BMO Mutual Funds 2014BMO SelectTrust™ Income Portfolio (formerly BMO SelectTrust Security...

27
BMO Mutual Funds 2014 ANNUAL FINANCIAL STATEMENTS December 31, 2014 BMO Global Diversified Fund (formerly BMO Guardian Global Diversified Fund)

Transcript of BMO Mutual Funds 2014BMO SelectTrust™ Income Portfolio (formerly BMO SelectTrust Security...

Page 1: BMO Mutual Funds 2014BMO SelectTrust™ Income Portfolio (formerly BMO SelectTrust Security Portfolio) BMO SelectTrust™ Conservative Portfolio (formerly BMO Conservative Solution

BMO Mutual Funds 2014ANNUAL FINANCIAL STATEMENTS

December 31, 2014

BMO Global Diversified Fund (formerly BMO Guardian Global Diversified Fund)

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Independent Auditor's Report

To the Unitholders ofBMO Canadian Diversified Monthly Income Fund (formerly BMO Guardian Canadian Diversified Monthly Income Fund)BMO Monthly Dividend Fund Ltd.(formerly BMO Guardian Monthly Dividend Fund Ltd.) BMO Growth & Income Fund(formerly BMO Guardian Growth & Income Fund) BMO Monthly High Income Fund II(formerly BMO Guardian Monthly High Income Fund II)BMO Enterprise Fund(formerly BMO Guardian Enterprise Fund)BMO Asian Growth and Income Fund(formerly BMO Guardian Asian Growth and Income Fund)

BMO Global Small Cap Fund(formerly BMO Guardian Global Small Cap Fund) BMO Global Diversified Fund(formerly BMO Guardian Global Diversified Fund) BMO Canadian Large Cap Equity Fund(formerly BMO Guardian Canadian Large Cap Equity Fund)BMO High Yield Bond Fund(formerly BMO Guardian High Yield Bond Fund) BMO Floating Rate Income Fund(formerly BMO Guardian Floating Rate Income Fund) BMO Global Growth and Income Fund(formerly BMO Global Absolute Return Fund) BMO SelectTrust™ Income Portfolio(formerly BMO SelectTrust Security Portfolio)

BMO SelectTrust™ Conservative Portfolio(formerly BMO Conservative Solution (Mar 28, 2013), BMO Guardian Conservative Solution)BMO SelectTrust™ Balanced Portfolio(formerly BMO Balanced Solution (Mar 28, 2013), BMO Guardian Balanced Solution)BMO SelectTrust™ Growth Portfolio(formerly BMO Growth Solution (Mar 28, 2013), BMO Guardian Growth Solution)BMO SelectTrust™ Equity Growth Portfolio(formerly BMO Aggressive Growth Solution (Mar 28, 2013), BMO Guardian Aggressive Growth Solution)BMO International Value Fund(formerly BMO Nesbitt Burns International Equity Fund)BMO Canadian Stock Selection Fund(formerly BMO Nesbitt Burns Canadian Stock Selection Fund)

(collectively the Funds)

__________________________________________________________________________________________________________

We have audited the accompanying financial statements of each of the Funds, which comprise the statements

of financial position as at December 31, 2014, December 31, 2013 and January 1, 2013 and statements of

comprehensive income, changes in net assets attributable to holders of redeemable units and cash flows for the

years ended December 31, 2014 and December 31, 2013, and the related notes, which comprise a summary of

significant accounting policies and other explanatory information.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of the financial statements of each of

the Funds in accordance with International Financial Reporting Standards, and for such internal control as

management determines is necessary to enable the preparation of financial statements that are free from material

misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial statements of each of the Funds based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards

require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance

about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of

the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk

assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of

the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for

the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes

evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made

by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained in each of our audits is sufficient and appropriate to provide a

basis for our audit opinion.

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Independent Auditor's Report

Opinion

In our opinion, the financial statements of each of the Funds present fairly, in all material respects, the financial

position of each of the Funds as at December 31, 2014, December 31, 2013 and January 1, 2013 and the financial

performance and cash flows of each of the Funds for the years ended December 31, 2014 and December 31, 2013 in

accordance with International Financial Reporting Standards.

Chartered Professional Accountants, Licensed Public Accountants

Toronto, Ontario

March 31, 2015

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STATEMENT OF FINANCIAL POSITION(All amounts in thousands of Canadian dollars, except per unit data)

STATEMENT OF COMPREHENSIVE INCOME(All amounts in thousands of Canadian dollars, except per unit data)

The accompanying notes are an integral part of these financial statements.

BMO Global Diversified Fund(formerly BMO Guardian Global Diversified Fund)

December 31 December 31 January 1 As at 2014 2013 2013

ASSETS

CURRENT ASSETSCash 1,475 1,393 1,330Investments

Non-derivative financial assets 79,813 56,773 43,842

Derivative assets — — 113Receivable for investments sold 6 — 122Subscriptions receivable 212 500 45Interest receivable 2 — 121Dividends receivable 55 39 82Distribution receivable from

investment trusts 17 8 11Total assets 81,580 58,713 45,666

LIABILITIES

CURRENT LIABILITIESPayable for investments

purchased 212 114 263Redemptions payable 5 47 0Derivative liabilities — — 234Accrued expenses 190 102 90Total liabilities 407 263 587

Net assets attributable to holders of redeemable units 81,173 58,450 45,079

Net assets attributable to holders of redeemable unitsAdvisor Series Units 68,618 52,236 40,751Series T5 Units 8,566 4,673 3,258Series F Units 3,989 1,541 1,070

Net assets attributable to holders of redeemable units per unit Advisor Series Units $ 12.62 $ 12.61 $ 11.22Series T5 Units $ 8.82 $ 8.82 $ 8.23Series F Units $ 13.16 $ 12.85 $ 11.31

December 31 December 31 For the periods ended 2014 2013

INCOMEInterest income 7 204Dividend income 682 773Distribution from investment trusts 2,161 364Other changes in fair value of investments and

derivativesNet realized gain 4,330 4,357Change in unrealized (depreciation)

appreciation (679) 1,383Net gain in fair value of investments and

derivatives 6,501 7,081

Securities lending 7 4Foreign exchange loss (10) (32)

Total loss (3) (28)

Total income 6,498 7,053

EXPENSESManagement fees (note 6) 1,545 1,052Variable administration fees (note 6) 127 164Audit fees 5 8Independent review committee fees 1 2Withholding taxes 36 37Custodian fees, interest and bank charges 26 34Legal and filing fees 21 20Unitholder reporting costs 5 9Commissions and other portfolio transaction costs (note 6) 36 47Operating expenses absorbed by the Manager (1) (104)Total expenses 1,801 1,269

Increase in net assets attributable to holders of redeemable units 4,697 5,784

Increase in net assets attributable to holders of redeemable unitsAdvisor Series Units 4,081 5,198Series T5 Units 431 430Series F Units 185 156

Increase in net assets attributable to holders of redeemable units per unit (note 3)Advisor Series Units 0.85 1.42Series T5 Units 0.56 1.02Series F Units 0.87 1.58

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BMO Global Diversified Fund(formerly BMO Guardian Global Diversified Fund)

STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS(All amounts in thousands of Canadian dollars)

The accompanying notes are an integral part of these financial statements.

December 31 December 31 For the periods ended 2014 2013

Advisor Series Units

Net assets attributable to holders of redeemable units at beginning of period 52,236 40,751

Increase in net assets attributable to holders of redeemable units 4,081 5,198

Distributions to holders of redeemable units from:Net investment income (35) —Net realized gains on investments and

derivatives (2,073) —Return of capital (2,321) —Management fee rebate 0 0

Total distributions to holders of redeemable units (4,429) 0

Redeemable unit transactionsProceeds from redeemable units issued 23,453 13,989Reinvestments of distributions to holders of

redeemable units 3,836 0Redemption of redeemable units (10,559) (7,702)Net increase from redeemable unit

transactions 16,730 6,287

Net increase in net assets attributable to holders of redeemable units 16,382 11,485

Net assets attributable to holders of redeemable units at end of period 68,618 52,236

December 31 December 31 For the periods ended 2014 2013

Series T5 Units

Net assets attributable to holders of redeemable units at beginning of period 4,673 3,258

Increase in net assets attributable to holders of redeemable units 431 430

Distributions to holders of redeemable units from:Net investment income (7) —Net realized gains on investments and

derivatives (236) —Return of capital (272) (173)

Total distributions to holders of redeemable units (515) (173)

Redeemable unit transactionsProceeds from redeemable units issued 4,445 1,623Reinvestments of distributions to holders of

redeemable units 242 112Redemption of redeemable units (710) (577)Net increase from redeemable unit

transactions 3,977 1,158

Net increase in net assets attributable to holders of redeemable units 3,893 1,415

Net assets attributable to holders of redeemable units at end of period 8,566 4,673

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BMO Global Diversified Fund(formerly BMO Guardian Global Diversified Fund)

STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS (cont’d)(All amounts in thousands of Canadian dollars)

The accompanying notes are an integral part of these financial statements.

December 31 December 31 For the periods ended 2014 2013

Series F Units

Net assets attributable to holders of redeemable units at beginning of period 1,541 1,070

Increase in net assets attributable to holders of redeemable units 185 156

Distributions to holders of redeemable units from:Net investment income (45) —Net realized gains on investments and

derivatives (94) —Return of capital (58) —

Total distributions to holders of redeemable units (197) —

Redeemable unit transactionsProceeds from redeemable units issued 2,946 532Reinvestments of distributions to holders of

redeemable units 160 —Redemption of redeemable units (646) (217)Net increase from redeemable unit

transactions 2,460 315

Net increase in net assets attributable to holders of redeemable units 2,448 471

Net assets attributable to holders of redeemable units at end of period 3,989 1,541

December 31 December 31 For the periods ended 2014 2013

Total FundNet assets attributable to holders of

redeemable units at beginning of period 58,450 45,079Increase in net assets attributable to holders of

redeemable units 4,697 5,784

Distributions to holders of redeemable units from:Net investment income (87) —Net realized gains on investments and

derivatives (2,403) —Return of capital (2,651) (173)Management fee rebate 0 0

Total distributions paid to holders of redeemable units (5,141) (173)

Redeemable unit transactionsProceeds from redeemable units issued 30,844 16,144Reinvestments of distributions to holders of

redeemable units 4,238 112Redemption of redeemable units (11,915) (8,496)

Net increase from redeemable unit transactions 23,167 7,760

Net increase in net assets attributable to holders of redeemable units 22,723 13,371

Net assets attributable to holders of redeemable units at end of period 81,173 58,450

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BMO Global Diversified Fund(formerly BMO Guardian Global Diversified Fund)

STATEMENT OF CASH FLOWS(All amounts in thousands of Canadian dollars)

The accompanying notes are an integral part of these financial statements.

