2014 Annual Management Report of Fund Performance

Transcription

1 (the Fund ) For the 12-month period ended December 31, (the period ) Manager: BMO Investments Inc. (the Manager or BMOII ) Portfolio Manager: Guardian Capital LP (the portfolio manager ) Annual Management Report of Fund Performance This annual management report of fund performance contains financial highlights but does not contain the complete annual financial statements of the Fund. If the annual financial statements of the Fund do not accompany the mailing of this report, you may obtain a copy of the annual financial statements at your request, and at no cost, by calling , by writing to us at BMO Investments Inc., 1 First Canadian Place, 43rd Floor, 100 King Street West, Toronto, Ontario, M5X 1A1 or by visiting our website at or SEDAR at You may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record and/or quarterly portfolio disclosure. MANAGEMENT DISCUSSION OF FUND PERFORMANCE Investment Objective and Strategies The Fund s objective is to generate a high level of monthly distributions with moderate volatility by investing primarily in a portfolio of trust units, equity securities and fixed income securities. The Fund attempts to achieve its objective by investing in trust units, such as Royalty Trust Units and Real Estate Investment Trusts from various sectors of the economy. It may also invest in common equities typically demonstrating large market capitalizations and above average dividend yields. Risk No changes affecting the overall level of risk associated with investing in the Fund were made during the period. The risks of this Fund remain as discussed in the Fund s most recent simplified prospectus or any amendments and fund facts. Results of Operations During the period, the Fund s total net asset value increased from approximately $1,569 million to approximately $1,805 million. Advisor Series units of the Fund returned 3.69% versus the Fund s benchmark, the S&P/TSX Composite Total Return Index, which returned 10.55%. Please see the Past Performance section for information on the performance returns of the Fund s other series. During the period, the Canadian equity market was volatile. After a weak start, driven by concerns about emerging market economies, the broad Canadian equity market pushed steadily higher through the first half of the period, turning in a strong performance relative to the U.S. and other global markets. Energy was a key driver of outperformance, with both oil and gas markets running strong. After a slow start, global economic activity showed signs of improvement through the second quarter with business conditions holding steady. Although the U.S. economy did not rebound quite as quickly as expected, it continued to gain ground as the year progressed. That was not enough, however, to offset growing concerns about elevated geopolitical risks, such as Ukraine/Russia and Iraq/ISIS and a softening global growth outlook for both Europe and China as we moved through the year. Another important theme was the strength of the U.S. dollar, driven by stronger relative U.S. growth, the prospects of a more hawkish U.S. Federal Reserve Board (the Fed ) and higher U.S. interest rates. This U.S. dollar strength led to substantial declines in commodity prices and materials stocks in the second half of the period. The weakness was exacerbated by a quick plunge in oil prices on concerns about the imbalance of crude oil supply and demand. Oil prices, as determined by West Texas Intermediate (WTI) (i.e., a benchmark used in pricing crude oil) fell 41% during the fourth quarter alone, to end the year at US$53.80, with the largest slide coming after OPEC s announcement on November 27th that it would not be curtailing production to balance the market. Natural gas prices on the New York Mercantile Exchange also weakened substantially, falling 28% during the fourth quarter as cold winter weather failed to materialize and storage levels continued to climb on strong production growth.

