Semi-Annual Financial Statements - BMOAdvantech Company Limited 34,100 73,602 170,096 Chunghwa...

B M O N E S B I T T B U R N S

JUNE 30, 2013

NOTICE OF NO AUDITOR REVIEW OF THE SEMI-ANNUAL FINANCIAL STATEMENTS

BMO Nesbitt Burns Inc., the Manager of the Fund, appoints independent auditors to audit the Fund’s Annual Financial Statements. Under Canadian securities laws (National Instrument 81-106), if an auditor has not reviewed the Semi-Annual Financial Statements, this must be disclosed in an accompanying notice. The Fund’s independent auditors have not performed a review of these Semi-Annual Financial Statements in accordance with standards established by the Canadian Institute of Chartered Accountants.

BMO Nesbitt Burns Group of Funds

Semi-Annual Financial StatementsBMO NESBITT BURNS INTERNATIONAL EQUITY FUND

As at June 30, 2013 December 31, 2012

STATEMENT OF NET ASSETS (ALL AMOUNTS IN CANADIAN DOLLARS)

Financial Statements


BMO NESBITT BURNS INTERNATIONAL EQUITY FUND (unaudi ted)

ASSETSCash 536,539 654,224 Investments at fair value 18,328,800 16,534,127 Income receivable 47,403 19,777 Subscriptions receivable 24,415 21,957 Total assets 18,937,157 17,230,085 LIABILITIES Accrued expenses 25,198 23,370 Redemptions payable 12,177 25,443Unrealized (loss)/gain on forward currency contracts at fair value (165,537) 27,183Total liabilities (128,162) 75,996 Net assets representing unitholders’ equity 19,065,319 17,154,089

Total net assets representing unitholders’ equity Class A units 3,864,511 3,682,167Class F units 15,200,808 13,471,922

Units issued and outstanding Class A units 301,414 313,462Class F units 1,165,861 1,133,850

Net assets per unit Class A units $12.82 $11.75Class F units $13.04 $11.88

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

For the periods ended June 30, 2013 June 30, 2012

STATEMENT OF OPERATIONS (ALL AMOUNTS IN CANADIAN DOLLARS)




INCOMEDividends 425,300 407,560 Interest 1,360 1,373 Securities lending revenue 4,767 8,107 Witholding tax (60,125) (52,016) 371,302 365,024 EXPENSES Management fees (note 5(a)) 100,636 81,341Audit fees 3,732 3,273Independent Review Committee fees 1,036 1,036 Custody fees 6,447 5,653Legal and filing fees 5,939 5,209Unitholder servicing fees (note 5(b)) 26,268 23,038Printing and stationery fees 3,298 2,893Commission and other portfolio transaction costs (note 5(b)) 11,567 7,290 158,923 129,733

Net investment income for the year 212,379 235,291Net realized gain/(loss) on sale of investments 474,323 (218,875)Realized loss on foreign exchange (81,835) (64,593)Change in unrealized appreciation in value of investments 847,149 620,904Change in unrealized appreciation in value of forward currency contracts 27,183 37,001 Unrealized gain/(loss) on foreign exchange 167,355 (1,157)Increase in net assets from operations 1,646,554 608,571

Increase in net assets from operationsClass A units 327,172 114,946Class F units 1,319,382 493,625

Increase in net assets from operations per unit (note 2)Class A units $1.07 $0.39Class F units $1.15 $0.45


STATEMENT OF CHANGES IN NET ASSETS (ALL AMOUNTS IN CANADIAN DOLLARS)




Net assets – beginning of year 3,682,167 3,096,232 13,471,922 11,532,903 17,154,089 14,629,135 Increase/(decrease) in net assets from operations 327,172 114,946 1,319,382 493,625 1,646,554 608,571 UNIT TRANSACTIONS: Proceeds from sale of units 215,709 102,994 2,099,599 1,720,161 2,315,308 1,823,155 Amount paid on units redeemed (360,537) (19,187) (1,690,095) (1,380,465) (2,050,632) (1,399,652)Total unit transactions (144,828) 83,807 409,504 339,696 264,676 423,503 Net assets – end of year 3,864,511 3,294,985 15,200,808 12,366,224 19,065,319 15,661,209


