485BPOS2020-08-310000889366false0.10980.14440.21980.31670.00220.01750.19370.00430.00070.08440.10120.35910.05750.10380.12280.03040.13970.07350.16680.15580.01250.01370.06560.02790.00170.01760.23670.00290.00020.07940.07520.03640.02170.02510.00710.09160.01130.05350.04380.02730.11880.16740.17670.19340.17230.00190.01530.19220.00240.15880.00010.10870.12480.12340.04220.10600.11910.06660.13210.04170.15670.14390.25820.27360.28760.34120.33700.38880.29110.01220.00040.00640.06350.00070.15210.00010.01320.00120.42580.00820.03890.09820.01620.16180.02190.28520.22850.34410.16260.13850.14000.14200.11760.05490.03250.00010.01160.06320.00020.00570.00010.06590.10330.07060.00150.01010.05140.05870.07340.06430.05730.07710.06980.05620.01960.03510.02350.05910.05790.08620.01180.00040.00360.11290.00030.04080.00010.02340.01770.04270.08860.00810.01740.01860.02620.02070.01810.02130.02160.05090.09840.15440.11460.08570.02090.17460.04810.00350.00320.00770.05260.00370.02920.00160.07380.06050.12900.08360.01950.05880.06460.00180.06950.01830.07530.07230.23220.12990.21900.20320.27960.23030.14700.27300.02250.00910.01170.38190.00690.18550.00700.04780.17760.06470.20470.01710.07340.11020.04730.14800.07000.22010.18700.09250.00320.04350.11340.00980.15920.15200.03690.01470.01860.01440.11910.01270.10510.01660.01480.03100.02720.08620.01570.03390.04670.00890.06120.02440.08380.07510.14980.24320.23600.20060.27360.19120.20650.28360.03080.02180.01830.12170.01360.21350.02040.09930.14920.14360.23810.04410.11560.14890.06300.18120.13260.25020.21460.19962013-03-312018-12-31<div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoLowVolatilityEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoLowVolatilityEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoLowVolatilityEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoLowVolatilityEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoLowVolatilityEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoLowVolatilityEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoDividendIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoDividendIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoDividendIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoDividendIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoDividendIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoDividendIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoLargeCapValueFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoLargeCapValueFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoLargeCapValueFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoLargeCapValueFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoLargeCapValueFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoLargeCapValueFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoLargeCapGrowthFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoLargeCapGrowthFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoLargeCapGrowthFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoLargeCapGrowthFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoLargeCapGrowthFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoLargeCapGrowthFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoDisciplinedInternationalEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoDisciplinedInternationalEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoDisciplinedInternationalEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoDisciplinedInternationalEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoDisciplinedInternationalEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoDisciplinedInternationalEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoMidCapValueFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoMidCapValueFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoMidCapValueFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoMidCapValueFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoMidCapValueFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoMidCapValueFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoMidCapGrowthFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoMidCapGrowthFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoMidCapGrowthFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoMidCapGrowthFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoMidCapGrowthFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoMidCapGrowthFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoShortTaxFreeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoShortTaxFreeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoShortTaxFreeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoShortTaxFreeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoShortTaxFreeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoShortTaxFreeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoPrimeMoneyMarketFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoPrimeMoneyMarketFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoPrimeMoneyMarketFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoPrimeMoneyMarketFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoPrimeMoneyMarketFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoPrimeMoneyMarketFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoUltraShortTaxFreeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoUltraShortTaxFreeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoUltraShortTaxFreeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoUltraShortTaxFreeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoUltraShortTaxFreeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoUltraShortTaxFreeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoLgmEmergingMarketsEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoLgmEmergingMarketsEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoLgmEmergingMarketsEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoLgmEmergingMarketsEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoLgmEmergingMarketsEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoLgmEmergingMarketsEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoTaxFreeMoneyMarketFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoTaxFreeMoneyMarketFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoTaxFreeMoneyMarketFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoTaxFreeMoneyMarketFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoTaxFreeMoneyMarketFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoTaxFreeMoneyMarketFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoPyrfordInternationalStockFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoPyrfordInternationalStockFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoPyrfordInternationalStockFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoPyrfordInternationalStockFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoPyrfordInternationalStockFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoPyrfordInternationalStockFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoGovernmentMoneyMarketFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoGovernmentMoneyMarketFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoGovernmentMoneyMarketFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoGovernmentMoneyMarketFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoGovernmentMoneyMarketFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoGovernmentMoneyMarketFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoCorePlusBondFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoCorePlusBondFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoCorePlusBondFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoCorePlusBondFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoCorePlusBondFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoCorePlusBondFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoGlobalLowVolatilityEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoGlobalLowVolatilityEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoGlobalLowVolatilityEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoGlobalLowVolatilityEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoGlobalLowVolatilityEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoGlobalLowVolatilityEquityFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoCorporateIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoCorporateIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoCorporateIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoCorporateIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoCorporateIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoCorporateIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoSmallCapGrowthFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoSmallCapGrowthFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoSmallCapGrowthFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoSmallCapGrowthFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoSmallCapGrowthFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoSmallCapGrowthFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoShortTermIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoShortTermIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoShortTermIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoShortTermIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoShortTermIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoShortTermIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoConservativeAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoConservativeAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoConservativeAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoConservativeAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoConservativeAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoConservativeAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoModerateAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoModerateAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoModerateAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoModerateAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoModerateAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoModerateAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoIntermediateTaxFreeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoIntermediateTaxFreeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoIntermediateTaxFreeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoIntermediateTaxFreeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoIntermediateTaxFreeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoIntermediateTaxFreeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoBalancedAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoBalancedAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoBalancedAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoBalancedAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoBalancedAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoBalancedAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoStrategicIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoStrategicIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoStrategicIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoStrategicIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoStrategicIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoStrategicIncomeFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoAggressiveAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoAggressiveAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoAggressiveAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoAggressiveAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoAggressiveAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoAggressiveAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoGrowthAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoGrowthAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoGrowthAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoGrowthAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoGrowthAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoGrowthAllocationFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ShareholderFeesBmoSmallCapValueFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualFundOperatingExpensesBmoSmallCapValueFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleTransposedBmoSmallCapValueFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/ExpenseExampleNoRedemptionTransposedBmoSmallCapValueFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AnnualTotalReturnsBarChartBmoSmallCapValueFund column period compact * ~</div><div style="display:none">~ http://www.bmofunds.com/role/AverageAnnualTotalReturnsTransposedBmoSmallCapValueFund column period compact * ~</div>The Maximum Deferred Sales Charge on Class A shares is applied only to purchases of $1,000,000 or more that are redeemed within 18 months of purchase.Management Fees have been restated to reflect current fees.BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.65% for Class I and 0.90% for Class A through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.54% for Class I, 0.79% for Class A, and 0.39% for Class R6 through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.79% for Class Y, 0.54% for Class I, 0.79% for Class A, and 0.39% for Class R6 through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.Other Expenses for the Class R6 shares are based on estimated amounts for the current fiscal year.BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.90% for Class I, 1.15% for Class A, and 0.75% for Class R6 through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.99% for Class I, 1.24% for Class A, and 0.84% for Class R6 through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.Because Class R6 shares have not yet commenced operations, no performance data is available. Class R6 shares are expected to have substantially similar annual returns as Class I shares because the shares are invested in the same portfolio of securities. The performance of Class R6 shares is expected to be higher than Class I shares because Class R6 shares have lower Total Annual Fund Operating Expenses.BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.40% for Class I and 0.55% for Class A through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.The management fee disclosed is a blended fee based on the Fund’s total assets as of August 31, 2020. Under the investment advisory agreement, the Fund pays a management fee of 0.20% on the Fund’s first $100 million of average daily net assets, 0.19% on the next $150 million of average daily net assets, 0.17% on the next $250 million of average daily net assets, and 0.10% on assets in excess of $500 million.BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.30% for Class I and 0.55% for Class A through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.45% for Class Y and 0.20% for Premier Class through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.The benchmark for the Fund is a blended benchmark, which consists of 50% Bloomberg Barclays 1 Year Municipal Bond Index and 50% iMoneyNet, Inc. Money Market Fund Tax-Free National Retail Index.Other Expenses have been restated to reflect current fees.BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 1.15% for Class I and 1.40% for Class A through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.The management fee disclosed is a blended fee based on the Fund’s total assets as of August 31, 2020. Under the investment advisory agreement, the Fund pays a management fee of 0.735% on the Fund’s first $500 million of average daily net assets, 0.72% on the next $200 million of average daily net assets, 0.62% on the next $100 million of average daily net assets, and 0.56% on assets in excess of $800 million.BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.94% for Class I, 1.19% for Class A, and 0.79% for Class R6 through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.The management fee disclosed is a blended fee based on the Fund’s total assets as of August 31, 2020. Under the investment advisory agreement, the Fund pays a management fee of 0.20% on the Fund’s first $2 billion of average daily net assets, 0.185% on the next $2 billion of average daily net assets, 0.17% on the next $2 billion of average daily net assets, 0.155% on the next $2 billion of average daily net assets, and 0.14% on assets in excess of $8 billion.Acquired Fund Fees and Expenses represent the pro rata expense indirectly incurred by the Fund as a result of its investment in other investment companies. Total Annual Fund Operating Expenses shown will not correlate to the Fund’s ratio of expenses to average net assets appearing in the Financial Highlights tables, which do not include Acquired Fund Fees and Expenses.The management fee disclosed is a blended fee based on the Fund’s total assets as of August 31, 2020. Under the investment advisory agreement, the Fund pays a management fee of 0.25% on the Fund’s first $100 million of average daily net assets, 0.16% on the next $150 million of average daily net assets, 0.12% on the next $250 million of average daily net assets, and 0.10% on assets in excess of $500 million.BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.85% for Class I and 1.10% for Class A through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.The management fee disclosed is a blended fee based on the Fund’s total assets as of August 31, 2020. Under the investment advisory agreement, the Fund pays a management fee of 0.20% on the Fund’s first $100 million of average daily net assets, 0.19% on the next $150 million of average daily net assets, 0.15% on the next $250 million of average daily net assets, and 0.10% on assets in excess of $500 million.BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.59% for Class Y, 0.55% for Class I, and 0.59% for Class A through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.99% for Class I and 1.24% for Class A through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.35% for Class I and 0.60% for Class A through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.33% for Class Y, 0.08% for Class I, 0.58% for Class R3, and (0.07)% for Class R6 through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.54% for Class Y, 0.50% for Class I, and 0.54% for Class A through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.30% for Class Y, 0.05% for Class I, 0.55% for Class R3, and (0.10)% for Class R6 through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.80% for Class Y, 0.55% for Class I, and 0.80% for Class A through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement. 0000889366 2020-12-29 2020-12-29 0000889366 bmo:S000038425Member 2020-12-29 2020-12-29 0000889366 bmo:S000035433Member 2020-12-29 2020-12-29 0000889366 bmo:S000000739Member 2020-12-29 2020-12-29 0000889366 bmo:S000000740Member 2020-12-29 2020-12-29 0000889366 bmo:S000050478Member 2020-12-29 2020-12-29 0000889366 bmo:S000000741Member 2020-12-29 2020-12-29 0000889366 bmo:S000000742Member 2020-12-29 2020-12-29 0000889366 bmo:S000038426Member 2020-12-29 2020-12-29 0000889366 bmo:S000000749Member 2020-12-29 2020-12-29 0000889366 bmo:S000026661Member 2020-12-29 2020-12-29 0000889366 bmo:S000024207Member 2020-12-29 2020-12-29 0000889366 bmo:S000000750Member 2020-12-29 2020-12-29 0000889366 bmo:S000035436Member 2020-12-29 2020-12-29 0000889366 bmo:S000000751Member 2020-12-29 2020-12-29 0000889366 bmo:S000024208Member 2020-12-29 2020-12-29 0000889366 bmo:S000042152Member 2020-12-29 2020-12-29 0000889366 bmo:S000024209Member 2020-12-29 2020-12-29 0000889366 bmo:S000000743Member 2020-12-29 2020-12-29 0000889366 bmo:S000000748Member 2020-12-29 2020-12-29 0000889366 bmo:S000041359Member 2020-12-29 2020-12-29 0000889366 bmo:S000041360Member 2020-12-29 2020-12-29 0000889366 bmo:S000000747Member 2020-12-29 2020-12-29 0000889366 bmo:S000041361Member 2020-12-29 2020-12-29 0000889366 bmo:S000000745Member 2020-12-29 2020-12-29 0000889366 bmo:S000041353Member 2020-12-29 2020-12-29 0000889366 bmo:S000041362Member 2020-12-29 2020-12-29 0000889366 bmo:S000031491Member 2020-12-29 2020-12-29 0000889366 bmo:S000038425Member bmo:C000142379Member 2020-12-29 2020-12-29 0000889366 bmo:S000038425Member bmo:C000118493Member 2020-12-29 2020-12-29 0000889366 bmo:S000035433Member bmo:C000142373Member 2020-12-29 2020-12-29 0000889366 bmo:S000035433Member bmo:C000108825Member 2020-12-29 2020-12-29 0000889366 bmo:S000000739Member bmo:C000058946Member 2020-12-29 2020-12-29 0000889366 bmo:S000000739Member bmo:C000142354Member 2020-12-29 2020-12-29 0000889366 bmo:S000000739Member bmo:C000167158Member 2020-12-29 2020-12-29 0000889366 bmo:S000000740Member bmo:C000002138Member 2020-12-29 2020-12-29 0000889366 bmo:S000000740Member bmo:C000058947Member 2020-12-29 2020-12-29 0000889366 bmo:S000000740Member bmo:C000142355Member 2020-12-29 2020-12-29 0000889366 bmo:S000000740Member bmo:C000167159Member 2020-12-29 2020-12-29 0000889366 bmo:S000050478Member bmo:C000159349Member 2020-12-29 2020-12-29 0000889366 bmo:S000050478Member bmo:C000159348Member 2020-12-29 2020-12-29 0000889366 bmo:S000050478Member bmo:C000159351Member 2020-12-29 2020-12-29 0000889366 bmo:S000000741Member bmo:C000058948Member 2020-12-29 2020-12-29 0000889366 bmo:S000000741Member bmo:C000142357Member 2020-12-29 2020-12-29 0000889366 bmo:S000000741Member bmo:C000142356Member 2020-12-29 2020-12-29 0000889366 bmo:S000000742Member bmo:C000058949Member 2020-12-29 2020-12-29 0000889366 bmo:S000000742Member bmo:C000142359Member 2020-12-29 2020-12-29 0000889366 bmo:S000000742Member bmo:C000142361Member 2020-12-29 2020-12-29 0000889366 bmo:C000118495Member bmo:S000038426Member 2020-12-29 2020-12-29 0000889366 bmo:C000142380Member bmo:S000038426Member 2020-12-29 2020-12-29 0000889366 bmo:S000000749Member bmo:C000002157Member 2020-12-29 2020-12-29 0000889366 bmo:S000000749Member bmo:C000002156Member 2020-12-29 2020-12-29 0000889366 bmo:S000026661Member bmo:C000080028Member 2020-12-29 2020-12-29 0000889366 bmo:S000026661Member bmo:C000142369Member 2020-12-29 2020-12-29 0000889366 bmo:C000071036Member bmo:S000024207Member 2020-12-29 2020-12-29 0000889366 bmo:C000142366Member bmo:S000024207Member 2020-12-29 2020-12-29 0000889366 bmo:S000000750Member bmo:C000002158Member 2020-12-29 2020-12-29 0000889366 bmo:S000000750Member bmo:C000002159Member 2020-12-29 2020-12-29 0000889366 bmo:S000035436Member bmo:C000108831Member 2020-12-29 2020-12-29 0000889366 bmo:S000035436Member bmo:C000142376Member 2020-12-29 2020-12-29 0000889366 bmo:S000035436Member bmo:C000142378Member 2020-12-29 2020-12-29 0000889366 bmo:S000000751Member bmo:C000002161Member 2020-12-29 2020-12-29 0000889366 bmo:S000000751Member bmo:C000002160Member 2020-12-29 2020-12-29 0000889366 bmo:S000024208Member bmo:C000071037Member 2020-12-29 2020-12-29 0000889366 bmo:S000024208Member bmo:C000071038Member 2020-12-29 2020-12-29 0000889366 bmo:S000024208Member bmo:C000142368Member 2020-12-29 2020-12-29 0000889366 bmo:S000042152Member bmo:C000130892Member 2020-12-29 2020-12-29 0000889366 bmo:S000042152Member bmo:C000142383Member 2020-12-29 2020-12-29 0000889366 bmo:S000024209Member bmo:C000071040Member 2020-12-29 2020-12-29 0000889366 bmo:S000024209Member bmo:C000071041Member 2020-12-29 2020-12-29 0000889366 bmo:S000024209Member bmo:C000071039Member 2020-12-29 2020-12-29 0000889366 bmo:S000000743Member bmo:C000058950Member 2020-12-29 2020-12-29 0000889366 bmo:S000000743Member bmo:C000186065Member 2020-12-29 2020-12-29 0000889366 bmo:S000000748Member bmo:C000049011Member 2020-12-29 2020-12-29 0000889366 bmo:S000000748Member bmo:C000142365Member 2020-12-29 2020-12-29 0000889366 bmo:S000041359Member bmo:C000128306Member 2020-12-29 2020-12-29 0000889366 bmo:S000041359Member bmo:C000128307Member 2020-12-29 2020-12-29 0000889366 bmo:S000041359Member bmo:C000128304Member 2020-12-29 2020-12-29 0000889366 bmo:S000041359Member bmo:C000128305Member 2020-12-29 2020-12-29 0000889366 bmo:S000041360Member bmo:C000128310Member 2020-12-29 2020-12-29 0000889366 bmo:S000041360Member bmo:C000128311Member 2020-12-29 2020-12-29 0000889366 bmo:S000041360Member bmo:C000128308Member 2020-12-29 2020-12-29 0000889366 bmo:S000041360Member bmo:C000128309Member 2020-12-29 2020-12-29 0000889366 bmo:S000000747Member bmo:C000002152Member 2020-12-29 2020-12-29 0000889366 bmo:S000000747Member bmo:C000096218Member 2020-12-29 2020-12-29 0000889366 bmo:S000000747Member bmo:C000142364Member 2020-12-29 2020-12-29 0000889366 bmo:S000041361Member bmo:C000128314Member 2020-12-29 2020-12-29 0000889366 bmo:S000041361Member bmo:C000128315Member 2020-12-29 2020-12-29 0000889366 bmo:S000041361Member bmo:C000128312Member 2020-12-29 2020-12-29 0000889366 bmo:S000041361Member bmo:C000128313Member 2020-12-29 2020-12-29 0000889366 bmo:S000000745Member bmo:C000002149Member 2020-12-29 2020-12-29 0000889366 bmo:S000000745Member bmo:C000049009Member 2020-12-29 2020-12-29 0000889366 bmo:S000000745Member bmo:C000142362Member 2020-12-29 2020-12-29 0000889366 bmo:S000041353Member bmo:C000128282Member 2020-12-29 2020-12-29 0000889366 bmo:S000041353Member bmo:C000128283Member 2020-12-29 2020-12-29 0000889366 bmo:S000041353Member bmo:C000128280Member 2020-12-29 2020-12-29 0000889366 bmo:S000041353Member bmo:C000128281Member 2020-12-29 2020-12-29 0000889366 bmo:S000041362Member bmo:C000128318Member 2020-12-29 2020-12-29 0000889366 bmo:S000041362Member bmo:C000128319Member 2020-12-29 2020-12-29 0000889366 bmo:S000041362Member bmo:C000128316Member 2020-12-29 2020-12-29 0000889366 bmo:S000041362Member bmo:C000128317Member 2020-12-29 2020-12-29 0000889366 bmo:S000031491Member bmo:C000097897Member 2020-12-29 2020-12-29 0000889366 bmo:S000031491Member bmo:C000142370Member 2020-12-29 2020-12-29 0000889366 bmo:S000031491Member bmo:C000142372Member 2020-12-29 2020-12-29 0000889366 bmo:S000038425Member rr:AfterTaxesOnDistributionsMember bmo:C000118493Member 2020-12-29 2020-12-29 0000889366 bmo:S000038425Member rr:AfterTaxesOnDistributionsAndSalesMember bmo:C000118493Member 2020-12-29 2020-12-29 0000889366 bmo:S000038425Member bmo:C000118493Member bmo:Russell1000Member 2020-12-29 2020-12-29 0000889366 bmo:S000038425Member bmo:C000118493Member bmo:LmcviMember 2020-12-29 2020-12-29 0000889366 bmo:S000038425Member bmo:C000142379Member bmo:Russell1000Member 2020-12-29 2020-12-29 0000889366 bmo:S000038425Member bmo:C000142379Member bmo:LmcviMember 2020-12-29 2020-12-29 0000889366 bmo:S000035433Member bmo:C000142373Member bmo:Russell1000Member 2020-12-29 2020-12-29 0000889366 bmo:S000035433Member bmo:C000142373Member bmo:SAndP500Member 2020-12-29 2020-12-29 0000889366 bmo:S000035433Member bmo:C000142373Member bmo:LeiiMember 2020-12-29 2020-12-29 0000889366 bmo:S000035433Member bmo:C000108825Member rr:AfterTaxesOnDistributionsMember 2020-12-29 2020-12-29 0000889366 bmo:S000035433Member bmo:C000108825Member rr:AfterTaxesOnDistributionsAndSalesMember 2020-12-29 2020-12-29 0000889366 bmo:S000035433Member bmo:C000108825Member bmo:Russell1000Member 2020-12-29 2020-12-29 0000889366 bmo:S000035433Member bmo:C000108825Member bmo:SAndP500Member 2020-12-29 2020-12-29 0000889366 bmo:S000035433Member bmo:C000108825Member bmo:LeiiMember 2020-12-29 2020-12-29 0000889366 bmo:S000000739Member rr:AfterTaxesOnDistributionsMember bmo:C000058946Member 2020-12-29 2020-12-29 0000889366 bmo:S000000739Member rr:AfterTaxesOnDistributionsAndSalesMember bmo:C000058946Member 2020-12-29 2020-12-29 0000889366 bmo:S000000739Member bmo:LmcviMember bmo:C000058946Member 2020-12-29 2020-12-29 0000889366 bmo:S000000739Member bmo:Russell1000ValueMember bmo:C000058946Member 2020-12-29 2020-12-29 0000889366 bmo:S000000739Member bmo:LmcviMember bmo:C000142354Member 2020-12-29 2020-12-29 0000889366 bmo:S000000739Member bmo:Russell1000ValueMember bmo:C000142354Member 2020-12-29 2020-12-29 0000889366 bmo:S000000739Member bmo:LmcviMember bmo:C000167158Member 2020-12-29 2020-12-29 0000889366 bmo:S000000739Member bmo:Russell1000ValueMember bmo:C000167158Member 2020-12-29 2020-12-29 0000889366 bmo:S000000740Member rr:AfterTaxesOnDistributionsMember bmo:C000058947Member 2020-12-29 2020-12-29 0000889366 bmo:S000000740Member rr:AfterTaxesOnDistributionsAndSalesMember bmo:C000058947Member 2020-12-29 2020-12-29 0000889366 bmo:S000000740Member bmo:C000002138Member bmo:LmcgiMember 2020-12-29 2020-12-29 0000889366 bmo:S000000740Member bmo:C000002138Member bmo:Russell1000GrowthMember 2020-12-29 2020-12-29 0000889366 bmo:S000000740Member bmo:Russell1000GrowthMember bmo:C000142355Member 2020-12-29 2020-12-29 0000889366 bmo:S000000740Member bmo:LmcgiMember bmo:C000142355Member 2020-12-29 2020-12-29 0000889366 bmo:S000000740Member bmo:Russell1000GrowthMember bmo:C000167159Member 2020-12-29 2020-12-29 0000889366 bmo:S000000740Member bmo:LmcgiMember bmo:C000167159Member 2020-12-29 2020-12-29 0000889366 bmo:S000050478Member bmo:C000159349Member rr:AfterTaxesOnDistributionsMember 2020-12-29 2020-12-29 0000889366 bmo:S000050478Member bmo:C000159349Member rr:AfterTaxesOnDistributionsAndSalesMember 2020-12-29 2020-12-29 0000889366 bmo:S000050478Member bmo:EafeMember 2020-12-29 2020-12-29 0000889366 bmo:S000050478Member bmo:LimcciMember 2020-12-29 2020-12-29 0000889366 bmo:S000000741Member rr:AfterTaxesOnDistributionsMember bmo:C000058948Member 2020-12-29 2020-12-29 0000889366 bmo:S000000741Member rr:AfterTaxesOnDistributionsAndSalesMember bmo:C000058948Member 2020-12-29 2020-12-29 0000889366 bmo:S000000741Member bmo:RmcviMember bmo:C000058948Member 2020-12-29 2020-12-29 0000889366 bmo:S000000741Member bmo:LmcviMember bmo:C000058948Member 2020-12-29 2020-12-29 0000889366 bmo:S000000741Member bmo:C000142356Member bmo:RmcviMember 2020-12-29 2020-12-29 0000889366 bmo:S000000741Member bmo:C000142356Member bmo:LmcviMember 2020-12-29 2020-12-29 0000889366 bmo:S000000742Member rr:AfterTaxesOnDistributionsMember bmo:C000058949Member 2020-12-29 2020-12-29 0000889366 bmo:S000000742Member rr:AfterTaxesOnDistributionsAndSalesMember bmo:C000058949Member 2020-12-29 2020-12-29 0000889366 bmo:S000000742Member bmo:RmcgiMember bmo:C000058949Member 2020-12-29 2020-12-29 0000889366 bmo:S000000742Member bmo:LmcgiMember bmo:C000058949Member 2020-12-29 2020-12-29 0000889366 bmo:S000000742Member bmo:RmcgiMember bmo:C000142361Member 2020-12-29 2020-12-29 0000889366 bmo:S000000742Member bmo:LmcgiMember bmo:C000142361Member 2020-12-29 2020-12-29 0000889366 bmo:S000038426Member bmo:C000118495Member rr:AfterTaxesOnDistributionsMember 2020-12-29 2020-12-29 0000889366 bmo:S000038426Member bmo:C000118495Member rr:AfterTaxesOnDistributionsAndSalesMember 2020-12-29 2020-12-29 0000889366 bmo:S000038426Member bmo:C000142380Member bmo:LsmdiMember 2020-12-29 2020-12-29 0000889366 bmo:BbsmiMember bmo:S000038426Member bmo:C000118495Member 2020-12-29 2020-12-29 0000889366 bmo:LsmdiMember bmo:S000038426Member bmo:C000118495Member 2020-12-29 2020-12-29 0000889366 bmo:S000038426Member bmo:C000142380Member bmo:BbsmiMember 2020-12-29 2020-12-29 0000889366 bmo:S000000749Member bmo:LmmiMember 2020-12-29 2020-12-29 0000889366 bmo:S000000749Member bmo:ImnmfraMember 2020-12-29 2020-12-29 0000889366 bmo:S000026661Member bmo:C000080028Member rr:AfterTaxesOnDistributionsMember 2020-12-29 2020-12-29 0000889366 bmo:S000026661Member bmo:C000080028Member rr:AfterTaxesOnDistributionsAndSalesMember 2020-12-29 2020-12-29 0000889366 bmo:S000026661Member bmo:C000080028Member bmo:BlendedBenchmarkMember 2020-12-29 2020-12-29 0000889366 bmo:S000026661Member bmo:C000142369Member bmo:BlendedBenchmarkMember 2020-12-29 2020-12-29 0000889366 bmo:S000026661Member bmo:C000142369Member bmo:LsmdiMember 2020-12-29 2020-12-29 0000889366 bmo:C000080028Member bmo:LsmdiMember bmo:S000026661Member 2020-12-29 2020-12-29 0000889366 bmo:S000024207Member bmo:C000071036Member rr:AfterTaxesOnDistributionsMember 2020-12-29 2020-12-29 0000889366 bmo:S000024207Member bmo:C000071036Member rr:AfterTaxesOnDistributionsAndSalesMember 2020-12-29 2020-12-29 0000889366 bmo:S000024207Member bmo:C000071036Member bmo:EmiMember 2020-12-29 2020-12-29 0000889366 bmo:S000024207Member bmo:C000071036Member bmo:LemiMember 2020-12-29 2020-12-29 0000889366 bmo:S000024207Member bmo:C000142366Member bmo:EmiMember 2020-12-29 2020-12-29 0000889366 bmo:S000024207Member bmo:C000142366Member bmo:LemiMember 2020-12-29 2020-12-29 0000889366 bmo:S000000750Member bmo:ImntfnriMember 2020-12-29 2020-12-29 0000889366 bmo:S000000750Member bmo:LtemmiMember 2020-12-29 2020-12-29 0000889366 bmo:S000035436Member bmo:C000108831Member rr:AfterTaxesOnDistributionsMember 2020-12-29 2020-12-29 0000889366 bmo:S000035436Member bmo:C000108831Member rr:AfterTaxesOnDistributionsAndSalesMember 2020-12-29 2020-12-29 0000889366 bmo:S000035436Member bmo:C000108831Member bmo:EafeMember 2020-12-29 2020-12-29 0000889366 bmo:S000035436Member bmo:C000108831Member bmo:LimcciMember 2020-12-29 2020-12-29 0000889366 bmo:C000142378Member bmo:S000035436Member bmo:EafeMember 2020-12-29 2020-12-29 0000889366 bmo:C000142378Member bmo:S000035436Member bmo:LimcciMember 2020-12-29 2020-12-29 0000889366 bmo:S000000751Member bmo:LusgmmiMember 2020-12-29 2020-12-29 0000889366 bmo:S000000751Member bmo:IngmmiMember 2020-12-29 2020-12-29 0000889366 bmo:C000071038Member rr:AfterTaxesOnDistributionsMember bmo:S000024208Member 2020-12-29 2020-12-29 0000889366 bmo:C000071038Member bmo:S000024208Member rr:AfterTaxesOnDistributionsAndSalesMember 2020-12-29 2020-12-29 0000889366 bmo:S000024208Member bmo:C000071037Member bmo:BbuabiMember 2020-12-29 2020-12-29 0000889366 bmo:S000024208Member bmo:C000071037Member bmo:LcpbiMember 2020-12-29 2020-12-29 0000889366 bmo:S000024208Member bmo:C000142368Member bmo:LcpbiMember 2020-12-29 2020-12-29 0000889366 bmo:S000024208Member bmo:C000142368Member bmo:BbuabiMember 2020-12-29 2020-12-29 0000889366 bmo:C000130892Member bmo:S000042152Member rr:AfterTaxesOnDistributionsMember 2020-12-29 2020-12-29 0000889366 bmo:C000130892Member bmo:S000042152Member rr:AfterTaxesOnDistributionsAndSalesMember 2020-12-29 2020-12-29 0000889366 bmo:C000130892Member bmo:S000042152Member bmo:MsciAllCountryWorldMember 2020-12-29 2020-12-29 0000889366 bmo:C000130892Member bmo:S000042152Member bmo:LgmcviMember 2020-12-29 2020-12-29 0000889366 bmo:S000042152Member bmo:C000142383Member bmo:MsciAllCountryWorldMember 2020-12-29 2020-12-29 0000889366 bmo:S000042152Member bmo:C000142383Member bmo:LgmcviMember 2020-12-29 2020-12-29 0000889366 bmo:S000024209Member bmo:C000071039Member bmo:LcdbriMember 2020-12-29 2020-12-29 0000889366 bmo:S000024209Member bmo:C000071039Member bmo:BbciMember 2020-12-29 2020-12-29 0000889366 bmo:S000024209Member bmo:C000071041Member rr:AfterTaxesOnDistributionsMember 2020-12-29 2020-12-29 0000889366 bmo:S000024209Member bmo:C000071041Member rr:AfterTaxesOnDistributionsAndSalesMember 2020-12-29 2020-12-29 0000889366 bmo:S000024209Member bmo:C000071040Member bmo:BbciMember 2020-12-29 2020-12-29 0000889366 bmo:S000024209Member bmo:C000071040Member bmo:LcdbriMember 2020-12-29 2020-12-29 0000889366 bmo:S000000743Member bmo:C000058950Member rr:AfterTaxesOnDistributionsMember 2020-12-29 2020-12-29 0000889366 bmo:S000000743Member bmo:C000058950Member rr:AfterTaxesOnDistributionsAndSalesMember 2020-12-29 2020-12-29 0000889366 bmo:S000000743Member bmo:C000058950Member bmo:Russell2000GrowthMember 2020-12-29 2020-12-29 0000889366 bmo:S000000743Member bmo:C000058950Member bmo:LscgiMember 2020-12-29 2020-12-29 0000889366 bmo:S000000743Member bmo:C000186065Member bmo:Russell2000GrowthMember 2020-12-29 2020-12-29 0000889366 bmo:S000000743Member bmo:C000186065Member bmo:LscgiMember 2020-12-29 2020-12-29 0000889366 bmo:S000000748Member bmo:C000049011Member rr:AfterTaxesOnDistributionsMember 2020-12-29 2020-12-29 0000889366 bmo:S000000748Member bmo:C000049011Member rr:AfterTaxesOnDistributionsAndSalesMember 2020-12-29 2020-12-29 0000889366 bmo:S000000748Member bmo:C000049011Member bmo:LsigdiMember 2020-12-29 2020-12-29 0000889366 bmo:S000000748Member bmo:C000049011Member bmo:Ml13Member 2020-12-29 2020-12-29 0000889366 bmo:S000000748Member bmo:C000142365Member bmo:Ml13Member 2020-12-29 2020-12-29 0000889366 bmo:S000000748Member bmo:C000142365Member bmo:LsigdiMember 2020-12-29 2020-12-29 0000889366 bmo:S000041359Member rr:AfterTaxesOnDistributionsMember bmo:C000128307Member 2020-12-29 2020-12-29 0000889366 bmo:S000041359Member rr:AfterTaxesOnDistributionsAndSalesMember bmo:C000128307Member 2020-12-29 2020-12-29 0000889366 bmo:S000041359Member bmo:BbuabiMember bmo:C000128307Member 2020-12-29 2020-12-29 0000889366 bmo:S000041359Member bmo:LmataciMember bmo:C000128307Member 2020-12-29 2020-12-29 0000889366 bmo:S000041359Member bmo:C000128305Member bmo:BbuabiMember 2020-12-29 2020-12-29 0000889366 bmo:S000041359Member bmo:C000128305Member bmo:LmataciMember 2020-12-29 2020-12-29 0000889366 bmo:S000041360Member bmo:C000128309Member bmo:BbuabiMember 2020-12-29 2020-12-29 0000889366 bmo:S000041360Member bmo:C000128309Member bmo:LmatamiMember 2020-12-29 2020-12-29 0000889366 bmo:S000041360Member bmo:C000128311Member rr:AfterTaxesOnDistributionsMember 2020-12-29 2020-12-29 0000889366 bmo:S000041360Member bmo:C000128311Member rr:AfterTaxesOnDistributionsAndSalesMember 2020-12-29 2020-12-29 0000889366 bmo:S000041360Member bmo:C000128311Member bmo:BbuabiMember 2020-12-29 2020-12-29 0000889366 bmo:S000041360Member bmo:C000128311Member bmo:LmatamiMember 2020-12-29 2020-12-29 0000889366 bmo:S000000747Member bmo:C000142364Member bmo:LimdiMember 2020-12-29 2020-12-29 0000889366 bmo:S000000747Member bmo:C000096218Member bmo:LimdiMember 2020-12-29 2020-12-29 0000889366 bmo:S000000747Member bmo:C000142364Member bmo:Bbmb115Member 2020-12-29 2020-12-29 0000889366 bmo:S000000747Member bmo:C000096218Member bmo:Bbmb115Member 2020-12-29 2020-12-29 0000889366 bmo:S000000747Member bmo:C000002152Member rr:AfterTaxesOnDistributionsAndSalesMember 2020-12-29 2020-12-29 0000889366 bmo:S000000747Member bmo:C000002152Member bmo:Bbmb115Member 2020-12-29 2020-12-29 0000889366 bmo:S000000747Member bmo:C000002152Member bmo:LimdiMember 2020-12-29 2020-12-29 0000889366 bmo:S000000747Member bmo:C000002152Member rr:AfterTaxesOnDistributionsMember 2020-12-29 2020-12-29 0000889366 bmo:S000041361Member bmo:C000128315Member rr:AfterTaxesOnDistributionsMember 2020-12-29 2020-12-29 0000889366 bmo:S000041361Member bmo:C000128315Member rr:AfterTaxesOnDistributionsAndSalesMember 2020-12-29 2020-12-29 0000889366 bmo:S000041361Member bmo:C000128315Member bmo:SAndP500Member 2020-12-29 2020-12-29 0000889366 bmo:S000041361Member bmo:C000128315Member bmo:LmatagiMember 2020-12-29 2020-12-29 0000889366 bmo:S000041361Member bmo:C000128313Member bmo:SAndP500Member 2020-12-29 2020-12-29 0000889366 bmo:S000041361Member bmo:C000128313Member bmo:LmatagiMember 2020-12-29 2020-12-29 0000889366 bmo:S000000745Member bmo:C000049009Member rr:AfterTaxesOnDistributionsMember 2020-12-29 2020-12-29 0000889366 bmo:S000000745Member bmo:C000049009Member rr:AfterTaxesOnDistributionsAndSalesMember 2020-12-29 2020-12-29 0000889366 bmo:S000000745Member bmo:C000002149Member bmo:BbuabiMember 2020-12-29 2020-12-29 0000889366 bmo:S000000745Member bmo:C000002149Member bmo:LmsiMember 2020-12-29 2020-12-29 0000889366 bmo:S000000745Member bmo:C000142362Member bmo:BbuabiMember 2020-12-29 2020-12-29 0000889366 bmo:S000000745Member bmo:C000142362Member bmo:LmsiiMember 2020-12-29 2020-12-29 0000889366 bmo:S000041353Member rr:AfterTaxesOnDistributionsMember bmo:C000128283Member 2020-12-29 2020-12-29 0000889366 bmo:S000041353Member rr:AfterTaxesOnDistributionsAndSalesMember bmo:C000128283Member 2020-12-29 2020-12-29 0000889366 bmo:S000041353Member bmo:Sp500Member bmo:C000128283Member 2020-12-29 2020-12-29 0000889366 bmo:S000041353Member bmo:LmcciMember bmo:C000128283Member 2020-12-29 2020-12-29 0000889366 bmo:S000041353Member bmo:LmcciMember bmo:C000128281Member 2020-12-29 2020-12-29 0000889366 bmo:S000041353Member bmo:Sp500Member bmo:C000128281Member 2020-12-29 2020-12-29 0000889366 bmo:S000041362Member rr:AfterTaxesOnDistributionsMember bmo:C000128319Member 2020-12-29 2020-12-29 0000889366 bmo:S000041362Member rr:AfterTaxesOnDistributionsAndSalesMember bmo:C000128319Member 2020-12-29 2020-12-29 0000889366 bmo:S000041362Member bmo:Sp500Member bmo:C000128319Member 2020-12-29 2020-12-29 0000889366 bmo:S000041362Member bmo:LmataaiMember bmo:C000128319Member 2020-12-29 2020-12-29 0000889366 bmo:S000041362Member bmo:LmataaiMember bmo:C000128317Member 2020-12-29 2020-12-29 0000889366 bmo:S000041362Member bmo:Sp500Member bmo:C000128317Member 2020-12-29 2020-12-29 0000889366 bmo:S000031491Member rr:AfterTaxesOnDistributionsMember bmo:C000097897Member 2020-12-29 2020-12-29 0000889366 bmo:S000031491Member rr:AfterTaxesOnDistributionsAndSalesMember bmo:C000097897Member 2020-12-29 2020-12-29 0000889366 bmo:S000031491Member bmo:Russell2000Member bmo:C000097897Member 2020-12-29 2020-12-29 0000889366 bmo:S000031491Member bmo:LscciMember bmo:C000097897Member 2020-12-29 2020-12-29 0000889366 bmo:S000031491Member bmo:LscciMember bmo:C000142372Member 2020-12-29 2020-12-29 0000889366 bmo:S000031491Member bmo:Russell2000Member bmo:C000142372Member 2020-12-29 2020-12-29 iso4217:USD xbrli:pure
As filed with the Securities and Exchange Commission on December 23, 2020
Securities Act Registration No. 033-48907
Investment Company Act Registration No. 811-58433
SECURITIE
S
AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
☒
Pre-Effective Amendment No. _____
□
Post-Effective Amendment No. 142
☒
And/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
☒
Amendment No. 142
☒
BMO FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
790 North Water Street, Suite 1100
Milwaukee, Wisconsin 53202
(Address of Principal Executive Offices)
Registrant’s Telephone Number, including Area Code: (800) 236-3863
John M. Blaser
790 North Water Street, Suite 1100
Milwaukee, Wisconsin 53202
(Name and Address of Agent for Service)
Copies to:
Michael P. O’Hare, Esq.
Stradley, Ronon, Stevens & Young, LLP
2005 Market Street, Suite 2600
Philadelphia, PA 19103
It is proposed that this filing will become effective (check appropriate box):
□ Immediately upon filing pursuant to paragraph (b) of Rule 485
☒ on December 29, 2020 pursuant to paragraph (b) of Rule 485
□ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
□ on (date) pursuant to paragraph (a)(1) of Rule 485
□ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
□ On (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
□
This post-effective amendment designates a new effective date for a previously filed post-effective amendment.
 
 
December 29, 2020
BMO Funds
BMO Funds
Prospectus
Equity Funds
International and Global Funds
Fixed Income Funds
Money Market Funds
Shares of the BMO Funds are not bank deposits or other obligations of, or issued, endorsed or guaranteed by, BMO Harris Bank N.A. or any of its affiliates. Shares of the BMO Funds, like shares of all mutual funds, are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation (FDIC), or any other government agency, and may lose value.
As with all mutual funds, the Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this Prospectus. Any representation to the contrary is a criminal offense.
Notification of electronic delivery of shareholder materials
Beginning on January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of the Funds’ shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Funds or from your broker/dealer, investment professional, or financial institution. Instead, the reports will be made available online at bmofunds.com/documents, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Funds electronically by calling 1-800-236-FUND (3863), by sending an email request to bmofundsus.services@bmo.com, or by asking your broker/dealer, investment professional, or financial institution.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Funds, you can call the Funds toll-free at 1-800-236-FUND (3863) or send an email request to bmofundsus.services@bmo.com. Your election to receive reports in paper will apply to all funds held in your account if you invest through your financial intermediary or all funds held with the fund complex if you invest directly with the Funds.
 
 
  Investor
Class
(Class Y) 		Institutional
Class
(Class I) 		Advisor
Class
(Class A) 		Retirement
Class
(Class R6) 		Premier
Class
Equity Funds          
BMO Low Volatility Equity Fund — MLVEX BLVAX — —
BMO Dividend Income Fund — MDIVX BADIX — —
BMO Large-Cap Value Fund — MLVIX BALVX BLCRX —
BMO Large-Cap Growth Fund MASTX MLCIX BALGX BLGRX —
BMO Mid-Cap Value Fund — MRVIX BAMCX BMVGX —
BMO Mid-Cap Growth Fund — MRMIX BGMAX BMGGX —
BMO Small-Cap Value Fund — MRSNX BACVX BSVGX —
BMO Small-Cap Growth Fund —
MSGIX BSLAX —
—
International and Global Funds          
BMO Global Low Volatility Equity Fund — BGLBX BAEGX — —
BMO Disciplined International Equity Fund — BDIQX BDAQX —
(1)
—
BMO Pyrford International Stock Fund — MISNX BPIAX BISGX —
BMO LGM Emerging Markets Equity Fund —
MIEMX BAEMX —
—
Fixed Income Funds          
BMO Ultra Short Tax-Free Fund — MUISX BAUSX — —
BMO Short Tax-Free Fund — MTFIX BASFX — —
BMO Short-Term Income Fund — MSIFX BTMAX — —
BMO Intermediate Tax-Free Fund MITFX MIITX BITAX — —
BMO Strategic Income Fund MRGIX MGIIX BMTAX — —
BMO Corporate Income Fund MCIYX MCIIX BATIX — —
BMO Core Plus Bond Fund MCYBX MCBIX BATCX — —
Money Market Funds          
BMO Government Money Market Fund MGYXX — — — MGNXX
BMO Tax-Free Money Market Fund MTFXX — — — MFIXX
BMO Prime Money Market Fund MARXX — — — MAIXX
(1)
Not yet offered for sale.
 
Table of contents
    
1
 
1
4
8
12
16
20
24
28
 
32
36
40
44
 
48
52
56
60
64
68
72
 
76
80
84
88
91
99
102
105
109
115
128
 
 
Fund Summary
BMO Low Volatility Equity Fund
Investment Objective:
To provide capital appreciation.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
 
You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Class A shares of certain BMO Funds. More information about these and other discounts and waivers is available from your financial professional and under “How to Buy Shares
–
Purchase of Class A Shares
–
Class A Shares
–
Sales Charge” on page 93 of this Prospectus, under “How to Buy Shares
–
Class A Shares
–
Waivers and Reductions of Sales Charges” beginning on page 94 of this Prospectus, under “Appendix
–
Sales Charge Waivers” on page 128 of this Prospectus, and “How to Buy Shares” beginning on page B-36 of the Fund’s Statement of Additional Information.
Shareholder Fees (fees paid directly from your investment)
Class I
Class A
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None 5.00%
Maximum Deferred Sales Charge (Load) (as a percentage of shares redeemed within 18 months of purchase)
(1)
None 1.00%
Redemption Fee None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees
(2)
0.40% 0.40%
Distribution (12b-1) Fees None 0.25%
Other Expenses 0.25% 0.25%
Total Annual Fund Operating Expenses 0.65% 0.90%
(1)
The Maximum Deferred Sales Charge on Class A shares is applied only to purchases of $1,000,000 or more that are redeemed within 18 months of purchase.
(2)
Management Fees have been restated to reflect current fees.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. Although your actual costs and
returns may be higher or lower, based on these assumptions your costs would be:
 
Class I
Class A
1 Year $
66 		$
587
3 Years $208 $
773
5 Years $362 $
974
10 Years $810 $1,552
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 51% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests at least 80% of its assets in a broadly diversified portfolio of common stocks of large-sized U.S. companies similar in size, at the time of purchase, to those within the Russell 1000
®
Index. The largest company by market capitalization in the Russell 1000
®
Index was approximately $1.9 trillion as of October 31, 2020 and the median market capitalization of companies in the Index as of the same date was approximately $10.9 billion. The Fund may at times focus its investments in one or more sectors.
The Fund invests in stocks that exhibit less volatile stock price patterns when compared to stocks in the Russell 1000
®
Index. The Adviser selects low volatility, undervalued stocks using a unique approach which combines the use of proprietary analytical tools and the qualitative judgments of the investment team. The Adviser’s investment process begins by using tools to rank stocks based on expected risk and expected return and construct preliminary portfolios with the use of fundamental factors. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
. All purchases and sales of portfolio securities, however, are subjected ultimately to the investment team’s qualitative judgments developed from their cumulative investment experience. The entire process is designed to focus on stock risk and company fundamentals through both quantitative and qualitative analysis to balance risk management with return generation. This strategy seeks to provide the Fund with lower downside risk and meaningful upside participation relative to the Russell 1000
®
Index.
 
Equity Funds 1
 
BMO Low Volatility Equity Fund (cont.)
From time to time, the Fund maintains a portion of its assets in cash. The Fund may increase its cash holdings in response to market conditions or in the event attractive investment opportunities are not available.
Principal Risks
The Fund cannot assure that it will achieve its investment objective.
 
An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
 
The net asset value of the Fund will vary and you could lose money by investing in the Fund. In addition, the Fund is subject to the following risks.
Common Stock Risks.
Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in, and perceptions of, their issuers change. Holders of common stocks are generally subject to greater risk than holders of preferred stocks and debt obligations of the same issuer because common stockholders generally have inferior rights to receive payments from issuers in comparison with the rights of preferred stockholders, bondholders, and other creditors.
Style Risks.
Investments in value stocks are subject to the risk that their intrinsic values may never be realized by the market, that a stock judged to be undervalued may actually be appropriately priced, or that their prices may decline, even though in theory they are already undervalued. Value stocks can react differently to issuer, political, market, and economic developments than the market as a whole and other types of stocks (e.g., growth stocks).
Sector Risks.
Companies with similar characteristics, such as those within similar industries, may be grouped together in broad categories called sectors. To the extent
the
Fund invests its assets in a particular sector, the Fund’s performance may be more susceptible to any economic, business, or other developments that generally affect that sector.
Stock Market Risks.
The Fund is subject to fluctuations in the stock market, which has periods of increasing and decreasing values. Stocks are more volatile than debt securities. The value of equity securities purchased by the Fund may decline if the financial condition of the companies in which the Fund invests declines or if overall market and economic conditions deteriorate. If the value of the Fund’s investments goes down, you may lose money. U.S. and international markets have experienced significant volatility in recent years, which may increase the risks of investing in the securities held by the Fund. Policy changes by the U.S. government and/or Federal Reserve, such as raising interest rates, also could cause increased volatility in financial markets, which could have a negative impact on the Fund. Adverse market events also may lead to
increased shareholder redemptions, which could cause the Fund to experience a loss or difficulty in selling investments to meet such redemptions.
Management Risks.
The Adviser’s judgments about the attractiveness, value, level of expected volatility, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results. In addition, the Adviser’s strategy may limit the Fund’s gains in rising markets.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total returns before taxes have varied from year to year, while the table compares the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives.
 
Please keep in mind that past performance, before and after taxes, does not represent how the Fund will perform in the future.
 
Investors may obtain updated performance information for the Fund at bmofunds.com.
Class I
—
Annual Total Returns
(calendar years 2013-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was (6.24)%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
3/31/2013
13.46%
Worst quarter
12/31/2018
(7.23)%
Average Annual Total Returns
t
hrough
12/31/19
 
1 Year
5 Years
Since
Inception
Class I (Inception 9/28/2012)      
Return Before Taxes 24.32% 9.55% 12.11%
Return After Taxes on Distributions 22.99% 8.11% 10.57%
Return After Taxes on Distributions and Sale of Fund Shares 14.86% 7.23% 9.38%
 
2 Equity Funds
 
BMO Low Volatility Equity Fund (cont.)
 
1 Year
5 Years
Since
Inception
Russell 1000
®
(reflects no deduction for fees, expenses or taxes)
31.43% 11.48% 14.06%
LMCVI
(reflects deduction of fees and no deduction for sales charges or taxes)
25.25% 6.74% 10.75%
    
 
1 Year
5 Years
Since
Inception
Class A (Inception 5/27/2014)      
Return Before Taxes 17.73% 8.16% 9.25%
Russell 1000
®
(reflects no deduction for fees, expenses or taxes)
31.43% 11.48% 11.83%
LMCVI
(reflects deduction of fees and no deduction for sales charges or taxes)
25.25% 6.74% 7.05%
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes.
 
Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.
 
After-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such as IRAs or 401(k) plans.
 
After-tax returns are shown only for Class I and after-tax returns for Class A will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The Russell 1000
®
Index (Russell 1000
®
) measures the performance of the large-cap segment of the U.S. equity universe. It includes approximately 1,000 of the largest securities based on a combination of their market cap and current index membership.
The Lipper Multi-Cap Value Funds Index (LMCVI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
David A. Corris, Jason C. Hans, Jay Kaufman, and David Rosenblatt co-manage the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Corris, Head of Disciplined Equities and a Managing Director of the Adviser, joined the Adviser in 2008 and has co-managed the Fund since April 2013. Mr. Hans, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2008 and has co-managed the Fund since its inception in 2012. Mr. Kaufman, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2010 and has co-managed the Fund since December 2015. Mr. Rosenblatt, a Director and Portfolio Manager of the Adviser,
joined the Adviser in 2012 and has co-managed the Fund since December 2020.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class A shares and $1,000,000 for Class I shares. For Class A, the minimum subsequent purchase amount is $50.
Sale of Fund Shares.
You may sell (redeem) your shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income or capital gains for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
 
Equity Funds 3
 
BMO Dividend Income Fund
Investment Objective:
To provide capital appreciation and current income.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
 
You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Class A shares of certain BMO Funds. More information about these and other discounts and waivers is available from your financial professional and under “How to Buy Shares
–
Purchase of Class A Shares
–
Class A Shares
–
Sales Charge” on page 93 of this Prospectus, under “How to Buy Shares
–
Class A Shares
–
Waivers and Reductions of Sales Charges” beginning on page 94 of this Prospectus, under “Appendix
–
Sales Charge Waivers” on page 128 of this Prospectus, and “How to Buy Shares” beginning on page B-36 of the Fund’s Statement of Additional Information.
Shareholder Fees (fees paid directly from your investment)
Class I
Class A
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None 5.00%
Maximum Deferred Sales Charge (Load) (as a percentage of shares redeemed within 18 months of purchase)
(1)
None 1.00%
Redemption Fee None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees 0.50% 0.50%
Distribution (12b-1) Fees None 0.25%
Other Expenses 0.26% 0.26%
Total Annual Fund Operating Expenses 0.76% 1.01%
Fee Waiver and Expense Reimbursement
(2)
(0.11)% (0.11)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(2)
0.65% 0.90%
(1)
The Maximum Deferred Sales Charge on Class A shares is applied only to purchases of $1,000,000 or more that are redeemed within 18 months of purchase.
(2)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.65% for Class I and 0.90% for Class A through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class I
Class A
1 Year $
66 		$
587
3 Years $232 $
795
5 Years $412 $1,020
10 Years $932 $1,665
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 46% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests at least 80% of its net assets primarily in dividend paying common stocks of large-sized U.S. companies similar in size, at the time of purchase, to those within the Russell 1000
®
Value Index. The largest company by market capitalization in the Russell 1000
®
Value Index was approximately $1.1 trillion as of October 31, 2020 and the median market capitalization of companies in the Index as of the same period was $9.6 billion. The Fund may at times focus its investments in one or more sectors.
To provide both capital appreciation and current income, the Adviser selects stocks using a unique, value-oriented approach, focusing on companies with dividend yields in excess of 1%, which combines the use of proprietary analytical tools and the qualitative judgments of the investment team. In general, the Adviser believes companies that are undervalued relative to their fundamentals and exhibit improving investor interest outperform the market over full market
cycles
. As a result, the
 
4 EQUITY Funds
 
BMO Dividend Income Fund (cont.)
Adviser’s investment process begins by using tools to rank stocks based on expected returns, construct preliminary portfolios with the use of fundamental factors, and manage risk. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
. All purchases and sales of portfolio securities, however, are subjected ultimately to the investment team’s qualitative judgments developed from their cumulative investment experience. The entire process is designed to focus on company fundamentals through both quantitative and qualitative analysis to balance return generation with risk management.
From time to time, the Fund maintains a portion of its assets in cash. The Fund may increase its cash holdings in response to market conditions or in the event attractive investment opportunities are not available.
Principal Risks
The Fund cannot assure that it will achieve its investment objective.
 
An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
 
The net asset value of the Fund will vary and you could lose money by investing in the Fund. In addition, the Fund is subject to the following risks.
Common Stock Risks.
Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in, and perceptions of, their issuers change. Holders of common stocks are generally subject to greater risk than holders of preferred stocks and debt obligations of the same issuer because common stockholders generally have inferior rights to receive payments from issuers in comparison with the rights of preferred stockholders, bondholders, and other creditors.
Income Risks.
The Fund can distribute to shareholders only what it earns. Therefore, if the amount of interest and/or dividends the Fund receives from its investments declines, the amount of dividends shareholders receive from the Fund also will decline. In addition, depending upon market conditions, an income producing common stock that meets the Fund’s investment criteria may not be widely available and/or may be highly concentrated in only a few market sectors. This may limit the ability of the Fund to produce current income.
Style Risks.
Investments in value stocks are subject to the risk that their intrinsic values may never be realized by the market, that a stock judged to be undervalued may actually be appropriately priced, or that their prices may decline, even though in theory they are already undervalued. Value stocks can react differently to issuer, political, market, and economic
developments than the market as a whole and other types of stocks (e.g., growth stocks).
Sector Risks.
Companies with similar characteristics, such as those within similar industries, may be grouped together in broad categories called sectors. To the extent the Fund invests its assets in a particular sector, the Fund’s performance may be more susceptible to any economic, business, or other developments that generally affect that sector.
Stock Market Risks.
The Fund is subject to fluctuations in the stock market, which has periods of increasing and decreasing values. Stocks are more volatile than debt securities. The value of equity securities purchased by the Fund may decline if the financial condition of the companies in which the Fund invests declines or if overall market and economic conditions deteriorate. If the value of the Fund’s investments goes down, you may lose money. U.S. and international markets have experienced significant volatility in recent years, which may increase the risks of investing in the securities held by the Fund. Policy changes by the U.S. government and/or Federal Reserve, such as raising interest rates, also could cause increased volatility in financial markets, which could have a negative impact on the Fund. Adverse market events also may lead to increased shareholder redemptions, which could cause the Fund to experience a loss or difficulty in selling investments to meet such redemptions.
Management Risks.
The Adviser’s judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total returns before taxes have varied from year to year, while the table compares the Fund’s average annual total returns to the returns of broad measures of market performance and an index of funds with similar investment objectives.
 
Please keep in mind that past performance, before and after taxes, does not represent how the Fund will perform in the future. Investors may obtain updated performance information for the Fund at bmofunds.com.
 
EQUITY Funds 5
 
BMO Dividend Income Fund (cont.)
Class I
—
Annual Total Returns
(calendar years 2012-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was (12.60)%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
3/31/2013
11.52%
Worst quarter
12/31/2018
(11.27)%
Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
Since
Inception
Class I (Inception 12/29/2011)      
Return Before Taxes 23.60% 9.93% 12.80%
Return After Taxes on Distributions 22.74% 8.03% 11.02%
Return After Taxes on Distributions and Sale of Fund Shares 14.27% 7.39% 10.05%
Russell 1000
®
Value
(reflects no deduction for fees, expenses or taxes)
26.54% 8.29% 12.78%
S&P 500
®
(reflects no deduction for fees, expenses or taxes)
31.49% 11.70% 14.81%
LEII
(reflects deduction of fees and no deduction for sales charges or taxes)
26.38% 8.80% 11.90%
    
 
1 Year
5 Years
Since
Inception
Class A (Inception 5/27/2014)      
Return Before Taxes 17.05% 8.52% 9.28%
Russell 1000
®
Value
(reflects no deduction for fees, expenses or taxes)
26.54% 8.29% 8.88%
S&P 500
®
(reflects no deduction for fees, expenses or taxes)
31.49% 11.70% 12.09%
LEII
(reflects deduction of fees and no deduction for sales charges or taxes)
26.38% 8.80% 8.99%
After-tax returns are calculated using the
highest
historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes.
 
Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors holding shares through tax-
deferred
programs, such
as IRAs or 401(k) plans.
 
After-tax returns are shown only for Class I and after-tax returns for Class A will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The Russell 1000
®
Value Index (Russell 1000
®
Value) measures the performance of those companies included in the Russell 1000
®
Index with lower price-to-book ratios and lower forecasted growth values.
The S&P 500
®
Index (S&P 500
®
) is a market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance.
The Lipper Equity Income Funds Index (LEII) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
Kenneth Conrad, Ph.D., and Casey J. Sambs have co-managed the Fund since April 2013 and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Dr. Conrad, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2008. Mr. Sambs, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2001.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class A shares and $1,000,000 for Class I shares. For Class A, the minimum subsequent purchase amount is $50.
Sale of Fund Shares.
You may sell (redeem) your shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at
 
6 EQUITY Funds
 
BMO Dividend Income Fund (cont.)
least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income or capital gains for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
EQUITY Funds 7
 
BMO Large-Cap Value Fund
Investment Objective:
To provide capital appreciation.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
 
You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Class A shares of certain BMO Funds. More information about these and other discounts and waivers is available from your financial professional and under “How to Buy Shares
–
Purchase of Class A Shares
–
Class A Shares
–
Sales Charge” on page 93 of this Prospectus, under “How to Buy Shares
–
Class A Shares
–
Waivers and Reductions of Sales Charges” beginning on page 94 of this Prospectus, under “Appendix
–
Sales Charge Waivers” on page 128 of this Prospectus, and “How to Buy Shares” beginning on page B-36 of the Fund’s Statement of Additional Information.
Shareholder Fees (fees paid directly from your investment)
Class I
Class A
Class R6
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None 5.00% None
Maximum Deferred Sales Charge (Load) (as a percentage of shares redeemed within 18 months of purchase)
(1)
None 1.00% None
Redemption Fee None None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees 0.35% 0.35% 0.35%
Distribution (12b-1) Fees None 0.25% None
Other Expenses 0.25% 0.25% 0.10%
Total Annual Fund Operating Expenses 0.60% 0.85% 0.45%
Fee Waiver and Expense Reimbursement
(2)
(0.06)% (0.06)% (0.06)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(2)
0.54% 0.79% 0.39%
(1)
The Maximum Deferred Sales Charge on Class A shares is applied only to purchases of $1,000,000 or more that are redeemed within 18 months of purchase.
(2)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.54% for Class I, 0.79% for Class A, and 0.39% for Class R6 through December 31, 2021. This
 
expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class I
Class A
Class R6
1 Year $
55 		$
577 		$
40
3 Years $186 $
752 		$138
5 Years $329 $
942 		$246
10 Years $744 $1,491 $561
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 76% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests at least 80% of its assets in a broadly diversified portfolio of common stocks of large-sized U.S. companies similar in size, at the time of purchase, to those within the Russell 1000
®
Value Index. The largest company by market capitalization in the Russell 1000
®
Value Index was approximately $1.1 trillion as of October 31, 2020 and the median market capitalization of companies in the Index as of the same period was $9.6 billion. The Fund may at times focus its investments in one or more sectors.
The Adviser selects stocks using a unique, value-oriented approach focusing on high quality companies with long-term capital appreciation potential that are available at reasonable prices, which combines the use of proprietary analytical tools
 
8 EQUITY Funds
 
BMO Large-Cap Value Fund (cont.)
and the qualitative judgments of the investment team. In general, the Adviser believes companies that are undervalued relative to their fundamentals and exhibit improving investor interest outperform the market over full market cycles. As a result, the Adviser’s investment process begins by using tools to rank stocks based on expected returns, construct preliminary portfolios with the use of fundamental factors, and manage risk. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
. All purchases and sales of portfolio securities, however, are subjected ultimately to the investment team’s qualitative judgments developed from their cumulative investment experience. The entire process is designed to focus on company fundamentals through both quantitative and qualitative analysis to balance return generation with risk management.
From time to time, the Fund maintains a portion of its assets in cash. The Fund may increase its cash holdings in response to market conditions or in the event attractive investment opportunities are not available.
Principal Risks
The Fund cannot assure that it will achieve its investment objective.
 
An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
 
The net asset value of the Fund will vary and you could lose money by investing in the Fund. In addition, the Fund is subject to the following risks.
Common Stock Risks.
Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in, and perceptions of, their issuers change. Holders of common stocks are generally subject to greater risk than holders of preferred stocks and debt obligations of the same issuer because common stockholders generally have inferior rights to receive payments from issuers in comparison with the rights of preferred stockholders, bondholders, and other creditors.
Style Risks.
Investments in value stocks are subject to the risk that their intrinsic values may never be realized by the market, that a stock judged to be undervalued may actually be appropriately priced, or that their prices may decline, even though in theory they are already undervalued. Value stocks can react differently to issuer, political, market, and economic developments than the market as a whole and other types of stocks (e.g., growth stocks).
Stock Market Risks.
The Fund is subject to fluctuations in the stock market, which has periods of increasing and decreasing values. Stocks are more volatile than debt securities. The value of equity securities purchased by the Fund may decline if the
financial condition of the companies in which the Fund invests declines or if overall market and economic conditions deteriorate. If the value of the Fund’s investments goes down, you may lose money. U.S. and international markets have experienced significant volatility in recent years, which may increase the risks of investing in the securities held by the Fund. Policy changes by the U.S. government and/or Federal Reserve, such as raising interest rates, also could cause increased volatility in financial markets, which could have a negative impact on the Fund. Adverse market events also may lead to increased shareholder redemptions, which could cause the Fund to experience a loss or difficulty in selling investments to meet such redemptions.
Sector Risks.
Companies with similar characteristics, such as those within similar industries, may be grouped together in broad categories called sectors. To the extent the Fund invests its assets in a particular sector, the Fund’s performance may be more susceptible to any economic, business, or other developments that generally affect that sector.
Management Risks.
The Adviser’s judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total returns before taxes have varied from year to year, while the table compares the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives.
 
Please keep in mind that past performance, before and after taxes, does not represent how the Fund will perform in the future.
 
Investors may obtain updated performance information for the Fund at
 
bmofunds.com.
Class I
—
Annual Total Returns
(calendar years 2010-2019)
 
EQUITY Funds 9
 
BMO Large-Cap Value Fund (cont.)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was (10.72)%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
3/31/2013
12.71%
Worst quarter
9/30/2011
(17.26)%
Average
Annual
Total Returns
through 12/31/19
 
1 Year
5 Years
10 Years
Class I (Inception 1/31/2008)      
Return Before Taxes 20.06% 6.82% 10.53%
Return After Taxes on Distributions 19.38% 4.77% 8.92%
Return After Taxes on Distributions and Sale of Fund Shares 12.09% 4.92% 8.34%
Russell 1000
®
Value
(reflects no deduction for fees, expenses or taxes)
26.54% 8.29% 11.80%
LMCVI
(reflects deduction of fees and no deduction for sales charges or taxes)
25.25% 6.74% 10.20%
    
 
1 Year
5 Years
Since
Inception
Class A (Inception 5/27/2014)      
Return Before Taxes 13.80% 5.46% 6.42%
Russell 1000
®
Value
(reflects no deduction for fees, expenses or taxes)
26.54% 8.29% 8.88%
LMCVI
(reflects deduction of fees and no deduction for sales charges or taxes)
25.25% 6.74% 7.05%
    
 
1 Year
Since
Inception
Class R6 (Inception 12/28/2015)    
Return Before Taxes 20.25% 9.19%
Russell 1000
®
Value
(reflects no deduction for fees, expenses or taxes)
26.54% 11.38%
LMCVI
(reflects deduction of fees and no deduction for sales charges or taxes)
25.25% 9.59%
After-tax returns are calculated using the
highest
historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes.
 
Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.
 
After-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such as IRAs or 401(k) plans.
 
After-tax returns are shown only for Class I and after-tax returns for Class A and Class R6 will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The Russell 1000
®
Value Index (Russell 1000
®
Value) measures the performance of those companies included in the Russell
1000
®
Index with lower price-to-book ratios and lower forecasted growth values.
The Lipper Multi-Cap Value Funds Index (LMCVI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
David A. Corris, J.P. Gurnee, and Jason C. Hans co-manage the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Corris, Head of Disciplined Equities and a Managing Director of the Adviser, joined the Adviser in 2008 and has co-managed the Fund since April 2013. Mr. Gurnee, a Vice President and Portfolio Manager of the Adviser, joined the Adviser in 2018 and has co-managed the Fund since December 2020. Mr. Hans, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2008 and has co-managed the Fund since February 2012
.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class A shares and $1,000,000 for Class I shares. For Class A, the minimum subsequent purchase amount is $50. Eligible retirement plans, fee-based wrap programs, and other registered investment companies generally may open an account and purchase Class R6 shares by contacting BMO Funds - U.S. Services.
Sale of Fund Shares.
Please contact your plan administrator or recordkeeper in order to sell (redeem) Class R6 shares from your retirement plan. You may sell (redeem) your Class A or Class I shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
 
10 EQUITY Funds
 
BMO Large-Cap Value Fund (cont.)
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income or capital gains for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
EQUITY Funds 11
 
BMO Large-Cap Growth Fund
Investment Objective:
To provide capital appreciation.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
 
You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Class A shares of certain BMO Funds. More information about these and other discounts and waivers is available from your financial professional and under “How to Buy Shares
–
Purchase of Class A Shares
–
Class A Shares
–
Sales Charge” on page 93 of this Prospectus, under “How to Buy Shares
–
Class A Shares
–
Waivers and Reductions of Sales Charges” beginning on page 94 of this Prospectus, under “Appendix
–
Sales Charge Waivers” on page 128 of this Prospectus, and “How to Buy Shares” beginning on page B-36 of the Fund’s Statement of Additional Information.
Shareholder Fees (fees paid directly from your investment)
Class Y
Class I
Class A
Class R6
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None None 5.00% None
Maximum Deferred Sales Charge (Load) (as a percentage of shares redeemed within 18 months of purchase)
(1)
None None 1.00% None
Redemption Fee None None None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees 0.35% 0.35% 0.35% 0.35%
Distribution (12b-1) Fees None None 0.25% None
Other Expenses 0.48% 0.23% 0.23% 0.08%
Total Annual Fund Operating Expenses 0.83% 0.58% 0.83% 0.43%
Fee Waiver and Expense Reimbursement
(2)
(0.04)% (0.04)% (0.04)% (0.04)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(2)
0.79% 0.54% 0.79% 0.39%
(1)
The Maximum Deferred Sales Charge on Class A shares is applied only to purchases of $1,000,000 or more that are redeemed within 18 months of purchase.
(2)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs,
 
and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.79% for Class Y, 0.54% for Class I, 0.79% for Class A, and 0.39% for Class R6 through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class Y
Class I
Class A
Class R6
1 Year $
81 		$
55 		$
577 		$
40
3 Years $
261 		$182 $
748 		$134
5 Years $
457 		$320 $
934 		$237
10 Years $1,022 $722 $1,471 $538
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 71% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests at least 80% of its assets in common stocks of large-sized U.S. companies similar in size, at the time of purchase, to those within the Russell 1000
®
Growth Index. The largest company by market capitalization in the Russell 1000
®
Growth Index was approximately $1.9 trillion as of October 31, 2020 and the median market capitalization of companies in the Index as of the same period was $14.5 billion. The Fund may at times focus its investments in one or more sectors.
 
12 EQUITY Funds
 
BMO Large-Cap Growth Fund (cont.)
The Adviser selects stocks using a unique, growth-oriented approach, focusing on high quality companies with sustainable earnings growth that are available at reasonable prices, which combines the use of proprietary analytical tools and the qualitative judgments of the investment team. In general, the Adviser believes companies that are undervalued relative to their fundamentals and exhibit improving investor interest outperform the market over full market cycles. As a result, the Adviser’s investment process begins by using tools to rank stocks based on expected returns, construct preliminary portfolios with the use of fundamental factors, and manage risk. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
. All purchases and sales of portfolio securities, however, are subjected ultimately to the investment team’s qualitative judgments developed from their cumulative investment experience. The entire process is designed to focus on company fundamentals through both quantitative and qualitative analysis to balance return generation with risk management.
From time to time, the Fund maintains a portion of its assets in cash. The Fund may increase its cash holdings in response to market conditions or in the event attractive investment opportunities are not available.
Principal Risks
The Fund cannot assure that it will achieve its investment objective.
 
An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
 
The net asset value of the Fund will vary and you could lose money by investing in the Fund. In addition, the Fund is subject to the following risks.
Common Stock Risks.
Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in, and perceptions of, their issuers change. Holders of common stocks are generally subject to greater risk than holders of preferred stocks and debt obligations of the same issuer because common stockholders generally have inferior rights to receive payments from issuers in comparison with the rights of preferred stockholders, bondholders, and other creditors.
Style Risks.
Due to their relatively high valuations, growth stocks are typically more volatile than value stocks. Further, growth stocks may not pay dividends or may pay lower dividends than value stocks. This means they depend more on price changes for returns and may be more adversely affected in a down market compared to value stocks that pay higher dividends.
Stock Market Risks.
The Fund is subject to fluctuations in the stock market, which has periods of increasing and decreasing values. Stocks are more volatile than debt securities. The value of equity securities purchased by the Fund may decline if the financial condition of the companies in which the Fund invests declines or if overall market and economic conditions deteriorate. If the value of the Fund’s investments goes down, you may lose money. U.S. and international markets have experienced significant volatility in recent years, which may increase the risks of investing in the securities held by the Fund. Policy changes by the U.S. government and/or Federal Reserve, such as raising interest rates, also could cause increased volatility in financial markets, which could have a negative impact on the Fund. Adverse market events also may lead to increased shareholder redemptions, which could cause the Fund to experience a loss or difficulty in selling investments to meet such redemptions.
Sector Risks.
Companies with similar characteristics, such as those within similar industries, may be grouped together in broad categories called sectors. To the extent the Fund invests its assets in a particular sector, the Fund’s performance may be more susceptible to any economic, business, or other developments that generally affect that sector.
Information Technology Sector Risks.
The information technology sector can be significantly affected by rapid obsolescence of existing technology, short product cycles, falling prices and profits, competition from new market entrants, government regulation, and general economic conditions.
Management Risks.
The Adviser’s judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total returns before taxes have varied from year to year, while the table compares the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives.
 
Please keep in mind that past performance, before and after taxes, does not represent how the Fund will perform in the future.
 
Investors may obtain updated performance information for the Fund at
 
bmofunds.com.
 
EQUITY Funds 13
 
BMO Large-Cap Growth Fund (cont.)
Class I
—
Annual Total Returns
(calendar years 2010-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was 14.83%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
3/31/2012
15.35%
Worst quarter
9/30/2011
(16.50)%
Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
10 Years
Class I (Inception 1/31/2008)      
Return Before Taxes 27.76% 13.40% 14.44%
Return After Taxes on Distributions 26.21% 10.72% 12.15%
Return After Taxes on Distributions and Sale of Fund Shares 17.34% 9.96% 11.32%
Class Y (Inception 11/20/1992)      
Return Before Taxes 27.53% 13.13% 14.15%
Russell 1000
®
Growth
(reflects no deduction for fees, expenses or taxes)
36.39% 14.63% 15.22%
LMCGI
(reflects deduction of fees and no deduction for sales charges or taxes)
32.89% 11.95% 13.57%
    
 
1 Year
5 Years
Since
Inception
Class A (Inception 5/27/2014)      
Return Before Taxes 21.16% 11.97% 12.65%
Russell 1000
®
Growth
(reflects deduction of fees and no deduction for sales charges or taxes)
36.39% 14.63% 14.73%
LMCGI
(reflects deduction of fees and no deduction for sales charges or taxes)
32.89% 11.95% 12.30%
    
 
1 Year
Since
Inception
Class R6 (Inception 12/28/2015)    
Return Before Taxes 28.02% 15.24%
Russell 1000
®
Growth
(reflects deduction of fees and no deduction for sales charges or taxes)
36.39% 16.76%
LMCGI
(reflects deduction of fees and no deduction for sales charges or taxes)
32.89% 14.11%
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes.
 
Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.
 
After-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such as IRAs or 401(k) plans.
 
After-tax returns are shown only for Class I and after-tax returns for Class Y, Class A, and Class R6 will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The Russell 1000
®
Growth Index (Russell 1000
®
Growth) measures the performance of those companies included in the Russell 1000
®
Index with higher price-to-book ratios and higher forecasted growth values.
The Lipper Multi-Cap Growth Funds Index (LMCGI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
David A. Corris, J.P. Gurnee, and Jason C. Hans co-manage the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Corris, Head of Disciplined Equities and a Managing Director of the Adviser, joined the Adviser in 2008 and has co-managed the Fund since April 2013. Mr. Gurnee, a Vice President and Portfolio Manager of the Adviser, joined the Adviser in 2018 and has co-managed the Fund since December 2020. Mr. Hans, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2008 and has co-managed the Fund since February 2012
.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class Y and Class A shares and $1,000,000 for Class I shares. For Class Y and Class A, the minimum subsequent purchase amount is $50. Eligible retirement plans, fee-based wrap programs, and other registered investment companies generally may open an account and purchase Class R6 shares by contacting BMO Funds - U.S. Services.
Sale of Fund Shares.
Please contact your plan administrator or recordkeeper in order to sell (redeem) Class R6 shares from your retirement plan. You may sell (redeem) your Class Y, Class A, or Class I shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
 
14 EQUITY Funds
 
BMO Large-Cap Growth Fund (cont.)
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be
 
directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income or capital gains for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
EQUITY Funds 15
 
BMO Mid-Cap Value Fund
Investment
Objective
:
To provide
capital
appreciation.
Fees and
Expenses
of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
 
You may
qualify
for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Class A shares of certain BMO Funds. More information about these and other discounts and waivers is available from your financial professional and under “How to Buy Shares
–
Purchase of Class A Shares
–
Class A Shares
–
Sales Charge” on page 93 of this Prospectus, under “How to Buy Shares
–
Class A Shares
–
Waivers and Reductions of Sales Charges” beginning on page 94 of this Prospectus, under “Appendix
–
Sales Charge Waivers” on page 128 of this Prospectus, and “How to Buy Shares” beginning on page B-36 of the Fund’s Statement of Additional Information.
Shareholder Fees (fees paid directly from your investment)
Class I
Class A
Class R6
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None 5.00% None
Maximum Deferred Sales Charge (Load) (as a percentage of shares redeemed within 18 months of purchase)
(1)
None 1.00% None
Redemption Fee None None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees 0.69% 0.69% 0.69%
Distribution (12b-1) Fees None 0.25% None
Other Expenses 0.36% 0.36% 0.21%
Total Annual Fund Operating Expenses 1.05% 1.30% 0.90%
Fee Waiver and Expense Reimbursement
(2)
(0.06)% (0.06)% (0.06)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(2)
0.99% 1.24% 0.84%
(1)
The Maximum Deferred Sales Charge on Class A shares is applied only to purchases of $1,000,000 or more that are redeemed within 18 months of purchase.
(2)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.99% for Class I, 1.24% for Class A, and 0.84% for Class R6 through December 31, 2021. This
 
expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you
compare
the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class I
Class A
Class R6
1 Year $
101 		$
620 		$
86
3 Years $
328 		$
886 		$
281
5 Years $
574 		$1,172 $
493
10 Years $1,277 $1,984 $1,102
Portfolio
Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 47% of the average value of its portfolio.
Principal Investment
Strategies
The Fund invests at least 80% of its assets in value-oriented common stocks of medium-sized U.S. companies similar in size, at the time of purchase, to those within the Russell Midcap
®
Value Index. The largest company by market capitalization in the Russell Midcap
®
Value Index was approximately $41.4 billion as of October 31, 2020 and the median market capitalization of companies in the Index as of the same period was $7.3 billion. The Fund may at times focus its investments in one or more sectors.
The Adviser selects stocks using a unique, value-oriented approach focusing on high quality companies with long-term capital appreciation potential that are available at reasonable prices, which combines the use of proprietary analytical tools
 
16 EQUITY Funds
 
BMO Mid-Cap Value Fund (cont.)
and the qualitative judgments of the investment team. In general, the Adviser believes companies that are undervalued relative to their fundamentals and exhibit improving investor interest outperform the market over full market cycles. As a result, the Adviser’s investment process begins by using tools to rank stocks based on expected returns, construct preliminary portfolios with the use of fundamental factors, and manage risk. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
. All purchases and sales of portfolio securities, however, are subjected ultimately to the investment team’s qualitative judgments developed from their cumulative investment experience. The entire process is designed to focus on company fundamentals through both quantitative and qualitative analysis to balance return generation with risk management.
From time to time, the Fund maintains a portion of its assets in cash. The Fund may increase its cash holdings in response to market conditions or in the event attractive investment opportunities are not available.
Principal Risks
The Fund cannot assure that it will achieve its investment objective.
 
An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
 
The net asset value of the Fund will vary and you could lose money by investing in the Fund. In addition, the Fund is subject to the following risks.
Common Stock Risks.
Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in, and perceptions of, their issuers change. Holders of common stocks are generally subject to greater risk than holders of preferred stocks and debt obligations of the same issuer because common stockholders generally have inferior rights to receive payments from issuers in comparison with the rights of preferred stockholders, bondholders, and other creditors.
Company Size Risks.
Generally, the smaller the market capitalization of a company, the fewer the number of shares traded daily, the less liquid its stock and the more volatile its price. Companies with smaller market capitalizations also tend to have unproven track records, a limited product or service base, and limited access to capital. These factors also increase risks and make these companies more likely to fail than companies with larger market capitalizations.
Style Risks.
Investments in value stocks are subject to the risk that their intrinsic values may never be realized by the market, that a stock judged to be undervalued may actually be appropriately priced, or that their prices may decline, even
though in theory they are already undervalued. Value stocks can react differently to issuer, political, market, and economic developments than the market as a whole and other types of stocks (e.g., growth stocks).
Stock Market Risks.
The Fund is subject to fluctuations in the stock market, which has periods of increasing and decreasing values. Stocks are more volatile than debt securities. The value of equity securities purchased by the Fund may decline if the financial condition of the companies in which the Fund invests declines or if overall market and economic conditions deteriorate. If the value of the Fund’s investments goes down, you may lose money. U.S. and international markets have experienced significant volatility in recent years, which may increase the risks of investing in the securities held by the Fund. Policy changes by the U.S. government and/or Federal Reserve, such as raising interest rates, also could cause increased volatility in financial markets, which could have a negative impact on the Fund. Adverse market events also may lead to increased shareholder redemptions, which could cause the Fund to experience a loss or difficulty in selling investments to meet such redemptions.
Sector Risks.
Companies with similar characteristics, such as those within similar industries, may be grouped together in broad categories called sectors. To the extent the Fund invests its assets in a particular sector, the Fund’s performance may be more susceptible to any economic, business, or other developments that generally affect that sector.
Management Risks.
The Adviser’s judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total returns before taxes have varied from year to year, while the table compares the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives.
 
Please keep in mind that past performance, before and after taxes, does not represent how the Fund will perform in the future.
 
Investors may obtain updated performance information for the Fund at
 
bmofunds.com.
 
EQUITY Funds 17
 
BMO Mid-Cap Value Fund (cont.)
Class I
—
Annual Total Returns
(calendar years 2010-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was (18.88)%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
3/31/2013
13.44%
Worst quarter
9/30/2011
(20.57)%
Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
10 Years
Class I (Inception 1/31/2008)      
Return Before Taxes 20.65% 5.34% 10.60%
Return After Taxes on Distributions 20.13% 2.26% 8.14%
Return After Taxes on Distributions and Sale of Fund Shares 12.42% 3.58% 8.23%
RMCVI
(reflects no deduction for fees, expenses or taxes)
27.06% 7.62% 12.41%
LMCVI
(reflects deduction of fees and no deduction for sales charges or taxes)
23.93% 5.90% 10.52%
    
 
1 Year
5 Years
Since
Inception
Class A (Inception 5/27/2014)      
Return Before Taxes 14.20% 4.01% 5.06%
Class R6 (Inception 5/27/2014)      
Return Before Taxes 20.68% 5.49% 6.43%
RMCVI
(reflects no deduction for fees, expenses or taxes)
27.06% 7.62% 8.14%
LMCVI
(reflects deduction of fees and no deduction for sales charges or taxes)
23.93% 5.90% 6.08%
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes.
 
Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such as IRAs or 401(k) plans.
 
After-tax returns are shown only for Class I and after-tax returns for Class A and Class R6 will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The Russell Midcap
®
Value Index (RMCVI) measures the performance of those companies included in the Russell Midcap
®
Index with lower price-to-book ratios and lower forecasted growth values. Those companies also are included in the Russell 1000
®
Value Index.
The Lipper Mid-Cap Value Funds Index (LMCVI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
David Corris, J.P. Gurnee, and Thomas Lettenberger co-manage the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Corris, Head of Disciplined Equities and a Managing Director of the Adviser, joined the Adviser in 2008 and has co-managed the Fund since October 2016. Mr. Gurnee, a Vice President and Portfolio Manager of the Adviser, joined the Adviser in 2018 and has co-managed the Fund since December 2020. Mr. Lettenberger, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2005 and has co-managed the Fund since October 2016
.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class A shares and $1,000,000 for Class I shares. For Class A, the minimum subsequent purchase amount is $50. Eligible retirement plans, fee-based wrap programs, and other registered investment companies generally may open an account and purchase Class R6 shares by contacting BMO Funds - U.S. Services.
Sale of Fund Shares.
Please contact your plan administrator or recordkeeper in order to sell (redeem) Class R6 shares from your retirement plan.You may sell (redeem) your Class A or Class I shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the 
 
18 EQUITY Funds
 
BMO Mid-Cap Value Fund (cont.)
dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income or capital gains for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
EQUITY Funds 19
 
BMO Mid-Cap Growth Fund
Investment Objective:
To provide capital appreciation.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
 
You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Class A shares of certain BMO Funds. More information about these and other discounts and waivers is available from your financial professional and under “How to Buy Shares
–
Purchase of Class A Shares
–
Class A Shares
–
Sales Charge” on page 93 of this Prospectus, under “How to Buy Shares
–
Class A Shares
–
Waivers and Reductions of Sales Charges” beginning on page 94 of this Prospectus, under “Appendix
–
Sales Charge Waivers” on page 128 of this Prospectus, and “How to Buy Shares” beginning on page B-36 of the Fund’s Statement of Additional Information.
Shareholder Fees (fees paid directly from your investment)
Class I
Class A
Class R6
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None 5.00% None
Maximum Deferred Sales Charge (Load) (as a percentage of shares redeemed within 18 months of purchase)
(1)
None 1.00% None
Redemption Fee None None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees 0.69% 0.69% 0.69%
Distribution (12b-1) Fees None 0.25% None
Other Expenses 0.40% 0.40% 0.25%
Total Annual Fund Operating Expenses 1.09% 1.34% 0.94%
Fee Waiver and Expense Reimbursement
(2)
(0.10)% (0.10)% (0.10)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(2)
0.99% 1.24% 0.84%
(1)
The Maximum Deferred Sales Charge on Class A shares is applied only to purchases of $1,000,000 or more that are redeemed within 18 months of purchase.
(2)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.99% for Class I, 1.24% for Class A, and 0.84% for Class R6 through December 31, 2021. This
 
expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class I
Class A
Class R6
1 Year $
101 		$
620 		$
86
3 Years $
337 		$
894 		$
290
5 Years $
591 		$1,188 $
510
10 Years $1,320 $2,024 $1,146
Portfolio
Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 56% of the average value of its portfolio.
Principal Investment
Strategies
The Fund invests at least 80% of its assets in growth-oriented common stocks of medium-sized U.S. companies similar in size, at the time of purchase, to those within the Russell Midcap
®
Growth Index. The largest company by market capitalization in the Russell Midcap
®
Growth Index was approximately $44.6 billion as of October 31, 2020 and the median market capitalization of companies in the Index as of the same period was $11.2 billion. The Fund may at times focus its investments in one or more sectors.
The Adviser selects stocks using a unique, growth-oriented approach focusing on high quality companies with sustainable earnings growth that are available at reasonable prices, which combines the use of proprietary analytical tools and the
 
20 EQUITY Funds
 
BMO Mid-Cap Growth Fund (cont.)
qualitative judgments of the investment team. In general, the Adviser believes companies that are undervalued relative to their fundamentals and exhibit improving investor interest outperform the market over full market cycles. As a result, the Adviser’s investment process begins by using tools to rank stocks based on expected returns, construct preliminary portfolios with the use of fundamental factors, and manage risk. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
. All purchases and sales of portfolio securities, however, are subjected ultimately to the investment team’s qualitative judgments developed from their cumulative investment experience. The entire process is designed to focus on company fundamentals through both quantitative and qualitative analysis to balance return generation with risk management.
From time to time, the Fund maintains a portion of its assets in cash. The Fund may increase its cash holdings in response to market conditions or in the event attractive investment opportunities are not available.
Principal
Risks
The Fund cannot assure that it will achieve its investment objective.
 
An
investment
in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
 
The net asset value of the Fund will vary and you could lose money by investing in the Fund. In addition, the Fund is subject to the following risks.
Common Stock Risks.
Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in, and perceptions of, their issuers change. Holders of common stocks are generally subject to greater risk than holders of preferred stocks and debt obligations of the same issuer because common stockholders generally have inferior rights to receive payments from issuers in comparison with the rights of preferred stockholders, bondholders, and other creditors.
Company Size Risks.
Generally, the smaller the market capitalization of a company, the fewer the number of shares traded daily, the less liquid its stock and the more volatile its price. Companies with smaller market capitalizations also tend to have unproven track records, a limited product or service base, and limited access to capital. These factors also increase risks and make these companies more likely to fail than companies with larger market capitalizations.
Style Risks.
Due to their relatively high valuations, growth stocks are typically more volatile than value stocks. Further, growth stocks may not pay dividends or may pay lower dividends than value stocks. This means they depend more on
price changes for returns and may be more adversely affected in a down market compared to value stocks that pay higher dividends.
Stock Market Risks.
The Fund is subject to fluctuations in the stock market, which has periods of increasing and decreasing values. Stocks are more volatile than debt securities. The value of equity securities purchased by the Fund may decline if the financial condition of the companies in which the Fund invests declines or if overall market and economic conditions deteriorate. If the value of the Fund’s investments goes down, you may lose money. U.S. and international markets have experienced significant volatility in recent years, which may increase the risks of investing in the securities held by the Fund. Policy changes by the U.S. government and/or Federal Reserve, such as raising interest rates, also could cause increased volatility in financial markets, which could have a negative impact on the Fund. Adverse market events also may lead to increased shareholder redemptions, which could cause the Fund to experience a loss or difficulty in selling investments to meet such redemptions.
Sector Risks.
Companies with similar characteristics, such as those within similar industries, may be grouped together in broad categories called sectors. To the extent the Fund invests its assets in a particular sector, the Fund’s performance may be more susceptible to any economic, business, or other developments that generally affect that sector.
Information Technology Sector Risks.
The information technology sector can be significantly affected by rapid obsolescence of existing technology, short product cycles, falling prices and profits, competition from new market entrants, government regulation, and general economic conditions.
Management Risks.
The Adviser’s judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results.
Fund
Performance
The bar chart and table show the historical
performance
of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total returns before taxes have varied from year to year, while the table compares the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives.
 
Please keep in mind that past performance, before and after taxes, does not represent how the Fund will perform in the future.
 
Investors may obtain updated performance information for the Fund at
 
bmofunds.com.
 
EQUITY Funds 21
 
BMO Mid-Cap Growth Fund (cont.)
Class I
—
Annual
Total
Returns
(calendar years 2010-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was 5.85%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
3/31/2019
18.32%
Worst quarter
9/30/2011
(21.89)%
Average Annual
Total
Returns
through 12/31/19
 
1 Year
5 Years
10 Years
Class I (Inception 1/31/2008)      
Return Before Taxes 28.36% 8.55% 11.91%
Return After Taxes on Distributions 24.89% 4.35% 8.84%
Return After Taxes on Distributions and Sale of Fund Shares 19.16% 5.53% 8.96%
RMCGI
(reflects no deduction for fees, expenses or taxes)
35.47% 11.60% 14.24%
LMCGI
(reflects deduction of fees and no deduction for sales charges or taxes)
33.83% 11.33% 13.01%
    
 
1 Year
5 Years
Since
Inception
Class A (Inception 5/27/2014)      
Return Before Taxes 21.56% 7.16% 7.17%
Class R6 (Inception 5/27/2014)      
Return Before Taxes 28.60% 8.72% 8.60%
RMCGI
(reflects no deduction for fees, expenses or taxes)
35.47% 11.60% 11.97%
LMCGI
(reflects deduction of fees and no deduction for sales charges or taxes)
33.83% 11.33% 11.48%
After-tax returns are
calculated
using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes.
 
Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such as IRAs or 401(k) plans.
 
After-tax returns are shown only for Class I and after-tax returns for Class A and Class R6 will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The Russell Midcap
®
Growth Index (RMCGI) measures the performance of those companies included in the Russell Midcap
®
Index with higher price-to-book ratios and higher forecasted growth values. Those companies also are included in the Russell 1000
®
Growth Index.
The Lipper Mid-Cap Growth Funds Index (LMCGI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers
.
David Corris, J.P. Gurnee, and Thomas Lettenberger co-manage the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Corris, Head of Disciplined Equities and a Managing Director of the Adviser, joined the Adviser in 2008 and has co-managed the Fund since October 2016. Mr. Gurnee, a Vice President and Portfolio Manager of the Adviser, joined the Adviser in 2018 and has co-managed the Fund since December 2020. Mr. Lettenberger, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2005 and has co-managed the Fund since October 2016
.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class A shares and $1,000,000 for Class I shares. For Class A, the minimum subsequent purchase amount is $50. Eligible retirement plans, fee-based wrap programs, and other registered investment companies generally may open an account and purchase Class R6 shares by contacting BMO Funds - U.S. Services.
Sale of Fund Shares.
Please contact your plan administrator or recordkeeper in order to sell (redeem) Class R6 shares from your retirement plan.You may sell (redeem) your Class A or Class I shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the 
 
22 EQUITY Funds
 
BMO Mid-Cap Growth Fund (cont.)
dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income or capital gains for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
EQUITY Funds 23
 
BMO Small-Cap Value Fund
Investment Objective:
To provide capital appreciation.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
 
You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Class A shares of certain BMO Funds. More information about these and other discounts and waivers is available from your financial professional and under “How to Buy Shares
–
Purchase of Class A Shares
–
Class A Shares
–
Sales Charge” on page 93 of this Prospectus, under “How to Buy Shares
–
Class A Shares
–
Waivers and Reductions of Sales Charges” beginning on page 94 of this Prospectus, under “Appendix
–
Sales Charge Waivers” on page 128 of this Prospectus, and “How to Buy Shares” beginning on page B-36 of the Fund’s Statement of Additional Information.
Shareholder Fees (fees paid directly from your investment)
Class I
Class A
Class R6
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None 5.00% None
Maximum Deferred Sales Charge (Load) (as a percentage of shares redeemed within 18 months of purchase)
(1)
None 1.00% None
Redemption Fee None None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees 0.69% 0.69% 0.69%
Distribution (12b-1) Fees None 0.25% None
Other Expenses
(2)
0.55% 0.55% 0.40%
Total Annual Fund Operating Expenses 1.24% 1.49% 1.09%
Fee Waiver and Expense Reimbursement
(3)
(0.25)% (0.25)% (0.25)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(3)
0.99% 1.24% 0.84%
(1)
The Maximum Deferred Sales Charge on Class A shares is applied only to purchases of $1,000,000 or more that are redeemed within 18 months of purchase.
(2)
Other Expenses have been restated to reflect current fees.
(3)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.99% for Class I, 1.24% for
 
Class A, and 0.84% for Class R6 through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class I
Class A
Class R6
1 Year $
101 		$
620 		$
86
3 Years $
369 		$
924 		$
322
5 Years $
657 		$1,250 $
577
10 Years $1,478 $2,170 $1,306
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 82% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests at least 80% of its assets in value-oriented common stocks of small-sized U.S. companies similar in size, at the time of purchase, to those within the Russell 2000
®
Value Index. The largest company by market capitalization in the Russell 2000
®
Value Index was approximately $11.8 billion as of October 31, 2020 and the median market capitalization of companies in the Index as of the same period was $562 million. The Fund may at times focus its investments in one or more sectors.
The Adviser selects stocks using a unique, value-oriented approach focusing on high quality companies with long-term capital appreciation potential that are available at reasonable
 
24 EQUITY Funds
 
BMO Small-Cap Value Fund (cont.)
prices, which combines the use of proprietary analytical tools and the qualitative judgments of the investment team. In general, the Adviser believes companies that are undervalued relative to their fundamentals and exhibit improving investor interest outperform the market over full market cycles. As a result, the Adviser’s investment process begins by using tools to rank stocks based on expected returns, construct preliminary portfolios with the use of fundamental factors, and manage risk. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
. All purchases and sales of portfolio securities, however, are subjected ultimately to the investment team’s qualitative judgments developed from their cumulative investment experience. The entire process is designed to focus on company fundamentals through both quantitative and qualitative analysis to balance return generation with risk management.
From time to time, the Fund maintains a portion of its assets in cash. The Fund may increase its cash holdings in response to market conditions or in the event attractive investment opportunities are not available.
Principal Risks
The Fund cannot assure that it will achieve its investment objective.
 
An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
 
The net asset value of the Fund will vary and you could lose money by investing in the Fund. In addition, the Fund is subject to the following risks.
Common Stock Risks.
Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in, and perceptions of, their issuers change. Holders of common stocks are generally subject to greater risk than holders of preferred stocks and debt obligations of the same issuer because common stockholders generally have inferior rights to receive payments from issuers in comparison with the rights of preferred stockholders, bondholders, and other creditors.
Company Size Risks.
Generally, the smaller the market capitalization of a company, the fewer the number of shares traded daily, the less liquid its stock and the more volatile its price. Companies with smaller market capitalizations also tend to have unproven track records, a limited product or service base, and limited access to capital. These factors also increase risks and make these companies more likely to fail than companies with larger market capitalizations.
Style Risks.
Investments in value stocks are subject to the risk that their intrinsic values may never be realized by the market, that a stock judged to be undervalued may actually be
appropriately priced, or that their prices may decline, even though in theory they are already undervalued. Value stocks can react differently to issuer, political, market, and economic developments than the market as a whole and other types of stocks (e.g., growth stocks).
Stock Market Risks.
The Fund is subject to fluctuations in the stock market, which has periods of increasing and decreasing values. Stocks are more volatile than debt securities. The value of equity securities purchased by the Fund may decline if the financial condition of the companies in which the Fund invests declines or if overall market and economic conditions deteriorate. If the value of the Fund’s investments goes down, you may lose money. U.S. and international markets have experienced significant volatility in recent years, which may increase the risks of investing in the securities held by the Fund. Policy changes by the U.S. government and/or Federal Reserve, such as raising interest rates, also could cause increased volatility in financial markets, which could have a negative impact on the Fund. Adverse market events also may lead to increased shareholder redemptions, which could cause the Fund to experience a loss or difficulty in selling investments to meet such redemptions.
Sector Risks.
Companies with similar characteristics, such as those within similar industries, may be grouped together in broad categories called sectors. To the extent the Fund invests its assets in a particular sector, the Fund’s performance may be more susceptible to any economic, business, or other developments that generally affect that sector.
Financial Services Sector Risks.
Financial services companies may be adversely affected by changes in regulatory framework or interest rates that may negatively affect financial services businesses; exposure of a financial institution to a non-diversified or concentrated loan portfolio; exposure to financial leverage and/or investments or agreements that, under certain circumstances, may lead to losses; and the risk that a market shock or other unexpected market, economic, political, regulatory, or other event might lead to a sudden decline in the values of most or all financial services companies.
Management Risks.
The Adviser’s judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total returns before taxes have varied from year to year, while the table compares the Fund’s average annual total returns to the
 
EQUITY Funds 25
 
BMO Small-Cap Value Fund (cont.)
returns of a broad measure of market performance and an index of funds with similar investment objectives.
 
Please keep in mind that past performance, before and after taxes, does not represent how the Fund will perform in the future.
 
Investors may obtain updated performance information for the Fund at
 
bmofunds.com.
Class I
—
Annual Total Returns
(calendar years 2012-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was (22.57)%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
3/31/2013
13.96%
Worst quarter
12/31/2018
(18.66)%
Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
Since
Inception
Class I (Inception 2/28/2011)      
Return Before Taxes 19.96% 5.44% 9.01%
Return After Taxes on Distributions 19.56% 3.48% 7.24%
Return After Taxes on Distributions and Sale of Fund Shares 12.02% 3.68% 6.77%
Russell 2000
®
Value
(reflects no deduction for fees, expenses or taxes)
22.39% 6.99% 8.67%
LSCCI
(reflects deduction of fees and no deduction for sales charges or taxes)
24.80% 8.18% 9.49%
    
 
1 Year
5 Years
Since
Inception
Class A (Inception 5/27/2014)      
Return Before Taxes 13.62% 4.10% 4.10%
Class R6 (Inception 5/27/2014)      
Return Before Taxes 20.07% 5.61% 5.51%
Russell 2000
®
Value
(reflects no deduction for fees, expenses or taxes)
22.39% 6.99% 6.97%
LSCCI
(reflects deduction of fees and no deduction for sales charges or taxes)
24.80% 8.18% 8.10%
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect
the effect of any applicable state and local taxes.
 
Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such as IRAs or 401(k) plans.
 
After-tax returns are shown only for Class I and after-tax returns for Class A and Class R6 will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The Russell 2000
®
Value Index (Russell 2000
®
Value) is a market-weighted, value-oriented index of those small companies included in the Russell 2000
®
Index with lower price-to-book ratios and lower forecasted growth values.
The Lipper Small-Cap Core Funds Index (LSCCI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers
. David Corris and Thomas Lettenberger have co-managed the Fund since October 2016 and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Corris, Head of Disciplined Equities and a Managing Director of the Adviser, joined the Adviser in 2008. Mr. Lettenberger, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2005.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class A shares and $1,000,000 for Class I shares. For Class A, the minimum subsequent purchase amount is $50. Eligible retirement plans, fee-based wrap programs, and other registered investment companies generally may open an account and purchase Class R6 shares by contacting BMO Funds - U.S. Services.
Sale of Fund Shares.
Please contact your plan administrator or recordkeeper in order to sell (redeem) Class R6 shares from your retirement plan.You may sell (redeem) your Class A or Class I shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
 
26 EQUITY Funds
 
BMO Small-Cap Value Fund (cont.)
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income or capital gains for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
EQUITY Funds 27
 
BMO Small-Cap Growth Fund
Investment Objective:
To provide capital appreciation.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
 
You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Class A shares of certain BMO Funds. More information about these and other discounts and waivers is available from your financial professional and under “How to Buy Shares
–
Purchase of Class A Shares
–
Class A Shares
–
Sales Charge” on page 93 of this Prospectus, under “How to Buy Shares
–
Class A Shares
–
Waivers and Reductions of Sales Charges” beginning on page 94 of this Prospectus, under “Appendix
–
Sales Charge Waivers” on page 128 of this Prospectus, and “How to Buy Shares” beginning on page B-36 of the Fund’s Statement of Additional Information.
Shareholder Fees (fees paid directly from your investment)
Class I
Class A
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None 5.00%
Maximum Deferred Sales Charge (Load) (as a percentage of shares redeemed within 18 months of purchase)
(1)
None 1.00%
Redemption Fee None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees 0.68% 0.68%
Distribution (12b-1) Fees None 0.25%
Other Expenses 0.41% 0.41%
Total Annual Fund Operating Expenses 1.09% 1.34%
Fee Waiver and Expense Reimbursement
(2)
(0.10)% (0.10)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(2)
0.99% 1.24%
(1)
The Maximum Deferred Sales Charge on Class A shares is applied only to purchases of $1,000,000 or more that are redeemed within 18 months of purchase.
(2)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.99% for Class I and 1.24% for Class A through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class I
Class A
1 Year $
101 		$
620
3 Years $
337 		$
894
5 Years $
591 		$1,188
10 Years $1,320 $2,024
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 70% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests at least 80% of its assets in growth-oriented common stocks of small-sized U.S. companies similar in size, at the time of purchase, to those within the Russell 2000
®
Growth Index. The largest company by market capitalization in the Russell 2000
®
Growth Index was approximately $11.8 billion as of October 31, 2020 and the median market capitalization of companies in the Index as of the same period was $915 million. The Fund may at times focus its investments in one or more sectors.
The Adviser selects stocks using a unique, growth-oriented approach focusing on high quality companies with sustainable earnings growth that are available at reasonable prices, which combines the use of proprietary analytical tools and the qualitative judgments of the investment team. In general, the Adviser believes companies that are undervalued relative to their fundamentals and exhibit improving investor interest outperform the market over full market cycles. As a result, the
 
28 EQUITY Funds
 
BMO Small-Cap Growth Fund (cont.)
Adviser’s investment process begins by using tools to rank stocks based on expected returns, construct preliminary portfolios with the use of fundamental factors, and manage risk. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
. All purchases and sales of portfolio securities, however, are subjected ultimately to the investment team’s qualitative judgments developed from their cumulative investment experience. The entire process is designed to focus on company fundamentals through both quantitative and qualitative analysis to balance return generation with risk management.
From time to time, the Fund maintains a portion of its assets in cash. The Fund may increase its cash holdings in response to market conditions or in the event attractive investment opportunities are not available.
Principal Risks
The Fund cannot assure that it will achieve its investment objective.
 
An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
 
The net asset value of the Fund will vary and you could lose money by investing in the Fund. In addition, the Fund is subject to the following risks.
Common Stock Risks.
Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in, and perceptions of, their issuers change. Holders of common stocks are generally subject to greater risk than holders of preferred stocks and debt obligations of the same issuer because common stockholders generally have inferior rights to receive payments from issuers in comparison with the rights of preferred stockholders, bondholders, and other creditors.
Company Size Risks.
Generally, the smaller the market capitalization of a company, the fewer the number of shares traded daily, the less liquid its stock and the more volatile its price. Companies with smaller market capitalizations also tend to have unproven track records, a limited product or service base, and limited access to capital. These factors also increase risks and make these companies more likely to fail than companies with larger market capitalizations.
Style Risks.
Due to their relatively high valuations, growth stocks are typically more volatile than value stocks. Further, growth stocks may not pay dividends or may pay lower dividends than value stocks. This means they depend more on price changes for returns and may be more adversely affected in a down market compared to value stocks that pay higher dividends.
Stock Market Risks.
The Fund is subject to fluctuations in the stock market, which has periods of increasing and decreasing values. Stocks are more volatile than debt securities. The value of equity securities purchased by the Fund may decline if the financial condition of the companies in which the Fund invests declines or if overall market and economic conditions deteriorate. If the value of the Fund’s investments goes down, you may lose money. U.S. and international markets have experienced significant volatility in recent years, which may increase the risks of investing in the securities held by the Fund. Policy changes by the U.S. government and/or Federal Reserve, such as raising interest rates, also could cause increased volatility in financial markets, which could have a negative impact on the Fund. Adverse market events also may lead to increased shareholder redemptions, which could cause the Fund to experience a loss or difficulty in selling investments to meet such redemptions.
Sector Risks.
Companies with similar characteristics, such as those within similar industries, may be grouped together in broad categories called sectors. To the extent the Fund invests its assets in a particular sector, the Fund’s performance may be more susceptible to any economic, business, or other developments that generally affect that sector.
Healthcare Sector Risks.
The profitability of companies in the healthcare sector may be adversely affected by government regulations and government healthcare programs, increases or decreases in the cost of medical products and services and product liability claims, among other factors. Many healthcare companies are heavily dependent on patent protection, and the expiration of a company’s patent may adversely affect that company’s profitability. Healthcare companies are subject to competitive forces that may result in price discounting, and may be thinly capitalized and susceptible to product obsolescence.
Management Risks.
The Adviser’s judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total returns before taxes have varied from year to year, while the table compares the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives.
 
Please keep in mind that past performance, before and after taxes, does not represent how the Fund will perform in the future.
 
Investors
 
EQUITY Funds 29
 
BMO Small-Cap Growth Fund (cont.)
may obtain updated performance information for the Fund at bmofunds.com.
Class I
—
Annual Total Returns
(calendar years 2010-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was (3.62)%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
12/31/2011
19.83%
Worst quarter
9/30/2011
(23.91)%
Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
10 Years
Class I (Inception 1/31/2008)      
Return Before Taxes 23.81% 6.12% 10.92%
Return After Taxes on Distributions 23.31% 4.25% 8.71%
Return After Taxes on Distributions and Sale of Fund Shares 14.43% 4.42% 8.42%
Russell 2000
®
Growth
(reflects no deduction for fees, expenses or taxes)
28.48% 9.34% 13.01%
LSCGI
(reflects deduction of fees and no deduction for sales charges or taxes)
30.65% 10.86% 12.92%
    
 
1 Year
Since
Inception
Class A (Inception 5/31/2017)    
Return Before Taxes 17.35% 7.51%
Russell 2000
®
Growth
(reflects no deduction for fees, expenses or taxes)
28.48% 11.95%
LSCGI
(reflects deduction of fees and no deduction for sales charges or taxes)
30.65% 15.32%
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes.
 
Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.
 
After-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such as IRAs or 401(k) plans.
 
After-tax returns are shown only for Class I and after-tax returns for Class A will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The Russell 2000
®
Growth Index (Russell 2000
®
Growth) measures the performance of those companies included in the Russell 2000
®
Index with higher price-to-book ratios and higher forecasted growth values.
The Lipper Small-Cap Growth Funds Index (LSCGI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
David Corris and Thomas Lettenberger have co-managed the Fund since October 2016 and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Corris, Head of Disciplined Equities and a Managing Director of the Adviser, joined the Adviser in 2008. Mr. Lettenberger, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2005.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class A shares and $1,000,000 for Class I shares. For Class A, the minimum subsequent purchase amount is $50.
Sale of Fund Shares.
You may sell (redeem) your shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
 
30 EQUITY Funds
 
BMO Small-Cap Growth Fund (cont.)
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income or capital gains for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
EQUITY Funds 31
 
BMO Global Low Volatility Equity Fund
Investment Objective:
To provide capital appreciation.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
 
You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Class A shares of certain BMO Funds. More information about these and other discounts and waivers is available from your financial professional and under “How to Buy Shares
–
Purchase of Class A Shares
–
Class A Shares
–
Sales Charge” on page 93 of this Prospectus, under “How to Buy Shares
–
Class A Shares
–
Waivers and Reductions of Sales Charges” beginning on page 94 of this Prospectus, under “Appendix
–
Sales Charge Waivers” on page 128 of this Prospectus, and “How to Buy Shares” beginning on page B-36 of the Fund’s Statement of Additional Information.
Shareholder Fees (fees paid directly from your investment)
Class I
Class A
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None 5.00%
Maximum Deferred Sales Charge (Load) (as a percentage of shares redeemed within 18 months of purchase)
(1)
None 1.00%
Redemption Fee (as a percentage of amount redeemed, for shares held less than 30 days) 2.00% 2.00%
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees
(2)
0.50% 0.50%
Distribution (12b-1) Fees None 0.25%
Other Expenses 0.95% 0.95%
Total Annual Fund Operating Expenses 1.45% 1.70%
Fee Waiver and Expense Reimbursement
(3)
(0.60)% (0.60)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(3)
0.85% 1.10%
(1)
The Maximum Deferred Sales Charge on Class A shares is applied only to purchases of $1,000,000 or more that are redeemed within 18 months of purchase.
(2)
Management Fees have been restated to reflect current fees.
(3)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.85% for Class I and 1.10% for Class A through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the
 
consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class I
Class A
1 Year $
87 		$
607
3 Years $
400 		$
953
5 Years $
735 		$1,323
10 Years $1,684 $2,361
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 49% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests at least 80% of its assets in equity securities of companies located in the countries included, at the time of purchase, in the MSCI All Country World Index, which includes 23 developed and 26 emerging market countries as of October 31, 2020. The Fund normally invests at least 40% of its net assets in securities located outside the United States and is diversified among at least three countries. The Fund may invest in companies across all market capitalizations and may at times focus its investments in one or more sectors.
The Fund invests in stocks that exhibit less volatile stock price patterns when compared to stocks in the MSCI All Country World Index. The Adviser selects low volatility, undervalued stocks using a unique approach which combines the use of proprietary analytical tools and the qualitative judgments of the investment team. The Adviser’s investment process begins by
 
32 International and Global Funds
 
BMO Global Low Volatility Equity Fund (cont.)
using tools to rank stocks based on expected risk and expected return, and construct preliminary portfolios with the use of fundamental factors. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
. All purchases and sales of portfolio securities, however, are subjected ultimately to the investment team’s qualitative judgments developed from their cumulative investment experience. The entire process is designed to focus on stock risk and company fundamentals through both quantitative and qualitative analysis to balance risk management with return generation. This strategy seeks to provide the Fund with lower downside risk and meaningful upside participation relative to the MSCI All Country World Index.
In determining where a company is located, the Adviser relies on the country where the company is incorporated, but also may consider the country where the company’s revenues are derived and the primary market listing for the class of shares to be purchased. Although the Fund invests primarily in companies located in countries included in the MSCI All Country World Index, the Fund may invest up to 20% of its net assets in companies located in countries not represented in this Index.
From time to time, the Fund maintains a portion of its assets in cash. The Fund may increase its cash holdings in response to market conditions or in the event attractive investment opportunities are not available.
Principal Risks
The Fund cannot assure that it will achieve its investment objective.
 
An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
 
The net asset value of the Fund will vary and you could lose money by investing in the Fund. In addition, the Fund is subject to the following risks.
Common Stock Risks.
Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in, and perceptions of, their issuers change. Holders of common stocks are generally subject to greater risk than holders of preferred stocks and debt obligations of the same issuer because common stockholders generally have inferior rights to receive payments from issuers in comparison with the rights of preferred stockholders, bondholders, and other creditors.
Foreign Securities Risks.
Investing in foreign securities may involve additional risks, including currency-rate fluctuations, political and economic instability, differences in financial reporting standards, less-strict regulation of the securities markets, and possible imposition of foreign withholding taxes.
 
Furthermore, the Fund may incur higher costs and expenses when making foreign investments, which will affect the Fund’s total return
.
Emerging Markets Risks.
Investments in emerging market countries can involve risks in addition to, and greater than, those generally associated with investing in more developed foreign markets. Emerging market countries may have less established legal, political, business, and social frameworks to support securities markets; greater sensitivity to interest rate changes; higher currency exchange rate volatility; and greater risks of inflation, deflation or currency devaluation. Securities in emerging markets also may be less liquid than those in developed markets and foreign investors may be limited in their ability to invest in, and withdraw assets from, these markets
.
Currency Risks.
To the extent that the Fund invests directly in foreign (non-U.S.) currencies or in securities denominated in, or that trade in, foreign (non-U.S.) currencies, it is subject to the risk that those currencies will decline in value relative to the U.S. dollar or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the currency being hedged.
Company Size Risks.
Generally, the smaller the market capitalization of a company, the fewer the number of shares traded daily, the less liquid its stock and the more volatile its price. Companies with smaller market capitalizations also tend to have unproven track records, a limited product or service base, and limited access to capital. These factors also increase risks and make these companies more likely to fail than companies with larger market capitalizations.
Style Risks.
Investments in value stocks are subject to the risk that their intrinsic values may never be realized by the market, that a stock judged to be undervalued may actually be appropriately priced, or that their prices may decline, even though in theory they are already undervalued. Value stocks can react differently to issuer, political, market, and economic developments than the market as a whole and other types of stocks (e.g., growth stocks).
Sector Risks.
Companies with similar characteristics, such as those within similar industries, may be grouped together in broad categories called sectors. To the extent the Fund invests its assets in a particular sector, the Fund’s performance may be more susceptible to any economic, business, or other developments that generally affect that sector.
Stock Market Risks.
The Fund is subject to fluctuations in the stock market, which has periods of increasing and decreasing values. Stocks are more volatile than debt securities. The value of equity securities purchased by the Fund may decline if the financial condition of the companies in which the Fund invests declines or if overall market and economic conditions deteriorate. If the value of the Fund’s investments goes down,
 
International and Global Funds 33
 
BMO Global Low Volatility Equity Fund (cont.)
you may lose money. U.S. and international markets have experienced significant volatility in recent years, which may increase the risks of investing in the securities held by the Fund. Policy changes by the U.S. government and/or Federal Reserve, such as raising interest rates, also could cause increased
 
volatility in financial markets, which could have a negative impact on the Fund. Adverse market events also may lead to increased shareholder redemptions, which could cause the Fund to experience a loss or difficulty in selling investments to meet such redemptions.
Management Risks.
The Adviser’s judgments about the attractiveness, value, level of expected volatility, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results. In addition, the Adviser’s strategy may limit the Fund’s gains in rising markets.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total returns before taxes have varied from year to year, while the table compares the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives.
 
Please keep in mind that past performance, before and after taxes, does not represent how the Fund will perform in the future.
 
Investors may obtain updated performance information for the Fund at bmofunds.com.
Class I
—
Annual Total Returns
(calendar years 2014-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was (11.69)%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
3/31/2019
9.17%
Worst quarter
12/31/2018
(6.55)%
 
Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
Since
Inception
Class I (Inception 9/30/2013)      
Return Before Taxes 14.97% 7.20% 8.19%
Return After Taxes on Distributions 13.56% 5.47% 6.72%
Return After Taxes on Distributions and Sale of Fund Shares 9.67% 5.42% 6.30%
MSCI All Country World
(reflects no deduction for fees, expenses or taxes)
26.60% 8.41% 8.59%
LGMCVI
(reflects deduction of fees and no deduction for sales charges or taxes)
19.35% 5.47% 5.80%
    
 
1 Year
5 Years
Since
Inception
Class A (Inception 5/27/2014)      
Return Before Taxes 9.00% 5.86% 5.88%
MSCI All Country World
(reflects no deduction for fees, expenses or taxes)
26.60% 8.41% 7.49%
LGMCVI
(reflects deduction of fees and no deduction for sales charges or taxes)
19.35% 5.47% 4.43%
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes.
 
Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.
 
After-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such as IRAs or 401(k) plans.
 
After-tax returns are shown only for Class I and after-tax returns for Class A will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The MSCI All Country World Index (MSCI All Country World) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed and emerging markets.
The Lipper Global Multi-Cap Value Funds Index (LGMCVI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
Jay Kaufman and David Rosenblatt co-manage the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Kaufman, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2010 and has co-managed the Fund since December 2013. Mr. Rosenblatt, a Director and Portfolio
 
34 International and Global Funds
 
 
BMO
Global Low Volatility Equity Fund (cont.)
Manager of the Adviser, joined the Adviser in 2012 and has co-managed the Fund since December 2016.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class A shares and $1,000,000 for Class I shares. For Class A, the minimum subsequent purchase amount is $50.
Sale of Fund Shares.
You may sell (redeem) your shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income or capital gains for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
International and Global Funds 35
 
BMO Disciplined International Equity Fund
Investment Objective:
To provide capital appreciation.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
 
You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Class A shares of certain BMO Funds. More information about these and other discounts and waivers is available from your financial professional and under “How to Buy Shares
–
Purchase of Class A Shares
–
Class A Shares
–
Sales Charge” on page 93 of this Prospectus, under “How to Buy Shares
–
Class A Shares
–
Waivers and Reductions of Sales Charges” beginning on page 94 of this Prospectus, under “Appendix
–
Sales Charge Waivers” on page 128 of this Prospectus, and “How to Buy Shares” beginning on page B-36 of the Fund’s Statement of Additional Information.
Shareholder Fees (fees paid directly from your investment)
Class I
Class A
Class R6
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None 5.00% None
Maximum Deferred Sales Charge (Load) (as a percentage of shares redeemed within 18 months of purchase)
(1)
None 1.00% None
Redemption Fee (as a percentage of amount redeemed, for shares held less than 30 days) 2.00% 2.00% 2.00%
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees 0.60% 0.60% 0.60%
Distribution (12b-1) Fees None 0.25% None
Other Expenses
(2)
0.58% 0.58% 0.43%
Total Annual Fund Operating Expenses 1.18% 1.43% 1.03%
Fee Waiver and Expense Reimbursement
(3)
(0.28)% (0.28)% (0.28)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(3)
0.90% 1.15% 0.75%
(1)
The Maximum Deferred Sales Charge on Class A shares is applied only to purchases of $1,000,000 or more that are redeemed within 18 months of purchase.
(2)
Other Expenses for the Class R6 shares are based on estimated amounts for the current fiscal year.
(3)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs,
 
and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.90% for Class I, 1.15% for Class A, and 0.75% for Class R6 through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class I
Class A
Class R6
1 Year $
92 		$
611 		$
77
3 Years $
347 		$
904 		$
300
5 Years $
622 		$1,217 $
541
10 Years $1,407 $2,105 $1,234
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 55% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests at least 80% of its assets in equity securities of companies located in countries outside of the United States. The Fund invests primarily in companies that are located in the countries included, at the time of purchase, in the MSCI EAFE Index, which includes developed countries outside of North America. However, the Fund may invest up to 20% of its net assets in companies located in countries not represented in this index, including emerging market countries. Equity securities in which the Fund may invest include common stock, preferred
 
36 International and Global Funds
 
BMO Disciplined International Equity Fund (cont.)
stock, depositary receipts, rights, warrants, and exchange-traded funds (ETFs). The Fund also may invest in convertible securities (fixed income securities convertible into shares of common or preferred stock).
The Fund’s Adviser focuses on companies that it believes are fundamentally strong, have attractive valuations, possess growing investor interest, and may outperform the overall equity market. Using a unique approach which combines the use of proprietary analytical tools and the qualitative judgments of the investment team, the Adviser selects equity securities that it believes will provide higher returns than the MSCI EAFE Index, its benchmark index. As part of this process, the Adviser considers numerous factors including (but not limited to) valuation, earnings quality, earnings growth potential, and earnings and price momentum. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
. The Adviser invests in those securities it believes will provide a better return relative to their risk than other securities. The Adviser may sell a security for numerous reasons, including if a company’s fundamentals deteriorate or the Adviser believes a company’s fundamentals will deteriorate, if another security appears to provide the potential for a better return relative to its risk, if the Adviser believes the security is no longer attractively valued, or if the Adviser believes the security will no longer help the Fund achieve its investment objective. The Adviser also may sell a security to manage the size of a holding or sector weighting or to fund redemptions.
In determining where a company is located, the Adviser primarily relies on the country where the company is incorporated, but also may consider the country where the company’s revenues are derived and the primary market listing for the class of shares to be purchased. The Fund may invest in companies across all market capitalizations and may at times focus its investments in one or more sectors.
From time to time, the Fund maintains a portion of its assets in cash. The Fund may increase its cash holdings in response to market conditions or in the event attractive investment opportunities are not available.
Principal Risks
The Fund cannot assure that it will achieve its investment objective.
 
An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
 
The net asset value of the Fund will vary and you could lose money by investing in the Fund.
 
In addition, the Fund is subject to the following risks.
Common Stock Risks.
Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in, and perceptions of, their issuers change. Holders of common stocks are generally subject to greater risk than holders of preferred stocks and debt obligations of the same issuer because common stockholders generally have inferior rights to receive payments from issuers in comparison with the rights of preferred stockholders, bondholders, and other creditors.
Foreign Securities Risks.
Investing in foreign securities may involve additional risks, including currency-rate fluctuations, political and economic instability, differences in financial reporting standards, less-strict regulation of the securities markets, and possible imposition of foreign withholding taxes. Furthermore, the Fund may incur higher costs and expenses when making foreign investments, which will affect the Fund’s total return.
Emerging Markets Risks.
Investments in emerging market countries can involve risks in addition to, and greater than, those generally associated with investing in more developed foreign markets. Emerging market countries may have less established legal, political, business, and social frameworks to support securities markets; greater sensitivity to interest rate changes; higher currency exchange rate volatility; and greater risks of inflation, deflation or currency devaluation. Securities in emerging markets also may be less liquid than those in developed markets and foreign investors may be limited in their ability to invest in, and withdraw assets from, these markets
.
Geographic Concentration Risks.
To the extent the Fund invests a substantial amount of its assets in securities of issuers located in a single country or geographic region, the Fund’s performance may be more susceptible to any changes to the regulatory, political, social or economic conditions in such country or geographic region.
Currency Risks.
To the extent that the Fund invests directly in foreign (non-U.S.) currencies or in securities denominated in, or that trade in, foreign (non-U.S.) currencies, it is subject to the risk that those currencies will decline in value relative to the U.S. dollar or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the currency being hedged.
Company Size Risks.
Generally, the smaller the market capitalization of a company, the fewer the number of shares traded daily, the less liquid its stock and the more volatile its price. Companies with smaller market capitalizations also tend to have unproven track records, a limited product or service base, and limited access to capital. These factors also increase risks and make these companies more likely to fail than companies with larger market capitalizations.
Sector Risks.
Companies with similar characteristics, such as those within similar industries, may be grouped together in 
 
International and Global Funds 37
 
BMO Disciplined International Equity Fund (cont.)
broad categories called sectors. To the extent the Fund invests its assets in a particular sector, the Fund’s performance may be more susceptible to any economic, business, or other developments that generally affect that sector.
Stock Market Risks.
The Fund is subject to fluctuations in the stock market, which has periods of increasing and decreasing values. Stocks are more volatile than debt securities. The value of equity securities purchased by the Fund may decline if the financial condition of the companies in which the Fund invests declines or if overall market and economic conditions deteriorate. If the value of the Fund’s investments goes down, you may lose money. U.S. and international markets have experienced significant volatility in recent years, which may increase the risks of investing in the securities held by the Fund. Policy changes by the U.S. government and/or Federal Reserve, such as raising interest rates, also could cause increased volatility in financial markets, which could have a negative impact on the Fund. Adverse market events also may lead to increased shareholder redemptions, which could cause the Fund to experience a loss or difficulty in selling investments to meet such redemptions.
Convertible Security Risks.
Convertible securities are fixed income securities that the Fund has the option to exchange for equity securities at a specified conversion price. Consequently, the value of the convertible security may be exposed to the stock market risk of the underlying stock, or may be exposed to the interest rate or credit risk of the issuer. Because both interest rate and market movements can influence its value, a convertible security is usually not as sensitive to interest rate changes as a similar fixed-income security, nor is it as sensitive to changes in share price as its underlying stock. Convertible securities also are subject to credit risks that affect debt securities in general.
Exchange-Traded Funds Risks.
By investing in an ETF, a risk exists that the value of
the
underlying securities of the ETF may decrease. In addition, the market price of ETF shares may trade at a discount to their net asset value or an active trading market for ETF shares may not develop or be maintained. ETFs in which the Fund invests typically will not be able to replicate exactly the performance of the indices they track. The Fund also will
bear
its proportionate share of the ETF’s fees (including management and advisory fees) and expenses.
Management Risks.
The Adviser’s judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total returns before taxes have varied from year to year, while the table compares the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives.
 
​​​​​​​
Please keep in mind that past performance, before and after taxes, does not represent how the Fund will perform in the future.
 
Investors may obtain updated performance information for the Fund at bmofunds.com.
Class I
—
Annual Total Returns
(calendar years 2016-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was (11.03)%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
3/31/2019
11.10%
Worst quarter
12/31/2018
(13.41)%
Average Annual Total Returns
through 12/31/19
(1)
 
1 Year
Since
Inception
Class I (Inception 9/17/2015)    
Return Before Taxes 19.12% 4.30%
Return After Taxes on Distributions 18.21% 3.80%
Return After Taxes on Distributions and Sale of Fund Shares 12.37% 3.43%
Class A (Inception 9/17/2015)    
Return Before Taxes 12.80% 2.78%
EAFE
(reflects no deduction for fees, expenses or taxes)
22.02% 7.22%
LIMCCI
(reflects deduction of fees and no deduction for sales charges or taxes)
21.38% 6.66%
(1)
Because Class R6 shares have not yet commenced operations, no performance data is available. Class R6 shares are expected to have substantially similar annual returns as Class I shares because the shares are invested in the same portfolio of securities. The performance of Class R6 shares is expected to be higher than Class I shares because Class R6 shares have lower Total Annual Fund Operating Expenses.
 
38 International and Global Funds
 
BMO Disciplined International Equity Fund (cont.)
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes.
 
Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.
 
After-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such
 
as IRAs or 401(k) plans.
 
After-tax returns are shown only for Class I and after-tax returns for Class A and Class R6 will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The Morgan Stanley Capital International Europe, Australasia, Far East Index (EAFE) is a free-float adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets, excluding the United States and Canada.
The Lipper International Multi-Cap Core Funds Index (LIMCCI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
Jay Kaufman and David Rosenblatt co-manage the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Kaufman, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2010 and has co-managed the Fund since its inception in 2015. Mr. Rosenblatt, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2012 and has co-managed the Fund since December 2016.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class A shares and $1,000,000 for Class I shares. For Class A, the minimum subsequent purchase amount is $50. Eligible retirement plans, fee-based wrap programs, and other registered investment companies generally may open an account and purchase Class R6 shares by contacting BMO Funds - U.S. Services.
Sale of Fund Shares.
Please contact your plan administrator or recordkeeper in order to sell (redeem) Class R6 shares from your retirement plan.You may sell (redeem) your Class A or Class I shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the
 
dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income or capital gains for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
 
International and Global Funds 39
 
BMO Pyrford International Stock Fund
Investment Objective:
To provide capital appreciation.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
 
You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Class A shares of certain BMO Funds. More information about these and other discounts and waivers is available from your financial professional and under “How to Buy Shares
–
Purchase of Class A Shares
–
Class A Shares
–
Sales Charge” on page 93 of this Prospectus, under “How to Buy Shares
–
Class A Shares
–
Waivers and Reductions of Sales Charges” beginning on page 94 of this Prospectus, under “Appendix
–
Sales Charge Waivers” on page 128 of this Prospectus, and “How to Buy Shares” beginning on page B-36 of the Fund’s Statement of Additional Information.
Shareholder Fees (fees paid directly from your investment)
Class I
Class A
Class R6
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None 5.00% None
Maximum Deferred Sales Charge (Load) (as a percentage of shares redeemed within 18 months of purchase)
(1)
None 1.00% None
Redemption Fee (as a percentage of amount redeemed, for shares held less than 30 days) 2.00% 2.00% 2.00%
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees
(2)
0.73% 0.73% 0.73%
Distribution (12b-1) Fees None 0.25% None
Other Expenses 0.22% 0.22% 0.07%
Total Annual Fund Operating Expenses 0.95% 1.20% 0.80%
Fee Waiver and Expense Reimbursement
(3)
(0.01)% (0.01)% (0.01)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(3)
0.94% 1.19% 0.79%
(1)
The Maximum Deferred Sales Charge on Class A shares is applied only to purchases of $1,000,000 or more that are redeemed within 18 months of purchase.
(2)
The management fee disclosed is a blended fee based on the Fund’s total assets as of August 31, 2020. Under the investment advisory agreement, the Fund pays a management fee of 0.735% on the Fund’s first $500 million of average daily net assets, 0.72% on the next $200 million of average daily net assets, 0.62% on the next $100 million of average daily net assets, and 0.56% on assets in excess of $800 million.
(3)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.94% for Class I, 1.19% for Class A, and 0.79% for Class R6 through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class I
Class A
Class R6
1 Year $
96 		$
615 		$
81
3 Years $
302 		$
861 		$254
5 Years $
525 		$1,126 $443
10 Years $1,165 $1,881 $989
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 28% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests at least 80% of its assets in equity securities of companies located in a number of countries outside the United States. The Fund invests primarily in companies that are located in the countries included, at the time of purchase, in the MSCI EAFE Index, which includes developed countries outside of North America. Although the Fund may invest in companies
 
40 International and Global Funds
 
BMO Pyrford International Stock Fund (cont.)
across all market capitalizations, the Fund invests primarily in companies that, at the time of purchase, have a minimum market capitalization of $2 billion. The Fund may at times focus its investments in one or more sectors.
The Fund’s sub-adviser is Pyrford International Ltd. (Pyrford), an affiliate of the Adviser. Pyrford seeks to minimize losses by adopting a highly defensive investment stance at times of perceived high risk, characterized by high valuation levels or high levels of financial leverage. The Fund does not target a specific volatility level, but aims to deliver volatility significantly below that of the MSCI EAFE Index by being zero weight in any country, sector, or stock that Pyrford believes has very poor value as measured by established fundamental value metrics (such as dividend yields, return on equity, and P/E ratios). Pyrford also integrates environmental, social, and governance (ESG) considerations into its
investment process
.
In determining where a company is located, the sub-adviser primarily relies on the country where the company is incorporated, but also may consider the country where the company’s revenues are derived and the primary market listing for the class of shares to be purchased. Although the Fund invests primarily in companies that are included in the MSCI EAFE Index, the Fund may invest up to 20% of its net assets in companies located in countries not represented in this index, including emerging market countries.
The Fund may invest in forward foreign currency exchange contracts, a type of derivative instrument, for purposes of hedging its exposure to non-U.S. currencies. From time to time, the Fund maintains a portion of its assets in cash. The Fund may increase its cash holdings in response to market conditions or in the event attractive investment opportunities are not available.
Principal Risks
The Fund cannot assure that it will achieve its investment objective.
 
An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
 
The net asset value of the Fund will vary and you could lose money by investing in the Fund. In addition, the Fund is subject to the following risks.
Common Stock Risks.
Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in, and perceptions of, their issuers change. Holders of common stocks are generally subject to greater risk than holders of preferred stocks and debt obligations of the same issuer because common stockholders generally have inferior rights to receive payments from issuers
in comparison with the rights of preferred stockholders, bondholders, and other creditors.
Foreign Securities Risks.
Investing in foreign securities may involve additional risks, including currency-rate fluctuations, political and economic instability, differences in financial reporting standards, less-strict regulation of the securities markets, and possible imposition of foreign withholding taxes. Furthermore, the Fund may incur higher costs and expenses when making foreign investments, which will affect the Fund’s total return.
Emerging Markets Risks.
Investments
in emerging market countries can involve risks in addition to, and greater than, those generally associated with investing in more developed foreign markets. Emerging market countries may have less established legal, political, business, and social frameworks to support securities markets; greater sensitivity to interest rate changes; higher currency exchange rate volatility; and greater risks of inflation, deflation or currency devaluation. Securities in emerging markets also may be less liquid than those in developed markets and foreign investors may be limited in their ability to invest in, and withdraw assets from, these markets
.
Currency Risks.
To the extent that the Fund invests directly in foreign (non-U.S.) currencies or in securities denominated in, or that trade in, foreign (non-U.S.) currencies, it is subject to the risk that those currencies will decline in value relative to the U.S. dollar or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the currency being hedged.
Stock Market Risks.
The Fund is subject to fluctuations in the stock market, which has periods of increasing and decreasing values. Stocks are more volatile than debt securities. The value of equity securities purchased by the Fund may decline if the financial condition of the companies in which the Fund invests declines or if overall market and economic conditions deteriorate. If the value of the Fund’s investments goes down, you may lose money. U.S. and international markets have experienced significant volatility in recent years, which may increase the risks of investing in the securities held by the Fund. Policy changes by the U.S. government and/or Federal Reserve, such as raising interest rates, also could cause increased volatility in financial markets, which could have a negative impact on the Fund. Adverse market events also may lead to increased shareholder redemptions, which could cause the Fund to experience a loss or difficulty in selling investments to meet such redemptions.
Company Size Risks.
Generally, the smaller the market capitalization of a company, the fewer the number of shares traded daily, the less liquid its stock and the more volatile its price. Companies with smaller market capitalizations also tend to have unproven track records, a limited product or service base, and limited access to capital. These factors also increase

 
International and Global Funds 41
 
BMO Pyrford International Stock Fund (cont.)
risks and make these companies more likely to fail than companies with larger market capitalizations.

Sector Risks.
Companies with similar characteristics, such as those within similar industries, may be grouped together in
 
broad categories called sectors. To the extent the Fund invests its assets in a particular sector, the Fund’s performance may be more susceptible to any economic, business, or other developments that generally affect that sector.
Forward Foreign Currency Exchange Contracts Risks.
Forward foreign currency exchange contracts are subject to currency risks. A forward foreign currency exchange contract also may result in losses in the event of a default or bankruptcy of the counterparty. Forward foreign currency exchange contracts may limit potential gain from a positive change in the relationship between the U.S. dollar and foreign currencies.
Management Risks.
Pyrford’s judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total returns before taxes have varied from year to year, while the table compares the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives.
 
Please keep in mind that past performance, before and after taxes, does not represent how the Fund will perform in the future.
 
Investors may obtain updated performance information for the Fund at bmofunds.com.
Class I
—
Annual Total Returns
(calendar years 2012-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was (6.67)%.
During the periods shown in the bar chart for the Fund:

 
Quarter Ended
Returns
Best quarter
3/31/2019
9.42%
Worst quarter
12/31/2018
(9.56)%

Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
Since
Inception
Class I (Inception 12/29/2011)      
Return Before Taxes 21.35% 4.91% 6.89%
Return After Taxes on Distributions 20.65% 4.28% 6.30%
Return After Taxes on Distributions and Sale of Fund Shares 13.24% 3.75% 5.48%
EAFE
(reflects no deduction for fees, expenses or taxes)
22.02% 5.67% 7.66%
LIMCCI
(reflects deduction of fees and no deduction for sales charges or taxes)
21.38% 5.58% 7.67%
    
 
1 Year
5 Years
Since
Inception
Class A (Inception 5/27/2014)      
Return Before Taxes 14.91% 3.57% 2.14%
Class R6 (Inception 5/27/2014)      
Return Before Taxes 21.53% 5.05% 3.50%
EAFE
(reflects no deduction for fees, expenses or taxes)
22.02% 5.67% 3.43%
LIMCCI
(reflects deduction of fees and no deduction for sales charges or taxes)
21.38% 5.58% 3.44%
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes.
 
Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.
 
After-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such as IRAs or 401(k) plans.
 
After-tax returns are shown only for Class I and after-tax returns for Class A and Class R6 will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The Morgan Stanley Capital International Europe, Australasia, Far East Index (EAFE) is a free-float adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets, excluding the United States and Canada.
The Lipper International Multi-Cap Core Funds Index (LIMCCI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
 
42 International and Global Funds
 
BMO Pyrford International Stock Fund (cont.)
Sub-Adviser.
Pyrford International Ltd., an affiliate of the Adviser.
Portfolio Managers.
Tony Cousins, Daniel McDonagh, and Paul Simons have co-managed the Fund since its inception in 2011 and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Cousins, Chief Executive Officer and Chief Investment Officer, joined Pyrford in 1989. Mr. McDonagh, Head of Portfolio Management, Europe & UK, joined Pyrford in 1997. Mr. Simons, Head of Portfolio Management, Asia-Pacific, joined Pyrford in 1996.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class A shares and $1,000,000 for Class I shares. For Class A, the minimum subsequent purchase amount is $50. Eligible retirement plans, fee-based wrap programs, and other registered investment companies generally may open an account and purchase Class R6 shares by contacting BMO Funds - U.S. Services.
Sale of Fund Shares.
Please contact your plan administrator or recordkeeper in order to sell (redeem) Class R6 shares from your retirement plan.You may sell (redeem) your Class A or Class I shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income or capital gains for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of
 
shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
 
International and Global Funds 43
 
BMO LGM Emerging Markets Equity Fund
Investment Objective:
To provide capital appreciation.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
 
You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Class A shares of certain BMO Funds. More information about these and other discounts and waivers is available from your financial professional and under “How to Buy Shares
–
Purchase of Class A Shares
–
Class A Shares
–
Sales Charge” on page 93 of this Prospectus, under “How to Buy Shares
–
Class A Shares
–
Waivers and Reductions of Sales Charges” beginning on page 94 of this Prospectus, under “Appendix
–
Sales Charge Waivers” on page 128 of this Prospectus, and “How to Buy Shares” beginning on page B-36 of the Fund’s Statement of Additional Information.
Shareholder Fees (fees paid directly from your investment)
Class I
Class A
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None 5.00%
Maximum Deferred Sales Charge (Load) (as a percentage of shares redeemed within 18 months of purchase)
(1)
None 1.00%
Redemption Fee (as a percentage of amount redeemed, for shares held less than 30 days) 2.00% 2.00%
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees 0.90% 0.90%
Distribution (12b-1) Fees None 0.25%
Other Expenses
(2)
0.36% 0.36%
Total Annual Fund Operating Expenses 1.26% 1.51%
Fee Waiver and Expense Reimbursement
(3)
(0.11)% (0.11)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(3)
1.15% 1.40%
(1)
The Maximum Deferred Sales Charge on Class A shares is applied only to purchases of $1,000,000 or more that are redeemed within 18 months of purchase.
(2)
Other Expenses have been restated to reflect current fees.
(3)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 1.15% for Class I and 1.40% for Class A through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the
 
consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class I
Class A
1 Year $
117 		$
635
3 Years $
389 		$
943
5 Years $
681 		$1,273
10 Years $1,513 $2,203
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 45% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests at least 80% of its assets in equity securities of foreign companies located in emerging markets or whose primary business activities or principal trading markets are in emerging markets. The Fund may invest in equity securities of any market capitalization and may at times focus its investments in one or more sectors. The Fund’s sub-adviser, LGM Investments Limited (LGM Investments), an affiliate of the Adviser, considers emerging markets to be those markets in any country other than Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Israel, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom, and the United States. LGM Investments may make adjustments to the list of emerging markets countries from time to time based on economic criteria, market changes, or other factors.
 
44 International and Global Funds
 
BMO LGM Emerging Markets Equity Fund (cont.)
LGM Investments uses a “bottom-up,” fundamental approach to identify quality, growth companies typically with dominant industry positions, strong balance sheets, and cash flows to support a sustainable dividend payout. LGM also integrates environmental, social, and governance (ESG) considerations into its
investment process
.
From time to time, the Fund maintains a portion of its assets in cash. The Fund may increase its cash holdings in response to market conditions or in the event attractive investment opportunities are not available.
Principal Risks
The Fund cannot assure that it will achieve its investment objective.
 
An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
 
The net asset value of the Fund will vary and you could lose money by investing in the Fund. In addition, the Fund is subject to the following risks.
Common Stock Risks.
Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in, and perceptions of, their issuers change. Holders of common stocks are generally subject to greater risk than holders of preferred stocks and debt obligations of the same issuer because common stockholders generally have inferior rights to receive payments from issuers in comparison with the rights of preferred stockholders, bondholders, and other creditors.
Emerging Markets Risks.
Investments
in emerging market countries can involve risks in addition to, and greater than, those generally associated with investing in more developed foreign markets. Emerging market countries may have less established legal, political, business, and social frameworks to support securities markets; greater sensitivity to interest rate changes; higher currency exchange rate volatility; and greater risks of inflation, deflation or currency devaluation. Securities in emerging markets also may be less liquid than those in developed markets and foreign investors may be limited in their ability to invest in, and withdraw assets from, these markets
.
Foreign Securities Risks.
Investing in foreign securities may involve additional risks, including currency-rate fluctuations, political and economic instability, differences in financial reporting standards, less-strict regulation of the securities markets, and possible imposition of foreign withholding taxes. Furthermore, the Fund may incur higher costs and expenses when making foreign investments, which will affect the Fund’s total return.
Geographic Concentration Risks.
To the extent the Fund invests a substantial amount of its assets in securities of issuers located in a single country or geographic region, the Fund’s performance may be more susceptible to any changes to the regulatory, political, social or economic conditions in such country or geographic region.
Currency Risks.
To the extent that the Fund invests directly in foreign (non-U.S.) currencies or in securities denominated in, or that trade in, foreign (non-U.S.) currencies, it is subject to the risk that those currencies will decline in value relative to the U.S. dollar or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the currency being hedged.
Company Size Risks.
Generally, the smaller the market capitalization of a company, the fewer the number of shares traded daily, the less liquid its stock and the more volatile its price. Companies with smaller market capitalizations also tend to have unproven track records, a limited product or service base, and limited access to capital. These factors also increase risks and make these companies more likely to fail than companies with larger market capitalizations.
Sector Risks.
Companies with similar characteristics, such as those within similar industries, may be grouped together in broad categories called sectors. To the extent the Fund invests its assets in a particular sector, the Fund’s performance may be more susceptible to any economic, business, or other developments that generally affect that sector.
Consumer Staples Sector Risks.
Companies in the consumer staples sector may be adversely affected by changes in consumer spending, competition, demographics and consumer preferences. Companies in this sector are also affected by changes in government regulation, world events and economic conditions. This sector can also be significantly affected by, among other things, changes in price and availability of underlying commodities, rising energy prices and global and economic conditions. Certain companies in the consumer staples sector are subject to government regulation affecting the permissibility of using various food additives and production methods, which regulations could affect company profitability. Also, the success of food and soft drink may be strongly affected by fads, marketing campaigns and other factors affecting supply and demand.
Financial Services Sector Risks.
Financial services companies may be adversely affected by changes in regulatory framework or interest rates that may negatively affect financial services businesses; exposure of a financial institution to a non-diversified or concentrated loan portfolio; exposure to financial leverage and/or investments or agreements that, under certain circumstances, may lead to losses; and the risk that a market shock or other unexpected market, economic, political,
 
International and Global Funds 45
 
BMO LGM Emerging Markets Equity Fund (cont.)
regulatory, or other event might lead to a sudden decline in the values of most or all financial services companies.

Stock Market Risks.
The Fund is subject to fluctuations in the stock market, which has periods of increasing and decreasing values. Stocks are more volatile than debt securities. The value of equity securities purchased by the Fund may decline if the
 
financial condition of the companies in which the Fund invests declines or if overall market and economic conditions deteriorate. If the value of the Fund’s investments goes down, you may lose money. U.S. and international markets have experienced significant volatility in recent years, which may increase the risks of investing in the securities held by the Fund. Policy changes by the U.S. government and/or Federal Reserve, such as raising interest rates, also could cause increased volatility in financial markets, which could have a negative impact on the Fund. Adverse market events also may lead to increased shareholder redemptions, which could cause the Fund to experience a loss or difficulty in selling investments to meet such redemptions.
Management Risks.
LGM Investments' judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total returns before taxes have varied from year to year, while the table compares the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives.
 
Please keep in mind that past performance, before and after taxes, does not represent how the Fund will perform in the future.
 
Investors may obtain updated performance information for the Fund at bmofunds.com. LGM Investments assumed its role as sub-adviser of the Fund effective December 28, 2012. From December 29, 2011 to December 28, 2012, Lloyd George Management (Hong Kong) Limited (LGM(HK)), another affiliate of the Adviser, served as the Fund’s sub-adviser. Prior to December 29, 2011, the Fund was known as the Marshall Emerging Markets Equity Fund and was managed by another sub-adviser. The performance results shown in the bar chart and table are from periods during which the Fund was managed by LGM Investments, LGM(HK), or another sub-adviser.
Class I
—
Annual Total Returns
(calendar years 2010-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was (3.71)%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
9/30/2010
22.15%
Worst quarter
9/30/2011
(23.74)%
Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
10 Years
Class I (Inception 12/22/2008)      
Return Before Taxes 12.17% 5.12% 3.34%
Return After Taxes on Distributions 11.66% 4.71% 2.81%
Return After Taxes on Distributions and Sale of Fund Shares 7.67% 4.02% 2.83%
EMI
(reflects no deduction for fees, expenses or taxes)
18.44% 5.61% 3.68%
LEMI
(reflects deduction of fees and no deduction for sales charges or taxes)
21.13% 5.91% 4.19%
    
 
1 Year
5 Years
Since
Inception
Class A (Inception 5/27/2014)      
Return Before Taxes 6.30% 3.77% 3.20%
EMI
(reflects no deduction for fees, expenses or taxes)
18.44% 5.61% 4.68%
LEMI
(reflects deduction of fees and no deduction for sales charges or taxes)
21.13% 5.91% 4.01%
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes.
 
Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.
 
After-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such as IRAs or 401(k) plans.
 
