Canadian Equity Plus Fund

4.         MB Canadian Equity Plus Fund

Investment Philosophy

To provide a superior real rate of return, primarily through capital appreciation, by investing in a diversified portfolio of Canadian and foreign equities.  Typically, at least 75% of the Canadian equity portion of the Fund will be invested in the largest one hundred stocks on the Toronto Stock Exchange as measured by available public float.  Foreign equity selection will generally be large, leading companies in their respective industries.

Performance Objective

To outperform the Fund's benchmark by 1.25% per annum over moving-four year periods.  The benchmark is comprised of 75%  BMO/TSX Composite CAP 10% Index + 25% Morgan Stanley Capital International World (MSCI World) Index.

            Asset Mix*   

                  Min            Max    

         %         %

Canadian equities             70        90

Foreign equities                         10        30*

Cash & equivalents            0          15

*The Fund may only invest in foreign securities up to the limit (currently 30% based on book value) imposed under the Income Tax Act of Canada.

            Canadian Equities

Diversification

The Canadian equity component of the Fund is governed by a series of risk control parameters that have been designed to ensure diversification.  These controls are as follows:

Economic Sectors  - (as a % of  BMO/TSX Composite CAP 10% Index):

                  Min     Max

                                 %         %

Technology¹                           70       130

Consumer²                             70       130

Interest Sensitive³                              70       130

Basic Industries⁴                             70       130

¹Technology=Information Technology

²Consumer=Consumer Staples, Consumer Discretionary, Healthcare, Telecommunication Services

³Interest Sensitive=Financial Services, Utilities

⁴Basic Industries=Materials, Energy, Industrials

         In addition, the Economic Sectors are subject to a nominal range of +/- 4% of their weight in the Index.

At the Industry Sector level the Fund's exposure will be the greater of 45% to 155% of the BMO/TSX Composite CAP 10% Index's sector weight and a nominal range of  +/-4% of their weight in the Index.  The Fund will normally hold investments in at least eight of the Index's ten industry sectors.

            Note:

   These risk control parameters are based on the BMO/TSX Composite CAP 10% calculated on the basis that the maximum percentage weight of any one security in the Index is 10%.

            Canadian Issues

·         50 - 90 securities

·         Normally, at least 75% of the Fund will be invested in the largest 100 stocks on the Toronto Stock Exchange as measured by available public float

·         Individual securities may vary by no more than a nominal +/- 4% from their weight in the BMO/TSX Composite CAP 10% Index 

·         No single security will comprise more than 14% of Market Value of the Fund

·         No single security will comprise more than 10% of the Book Value of the Fund

·         A minimum of 0.25% in any equity security, at time of purchase, except for

(i) private placements, or

(ii) when adding or closing a position

·         The Fund will not hold more than 30% of voting shares of any corporation

            Foreign Equities

Diversification

The foreign equity component of the Fund is governed by a series of risk control parameters that have been designed to ensure diversification.  These controls are as follows:

Regional -  (as a  % of MSCI World Index):

                                                            Min                                          Max

                                                                      %                             % 

U.S.      70      130

            Japan            70            130

            Continental Europe             70            130

            U.K.            70            130

            Far East      0                          6

            Emerging Markets            0                          6             

In addition, the U.S., Japan, Continental Europe and U.K. are subject to a nominal range of +/- 6% of their weight in the Index, whichever is greater.  In the case of the Far East and Emerging Markets the maximum weight is stated as a percentage of the Fund.

Economic Sectors - (as a % of MSCI World Index):

                                                Min                                          Max

                                                                       %            %

             Technology¹            70            130

            Consumer²        70            130

            Interest Sensitive³             70            130

            Basic Industries⁴            70            130

¹Technology=Information Technology

²Consumer=Consumer Staples, Consumer Discretionary, Healthcare, Telecommunication Services

³Interest Sensitive=Financial Services, Utilities

⁴Basic Industries=Materials, Energy, Industrials

In addition, the Economic Sectors are subject to a nominal range of +/- 11% of their weight in the Index.

At the Industry Sector level the Fund's exposure will be the greater of 45% to 155% of the MSCI World Index's sector weight and  a nominal range of +/- 6% of  their weight in the Index.  The Fund will normally hold investments in at least eight of the Index's ten Industry Sectors.

            Foreign Issues

Investment Process

Investment Philosophy