December 31 December 31 For the periods ended 2014 2013

Cash flows from operating activitiesIncrease in net assets attributable to holders of redeemable units 4,697 5,784Adjustments for:

Foreign exchange loss on cash — 1Net realized gain on sale of investments

and derivatives (4,330) (4,357)Change in unrealized depreciation

(appreciation) of investments and derivatives 679 (1,383)

(Increase) decrease in interest receivable (2) 121(Increase) decrease in dividends

receivable (16) 43(Increase) decrease in distribution

receivable from investment trusts (9) 3Decrease in accrued interest on money

market investments 0 0Increase in accrued expenses 88 12Return of capital distributions received 41 51Dividend reinvestments (2,064) (296)Purchases of investments (42,132) (58,429)Proceeds from sale and maturity of

investments 24,842 51,635Cash inflows/outflows on derivatives 16 (300)

Net cash from operating activities (18,190) (7,115)

Cash flows used in financing activitiesDistributions paid to holders of redeemable

units, net of reinvested distributions (903) (61)Proceeds from issuances of redeemable

units 31,132 15,689Amounts paid on redemption of redeemable

units (11,957) (8,449)

Net cash used in financing activities 18,272 7,179

Foreign exchange loss on cash — (1)Net increase in cash 82 64Cash at beginning of period 1,393 1,330

Cash at end of period 1,475 1,393

Supplementary InformationInterest received, net of withholding taxes* 4 323Dividends received, net of withholding taxes* 643 781*These items are from operating activities

Page 8: BMO Mutual Funds 2014BMO SelectTrust™ Income Portfolio (formerly BMO SelectTrust Security Portfolio) BMO SelectTrust™ Conservative Portfolio (formerly BMO Conservative Solution

BMO Global Diversified Fund(formerly BMO Guardian Global Diversified Fund)

SCHEDULE OF INVESTMENT PORTFOLIO December 31, 2014 (All amounts in thousands of Canadian dollars, unless otherwise noted)

The accompanying notes are an integral part of these financial statements.

Par  Value 

(in thousands)Cost  ($) 

Fair  Value 

($) 

MONEY MARKET INVESTMENTS

Federal — 1.0%Government of Canada, Treasury Bills, 0.880% Jan

29, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300. . . . . . . . 299. . . . . . . . . 299Government of Canada, Treasury Bills, 0.881% Jan

29, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135. . . . . . . . 135. . . . . . . . . 135Government of Canada, Treasury Bills, 0.889% Jan

29, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200. . . . . . . . 200. . . . . . . . . 200Government of Canada, Treasury Bills, 0.868% Jan

29, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225. . . . . . . . 225. . . . . . . . . 225. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 859. . . . . . . . . 859Total Money Market Investments — 1.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 859. . . . . . . . . 859

Par  Value 

(in thousands)Cost  ($) 

Fair  Value 

($) 

BONDS & DEBENTURES

Hong Kong — 1.1%Hong Kong Exchanges & Clearing Limited, Senior,

Unsecured, Notes, Convertible, 0.500% Oct 23, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US$ 200. . . . . . . . 272. . . . . . . . . 275

Johnson Electric Holdings Ltd., Senior, Unsecured, Notes, Convertible, Putable, 1.000% Apr 2, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US$ 250. . . . . . . . 301. . . . . . . . . 303

PB Issuer (No. 2) Limited, Senior, Unsecured, Notes, Convertible, Putable, 1.750% Apr 12, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US$ 50. . . . . . . . . 55. . . . . . . . . . . 56

Shine Power International Ltd., Senior, Unsecured, Notes, Convertible, Putable, Zero Coupon, Jul 28, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$ 2,000. . . . . . . . 284. . . . . . . . . 288

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 912. . . . . . . . . 922

Singapore — 0.3%CapitaLand Limited, Senior, Unsecured, Notes,

Convertible, Putable, 1.950% Oct 17, 2023 . . . . . . . . . . SGD 250. . . . . . . . 220. . . . . . . . . 222Total Bonds & Debentures — 1.4% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,132. . . . . . . 1,144

Number of  Shares or Units

Cost+* 

($)

Fair  Value 

($) 

EQUITIES

CANADIAN EQUITIESConsumer Discretionary — 1.6%Cineplex Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,900. . . . . . . . 314. . . . . . . . . 444Shaw Communications Inc., Class B . . . . . . . . . . . . . . . . . . . . . . . . 14,000. . . . . . . . 323. . . . . . . . . 439Thomson Reuters Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,100. . . . . . . . 327. . . . . . . . . 379. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 964. . . . . . . 1,262

Consumer Staples — 0.4%North West Company Inc., The, . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,600. . . . . . . . 253. . . . . . . . . 304

Energy — 5.6%AltaGas Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,600. . . . . . . . 436. . . . . . . . . 546ARC Resources Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,300. . . . . . . . 434. . . . . . . . . 435Baytex Energy Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,400. . . . . . . . 633. . . . . . . . . 298

Number of  Shares or Units

Cost+* 

($)

Fair  Value 

($) 

Bonavista Energy Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,700. . . . . . . . 424. . . . . . . . . 173Cenovus Energy Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000. . . . . . . . 430. . . . . . . . . 336Crescent Point Energy Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,800. . . . . . . . 475. . . . . . . . . 344Enbridge Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500. . . . . . . . 247. . . . . . . . . 269Keyera Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,100. . . . . . . . 342. . . . . . . . . 494Mullen Group Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,300. . . . . . . . 311. . . . . . . . . 283Pembina Pipeline Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,800. . . . . . . . 405. . . . . . . . . 500Peyto Exploration & Development Corp. . . . . . . . . . . . . . . . . . . 12,000. . . . . . . . 310. . . . . . . . . 402Vermilion Energy Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,700. . . . . . . . 417. . . . . . . . . 439. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,864. . . . . . . 4,519

Financials — 9.4%Bank of Nova Scotia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,900. . . . . . . . 565. . . . . . . . . 656Boardwalk REIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,700. . . . . . . . 344. . . . . . . . . 412Brookfield Property Partners L.P.. . . . . . . . . . . . . . . . . . . . . . . . . . . 14,669. . . . . . . . 315. . . . . . . . . 388Canadian Apartment Properties REIT . . . . . . . . . . . . . . . . . . . . . . . 12,800. . . . . . . . 225. . . . . . . . . 322Canadian Imperial Bank of Commerce . . . . . . . . . . . . . . . . . . . . . . . 5,100. . . . . . . . 406. . . . . . . . . 509Canadian REIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,800. . . . . . . . 433. . . . . . . . . 540Chartwell Retirement Residences . . . . . . . . . . . . . . . . . . . . . . . . . . 35,400. . . . . . . . 313. . . . . . . . . 422CI Financial Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,200. . . . . . . . 272. . . . . . . . . 265DH Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,500. . . . . . . . 204. . . . . . . . . 312H&R REIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,800. . . . . . . . 322. . . . . . . . . 365Intact Financial Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,100. . . . . . . . 366. . . . . . . . . 512Manulife Financial Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,900. . . . . . . . 482. . . . . . . . . 597Manulife Financial Corporation, Subscription

Receipts, Mar 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400. . . . . . . . . 51. . . . . . . . . . . 53Power Corporation of Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,400. . . . . . . . 293. . . . . . . . . 330RioCan REIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000. . . . . . . . 468. . . . . . . . . 529Royal Bank of Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,800. . . . . . . . 556. . . . . . . . . 706Toronto-Dominion Bank, The, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,100. . . . . . . . 555. . . . . . . . . 727. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,170. . . . . . . 7,645

Industrials — 0.5%Progressive Waste Solutions Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500. . . . . . . . 104. . . . . . . . . 157Westshore Terminals Investment Corporation. . . . . . . . . . . . . . . 8,000. . . . . . . . 226. . . . . . . . . 253. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330. . . . . . . . . 410

Materials — 0.7%Agrium Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500. . . . . . . . 345. . . . . . . . . 385Labrador Iron Ore Royalty Corporation . . . . . . . . . . . . . . . . . . . . 10,600. . . . . . . . 267. . . . . . . . . 197. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 612. . . . . . . . . 582

Telecommunication Services — 1.2%Manitoba Telecom Services Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,800. . . . . . . . 362. . . . . . . . . 320TELUS Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,500. . . . . . . . 524. . . . . . . . . 691. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 886. . . . . . . 1,011

Utilities — 1.1%Brookfield Renewable Energy Partners L.P. . . . . . . . . . . . . . . . 11,800. . . . . . . . 278. . . . . . . . . 424Emera Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200. . . . . . . . . 96. . . . . . . . . 124Northland Power Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,500. . . . . . . . 331. . . . . . . . . 313. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 705. . . . . . . . . 861

Total Canadian Equities — 20.5% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,784. . . . . 16,594

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BMO Global Diversified Fund(formerly BMO Guardian Global Diversified Fund)

SCHEDULE OF INVESTMENT PORTFOLIO (cont’d)December 31, 2014 (All amounts in thousands of Canadian dollars, unless otherwise noted)

The accompanying notes are an integral part of these financial statements.