Class A Units Class F Units Total Fund

June 30 June 30 June 30 June 30 June 30 June 30 For the periods ended 2013 2012 2013 2012 2013 2012

STATEMENT OF INVESTMENT PORTFOLIO (ALL AMOUNTS IN CANADIAN DOLLARS)

As at June 30, 2013




Number Cost* Fair Value of Shares ($) ($)

EQUITIES

Australia – 9.2%Brambles Limited 37,449 244,399 335,488Computershare Limited 28,868 247,127 284,662Newcrest Mining Limited 14,472 311,686 140,501QBE Insurance Group Limited 14,347 229,278 208,912Rio Tinto Limited 2,670 158,127 134,577Telstra Corporation Limited 18,859 58,487 86,228Woodside Petroleum Limited 8,562 330,814 286,780Woolworths Limited 8,850 239,002 278,824 1,818,920 1,755,972Belgium – 2.6% Belgacom SA 8,269 264,795 194,715Colruyt SA 5,578 272,350 308,681 537,145 503,396Finland – 1.0% Kone Oyj 2,370 130,070 197,705 130,070 197,705France – 6.9% Air Liquide SA 2,755 290,413 357,831Legrand SA 4,902 184,716 239,032Sanofi-Aventis 3,097 220,764 336,721Total SA 7,485 407,461 384,489 1,103,354 1,318,073Germany – 7.2% Adidas AG 1,911 128,836 217,256Brenntag AG 873 128,411 139,549Deutsche Post AG 8,481 137,642 221,363Fuchs Petrolub AG 2,302 105,360 191,941SAP AG 3,837 209,081 294,674Symrise AG 3,563 89,133 151,667Wincor Nixdorf AG 2,784 156,183 158,366 954,646 1,374,816Hong Kong – 7.4% ASM Pacific Technology 23,800 259,608 274,778China mobile Limited 23,000 259,890 250,523CNOOC Limited 187,900 340,555 330,988Power Assets Holdings Limited 31,000 194,382 280,644Vtech Holdings Limited 17,100 160,942 273,493 1,215,377 1,410,426Ireland – 1.0% CRH plc 9,200 186,639 195,763Irish Bank Resolution Corporation Limited 1,000 3,417 0 190,056 195,763

* For the purpose of the Statement of Investment Portfolio, cost includes commissions and other portfolio transaction costs (note 2). 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.

** These securities have no quoted market value and are valued using valuation techniques (note 2).



As at June 30, 2013





Israel – 1.4%Bezeq Israeli Telecommunications Corporation Limited 62,598 105,744 87,529Teva Pharmaceutical Industries Limited 4,175 211,224 171,848 316,968 259,377Japan – 9.4% KDDI Corporation 5,400 210,586 295,735Makita Corporation 5,300 177,564 299,672Mitsubishi Electric Corporation 31,000 262,802 304,643Shin-Etsu Chemical Company Limited 4,000 217,287 278,428Sumitomo Rubber Industries 19,400 202,213 333,059Toyota Tsusho Corporation 10,100 160,637 273,127 1,231,089 1,784,664Malaysia – 4.9% Axiata Group Berhad 161,300 319,443 355,281Lafarge Malayan Cement Berhad 25,200 52,253 85,302Magnum Berhad 73,700 81,478 88,407Malayan Banking Berhad 114,771 310,312 396,012 763,486 925,002Norway – 0.9% Telenor ASA 8,120 96,157 169,626 96,157 169,626Singapore – 4.8% ComfortDelGro Corporation 157,100 189,831 237,442Sembcorp Industries Limiyed 38,000 162,568 155,482Singapore Technologies Engineering Limited 42,000 119,945 145,508United Overseas Banking Limited 12,800 167,903 210,220Venture Corporation Limited 28,000 169,531 168,612 809,778 917,264Sweden – 3.4% Assab Abloy AB-B 6,542 264,749 268,891Atlas Copco AB-A Shares 9,784 234,821 248,004Swedish Match AB 3,660 94,470 136,626 594,040 653,521Switzerland – 12.3% Givaudan SA 88 75,489 119,257Nestle SA 8,120 404,311 560,385Novartis AG 6,710 352,320 499,845Panalpina Welttransport Holding AG 1,200 103,236 136,122Roche Holding AG 2,186 328,332 570,609Schindler Holding AG 831 93,864 121,602Syngenta AG 300 78,606 123,036Zurich Financial Services AG 830 150,625 226,267 1,586,783 2,357,123Taiwan – 2.8% Advantech Company Limited 34,100 73,602 170,096Chunghwa Telecom Company Limited 49,581 129,482 174,475Mediatek Inc. 15,005 169,655 181,930 372,739 526,501




