LifeStage Retirement Income Notes when they mature, the price at which an investor will be able to sell their LifeStage Retirement Income Notes before maturity will depend on a number of factors described under the heading Selling your LifeStage Retirement Income Notes early below and may differ from the Deposit Value. Temporary suspension of the calculation of Deposit Value We may not be able to determine a Deposit Value for the LifeStage Retirement Income Notes if calculation becomes impossible, impractical or prejudicial to investors. This might happen if, for example, we were unable to get the net asset value for units of an underlying fund or a significant part of an underlying fund s investments could not be sold or valued. There could also be other circumstances beyond our control where we may need to suspend the calculation of the Deposit Value. If we suspend the calculation of the Deposit Value, a fair and accurate price for the LifeStage Retirement Income Notes may not be available. In those circumstances, it may be necessary for BMO Capital Markets to suspend any market for LifeStage Retirement Income Notes that allows investors to sell their LifeStage Retirement Income Notes before maturity since the absence of a Deposit Value would make it difficult or impossible to determine a price for the LifeStage Retirement Income Notes. If the calculation of the Deposit Value is suspended for a prolonged period of time, this could also result in an extraordinary event, as described under the heading Special circumstances Extraordinary Events. If an extraordinary event or capital preservation event, as described under the heading Special circumstances occurs, the Deposit Value will not be calculated as described above but will be determined as set out in that section. Selling your LifeStage Retirement Income Notes early The LifeStage Retirement Income Notes are not redeemable. There is currently no market for investors to sell LifeStage Retirement Income Notes and we do not intend to have them listed on any stock exchange. BMO Capital Markets, one of our affiliates, will use reasonable efforts under normal market conditions to create a market where investors can sell LifeStage Retirement Income Notes to BMO Capital Markets before they mature. This market is referred to as a secondary market. 9

12 You will not be able to redeem or sell a LifeStage Retirement Income Note before it matures other than through the secondary market. You should be aware, however, that BMO Capital Markets is not required to create or arrange for a secondary market so you may not be able to sell your LifeStage Retirement Income Notes before they mature. A secondary market may be suspended at any time by BMO Capital Markets without notifying the holders of LifeStage Retirement Income Notes. This would generally happen if there were a disruption in the financial markets. Therefore, we cannot guarantee that a secondary market will exist. How do I sell my LifeStage Retirement Income Note in the secondary market? In general, if you want to sell a LifeStage Retirement Income Note in the secondary market, if available, you should contact an investment professional at any BMO Bank of Montreal branch during normal business hours. If you arrange to sell LifeStage Retirement Income Notes on or before 4:00 p.m. (Toronto time) on any business day, the proceeds of your sale will be the price at the end of that business day less any early trading charge that may be applicable (described below). If you arrange to sell LifeStage Retirement Income Notes after 4:00 p.m. (Toronto time) on any business day, the price you will receive will be the price determined at the end of the next business day less any applicable early trading charge. The proceeds of any sale of LifeStage Retirement Income Notes in the secondary market will be payable to you no later than three business days after the business day on which you sell your LifeStage Retirement Income Notes. We will publish daily on our public website at the price at the end of the previous business day (before deducting any applicable early trading charges). This price will also be available from any BMO Bank of Montreal branch during normal business hours. LifeStage Retirement Income Notes are intended to be held until they mature with their Deposit Balances repayable at that time. If you sell LifeStage Retirement Income Notes before they mature, you may receive a price that is less than the Deposit Balance at that time, even if the LifeStage Retirement Income Portfolio has performed well. As a result, you could suffer a loss on the sale. What price will I get if I sell my LifeStage Retirement Income Note in the secondary market? The price you receive when you sell a LifeStage Retirement Income Note before maturity will depend on a number of factors including: the Deposit Value and how much it has risen or fallen since that particular version and series of LifeStage Retirement Income Notes was issued the number and amount of capital distributions made on your LifeStage Retirement Income Notes before the sale date the allocations to the equity