Number of  Shares or Units

Cost+* 

($)

Fair  Value 

($) 

FOREIGN EQUITIES

Australia — 0.7%CSL Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,547. . . . . . . . . 73. . . . . . . . . 208Orica Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,976. . . . . . . . 165. . . . . . . . . 178Woolworths Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,116. . . . . . . . 180. . . . . . . . . 177. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 418. . . . . . . . . 563

China — 0.2%China Oilfield Services Limited, Class H Shares . . . . . . . . . . . 72,000. . . . . . . . 138. . . . . . . . . 146

Hong Kong — 3.2%AIA Group Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,800. . . . . . . . 389. . . . . . . . . 389Cafe De Coral Holdings Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,000. . . . . . . . 179. . . . . . . . . 185China Mobile Limited, ADR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,600. . . . . . . . 244. . . . . . . . . 246CLP Holdings Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,500. . . . . . . . 229. . . . . . . . . 236Hang Lung Properties Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,000. . . . . . . . 196. . . . . . . . . 191Hutchison Whampoa Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000. . . . . . . . 201. . . . . . . . . 200Jardine Matheson Holdings Limited . . . . . . . . . . . . . . . . . . . . . . . . . . 5,600. . . . . . . . 397. . . . . . . . . 396Television Broadcasts Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,300. . . . . . . . 269. . . . . . . . . 286Vitasoy International Holdings Limited . . . . . . . . . . . . . . . . . . . 122,000. . . . . . . . 203. . . . . . . . . 205VTech Holdings Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,700. . . . . . . . 231. . . . . . . . . 244. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,538. . . . . . . 2,578

Indonesia — 0.5%PT Perusahaan Gas Negara (Persero) Tbk . . . . . . . . . . . . . . . . 372,100. . . . . . . . 205. . . . . . . . . 208PT Telekomunikasi Indonesia (Persero) TBK, ADR . . . . . . . . . . 3,800. . . . . . . . 201. . . . . . . . . 200. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 406. . . . . . . . . 408

Japan — 0.6%Japan Tobacco Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,900. . . . . . . . 285. . . . . . . . . 252Lawson, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,800. . . . . . . . 270. . . . . . . . . 267. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 555. . . . . . . . . 519

Malaysia — 1.2%AMMB Holdings Berhad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,200. . . . . . . . 269. . . . . . . . . 274Axiata Group Berhad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,100. . . . . . . . 174. . . . . . . . . 176British American Tobacco (Malaysia) Berhad . . . . . . . . . . . . . . . . 8,000. . . . . . . . 191. . . . . . . . . 172Genting Malaysia Berhad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175,300. . . . . . . . 239. . . . . . . . . 237Telekom Malaysia Berhad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,400. . . . . . . . 111. . . . . . . . . 110. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 984. . . . . . . . . 969

New Zealand — 0.4%SKY Network Television Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,766. . . . . . . . 200. . . . . . . . . 190SKYCITY Entertainment Group Limited . . . . . . . . . . . . . . . . . . . . . 50,418. . . . . . . . 177. . . . . . . . . 177. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377. . . . . . . . . 367

Philippines — 0.3%Globe Telecom, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,010. . . . . . . . 222. . . . . . . . . 224

Singapore — 2.0%ARA Asset Management Limited, REIT . . . . . . . . . . . . . . . . . . . . . 75,000. . . . . . . . 111. . . . . . . . . 112Ascendas REIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126,000. . . . . . . . 254. . . . . . . . . 263Keppel Corporation Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000. . . . . . . . 225. . . . . . . . . 232SIA Engineering Company Limited . . . . . . . . . . . . . . . . . . . . . . . . . 51,000. . . . . . . . 182. . . . . . . . . 188Singapore Post Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,000. . . . . . . . 142. . . . . . . . . 143Singapore Technologies Engineering Ltd. . . . . . . . . . . . . . . . . . 115,000. . . . . . . . 336. . . . . . . . . 342United Overseas Bank Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000. . . . . . . . 313. . . . . . . . . 322. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,563. . . . . . . 1,602

South Korea — 1.4%GS Home Shopping Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 697. . . . . . . . 149. . . . . . . . . 163Hyundai Motor Company, Preference . . . . . . . . . . . . . . . . . . . . . . . . . . 883. . . . . . . . 116. . . . . . . . . 117Hyundai Motor Company, Second Preference . . . . . . . . . . . . . . . . . 791. . . . . . . . 107. . . . . . . . . 111KEPCO Plant Service & Engineering Co., Ltd. . . . . . . . . . . . . . . . . 1,672. . . . . . . . 148. . . . . . . . . 140

Number of  Shares or Units

Cost+* 

($)

Fair  Value 

($) 

KT&G Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,635. . . . . . . . 242. . . . . . . . . 212LG Household & Health Care Ltd., Preference . . . . . . . . . . . . . . . . . 327. . . . . . . . . 99. . . . . . . . . . . 94Samsung Electronics Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132. . . . . . . . 179. . . . . . . . . 184Samsung Fire & Marine Insurance Co. Ltd.,

Preference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520. . . . . . . . 107. . . . . . . . . . . 92. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,147. . . . . . . 1,113

Taiwan — 0.7%Chunghwa Telecom Co., Ltd., ADR . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000. . . . . . . . 135. . . . . . . . . 137Taiwan Semiconductor Manufacturing Company

Limited, ADR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,600. . . . . . . . 197. . . . . . . . . 198Taiwan Semiconductor Manufacturing Company

Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,000. . . . . . . . 249. . . . . . . . . 251. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 581. . . . . . . . . 586

Thailand — 0.9%Advanced Info Service Public Company Limited,

Foreign Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,400. . . . . . . . 193. . . . . . . . . 207BEC World Public Company Limited, Foreign

Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,800. . . . . . . . 183. . . . . . . . . 167Glow Energy Public Company Limited, Foreign

Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,600. . . . . . . . 176. . . . . . . . . 163PTT Public Company Limited, Foreign Market . . . . . . . . . . . . . 16,000. . . . . . . . 203. . . . . . . . . 182. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 755. . . . . . . . . 719

United Kingdom — 0.4%BHP Billiton Plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,015. . . . . . . . 162. . . . . . . . . 149HSBC Holdings plc, ADR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,900. . . . . . . . 218. . . . . . . . . 214. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380. . . . . . . . . 363

United States — 0.2%Yum! Brands, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,200. . . . . . . . 194. . . . . . . . . 186

Total Foreign Equities — 12.7% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,258. . . . . 10,343Total Equities — 33.2% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,042. . . . . 26,937

Number  of 

UnitsCost+* 

($)

Fair  Value 

($) 

HOLDINGS IN UNDERLYING INVESTMENT FUNDS BMO Global Dividend Fund, Series I . . . . . . . . . . . . . . . . . . . . 2,290,997. . . . 25,434. . . . . . 29,935BMO Global Strategic Bond Fund, Series I . . . . . . . . . . . . . . 2,210,848. . . . 20,955. . . . . . 20,938Total Holdings in Underlying Investment Funds — 62.7% . . . . . . . . . . . 46,389. . . . . 50,873

Total Investment Portfolio — 98.3% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,422. . . . . 79,813Other Assets Less Liabilities — 1.7% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,360NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS - 100.0% . . . . . . . . . 81,173

+ Where applicable, distributions received from holdings as a return of capital are used to reduce the adjusted cost base of the securities in the portfolio.

* For the purpose of the Statement of Investment Portfolio, cost includes commissions and other portfolio transaction costs (note 3).

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BMO Global Diversified Fund(formerly BMO Guardian Global Diversified Fund)

NOTES TO THE FINANCIAL STATEMENTS(All amounts in thousands of Canadian dollars, except per unit data)December 31, 2014

1. The Mutual FundBMO Global Diversified Fund [“the Fund”] is an open-ended mutual fund trust established under the laws of the province of Ontario by Declaration of Trust. BMO Investments Inc. (“the Manager”) is the Manager and Trustee of the Fund. The Manager is a wholly owned subsidiary of Bank of Montreal. The address of the Fund’s registered office is 100 King Street West, Toronto, Ontario.

The information provided in these annual financial statements is as at and for the periods ended December 31, 2014, December 31, 2013 and opening Statement of Financial Position as at January 1, 2013. Financial information for a Fund established during the period(s) is presented from the date of inception as noted in Note 8. Financial information provided for a series established during the period(s) is presented from the launch date as noted in Note 8.

These financial statements were authorized for issue by the Manager on March 10, 2015.

2. Basis of preparation and presentationThese annual financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The Fund has adopted this basis of accounting effective January 1, 2014 as required by Canadian securities legislation and the Canadian Accounting Standards Board. Previously, the Fund prepared its financial statements in accordance with Canadian Generally Accounting Principles as defined in Part V of the Chartered Professional Accountant (“CPA”) Handbook (“Canadian GAAP”). The Fund has consistently applied the accounting policies used in the preparation of their opening IFRS statements of financial position at January 1, 2013 and throughout all periods presented as if these policies had always been in effect.

As required under IFRS, the Fund has:

• provided comparative financial information including an opening balance sheet as at the transition date

• retroactively applied all IFRS, other than in respect of elections taken under IFRS 1; and

• applied all mandatory exceptions as applicable for the first-time adopters of IFRS.

Note 8 contains reconciliations and descriptions of the effects of the transition to IFRS on the Fund's reported financial position, financial performance and cash flows.

3. Summary of significant accounting policiesFund mergersThe Manager has adopted the purchase method of accounting for certain Fund mergers which occurred during the periods. Under this method, one of the Funds in each merger is identified as the acquiring Fund, and is referred to as the “Continuing Fund”, and the other Fund involved in the merger is referred to as the “Terminated Fund”. This identification is based on the comparison of the relative net asset values of the Funds as well as consideration of the continuation of such aspects of the Continuing Fund as: investment advisors; investment objectives and practices; type of portfolio securities; and management fees and expenses. Where applicable, refer to Note 8 for the details of the merger transactions.

Financial instrumentsThe Fund records financial instruments at fair value. Investment transactions are accounted for on the trade date. The Fund’s investments are either designated at fair value through profit or loss (“FVTPL”) at inception or classified as held for trading. The changes in the investment fair values and related transaction costs are recorded in the Fund’s Statement of Comprehensive Income.

Financial assets or financial liabilities held for trading are those acquired or incurred principally for the purpose of selling or repurchasing in the near future, or on initial recognition, are part of a portfolio of identified financial instruments that the Fund manages together and that have a recent actual pattern of short-term profit taking. The Fund classifies all derivatives and short positions as held for trading. The Fund does not designate any derivatives as hedges in a hedging relationship.

The Fund designates all other investments at FVTPL, as they have reliably measurable fair values, are part of a group of financial assets or liabilities that are managed and have their performance evaluated on a fair value basis in accordance with the Fund’s investment strategy.

The Fund has issued multiple series of redeemable units which are equally subordinated but are not

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BMO Global Diversified Fund(formerly BMO Guardian Global Diversified Fund)

NOTES TO THE FINANCIAL STATEMENTS (cont’d)(All amounts in thousands of Canadian dollars, except per unit data)December 31, 2014

identical and consequently, do not meet the conditions to be classified as equity. As a result, the Fund’s obligations for net assets attributable to holders of redeemable units are presented at the redemption amounts.

All other financial assets and liabilities are measured at amortized cost. Under this method, financial assets and liabilities reflect the amount required to be received or paid or discounted, when appropriate, at the contract’s effective interest rate.