As at June 30, 2013





The Netherlands – 7.2% Koninklijke Vopak NV 4,663 265,508 289,454Reed Elsevier NV 17,228 213,744 301,756Royal Dutch Shell NV, A shares 11,839 373,834 397,857Rubis Et CIE 2,273 143,927 147,110Unilever NV, 5,774 184,103 239,039 1,181,116 1,375,216United Kingdom – 13.7% BP plc 28,900 241,233 210,935British American Tobacco plc 3,600 120,579 194,190British Sky Broadcasting Group plc 15,100 150,763 191,315Glaxosmithkline plc 11,500 235,016 302,320Legal & General Group plc 92,400 117,078 253,279National Grid plc 17,800 160,329 212,207Royal Dutch Shell plc, B Shares 8,000 241,514 278,651Scottish & Southern Energy plc 8,500 157,903 207,017Tesco plc 32,300 197,419 171,067United Utilities Group plc 15,800 142,431 172,886Vodafone Group plc 136,200 327,441 410,488 2,091,706 2,604,355 Total Equities – 96.1% 14,993,427 18,328,800 Total Investments – 96.1% 14,993,427 18,328,800 Other Assets less Liabilities – 3.9% 736,519 Total Net Asset Value – 100% 19,065,319




As at June 30, 2013




THE FUND’S INVESTMENT PORTFOLIO IS CONCENTRATED IN THE FOLLOWING SEGMENTS AS AT: June 30 December 31 2013 2012

Australia 9.2% 8.9%Belgium 2.6% 3.2%Finland 1.0% 1.0%France 6.9% 8.9%Germany 7.2% 7.8%Hong Kong 7.4% 7.6%Ireland 1.0% 1.1%Israel 1.4% 1.3%Japan 9.4% 8.9%Malaysia 4.9% 3.7%Norway 0.9% 1.0%Singapore 4.8% 5.0%Sweden 3.4% 2.6%Switzerland 12.3% 12.9%Taiwan 2.8% 3.0%The Netherlands 7.2% 6.6%United Kingdom 13.7% 12.9%Other Assets less Liabilities 3.9% 3.6%

100% 100.0%

Unrealized loss on forward currency contracts

Settlement Currency Position Currency Position Contract Counterparty Rating Unrealized Date Buy Sell Rates Gain

24-Sep-13 CAD 1,676,720 AUD 1,600,000 0.9579 State Street AA (144,019) 24-Sep-13 CAD 270,582 AUD 260,000 0.9579 State Street AA (21,518)

Total Unrealized loss on Forward Currency Contracts (165,537)


BMO Nesbitt Burns Group of FundsNotes to Financial Statements

JUNE 30, 2013BMO NESBITT BURNS INTERNATIONAL EQUITY FUND (unaudi ted)

1. THE FUND

BMO Nesbitt Burns International Equity Fund (the “Fund”) is an open-ended mutual fund trust established under the laws of the province of Ontario and is governed by a Master Declaration of Trust dated October 31, 2008. The Fund is authorized to issue an unlimited number of units in an unlimited number of classes. Each class is intended for different kinds of investors and has different management fees. Refer to Note 7(a) for the classes issued in this Fund and the launch date, and Note 7(d) for management fee rates for each class.