2 The Fund s relative sector weights detracted from performance, with an overweight position in Energy, an underweight position in Telecommunication Services and Utilities, creating a significant negative impact. The portfolio manager was not able to fully offset this negative impact through stock selection, although value added was strong. Within the Energy sector, all of the Energy infrastructure securities contributed positively, with Pembina Pipeline Corporation, Keyera Corp., AltaGas Ltd. and TransCanada Corporation adding significant value; however, the portfolio manager did miss the strong returns for Enbridge Income Fund and Veresen Inc. Within the Exploration & Production sub-sector, the portfolio manager avoided many of the lower quality securities such as Canadian Oil Sands Ltd., Enerplus Corp., Lightstream Resources Ltd. and PennWest Petroleum Ltd. and this more than offset the negative impact from the Fund s holdings in Baytex Energy Corp. and Bonavista Energy Corporation. Gas weighted Peyto Exploration & Development Corp. added value. Within the Financials sector, Intact Financial Corporation added value and offset the negative impacts of holding Bank of Nova Scotia and not owning Bank of Montreal. Within the Industrials sector, Progressive Waste Solutions Ltd. added value and within the Utilities sector, Brookfield Renewable Energy Partners L.P. added value as did not owning TransAlta Corporation. On the negative side, Labrador Iron Ore Royalty Corporation significantly detracted from performance given the pervasive weakness in iron ore pricing. During the period, the portfolio manager added Brookfield Property Partners, CI Financial Corporation and Enbridge Inc., while selling Brookfield Properties Partners L.P., Cominar Real Estate Investment Trust and TransCanada Corp. The addition of CI Financial Corporation was based upon the Bank of Nova Scotia s sale of most of its CI Financial Corporation holding, based on its attractive valuation and their positive views of the outlook for the asset management industry. CI Financial Corporation has a leading industry position based on its strong fund line-up, which should benefit from the shift from fixed income to global equities and industry leading cost efficiency. In addition, the portfolio manager also added Enbridge Inc. as a switch out of TransCanada Corp., which was based on its more stable, and visible growth profile and strong dividend growth outlook in the current uncertain energy environment. The portfolio manager participated in the initial public offering of Prairie Sky Royalty Ltd., which was spun out of Encana Corp; however, they received only a partial allocation on the initial public offering and were unable to build to a full position at what they felt was a reasonable valuation, so subsequently they sold the position. In addition, Cominar Real Estate Investment Trust was sold as they believe that the company s strategic focus has shifted and it will have a difficult time growing earnings in a rising interest rate environment. The portfolio manager also added to a number of positions at various points during the period, including Agrium Inc., Cineplex Inc., H&R REIT, Manulife Financial Corporation, Power Corporation of Canada and Labrador Iron Ore Royalty Corporation, Arc Resources Ltd., Baytex Energy Corp., Vermillion Energy, Inc., AltaGas Ltd. and Pembina Pipeline Corporation, all on share price weakness and/or attractive valuation in those securities. In addition, they trimmed positions in Keyera Corp., Pembina Pipeline Corporation, AltaGas Ltd., Davis & Henderson Corporation and Progressive Waste Solutions Ltd. at various points through the period, following strong price appreciation in those securities. The Fund distributes a fixed amount per unit each month, consistent with the Fund s stated objective of providing a stable cash flow to its unitholders. A portion of a distribution may consist of a return of capital. This portion may be significant, and will occur when the income earned by the Fund per unit is less than the fixed amount of the distribution. Distributions are expected to continue to include return of capital until there is a general improvement in the economy, an increase in interest rates, or there is a change in the fixed amount to be distributed. The Manager confirms that the Fund did not borrow money during the period. Recent Developments The portfolio manager remains cautious on the near-term outlook for the Canadian equity market, driven by increased geopolitical risks, weak energy markets, and soft global growth. However, they believe the Canadian market will improve as the year progresses, based upon their belief that a continued recovery in the U.S. economy, increased stimulus measures in Europe and China, and an eventual rebound in oil prices, will more than offset weakness from outside of North America.