The Fund has determined that it meets the definition of “investment entity” and as a result, it measures subsidiaries other than those which provide services to the Fund, at FVTPL.

Cost of investmentsThe cost of investments represents the amount paid for each security and is determined on an average cost basis.

Fair value measurementInvestments are recorded at their fair value with the change between this amount and their average cost being recorded as change in unrealized appreciation (depreciation) in the Statement of Comprehensive Income.

For exchange traded securities close prices are considered to be fair value if they fall within the bid-ask spread. In circumstances where the close price is not within the bid-ask spread, the Manager determines the point within the bid-ask spread that is most representative of fair value based on the specific facts and circumstances.

Procedures are in place to fair value securities traded in countries outside of North America daily, to avoid stale prices and to take into account among other things, any significant events occurring after the close of a foreign market.

For bonds, debentures, asset-backed securities and other debt securities fair value is represented by bid prices provided by independent security pricing services. Short-term investments, if any, are carried at amortized cost which approximates fair value. Unlisted warrants, if any, are valued based on a pricing model which considers factors such as the market value of the underlying security, strike price and terms of the warrant. Exchange traded funds held as investments are valued at close prices except

for related exchange traded funds which are valued at their respective Net Asset Value (“NAV”) on each Valuation Date (the “Valuation Date” is each day on which the Toronto Stock Exchange is open for trading), as these values are the most readily and regularly available.

For securities where market quotes are not available, unreliable or not considered to reflect the current value, the Fund may determine another value which it considers to be fair and reasonable, or using a valuation technique that, to the extent possible, makes maximum use of inputs and assumptions based on observable market data including volatility, comparable companies and other applicable rates or prices. These estimation techniques include discounted cash flows, internal models that utilize observable data or comparisons with other securities that are substantially similar. In limited circumstances, the Fund uses internal models where the inputs are not based on observable market data.

Derivative instrumentsDerivative instruments are financial contracts that derive their value from underlying changes in interest rates, foreign exchange rates or other financial or commodity prices or indices.

Derivative instruments are either regulated exchange-traded contracts or negotiated over-the-counter contracts. The Fund may use these instruments for trading purposes, as well as to manage the Fund’s risk exposures.

Derivatives are marked to fair value. Discussion of the fair value measurement of derivatives is included in Note 3. Realized and unrealized gains and losses are recorded in the Statement of Comprehensive Income.

Forward currency contractsA forward currency contract is an agreement between two parties (the Fund and the counterparty) to purchase or sell a currency against another currency at a set price on a future date. The Fund may enter into forward currency contracts for hedging purposes which can include the economic hedging of all or a portion of the currency exposure of an investment or group of investments, either directly or indirectly. The Fund may also enter into these contracts for non-hedging purposes which can include increasing the exposure to a foreign currency or the shifting exposure to foreign currency fluctuations from one country to

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BMO Global Diversified Fund(formerly BMO Guardian Global Diversified Fund)

NOTES TO THE FINANCIAL STATEMENTS (cont’d)(All amounts in thousands of Canadian dollars, except per unit data)December 31, 2014

another. The value of forward currency contracts entered into by the Fund is recorded as the difference between the value of the contract on the Valuation Date and the value on the date the contract originated.

Income recognitionDividend income and distributions from investment trust units are recognized on the ex-dividend and ex-distribution date, respectively.

Interest income from interest bearing investments is recognized in the Statement of Comprehensive Income using the effective interest rate. Interest receivable shown in the Statement of Financial Position is accrued based on the interest bearing instruments’ stated rates of interest.

Interest on inflation-indexed bonds is paid based on a principal value, which is adjusted for inflation. The inflation adjustment of the principal value is recognized as part of interest income in the Statement of Comprehensive Income. If held to maturity, the Fund will receive, in addition to a coupon interest payment, a final payment equal to the sum of the par value and the inflation compensation accrued from the original issue date. Interest is accrued on each Valuation Date based on the inflation adjusted par value at that time and is included in “Interest income” in the Statement of Comprehensive Income.

Foreign currency translationThe fair value of investments and other assets and liabilities in foreign currencies are translated into the Fund’s functional currency at the rates of exchange prevailing at the period-end date. Purchases and sales of investments, and income and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Foreign exchange gains (losses) on completed transactions are included in “Realized gains (losses)” and unrealized foreign exchange gains (losses) are included in “Change in unrealized appreciation (depreciation)” in the Statement of Comprehensive Income. Foreign exchange gains and losses relating to cash, receivables and payables are included as "Foreign exchange gain (loss)".

Securities lendingA Fund may engage in securities lending pursuant to the terms of an agreement which includes restrictions as set out in Canadian securities legislation. Collateral held is government Treasury Bills and qualified Notes.

Income from securities lending, where applicable, is included in the Statement of Comprehensive Income and is recognized when earned. The market value of the securities loaned and collateral held is determined daily. Aggregate values of securities held in trust as at December 31, 2014, December 31, 2013 and January 1, 2014, where applicable, are disclosed in Note 8.

Short-term trading penaltyTo discourage excessive trading, the Fund may, at the Manager’s sole discretion, charge a short-term trading penalty. This penalty is paid directly to the Fund and is included in “Short-term penalty fees” in the Statement of Comprehensive Income.

CashCash is comprised of cash and deposits with banks which include banker acceptances and overnight demand deposits. Cash is recorded at amortized cost.

Other assets and other liabilitiesDividend receivable, interest receivable, distributions form investment trust units receivable, due from broker and subscriptions receivable are measured at fair value and subsequently measured at amortized cost. Similarly, due to broker, redemptions payable and accrued expenses are initially measured at amortized cost. Other assets and liabilities are short-term in nature, and are carried at cost or amortized cost, which approximates fair value.

Increase or decrease in net assets attributable to holders of redeemable units“Increase (decrease) in net assets attributable to holders of redeemable units per unit” of a series in the Statement of Comprehensive Income represents the increase (decrease) in net assets attributable to holders of redeemable units (“Net Assets”) of the series divided by the weighted average number of units of the series outstanding during the period.

TaxationThe Fund qualifies as a unit trust under the provisions of the Income Tax Act (Canada). Distributions of all net taxable income and sufficient amounts of net realized capital gains for each taxation year will be paid to unitholders so that the Fund will not be subject to income tax. As a result, the Fund has determined that it is in substance not taxable and therefore does not record income taxes in the Statement of Comprehensive Income nor does it recognize any

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NOTES TO THE FINANCIAL STATEMENTS (cont’d)(All amounts in thousands of Canadian dollars, except per unit data)December 31, 2014

deferred tax assets in the Statement of Financial Position.

The Fund incurs withholding taxes imposed by certain countries on investment income and capital gains. Such income and gains are recorded on a gross basis with the related withholding taxes shown as a separate expense in the Statement of Comprehensive Income.

Investments in associates, joint ventures and subsidiariesSubsidiaries are entities over which the Fund has control through its exposure or rights to variable returns from its investment and has the ability to affect those returns through its power over the entity. The Fund has determined that it is an investment entity and as such, it accounts for subsidiaries at fair value. Joint ventures are those where the Fund exercises joint control through an agreement with other shareholders, and associates are investments in which the Fund exerts significant influence over operating, investing, and financing decisions (such as entities in which the Fund owns 20% - 50% of voting shares), all of which have been designated at FVTPL.

Unconsolidated structured entitiesThe Fund has determined that the underlying funds in which the Fund invests are unconsolidated structured entities. This determination is based on the fact that decision making about the underlying funds is not governed by the voting right or other similar right held by the Fund, Similarly, investments in securitizations, asset-backed securities and mortgage-backed securities are also disclosed as interest in unconsolidated structured entities.

The Fund invests in underlying funds whose investment objectives range from achieving short –term to long-term income and capital growth potential. Underlying funds may use leverage in a manner consistent with their respective investment objectives and as permitted by Canadian securities regulatory authorities. Underlying funds finance their operations by issuing redeemable units which are puttable at the holders’ option and entitles the holder to a proportionate stake in the respective Fund’s net assets. The change in fair value of each of the underlying funds during the periods is included in “Change in unrealized appreciation (depreciation) of investments” in the Statements of Comprehensive Income.

Mortgage-related securities are created from pools of residential or commercial mortgage loans, including

mortgage loans made by savings and loan institutions, mortgage bankers, commercial banks and others. Asset-backed securities are created from many types of assets, including auto loans, credit card receivables, home equity loans and student loans.

The Fund does not provide and has not committed to providing any additional significant financial information or other support to the unconsolidated structured entities other than its investment in the unconsolidated structured entities. During the periods, the Fund had no sponsored unconsolidated structured entities.

Additional information on the Fund’s interest in unconsolidated structured entities, where applicable, is provided in Note 8.

Offsetting of financial assets and financial liabilitiesFinancial instruments are presented at net or gross amounts on the Statement of Financial Position depending on the existence of intention and legal right to offset opposite positions of such instruments held with the same counterparties. Amounts offset in the Statement of Financial Position are transactions for which the Fund has legally enforceable rights to offset and intends to settle the positions on a net basis, such as derivative instruments. Amounts not offset in the Statement of Financial Position relate to transactions where a master netting arrangement or similar agreement is in place with a right to offset only in the event of default, insolvency or bankruptcy, or where the Fund has no intention to settling on a net basis.

Accounting standards issued but not yet adoptedBelow are accounting standards issued or amended but not yet effective and not yet adopted. The Manager does not expect the adoption of these standards or amendments to have significant impact to the Fund’s financial statements.

In July 2014, the IASB issued the most recent version of IFRS 9 Financial Instruments, which addresses classification and measurement, impairment and hedge accounting.

The new standard requires assets to be carried at amortized cost, fair value through profit and loss or fair value through comprehensive income based on the entity’s business model for managing financial assets and the contractual cash flow characteristics of the financial asset. The classification and measurement of liabilities remains generally unchanged with the

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BMO Global Diversified Fund(formerly BMO Guardian Global Diversified Fund)

NOTES TO THE FINANCIAL STATEMENTS (cont’d)(All amounts in thousands of Canadian dollars, except per unit data)December 31, 2014

exception of liabilities recorded at fair value through profit and loss. For these liabilities, fair value changes attributable to changes in the entity’s own credit risk are to be presented in other comprehensive income unless they affect amounts recorded in income.