After-tax returns are shown only for Class I and after-tax returns for Class A will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is
 
46 International and Global Funds
 
BMO LGM Emerging Markets Equity Fund (cont.)
realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The Morgan Stanley Capital International Emerging Markets Index (EMI) is a market capitalization-weighted equity index of companies representative of the market structure of emerging countries in Europe, Latin America, Africa, the Middle East, and Asia.
The Lipper Emerging Markets Funds Index (LEMI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Sub-Adviser.
LGM Investments Limited, an affiliate of the Adviser.
Portfolio Managers.
Irina Hunter and Rishikesh Patel co-manage the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Ms. Hunter, a Portfolio Manager at LGM Investments, joined Lloyd George Management (together with LGM Investments and its subsidiaries, “LGM”) in 2007 and has co-managed the Fund since December 2011. Mr. Patel, a Portfolio Manager at LGM Investments, joined LGM in 2006 and has co-managed the Fund since March 2016.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class A shares and $1,000,000 for Class I shares. For Class A, the minimum subsequent purchase amount is $50.
Sale of Fund Shares.
You may sell (redeem) your shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income or capital gains for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
 
International and Global Funds 47
 
BMO Ultra Short Tax-Free Fund
Investment Objective:
To provide current income exempt from federal income tax consistent with preservation of capital.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
 
You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Class A shares of certain BMO Funds. More information about these and other discounts and waivers is available from your financial professional and under “How to Buy Shares
–
Purchase of Class A Shares
–
Class A Shares
–
Sales Charge” on page 93 of this Prospectus, under “How to Buy Shares
–
Class A Shares
–
Waivers and Reductions of Sales Charges” beginning on page 94 of this Prospectus, under “Appendix
–
Sales Charge Waivers” on page 128 of this Prospectus, and “How to Buy Shares” beginning on page B-36 of the Fund’s Statement of Additional Information.
Shareholder Fees (fees paid directly from your investment)
Class I
Class A
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None 2.00%
Maximum Deferred Sales Charge (Load) None None
Redemption Fee None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees
(1)
0.17% 0.17%
Distribution (12b-1) Fees None 0.25%
Other Expenses 0.21% 0.21%
Total Annual Fund Operating Expenses 0.38% 0.63%
Fee Waiver and Expense Reimbursement
(2)
(0.08)% (0.08)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(2)
0.30% 0.55%
(1)
The management fee disclosed is a blended fee based on the Fund’s total assets as of August 31, 2020. Under the investment advisory agreement, the Fund pays a management fee of 0.20% on the Fund’s first $100 million of average daily net assets, 0.19% on the next $150 million of average daily net assets, 0.17% on the next $250 million of average daily net assets, and 0.10% on assets in excess of $500 million.
(2)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.30% for Class I and 0.55% for Class A through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the
 
consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class I
Class A
1 Year $
31 		$255
3 Years $114 $390
5 Years $205 $536
10 Years $473 $963
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 267% of the average value of its portfolio.
Principal Investment Strategies
Under normal circumstances, the Fund invests at least 80% of its assets in municipal securities, the income from which is exempt from federal income tax (including the federal alternative minimum tax (AMT)). The Fund normally maintains an average dollar-weighted effective maturity of one year or less. Effective maturity takes into account the possibility that a bond may have prepayments or may be called by the issuer before its stated maturity date.
The Fund invests primarily in municipal securities within the investment grade category (i.e., rated BBB by Standard & Poor’s or Baa by Moody’s Investors Service, or higher, or unrated and considered by the Adviser to be comparable in quality) at the time of purchase. The Fund also may invest up to 10% of its assets in municipal securities that are below investment grade, also known as high yield securities or “junk bonds.” Municipal
 
48 Fixed Income Funds
 
BMO Ultra Short Tax-Free Fund (cont.)
securities include fixed and floating rate debt obligations of states, territories, and possessions of the U.S., and political subdivisions and financing authorities of these entities that provide income exempt from federal income tax (although not necessarily exempt from federal AMT). Fund investments are selected after assessing factors such as the cyclical trend in interest rates, the shape of the municipal yield curve, tax rates, sector valuation, and municipal bond supply factors. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
.
From time to time, the Fund maintains a portion of its assets in cash. The Fund may increase its cash holdings in response to market conditions or in the event attractive investment opportunities are not available.
Principal Risks
The Fund cannot assure that it will achieve its investment objective.
 
An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
 
The net asset value of the Fund will vary and you could lose money by investing in the Fund. In addition, the Fund is subject to the following risks.
Municipal Securities Risks.
Municipal bonds are subject to risks based on many factors, including economic and regulatory developments, changes or proposed changes in the federal and state tax structure, deregulation, court rulings, and other factors. The value of municipal securities may be affected more by supply and demand factors or the creditworthiness of the issuer than by market interest rates. Repayment of municipal securities depends on the ability of the issuer or project backing such securities to generate taxes or revenues. There is a risk that interest may be taxable on a municipal security that is otherwise expected to produce tax-exempt interest.
Sector Risks.
The Fund may invest its assets in municipal securities that finance similar projects, such as those relating to education, health care, transportation, and utilities. To the extent the Fund invests its assets in a particular sector, the Fund’s performance may be more susceptible to any economic, business, or other developments that generally affect that sector.
Income Risks.
The Fund’s income could decline due to falling market interest rates. In a falling interest rate environment, the Fund may be required to invest its assets in lower-yielding securities.
Interest Rate Risks.
Prices of fixed income securities rise and fall in response to changes in the interest rate paid by similar
 
securities. Generally, when interest rates rise, prices of fixed
income securities fall. Interest rate changes have a greater effect on the price of fixed income securities with longer maturities. Interest rate changes also are influenced by a number of factors including government or central bank policy, inflation expectations, and supply and demand.
Credit Risks.
Credit risk is the possibility that an issuer or counterparty will default on a security or repurchase agreement by failing to pay interest or principal when due. If an issuer defaults, the Fund may lose money. Lower credit ratings correspond to higher credit risk. Bonds rated lower than BBB or Baa have speculative characteristics.
Call Risks.
If the securities in which the Fund invests are redeemed by the issuer before maturity (or “called”), the Fund may have to reinvest the proceeds in securities that pay a lower interest rate, which may decrease the Fund’s yield. This will most likely happen when interest rates are declining.
High Yield Securities Risks.
High yield securities, also referred to as “junk bonds” or non-investment grade securities, are debt securities rated lower than BBB by Standard & Poor’s or Baa by Moody’s Investors Service. These securities tend to be more sensitive to economic conditions than are higher-rated securities, generally involve more credit risk than securities in the higher-rated categories, and are predominantly considered to be speculative. The issuers of high yield securities are typically more leveraged and the risk of loss due to default by an issuer of high yield securities is significantly greater than issuers of higher-rated securities because such securities are generally unsecured and are often subordinated to other creditors. The Fund may have difficulty disposing of certain high yield securities because a thin trading market for such securities may exist.
Liquidity Risks.
Liquidity risk refers to the possibility that the trading market for a particular type of security becomes less liquid or the Fund may not be able to sell or buy a security or close out an investment contract at a favorable price or time. The market for lower-quality debt instruments, including junk bonds, is generally less liquid than the market for higher-quality debt instruments. Consequently, the Fund may have to accept a lower price to sell a security, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative effect on the Fund’s performance. Infrequent trading of securities also may lead to an increase in their price volatility. Illiquidity may result from political, economic, or issuer specific events or overall market disruptions.
Portfolio Turnover Risks.
A high portfolio turnover rate (100% or more) may result in the realization and distribution to shareholders of a greater amount of capital gains than if the Fund had a low portfolio turnover rate. A higher tax liability
 
may result. High portfolio turnover also may result in higher
 
Fixed Income Funds 49
 
BMO Ultra Short Tax-Free Fund (cont.)
transaction costs, which may negatively affect Fund performance.
Management Risks.
The Adviser’s judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total returns before taxes have varied from year to year, while the table compares the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives.
 
Please keep in mind that past performance, before and after taxes, does not represent how the Fund will perform in the future.
 
Investors may obtain updated performance information for the Fund at bmofunds.com.
Class I
—
Annual Total Returns
(calendar years 2010-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was 0.87%.
During the periods shown in the bar chart for the Fund:

 
Quarter Ended
Returns
Best quarter
9/30/2010
0.60%
Worst quarter
6/30/2013
(0.06)%

Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
10 Years
Class I (Inception 9/30/2009)      
Return Before Taxes 1.83% 1.11% 1.24%
Return After Taxes on Distributions 1.83% 1.10% 1.23%
Return After Taxes on Distributions and Sale of Fund Shares 1.75% 1.10% 1.22%
Blended Benchmark
(reflects no deduction for fees, expenses or taxes)
(1)
1.76% 0.86% 0.68%
LSMDI
(reflects deduction of fees and no deduction for sales charges or taxes)
2.58% 1.16% 1.25%
    
 
1 Year
5 Years
Since
Inception
Class A (Inception 5/27/2014)      
Return Before Taxes -0.50% 0.44% 0.46%
Blended Benchmark
(reflects no deduction for fees, expenses or taxes)
(1)
1.76% 0.86% 0.78%
LSMDI
(reflects deduction of fees and no deduction for sales charges or taxes)
2.58% 1.16% 1.09%
(1)
The benchmark for the Fund is a blended benchmark, which consists of 50% Bloomberg Barclays 1 Year Municipal Bond Index and 50% iMoneyNet, Inc. Money Market Fund Tax-Free National Retail Index.
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes.
 
Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.
 
After-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such as IRAs or 401(k) plans.
 
After-tax returns are shown only for Class I and after-tax returns for Class A will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The Bloomberg Barclays 1 Year Municipal Bond Index is the 1-year component of the Bloomberg Barclays Capital Municipal Bond Index, which is an unmanaged index composed of long-term tax-exempt bonds with a minimum credit rating of Baa.
The iMoneyNet, Inc. Money Market Fund Tax-Free National Retail Index is an average of money funds with investment objectives similar to that of the Fund.
The Lipper Short Municipal Debt Funds Index (LSMDI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
Robert Wimmel, Thomas Byron, and Brian Sipich are co-portfolio managers of the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Wimmel, Head of Tax Exempt Fixed Income and a Managing Director of the Adviser, joined the Adviser in 2015 and has co-managed the Fund since August 2015. Mr. Byron, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2015 and has co-managed the Fund since October 2015. Mr. Sipich, a Vice President and Portfolio
 Manager of the Adviser, joined the Adviser in 2015 and has co-managed the Fund since October 2016.
 
50 Fixed Income Funds
 
BMO Ultra Short Tax-Free Fund (cont.)
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class A shares and $1,000,000 for Class I shares. For Class A, the minimum subsequent purchase amount is $50.
Sale of Fund Shares.
You may sell (redeem) your shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that are primarily exempt from federal income tax; however, a portion of the Fund’s distributions may be subject to federal income tax.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
Fixed Income Funds 51
 
BMO Short Tax-Free Fund
Investment Objective:
To provide current income exempt from federal income tax consistent with preservation of capital.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
 
You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Class A shares of certain BMO Funds. More information about these and other discounts and waivers is available from your financial professional and under “How to Buy Shares
–
Purchase of Class A Shares
–
Class A Shares
–
Sales Charge” on page 93 of this Prospectus, under “How to Buy Shares
–
Class A Shares
–
Waivers and Reductions of Sales Charges” beginning on page 94 of this Prospectus, under “Appendix
–
Sales Charge Waivers” on page 128 of this Prospectus, and “How to Buy Shares” beginning on page B-36 of the Fund’s Statement of Additional Information.
Shareholder Fees (fees paid directly from your investment)
Class I
Class A
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None 2.00%
Maximum Deferred Sales Charge (Load) None None
Redemption Fee None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees 0.20% 0.20%
Distribution (12b-1) Fees None 0.25%
Other Expenses 0.29% 0.29%
Total Annual Fund Operating Expenses 0.49% 0.74%
Fee Waiver and Expense Reimbursement
(1)
(0.09)% (0.19)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(1)
0.40% 0.55%
(1)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.40% for Class I and 0.55% for Class A through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class I
Class A
1 Year $
41 		$
255
3 Years $148 $
413
5 Years $265 $
585
10 Years $607 $1,083
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 62% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests at least 80% of its assets in municipal securities, the income from which is exempt from federal income tax (including the federal alternative minimum tax (AMT)). The Fund normally maintains an average dollar-weighted effective maturity of one to three years. Effective maturity takes into account the possibility that a bond may have prepayments or may be called by the issuer before its stated maturity date.
Fund investments include municipal securities with a minimum rating in the lowest investment grade category (i.e., rated BBB by Standard & Poor’s or Baa by Moody’s Investors Service, or higher, or unrated and considered by the Adviser to be comparable in quality) at the time of purchase. The Fund also may invest up to 10% of its assets in municipal securities that are below investment grade, also known as high yield securities or “junk bonds.” Municipal securities include debt obligations of states, territories, and possessions of the U.S., and political
 
52 Fixed Income Funds
 
 
BMO
Short Tax-Free Fund (cont.)
subdivisions and financing authorities of these entities that provide income exempt from federal income tax (although not necessarily exempt from federal AMT). The Adviser selects Fund investments after assessing factors such as the cyclical trend in interest rates, the shape of the municipal yield curve, tax rates, sector valuation, and municipal bond supply factors. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
.
From time to time, the Fund maintains a portion of its assets in cash. The Fund may increase its cash holdings in response to market conditions or in the event attractive investment opportunities are not available.
Principal Risks
The Fund cannot assure that it will achieve its investment objective.
 
An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
 
The net asset value of the Fund will vary and you could lose money by investing in the Fund. In addition, the Fund is subject to the following risks.
Municipal Securities Risks.
Municipal bonds are subject to risks based on many factors, including economic and regulatory developments, changes or proposed changes in the federal and state tax structure, deregulation, court rulings, and other factors. The value of municipal securities may be affected more by supply and demand factors or the creditworthiness of the issuer than by market interest rates. Repayment of municipal securities depends on the ability of the issuer or project backing such securities to generate taxes or revenues. There is a risk that interest may be taxable on a municipal security that is otherwise expected to produce tax-exempt interest.
Sector Risks.
The Fund may invest its assets in municipal securities that finance similar projects, such as those relating to education, health care, transportation, and utilities. To the extent the Fund invests its assets in a particular sector, the Fund’s performance may be more susceptible to any economic, business, or other developments that generally affect that sector.
Healthcare Sector Risks.
The profitability of companies in the healthcare sector may be adversely affected by government regulations and government healthcare programs, increases or decreases in the cost of medical products and services and product liability claims, among other factors. Many healthcare companies are heavily dependent on patent protection, and the expiration of a company’s patent may adversely affect that company’s profitability. Healthcare companies are subject to competitive forces that may result in price discounting, and
may be thinly capitalized and susceptible to product obsolescence.
Income Risks.
The Fund’s income could decline due to falling market interest rates. In a falling interest rate environment, the Fund may be required to invest its assets in lower-yielding securities.
Interest Rate Risks.
Prices of fixed income securities rise and fall in response to changes in the interest rate paid by similar securities. Generally, when interest rates rise, prices of fixed income securities fall. Interest rate changes have a greater effect on the price of fixed income securities with longer maturities. Interest rate changes also are influenced by a number of factors including government or central bank policy, inflation expectations, and supply and demand.
Credit Risks.
Credit risk is the possibility that an issuer or counterparty will default on a security or repurchase agreement by failing to pay interest or principal when due. If an issuer defaults, the Fund may lose money. Lower credit ratings correspond to higher credit risk. Bonds rated lower than BBB or Baa have speculative characteristics.
Call Risks.
If the securities in which the Fund invests are redeemed by the issuer before maturity (or “called”), the Fund may have to reinvest the proceeds in securities that pay a lower interest rate, which may decrease the Fund’s yield. This will most likely happen when interest rates are declining.
High Yield Securities Risks.
High yield securities, also referred to as “junk bonds” or non-investment grade securities, are debt securities rated lower than BBB by Standard & Poor’s or Baa by Moody’s Investors Service. These securities tend to be more sensitive to economic conditions than are higher-rated securities, generally involve more credit risk than securities in the higher-rated categories, and are predominantly considered to be speculative. The issuers of high yield securities are typically more leveraged and the risk of loss due to default by an issuer of high yield securities is significantly greater than issuers of higher-rated securities because such securities are generally unsecured and are often subordinated to other creditors. The Fund may have difficulty disposing of certain high yield securities because a thin trading market for such securities may exist.
Liquidity Risks.
Liquidity risk refers to the possibility that the trading market for a particular type of security becomes less liquid or the Fund may not be able to sell or buy a security or close out an investment contract at a favorable price or time. The market for lower-quality debt instruments, including junk bonds, is generally less liquid than the market for higher-quality debt instruments. Consequently, the Fund may have to accept a lower price to sell a security, sell other securities to raise cash, or give up an investment opportunity, any of which could have
 
Fixed Income Funds 53
 
BMO Short Tax-Free Fund (cont.)
a negative effect on the Fund’s performance. Infrequent trading of securities also may lead to an increase in their price volatility. Illiquidity may result from political, economic, or issuer specific events or overall market disruptions.
Management Risks.
The Adviser’s judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total returns before taxes have varied from year to year, while the table compares the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives.
 
Please keep in mind that past performance, before and after taxes, does not represent how the Fund will perform in the future.
 
Investors may obtain updated performance information for the Fund at bmofunds.com.
Class I
—
Annual Total Returns
(calendar years 2013-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was 1.70%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
3/31/2017
1.05%
Worst quarter
12/31/2016
(1.11)%
Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
Since
Inception
Class I (Inception 11/29/2012)      
Return Before Taxes 3.08% 1.62% 1.88%
Return After Taxes on Distributions 3.08% 1.60% 1.86%
Return After Taxes on Distributions and Sale of Fund Shares 2.59% 1.58% 1.77%
 
1 Year
5 Years
Since
Inception
BBSMI
(reflects no deduction for fees, expenses or taxes)
3.66% 1.66% 1.49%
LSMDI
(reflects deduction of fees and no deduction for sales charges or taxes)
2.58% 1.16% 1.00%
    
 
1 Year
5 Years
Since
Inception
Class A (Inception 5/27/2014)      
Return Before Taxes 0.93% 1.08% 1.18%
BBSMI
(reflects no deduction for fees, expenses or taxes)
3.66% 1.66% 1.55%
LSMDI
(reflects deduction of fees and no deduction for sales charges or taxes)
2.58% 1.16% 1.09%
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes.
 
Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.
 
After-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such as IRAs or 401(k) plans.
 
After-tax returns are shown only for Class I and after-tax returns for Class A will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The Bloomberg Barclays Short (1
–
5 Year) Municipal Index (BBSMI) includes investment-grade tax-exempt bonds that are issued by state and local governments and have maturities of 1 to 5 years.
The Lipper Short Municipal Debt Funds Index (LSMDI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
Robert Wimmel, Thomas Byron, and Brian Sipich are co-portfolio managers of the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Wimmel, Head of Tax Exempt Fixed Income and a Managing Director of the Adviser, joined the Adviser in 2015 and has co-managed the Fund since August 2015. Mr. Byron, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2015 and has co-managed the Fund since October 2015. Mr. Sipich, a Vice President and Portfolio Manager of the Adviser, joined the Adviser in 2015 and has co-managed the Fund since October 2016.
 
54 Fixed Income Funds
 
BMO Short Tax-Free Fund (cont.)
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class A shares and $1,000,000 for Class I shares. For Class A, the minimum subsequent purchase amount is $50.
Sale of Fund Shares.
You may sell (redeem) your shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that are primarily exempt from federal income tax; however, a portion of the Fund’s distributions may be subject to federal income tax.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
Fixed Income Funds 55
 
BMO Short-Term Income Fund
Investment Objective:
To maximize total return consistent with current income.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Class A shares of certain BMO Funds. More information about these and other discounts and waivers is available from your financial professional and under “How to Buy Shares
–
Purchase of Class A Shares
–
Class A Shares
–
Sales Charge” on page 93 of this Prospectus, under “How to Buy Shares
–
Class A Shares
–
Waivers and Reductions of Sales Charges” beginning on page 94 of this Prospectus, under “Appendix
–
Sales Charge Waivers” on page 128 of this Prospectus, and “How to Buy Shares” beginning on page B-36 of the Fund’s Statement of Additional Information.
Shareholder Fees (fees paid directly from your investment)
Class I
Class A
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None 2.00%
Maximum Deferred Sales Charge (Load) None None
Redemption Fee None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees
(1)
0.19% 0.19%
Distribution (12b-1) Fees None 0.25%
Other Expenses 0.26% 0.26%
Total Annual Fund Operating Expenses 0.45% 0.70%
Fee Waiver and Expense Reimbursement
(2)
(0.10)% (0.10)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(2)
0.35% 0.60%
(1)
The management fee disclosed is a blended fee based on the Fund’s total assets as of August 31, 2020. Under the investment advisory agreement, the Fund pays a management fee of 0.20% on the Fund’s first $100 million of average daily net assets, 0.19% on the next $150 million of average daily net assets, 0.17% on the next $250 million of average daily net assets, and 0.10% on assets in excess of $500 million.
(2)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.35% for Class I and 0.60% for Class A through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the
 
consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class I
Class A
1 Year $
36 		$
260
3 Years $134 $
410
5 Years $242 $
572
10 Years $557 $1,044
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 48% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests at least 80% of its assets in fixed income securities. Fund investments include corporate, asset-backed, and mortgage-backed securities with a minimum rating in the lowest investment grade category (i.e., rated BBB by Standard & Poor’s or Baa by Moody’s Investors Service, or higher, or unrated and considered by the Adviser to be comparable in quality) at the time of purchase and bank instruments, repurchase agreements, and U.S. government securities. The Adviser changes the Fund’s weightings in these fixed income asset classes as it deems appropriate and uses macroeconomic, credit, and market analysis to select portfolio securities. The Adviser also integrates environmental, social, and governance (ESG) considerations into its investment process. The Fund normally maintains an average dollar-weighted effective maturity of six months to three years. Effective maturity takes
 
56 Fixed Income Funds
 
BMO Short-Term Income Fund (cont.)
into account the possibility that a bond may have prepayments or may be called by the issuer before its stated maturity date.
From time to time, the Fund maintains a portion of its assets in cash. The Fund may increase its cash holdings in response to market conditions or in the event attractive investment opportunities are not available.
Principal Risks
The Fund cannot assure that it will achieve its investment objective. An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency. The net asset value of the Fund will vary and you could lose money by investing in the Fund. In addition, the Fund is subject to the following risks.
Corporate Debt Securities Risks.
Corporate debt securities are fixed income securities issued by businesses. The market value of corporate debt may be affected by changes in the market rate of interest, the credit rating of the corporation, the corporation’s performance, and perceptions of the corporation in the market place. Corporate issuers may not be able to meet their obligations on interest or principal payments at the time called for by an instrument.
Income Risks.
The Fund’s income could decline due to falling market interest rates. In a falling interest rate environment, the Fund may be required to invest its assets in lower-yielding securities.
Interest Rate Risks.
Prices of fixed income securities rise and fall in response to changes in the interest rate paid by similar securities. Generally, when interest rates rise, prices of fixed income securities fall. Interest rate changes have a greater effect on the price of fixed income securities with longer maturities. Interest rate changes also are influenced by a number of factors including government or central bank policy, inflation expectations, and supply and demand.
Credit Risks.
Credit risk is the possibility that an issuer or counterparty will default on a security or repurchase agreement by failing to pay interest or principal when due. If an issuer defaults, the Fund may lose money. Lower credit ratings correspond to higher credit risk. Bonds rated lower than BBB or Baa have speculative characteristics.
Call Risks.
If the securities in which the Fund invests are redeemed by the issuer before maturity (or “called”), the Fund may have to reinvest the proceeds in securities that pay a lower interest rate, which may decrease the Fund’s yield. This will most likely happen when interest rates are declining.
Asset-Backed/Mortgage-Backed Securities Risks.
Asset-backed and mortgage-backed securities are subject to risks of prepayment. The Fund’s yield will be reduced if cash from
prepaid securities is reinvested in securities with lower interest rates. The risk of prepayment also may decrease the value of mortgage-backed securities. Asset-backed securities may have a higher level of default and recovery risk than mortgage-backed securities. Asset-backed securities may also be subject to greater risk of default during periods of economic downturn than other securities, which could result in possible losses to the Fund. In addition, the secondary market for asset-backed securities may not be as liquid as the market for other securities which may result in the Fund experiencing difficulty in selling or valuing asset-backed securities. Both of these types of securities may decline in value because of mortgage foreclosures or defaults on the underlying obligations. Credit risk is greater for mortgage-backed and asset-backed securities that are subordinate to another security.
Repurchase Agreements Risk.
Repurchase agreements are transactions in which the Fund buys a security from a dealer or bank and agrees to sell the security back at a mutually agreed upon time and price. Repurchase agreements are subject to market risk with respect to the collateral securing the repurchase agreements and credit risk with respect to the counterparty. In the event of a bankruptcy or other default by the counterparty, the Fund could experience delays and potential losses in liquidating the underlying security.
Government Obligations Risks.
No assurance can be given that the U.S. government will provide financial support to U.S. government-sponsored agencies or instrumentalities where it is not obligated to do so by law (such as Fannie Mae or Freddie Mac). As a result, a risk exists that these entities will default on a financial obligation.
Liquidity Risks.
Liquidity risk refers to the possibility that the trading market for a particular type of security becomes less liquid or the Fund may not be able to sell or buy a security or close out an investment contract at a favorable price or time. Consequently, the Fund may have to accept a lower price to sell a security, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative effect on the Fund’s performance. Infrequent trading of securities also may lead to an increase in their price volatility. Illiquidity may result from political, economic, or issuer specific events or overall market disruptions.
Management Risks.
The Adviser’s judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of
 
Fixed Income Funds 57
 
BMO Short-Term Income Fund (cont.)
 
investing in the Fund. The bar chart shows how the Fund’s total returns before taxes have varied from year to year, while the table compares the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives. Please keep in mind that past performance, before and after taxes, does not represent how the Fund will perform in the future. Investors may obtain updated performance information for the Fund at bmofunds.com.
Class I
—
Annual Total Returns
(calendar years 2010-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was 2.76%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
9/30/2010
2.30%
Worst quarter
6/30/2013
(0.61)%

Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
10 Years
Class I (Inception 5/31/2007)      
Return Before Taxes 4.47% 2.11% 2.44%
Return After Taxes on Distributions 3.39% 1.29% 1.62%
Return After Taxes on Distributions and Sale of Fund Shares 2.64% 1.25% 1.54%
ML 1-3
(reflects no deduction for fees, expenses or taxes)
4.07% 1.70% 1.58%
LSIGDI
(reflects deduction of fees and no deduction for sales charges or taxes)
4.69% 2.02% 2.18%
    
 
1 Year
5 Years
Since
Inception
Class A (Inception 5/27/2014)      
Return Before Taxes 2.12% 1.44% 1.29%
ML 1-3
(reflects no deduction for fees, expenses or taxes)
4.07% 1.70% 1.54%
LSIGDI
(reflects deduction of fees and no deduction for sales charges or taxes)
4.69% 2.02% 1.79%
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such as IRAs or 401(k) plans. After-tax returns are shown only for Class I and after-tax returns for Class A will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The Bank of America Merrill Lynch 1-3 Year U.S. Government/Corporate Index (ML 1-3) is an index tracking short-term U.S. government and corporate securities with maturities between 1 and 2.99 years. ML 1-3 is produced by Merrill Lynch Pierce Fenner & Smith.
The Lipper Short Investment-Grade Debt Funds Index (LSIGDI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
Peter J. Arts, Boyd R. Eager, and Don McConnell co-manage the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Arts, Global Head of Money Markets and Short Duration and a Managing Director of the Adviser, joined the Adviser in 1994 and has co-managed the Fund since February 2012. Mr. Eager, a Director and Portfolio Manager of the Adviser, joined the Adviser in 1996 and has co-managed the Fund since February 2012. Mr. McConnell, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2013 and has co-managed the Fund since December 2019.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class A shares and $1,000,000 for Class I shares. For Class A, the minimum subsequent purchase amount is $50.
Sale of Fund Shares.
You may sell (redeem) your shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
 
58 Fixed Income Funds
 
 
BMO
Short
-Term Income Fund (cont.)
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that are expected to be taxed primarily as ordinary income for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
Fixed Income Funds 59
 
BMO Intermediate Tax-Free Fund
Investment Objective:
To provide a high level of current income exempt from federal income tax consistent with preservation of capital.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Class A shares of certain BMO Funds. More information about these and other discounts and waivers is available from your financial professional and under “How to Buy Shares
–
Purchase of Class A Shares
–
Class A Shares
–
Sales Charge” on page 93 of this Prospectus, under “How to Buy Shares
–
Class A Shares
–
Waivers and Reductions of Sales Charges” beginning on page 94 of this Prospectus, under “Appendix
–
Sales Charge Waivers” on page 128 of this Prospectus, and “How to Buy Shares” beginning on page B-36 of the Fund’s Statement of Additional Information.
Shareholder Fees (fees paid directly from your investment)
Class Y
Class I
Class A
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None None 3.50%
Maximum Deferred Sales Charge (Load) (as a percentage of shares redeemed within 18 months of purchase)
(1)
None None 0.55%
Redemption Fee None None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees
(2)
0.12% 0.12% 0.12%
Distribution (12b-1) Fees None None 0.25%
Other Expenses 0.44% 0.19% 0.19%
Total Annual Fund Operating Expenses 0.56% 0.31% 0.56%
Fee Waiver and Expense Reimbursement
(3)
(0.02)% 0.00% (0.02)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(3)
0.54% 0.31% 0.54%
(1)
The Maximum Deferred Sales Charge on Class A shares is applied only to purchases of $1,000,000 or more that are redeemed within 18 months of purchase.
(2)
The management fee disclosed is a blended fee based on the Fund’s total assets as of August 31, 2020. Under the investment advisory agreement, the Fund pays a management fee of 0.25% on the Fund’s first $100 million of average daily net assets, 0.16% on the next $150 million of average daily net assets, 0.12% on the next $250 million of average daily net assets, and 0.10% on assets in excess of $500 million.
(3)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce
 
its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.54% for Class Y, 0.50% for Class I, and 0.54% for Class A through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class Y
Class I
Class A
1 Year $
55 		$
32 		$
403
3 Years $177 $100 $
521
5 Years $311 $174 $
650
10 Years $700 $393 $1,025
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 52% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests at least 80% of its assets in municipal securities, the income from which is exempt from federal income tax (including the federal alternative minimum tax (AMT)). The Fund normally maintains an average dollar-weighted effective maturity of three to ten years. Effective maturity takes into account the possibility that a bond may
 
60 Fixed Income Funds
 
BMO Intermediate Tax-Free Fund (cont.)
have prepayments or may be called by the issuer before its stated maturity date.
Fund investments include municipal securities with a minimum rating in the lowest investment grade category (i.e., rated BBB by Standard & Poor’s or Baa by Moody’s Investors Service, or higher, or unrated and considered by the Adviser to be comparable in quality) at the time of purchase. The Fund also may invest up to 10% of its assets in municipal securities that are below investment grade, also known as high yield securities or “junk bonds.” Municipal securities include debt obligations of states, territories, and possessions of the U.S. and political subdivisions, and financing authorities of these entities that provide income exempt from federal income tax (although not necessarily exempt from federal AMT). The Adviser selects Fund investments after assessing factors such as the cyclical trend in interest rates, the shape of the municipal yield curve, tax rates, sector valuation, and municipal bond supply factors. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
.
From time to time, the Fund maintains a portion of its assets in cash. The Fund may increase its cash holdings in response to market conditions or in the event attractive investment opportunities are not available.
Principal Risks
The Fund cannot assure that it will achieve its investment objective. An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency. The net asset value of the Fund will vary and you could lose money by investing in the Fund. In addition, the Fund is subject to the following risks.
Municipal Securities Risks.
Municipal bonds are subject to risks based on many factors, including economic and regulatory developments, changes or proposed changes in the federal and state tax structure, deregulation, court rulings, and other factors. The value of municipal securities may be affected more by supply and demand factors or the creditworthiness of the issuer than by market interest rates. Repayment of municipal securities depends on the ability of the issuer or project backing such securities to generate taxes or revenues. There is a risk that interest may be taxable on a municipal security that is otherwise expected to produce tax-exempt interest.
Sector Risks.
The Fund may invest its assets in municipal securities that finance similar projects, such as those relating to education, health care, transportation, and utilities. To the extent the Fund invests its assets in a particular sector, the Fund’s performance may be more susceptible to any economic,
business, or other developments that generally affect that sector.
Income Risks.
The Fund’s income could decline due to falling market interest rates. In a falling interest rate environment, the Fund may be required to invest its assets in lower-yielding securities.
Interest Rate Risks.
Prices of fixed income securities rise and fall in response to changes in the interest rate paid by similar securities. Generally, when interest rates rise, prices of fixed income securities fall. Interest rate changes have a greater effect on the price of fixed income securities with longer maturities. Interest rate changes also are influenced by a number of factors including government or central bank policy, inflation expectations, and supply and demand.
Credit Risks.
Credit risk is the possibility that an issuer or counterparty will default on a security or repurchase agreement by failing to pay interest or principal when due. If an issuer defaults, the Fund may lose money. Lower credit ratings correspond to higher credit risk. Bonds rated lower than BBB or Baa have speculative characteristics.
Call Risks.
If the securities in which the Fund invests are redeemed by the issuer before maturity (or “called”), the Fund may have to reinvest the proceeds in securities that pay a lower interest rate, which may decrease the Fund’s yield. This will most likely happen when interest rates are declining.
High Yield Securities Risks.
High yield securities, also referred to as “junk bonds” or non-investment grade securities, are debt securities rated lower than BBB by Standard & Poor’s or Baa by Moody’s Investors Service. These securities tend to be more sensitive to economic conditions than are higher-rated securities, generally involve more credit risk than securities in the higher-rated categories, and are predominantly considered to be speculative. The issuers of high yield securities are typically more leveraged and the risk of loss due to default by an issuer of high yield securities is significantly greater than issuers of higher-rated securities because such securities are generally unsecured and are often subordinated to other creditors. The Fund may have difficulty disposing of certain high yield securities because a thin trading market for such securities may exist.
Liquidity Risks.
Liquidity risk refers to the possibility that the trading market for a particular type of security becomes less liquid or the Fund may not be able to sell or buy a security or close out an investment contract at a favorable price or time. The market for lower-quality debt instruments, including junk bonds, is generally less liquid than the market for higher-quality debt instruments. Consequently, the Fund may have to accept a lower price to sell a security, sell other securities to raise cash, or give up an investment opportunity, any of which could have
 
Fixed Income Funds 61
 
BMO Intermediate Tax-Free Fund (cont.)
a negative effect on the Fund’s performance. Infrequent trading of securities also may lead to an increase in their price volatility. Illiquidity may result from political, economic, or issuer specific events or overall market disruptions.
Management Risks.
The Adviser’s judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total returns before taxes have varied from year to year, while the table compares the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives. Please keep in mind that past performance, before and after taxes, does not represent how the Fund will perform in the future. Investors may obtain updated performance information for the Fund at bmofunds.com.
Class Y
—
Annual Total Returns
(calendar years 2010-2019)
The return for the Class Y shares of the Fund from January 1, 2020 through September 30, 2020 was 1.90%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
9/30/2010
3.13%
Worst quarter
12/31/2016
(3.18)%
Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
10 Years
Class Y (Inception 2/1/1994)      
Return Before Taxes 6.30% 2.92% 3.88%
Return After Taxes on Distributions 6.30% 2.89% 3.84%
Return After Taxes on Distributions and Sale of Fund Shares 4.86% 2.82% 3.64%
BBMB 1-15
(reflects no deduction for fees, expenses or taxes)
6.44% 3.01% 3.66%
 
1 Year
5 Years
10 Years
LIMDI
(reflects deduction of fees and no deduction for sales charges or taxes)
6.48% 2.87% 3.51%
    
 
1 Year
5 Years
Since
Inception
Class I (Inception 12/27/2010)      
Return Before Taxes 6.57% 3.16% 4.17%
BBMB 1-15
(reflects no deduction for fees, expenses or taxes)
6.44% 3.01% 3.73%
LIMDI
(reflects deduction of fees and no deduction for sales charges or taxes)
6.48% 2.87% 3.63%
    
 
1 Year
5 Years
Since
Inception
Class A (Inception 5/27/2014)      
Return Before Taxes 2.61% 2.19% 2.48%
BBMB 1-15
(reflects no deduction for fees, expenses or taxes)
6.44% 3.01% 3.09%
LIMDI
(reflects deduction of fees and no deduction for sales charges or taxes)
6.48% 2.87% 2.95%
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such as IRAs or 401(k) plans. After-tax returns are shown only for Class Y and after-tax returns for Class I and Class A will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The Bloomberg Barclays 1-15 Year Blend Municipal Bond Index (BBMB 1-15) is the 1-15 year Blend component of the Bloomberg Barclays Capital Municipal Bond Index, which is an unmanaged index composed of long-term tax-exempt bonds with a minimum credit rating of Baa and a range of maturities between 1 and 17 years.
The Lipper Intermediate Municipal Debt Funds Index (LIMDI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
Robert Wimmel, Thomas Byron, and Brian Sipich are co-portfolio managers of the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Wimmel, Head of Tax Exempt Fixed Income and a Managing Director of the Adviser, joined the
 
62 Fixed Income Funds
 
BMO Intermediate Tax-Free Fund (cont.)
Adviser in 2015 and has co-managed the Fund since August 2015. Mr. Byron, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2015 and has co-managed the Fund since October 2015. Mr. Sipich, a Vice President and Portfolio Manager of the Adviser, joined the Adviser in 2015 and has co-managed the Fund since October 2016.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class Y and Class A shares and $1,000,000 for Class I shares. For Class Y and Class A, the minimum subsequent purchase amount is $50.
Sale of Fund Shares.
You may sell (redeem) your shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that are primarily exempt from federal income tax; however, a portion of the Fund’s distributions may be subject to federal income tax.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
Fixed Income Funds 63
 
BMO Strategic Income Fund
Investment Objective:
To maximize total return consistent with current income.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Class A shares of certain BMO Funds. More information about these and other discounts and waivers is available from your financial professional and under “How to Buy Shares
–
Purchase of Class A Shares
–
Class A Shares
–
Sales Charge” on page 93 of this Prospectus, under “How to Buy Shares
–
Class A Shares
–
Waivers and Reductions of Sales Charges” beginning on page 94 of this Prospectus, under “Appendix
–
Sales Charge Waivers” on page 128 of this Prospectus, and “How to Buy Shares” beginning on page B-36 of the Fund’s Statement of Additional Information.
Shareholder Fees (fees paid directly from your investment)
Class Y
Class I
Class A
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None None 3.50%
Maximum Deferred Sales Charge (Load) (as a percentage of shares redeemed within 18 months of purchase)
(1)
None None 1.00%
Redemption Fee None None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees 0.25% 0.25% 0.25%
Distribution (12b-1) Fees None None 0.25%
Other Expenses
(2)
0.76% 0.51% 0.51%
Total Annual Fund Operating Expenses 1.01% 0.76% 1.01%
Fee Waiver and Expense Reimbursement
(3)
(0.21)% (0.21)% (0.21)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(3)
0.80% 0.55% 0.80%
(1)
The Maximum Deferred Sales Charge on Class A shares is applied only to purchases of $1,000,000 or more that are redeemed within 18 months of purchase.
(2)
Other Expenses have been restated to reflect current fees.
(3)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.80% for Class Y, 0.55% for
 
Class I, and 0.80% for Class A through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class Y
Class I
Class A
1 Year $
82 		$
56 		$
429
3 Years $
301 		$222 $
640
5 Years $
537 		$402 $
869
10 Years $1,217 $923 $1,525
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 31% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests primarily in U.S. and foreign debt securities, including those in emerging markets. Debt securities include all types of fixed and floating rate securities including high yield securities (junk bonds), investment grade corporate bonds, U.S. Treasury, agency, and municipal securities, and foreign government securities, including inflation-indexed securities of U.S. and non-U.S. governments, convertible securities, preferred securities, and mortgage-backed and asset-backed securities.
The Fund may invest without limitation in fixed and floating rate debt securities of any geography and maturity. The Fund may invest up to 65% of its net assets in debt securities rated below investment grade. Below investment grade, or high
 
64 Fixed Income Funds
 
BMO Strategic Income Fund (cont.)
yield, securities are commonly referred to as “junk bonds.” Investment grade securities are: securities rated BBB- or higher by Standard & Poor’s Ratings Services (S&P) or Baa3 or higher by Moody’s Investors Service, Inc. (Moody’s) or an equivalent rating by another nationally recognized statistical rating organization (NRSRO), or unrated securities determined by the Adviser to be of comparable quality.
The Fund’s securities may be denominated in either U.S. dollars or foreign currencies. While the Fund’s assets are predominantly U.S. dollar denominated, the Fund also may invest up to 25% of its assets in foreign currency denominated debt securities, all or a portion of which may be emerging markets debt securities. The Fund may invest up to 10% of its assets in common stocks; however, most common stocks generally will be acquired from conversions of convertible bonds or as residual interests from other fixed income securities. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
.
From time to time, the Fund maintains a portion of its assets in cash. The Fund may increase its cash holdings in response to market conditions or in the event attractive investment opportunities are not available.
Principal Risks
The Fund cannot assure that it will achieve its investment objective. An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency. The net asset value of the Fund will vary and you could lose money by investing in the Fund. In addition, the Fund is subject to the following risks.
Corporate Debt Securities Risks.
Corporate debt securities are fixed income securities issued by businesses. The market value of corporate debt may be affected by changes in the market rate of interest, the credit rating of the corporation, the corporation’s performance, and perceptions of the corporation in the market place. Corporate issuers may not be able to meet their obligations on interest or principal payments at the time called for by an instrument.
Income Risks.
The Fund’s income could decline due to falling market interest rates. In a falling interest rate environment, the Fund may be required to invest its assets in lower-yielding securities.
Interest Rate Risks.
Prices of fixed income securities rise and fall in response to changes in the interest rate paid by similar securities. Generally, when interest rates rise, prices of fixed income securities fall. Interest rate changes have a greater effect on the price of fixed income securities with longer maturities.
 
Interest rate changes also are influenced by a number of factors
including government or central bank policy, inflation expectations, and supply and demand.
Credit Risks.
Credit risk is the possibility that an issuer or counterparty will default on a security or repurchase agreement by failing to pay interest or principal when due. If an issuer defaults, the Fund may lose money. Lower credit ratings correspond to higher credit risk. Bonds rated lower than BBB or Baa have speculative characteristics.
Call Risks.
If the securities in which the Fund invests are redeemed by the issuer before maturity (or “called”), the Fund may have to reinvest the proceeds in securities that pay a lower interest rate, which may decrease the Fund’s yield. This will most likely happen when interest rates are declining.
High Yield Securities Risks.
High yield securities, also referred to as “junk bonds” or non-investment grade securities, are debt securities rated lower than BBB by Standard & Poor’s or Baa by Moody’s Investors Service. These securities tend to be more sensitive to economic conditions than are higher-rated securities, generally involve more credit risk than securities in the higher-rated categories, and are predominantly considered to be speculative. The issuers of high yield securities are typically more leveraged and the risk of loss due to default by an issuer of high yield securities is significantly greater than issuers of higher-rated securities because such securities are generally unsecured and are often subordinated to other creditors. The Fund may have difficulty disposing of certain high yield securities because a thin trading market for such securities may exist.
Foreign Securities Risks.
Investing in foreign securities may involve additional risks, including currency-rate fluctuations, political and economic instability, differences in financial reporting standards, less-strict regulation of the securities markets, and possible imposition of foreign withholding taxes. Furthermore, the Fund may incur higher costs and expenses when making foreign investments, which will affect the Fund’s total return.
Emerging Markets Risks.
Investments in emerging market countries can involve risks in addition to, and greater than, those generally associated with investing in more developed foreign markets. Emerging market countries may have less established legal, political, business, and social frameworks to support securities markets; greater sensitivity to interest rate changes; higher currency exchange rate volatility; and greater risks of inflation, deflation or currency devaluation. Securities in emerging markets also may be less liquid than those in developed markets and foreign investors may be limited in their ability to invest in, and withdraw assets from, these markets
.
 
Fixed Income Funds 65
 
BMO Strategic Income Fund (cont.)
Asset-Backed/Mortgage-Backed Securities Risks.
Asset-backed and mortgage-backed securities are subject to risks of prepayment. The Fund’s yield will be reduced if cash from prepaid securities is reinvested in securities with lower interest rates. The risk of prepayment also may decrease the value of mortgage-backed securities. Asset-backed securities may have
 
a higher level of default and recovery risk than mortgage-backed securities. Asset-backed securities may also be subject to greater risk of default during periods of economic downturn than other securities, which could result in possible losses to the Fund. In addition, the secondary market for asset-backed securities may not be as liquid as the market for other securities which may result in the Fund experiencing difficulty in selling or valuing asset-backed securities. Both of these types of securities may decline in value because of mortgage foreclosures or defaults on the underlying obligations. Credit risk is greater for mortgage-backed and asset-backed securities that are subordinate to another security.
Repurchase Agreements Risk.
Repurchase agreements are transactions in which the Fund buys a security from a dealer or bank and agrees to sell the security back at a mutually agreed upon time and price. Repurchase agreements are subject to market risk with respect to the collateral securing the repurchase agreements and credit risk with respect to the counterparty. In the event of a bankruptcy or other default by the counterparty, the Fund could experience delays and potential losses in liquidating the underlying security.
Government Obligations Risks.
No assurance can be given that the U.S. government will provide financial support to U.S. government-sponsored agencies or instrumentalities where it is not obligated to do so by law (such as Fannie Mae or Freddie Mac). As a result, a risk exists that these entities will default on a financial obligation.
Liquidity Risks.
Liquidity risk refers to the possibility that the trading market for a particular type of security becomes less liquid or the Fund may not be able to sell or buy a security or close out an investment contract at a favorable price or time. Consequently, the Fund may have to accept a lower price to sell a security, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative effect on the Fund’s performance. Infrequent trading of securities also may lead to an increase in their price volatility. Illiquidity may result from political, economic, or issuer specific events or overall market disruptions.
Management Risks.
The Adviser’s judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total returns before taxes have varied from year to year, while the table compares the Fund’s average annual total returns to the
 
returns of a broad measure of market performance and an index of funds with similar investment objectives.
 
Please keep in mind that past performance, before and after taxes, does not represent how the Fund will perform in the future. Investors may obtain updated performance information for the Fund at bmofunds.com.
Class I
—
Annual Total Returns
(calendar years 2010-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was 5.26%.
During the periods shown in the bar chart for the Fund:

 
Quarter Ended
Returns
Best quarter
3/31/2019
5.85%
Worst quarter
12/31/2018
(2.33)%
Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
10 Years
Class I (Inception 5/31/2007)      
Return Before Taxes 13.26% 4.16% 4.09%
Return After Taxes on Distributions 11.08% 2.47% 2.46%
Return After Taxes on Distributions and Sale of Fund Shares 7.80% 2.41% 2.49%
Class Y (Inception 12/13/1992)      
Return Before Taxes 12.97% 3.92% 3.84%
BBUABI
(reflects no deduction for fees, expenses or taxes)
8.72% 3.05% 3.75%
LMSI
(reflects deduction of fees and no deduction for sales charges or taxes)
8.70% 3.86% 5.12%
    
 
1 Year
5 Years
Since
Inception
Class A (Inception 5/27/2014)      
Return Before Taxes 9.00% 3.18% 3.21%
 
66 Fixed Income Funds
 
BMO Strategic Income Fund (cont.)
 
1 Year
5 Years
Since
Inception
BBUABI
(reflects no deduction for fees, expenses or taxes)
8.72% 3.05% 3.13%
LMSII
(reflects deduction of fees and no deduction for sales charges or taxes)
8.70% 3.86% 3.35%
The Fund changed its investment objective and principal investment strategy effective May 8, 2017. Performance prior to that date reflects the Fund’s previous investment objective and principal investment strategy.
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such as IRAs or 401(k) plans. After-tax returns are shown only for Class I and after-tax returns for Class Y and Class A will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The Bloomberg Barclays U.S. Aggregate Bond Index (BBUABI) is an index that covers the U.S. investment-grade fixed-rate bond market, including government and credit securities, agency mortgage pass-through securities, asset-backed securities and commercial mortgage-backed securities. To qualify for inclusion, a bond or security must have at least one year to final maturity and be rated Baa3 or better, dollar denominated, non-convertible, fixed-rate and publicly issued.
The Lipper Multi-Sector Funds Index (LMSI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
Scott M. Kimball and Frank Reda are co-portfolio managers of the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Kimball, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2013 and has co-managed the Fund since August 2013. Mr. Reda, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2017 and has co-managed the Fund since April 2017.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class Y and Class A shares and $1,000,000 for Class I shares. For Class Y and Class A, the minimum subsequent purchase amount is $50.
Sale of Fund Shares.
You may sell (redeem) your shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that are expected to be taxed primarily as ordinary income for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
 
Fixed Income Funds 67
 
BMO Corporate Income Fund
Investment Objective:
To maximize total return consistent with current income.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Class A shares of certain BMO Funds. More information about these and other discounts and waivers is available from your financial professional and under “How to Buy Shares
–
Purchase of Class A Shares
–
Class A Shares
–
Sales Charge” on page 93 of this Prospectus, under “How to Buy Shares
–
Class A Shares
–
Waivers and Reductions of Sales Charges” beginning on page 94 of this Prospectus, under “Appendix
–
Sales Charge Waivers” on page 128 of this Prospectus, and “How to Buy Shares” beginning on page B-36 of the Fund’s Statement of Additional Information.
Shareholder Fees (fees paid directly from your investment)
Class Y
Class I
Class A
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None None 3.50%
Maximum Deferred Sales Charge (Load) (as a percentage of shares redeemed within 18 months of purchase)
(1)
None None 0.55%
Redemption Fee None None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees
(2)
0.18% 0.18% 0.18%
Distribution (12b-1) Fees None None 0.25%
Other Expenses 0.48% 0.23% 0.23%
Total Annual Fund Operating Expenses 0.66% 0.41% 0.66%
Fee Waiver and Expense Reimbursement
(3)
(0.07)% 0.00% (0.07)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(3)
0.59% 0.41% 0.59%
(1)
The Maximum Deferred Sales Charge on Class A shares is applied only to purchases of $1,000,000 or more that are redeemed within 18 months of purchase.
(2)
The management fee disclosed is a blended fee based on the Fund’s total assets as of August 31, 2020. Under the investment advisory agreement, the Fund pays a management fee of 0.20% on the Fund’s first $100 million of average daily net assets, 0.19% on the next $150 million of average daily net assets, 0.15% on the next $250 million of average daily net assets, and 0.10% on assets in excess of $500 million.
(3)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent
 
necessary to prevent total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.59% for Class Y, 0.55% for Class I, and 0.59% for Class A through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class Y
Class I
Class A
1 Year $
60 		$
42 		$
408
3 Years $204 $132 $
547
5 Years $361 $230 $
698
10 Years $816 $518 $1,137
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 31% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests at least 80% of its assets in corporate debt securities, including convertible debt securities. Although the Fund will invest primarily in U.S. dollar denominated securities with a minimum rating in the lowest investment grade category (i.e., rated BBB by Standard & Poor’s or Baa by Moody’s Investors Service, or higher, or unrated and considered by the sub-adviser to be comparable in quality) at the time of purchase, the Fund may invest up to 20% of its assets in debt
 
68 Fixed Income Funds
 
BMO Corporate Income Fund (cont.)
securities that are below investment grade, also known as high yield securities or “junk bonds,” and non-U.S. dollar denominated foreign debt securities. The Fund also may invest in U.S. government securities, asset-backed and mortgage-backed securities, and U.S. dollar denominated foreign debt securities.
The Adviser uses macroeconomic, credit, and market analysis to select portfolio securities. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
. The Fund normally maintains an average dollar-weighted effective maturity of three to fifteen years. Effective maturity takes into account the possibility that a bond may have prepayments or may be called by the issuer before its maturity date.
From time to time, the Fund maintains a portion of its assets in cash. The Fund may increase its cash holdings in response to market conditions or in the event attractive investment opportunities are not available.
Principal Risks
The Fund cannot assure that it will achieve its investment objective. An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency. The net asset value of the Fund will vary and you could lose money by investing in the Fund. In addition, the Fund is subject to the following risks.
Corporate Debt Securities Risks.
Corporate debt securities are fixed income securities issued by businesses. The market value of corporate debt may be affected by changes in the market rate of interest, the credit rating of the corporation, the corporation’s performance, and perceptions of the corporation in the market place. Corporate issuers may not be able to meet their obligations on interest or principal payments at the time called for by an instrument.
Income Risks.
The Fund’s income could decline due to falling market interest rates. In a falling interest rate environment, the Fund may be required to invest its assets in lower-yielding securities.
Interest Rate Risks.
Prices of fixed income securities rise and fall in response to changes in the interest rate paid by similar securities. Generally, when interest rates rise, prices of fixed income securities fall. Interest rate changes have a greater effect on the price of fixed income securities with longer maturities. Interest rate changes also are influenced by a number of factors including government or central bank policy, inflation expectations, and supply and demand.
Credit Risks.
Credit risk is the possibility that an issuer or counterparty will default on a security or repurchase agreement by failing to pay interest or principal when due. If an issuer defaults, the Fund may lose money. Lower credit ratings correspond to higher credit risk. Bonds rated lower than BBB or Baa have speculative characteristics.
Call Risks.
If the securities in which the Fund invests are redeemed by the issuer before maturity (or “called”), the Fund may have to reinvest the proceeds in securities that pay a lower interest rate, which may decrease the Fund’s yield. This will most likely happen when interest rates are declining.
High Yield Securities Risks.
High yield securities, also referred to as “junk bonds” or non-investment grade securities, are debt securities rated lower than BBB by Standard & Poor’s or Baa by Moody’s Investors Service. These securities tend to be more sensitive to economic conditions than are higher-rated securities, generally involve more credit risk than securities in the higher-rated categories, and are predominantly considered to be speculative. The issuers of high yield securities are typically more leveraged and the risk of loss due to default by an issuer of high yield securities is significantly greater than issuers of higher-rated securities because such securities are generally unsecured and are often subordinated to other creditors. The Fund may have difficulty disposing of certain high yield securities because a thin trading market for such securities may exist.
Foreign Securities Risks.
Investing in foreign securities may involve additional risks, including currency-rate fluctuations, political and economic instability, differences in financial reporting standards, less-strict regulation of the securities markets, and possible imposition of foreign withholding taxes. Furthermore, the Fund may incur higher costs and expenses when making foreign investments, which will affect the Fund’s total return.
Asset-Backed/Mortgage-Backed Securities Risks.
Asset-backed and mortgage-backed securities are subject to risks of prepayment. The Fund’s yield will be reduced if cash from prepaid securities is reinvested in securities with lower interest rates. The risk of prepayment also may decrease the value of mortgage-backed securities. Asset-backed securities may have a higher level of default and recovery risk than mortgage-backed securities. Asset-backed securities may also be subject to greater risk of default during periods of economic downturn than other securities, which could result in possible losses to the Fund. In addition, the secondary market for asset-backed securities may not be as liquid as the market for other securities which may result in the Fund experiencing difficulty in selling or valuing asset-backed securities. Both of these types of securities may decline in value because of mortgage foreclosures or defaults on the underlying obligations.
Credit risk is greater for mortgage-backed and asset-backed securities that are subordinate to another security.
 
Fixed Income Funds 69
 
BMO Corporate Income Fund (cont.)
Government Obligations Risks.
No assurance can be given that the U.S. government will provide financial support to U.S. government-sponsored agencies or instrumentalities where it is not obligated to do so by law (such as Fannie Mae or Freddie Mac). As a result, a risk exists that these entities will default on a financial obligation.
Liquidity Risks.
Liquidity risk refers to the possibility that the trading market for a particular type of security becomes less liquid or the Fund may not be able to sell or buy a security or close out an investment contract at a favorable price or time. The market for lower-quality debt instruments, including junk bonds, is generally less liquid than the market for higher-quality debt instruments. Consequently, the Fund may have to accept a lower price to sell a security, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative effect on the Fund’s performance. Infrequent trading of securities also may lead to an increase in their price volatility. Illiquidity may result from political, economic, or issuer specific events or overall market disruptions.
Management Risks.
The Adviser's judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total returns before taxes have varied from year to year, while the table compares the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives. Please keep in mind that past performance, before and after taxes, does not represent how the Fund will perform in the future. Investors may obtain updated performance information for the Fund at bmofunds.com.
Class I
—
Annual Total Returns
(calendar years 2010-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was 6.65%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
6/30/2016
5.50%
Worst quarter
6/30/2013
(2.82)%
Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
10 Years
Class I (Inception 12/22/2008)      
Return Before Taxes 14.36% 5.06% 6.21%
Return After Taxes on Distributions 12.71% 3.48% 4.44%
Return After Taxes on Distributions and Sale of Fund Shares 8.46% 3.17% 4.12%
Class Y (Inception 12/22/2008)      
Return Before Taxes 14.15% 4.91% 6.05%
BBCI
(reflects no deduction for fees, expenses or taxes)
13.80% 4.39% 5.32%
LCDBRI
(reflects deduction of fees and no deduction for sales charges or taxes)
13.63% 4.28% 5.64%
    
 
1 Year
5 Years
Since
Inception
Class A (Inception 5/27/2014)      
Return Before Taxes 10.15% 4.18% 3.93%
BBCI
(reflects no deduction for fees, expenses or taxes)
13.80% 4.39% 4.31%
LCDBRI
(reflects deduction of fees and no deduction for sales charges or taxes)
13.63% 4.28% 4.12%
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.​​​​​​​
After-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such as IRAs or 401(k) plans.After-tax returns are shown only for Class I and after-tax returns for Class Y and Class A will vary.​​​​​​​
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The Bloomberg Barclays U.S. Credit Index (BBCI) is an index that covers U.S. corporate and specified foreign debentures and secured notes that meet specified maturity, liquidity and quality requirements.
The Lipper Corporate Debt Funds BBB-Rated Index (LCDBRI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
 

70 Fixed Income Funds
 
BMO Corporate Income Fund (cont.)
Portfolio Managers.
Scott M. Kimball and Frank Reda are co-portfolio managers of the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Kimball, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2013 and has co-managed the Fund since 2012. Mr. Reda, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2017 and has co-managed the Fund since 2015.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class Y and Class A shares and $1,000,000 for Class I shares. For Class Y and Class A, the minimum subsequent purchase amount is $50.
Sale of Fund Shares.
You may sell (redeem) your shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that are expected to be taxed primarily as ordinary income for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information. 
Fixed Income Funds 71
 
BMO Core Plus Bond Fund
Investment Objective:
To maximize total return consistent with current income.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Class A shares of certain BMO Funds. More information about these and other discounts and waivers is available from your financial professional and under “How to Buy Shares
–
Purchase of Class A Shares
–
Class A Shares
–
Sales Charge” on page 93 of this Prospectus, under “How to Buy Shares
–
Class A Shares
–
Waivers and Reductions of Sales Charges” beginning on page 94 of this Prospectus, under “Appendix
–
Sales Charge Waivers” on page 128 of this Prospectus, and “How to Buy Shares” beginning on page B-36 of the Fund’s Statement of Additional Information.
Shareholder Fees (fees paid directly from your investment)
Class Y
Class I
Class A
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None None 3.50%
Maximum Deferred Sales Charge (Load) (as a percentage of shares redeemed within 18 months of purchase)
(1)
None None 0.55%
Redemption Fee None None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees
(2)
0.13% 0.13% 0.13%
Distribution (12b-1) Fees None None 0.25%
Other Expenses 0.43% 0.18% 0.18%
Total Annual Fund Operating Expenses 0.56% 0.31% 0.56%
(1)
The Maximum Deferred Sales Charge on Class A shares is applied only to purchases of $1,000,000 or more that are redeemed within 18 months of purchase.
(2)
The management fee disclosed is a blended fee based on the Fund’s total assets as of August 31, 2020. Under the investment advisory agreement, the Fund pays a management fee of 0.25% on the Fund’s first $100 million of average daily net assets, 0.16% on the next $150 million of average daily net assets, 0.12% on the next $250 million of average daily net assets, and 0.10% on assets in excess of $500 million.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of
your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class Y
Class I
Class A
1 Year $
57 		$
32 		$
405
3 Years $179 $100 $
523
5 Years $313 $174 $
652
10 Years $701 $393 $1,027
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 28% of the average value of its portfolio.
Principal Investment Strategies
The Fund invests at least 80% of its assets in bonds. Fund investments include corporate, asset-backed, mortgage-backed and U.S. government securities. Although the Fund will invest primarily in securities with a minimum rating in the lowest investment grade category (i.e., rated BBB by Standard & Poor’s or Baa by Moody’s Investors Service, or higher, or unrated and considered by the sub-adviser to be comparable in quality) at the time of purchase, the Fund may invest up to 20% of its assets in debt securities that are below investment grade, also known as high yield securities or “junk bonds.” While the Fund’s assets are predominantly U.S. dollar denominated, the Fund also may invest up to 20% of its assets in non-U.S. dollar denominated foreign debt securities, all or a portion of which may be emerging markets debt securities.
The Fund’s investment strategy is referred to as “Core Plus” because the Adviser has the ability to add high yield securities and emerging markets debt securities to a core portfolio of investment grade fixed income securities. The Adviser’s strategy for maximizing total return is to adjust the Fund’s weightings in these sectors as it deems appropriate. The Adviser uses macroeconomic, credit, and market analysis to select portfolio securities. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
. The Fund normally maintains an average dollar-weighted effective maturity of three to ten years. Effective maturity takes
 
72 Fixed Income Funds
 
BMO Core Plus Bond Fund (cont.)
into
account the possibility that a bond may have prepayments or may be called by the issuer before its stated maturity date.
From time to time, the Fund maintains a portion of its assets in cash. The Fund may increase its cash holdings in response to market conditions or in the event attractive investment opportunities are not available.
Principal Risks
The Fund cannot assure that it will achieve its investment objective. An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
 
The net asset value of the Fund will vary and
you could lose money by investing in the Fund.
In addition, the Fund is subject to the following risks.
Corporate Debt Securities Risks.
Corporate debt securities are fixed income securities issued by businesses. The market value of corporate debt may be affected by changes in the market rate of interest, the credit rating of the corporation, the corporation’s performance, and perceptions of the corporation in the market place. Corporate issuers may not be able to meet their obligations on interest or principal payments at the time called for by an instrument.
Income Risks.
The Fund’s income could decline due to falling market interest rates. In a falling interest rate environment, the Fund may be required to invest its assets in lower-yielding securities.
Interest Rate Risks.
Prices of fixed income securities rise and fall in response to changes in the interest rate paid by similar securities. Generally, when interest rates rise, prices of fixed income securities fall. Interest rate changes have a greater effect on the price of fixed income securities with longer maturities. Interest rate changes also are influenced by a number of factors including government or central bank policy, inflation expectations, and supply and demand.
Credit Risks.
Credit risk is the possibility that an issuer or counterparty will default on a security or repurchase agreement by failing to pay interest or principal when due. If an issuer defaults, the Fund may lose money. Lower credit ratings correspond to higher credit risk. Bonds rated lower than BBB or Baa have speculative characteristics.
Call Risks.
If the securities in which the Fund invests are redeemed by the issuer before maturity (or “called”), the Fund may have to reinvest the proceeds in securities that pay a lower interest rate, which may decrease the Fund’s yield. This will most likely happen when interest rates are declining.
High Yield Securities Risks.
High yield securities, also referred to as “junk bonds” or non-investment grade securities, are debt securities rated lower than BBB by Standard & Poor’s or Baa by
Moody’s Investors Service. These securities tend to be more sensitive to economic conditions than are higher-rated securities, generally involve more credit risk than securities in the higher-rated categories, and are predominantly considered to be speculative. The issuers of high yield securities are typically more leveraged and the risk of loss due to default by an issuer of high yield securities is significantly greater than issuers of higher-rated securities because such securities are generally unsecured and are often subordinated to other creditors. The Fund may have difficulty disposing of certain high yield securities because a thin trading market for such securities may exist.
Foreign Securities Risks.
Investing in foreign securities may involve additional risks, including currency-rate fluctuations, political and economic instability, differences in financial reporting standards, less-strict regulation of the securities markets, and possible imposition of foreign withholding taxes. Furthermore, the Fund may incur higher costs and expenses when making foreign investments, which will affect the Fund’s total return.
Emerging Markets Risks.
Investments
in emerging market countries can involve risks in addition to, and greater than, those generally associated with investing in more developed foreign markets. Emerging market countries may have less established legal, political, business, and social frameworks to support securities markets; greater sensitivity to interest rate changes; higher currency exchange rate volatility; and greater risks of inflation, deflation or currency devaluation. Securities in emerging markets also may be less liquid than those in developed markets and foreign investors may be limited in their ability to invest in, and withdraw assets from, these markets
.
Asset-Backed/Mortgage-Backed Securities Risks.
Asset-backed and mortgage-backed securities are subject to risks of prepayment. The Fund’s yield will be reduced if cash from prepaid securities is reinvested in securities with lower interest rates. The risk of prepayment also may decrease the value of mortgage-backed securities. Asset-backed securities may have a higher level of default and recovery risk than mortgage-backed securities. Asset-backed securities may also be subject to greater risk of default during periods of economic downturn than other securities, which could result in possible losses to the Fund. In addition, the secondary market for asset-backed securities may not be as liquid as the market for other securities which may result in the Fund experiencing difficulty in selling or valuing asset-backed securities. Both of these types of securities may decline in value because of mortgage foreclosures or defaults on the underlying obligations. Credit risk is greater for mortgage-backed and asset-backed securities that are subordinate to another security.
 
Fixed Income Funds 73
 
BMO Core Plus Bond Fund (cont.)
Government Obligations Risks.
No assurance can be given that the U.S. government will provide financial support to U.S. government-sponsored agencies or instrumentalities where it is not obligated to do so by law (such as Fannie Mae or Freddie Mac). As a result, a risk exists that these entities will default on a financial obligation.
Liquidity Risks.
Liquidity risk refers to the possibility that the trading market for a particular type of security becomes less liquid or the Fund may not be able to sell or buy a security or close out an investment contract at a favorable price or time. The market for lower-quality debt instruments, including junk bonds, is generally less liquid than the market for higher-quality debt instruments. Consequently, the Fund may have to accept a lower price to sell a security, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative effect on the Fund’s performance. Infrequent trading of securities also may lead to an increase in their price volatility. Illiquidity may result from political, economic, or issuer specific events or overall market disruptions.
Management Risks.
The Adviser's judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total returns before taxes have varied from year to year, while the table compares the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives. Please keep in mind that past performance, before and after taxes, does not represent how the Fund will perform in the future. Investors may obtain updated performance information for the Fund at bmofunds.com.
Class I
—
Annual Total Returns
(calendar years 2010-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was 6.23%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
9/30/2012
4.13%
Worst quarter
6/30/2013
(2.96)%
Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
10 Years
Class I (Inception 12/22/2008)      
Return Before Taxes 9.93% 3.54% 4.97%
Return After Taxes on Distributions 8.42% 2.15% 3.41%
Return After Taxes on Distributions and Sale of Fund Shares 5.85% 2.08% 3.23%
Class Y (Inception 12/22/2008)      
Return Before Taxes 9.66% 3.28% 4.73%
BBUABI
(reflects no deduction for fees, expenses or taxes)
8.72% 3.05% 3.75%
LCPBI
(reflects deduction of fees and no deduction for sales charges or taxes)
9.33% 3.37% 4.49%
    
 
1 Year
5 Years
Since
Inception
Class A (Inception 5/27/2014)      
Return Before Taxes 5.79% 2.54% 2.54%
BBUABI
(reflects no deduction for fees, expenses or taxes)
8.72% 3.05% 3.13%
LCPBI
(reflects deduction of fees and no deduction for sales charges or taxes)
9.33% 3.37% 3.29%
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such as IRAs or 401(k) plans.
 
After-tax returns are shown only for Class I and after-tax returns for Class Y and Class A will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The Bloomberg Barclays U.S. Aggregate Bond Index (BBUABI) is an index that covers the U.S. investment-grade fixed-rate bond market, including government and credit securities, agency mortgage pass-through securities, asset-backed securities and commercial mortgage-backed securities. To qualify for inclusion, a bond or security must have at least one year to final maturity and be rated Baa3 or better, dollar denominated, non-convertible, fixed-rate and publicly issued.
 
74 Fixed Income Funds
 
BMO Core Plus Bond Fund (cont.)
The Lipper Core Plus Bond Funds Index (LCPBI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
Scott M. Kimball and Frank Reda are co-portfolio managers of the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Kimball, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2013 and has co-managed the Fund since 2012. Mr. Reda, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2017 and has co-managed the Fund since 2015.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class Y and Class A shares and $1,000,000 for Class I shares. For Class Y and Class A, the minimum subsequent purchase amount is $50.
Sale of Fund Shares.
You may sell (redeem) your shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that are expected to be taxed primarily as ordinary income for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of

shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
Fixed Income Funds 75
 
BMO Government Money Market Fund
Investment Objective:
To provide current income consistent with stability of principal.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees (fees paid directly from your investment)
Class Y
Premier Class
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None None
Maximum Deferred Sales Charge (Load) (as a percentage of shares redeemed within 18 months of purchase) None None
Redemption Fee None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees
(1)
0.19% 0.19%
Distribution (12b-1) Fees None None
Other Expenses 0.31% 0.06%
Acquired Fund Fees and Expenses
(2)
0.01% 0.01%
Total Annual Fund Operating Expenses 0.51% 0.26%
Fee Waiver and Expense Reimbursement
(3)
(0.05)% (0.05)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(3)
0.46% 0.21%
(1)
The management fee disclosed is a blended fee based on the Fund’s total assets as of August 31, 2020. Under the investment advisory agreement, the Fund pays a management fee of 0.20% on the Fund’s first $2 billion of average daily net assets, 0.185% on the next $2 billion of average daily net assets, 0.17% on the next $2 billion of average daily net assets, 0.155% on the next $2 billion of average daily net assets, and 0.14% on assets in excess of $8 billion.
(2)
Acquired Fund Fees and Expenses represent the pro rata expense indirectly incurred by the Fund as a result of its investment in other investment companies. Total Annual Fund Operating Expenses shown will not correlate to the Fund’s ratio of expenses to average net assets appearing in the Financial Highlights tables, which do not include Acquired Fund Fees and Expenses.
(3)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.45% for Class Y and 0.20% for Premier Class through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without
 
the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class Y
Premier Class
1 Year $
47 		$
22
3 Years $159 $
79
5 Years $280 $141
10 Years $636 $326
Principal Investment Strategies
The Fund invests at least 80% of its assets in obligations issued and/or guaranteed by the U.S. government or by its agencies or instrumentalities and in repurchase agreements secured by such obligations (collectively referred to as U.S. government securities). The Fund operates as a “government money market fund” within the meaning of Rule 2a-7 under the Investment Company Act of 1940, as amended (1940 Act). As such, the Fund invests at least 99.5% of its total assets in U.S. government securities, cash, and/or repurchase agreements that are collateralized fully (as defined in Rule 2a-7 under the 1940 Act). The Fund invests its assets in high quality, short-term money market instruments and repurchase agreements.
The Fund may invest only in securities which have been determined by the Adviser to present minimal credit risks to the Fund, based on the Adviser’s consideration of a number of factors including, but not limited to, financial condition, sources of liquidity, ability to react to market-wide and issuer- or guarantor-specific events, and positions within the industry and industry strength. U.S. government securities present minimal credit risk by definition under applicable regulation. The Adviser uses a “bottom-up” approach, which evaluates debt securities against the context of broader market factors such as the cyclical trend in interest rates, the shape of the yield curve, and debt security supply factors.
 
76 Money Market Funds
 
BMO Government Money Market Fund (cont.)
The Fund invests in the securities of U.S. government-sponsored entities that are not backed by the full faith and credit of the U.S. government, but are supported through federal loans or other benefits, including the Federal Home Loan Banks (FHLBs), Federal National Mortgage Association (Fannie Mae), and Federal Home Loan Mortgage Corporation (Freddie Mac). The Fund also may invest in the securities of U.S. government-sponsored entities that are supported by the full faith and credit of the U.S. government, such as the Government National Mortgage Association (Ginnie Mae). Finally, the Fund may invest in the securities of governmental entities that have no explicit financial support from the U.S. government, but are regarded as having implied support because the U.S. government sponsors their activities, including the Farm Credit Administration and the Financing Corporation. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
.
In pursuing its investment objective and implementing its investment strategies, the Fund will comply with Rule 2a-7 under the 1940 Act, which requires, among other things, the Fund to meet certain requirements as to portfolio quality, diversification, maturity, and liquidity.
Principal Risks
You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency. The Adviser has no legal obligation to provide financial support to the Fund, and you should not expect that the Adviser will provide financial support to the Fund at any time. In addition, the Fund is subject to the following risks.
Government Obligations Risks.
No assurance can be given that the U.S. government will provide financial support to U.S. government-sponsored agencies or instrumentalities where it is not obligated to do so by law (such as Fannie Mae or Freddie Mac). As a result, a risk exists that these entities will default on a financial obligation.
Repurchase Agreements Risk.
Repurchase agreements are transactions in which the Fund buys a security from a dealer or bank and agrees to sell the security back at a mutually agreed upon time and price. Repurchase agreements are subject to market risk with respect to the collateral securing the repurchase agreements and credit risk with respect to the counterparty. In the event of a bankruptcy or other default by the counterparty, the Fund could experience delays and potential losses in liquidating the underlying security.
Income Risks.
The Fund’s income could decline due to falling market interest rates. In a falling interest rate environment, the Fund may be required to invest its assets in lower-yielding securities.
Interest Rate Risks.
Prices of fixed income securities rise and fall in response to changes in the interest rate paid by similar securities. Generally, when interest rates rise, prices of fixed income securities fall. Interest rate changes have a greater effect on the price of fixed income securities with longer maturities. Interest rate changes also are influenced by a number of factors including government or central bank policy, inflation expectations, and supply and demand. During periods of low short-term interest rates, the Fund may have difficulty maintaining a positive yield.
Credit Risks.
Credit risk is the possibility that an issuer or counterparty will default on a security or repurchase agreement by failing to pay interest or principal when due. If an issuer defaults, the Fund may lose money. Lower credit ratings correspond to higher credit risk.
Call Risks.
If the securities in which the Fund invests are redeemed by the issuer before maturity (or “called”), the Fund may have to reinvest the proceeds in securities that pay a lower interest rate, which may decrease the Fund’s yield. This will most likely happen when interest rates are declining.
Liquidity Risks.
Liquidity risk refers to the possibility that the trading market for a particular type of security becomes less liquid or the Fund may not be able to sell or buy a security or close out an investment contract at a favorable price or time. Consequently, the Fund may have to accept a lower price to sell a security, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative effect on the Fund’s performance. Infrequent trading of securities also may lead to an increase in their price volatility. Illiquidity may result from political, economic, or issuer specific events or overall market disruptions. Additionally, significant redemptions by large investors in the Fund could have a material adverse effect on the Fund’s other shareholders and the net asset value could be affected by forced selling during periods of high redemption pressures and/or illiquid markets.
Management Risks.
The Adviser’s judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total
 
Money Market Funds 77
 
BMO Government Money Market Fund (cont.)
returns have varied from year to year, while the table compares the Fund’s average annual total returns to the returns of an average of money funds with similar objectives and an index of funds with similar investment objectives.
 
