Important announcements regarding BMO Funds
Update: August 17, 2021
On August 11, 2021, the Board of Directors (the “Board”) of BMO Funds, Inc. (the “Corporation”) approved agreements and plans of reorganization (each a “Plan” and together, the “Plans”) providing for the reorganization of certain series of the Corporation (each a “BMO Fund”) into a corresponding series (each an “Acquiring Fund”) of Columbia Funds Series Trust (“CFST”), Columbia Funds Series Trust I (“CFST I”) or Columbia Funds Series Trust II (“CFST II”) (each a “Reorganization” and together, the “Reorganizations”).
BMO Asset Management Corp. (“BAMC”), investment adviser to each of the BMO Funds, recommended that the Board approve the Reorganizations in connection with its decision to exit the mutual fund investment advisory business in the United States, including ceasing management of the BMO Funds. BAMC’s decision to exit the mutual fund investment advisory business is connected to the decision by Bank of Montreal, BAMC’s parent, to sell the entities representing its EMEA (Europe, the Middle East and Africa) asset management business to Ameriprise Financial, Inc. (the “EMEA Transaction”). To ensure that shareholders of the BMO Funds have continued access to a large and stable mutual fund platform, BAMC has proposed reorganizing the BMO Funds into the Acquiring Funds. Columbia Management Investment Advisers, LLC (“Columbia”) serves as investment adviser to each of the Acquiring Funds.
Each Reorganization is subject to the approval by shareholders of the applicable BMO Fund. The Plans provide for each BMO Fund to transfer all of its assets to the corresponding Acquiring Fund in return for shares of the Acquiring Fund and the Acquiring Fund’s assumption of the BMO Fund’s obligations, as defined in the Plans. Shareholders of each BMO Fund as of the closing date will become shareholders of the corresponding Acquiring Fund, receiving shares of the Acquiring Fund equal in value to the shares of the BMO Fund held by the shareholders prior to the applicable Reorganization. The Reorganizations are not expected to result in the recognition of gain or loss by the BMO Fund or its shareholders for federal tax purposes. Shareholders of the BMO Funds and the Acquiring Funds will not bear the costs of the Reorganizations.
The tables below show the BMO Funds and corresponding Acquiring Funds.
Proposed Reorganizations from the Corporation into CFST
BMO Fund | Corresponding Acquiring Fund |
|---|---|
BMO Disciplined International Equity Fund | Columbia Overseas Value Fund |
BMO Mid-Cap Value Fund | Columbia Select Mid Cap Value Fund |
BMO Small-Cap Value Fund | Columbia Small Cap Value Fund II |
BMO Short Tax-Free Fund | Columbia Short Term Municipal Bond Fund |
BMO Short-Term Income Fund | Columbia Short Term Bond Fund |
BMO Balanced Allocation Fund | Columbia Capital Allocation Moderate Aggressive Portfolio |
Proposed Reorganizations from the Corporation into CFST I
BMO Fund | Corresponding Acquiring Fund |
|---|---|
BMO LGM Emerging Markets Equity Fund | Columbia Emerging Markets Fund |
BMO Mid-Cap Growth Fund | Columbia Mid Cap Growth Fund |
BMO Core Plus Bond Fund | Columbia Total Return Bond Fund |
BMO Corporate Income Fund | Columbia Corporate Income Fund |
BMO Intermediate Tax-Free Fund | Columbia Intermediate Municipal Bond Fund |
BMO Strategic Income Fund | Columbia Strategic Income Fund |
Proposed Reorganizations from the Corporation into CFST II
BMO Fund | Corresponding Acquiring Fund |
|---|---|
BMO Conservative Allocation Fund | Columbia Capital Allocation Conservative Portfolio |
BMO Moderate Allocation Fund | Columbia Capital Allocation Moderate Portfolio |
BMO Growth Allocation Fund | Columbia Capital Allocation Aggressive Portfolio |
BMO Aggressive Allocation Fund | Columbia Capital Allocation Aggressive Portfolio |
BMO Dividend Income Fund | Columbia Integrated Large Cap Value Fund |
BMO Large Cap Value Fund | Columbia Integrated Large Cap Value Fund |
BMO Low Volatility Equity Fund | Columbia Integrated Large Cap Value Fund |
BMO Large-Cap Growth Fund | Columbia Integrated Large Cap Growth Fund |
BMO Small-Cap Growth Fund | Columbia Integrated Small Cap Growth Fund |
BMO Pyrford International Stock Fund | Columbia Pyrford International Stock Fund |
BMO Ultra Short Tax-Free Fund | Columbia Ultra Short Municipal Bond Fund |
Share Class Mapping
If a BMO Fund’s shareholders approve a Reorganization, the BMO Fund shareholders will receive shares of the corresponding Acquiring Fund as set forth in the table below.