component and the fixed income component of the LifeStage Retirement Income Portfolio how much the investments of the underlying funds have changed interest and foreign exchange rates the time remaining until the LifeStage Retirement Income Notes mature other related factors The relationship among these factors is complex and may be influenced by political, economic and other factors. Investors should realize that the price for a LifeStage Retirement Income Note may differ from the Deposit Value. If you sell a LifeStage Retirement Income Note in the secondary market within 120 days after it is issued, BMO Capital Markets may deduct an early trading charge from the proceeds of the sale. The early trading charge will be up to 2% of the amount paid for the LifeStage Retirement Income Note when it was issued. Any Deposit Value shown on your periodic investment account statements and any price quoted to an investor to sell LifeStage Retirement Income Notes will not take into account any applicable early trading charge. BMO Capital Markets will not deduct an early trading charge from the proceeds of sale of LifeStage Retirement Income Notes sold through the secondary market by an investor s estate as long as BMO Capital Markets receives any estate documentation it reasonably requests. If you want to sell LifeStage Retirement Income Notes before they mature, you should ask an investment professional at any BMO Bank of Montreal branch whether an early trading charge will apply to your sale and, if so, how much it will be. 10

13 Before you decide to sell LifeStage Retirement Income Notes on the secondary market (if available), you should consult an investment professional at any BMO Bank of Montreal branch about whether it would be better to sell your LifeStage Retirement Income Notes early or hold them until they mature. You should also consult your tax advisor about the tax consequences of a sale of LifeStage Retirement Income Notes before they mature (as compared to holding them until they mature). Certain tax consequences of a sale of LifeStage Retirement Income Notes are discussed in Part D under CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS. Special circumstances If certain unusual events occur, we may decide that LifeStage Retirement Income Notes will no longer be exposed to the performance of the LifeStage Retirement Income Portfolio. There are two types of events that could have this result: an extraordinary event or a capital preservation event. Extraordinary events Extraordinary events are typically adverse events that may happen to LifeStage Retirement Income Notes or an underlying fund, its manager, its units or unitholders, or to us. Examples include: an underlying fund ceases to exist the manager of an underlying fund ceases to manage that fund the investment objectives, strategies or policies of an underlying fund change no value is available for units of an underlying fund, or its units cannot be purchased or redeemed or are redeemed without the unitholder s consent changes in Canadian tax or other laws limit the activities of an underlying fund or its manager or unitholder or adversely affect a holder of LifeStage Retirement Income Notes This list is not complete. Other events may also be extraordinary events. We will determine whether an extraordinary event has occurred in our sole discretion. Substitution to cure an extraordinary event Where an underlying fund is affected by an event that would otherwise be an extraordinary event, we will use our reasonable best efforts to replace that underlying fund with one or more other mutual funds managed or sponsored by one of our affiliates. We refer to the replacement of an underlying fund with one or more other mutual funds as a substitution. A substitution will only take place: with the consent of the manager of the affected fund and any person appointed by us to perform calculations for the LifeStage Retirement Income Note Program, and if we determine, after consulting with the manager of the affected fund and any person appointed by us to perform calculations for the LifeStage Retirement Income Note Program, that the substitution will eliminate the extraordinary event. Only we can make the decision to carry out a substitution to avoid an extraordinary event. If we decide to proceed with the substitution, we will use reasonable efforts to notify holders of LifeStage Retirement Income Notes of our decision within 10 business days of the day on which the substitution takes place. After a substitution takes place, any references in this Master Information Statement and any Supplement to the affected fund will be considered to be references to the mutual fund or funds that replaced it. Any person performing calculations for the LifeStage Retirement Income Note Program will be entitled to make any adjustments it considers necessary or appropriate to give effect to the substitution. Capital preservation event On each business day, we will compare the Deposit Value of a version and series of LifeStage Retirement Income Notes to the annuity value of a LifeStage Retirement Income Note of the same version and series. If on any business day that Deposit Value is equal to or less than the annuity value, a capital preservation event will have occurred. This indicates that the value of the LifeStage Retirement Income Portfolio is not enough, if invested at the relevant government bond rates (or other higher rate as may be chosen by us), to pay the scheduled capital distributions during the remainder of the term and the Deposit Balance at maturity. A number of factors will determine whether a capital preservation event occurs at any time, including the performance of the LifeStage Retirement Income Portfolio, the Deposit Balance, the remaining term of the LifeStage Retirement Income Note and prevailing interest rates. 11