The new standard also addresses impairment of financial assets. It also introduced a new hedge accounting model that expands the scope of eligible hedged items and risks eligible for hedge accounting, and aligns hedge accounting more closely with risk management.

The new standard is effective for the Fund for its fiscal year beginning January 1, 2018. The Fund is evaluating the impact of this standard on its financial statements.

4. Critical accounting estimates and judgementsThe preparation of financial statements requires the use of judgement in applying the Fund’s accounting policies and to make estimates and assumptions about the future. The following discusses the most significant accounting judgements and estimates that the Fund has made in preparing its financial statements:

Accounting judgements:Functional and presentation currencyThe Fund unitholders are mainly Canadian residents, with the subscriptions and redemptions of the redeemable shares denominated in Canadian dollars. The Fund invests in Canadian and U.S. dollars and other foreign denominated securities, as applicable. The performance of the Fund is measured and reported to the investors in Canadian dollars. The Manager considers the Canadian dollar as the currency that most faithfully represents the economic effects of the underlying transactions, events and conditions. The financial statements are presented in Canadian dollars, which is the Fund's functional and presentation currency.

Classification of measurement of financial instruments and application of fair value optionIn classifying and measuring financial instruments held by the Fund, the Manager is required to make significant judgements about whether or not the business of the Fund is to invest on a total return basis for the purpose of applying the fair value options for financial assets.

Accounting estimates:Fair value measurement of securities not quoted in an active marketThe Fund has established policies and control procedures that are intended to ensure these judgements are well controlled, independently reviewed, and consistently applied from period to period. The estimates of the value of the Fund’s assets and liabilities are believed to be appropriate as at the reporting date.

The Fund may hold financial instruments that are not quoted in active markets. Note 3 discusses the estimates used in determining fair value.

5. Units and unit transactionsThe redeemable units of the Fund are classified as liabilities.

The units have no par value and are entitled to distributions, if any. Upon redemption, a unit is entitled to a proportionate share of the Fund’s NAV. The Fund is required to pay distributions in an amount not less than the amount necessary to ensure the Fund will not be liable for income taxes. The Fund has no restrictions or specific capital requirements on the subscriptions and redemptions of units except as disclosed in Note 8. The relevant movements in redeemable units are shown on the Statement of Changes in Net Assets Attributable to Holders of Redeemable Units. In accordance with its investment objectives and strategies, and the risk management practices outlined in Note 7, the Fund endeavours to invest the subscriptions received in appropriate investments, while maintaining sufficient liquidity to meet redemptions, with such liquidity being augmented by short-term borrowings or disposal of investments where necessary.

Redeemable units of the Fund are offered for sale on a continuous basis and may be purchased or redeemed on any Valuation Date at the NAV per unit of a particular series. The NAV per unit of a series for the purposes of subscription or redemption is computed by dividing the NAV of the Fund attributable to the series (that is, the total fair value of the assets attributable to the series less the liabilities attributable to the series) by the total number of units of the series of the Fund outstanding at such time.

Expenses directly attributable to a series are charged to that series. Other expenses, income, realized

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BMO Global Diversified Fund(formerly BMO Guardian Global Diversified Fund)

NOTES TO THE FINANCIAL STATEMENTS (cont’d)(All amounts in thousands of Canadian dollars, except per unit data)December 31, 2014

and unrealized gains and losses from investment transactions are allocated proportionately to each series based upon the relative NAV of each series.

6. Related party transactions(a) Management FeesThe Manager is responsible for the day-to-day management of the Fund and its investment Fund in compliance with the Fund’s constating documents. The Manager monitors and evaluates the performance of the Fund, pays for the investment management services of the investment advisors and provides all related administrative services required by the Fund. As compensation for its services the Manager is entitled to receive a fee payable monthly, calculated at the maximum annual rates included in Note 8.

(b) Fixed administration feesThe Manager pays certain operating expenses of the series A, Advisor, I and T6 including audit and legal fees and expenses; custodian and transfer agency fees; costs attributable to the issue, redemption and change of securities, including the cost of the securityholder record keeping system; expenses incurred in respect of preparing and distributing prospectuses, financial reports and other types of reports, statements and communications to securityholders; fund accounting and valuation costs; filing fees, including those incurred by the manager (collectively the “Administration Expenses”). In return, the Fund pays a fixed administration fee to the Manager. The fixed administration fee is calculated daily as a fixed annual percentage of the average NAV of the Fund. Refer to Note 8 for the fixed administration fee rates charged to the Fund.

(c) Fund expensesThe Fund also pays certain operating expenses directly ("Fund Expenses"), including expenses incurred in respect of preparing and distributing fund facts; interest or other borrowing expenses; all reasonable costs and expenses incurred in relation to compliance with NI 81-107, including compensation and expenses payable to Independent Review Committee ("IRC") members and any independent counsel or other advisors employed by the IRC, the costs of the orientation and continuing education of IRC members and the costs and expenses associated with IRC meetings; taxes of all kinds to which the Fund is or might be subject; and costs associated with compliance

with any new governmental or regulatory requirement introduced after December 1, 2007.

The Manager may, in some years and in certain cases, absorb a portion of management fees, fixed administration fees or certain specified expenses of the Fund or series of the Fund. The decision to absorb these expenses is reviewed periodically and determined at the discretion of the Manager, without notice to unitholders.

(d) Variable administration feesThe NBA and NBF series pay all of its operating expenses directly. These operating expenses include Administration Expenses and Fund Expenses.

(e) Commissions and other portfolio transaction costsThe Fund may execute trades with and through BMO Nesbitt Burns Inc., an affiliate of the Manager based on established standard brokerage agreements at market prices. These fees are included in “Commissions and other Fund transaction costs” in the Statement of Comprehensive Income. Refer to Note 8 for related party fees charged to the Fund during the period(s) ended December 31, 2014 and December 31, 2013, where applicable.

The Manager may, in some years and in certain cases, absorb a portion of management fees, administration fees or other operating expenses of the Fund or class of the Fund. The decision to absorb these expenses is reviewed periodically and determined at the discretion of the Manager, without notice to unitholders.

(f) Initial investmentsIn order to establish a new Fund, the Manager, makes an initial investment in the Fund. Pursuant to the policies of the Canadian Securities Administrators, an initial investor cannot redeem its investments until an additional $500 has been received from other investors with respect to the same class of units. Refer to Note 8 for the investment in units of the Fund held by the Manager as at December 31, 2014, December 31, 2013 , and January 1, 2013, where applicable.

(g) Other related party transactionsFrom time to time, the Manager may on behalf of the Fund enter into transactions or arrangements with or involving subsidiaries and affiliates of Bank of Montreal group of companies, or certain other persons or companies that are related or connected to the Manager of the Fund. These transactions

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NOTES TO THE FINANCIAL STATEMENTS (cont’d)(All amounts in thousands of Canadian dollars, except per unit data)December 31, 2014

or arrangements may include transactions or arrangements with or involving subsidiaries and affiliates of Bank of Montreal group of companies, BMO Nesbitt Burns Inc., BMO Private Investment Counsel Inc., BMO Asset Management Corp., BMO Asset Management Inc., BMO InvestorLine Inc., Pyrford International Ltd, Monegy Inc., LGM Investments Limited, BMO Trust Company, F&C Asset Management plc, or other investment funds offered by BMO, and may involve the purchase or sale of Fund securities through or from a member of Bank of Montreal group of companies, the purchase or sale of securities issued or guaranteed by a member of Bank of Montreal group of companies, the purchase or redemption of units or shares of other BMO mutual funds or the provision of services to the Manager.

7. Financial instrument riskThe Fund’s activities expose it to a variety of risks associated with the financial instruments, as follows: market risk (including currency risk, interest rate risk and other market risk), credit risk and liquidity risk. The concentration table groups securities by asset type, geographic location and/or market segment. The Fund’s risk management practice outlines the monitoring of compliance to investment guidelines.

The Manager manages the potential effects of these financial risks on the Fund’s performance by employing and overseeing professional and experienced portfolio managers that regularly monitor the Fund’s positions, market events and diversify investment portfolios within the constraints of the investment guidelines.

Where the Fund invests in other investment fund(s), it may be indirectly exposed to the financial instrument risk of the underlying fund(s), depending on the investment objectives and the type of securities held by the underlying fund(s). The decision to buy or sell an underlying fund is based on the investment guidelines and positions, rather than the exposure of the underlying fund(s).

(a) Currency riskCurrency risk is the risk that the value of financial instruments denominated in currencies, other than the functional currency of the Fund, will fluctuate due to changes in foreign exchange rates. Investments in foreign markets are exposed to currency risk as the prices denominated in foreign currencies

are converted to the Fund’s functional currency in determining fair value. The Fund may enter into forward currency contracts for hedging purposes to reduce foreign currency exposure or to establish exposure to foreign currencies. The Fund’s exposure to currency risk, if any, is further disclosed in Note 8.

(b) Interest rate riskInterest rate risk is the risk that the fair value of the Fund's interest-bearing investments will fluctuate due to changes in market interest rates. The Fund's exposure to interest rate risk is concentrated in its investment in debt securities (such as bonds, money market instruments, short-term investments and debentures) and interest rate derivative instruments, if any. Other assets and liabilities are short-term in nature and/or non-interest bearing. The Fund's exposure to interest rate risk, if any, is further discussed in Note 8.

(c) Other market riskOther market risk is the risk that the fair value of a financial instrument will fluctuate as a result of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in a market. Other assets and liabilities are monetary items that are short-term in nature, as such they are not subject to other market risk. The Fund's exposure to other market risk, if any, is further discussed in Note 8.

(d) Credit riskCredit risk is the risk that a loss could arise from a security issuer or counterparty to a financial instrument not being able to meet its financial obligations. The fair value of debt securities includes consideration of the credit worthiness of the debt issuer. Credit risk exposure for over-the-counter derivative instruments is based on the Fund's unrealized gain of the contractual obligations with the counterparty as at the reporting date. The credit exposure of other assets is represented by its carrying amount. The Fund's exposure to credit risk, if any, is further discussed in Note 8.

The Fund may enter into securities lending transactions with approved counterparties. Credit risk associated with these transactions is considered minimal as all counterparties have a sufficient

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NOTES TO THE FINANCIAL STATEMENTS (cont’d)(All amounts in thousands of Canadian dollars, except per unit data)December 31, 2014

approved credit rating and the market value of collateral held by the Fund must be at least 102% of the fair value of securities loaned, as disclosed in Note 8.