BMO Fund Share Class | Acquiring Fund Share Class |
|---|---|
Class A | Class A |
Class I | Class Advisor |
Class R6 | Class Inst3 |
Class Y | Class A |
Class R3 | Class R |
Interim Advisory and Subadvisory Agreements
BAMC’s disciplined equity team (the “DE Team”) manages the (1) BMO Disciplined International Fund, (2) BMO Mid-Cap Value Fund, (3) BMO Small-Cap Value Fund, (4) BMO Mid-Cap Growth Fund, (5) BMO Dividend Income Fund, (6) BMO Large-Cap Value Fund, (7) BMO Low Volatility Equity Fund, (8) BMO Large-Cap Growth Fund, and (9) BMO Small-Cap Growth Fund (together, the “DE Funds”). The DE Team will transfer to become employees of Columbia on or about December 16, 2021. On August 11, 2021, the Board approved an interim investment advisory agreement between Columbia and the Corporation, on behalf the DE Funds that will go into effect when the DE Team transfers to Columbia, if one or more of the DE Funds have not reorganized into the corresponding Acquiring Fund as of the transfer date. Shareholders of the DE Funds will be asked to approve a new investment advisory agreement between Columbia and the Corporation in addition to being asked to approve the applicable Reorganization. The interim advisory agreement can continue in effect for 150 days or until shareholders of a DE Fund approve a new investment advisory agreement between Columbia and the Corporation.
Pyrford International Ltd. (“Pyrford”) serves as investment subadviser to the BMO Pyrford International Stock Fund (the “Pyrford Fund”) pursuant to a subadvisory agreement with BAMC. LGM Investments Limited (“LGM”) serves as the investment subadviser to the BMO LGM Emerging Markets Equity Fund (the “LGM Fund”) pursuant to a subadvisory agreement with BAMC. The change of control of Pyrford and LGM resulting from the EMEA Transaction in the fourth quarter of 2021 will trigger an assignment and termination of the subadvisory agreements for the Pyrford Fund and the LGM Fund. In order to ensure continuity of portfolio management for the Pyrford Fund and the LGM Fund, the Board approved interim subadvisory agreements between BAMC and LGM for the LGM Fund and between BAMC and Pyrford for the Pyrford Fund. Each interim subadvisory agreement will go into effect on the date that Pyrford and LGM undergo a change of control. The interim subadvisory agreements can continue in effect for 150 days or until shareholders of the Pyrford Fund and the LGM Fund approve a new subadvisory agreement. Shareholders of the Pyrford Fund and LGM Fund will be asked to approve new investment subadvisory agreements between BAMC and Pyrford and BAMC and LGM, respectively, in addition to being asked to approve the applicable Reorganization
BMO Funds Shareholder Meeting
The Board will call a joint meeting of shareholders of the BMO Funds at which shareholders of each BMO Fund will be asked to consider and vote on a Plan with respect to their BMO Fund. As indicated above, shareholders of the DE Funds will also be asked to consider and vote on a new investment advisory agreement, and shareholders of the Pyrford Fund and LGM Fund will be asked to consider and vote on new subadvisory agreements. The joint shareholder meeting is expected to take place during the fourth quarter of 2021.
Shareholders of each BMO Fund will receive a combined prospectus/proxy statement with additional information about the shareholder meeting, the Reorganizations and the new investment advisory or subadvisory agreements. Please read the proxy materials carefully, as they will contain a more detailed description of the proposals.
Original message: April 12, 2021
BMO Asset Management Corp. (the “Adviser”), the investment adviser to each Fund, is part of BMO Financial Group (“BMO”). On April 12, 2021, BMO announced that it has reached a definitive agreement with Ameriprise Financial, Inc. (“Ameriprise”) to sell the entities that represent BMO’s EMEA (Europe, the Middle-East and Africa) Asset Management business. Separately, in the U.S. BMO and Ameriprise have agreed to work together to facilitate the transition of investment advisory services for certain mutually agreed upon BMO Funds, contingent upon the approval of the Funds’ Board of Directors and shareholders. Additional information will be provided to Fund shareholders once it becomes available.