Please keep in mind that past performance does not represent how the Fund will perform in the future. Investors may obtain the Fund’s current 7-Day Net Yield or updated performance information at bmofunds.com.
Premier Class
—
Annual Total Returns
(calendar years 2010-2019)
The return for the Premier Class shares of the Fund from January 1, 2020 through September 30, 2020 was 0.31%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
6/30/2019
0.56%
Worst quarter
3/31/2014
0.00%
7-Day Net Yield as of December 31, 2019 was 1.44% for Premier Class shares and 1.20% for Class Y shares.
Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
10 Years
Premier Class (Inception 5/28/2004) 2.04% 0.91% 0.47%
Class Y (Inception 5/17/2004) 1.79% 0.73% 0.37%
INGMMI
(reflects no deduction for fees, expenses or taxes)
1.81% 0.74% 0.38%
LUSGMMI
(reflects deduction of fees and no deduction for sales charges or taxes)
1.73% 0.70% 0.36%
The iMoneyNet, Inc. Government Money Market Index (INGMMI) is an average of money funds with investment objectives similar to that of the Fund.
The Lipper U.S. Government Money Market Funds Index (LUSGMMI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
Peter J. Arts, Boyd R. Eager, and Robert Stapleton co-manage the Fund and are jointly and primarily
responsible for the day-to-day management of the Fund’s portfolio. Mr. Arts, Global Head of Money Markets and Short Duration and a Managing Director of the Adviser, joined the Adviser in 1994 and has co-managed the Fund since February 2012. Mr. Eager, a Director and Portfolio Manager of the Adviser, joined the Adviser in 1996 and has co-managed the Fund since February 2012. Mr. Stapleton, a Senior Associate and Portfolio Manager of the Adviser, joined the Adviser in 2014 and has co-managed the Fund since December 2019.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class Y shares and $10,000,000 for Premier Class shares. For Class Y, the minimum subsequent purchase amount is $50.
Sale of Fund Shares.
You may sell (redeem) your shares of the Fund on any day the Federal Reserve Bank of New York is open for business and, alternatively, on any day the U.S. government securities markets are open and the Fund’s portfolio managers determine sufficient liquidity exists in those markets using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Checkwriting.
Write a check in an amount of at
least
$250.
Tax Information
The Fund intends to make distributions that are expected to be taxed primarily as ordinary income for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a
 
78 Money Market Funds
 
BMO Government Money Market Fund (cont.)
conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
Money Market Funds 79
 
BMO Tax-Free Money Market Fund
Investment Objective:
To provide current income exempt from federal income tax consistent with stability of principal.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees (fees paid directly from your investment)
Class Y
Premier Class
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None None
Maximum Deferred Sales Charge (Load) (as a percentage of shares redeemed within 18 months of purchase) None None
Redemption Fee None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees 0.20% 0.20%
Distribution (12b-1) Fees None None
Other Expenses 0.36% 0.11%
Total Annual Fund Operating Expenses 0.56% 0.31%
Fee Waiver and Expense Reimbursement
(1)
(0.11)% (0.11)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(1)
0.45% 0.20%
(1)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.45% for Class Y and 0.20% for Premier Class through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples
reflect the Adviser’s agreement to waive fees and reimburse expenses through
 
December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class Y
Premier Class
1 Year $
46 		$
20
3 Years $168 $
89
5 Years $302 $163
10 Years $691 $382
Principal Investment Strategies
The Fund invests primarily in fixed and floating rate municipal bonds and notes, variable rate demand instruments, and other high-quality, short-term tax-exempt obligations maturing in 397 calendar days or less. Under normal circumstances, the Fund invests its assets so that at least 80% of the annual interest income that the Fund distributes will be exempt from federal income tax, including federal alternative minimum tax (AMT).
To maintain principal preservation, the Adviser places a strict emphasis on credit research. Using fundamental analysis, the Adviser develops an approved list of issuers and securities that meet the Adviser’s standards for minimal credit risk. The Adviser continually monitors the credit risks of all of the Fund’s portfolio securities on an ongoing basis by reviewing financial data. The Fund may invest only in securities which have been determined by the Adviser to present minimal credit risks to the Fund, based on the Adviser’s consideration of a number of factors including, but not limited to, financial condition, sources of liquidity, ability to react to market-wide and issuer- or guarantor-specific events, and positions within the industry and industry strength.
The Fund seeks to enhance yield by taking advantage of favorable changes in interest rates and reducing the effect of unfavorable changes in interest rates. In seeking to achieve this objective, the Adviser targets a dollar-weighted average portfolio maturity of 60 calendar days or less based on its interest rate outlook. The interest rate outlook is developed by analyzing a variety of factors, such as current and expected U.S. economic growth, current and expected interest rates and inflation, and the Federal Reserve Board’s monetary policy. By developing an interest rate outlook and adjusting the portfolio’s maturity accordingly, the Adviser seeks to position the Fund to take advantage of yield enhancing opportunities. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
.
In pursuing its investment objective and implementing its investment strategies, the Fund will comply with Rule 2a-7 under the Investment Company Act of 1940, as amended,
 which requires, among other things, the Fund to meet certain
 
80 Money Market Funds
 
BMO Tax-Free Money Market Fund (cont.)
requirements as to portfolio quality, diversification, maturity, and liquidity.
Principal Risks
You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The Fund may impose a fee upon sale of your shares or temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency. The Adviser has no legal obligation to provide financial support to the Fund, and you should not expect that the Adviser will provide financial support to the Fund at any time. In addition, the Fund is subject to the following risks.
Municipal Securities Risks.
Municipal bonds are subject to risks based on many factors, including economic and regulatory developments, changes or proposed changes in the federal and state tax structure, deregulation, court rulings, and other factors. The value of municipal securities may be affected more by supply and demand factors or the creditworthiness of the issuer than by market interest rates. Repayment of municipal securities depends on the ability of the issuer or project backing such securities to generate taxes or revenues. There is a risk that interest may be taxable on a municipal security that is otherwise expected to produce tax-exempt interest.
Sector Risks.
The Fund may invest its assets in municipal securities that finance similar projects, such as those relating to education, health care, transportation, and utilities. To the extent the Fund invests its assets in a particular sector, the Fund’s performance may be more susceptible to any economic, business, or other developments that generally affect that sector.
Income Risks.
The Fund’s income could decline due to falling market interest rates. In a falling interest rate environment, the Fund may be required to invest its assets in lower-yielding securities.
Interest Rate Risks.
Prices of fixed income securities rise and fall in response to changes in the interest rate paid by similar securities. Generally, when interest rates rise, prices of fixed income securities fall. Interest rate changes have a greater effect on the price of fixed income securities with longer maturities. Interest rate changes also are influenced by a number of factors including government or central bank policy, inflation expectations, and supply and demand. During periods of low
 
short-term interest rates, the Fund may have difficulty maintaining a positive yield.
Credit Risks.
Credit risk is the possibility that an issuer or counterparty will default on a security or repurchase agreement by failing to pay interest or principal when due. If an issuer defaults, the Fund may lose money. Lower credit ratings correspond to higher credit risk.
Call Risks.
If the securities in which the Fund invests are redeemed by the issuer before maturity (or “called”), the Fund may have to reinvest the proceeds in securities that pay a lower interest rate, which may decrease the Fund’s yield. This will most likely happen when interest rates are declining.
Demand Instruments Risks.
The Fund's right to obtain payment at par on a demand instrument upon demand may be negatively impacted by events impacting issuer’s ability to pay the par value that occur between the date the Fund elects to redeem the instrument and the date redemption proceeds are due.
Liquidity Risks.
Liquidity risk refers to the possibility that the trading market for a particular type of security becomes less liquid or the Fund may not be able to sell or buy a security or close out an investment contract at a favorable price or time. Consequently, the Fund may have to accept a lower price to sell a security, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative effect on the Fund’s performance. Infrequent trading of securities also may lead to an increase in their price volatility. Illiquidity may result from political, economic, or issuer specific events or overall market disruptions. Additionally, significant redemptions by large investors in the Fund could have a material adverse effect on the Fund’s other shareholders and the net asset value could be affected by forced selling during periods of high redemption pressures and/or illiquid markets.
Fees and Gates Risks.
The Fund has adopted policies and procedures to impose liquidity fees on redemptions and/or temporary redemption gates in the event that the Fund’s weekly liquid assets were to fall below a designated threshold, subject to the discretion of the Fund’s Board. If the Fund’s weekly liquid assets fall below 30% of its total assets, the Board, in its discretion, may impose liquidity fees of up to 2% of the value of the shares redeemed and/or impose temporary gates on redemptions. In addition, if the Fund’s weekly liquid assets fall below 10% of its total assets, the Fund must impose a liquidity fee in the default amount of 1% of the value of shares redeemed unless the Board determines that not doing so is in the best interests of the Fund, or that a higher or lower fee level (up to 2% of the value of shares redeemed) is in the best interests of the Fund.
Management Risks.
The Adviser’s judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no

 
Money Market Funds 81
 
BMO Tax-Free Money Market Fund (cont.)
guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total returns have varied from year to year, while the table compares the Fund’s average annual total returns to the returns of an average of money funds with similar objectives and an index of funds with similar investment objectives.
Please keep in mind that past performance does not represent how the Fund will perform in the future. Investors may obtain the Fund’s current 7-Day Net Yield or updated performance information at bmofunds.com.
Premier Class
—
Annual Total Returns
(calendar years 2010-2019)
The return for the Premier Class shares of the Fund from January 1, 2020 through September 30, 2020
was 0.52%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
6/30/2019
0.39%
W
orst quarter
3/31/2015
0.00%
7-Day Net Yield as of December 31, 2019 was 1.39% for Premier Class shares and 1.14% for Class Y shares.
Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
10 Years
Premier Class (Inception 6/29/2005) 1.36% 0.74% 0.48%
Class Y (Inception 9/22/2004) 1.11% 0.55% 0.31%
IMNTFNRI
(reflects no deduction for fees, expenses or taxes)
1.07% 0.51% 0.27%
LTEMMI
(reflects deduction of fees and no deduction for sales charges or taxes)
1.15% 0.57% 0.30%
The iMoneyNet, Inc. Fund Report/Tax-Free National Retail Index (IMNTFNRI) is an average of money funds with investment objectives similar to that of the Fund.
The Lipper Tax-Exempt Money Market Funds Index (LTEMMI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers
. Robert Wimmel, Thomas Byron, Michael Montgomery, and Brian Sipich co-manage the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Wimmel, Head of Tax Exempt Fixed Income and a Managing Director of the Adviser, joined the Adviser in 2015 and has co-managed the Fund since October 2016. Mr. Byron, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2015 and has co-managed the Fund since October 2016. Mr. Montgomery, a Vice President and Portfolio Manager of the Adviser, joined the Adviser in 2017 and has co-managed the Fund since December 2019. Mr. Sipich, a Vice President and Portfolio Manager of the Adviser, joined the Adviser in 2015 and has co-managed the Fund since October 2016.
Purchase and Sale of Fund Shares
The Fund operates as a retail money market fund. Accordingly, investments in the Fund are limited to accounts beneficially owned by natural persons.
Minimums.
To open an account, your first investment must be at least $1,000 for Class Y shares and $10,000,000 for Premier Class shares. For Class Y, the minimum subsequent purchase amount is $50.
Sale of Fund Shares.
You may sell (redeem) your shares of the Fund on any day the Federal Reserve Bank of New York is open for business and, alternatively, on any day the U.S. government securities markets are open and the Fund’s portfolio managers determine sufficient liquidity exists in those markets using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.

 
82 Money Market Funds
 
BMO Tax-Free Money Market Fund (cont.)
BMO Funds Website.
Go to bmofunds.com.
Checkwriting.
Write a check in an amount of at least $250.
Tax Information
The Fund intends to make distributions that are primarily exempt from federal income tax; however, a portion of the Fund’s distributions may be subject to federal income tax.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
Money Market Funds 83
 
BMO Prime Money Market Fund
Investment Objective:
To provide current income consistent with stability of principal.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees (fees paid directly from your investment)
Class Y
Premier Class
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None None
Maximum Deferred Sales Charge (Load) (as a percentage of shares redeemed within 18 months of purchase) None None
Redemption Fee None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees 0.15% 0.15%
Distribution (12b-1) Fees None None
Other Expenses 0.35% 0.10%
Acquired Fund Fees and Expenses 0.01% 0.01%
Total Annual Fund Operating Expenses 0.51% 0.26%
Fee Waiver and Expense Reimbursement
(1)
(0.05)% (0.05)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(1)
0.46% 0.21%
(1)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.45% for Class Y and 0.20% for Premier Class through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples
reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class Y
Premier Class
1 Year $
47 		$
22
3 Years $159 $
79
5 Years $280 $141
10 Years $636 $326
Principal Investment Strategies
The Fund invests in high quality, short-term money market instruments, such as short-term commercial paper, corporate bonds and notes, asset-backed securities, bank instruments, demand and variable rate demand instruments, U.S. government obligations, municipal securities, repurchase agreements, and funding agreements. The Fund may invest in U.S. dollar-denominated instruments issued by foreign governments, corporations and financial institutions. The Fund may invest only in securities which have been determined by the Adviser to present minimal credit risks to the Fund, based on the Adviser’s consideration of a number of factors including, but not limited to, financial condition, sources of liquidity, ability to react to market-wide and issuer- or guarantor-specific events, and positions within the industry and industry strength. The Adviser uses a “bottom-up” approach, which evaluates debt securities of individual companies against the context of broader market factors such as the cyclical trend in interest rates, the shape of the yield curve, and debt security supply factors. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
.
In pursuing its investment objective and implementing its investment strategies, the Fund will comply with Rule 2a-7 under the Investment Company Act of 1940, as amended (1940 Act), which requires, among other things, the Fund to meet certain requirements as to portfolio quality, diversification, maturity, and liquidity.
Principal Risks
You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The Fund may impose a fee upon sale of your shares or temporarily suspend your ability to sell shares if the Fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
 
The Adviser has no legal obligation to provide financial support
to the Fund, and you should not expect that the Adviser will
 
84 Money Market Funds
 
BMO Prime Money Market Fund (cont.)
provide financial support to the Fund at any time. In addition, the Fund is subject to the following risks.
Bank Instruments Risks.
Bank instruments are unsecured interest-bearing deposits with banks, including bank accounts, time deposits, certificates of deposit, and banker’s acceptances. Changes in economic, regulatory, or political conditions or other events that affect the banking industry, may have an adverse effect on bank instruments or banking institutions that serve as counterparties in transactions with the Fund.
Asset-Backed Securities Risks.
Asset-backed securities are subject to risks of prepayment. The Fund’s yield will be reduced if cash from prepaid securities is reinvested in securities with lower interest rates. Asset-backed securities may decline in value because of defaults on the underlying obligations. Asset-backed securities may also be subject to greater risk of default during periods of economic downturn than other securities, which could result in possible losses to the Fund. In addition, the secondary market for asset-backed securities may not be as liquid as the market for other securities which may result in the Fund experiencing difficulty in selling or valuing asset-backed securities.
Foreign Securities Risks.
Investing in foreign securities may involve additional risks, including political and economic instability, differences in financial reporting standards, less-strict regulation of the securities markets, and possible imposition of foreign withholding taxes. Furthermore, the Fund may incur higher costs and expenses when making foreign investments, which will affect the Fund’s total return.
Repurchase Agreements Risk.
Repurchase agreements are transactions in which the Fund buys a security from a dealer or bank and agrees to sell the security back at a mutually agreed upon time and price. Repurchase agreements are subject to market risk with respect to the collateral securing the repurchase agreements and credit risk with respect to the counterparty. In the event of a bankruptcy or other default by the counterparty, the Fund could experience delays and potential losses in liquidating the underlying security.
Income Risks.
The Fund’s income could decline due to falling market interest rates. In a falling interest rate environment, the Fund may be required to invest its assets in lower-yielding securities.
Interest Rate Risks.
Prices of fixed income securities rise and fall in response to changes in the interest rate paid by similar securities. Generally, when interest rates rise, prices of fixed income securities fall. Interest rate changes have a greater effect on the price of fixed income securities with longer maturities. Interest rate changes also are influenced by a number of factors including government or central bank policy, inflation
expectations, and supply and demand. During periods of low short-term interest rates, the Fund may have difficulty maintaining a positive yield.
Credit Risks.
Credit risk is the possibility that an issuer or counterparty will default on a security or repurchase agreement by failing to pay interest or principal when due. If an issuer defaults, the Fund may lose money. Lower credit ratings correspond to higher credit risk.
Call Risks.
If the securities in which the Fund invests are redeemed by the issuer before maturity (or “called”), the Fund may have to reinvest the proceeds in securities that pay a lower interest rate, which may decrease the Fund’s yield. This will most likely happen when interest rates are declining.
Demand Instruments Risks.
The Fund's right to obtain payment at par on a demand instrument upon demand may be negatively impacted by events impacting issuer’s ability to pay the par value that occur between the date the Fund elects to redeem the instrument and the date redemption proceeds are due.
Government Obligations Risks.
No assurance can be given that the U.S. government will provide financial support to U.S. government-sponsored agencies or instrumentalities where it is not obligated to do so by law (such as Fannie Mae or Freddie Mac). As a result, a risk exists that these entities will default on a financial obligation.
Municipal Securities Risks.
Municipal bonds are subject to risks based on many factors, including economic and regulatory developments, changes or proposed changes in the federal and state tax structure, deregulation, court rulings, and other factors. The value of municipal securities may be affected more by supply and demand factors or the creditworthiness of the issuer than by market interest rates. Repayment of municipal securities depends on the ability of the issuer or project backing such securities to generate taxes or revenues. There is a risk that interest may be taxable on a municipal security that is otherwise expected to produce tax-exempt interest.
Sovereign Debt Securities Risks.
Sovereign debt securities are subject to risks in addition to those relating to debt securities and foreign securities, including the risk that a governmental entity may be unwilling or unable to meet its obligations due to insufficient cash flow or foreign reserves, the size of the debt service burden, or government monetary policy. In the event of a default on sovereign debt, the Fund also may have limited legal recourse against the defaulting government entity.
Liquidity Risks.
Liquidity risk refers to the possibility that the trading market for a particular type of security becomes less liquid or the Fund may not be able to sell or buy a security or
 
close out an investment contract at a favorable price or time.
 
Money Market Funds 85
 
BMO Prime Money Market Fund (cont.)
Consequently, the Fund may have to accept a lower price to sell a security, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative effect on the Fund’s performance. Infrequent trading of securities also may lead to an increase in their price volatility. Illiquidity may result from political, economic, or issuer specific events or overall market disruptions. Additionally, significant redemptions by large investors in the Fund could have a material adverse effect on the Fund’s other shareholders and the net asset value could be affected by forced selling during periods of high redemption pressures and/or illiquid markets.
Fees and Gates Risks.
The Fund has adopted policies and procedures to impose liquidity fees on redemptions and/or temporary redemption gates in the event that the Fund’s weekly liquid assets were to fall below a designated threshold, subject to the discretion of the Fund’s Board. If the Fund’s weekly liquid assets fall below 30% of its total assets, the Board, in its discretion, may impose liquidity fees of up to 2% of the value of the shares redeemed and/or impose temporary gates on redemptions. In addition, if the Fund’s weekly liquid assets fall below 10% of its total assets, the Fund must impose a liquidity fee in the default amount of 1% of the value of shares redeemed unless the Board determines that not doing so is in the best interests of the Fund, or that a higher or lower fee level (up to 2% of the value of shares redeemed) is in the best interests of the Fund.
Management Risks.
The Adviser’s judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results.
Fund Performance
The bar chart and table show the historical performance of the Fund’s shares and provide some indication of the risks of investing in the Fund. The bar chart shows how the Fund’s total returns have varied from year to year, while the table compares the Fund’s average annual total returns to the returns of an average of money funds with similar objectives and an index of funds with similar investment objectives. Please keep in mind that past performance does not represent how the Fund will perform in the future. Investors may obtain the Fund’s current 7-Day Net Yield or updated performance information at bmofunds.com.
Premier Class
—
Annual Total Returns
(calendar years 2010-2019)
The return for the Premier Class shares of the Fund from January 1, 2020 through September 30, 2020 was 0.41%.
During the periods shown in the bar chart for the Fund:
 
 
Quarter Ended
Returns
Best quarter
3/31/2019
0.59%
Worst quarter
6/30/2014
0.00%
7-Day Net Yield as of December 31, 2019 was 1.63% for Premier Class shares and 1.38% for Class Y shares.
Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
10 Years
Premier Class (Inception 4/3/2000) 2.18% 1.06% 0.59%
Class Y (Inception 11/23/1992) 1.92% 0.85% 0.43%
IMNMFRA
(reflects no deduction for fees, expenses or taxes)
1.85% 0.80% 0.41%
LMMI
(reflects deduction of fees and no deduction for sales charges or taxes)
1.97% 0.87% 0.44%
The iMoneyNet, Inc. Money Fund Report Averages (IMNMFRA) is an average of money funds with investment objectives similar to that of the Fund.
The Lipper Money Market Instrument Funds Index (LMMI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
Peter J. Arts, Boyd R. Eager, and Robert Stapleton co-manage the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Arts, Global Head of Money Markets and Short Duration and a Managing Director of the Adviser, joined the Adviser in 1994 and has co-managed the Fund since February 2012. Mr. Eager, a Director and Portfolio Manager of the Adviser, joined the Adviser in 1996 and has co-managed the Fund since February 2012. Mr. Stapleton, a Senior Associate and Portfolio Manager of the Adviser, joined the Adviser in 2014 and has co-managed the Fund since December 2019.
 
86 Money Market Funds
 
BMO Prime Money Market Fund (cont.)
Purchase and Sale of Fund Shares
The Fund operates as a retail money market fund. Accordingly, investments in the Fund are limited to accounts beneficially owned by natural persons.
Minimums.
To open an account, your first investment must be at least $1,000 for Class Y shares and $10,000,000 for Premier Class shares. For Class Y, the minimum subsequent purchase amount is $50.
Sale of Fund Shares.
You may sell (redeem) your shares of the Fund on any day the Federal Reserve Bank of New York is open for business and, alternatively, on any day the U.S. government securities markets are open and the Fund’s portfolio managers determine sufficient liquidity exists in those markets using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Checkwriting.
Write a check in an amount of at least $250.
Tax Information
The Fund intends to make distributions that are expected to be taxed primarily as ordinary income for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
Money Market Funds 87
 
Additional Information Regarding Principal Investment Strategies and Risks
Each Fund’s investment objective is non-fundamental and may be changed without shareholder approval. In addition, each Fund that has adopted a non-fundamental policy to invest at least 80% of its net assets plus the amount of any borrowings for investment purposes in the types of securities suggested by such Fund’s name will provide shareholders with at least 60 days’ notice of any change in this policy. The GOVERNMENT MONEY MARKET FUND also must provide shareholders with at least 60 days’ notice of any change in its non-fundamental policy to invest at least 99.5% of its total assets in U.S. government securities, cash, and/or repurchase agreements that are collateralized fully (as defined in Rule 2a-7 under the 1940 Act). The ULTRA SHORT TAX-FREE FUND, SHORT TAX-FREE FUND, and INTERMEDIATE TAX-FREE FUND, which have each adopted a fundamental policy to invest at least 80% of its net assets plus the amount of any borrowings for investment purposes in the types of securities suggested by its name, may only change this policy with shareholder approval. The TAX-FREE MONEY MARKET FUND may only change its policy to invest its assets so that 80% of the annual income it distributes will be exempt from federal income tax, including the federal AMT, with shareholder approval.
Additional information regarding the other investment techniques used by the Funds and the risks associated with various investment strategies is provided below.
Other Investment Techniques
Securities Lending.
  Although securities lending is not a principal investment strategy, each Fund (other than the MONEY MARKET FUNDS) may lend portfolio securities to borrowers that the Adviser deems creditworthy. In return, a Fund receives cash or liquid securities from the borrower as collateral and will reinvest cash collateral in securities that qualify as an acceptable investment for the Fund. The borrower must furnish additional collateral if the market value of the loaned securities increases. Also, the borrower must pay a Fund the equivalent of any dividends or interest received on the loaned securities. Any dividend equivalent payments will not be treated as “qualified dividend income” for federal income tax purposes and will generally be taxable as ordinary income for federal income tax purposes.
Loans are subject to termination at the option of a Fund or the borrower. A Fund will not have the right to vote on securities while they are on loan, but it may terminate a loan in anticipation of any important vote. A Fund may pay administrative and custodial fees in connection with a loan and may pay a negotiated portion of the interest earned on the cash collateral to a securities lending agent or broker. Securities lending activities are subject to interest rate risks and credit risks. In addition, the Fund may be affected adversely if the
borrower is unable to furnish additional collateral or return the loaned portfolio securities when requested as required under the securities lending agreement.
Temporary Defensive Investments.
  To minimize potential losses and maintain liquidity to meet shareholder redemptions during adverse market, economic, political, or other conditions, or when it receives large cash inflows, each Fund (except the MONEY MARKET FUNDS) may temporarily use a different investment strategy by investing up to 100% of its assets in cash or short-term, high quality money market instruments (for example, commercial paper and repurchase agreements). Each MONEY MARKET FUND may take temporary defensive positions by holding cash, shortening its dollar weighted average maturity, or investing in other eligible securities. This may cause a Fund to temporarily forgo greater investment returns for the safety of principal. When so invested, a Fund may not achieve its investment objective.
Additional Principal Risk Information
Cybersecurity Risks.
  With the increased use of technologies such as the Internet to conduct business, the Funds are susceptible to operational, information security, and related risks. In general, cyber incidents can result from deliberate attacks or unintentional events. Cyber attacks include, but are not limited to, gaining unauthorized access to digital systems (e.g., through “hacking” or malicious software coding) for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption. Cyber attacks also may be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service attacks on websites (i.e., efforts to make network services unavailable to intended users).
Cyber incidents affecting the Funds or their service providers have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with the Funds’ ability to calculate their NAV, impediments to trading, the inability of shareholders to transact business, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, or additional compliance costs. Similar adverse consequences could result from cyber incidents affecting issuers of securities in which the Funds invest, counterparties with which the Funds engage in transactions, governmental and other regulatory authorities, exchange and other financial market operators, banks, brokers, dealers, insurance companies and other financial institutions (including financial intermediaries and service providers for shareholders) and other parties.
 
88 Additional Information Regarding Principal Investment Strategies and Risks
 
Additional Information Regarding Principal Investment Strategies and Risks (cont.)
In addition, substantial costs may be incurred to prevent any cyber incidents in the future. While the Funds’ service providers have established business continuity plans in the event of, and risk management systems to prevent, such cyber incidents, inherent limitations exist in such plans and systems including the possibility that certain risks have not been identified. Furthermore, the Funds cannot control the cyber security plans and systems put in place by their service providers or any other third parties whose operations may affect the Funds or their shareholders. As a result, the Funds and their shareholders could be negatively affected.
Extraneous Risks.
  The market values of securities or other investments that a Fund holds may decline, sometimes rapidly or unpredictably, due to factors that are not associated with normal market conditions. These declines may be the result of market reactions to such factors as acts of war or terrorism, recessions, national or global pandemics, or other events. Accordingly, an investment in a Fund could lose money over short or long periods of time. Furthermore, the Adviser’s ability to operate effectively, including the ability of its personnel or its service providers to function, communicate, and travel to the extent necessary to carry out the Funds’ investment strategies and objectives may be impaired.
Liquidity Risks
–
Money Market Funds.
  Significant redemptions by large investors in a Fund could have a material adverse effect on a Fund’s other shareholders and the net asset value (NAV) could be affected by forced selling during periods of high redemption pressures and/or illiquid markets. In an attempt to combat this risk and in conjunction with changes to the money market fund rules which went into effect on October 14, 2016, the MONEY MARKET FUNDS (other than the GOVERNMENT MONEY MARKET FUND) adopted policies and procedures for imposing liquidity fees on redemptions or temporarily suspending redemptions (“gating”) if a Fund’s weekly liquid assets fall below a certain threshold and the Board determines such actions to be in the best interest of the Fund. Among other requirements, a MONEY MARKET FUND (other than the GOVERNMENT MONEY MARKET FUND) must impose a 1% liquidity fee on shareholder redemptions if a Fund’s weekly liquid assets fall below 10% of its total assets at the end of any business day, unless the Board determines that not doing so is in the best interests of the Fund, or that a higher or lower fee level (up to 2% of the value of shares redeemed) is in the best interests of the Fund. If the weekly liquid assets of a Fund (other than the GOVERNMENT MONEY MARKET FUND) fall below 30% of its total assets, the Board, in its discretion, may impose liquidity fees of up to 2% of the value of the shares redeemed or gate redemptions for a period of not more than 10 business days in any 90 day period. The Board has chosen not to subject the GOVERNMENT MONEY MARKET FUND to a
liquidity fee or redemption gate, and may do so in the future only with advance notice to shareholders.
Portfolio Turnover Risks.
  A Fund’s portfolio turnover rate may vary from year to year. A high portfolio rate (100% or more) may result in the realization and distribution to shareholders of a greater amount of capital gains than if the Fund had a low portfolio turnover rate. A higher tax liability may result. High portfolio turnover also may result in higher transaction costs (such as brokerage commissions), which may negatively affect a Fund’s performance.
Regulatory Risks.
  Future regulatory developments applicable to mutual funds and financial institutions could limit or restrict the ability of a Fund to use certain instruments as a part of its investment strategies. On July 21, 2015, rules implementing Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Volcker Rule) went into effect. The Volcker Rule prohibits banking entities, such as the Bank of Montreal (BMO) and its affiliates, including the Adviser, from engaging in proprietary trading of certain instruments and limits such entities’ investments in and relationships with “covered funds,” as defined in the rules.
During 2016, the SEC’s money market fund reform rules took effect. These rules: (i) categorize all money market funds as either institutional, retail, or government money market funds; (ii) require funds operating as government money market funds to invest at least 99.5% of their total assets in U.S. government securities, cash, and/or repurchase agreements that are collateralized fully (as defined in Rule 2a-7 under the 1940 Act); (iii) require institutional funds to operate with a floating NAV; and (iv) require institutional and retail funds to adopt policies and procedures regarding “liquidity fees” and “redemption gates,” and permit (but not require) government money market funds to do the same. Further regulatory actions could impact the Funds’ operations, universe of potential investment options, and return potential.
On October 28, 2020, the SEC approved new Rule 18f-4 under the 1940 Act, which governs the use of derivatives by registered investment companies. The new Rule 18f-4 imposes limits on the amount of derivatives a fund can enter into, eliminates the asset segregation framework previously used by funds to comply with Section 18 of the 1940 Act, and amends a fund's reporting and disclosure requirements on Forms N-CEN and N-PORT regarding its use of derivatives. In addition, new Rule 18f-4 requires funds that enter into derivatives transactions, who are more than a “limited derivatives user,” to adopt and implement a written derivatives risk management program and appoint a derivatives risk manager. A fund is considered to be a “limited derivatives user,” if it limits its derivatives exposure to 10% of its net assets and adopts and
 
Additional Information Regarding Principal Investment Strategies and Risks 89
 
Additional Information Regarding Principal Investment Strategies and Risks (cont.)
implements policies and procedures reasonably designed to manage the fund's derivatives risks.
90 Additional Information Regarding Principal Investment Strategies and Risks
 
How to Buy Shares
Who Can Invest in the BMO Funds?
  Only adult U.S. citizens/residents or a U.S. entity may invest in the BMO Funds as long as they have a valid U.S. taxpayer identification (social security or employer identification) number. You may not place transactions in your account for the benefit of any person other than yourself (except for a transfer of shares to another account). If the Funds determine that the registered owner of an account has permitted another person or entity who is not the registered or beneficial owner of the account to hold shares through that account, the Funds may reject future purchases in that account and any related accounts.
Shares of the Funds are qualified for sale only in the United States and its territories and possessions. The Funds generally do not sell shares to investors residing outside the United States, even if they are U.S. citizens or lawful permanent residents, except to investors with U.S. military APO or FPO addresses.
The TAX-FREE MONEY MARKET FUND and PRIME MONEY MARKET FUND are operated as retail money market funds. Accordingly, each Fund has adopted policies and procedures reasonably designed to limit investments in the Fund to accounts beneficially owned by natural persons, as required by amended Rule 2a-7 under the 1940 Act. In order to comply with amended Rule 2a-7, the TAX-FREE MONEY MARKET FUND and PRIME MONEY MARKET FUND may redeem investors who are not natural persons. Each Fund will provide written notification of its intent at least 60 days prior to any such involuntary redemptions. Neither the Funds nor the Adviser will be responsible for any loss or tax liability resulting from an involuntary redemption.
How Do I Purchase Shares?
  You may purchase shares through a broker/dealer, investment professional, or financial institution (Authorized Dealers). Some Authorized Dealers may charge a transaction fee for this service. Consult your Authorized Dealer or service provider for more information, including applicable fees. You also may purchase shares directly from the Funds by the methods described below under the “Fund Purchase Easy Reference Table” and sending your payment to the Funds by check or wire. In connection with opening an account, you will be requested to provide information that will be used by the Funds to verify your identity, as described in more detail under “Important Information About Procedures for Opening a New Account” below.
The minimum investment for each class of shares is listed in the “Fund Purchase Easy Reference Table” below. In certain circumstances, the minimum investments listed in the table may be waived or lowered at the Funds’ discretion. You may meet the minimum investment amount for Class A, Class I, or
Premier Class shares by aggregating multiple accounts with common ownership or discretionary control within a Fund, including accounts held at Authorized Dealers. If approved in advance by Fund management, clients of a financial adviser or institutional consultant may qualify to purchase Class A, Class I, or Premier Class shares if the aggregate amount invested by the adviser or consultant in a Fund meets the minimum investment amount. Different minimums may apply to accounts opened through third parties. Call your Authorized Dealer for any additional limitations.
The minimum initial investment amount for Class I shares is $1 million per Fund. This requirement may be met by investments through financial intermediary omnibus accounts. In addition, no minimum initial investment amount exists for certain employer-sponsored retirement plans (operated pursuant to Code sections 401(a), 401(k), 403(b), and 457) where a financial intermediary provides retirement recordkeeping services to plan participants with the use of omnibus accounts held on the books of a Fund. The minimum investment amount also does not apply to fee-based wrap programs where an Authorized Dealer has an omnibus account on the books of a Fund and charges a fee for advisory, investment, consulting or similar services. The minimum investment amount may be waived in other circumstances at the discretion of Fund management.
The minimum investment for Class I and Premier Class shares does not apply to current employees of BMO Financial Corp. and/or its affiliates, the spouse or domestic partner or children of a current employee of BMO Financial Corp. or its affiliates, or to the directors of the BMO Funds, provided such persons purchase shares directly from the BMO Funds. Persons investing in Class I and Premier Class shares in this manner are not eligible to participate in the Systematic Investment Program or Checkwriting described in the tables below.
If you purchase shares of a Fund through a program of services offered or administered by an Authorized Dealer or other service provider, you should read the program materials, including information relating to fees and investment minimums, in conjunction with this Prospectus. Certain features of a Fund may not be available or may be modified in connection with the program of services provided.
Once you have opened an account, you may purchase additional Fund shares by contacting BMO Funds - U.S. Services at 1-800-236-FUND (3863) if you have pre-authorized the telephone purchase privilege.
Each Fund reserves the right to reject any purchase request. It is the responsibility of BMO Funds - U.S. Services, any Authorized Dealer, or other service provider that has entered into an agreement with a Fund, its distributor, or its administrative or
 
How to Buy Shares 91
 
How to Buy Shares (cont.)
shareholder services agent to promptly submit purchase orders to the Fund.
You are not the owner of Fund shares (and therefore will not receive distributions) until payment for the shares is received in “good funds.” Wires are generally “good funds” on the day received and checks are “good funds” when deposited with the Funds’ custodian, normally the next business day after receipt. Checks sent to the BMO Funds to purchase shares must be made payable to the “BMO Funds.”
When Can Shares Be Purchased?
  You can buy the shares of a Fund (other than the MONEY MARKET FUNDS) on any day the New York Stock Exchange (NYSE) is open for regular session trading. You can buy the shares of the MONEY MARKET FUNDS on any day the Federal Reserve Bank of New York (Federal Reserve) is open for business and, alternatively, on any day the U.S. government securities markets are open and the MONEY MARKET FUND’s portfolio manager determines sufficient liquidity exists in those markets. The NYSE is closed on weekends and the following holidays: New Year’s Day, Martin Luther King, Jr. Day, President’s Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
When you deliver your transaction request in proper form and it is accepted by the BMO Funds, or its authorized agent, your transaction is processed at the next determined NAV plus any applicable sales charge. The NAV is calculated for each Fund (other than the MONEY MARKET FUNDS) at the end of regular trading (generally 3:00 p.m. Central Time) each day the NYSE is open. The NAV for the TAX-FREE MONEY MARKET FUND is determined daily at 11:00 a.m. (Central Time). The NAV for the PRIME MONEY MARKET FUND and GOVERNMENT MONEY MARKET FUND is determined daily at 4:00 p.m. (Central Time). For purchase orders for the GOVERNMENT MONEY MARKET FUND and PRIME MONEY MARKET FUND that are received after 3:00 p.m. but before 4:00 p.m. (Central Time), BMO Funds - U.S. Services will use its best efforts to accept and process such purchase orders that day; however, no guarantee exists that BMO Funds - U.S. Services will be able to do so. All purchase orders received in proper form and accepted by the time a Fund’s NAV is calculated will receive that day’s NAV, regardless of when the order is processed. If the U.S. government securities markets close early, the MONEY MARKET FUNDS reserve the right to determine their NAV at earlier times under those circumstances.
How is NAV Calculated?
  Each class’s NAV per share is the value of a single share of the class. It is computed for each class of a Fund by totaling the class’s pro rata share of the value of the Fund’s investments, cash, and other assets, subtracting the class’s pro rata share of the value of the Fund’s general liabilities
and the liabilities specifically allocated to the class, then dividing the result by the number of shares of that class outstanding. For purposes of calculating the NAV, securities transactions and shareholder transactions are accounted for no later than one business day after the trade date. Each Fund’s NAV per share for each class is readily available at www.bmo.com/gam/funds/g/us/home/daily-historical-pricing.
The MONEY MARKET FUNDS use the amortized cost method to value portfolio securities in accordance with Rule 2a-7 under the Investment Company Act of 1940, as amended (1940 Act), to determine their respective NAVs.
In determining the NAV for all other Funds, listed equity securities are valued each trading day at the last sale price or official closing price reported on a national securities exchange, including NASDAQ. Securities listed on a foreign exchange are valued each trading day at the last closing price on the principal exchange on which they are traded immediately prior to the time for determination of NAV or at fair value as discussed below.
Equity securities without a reported trade, U.S. government securities, listed corporate bonds, other fixed income and asset-backed securities with maturities of 60 days or more, unlisted securities, and private placement securities are generally valued at the mean of the latest bid and asked price as furnished by an independent pricing service. Fixed income securities that are not exchange traded are valued by an independent pricing service, taking into consideration yield, liquidity, risk, credit quality, coupon, maturity, type of issue, and any other factors or market data the pricing service deems relevant. Fixed income securities with remaining maturities of 60 days or less at the time of purchase generally are valued at amortized cost, which approximates fair value. Investments in other open-end registered investment companies are valued at NAV. Investments in ETFs are valued at market prices.
Securities or other assets for which market valuations are not readily available, or are deemed to be inaccurate, are valued at fair value as determined in good faith using methods approved by the Board. The Board oversees a Pricing Committee, which is responsible for determinations of fair value, subject to the supervision of the Board. In determining fair value, the Pricing Committee takes into account all information available and any factors it deems appropriate. Consequently, the price of securities used by a Fund to calculate its NAV may differ from quoted or published prices for the same securities. Fair value pricing involves subjective judgments. It is possible that the fair value determined for a security is materially different than the value that could be realized upon the sale of that security and the difference may be material to the NAV of the respective Fund.
 
92 How to Buy Shares
 
How to Buy Shares (cont.)
Certain securities held by the Funds, primarily in the INTERNATIONAL AND GLOBAL FUNDS, may be listed on foreign exchanges that trade on days when a Fund does not calculate its NAV. As a result, the market value of the Fund’s investments may change on days when you cannot purchase or sell Fund shares. In addition, a foreign exchange may not value its listed securities at the same time that the Fund calculates its NAV. Most foreign markets close well before the Funds value their securities, generally 3:00 p.m. (Central Time). The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may occur in the interim, which may affect a security’s value.
The Pricing Committee may determine that a security needs to be fair valued if, among other things, it believes the value of the security might have been materially affected by events occurring after the close of the market in which the security was principally traded, but before the time for determination of the NAV (a subsequent event). A subsequent event might include a company-specific development (for example, announcement of a merger that is made after the close of the foreign market), a development that might affect an entire market or region (for example, weather related events), or a potentially global development (such as a terrorist attack or global pandemic that may be expected to have an effect on investor expectations worldwide). The Board has retained an independent fair value pricing service to assist in valuing foreign securities when a subsequent event has occurred. The service uses statistical data based on historical performance of securities and markets and other data in developing factors used to estimate fair value for that day.
Redemption Fee.
  Your redemption or exchange proceeds may be reduced by a redemption fee of 2.00% (INTERNATIONAL AND GLOBAL FUNDS) if you redeem or exchange shares of a Fund less than 30 days after the purchase of such shares. The redemption fee is paid to the Fund. The purpose of the fee is to offset the costs associated with short-term trading in a Fund’s shares. See “How to Redeem and Exchange Shares
—
Will I Be Charged a Fee for Redemptions?,” “Additional Conditions for Redemption
—
Exchange Privilege,” and “Additional Conditions for Redemptions
—
Frequent Traders” below.
Purchase of Class A Shares
Class A Shares
–
Sales Charge.
  The applicable sales charge for the purchase of Class A shares depends on the Fund in which you invest, as set forth in the following table:
Equity Funds and Global and International Funds
Purchase Amount
Sales
Charge as
a % of
Public
Offering
Price*
Sales
Charge
as a %
of NAV
Typical
Dealer
Concession
as a % of
Public
Offering
Price
Under $50,000 5.00% 5.26% 5.00%
$50,000-$99,999 4.00 4.17 4.00
$100,000-$249,999 3.25 3.36 3.25
$250,000-$499,999 2.50 2.56 2.50
$500,000-$999,999 1.75 1.78 1.75
$1,000,000-$4,999,999 0.00 0.00 1.00
$5,000,000-$9,999,999 0.00 0.00 0.75
$10,000,000-$49,999,999 0.00 0.00 0.50
$50,000,000 and above 0.00 0.00 0.25
*
For purchases of $1,000,000 and above, a Contingent Deferred Sales Charge (CDSC) of 1.00% will apply to shares redeemed within 18 months of purchase.
Strategic Income Fund
Purchase Amount
Sales
Charge as
a % of
Public
Offering
Price*
Sales
Charge
as a %
of NAV
Typical
Dealer
Concession
as a % of
Public
Offering
Price
Under $100,000 3.50% 3.63% 3.50%
$100,000-$249,999 3.00 3.09 3.00
$250,000-$499,999 2.25 2.30 2.25
$500,000-$999,999 1.75 1.78 1.75
$1,000,000-$4,999,999 0.00 0.00 1.00
$5,000,000-$9,999,999 0.00 0.00 0.75
$10,000,000-$49,999,999 0.00 0.00 0.50
$50,000,000 and above 0.00 0.00 0.25
*
For purchases of $1,000,000 and above, a CDSC of 1.00% will apply to shares redeemed within 18 months of purchase.
Intermediate Tax-Free, Corporate Income, and Core Plus Bond Funds
Purchase Amount
Sales
Charge as
a % of
Public
Offering
Price*
Sales
Charge
as a %
of NAV
Typical
Dealer
Concession
as a % of
Public
Offering
Price
Under $100,000 3.50% 3.63% 3.50%
$100,000-$249,999 3.00 3.09 3.00
$250,000-$499,999 2.25 2.30 2.25
$500,000-$999,999 1.75 1.78 1.75
$1,000,000-$4,999,999 0.00 0.00 0.55
 
How to Buy Shares 93
 
 
How to Buy Shares (cont.)
Purchase Amount
Sales
Charge as
a % of
Public
Offering
Price*
Sales
Charge
as a %
of NAV
Typical
Dealer
Concession
as a % of
Public
Offering
Price
$5,000,000-$9,999,999 0.00 0.00 0.50
$10,000,000-$49,999,999 0.00 0.00 0.40
$50,000,000 and above 0.00 0.00 0.25
*
For purchases of $1,000,000 and above, a CDSC of 0.55% will apply to shares redeemed within 18 months of purchase.
Ultra Short Tax-Free, Short Tax-Free, and Short-Term Income Funds
Purchase Amount
Sales
Charge as
a % of
Public
Offering
Price*
Sales
Charge
as a %
of NAV
Typical
Dealer
Concession
as a % of
Public
Offering
Price
Under $50,000 2.00% 2.04% 2.00%
$50,000-$99,999 1.50 1.52 1.50
$100,000-$249,999 1.00 1.01 1.00
$250,000 and above 0.00 0.00 0.00
*
Purchases of $250,000 and above of these Funds are not subject to a CDSC.
The term “offering price” includes any applicable sales charge. Some or all of the sales charges may be paid as concessions to Authorized Dealers, as that term is defined under “How Do I Purchase Shares?” above.
Class A Shares
–
Waivers and Reductions of Sales Charges.
Investments of $1,000,000 or More.
No initial sales charge exists on a lump sum Class A share purchase of the Funds of $1,000,000 or more ($250,000 or more for the ULTRA SHORT TAX-FREE FUND, SHORT TAX-FREE FUND, and SHORT-TERM INCOME FUND), nor on any purchase into a Class A account with an accumulated value of $1,000,000 (or $250,000, as applicable) or more. However, if you have taken advantage of this waiver and redeem your shares within 18 months of purchase, a CDSC of 1.00% or 0.55%, as applicable, may be imposed on such shares based on the lesser of original cost or current market value, determined on a first-in, first-out basis. The CDSC generally will not apply if you are otherwise entitled to a waiver of the initial sales charge as listed in “Waivers of Sales Charges” below. Also, the CDSC generally will not apply if you are entitled to a waiver as listed in “Contingent Deferred Sales Charge Waivers” below. Purchases of ULTRA SHORT TAX-FREE FUND, SHORT TAX-FREE FUND, and SHORT-TERM INCOME FUND are not subject to a CDSC.
Waivers of Sales Charges.
For the following categories of investors and circumstances, Class A shares may be purchased at NAV, without payment of any front-end sales charge that would otherwise apply:
• Banks, broker-dealers, and other financial institutions (including registered investment advisors and financial planners) that have entered into an agreement with the Distributor or one of its affiliates, purchasing shares on behalf of clients participating in a fund supermarket or in a wrap program, asset allocation program, or other program in which the clients pay an asset-based fee;
• Registered representatives and other employees of affiliated or unaffiliated selling agents having a selling agreement with the Distributor;
• Employer-sponsored defined contribution
–
type plans, including 401(k) plans, 457 plans, 403(b) plans, profit-sharing and money purchase pension plans, defined benefit plans and non-qualified deferred compensation plans, and individual retirement account (IRA) rollovers involving retirement plan assets invested in the Funds and transferred in-kind to an IRA held at a financial intermediary that has an agreement with the Distributor to service such accounts;
• State sponsored college savings plans established under Section 529 of the Internal Revenue Code of 1986, as amended (Code);
• Direct rollovers (i.e., a rollover of Fund shares and not a reinvestment of redemption proceeds) from qualified employee benefit plans, provided that the rollover involves a transfer to Class A shares in the same Fund or another BMO Fund;
• Trustees or other fiduciaries purchasing Class A shares for employee benefit plans of employers with ten or more employees;
• Reinvested dividends and capital gain distributions; or
• In the Funds’ discretion, shares issued in plans of reorganization, such as mergers, asset acquisitions and exchange offers, to which a BMO Fund is a party.
Other purchases of Class A shares may be made without a sales charge from time to time in the Funds’ sole discretion. In addition, purchases of Class A shares may be made without a sales charge if your Authorized Dealer agrees to a waiver of such sales charges. Please see “Appendix
–
Sales Charge Waivers” for more information. Whether a sales charge waiver is available for your retirement plan or charitable account depends on the policies and procedures of your Authorized Dealer. Please consult your Authorized Dealer for more information.
 
94 How to Buy Shares
 
 
How to Buy Shares (cont.)
Reductions of Sales Charges.
The following accounts are eligible for account value aggregation for purposes of the right of accumulation and letters of intent:
• Individual or joint accounts;
• Roth and traditional IRAs, Simplified Employee Pension accounts (SEPs), and Savings Investment Match Plans for Employees of Small Employers accounts (SIMPLEs);
• Tax Sheltered Custodial Accounts (TSCAs);
• Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors (UTMA) accounts for which you, your spouse, or your domestic partner is parent or guardian of the minor child;
• Revocable trust accounts for which you or an immediate family member, individually, is the beneficial owner/grantor;
• Accounts held in the name of your, your spouse’s, or your domestic partner’s sole proprietorship or single owner limited liability company or S corporation;
• Qualified retirement plan assets, provided that you are the sole owner of the business sponsoring the plan, are the sole participant (other than a spouse) in the plan, and have no intention of adding participants to the plan; and
• Investments in wrap accounts.
The following accounts are not eligible for account value aggregation:
• Accounts of pension and retirement plans with multiple participants, such as 401(k) plans (which are combined to reduce the sales charge for the entire pension or retirement plan and therefore are not used to reduce the sales charge for your individual accounts); and
• Accounts invested in Class I, Class R6, and Premier Class shares of the Funds.
Contingent Deferred Sales Charge Waivers.
In the following circumstances, the CDSC will not be charged upon the redemption of Class A shares:
• In the event of the shareholder’s death;
• For which no sales commission or transaction fee was paid to an authorized selling agent at the time of purchase;
• Purchased through reinvestment of dividend and capital gain distributions;
• In an account that has been closed because it falls below the minimum account balance;
• That result from required minimum distributions taken from retirement accounts upon the shareholder’s attainment of the qualified age based on applicable IRS regulations.
• That result from returns of excess contributions made to retirement plans or IRAs, so long as the selling agent returns the applicable portion of any commission paid by the Distributor;
• Shares initially purchased by an employee benefit plan; or
• In the Funds’ discretion, shares issued in connection with plans of reorganization, including but not limited to mergers, asset acquisitions and exchange offers, to which the BMO Fund is a party.
Class A Shares
–
Letter Of Intent
A shareholder may sign a letter of intent committing to purchase a certain amount of the same Class A shares within a 13-month period to combine such purchases in calculating the applicable sales charge. The Funds’ custodian will hold shares in escrow equal to the maximum applicable sales charge. If the shareholder completes the commitment, the escrowed shares will be released to his/her account. If the commitment is not completed within 13 months, the custodian will redeem an appropriate number of escrowed shares to pay for the applicable sales charge.
While this letter of intent will not obligate the shareholder to purchase the Class A shares, each purchase during the period will be at the sales charge applicable to the total amount intended to be purchased. At the time a letter of intent is established, current balances in accounts in any Class A shares of any Fund, excluding money market accounts, will be aggregated to provide a purchase credit towards fulfillment of the letter of intent. The letter may be dated as of a prior date to include any purchase made within the past 90 days. Prior trade prices will not be adjusted.
Class A Shares
–
Rights of Accumulation
The sales charge you pay to purchase Class A shares of a Fund may be reduced or eliminated by:
• combining concurrent purchases of Class A shares by you, your spouse, and your children under age 21;
• combining concurrent purchases of Class A shares of two or more BMO Funds;
• accumulating purchases (in calculating the sales charge on an additional purchase, you may count the current NAV of previous Class A share purchases still invested in a BMO Fund);
 
How to Buy Shares 95
 
 
How to Buy Shares (cont.)
• signing a letter of intent to purchase a specific dollar amount of Class A shares within 13 months (call your investment representative for an application and more information); or
• accumulating purchases of shares of other BMO Funds with subsequent purchases of the BMO Funds’ Class A shares that do not otherwise qualify for the Funds’ reduced sales charges.
If your investment qualifies for a reduced sales charge due to accumulation of purchases, including due to accumulation of investments in other mutual funds held at BMO Financial Corp., you or your investment representative must notify BMO Funds at the time of purchase of the existence of other accounts and/or holdings eligible to be aggregated to reduce or eliminate the sales charge. You may be required to provide information or records to verify your eligibility for a sales charge reduction. This may include account statements of family members and information regarding shares held in accounts with your financial professional or another BMO entity. Additional information concerning sales load breakpoints is available in the SAI. Sales load and breakpoint discount information is also available, free of charge and in a clear and prominent format, on the Funds’ website at bmofunds.com.
Purchase of Class R6 Shares.
  Class R6 shares are available generally to retirement plans established under Code sections 401(a) (including 401(k) plans), 403(b) or 457, and to nonqualified deferred compensation plans and certain voluntary employee benefit association and post-retirement benefit plans. Class R6 shares also are available generally to retirement plans where plan level or omnibus accounts are held on the books of BMO Harris Bank N.A. Class R6 shares also are available generally to fee-based wrap programs or through retirement plan intermediaries that have an agreement with the Fund’s distributor specifically for the sale of such shares and to other registered investment companies. Class R6 shares generally are not available to retail nonretirement accounts, traditional and Roth IRAs, Coverdell Education Savings Accounts, SEPs, SARSEPs, and SIMPLE IRAs.
Class R6 shares are sold without any initial sales charge or CDSC and are not subject to 12b-1, shareholder servicing, or administrative services fees.
Rule 12b-1 Plan.
  The Funds have adopted a Rule 12b-1 Plan, which allows them to pay an annual fee equal to a maximum of 0.25% of the Class A assets to the distributor and financial intermediaries for the sale and distribution of each Fund’s Class A shares and for services provided to shareholders of that class. Such activities include, but are not necessarily limited to, compensating brokers, dealers, financial intermediaries, and sales personnel for distribution and shareholder services, recordkeeping, printing and mailing prospectuses to persons other than current shareholders, printing and mailing sales literature, and advertising. Because Rule 12b-1 fees are ongoing, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
Important Information About Procedures for Opening a New Account.
  The Funds are required to comply with various anti-money laundering laws and regulations. To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions, including mutual funds, to obtain, verify, and record information that identifies each person who opens an account. Consequently, when you open an account, the Funds must obtain certain personal information, including your full name, address, date of birth, social security number, and other information that will allow the Funds to identify you. The Funds also may ask for other identifying documents or information. If you do not provide this information, the Funds may be unable to open an account for you and your purchase order will not be in proper form. In the event the Funds are unable to verify your identity from the information provided, the Funds may, without prior notice to you, close your account within five business days and redeem your shares at the NAV next determined after the account is closed. Any delay in processing your order due to your failure to provide all required information will affect the purchase price you receive for your shares. The Funds are not liable for fluctuations in value experienced as a result of such delays in processing. If at any time the Funds detect suspicious behavior or if certain account information matches government lists of suspicious persons, the Funds may determine not to open an account, may reject additional purchases, may close an existing account, may file a suspicious activity report or may take other appropriate action.
 
96 How to Buy Shares
 
 
How to Buy Shares (cont.)
Fund Purchase Easy Reference Table
   
Minimum Investments
    Class Y
    •
To open an account
–
$1,000
    •
To add to an account (including through a Systematic Investment Program)
–
$50
    Class I
    •
To open an account
–
$1,000,000 (EQUITY, INTERNATIONAL and GLOBAL, and FIXED INCOME FUNDS)
    Class A
    •
To open an account
–
$1,000
    •
To add to an account (including through a Systematic Investment Program)
–
$50
    Class R6
    •
To open an account
–
Contact BMO Funds - U.S. Services
    Premier Class
    •
To open an account
–
$10,000,000
   
Phone 1-800-236-FUND (3863)
    •
Contact BMO Funds - U.S. Services.
    •
Complete an application for a new account.
    •
Once you have opened an account and if you have not opted out of telephone privileges on your account application or by a subsequent authorization form, you may purchase additional shares or exchange shares from another BMO Fund having an identical shareholder registration.
   
Mail
    •
To open an account, send your completed account application and check payable to “BMO Funds” to the following address:
    BMO Funds - U.S. Services
P.O. Box 219006
Kansas City, MO 64121-9006
    •
To add to your existing Fund account, send in your check, payable to “BMO Funds,” to the same address. Indicate your Fund account number on the check.
How to Buy Shares 97
 
 
How to Buy Shares (cont.)
   
Wire
    •
Notify BMO Funds - U.S. Services and request wire instructions at 1-800-236-FUND (3863).
    •
Mail a completed account application to the Fund at the address above under “Mail.”
    •
Your bank may charge a fee for wiring funds. Wire orders are accepted only on days when the Fund and the Federal Reserve wire system are open for business.
   
Systematic Investment Program
    •
You can have money automatically withdrawn from your checking account ($50 minimum) on predetermined dates and invest it in a Fund at the next Fund share price determined after BMO Funds - U.S. Services receives the order.
    •
Call BMO Funds - U.S. Services at 1-800-236-FUND (3863) to apply for this program.
    •
A medallion signature guarantee will be required to add this feature to your account when you are also adding or changing your bank account information.
   
BMO Funds Website
    •
You may purchase Fund shares at bmofunds.com if you have not opted out of this feature included as part of telephone privileges on the account application.
   
Additional Information About Checks and Automated Clearing House (ACH) Transactions Used to Purchase Shares
    •
If your check or ACH purchase does not clear, your purchase will be canceled and you will be charged a $15 fee and held liable for any losses incurred by the Fund.
    •
If you purchase shares by check or ACH, you may not be able to receive proceeds from a redemption for up to seven days.
    •
All checks should be made payable to “BMO Funds.”
    •
The maximum ACH purchase amount is $100,000.
    
 
Employer-Sponsored Retirement Plans
  •
Eligible retirement plans may open an account and purchase Class R6 shares by contacting an Authorized Dealer. Additional shares may be purchased through the plan’s administrator or recordkeeper.
98 How to Buy Shares
 
 
How to Redeem and Exchange Shares
How Do I Redeem Shares?
  You may redeem your Fund shares by several methods, described below under the “Fund Redemption Easy Reference Table.” You should note that redemptions will be made only on days when a Fund computes its NAV. When your redemption request is received in proper form, it is processed at the next determined NAV.
Clients of BMO Harris Bank or BMO Harris Financial Advisors should contact their account officer to make redemption requests. Telephone or written requests for redemptions must be received in proper form, as described below, and can be made through BMO Funds - U.S. Services or any Authorized Dealer. It is the responsibility of BMO Funds - U.S. Services, any Authorized Dealer or other service provider to promptly submit redemption requests to a Fund.
Redemption requests for the Funds (other than the MONEY MARKET FUNDS) must be received in proper form by the close of trading on the NYSE, generally 3:00 p.m. (Central Time), for shares to be redeemed at that day’s NAV. Redemption requests for the TAX-FREE MONEY MARKET FUND must be accepted by 11:00 a.m. (Central Time) for shares to be redeemed at that day’s NAV. Redemption requests for the GOVERNMENT MONEY MARKET FUND and PRIME MONEY MARKET FUND must be accepted by 4:00 p.m. (Central Time) for shares to be redeemed at that day’s NAV. For redemption requests for the GOVERNMENT MONEY MARKET FUND and PRIME MONEY MARKET FUND that are received after 3:00 p.m. but before 4:00 p.m. (Central Time), BMO Funds - U.S. Services will use its best efforts to accept and process such redemption requests that day; however, no guarantee exists that BMO Funds - U.S. Services will be able to do so. Different cut-off times for redemption requests through an Authorized Dealer may be imposed by the Authorized Dealer. Please contact your Authorized Dealer for more information.
All redemption requests received in proper form by the time a Fund’s NAV is calculated will receive that day’s NAV, regardless of when the request is processed. Redemption proceeds will normally be mailed, or wired if by written request, the following
business day, but in no event more than seven days, after the request is received, regardless of the method by which the redemption proceeds are paid. The Funds will meet redemption requests with cash on hand, by selling portfolio securities, or by utilizing a line of credit or interfund lending arrangement. These redemption methods will be used regularly and also may be used in stressed market conditions. The Funds also may meet redemption requests by redeeming shares in-kind, although the Funds do not intend to do so.
Will I Be Charged a Fee for Redemptions?
  A contingent deferred sales charge (CDSC) applies to Class A shares of the Funds redeemed within 18 months of purchase for purchases of $1,000,000 or more in an amount of 0.55% of the amount redeemed with respect to the INTERMEDIATE TAX-FREE FUND, CORPORATE INCOME FUND, and CORE PLUS BOND FUND and 1.00% of the amount redeemed with respect to all other applicable Funds. Purchases of the ULTRA SHORT TAX-FREE FUND, SHORT TAX-FREE FUND, and SHORT-TERM INCOME FUND are not subject to a CDSC. For applicable Funds, the CDSC is based on the lesser of original cost or current market value of the shares being redeemed. A CDSC does not apply in certain circumstances or to accounts held at certain Authorized Dealers. See “How to Buy Shares
–
Class A Shares
–
Waivers and Reductions of Sales Charges” and “Appendix
–
Sales Charge Waivers" for additional information.
You may be charged a transaction fee if you redeem Fund shares through an Authorized Dealer or service provider (other than BMO Funds - U.S. Services or BMO Harris Bank), or if you are redeeming by wire. Consult your Authorized Dealer or service provider for more information, including applicable fees. You will be charged a 2.00% short-term redemption fee (INTERNATIONAL AND GLOBAL FUNDS only) on shares that have been held for less than 30 days when redeemed (other than shares acquired through reinvestments of net capital gain or net investment income distributions), determined on a first-in, first-out basis. See “Additional Conditions for Redemptions
—
Frequent Traders” below.
 
How to Redeem and Exchange Shares 99
 
 
How to Redeem and Exchange Shares (cont.)
Fund Redemption Easy Reference Table
Certain redemption requests may require a medallion guarantee. See “Additional Conditions for Redemption
–
Medallion Guarantee” below for details.
   
Phone 1-800-236-FUND (3863)
    •
Contact BMO Funds - U.S. Services.
    •
If you have not opted out of the telephone redemption privilege in your account application or by a subsequent authorization form, you may redeem shares by telephone. If you are a customer of an Authorized Dealer, you must contact your account representative.
    •
Not available to retirement accounts, for which redemptions must be done in writing.
   
Mail
    •
Send in your written request to the following address, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem to:
    BMO Funds - U.S. Services
P.O. Box 55931
Boston, MA 02205-5931
    •
For additional assistance, call BMO Funds - U.S. Services at 1-800-236-FUND (3863).
   
Wire/Electronic Transfer
    •
Upon written request sent to the address above under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired directly to a domestic commercial bank previously designated by you in your account application or by subsequent form.
    •
Wires of redemption proceeds will only be made on days on which the Funds and the Federal Reserve wire system are open for business.
    •
Each wire transfer is subject to a $10 fee, except for wire transfers from the MONEY MARKET FUNDS.
    •
Wire-transferred redemptions may be subject to an additional fee imposed by the bank receiving the wire.
   
Systematic Withdrawal Program
    •
If you have a Fund account balance of at least $10,000, you can have predetermined amounts of at least $100 automatically redeemed from your Fund account on predetermined dates on a monthly or quarterly basis.
    •
Contact BMO Funds - U.S. Services to apply for this program.
    •
A medallion signature guarantee will be required to add this feature to your account when you are also adding or changing your bank account information.
100 How to Redeem and Exchange Shares
 
 
How to Redeem and Exchange Shares (cont.)
   
BMO Funds Website
    •
You may redeem Fund shares at bmofunds.com if you have not opted out of this feature included as part of telephone privileges on the account application..
    
 
Employer-Sponsored Retirement Plans
  •
Shares held in eligible retirement plans may be sold through the plan’s administrator or recordkeeper.
   
Checkwriting (Money Market Funds (Class Y) Only)
    •
You can redeem shares of any MONEY MARKET FUND by writing a check in an amount of at least $250. You must have completed the checkwriting section of your account application and the attached signature card, or have completed a subsequent application form. The Fund will then provide you with the checks.
    •
Your check is treated as a redemption order for Fund shares equal to the amount of the check.
    •
A check for an amount in excess of your available Fund account balance will be returned marked “insufficient funds.”
    •
Checks cannot be used to close your Fund account balance.
    •
Checks deposited or cashed through foreign banks or financial institutions may be subject to local bank charges.
How to Redeem and Exchange Shares 101
 
 
Additional Conditions for Redemption
Medallion Guarantees.
  A medallion signature guarantee is a guarantee by a financial institution that a signature is genuine and is used in connection with transferring securities to protect against unauthorized transfers. In the following instances, you must have a medallion guarantee on written redemption requests:
• when you want a redemption to be sent to an address other than the one you have on record with a Fund;
• when you want the redemption payable to someone other than the shareholder of record;
• when your redemption is to be sent to an address of record that was changed within the last 30 days; or
• when you add a new bank account or change the bank account associated with your account.
Your signature can be guaranteed by any federally insured financial institution (such as a bank or credit union) or a broker/dealer that is a domestic stock exchange member, but not by a notary public.
Limitations on Redemption Proceeds.
  Redemption proceeds normally are wired or mailed within one business day after accepting a request in proper form. However, delivery of payment may be delayed up to seven days:
• to allow your purchase payment to clear;
• during periods of market volatility; or
• when a shareholder’s trade activity or amount adversely impacts a Fund’s ability to manage its assets.
You will not accrue interest or dividends on uncashed checks from a Fund. If those checks are undeliverable and returned to a Fund, the proceeds will be reinvested in shares of the Funds that were redeemed.
Corporate Resolutions.
  Corporations, trusts, and institutional organizations are required to furnish evidence of the authority of persons designated on the account application to effect transactions on behalf of the organizations.
Redemption In-Kind.
  The Funds have reserved the right to pay the redemption price in whole or in part by a distribution of a Fund’s portfolio securities. This means that the Funds are obligated to pay share redemptions to any one shareholder in cash only up to the lesser of $250,000 or 1.00% of a Fund’s net assets represented by such share class during any 90-day period. Generally, any share redemption payment greater than this amount will be paid in cash unless the Adviser determines that payment should be in-kind. Securities received in-kind may remain exposed to market risk until sold and shareholders may incur brokerage costs when converting these securities to cash. Redemptions in-kind are taxable for federal income tax purposes in the same manner to a redeeming shareholder as
redemptions for cash. The subsequent sale of securities received in-kind may result in taxable gains or realized losses for federal income tax purposes.
Exchange Privilege.
  You may exchange shares of a Fund for shares of the same class of any of the other BMO Funds free of charge (and with respect to Class A shares, if you have previously paid a sales charge), provided you meet the investment minimum of the Fund and you reside in a jurisdiction where Fund shares may be lawfully offered for sale. An exchange of shares of the INTERNATIONAL AND GLOBAL FUNDS, if less than 30 days after purchase, may be subject to a 2.00% short-term redemption fee. See “Will I Be Charged a Fee for Redemptions?” An exchange is treated as a redemption and a subsequent purchase, and is therefore a taxable transaction for federal income tax purposes.
You must have a medallion guarantee if you request an exchange into another Fund with a different shareholder registration. The exchange privilege may be modified or terminated at any time.
Exchanges by Telephone.
  If you have completed the telephone authorization section on your account application or an authorization form obtained through BMO Funds - U.S. Services, you may telephone instructions to BMO Funds - U.S. Services to exchange between Fund accounts that have identical shareholder registrations. Customers of broker/dealers, financial institutions, or service providers should contact their account representatives. Telephone exchange instructions must be received by the Funds (other than the TAX-FREE MONEY MARKET FUND) before the close of trading on the NYSE, generally 3:00 p.m. (Central Time), for shares to be exchanged at the NAV calculated that day and to receive a dividend of the Fund into which you exchange, if applicable. Telephone exchange instructions must be received before 11:00 a.m. (Central Time) with respect to the TAX-FREE MONEY MARKET FUND for shares to be exchanged at that day’s NAV and to receive a dividend of the Fund into which you exchange, if applicable.
The Funds will record your telephone instructions. The Funds will not be liable for losses due to unauthorized or fraudulent telephone instructions as long as reasonable security procedures are followed. You will be notified of changes to telephone transaction privileges.
Conversion Privilege.
  Shareholders of a Fund may elect on a voluntary basis to convert their shares in one class of the Fund into shares of a different class of the same Fund, subject to satisfying the eligibility requirements for investment in the new share class. You may be required to provide sufficient information to establish eligibility to convert the new share class. A share conversion within the same Fund should not
 
102 Additional Conditions for Redemption
 
 
Additional Conditions for Redemption (cont.)
result in a capital gain or loss for federal income tax purposes. However, please consult your own tax advisor regarding tax considerations. The Fund may change, suspend, or terminate this conversion feature at any time.
Frequent Traders.
  The Funds’ management or the Adviser may determine from the amount, frequency, and pattern of exchanges or redemptions that a shareholder is engaged in excessive trading that is detrimental to a Fund or its other shareholders. Such short-term or excessive trading into and out of a Fund may harm all shareholders by disrupting investment strategies, increasing brokerage, administrative, and other expenses, decreasing tax efficiency, and diluting the value of shares held by long-term shareholders.
The Board has approved policies that seek to discourage frequent purchases and redemptions and curb the disruptive effects of frequent trading (the Market Timing Policy). Pursuant to the Market Timing Policy, a Fund may decline to accept an application or may reject a purchase request, including an exchange, from an investor who, in the sole judgment of the Adviser, has a pattern of short-term or excessive trading or whose trading has been or may be disruptive to the Fund. The Funds, the Adviser, and affiliates thereof are prohibited from entering into arrangements with any shareholder or other person to permit frequent purchases and redemptions of Fund shares. The Board has not adopted the Market Timing Policy for the MONEY MARKET FUNDS because the MONEY MARKET FUNDS are typically used for cash management purposes and invest in highly liquid securities. However, the Adviser seeks to prevent the use of the MONEY MARKET FUNDS to facilitate frequent trading in other BMO Funds in violation of the Market Timing Policy.
Each Fund monitors and enforces the Market Timing Policy through:
• the termination of a shareholder’s purchase and/or exchange privileges;
• selective monitoring of trade activity; and
• the imposition of a 2.00% short-term redemption fee for redemptions or exchanges of shares of the INTERNATIONAL AND GLOBAL FUNDS within 30 days after purchase of such shares, determined on a first-in, first-out basis.
The redemption fee is deducted from redemption proceeds and is paid directly to the applicable Fund.
A redemption of shares acquired as a result of reinvesting distributions is not subject to the redemption fee. The redemption fee may not apply to shares redeemed in the case of death, through an automatic, nondiscretionary rebalancing or asset allocation program, trade error correction, and
involuntary redemptions imposed by the Fund or a financial intermediary. In addition, the redemption fee will not apply to certain transactions, including redemptions due to disability or hardship, forfeitures, required minimum distributions, systematic withdrawals, shares purchased through a systematic purchase plan, return of excess contributions, and loans. The redemption fee also will not apply to transactions in (i) retirement accounts (for example, IRA accounts and qualified employee benefit plans); (ii) broker-dealer managed account or wrap programs that charge an asset-based fee; (iii) registered investment adviser mutual fund wrap programs or other accounts that charge a fee for advisory, investment, consulting or similar services; or (iv) private bank and trust company managed accounts or wrap programs that charge an asset-based fee. The Funds’ officers may, in their sole discretion, authorize waivers of the short-term redemption fee in other limited circumstances that do not indicate market timing strategies. All waivers authorized by the officers are reported to the Board.
Although the Funds seek to detect and deter market timing activity, their ability to monitor trades that are placed by individual shareholders through omnibus accounts is limited because the Funds may not have direct access to the underlying shareholder account information. Omnibus accounts are accounts maintained by financial intermediaries on behalf of multiple beneficial shareholders. Due to policy, operational or system requirements and limitations, omnibus account holders, including qualified employee benefit plans, may use criteria and methods for tracking, applying, or calculating the redemption fee that may differ from those utilized by the Funds’ transfer agent. In addition, the Funds may rely on a financial intermediary’s market timing policy, even if those policies are different from the Funds’ policy, when the Funds believe that the policy is reasonably designed to prevent excessive trading practices that are detrimental to the Fund. If you purchase Fund shares through a financial intermediary, you should contact your financial intermediary for more information on how the redemption fee is applied to redemptions or exchanges of your shares.
The Funds may request that financial intermediaries furnish the Funds with trading and identifying information relating to beneficial shareholders, such as social security and account numbers, in order to review any unusual patterns of trading activity discovered in the omnibus account. The Funds also may request that the financial intermediaries take action to prevent a particular shareholder from engaging in excessive trading and to enforce the Funds’ or their market timing policies. Legal and technological limitations on the ability of financial intermediaries may exist to restrict the trading practices of their clients and they may impose restrictions or
 
Additional Conditions for Redemption 103
 
 
Additional Conditions for Redemption (cont.)
limitations that are different from the Funds’ policies. As a result, the Funds’ ability to monitor and discourage excessive trading practices in omnibus accounts may be limited.
104 Additional Conditions for Redemption
 
 
Account and Share Information
Fund Transactions Through BMO Funds Website.
  If you have previously established an account with a Fund, you may purchase, redeem, or exchange shares through the BMO Funds’ website at bmofunds.com. You also may check your Fund account balance(s) and historical transactions through the website. You cannot, however, establish a new Fund account through the website
—
you may only establish a new Fund account under the methods described in the “How to Buy Shares” section.
Online Conditions.
  Because of security concerns and costs associated with maintaining the website, purchases, redemptions, and exchanges through the website are subject to the following daily minimum and maximum transaction amounts:
 
Minimum
Maximum
Purchases: $50 $100,000
Redemptions: By ACH: $50
By wire: $1,000 		By ACH: $100,000
By wire: $100,000
Exchanges: $50 $100,000
Your transactions through the website are effective at the time they are accepted by a Fund and are subject to all of the conditions and procedures described in this Prospectus.
You may not change your address of record, registration, or wiring instructions through the website. The website privilege may be modified at any time, but you will be notified in writing of any termination of the privilege.
Online Risks.
  If you utilize the website for account histories or transactions, you should be aware that the Internet is an unsecured, unregulated, and unpredictable environment. Your ability to use the website for transactions is dependent upon the Internet and equipment, software, systems, data, and services provided by various vendors and third parties (including telecommunications carriers, equipment manufacturers, firewall providers, and encryption system providers). While the Funds and their service providers have established certain security procedures, the Funds and their transfer agent cannot assure you that inquiries or trading activity will be completely secure. There also may be delays, malfunctions, or other inconveniences generally associated with this medium. There may be times when the website is unavailable for Fund transactions, which may be due to the Internet or the actions or omissions of a third party
—
should this happen, you should consider purchasing, redeeming, or exchanging shares by another method. The Funds, their transfer agent, and BMO Funds - U.S. Services are not responsible for any such delays or malfunctions and are not responsible for
wrongful acts by third parties as long as reasonable security procedures are followed.
Confirmations and Account Statements.
  You will receive confirmation of purchases, redemptions, and exchanges (except for systematic program transactions). In addition, you will receive annual account statements reporting all account activity, including systematic program transactions and distributions of net investment income and net capital gains. You may request copies of historical account statements for a fee of $10 per Fund per year requested.
Distributions of Net Investment Income and Net Capital Gains.
  A distribution of net investment income is the money or shares paid to shareholders that a mutual fund has earned from the income on its investments after paying any Fund expenses. A net capital gain distribution is the money or shares paid to shareholders from a mutual fund’s net profit realized from the sales of portfolio securities. Distributions of net investment income, if any, of the FIXED INCOME FUNDS and MONEY MARKET FUNDS are declared daily and paid monthly. Provided that your order is received in proper form, payment in “good funds” is received and your order is accepted by the time a Fund’s NAV is calculated, you will receive distributions declared that day. You will continue to receive distributions declared through, and including, the day you redeem your shares.
Distributions of net investment income, if any, of the EQUITY FUNDS are declared and paid quarterly. The INTERNATIONAL and GLOBAL FUNDS declare and pay distributions of net investment income annually. Distributions of net investment income are paid to all shareholders invested in the EQUITY FUNDS and INTERNATIONAL and GLOBAL FUNDS on the record date, which is the date on which a shareholder must officially own shares to earn a distribution.
In addition, each Fund distributes its net capital gains, if any, at least annually. If capital gains or losses were realized by a Fund, they could result in an increase or decrease in such Fund’s distributions. Your distributions of net investment income and net capital gains will be automatically reinvested in additional shares of the same class of the same Fund without a sales charge, unless you elect cash payments. If you elect cash payments and the payment is returned as undeliverable, your cash payment will be reinvested in shares of the Fund and your distribution option will convert to automatic reinvestment. If any distribution check remains uncashed for six months, the check amount will be reinvested in shares and you will not accrue any interest or distributions on this amount prior to the reinvestment. You will be taxed in the same manner whether you receive your distributions in cash or additional Fund shares.
 