BMO Nesbitt Burns Inc. (the “Manager”) is responsible for the management of the Fund. The Manager is a wholly-owned subsidiary of the Bank of Montreal.

Class A units are available to all investors.

Class F units are available for purchase by investors who are enrolled in dealer sponsored wrap programs or flat fee accounts. Instead of paying a commission on each transaction, these investors pay an annual fee to the Manager based on the value of their assets.

The information provided in these unaudited financial statements is for the period(s) ended June 30, 2013 and 2012 except for the comparative information In the Statement of Net Assets and the related notes which are as at December 31, 2012. Financial information provided for a fund established during the period(s) is presented from the date of inception as noted in Note 7(a). Financial information provided for a class established during the period(s) is presented from the launch date as noted in Note 7(a).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These interim financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”), including estimates and assumptions made by management that may affect the reported amounts of assets, liabilities, income and expenses during the reported periods. Actual results could differ from estimates.

Valuation of investments

Canadian GAAP requires 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 closing prices currently used for the purpose of determining Net Asset Value (“NAV”). For investments that are not traded in an active market, Canadian GAAP requires the use of valuation techniques, incorporating factors that market participants would consider in setting a price.

The NAV is the value of the total assets of a fund less the fair value of its total liabilities at a Valuation Date (the “Valuation Date” is each day on which the Toronto Stock Exchange is open for trading) determined in accordance with Part 14 of National Instrument 81-106 – Investment Fund Continuous Disclosure (“NI 81-106”) for the purpose of processing unitholder transactions. For financial statement purposes, valuations are determined in accordance with Canadian GAAP. This may result in a difference between the net assets per unit for each class and the NAV per unit (“NAVPU”) for each class. Refer to Note 7(b) for the comparison between NAV per unit and Net Assets per unit for each class.

Investments are deemed to be held for trading. Investments are recorded at their fair value with the change between this amount and average cost being recorded as unrealized appreciation (depreciation) in value of investments in the Statement of Operations.

Securities and exchange traded funds listed on a recognized public securities exchange in North America are valued for financial statement purposes at their bid prices for long positions and ask prices for short positions. 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, the fair value represents the bid price provided by independent security pricing services. Short-term investments are included in the Statement of Investment Portfolio at their fair value. Mutual Fund units held as investments are valued at their respective NAVs on each Valuation Date, as these values are the most readily and regularly available.

The Manager uses fair value pricing when the price of a security held in the Fund is unavailable, unreliable or not considered to reflect the current value, and may determine another value which it considers to be fair and reasonable using the services of third-party valuation service providers, 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.

Investment transactions

Investment transactions are accounted for on the trade date. Realized gains (losses) from the sale of investments and unrealized appreciation (depreciation) in the value of investments are calculated with reference to the average cost of the related investments which exclude brokerage commissions and other trading expenses. All net realized gains (losses), unrealized appreciation (depreciation) in value, and transaction costs are attributable to investments and derivative instruments which are deemed held for trading, and are included in the Statement of Operations.

Client brokerage commissions, where applicable, are used as payment for order execution services or research services. The portfolio advisors or Manager may select brokers, including their affiliates, who charge a commission in excess of that charged by other brokers (“soft dollars”) if they determine in good faith that the commission is reasonable in relation to the order execution and research services utilized. It is the Manager’s objective that over time, all clients receive benefits from client brokerage commissions.

Transaction costs, such as brokerage commissions, If any, incurred in the purchase and sale of securities by the Fund are expensed and included in “Commissions and other portfolio transaction costs” in the Statement of Operations.

Cost of investments

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

Income recognition

Interest income is recognized on the accrual basis. Dividend income and distributions from investment trust units are recognized on the ex-dividend date and ex-distribution date respectively.

Translation of foreign currencies

The fair value of investments and other assets and liabilities denominated in foreign currencies is translated into the Fund’s functional currency, the Canadian dollar, at the rates of exchange 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 gain (loss) on sale of investments” and unrealized foreign exchange gains (losses) are included in “Change in unrealized appreciation (depreciation) in value of investments” in the Statement of Operations. Realized and unrealized foreign exchange gains (losses) on assets (other than investments) and liabilities are included in “Realized/unrealized gain (loss) on foreign exchange”, respectively, in the Statement of Operations.