3 While the portfolio manager believes the continued recovery in the U.S. economy will be supportive of Canadian economic growth and stock market returns, economic and geopolitical risks increased into year-end. Growth throughout Europe continues to stagnate, while uncertainty regarding Greece s future within the European Union has resurfaced. Chinese economic data activity remains soft, while serious questions about the state of Russia s economy intensified due to ongoing sanctions over Ukraine and low oil prices. These factors represent potential challenges to global economic stability and the portfolio manager s outlook. Relative to Europe and Asia, the U.S. is the single bright spot with strong absolute and relative economic data. The portfolio manager expects economic data to remain positive in 2015, led by a stronger U.S. consumer, driven by continued employment gains and lower oil prices. Importantly, the portfolio manager saw strengthening top line revenue growth and bottom line earnings growth during the third quarter earnings season which, if sustained, is further supportive of stronger confidence among corporations and should lead to an increase in both capital investments and hiring. With the Fed ending quantitative easing (i.e., monetary policy used by the Fed to increase money supply) at the end of October, it appears likely that they will begin to moderately raise their central interest rate by mid The Fed s ability to balance the gradual tapering (i.e., reduction) of monetary stimulus without interrupting the U.S. recovery or damaging investor sentiment, will be a key driver of the U.S. economy and equity markets. Significant Accounting Changes Resulting from our Adoption of IFRS Effective January 1,, the Fund adopted International Financial Reporting Standards ( IFRS ) as its basis of accounting. The annual financial statements for the year ended December 31, are the first set of annual financial statements prepared on an IFRS basis. The adjustments made to reflect the impact of the change from Canadian generally accepted accounting principles ( Canadian GAAP ) to IFRS are presented in note 8 to the financial statements. Key changes to the financial statements as a result of the implementation of IFRS are: Statement of Financial Position replaced the Statement of Net Assets: - The Fund s unitholders investments in the units of the Fund did not qualify for equity classification under IFRS and have been classified as a financial liability for financial reporting purposes. - Classification of financial instruments: derivatives and short positions have been classified as held for trading while all other financial instruments have been designated as fair valued through profit and loss. Following adoption of IFRS by the Fund for financial reporting purposes, the Fund now fair values its investment securities traded on an exchange at close price, which is determined as the price within the bid ask range that represents the best estimate of fair value. Statement of Comprehensive Income replaced Statement of Operations: - The Fund accounts for interest income using the effective interest rate method, rather than the coupon method previously used under Canadian GAAP. Statement of Changes in Net Assets Attributable to Holders of Redeemable Units replaced the Statement of Changes in Net Assets and the Fund now presents a Statement of Cash Flows. Other notable changes to the financial statement notes include additional or enhanced information in the notes to the financial statements, including a more detailed note and reconciliation on the Fund s transition from Canadian GAAP to IFRS. RELATED PARTY TRANSACTIONS BMO Investments Inc., an indirect, wholly-owned subsidiary of Bank of Montreal ( BMO ), is the Manager of the Fund. From time to time, the Manager may, on behalf of the Fund, enter into transactions or arrangements with, or involving, other members of BMO Financial Group, or certain other persons or companies that are related or connected to the Manager (each a Related Party ). The purpose of this section is to provide a brief description of any transaction involving the Fund and a Related Party. Buying and Selling Securities Conducting Inter-Fund Trades During the period, the Manager relied on an approval and standing instruction provided by the Fund s Independent Review Committee ( IRC ) with respect to conducting inter-fund trades (each, a Related Party Transaction ). In accordance with the IRC s approval and standing instruction, in making a decision to cause the Fund to make a Related Party Transaction, the Manager and portfolio manager of the Fund, are required to comply with the Manager s written policies and procedures governing the Related Party Transaction and report periodically to the IRC,

4 describing each instance that the Manager and/or portfolio manager relied on the approval and standing instruction and its compliance or non-compliance with the governing policies and procedures. The governing policies and procedures are designed to ensure the Related Party Transaction (i) is made free from any influence of BMO, BMO Nesbitt Burns Inc. or an associate or affiliate of BMO and/or BMO Nesbitt Burns Inc. and without taking into account any considerations relevant to BMO, BMO Nesbitt Burns Inc. or an associate or affiliate of BMO and/or BMO Nesbitt Burns Inc., (ii) represents the business judgment of the portfolio manager, uninfluenced by considerations other than the best interests of the Fund, and (iii) achieves a fair and reasonable result for the Fund. Brokerage Commissions The Fund pays standard brokerage commissions at market rates to BMO Nesbitt Burns Inc., an affiliate of the Manager, for executing a portion of its trades. The brokerage commissions charged to the Fund (excluding exchange and other fees) during the periods indicated, were as follows: Period ended Period ended Dec. 31, Dec. 31, 2013 ($) ($) Total brokerage commissions $ 449, ,767 Brokerage commissions paid to BMO Nesbitt Burns Inc. $ 110,719 85,580 Administration Services The Manager and other members of BMO Financial Group provide the Fund with certain administration services, such as those relating to fund accounting, record keeping, order processing, issuing and distributing account statements and general administrative support. Further details about the Fund s administration fees can be found in the Fund s most recent simplified prospectus. The expenses charged to the Fund in respect of such services during the period amounted to $2,413,852 (2013 $3,330,294). Distribution Services The Manager markets and distributes the Fund through Bank of Montreal branches and/or (depending on the series) through registered dealers and brokers, including BMO InvestorLine Inc. and BMO Nesbitt Burns Inc., both affiliates of the Manager. The Manager pays to these affiliates a service fee called a trailing commission based on the average daily value of the units and/or shares that are held in investor accounts. This service fee is paid monthly or quarterly and varies by purchase option and by series. Management Fees The Manager is responsible for the day-to-day management of the business and operations of the Fund. The Manager monitors and evaluates the Fund s performance, pays for the investment advice provided by the Fund s portfolio manager and provides certain administrative services required by the Fund. As compensation for its services, the Manager is entitled to receive a management fee payable monthly, calculated based on the daily net asset value of each series of the Fund at the maximum annual rate set out in the table below. As a Percentage of Management Fees General Maximum Annual Administration, Management Dealer Investment Fee Rate* Compensation Advice and Profit % % % Series A Units Advisor Series Units Series T5 Units Series T8 Units Series F Units Series D Units Series I Units * For Series I Units, separate Series I fees are negotiated and paid by each Series I investor. Because the Manager pays no distribution, service or trailing fees on Series I Units, Series I Units will have lower Series I fees than the management fees for Advisor Series Units. FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the periods indicated. The Fund s Net Assets per Unit (1) Series A Units Net assets, beginning of period $ )* Total revenue $ Total expenses (2) $ for the period $ for the period $ from operations (3) $ (excluding dividends) $ From dividends $ From capital gains $ Return of capital $ Total annual distributions (4) $ Net assets, end of period $ (6) 2013)