Account and Share Information 105
 
 
Account and Share Information (cont.)
If you purchase shares just before a Fund (other than a MONEY MARKET FUND) declares a distribution of net investment income or net capital gain, you will pay the full price for the shares and then receive a portion of the price back in the form of the distribution. Other than a distribution of tax-exempt interest received from the ULTRA SHORT TAX-FREE FUND, SHORT TAX-FREE FUND, or INTERMEDIATE TAX-FREE FUND, the distribution will generally be taxable to you for federal income tax purposes, unless you are investing through a tax deferred arrangement such as an IRA or a 401(k) plan.
Shares may be redeemed or exchanged based on either a dollar amount or number of shares. If you are redeeming or exchanging based upon a number of Fund shares, you must redeem or exchange enough shares to meet the minimum dollar amounts described above, but not so much as to exceed the maximum dollar amounts.
Accounts with Low Balances.
  Due to the high cost of maintaining accounts with low balances, a Fund may redeem your Class Y or Class A shares and pay you the proceeds if your account balance falls below the required minimum value of $1,000. Similarly, your Class I or Premier Class shares may be converted to Class Y or Class A shares if your account balance falls below the required minimum of $1,000,000 or $10,000,000, as applicable. Before shares are redeemed to close an account or converted from Class I or Premier Class shares to Class Y or Class A shares, you will be notified in writing and allowed 30 days to purchase additional shares to meet the minimum account balance requirement. A redemption by the Fund may result in a taxable gain or loss.
Multiple Classes.
  The BMO Funds have adopted a plan that permits each Fund to offer more than one class of shares. All shares of each Fund or class have equal voting rights and will generally be entitled to vote in the aggregate and not by Fund or class. There may be circumstances, however, when only shareholders of a particular Fund or class are entitled to vote on matters affecting that Fund or class. Share classes may have different sales charges and other expenses, which may affect their performance.
Tax Information
Federal Income Tax.
  Each Fund intends to qualify and elect to be treated as a Regulated Investment Company (RIC) under Subchapter M of the Code, provided that it complies with all applicable requirements regarding the source of its income, diversification of its assets, and the timing and amount of its distributions. No assurance exists that a Fund will satisfy all requirements to be taxed as a RIC.
The Funds will send you an annual statement of your account activity to assist you in completing your federal, state, and local
tax returns. You will be taxed in the same manner regardless of whether you elect to receive distributions of investment company taxable income, tax-exempt income, or net capital gains in cash or in additional shares of a Fund. Distributions from a Fund’s investment company taxable income (which includes but is not limited to dividends, interest, net short-term capital gains, and net gains from foreign currency transactions), if any, generally are taxable to you as ordinary income. For non-corporate shareholders, to the extent that distributions of investment company taxable income are attributable to and reported as “qualified dividend income,” such distributions may be eligible for the reduced federal income tax rates applicable to long-term capital gains, provided certain holding periods and other requirements are satisfied by the shareholder. To the extent that a Fund’s distributions of investment company taxable income are attributable to net short-term capital gain, such distributions will be treated as ordinary income and cannot be used to offset a shareholder’s losses from other investments. Distributions of a Fund’s net capital gains (the excess of net long-term capital gains over net short-term capital losses), if any, are generally taxable as long-term capital gains, regardless of how long such shareholder has held shares of such Fund. Fund distributions from the LOW VOLATILITY EQUITY FUND, DIVIDEND INCOME FUND, LARGE-CAP VALUE FUND, LARGE-CAP GROWTH FUND, MID-CAP VALUE FUND, SMALL-CAP VALUE FUND, and GLOBAL LOW VOLATILITY EQUITY FUND are expected to consist of both investment company taxable income and net capital gains. Fund distributions from the MID-CAP GROWTH FUND, SMALL-CAP GROWTH FUND, DISCIPLINED INTERNATIONAL EQUITY FUND, PYRFORD INTERNATIONAL STOCK FUND, and LGM EMERGING MARKETS EQUITY FUND are expected to primarily consist of net capital gains and Fund distributions of the SHORT-TERM INCOME FUND, STRATEGIC INCOME FUND, CORPORATE INCOME FUND, CORE PLUS BOND FUND, and MONEY MARKET FUNDS are expected to primarily consist of investment company taxable income.
It is anticipated that the distributions from the ULTRA SHORT TAX-FREE FUND, SHORT TAX-FREE FUND, INTERMEDIATE TAX-FREE FUND, and TAX-FREE MONEY MARKET FUND will primarily consist of interest income that is generally exempt from regular federal income tax, although a portion of such Funds’ distributions may not be exempt. Even if distributions are exempt from federal income tax, they may be subject to state and local taxes. Each such Fund may invest up to 20% of its assets in securities that produce income subject to federal AMT for non-corporate shareholders. You may owe tax on a portion of your distributions if federal AMT applies to you. You may be subject to federal income tax on any net capital gains distributed or deemed to be distributed by these Funds.
 
106 Account and Share Information
 
 
Account and Share Information (cont.)
Certain individuals, trusts, and estates may be subject to a Net Investment Income (NII) tax of 3.8% (in addition to regular income tax). The NII tax is imposed on the lesser of (i) a taxpayer’s investment income, net of deductions properly allocable to such income or (ii) the amount by which the taxpayer’s modified adjusted gross income exceeds certain thresholds ($250,000 for married individuals filing jointly, $200,000 for unmarried individuals, and $125,000 for married individuals filing separately). The Funds’ distributions (other than tax-exempt distributions made by the ULTRA SHORT TAX-FREE FUND, SHORT TAX-FREE FUND, INTERMEDIATE TAX-FREE FUND, and TAX-FREE MONEY MARKET FUND) are includable in a shareholder’s investment income for purposes of this NII tax. In addition, any capital gain realized on the sale, redemption, or exchange of Fund shares is includable in a shareholder’s investment income for purposes of this NII tax.
Distributions generally are taxed when received. However, distributions declared by a Fund during October, November, or December to shareholders of record during such month and paid by January 31 of the following year are treated for federal income tax purposes as if received by shareholders on December 31 of the year in which the distribution was declared.
If more than 50% of the value of a Fund’s total assets at the close of its taxable year consists of stock or securities of foreign corporations, such Fund may be eligible to elect to “pass through” to you foreign taxes that it pays. If a Fund is eligible for and makes this election, you will be required to include your share of those taxes in gross income as a distribution from the Fund. You will then be allowed to claim a credit (or a deduction, if you itemize deductions) for such amounts on your federal income tax return, subject to certain limitations. Tax-exempt holders of Fund shares, such as qualified retirement plans, will not generally benefit from such deduction or credit.
Your sale, redemption, or exchange of Fund shares may result in a taxable capital gain or loss to you for federal income tax purposes, depending on whether the redemption proceeds (including in-kind proceeds) are more or less than your basis in the sold, redeemed or exchanged shares. The gain or loss will generally be treated as long-term capital gain or loss if the shares were held for more than one year, and if held for one year or less, as short-term capital gain or loss. Any loss arising from the sale, redemption, or exchange of Fund shares held for six months or less, however, is treated as a long-term capital loss to the extent of any distributions of net capital gains received or deemed to be received with respect to such shares. Any loss realized upon the sale, exchange or redemption of shares of the ULTRA SHORT TAX-FREE FUND, SHORT TAX-FREE FUND, INTERMEDIATE TAX-FREE FUND, or TAX-FREE MONEY MARKET FUND that were held for six months or less will be
disallowed to the extent of any tax-exempt distributions received with respect to such shares. In determining the holding period of such shares for this purpose, any period during which your risk of loss is offset by means of options, short sales, or similar transactions is not counted. If you purchase Fund shares (through reinvestment of distributions or otherwise) within thirty days before or after selling, redeeming, or exchanging other shares of the same Fund at a loss, all or part of your loss will not be deductible and will instead increase the basis of the new shares to preserve the loss until a future sale, redemption, or exchange.
If you do not furnish a Fund with your correct social security number or taxpayer identification number, if you fail to make certain required certifications, and/or if the Fund receives notification from the IRS requiring backup withholding, the Fund is required by federal law to withhold federal income tax from your distributions (including distributions of tax-exempt interest) and redemption proceeds, at the rate set forth in the Code. Backup withholding is not an additional tax. Any amounts withheld may be credited against your federal income tax liability, provided the appropriate information is furnished to the IRS.
This section is not intended to be a full discussion of the federal income tax laws and the effect of such laws on you. Changes in income tax laws, potentially with retroactive effect, could impact a Fund’s investments or the tax consequences to you of investing in a Fund. Some of these changes could affect the timing, amount, and tax treatment of Fund distributions made to shareholders. There may be other federal, state, foreign, or local tax considerations applicable to a particular investor. Please consult your own tax advisor regarding federal, state, foreign, and local tax considerations.
Portfolio Holdings
A description of the Funds’ policies and procedures with respect to the disclosure of the Funds’ portfolio securities is available in the Funds’ Statement of Additional Information (SAI). Monthly portfolio holdings for all Funds other than the MONEY MARKET FUNDS are disclosed at www.bmo.com/gam/
funds/g/us/home/prospectus-and-fund-docs approximately thirty days after the end of each month. With respect to the MONEY MARKET FUNDS, the portfolio holdings are disclosed on the website no later than five business days after month-end for at least the previous six months.
Cost Basis Reporting
The Funds are required to report to certain shareholders and the IRS the cost basis of any Fund shares acquired on or after January 1, 2012 when such shareholders subsequently sell,
 
Account and Share Information 107
 
 
Account and Share Information (cont.)
redeem, or exchange those Fund shares. Each Fund will determine cost basis using the average cost method unless you elect in writing (and not over the telephone) any alternate
IRS-approved cost basis method. Please see the SAI for more information regarding cost basis reporting.
 
108 Account and Share Information
 
 
BMO Funds Information
Management of the BMO Funds.
  The Board governs the Funds and oversees the Adviser. The Adviser manages each Fund’s assets, including buying and selling the portfolio securities for the Funds and any underlying funds (except the PYRFORD INTERNATIONAL STOCK FUND and LGM EMERGING MARKETS EQUITY FUND). The Adviser’s address is 115 S. LaSalle Street, Chicago, Illinois 60603.
The Adviser has entered into a sub-advisory contract with the following subadvisers, pursuant to which each subadviser manages the Fund indicated.
Sub-Adviser
Fund Managed
Pyrford International Ltd.
  (Pyrford)* 		BMO Pyrford International Stock
LGM Investments Limited
  (LGM Investments)* 		LGM Emerging Markets Equity
* Affiliate of the Adviser.
Adviser’s Background.
  The Adviser is a registered investment adviser and a wholly-owned subsidiary of BMO Financial Corp., a financial services company headquartered in Chicago, Illinois, and an indirect wholly-owned subsidiary of the Bank of Montreal (BMO), a publicly-held Canadian diversified financial services company. As of August 31, 2020, the Adviser had approximately $35.8 billion in assets under management, of which approximately $13.0 billion was in the BMO Funds’ assets.
The Adviser, including its predecessor entities, has managed investments for individuals and institutions since 1973. The Adviser has managed the BMO Funds since 1992.
Sub-Advisers’ Background.
  Pyrford is a registered investment adviser that provides asset management services to institutional clients, including pension funds, insurance companies, registered mutual funds, private investment funds, charities, endowments and other corporate entities. Pyrford is a wholly-owned subsidiary of the Bank of Montreal Capital Markets (Holdings) Limited, a BMO Financial Group company. As part of BMO’s private client group, Pyrford provides wealth management services to clients in North America, the Middle East, UK, and Europe. As of August 31, 2020, Pyrford had approximately $11.7 billion in assets under management. Pyrford’s address is 95 Wigmore Street, London, United Kingdom, W1U 1FD.
LGM Investments is a registered investment adviser founded in 1995 that specializes in Asia Pacific, global emerging market, and frontier equities and provides investment management services to pension funds, foundations, government organizations, mutual funds, high net worth individuals, hedge funds, and other funds it sponsors. LGM Investments is a wholly-owned subsidiary of BMO. As of August 31, 2020, LGM Investments had approximately $3.5 billion in assets under
management. LGM Investments’ address is 95 Wigmore Street, London, United Kingdom, W1U 1FD.
BMO is the ultimate parent company of the Adviser, Pyrford, and LGM Investments. Accordingly, the Adviser, Pyrford, and LGM Investments are affiliates.
All fees of the Funds’ sub-advisers are paid by the Adviser.
Manager-of-Managers Exemptive Order.
  BMO Funds, Inc. and the Adviser received an exemptive order from the SEC on June 10, 2015 that permits the Adviser, subject to certain conditions, to terminate an existing sub-adviser or hire a new, wholly-owned or non-affiliated sub-adviser for a Fund, to materially amend the terms of particular agreements with a sub-adviser, or to continue the employment of an existing sub-adviser after events that would otherwise cause an automatic termination of a sub-advisory agreement. This arrangement, which is commonly referred to as a “manager-of-managers” investment strategy, has been approved by the Board of Directors and the sole initial shareholder of the DISCIPLINED INTERNATIONAL EQUITY FUND, although it is not currently in use. Additionally, any other Fund may rely on the exemptive order, subject to shareholder approval and so long as it: (i) is advised by the Adviser; (ii) uses the manager-of managers structure that is described in the exemptive application; and (iii) complies with the terms and conditions of the exemptive application. Consequently, under the exemptive order, the Adviser has the right to hire, terminate, and replace sub-advisers when the Board of Directors and the Adviser determine that a change would benefit a Fund.
Pursuant to the conditions imposed by the exemptive order, if a new sub-adviser is retained, shareholders of the affected Fund will receive notification of the change within 90 days, and the Corporation will make available and maintain the notification on its website for 90 days thereafter. The exemptive order also exempts a Fund from certain requirements to disclose the compensation paid by the Adviser to the sub-adviser. The manager-of-managers structure enables the Funds to operate with greater efficiency and without incurring the expense and delays associated with obtaining shareholder approval of sub-advisory agreements. The structure does not permit advisory fees paid by a Fund to be increased or change the Adviser’s obligations under the investment advisory agreement, including the Adviser’s responsibility to monitor and oversee sub-advisory services furnished to the Fund, without shareholder approval.
Fund-of-Funds Exemptive Order.
  BMO Funds, Inc., the Adviser, and the Distributor received a “fund-of-funds” exemptive order from the SEC on June 25, 2014 that permits a Fund that relies on the order to invest in securities issued by other investment companies in amounts exceeding the
 
BMO Funds Information 109
 
 
BMO Funds Information (cont.)
statutory limits set forth in the 1940 Act that would otherwise be applicable. The exemptive order requires the Board, before approving any advisory contract, to make a determination the fees charged under such advisory contract are based on services provided that are in addition to, rather than duplicative of, services provided under the advisory contract(s) of any underlying fund in which a Fund invests pursuant to the order.
Portfolio Managers.
  The following individuals are jointly and primarily responsible for the day-to-day management of each respective Fund’s portfolio. The Funds’ SAI provides additional information about the portfolio managers, including other accounts they manage, their ownership of Fund shares and their compensation.
LOW VOLATILITY EQUITY FUND
: David A. Corris, Jason C. Hans, Jay Kaufman, and David Rosenblatt co-manage the LOW VOLATILITY EQUITY FUND. All members of the team share investment decision making responsibilities with respect to the Fund.
• Mr. Corris has co-managed the Fund since April 2013. He joined the Adviser in 2008 where he currently serves as Head of Disciplined Equities and a Managing Director. He is a CFA Charterholder.
• Mr. Hans has co-managed the Fund since its inception in September 2012. He joined the Adviser in 2008 where he currently serves as a Director and Portfolio Manager. He is a CFA Charterholder.
• Mr. Kaufman has co-managed the Fund since December 2015. He joined the Adviser in 2010 where he currently serves as a Director and Portfolio Manager.
• Mr. Rosenblatt has co-managed Fund since December 2020. He joined the Adviser in 2012 where he currently serves as a Director and Portfolio Manager.
 
 
DIVIDEND INCOME FUND
: Kenneth Conrad, Ph.D., and Casey J. Sambs co-manage the DIVIDEND INCOME FUND. Both members of the team share investment decision making responsibilities with respect to the Fund.
• Dr. Conrad has co-managed the Fund since April 2013. He joined the Adviser in 2008 where he currently serves as a Director and Portfolio Manager. He is a CFA Charterholder.
• Mr. Sambs has co-managed the Fund since April 2013. He joined the Adviser in 2001 where he currently serves as a Director and Portfolio Manager. He is a CFA Charterholder.
 
 
LARGE-CAP VALUE FUND
: David A. Corris, J.P. Gurnee, and Jason C. Hans co-manage the LARGE-CAP VALUE FUND. All members of the team share investment decision making responsibilities with respect to the Fund.
• Mr. Corris has co-managed the Fund since April 2013. His biographical information is described above.
• Mr. Gurnee has co-managed the Fund since December 2020. He joined the Adviser in 2018 where he currently serves as a Vice President and Portfolio Manager. Previously, Mr. Gurnee was an analyst at Northern Trust from 2016-2018 and at Calamos Investments from 2014-2016. He is a CFA Charterholder.
• Mr. Hans has co-managed the Fund since February 2012. His biographical information is described above.
 
 
LARGE-CAP GROWTH FUND
: David A. Corris, J.P. Gurnee, and Jason C. Hans co-manage the LARGE-CAP GROWTH FUND. All members of the team share investment decision making responsibilities with respect to the Fund.
• Mr. Corris has co-managed the Fund since April 2013. His biographical information is described above.
• Mr. Gurnee has co-managed the Fund since December 2020. His biographical information is described above.
• Mr. Hans has co-managed the Fund since February 2012. His biographical information is described above.
 
 
MID-CAP VALUE FUND
: David Corris, J.P. Gurnee, and Thomas Lettenberger co-manage the MID-CAP VALUE FUND. All members of the team share investment decision making responsibilities with respect to the Fund.
• Mr. Corris has co-managed the Fund since October 2016. His biographical information is described above.
• Mr. Gurnee has co-managed the Fund since December 2020. His biographical information is described above.
• Mr. Lettenberger has co-managed the Fund since October 2016. He joined the Adviser in 2005 where he currently serves as a Director and Portfolio Manager. He is a CFA Charterholder.
 
 
MID-CAP GROWTH FUND
: David Corris, J.P. Gurnee, and Thomas Lettenberger co-manage the MID-CAP GROWTH FUND. All members of the team share investment decision making responsibilities with respect to the Fund.
• Mr. Corris has co-managed the Fund since October 2016. His biographical information is described above.
• Mr. Gurnee has co-managed the Fund since December 2020. His biographical information is described above.
• Mr. Lettenberger has co-managed the Fund since October 2016. His biographical information is described above.
 
 
SMALL-CAP VALUE FUND
: David Corris and Thomas Lettenberger co-manage the SMALL-CAP VALUE FUND. Both members of the team share investment decision making responsibilities with respect to the Fund.
110 BMO Funds Information
 
BMO Funds Information (cont.)
• Mr. Corris has co-managed the Fund since October 2016. His biographical information is described above.
• Mr. Lettenberger has co-managed the Fund since October 2016. His biographical information is described above.
SMALL-CAP GROWTH FUND
: David Corris and Thomas Lettenberger co-manage the SMALL-CAP GROWTH FUND. Both members of the team share investment decision making responsibilities with respect to the Fund.
• Mr. Corris has co-managed the Fund since October 2016. His biographical information is described above.
• Mr. Lettenberger has co-managed the Fund since October 2016. His biographical information is described above.
GLOBAL LOW VOLATILITY EQUITY FUND
: Jay Kaufman and David Rosenblatt co-manage the GLOBAL LOW VOLATILITY EQUITY FUND. Both members of the team share investment decision making responsibilities with respect to the Fund.
• Mr. Kaufman has co-managed the Fund since December 2013. His biographical information is described above.
• Mr. Rosenblatt has co-managed Fund since December 2016. His biographical information is described above.
DISCIPLINED INTERNATIONAL EQUITY FUND
: Jay Kaufman and David Rosenblatt co-manage the DISCIPLINED INTERNATIONAL EQUITY FUND. Both members of the team share investment decision making responsibilities with respect to the Fund.
• Mr. Kaufman has co-managed the Fund since its inception in 2015. His biographical information is described above.
• Mr. Rosenblatt has co-managed the Fund since December 2016. His biographical information is described above.
PYRFORD INTERNATIONAL STOCK FUND
: Pyrford has managed the PYRFORD INTERNATIONAL STOCK FUND since its inception in December 2011. Tony Cousins, Daniel McDonagh, and Paul Simons co-manage the Fund. All members of the team share investment decision making responsibilities with respect to the Fund.
• Mr. Cousins has co-managed the Fund since December 2011. He joined Pyrford in 1989. He currently serves as Chief Executive Officer, Chief Investment Officer, and is a member of the Investment Strategy Committee.
• Mr. McDonagh has co-managed the Fund since December 2011. He joined Pyrford in 1997. He currently serves as Head of Portfolio Management, Europe & UK and is a member of the Investment Strategy Committee.
• Mr. Simons has co-managed the Fund since December 2011. He joined Pyrford in 1996. He currently serves as Head of Portfolio Management, Asia-Pacific and is a member of the Investment Strategy Committee.
LGM EMERGING MARKETS EQUITY FUND
: LGM Investments and its affiliated predecessor have managed the LGM EMERGING MARKETS EQUITY FUND since December 2011. Irina Hunter and Rishikesh Patel co-manage the Fund. Both members of the team share investment decision making responsibilities with respect to the Fund.
• Ms. Hunter has co-managed the Fund since December 2011. She joined LGM in 2007 where she serves as a Senior Portfolio Manager.
• Mr. Patel has co-managed the Fund since March 2016. He joined LGM in 2006 where he currently serves as a Portfolio Manager.
ULTRA SHORT TAX-FREE FUND
: Robert Wimmel, Thomas Byron, and Brian Sipich co-manage the ULTRA SHORT TAX-FREE FUND. All members of the team share investment decision making responsibilities with respect to the Fund.
• Mr. Wimmel has co-managed the Fund since August 2015. He joined the Adviser in 2015 where he serves as Head of Tax Exempt Fixed Income and a Managing Director.
• Mr. Byron has co-managed the Fund since October 2015. He joined the Adviser in 2015 where he serves as a Director and Portfolio Manager.
• Mr. Sipich has co-managed the Fund since October 2016. He joined the Adviser in 2015 where he serves as a Vice President and Portfolio Manager. He is a CFA Charterholder.
SHORT TAX-FREE FUND
: Robert Wimmel, Thomas Byron, and Brian Sipich co-manage the SHORT TAX-FREE FUND. All members of the team share investment decision making responsibilities with respect to the Fund.
• Mr. Wimmel has co-managed the Fund since August 2015. His biographical information is described above.
• Mr. Byron has co-managed the Fund since October 2015. His biographical information is described above.
• Mr. Sipich has co-managed the Fund since October 2016. His biographical information is described above.
SHORT-TERM INCOME FUND
: Peter J. Arts, Boyd R. Eager, and Don McConnell co-manage the SHORT-TERM INCOME FUND. All members of the team share investment decision making responsibilities with respect to the Fund.
 
BMO Funds Information 111
 
BMO Funds Information (cont.)
• Mr. Arts has co-managed the Fund since February 2012. He joined the Adviser in 1994 where he serves as Global Head of Money Markets and Short Duration and a Managing Director.
• Mr. Eager has co-managed the Fund since February 2012. He joined the Adviser in 1996 where he serves as a Director and Portfolio Manager.
• Mr. McConnell has co-managed the Fund since December 2019. He joined the Adviser in 2013 where he serves as a Director and Portfolio Manager.
INTERMEDIATE TAX-FREE FUND
: Robert Wimmel, Thomas Byron, and Brian Sipich co-manage the INTERMEDIATE TAX-FREE FUND. All members of the team share investment decision making responsibilities with respect to the Fund.
• Mr. Wimmel has co-managed the Fund since August 2015. His biographical information is described above.
• Mr. Byron has co-managed the Fund since October 2015. His biographical information is described above.
• Mr. Sipich has co-managed the Fund since October 2016. His biographical information is described above.
STRATEGIC INCOME FUND
: Scott M. Kimball and Frank Reda co-manage the STRATEGIC INCOME FUND. Both members of the team share investment decision making responsibilities with respect to the Fund.
• Mr. Kimball has co-managed the Fund since 2013. He joined the Adviser in 2013 where he serves as a Director and Portfolio Manager. He is a CFA Charterholder.
• Mr. Reda has co-managed the Fund since April 2017. He joined the Adviser in 2017 where he serves as a Director and Portfolio Manager.
CORPORATE INCOME FUND
: Scott M. Kimball and Frank Reda are co-portfolio managers of the CORPORATE INCOME FUND. Both members of the team share investment decision making responsibilities with respect to the Fund.
• Mr. Kimball has co-managed the Fund since 2012. His biographical information is described above.
• Mr. Reda has co-managed the Fund since 2015. His biographical information is described above.
CORE PLUS BOND FUND
: Scott M. Kimball and Frank Reda are co-portfolio managers of the CORE PLUS BOND FUND. Both members of the team share investment decision making responsibilities with respect to the Fund.
• Mr. Kimball has co-managed the Fund since 2012. His biographical information is described above.
• Mr. Reda has co-managed the Fund since 2015. His biographical information is described above.
GOVERNMENT MONEY MARKET FUND
: Peter J. Arts, Boyd R. Eager, and Robert Stapleton co-manage the GOVERNMENT MONEY MARKET FUND. All members of the team share investment decision making responsibilities with respect to the Fund.
• Mr. Arts has co-managed the Fund since February 2012. His biographical information is described above.
• Mr. Eager has co-managed the Fund since February 2012. His biographical information is described above.
• Mr. Stapleton has co-managed the Fund since December 2019. He joined the Adviser in 2014 where he serves as a Senior Associate and Portfolio Manager.
TAX-FREE MONEY MARKET FUND
: Robert Wimmel, Thomas Byron, Michael Montgomery, and Brian Sipich co-manage the TAX-FREE MONEY MARKET FUND. All members of the team share investment decision making responsibilities with respect to the Fund.
• Mr. Wimmel has co-managed the Fund since October 2016. His biographical information is described above.
• Mr. Byron has co-managed the Fund since October 2016. His biographical information is described above.
• Mr. Montgomery has co-managed the Fund since December 2019. He joined the Adviser in 2017 where he serves as a Vice President and Portfolio Manager. Previously, Mr. Montgomery was an associate at B.C. Ziegler and Company from 2014 to 2017.
• Mr. Sipich has co-managed the Fund since October 2016. His biographical information is described above.
PRIME MONEY MARKET FUND
: Peter J. Arts, Boyd R. Eager, and Robert Stapleton co-manage the PRIME MONEY MARKET FUND. All members of the team share investment decision making responsibilities with respect to the Fund.
• Mr. Arts has co-managed the Fund since February 2012. His biographical information is described above.
• Mr. Eager has co-managed the Fund since February 2012. His biographical information is described above.
• Mr. Stapleton has co-managed the Fund since December 2019. His biographical information is described above.
Advisory Fees.
  The Adviser is entitled to receive from each Fund an investment advisory fee equal to a percentage of each Fund’s average daily net assets (ADNA) at the rates, and subject to reduction at breakpoints for each Fund as shown in the following tables. Each rate and breakpoint was in effect for the full fiscal year ended August 31, 2020 and is currently in effect unless otherwise noted.
 
112 BMO Funds Information
 
BMO Funds Information (cont.)
EQUITY FUNDS (except Large-Cap Value and Large-Cap Growth), INTERNATIONAL and GLOBAL FUNDS (except Disciplined International Equity) (effective December 27, 2019 for Low Volatility and Global Low Volatility):
 
Advisory Fee
(as % of each Fund’s ADNA)
Fund
on the
first $500
million
on the
next $200
million
on the
next $100
million
in excess
of $800
million
Low Volatility Equity 0.40% 0.39% 0.35% 0.30%
Dividend Income 0.50 0.49 0.45 0.40
Mid-Cap Value 0.685 0.67 0.57 0.51
Mid-Cap Growth 0.685 0.67 0.57 0.51
Small-Cap Value 0.685 0.68 0.62 0.61
Small-Cap Growth 0.685 0.68 0.62 0.61
Global Low Volatility Equity 0.50 0.49 0.45 0.40
Pyrford International Stock 0.735 0.72 0.62 0.56
LGM Emerging Markets Equity 0.90 0.89 0.85 0.80
FIXED INCOME FUNDS:
 
Advisory Fee
(as % of each Fund’s ADNA)
Fund
on the
first $100
million
on the
next $150
million
on the
next $250
million
in excess
of $500
million
Ultra Short Tax-Free 0.20% 0.19% 0.17% 0.10%
Short Tax-Free 0.20 0.19 0.17 0.15
Short-Term Income 0.20 0.19 0.17 0.10
Intermediate Tax-Free 0.25 0.16 0.12 0.10
Strategic Income 0.25 0.20 0.20 0.20
Corporate Income 0.20 0.19 0.15 0.10
Core Plus Bond 0.25 0.16 0.12 0.10
LARGE-CAP VALUE, LARGE-CAP GROWTH, and DISCIPLINED INTERNATIONAL EQUITY:
 
Advisory Fee
(as % of each Fund’s ADNA)
Fund
on the
first $1
billion
on the
next $1
billion
in excess
of $2
billion
Large-Cap Value 0.35% 0.325% 0.30%
Large-Cap Growth 0.35 0.325 0.30
Disciplined International Equity 0.60 0.575 0.55
MONEY MARKET FUNDS:
 
Advisory Fee (as % of each Fund’s ADNA)
Fund
on the
first $2
billion
on the
next $2
billion
on the
next $2
billion
on the
next $2
billion
in excess
of $8
billion
Government 0.20% 0.185% 0.17% 0.155% 0.14%
Tax-Free 0.20 0.185 0.17 0.155 0.14
Prime 0.15 0.135 0.12 0.105 0.09
The following table reflects the investment advisory fee paid by each Fund as a percentage of a Fund’s ADNA in accordance with the fee schedule in effect during the fiscal year ended August 31, 2020, after taking into effect breakpoints and/or waivers by the Adviser during the period.
Fund
Advisory Fee
Paid in
Fiscal 2020
Low Volatility Equity Fund
(1)
0.40%
Dividend Income Fund 0.39
Large-Cap Value Fund 0.29
Large-Cap Growth Fund 0.31
Mid-Cap Value Fund 0.62
Mid-Cap Growth Fund 0.59
Small-Cap Value Fund 0.44
Small-Cap Growth Fund 0.59
Global Low Volatility Equity Fund
(1)(2)
(0.11)
Disciplined International Equity Fund 0.32
Pyrford International Stock Fund 0.73
LGM Emerging Markets Equity Fund 0.79
Ultra Short Tax-Free Fund 0.10
Short Tax-Free Fund 0.10
Short-Term Income Fund 0.09
Intermediate Tax-Free Fund 0.12
Strategic Income Fund 0.04
Corporate Income Fund 0.16
Core Plus Bond Fund 0.13
Government Money Market Fund 0.12
Tax-Free Money Market Fund 0.09
Prime Money Market Fund 0.07
(1)
The percentage shown reflects the fees paid based on the prior advisory fee rates which were changed effective December 27, 2019.
(2)
The negative advisory fee represents the full waiver of the advisory fee plus additional reimbursement of fund expenses by the Adviser.
The Adviser has contractually agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding acquired fund fees and expenses, interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses
 
BMO Funds Information 113

 
 
BMO Funds Information (cont.)
not incurred in the ordinary course of a Fund’s business for all Funds) from exceeding the percentage of the average daily net assets of the class of each Fund, as set forth in the “Fees and Expenses of the Fund” section and in the Funds’ SAI. This agreement may not be terminated prior to December 31, 2021 without the consent of the Board of Directors of BMO Funds, Inc. unless terminated due to the termination of the investment advisory agreement. Additionally, the agreement does not provide for recoupment by the Adviser of waived fees or reimbursed expenses.
In addition, the Adviser has the discretion to waive its fee for any Fund. Any such waivers by the Adviser are voluntary and may be terminated at any time in the Adviser’s sole discretion.
The Funds’ August 31, 2020 Annual Report contains a discussion regarding the Board’s basis for approving the investment advisory contract and sub-advisory contracts on behalf of the Funds.
Distributor.
  Foreside Financial Services, LLC (Distributor), a registered broker- dealer and member of the Financial Industry Regulatory Authority, Inc., serves as principal distributor of the Funds’ shares. All fees of the Distributor are paid by the Adviser.
Affiliate Services and Fees.
  BMO Harris Bank provides services to the Funds (except for the INTERNATIONAL AND GLOBAL FUNDS) as securities lending agent. For each such Fund, BMO Harris Bank receives a fee as compensation for its services as securities lending agent.
The Adviser serves as the Funds’ shareholder servicing agent, recordkeeper, and administrator directly and through its division, BMO Funds - U.S. Services. The Adviser is entitled to receive shareholder services fees from the Class Y shares of each Fund at the annual rate of 0.25% of the Fund’s ADNA. The Adviser has the discretion to waive a portion of its fees. However, any fee waivers are voluntary and may be terminated at any time in its sole discretion. The Adviser does not receive shareholder service fees from the Class I, A, R6, or Premier Class shares of the Funds.
The Adviser is the administrator of the Funds and State Street Bank & Trust Company is the sub-administrator.
The Adviser, as administrator, is entitled to receive a fee from the Class Y, A, and I shares of each Fund (except the MONEY MARKET FUNDS) of 0.15% of each Fund’s ADNA.
The Adviser, as administrator, is entitled to receive fees from the MONEY MARKET FUNDS at the following annual rates based on the aggregate ADNA of the MONEY MARKET FUNDS combined:
Fee
Combined ADNA
0.040% on the first $2 billion
Fee
Combined ADNA
0.030 on the next $2 billion
0.025 on the next $2 billion
0.020 on the next $2 billion
0.010 on ADNA in excess of $8 billion
All fees of the sub-administrator are paid by the Adviser.
The Funds pay fees to the Distributor for the sale and distribution of Class A shares, pursuant to the Rule 12b-1 Plan. The Distributor generally uses the fees to compensate broker/dealers and may retain the fees in certain circumstances.
Payments to Financial Intermediaries.
  From time to time, the Adviser, BMO Harris Bank, BMO Harris Financial Advisors (member FINRA/SIPC), or their affiliates may enter into arrangements with each other or with brokers or other financial intermediaries pursuant to which such parties agree to perform administrative or other services on behalf of their clients who are Fund shareholders. Pursuant to these arrangements, the Adviser, BMO Harris Bank, BMO Harris Financial Advisors, or their affiliates may make payments to each other or to brokers or other financial intermediaries from their own resources (including shareholder services fees paid by the Funds to the Adviser and Rule 12b-1 fees paid by the Funds to the Distributor) for services provided to clients who hold Fund shares. In addition, the Adviser or an affiliate may make payments to a financial intermediary, including affiliates such as BMO Harris Financial Advisors. In exchange for such payments, the Adviser, BMO Harris Bank, BMO Harris Financial Advisors, or their affiliates generally expect to receive the opportunity for the Funds to be sold through the financial intermediaries’ sales forces or to have access to third-party platforms or other marketing programs, including but not limited to mutual fund “supermarket” platforms or other sales programs. These payments may vary in amount and generally range from 0.05% to 0.40%. Additionally, flat fees on a one-time or irregular basis may be made for the initial set-up of a Fund on a financial intermediary’s systems, participation or attendance at a financial intermediary’s meetings, or for other reasons. The receipt of (or prospect of receiving) such payments or compensation may provide the affiliate or intermediary and its salespersons with an incentive to favor sales of Fund shares, or certain classes of those shares, over other investment alternatives. You may wish to consider whether such arrangements exist when evaluating recommendations from the affiliate or intermediary.
 
114 BMO Funds Information
 
Financial Highlights
—
Investor Class (Class Y) of Shares (For a share outstanding throughout each period)
The Financial Highlights will help you understand the financial performance of the shares of each Fund for the last five fiscal years or since inception. Some of the information is presented on a per share basis. Total returns represent the rate an investor would have earned (or lost) on an investment in a Fund, assuming reinvestment of any dividends and capital gains distributions.
The information for the fiscal years ended August 31, 2016, 2017, 2018, 2019, and 2020 was derived from financial statements audited by KPMG LLP, the Funds’ independent registered public accounting firm, whose report, along with the Funds’ financial statements and notes thereto, is included in the Funds’ Annual Report dated August 31, 2020, which is available free of charge from the Funds upon request.
Period
Ended
August 31,
Net asset
value,
beginning
of period
Net
investment
income
(loss)
Net realized
and unrealized
gain (loss)
Total from
investment
operations
Distributions to
shareholders
from net
investment
income
Distributions to
shareholders
from net
realized gain
Total
distributions
Net asset
value, end
of period
Total
return
(2)(3)
Ratios to Average Net Assets
(1)
Net assets,
end of period
(000 omitted)
Portfolio
turnover
rate
(3)
Gross
Expenses
Net
Expenses
(4)
Net
investment
income
(loss)
(4)
Large-Cap Growth Fund
2020
(5)
$17.96 $0.05 $
5.11 		$
5.16 		$(0.09
) 		$(0.79
) 		$(0.88) $22.24 29.88
% 		0.83
% 		0.79
% 		0.22
% 		$
66,477 		71
%
2019 20.95 0.09 (0.47
) 		(0.38
) 		(0.06
) 		(2.55
) 		(2.61) 17.96 (0.62
) 		0.84 0.79 0.50 58,562 89
2018 17.46 0.07 4.42 4.49 — (1.00
) 		(1.00) 20.95 26.78 0.92 0.91 0.28 65,365 57
2017 15.34 0.06 3.03 3.09 (0.07
) 		(0.90
) 		(0.97) 17.46 21.30 1.03 1.00 0.34 74,359 75
2016 16.26 0.03 1.44 1.47 (0.02
) 		(2.37
) 		(2.39) 15.34 9.68 1.13 1.07 0.23 163,712 70
Intermediate Tax-Free Fund
2020 11.60 0.30 (0.10
) 		0.20 (0.30
) 		— (0.30) 11.50 1.78 0.56 0.54 2.63 440,189 52
2019 11.13 0.31 0.46 0.77 (0.30
) 		— (0.30) 11.60 7.05 0.56 0.55 2.69 528,980 64
2018 11.37 0.30 (0.24
) 		0.06 (0.30
) 		(0.00
) 		(0.30) 11.13 0.53 0.55 0.55 2.65 870,195 45
2017 11.61 0.29 (0.21
) 		0.08 (0.29
) 		(0.03
) 		(0.32) 11.37 0.78 0.57 0.55 2.55 975,664 44
2016 11.26 0.25 0.37 0.62 (0.25
) 		(0.02
) 		(0.27) 11.61 5.56 0.57 0.55 2.19 1,241,387 42
Strategic Income Fund
2020 9.46 0.40 0.24 0.64 (0.66
)
(6)
— (0.66) 9.44 7.24
(8)
1.01 0.80 4.37 52,054 31
2019 9.08 0.42 0.38 0.80 (0.42
) 		— (0.42) 9.46 9.08 0.96 0.80 4.41 56,576 39
2018 9.45 0.38 (0.37
) 		0.04 (0.41
) 		— (0.41) 9.08 0.37 0.91 0.80 4.09 59,724 33
2017 9.43 0.23 0.08 0.31 (0.29
) 		— (0.29) 9.45 3.32 0.90 0.80 2.46 73,488 65
2016 9.31 0.21 0.17 0.38 (0.26
) 		— (0.26) 9.43 4.17 0.86 0.80 2.28 85,665 13
Corporate Income Fund
2020 13.65 0.42 0.63 1.05 (0.42
) 		— (0.42) 14.28 7.86
(9)
0.66 0.59 3.02 98,766 31
2019 12.79 0.45 0.90 1.35 (0.45
) 		(0.04
) 		(0.49) 13.65 10.88 0.67 0.59 3.52 101,125 37
2018 13.20 0.40 (0.39
) 		0.01 (0.40
) 		(0.02
) 		(0.42) 12.79 0.05 0.63 0.59 3.08 102,523 31
2017 13.17 0.35 0.14 0.49 (0.35
) 		(0.11
) 		(0.46) 13.20 3.86 0.71 0.59 2.70 120,745 44
2016 12.33 0.45 0.89 1.34 (0.45
) 		(0.05
) 		(0.50) 13.17 11.23 0.72 0.59 3.65 82,643 62
Core Plus Bond Fund
2020 12.00 0.32 0.44 0.76 (0.34
)
(7)
— (0.34) 12.42 6.49
(10)
0.56 0.56 2.69 92,259 28
2019 11.41 0.37 0.59 0.96 (0.37
) 		— (0.37) 12.00 8.63 0.58 0.58 3.24 74,970 51
2018 11.79 0.32 (0.37
) 		(0.05
) 		(0.32
) 		(0.01
) 		(0.33) 11.41 (0.45
) 		0.58 0.58 2.70 61,251 45
2017 11.89 0.24 (0.02
) 		0.22 (0.28
) 		(0.04
) 		(0.32) 11.79 1.91 0.59 0.59 2.37 68,946 34
2016 11.42 0.34 0.48 0.82 (0.35
) 		(0.00
) 		(0.35) 11.89 7.36 0.59 0.59 3.00 508,030 39
Financial Highlights 115
 
 
Period
Ended
August 31,
Net asset
value,
beginning
of period
Net
investment
income
(loss)
Net realized
and unrealized
gain (loss)
Total from
investment
operations
Distributions to
shareholders
from net
investment
income
Distributions to
shareholders
from net
realized gain
Total
distributions
Net asset
value, end
of period
Total
return
(2)(3)
Ratios to Average Net Assets
(1)
Net assets,
end of period
(000 omitted)
Portfolio
turnover
rate
(3)
Gross
Expenses
Net
Expenses
(4)
Net
investment
income
(loss)
(4)
Government Money Market Fund
2020 $
1.00 		$0.01 $(0.00
) 		$
0.01 		$(0.01
) 		$
— 		$(0.01) $
1.00 		0.71
% 		0.50
% 		0.45
% 		0.77
% 		$
600,043 		—
%
2019 1.00 0.02 0.00 0.02 (0.02
) 		(0.00
) 		(0.02) 1.00 1.89 0.50 0.45 1.89 805,270 —
2018 1.00 0.01 0.00 0.01 (0.01
) 		(0.00
) 		(0.01) 1.00 1.05 0.50 0.45 1.03 747,981 —
2017 1.00 0.00 0.00 0.00 (0.00
) 		(0.00
) 		(0.00) 1.00 0.24 0.50 0.42 0.24 814,242 —
2016 1.00 0.00 0.00 0.00 (0.00
) 		(0.00
) 		(0.00) 1.00 0.01 0.53 0.29 0.01 268,417 —
Tax-Free Money Market Fund
2020 1.00 0.00 0.01 0.01 (0.01
) 		— (0.01) 1.00 0.66 0.56 0.45 0.65 61,100 —
2019 1.00 0.01 0.00 0.01 (0.01
) 		(0.00
) 		(0.01) 1.00 1.20 0.55 0.45 1.20 71,794 —
2018 1.00 0.01 0.00 0.01 (0.01
) 		(0.00
) 		(0.01) 1.00 0.80 0.56 0.45 0.79 75,889 —
2017 1.00 0.00 0.00 0.00 (0.00
) 		(0.00
) 		(0.00) 1.00 0.37 0.57 0.45 0.33 76,029 —
2016 1.00 0.00 0.00 0.00 (0.00
) 		(0.00
) 		(0.00) 1.00 0.06 0.53 0.26 0.03 90,098 —
Prime Money Market Fund
2020 1.00 0.01   0.01 (0.01
) 		  (0.01) 1.00 0.83 0.50 0.45 0.73 268,054 —
2019 1.00 0.02 0.00 0.02 (0.02
) 		— (0.02) 1.00 2.03 0.51 0.45 2.03 247,742 —
2018 1.00 0.01 0.00 0.01 (0.01
) 		(0.00
) 		(0.01) 1.00 1.25 0.52 0.45 1.24 193,006 —
2017 1.00 0.00 0.00 0.00 (0.00
) 		(0.00
) 		(0.00) 1.00 0.42 0.53 0.45 0.36 202,251 —
2016 1.00 0.00 0.00 0.00 (0.00
) 		(0.00
) 		(0.00) 1.00 0.03 0.45 0.38 0.03 903,864 —
(1)
Annualized for periods less than one year.
(2)
Based on net asset value as of end of period date.
(3)
Not annualized for periods less than one year.
(4)
The contractual and voluntary expense waivers pursuant to Note 5 of the financial statements are reflected in both the net expense and net investment income ratios.
(5)
Calculated using the average shares method.
(6)
Includes distribution to shareholder for return of capital in the amount $0.24 per share.
(7)
Includes distribution to shareholder for return of capital in the amount $0.01 per share.
(8)
Total return includes litigation proceeds received during the year. Excluding these litigation proceeds, the total return would have been 4.31%
(9)
Total return includes litigation proceeds received during the year. Excluding these litigation proceeds, the total return would have been 7.82%
(10)
Total return includes litigation proceeds received during the year. Excluding these litigation proceeds, the total return would have been 6.40%
116 Financial Highlights
 
 
Financial Highlights
—
Advisor Class (Class A) of Shares (For a share outstanding throughout each period)
Period
Ended
August 31,
Net asset
value,
beginning
of period
Net
investment
income
(loss)
Net realized
and unrealized
gain (loss)
Total from
investment
operations
Distributions to
shareholders
from net
investment
income
Distributions to
shareholders
from net
realized gain
Total
distributions
Net asset
value, end
of period
Total
return
(2)(3)
Ratios to Average Net Assets
(1)
Net assets,
end of period
(000 omitted)
Portfolio
turnover
rate
(3)
Gross
Expenses
Net
Expenses
(4)
Net
investment
income
(loss)
(4)
Low Volatility Equity Fund
2020 $15.81 $
0.22 		$(0.42
) 		$(0.20
) 		$(0.24
) 		$(0.31
) 		$(0.55
) 		$15.06 (1.25
)% 		0.93
% 		0.90
% 		1.50
% 		$
41,688 		51
%
2019 15.72 0.22 1.43 1.65 (0.22
) 		(1.34
) 		(1.56
) 		15.81 11.80 1.03 0.90 1.48 29,006 32
2018 14.36 0.19 1.76 1.95 (0.20
) 		(0.39
) 		(0.59
) 		15.72 13.96 1.03 0.90 1.25 25,571 43
2017 13.79 0.20 0.74 0.94 (0.20
) 		(0.17
) 		(0.37
) 		14.36 6.94 1.03 0.90 1.47 31,624 56
2016 12.81 0.16 1.35 1.51 (0.17
) 		(0.36
) 		(0.53
) 		13.79 12.13 1.05 0.90 1.40 15,064 40
Dividend Income Fund
2020 14.02 0.32 (0.35
) 		(0.03
) 		(0.31
) 		(0.02
) 		(0.33
) 		13.66 (0.01
) 		1.01 0.90 2.20 8,789.00 46
2019 15.46 0.30 (0.85
) 		(0.55
) 		(0.31
) 		(0.58
) 		(0.89
) 		14.02 (3.51
) 		1.02 0.90 2.32 15,365 43
2018 14.51 0.28 2.67 2.95 (0.30
) 		(1.70
) 		(2.00
) 		15.46 21.90 1.04 0.90 2.07 6,092 39
2017
(5)
12.94 0.28 1.61 1.89 (0.21
) 		(0.11
) 		(0.32
) 		14.51 14.80 1.08 0.90 2.06 3,205 43
2016 12.59 0.30 1.11 1.41 (0.30
) 		(0.76
) 		(1.06
) 		12.94 11.89 1.08 0.90 2.44 78,531 51
Large-Cap Value Fund
2020 13.72 0.22 (0.18
) 		0.04 (0.24
) 		— (0.24
) 		13.52 0.43 0.85 0.79 1.62 14,047 76
2019 16.59 0.26 (1.46
) 		(1.20
) 		(0.27
) 		(1.40
) 		(1.67
) 		13.72 (7.15
) 		0.85 0.79 1.78 18,621 67
2018 15.85 0.16 2.22 2.38 (0.19
) 		(1.45
) 		(1.64
) 		16.59 15.57 0.91 0.89 0.82 22,602 54
2017
(5)
14.14 0.08 1.93 2.01 (0.18
) 		(0.12
) 		(0.30
) 		15.85 14.33 1.02 1.00 0.49 25,061 62
2016 15.23 0.21 0.53 0.74 (0.22
) 		(1.61
) 		(1.83
) 		14.14 5.31 1.10 1.07 1.61 37 60
Large-Cap Growth Fund
2020
(5)
17.94 0.04 5.12 5.16 (0.09
) 		(0.79
) 		(0.88
) 		22.22 29.85 0.83 0.79 0.22 687 71
2019 20.96 0.09 (0.48
) 		(0.39
) 		(0.08
) 		(2.55
) 		(2.63
) 		17.94 (0.63
) 		0.84 0.79 0.49 712 89
2018 17.46 0.05 4.45 4.50 — (1.00
) 		(1.00
) 		20.96 26.84 0.91 0.88 0.32 860 57
2017 15.34 0.03 3.06 3.09 (0.07
) 		(0.90
) 		(0.97
) 		17.46 21.30 1.03 1.00 0.39 808 75
2016 16.26 0.02 1.45 1.47 (0.02
) 		(2.37
) 		(2.39
) 		15.34 9.68 1.13 1.07 0.29 405 70
Mid-Cap Value Fund
2020 9.99 0.16 (0.95
) 		(0.79
) 		(0.13
) 		— (0.13
) 		9.07 (8.10
) 		1.30 1.24 1.36 28,114 47
2019 12.64 0.13 (1.34
) 		(1.21
) 		(0.11
) 		(1.33
) 		(1.44
) 		9.99 (9.63
) 		1.26 1.24 0.98 39,032 50
2018 11.91 0.11 1.17 1.28 (0.05
) 		(0.50
) 		(0.55
) 		12.64 10.89 1.25 1.24 0.79 55,151 64
2017 14.40 0.05 1.28 1.33 (0.05
) 		(3.77
) 		(3.82
) 		11.91 12.88 1.26 1.24 0.74 64,462 139
2016 15.02 0.11 0.86 0.97 (0.12
) 		(1.47
) 		(1.59
) 		14.40 7.27 1.23 1.23 0.90 39 24
Financial Highlights 117
 
 
Period
Ended
August 31,
Net asset
value,
beginning
of period
Net
investment
income
(loss)
Net realized
and unrealized
gain (loss)
Total from
investment
operations
Distributions to
shareholders
from net
investment
income
Distributions to
shareholders
from net
realized gain
Total
distributions
Net asset
value, end
of period
Total
return
(2)(3)
Ratios to Average Net Assets
(1)
Net assets,
end of period
(000 omitted)
Portfolio
turnover
rate
(3)
Gross
Expenses
Net
Expenses
(4)
Net
investment
income
(loss)
(4)
Mid-Cap Growth Fund
2020 $14.20 $(0.06
) 		$
2.55 		$
2.49 		$
— 		$(1.82
) 		$(1.82
) 		$14.87 19.05
% 		1.34
% 		1.24
% 		(0.37
)% 		$
14,016 		56
%
2019 17.96 (0.06
) 		(0.75
) 		(0.81
) 		— (2.95
) 		(2.95
) 		14.20 (2.95
) 		1.32 1.24 (0.41
) 		14,229 61
2018 14.79 (0.08
) 		4.24 4.16 — (0.99
) 		(0.99
) 		17.96 29.40 1.31 1.24 (0.43
) 		16,399 63
2017 16.26 (0.02
) 		2.11 2.09 (0.02
) 		(3.54
) 		(3.56
) 		14.79 16.73 1.37 1.24 (0.47
) 		17,945 157
2016 20.02 0.03 (0.91
) 		(0.88
) 		— (2.88
) 		(2.88
) 		16.26 (4.23
) 		1.29 1.24 0.09 31 59
Small-Cap Value Fund
2020
(5)
11.39 0.06 (1.03
) 		(0.97
) 		(0.07
) 		(0.05
) 		(0.12
) 		10.30 (8.63
) 		1.48 1.24 0.52 1,575 82
2019 14.78 0.08 (2.45
) 		(2.37
) 		(0.06
) 		(0.96
) 		(1.02
) 		11.39 (16.19
) 		1.39 1.24 0.53 3,140 67
2018 13.30 0.03 2.57 2.60 — (1.12
) 		(1.12
) 		14.78 20.32 1.41 1.24 0.25 4,741 70
2017
(5)
13.21 0.03 1.36 1.39 (0.04
) 		(1.26
) 		(1.30
) 		13.30 11.58 1.49 1.24 0.22 4,931 148
2016 12.72 0.03 0.98 1.01 — (0.52
) 		(0.52
) 		13.21 8.23 1.39 1.24 0.17 42,615 39
Small-Cap Growth Fund
2020 15.32 (0.07
) 		1.69 1.62 — (0.30
) 		(0.30
) 		16.64 10.60 1.34 1.24 (0.46
) 		27,152 70
2019 21.60 (0.02
) 		(3.51
) 		(3.53
) 		— (2.75
) 		(2.75
) 		15.32 (16.12
) 		1.30 1.24 (0.54
) 		31,378 61
2018 18.37 (0.12
) 		5.43 5.31 — (2.08
) 		(2.08
) 		21.60 31.55 1.28 1.24 (0.47
) 		53,772 80
2017
(6)
17.79 (0.06
) 		0.64 0.58 — — — 18.37 3.26 1.24 1.24 (0.97
) 		57,737 197
Global Low Volatility Equity Fund
2020
(5)
11.42 0.16 (0.74
) 		(0.58
) 		(0.36
) 		(0.21
) 		(0.57
) 		10.27 (5.51
) 		1.77 1.10 1.44 101 49
2019
(7)
14.00 0.52 (0.37
) 		0.15 (0.38
) 		(2.35
) 		(2.73
) 		11.42 2.21 1.62 1.10 2.50 660 44
2018 13.16 (0.15
) 		1.46 1.31 (0.34
) 		(0.13
) 		(0.47
) 		14.00 10.21 1.46 1.10 1.50 339 34
2017
(7)
12.61 0.14 0.66 0.80 (0.17
) 		(0.08
) 		(0.25
) 		13.16 6.59 1.52 1.10 1.96 997 74
2016
(7)
11.31 0.11 1.25 1.36 (0.06
) 		(0.00
) 		(0.06
) 		12.61 12.11 1.63 1.10 2.04 266 36
Disciplined International Equity Fund
2020
(5)
10.01 0.19 (0.07
) 		0.12 (0.42
) 		— (0.42
) 		9.71 0.92 1.44 1.15 1.99 139 55
2019 10.94 0.33 (1.09
) 		(0.76
) 		(0.17
) 		— (0.17
) 		10.01 (6.91
) 		1.28 1.15 2.79 141 59
2018
(7)
11.17 0.21 (0.22
) 		(0.01
) 		(0.22
) 		— (0.22
) 		10.94 (0.15
) 		1.27 1.15 2.11 186 52
2017
(7)
9.56 0.20 1.66 1.86 (0.25
) 		— (0.25
) 		11.17 19.97 1.39 1.15 1.98 149 77
2016
(7)(8)
10.00 0.23 (0.67
) 		(0.44
) 		— — — 9.56 (4.40
) 		1.45 1.15 2.53 125 64
Pyrford International Stock Fund
2020
(5)(7)
13.08 0.26 0.54 0.80 (0.32
) 		  (0.32
) 		13.56 6.11 1.20 1.19 1.95 1,816 28
2019
(7)
13.43 0.32 (0.34
) 		(0.02
) 		(0.33
) 		— (0.33
) 		13.08 0.04 1.21 1.19 2.32 4,621 16
2018
(7)
13.16 (0.09
) 		0.36 0.27 — — — 13.43 2.05 1.20 1.18 2.88 6,037 20
2017
(5)(7)
12.18 0.40 0.83 1.23 (0.25
) 		— (0.25
) 		13.16 10.38 1.30 1.21 3.11 891 33
2016
(7)
11.74 0.33 0.35 0.68 (0.24
) 		— (0.24
) 		12.18 5.96 1.31 1.24 0.92 88 12
118 Financial Highlights
 
 
Period
Ended
August 31,
Net asset
value,
beginning
of period
Net
investment
income
(loss)
Net realized
and unrealized
gain (loss)
Total from
investment
operations
Distributions to
shareholders
from net
investment
income
Distributions to
shareholders
from net
realized gain
Total
distributions
Net asset
value, end
of period
Total
return
(2)(3)
Ratios to Average Net Assets
(1)
Net assets,
end of period
(000 omitted)
Portfolio
turnover
rate
(3)
Gross
Expenses
Net
Expenses
(4)
Net
investment
income
(loss)
(4)
LGM Emerging Markets Equity Fund
2020
(5)(7)
$14.89 $
0.28 		$
0.36 		$
0.64 		$(0.23
) 		$(0.08
) 		$(0.31
) 		$15.22 4.30
% 		1.51
% 		1.40
% 		1.90
% 		$
3,896 		45
%
2019
(7)
16.04 (0.02
) 		(0.49
) 		(0.51
) 		(0.13
) 		(0.51
) 		(0.64
) 		14.89 (3.05
) 		1.51 1.40 1.30 5,224 24
2018
(7)
15.93 0.14 (0.03
) 		0.11 — — — 16.04 0.69 1.55 1.40 0.84 4,983 22
2017
(5)(7)
14.04 0.13 1.82 1.95 (0.06
) 		— (0.06
) 		15.93 14.03 1.63 1.40 0.96 4,776 40
2016
(7)
12.12 0.16 1.86 2.02 (0.10
) 		— (0.10
) 		14.04 16.88 1.64 1.40 0.92 51,879 24
Ultra Short Tax-Free Fund
2020 10.09 0.09 0.01 0.10 (0.10
) 		— (0.10
) 		10.09 1.06 0.63 0.55 1.05 12,998 267
2019 10.07 0.13 0.03 0.16 (0.14
) 		— (0.14
) 		10.09 1.62 0.62 0.55 1.41 16,498 155
2018 10.08 0.10 0.00 0.10 (0.10
) 		(0.01
) 		(0.11
) 		10.07 0.95 0.62 0.55 0.99 27,434 156
2017 10.08 0.07 0.01 0.08 (0.07
) 		(0.01
) 		(0.08
) 		10.08 0.80 0.64 0.55 0.74 34,696 126
2016 10.08 0.04 0.01 0.05 (0.04
) 		(0.01
) 		(0.05
) 		10.08 0.50 0.64 0.55 0.39 25 56
Short Tax-Free Fund
2020 10.28 0.17 0.01 0.18 (0.17
) 		— (0.17
) 		10.29 1.73 0.74 0.55 1.62 3,465 62
2019 10.14 0.17 0.14 0.31 (0.17
) 		— (0.17
) 		10.28 3.10 0.72 0.55 1.68 3,668 94
2018 10.22 0.14 (0.08
) 		0.06 (0.14
) 		— (0.14
) 		10.14 0.62 0.67 0.55 1.40 6,502 95
2017 10.24 0.13 (0.02
) 		0.11 (0.13
) 		(0.00
) 		(0.13
) 		10.22 1.08 0.76 0.55 1.27 7,166 93
2016 10.20 0.11 0.06 0.17 (0.11
) 		(0.02
) 		(0.13
) 		10.24 1.69 0.77 0.55 1.04 1,151 39
Short-Term Income Fund
2020 9.45 0.18 0.11 0.29 (0.19
) 		— 0.19 9.55 3.09 0.70 0.60 1.94 20,404 48
2019 9.27 0.22 0.18 0.40 (0.22
) 		— (0.22
) 		9.45 4.34 0.70 0.60 2.30 24,531 53
2018 9.39 0.17 (0.12
) 		0.05 (0.17
) 		— (0.17
) 		9.27 0.56 0.71 0.60 1.80 26,011 48
2017 9.40 0.15 (0.01
) 		0.14 (0.15
) 		— (0.15
) 		9.39 1.46 0.72 0.60 1.61 33,311 53
2016 9.33 0.10 0.07 0.17 (0.10
) 		— (0.10
) 		9.40 1.87 0.70 0.60 0.98 157 64
Intermediate Tax-Free Fund
2020 11.60 0.29 (0.09
) 		0.20 (0.30
) 		— (0.30
) 		11.50 1.78 0.56 0.54 2.63 5,016 52
2019 11.13 0.30 0.47 0.77 (0.30
) 		— (0.30
) 		11.60 7.05 0.56 0.55 2.69 4,505 64
2018 11.37 0.30 (0.24
) 		0.06 (0.30
) 		— (0.30
) 		11.13 0.53 0.55 0.55 2.65 14,701 45
2017 11.61 0.29 (0.21
) 		0.08 (0.29
) 		(0.03
) 		(0.32
) 		11.37 0.79 0.57 0.55 2.57 10,842 44
2016 11.26 0.25 0.37 0.62 (0.25
) 		(0.02
) 		(0.27
) 		11.61 5.56 0.57 0.55 2.18 1,693 42
Financial Highlights 119
 
 
Period
Ended
August 31,
Net asset
value,
beginning
of period
Net
investment
income
(loss)
Net realized
and unrealized
gain (loss)
Total from
investment
operations
Distributions to
shareholders
from net
investment
income
Distributions to
shareholders
from net
realized gain
Total
distributions
Net asset
value, end
of period
Total
return
(2)(3)
Ratios to Average Net Assets
(1)
Net assets,
end of period
(000 omitted)
Portfolio
turnover
rate
(3)
Gross
Expenses
Net
Expenses
(4)
Net
investment
income
(loss)
(4)
Strategic Income Fund
2020 $
9.46 		$
0.40 		$
0.24 		$
0.64 		$(0.66
)
(9)
$
— 		$
0.66 		$
9.44 		7.24
(11)
% 		1.01
% 		0.80
% 		4.39
% 		$
12,858 		31
%
2019 9.08 0.42 0.38 0.80 (0.42
) 		— (0.42
) 		9.46 9.08 0.96 0.80 4.41 12,523 39
2018 9.45 0.37 (0.37
) 		0.03 (0.40
) 		— (0.40
) 		9.08 0.37 0.92 0.80 4.09 13,602 33
2017 9.43 0.28 0.03 0.31 (0.29
) 		— (0.29
) 		9.45 3.32 0.90 0.80 3.14 18,354 65
2016 9.31 0.22 0.16 0.38 (0.26
) 		— (0.26
) 		9.43 4.17 0.86 0.80 2.27 32 13
Corporate Income Fund
2020 13.65 0.42 0.63 1.05 (0.42
) 		  (0.42
) 		14.28 7.86(12
) 		0.66 0.59 3.05 3,719 31
2019 12.79 0.45 0.90 1.35 (0.45
) 		(0.04
) 		(0.49
) 		13.65 10.89 0.67 0.59 3.48 7,208 37
2018 13.20 0.40 (0.39
) 		0.01 (0.40
) 		(0.02
) 		(0.42
) 		12.79 0.06 0.63 0.59 3.15 1,864 31
2017 13.17 0.35 0.14 0.49 (0.35
) 		(0.11
) 		(0.46
) 		13.20 3.86 0.71 0.59 2.63 1,384 44
2016 12.33 0.45 0.89 1.34 (0.45
) 		(0.05
) 		(0.50
) 		13.17 11.23 0.72 0.59 3.77 66 62
Core Plus Bond Fund
2020 12.00 0.32 0.43 0.75 (0.34
)
(10)
— (0.34
) 		12.41 6.49
(13)
0.56 0.56 2.69 4,438 28
2019 11.41 0.37 0.59 0.96 (0.37
) 		— (0.37
) 		12.00 8.63 0.58 0.58 3.23 3,727 51
2018 11.79 0.31 (0.37
) 		(0.05
) 		(0.32
) 		(0.01
) 		(0.33
) 		11.41 (0.45
) 		0.58 0.58 2.69 3,032 45
2017 11.89 0.28 (0.06
) 		0.22 (0.28
) 		(0.04
) 		(0.32
) 		11.79 1.91 0.59 0.59 2.36 3,337 34
2016 11.42 0.34 0.48 0.82 (0.35
) 		(0.00
) 		(0.35
) 		11.89 7.36 0.59 0.59 2.99 1,434 39
(1)
Annualized for periods less than one year.
(2)
Based on net asset value as of end of period date.
(3)
Not annualized for periods less than one year.
(4)
The contractual and voluntary expense waivers pursuant to Note 5 of the financial statements are reflected in both the net expense and net investment income (loss) ratios.
(5)
Calculated using the average shares method.
(6)
Reflects operations for the period from May 31, 2017 (inception date) to August 31, 2017
(7)
Redemption fees consisted of per share amounts less than $0.01.
(8)
Reflects operations for the period from September 17, 2015 (inception date) to August 31, 2016.
(9)
Includes distribution to shareholder for return of capital in the amount $0.24 per share.
(10)
Includes distribution to shareholder for return of capital in the amount $0.01 per share.
(11)
Total return includes litigation proceeds received during the year. Excluding these litigation proceeds, the total return would have been 4.31%
(12)
Total return includes litigation proceeds received during the year. Excluding these litigation proceeds, the total return would have been 7.82%
(13)
Total return includes litigation proceeds received during the year. Excluding these litigation proceeds, the total return would have been 6.40%
120 Financial Highlights
 
 
Financial Highlights
—
Institutional Class (Class I) of Shares (For a share outstanding throughout each period)
Period
Ended
August 31,
Net asset
value,
beginning
of period
Net
investment
income
(loss)
Net realized
and unrealized
gain (loss)
Total from
investment
operations
Distributions to
shareholders
from net
investment
income
Distributions to
shareholders
from net
realized gain
Total
distributions
Net asset
value, end
of period
Total
return
(2)(3)
Ratios to Average Net Assets
(1)
Net assets,
end of period
(000 omitted)
Portfolio
turnover
rate
(3)
Gross
Expenses
Net
Expenses
(4)
Net
investment
income
(loss)
(4)
Low Volatility Equity Fund
2020 $15.88 $
0.28 		$(0.45
) 		$(0.17
) 		$(0.28
) 		$(0.31
) 		$(0.59
) 		$15.12 (1.06
)% 		0.68
% 		0.65
% 		1.76
% 		$
217,448 		51
%
2019 15.77 0.25 1.46 1.71 (0.26
) 		(1.34
) 		(1.60
) 		15.88 12.18 0.78 0.65 1.71 184,158 32
2018 14.42 0.24 1.74 1.98 (0.24
) 		(0.39
) 		(0.63
) 		15.77 14.12 0.78 0.65 1.52 102,815 43
2017 13.84 0.24 0.74 0.98 (0.23
) 		(0.17
) 		(0.40
) 		14.42 7.24 0.78 0.65 1.69 127,837 56
2016 12.84 0.20 1.35 1.55 (0.19
) 		(0.36
) 		(0.55
) 		13.84 12.47 0.80 0.65 1.62 135,413 40
Dividend Income Fund
2020 13.98 0.34 (0.34
) 		0.00 (0.34
) 		(0.02
) 		(0.36
) 		13.62 0.28 0.76 0.65 2.47 235,928 46
2019 15.41 0.34 (0.85
) 		(0.51
) 		(0.34
) 		(0.58
) 		(0.92
) 		13.98 (3.24
) 		0.78 0.65 2.56 297,622 43
2018 14.47 0.34 2.64 2.98 (0.34
) 		(1.70
) 		(2.04
) 		15.41 22.17 0.79 0.65 2.31 149,009 39
2017
(5)
12.96 0.33 1.60 1.93 (0.31
) 		(0.11
) 		(0.42
) 		14.47 15.15 0.83 0.65 2.37 112,377 43
2016 12.62 0.35 1.08 1.43 (0.33
) 		(0.76
) 		(1.09
) 		12.96 12.07 0.83 0.65 2.68 38,719 51
Large-Cap Value Fund
2020 13.74 0.27 (0.20
) 		0.07 (0.28
) 		— (0.28
) 		13.53 0.70 0.60 0.54 1.90 213,466 76
2019 16.61 0.30 (1.46
) 		(1.16
) 		(0.31
) 		(1.40
) 		(1.71
) 		13.74 (6.97
) 		0.59 0.54 2.01 224,930 67
2018 15.88 0.28 2.14 2.42 (0.24
) 		(1.45
) 		(1.69
) 		16.61 15.83 0.67 0.64 1.64 287,685 54
2017
(5)
14.16 0.22 1.83 2.05 (0.21
) 		(0.12
) 		(0.33
) 		15.88 14.66 0.77 0.75 1.47 307,156 62
2016 15.26 0.24 0.53 0.77 (0.26
) 		(1.61
) 		(1.87
) 		14.16 5.57 0.85 0.82 1.83 136,813 60
Large-Cap Growth Fund
2020 18.15 0.09 5.18 5.27 (0.14
) 		(0.79
) 		(0.93
) 		22.49 30.19 0.58 0.54 0.40 121,958 71
2019 21.17 0.18 (0.53
) 		(0.35
) 		(0.12
) 		(2.55
) 		(2.67
) 		18.15 (0.40
) 		0.59 0.54 0.75 168,838 89
2018 17.60 0.11 4.48 4.59 (0.02
) 		(1.00
) 		(1.02
) 		21.17 27.19 0.67 0.64 0.56 279,227 57
2017 15.47 0.10 3.06 3.16 (0.13
) 		(0.90
) 		(1.03
) 		17.60 21.63 0.78 0.75 0.65 278,436 75
2016 16.39 0.07 1.44 1.51 (0.06
) 		(2.37
) 		(2.43
) 		15.47 9.88 0.88 0.82 0.50 95,438 70
Mid-Cap Value Fund
2020 9.92 0.16 (0.91
) 		(0.75
) 		(0.16
) 		— (0.16
) 		9.01 (7.79
) 		1.05 0.99 1.62 65,345 47
2019 12.58 0.13 (1.32
) 		(1.19
) 		(0.14
) 		(1.33
) 		(1.47
) 		9.92 (9.47
) 		1.01 0.99 1.23 87,893 50
2018 11.89 0.13 1.18 1.31 (0.12
) 		(0.50
) 		(0.62
) 		12.58 11.21 1.00 0.99 1.04 113,786 64
2017 14.38 0.08 1.27 1.35 (0.07
) 		(3.77
) 		(3.84
) 		11.89 13.10 1.01 0.99 0.91 127,304 139
2016 15.01 0.16 0.85 1.01 (0.17
) 		(1.47
) 		(1.64
) 		14.38 7.55 0.98 0.98 1.09 75,608 24
Financial Highlights 121
 
