PRIVATE CLIENT GROUP  Group Description and Strategy Private Client Group (PCG) brings together all of BMO Financial Group’s wealth management businesses. We offer clients a broad range of wealth management products and services, including retail investment products, direct and full-service investing, private banking and institutional asset management. Operating as BMO Private Client Group in Canada and The Harris in the United States, we provide North American investors with the tools they need to accumulate, protect and grow their financial assets. We serve four key North American market segments: the mainstream, affluent, high net worth and institutional market segments. These segments are served through BMO Bank of Montreal, BMO Nesbitt Burns, BMO InvestorLine and BMO Harris Private Banking in Canada, and through Harris Private Bank, Harris direct and Harris Bank in the United States.  Our goal is to build a fully integrated North American wealth  management business by delivering an integrated and flexible choice of advice-driven or guided offerings. The group has  total assets under management and administration, including term deposits, of $270 billion.  2002 Group Objectives and Achievements  Expand the distribution network on both sides of the border by contin- uing to expand our total number of investment sales professionals. b Managed the pace of growth given current challenging market conditions. b Added more than 70 representatives to expand the North American investment sales professional team to more than 2,310 representatives. b Opened 11 new U.S. distribution points. b Added 115 representatives, increasing our BMO Bank of Montreal branch presence by 17% to more than 815. b Developed a team-based sales model in the United States that focuses on cross-selling. b Strengthened our partnership with P&C by aligning the organization of our retail bank sales forces and introducing joint marketing initiatives. Leverage relationships with BMOGLYPH<213>s North American client base by placing more trained investment professionals in bank branches. Continue to expand U.S. wealth management businesses through both acquisitions and organic growth by leveraging HarrisGLYPH<213> long-standing reputation in major U.S. markets while expanding into selective new markets across the country. b Completed the acquisition of CSFB direct and acquired the online accounts of Morgan Stanley Individual Investor Group. We also successfully inte- grated operations with Harris InvestorLine to create Harris direct . These acquisitions added $29 billion of assets under administration, increasing our U.S. assets under administration and management to more than 50% of the group total. b Acquired Northwestern Trust and Investors Advisory Company on April 1, 2002, which expanded our service offerings in the Pacific Northwest and added $4 billion of assets under administration. b Announced the acquisition in September 2002 of selected assets of myCFO, a California-based investment advisory team servicing high net worth clients, which will expand the distribution network and investment capabilities of Harris Private Bank and adds a further $6 billion of assets under administration. The $47 million acquisition closed on November 1, 2002, subsequent to our year-end. b Award-winning and recognized leadership in many of our businesses: — BMO InvestorLine was ranked best direct investing firm in Canada by both GomezCanada and  The Globe and Mail . — Harris directGLYPH<213> s online site was ranked GLYPH<210>Best of the WebGLYPH<211> by Forbes.com, and Harris direct was ranked second-best online broker by  BarronGLYPH<213>s ¤ $^{5}$. — Harris Insight Fund family placed eighth out of 87 fund families ranked by  BarronGLYPH<213>s . This annual evaluation of high-quality fund families looks at the performance of each firmGLYPH<213>s entire product line. Increase the breadth and depth of our product and service offering. 2003 Group Objectives b Enhance our offering to retail and affluent clients through sales force growth and development, technology enhancement and integrated product and marketing initiatives. b Further leverage relationships within our group and with BMO partners by providing an integrated sales approach and product offering to clients.  b Expand U.S. wealth management businesses through both selective acqui- sitions and organic growth while building on The HarrisGLYPH<213> strong reputation as we expand into targeted new markets. b Continue to refine our businesses to enhance productivity and align our business units to ensure consistently successful results regardless of the business environment.  b Capitalize on our acquisitions to create synergies with existing businesses in order to accelerate our future growth. Business Environment and Outlook Private Client Group operated in a very challenging environ- ment in 2002. Our business was adversely affected by low  client trading volumes, weak equity markets and low interest rates. Management took this opportunity to re-assess the cost  structure of our business while continuing to invest in key  initiatives that support our long-term strategy. We expect that the difficult business climate will continue into fiscal 2003 and, in response, we will continue to balance cost management with strategic investment. Long-term demographic trends are attractive, indicating  continued strong demand for wealth management services  well into the future. Affluent investors are increasingly seeking advice from trusted financial service providers like PCG, who can best meet their asset protection and growth needs. We are well positioned to capitalize on these trends through a service offering that more than meets affluent investors’ needs. Revenue will be enhanced in 2003 and beyond by the acquisitions of the past year, and we will continue to explore selective wealth management acquisition opportunities that meet our strategic and financial objectives. BMO FINANCIAL GROUP ANNUAL REPORT 2002 41