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BMO’s New GICs Help Investors Benefit from Rising Interest Rates  

TORONTO, December 13, 2005 – BMO Term Investments today announced the launch of its new family of BMO RateOptimizer® GICs. This new suite of GIC products combines the two most important elements of GIC investing into one – interest rate maximization and protection from reinvestment risk.

Unlike a traditional laddered investing approach, the new family of BMO RateOptimizer GICs uses an advanced laddering strategy designed to help investors earn higher rates of return sooner. This is accomplished with a unique "blend and extend" feature:

  • Investors begin by earning a 5-year interest rate on all of their funds, right away.
  • Each year, when the investment is automatically renewed, 20 per cent of the investment’s blended interest rate is updated by factoring in the current five-year renewal rate.

By offering 5-year rates on the entire investment right away, BMO RateOptimizer GIC investors no longer have to sacrifice their initial earnings to build a long-term laddered portfolio. Investors now automatically benefit in a rising interest rate environment, as each year 20 per cent of their investment is reinvested at the potentially higher 5-year interest rates. If interest rates actually fall, only a portion of the investment is affected. Investors can also choose to lock in their rate at any time, providing them with more protection in the event that rates fall.

"The new BMO RateOptimizer GIC is an all-in-one solution – ideal for a long-term, security conscious investor who wants stability, security and performance," said Julie Sheen, Vice President, BMO Term Investments. "This new solution provides all the benefits of a laddering strategy without the need to track and renew multiple GICs and takes the guess-work out of interest rate fluctuations."

Recent research commissioned by BMO Bank of Montreal and compiled by Sigma Analysis and Investment Management, one of Canada’s leading providers of independent investment research and portfolio management, found that GICs can potentially reduce risk and/or increase returns when included in the portfolios of conservative investors. These findings can help guide conservative investors to build better overall portfolios without compromising the security they’ve come to expect.

BMO Term Investments is committed to bringing leading edge advice and solutions such as BMO RateOptimizer to the market. In January of this year, BMO Bank of Montreal was the first bank in Canada to link the return paid on a GIC to the performance of a professionally managed dividend fund with the launch of the BMO Dividend Fund Linked GIC – potentially allowing conservative investors to partially participate in the returns of the BMO Dividend Fund.

BMO Term Investments is part of BMO Financial Group's Private Client Group. The Private Client Group provides integrated wealth management services in Canada and the United States and had total assets under management and administration and term investments of $255.9 billion as at October 31, 2005.