 
Period
Ended
August 31,
Net asset
value,
beginning
of period
Net
investment
income
(loss)
Net realized
and unrealized
gain (loss)
Total from
investment
operations
Distributions to
shareholders
from net
investment
income
Distributions to
shareholders
from net
realized gain
Total
distributions
Net asset
value, end
of period
Total
return
(2)(3)
Ratios to Average Net Assets
(1)
Net assets,
end of period
(000 omitted)
Portfolio
turnover
rate
(3)
Gross
Expenses
Net
Expenses
(4)
Net
investment
income
(loss)
(4)
Mid-Cap Growth Fund
2020 $15.04 $(0.01
) 		$
2.71 		$
2.70 		$
— 		$(1.82
) 		$(1.82
) 		$15.92 19.41
% 		1.09
% 		0.99
% 		(0.12
)% 		$
78,143 		56
%
2019 18.79 (0.02
) 		(0.78
) 		(0.80
) 		— (2.95
) 		(2.95
) 		15.04 (2.75
) 		1.07 0.99 (0.16
) 		74,575 61
2018 15.39 (0.03
) 		4.42 4.39 — (0.99
) 		(0.99
) 		18.79 29.76 1.06 0.99 (0.18
) 		89,028 63
2017 16.76 0.03 2.19 2.22 (0.05
) 		(3.54
) 		(3.59
) 		15.39 17.07 1.12 0.99 (0.07
) 		94,464 157
2016 20.51 0.04 (0.91
) 		(0.87
) 		— (2.88
) 		(2.88
) 		16.76 (4.06
) 		1.04 0.99 0.33 39,569 59
Small-Cap Value Fund
2020 11.60 0.09 (1.05
) 		(0.96
) 		(0.11
) 		(0.05
) 		(0.16
) 		10.48 (8.40
) 		1.24 0.99 0.78 41,135 82
2019 15.03 0.09 (2.47
) 		(2.38
) 		(0.09
) 		(0.96
) 		(1.05
) 		11.60 (15.93
) 		1.14 0.99 0.78 44,586 67
2018 13.47 0.07 2.61 2.68 — (1.12
) 		(1.12
) 		15.03 20.67 1.16 0.99 0.49 56,848 70
2017
(5)
13.37 0.04 1.41 1.45 (0.09
) 		(1.26
) 		(1.35
) 		13.47 11.87 1.24 0.99 0.33 56,585 148
2016 12.84 0.05 1.00 1.05 — (0.52
) 		(0.52
) 		13.37 8.47 1.14 0.99 0.40 25,522 39
Small-Cap Growth Fund
2020 16.10 (0.03
) 		1.78 1.75   (0.30
) 		(0.30
) 		17.55 10.89 1.09 0.99 (0.22
) 		69,926 70
2019 22.48 0.01 (3.64
) 		(3.63
) 		— (2.75
) 		(2.75
) 		16.10 (15.92
) 		0.01 0.99 (0.29
) 		68,226 61
2018 19.00 (0.03
) 		5.59 5.56 — (2.08
) 		(2.08
) 		22.48 31.83 1.02 0.99 (0.21
) 		99,311 80
2017 16.62 (0.14
) 		2.52 2.38 — — — 19.00 14.32 1.02 1.02 (0.37
) 		81,259 197
2016 18.60 (0.10
) 		(0.64
) 		(0.74
) 		— (1.24
) 		(1.24
) 		16.62 (3.72
) 		1.18 1.18 (0.21
) 		179,726 63
Global Low Volatility Equity Fund
2020
(5)(6)
11.49 0.21 (0.77
) 		(0.56
) 		(0.36
) 		(0.21
) 		(0.57
) 		10.36 (5.29
) 		1.53 0.85 1.95 13,739 49
2019
(6)
14.05 0.38 (0.19
) 		0.19 (0.40
) 		(2.35
) 		(2.75
) 		11.49 2.48 1.37 0.85 2.67 34,335 44
2018 13.20 0.30 1.05 1.35 (0.37
) 		(0.13
) 		(0.50
) 		14.05 10.44 1.19 0.85 1.94 30,205 34
2017
(6)
12.65 0.19 0.64 0.83 (0.20
) 		(0.08
) 		(0.28
) 		13.20 6.76 1.27 0.85 1.98 48,221 74
2016
(6)
11.34 0.07 1.33 1.40 (0.09
) 		(0.00
) 		(0.09
) 		12.65 12.44 1.38 0.85 2.26 38,909 36
Disciplined International Equity Fund
2020
(5)
10.03 0.22 (0.06
) 		0.16 (0.45
) 		— (0.45
) 		9.74 1.30 1.18 0.90 2.19 38,899 55
2019 10.96 0.34 (1.08
) 		(0.74
) 		(0.19
) 		— (0.19
) 		10.03 (6.64
) 		1.03 0.90 3.00 60,828 59
2018
(6)
11.19 0.26 (0.25
) 		0.01 (0.24
) 		— (0.24
) 		10.96 0.05 1.03 0.90 2.33 77,339 52
2017
(6)
9.58 0.25 1.64 1.89 (0.28
) 		— (0.28
) 		11.19 20.30 1.14 0.90 2.13 72,239 77
2016
(6)(7)
10.00 0.23 (0.65
) 		(0.42
) 		— — — 9.58 (4.20
) 		1.20 0.90 2.51 67,434 64
122 Financial Highlights
 
 
Period
Ended
August 31,
Net asset
value,
beginning
of period
Net
investment
income
(loss)
Net realized
and unrealized
gain (loss)
Total from
investment
operations
Distributions to
shareholders
from net
investment
income
Distributions to
shareholders
from net
realized gain
Total
distributions
Net asset
value, end
of period
Total
return
(2)(3)
Ratios to Average Net Assets
(1)
Net assets,
end of period
(000 omitted)
Portfolio
turnover
rate
(3)
Gross
Expenses
Net
Expenses
(4)
Net
investment
income
(loss)
(4)
Pyrford International Stock Fund
2020
(5)(6)
$12.84 $
0.31 		$
0.51 		$
0.82 		$(0.37
) 		$
— 		$(0.37
) 		$13.29 6.38
% 		0.95
% 		0.94
% 		2.40
% 		$
463,023 		28
%
2019
(6)
13.18 0.33 (0.33
) 		0.00 (0.34
) 		— (0.34
) 		12.84 0.25 0.96 0.94 2.71 486,114 16
2018
(6)
13.21 0.37 (0.06
) 		0.31 (0.34
) 		— (0.34
) 		13.18 2.34 0.96 0.94 2.41 485,053 20
2017
(5)(6)
12.22 0.32 0.94 1.26 (0.27
) 		— (0.27
) 		13.21 10.68 1.05 0.96 2.59 593,746 33
2016
(6)
11.78 0.35 0.36 0.71 (0.27
) 		— (0.27
) 		12.22 6.21 1.06 0.99 2.44 485,787 12
LGM Emerging Markets Equity Fund
2020
(5)(6)
14.82 0.29 0.39 0.68 (0.26
) 		(0.08
) 		(0.34
) 		15.16 4.60 1.27 1.15 2.06 255,796 45
2019
(6)
15.99 0.22 (0.69
) 		(0.47
) 		(0.19
) 		(0.51
) 		(0.70
) 		14.82 (2.76
) 		1.25 1.15 1.65 286,159 24
2018
(6)
15.97 0.19 (0.04
) 		0.15 (0.13
) 		— (0.13
) 		15.99 0.92 1.29 1.15 1.20 201,835 22
2017
(5)(6)
14.08 0.15 1.84 1.99 (0.10
) 		— (0.10
) 		15.97 14.36 1.38 1.15 1.04 157,581 40
2016
(6)
12.16 0.15 1.90 2.05 (0.13
) 		— (0.13
) 		14.08 17.12 1.39 1.15 1.07 78,851 24
Ultra Short Tax-Free Fund
2020 10.09 0.13 (0.13
) 		0.12 (0.13
) 		— (0.13
) 		10.08 1.21 0.38 0.30 1.28 523,605 267
2019 10.06 0.17 0.03 0.20 (0.17
) 		— (0.17
) 		10.09 1.98 0.37 0.30 1.66 541,859 155
2018 10.08 0.13 (0.01
) 		0.12 (0.13
) 		(0.01
) 		(0.14
) 		10.06 1.10 0.37 0.30 1.25 572,669 156
2017 10.07 0.10 0.02 0.12 (0.10
) 		(0.01
) 		(0.11
) 		10.08 1.15 0.39 0.30 0.94 625,691 126
2016 10.08 0.07 0.00 0.07 (0.07
) 		(0.01
) 		(0.08
) 		10.07 0.65 0.39 0.30 0.65 548,641 56
Short Tax-Free Fund
2020 10.29 0.18 0.01 0.19 (0.18
) 		  (0.18
) 		10.30 1.88 0.49 0.40 1.78 124,485 62
2019 10.14 0.19 0.15 0.34 (0.19
) 		— (0.19
) 		10.29 3.35 0.47 0.40 1.83 156,128 94
2018 10.22 0.16 (0.08
) 		0.08 (0.16
) 		— (0.16
) 		10.14 0.77 0.48 0.40 1.56 182,022 95
2017 10.25 0.14 (0.03
) 		0.11 (0.14
) 		(0.00
) 		(0.14
) 		10.22 1.14 0.51 0.40 1.39 175,454 93
2016 10.20 0.13 0.07 0.20 (0.13
) 		(0.02
) 		(0.15
) 		10.25 1.94 0.52 0.40 1.18 168,592 39
Short-Term Income Fund
2020 9.47 0.20 0.11 0.31 (0.21
) 		— (0.21
) 		9.57 3.35 0.45 0.35 2.18 216,283 48
2019 9.29 0.24 0.18 0.42 (0.24
) 		— (0.24
) 		9.47 4.59 0.45 0.35 2.56 233,816 53
2018 9.40 0.20 (0.11
) 		0.09 (0.20
) 		— (0.20
) 		9.29 0.92 0.46 0.35 2.06 214,068 48
2017 9.42 0.17 (0.02
) 		0.15 (0.17
) 		— (0.17
) 		9.40 1.60 0.47 0.35 1.76 209,278 53
2016 9.35 0.11 0.09 0.20 (0.13
) 		— (0.13
) 		9.42 2.12 0.45 0.35 1.16 234,507 64
Financial Highlights 123
 
 
Period
Ended
August 31,
Net asset
value,
beginning
of period
Net
investment
income
(loss)
Net realized
and unrealized
gain (loss)
Total from
investment
operations
Distributions to
shareholders
from net
investment
income
Distributions to
shareholders
from net
realized gain
Total
distributions
Net asset
value, end
of period
Total
return
(2)(3)
Ratios to Average Net Assets
(1)
Net assets,
end of period
(000 omitted)
Portfolio
turnover
rate
(3)
Gross
Expenses
Net
Expenses
(4)
Net
investment
income
(loss)
(4)
Intermediate Tax-Free Fund
2020 $11.59 $
0.33 		$(0.10
) 		$
0.23 		$(0.33
) 		$
— 		$(0.33
) 		$11.49 2.02
% 		0.31
% 		0.31
% 		2.86
% 		$1,417,833 52
%
2019 11.12 0.33 0.47 0.80 (0.33
) 		— (0.33
) 		11.59 7.40 0.30 0.30 2.95 1,384,178 64
2018 11.37 0.32 (0.25
) 		0.07 (0.32
) 		— (0.32
) 		11.12 0.68 0.31 0.31 2.88 894,463 45
2017 11.60 0.31 (0.20
) 		0.11 (0.31
) 		(0.03
) 		(0.34
) 		11.37 1.11 0.32 0.32 2.79 631,658 44
2016 11.26 0.28 0.36 0.64 (0.28
) 		(0.02
) 		(0.30
) 		11.60 5.71 0.32 0.32 2.43 601,873 42
Strategic Income Fund
2020 9.45 0.44 0.23 0.67 (0.69
)
(8)
— (0.69
) 		9.43 7.51
(10)
0.75 0.55 4.52 6,313 31
2019 9.08 0.43 0.38 0.81 (0.44
) 		— (0.44
) 		9.45 9.23 0.70 0.55 4.65 9,117 39
2018 9.44 0.40 (0.36
) 		0.07 (0.43
) 		— (0.43
) 		9.08 0.72 0.67 0.55 4.31 12,701 33
2017 9.42 0.27 0.06 0.33 (0.31
) 		— (0.31
) 		9.44 3.58 0.65 0.55 2.68 21,550 65
2016 9.31 0.23 0.17 0.40 (0.29
) 		— (0.29
) 		9.42 4.32 0.61 0.55 2.53 21,663 13
Corporate Income Fund
2020 13.64 0.44 0.62 1.06 (0.44
) 		— 0.44 14.26 7.98
(11)
0.41 0.41 3.19 298,296 31
2019 12.78 0.47 0.90 1.37 (0.47
) 		(0.04
) 		(0.51
) 		13.64 11.07 0.42 0.42 3.68 236,955 37
2018 13.19 0.42 (0.39
) 		0.03 (0.42
) 		(0.02
) 		(0.44
) 		12.78 0.19 0.45 0.45 3.24 140,395 31
2017 13.15 0.37 0.15 0.52 (0.37
) 		(0.11
) 		(0.48
) 		13.19 4.07 0.46 0.46 2.84 134,293 44
2016 12.32 0.46 0.88 1.34 (0.46
) 		(0.05
) 		(0.51
) 		13.15 11.28 0.47 0.47 3.77 129,429 62
Core Plus Bond Fund
2020 12.00 0.35 0.43 0.78 (0.37
)
(9)
— (0.37
) 		12.41 6.67
(12)
0.31 0.31 2.94 1,062,276 28
2019 11.40 0.40 0.60 1.00 (0.40
) 		— (0.40
) 		12.00 8.99 0.33 0.33 3.48 945,420 51
2018 11.78 0.34 (0.37
) 		(0.03
) 		(0.34
) 		(0.01
) 		(0.35
) 		11.40 (0.20
) 		0.33 0.33 2.95 981,569 45
2017 11.89 0.31 (0.07
) 		0.24 (0.31
) 		(0.04
) 		(0.35
) 		11.78 2.08 0.34 0.34 2.62 975,051 34
2016 11.42 0.37 0.48 0.85 (0.38
) 		(0.00
) 		(0.38
) 		11.89 7.63 0.34 0.34 3.25 459,228 39
(1)
Annualized for periods less than one year.
(2)
Based on net asset value as of end of period date.
(3)
Not annualized for periods less than one year.
(4)
The contractual and voluntary expense waivers pursuant to Note 5 of the financial statements are reflected in both the net expense and net investment income (loss) ratios.
(5)
Calculated using the average shares method.
(6)
Redemption fees consisted of per share amounts less than $0.01.
(7)
Reflects operations for the period from September 17, 2015 (inception date) to August 31, 2016.
(8)
Includes distribution to shareholders for return of capital in the amount of $0.23 per share.
(9)
Includes distribution to shareholder for return of capital in the amount $0.01 per share.
(10)
Includes distribution to shareholder for return of capital in the amount $0.01 per share.
(11)
Total return includes litigation proceeds received during the year. Excluding these litigation proceeds, the total return would have been 4.58%
(12)
Total return includes litigation proceeds received during the year. Excluding these litigation proceeds, the total return would have been 7.94%
(13)
Total return includes litigation proceeds received during the year. Excluding these litigation proceeds, the total return would have been 6.58%
124 Financial Highlights
 
 
Financial Highlights
—
Premier Class of Shares (For a share outstanding throughout each period)
Period
Ended
August 31,
Net asset
value,
beginning
of period
Net
investment
income
(loss)
Net realized
and unrealized
gain (loss)
Total from
investment
operations
Distributions to
shareholders
from net
investment
income
Distributions to
shareholders
from net
realized gain
Total
distributions
Net asset
value, end
of period
Total
return
(2)(3)
Ratios to Average Net Assets
(1)
Net assets,
end of period
(000 omitted)
Portfolio
turnover
rate
(3)
Gross
Expenses
Net
Expenses
(4)
Net
investment
income
(loss)
(4)
Government Money Market Fund
2020 $1.00 $0.01 $(0.00
) 		$0.01 $(0.01
) 		$
— 		$(0.01
) 		$1.00 0.86
% 		0.25
% 		0.20
% 		0.75
% 		$3,337,318 —
%
2019 1.00 0.02 0.00 0.02 (0.02
) 		(0.00
) 		(0.02
) 		1.00 0.02 0.25 0.20 2.13 2,384,545 —
2018 1.00 0.01 0.00 0.01 (0.01
) 		— (0.01
) 		1.00 1.30 0.25 0.20 1.30 2,641,069 —
2017 1.00 0.00 0.00 0.00 0.00 0.00 0.00 1.00 0.45 0.25 0.20 0.45 2,269,361 —
2016 1.00 0.00 0.00 0.00 (0.00
) 		(0.00
) 		(0.00
) 		1.00 0.11 0.28 0.18 0.12 1,967,459 —
Tax-Free Money Market Fund
2020 1.00 0.01 0.00 0.01 (0.01
) 		— (0.01
) 		1.00 0.91 0.31 0.20 0.91 325,028 —
2019 1.00 0.01 0.00 0.01 (0.01
) 		(0.00
) 		(0.01
) 		1.00 1.46 0.30 0.20 1.44 336,282 —
2018 1.00 0.01 0.00 0.01 (0.01
) 		(0.00
) 		(0.01
) 		1.00 1.05 0.31 0.20 1.07 305,424 —
2017 1.00 0.01 0.00 0.01 (0.01
) 		(0.00
) 		(0.01
) 		1.00 0.62 0.32 0.20 0.57 238,772 —
2016 1.00 0.00 0.00 0.00 (0.00
) 		(0.00
) 		(0.00
) 		1.00 0.17 0.28 0.16 0.13 313,954 —
Prime Money Market Fund
2020 1.00 0.01 — 0.01 (0.01
) 		— (0.01
) 		1.00 1.02 0.25 0.20 0.93 344,297 —
2019 1.00 0.02 0.00 0.02 (0.02
) 		(0.00
) 		(0.02
) 		1.00 2.28 0.26 0.20 2.27 248,781 —
2018 1.00 0.01 0.00 0.01 (0.01
) 		(0.00
) 		(0.01
) 		1.00 1.50 0.27 0.20 1.52 268,487 —
2017 1.00 0.01 0.00 0.01 (0.01
) 		(0.00
) 		(0.01
) 		1.00 0.67 0.28 0.20 0.61 166,338 —
2016 1.00 0.00 0.00 0.00 (0.00
) 		(0.00
) 		(0.00
) 		1.00 0.22 0.20 0.20 0.21 668,609 —
(1)
Annualized for periods less than one year.
(2)
Based on net asset value as of end of period date.
(3)
Not annualized for periods less than one year.
(4)
The contractual and voluntary expense waivers pursuant to Note 5 of the financial statements are reflected in both the net expense and net investment income ratios.
Financial Highlights 125
 
 
Financial Highlights
—
Retirement Class R6 of Shares (For a share outstanding throughout each period)
Period
Ended
August 31,
Net asset
value,
beginning
of period
Net
investment
income
(loss)
Net realized
and unrealized
gain (loss)
Total from
investment
operations
Distributions to
shareholders
from net
investment
income
Distributions to
shareholders
from net
realized gain
Total
distributions
Net asset
value, end
of period
Total
return
(2)(3)
Ratios to Average Net Assets
(1)
Net assets,
end of period
(000 omitted)
Portfolio
turnover
rate
(3)
Gross
Expenses
Net
Expenses
(4)
Net
investment
income
(loss)
(4)
Large-Cap Value Fund
2020 $13.75 $
0.28 		$(0.19
) 		$
0.09 		$(0.29
) 		— $(0.29
) 		$13.55 0.82
% 		0.45
% 		0.39
% 		2.00
% 		$
33,318 		76
%
2019 16.62 0.31 (1.46
) 		(1.15
) 		(0.32
) 		(1.40
) 		(1.72
) 		13.75 (6.80
) 		0.45 0.39 2.15 53,513 67
2018 15.88 (0.48
) 		2.94 2.46 (0.27
) 		(1.45
) 		(1.72
) 		16.62 16.07 0.42 0.39 1.97 81,786 54
2017
(5)
14.17 0.26 1.81 2.07 (0.24
) 		(0.12
) 		(0.36
) 		15.88 14.75 0.62 0.60 1.64 1,479 62
2016
(6)
13.81 0.21 0.30 0.51 (0.15
) 		— (0.15
) 		14.17 3.77 0.63 0.60 2.27 52 60
Large-Cap Growth Fund
2020
(5)
18.20 0.12 5.19 5.31 (0.16
) 		(0.79
) 		(0.95
) 		22.56 30.40 0.43 0.39 0.62 268,706 71
2019 21.21 0.13 (0.44
) 		(0.31
) 		(0.15
) 		(2.55
) 		(2.70
) 		18.20 (0.22
) 		0.43 0.39 0.94 226,978 89
2018 17.62 0.11 4.52 4.63 (0.04
) 		(1.00
) 		(1.04
) 		21.21 27.36 0.43 0.40 0.87 60,971 57
2017 15.49 0.09 3.10 3.19 (0.16
) 		(0.90
) 		(1.06
) 		17.62 21.83 0.63 0.60 0.75 2,852 75
2016
(6)
14.75 0.07 0.67 0.74 — — — 15.49 5.02 0.66 0.60 0.72 53 70
Mid-Cap Value Fund
2020 9.93 0.17 (0.91
) 		(0.74
) 		(0.17
) 		— (0.17
) 		9.02 7.66 0.91 0.84 1.72 12,843 47
2019 12.60 0.17 (1.35
) 		(1.18
) 		(0.16
) 		(1.33
) 		(1.49
) 		9.93 (9.37
) 		0.86 0.84 1.37 13,957 50
2018 11.90 0.14 1.19 1.33 (0.13
) 		(0.50
) 		(0.63
) 		12.60 11.41 0.83 0.83 1.24 31,173 64
2017 14.38 0.11 1.26 1.37 (0.08
) 		(3.77
) 		(3.85
) 		11.90 13.31 0.86 0.84 1.05 14,714 139
2016 15.03 0.18 0.84 1.02 (0.20
) 		(1.47
) 		(1.67
) 		14.38 7.65 0.83 0.83 1.28 11,332 24
Mid-Cap Growth Fund
2020 15.19 0.01 2.73 2.74 — (1.82
) 		(1.82
) 		16.11 19.49 0.94 0.84 0.03 7,767 56
2019 18.91 0.02 (0.79
) 		(0.77
) 		— (2.95
) 		(2.95
) 		15.19 (2.54
) 		0.92 0.84 0.01 7,980 61
2018 15.46 — 4.44 4.44 — (0.99
) 		(0.99
) 		18.91 29.96 0.88 0.84 — 23,005 63
2017 16.83 0.07 2.18 2.25 (0.08
) 		(3.54
) 		(3.62
) 		15.46 17.22 0.97 0.84 (0.13
) 		592 157
2016 20.55 0.09 (0.93
) 		(0.84
) 		— (2.88
) 		(2.88
) 		16.83 (3.89
) 		0.89 0.84 0.49 25 59
Small-Cap Value Fund
2020
(5)
11.70 0.11 (1.06
) 		(0.95
) 		(0.11
) 		(0.05
) 		(0.16
) 		10.59 (8.24
) 		1.08 0.84 0.92 7,658 82
2019 15.13 0.12 (2.50
) 		(2.38
) 		(0.09
) 		(0.96
) 		(1.05
) 		11.70 (15.81
) 		1.00 0.84 0.91 8,108 67
2018 13.53 0.04 2.68 2.72 — (1.12
) 		(1.12
) 		15.13 20.89 0.97 0.84 0.69 14,260 70
2017
(5)
13.42 0.05 1.42 1.47 (0.10
) 		(1.26
) 		(1.36
) 		13.53 12.05 1.09 0.84 0.37 2,653 148
2016 12.87 0.07 1.00 1.07 — (0.52
) 		(0.52
) 		13.42 8.61 0.99 0.84 0.60 926 39
126 Financial Highlights
 
Period
Ended
August 31,
Net asset
value,
beginning
of period
Net
investment
income
(loss)
Net realized
and unrealized
gain (loss)
Total from
investment
operations
Distributions to
shareholders
from net
investment
income
Distributions to
shareholders
from net
realized gain
Total
distributions
Net asset
value, end
of period
Total
return
(2)(3)
Ratios to Average Net Assets
(1)
Net assets,
end of period
(000 omitted)
Portfolio
turnover
rate
(3)
Gross
Expenses
Net
Expenses
(4)
Net
investment
income
(loss)
(4)
Pyrford International Stock Fund
2020
(5)(7)
$12.86 $
0.34 		$
0.50 		$
0.84 		$(0.39
) 		$
— 		$(0.39
) 		$13.31 6.54
% 		0.80
% 		0.79
% 		2.65
% 		$230,148 28
%
2019
(7)
13.20 0.34 (0.31
) 		0.03 (0.37
) 		— (0.37
) 		12.86 0.44 0.81 0.79 2.86 163,829 16
2018
(7)
13.22 0.35 (0.01
) 		0.34 (0.36
) 		— (0.36
) 		13.20 2.55 0.81 0.79 3.32 155,368 20
2017
(5)(7)
12.23 0.40 0.88 1.28 (0.29
) 		— (0.29
) 		13.22 10.85 0.90 0.81 3.21 48,889 33
2016
(7)
11.79 0.20 0.53 0.73 (0.29
) 		— (0.29
) 		12.23 6.35 0.91 0.84 2.85 16,100 12
(1)
Annualized for periods less than one year.
(2)
Based on net asset value as of end of period date.
(3)
Not annualized for periods less than one year.
(4)
The contractual and voluntary expense waivers pursuant to Note 5 of the financial statements are reflected in both the net expense and net investment income (loss) ratios.
(5)
Calculated using the average shares method.
(6)
Reflects operations for the period from December 28, 2015 (inception date) to August 31, 2016.
(7)
Redemption fees consisted of per share amounts less than $0.01.
Financial Highlights 127
 
Appendix
–
Sales Charge Waivers
The Funds offer several ways to reduce or eliminate the front-end sales charge or contingent deferred (back-end) sales charge (CDSC) on Class A shares, which are discussed in the “How to Buy Shares” section of the Prospectus. The availability of the sales charge reductions and waivers will depend on the policies of the Authorized Dealer through which you purchase your shares.
Authorized Dealers may have different policies and procedures regarding the availability of front-end sales charge waivers or CDSC waivers. In all instances, it is the investor’s responsibility to notify the Fund or the investor’s Authorized Dealer at the time of purchase of any relationship or other facts qualifying the investor for sales charge waivers or reductions. For waivers and reductions not available through a particular Authorized Dealer, investors will have to purchase Fund shares directly from the Fund or through another Authorized Dealer to receive these waivers or discounts.
The Authorized Dealer sales charge waivers, discounts, policies or procedures disclosed in this Appendix may vary from those disclosed elsewhere in the Fund’s Prospectus or SAI and are subject to change. This Appendix will be updated based on information provided by the Authorized Dealers. The Funds do not necessarily offer all share classes referred to by an Authorized Dealer. Neither the Funds, the Adviser nor the Distributor supervises the implementation of Authorized Dealer sales charge waivers, discounts, policies or procedures nor do they verify the Authorized Dealers’ administration of such waivers, discounts, policies or procedures.
Raymond James & Associates, Inc., Raymond James Financial Services, Inc. and each entity’s affiliates (“Raymond James”)
Effective March 1, 2019, shareholders purchasing fund shares through a Raymond James platform or account, or through an introducing broker-dealer or independent registered investment adviser for which Raymond James provides trade execution, clearance, and/or custody services, will be eligible only for the following load waivers (front-end sales charge waivers and contingent deferred, or back-end, sales charge waivers) and discounts, which may differ from those disclosed elsewhere in each Fund’s Prospectus or SAI.
Front-end Sales Load Waivers on Class A Shares Available at Raymond James
• Shares purchased in an investment advisory program.
• Shares purchased within the same fund family through a systematic reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same Fund (but not any other Fund within the Fund family).
• Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James.
• Shares purchased from the proceeds of redemptions within the same Fund family, provided (i) the repurchase occurs within 90 days following the redemption, (ii) the redemption and purchase occur in the same account, and (iii) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement).
• A shareholder in a Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of Raymond James.
CDSC Waivers on Class A, B, and C Shares Available at Raymond James
• Death or disability of the shareholder.
• Shares sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus.
• Return of excess contributions from an IRA Account.
• Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable IRS regulations as described in the fund’s Prospectus.
• Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James.
• Shares acquired through a right of reinstatement.
Front-end Load Discounts Available at Raymond James: Breakpoints, Rights of Accumulation, and/or Letters of Intent
• Breakpoints as described in this Prospectus.
• Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible Fund family assets not held at Raymond James may be included in the calculation of rights of accumulation only if the shareholder notifies his or her financial advisor about such assets.
• Letters of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible fund family assets not held at Raymond James may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets.
 
128 Appendix
–
Sales Charge Waivers
 
PRSRT STD
U.S. POSTAGE
PAID
LANCASTER, PA
PERMIT NO. 1793
BMO Funds - U.S. Services
P.O. Box 219006
Kansas City, MO 64121-9006
Contact us
1-800-236-FUND (3863)
414-287-8555
Learn more
bmofunds.com
The SAI is incorporated by reference into this Prospectus. Additional information about the Funds’ investments is contained in the SAI and the Annual and Semi-Annual Reports of the Funds as they become available. The Annual Report’s investment commentaries discuss market conditions and investment strategies that significantly affected the performance of each Fund during its last fiscal year.
To obtain the SAI, Annual Report, Semi-Annual Report, and other information, free of charge, and to make inquiries, write to or call BMO Funds - U.S. Services at 1-800-236-FUND (3863). You also may obtain these materials free of charge on the BMO Funds’ website at bmofunds.com.
Information about the Funds, including the SAI, may be obtained by electronic request at the following e-mail address: publicinfo@sec.gov. You will be charged a fee for this duplicating service.
Reports and other information about the Funds are also available on the EDGAR database on the SEC’s Internet site at http://www.sec.gov.
BMO Global Asset Management is the brand name for various affiliated entities of BMO Financial Group that provide investment management and trust and custody services. Certain of the products and services offered under the brand name BMO Global Asset Management are designed specifically for various categories of investors in a number of different countries and regions and may not be available to all investors. Products and services are only offered to such investors in those countries and regions in accordance with applicable laws and regulations. BMO Financial Group is a service mark of Bank of Montreal.
Foreside Financial Services, LLC, Distributor
Investment products are:
NOT FDIC INSURED
—
NO BANK GUARANTEE
—
MAY LOSE VALUE.
© 2020 BMO Financial Corp. (12/20) Investment Company Act File No. 811-58433

December 29, 2020
BMO Funds
BMO Funds
Prospectus
Conservative Allocation Fund
Moderate Allocation Fund
Balanced Allocation Fund
Growth Allocation Fund
Aggressive Allocation Fund
Shares of the BMO Funds are not bank deposits or other obligations of, or issued, endorsed or guaranteed by, BMO Harris Bank N.A. or any of its affiliates. Shares of the BMO Funds, like shares of all mutual funds, are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation (FDIC), or any other government agency, and may lose value.
As with all mutual funds, the Securities and Exchange Commission (SEC) has not approved or disapproved these securities or passed upon the adequacy of this Prospectus. Any representation to the contrary is a criminal offense.
Notification of electronic delivery of shareholder materials
Beginning on January 1, 2021, as permitted by regulations adopted by the SEC, paper copies of the Funds’ shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Funds or from your broker/dealer, investment professional, or financial institution. Instead, the reports will be made available online at bmofunds.com/documents, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Funds electronically by calling 1-800-236-FUND (3863), by sending an email request to bmofundsus.services@bmo.com, or by asking your broker/dealer, investment professional, or financial institution.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Funds, you can call the Funds toll-free at 1-800-236-FUND (3863) or send an email request to bmofundsus.services@bmo.com. Your election to receive reports in paper will apply to all funds held in your account if you invest through your financial intermediary or all funds held with the fund complex if you invest directly with the Funds.
 
 
  Investor
Class
(Class Y) 		Institutional
Class
(Class I) 		Retirement
Class
(Class R3) 		Retirement
Class
(Class R6)
BMO Conservative Allocation Fund BDVYX BDVIX BDVRX BDVSX
BMO Moderate Allocation Fund BMBYX BMBHX BMBQX BMBTX
BMO Balanced Allocation Fund BGRYX BGRHX BGRRX BGRQX
BMO Growth Allocation Fund BABYX BABHX BABRX BABQX
BMO Aggressive Allocation Fund BDSYX BDSHX BDSRX BDSQX
 
Table of contents
 
 
Fund Summary
BMO Conservative Allocation Fund
Investment Objective:
To provide total return primarily from income,
 
secondarily from appreciation.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund.
 
You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees (fees paid directly from your investment)
Class Y
Class I
Class R3
Class R6
Maximum Sales Charge (Load) Imposed on Purchases None None None None
Redemption Fee None None None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees None None None None
Distribution (12b-1) Fees None None 0.50% None
Other Expenses 0.87% 0.62% 0.62% 0.47%
Acquired (underlying) Fund Fees and Expenses
(1)
0.46% 0.46% 0.46% 0.46%
Total Annual Fund Operating Expenses 1.33% 1.08% 1.58% 0.93%
Fee Waiver and Expense Reimbursement
(2)
(0.54)% (0.54)% (0.54)% (0.54)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(2)
0.79% 0.54% 1.04% 0.39%
(1)
Acquired Fund Fees and Expenses represent the pro rata expense indirectly incurred by the Fund as a result of its investment in other investment companies. Total Annual Fund Operating Expenses shown will not correlate to the Fund’s ratio of expenses to average net assets appearing in the Financial Highlights tables, which do not include Acquired Fund Fees and Expenses.
(2)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.33% for Class Y, 0.08% for Class I, 0.58% for Class R3, and (0.07)% for Class R6 through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class Y
Class I
Class R3
Class R6
1 Year $
81 		$
55 		$
106 		$
40
3 Years $
368 		$
290 		$
446 		$
242
5 Years $
677 		$
543 		$
809 		$
462
10 Years $1,554 $1,269 $1,833 $1,093
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 77% of the average value of its portfolio.
Principal Investment Strategies
The Adviser constructs an overall portfolio for the Fund consistent with its investment objective by investing substantially, but without limitation, in other BMO mutual funds from a variety of asset classes and supplementing those with unaffiliated funds as considered desirable.
The Adviser intends to accomplish the Fund’s investment objective with the predominant use of the BMO Funds because of the greater familiarity with 1) the capabilities of those investment teams, 2) the consistency of the underlying investment strategy with the Fund’s overall investment objective, 3) how those BMO Funds will react to a wide range of market conditions, and 4) how those strategies will interact with the unaffiliated funds selected or under consideration by the Adviser.
Despite the predominant use of BMO Funds for reasons mentioned above, the Adviser has the sole discretion to select unaffiliated funds, including exchange-traded funds, in any
 
BMO Target Risk Funds 1
 
BMO Conservative Allocation Fund (cont.)
 
asset class as an underlying fund at any time even if a BMO Fund exists in a similar asset class. The Adviser considers numerous factors when selecting the unaffiliated underlying funds, but focuses on how those unaffiliated funds can supplement the BMO Funds already selected for the portfolio to accomplish the Fund’s investment objective.
The predominant use of underlying BMO Funds creates conflicts of interest because the Adviser receives fees for managing the underlying BMO Funds. The Adviser receives more revenue when more assets are invested in the underlying BMO Funds. The Fund’s investment in other BMO Funds presents additional collateral benefits to the Adviser, such as increasing the Adviser’s assets under management and seeding an underlying fund or increasing its assets and the resulting economies of scale.
The overall allocation, or asset mix, of the underlying funds is at the discretion of the Adviser and is periodically rebalanced or modified. The Fund normally targets an allocation of approximately 80% of its total assets in funds that invest principally in fixed income securities and 20% of its total assets in funds that invest principally in equity securities. Under normal market conditions, the Fund allocates its assets among the underlying funds based on asset allocation target ranges of 70-90% of its total assets in funds that invest principally in fixed income securities and 10-30% of its total assets in funds that invest principally in equity securities.
Equity securities in which the underlying funds may invest may be of any market capitalization and include common stock, preferred stock, depositary receipts, rights and warrants, and exchange-traded funds. Fixed income securities in which the underlying funds may invest include corporate bonds and government securities, mortgage-backed and asset-backed securities, and convertible securities (fixed income securities convertible into shares of common or preferred stock). The Fund also may invest in funds with exposure to debt securities that are below investment grade, also known as high yield securities (junk bonds), and in funds that invest in cash, cash equivalents, and other short-term fixed income instruments, including money market funds.
The Fund is one of the BMO Target Risk Funds. The target investment allocation for each of the Target Risk Funds, based on each Fund’s total assets, is set forth below.
BMO Fund
Equity
Fixed
Income
Alternatives
Money
Market
Funds
Conservative Allocation 10% - 30% 60% - 80% 0% - 15% 0% - 10%
Moderate Allocation 30% - 50% 40% - 60% 0% - 15% 0% - 10%
 
BMO Fund
Equity
Fixed
Income
Alternatives
Money
Market
Funds
Balanced Allocation 50% - 70% 25% - 45% 0% - 15% 0% - 10%
Growth Allocation 70% - 90% 5% - 25% 0% - 15% 0% - 10%
Aggressive Allocation 90% - 100% 0% 0% - 10% 0% - 10%
The Adviser will continuously monitor the Fund and may make modifications to either the investment approach or the underlying fund allocations that the Adviser believes could benefit shareholders. The Adviser will also monitor the underlying funds on an ongoing basis and may increase or decrease the Fund’s investment in one or several underlying funds. The underlying fund selections are made based on several considerations, including the fund’s investment team expertise, style or asset class exposures, portfolio characteristics, risk profile, and investment process. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
.
The underlying funds invest their assets directly in equity securities, fixed income securities, derivatives and other alternative investments, cash, and cash equivalents (including money market funds) in accordance with their own investment objectives and policies.
Although the Fund intends to invest primarily in a combination of underlying funds, the Fund may invest directly in equity and fixed income securities, money market securities, and certain derivative instruments including currency and index-related futures and forwards for both hedging and investment purposes.
For temporary defensive purposes during unusual economic or market conditions or for liquidity purposes, the Fund may invest up to 100% of its assets directly in cash, money market funds, and other money market instruments, repurchase agreements, and other short-term obligations. When the Fund engages in such activities, it may not achieve its investment objective.
Principal Risks
The Fund cannot assure that it will achieve its investment objective.
 
An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
This section describes the principal risks associated with the Fund’s principal investment strategies.
 
The net asset value of the Fund will vary, and you could lose money by investing in the Fund. The likelihood of loss may be greater if you invest for
 
a shorter period of time. Investors in the Fund should have a
 
2 BMO Target Risk Funds
 
BMO Conservative Allocation Fund (cont.)
 
long-term perspective and be able to tolerate potentially sharp declines in value.
Asset Allocation Risk.
Investments in the Fund are subject to risks related to the Adviser’s allocation choices. The selection of the underlying funds and the allocation of the Fund’s assets among the various asset classes and market segments could cause the Fund to lose value or cause the Fund to underperform relevant benchmarks or other funds with similar investment objectives.
Underlying Fund Investment Risk.
The Fund invests in underlying funds, including exchange-traded funds, and incurs expenses related to the underlying funds. In addition, investors in the Fund will incur fees to pay for certain expenses related to the operations of the Fund. An investor holding the underlying funds directly and in the same proportions as the Fund would incur lower overall expenses, but would not receive the benefit of the portfolio management and other services provided by the Fund. The Fund’s risks are directly related to the risks of the underlying funds. It is important to understand the risks associated with investing in the underlying funds.
•
Fixed Income Risk.
Interest rates rise and fall over time, which will affect an underlying fund’s yield and share price. The credit quality of a portfolio investment could also cause an underlying fund’s share price to fall. An underlying fund could lose money if the issuer or counterparty defaults by failing to pay interest or principal when due. Fixed income securities may be paid off earlier or later than expected. Either situation could cause an underlying fund to hold securities paying lower-than-market rates of interest, which could hurt the fund’s yield or share price.
•
Equity Risk.
The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries, or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.
•
Foreign Securities Risk.
Investing in foreign securities may involve additional risks, including currency-rate fluctuations, political and economic instability, differences in financial reporting standards, less-strict regulation of the securities markets, and possible imposition of foreign withholding taxes. Furthermore, a fund may incur higher costs and expenses when making foreign investments, which will affect the fund’s total return.
•
Emerging Markets Risk.
Investments in emerging markets can involve risks in addition to and greater than those generally associated with investing in more
 
 
  developed foreign markets, which may make emerging market securities more volatile and potentially less liquid than securities issued in more developed markets.
 
•
Large-, Mid-, and Small-Cap Risk.
 
Stocks of different market capitalizations tend to go in and out of favor based on market and economic conditions. Historically, small- and mid-cap stocks tend to be more volatile than large-cap stocks, and small-cap stocks have been riskier than large- and mid-cap stocks. During a period when stocks of a particular market capitalization fall behind other types of investments, an underlying fund’s large-, mid-, or small-cap holdings could adversely affect performance.
•
Sector Risk.
 
Companies with similar characteristics, such as those within the same industry, may be grouped together in broad categories called sectors. To the extent an underlying fund invests its assets in a particular sector, the fund’s performance may be more susceptible to any economic, business or other developments that generally affect that sector.
•
Style Risk.
 
Different investment styles, such as growth or equity, tend to shift in and out of favor depending on market and investor sentiment. The Fund may underperform other funds that invest in underlying funds with similar asset classes but employ different investment styles.
•
High Yield Securities Risk.
 
High yield securities, also referred to as “junk bonds” or non-investment grade securities, tend to be more sensitive to economic conditions than higher-rated securities, generally involve more credit risk than securities in the higher-rated categories and are predominantly considered to be speculative. The issuers of high yield securities are typically more leveraged, and the risk of loss due to default by an issuer of high yield securities is significantly greater than issuers of higher-rated securities because such securities are generally unsecured and are often subordinated to other creditors.
•
Asset-Backed/Mortgage-Backed Securities Risk.
 
Asset-backed and mortgage-backed securities are subject to risks of prepayment. An underlying fund’s yield will be reduced if cash from prepaid securities is reinvested in securities with lower interest rates. The risk of prepayment also may decrease the value of mortgage-backed securities. Asset-backed securities may also be subject to greater risk of default during periods of economic downturn than other securities, which could result in possible losses to the Fund. In addition, the secondary market for asset-backed securities may not be as liquid as the market for other securities which may result in the
 
BMO Target Risk Funds 3
 
BMO Conservative Allocation Fund (cont.)
 
 
Fund experiencing difficulty in selling or valuing asset-backed securities. Asset-backed securities may have a higher level of default and recovery risk than mortgage-backed securities. Both of these types of securities may decline in value because of mortgage foreclosures or defaults on the underlying obligations. Credit risk is greater for mortgage-backed and asset-backed securities that are subordinate to another security.
•
Government Obligations Risk.
 
No assurance can be given that the U.S. government will provide financial support to U.S. government-sponsored agencies or instrumentalities where it is not obligated to do so by law (such as Fannie Mae or Freddie Mac). As a result, a risk exists that these entities will default on a financial obligation.
•
Derivatives Risk.
 
The performance of derivative instruments depends largely on the performance of the underlying reference instrument and the portfolio manager’s ability to predict correctly the direction of securities prices, interest rates, currency exchange rates, and/or other economic factors. Derivatives involve additional costs and can create economic leverage in an underlying fund’s portfolio which may result in significant volatility and cause the underlying fund to participate in losses (as well as gains) in an amount that exceeds the underlying fund’s initial investment. Other risks include liquidity due to a possible lack of a secondary market, mispricing or improper valuation of the derivative instrument, and imperfect correlation between the value of the derivative and the underlying instrument such that the underlying fund may not realize the intended benefits. When used for hedging, the change in value of the derivative may also not correlate specifically with the currency, security or other risk being hedged. With over-the-counter derivatives, there is the risk that the other party to the transaction will fail to perform. Specific types of derivative securities also are subject to a number of additional risks, such as:
Forward Foreign Currency Exchange Contracts Risk.
Forward foreign currency exchange contracts are subject to currency risks. A forward foreign currency exchange contract may also result in losses in the event of a default or bankruptcy of the counterparty. Forward foreign currency exchange contracts may limit potential gain from a positive change in the relationship between the U.S. dollar and foreign currencies.
Forward Contracts Risk.
Forward contracts are not currently exchange-traded and therefore no clearinghouse or exchange stands ready to meet the obligations of the contracts. Thus, an underlying fund
 

faces the risk that its counterparties may not perform their obligations. Non-deliverable forwards are considered swaps and may in the future be required to be centrally cleared and traded on public facilities.
Options and Futures Risk.
 
Options and futures contracts may be more volatile than investments directly in the underlying securities, involve additional costs, and may involve a small initial investment relative to the risk assumed.
Swap Agreements Risk.
 
A swap agreement may not be assigned without the consent of the counterparty and may result in losses in the event of a default or bankruptcy of the counterparty.
 
•
Liquidity Risk.
 
Liquidity risk refers to the possibility that a fund may not be able to sell or buy a security or close out an investment contract at a favorable price or time. Consequently, an underlying fund may have to accept a lower price to sell a security, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative effect on the fund’s performance.
Stock Market Risks.
The Fund is subject to fluctuations in the stock market, which has periods of increasing and decreasing values. Stocks are more volatile than debt securities. The value of equity securities purchased by the Fund may decline if the financial condition of the companies in which the Fund invests declines or if overall market and economic conditions deteriorate. If the value of the Fund’s investments goes down, you may lose money. U.S. and international markets have experienced significant volatility in recent years, which may increase the risks of investing in the securities held by the Fund. Policy changes by the U.S. government and/or Federal Reserve, such as raising interest rates, also could cause increased volatility in financial markets, which could have a negative impact on the Fund. Adverse market events also may lead to increased shareholder redemptions, which could cause the Fund to experience a loss or difficulty in selling investments to meet such redemptions.
Derivatives Risks.
Direct investment in derivatives involves the same risks described as part of the “Underlying Fund Investment Risk” above.
Cybersecurity Risk.
With the increased use of technologies such as the Internet to conduct business, the Fund is susceptible to operational, information security, and related risks. Cyber incidents affecting the Fund or its service providers have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with the Fund’s ability to calculate its net asset value, impediments to trading, the inability of shareholders to transact business, violations of applicable privacy and other laws,
 
4 BMO Target Risk Funds
 
BMO Conservative Allocation Fund (cont.)
 
regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, or additional compliance costs.
Management Risks.
The Adviser's judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results. In addition, the Adviser’s strategy may limit the Fund’s gains in rising markets.
Fund Performance
The Fund is the successor to the portfolio of a collective trust fund (Collective Fund) managed by the Adviser with objectives, policies and restrictions that were, in all material respects, equivalent to those of the Fund. On May 30, 2014, the Fund’s inception date, the assets of the Collective Fund were transferred to the Fund in exchange for Fund shares. The performance information shown for the Class I shares includes the performance of the Collective Fund for periods before the Fund commenced operations, not adjusted to reflect the Class I expenses. If the Class I expenses had been deducted, the returns would be lower than those shown below. The Collective Fund was not registered under the Investment Company Act of 1940, as amended (1940 Act), and was not subject to certain investment restrictions and diversification requirements that are imposed by the 1940 Act and the Internal Revenue Code of 1986, as amended (Code), which, if applicable, might have adversely affected the performance of the Collective Fund.
The bar chart and table show the historical performance of the Collective Fund and the Fund and provide some indication of the risks of investing in the Fund. The bar chart shows how the Collective Fund’s and the Fund’s total returns before taxes have varied from year to year, while the table compares the Collective Fund’s and the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives.
 
Performance for the Fund’s Class Y, R3 and R6 shares will vary from the Class I shares based on the expenses of each class.
 
Please keep in mind that past performance does not represent how the Fund will perform in the future both before and after taxes. Investors may obtain updated performance information for the Fund at bmofunds.com.
Class I
—
Annual Total Returns
(calendar years 2010-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was 3.73%.
During the periods shown in the bar chart for the Fund:
 
 
Quarter Ended
Returns
Best quarter
9/30/2010
5.61%
Worst quarter
9/30/2011
(4.74)%
Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
10 Years
Class I (Inception 7/31/1994)      
Return Before Taxes 11.56% 3.78% 5.11%
Return After Taxes on Distributions 9.62% 1.40% 3.80%
Return After Taxes on Distributions and Sale of Fund Shares 7.34% 2.40% 3.76%
BBUABI
(reflects no deduction for fees, expenses or taxes)
8.72% 3.05% 3.75%
LMATACI
(reflects deduction of fees and no deduction for sales charges or taxes)
13.28% 4.45% 5.52%
    
 
1 Year
5 Years
Since
Inception
Class Y (Inception 5/30/2014)      
Return Before Taxes 11.33% 3.54% 3.33%
Class R3 (Inception 5/30/2014)      
Return Before Taxes 11.03% 3.27% 3.07%
Class R6 (Inception 5/30/2014)      
Return Before Taxes 11.72% 3.95% 3.74%
BBUABI
(reflects no deduction for fees, expenses or taxes)
8.72% 3.05% 3.09%
LMATACI
(reflects deduction of fees and no deduction for sales charges or taxes)
13.28% 4.45% 4.07%
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes.
 
Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.
 A
fter-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such
 
BMO Target Risk Funds 5
 
BMO Conservative Allocation Fund (cont.)
as IRAs or 401(k) plans.
 
After-tax returns are shown only for Class I and after-tax returns for Class Y, Class R3, and Class R6 will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The Bloomberg Barclays U.S. Aggregate Bond Index (BBUABI) is an index that covers the U.S. investment-grade fixed-rate bond market, including government and credit securities, agency mortgage pass-through securities, asset-backed securities and commercial mortgage-backed securities. To qualify for inclusion, a bond or security must have at least one year to final maturity and be rated Baa3 or better, dollar denominated, non-convertible, fixed-rate and publicly issued.
The Lipper Mixed-Asset Target Allocation Conservative Funds Index (LMATACI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
Jon Adams and Michael Dowdall are co-portfolio managers of the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Adams, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2015 and has co-managed the Fund since August 2015. Mr. Dowdall, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2016 and has co-managed the Fund since March 2017.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class Y shares and $1,000,000 for Class I shares. For Class Y, the minimum subsequent purchase amount is $50. Class R3 and Class R6 shares are available generally for purchase by eligible retirement plans. Class R6 shares also are available generally for purchase by fee-based wrap programs and other registered investment companies.
Sale of Fund Shares.
Please contact your plan administrator or recordkeeper in order to sell (redeem) Class R3 or Class R6 shares from your retirement plan. You may sell (redeem) your Class Y or Class I shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income or capital gains for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
 
6 BMO Target Risk Funds
 
BMO Moderate Allocation Fund
Investment Objective:
To provide total investment return from income and appreciation.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund.
 
You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees (fees paid directly from your investment)
Class Y
Class I
Class R3
Class R6
Maximum Sales Charge (Load) Imposed on Purchases None None None None
Redemption Fee None None None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees None None None None
Distribution (12b-1) Fees None None 0.50% None
Other Expenses 0.66% 0.41% 0.41% 0.26%
Acquired (underlying) Fund Fees and Expenses
(1)
0.48% 0.48% 0.48% 0.48%
Total Annual Fund Operating Expenses 1.14% 0.89% 1.39% 0.74%
Fee Waiver and Expense Reimbursement
(2)
(0.36)% (0.36)% (0.36)% (0.36)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(2)
0.78% 0.53% 1.03% 0.38%
(1)
Acquired Fund Fees and Expenses represent the pro rata expense indirectly incurred by the Fund as a result of its investment in other investment companies. Total Annual Fund Operating Expenses shown will not correlate to the Fund’s ratio of expenses to average net assets appearing in the Financial Highlights tables, which do not include Acquired Fund Fees and Expenses.
(2)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.30% for Class Y, 0.05% for Class I, 0.55% for Class R3, and (0.10)% for Class R6 through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class Y
Class I
Class R3
Class R6
1 Year $
80 		$
54 		$
105 		$
39
3 Years $
327 		$
248 		$
405 		$200
5 Years $
593 		$
458 		$
726 		$376
10 Years $1,354 $1,063 $1,637 $885
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 82% of the average value of its portfolio.
Principal Investment Strategies
The Adviser constructs an overall portfolio for the Fund consistent with its investment objective by investing substantially, but without limitation, in other BMO mutual funds from a variety of asset classes and supplementing those with unaffiliated funds as considered desirable.
The Adviser intends to accomplish the Fund’s investment objective with the predominant use of the BMO Funds because of the greater familiarity with 1) the capabilities of those investment teams, 2) the consistency of the underlying investment strategy with the Fund’s overall investment objective, 3) how those BMO Funds will react to a wide range of market conditions, and 4) how those strategies will interact with the unaffiliated funds selected or under consideration by the Adviser.
Despite the predominant use of BMO Funds for reasons mentioned above, the Adviser has the sole discretion to select unaffiliated funds, including exchange-traded funds, in any
 
BMO Target RISK Funds 7
 
BMO Moderate Allocation Fund (cont.)
asset class as an underlying fund at any time even if a BMO Fund exists in a similar asset class. The Adviser considers numerous factors when selecting the unaffiliated underlying funds, but focuses on how those unaffiliated funds can supplement the BMO Funds already selected for the portfolio to accomplish the Fund’s investment objective.
The predominant use of underlying BMO Funds creates conflicts of interest because the Adviser receives fees for managing the underlying BMO Funds. The Adviser receives more revenue when more assets are invested in the underlying BMO Funds. The Fund’s investment in other BMO Funds presents additional collateral benefits to the Adviser, such as increasing the Adviser’s assets under management and seeding an underlying fund or increasing its assets and the resulting economies of scale.
The overall allocation, or asset mix, of the underlying funds is at the discretion of the Adviser and is periodically rebalanced or modified. The Fund normally targets an allocation of approximately 60% of its total assets in funds that invest principally in fixed income securities and 40% of its total assets in funds that invest principally in equity securities. Under normal market conditions the Fund allocates its assets among the underlying funds based on asset allocation target ranges of 50-70% of its total assets in funds that invest principally in fixed income securities and 30-50% of its total assets in funds that invest principally in equity securities.
Equity securities in which the underlying funds may invest may be of any market capitalization and include common stock, preferred stock, depositary receipts, rights and warrants, and exchange-traded funds. Fixed income securities in which the underlying funds may invest include corporate bonds and government securities, mortgage-backed and asset-backed securities, and convertible securities (fixed income securities convertible into shares of common or preferred stock). The Fund also may invest in funds with exposure to debt securities that are below investment grade, also known as high yield securities (junk bonds), and in funds that invest in cash, cash equivalents, and other short-term fixed income instruments, including money market funds. While the Fund will invest primarily in underlying funds that invest in U.S. securities, some underlying funds may invest in foreign securities, including emerging markets.
The Fund is one of the BMO Target Risk Funds. The target investment allocation for each of the Target Risk Funds, based on each Fund’s total assets, is set forth below.
 
BMO Fund
Equity
Fixed
Income
Alternatives
Money
Market
Funds
Conservative Allocation 10% - 30% 60% - 80% 0% - 15% 0% - 10%
Moderate Allocation 30% - 50% 40% - 60% 0% - 15% 0% - 10%
Balanced Allocation 50% - 70% 25% - 45% 0% - 15% 0% - 10%
Growth Allocation 70% - 90% 5% - 25% 0% - 15% 0% - 10%
Aggressive Allocation 90% - 100% 0% 0% - 10% 0% - 10%
The Adviser will continuously monitor the Fund and may make modifications to either the investment approach or the underlying fund allocations that the Adviser believes could benefit shareholders. The Adviser will also monitor the underlying funds on an ongoing basis and may increase or decrease the Fund’s investment in one or several underlying funds. The underlying fund selections are made based on several considerations, including the fund’s investment team expertise, style or asset class exposures, portfolio characteristics, risk profile, and investment process. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
.
The underlying funds invest their assets directly in equity securities, fixed income securities, derivatives and other alternative investments, cash, and cash equivalents (including money market funds) in accordance with their own investment objectives and policies.
Although the Fund intends to invest primarily in a combination of underlying funds, the Fund may invest directly in equity and fixed income securities, money market securities, and certain derivative instruments including currency and index-related futures and forwards for both hedging and investment purposes.
For temporary defensive purposes during unusual economic or market conditions or for liquidity purposes, the Fund may invest up to 100% of its assets directly in cash, money market funds, and other money market instruments, repurchase agreements, and other short-term obligations. When the Fund engages in such activities, it may not achieve its investment objective.
Principal Risks
The Fund cannot assure that it will achieve its investment objective.
 
An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
 
8 BMO Target RISK Funds
 
BMO Moderate Allocation Fund (cont.)
This section describes the principal risks associated with the Fund’s principal investment strategies.
 
The net asset value of the Fund will vary, and you could lose money by investing in the Fund. The likelihood of loss may be greater if you invest for a shorter period of time. Investors in the Fund should have a long-term perspective and be able to tolerate potentially sharp declines in value.
Asset Allocation Risk.
Investments in the Fund are subject to risks related to the Adviser’s allocation choices. The selection of the underlying funds and the allocation of the Fund’s assets among the various asset classes and market segments could cause the Fund to lose value or cause the Fund to underperform relevant benchmarks or other funds with similar investment objectives.
Underlying Fund Investment Risk.
The Fund invests in underlying funds, including exchange-traded funds, and incurs expenses related to the underlying funds. In addition, investors in the Fund will incur fees to pay for certain expenses related to the operations of the Fund. An investor holding the underlying funds directly and in the same proportions as the Fund would incur lower overall expenses, but would not receive the benefit of the portfolio management and other services provided by the Fund. The Fund’s risks are directly related to the risks of the underlying funds. It is important to understand the risks associated with investing in the underlying funds.
•
Equity Risk.
The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries, or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.
•
Foreign Securities Risk.
Investing in foreign securities may involve additional risks, including currency-rate fluctuations, political and economic instability, differences in financial reporting standards, less-strict regulation of the securities markets, and possible imposition of foreign withholding taxes. Furthermore, a fund may incur higher costs and expenses when making foreign investments, which will affect the fund’s total return.
•
Emerging Markets Risk.
Investments in emerging markets can involve risks in addition to and greater than those generally associated with investing in more developed foreign markets, which may make emerging market securities more volatile and potentially less liquid than securities issued in more developed markets.
•
Large-, Mid-, and Small-Cap Risk.
Stocks of different market capitalizations tend to go in and out of favor based
  on market and economic conditions. Historically, small- and mid-cap stocks tend to be more volatile than large-cap stocks, and small-cap stocks have been riskier than large- and mid-cap stocks. During a period when stocks of a particular market capitalization fall behind other types of investments, an underlying fund’s large-, mid-, or small-cap holdings could adversely affect performance.
•
Sector Risk.
Companies with similar characteristics, such as those within the same industry, may be grouped together in broad categories called sectors. To the extent an underlying fund invests its assets in a particular sector, the fund’s performance may be more susceptible to any economic, business or other developments that generally affect that sector.
•
Style Risk.
Different investment styles, such as growth or equity, tend to shift in and out of favor depending on market and investor sentiment. The Fund may underperform other funds that invest in underlying funds with similar asset classes but employ different investment styles.
•
Fixed Income Risk.
Interest rates rise and fall over time, which will affect an underlying fund’s yield and share price. The credit quality of a portfolio investment could also cause an underlying fund’s share price to fall. An underlying fund could lose money if the issuer or counterparty defaults by failing to pay interest or principal when due. Fixed income securities may be paid off earlier or later than expected. Either situation could cause an underlying fund to hold securities paying lower-than-market rates of interest, which could hurt the fund’s yield or share price.
•
High Yield Securities Risk.
High yield securities, also referred to as “junk bonds” or non-investment grade securities, tend to be more sensitive to economic conditions than higher-rated securities, generally involve more credit risk than securities in the higher-rated categories and are predominantly considered to be speculative. The issuers of high yield securities are typically more leveraged, and the risk of loss due to default by an issuer of high yield securities is significantly greater than issuers of higher-rated securities because such securities are generally unsecured and are often subordinated to other creditors.
•
Asset-Backed/Mortgage-Backed Securities Risk.
Asset-backed and mortgage-backed securities are subject to risks of prepayment. An underlying fund’s yield will be reduced if cash from prepaid securities is reinvested in securities with lower interest rates. The risk of prepayment also may decrease the value of mortgage-backed
BMO Target RISK Funds 9
 
BMO Moderate Allocation Fund (cont.)
 
 
  securities. Asset-backed securities may also be subject to greater risk of default during periods of economic downturn than other securities, which could result in possible losses to the Fund. In addition, the secondary market for asset-backed securities may not be as liquid as the market for other securities which may result in the Fund experiencing difficulty in selling or valuing asset-backed securities. Asset-backed securities may have a higher level of default and recovery risk than mortgage-backed securities. Both of these types of securities may decline in value because of mortgage foreclosures or defaults on the underlying obligations. Credit risk is greater for mortgage-backed and asset-backed securities that are subordinate to another security.
•
Government Obligations Risk.
No assurance can be given that the U.S. government will provide financial support to U.S. government-sponsored agencies or instrumentalities where it is not obligated to do so by law (such as Fannie Mae or Freddie Mac). As a result, a risk exists that these entities will default on a financial obligation.
•
Derivatives Risk.
The performance of derivative instruments depends largely on the performance of the underlying reference instrument and the portfolio manager’s ability to predict correctly the direction of securities prices, interest rates, currency exchange rates, and/or other economic factors. Derivatives involve additional costs and can create economic leverage in an underlying fund’s portfolio which may result in significant volatility and cause the underlying fund to participate in losses (as well as gains) in an amount that exceeds the underlying fund’s initial investment. Other risks include liquidity due to a possible lack of a secondary market, mispricing or improper valuation of the derivative instrument, and imperfect correlation between the value of the derivative and the underlying instrument such that the underlying fund may not realize the intended benefits. When used for hedging, the change in value of the derivative may also not correlate specifically with the currency, security or other risk being hedged. With over-the-counter derivatives, there is the risk that the other party to the transaction will fail to perform. Specific types of derivative securities also are subject to a number of additional risks, such as:
Forward Foreign Currency Exchange Contracts Risk.
Forward foreign currency exchange contracts are subject to currency risks. A forward foreign currency exchange contract may also result in losses in the event of a default or bankruptcy of the counterparty. Forward
 
foreign currency exchange contracts may limit potential gain from a positive change in the relationship between the U.S. dollar and foreign currencies.
Forward Contracts Risk.
Forward contracts are not currently exchange-traded and therefore no clearinghouse or exchange stands ready to meet the obligations of the contracts. Thus, an underlying fund faces the risk that its counterparties may not perform their obligations. Non-deliverable forwards are considered swaps and may in the future be required to be centrally cleared and traded on public facilities.
Options and Futures Risk.
Options and futures contracts may be more volatile than investments directly in the underlying securities, involve additional costs, and may involve a small initial investment relative to the risk assumed.
Swap Agreements Risk.
A swap agreement may not be assigned without the consent of the counterparty and may result in losses in the event of a default or bankruptcy of the counterparty.
•
Liquidity Risk.
Liquidity risk refers to the possibility that a fund may not be able to sell or buy a security or close out an investment contract at a favorable price or time. Consequently, an underlying fund may have to accept a lower price to sell a security, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative effect on the fund’s performance.
Stock Market Risks.
The Fund is subject to fluctuations in the stock market, which has periods of increasing and decreasing values. Stocks are more volatile than debt securities. The value of equity securities purchased by the Fund may decline if the financial condition of the companies in which the Fund invests declines or if overall market and economic conditions deteriorate. If the value of the Fund’s investments goes down, you may lose money. U.S. and international markets have experienced significant volatility in recent years, which may increase the risks of investing in the securities held by the Fund. Policy changes by the U.S. government and/or Federal Reserve, such as raising interest rates, also could cause increased volatility in financial markets, which could have a negative impact on the Fund. Adverse market events also may lead to increased shareholder redemptions, which could cause the Fund to experience a loss or difficulty in selling investments to meet such redemptions.
Derivatives Risks.
Direct investment in derivatives involves the same risks described as part of the “Underlying Fund Investment Risk” above.
Cybersecurity Risk.
With the increased use of technologies such as the Internet to conduct business, the Fund is
 
10 BMO Target RISK Funds
 
BMO Moderate Allocation Fund (cont.)
susceptible to operational, information security, and related risks. Cyber incidents affecting the Fund or its service providers have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with the Fund’s ability to calculate its net asset value, impediments to trading, the inability of shareholders to transact business, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, or additional compliance costs.
Management Risks.
The Adviser's judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results. In addition, the Adviser’s strategy may limit the Fund’s gains in rising markets.
Fund Performance
The Fund is the successor to the portfolio of a collective trust fund (Collective Fund) managed by the Adviser with objectives, policies and restrictions that were, in all material respects, equivalent to those of the Fund. On May 30, 2014, the Fund’s inception date, the assets of the Collective Fund were transferred to the Fund in exchange for Fund shares. The performance information shown for the Class I shares includes the performance of the Collective Fund for periods before the Fund commenced operations, not adjusted to reflect the Class I expenses. If the Class I expenses had been deducted, the returns would be lower than those shown below. The Collective Fund was not registered under the Investment Company Act of 1940, as amended (1940 Act), and was not subject to certain investment restrictions and diversification requirements that are imposed by the 1940 Act and the Internal Revenue Code of 1986, as amended (Code), which, if applicable, might have adversely affected the performance of the Collective Fund.
The bar chart and table show the historical performance of the Collective Fund and the Fund and provide some indication of the risks of investing in the Fund. The bar chart shows how the Collective Fund’s and the Fund’s total returns before taxes have varied from year to year, while the table compares the Collective Fund’s and the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives.
 
Performance for the Fund’s Class Y, R3 and R6 shares will vary from the Class I shares based on the expenses of each class.
 
Please keep in mind that past performance does not represent how the Fund will perform in the future both before and after taxes. Investors
may obtain updated performance information for the Fund at bmofunds.com.
Class I
—
Annual Total Returns
(calendar years 2010-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was 3.35%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
9/30/2010
7.66%
Worst quarter
9/30/2011
(8.30)%
Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
10 Years
Class I (Inception 7/31/1994)      
Return Before Taxes 14.89% 4.90% 6.45%
Return After Taxes on Distributions 12.84% 2.91% 5.35%
Return After Taxes on Distributions and Sale of Fund Shares 9.54% 3.31% 4.90%
BBUABI
(reflects no deduction for fees, expenses or taxes)
8.72% 3.05% 3.75%
LMATAMI
(reflects deduction of fees and no deduction for sales charges or taxes)
18.08% 6.07% 7.43%
    
 
1 Year
5 Years
Since
Inception
Class Y (Inception 5/30/2014)      
Return Before Taxes 14.70% 4.64% 4.44%
Class R3 (Inception 5/30/2014)      
Return Before Taxes 14.40% 4.38% 4.18%
Class R6 (Inception 5/30/2014)      
Return Before Taxes 15.15% 5.06% 4.86%
BBUABI
(reflects no deduction for fees, expenses or taxes)
8.72% 3.05% 3.09%
LMATAMI
(reflects deduction of fees and no deduction for sales charges or taxes)
18.08% 6.07% 5.78%
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to
 
BMO Target RISK Funds 11
 
BMO Moderate Allocation Fund (cont.)
investors holding shares through tax-deferred programs, such as IRAs or 401(k) plans.
 
After-tax returns are shown only for Class I and after-tax returns for Class Y, Class R3, and Class R6 will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The Bloomberg Barclays U.S. Aggregate Bond Index (BBUABI) is an index that covers the U.S. investment-grade fixed-rate bond market, including government and credit securities, agency mortgage pass-through securities, asset-backed securities and commercial mortgage-backed securities. To qualify for inclusion, a bond or security must have at least one year to final maturity and be rated Baa3 or better, dollar denominated, non-convertible, fixed-rate and publicly issued.
The Lipper Mixed-Asset Target Allocation Moderate Funds Index (LMATAMI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
Jon Adams and Michael Dowdall are co-portfolio managers of the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Adams, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2015 and has co-managed the Fund since August 2015. Mr. Dowdall, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2016 and has co-managed the Fund since March 2017.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class Y shares and $1,000,000 for Class I shares. For Class Y, the minimum subsequent purchase amount is $50. Class R3 and Class R6 shares are available generally for purchase by eligible retirement plans. Class R6 shares also are available generally for purchase by fee-based wrap programs and other registered investment companies.
Sale of Fund Shares.
Please contact your plan administrator or recordkeeper in order to sell (redeem) Class R3 or Class R6 shares from your retirement plan. You may sell (redeem) your Class Y or Class I shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be
directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income or capital gains for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
 
12 BMO Target RISK Funds
 
BMO Balanced Allocation Fund
Investment Objective:
To provide total investment return from income and appreciation.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund.
 
You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees (fees paid directly from your investment)
Class Y
Class I
Class R3
Class R6
Maximum Sales Charge (Load) Imposed on Purchases None None None None
Redemption Fee None None None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees None None None None
Distribution (12b-1) Fees None None 0.50% None
Other Expenses 0.49% 0.24% 0.24% 0.09%
Acquired (underlying) Fund Fees and Expenses
(1)
0.50% 0.50% 0.50% 0.50%
Total Annual Fund Operating Expenses 0.99% 0.74% 1.24% 0.59%
Fee Waiver and Expense Reimbursement
(2)
(0.16)% (0.16)% (0.16)% (0.16)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(2)
0.83% 0.58% 1.08% 0.43%
(1)
Acquired Fund Fees and Expenses represent the pro rata expense indirectly incurred by the Fund as a result of its investment in other investment companies. Total Annual Fund Operating Expenses shown will not correlate to the Fund’s ratio of expenses to average net assets appearing in the Financial Highlights tables, which do not include Acquired Fund Fees and Expenses.
(2)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.33% for Class Y, 0.08% for Class I, 0.58% for Class R3, and (0.07)% for Class R6 through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class Y
Class I
Class R3
Class R6
1 Year $
85 		$
59 		$
110 		$
44
3 Years $
299 		$220 $
378 		$173
5 Years $
532 		$396 $
666 		$313
10 Years $1,198 $903 $1,486 $723
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 60% of the average value of its portfolio.
Principal Investment Strategies
The Adviser constructs an overall portfolio for the Fund consistent with its investment objective by investing substantially, but without limitation, in other BMO mutual funds from a variety of asset classes and supplementing those with unaffiliated funds as considered desirable.
The Adviser intends to accomplish the Fund’s investment objective with the predominant use of the BMO Funds because of the greater familiarity with 1) the capabilities of those investment teams, 2) the consistency of the underlying investment strategy with the Fund’s overall investment objective, 3) how those BMO Funds will react to a wide range of market conditions, and 4) how those strategies will interact with the unaffiliated funds selected or under consideration by the Adviser.
Despite the predominant use of BMO Funds for reasons mentioned above, the Adviser has the sole discretion to select unaffiliated funds, including exchange-traded funds, in any
 
BMO Target RISK Funds 13
 
BMO Balanced Allocation Fund (cont.)
asset class as an underlying fund at any time even if a BMO Fund exists in a similar asset class. The Adviser considers numerous factors when selecting the unaffiliated underlying funds, but focuses on how those unaffiliated funds can supplement the BMO Funds already selected for the portfolio to accomplish the Fund’s investment objective.
The predominant use of underlying BMO Funds creates conflicts of interest because the Adviser receives fees for managing the underlying BMO Funds. The Adviser receives more revenue when more assets are invested in the underlying BMO Funds. The Fund’s investment in other BMO Funds presents additional collateral benefits to the Adviser, such as increasing the Adviser’s assets under management and seeding an underlying fund or increasing its assets and the resulting economies of scale.
The overall allocation, or asset mix, of the underlying funds is at the discretion of the Adviser and is periodically rebalanced or modified. The Fund normally targets an allocation of approximately 40% of its total assets in funds that invest principally in fixed income securities and 60% of its total assets in funds that invest principally in equity securities. Under normal market conditions, the Fund allocates its assets among the underlying funds based on asset allocation target ranges of 30-50% of its total assets in funds that invest principally in fixed income securities and 50-70% of its total assets in funds that invest principally in equity securities.
Equity securities in which the underlying funds may invest may be of any market capitalization and include common stock, preferred stock, depositary receipts, rights and warrants, and exchange-traded funds. Fixed income securities in which the underlying funds may invest include corporate bonds and government securities, mortgage-backed and asset-backed securities, and convertible securities (fixed income securities convertible into shares of common or preferred stock). The Fund also may invest in funds with exposure to debt securities that are below investment grade, also known as high yield securities (junk bonds), and in funds that invest in cash, cash equivalents, and other short-term fixed income instruments, including money market funds. While the Fund will invest primarily in underlying funds that invest in U.S. securities, some underlying funds may invest in foreign securities, including emerging markets.
The Fund is one of the BMO Target Risk Funds. The target investment allocation for each of the Target Risk Funds, based on each Fund’s total assets, is set forth below.
BMO Fund
Equity
Fixed
Income
Alternatives
Money
Market
Funds
Conservative Allocation 10% - 30% 60% - 80% 0% - 15% 0% - 10%
Moderate Allocation 30% - 50% 40% - 60% 0% - 15% 0% - 10%
Balanced Allocation 50% - 70% 25% - 45% 0% - 15% 0% - 10%
Growth Allocation 70% - 90% 5% - 25% 0% - 15% 0% - 10%
Aggressive Allocation 90% - 100% 0% 0% - 10% 0% - 10%
The Adviser will continuously monitor the Fund and may make modifications to either the investment approach or the underlying fund allocations that the Adviser believes could benefit shareholders. The Adviser will also monitor the underlying funds on an ongoing basis and may increase or decrease the Fund’s investment in one or several underlying funds. The underlying fund selections are made based on several considerations, including the fund’s investment team expertise, style or asset class exposures, portfolio characteristics, risk profile, and investment process. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
.
The underlying funds invest their assets directly in equity securities, fixed income securities, derivatives and other alternative investments, cash, and cash equivalents (including money market funds) in accordance with their own investment objectives and policies.
Although the Fund intends to invest primarily in a combination of underlying funds, the Fund may invest directly in equity and fixed income securities, money market securities, and certain derivative instruments including currency and index-related futures and forwards for both hedging and investment purposes.
For temporary defensive purposes during unusual economic or market conditions or for liquidity purposes, the Fund may invest up to 100% of its assets directly in cash, money market funds, and other money market instruments, repurchase agreements, and other short-term obligations. When the Fund engages in such activities, it may not achieve its investment objective.
Principal Risks
The Fund cannot assure that it will achieve its investment objective.
 