Forward currency contracts

A forward currency contract is an agreement between two parties (the Fund A 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 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 to shift exposure to foreign currency fluctuations from one country to 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.

Changes in the value of open forward currency contracts at each Valuation Date are recognized in the Statement of Operations as “Change in unrealized appreciation (depreciation) in value of forward currency contracts”.

Amounts realized at the close of the contracts are recorded as “Realized gain (loss) on forward currency contracts” In the Statement of Operations.

Securities lending

The 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 Operations and is recognized when earned. The securities on loan continue to be displayed in the Statement of Investment Portfolio. The market value of the securities loaned and collateral held is determined daily. Aggregate fair values of securities on loan and related collateral held in trust as at June 30, 2013 and December 31, 2012, where applicable, are disclosed in Note 7(g).

Increase or decrease in net assets from operations per unit

“Increase (decrease) in net assets from operations per unit” of a class in the Statement of Operations represents the increase (decrease) in net assets from operations attributable to the class, divided by the weighted average number of units of the class outstanding during the period.

Short-term trading penalty

To 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 “Interest” in the Statement of Operations, if any.

Other assets and liabilities

Income receivable, subscriptions receivable, and due from broker are designated as loans and receivables and recorded at cost or amortized cost. Similarly, amounts due to broker, redemptions payable and accrued expenses are designated as financial liabilities and reported at amortized cost. Other assets and liabilities are short-term in nature, and are carried at amortized cost, which approximates fair value.

Future accounting standards

Canadian investment entities will be required to prepare their financial statements in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), for fiscal years beginning on or after January 1, 2014. For reporting periods commencing January 1, 2014, the Fund will adopt IFRS as the basis for

preparing its financial statements. The Fund will report its financial results for the interim period ending June 30, 2014, prepared on an IFRS basis. It will also provide comparative data on an IFRS basis, including an opening balance sheet as at January 1, 2013 (transition date). A summary of the significant standards impacting the Fund under IFRS are outlined below.

Based on the Fund’s analysis to date, the more significant accounting changes that will result from its adoption of IFRS will be in the areas of fair valuation, cash flow presentation, consolidation of investments and classification of net assets representing unitholders’ equity. The differences described in the sections that follow are based on Canadian GAAP and IFRS that are in effect as of this date. This should not be considered a comprehensive list of the main accounting changes when the Fund adopts IFRS.

The framework for fair valuation is set out under IFRS 13 Fair Value Measurement, which includes the requirements for the measurement and disclosure of fair value. If an asset or liability measured at fair value has a bid price and an ask price, the standard requires valuation to be based on a price within the bid-ask spread that is most representative of fair value. The standard allows the use of mid-market pricing or other pricing conventions that are used by market participants as a practical means for fair value measurements within a bid-ask spread. Thus this standard will impact the net assets per unit for financial statement reporting purposes compared to current standards, and may also result in the elimination of the differences between the net asset per unit and NAV per unit at the financial statement reporting date. The Manager has not identified any changes that will impact NAVPU as a result of the transition to IFRS.

Where the Fund holds controlling interest in an investment, it is the Manager’s expectation that the Fund will qualify as an Investment Entity in accordance with IFRS 10 Consolidated Financial Statements. As such, the Fund will not be required to consolidate its investments, but rather to fair value its investments regardless of whether those investments are controlled. If the Fund fair values investments that it controls, it may be required to make additional financial statement disclosures on its controlled investments in accordance with IFRS 12 Disclosure of Interests in Other Entities. IFRS 12 also requires additional disclosures if the Fund is determined to qualify as an investment entity while not possessing all of the typical characteristics of an investment entity.

The criteria contained within IAS 32 Financial Instruments: Presentation may require unitholders’ equity to be classified as a liability within the Fund’s Statement of Net Assets, unless certain conditions are met. The Manager is currently assessing the Fund’s unitholder structure to confirm classification.