14 Consequences of an extraordinary event or a capital preservation event If an extraordinary event or a capital preservation event occurs: your LifeStage Retirement Income Notes will no longer have exposure to the underlying funds and you will not participate in any subsequent performance of the underlying funds. you will continue to receive regular capital distributions at the same level as the last capital distribution made before the event occurred without any further adjustments for inflation, subject to maximum total capital distributions of $99 per LifeStage Retirement Income Note. If the relevant event occurs before the first payment date, your capital distributions will be adjusted to reflect the level of inflation up to the occurrence of that event but will remain will no longer be adjusted for inflation. you will receive your Deposit Balance when your LifeStage Retirement Income Note matures. no further Annual LifeStage Retirement Income Portfolio Fees will be charged on your LifeStage Retirement Income Notes. if an extraordinary event has occurred, you are less likely to receive more than the principal amount you invested if you hold your LifeStage Retirement Income Notes until they mature. if a capital preservation event has occurred, you will receive only the principal amount you invested if you hold your LifeStage Retirement Income Notes until maturity. the Deposit Value of a LifeStage Retirement Income Note on any day after an extraordinary event or capital preservation event occurs will be the annuity value of a LifeStage Retirement Income Note on that day. If an extraordinary event occurs, you may also receive an additional return equal to the amount, if any, by which the Deposit Value immediately before the extraordinary event occurred exceeds the annuity value at that time. This amount will be payable, together with interest from the date of the extraordinary event, when you sell your LifeStage Retirement Income Note or it matures. In such circumstances, the Deposit Value will depend on (i) prevailing government bond rates (or other higher rate as may be chosen by us), (ii) the amounts and payment dates of remaining capital distributions to you, and (iii) the Deposit Balance. If we cannot calculate the Deposit Value on the basis set out above, we will adjust our procedures as we consider appropriate in order to calculate the Deposit Value. C. THE UNDERLYING FUNDS Each LifeStage Retirement Income Note will provide exposure to the performance of the underlying funds listed in the Supplement. The Supplement contains limited information about each underlying fund, including: its investment objectives and strategies whether it will be included in the equity component or the fixed income component of the LifeStage Retirement Income Portfolio and the target weight of each underlying fund in the LifeStage Retirement Income Portfolio on the issue date and the maturity date of the particular LifeStage Retirement Income Note Any information about the underlying funds set out in the Supplement is subject to any disclosure filed publicly by each underlying fund and could change. For further information about an underlying fund, including further details of its investment objectives and strategies, please refer to the most recent simplified prospectus and annual information form of that underlying fund, and any amendments to those documents, filed at Information about the performance and holdings of an underlying fund is also available at D. CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS In the opinion of Torys LLP, our counsel, the following is, as of the date hereof, a summary of the principal Canadian federal income tax considerations generally applicable to the acquisition, holding and disposition of LifeStage Retirement Income Notes by an investor ( Initial Holder ) who purchases LifeStage Retirement Income Notes only at the time of their issuance. This summary is applicable only to an Initial Holder who is an individual (other than a trust) and, for the purposes of the Income Tax Act (Canada) (the Act ), is a resident of Canada, deals at arm s length with and is not affiliated with us and holds LifeStage Retirement Income Notes as capital property. The LifeStage Retirement Income Notes will generally be considered to be capital property to an Initial Holder unless: (i) the Initial Holder holds the LifeStage Retirement 12