An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
 
14 BMO Target RISK Funds
 
BMO Balanced Allocation Fund (cont.)
This section describes the principal risks associated with the Fund’s principal investment strategies.
 
The net asset value of the Fund will vary, and you could lose money by investing in the Fund. The likelihood of loss may be greater if you invest for a shorter period of time. Investors in the Fund should have a long-term perspective and be able to tolerate potentially sharp declines in value.
Asset Allocation Risk.
Investments in the Fund are subject to risks related to the Adviser’s allocation choices. The selection of the underlying funds and the allocation of the Fund’s assets among the various asset classes and market segments could cause the Fund to lose value or cause the Fund to underperform relevant benchmarks or other funds with similar investment objectives.
Underlying Fund Investment Risk.
The Fund invests in underlying funds, including exchange-traded funds, and incurs expenses related to the underlying funds. In addition, investors in the Fund will incur fees to pay for certain expenses related to the operations of the Fund. An investor holding the underlying funds directly and in the same proportions as the Fund would incur lower overall expenses, but would not receive the benefit of the portfolio management and other services provided by the Fund. The Fund’s risks are directly related to the risks of the underlying funds. It is important to understand the risks associated with investing in the underlying funds.
•
Equity Risk.
The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries, or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.
•
Foreign Securities Risk.
Investing in foreign securities may involve additional risks, including currency-rate fluctuations, political and economic instability, differences in financial reporting standards, less-strict regulation of the securities markets, and possible imposition of foreign withholding taxes. Furthermore, a fund may incur higher costs and expenses when making foreign investments, which will affect the fund’s total return.
•
Emerging Markets Risk.
Investments in emerging markets can involve risks in addition to and greater than those generally associated with investing in more developed foreign markets, which may make emerging market securities more volatile and potentially less liquid than securities issued in more developed markets.
•
Large-, Mid-, and Small-Cap Risk.
Stocks of different market capitalizations tend to go in and out of favor based
  on market and economic conditions. Historically, small- and mid-cap stocks tend to be more volatile than large-cap stocks, and small-cap stocks have been riskier than large- and mid-cap stocks. During a period when stocks of a particular market capitalization fall behind other types of investments, an underlying fund’s large-, mid-, or small-cap holdings could adversely affect performance.
•
Sector Risk.
Companies with similar characteristics, such as those within the same industry, may be grouped together in broad categories called sectors. To the extent an underlying fund invests its assets in a particular sector, the fund’s performance may be more susceptible to any economic, business or other developments that generally affect that sector.
•
Style Risk.
Different investment styles, such as growth or equity, tend to shift in and out of favor depending on market and investor sentiment. The Fund may underperform other funds that invest in underlying funds with similar asset classes but employ different investment styles.
•
Fixed Income Risk.
Interest rates rise and fall over time, which will affect an underlying fund’s yield and share price. The credit quality of a portfolio investment could also cause an underlying fund’s share price to fall. An underlying fund could lose money if the issuer or counterparty defaults by failing to pay interest or principal when due. Fixed income securities may be paid off earlier or later than expected. Either situation could cause an underlying fund to hold securities paying lower-than-market rates of interest, which could hurt the fund’s yield or share price.
•
High Yield Securities Risk.
High yield securities, also referred to as “junk bonds” or non-investment grade securities, tend to be more sensitive to economic conditions than higher-rated securities, generally involve more credit risk than securities in the higher-rated categories and are predominantly considered to be speculative. The issuers of high yield securities are typically more leveraged, and the risk of loss due to default by an issuer of high yield securities is significantly greater than issuers of higher-rated securities because such securities are generally unsecured and are often subordinated to other creditors.
•
Asset-Backed/Mortgage-Backed Securities Risk.
Asset-backed and mortgage-backed securities are subject to risks of prepayment. An underlying fund’s yield will be reduced if cash from prepaid securities is reinvested in securities with lower interest rates. The risk of prepayment also may decrease the value of mortgage-backed
 
BMO Target RISK Funds 15
 
BMO Balanced Allocation Fund (cont.)
  securities. Asset-backed securities may also be subject to greater risk of default during periods of economic downturn than other securities, which could result in possible losses to the Fund. In addition, the secondary market for asset-backed securities may not be as liquid as the market for other securities which may result in the Fund experiencing difficulty in selling or valuing asset-backed securities. Asset-backed securities may have a higher level of default and recovery risk than mortgage-backed securities. Both of these types of securities may decline in value because of mortgage foreclosures or defaults on the underlying obligations. Credit risk is greater for mortgage-backed and asset-backed securities that are subordinate to another security.
•
Government Obligations Risk.
No assurance can be given that the U.S. government will provide financial support to U.S. government-sponsored agencies or instrumentalities where it is not obligated to do so by law (such as Fannie Mae or Freddie Mac). As a result, a risk exists that these entities will default on a financial obligation.
•
Derivatives Risk.
The performance of derivative instruments depends largely on the performance of the underlying reference instrument and the portfolio manager’s ability to predict correctly the direction of securities prices, interest rates, currency exchange rates, and/or other economic factors. Derivatives involve additional costs and can create economic leverage in an underlying fund’s portfolio which may result in significant volatility and cause the underlying fund to participate in losses (as well as gains) in an amount that exceeds the underlying fund’s initial investment. Other risks include liquidity due to a possible lack of a secondary market, mispricing or improper valuation of the derivative instrument, and imperfect correlation between the value of the derivative and the underlying instrument such that the underlying fund may not realize the intended benefits. When used for hedging, the change in value of the derivative may also not correlate specifically with the currency, security or other risk being hedged. With over-the-counter derivatives, there is the risk that the other party to the transaction will fail to perform. Specific types of derivative securities also are subject to a number of additional risks, such as:
Forward Foreign Currency Exchange Contracts Risk.
Forward foreign currency exchange contracts are subject to currency risks. A forward foreign currency exchange contract may also result in losses in the event of a default or bankruptcy of the counterparty. Forward
foreign currency exchange contracts may limit potential gain from a positive change in the relationship between the U.S. dollar and foreign currencies.
Forward Contracts Risk.
Forward contracts are not currently exchange-traded and therefore no clearinghouse or exchange stands ready to meet the obligations of the contracts. Thus, an underlying fund faces the risk that its counterparties may not perform their obligations. Non-deliverable forwards are considered swaps and may in the future be required to be centrally cleared and traded on public facilities.
Options and Futures Risk.
Options and futures contracts may be more volatile than investments directly in the underlying securities, involve additional costs, and may involve a small initial investment relative to the risk assumed.
Swap Agreements Risk.
A swap agreement may not be assigned without the consent of the counterparty and may result in losses in the event of a default or bankruptcy of the counterparty.
•
Liquidity Risk.
Liquidity risk refers to the possibility that a fund may not be able to sell or buy a security or close out an investment contract at a favorable price or time. Consequently, an underlying fund may have to accept a lower price to sell a security, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative effect on the fund’s performance.
Stock Market Risks.
The Fund is subject to fluctuations in the stock market, which has periods of increasing and decreasing values. Stocks are more volatile than debt securities. The value of equity securities purchased by the Fund may decline if the financial condition of the companies in which the Fund invests declines or if overall market and economic conditions deteriorate. If the value of the Fund’s investments goes down, you may lose money. U.S. and international markets have experienced significant volatility in recent years, which may increase the risks of investing in the securities held by the Fund. Policy changes by the U.S. government and/or Federal Reserve, such as raising interest rates, also could cause increased volatility in financial markets, which could have a negative impact on the Fund. Adverse market events also may lead to increased shareholder redemptions, which could cause the Fund to experience a loss or difficulty in selling investments to meet such redemptions.
Derivatives Risks.
Direct investment in derivatives involves the same risks described as part of the “Underlying Fund Investment Risk” above.
Cybersecurity Risk.
With the increased use of technologies such as the Internet to conduct business, the Fund is
 
16 BMO Target RISK Funds
 
BMO Balanced Allocation Fund (cont.)
susceptible to operational, information security, and related risks. Cyber incidents affecting the Fund or its service providers have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with the Fund’s ability to calculate its net asset value, impediments to trading, the inability of shareholders to transact business, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, or additional compliance costs.
Management Risks.
The Adviser's judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results. In addition, the Adviser’s strategy may limit the Fund’s gains in rising markets.
Fund Performance
The Fund is the successor to the portfolio of a collective trust fund (Collective Fund) managed by the Adviser with objectives, policies and restrictions that were, in all material respects, equivalent to those of the Fund. On May 30, 2014, the Fund’s inception date, the assets of the Collective Fund were transferred to the Fund in exchange for Fund shares. The performance information shown for the Class I shares includes the performance of the Collective Fund for periods before the Fund commenced operations, not adjusted to reflect the Class I expenses. If the Class I expenses had been deducted, the returns would be lower than those shown below. The Collective Fund was not registered under the Investment Company Act of 1940, as amended (1940 Act), and was not subject to certain investment restrictions and diversification requirements that are imposed by the 1940 Act and the Internal Revenue Code of 1986, as amended (Code), which, if applicable, might have adversely affected the performance of the Collective Fund.
The bar chart and table show the historical performance of the Collective Fund and the Fund and provide some indication of the risks of investing in the Fund. The bar chart shows how the Collective Fund’s and the Fund’s total returns before taxes have varied from year to year, while the table compares the Collective Fund’s and the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives.
 
Performance for the Fund’s Class Y, R3 and R6 shares will vary from the Class I shares based on the expenses of each class.
 
Please keep in mind that past performance does not represent how the Fund will perform in the future both before and after taxes. Investors
may obtain updated performance information for the Fund at bmofunds.com.
Class I
—
Annual Total Returns
(calendar years 2010-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was 1.97%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
9/30/2010
9.48%
Worst quarter
9/30/2011
(11.66)%
Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
10 Years
Class I (Inception 7/31/1994)      
Return Before Taxes 18.12% 5.92% 7.72%
Return After Taxes on Distributions 14.88% 3.30% 6.29%
Return After Taxes on Distributions and Sale of Fund Shares 12.30% 4.12% 5.98%
S&P 500
®
(reflects no deduction for fees, expenses or taxes)
31.49% 11.70% 14.74%
LMATAGI
(reflects deduction of fees and no deduction for sales charges or taxes)
21.10% 7.24% 8.80%
    
 
1 Year
5 Years
Since
Inception
Class Y (Inception 5/30/2014)      
Return Before Taxes 17.90% 5.65% 5.45%
Class R3 (Inception 5/30/2014)      
Return Before Taxes 17.60% 5.39% 5.19%
Class R6 (Inception 5/30/2014)      
Return Before Taxes 18.39% 6.08% 5.88%
S&P 500
®
(reflects no deduction for fees, expenses or taxes)
31.49% 11.70% 11.98%
LMATAGI
(reflects deduction of fees and no deduction for sales charges or taxes)
21.10% 7.24% 7.00%
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes.
 
Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.
 
After-tax returns shown are not relevant to
 
BMO Target RISK Funds 17
 
BMO Balanced Allocation Fund (cont.)
investors holding shares through tax-deferred programs, such as IRAs or 401(k) plans.
 
After-tax returns are shown only for Class I and after-tax returns for Class Y, Class R3, and Class R6 will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The S&P 500
®
Index (S&P 500
®
) is a market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance.
The Lipper Mixed-Asset Target Allocation Growth Funds Index (LMATAGI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
Jon Adams and Michael Dowdall are co-portfolio managers of the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Adams, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2015 and has co-managed the Fund since August 2015. Mr. Dowdall, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2016 and has co-managed the Fund since March 2017.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class Y shares and $1,000,000 for Class I shares. For Class Y, the minimum subsequent purchase amount is $50. Class R3 and Class R6 shares are available generally for purchase by eligible retirement plans. Class R6 shares also are available generally for purchase by fee-based wrap programs and other registered investment companies.
Sale of Fund Shares.
Please contact your plan administrator or recordkeeper in order to sell (redeem) Class R3 or Class R6 shares from your retirement plan. You may sell (redeem) your Class Y or Class I shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the
dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income or capital gains for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
 
18 BMO Target RISK Funds
 
BMO Growth Allocation Fund
Investment Objective:
To provide total investment return from income and appreciation.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees (fees paid directly from your investment)
Class Y
Class I
Class R3
Class R6
Maximum Sales Charge (Load) Imposed on Purchases None None None None
Redemption Fee None None None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees None None None None
Distribution (12b-1) Fees None None 0.50% None
Other Expenses 0.58% 0.33% 0.33% 0.18%
Acquired (underlying) Fund Fees and Expenses
(1)
0.51% 0.51% 0.51% 0.51%
Total Annual Fund Operating Expenses 1.09% 0.84% 1.34% 0.69%
Fee Waiver and Expense Reimbursement
(2)
(0.28)% (0.28)% (0.28)% (0.28)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(2)
0.81% 0.56% 1.06% 0.41%
(1)
Acquired Fund Fees and Expenses represent the pro rata expense indirectly incurred by the Fund as a result of its investment in other investment companies. Total Annual Fund Operating Expenses shown will not correlate to the Fund’s ratio of expenses to average net assets appearing in the Financial Highlights tables, which do not include Acquired Fund Fees and Expenses.
(2)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.30% for Class Y, 0.05% for Class I, 0.55% for Class R3, and (0.10)% for Class R6 through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class Y
Class I
Class R3
Class R6
1 Year $
83 		$
57 		$
108 		$
42
3 Years $
319 		$
240 		$
397 		$193
5 Years $
574 		$
438 		$
707 		$356
10 Years $1,304 $1,011 $1,588 $832
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 58% of the average value of its portfolio.
Principal Investment Strategies
The Adviser constructs an overall portfolio for the Fund consistent with its investment objective by investing substantially, but without limitation, in other BMO mutual funds from a variety of asset classes and supplementing those with unaffiliated funds as considered desirable.
The Adviser intends to accomplish the Fund’s investment objective with the predominant use of the BMO Funds because of the greater familiarity with 1) the capabilities of those investment teams, 2) the consistency of the underlying investment strategy with the Fund’s overall investment objective, 3) how those BMO Funds will react to a wide range of market conditions, and 4) how those strategies will interact with the unaffiliated funds selected or under consideration by the Adviser.
Despite the predominant use of BMO Funds for reasons mentioned above, the Adviser has the sole discretion to select unaffiliated funds, including exchange-traded funds, in any
 
BMO Target RISK Funds 19
 
BMO Growth Allocation Fund (cont.)
 
asset class as an underlying fund at any time even if a BMO Fund exists in a similar asset class. The Adviser considers numerous factors when selecting the unaffiliated underlying funds, but focuses on how those unaffiliated funds can supplement the BMO Funds already selected for the portfolio to accomplish the Fund’s investment objective.
The predominant use of underlying BMO Funds creates conflicts of interest because the Adviser receives fees for managing the underlying BMO Funds. The Adviser receives more revenue when more assets are invested in the underlying BMO Funds. The Fund’s investment in other BMO Funds presents additional collateral benefits to the Adviser, such as increasing the Adviser’s assets under management and seeding an underlying fund or increasing its assets and the resulting economies of scale.
The overall allocation, or asset mix, of the underlying funds is at the discretion of the Adviser and is periodically rebalanced or modified. The Fund normally targets an allocation of approximately 20% of its total assets in funds that invest principally in fixed income securities and 80% of its total assets in funds that invest principally in equity securities. Under normal market conditions the Fund allocates its assets among the underlying funds based on asset allocation target ranges of 10-30% of its total assets in funds that invest principally in fixed income securities and 70-90% of its total assets in funds that invest principally in equity securities.
Equity securities in which the underlying funds may invest may be of any market capitalization and include common stock, preferred stock, depositary receipts, rights and warrants, and exchange-traded funds. The underlying funds may also invest in fixed income securities, including corporate bonds and government securities, mortgage-backed and asset-backed securities, and convertible securities (fixed income securities convertible into shares of common or preferred stock). The Fund also may allocate assets to underlying funds that invest in cash, cash equivalents, and other short-term fixed income instruments, including money market funds. While the Fund will invest primarily in underlying funds that invest in U.S. securities, some underlying funds may invest in foreign securities, including emerging markets.
The Fund is one of the BMO Target Risk Funds. The target investment allocation for each of the Target Risk Funds, based on each Fund’s total assets, is set forth below.
BMO Fund
Equity
Fixed
Income
Alternatives
Money
Market
Funds
Conservative Allocation 10% - 30% 60% - 80% 0% - 15% 0% - 10%
 
 
BMO Fund
Equity
Fixed
Income
Alternatives
Money
Market
Funds
Moderate Allocation 30% - 50% 40% - 60% 0% - 15% 0% - 10%
Balanced Allocation 50% - 70% 25% - 45% 0% - 15% 0% - 10%
Growth Allocation 70% - 90% 5% - 25% 0% - 15% 0% - 10%
Aggressive Allocation 90% - 100% 0% 0% - 10% 0% - 10%
The Adviser will continuously monitor the Fund and may make modifications to either the investment approach or the underlying fund allocations that the Adviser believes could benefit shareholders. The Adviser will also monitor the underlying funds on an ongoing basis and may increase or decrease the Fund’s investment in one or several underlying funds. The underlying fund selections are made based on several considerations, including the fund’s investment team expertise, style or asset class exposures, portfolio characteristics, risk profile, and investment process. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
.
The underlying funds invest their assets directly in equity securities, fixed income securities, derivatives and other alternative investments, cash, and cash equivalents (including money market funds) in accordance with their own investment objectives and policies.
Although the Fund intends to invest primarily in a combination of underlying funds, the Fund may invest directly in equity and fixed income securities, money market securities, and certain derivative instruments including currency and index-related futures and forwards for both hedging and investment purposes.
For temporary defensive purposes during unusual economic or market conditions or for liquidity purposes, the Fund may invest up to 100% of its assets directly in cash, money market funds, and other money market instruments, repurchase agreements, and other short-term obligations. When the Fund engages in such activities, it may not achieve its investment objective.
Principal Risks
The Fund cannot assure that it will achieve its investment objective.
 
An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
This section describes the principal risks associated with the Fund’s principal investment strategies. The net asset value of the Fund will vary, and you could lose money by investing in

 
20 BMO Target RISK Funds
 
BMO Growth Allocation Fund (cont.)
 
the Fund.
 
The likelihood of loss may be greater if you invest for a shorter period of time. Investors in the Fund should have a long-term perspective and be able to tolerate potentially sharp declines in value.
Asset Allocation Risk.
Investments in the Fund are subject to risks related to the Adviser’s allocation choices. The selection of the underlying funds and the allocation of the Fund’s assets among the various asset classes and market segments could cause the Fund to lose value or cause the Fund to underperform relevant benchmarks or other funds with similar investment objectives.
Underlying Fund Investment Risk.
The Fund invests in underlying funds, including exchange-traded funds, and incurs expenses related to the underlying funds. In addition, investors in the Fund will incur fees to pay for certain expenses related to the operations of the Fund. An investor holding the underlying funds directly and in the same proportions as the Fund would incur lower overall expenses, but would not receive the benefit of the portfolio management and other services provided by the Fund. The Fund’s risks are directly related to the risks of the underlying funds. It is important to understand the risks associated with investing in the underlying funds.
•
Equity Risk.
The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries, or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.
•
Foreign Securities Risk.
Investing in foreign securities may involve additional risks, including currency-rate fluctuations, political and economic instability, differences in financial reporting standards, less-strict regulation of the securities markets, and possible imposition of foreign withholding taxes. Furthermore, a fund may incur higher costs and expenses when making foreign investments, which will affect the fund’s total return.
•
Emerging Markets Risk.
Investments in emerging markets can involve risks in addition to and greater than those generally associated with investing in more developed foreign markets, which may make emerging market securities more volatile and potentially less liquid than securities issued in more developed markets.
•
Large-, Mid-, and Small-Cap Risk.
Stocks of different market capitalizations tend to go in and out of favor based on market and economic conditions. Historically, small- and mid-cap stocks tend to be more volatile than large-cap stocks, and small-cap stocks have been riskier than large- and mid-cap stocks. During a period when stocks of
 
  a particular market capitalization fall behind other types of investments, an underlying fund’s large-, mid-, or small-cap holdings could adversely affect performance.
•
Sector Risk.
Companies with similar characteristics, such as those within the same industry, may be grouped together in broad categories called sectors. To the extent an underlying fund invests its assets in a particular sector, the fund’s performance may be more susceptible to any economic, business or other developments that generally affect that sector.
•
Style Risk.
Different investment styles, such as growth or equity, tend to shift in and out of favor depending on market and investor sentiment. The Fund may underperform other funds that invest in underlying funds with similar asset classes but employ different investment styles.
•
Fixed Income Risk.
Interest rates rise and fall over time, which will affect an underlying fund’s yield and share price. The credit quality of a portfolio investment could also cause an underlying fund’s share price to fall. An underlying fund could lose money if the issuer or counterparty defaults by failing to pay interest or principal when due. Fixed income securities may be paid off earlier or later than expected. Either situation could cause an underlying fund to hold securities paying lower-than-market rates of interest, which could hurt the fund’s yield or share price.
•
Asset-Backed/Mortgage-Backed Securities Risk.
Asset-backed and mortgage-backed securities are subject to risks of prepayment. An underlying fund’s yield will be reduced if cash from prepaid securities is reinvested in securities with lower interest rates. The risk of prepayment also may decrease the value of mortgage-backed securities. Asset-backed securities may also be subject to greater risk of default during periods of economic downturn than other securities, which could result in possible losses to the Fund. In addition, the secondary market for asset-backed securities may not be as liquid as the market for other securities which may result in the Fund experiencing difficulty in selling or valuing asset-backed securities. Asset-backed securities may have a higher level of default and recovery risk than mortgage-backed securities. Both of these types of securities may decline in value because of mortgage foreclosures or defaults on the underlying obligations. Credit risk is greater for mortgage-backed and asset-backed securities that are subordinate to another security.
•
Government Obligations Risk.
No assurance can be given that the U.S. government will provide financial
 
BMO Target RISK Funds 21
 
BMO Growth Allocation Fund (cont.)
  support to U.S. government-sponsored agencies or instrumentalities where it is not obligated to do so by law (such as Fannie Mae or Freddie Mac). As a result, a risk exists that these entities will default on a financial obligation.
•
Derivatives Risk.
The performance of derivative instruments depends largely on the performance of the underlying reference instrument and the portfolio manager’s ability to predict correctly the direction of securities prices, interest rates, currency exchange rates, and/or other economic factors. Derivatives involve additional costs and can create economic leverage in an underlying fund’s portfolio which may result in significant volatility and cause the underlying fund to participate in losses (as well as gains) in an amount that exceeds the underlying fund’s initial investment. Other risks include liquidity due to a possible lack of a secondary market, mispricing or improper valuation of the derivative instrument, and imperfect correlation between the value of the derivative and the underlying instrument such that the underlying fund may not realize the intended benefits. When used for hedging, the change in value of the derivative may also not correlate specifically with the currency, security or other risk being hedged. With over-the-counter derivatives, there is the risk that the other party to the transaction will fail to perform. Specific types of derivative securities also are subject to a number of additional risks, such as:
Forward Foreign Currency Exchange Contracts Risk.
Forward foreign currency exchange contracts are subject to currency risks. A forward foreign currency exchange contract may also result in losses in the event of a default or bankruptcy of the counterparty. Forward foreign currency exchange contracts may limit potential gain from a positive change in the relationship between the U.S. dollar and foreign currencies.
Forward Contracts Risk.
Forward contracts are not currently exchange-traded and therefore no clearinghouse or exchange stands ready to meet the obligations of the contracts. Thus, an underlying fund faces the risk that its counterparties may not perform their obligations. Non-deliverable forwards are considered swaps and may in the future be required to be centrally cleared and traded on public facilities.
Options and Futures Risk.
Options and futures contracts may be more volatile than investments directly in the underlying securities, involve additional costs, and may involve a small initial investment relative to the risk assumed.
Swap Agreements Risk.
A swap agreement may not be assigned without the consent of the counterparty and may result in losses in the event of a default or bankruptcy of the counterparty.
•
Liquidity Risk.
Liquidity risk refers to the possibility that a fund may not be able to sell or buy a security or close out an investment contract at a favorable price or time. Consequently, an underlying fund may have to accept a lower price to sell a security, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative effect on the fund’s performance.
Stock Market Risks.
The Fund is subject to fluctuations in the stock market, which has periods of increasing and decreasing values. Stocks are more volatile than debt securities. The value of equity securities purchased by the Fund may decline if the financial condition of the companies in which the Fund invests declines or if overall market and economic conditions deteriorate. If the value of the Fund’s investments goes down, you may lose money. U.S. and international markets have experienced significant volatility in recent years, which may increase the risks of investing in the securities held by the Fund. Policy changes by the U.S. government and/or Federal Reserve, such as raising interest rates, also could cause increased volatility in financial markets, which could have a negative impact on the Fund. Adverse market events also may lead to increased shareholder redemptions, which could cause the Fund to experience a loss or difficulty in selling investments to meet such redemptions.
Derivatives Risks.
Direct investment in derivatives involves the same risks described as part of the “Underlying Fund Investment Risk” above.
Cybersecurity Risk.
With the increased use of technologies such as the Internet to conduct business, the Fund is susceptible to operational, information security, and related risks. Cyber incidents affecting the Fund or its service providers have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with the Fund’s ability to calculate its net asset value, impediments to trading, the inability of shareholders to transact business, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, or additional compliance costs.
Management Risks.
The Adviser's judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results. In addition,
 
22 BMO Target RISK Funds
 
BMO Growth Allocation Fund (cont.)
the Adviser’s strategy may limit the Fund’s gains in rising markets.
Fund Performance
The Fund is the successor to the portfolio of a collective trust fund (Collective Fund) managed by the Adviser with objectives, policies and restrictions that were, in all material respects, equivalent to those of the Fund. On May 30, 2014, the Fund’s inception date, the assets of the Collective Fund were transferred to the Fund in exchange for Fund shares. The performance information shown for the Class I shares includes the performance of the Collective Fund for periods before the Fund commenced operations, not adjusted to reflect the Class I expenses. If the Class I expenses had been deducted, the returns would be lower than those shown below. The Collective Fund was not registered under the Investment Company Act of 1940, as amended (1940 Act), and was not subject to certain investment restrictions and diversification requirements that are imposed by the 1940 Act and the Internal Revenue Code of 1986, as amended (Code), which, if applicable, might have adversely affected the performance of the Collective Fund.
The bar chart and table show the historical performance of the Collective Fund and the Fund and provide some indication of the risks of investing in the Fund. The bar chart shows how the Collective Fund’s and the Fund’s total returns before taxes have varied from year to year, while the table compares the Collective Fund’s and the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives.
 
Performance for the Fund’s Class Y, R3 and R6 shares will vary from the Class I shares based on the expenses of each class.
 
Please keep in mind that past performance does not represent how the Fund will perform in the future both before and after taxes. Investors may obtain updated performance information for the Fund at
 
bmofunds.com.
Class I
—
Annual Total Returns
(calendar years 2010-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was 0.21%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
9/30/2010
11.47%
Worst quarter
9/30/2011
(14.85)%
Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
10 Years
Class I (Inception 7/31/1994)      
Return Before Taxes 21.46% 6.94% 8.99%
Return After Taxes on Distributions 18.96% 4.69% 7.77%
Return After Taxes on Distributions and Sale of Fund Shares 13.93% 4.95% 7.09%
S&P 500
®
(reflects no deduction for fees, expenses or taxes)
31.49% 11.70% 14.74%
LMATAAI
(reflects deduction of fees and no deduction for sales charges or taxes)
24.37% 7.53% 9.09%
    
 
1 Year
5 Years
Since
Inception
Class Y (Inception 5/30/2014)      
Return Before Taxes 21.23% 6.69% 6.49%
Class R3 (Inception 5/30/2014)      
Return Before Taxes 20.90% 6.42% 6.23%
Class R6 (Inception 5/30/2014)      
Return Before Taxes 21.68% 7.11% 6.91%
S&P 500
®
(reflects no deduction for fees, expenses or taxes)
31.49% 11.70% 11.98%
LMATAAI
(reflects deduction of fees and no deduction for sales charges or taxes)
24.37% 7.53% 7.20%
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes.
 
Actual after-tax returns depend on an investor’s tax situation and may differ from those shown.
 
After-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such as IRAs or 401(k) plans.
 
After-tax returns are shown only for Class I and after-tax returns for Class Y, Class R3, and Class R6 will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The S&P 500
®
Index (S&P 500
®
) is a market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance.
The Lipper Mixed-Asset Target Allocation Aggressive Funds Index (LMATAAI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
 
BMO Target RISK Funds 23
 
BMO Growth Allocation Fund (cont.)
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
Jon Adams and Michael Dowdall are co-portfolio managers of the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Adams, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2015 and has co-managed the Fund since August 2015. Mr. Dowdall, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2016 and has co-managed the Fund since March 2017.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class Y shares and $1,000,000 for Class I shares. For Class Y, the minimum subsequent purchase amount is $50. Class R3 and Class R6 shares are available generally for purchase by eligible retirement plans. Class R6 shares also are available generally for purchase by fee-based wrap programs and other registered investment companies.
Sale of Fund Shares.
Please contact your plan administrator or recordkeeper in order to sell (redeem) Class R3 or Class R6 shares from your retirement plan. You may sell (redeem) your Class Y or Class I shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income or capital gains for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
 
24 BMO Target RISK Funds
 
BMO Aggressive Allocation Fund
Investment Objective:
To provide total investment return primarily from appreciation,
 
secondarily from income.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay if you buy, hold, and sell shares of the Fund. You may pay other fees, such as brokerage commissions and other fees to financial intermediaries, which are not reflected in the table and example below.
Shareholder Fees (fees paid directly from your investment)
Class Y
Class I
Class R3
Class R6
Maximum Sales Charge (Load) Imposed on Purchases None None None None
Redemption Fee None None None None
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Management Fees None None None None
Distribution (12b-1) Fees None None 0.50% None
Other Expenses 0.54% 0.29% 0.29% 0.14%
Acquired (underlying) Fund Fees and Expenses
(1)
0.48% 0.48% 0.48% 0.48%
Total Annual Fund Operating Expenses 1.02% 0.77% 1.27% 0.62%
Fee Waiver and Expense Reimbursement
(2)
(0.21)% (0.21)% (0.21)% (0.21)%
Total Annual Fund Operating Expenses After Fee Waiver and Expense Reimbursement
(2)
0.81% 0.56% 1.06% 0.41%
(1)
Acquired Fund Fees and Expenses represent the pro rata expense indirectly incurred by the Fund as a result of its investment in other investment companies. Total Annual Fund Operating Expenses shown will not correlate to the Fund’s ratio of expenses to average net assets appearing in the Financial Highlights tables, which do not include Acquired Fund Fees and Expenses.
(2)
BMO Asset Management Corp. (Adviser) has agreed to waive or reduce its investment advisory fee and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Fund’s business, and Acquired Fund Fees and Expenses) from exceeding 0.33% for Class Y, 0.08% for Class I, 0.58% for Class R3, and (0.07)% for Class R6 through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Fund’s Board of Directors, unless terminated due to the termination of the investment advisory agreement.
Example
This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated, whether you redeem all of your shares at the end of those periods or not. The example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses are as shown in the table and remain the same. The costs in the one-year example and for the first year of the three-, five-, and ten-year examples reflect the Adviser’s agreement to waive fees and reimburse expenses through December 31, 2021. Although your actual costs and returns may be higher or lower, based on these assumptions your costs would be:
 
Class Y
Class I
Class R3
Class R6
1 Year $
83 		$
57 		$
108 		$
42
3 Years $
304 		$225 $
382 		$177
5 Years $
543 		$407 $
677 		$325
10 Years $1,229 $935 $1,515 $754
Portfolio Turnover
The Fund incurs transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 37% of the average value of its portfolio.
Principal Investment Strategies
The Adviser constructs an overall portfolio for the Fund consistent with its investment objective by investing substantially, but without limitation, in other BMO mutual funds from a variety of asset classes and supplementing those with unaffiliated funds as considered desirable.
The Adviser intends to accomplish the Fund’s investment objective with the predominant use of the BMO Funds because of the greater familiarity with 1) the capabilities of those investment teams, 2) the consistency of the underlying investment strategy with the Fund’s overall investment objective, 3) how those BMO Funds will react to a wide range of market conditions, and 4) how those strategies will interact with the unaffiliated funds selected or under consideration by the Adviser.
Despite the predominant use of BMO Funds for reasons mentioned above, the Adviser has the sole discretion to select unaffiliated funds, including exchange-traded funds, in any
 
BMO Target RISK Funds 25
 
BMO Aggressive Allocation Fund (cont.)
asset class as an underlying fund at any time even if a BMO Fund exists in a similar asset class. The Adviser considers numerous factors when selecting the unaffiliated underlying funds, but focuses on how those unaffiliated funds can supplement the BMO Funds already selected for the portfolio to accomplish the Fund’s investment objective.
The predominant use of underlying BMO Funds creates conflicts of interest because the Adviser receives fees for managing the underlying BMO Funds. The Adviser receives more revenue when more assets are invested in the underlying BMO Funds. The Fund’s investment in other BMO Funds presents additional collateral benefits to the Adviser, such as increasing the Adviser’s assets under management and seeding an underlying fund or increasing its assets and the resulting economies of scale.
The overall allocation, or asset mix, of the underlying funds is at the discretion of the Adviser and is periodically rebalanced or modified. The Fund normally targets an allocation of approximately 100% of its total assets in funds that invest principally in equity securities, and will invest at least 80% of its assets in funds that invest principally in common or preferred stocks. Under normal market conditions the Fund allocates its assets among the underlying funds based on asset allocation target ranges of 0-10% of its total assets in funds that invest principally in money market funds and 90-100% of its total assets in funds that invest principally in equity securities.
Equity securities in which the underlying funds may invest may be of any market capitalization and include common stock, preferred stock, depositary receipts, rights and warrants, and exchange-traded funds. The Fund also may allocate assets to underlying funds that invest in cash, cash equivalents, convertible securities (fixed income securities convertible into shares of common or preferred stock), and other short-term fixed income instruments, including money market funds. While the Fund will invest primarily in underlying funds that invest in U.S. securities, some
underlying
funds may invest in foreign securities, including emerging markets.
The Fund is one of the BMO Target Risk Funds. The target investment allocation for each of the Target Risk Funds, based on each Fund’s total assets, is set forth below.
BMO Fund
Equity
Fixed
Income
Alternatives
Money
Market
Funds
Conservative Allocation 10% - 30% 60% - 80% 0% - 15% 0% - 10%
Moderate Allocation 30% - 50% 40% - 60% 0% - 15% 0% - 10%
Balanced Allocation 50% - 70% 25% - 45% 0% - 15% 0% - 10%
BMO Fund
Equity
Fixed
Income
Alternatives
Money
Market
Funds
Growth Allocation 70% - 90% 5% - 25% 0% - 15% 0% - 10%
Aggressive Allocation 90% - 100% 0% 0% - 10% 0% - 10%
The Adviser will continuously monitor the Fund and may make modifications to either the investment approach or the underlying fund allocations that the Adviser believes could benefit shareholders. The Adviser will also monitor the underlying funds on an ongoing basis and may increase or decrease the Fund’s investment in one or several underlying funds. The underlying fund selections are made based on several considerations, including the fund’s investment team expertise, style or asset class exposures, portfolio characteristics, risk profile, and investment process. The Adviser also integrates environmental, social, and governance (ESG) considerations into its
investment process
.
The underlying funds invest their assets directly in equity securities, fixed income securities, derivatives and other alternative investments, cash, and cash equivalents (including money market funds) in accordance with their own investment objectives and policies.
Although the Fund intends to invest primarily in a combination of underlying funds, the Fund may invest directly in equity and fixed income securities, money market securities, and certain derivative instruments including currency and index-related futures and forwards for both hedging and investment purposes.
For temporary defensive purposes during unusual economic or market conditions or for liquidity purposes, the Fund may invest up to 100% of its assets directly in cash, money market funds, and other money market instruments, repurchase agreements, and other short-term obligations. When the Fund engages in such activities, it may not achieve its investment objective.
Principal Risks
The Fund cannot assure that it will achieve its investment objective.
 
An investment in the Fund is not a deposit of BMO Harris Bank N.A., or any of its affiliates, and is not insured or guaranteed by the FDIC or any other government agency.
This section describes the principal risks associated with the Fund’s principal investment strategies.
 
The net asset value of the Fund will vary, and you could lose money by investing in the Fund. The likelihood of loss may be greater if you invest for a shorter period of time. Investors in the Fund should have a
 
long-term perspective and be able to tolerate potentially sharp declines in value.
 
26 BMO Target RISK Funds
 
BMO Aggressive Allocation Fund (cont.)
Asset Allocation Risk.
Investments in the Fund are subject to risks related to the Adviser’s allocation choices. The selection of the underlying funds and the allocation of the Fund’s assets among the various asset classes and market segments could cause the Fund to lose value or cause the Fund to underperform relevant benchmarks or other funds with similar investment objectives.
Underlying Fund Investment Risk.
The Fund invests in underlying funds, including exchange-traded funds, and incurs expenses related to the underlying funds. In addition, investors in the Fund will incur fees to pay for certain expenses related to the operations of the Fund. An investor holding the underlying funds directly and in the same proportions as the Fund would incur lower overall expenses, but would not receive the benefit of the portfolio management and other services provided by the Fund. The Fund’s risks are directly related to the risks of the underlying funds. It is important to understand the risks associated with investing in the underlying funds.
•
Equity Risk.
The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries, or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.
•
Foreign Securities Risk.
Investing in foreign securities may involve additional risks, including currency-rate fluctuations, political and economic instability, differences in financial reporting standards, less-strict regulation of the securities markets, and possible imposition of foreign withholding taxes. Furthermore, a fund may incur higher costs and expenses when making foreign investments, which will affect the fund’s total return.
•
Emerging Markets Risk.
Investments in emerging markets can involve risks in addition to and greater than those generally associated with investing in more developed foreign markets, which may make emerging market securities more volatile and potentially less liquid than securities issued in more developed markets.
•
Large-, Mid-, and Small-Cap Risk.
Stocks of different market capitalizations tend to go in and out of favor based on market and economic conditions. Historically, small- and mid-cap stocks tend to be more volatile than large-cap stocks, and small-cap stocks have been riskier than large- and mid-cap stocks. During a period when stocks of a particular market capitalization fall behind other types of investments, an underlying fund’s large-, mid-, or small-cap holdings could adversely affect performance.
•
Sector Risk.
Companies with similar characteristics, such as those within the same industry, may be grouped together in broad categories called sectors. To the extent an underlying fund invests its assets in a particular sector, the fund’s performance may be more susceptible to any economic, business or other developments that generally affect that sector.
•
Style Risk.
Different investment styles, such as growth or equity, tend to shift in and out of favor depending on market and investor sentiment. The Fund may underperform other funds that invest in underlying funds with similar asset classes but employ different investment styles.
•
Derivatives Risk.
The performance of derivative instruments depends largely on the performance of the underlying reference instrument and the portfolio manager’s ability to predict correctly the direction of securities prices, interest rates, currency exchange rates, and/or other economic factors. Derivatives involve additional costs and can create economic leverage in an underlying fund’s portfolio which may result in significant volatility and cause the underlying fund to participate in losses (as well as gains) in an amount that exceeds the underlying fund’s initial investment. Other risks include liquidity due to a possible lack of a secondary market, mispricing or improper valuation of the derivative instrument, and imperfect correlation between the value of the derivative and the underlying instrument such that the underlying fund may not realize the intended benefits. When used for hedging, the change in value of the derivative may also not correlate specifically with the currency, security or other risk being hedged. With over-the-counter derivatives, there is the risk that the other party to the transaction will fail to perform. Specific types of derivative securities also are subject to a number of additional risks, such as:
Forward Foreign Currency Exchange Contracts Risk.
Forward foreign currency exchange contracts are subject to currency risks. A forward foreign currency exchange contract may also result in losses in the event of a default or bankruptcy of the counterparty. Forward foreign currency exchange contracts may limit potential gain from a positive change in the relationship between the U.S. dollar and foreign currencies.
Forward Contracts Risk.
Forward contracts are not currently exchange-traded and therefore no clearinghouse or exchange stands ready to meet the obligations of the contracts. Thus, an underlying fund faces the risk that its counterparties may not perform
 
their obligations. Non-deliverable forwards are considered swaps and may in the future be required to be centrally cleared and traded on public facilities.
 
BMO Target RISK Funds 27
 
BMO Aggressive Allocation Fund (cont.)
Options and Futures Risk.
Options and futures contracts may be more volatile than investments directly in the underlying securities, involve additional costs, and may involve a small initial investment relative to the risk assumed.
Swap Agreements Risk.
A swap agreement may not be assigned without the consent of the counterparty and may result in losses in the event of a default or bankruptcy of the counterparty.
•
Liquidity Risk.
Liquidity risk refers to the possibility that a fund may not be able to sell or buy a security or close out an investment contract at a favorable price or time. Consequently, an underlying fund may have to accept a lower price to sell a security, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative effect on the fund’s performance.
Stock Market Risks.
The Fund is subject to fluctuations in the stock market, which has periods of increasing and decreasing values. Stocks are more volatile than debt securities. The value of equity securities purchased by the Fund may decline if the financial condition of the companies in which the Fund invests declines or if overall market and economic conditions deteriorate. If the value of the Fund’s investments goes down, you may lose money. U.S. and international markets have experienced significant volatility in recent years, which may increase the risks of investing in the securities held by the Fund. Policy changes by the U.S. government and/or Federal Reserve, such as raising interest rates, also could cause increased volatility in financial markets, which could have a negative impact on the Fund. Adverse market events also may lead to increased shareholder redemptions, which could cause the Fund to experience a loss or difficulty in selling investments to meet such redemptions.
Derivatives Risks.
Direct investment in derivatives involves the same risks described as part of the “Underlying Fund Investment Risk” above.
Cybersecurity Risk.
With the increased use of technologies such as the Internet to conduct business, the Fund is susceptible to operational, information security, and related risks. Cyber incidents affecting the Fund or its service providers have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with the Fund’s ability to calculate its net asset value, impediments to trading, the inability of shareholders to transact business, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage,
reimbursement or other compensation costs, or additional compliance costs.
Management Risks.
The Adviser's judgments about the attractiveness, value, and potential appreciation of the Fund’s investments may prove to be incorrect. Accordingly, no guarantee exists that the investment techniques used by the Fund’s managers will produce the desired results. In addition, the Adviser’s strategy may limit the Fund’s gains in rising markets.
Fund Performance
The Fund is the successor to the portfolio of a collective trust fund (Collective Fund) managed by the Adviser with objectives, policies and restrictions that were, in all material respects, equivalent to those of the Fund. On May 30, 2014, the Fund’s inception date, the assets of the Collective Fund were transferred to the Fund in exchange for Fund shares. The performance information shown for the Class I shares includes the performance of the Collective Fund for periods before the Fund commenced operations, not adjusted to reflect the Class I expenses. If the Class I expenses had been deducted, the returns would be lower than those shown below. The Collective Fund was not registered under the Investment Company Act of 1940, as amended (1940 Act), and was not subject to certain investment restrictions and diversification requirements that are imposed by the 1940 Act and the Internal Revenue Code of 1986, as amended (Code), which, if applicable, might have adversely affected the performance of the Collective Fund.
The bar chart and table show the historical performance of the Collective Fund and the Fund and provide some indication of the risks of investing in the Fund. The bar chart shows how the Collective Fund’s and the Fund’s total returns before taxes have varied from year to year, while the table compares the Collective Fund’s and the Fund’s average annual total returns to the returns of a broad measure of market performance and an index of funds with similar investment objectives.
 
Performance for the Fund’s Class Y, R3 and R6 shares will vary from the Class I shares based on the expenses of each class.
 
Please keep in mind that past performance does not represent how the Fund will perform in the future both before and after taxes. Investors may obtain updated performance information for the Fund at
 
bmofunds.com.
 
28 BMO Target RISK Funds
 
BMO Aggressive Allocation Fund (cont.)
Class I
—
Annual Total Returns
(calendar years 2010-2019)
The return for the Class I shares of the Fund from January 1, 2020 through September 30, 2020 was (0.58)%.
During the periods shown in the bar chart for the Fund:
 
Quarter Ended
Returns
Best quarter
9/30/2010
12.82%
Worst quarter
9/30/2011
(17.71)%
Average Annual Total Returns
through 12/31/19
 
1 Year
5 Years
10 Years
Class I (Inception 7/31/1994)      
Return Before Taxes 25.02% 8.02% 10.14%
Return After Taxes on Distributions 22.03% 5.10% 8.55%
Return After Taxes on Distributions and Sale of Fund Shares 16.41% 5.71% 8.01%
S&P 500
®
(reflects no deduction for fees, expenses or taxes)
31.49% 11.70% 14.74%
LMCCI
(reflects deduction of fees and no deduction for sales charges or taxes)
29.31% 9.73% 11.81%
    
 
1 Year
5 Years
Since
Inception
Class Y (Inception 5/30/2014)      
Return Before Taxes 24.86% 7.75% 7.59%
Class R3 (Inception 5/30/2014)      
Return Before Taxes 24.49% 7.47% 7.31%
Class R6 (Inception 5/30/2014)      
Return Before Taxes 25.29% 8.19% 8.02%
S&P 500
®
(reflects no deduction for fees, expenses or taxes)
31.49% 11.70% 11.98%
LMCCI
(reflects deduction of fees and no deduction for sales charges or taxes)
29.31% 9.73% 9.84%
After-tax returns are calculated using the highest historical individual marginal federal income tax rates and do not reflect the effect of any applicable state and local taxes.
 
Actual after-tax returns depend on an investor’s tax situation and may differ from those show
n.
 
After-tax returns shown are not relevant to investors holding shares through tax-deferred programs, such
as IRAs or 401(k) plans.
 
After-tax returns are shown only for Class I and after-tax returns for Class Y, Class R3, and Class R6 will vary.
The Return After Taxes on Distributions and Sale of Fund Shares may be higher than other return figures when a capital loss is realized on the sale of Fund shares which provides an assumed tax benefit to the shareholder that increases the after-tax return.
The S&P 500
®
Index (S&P 500
®
) is a market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance.
The Lipper Multi-Cap Core Funds Index (LMCCI) tracks the total return performance of the 30 largest mutual funds included in this Lipper category.
Management of the Fund
Adviser.
BMO Asset Management Corp.
Portfolio Managers.
Jon Adams and Michael Dowdall are co-portfolio managers of the Fund and are jointly and primarily responsible for the day-to-day management of the Fund’s portfolio. Mr. Adams, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2015 and has co-managed the Fund since August 2015. Mr. Dowdall, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2016 and has co-managed the Fund since March 2017.
Purchase and Sale of Fund Shares
Minimums.
To open an account, your first investment must be at least $1,000 for Class Y shares and $1,000,000 for Class I shares. For Class Y, the minimum subsequent purchase amount is $50. Class R3 and Class R6 shares are available generally for purchase by eligible retirement plans. Class R6 shares also are available generally for purchase by fee-based wrap programs and other registered investment companies.
Sale of Fund Shares.
Please contact your plan administrator or recordkeeper in order to sell (redeem) Class R3 or Class R6 shares from your retirement plan. You may sell (redeem) your Class Y or Class I shares of the Fund on any day the New York Stock Exchange is open for business using one of the following methods, depending on the elections you made in your account application:
Phone.
Call 1-800-236-FUND (3863).
Wire/Electronic Transfer.
Upon written request sent to the address below under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired to your previously designated domestic commercial bank.
Mail.
Send a written request, indicating your name, the Fund name, your account number, and the number of shares or the
 
BMO Target RISK Funds 29
 
BMO Aggressive Allocation Fund (cont.)
dollar amount you want to redeem, to: BMO Funds - U.S. Services, P.O. Box 219006, Kansas City, MO 64121-9006.
Systematic Withdrawal Program.
If your account balance is at least $10,000, you may have predetermined amounts of at least $100 withdrawn from your account on a monthly or quarterly basis.
BMO Funds Website.
Go to bmofunds.com.
Tax Information
The Fund intends to make distributions that may be taxed as ordinary income or capital gains for federal income tax purposes.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
30 BMO Target RISK Funds
 
Additional Information Regarding Principal Investment Strategies and Risks
The investment objective of each of the BMO Conservative Allocation Fund, BMO Moderate Allocation Fund, BMO Balanced Allocation Fund, BMO Growth Allocation Fund, and BMO Aggressive Allocation Fund (each, a Target Risk Fund or a Fund) is non-fundamental and may be changed without shareholder approval. In implementing their respective investment objectives, the Funds share the same investment approach: each Fund seeks to achieve its investment objective by investing primarily in other BMO mutual funds from a variety of asset classes (the underlying funds) according to an asset allocation strategy developed by the Adviser. The Adviser may select unaffiliated funds in any asset class as an underlying fund in its discretion and periodically may rebalance or modify the asset mix and change the underlying funds. The underlying funds will include funds that invest in equity and fixed income investments and will be used by the Funds to meet their target asset allocations and investment strategies. The Funds are designed to provide investors with investment management, asset allocation, and ongoing reallocation over time. Because the Funds invest in other mutual funds, each Fund is considered a “fund of funds.” A fund of funds bears its own direct expenses in addition to bearing a proportionate share of expenses charged to the underlying funds in which it invests.
BMO Funds, Inc. and the Adviser received a “fund-of-funds” exemptive order from the SEC on June 25, 2014 that permits a
Fund that relies on the order to invest in securities issued by other investment companies in amounts exceeding the statutory limits set forth in the 1940 Act that would otherwise be applicable. The exemptive order requires the Board, before approving any advisory contract, to make a determination that the fees charged under such advisory contract are based on services provided that are in addition to, rather than duplicative of, services provided under the advisory contract(s) of any underlying fund in which a Fund invests pursuant to the order. In October 2020, the SEC adopted certain regulatory changes relating to a fund’s ability to invest in another investment company. These changes include the adoption of Rule 12d1-4 under the 1940 Act and the rescission of certain related exemptive relief. These changes likely will take effect in 2021 and may negatively impact a Fund’s investment strategies and operations.
The Funds are designed for investors with varying degrees of risk tolerance. The Funds maintain their equity and fixed income holdings in underlying funds that target varying levels of risk. Market appreciation or depreciation may cause a Fund’s actual asset allocation to vary temporarily from the Fund’s target asset allocation. Based on the target risk, each Fund will have a customized asset allocation best suited for the following types of investors:
 
Fund Name
Type of Investor
BMO Conservative Allocation Fund Investors who are relatively conservative and whose primary goal is receiving investment income while avoiding high levels of volatility
BMO Moderate Allocation Fund Investors whose primary goal is to receive income but who are willing to accept some additional risk in pursuing appreciation
BMO Balanced Allocation Fund Investors whose preferences for capital appreciation and investment income are about equal
BMO Growth Allocation Fund Investors pursuing investment growth but who would prefer to reduce some of the risks involved with aggressive equity strategies
BMO Aggressive Allocation Fund Investors interested in pursuing a high rate of investment growth over the long term and who are comfortable with the risks of stock investing
The Funds are intended for investors who are comfortable with varying levels of volatility and who are willing to accept the risks associated with the Funds’ asset allocation strategies. In general, a fund with a higher equity asset allocation is expected to be more volatile than a fund with a higher fixed income asset allocation. For more information on the principal risks of investing in the Funds, please see the Fund Summary sections in this Prospectus and the SAI.
The Adviser may adjust each Fund’s underlying fund allocations within a particular asset class based on the following considerations: market trends, its outlook for a given market capitalization, and the underlying funds’ performance in various market conditions. Accordingly, a Fund’s allocation to a
particular underlying fund may increase or decrease throughout the year. Within the equity asset class, each Fund will have exposure to one or more style classes. The style classes include large-cap, mid-cap, small-cap, and international funds. The Adviser may adjust a Fund’s allocation to a particular style class based on the following considerations: market trends, its outlook for a given style class, and the style classes’ performance in various market conditions.
Accordingly, a Fund’s allocation to a particular style class within the equity asset class may increase or decrease throughout the year.
 
Additional Information Regarding Principal Investment Strategies and Risks 31
 
Additional Information Regarding Principal Investment Strategies and Risks (cont.)
Although each Fund intends to invest primarily in a combination of underlying funds, the Fund may invest directly in equity and fixed income securities and money market securities.
For temporary defensive purposes during unusual economic or market conditions or for liquidity purposes, each Fund may invest up to 100% of its assets directly in cash, money market funds, and other money market instruments, repurchase agreements, and other short-term obligations. When a Fund engages in such activities, it may not achieve its investment objective.
Future regulatory developments applicable to mutual funds and financial institutions could limit or restrict the ability of a Fund to use certain instruments as a part of its investment strategies. On July 21, 2015, rules implementing section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Volcker Rule) went into effect. The Volcker Rule prohibits banking entities, such as the Bank of Montreal (BMO) and its affiliates, including the Adviser, from engaging in proprietary trading of certain instruments and limits such entities’ investments in and relationships with “covered funds,” as defined in the rules. These prohibitions may include certain restrictions on the extent to which BMO and/or its affiliates may own shares of the Funds. If BMO or its affiliates own 25% or more of the outstanding shares of any Fund longer than three years from the Fund’s launch date, the Fund may be subject to these proprietary trading restrictions, which may include the ability to purchase and sell securities on a short term basis. Reducing the seed capital in a new Fund to address these trading restrictions may prevent the Fund from pursuing its investment objective, may restrict the Fund’s activities, and may prevent the Fund from retaining enough capital to engage in certain investment strategies, which could have a negative effect on the Fund’s performance. Additionally, if BMO or its affiliates reduce their interest in a Fund, the Fund may be subject to transaction costs, losses and adverse tax consequences and may be forced to liquidate prematurely, among other things.
In addition, on October 28, 2020, the SEC approved new Rule 18f-4 under the 1940 Act, which governs the use of derivatives by registered investment companies. The new Rule 18f-4 imposes limits on the amount of derivatives a fund can enter into, eliminates the asset segregation framework previously used by funds to comply with Section 18 of the 1940 Act, and amends a fund's reporting and disclosure requirements on Forms N-CEN and N-PORT regarding its use of derivatives. In addition, new Rule 18f-4 requires funds that enter into derivatives transactions, who are more than a “limited derivatives user,” to adopt and implement a written derivatives risk management program and appoint a derivatives risk
manager. A fund is considered to be a “limited derivatives user,” if it limits its derivatives exposure to 10% of its net assets and adopts and implements policies and procedures reasonably designed to manage the fund's derivatives risks.
The Funds are designed to be an integral part of an investor’s overall investment strategy. However, they are not designed to provide investors with a complete solution to their investment needs. Investors must consider many factors when choosing an investment strategy. For example, factors such as current income needs and your sources of income all should be considered when you choose your overall investment strategy.
 
32 Additional Information Regarding Principal Investment Strategies and Risks
 
 
How to Buy Shares
Who Can Invest in the BMO Funds?
  Only adult U.S. citizens/residents or a U.S. entity may invest in the BMO Funds as long as they have a valid U.S. taxpayer identification (social security or employer identification) number. You may not place transactions in your account for the benefit of any person other than yourself (except for a transfer of shares to another account). If the Funds determine that the registered owner of an account has permitted another person or entity who is not the registered or beneficial owner of the account to hold shares through that account, the Funds may reject future purchases in that account and any related accounts.
Shares of the Funds are qualified for sale only in the United States and its territories and possessions. The Funds generally do not sell shares to investors residing outside the United States, even if they are U.S. citizens or lawful permanent residents, except to investors with U.S. military APO or FPO addresses.
How Do I Purchase Shares?
  You may purchase shares through a broker/dealer, investment professional, or financial institution (Authorized Dealers). Some Authorized Dealers may charge a transaction fee for this service. Consult your Authorized Dealer or service provider for more information, including applicable fees. You also may purchase shares directly from the Funds by the methods described below under the “Fund Purchase Easy Reference Table” and sending your payment to the Funds by check or wire. In connection with opening an account, you will be requested to provide information that will be used by the Funds to verify your identity, as described in more detail under “Important Information About Procedures for Opening a New Account” below.
The minimum investment for each class of shares is listed in the “Fund Purchase Easy Reference Table” below. In certain circumstances, the minimum investments listed in the table may be waived or lowered at the Funds’ discretion. You may meet the minimum investment amount for Class I shares by aggregating multiple accounts with common ownership or discretionary control within a Fund, including accounts held at Authorized Dealers. If approved in advance by Fund management, clients of a financial adviser or institutional consultant may qualify to purchase Class I shares if the aggregate amount invested by the adviser or consultant in a Fund meets the minimum investment amount. Different minimums may apply to accounts opened through third parties. Call your Authorized Dealer for any additional limitations.
The minimum initial investment amount for Class I shares is $1 million per Fund. This requirement may be met by investments through financial intermediary omnibus accounts. In addition,
no minimum initial investment amount exists for certain employer-sponsored retirement plans (operated pursuant to Code sections 401(a), 401(k), 403(b), and 457) where a financial intermediary provides retirement recordkeeping services to plan participants with the use of omnibus accounts held on the books of a Fund. The minimum investment amount also does not apply to fee-based wrap programs where an Authorized Dealer has an omnibus account on the books of a Fund and charges a fee for advisory, investment, consulting or similar services. The minimum investment amount may be waived in other circumstances at the discretion of Fund management.
The minimum investment for Class I shares does not apply to current employees of BMO Financial Corp. and/or its affiliates, the spouse or domestic partner or children of a current employee of BMO Financial Corp. or its affiliates, or to the directors of the BMO Funds, provided such persons purchase shares directly from the BMO Funds. Persons investing in Class I shares in this manner are not eligible to participate in the Systematic Investment Program or Checkwriting described in the tables below.
If you purchase shares of a Fund through a program of services offered or administered by an Authorized Dealer or other service provider, you should read the program materials, including information relating to fees and investment minimums, in conjunction with this Prospectus. Certain features of a Fund may not be available or may be modified in connection with the program of services provided.
Once you have opened an account, you may purchase additional Fund shares by contacting BMO Funds - U.S. Services at 1-800-236-FUND (3863) if you have pre-authorized the telephone purchase privilege.
Each Fund reserves the right to reject any purchase request. It is the responsibility of BMO Funds - U.S. Services, any Authorized Dealer, or other service provider that has entered into an agreement with a Fund, its distributor, or its administrative or shareholder services agent to promptly submit purchase orders to the Fund.
You are not the owner of Fund shares (and therefore will not receive distributions) until payment for the shares is received in “good funds.” Wires are generally “good funds” on the day received and checks are “good funds” when deposited with the Funds’ custodian, normally the next business day after receipt. Checks sent to the BMO Funds to purchase shares must be made payable to the “BMO Funds.”
When Can Shares Be Purchased?
  You can buy the shares of a Fund on any day the New York Stock Exchange (NYSE) is open for regular session trading. The NYSE is closed on weekends and the following holidays: New Year’s Day, Martin Luther King,
 
How to Buy Shares 33
 
 
How to Buy Shares (cont.)
Jr. Day, President’s Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
When you deliver your transaction request in proper form and it is accepted by the BMO Funds, or its authorized agent, your transaction is processed at the next determined net asset value (NAV). The NAV is calculated for each of the Funds at the end of regular trading (generally 3:00 p.m. Central Time) each day the NYSE is open. All purchase orders received in proper form and accepted by the time a Fund’s NAV is calculated will receive that day’s NAV, regardless of when the order is processed.
How is NAV Calculated?
  Each class’s NAV per share is the value of a single share of the class. It is computed for each class of a Fund by totaling the class’s pro rata share of the value of the Fund’s investments, cash, and other assets, subtracting the class’s pro rata share of the value of the Fund’s general liabilities and the liabilities specifically allocated to the class, then dividing the result by the number of shares of that class outstanding. For purposes of calculating the NAV, securities transactions and shareholder transactions are accounted for no later than one business day after the trade date. Each Fund’s NAV per share for each class is readily available at www.bmo.com/gam/funds/g/us/home/daily-historical-pricing.
In determining the NAV for the Funds, investments in other open-end registered investment companies are valued at net asset value. In valuing other portfolio securities, listed equity securities are valued each trading day at the last sale price or official closing price reported on a national securities exchange, including NASDAQ. Securities listed on a foreign exchange are valued each trading day at the last closing price on the principal exchange on which they are traded immediately prior to the time for determination of NAV or at fair value as discussed below. Certain securities held by the Funds may be listed on foreign exchanges that trade on days when a Fund does not calculate its NAV. As a result, the market value of the Fund’s investments may change on days when you cannot purchase or sell Fund shares.
Equity securities without a reported trade, U.S. government securities, listed corporate bonds, other fixed income and asset-backed securities with maturities of 60 days or more, unlisted securities, and private placement securities are generally valued at the mean of the latest bid and asked price as furnished by an independent pricing service. Fixed income securities that are not exchange traded are valued by an independent pricing service, taking into consideration yield, liquidity, risk, credit quality, coupon, maturity, type of issue, and any other factors or market data the pricing service deems relevant. Fixed income securities with remaining maturities of 60 days or less at the time of purchase generally are valued at amortized cost, which
approximates fair value. Investments in exchange-traded funds are valued at market prices.
Securities or other assets for which market valuations are not readily available, or are deemed to be inaccurate, are valued at fair value as determined in good faith using methods approved by the Board. The Board oversees a Pricing Committee, which is responsible for determinations of fair value, subject to the supervision of the Board. In determining fair value, the Pricing Committee takes into account all information available and any factors it deems appropriate. Consequently, the price of securities used by a Fund to calculate its NAV may differ from quoted or published prices for the same securities. Fair value pricing involves subjective judgments. It is possible that the fair value determined for a security is materially different than the value that could be realized upon the sale of that security and the difference may be material to the NAV of the respective Fund.
The Pricing Committee may determine that a security needs to be fair valued if, among other things, it believes the value of the security might have been materially affected by events occurring after the close of the market in which the security was principally traded, but before the time for determination of the NAV (a subsequent event). A subsequent event might include a company-specific development (for example, announcement of a merger that is made after the close of the foreign market), a development that might affect an entire market or region (for example, weather related events) or a potentially global development (such as a terrorist attack that may be expected to have an effect on investor expectations worldwide). The Board has retained an independent fair value pricing service to assist in valuing foreign securities when a subsequent event has occurred. The service uses statistical data based on historical performance of securities and markets and other data in developing factors used to estimate fair value for that day.
In valuing underlying fund investments, the Funds use the NAVs reported by the underlying funds. An underlying fund may need to fair value one or more of its investments, which may, in turn, require a Fund to do the same because of delays in obtaining the underlying fund’s NAV.
Purchase of Class R Shares.
  Class R3 and Class R6 shares are available generally to retirement plans established under Code sections 401(a) (including 401(k) plans), 403(b) or 457, and to nonqualified deferred compensation plans and certain voluntary employee benefit association and post-retirement benefit plans. Class R3 and Class R6 shares also are available generally to retirement plans where plan level or omnibus accounts are held on the books of BMO Harris Bank N.A. Class R6 shares also are available generally to fee-based wrap
 
34 How to Buy Shares
 
 
How to Buy Shares (cont.)
programs or through retirement plan intermediaries that have an agreement with the Fund’s distributor specifically for the sale of such shares. Class R6 shares also are available generally to other registered investment companies. Class R3 and Class R6 shares generally are not available to retail nonretirement accounts, traditional and Roth individual retirement accounts (IRAs), Coverdell Education Savings Accounts, SEPs, SARSEPs, and SIMPLE IRAs.
Class R3 shares are subject to a 0.50% 12b-1 fee and a 0.15% administrative services fee, while Class R6 shares are not.
Rule 12b-1 Plan.
  The Funds have adopted a Rule 12b-1 Plan, which allows them to pay an annual fee equal to a maximum of 0.50% of the Class R3 assets to the distributor and financial intermediaries for the sale and distribution of each Fund’s Class R3 shares and for services provided to shareholders of that class. Such activities include, but are not necessarily limited to, compensating brokers, dealers, financial intermediaries, and sales personnel for distribution and shareholder services, recordkeeping, printing and mailing prospectuses to persons other than current shareholders, printing and mailing sales literature, and advertising. Because Rule 12b-1 fees are ongoing, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
Important Information About Procedures for Opening a New Account.
  The Funds are required to comply with various anti-money laundering laws and regulations. To help the
government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions, including mutual funds, to obtain, verify, and record information that identifies each person who opens an account. Consequently, when you open an account, the Funds must obtain certain personal information, including your full name, address, date of birth, social security number, and other information that will allow the Funds to identify you. The Funds also may ask for other identifying documents or information. If you do not provide this information, the Funds may be unable to open an account for you and your purchase order will not be in proper form. In the event the Funds are unable to verify your identity from the information provided, the Funds may, without prior notice to you, close your account within five business days and redeem your shares at the NAV next determined after the account is closed. Any delay in processing your order due to your failure to provide all required information will affect the purchase price you receive for your shares. The Funds are not liable for fluctuations in value experienced as a result of such delays in processing. If at any time the Funds detect suspicious behavior or if certain account information matches government lists of suspicious persons, the Funds may determine not to open an account, may reject additional purchases, may close an existing account, may file a suspicious activity report or may take other appropriate action.
 
Fund Purchase Easy Reference Table
   
Minimum Investments
    Class Y
    •
To open an account
–
$1,000
    •
To add to an account (including through a Systematic Investment Program)
–
$50
    Class I
    •
To open an account
–
$1,000,000
    Class R3
    •
To open an account
–
Contact BMO Funds - U.S. Services
    Class R6
    •
To open an account
–
Contact BMO Funds - U.S. Services
How to Buy Shares 35
 
 
How to Buy Shares (cont.)
   
Phone 1-800-236-FUND (3863)
    •
Contact BMO Funds - U.S. Services.
    •
Complete an application for a new account.
    •
Once you have opened an account and if you have not opted out of telephone privileges on your account application or by a subsequent authorization form, you may purchase additional shares or exchange shares from another BMO Fund having an identical shareholder registration.
   
Mail
    •
To open an account, send your completed account application and check payable to “BMO Funds” to the following address:
    BMO Funds - U.S. Services
P.O. Box 219006
Kansas City, MO 64121-9006
    •
To add to your existing Fund account, send in your check, payable to “BMO Funds,” to the same address. Indicate your Fund account number on the check.
   
Wire
    •
Notify BMO Funds - U.S. Services and request wire instructions at 1-800-236-FUND (3863).
    •
Mail a completed account application to the Fund at the address above under “Mail.”
    •
Your bank may charge a fee for wiring funds. Wire orders are accepted only on days when the Fund and the Federal Reserve wire system are open for business.
   
Systematic Investment Program
    •
You can have money automatically withdrawn from your checking account ($50 minimum) on predetermined dates and invest it in a Fund at the next Fund share price determined after BMO Funds - U.S. Services receives the order.
    •
Call BMO Funds - U.S. Services at 1-800-236-FUND (3863) to apply for this program.
    •
A medallion signature guarantee will be required to add this feature to your account when you are also adding or changing your bank account information.
   
BMO Funds Website
    •
You may purchase Fund shares at bmofunds.com if you have not opted out of this feature included as part of telephone privileges on the account application.
36 How to Buy Shares
 
 
How to Buy Shares (cont.)
   
Additional Information About Checks and Automated Clearing House (ACH) Transactions Used to Purchase Shares
    •
If your check or ACH purchase does not clear, your purchase will be canceled and you will be charged a $15 fee and held liable for any losses incurred by the Fund.
    •
If you purchase shares by check or ACH, you may not be able to receive proceeds from a redemption for up to seven days.
    •
All checks should be made payable to “BMO Funds.”
    •
The maximum ACH purchase amount is $100,000.
    
 
Employer-Sponsored Retirement Plans
  •
Eligible retirement plans may open an account and purchase Class R shares by contacting an Authorized Dealer. Additional shares may be purchased through the plan’s administrator or recordkeeper.
How to Buy Shares 37
 
 
How to Redeem and Exchange Shares
How Do I Redeem Shares?
  You may redeem your Fund shares by several methods, described below under the “Fund Redemption Easy Reference Table.” You should note that redemptions will be made only on days when a Fund computes its NAV. When your redemption request is received in proper form, it is processed at the next determined NAV.
Telephone or written requests for redemptions must be received in proper form, as described below, and can be made through BMO Funds - U.S. Services or any Authorized Dealer. It is the responsibility of BMO Funds - U.S. Services, any Authorized Dealer or other service provider to promptly submit redemption requests to a Fund.
Redemption requests for the Funds must be received in proper form by the close of trading on the NYSE, generally 3:00 p.m. (Central Time), for shares to be redeemed at that day’s NAV. Different cut-off times for redemption requests through an Authorized Dealer may be imposed by the Authorized Dealer. Please contact your Authorized Dealer for more information.
All redemption requests received in proper form by the time a Fund’s NAV is calculated will receive that day’s NAV, regardless
of when the request is processed. Redemption proceeds will normally be mailed, or wired if by written request, the following business day, but in no event more than seven days, after the request is received, regardless of the method by which the redemption proceeds are paid. The Funds will meet redemption requests with cash on hand, by selling portfolio securities, or by utilizing a line of credit or interfund lending arrangement. These redemption methods will be used regularly and may also be used in stressed market conditions. The Funds also may meet redemption requests by redeeming shares in-kind, although the Funds do not intend to do so.
Will I Be Charged a Fee for Redemptions?
  You may be charged a transaction fee if you redeem Fund shares through an Authorized Dealer or service provider (other than BMO Funds - U.S. Services or BMO Harris Bank), or if you are redeeming by wire. Consult your Authorized Dealer or service provider for more information, including applicable fees.
 
Fund Redemption Easy Reference Table
Certain redemption requests may require a medallion guarantee. See “Additional Conditions for Redemption
–
Medallion Guarantees” below for details.
   
Phone 1-800-236-FUND (3863)
    •
Contact BMO Funds - U.S. Services.
    •
If you have not opted out of the telephone redemption privilege in your account application or by a subsequent authorization form, you may redeem shares by telephone. If you are a customer of an Authorized Dealer, you must contact your account representative.
    •
Not available to retirement accounts, for which redemptions must be done in writing.
   
Mail
    •
Send in your written request to the following address, indicating your name, the Fund name, your account number and the number of shares or the dollar amount you want to redeem to:
    BMO Funds - U.S. Services
P.O. Box 219006
Kansas City, MO 64121-9006
    •
For additional assistance, call BMO Funds - U.S. Services at 1-800-236-FUND (3863).
38 How to Redeem and Exchange Shares
 
 
How to Redeem and Exchange Shares (cont.)
   
Wire/Electronic Transfer
    •
Upon written request sent to the address above under “Mail,” redemption proceeds can be directly deposited by Electronic Funds Transfer or wired directly to a domestic commercial bank previously designated by you in your account application or by subsequent form.
    •
Wires of redemption proceeds will only be made on days on which the Funds and the Federal Reserve wire system are open for business.
    •
Each wire transfer is subject to a $10 fee.
    •
Wire-transferred redemptions may be subject to an additional fee imposed by the bank receiving the wire.
   
Systematic Withdrawal Program
    •
If you have a Fund account balance of at least $10,000, you can have predetermined amounts of at least $100 automatically redeemed from your Fund account on predetermined dates on a monthly or quarterly basis.
    •
Contact BMO Funds - U.S. Services to apply for this program.
    •
A medallion signature guarantee will be required to add this feature to your account when you are also adding or changing your bank account information.
   
BMO Funds Website
    •
You may redeem Fund shares at bmofunds.com if you have not opted out of this feature included as part of telephone privileges on the account application..
    