(e) Liquidity riskThe Fund's exposure to liquidity risk is concentrated in the daily cash redemptions of units. The Fund primarily invests in securities that are traded in active markets and can be readily disposed. In addition, the Fund retains sufficient cash and cash equivalent positions to maintain liquidity. The Fund may, from time to time, enter into over-the-counter derivative contracts or invest in unlisted securities, which are not traded in an organized market and may be illiquid. Securities for which a market quotation could not be obtained and may be illiquid are identified on the Statement of Investment Fund. The proportion of illiquid securities to the NAV of the Fund is monitored by the Manager to ensure it does not exceed the regulatory limit and does not significantly affect the liquidity required to meet the Fund's financial obligations.

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BMO Global Diversified Fund(formerly BMO Guardian Global Diversified Fund)

NOTES TO THE FINANCIAL STATEMENTS (cont’d)(All amounts in thousands of Canadian dollars, except per unit data)December 31, 2014

8. Fund specific information(a) Fund and Series information, change in units and significant eventsThe Fund is authorized to issue an unlimited number of units in each of Advisor Series Units, Series T5 Units and Series F Units, which are redeemable at the unitholders’ option.

Series Launch date

Advisor Series February 27, 2006

Series T5 January 22, 2007

Series F February 27, 2006

Advisor Series Units and Series T5 Units are available to all investors and are sold through investment and mutual fund dealers. Series T5 Units are designed for investors who wish to receive a regular monthly cash flow from a Fund.

Series F Units are designed for investors who are participants in programs that do not require the payment of sales charges by investors or the payment of trailing commissions to dealers.

The number of units of each series that have been issued and are outstanding are disclosed in the table below.

For the periods ended (in thousands of units)

Dec. 31, 2014

Dec. 31, 2013

Advisor Series

Units issued and outstanding, beginning of period 4,142 3,631

Issued 1,811 1,161

Issued on reinvestment of distributions 299 0

Redeemed during the period (817) (650)Units issued and outstanding,

end of period 5,435 4,142

For the periods ended (in thousands of units)

Dec. 31, 2014

Dec. 31, 2013

Series T5

Units issued and outstanding, beginning of period 530 396

Issued 492 189

Issued on reinvestment of distributions 27 13

Redeemed during the period (78) (68)Units issued and outstanding,

end of period 971 530

Series F

Units issued and outstanding, beginning of period 120 95

Issued 220 43

Issued on reinvestment of distributions 12 —

Redeemed during the period (49) (18)Units issued and outstanding,

end of period 303 120

Fund name changeEffective March 28, 2013, the Fund’s name changed from BMO Guardian Global Diversified Fund to BMO Global Diversified Fund.

Class name changeEffective March 28, 2013, the classes’ names changed as follows:

• Mutual Fund Units changed to Advisor Series Units

• T5 Class Units changed to Series T5 Units

• F Class Units changed to Series F Units

(b) Reconciliation of NAV to net assetsAs at December 31, 2014, December 31, 2013 and January 1, 2013, there were no differences between the Fund’s NAV per unit and its net assets per unit calculated in accordance with IFRS.

(c) Increase (decrease) in net assets attributable to holders of redeemable units per unitThe increase (decrease) in net assets attributable to holders of redeemable units per unit for the periods ended December 31, 2014 and December 31, 2013 is calculated as follows:

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NOTES TO THE FINANCIAL STATEMENTS (cont’d)(All amounts in thousands of Canadian dollars, except per unit data)December 31, 2014

Dec. 31, Dec. 31,2014 2013

Advisor Series Units

Increase in net assets attributable to holders of redeemable units 4,081 5,198

Weighted average units outstanding during the period 4,782 3,667

Increase in net assets attributable to holders of redeemable units per unit 0.85 1.42

Series T5 Units

Increase in net assets attributable to holders of redeemable units 431 430

Weighted average units outstanding during the period 775 421

Increase in net assets attributable to holders of redeemable units per unit 0.56 1.02

Series F Units

Increase in net assets attributable to holders of redeemable units 185 156

Weighted average units outstanding during the period 212 99

Increase in net assets attributable to holders of redeemable units per unit 0.87 1.58

(d)  Income taxesThe Fund did not have any available capital and non-capital losses carried forward for income tax purposes as of the tax year-ended December 2014.

(e) Related party transactions

Management feesThe Manager is entitled to receive the following fees payable monthly, calculated at the following maximum annual rates:

SeriesManagement

Fees (%)

Advisor Series 2.00Series T5 2.00Series F 0.60

The outstanding accrued management fees due to the Manager are included in “Accrued expenses” in the Statement of Financial Position and for the period ended December 31, 2014 amounted to $147 (December 31, 2013 - $68; January 1, 2013 - $83).

Administration servicesThe related party fees charged relating to administration services are as follows:

Dec. 31, 2014

Dec. 31, 2013

($) ($)

Administration services 127 92

The outstanding accrued administration services due to the Manager are included in “Accrued expenses” in the Statement of Financial Position and for the period ended December 31, 2014 amounted to $8 (December 31, 2013 - $15; January 1, 2013 - $7).

Brokerage commissions and soft dollarsBrokerage commissions paid on securities transactions and amounts paid to related parties of the Manager for brokerage services provided to the Fund for the periods are as follows:

Dec. 31, 2014 Dec. 31, 2013($) ($)

Total brokerage amounts paid 20 44Total brokerage amounts paid

to related parties 1 1

There were no ascertainable soft dollars or client brokerage commissions paid or payable to dealers by the Fund during the periods.

(f) Financial instrument riskThe Fund’s objective is to provide a competitive total rate of return, comprised of capital gains and income from interest and dividends, while maintaining a lower level of volatility than pure equity funds by investing primarily in a diversified portfolio of both Canadian and foreign equity and fixed income securities with no restrictions on the capital appreciation of the issuers. No changes affecting the overall level of risk of investing in the Fund were made during the period.

Currency riskThe tables below summarize the Fund’s exposure, directly and through its investment in the underlying funds, to currency risk. Amounts shown are based on the carrying value of monetary and non-monetary assets (including derivatives and the underlying principle (notional) amount of forward currency contracts, if any).

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BMO Global Diversified Fund(formerly BMO Guardian Global Diversified Fund)

NOTES TO THE FINANCIAL STATEMENTS (cont’d)(All amounts in thousands of Canadian dollars, except per unit data)December 31, 2014

As at Dec. 31, 2014Cash and

other current

receivables & payables

($)

Invest- ments

(monetary & non-

monetary) ($)

Forward currency contracts

($)

Net currency exposure

($)

As a % of Net Assets

(%)

Australian Dollar 3 2,057 – 2,060 2.5

Brazilian Real 1 – – 1 0.0

Euro 41 5,842 (2,862) 3,021 3.7

Hong Kong Dollar 6 2,370 – 2,376 2.9

Indonesian Rupiah — 208 – 208 0.3

Japanese Yen 3 519 (430) 92 0.1

Malaysian Ringgit — 969 – 969 1.2

New Zealand Dollar — 367 – 367 0.5

Philippine Peso — 224 – 224 0.3

Pound Sterling 25 2,821 (627) 2,219 2.7

Singapore Dollar 1 1,824 – 1,825 2.4

South African Rand — – 6 6 0.0

South Korean Won — 1,113 – 1,113 1.4

Swedish Krona — 520 – 520 0.6

Swiss Franc — 980 – 980 1.2

Taiwan New Dollar — 251 – 251 0.3

Thai Baht — 719 – 719 0.9

U.S. Dollar 226 39,151 (16,325) 23,052 28.4

Total 306 59,935 (20,238) 40,003 49.4

All amounts in Canadian dollars

As at Dec. 31, 2013Cash and

other current

receivables & payables

($)

Invest- ments

(monetary & non-

monetary) ($)

Forward currency contracts

($)

Net currency exposure

($)

As a % of Net Assets

(%)

Australian Dollar — 1,303 – 1,303 2.2

Brazilian Real 25 – (27) (2) 0.0

Euro 22 4,280 (1,080) 3,222 5.5

Hong Kong Dollar — 966 – 966 1.7

Indian Rupee — 435 – 435 0.7

Indonesian Rupiah — 717 – 717 1.2

Japanese Yen 3 4,413 – 4,416 7.6

Malaysian Ringgit — 229 – 229 0.4

Mexican Peso 9 – (9) – —

Philippine Peso (29) 266 – 237 0.5

Pound Sterling 23 2,221 (589) 1,655 2.8

Singapore Dollar 2 193 – 195 0.3

South African Rand — – 4 4 0.1

Swedish Krona — 197 – 197 0.3

Swiss Franc — 580 – 580 1.0

Taiwan New Dollar — 496 – 496 0.8

Thai Baht — 404 – 404 0.7

U.S. Dollar 207 26,637 (14,692) 12,152 20.8

Total 262 43,337 (16,393) 27,206 46.6

All amounts in Canadian dollars

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BMO Global Diversified Fund(formerly BMO Guardian Global Diversified Fund)

NOTES TO THE FINANCIAL STATEMENTS (cont’d)(All amounts in thousands of Canadian dollars, except per unit data)December 31, 2014

As at Jan. 1, 2013Cash and

other current

receivables & payables

($)

Invest- ments

(monetary & non-

monetary) ($)

Forward currency contracts

($)

Net currency exposure

($)

As a % of Net Assets

(%)

Australian Dollar 3 675 (207) 471 1.0

Brazilian Real 1 67 (73) (5) 0.0

Chinese Yuan Renminbi 7 312 – 319 0.7

Danish Krone (56) 55 259 258 0.6

Euro (48) 1,884 (1,121) 715 1.6

Hong Kong Dollar 122 1,465 152 1,739 3.9

Indian Rupee — 429 – 429 1.0

Indonesian Rupiah — 473 – 473 1.1

Japanese Yen (98) 2,844 590 3,336 7.4

Malaysian Ringgit 1 177 – 178 0.4

Mexican Peso — 147 (125) 22 0.0

New Zealand Dollar 7 429 (430) 6 0.0

Norwegian Krone 7 677 (550) 134 0.3

Pound Sterling 29 1,308 (862) 475 1.1

Singapore Dollar — 209 13 222 0.5

South Korean Won — 444 (123) 321 0.7

Swedish Krona 2 168 (141) 29 0.1

Swiss Franc 1 379 347 727 1.6

Taiwan New Dollar — 358 – 358 0.8

As at Jan. 1, 2013Cash and

other current

receivables & payables

($)

Invest- ments

(monetary & non-

monetary) ($)

Forward currency contracts

($)

Net currency exposure

($)

As a % of Net Assets

(%)

Thai Baht (5) 599 – 594 1.3

U.S. Dollar 201 7,999 (2,852) 5,348 11.9

Total 174 21,098 (5,123) 16,149 36.0

All amounts in Canadian dollars

As at December 31, 2014, December 31, 2013 and January 1, 2013, if the Canadian dollar had strengthened or weakened by 5% in relation to all foreign currencies, with all factors remaining constant, Net Assets could possibly have increased or decreased, respectively, by approximately $2,000 (December 31, 2013 – $1,365; January 1, 2013 – $819). In practice, actual results may differ from this sensitivity analysis and the difference could be material.