3. UNIT VALUATION

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 class. The NAV per unit of a class for the purposes of subscription or redemption is computed by dividing the NAV of the Fund attributable to the class (that is, the total fair value of the assets attributable to the class less the liabilities attributable to the class) by the total number of units of the class of the Fund outstanding at such time. This amount may be different from the Net Assets per unit of a class calculation, which is presented on the Statement of Net Assets. Generally, any differences are due to valuing actively traded securities at bid prices for Canadian GAAP purposes while NAV typically utilizes closing price to determine fair value for the purchase and redemption of units. See Note 7(b) for the comparison between NAV per unit and Net Assets per unit for each class.

Expenses directly attributable to a class are charged to that class. Other expenses, income, realized and unrealized gains and losses from investment transactions are allocated proportionately to each class based upon the relative NAV of each class.



Capital

The capital of the Fund is represented by issued and redeemable units with no par value. The units are entitled to distributions, if any, and to payment of a proportionate share based on the Fund’s NAV per unit upon redemption. The Fund has no restrictions or specific capital requirements on the subscriptions and redemptions of units except as disclosed in Note 7(a), if any. The relevant movements in capital are shown on the Statement of Changes in Net Assets. In accordance with its investment objectives and strategies, and the risk management practices outlined in Note 6, the Fund endeavours to invest the subscriptions received in appropriate investments while maintaining sufficient liquidity to meet redemptions, such liquidity being augmented by short-term borrowings or disposal of investments where necessary.

4. INCOME TAXES

The Fund qualifies as a mutual fund trust under the provisions of the Income Tax Act (Canada) (the “Tax Act”). Distributions of all net taxable income and sufficient amounts of net realized capital gains for each taxation year will be paid to unitholders. Part of the Fund’s net income and net realized capital gains not paid or payable, is subject to income tax. It is the intentions of the Fund to distribute all of its income and sufficient net realized capital gains so that the Fund will not be subject to income tax. Income tax on net realized capital gains not paid or payable is generally recoverable by virtue of refunding provisions contained in tax legislation, as redemptions occur.

Non-capital losses that arose in 2004 and 2005 are available to be carried forward for ten years and applied against future taxable income. Non-capital losses that arose in 2006 and thereafter are available to be carried forward for twenty years. Capital losses for income tax purposes may be carried forward indefinitely and applied against capital gains realized in future years.

The Fund’s non-capital and capital losses for income tax purposes as of the tax year ended December 15, 2012 and 2011 are included in Note 7(c), if applicable.

5. RELATED PARTY TRANSACTIONS

(a) Management feesThe Manager is responsible for the day-to-day management of the Fund and its investment portfolio 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 7(d).

The Manager may, in some years and in certain cases, absorb a portion of management or certain specified 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.

Refer to Note 7(d) for related party fees charged to the Fund for the periods ended June 30, 2013 and 2012.

(b) Unitholder servicingThe Fund is provided with certain facilities and services by the Manager and its affiliates. A portion of the unitholder servicing expenses include expenses incurred in the administration of the Fund that were paid to Bank of Montreal Ireland p.l.c.

Refer to Note 7(d) for related party fees charged to the Fund for the periods ended June 30, 2013 and 2012.

(c) 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 $500,000 has been received from other investors with respect to the same class of units. Refer to Note 7(d) for the investment in units of the Fund held by the Manager as June 30, 2013 and December 31, 2012.

(d) Other related party transactionsFrom time to time, the Manager may on behalf of the Fund enter into transactions or arrangements with or involving other members 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 or arrangements may include transactions or arrangements with or involving Bank of Montreal Group of Companies, BMO Nesbitt Burns Inc., BMO Investment Inc., BMO Harris Investment Management Inc., BMO Asset Management Inc., BMO InvestorLine Inc., HIM Monegy Inc., BMO Trust Company, Pyrford International Ltd., Lloyd George Management Inc., or other investment funds offered by BMO and may involve the purchase or sale of portfolio 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 of other BMO Mutual Funds or the provision of services to the Manager.