5 Advisor Series Units Net assets, beginning of period $ Total revenue $ Total expenses (2) $ for the period $ for the period $ from operations (3) $ (excluding dividends) $ 0.17 From dividends $ From capital gains $ Return of capital $ Total annual distributions (4) $ Net assets, end of period $ Series T5 Units (5) Net assets, beginning of period $ * Total revenue $ Total expenses (2) $ for the period $ for the period $ from operations (3) $ (excluding dividends) $ 0.20 From dividends $ From capital gains $ Return of capital $ Total annual distributions (4) $ Net assets, end of period $ Series T8 Units Net assets, beginning of period $ Total revenue $ Total expenses (2) $ for the period $ for the period $ from operations (3) $ (excluding dividends) $ 0.13 From dividends $ From capital gains $ Return of capital $ Total annual distributions (4) $ Net assets, end of period $ Series F Units Net assets, beginning of period $ Total revenue $ Total expenses (2) $ for the period $ for the period $ from operations (3) $ (excluding dividends) $ 0.35 From dividends $ From capital gains $ Return of capital $ Total annual distributions (4) $ Net assets, end of period $

6 Series D Units Apr. 8, to Dec. 31, Net assets, beginning of period $ 10.00)* Total revenue $ 0.33 Total expenses (2) $ for the period $ 0.15 for the period $ from operations (3) $ (excluding dividends) $ From dividends $ 0.16 From capital gains $ Return of capital $ 0.16 Total annual distributions (4) $ 0.32 Net assets, end of period $ 9.69 Series I Units Net assets, beginning of period $ Total revenue $ Total expenses (2) $ for the period $ for the period $ from operations (3) $ (excluding dividends) $ From dividends $ From capital gains $ Return of capital $ Total annual distributions (4) $ Net assets, end of period $ * Initial net assets. (1) The information is derived from the Fund s audited annual financial statements. The financial information presented for the years ended December 31, and December 31, 2013 is derived from the financial statements determined in accordance with IFRS. Information for years prior to January 1, 2013 is derived from prior period financial statements prepared in accordance with Canadian GAAP. An explanation of these differences can be found in the notes to the Fund s financial statements. (2) Includes commissions and portfolio transaction costs. Prior to 2013, withholding taxes were not included in expenses as they were included in revenue. (3) Net assets and distributions are based on the actual number of units outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of units outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per unit. (4) Distributions were paid in cash or reinvested in additional units of the Fund, or both, where applicable. (5) The information shown in this column is for the period beginning January 4, 2010 (the series inception date) and ending December 31, (6) The information shown in this column is for the period beginning April 1, 2013 (the series inception date) and ending December 31, Ratios and Supplemental Data Series A Units Total net asset value (000s) (1) $ 241, ,683 outstanding (000s) (1) 16,344 9,038 (2) % before waivers or absorptions % Trading expense ratio (3) % Portfolio turnover rate (4) % Net asset value per unit $ Advisor Series Units (6) 2013) Total net asset value (000s) (1) $ 1,335,132 1,268,032 1,011, , ,720 outstanding (000s) (1) 90,646 85,174 73,705 61,806 56,960 (2) % before waivers or absorptions % Trading expense ratio (3) % Portfolio turnover rate (4) % Net asset value per unit $ Series T5 Units (5) Total net asset value (000s) (1) $ 23,379 14,676 5,024 1, outstanding (000s) (1) 1,762 1, (2) % before waivers or absorptions % Trading expense ratio (3) % Portfolio turnover rate (4) % Net asset value per unit $ Series T8 Units Total net asset value (000s) (1) $ 56,157 41,270 25,547 14,907 9,608 outstanding (000s) (1) 6,309 4,444 2,903 1,681 1,106 (2) % before waivers or absorptions % Trading expense ratio (3) % Portfolio turnover rate (4) % Net asset value per unit $ Series F Units Total net asset value (000s) (1) $ 127,039 92,643 77,421 52,590 34,974 outstanding (000s) (1) 7,160 5,242 4,848 3,426 2,426 (2) % before waivers or absorptions % Trading expense ratio (3) % Portfolio turnover rate (4) % Net asset value per unit $