Interest rate riskThe following table summarizes the Fund’s exposure to interest rate risk by remaining term to maturity:

Interest Rate Exposure as atDec. 31, Dec. 31, Jan. 1,

Number of years 2014 2013 2013

Less than one year 4,010 1,892 617

One to three years 1,231 672 1,340

Three to five years 3,303 2,253 1,361

Five to ten years 9,591 9,127 2,745

Greater than ten years 6,156 2,740 1,613

Total 24,291 16,684 7,676

All amounts in Canadian dollars

As at December 31, 2014, December 31, 2013 and January 1, 2013, if the prevailing interest rates had been raised or lowered by 1%, assuming a parallel shift in the yield curve, with all other factors remaining constant, Net Assets could possibly have increased or decreased, respectively, by approximately $1,026 (December 31, 2013 – $692; January 1, 2013 – $431). The Fund’s interest rate sensitivity was determined based on portfolio weighted duration. In practice, actual results may differ from this sensitivity analysis and the difference could be material.

Page 22: BMO Mutual Funds 2014BMO SelectTrust™ Income Portfolio (formerly BMO SelectTrust Security Portfolio) BMO SelectTrust™ Conservative Portfolio (formerly BMO Conservative Solution

BMO Global Diversified Fund(formerly BMO Guardian Global Diversified Fund)

NOTES TO THE FINANCIAL STATEMENTS (cont’d)(All amounts in thousands of Canadian dollars, except per unit data)December 31, 2014

Other market riskThe Fund has a significant exposure to other market risk arising from its investment in equity securities. Using historical correlation between the Fund's return and the return of its benchmark, if the benchmark, Blended - 45% CitiGroup World Government Bond Index (C$), 45% MSCI World Index (C$) and 10% S&P 500 Index (C$), had increased or decreased by 10%, with all other variables held constant, the net assets of the Fund would have increased or decreased, respectively, by $6,301 (December 31, 2013 - $5,302; January 1, 2013 - $4,005). Historical correlation may not be representative of future correlation, and accordingly, actual results may differ and the difference could be material.

Credit riskThe Fund’s credit risk exposure grouped by credit ratings is listed in the following table:

As a % of Net Assets as atDec. 31, Dec. 31, Jan. 1,

Credit Rating 2014 2013 2013

R-1 High 4.3 3.0 0.8

AAA 0.6 0.1 5.2

AA 0.1 0.1 4.3

A 1.0 0.1 3.9

BBB 9.6 9.8 2.5

BB 7.1 7.7 0.6

B 4.4 5.6 –

Below B 2.0 2.2 –

Unrated 1.0 – –

Total 30.1 28.6 17.3

Securities lendingThe Fund had assets involved in securities lending transactions outstanding as at December 31, 2014, December 31, 2013 and January 1, 2013 as follows:

Aggregate value of securities on loan

($)

Aggregate value of collateral received for

the loan ($)

Dec. 31, 2014 4,464 4,716Dec. 31, 2013 2,957 3,118Jan. 1, 2013 4,265 4,504

Concentration riskThe following is a summary of the Fund’s concentration risk:

Dec. 31 2014

Dec. 31 2013

Jan. 1 2013

Money Market InvestmentsFederal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.0%... . . . . . . . . . .0.8%... . . . . . . . . . .0.8%

Foreign Bonds & DebenturesAustralia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.8%Austria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.2%Bahamas .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.3%Belgium .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.4%Bermuda .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.3%Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.5%Chile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.2%China .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.2%Czech Republic . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.3%Denmark .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.1%France .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.4%Germany .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.9%Hong Kong .. . . . . . . . . . . . . . . . . . . . . . . . .1.1%... . . . . . . . . . . . —%... . . . . . . . . . . . —%Mexico .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.6%Netherlands .. . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.5%New Zealand .. . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.2%Norway .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.5%Peru .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.4%Poland .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .1.2%Qatar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.4%Singapore .. . . . . . . . . . . . . . . . . . . . . . . . . . .0.3%... . . . . . . . . . . . —%... . . . . . . . . . .0.4%South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.2%Supernational . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .1.5%Sweden .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.6%Turkey .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.1%United Kingdom ... . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .1.1%United States . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .2.5%

Canadian Bonds & DebenturesProvincial Bonds .. . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .1.0%Corporate Bonds &

Debentures . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.5%

Page 23: BMO Mutual Funds 2014BMO SelectTrust™ Income Portfolio (formerly BMO SelectTrust Security Portfolio) BMO SelectTrust™ Conservative Portfolio (formerly BMO Conservative Solution

BMO Global Diversified Fund(formerly BMO Guardian Global Diversified Fund)

NOTES TO THE FINANCIAL STATEMENTS (cont’d)(All amounts in thousands of Canadian dollars, except per unit data)December 31, 2014

Canadian EquitiesConsumer

Discretionary .. . . . . . . . . . . . . . . . . . . .1.6%... . . . . . . . . . .1.1%... . . . . . . . . . .1.7%Consumer Staples . . . . . . . . . . . . . . . . . .0.4%... . . . . . . . . . .0.3%... . . . . . . . . . .0.4%Energy .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.6%... . . . . . . . . . .6.1%... . . . . . . . . 17.5%Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . .9.4%... . . . . . . . . . .7.8%... . . . . . . . . 14.5%Health Care .. . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.1%Industrials . . . . . . . . . . . . . . . . . . . . . . . . . . .0.5%... . . . . . . . . . .0.5%... . . . . . . . . . .4.0%Information

Technology .. . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.1%Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . .0.7%... . . . . . . . . . .0.4%... . . . . . . . . . .5.3%Telecommunication

Services . . . . . . . . . . . . . . . . . . . . . . . . . . .1.2%... . . . . . . . . . .1.1%... . . . . . . . . . .2.0%Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.1%... . . . . . . . . . .0.8%... . . . . . . . . . .1.3%

Exchange Traded Funds

Foreign EquitiesAustralia . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0.7%... . . . . . . . . . .0.6%... . . . . . . . . . .1.5%Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.5%Cambodia .. . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.3%China .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0.2%... . . . . . . . . . .0.7%... . . . . . . . . . .1.4%France .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.6%Hong Kong .. . . . . . . . . . . . . . . . . . . . . . . . .3.2%... . . . . . . . . . .0.9%... . . . . . . . . . .1.7%India .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . .1.0%... . . . . . . . . . .1.3%Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . .0.5%... . . . . . . . . . .1.2%... . . . . . . . . . .1.0%Ireland .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.5%Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.2%Japan .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0.6%... . . . . . . . . . .7.2%... . . . . . . . . . .6.3%Macau .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . .0.5%... . . . . . . . . . .0.3%Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.2%... . . . . . . . . . .0.4%... . . . . . . . . . .0.4%Netherlands .. . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.5%New Zealand .. . . . . . . . . . . . . . . . . . . . . . .0.4%... . . . . . . . . . . . —%... . . . . . . . . . . . —%Norway .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.3%Philippines .. . . . . . . . . . . . . . . . . . . . . . . . .0.3%... . . . . . . . . . .0.5%... . . . . . . . . . . . —%Singapore .. . . . . . . . . . . . . . . . . . . . . . . . . . .2.0%... . . . . . . . . . .0.5%... . . . . . . . . . .0.7%South Korea .. . . . . . . . . . . . . . . . . . . . . . . .1.4%... . . . . . . . . . . . —%... . . . . . . . . . .0.7%Switzerland .. . . . . . . . . . . . . . . . . . . . . . . . . . —%... . . . . . . . . . . . —%... . . . . . . . . . .0.7%Taiwan .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0.7%... . . . . . . . . . .0.8%... . . . . . . . . . .1.0%Thailand .. . . . . . . . . . . . . . . . . . . . . . . . . . . .0.9%... . . . . . . . . . .0.7%... . . . . . . . . . .1.3%United Kingdom ... . . . . . . . . . . . . . . . . .0.4%... . . . . . . . . . . . —%... . . . . . . . . . .1.4%United States . . . . . . . . . . . . . . . . . . . . . . .0.2%... . . . . . . . . . . . —%... . . . . . . . . . .8.5%

Investment Funds.... . . . . . . . . . . . . 62.7%... . . . . . . . . 63.2%... . . . . . . . . . . . —%

Other Assets Less Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.7%... . . . . . . . . . .2.9%... . . . . . . . . . .2.7%....................... . . . . . . . . . 100.0%.... . . . . . 100.0%.... . . . . . 100.0%

(g) Financial assets and financial liabilitiesCategories of financial assets and financial liabilities

The table below shows the categories of financial assets and financial liabilities:

Dec. 31, Dec. 31, Jan. 1,2014 2013 2013

Financial assets designated as FVTPL 79,813 56,773 43,842

Financial assets designated as held for trading — — 113

Loans and receivables 292 547 381Financial liabilities designated

as held for trading — — 234Financial liabilities measured at

amortized cost 407 263 353

Net gains and losses on financial assets and financial liabilities at fair value

Dec. 31, Dec. 31,2014 2013

Net realized gains (losses) on financial assets at FVTPL

Held for trading 16 —

Designated at FVTPL 7,164 5,998

7,180 5,998

Net realized gains (losses) on financial liabilities at FVTPL

Held for trading — (300)

Total net realized gains (losses) on financial assets and liabilities at FVTPL 7,180 5,698

Change in unrealized gains (losses) on financial assets at FVTPL

Held for trading — 121

Designated at fair value FVTPL (679) 1,262

(679) 1,383

Change in unrealized gains (losses) on financial liabilities at FVTPL

Held for trading — —

Total change in unrealized gains (losses) on financial assets and liabilities at FVTPL (679) 1,383

Page 24: BMO Mutual Funds 2014BMO SelectTrust™ Income Portfolio (formerly BMO SelectTrust Security Portfolio) BMO SelectTrust™ Conservative Portfolio (formerly BMO Conservative Solution

BMO Global Diversified Fund(formerly BMO Guardian Global Diversified Fund)

NOTES TO THE FINANCIAL STATEMENTS (cont’d)(All amounts in thousands of Canadian dollars, except per unit data)December 31, 2014

(h) Fair value hierarchyThe Fund classifies its financial instruments into three levels based on the inputs used to value the financial instruments. Level 1 securities are valued based on quoted prices in active markets for identical securities. Level 2 securities are valued based on significant observable market inputs, such as quoted prices from similar securities and quoted prices in inactive markets or based on observable inputs to models. Level 3 securities are valued based on significant unobservable inputs that reflect the Manager's determination of assumptions that market participants might reasonably use in valuing the securities. The tables below show the relevant disclosure.