6. FINANCIAL INSTRUMENT RISK

The Fund may be exposed to a variety of financial risks that are concentrated in its investment holdings, including derivative instruments. The Statement of Investment Portfolio groups securities by asset type, geographic region and/or market segment. The Fund’s risk management practice includes 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 advisors that regularly monitor the Fund’s positions, market events and diversify investment portfolios within the constraints of the investment guidelines.

(a) Currency riskCurrency risk is the risk that the value of investments denominated in currencies, other than the functional currency of the Fund, will fluctuate due to changes in foreign exchange rates. All investments and derivative instruments, denominated in foreign currencies are identifiable on the Statement of Investment Portfolio. 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 discussed in Note 7(f).

(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 7(f).



7. FUND SPECIFIC INFORMATION

(a) Fund and Unit Class informationThe Fund’s inception date was October 31, 2008. The Fund is authorized to issue an unlimited number of units in each of Class A and F. The launch date for each class is as disclosed below.

Unit Class Launch Date

Class A Units October 31, 2008Class F Units October 31, 2008

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

June 30 June 30Change in Units 2013 2012

Class AUnits issued and outstanding, beginning of period 313,462 294,841Issued for cash 15,594 9,595Redeemed during the period (27,641) (1,796)

Units issued and outstanding, end of period 301,415 302,640

Class FUnits issued and outstanding, beginning of period 1,133,850 1,085,945Issued for cash 165,613 158,181Redeemed during the period (133,603) (127,023)

Units issued and outstanding, end of period 1,165,860 1,117,103

(b) Comparison of Net Asset Value per Unit to Net Assets per Unit

June 30, 2013 December 31, 2012

Net Asset Value Net Assets Net Asset Value Net Assets per Unit per Unit per Unit per Unit ($) ($) ($) ($)

Class A Units 12.82 12.82 11.75 11.75 Class F Units 13.04 13.04 11.88 11.88

(c) Income TaxesAs at the tax year ended December 2012, the Fund has the following available non-capital and capital losses for income tax purposes, if applicable:

Non-Capital Losses That Expire in

Total Total Capital Non-Capital 2026 and Losses Losses 2014 2015 thereafter ($) ($) ($) ($) ($)

157,646 – – – –

(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, and 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 7(f).

(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 it’s 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, if any, 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 7(f).

The Fund may enter into securities lending transactions with approved counterparties. Credit risk associated with these transactions is considered minimal as all counterparties have the 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, if any, as disclosed in Note 7(g).

(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 of. 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 Portfolio. The proportion of illiquid securities to the 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.



Currency risk

The table below summarizes the fund’s exposure to currency risk, categorized by currency. 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).

As at June 30, 2013 As at December 31, 2012

Currency As a % of Currency As a % of Exposure Net Assets Exposure Net Assets ($) (%) ($) (%)

Australian Dollar 1,755,972 9.2 73,537 0.4Euro 4,772,130 25.0 4,911,804 28.6HongKong Dollar 1,416,627 7.4 1,311,209 7.6Israeli Shekel 259,377 1.4 226,442 1.3Japanese Yen 1,789,506 9.4 1,535,627 9.0Malaysian Rinngit 926,425 4.9 645,202 3.8Norwegian Krona 169,626 0.9 164,462 1.0Pound Sterling 2,644,602 13.9 2,233,554 13.0Singapore Dollar 917,264 4.8 858,756 5.0Swedish Krona 653,521 3.4 438,425 2.6Swiss Franc 2,357,123 12.4 2,201,622 12.8Taiwan Dollar 622,491 3.3 561,950 3.3

Total 18,284,664 96.0 15,162,590 88.4

As at the periods ended June 30, 2013 and December 31, 2012, if the Canadian Dollar had strengthened or weakened by 5% in relation to all foreign currencies, with all other variables held constant, Net Assets could possibly have increased or decreased respectively by approximately $914,233 (December 31, 2012 – $758,130). In practice, actual results may differ from this sensitivity analysis and the difference could be material.

Interest rate risk

As at June 30, 2013 and December 31, 2012, the Fund did not have any significant exposure to interest rate risk.