7 Series D Units Apr. 8, to Dec. 31, Total net asset value (000s) (1) $ 2,396 outstanding (000s) (1) 247 (2) % 1.27 before waivers or absorptions % 1.27 Trading expense ratio (3) % 0.03 Portfolio turnover rate (4) % 6.95 Net asset value per unit $ 9.69 Series I Units Total net asset value (000s) (1) $ 20,255 17,401 6,956 5,480 5,287 outstanding (000s) (1) 1, % before waivers or absorptions + % Trading expense ratio (3) % Portfolio turnover rate (4) % Net asset value per unit $ Operating expenses are paid by BMOII and management fees are paid directly to BMOII as negotiated with the investor. (1) This information is provided as at December 31 of the period shown. (2) The management expense ratio of a particular series is calculated based on all expenses allocated to the series, as applicable, including all taxes and interest expenses but excluding brokerage commissions and other portfolio transaction costs, divided by the average daily net asset value of that series, annualized. (3) BMOII absorbed certain expenses or waived certain fees otherwise payable by a series. In doing so, BMOII attempts to maintain the overall MER of the Fund at a relatively consistent level. BMOII may discontinue the absorption or waiver at any time. (3) The trading expense ratio represents the total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. (4) The Fund s portfolio turnover rate indicates how actively the Fund s portfolio manager manages its portfolio investments. A portfolio turnover rate of 10 is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a fund. (5) The information shown in this column is for the period beginning January 4, 2010 (the series inception date) and ending December 31, (6) The information shown in this column is for the period beginning April 1, 2013 (the series inception date) and ending December 31, The returns of each series may differ from one another for a number of reasons, including if the series was not issued and outstanding for the entire reporting period and because of the different levels of fees and expenses allocated and payable by each series. Year-by-Year Returns The following bar charts show the performance for each series of the Fund for each of the financial years shown. The charts show in percentage terms how an investment made on the first day of each financial year would have increased or decreased by the last day of the financial year. Series A Units 5-5 Advisor Series Units (3) PAST PERFORMANCE Series T5 Units The Fund s performance information assumes that all distributions made by the Fund in the periods shown were used to purchase additional units or shares of the Fund and is based on the net asset value of the Fund. The performance information does not take into account sales, redemption, distribution or other optional charges that, if applicable, would have reduced returns or performance. Please remember, how the Fund has performed in the past does not indicate how it will perform in the future (2)