As at Dec. 31, 2014Financial assets Level 1 Level 2 Level 3 Total

Equity Securities 67,653 10,157 — 77,810Debt Securities 1,144 859 — 2,003Total 68,797 11,016 — 79,813

As at Dec. 31, 2013Financial assets Level 1 Level 2 Level 3 Total

Equity Securities 47,509 8,785 — 56,294Debt Securities — 479 — 479Total 47,509 9,264 — 56,773

As at Jan. 1, 2013Financial assets Level 1 Level 2 Level 3 Total

Equity Securities 25,963 10,203 — 36,166Debt Securities 1,288 6,388 — 7,676Derivatives — 113 — 113Total 27,251 16,704 — 43,955

Financial liabilities

Derivatives — (234) — (234)

Transfers between levelsThere were no transfers between levels during the periods.

(i) Unconsolidated structured entitiesInformation on the carrying amount and the size of the investments in structured entities is shown in the table below.

Dec. 31, 2014

Dec. 31, 2013

Jan. 1, 2013

Carrying amount

BMO Global Dividend Fund, Series I . . . . . . . . . . . . . . . . . . . . 29,935... . . . . . . . 20,103... . . . . . . . . . . . . . . . –

BMO Global Strategic Bond Fund, Series I . . . . . . . . . . . . . 20,938... . . . . . . . 16,809... . . . . . . . . . . . . . . . –

iShares FTSE EPRA/NAREIT Asia Index Fund .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –. . . . . . . . . . . . . . . . . . –. . . . . . . . . . . . . . 529

iShares FTSE EPRA/NAREIT Developed Europe Index Fund .. . . . . . . . . . . . . . . . . . . . . –. . . . . . . . . . . . . . . . . . –. . . . . . . . . . . . . . 388

ETFS Physical Gold .. . . . . . . . . . . . . . . . . . . . . . –. . . . . . . . . . . . . . . . . . –. . . . . . . . . . . . . . . . 68Total 50,873 36,912 985

Percentage of structured entity held

BMO Global Dividend Fund, Series I . . . . . . . . . . . . . . . . . . . . . 25.8%... . . . . . . . . 30.4%... . . . . . . . . . . . . –%

BMO Global Strategic Bond Fund, Series I . . . . . . . . . . . . . . . .4.9%... . . . . . . . . . .3.6%... . . . . . . . . . . . . –%

iShares FTSE EPRA/NAREIT Asia Index Fund .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –%... . . . . . . . . . . . . –%... . . . . . . . . . .2.0%

iShares FTSE EPRA/NAREIT Developed Europe Index Fund .. . . . . . . . . . . . . . . . . . –%... . . . . . . . . . . . . –%... . . . . . . . . . .3.1%

ETFS Physical Gold .. . . . . . . . . . . . . . . . . . . –%... . . . . . . . . . . . . –%... . . . . . . . . . .0.0%

(j) Transition to IFRSThe differences between the Fund’s Canadian GAAP accounting policies and IFRS requirements resulted in measurement and classification differences on transition to IFRS. The net impact of these differences was recorded in opening Net Assets as of January 1, 2013.

The following information reflects the Fund’s transition elections under IFRS 1, First-time Adoption of International Financial Reporting Standards (“IFRS 1”), the standard for first-time adoption and the

Page 25: BMO Mutual Funds 2014BMO SelectTrust™ Income Portfolio (formerly BMO SelectTrust Security Portfolio) BMO SelectTrust™ Conservative Portfolio (formerly BMO Conservative Solution

BMO Global Diversified Fund(formerly BMO Guardian Global Diversified Fund)

NOTES TO THE FINANCIAL STATEMENTS (cont’d)(All amounts in thousands of Canadian dollars, except per unit data)December 31, 2014

significant accounting changes resulting from our adoption of IFRS. The general principle under IFRS 1 is retroactive application, such that the Fund’s Statement of Financial Position as at January 1, 2013 was restated as though the Fund has always applied IFRS with the net impact shown as an adjustment to opening Net Assets.

Transition electionsThe Fund had applied the voluntary exemption upon transition to designate financial assets or financial liabilities at FVTPL. All financial assets designated at FVTPL upon transition were previously recorded at fair value under Canadian GAAP as required by Accounting Guideline 18, Investment Companies.

Statement of cash flowsUnder Canadian GAAP, the Fund was exempt from providing a Statement of Cash Flows. IAS 1, Presentation of Financial Statement (“IAS 1”), requires that a Statement of Cash Flows be presented as part of a complete set of financial statements. As such, the Fund has presented a Statement of Cash Flows in the annual financial statements for the periods ended December 31, 2014 and December 31, 2013.

Classification of redeemable units issued by the FundUnder Canadian GAAP, redeemable units of the Fund were presented as Net Assets. IAS 32, Financial Instruments: Disclosure and Presentation (“IAS 32”), however, requires an assessment to determine whether the units issued to unitholders are puttable instruments that qualify for equity treatment. The Fund’s units do not meet the criteria in IAS 32 for equity classification and therefore, have been reclassified as financial liabilities on transition to IFRS and presented on the Statement of Financial Position as Net Assets.

Reclassification adjustmentsIn addition to the measurement adjustments noted above, the Fund reclassified certain amounts upon transition in order to conform its financial statement presentation under IFRS. Under Canadian GAAP, the Fund presented withholding taxes by netting them against investment income, whereas they have been reclassified and presented separately as an expense under IFRS.

Revaluation of investments at FVTPLCanadian GAAP required the use of bid prices for long positions and ask prices for short positions in the fair valuation of investments traded in an active market,

rather than the use of close prices used for the purpose of determining NAV. IFRS 13, Fair Value Measurement (“IFRS 13”), requires that if an asset or a liability has a bid price and an ask price, then its fair value is to be based on a price within the bid-ask spread that is most representative of fair value. The standard also allows the use of mid-market pricing or other pricing conventions that are used by market participants as a practical expedient for fair value measurements within a bid-ask spread. Upon adoption of IFRS, the Fund has determined that for traded securities, close prices are considered to be fair value, if they fall within the bid-ask spread. See Note 3 for the Fund’s fair value measurement policy.

Reconciliation of Net Assets as reported under Canadian GAAP to IFRS

Dec. 31, Jan. 1,As at 2013 2013

Net assets representing unitholders' equity under Canadian GAAP 58,432 45,036

Revaluation of investments at FVTPL 18 43

Net assets attributable to holders of redeemable units 58,450 45,079

Reconciliation of increase (decrease) in net assets reported under Canadian GAAP to IFRS

Dec. 31,For the period ended 2013

Increase in net assets from operations under Canadian GAAP 5,809

Revaluation of investments at FVTPL (25)

Increase in net assets attributable to holders of redeemable units 5,784

Page 26: BMO Mutual Funds 2014BMO SelectTrust™ Income Portfolio (formerly BMO SelectTrust Security Portfolio) BMO SelectTrust™ Conservative Portfolio (formerly BMO Conservative Solution

Management’s Responsibility for Financial Reporting

The accompanying financial statements have been prepared by management of BMO Investments Inc.

Management is responsible for the information and representations made in these financial statements.

Management has maintained appropriate processes to ensure that relevant and reliable financial information is

produced. The financial statements have been produced in accordance with International Financial Reporting

Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and include certain amounts

based on estimates and judgements. The significant accounting policies which management believes are

appropriate for the BMO Mutual Funds are described in Note 2 to the financial statements.

The Trustee of each of the Trusts is responsible for reviewing and approving the financial statements and

overseeing management’s performance of its financial reporting responsibilities. The Trustee reviews the financial

statements, adequacy of internal controls, the audit process and financial reporting with management and the

external auditors.

The Board of Directors of BMO Monthly Dividend Fund Ltd. is responsible for reviewing and approving the

financial statements and overseeing management’s performance of its financial reporting responsibilities. The

Audit Committee of the Board of Directors reviews the financial statements, adequacy of internal controls, the

audit process and financial reporting with management and the external auditors. The Audit Committee reports to

the Board of Directors prior to the Board approval of the financial statements.

PricewaterhouseCoopers LLP are the external auditors of the BMO Mutual Funds. The auditors have been

appointed by the respective Boards and cannot be changed without the prior approval of the Independent Review

Committee and 60 days notice to the Securityholders. They have audited the financial statements in accordance

with generally accepted auditing standards in Canada to enable them to express their opinion on the financial

statements. Their report is included as an integral part of the financial statements.

Rajiv Silgardo Chief Executive Officer BMO Investments Inc. March 10, 2015

R.J. SchauerTreasurer and Chief Financial OfficerBMO Mutual Funds March 10, 2015 

Page 27: BMO Mutual Funds 2014BMO SelectTrust™ Income Portfolio (formerly BMO SelectTrust Security Portfolio) BMO SelectTrust™ Conservative Portfolio (formerly BMO Conservative Solution

www.bmo.com/mutualfunds

BMO Investments Inc.First Canadian Place, 43rd Floor, 100 King Street WestToronto, ON M5X 1A1

For more information please call 1-800-668-7327

BMO Mutual Funds are offered by BMO Investments Inc., a financial services firm and separate legal entity from Bank of Montreal.

® Registered trade-marks of Bank of Montreal, used under licence.™ Trade-mark of Bank of Montreal, used under licence.

Independent AuditorPricewaterhouseCoopers LLPPwC Tower 18 York Street, Suite 2600Toronto, Ontario M5J 0B2