Other market risk

As at June 30, 2013 approximately 96% (December 31, 2012 – 96%) of the Fund’s Net Assets were traded on respective stock exchanges. If equity prices on the respective stock exchanges for these securities had increased or decreased by 10% as at the periods ended, with all other factors remaining constant, Net Assets could possibly have increased or decreased, respectively, by approximately $1,832,880 (December 31, 2012 – $1,653,413). In practice, actual results may differ from this sensitivity analysis and the difference could be material.

Credit risk

As at ended June 30, 2013 and December 31, 2012, the Fund did not have any significant exposure to credit risk.

(d) Related party transactions

Management fees

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

Management FeesUnit Class (%)

Class A Units 2.25Class F Units 1.25

Initial investments

The Manager held the following investments in units of the Fund:

As at June 30, 2013 As at December 31, 2012

Number Fair Value Number Fair Value of Units of units of Units of unitsUnit Class ($) ($)

Class A Units 103,551 1,327,524 103,551 1,216,724

Unitholder servicing fees

The related party fees charged relating to unitholder servicing are as follows:

Period ended Period ended June 30, 2013 June 30, 2012 ($) ($)

Unitholder servicing 19,329 16,952

(e) Brokerage Commissions and Soft Dollars Brokerage 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:

June 30, 2013 June 30, 2012 $ $

Total Brokerage Amounts Paid 11,567 6,398

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 achieve long-term capital growth consistent with the preservation of capital by investing primarily in equity securities of mid to large capitalization companies located outside of Canada and the United States that have long-term growth potential or that pay, or are expected to pay, above-average dividends.

No changes to the Fund’s objective or strategy, which would have had an affect on the overall level of risk of investing in the Fund, were made during the period.


JUNE 30, 2013

(g) Securities lending The Fund had assets involved in securities lending transactions outstanding as at June 30, 2013 and December 31, 2012 as follows:

June 30, 2013 December 31, 2012 $ $

Aggregate Fair Value of Securities on Loan 384,388 370,685

Aggregate Fair Value of Collateral for Loan 432,509 398,027

(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 – June 30, 2013

Financial Assets Level 1 Level 2 Level 3 Total

Equity Securities – 18,328,800 – 18,328,800

Financial Liabilities

Derivatives – 165,537 – 165,537

As at – December 31, 2012

Financial Assets Level 1 Level 2 Level 3 Total

Equity Securities – 16,534,127 – 16,534,127

Financial Liabilities

Derivatives – 27,183 – 27,183


BMO Nesbitt Burns Inc.1 First Canadian Place, 37th Floor, P.O. Box 150Toronto, Ontario M5X 1H3www.bmonesbittburns.com [email protected]

® “BMO (M-bar roundel symbol)” is a registered trade-mark of Bank of Montreal, used under licence. ® “Nesbitt Burns” is a registered trade-mark of BMO Nesbitt Burns Corporation Limited, used under licence.

TRUSTEES

Richard Belley, Toronto, OntarioWilliam Brown, Toronto, OntarioBruce Ferman, North York, OntarioDarcy M. Lake, Toronto, OntarioJames Loughery, Toronto, OntarioJennifer Marks, Toronto, OntarioTamara Peres, Toronto, Ontario

MANAGER, PROMOTER AND DISTRIBUTOR

BMO Nesbitt Burns Inc.1 First Canadian Place37th Floor, P.O. Box 150Toronto, OntarioM5X 1H3

INDEPENDENT AUDITORS

PricewaterhouseCoopers LLPPwC Tower18 York Street, Suite 2600Toronto, OntarioM5J 0B2

CLIENT SERVICES

Toll Free: 1-800-361-1392Fax: 1-866-486-2846

Email: [email protected]: www.bmonesbittburns.com

INVESTMENT ADVISORS

BMO Asset Management Inc.77 King Street WestSuite 4200Toronto, OntarioM5K 1J5

BMO Asset Management Corp.190 South LaSalle Street, 4th floorChicago, Illinois60690-0755

Pyrford International Limited79 Grosvenor StreetLondon, United KingdomW1K 3JU

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