8 Series T8 Units (1) Annual Compound Returns This table compares the historical annual compound returns of the Fund with its benchmark, the S&P/TSX Composite Total Return Index ( S&P/TSX ), a broad-based index. The S&P/TSX reflects the price movements of selected securities listed on the Toronto Stock Exchange and weighted by market capitalization. Series A Units year years years years Inception (3) Series F Units BMO Monthly High Income Fund II % S&P/TSX % Advisor Series Units year years years years Inception BMO Monthly High Income Fund II % S&P/TSX % Series T5 Units year years years years Inception (2) BMO Monthly High Income Fund II % S&P/TSX % Series D Units 5 Series T8 Units year years years years Inception (1) BMO Monthly High Income Fund II % S&P/TSX % Series I Units (1) Return from January 8, 2008 to December 31, (2) Return from January 4, 2010 to December 31, (3) Return from April 1, 2013 to December 31, (4) Return from April 8, to December 31, (4) 5.99 Series F Units year years years years Inception BMO Monthly High Income Fund II % S&P/TSX % Series D Units year years years years Inception (4) BMO Monthly High Income Fund II S&P/TSX 2.41 Series I Units year years years years Inception BMO Monthly High Income Fund II % S&P/TSX % (1) Return from January 8, 2008 to December 31,. (2) Return from January 4, 2010 to December 31,. (3) Return from April 1, 2013 to December 31,. (4) Return from April 8, to December 31,. A commentary on the market and/or information regarding the relative performance of the Fund as compared to its benchmark can be found under the Results of Operations section of this report.

9 SUMMARY OF INVESTMENT PORTFOLIO As at December 31, % of Net Portfolio Allocation Asset Value Financials 43.9 Energy 26.0 Consumer Discretionary 7.3 Telecommunication Services 5.7 Utilities 5.0 Money Market Investments 4.0 Materials 3.5 Industrials 2.4 Consumer Staples 1.7 Cash/Receivables/Payables 0.5 Total Portfolio Allocation % of Net Top 25 Holdings Asset Value Issuer Toronto-Dominion Bank, The, 4.3 Royal Bank of Canada 4.1 TELUS Corporation 3.9 Bank of Nova Scotia 3.8 Manulife Financial Corporation 3.7 AltaGas Ltd. 3.1 Canadian REIT 3.1 RioCan REIT 3.1 Canadian Imperial Bank of Commerce 3.0 Intact Financial Corporation 2.9 Pembina Pipeline Corporation 2.9 Keyera Corp. 2.8 Shaw Communications Inc., Class B 2.6 Cineplex Inc. 2.6 Vermilion Energy Inc. 2.5 ARC Resources Ltd. 2.5 Brookfield Renewable Energy Partners L.P. 2.4 Boardwalk REIT 2.4 Chartwell Retirement Residences 2.3 Peyto Exploration & Development Corp. 2.3 Agrium Inc. 2.3 Brookfield Property Partners L.P. 2.2 Thomson Reuters Corporation 2.2 H&R REIT 2.1 Crescent Point Energy Corp. 1.9 Top Holdings as a Percentage of Total Net Asset Value 71.0 Total Net Asset Value $1,805,428,502 The summary of investment portfolio may change due to the Fund s ongoing portfolio transactions. Updates are available quarterly.

10 BMO Investments Inc. First Canadian Place, 43rd Floor, 100 King Street West Toronto, ON M5X 1A1 For more information please call This document may contain forward-looking statements relating to anticipated future events, results, circumstances, performance or expectations that are not historical facts but instead represent our beliefs regarding future events. By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that predictions and other forward-looking statements will not prove to be accurate. We caution readers of this document not to place undue reliance on our forward-looking statements as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed or implied in the forward-looking statements. Actual results may differ materially from management expectations as projected in such forward-looking statements for a variety of reasons, including but not limited to market and general economic conditions, interest rates, regulatory and statutory developments, the effects of competition in the geographic and business areas in which the Fund may invest in and the risks detailed from time to time in BMO Mutual Funds simplified prospectus. We caution that the foregoing list of factors is not exhaustive and that when relying on forward-looking statements to make decisions with respect to investing in the Fund, investors and others should carefully consider these factors, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements. Due to the potential impact of these factors, BMO Investments Inc. does not undertake, and specifically disclaims, any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law. Registered trade-mark of Bank of Montreal, used under licence. Trade-mark of Bank of Montreal, used under licence. BMO Mutual Funds are offered by BMO Investments Inc., a financial services firm and separate legal entity from Bank of Montreal.