 
Employer-Sponsored Retirement Plans
  •
Shares held in eligible retirement plans may be sold through the plan’s administrator or recordkeeper.
How to Redeem and Exchange Shares 39
 
 
Additional Conditions for Redemption
Medallion Guarantees.
  A medallion signature guarantee is a guarantee by a financial institution that a signature is genuine and is used in connection with transferring securities to protect against unauthorized transfers. In the following instances, you must have a medallion guarantee on written redemption requests:
• when you want a redemption to be sent to an address other than the one you have on record with a Fund;
• when you want the redemption payable to someone other than the shareholder of record;
• when your redemption is to be sent to an address of record that was changed within the last 30 days; or
• when you add a new bank account or change the bank account associated with your account.
Your signature can be guaranteed by any federally insured financial institution (such as a bank or credit union) or a broker/dealer that is a domestic stock exchange member, but not by a notary public.
Limitations on Redemption Proceeds.
  Redemption proceeds normally are wired or mailed within one business day after accepting a request in proper form. However, delivery of payment may be delayed up to seven days:
• to allow your purchase payment to clear;
• during periods of market volatility; or
• when a shareholder’s trade activity or amount adversely impacts a Fund’s ability to manage its assets.
You will not accrue interest or dividends on uncashed checks from a Fund. If those checks are undeliverable and returned to a Fund, the proceeds will be reinvested in shares of the Funds that were redeemed.
Corporate Resolutions.
  Corporations, trusts, and institutional organizations are required to furnish evidence of the authority of persons designated on the account application to effect transactions on behalf of the organizations.
Redemption In-Kind.
  The Funds have reserved the right to pay the redemption price in whole or in part by a distribution of a Fund’s portfolio securities. This means that the Funds are obligated to pay share redemptions to any one shareholder in cash only up to the lesser of $250,000 or 1.00% of a Fund’s net assets represented by such share class during any 90-day period. Generally, any share redemption payment greater than this amount will be paid in cash unless the Adviser determines that payment should be in-kind. Securities received in-kind may remain exposed to market risk until sold and shareholders may incur brokerage costs when converting these securities to cash. Redemptions in-kind are taxable for federal income tax purposes in the same manner to a redeeming shareholder as
redemptions for cash. The subsequent sale of securities received in-kind may result in taxable gains or realized losses for federal income tax purposes.
Exchange Privilege.
  You may exchange shares of a Fund for shares of the same class of any of the other BMO Funds free of charge, provided you meet the investment minimum of the Fund and you reside in a jurisdiction where Fund shares may be lawfully offered for sale. An exchange is treated as a redemption and a subsequent purchase and is, therefore, a taxable transaction for federal income tax purposes.
You must have a medallion guarantee if you request an exchange into another Fund with a different shareholder registration. The exchange privilege may be modified or terminated at any time.
Exchanges by Telephone.
  If you have completed the telephone authorization section on your account application or an authorization form obtained through BMO Funds - U.S. Services, you may telephone instructions to BMO Funds - U.S. Services to exchange between Fund accounts that have identical shareholder registrations. Customers of broker/dealers, financial institutions, or service providers should contact their account representatives. Telephone exchange instructions must be received by the Funds before the close of trading on the NYSE, generally 3:00 p.m. (Central Time), for shares to be exchanged at the NAV calculated that day and to receive a dividend of the Fund into which you exchange, if applicable.
The Funds will record your telephone instructions. The Funds will not be liable for losses due to unauthorized or fraudulent telephone instructions as long as reasonable security procedures are followed. You will be notified of changes to telephone transaction privileges.
Conversion Privilege.
  Shareholders of a Fund may elect on a voluntary basis to convert their shares in one class of the Fund into shares of a different class of the same Fund, subject to satisfying the eligibility requirements for investment in the new share class. You may be required to provide sufficient information to establish eligibility to convert the new share class. A share conversion within the same Fund should not result in a capital gain or loss for federal income tax purposes.
However, please consult your own tax advisor regarding tax considerations. The Fund may change, suspend or terminate this conversion feature at any time.
Frequent Traders.
  The Funds’ management or the Adviser may determine from the amount, frequency, and pattern of exchanges or redemptions that a shareholder is engaged in excessive trading that is detrimental to a Fund or its other shareholders. Such short-term or excessive trading into and out of a Fund may harm all shareholders by disrupting investment
 
40 Additional Conditions for Redemption
 
 
Additional Conditions for Redemption (cont.)
strategies, increasing brokerage, administrative and other expenses, decreasing tax efficiency, and diluting the value of shares held by long-term shareholders.
The Board has approved policies that seek to discourage frequent purchases and redemptions and curb the disruptive effects of frequent trading (the Market Timing Policy). Pursuant to the Market Timing Policy, a Fund may decline to accept an application or may reject a purchase request, including an exchange, from an investor who, in the sole judgment of the Adviser, has a pattern of short-term or excessive trading or whose trading has been or may be disruptive to the Fund. The Funds, the Adviser, and affiliates thereof are prohibited from entering into arrangements with any shareholder or other person to permit frequent purchases and redemptions of Fund shares.
Each Fund monitors and enforces the Market Timing Policy through:
• the termination of a shareholder’s purchase and/or exchange privileges; and
• selective monitoring of trade activity.
Although the Funds seek to detect and deter market timing activity, their ability to monitor trades that are placed by individual shareholders through omnibus accounts is limited because the Funds may not have direct access to the underlying shareholder account information. Omnibus accounts are accounts maintained by financial intermediaries on behalf of multiple beneficial shareholders. Due to policy,
operational or system requirements and limitations, omnibus account holders, including qualified employee benefit plans, may use criteria and methods for tracking, applying, or calculating the redemption fee that may differ from those utilized by the Funds’ transfer agent. In addition, the Funds may rely on a financial intermediary’s market timing policy, even if those policies are different from the Funds’ policy, when the Funds believe that the policy is reasonably designed to prevent excessive trading practices that are detrimental to the Fund. If you purchase Fund shares through a financial intermediary, you should contact your financial intermediary for more information on how the redemption fee is applied to redemptions or exchanges of your shares.
The Funds may request that financial intermediaries furnish the Funds with trading and identifying information relating to beneficial shareholders, such as social security and account numbers, in order to review any unusual patterns of trading activity discovered in the omnibus account. The Funds also may request that the financial intermediaries take action to prevent a particular shareholder from engaging in excessive trading and to enforce the Funds’ or their market timing policies. Legal and technological limitations on the ability of financial intermediaries may exist to restrict the trading practices of their clients and they may impose restrictions or limitations that are different from the Funds’ policies. As a result, the Funds’ ability to monitor and discourage excessive trading practices in omnibus accounts may be limited.
 
Additional Conditions for Redemption 41
 
 
Account and Share Information
Fund Transactions Through BMO Funds Website.
  If you have previously established an account with a Fund, you may purchase, redeem, or exchange shares through the BMO Funds’ website at bmofunds.com. You also may check your Fund account balance(s) and historical transactions through the website. You cannot, however, establish a new Fund account through the website
—
you may only establish a new Fund account under the methods described in the “How to Buy Shares” section.
Online Conditions.
  Because of security concerns and costs associated with maintaining the website, purchases, redemptions, and exchanges through the website are subject to the following daily minimum and maximum transaction amounts:
 
Minimum
Maximum
Purchases: $50 $100,000
Redemptions: By ACH: $50
By wire: $1,000 		By ACH: $100,000
By wire: $100,000
Exchanges: $50 $100,000
Your transactions through the website are effective at the time they are accepted by a Fund and are subject to all of the conditions and procedures described in this Prospectus.
You may not change your address of record, registration, or wiring instructions through the website. The website privilege may be modified at any time, but you will be notified in writing of any termination of the privilege.
Online Risks.
  If you utilize the website for account histories or transactions, you should be aware that the Internet is an unsecured, unregulated, and unpredictable environment. Your ability to use the website for transactions is dependent upon the Internet and equipment, software, systems, data, and services provided by various vendors and third parties (including telecommunications carriers, equipment manufacturers, firewall providers, and encryption system providers). While the Funds and their service providers have established certain security procedures, the Funds and their transfer agent cannot assure you that inquiries or trading activity will be completely secure. There also may be delays, malfunctions, or other inconveniences generally associated with this medium. There may be times when the website is unavailable for Fund transactions, which may be due to the Internet or the actions or omissions of a third party
—
should this happen, you should consider purchasing, redeeming, or exchanging shares by another method. The Funds, their transfer agent, and BMO Funds - U.S. Services are not responsible for any such delays or malfunctions and are not responsible for
wrongful acts by third parties as long as reasonable security procedures are followed.
Confirmations and Account Statements.
  You will receive confirmation of purchases, redemptions, and exchanges (except for systematic program transactions). In addition, you will receive annual account statements reporting all account activity, including systematic program transactions and distributions of net investment income and net capital gains. You may request copies of historical account statements for a fee of $10 per Fund per year requested.
Distributions of Net Investment Income and Net Capital Gains.
  A distribution of net investment income is the money paid to shareholders that a Fund has earned from the income on its investments after paying any Fund expenses. A net capital gain distribution is the money paid to shareholders from a Fund’s net profit realized from the sales of portfolio securities.
Distributions of net investment income, if any, of each Fund are declared and paid annually. Distributions of net investment income are paid to all shareholders invested in the Funds on the record date, which is the date on which a shareholder must officially own shares in order to receive a distribution.
In addition, each Fund distributes its net capital gains, if any, at least annually. If capital gains or losses were realized by a Fund, they could result in an increase or decrease in such Fund’s distributions. Your distributions of net investment income and net capital gains will be automatically reinvested in additional shares of the same class of the same Fund unless you elect cash payments. If you elect cash payments and the payment is returned as undeliverable, your cash payment will be reinvested in shares of the Fund and your distribution option will convert to automatic reinvestment. If any distribution check remains uncashed for six months, the check amount will be reinvested in shares and you will not accrue any interest or distributions on this amount prior to the reinvestment. You will be taxed in the same manner whether you receive your distributions in cash or additional Fund shares.
If you purchase shares just before a Fund declares a distribution of net investment income or net capital gain, you will pay the full price for the shares and then receive a portion of the price back in the form of the distribution.
The distribution will generally be taxable to you for federal income tax purposes, unless you are investing through a tax-deferred arrangement such as an IRA or a 401(k) plan.
Shares may be redeemed or exchanged based on either a dollar amount or number of shares. If you are redeeming or exchanging based upon a number of Fund shares, you must redeem or exchange enough shares to meet the minimum
 
42 Account and Share Information
 
 
Account and Share Information (cont.)
dollar amounts described above, but not so much as to exceed the maximum dollar amounts.
Accounts with Low Balances.
  Due to the high cost of maintaining accounts with low balances, a Fund may redeem your Class Y shares and pay you the proceeds if your account balance falls below the required minimum value of $1,000. Similarly, your Class I shares may be converted to Class Y shares if your account balance falls below the required minimum of $1,000,000. Before shares are redeemed to close an account or converted from Class I shares to Class Y shares, you will be notified in writing and allowed 30 days to purchase additional shares to meet the minimum account balance requirement. A redemption by the Fund may result in a taxable gain or loss.
Multiple Classes.
  The BMO Funds have adopted a plan that permits each Fund to offer more than one class of shares. The Funds in this Prospectus each offer three classes of shares. All shares of each Fund or class have equal voting rights and will generally be entitled to vote in the aggregate and not by Fund or class. There may be circumstances, however, when only shareholders of a particular Fund or class are entitled to vote on matters affecting that Fund or class. Share classes may have different expenses, which may affect their performance.
Tax Information
Federal Income Tax.
  Each Fund intends to qualify and elect to be treated as a Regulated Investment Company (RIC) under Subchapter M of the Code, provided that it complies with all applicable requirements regarding the source of its income, diversification of its assets, and the timing and amount of its distributions. There can be no assurances that a Fund will satisfy all requirements to be taxed as a RIC.
The Funds will send you an annual statement of your account activity to assist you in completing your federal, state, and local tax returns. You will be taxed in the same manner regardless of whether you elect to receive distributions of investment company taxable income and net capital gains in cash or additional Fund shares. Distributions from a Fund’s investment company taxable income (which includes but is not limited to dividends, interest, net short-term capital gains, and net gains from foreign currency transactions), if any, generally are taxable to you as ordinary income. For a non-corporate shareholder, to the extent that distributions of investment company taxable income are attributable to and reported as “qualified dividend income,” such distributions may be eligible for the reduced federal income tax rates applicable to long-term capital gains, provided certain holding periods and other requirements are satisfied by the shareholder. To the extent that a Fund’s distributions of investment company taxable income are attributable to net short-term capital gain, such distributions
will be treated as ordinary income and cannot be used to offset a shareholder’s losses from other investments. Distributions of a Fund’s net capital gains (the excess of net long-term capital gains over net short-term capital losses), if any, are generally taxable as long-term capital gains, regardless of how long such shareholder has held shares of such Fund. Fund distributions are expected to consist of both investment company taxable income and net capital gains.
Each Fund is a successor to the portfolio of a collective trust fund managed by the Adviser with objectives, policies, and restrictions that were, in all material respects, equivalent to those of the succeeding Fund. Each Fund has taken the position that it has succeeded to the tax basis of the assets of its respective predecessor collective trust fund. Shareholders should be aware that as a Fund sells portfolio securities that were acquired from a predecessor collective trust fund, any gain inherent in such securities at the time the Fund acquired such securities, along with any appreciation that occurred while the Fund held such securities, may be recognized by the Fund. Any such recognized gain will be distributed to Fund shareholders and will be taxable to them for federal income tax purposes. Accordingly, a shareholder of a Fund may be taxed on appreciation that occurred before the shareholder purchased Fund shares, including appreciation that occurred prior to the Fund’s acquisition of portfolio securities from a predecessor collective trust fund.
Certain individuals, trusts and estates may be subject to a Net Investment Income (NII) tax of 3.8% (in addition to regular income tax). The NII tax is imposed on the lesser of (i) a taxpayer’s investment income, net of deductions properly allocable to such income, or (ii) the amount by which the taxpayer’s modified adjusted gross income exceeds certain thresholds ($250,000 for married individuals filing jointly, $200,000 for unmarried individuals and $125,000 for married individuals filing separately). The Funds’ distributions are includable in a shareholder’s investment income for purposes of this NII tax. In addition, any capital gain realized on the sale, redemption, or exchange of Fund shares is includable in a shareholder’s investment income for purposes of this NII tax.
Distributions are generally taxed when received. However, distributions declared by a Fund during October, November, or December to shareholders of record during such month and paid by January 31 of the following year are treated for federal income tax purposes as if received by shareholders on December 31 of the year in which the distribution was declared.
If at least 50% of the value of a Fund’s total assets at the close of each quarter of its taxable year consists of interests in other RICs, the Fund may be eligible to elect to “pass through” foreign
 
Account and Share Information 43
 
 
Account and Share Information (cont.)
taxes to you. If a Fund is eligible for and makes this election, you will be required to include your share of those taxes in gross income as a distribution from the Fund. You will then be allowed to claim a credit (or a deduction, if you itemize deductions) for such amounts on your federal income tax return, subject to certain limitations. Tax-exempt holders of Fund shares, such as qualified retirement plans, will not generally benefit from such deduction or credit.
Your sale, redemption, or exchange of Fund shares may result in a taxable capital gain or loss to you for federal income tax purposes, depending on whether the redemption proceeds (including in-kind proceeds) are more or less than your basis in the sold, redeemed or exchanged shares. The gain or loss will generally be treated as long-term capital gain or loss if the shares were held for more than one year, and if held for one year or less, as short-term capital gain or loss. Any loss arising from the sale, redemption, or exchange of Fund shares held for six months or less, however, is treated as a long-term capital loss to the extent of any distributions of net capital gains received or deemed to be received with respect to such shares. In determining the holding period of such shares for this purpose, any period during which your risk of loss is offset by means of options, short sales, or similar transactions is not counted. If you purchase Fund shares (through reinvestment of distributions or otherwise) within thirty days before or after selling, redeeming, or exchanging other shares of the same Fund at a loss, all or part of your loss will not be deductible and will instead increase the basis of the new shares to preserve the loss until a future sale, redemption, or exchange.
If you do not furnish a Fund with your correct social security number or taxpayer identification number, if you fail to make certain required certifications, and/or if the Fund receives notification from the Internal Revenue Service (IRS) requiring backup withholding, the Fund is required by federal law to withhold federal income tax from your distributions and
redemption proceeds, at the rate set forth in the Code. Backup withholding is not an additional tax. Any amounts withheld may be credited against your federal income tax liability, provided the appropriate information is furnished to the IRS.
This section is not intended to be a full discussion of the federal income tax laws and the effect of such laws on you. Changes in income tax laws, potentially with retroactive effect, could impact a Fund’s investments or the tax consequences to you of investing in a Fund. Some of these changes could affect the timing, amount, and tax treatment of Fund distributions made to shareholders. There may be other federal, state, foreign, or local tax considerations applicable to a particular investor. Please consult your own tax advisor regarding federal, state, foreign, and local tax considerations.
Portfolio Holdings
A description of the Funds’ policies and procedures with respect to the disclosure of the Funds’ portfolio securities is available in the Funds’ Statement of Additional Information (SAI). Monthly portfolio holdings for all Funds are disclosed at www.bmo.com/gam/
funds/g/us/home/prospectus-and-fund-docs approximately thirty days after the end of each month.
Cost Basis Reporting
The Funds are required to report to certain shareholders and the IRS the cost basis of any Fund shares acquired on or after January 1, 2012 when such shareholders subsequently sell, redeem, or exchange those Fund shares. Each Fund will determine cost basis using the average cost method unless you elect in writing (and not over the telephone) any alternate IRS-approved cost basis method. Please see the SAI for more information regarding cost basis reporting.
 
44 Account and Share Information
 
 
BMO Funds Information
Management of the BMO Funds.
  The Board governs the Funds and oversees the Adviser. The Adviser manages each Fund’s assets, including buying and selling the underlying funds and any portfolio securities for the Funds. The Adviser’s address is 115 S. LaSalle Street, Chicago, Illinois 60603.
Adviser’s Background.
  The Adviser is a registered investment adviser and a wholly-owned subsidiary of BMO Financial Corp., a financial services company headquartered in Chicago, Illinois, and an indirect wholly-owned subsidiary of the Bank of Montreal (BMO), a publicly-held Canadian diversified financial services company. As of August 31, 2020, the Adviser had approximately $35.8 billion in assets under management, of which approximately $13.0 billion was in the BMO Funds’ assets.
The Adviser, including its predecessor entities, has managed investments for individuals and institutions since 1973. The Adviser has managed the BMO Funds since 1992.
Portfolio Managers.
  Jon Adams and Michael Dowdall are co-portfolio managers of the Funds. Both members of the team are jointly and primarily responsible for the day-to-day management of the Funds and share investment decision making responsibilities with respect to the Funds. Mr. Adams, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2015 and has managed the Funds since August 2015. He is a CFA Charterholder. Previously, Mr. Adams was a portfolio manager with UBS Global Asset Management from 2003 to 2015. Mr. Dowdall, a Director and Portfolio Manager of the Adviser, joined the Adviser in 2016 and has managed the Funds since March 2017. He is a CFA Charterholder. Previously, Mr. Dowdall was an investment analyst with Lighthouse Investment Partners from 2010 to 2016.
The Funds’ SAI provides additional information about the portfolio managers, including other accounts they manage, their ownership of Fund shares, and their compensation.
Advisory Fees.
  The Adviser does not receive an investment advisory fee for the services it performs for the Target Risk Funds. However, the Adviser is entitled to receive an investment advisory fee from each of the affiliated BMO Funds that serve as underlying funds.
The Adviser has contractually agreed to waive or reduce fees and reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding interest, taxes, brokerage commissions, other investment-related costs and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of a Fund’s business, and acquired fund fees and expenses) from exceeding the levels set out in the table below through December 31, 2021. This expense limitation agreement may not be terminated prior to December 31, 2021 without the consent of the Funds’ Board of Directors, unless terminated due to the termination of the
investment advisory agreement. Additionally, the agreement does not provide for recoupment by the Adviser of waived fees or reimbursed expenses.
 
Class Y
Class I
Class R3
Class R6
BMO Conservative Allocation Fund 0.33% 0.08% 0.58% (0.07)%
BMO Moderate Allocation Fund 0.30% 0.05% 0.55% (0.10)%
BMO Balanced Allocation Fund 0.33% 0.08% 0.58% (0.07)%
BMO Growth Allocation Fund 0.30% 0.05% 0.55% (0.10)%
BMO Aggressive Allocation Fund 0.33% 0.08% 0.58% (0.07)%
The Board’s basis for approving the investment advisory contract for the Funds is discussed in the Funds’ Annual Report dated August 31, 2020.
Distributor.
  Foreside Financial Services, LLC (Distributor), a registered broker- dealer and member of the Financial Industry Regulatory Authority, Inc. (FINRA), serves as principal distributor of the Funds’ shares effective January 1, 2020. Prior to that date, BMO Investment Distributors, LLC, an affiliate of the Adviser and BMO Harris Bank, served as the distributor. All fees of the Distributor are paid by the Adviser.
Affiliate Services and Fees.
  The Adviser serves as the Funds’ shareholder servicing agent, recordkeeper, and administrator directly and through its division, BMO Funds - U.S. Services. The Adviser is entitled to receive shareholder services fees from the Class Y shares of each Fund at the annual rate of 0.25% of the Fund’s average daily net assets (ADNA). The Adviser has the discretion to waive a portion of its fees. However, any fee waivers are voluntary and may be terminated at any time in its sole discretion. The Adviser does not receive shareholder service fees from the Class I, R3, or R6 shares of the Funds.
The Adviser is the administrator of the Funds and State Street Bank & Trust Company is the sub-administrator. The Adviser, as administrator, is entitled to receive fees from the Class Y, I, and R3 shares of each Fund at the annual rate of 0.15% of the Fund’s ADNA. All fees of the sub-administrator are paid by the Adviser.
The Funds pay fees to the Distributor for the sale and distribution of Class A and Class R3 shares, pursuant to the Rule 12b-1 Plan. The Distributor generally uses the fees to compensate broker/dealers and may retain the fees in certain circumstances.
Payments to Financial Intermediaries.
  From time to time, the Adviser, BMO Harris Bank, BMO Harris Financial Advisors (member FINRA/SIPC), or their affiliates may enter into arrangements with each other or with brokers or other financial intermediaries pursuant to which such parties agree to perform administrative or other services on behalf of their clients who are Fund shareholders. Pursuant to these arrangements, the
 
BMO Funds Information 45
 
 
BMO Funds Information (cont.)
Adviser, BMO Harris Bank, BMO Harris Financial Advisors, or their affiliates may make payments to each other or to brokers or other financial intermediaries from their own resources (including shareholder services fees paid by the Funds to the Adviser and Rule 12b-1 fees paid by the Funds to the Distributor) for services provided to clients who hold Fund shares. In addition, the Adviser or an affiliate may make payments to a financial intermediary, including affiliates such as BMO Harris Financial Advisors. In exchange for such payments, the Adviser, BMO Harris Bank, BMO Harris Financial Advisors, or their affiliates generally expect to receive the opportunity for the Funds to be sold through the financial intermediaries’ sales forces or to have access to third-party platforms or other marketing programs, including but not limited to mutual fund “supermarket” platforms or other sales programs. These payments may vary in amount and generally range from 0.05% to 0.40%. Additionally, flat fees on a one-time or irregular basis may be made for the initial set-up of a Fund on a financial intermediary’s systems, participation or attendance at a financial intermediary’s meetings, or for other reasons. The receipt of (or prospect of receiving) such payments or compensation may provide the affiliate or intermediary and its salespersons with an incentive to favor sales of Fund shares, or certain classes of those shares, over other investment alternatives. You may wish to consider whether such arrangements exist when evaluating recommendations from the affiliate or intermediary.
46 BMO Funds Information
 
 
Financial Highlights
—
Investor Class (Class Y) of Shares (For a share outstanding throughout each period)
The Financial Highlights will help you understand the financial performance of the shares of each Fund for the last five fiscal years or since inception. Some of the information is presented on a per share basis. Total returns represent the rate an investor would have earned (or lost) on an investment in a Fund, assuming reinvestment of any dividends and capital gains distributions.
The information for the fiscal years ended August 31, 2016, 2017, 2018, 2019, and 2020 was derived from financial statements audited by KPMG LLP, the Funds’ independent registered public accounting firm, whose report, along with the Funds’ financial statements and notes thereto, is included in the Funds’ Annual Report dated August 31, 2020, which is available free of charge from the Funds upon request.
Period
Ended
August 31,
Net asset
value,
beginning
of period
Net
investment
income
(loss)
Net realized
and unrealized
gain (loss)
Total from
investment
operations
Distributions to
shareholders
from net
investment
income
Distributions to
shareholders
from net
realized gain
Total
distributions
Net asset
value, end
of period
Total
return
(1)
Ratios to Average Net Assets
Net assets,
end of period
(000 omitted)
Portfolio
turnover
rate
Gross
Expenses
Net
Expenses
(2)
Net
investment
income
(loss)
(2)
Conservative Allocation Fund
2020 $
7.72 		$0.16
(3)
$
0.32 		$
0.48 		$(0.22) $(0.22) $(0.44) $
7.76 		6.49
% 		0.87
% 		0.33
% 		2.08
% 		$
10,750 		77
%
2019 8.67 0.18
(3)
0.14 0.32 (0.22) (1.05) (1.27) 7.72 5.13 0.85 0.33 2.36 10,526 50
2018 10.02 0.21 (0.03
) 		0.18 (0.40) (1.13) (1.53) 8.67 1.79 0.79 0.33 1.99 13,395 29
2017 9.80 0.18 0.28 0.46 (0.24) (0.00) (0.24) 10.02 4.83 0.58 0.33 1.55 15,531 40
2016 9.76 0.25 0.21 0.46 (0.23) (0.19) (0.42) 9.80 4.98 0.56 0.33 2.23 17,919 31
Moderate Allocation Fund
2020 9.13 0.19 0.6 0.79 (0.23) (0.32) (0.55) 9.37 9.03 0.66 0.30 2.00 3,486 82
2019 9.92 0.19
(3)
0.02 0.21 (0.26) (0.74) (1.00) 9.13 3.15 0.64 0.30 2.05 3,486 57
2018 10.08 0.18 0.31 0.49 (0.19) (0.46) (0.65) 9.92 4.94 0.60 0.30 1.69 7,126 31
2017 9.72 0.17 0.55 0.72 (0.22) (0.14) (0.36) 10.08 7.59 0.58 0.30 1.43 7,777 39
2016 9.78 0.24 0.23 0.47 (0.20) (0.33) (0.53) 9.72 5.13 0.56 0.30 1.92 13,119 38
Balanced Allocation Fund
2020 8.49 0.16 0.68 0.84 (0.19) (0.68) (0.87) 8.46 10.4 0.49 0.33 1.91 47,469 60
2019 9.41 0.23 (0.25
) 		(0.02
) 		(0.21) (0.69) (0.90) 8.49 0.94 0.47 0.33 1.87 62,662 52
2018 9.65 0.15 0.60 0.75 (0.18) (0.81) (0.99) 9.41 8.06 0.48 0.33 1.39 98,453 29
2017 9.42 0.13 0.79 0.92 (0.18) (0.51) (0.69) 9.65 10.33 0.48 0.33 1.19 101,517 35
2016 9.78 0.15 0.32 0.47 (0.17) (0.66) (0.83) 9.42 5.23 0.47 0.33 1.54 110,814 33
Growth Allocation Fund
2020 9.33 0.20
(3)
0.81 1.01 (0.19) (0.55) (0.74) 9.60 11.13 0.58 0.30 2.13 2,316 58
2019 10.58 0.15
(3)
(0.39
) 		(0.24
) 		(0.22) (0.79) (1.01) 9.33 (1.00
) 		0.56 0.30 1.63 5,883 44
2018 10.23 0.13 0.98 1.11 (0.18) (0.58) (0.76) 10.58 11.15 0.56 0.30 1.18 13,887 32
2017 9.57 0.10 1.11 1.21 (0.12) (0.43) (0.55) 10.23 13.27 0.57 0.30 1.10 16,758 42
2016 9.82 0.12 0.37 0.49 (0.16) (0.58) (0.74) 9.57 5.28 0.56 0.30 1.22 24,691 38
Aggressive Allocation Fund
2020 8.53 0.15
(3)
0.91 1.06 (0.16) (0.66) (0.82) 8.77 12.79 0.54 0.33 1.77 18,159 37
2019 10.01 0.24 (0.61
) 		(0.37
) 		(0.21) (0.90) (1.11) 8.53 (2.10
) 		0.52 0.33 1.59 23,715 47
2018 10.01 0.12 1.20 1.32 (0.19) (1.13) (1.32) 10.01 13.90 0.53 0.33 1.06 34,898 27
2017 9.56 0.11 1.27 1.38 (0.10) (0.83) (0.93) 10.01 15.60 0.53 0.33 1.03 37,632 33
2016 9.85 0.10 0.38 0.48 (0.13) (0.64) (0.77) 9.56 5.14 0.52 0.33 1.04 52,260 33
(1)
Based on net asset value as of end of period date.
Financial Highlights 47
 
 
(2)
The contractual and voluntary expense waivers pursuant to Note 5 of the financial statements are reflected in both the net expense and net investment income ratios.
(3)
Calculated using the average shares method.
48 Financial Highlights
 
 
Financial Highlights
—
Institutional Class (Class I) of Shares (For a share outstanding throughout each period)
Period
Ended
August 31,
Net asset
value,
beginning
of period
Net
investment
income
(loss)
Net realized
and unrealized
gain (loss)
Total from
investment
operations
Distributions to
shareholders
from net
investment
income
Distributions to
shareholders
from net
realized gain
Total
distributions
Net asset
value, end
of period
Total
return
(1)
Ratios to Average Net Assets
Net assets,
end of period
(000 omitted)
Portfolio
turnover
rate
Gross
Expenses
Net
Expenses
(2)
Net
investment
income
(loss)
(2)
Conservative Allocation Fund
2020 $
8.05 		$
0.18
(3)
$
0.35 		$
0.53 		$(0.22) $(0.22) $(0.44) $
8.14 		6.86
% 		0.62
% 		0.08
% 		2.29
% 		$
415 		77
%
2019 8.97 0.21(3
) 		0.14 0.35 (0.22) (1.05) (1.27) 8.05 5.32 0.60 0.08 2.57 564 50
2018 10.02 3.41 (3.20
) 		0.21 (0.13) (1.13) (1.26) 8.97 2.11 0.52 0.08 1.10 1,416 29
2017 9.81 0.18 0.30 0.48 (0.27) (0.00) (0.27) 10.02 5.07 0.33 0.08 1.78 26,464 40
2016 9.77 0.24 0.25 0.49 (0.26) (0.19) (0.45) 9.81 5.29 0.31 0.08 2.46 29,479 31
Moderate Allocation Fund
2020 9.16 0.24 0.57 0.81 (0.24) (0.32) (0.56) 9.41 9.20 0.41 0.05 2.33 6,378 82
2019 9.94 0.21
(3)
0.02 0.23 (0.27) (0.74) (1.01) 9.16 3.42 0.39 0.05 2.27 6,997 57
2018 10.08 0.28 0.25 0.53 (0.21) (0.46) (0.67) 9.94 5.33 0.36 0.05 1.68 5,888 31
2017 9.73 0.17 0.57 0.74 (0.25) (0.14) (0.39) 10.08 7.82 0.33 0.05 1.66 9,375 39
2016 9.79 0.23 0.28 0.51 (0.24) (0.33) (0.57) 9.73 5.50 0.31 0.05 2.15 11,990 38
Balanced Allocation Fund
2020 8.50 0.18 0.69 0.87 (0.22) (0.68) (0.90) 8.47 10.75 0.24 0.08 2.11 37,233 60
2019 9.42 0.26 (0.26
) 		— (0.23) (0.69) (0.92) 8.50 1.23 0.22 0.08 1.99 37,232 52
2018 9.66 0.19 0.58 0.77 (0.20) (0.81) (1.01) 9.42 8.27 0.23 0.08 1.61 47,597 29
2017 9.43 0.13 0.81 0.94 (0.20) (0.51) (0.71) 9.66 10.67 0.23 0.08 1.42 52,821 35
2016 9.79 0.17 0.33 0.50 (0.20) (0.66) (0.86) 9.43 5.54 0.22 0.08 1.73 74,515 33
Growth Allocation Fund
2020 9.32 0.22
(3)
0.82 1.04 (0.20) (0.55) (0.75) 9.61 11.55 0.33 0.05 2.37 5,172 58
2019 10.59 0.18
(3)
(0.42
) 		(0.24
) 		(0.24) (0.79) (1.03) 9.32 (0.88
) 		0.31 0.05 1.96 13,390 44
2018 10.23 0.15 1.00 1.15 (0.21) (0.58) (0.79) 10.59 11.59 0.31 0.05 1.42 11,441 32
2017 9.58 0.09 1.14 1.23 (0.15) (0.43) (0.58) 10.23 13.51 0.32 0.05 1.15 8,969 42
2016 9.84 0.14 0.37 0.51 (0.19) (0.58) (0.77) 9.58 5.50 0.31 0.05 1.48 9,696 38
Aggressive Allocation Fund
2020 8.53 0.16
(3)
0.92 1.08 (0.18) (0.66) (0.84) 8.77 13.06 0.29 0.08 1.99 9,549 37
2019 10.01 0.26 (0.61
) 		(0.35
) 		(0.23) (0.90) (1.13) 8.53 (1.79
) 		0.27 0.08 1.79 12,095 47
2018 10.00 0.15 1.20 1.35 (0.21) (1.13) (1.34) 10.01 14.26 0.28 0.08 1.23 15,878 27
2017 9.57 0.14 1.25 1.39 (0.13) (0.83) (0.96) 10.00 15.79 0.28 0.08 1.29 14,685 33
2016 9.87 0.11 0.39 0.50 (0.16) (0.64) (0.80) 9.57 5.41 0.27 0.08 1.31 24,026 33
(1)
Based on net asset value as of end of period date.
(2)
The contractual and voluntary expense waivers pursuant to Note 5 of the financial statements are reflected in both the net expense and net investment income ratios.
(3)
Calculated using the average shares method.
Financial Highlights 49
 
 
Financial Highlights
—
Retirement Class R3 of Shares (For a share outstanding throughout each period)
Period
Ended
August 31,
Net asset
value,
beginning
of period
Net
investment
income
(loss)
Net realized
and unrealized
gain (loss)
Total from
investment
operations
Distributions to
shareholders
from net
investment
income
Distributions to
shareholders
from net
realized gain
Total
distributions
Net asset
value, end
of period
Total
return
(1)
Ratios to Average Net Assets
Net assets,
end of period
(000 omitted)
Portfolio
turnover
rate
Gross
Expenses
Net
Expenses
(2)
Net
investment
income
(loss)
(2)
Conservative Allocation Fund
2020 $
7.88 		$0.14
(3)
$
0.34 		$
0.48 		$(0.21) $(0.22
) 		$(0.43) $
7.93 		6.29
% 		1.12
% 		0.58
% 		1.86
% 		$
549 		77
%
2019 8.84 0.17
(3)
0.13 0.30 (0.21) (1.05
) 		(1.26) 7.88 4.78 1.10 0.58 2.14 633 50
2018 10.01 0.52 (0.36
) 		0.16 (0.20) (1.13
) 		(1.33) 8.84 1.58 1.04 0.58 1.41 956 29
2017 9.80 0.13 0.30 0.43 (0.22) (0.00
) 		(0.22) 10.01 4.52 0.83 0.58 1.34 3,012 40
2016 9.74 0.21 0.24 0.45 (0.20) (0.19
) 		(0.39) 9.80 4.82 0.81 0.58 1.97 6,802 31
Moderate Allocation Fund
2020 9.14 0.15 0.62 0.77 (0.21) (0.32
) 		(0.53) 9.38 8.76 0.91 0.55 1.73 7,705 82
2019 9.91 0.17
(3)
0.02 0.19 (0.22) (0.74
) 		(0.96) 9.14 2.94 0.89 0.55 1.89 6,975 57
2018 10.08 0.20 0.26 0.46 (0.17) (0.46
) 		(0.63) 9.91 4.65 0.85 0.55 1.43 8,095 31
2017 9.72 0.11 0.58 0.69 (0.19) (0.14
) 		(0.33) 10.08 7.37 0.83 0.55 1.10 13,725 39
2016 9.76 0.26 0.19 0.45 (0.16) (0.33
) 		(0.49) 9.72 4.90 0.81 0.55 1.65 12,695 38
Balanced Allocation Fund
2020 8.50 0.13 0.69 0.82 (0.17) 0.68 (0.85) 8.47 10.14 0.74 0.58 1.57 14,550 60
2019 9.41 0.21 (0.24
) 		(0.03
) 		(0.19) (0.69
) 		(0.88) 8.50 0.75 0.72 0.58 1.73 13,632 52
2018 9.64 0.13 0.59 0.72 (0.14) (0.81
) 		(0.95) 9.41 7.77 0.73 0.58 1.16 19,213 29
2017 9.40 0.09 0.80 0.89 (0.14) (0.51
) 		(0.65) 9.64 10.11 0.73 0.58 0.92 23,649 35
2016 9.76 0.13 0.31 0.44 (0.14) (0.66
) 		(0.80) 9.40 4.94 0.72 0.58 1.28 29,095 33
Growth Allocation Fund
2020 9.34 0.13
(3)
0.86 0.99 (0.17) (0.55
) 		(0.72) 9.61 10.86 0.83 0.55 1.46 9,437 58
2019 10.58 0.15
(3)
(0.42
) 		(0.27
) 		(0.18) (0.79
) 		(0.97) 9.34 (1.29
) 		0.81 0.55 1.59 8,220 44
2018 10.22 0.10 0.99 1.09 (0.15) (0.58
) 		(0.73) 10.58 11.00 0.81 0.55 0.91 15,107 32
2017 9.55 0.10 1.08 1.18 (0.08) (0.43
) 		(0.51) 10.22 12.96 0.82 0.55 0.85 18,846 42
2016 9.81 0.09 0.37 0.46 (0.14) (0.58
) 		(0.72) 9.55 4.95 0.81 0.55 0.91 25,876 38
Aggressive Allocation Fund
2020 8.50 0.11
(3)
0.93 1.04 (0.14) (0.66
) 		(0.80) 8.74 12.59 0.79 0.58 1.33 18,171 37
2019 9.99 0.20 (0.60
) 		(0.40
) 		(0.19) (0.90
) 		(1.09) 8.50 (2.47
) 		0.77 0.58 1.29 16,079 47
2018 9.98 0.10 1.20 1.30 (0.16) (1.13
) 		(1.29) 9.99 13.70 0.78 0.58 0.79 16,950 27
2017 9.55 0.06 1.29 1.35 (0.09) (0.83
) 		(0.92) 9.98 15.24 0.78 0.58 0.63 17,152 33
2016 9.84 0.07 0.38 0.45 (0.10) (0.64
) 		(0.74) 9.55 4.87 0.77 0.58 0.77 19,395 33
(1)
Based on net asset value as of end of period date.
(2)
The contractual and voluntary expense waivers pursuant to Note 5 of the financial statements are reflected in both the net expense and net investment income ratios.
(3)
Calculated using the average shares method.
50 Financial Highlights
 
 
Financial Highlights
—
Retirement Class R6 of Shares (For a share outstanding throughout each period)
Period
Ended
August 31,
Net asset
value,
beginning
of period
Net
investment
income
(loss)
Net realized
and unrealized
gain (loss)
Total from
investment
operations
Distributions to
shareholders
from net
investment
income
Distributions to
shareholders
from net
realized gain
Total
distributions
Net asset
value, end
of period
Total
return
(1)
Ratios to Average Net Assets
(3)
Net assets,
end of period
(000 omitted)
Portfolio
turnover
rate
Gross
Expenses
Net
Expenses
(2)(3)
Net
investment
income
(loss)
(2)
Conservative Allocation Fund
2020 $
7.76 		$0.19
(4)
$
0.33 		$
0.52 		$(0.22) $(0.22) $(0.44) $
7.84 		6.99
% 		0.47
% 		0.00
% 		2.46
% 		$
34,340 		77
%
2019 8.68 0.21
(4)
0.14 0.35 (0.22) (1.05) (1.27) 7.76 5.51 0.45 0.00 2.72 26,067 50
2018 10.03 0.21 0.01 0.22 (0.44) (1.13) (1.57) 8.68 2.28 0.39 0.00 2.42 21,748 29
2017 9.82 0.27 0.23 0.50 (0.29) (0.00) (0.29) 10.03 5.22 0.18 0.00 1.96 28,927 40
2016 9.79 0.25 0.24 0.49 (0.27) (0.19) (0.46) 9.82 5.34 0.16 0.00 2.61 88,818 31
Moderate Allocation Fund
2020 9.16 0.22 0.61 0.83 (0.24) (0.32) (0.56) 9.43 9.42 0.26 0.00 2.37 60,501 82
2019 9.92 0.23
(4)
0.02 0.25 (0.27) (0.74) (1.01) 9.16 3.63 0.24 0.00 2.58 54,363 57
2018 10.09 0.22 0.31 0.53 (0.24) (0.46) (0.70) 9.92 5.33 0.20 0.00 2.12 60,855 31
2017 9.74 0.21 0.54 0.75 (0.26) (0.14) (0.40) 10.09 8.02 0.18 0.00 1.83 80,283 39
2016 9.80 0.22 0.30 0.52 (0.25) (0.33) (0.58) 9.74 5.67 0.16 0.00 2.27 101,327 38
Balanced Allocation Fund
2020 8.52 0.19 0.68 0.87 (0.22) (0.68) (0.90) 8.49 10.73 0.09 0.00 2.23 148,054 60
2019 9.42 0.25 (0.23
) 		0.02 (0.23) (0.69) (0.92) 8.52 1.48 0.07 0.00 2.23 160,166 52
2018 9.66 0.18 0.61 0.79 (0.22) (0.81) (1.03) 9.42 8.51 0.08 0.00 1.82 180,451 29
2017 9.44 0.19 0.76 0.95 (0.22) (0.51) (0.73) 9.66 10.73 0.08 0.00 1.67 193,690 35
2016 9.80 0.18 0.33 0.51 (0.21) (0.66) (0.87) 9.44 5.70 0.07 0.00 1.87 252,982 33
Growth Allocation Fund
2020 9.34 0.19
(4)
0.86 1.05 (0.20) (0.55) (0.75) 9.64 11.63 0.18 0.00 2.12 89,237 58
2019 10.59 0.18
(4)
(0.40
) 		(0.22
) 		(0.24) (0.79) (1.03) 9.34 (0.68
) 		0.16 0.00 1.94 86,392 44
2018 10.24 0.17 0.99 1.16 (0.23) (0.58) (0.81) 10.59 11.66 0.17 0.00 1.59 82,185 32
2017 9.59 0.16 1.09 1.25 (0.17) (0.43) (0.60) 10.24 13.69 0.17 0.00 1.49 84,417 42
2016 9.85 0.15 0.37 0.52 (0.20) (0.58) (0.78) 9.59 5.67 0.16 0.00 1.51 79,852 38
Aggressive Allocation Fund
2020 8.54 0.17
(4)
0.93 1.10 (0.18) (0.66) (0.84) 8.80 13.29 0.14 0.00 2.03 107,910 37
2019 10.02 0.25 (0.60
) 		(0.35
) 		(0.23) (0.90) (1.13) 8.54 (1.77
) 		0.12 0.00 1.94 110,386 47
2018 10.01 0.16 1.21 1.37 (0.23) (1.13) (1.36) 10.02 14.51 0.13 0.00 1.47 112,003 27
2017 9.58 0.15 1.26 1.41 (0.15) (0.83) (0.98) 10.01 16.00 0.13 0.00 1.43 105,925 33
2016 9.88 0.14 0.38 0.52 (0.18) (0.64) (0.82) 9.58 5.58 0.12 0.00 1.38 123,203 33
(1)
Based on net asset value as of end of period date.
(2)
The contractual and voluntary expense waivers pursuant to Note 5 of the financial statements are reflected in both the net expense and net investment income ratios.
(3)
Please refer to Note 5, subsection Investment Adviser Fee and Other Transactions with Affiliates, in the Notes to Financial Statements.
(4)
Calculated using the average shares method.
Financial Highlights 51
 
 
PRSRT STD
U.S. POSTAGE
PAID
LANCASTER, PA
PERMIT NO. 1793
BMO Funds - U.S. Services
P.O. Box 219006
Kansas City, MO 64121-9006
Contact us
1-800-236-FUND (3863)
414-287-8555
Learn more
bmofunds.com
The SAI is incorporated by reference into this Prospectus. Additional information about the Funds’ investments is contained in the SAI and the Annual and Semi-Annual Reports of the Funds as they become available. The Annual Report’s investment commentaries discuss market conditions and investment strategies that significantly affected the performance of each Fund during its last fiscal year.
To obtain the SAI, Annual Report, Semi-Annual Report, and other information, free of charge, and to make inquiries, write to or call BMO Funds - U.S. Services at 1-800-236-FUND (3863). You also may obtain these materials free of charge on the BMO Funds’ website at bmofunds.com.
Information about the Funds, including the SAI, may be obtained by electronic request at the following e-mail address: publicinfo@sec.gov. You will be charged a fee for this duplicating service.
Reports and other information about the Funds are also available on the EDGAR database on the SEC’s Internet site at http://www.sec.gov.
BMO Global Asset Management is the brand name for various affiliated entities of BMO Financial Group that provide investment management and trust and custody services. Certain of the products and services offered under the brand name BMO Global Asset Management are designed specifically for various categories of investors in a number of different countries and regions and may not be available to all investors. Products and services are only offered to such investors in those countries and regions in accordance with applicable laws and regulations. BMO Financial Group is a service mark of Bank of Montreal.
Foreside Financial Services, LLC, Distributor
Investment products are:
NOT FDIC INSURED
—
NO BANK GUARANTEE
—
MAY LOSE VALUE.
© 2020 BMO Financial Corp. (12/20) Investment Company Act File No. 811-58433
 

BMO Funds, Inc.
Statement of Additional Information
December 29, 2020
  Investor
Class
(Class Y) 		Institutional
Class
(Class I) 		Advisor
Class
(Class A) 		Retirement
Class
(Class R3) 		Retirement
Class
(Class R6) 		Premier
Class
Equity Funds            
BMO Low Volatility Equity Fund — MLVEX BLVAX — — —
BMO Dividend Income Fund — MDIVX BADIX — — —
BMO Large-Cap Value Fund — MLVIX BALVX — BLCRX —
BMO Large-Cap Growth Fund MASTX MLCIX BALGX — BLGRX —
BMO Mid-Cap Value Fund — MRVIX BAMCX — BMVGX —
BMO Mid-Cap Growth Fund — MRMIX BGMAX — BMGGX —
BMO Small-Cap Value Fund — MRSNX BACVX — BSVGX —
BMO Small-Cap Growth Fund —
MSGIX BSLAX —
—
—
International and Global Funds            
BMO Global Low Volatility Equity Fund — BGLBX BAEGX — — —
BMO Disciplined International Equity Fund — BDIQX BDAQX — —
(1)
—
BMO Pyrford International Stock Fund — MISNX BPIAX — BISGX —
BMO LGM Emerging Markets Equity Fund —
MIEMX BAEMX —
—
—
Fixed Income Funds            
BMO Ultra Short Tax-Free Fund — MUISX BAUSX — — —
BMO Short Tax-Free Fund — MTFIX BASFX — — —
BMO Short-Term Income Fund — MSIFX BTMAX — — —
BMO Intermediate Tax-Free Fund MITFX MIITX BITAX — — —
BMO Strategic Income Fund MRGIX MGIIX BMTAX — — —
BMO Corporate Income Fund MCIYX MCIIX BATIX — — —
BMO Core Plus Bond Fund MCYBX MCBIX BATCX — — —
Money Market Funds            
BMO Government Money Market Fund MGYXX — — — — MGNXX
BMO Tax-Free Money Market Fund MTFXX — — — — MFIXX
BMO Prime Money Market Fund MARXX — — — — MAIXX
Asset Allocation
–
Target Risk Funds 		           
BMO Conservative Allocation Fund BDVYX BDVIX — BDVRX BDVSX —
BMO Moderate Allocation Fund BMBYX BMBHX — BMBQX BMBTX —
BMO Balanced Allocation Fund BGRYX BGRHX — BGRRX BGRQX —
BMO Growth Allocation Fund BABYX BABHX — BABRX BABQX —
BMO Aggressive Allocation Fund BDSYX BDSHX — BDSRX BDSQX —
(1) Not yet offered for sale.
This Statement of Additional Information (SAI) is not a Prospectus and should be read in conjunction with the Prospectuses for the BMO Funds listed above (each, a Fund and collectively, the Funds) dated December 29, 2020, each as may be supplemented. This SAI incorporates by reference the financial statements for the year ended August 31, 2020 from the . You may obtain the Prospectuses and the Annual Reports without charge by writing to the Funds’ distributor, Foreside Financial Services, LLC, at Three Canal Plaza, Portland, Maine 04101, by calling BMO Funds - U.S. Services at 1-800-236-FUND (3863), or you can visit the BMO Funds’ website at bmofunds.com.
 
 
Table of contents
i
 
 
How Are the Funds Organized?
BMO Funds, Inc. (the Corporation) is an open-end, management investment company that was established as Marshall Funds, Inc., a Wisconsin corporation, on July 31, 1992. On July 5, 2011, the Bank of Montreal, a publicly-traded Canadian banking institution (BMO), acquired Marshall & Ilsley Corporation, and as a result of the transaction, Marshall Funds, Inc. began doing business as BMO Funds. On May 17, 2013, the Corporation changed its corporate name to BMO Funds, Inc.
The Funds are diversified portfolios of the Corporation with a fiscal year end of August 31. The Corporation may offer separate series of shares representing interests in separate portfolios of securities, and the shares in any one portfolio may be offered in separate classes. Currently, the Corporation offers 27 separate series and the following share classes: Investor Class (Class Y), Institutional Class (Class I), Advisor Class (Class A), Retirement Class R3, Retirement Class R6, and Premier Class.
BMO Asset Management Corp. (Adviser), the Funds’ investment adviser, has retained the following sub-advisers (each, a Sub-Adviser and collectively, the Sub-Advisers) for certain Funds:
Fund Name
 
Sub-Adviser
Pyrford International Stock   Pyrford International, Ltd. (Pyrford)
LGM Emerging Markets Equity   LGM Investments Limited (LGM Investments)
This SAI contains additional information about the Corporation and the Funds. This SAI uses the same terms as defined in the Funds’ Prospectuses.
The definitions of the terms “series” and “class” in the Wisconsin Business Corporation Law, Chapter 180 of the Wisconsin Statutes (WBCL), differ from the meanings assigned to those terms in the Prospectuses and this SAI. The Corporation’s Articles of Incorporation, as amended, reconcile this inconsistency in terminology and provide that the Prospectuses and SAI may use the meanings assigned the terms in such documents.
Securities, Transactions, Investment Techniques, and Risks
The following information supplements the discussion of each Fund’s securities, investment techniques, and risks that are described in the Prospectus. While all of the Funds may invest in the securities discussed below (unless otherwise indicated), the Funds most likely to invest in a given security are noted in the discussion.
For each of the
Target Risk Funds
, the following combined summary discloses the investment strategies of the underlying funds in which the
Target Risk Funds
invest. Certain investments, techniques, and risks will only apply to your
Target Risk Fund
to the extent it is invested in an underlying fund that invests in or engages in those investments, techniques, or strategies or directly invests in or engages in such investments, techniques, or strategies. With respect to the disclosure in this section of the SAI, the term “Fund” includes underlying funds in which the
Target Risk Funds
invest. Unless otherwise prohibited by the description in the relevant Fund’s prospectus or this SAI, each
Target Risk Fund
may invest directly or indirectly in underlying funds that engage in the investments and strategies described below.
As used in this section, the term Adviser means Adviser or Sub-Adviser, as applicable.
Aggressive Investment Techniques and Strategies
. Certain Funds may invest in and use investment techniques, strategies, and financial instruments that may be considered aggressive. These techniques may expose the Fund to economic leverage or potentially dramatic changes (losses) in the value of its portfolio holdings.
Asset-Backed/Privately-Issued Mortgage-Backed Securities
. The
Short-Term Income, Strategic Income, Corporate Income, Core Plus Bond,
and
Prime Money Market Funds
may invest in asset-backed/privately-issued mortgage-backed securities, which are issued by non-governmental entities and carry no direct or indirect government guarantee. The value and liquidity of asset-backed and mortgage-backed securities in which a Fund invests may be affected adversely by downturns in the sub-prime mortgage lending market. Concerns about defaults on sub-prime loans, which are made to borrowers with low credit ratings and other factors that increase the risk of default, have created and may continue to create heightened volatility and turmoil in the credit markets. Asset-backed securities may also be subject to greater risk of default during periods of economic downturn than other securities, which could result in possible losses to the Fund. In addition, the secondary market for asset-backed securities
B-1
 
 
may not be as liquid as the market for other securities which may result in the Fund experiencing difficulty in selling or valuing asset-backed securities. Asset-backed and mortgage-backed securities may be supported by credit enhancements. However, no assurance can be made that private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. Asset-backed securities represent an interest in a pool of assets such as car loans and credit card receivables. Almost any type of fixed income assets (including other fixed income securities) may be used to create an asset-backed security. However, most asset-backed securities involve consumer or commercial debts with maturities of less than ten years. Asset-backed securities may take the form of commercial paper or notes, in addition to pass-through certificates or asset-backed bonds. Asset-backed securities also may resemble some types of collateralized mortgage obligations (CMOs).
Payments on asset-backed securities depend upon assets held by the issuer and collections of the underlying loans. The value of these securities depends on many factors, including changing interest rates, the availability of information about the pool and its structure, the credit quality of the underlying assets, the market’s perception of the servicer of the pool, and any credit enhancement provided. Also, these securities may be subject to prepayment risk.
Mortgage-backed securities represent interests in pools of mortgages. The underlying mortgages normally have similar interest rates, maturities, and other terms. Mortgages may have fixed or adjustable interest rates. Adjustable rate mortgages are known as ARMs. Mortgage-backed securities come in a variety of forms. Many have extremely complicated terms. The simplest form of mortgage-backed securities is a “pass-through certificate.” Holders of pass-through certificates receive a pro rata share of the payments from the underlying mortgages. Holders also receive a pro rata share of any prepayments, so they assume all the prepayment risk of the underlying mortgages.
CMOs are complicated instruments that allocate payments and prepayments from an underlying pass-through certificate among holders of different classes of mortgage-backed securities. This creates different prepayment and market risks for each CMO class. In addition, CMOs may allocate interest payments to one class (Interest Only or IOs) and principal payments to another class (Principal Only or POs). POs increase in value when prepayment rates increase. In contrast, IOs decrease in value when prepayments increase, because the underlying mortgages generate fewer interest payments. However, IOs’ prices tend to increase when interest rates rise (and prepayments fall), making IOs a useful hedge against market risk.
Generally, homeowners have the option to prepay their mortgages at any time without penalty. Homeowners frequently refinance high rate mortgages when mortgage rates fall. This results in the prepayment of the mortgages underlying mortgage-backed securities, which deprives holders of the securities of the higher yields. Conversely, when mortgage rates increase, prepayments due to refinancings decline. This extends the life of mortgage-backed securities with lower yields. As a result, increases in prepayments of premium mortgage-backed securities, or decreases in prepayments of discount mortgage-backed securities, may reduce their yield and price. This relationship between interest rates and mortgage prepayments makes the price of mortgage-backed securities more volatile than most other types of fixed income securities with comparable credit risks. Mortgage-backed securities tend to pay higher yields to compensate for this volatility.
CMOs may include planned amortization classes (PACs) and targeted amortization classes (TACs). PACs and TACs are issued with companion classes. PACs and TACs receive principal payments and prepayments at a specified rate. The companion classes receive principal payments and any prepayments in excess of this rate. In addition, PACs will receive the companion classes’ share of principal payments if necessary to cover a shortfall in the prepayment rate. This structure helps PACs and TACs to control prepayment risk by increasing the risk to their companion classes.
Another variant allocates interest payments between two classes of CMOs. One class (Floaters) receives a share of interest payments based upon a market index such as London Interbank Offered Rates (LIBOR) or an alternative reference rate. The other class (Inverse Floaters) receives any remaining interest payments from the underlying mortgages. Floater classes receive more interest (and Inverse Floater classes receive correspondingly less interest) as interest rates rise. This shifts prepayment and market risks from the Floater to the Inverse Floater class, reducing the price volatility of the Floater class and increasing the price volatility of the Inverse Floater class.
CMOs must allocate all payments received from the underlying mortgages to some class. To capture any unallocated payments, CMOs generally have an accrual (Z) class. Z classes do not receive any payments from the underlying mortgages until all other CMO classes have been paid off. Once this happens, holders of Z class CMOs receive all payments and prepayments. Similarly, real estate mortgage investment conduits (REMICs) (offerings of multiple class mortgage-backed securities that qualify and elect treatment as such under provisions of the Internal Revenue Code of 1986, as amended (Code)) have residual interests that receive any mortgage payments not allocated to another REMIC class.
B-2
 
 
The degree of increased or decreased prepayment risk depends upon the structure of the CMOs. Z classes, IOs, POs, and Inverse Floaters are among the most volatile investment grade fixed income securities currently traded in the United States. However, the actual returns on any type of mortgage-backed security depend upon the performance of the underlying pool of mortgages, which no one can predict and will vary among pools.
Unlike traditional fixed income securities, which pay a fixed rate of interest until maturity (when the entire principal amount is due), payments on mortgage-backed securities include both interest and a partial payment of principal. Partial payments of principal may be comprised of scheduled principal payments as well as unscheduled payments from the voluntary prepayment, refinancing, or foreclosure of the underlying loans. These unscheduled prepayments of principal create risks that can adversely affect a Fund if it is holding mortgage-backed securities. For example, when interest rates decline, the values of mortgage-backed securities generally rise. However, when interest rates decline, unscheduled prepayments can be expected to accelerate and a Fund would be required to reinvest the proceeds of the prepayments at the lower interest rates then available. Unscheduled prepayments would also limit the potential for capital appreciation on mortgage-backed securities. Conversely, when interest rates rise, the values of mortgage-backed securities generally fall. Since rising interest rates typically result in decreased prepayments, this could lengthen the average lives of mortgage-backed securities and cause their value to decline more than traditional fixed income securities.
Bank Instruments
.
The
Short-Term Income
and
Prime Money Market Funds
may invest in bank instruments, which are unsecured interest-bearing deposits with banks. Bank instruments include bank accounts, time deposits, certificates of deposit, and banker’s acceptances. Instruments denominated in U.S. dollars and issued by non-U.S. branches of U.S. or foreign banks are commonly referred to as Eurodollar instruments. Instruments denominated in U.S. dollars and issued by U.S. branches of foreign banks are referred to as Yankee dollar instruments. The Funds may invest in bank instruments that have been issued by banks and savings and loans that have capital, surplus, and undivided profits of over $100 million or whose principal amount is insured by the Bank Insurance Fund or the Savings Association Insurance Fund, which are administered by the Federal Deposit Insurance Corporation. Securities that are supported by a bank through various types of credit enhancements including a liquidity facility, irrevocable letter of credit, cash collateral, repurchase agreements, or unconditional guaranty, among others, also will be treated as bank instruments. With respect to the
Prime Money Market Fund
, asset-backed securities issued by special purpose entities, substantially all of the assets of which consist of “qualifying assets” as defined in Rule 2a-7 under the 1940 Act, also are considered bank instruments.
Foreign Bank and Money Market Instruments.
Certain of the Funds that may invest in bank instruments may invest in foreign bank and money market instruments. Eurodollar Certificates of Deposit (ECDs), Yankee dollar Certificates of Deposit (YCDs), and Eurodollar Time Deposits (ETDs) are all U.S. dollar denominated certificates of deposit. ECDs are issued by, and ETDs are deposits of, foreign banks or foreign branches of U.S. banks. YCDs are issued in the U.S. by branches and agencies of foreign banks. Europaper is dollar-denominated commercial paper and other short-term notes issued in the U.S. by foreign issuers.
ECDs, ETDs, YCDs, and Europaper have many of the same risks as other foreign securities. Examples of these risks include economic and political developments that may adversely affect the payment of principal or interest, foreign withholding or other taxes, difficulties in obtaining or enforcing a judgment against the issuing bank, and possible interruptions in the flow of international currency transactions. Also, the issuing banks or their branches are not necessarily subject to the same regulatory requirements that apply to domestic banks, such as reserve requirements, loan limitations, examinations, accounting, auditing, recordkeeping, and the public availability of information. These factors will be carefully considered by the Adviser in selecting these investments.
Borrowing
.
The Funds may borrow money directly or, in some cases, through reverse repurchase agreements and pledge some assets as collateral. If a Fund borrows, it will pay interest on borrowed money and may incur other transaction costs. These expenses could exceed the income received or capital appreciation realized by a Fund from any securities purchased with borrowed money. With respect to borrowings, a Fund is required to maintain continuous asset coverage within the limits of the 1940 Act, and as interpreted or modified by regulatory authority having jurisdiction, from time to time. Borrowing by a Fund will involve special risk considerations, including that a Fund may have to sell portfolio securities to reduce its borrowings and restore the appropriate asset coverage even if it must sell the securities at a loss.
The Corporation has established a line of credit with a bank by which the Funds may borrow money for temporary or emergency purposes.
In addition, the Corporation received an exemptive order from the Securities and Exchange Commission (SEC) on July 30, 2014 permitting the Funds to participate in an interfund lending program, subject to their investment policies and limitations. This program allows a Fund to lend cash to and borrow cash from other BMO Funds for temporary purposes, although the
Money Market Funds
will not participate as borrowers. The program is subject to a number of conditions, including the requirement that
B-3
 
 
the interfund loan rate to be charged to the Fund under the program is (i) more favorable to the lending Fund than the rate it could otherwise obtain from investing cash in repurchase agreements or purchasing shares of a money market fund and (ii) more favorable to the borrowing Fund than the lowest interest rate at which bank short-term loans would be available to the Fund. A Fund will participate in the program only to the extent that its participation is consistent with the Fund’s investment policies and limitations. The Board is responsible for overseeing and periodically reviewing the interfund lending program.
Collateralized Debt Obligations.
The
Disciplined International Equity Fund
may invest in collateralized debt obligations (CDOs). CDOs and similarly structured securities are interests in a trust or other special purpose entity (SPE) and are typically backed by a pool of bonds, loans, or other debt obligations. CDOs are not limited to investments in one type of debt and, accordingly, a CDO may be collateralized by corporate bonds, commercial loans, asset-backed securities, residential mortgage-backed securities, real estate investment trusts (REITs), commercial mortgage-backed securities, emerging market debt, and municipal bonds. CDOs may use derivatives contracts to create “synthetic” exposure to assets rather than holding such assets directly. There are various types of CDOs, which include collateralized loan obligations and collateralized bond obligations, among others.
CDOs are split into two or more tranches that vary in risk and yield. The equity tranche is the riskiest and the first to suffer a loss from defaults. Senior tranches are less risky and generally have higher ratings and lower yields than the underlying collateral securities held by the trust. All tranches of CDOs, including senior tranches with high credit ratings have experienced substantial losses due to actual defaults, increased sensitivity to future defaults due to the disappearance of protecting tranches, market anticipation of defaults, and market aversion to CDO securities as a class. No assurance can be made that additional losses of equal or greater magnitude will not occur in the future.
CDOs carry risks including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the quality of the collateral may decline in value or quality or go into default or be downgraded; (iii) a Fund may invest in tranches of a CDO that are subordinate to other classes; and (iv) the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the issuer, difficulty in valuing the security, or unexpected investment results. CDOs also may charge management fees and administrative expenses that the shareholders of a Fund would pay indirectly.
Commercial Paper.
The
Fixed Income
and
Money Market Funds
may invest in commercial paper and restricted and illiquid securities. Commercial paper represents an issuer’s draft or note with a maturity of less than nine months. Companies typically issue commercial paper to fund current expenditures. Most issuers constantly reissue their commercial paper and use the proceeds (or bank loans) to repay maturing paper. Commercial paper may default if the issuer cannot continue to obtain financing in this fashion. The short maturity of commercial paper reduces both the interest rate and credit risk as compared to other debt securities of the same issuer.
The Funds may invest in commercial paper issued under Section 4(a)(2) of the Securities Act of 1933, as amended (1933 Act). By law, the sale of Section 4(a)(2) commercial paper is restricted and is generally sold only to institutional investors, such as the Funds. A Fund purchasing Section 4(a)(2) commercial paper must agree to purchase the paper for investment purposes only and not with a view to public distribution. Section 4(a)(2) commercial paper is normally resold to other institutional investors through investment dealers who make a market in Section 4(a)(2) commercial paper and, thus, provide liquidity.
The Adviser determines whether Section 4(a)(2) commercial paper and certain other restricted securities are liquid in accordance with the Funds’ procedures. Section 4(a)(2) commercial paper and other restricted securities that the Adviser has determined to be liquid are not subject to a Fund’s investment limitation applicable to illiquid securities.
Concentration
.
All of the Funds have adopted a fundamental investment policy that prohibits a Fund from investing 25% or more of its assets in the securities of companies in any one industry (except as described under “Investment Policies and Limitations
—
Fundamental Limitations
—
Concentration of Investments”). This policy does not apply to securities in which a Fund may invest that are issued by the U.S. government. For purposes of this policy, the Adviser determines industry classifications in accordance with the Global Industry Classification Standards, an industry classification system developed by Standard & Poor’s Corporation in collaboration with MSCI, or other sources. In the absence of such classification, or if the Adviser determines in good faith based on its own information that the economic characteristics affecting a particular issuer make it more appropriate to be considered engaged in a different industry, the Adviser may classify an issuer accordingly. As a result, the composition of an industry or group of industries may change from time to time. For purposes of the fundamental investment policy regarding industry concentration, “group of industries” means a group of related industries, as determined in good faith by the Adviser, based on published classifications or other sources.
B-4
 
 
Convertible Securities.
All of the Funds
(other than the
Money Market Funds
) may invest in convertible securities, which are fixed income securities that give the holder the option to exchange for equity securities at a specified conversion price within a specified time. The option allows the holder to realize additional returns if the market price of the equity securities exceeds the conversion price. For example, if the holder owns fixed income securities convertible into shares of common stock at a conversion price of $10 per share and the shares have a market value of $12, the holder could realize an additional $2 per share by converting the fixed income securities.
To compensate for the value of the conversion option, convertible securities have lower yields than comparable fixed income securities. In addition, the conversion price exceeds the market value of the underlying equity securities at the time a convertible security is issued. Thus, convertible securities may provide lower returns than non-convertible fixed income securities or equity securities depending upon changes in the price of the underlying equity securities. However, convertible securities permit the holder to realize some of the potential appreciation of the underlying equity securities with less risk of losing its initial investment.
The Funds treat convertible securities as both fixed income and equity securities for purposes of their investment policies and limitations because of their unique characteristics.
Corporate Debt Securities.
The
Fixed Income
and
Prime Money Market Funds
invest in corporate debt securities, which are fixed income securities issued by businesses. Notes, bonds, debentures, and commercial paper are the most common types of corporate debt securities. The credit risks of corporate debt securities vary widely among issuers.
Corporate Restructuring
.
The
Mid-Cap Value, Mid-Cap Growth, Small-Cap Value, and Small-Cap Growth Funds
may invest in securities of companies that are involved in company turnarounds or corporate restructurings. Investment in these securities may present special risk because of the high degree of uncertainty that can be associated with such events. It is possible that the market price of securities of companies involved in company turnarounds or corporate restructurings may be subject to significant and unpredictable fluctuations.
Credit Enhancement.
Some of the Funds may invest in credit-enhanced securities. Certain acceptable investments may be credit-enhanced by a guaranty, letter of credit, or insurance. The Adviser may evaluate a security based, in whole or in part, upon the financial condition of the party providing the credit enhancement (the credit enhancer). The bankruptcy, receivership, or default of the credit enhancer will adversely affect the quality and marketability of the underlying security. In certain cases, credit-enhanced securities may be treated as having been issued both by the issuer and the credit enhancer.
Credit Risks.
Credit risk is the possibility that an issuer will default on a security by failing to pay interest or principal when due. If an issuer defaults, a Fund may lose money. Many fixed income securities receive credit ratings from services such as Standard & Poor’s and Moody’s Investors Service. These services assign ratings to securities by assessing the likelihood of issuer default. Lower credit ratings correspond to higher credit risk. If a security has not received a rating, a Fund must rely entirely upon the Adviser’s credit assessment.
When a Fund invests in investment grade bonds or other debt securities or convertible securities, some may be rated in the lowest investment grade category (i.e., BBB or Baa). Bonds rated lower than BBB by Standard & Poor’s or Baa by Moody’s Investors Service have speculative characteristics. The Adviser or Sub-Adviser, as applicable, will determine the credit quality of unrated bonds, which may have greater risk (but a potentially higher yield) than comparably rated bonds. If a bond is downgraded, the Adviser or Sub-Adviser, as applicable, will re-evaluate the bond and determine whether the bond should be retained or sold. The Money Market Funds may invest only in securities which have been determined by the Board to present minimal credit risks to the Funds, based on the Board’s consideration of a number of factors including, but not limited to, financial condition, sources of liquidity, ability to react to market-wide and issuer- or guarantor-specific events, and positions within the industry and industry strength.
Fixed income securities generally compensate for greater credit risk by paying interest at a higher rate. The difference between the yield of a security and the yield of a U.S. Treasury security with a comparable maturity (the spread) measures the additional interest paid for risk. Spreads may increase generally in response to adverse economic or market conditions. A security’s spread also may increase if the security’s rating is lowered or the security is perceived to have an increased credit risk. An increase in the spread will cause the price of the security to decline.
Cybersecurity Risks.
The Funds, like all companies, may be susceptible to operational and information security risks, or risks of catastrophic systems failures by critical service providers. Cybersecurity or critical systems failures or breaches of the Funds, their service providers, Authorized Participants or the issuers of securities in which a Fund invests, have the ability to cause disruptions, impact business operations and impede trading, potentially resulting in financial losses, the inability of Authorized Participants to
B-5
 
 
process transactions, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, and/or additional compliance costs. The Funds and their shareholders could be negatively impacted as a result.
Demand Features.
The
Ultra-Short Tax-Free, Short Tax-Free, Intermediate Tax-Free,
and
Money Market Funds
may purchase securities subject to a demand feature, which may take the form of a put or standby commitment. Demand features permit the holder to demand payment of the value of the security (plus any accrued interest) from either the issuer of the security or a third-party. Demand features help make a security more liquid, although an adverse change in the financial health of the provider of a demand feature (such as bankruptcy) will negatively affect the liquidity of the security. Other events also may terminate a demand feature which also causes liquidity to be affected.
Demand Master Notes.
All of the Funds (other than the
Low Volatility Equity, Dividend Income, Large-Cap Value, Large-Cap Growth, Mid-Cap Value, Mid-Cap Growth, Small-Cap Value, Small-Cap Growth, Pyrford International Stock, LGM Emerging Markets Equity,
and
Intermediate Tax-Free Funds
) may invest in demand master notes, which are short-term borrowing arrangements between a corporation or government agency and an institutional lender (such as a Fund) payable upon demand by either party. A party may demand full or partial payment, and the notice period for demand typically ranges from one to seven days. Many master notes give the holder the option of increasing or decreasing the principal amount of the master note on a daily or weekly basis within certain limits. Demand master notes usually provide for floating or variable rates of interest.
Depositary Receipts.
All of the Funds (other than the
Intermediate Tax-Free
and
Money Market Funds
) may purchase depositary receipts, which are securities representing common stock in non-U.S. issuers. American Depositary Receipts (ADRs) are receipts issued by a U.S. bank that represent an interest in shares of a foreign-based corporation. ADRs provide a way to buy shares of foreign-based companies in the U.S. rather than in overseas markets. European Depositary Receipts (EDRs) and Global Depositary Receipts (GDRs) are receipts issued by foreign banks or trust companies or foreign branches of U.S. banks that represent an interest in shares of either a foreign or U.S. corporation. Only the
International and Global Funds
may purchase EDRs and GDRs. Depositary receipts may not be denominated in the same currency as the underlying securities into which they may be converted and are subject to currency risks. Depositary receipts involve many of the same risks of investing directly in foreign securities.
Derivative Instruments.
Derivative instruments are financial instruments that require payments based upon changes in the values of designated (or underlying) securities, currencies, commodities, interest rates, credit ratings, or other market factors (reference instruments). Some derivative instruments (such as futures, forwards, and options) require payments relating to a future trade involving the underlying asset. Other derivative instruments (such as swaps) require payments relating to the income or returns from the underlying asset. The other party to a derivative instrument is referred to as a counterparty.
In General.
The
Money Market Funds
may not purchase or sell derivative instruments. The other Funds, in pursuing their individual objectives and to the extent specified herein or in the Prospectuses, may (i) purchase and sell (write) both put options and call options on securities, swap agreements, securities indexes, and foreign currencies, (ii) enter into futures contracts based on securities, interest rates, indices, currencies, and/or U.S. government bonds, and (iii) purchase and sell options on such futures contracts for hedging purposes to seek to replicate the composition and performance of a particular index or as part of their overall investment strategies. The Funds may purchase and sell foreign currency options for purposes of increasing exposure to a foreign currency or to shift exposure to foreign currency fluctuations from one country to another, except that those Funds that may not invest in foreign currency-denominated securities may not enter into transactions involving currency futures or options. The Funds may enter into swap agreements with respect to interest rates, credit events, single currency securities, and indices of securities, and to the extent a Fund may invest in foreign currency-denominated securities, may enter into swap agreements with respect to foreign currencies. The Funds also may invest in structured notes. If other types of financial instruments, including other types of options, futures contracts or futures options, are traded in the future, the Board may authorize their use.
Derivatives may be more volatile than investments directly in the underlying reference instrument. Derivatives may create economic leverage and can result in losses to the Funds that exceed the original amount invested. The value of some derivative instruments in which a Fund invests may be particularly sensitive to changes in prevailing interest rates and, like the other investments of the Fund, the ability of the Fund to successfully utilize these instruments may depend in part upon the ability of the Adviser to forecast interest rates and other economic factors correctly. If a Fund’s Adviser incorrectly forecasts such factors and has taken positions in derivative instruments contrary to prevailing market trends, a Fund could be exposed to a risk of loss.
The Funds might not employ any of the derivatives strategies described herein and no assurance can be given that any strategy used will succeed. If the Adviser incorrectly forecasts securities prices, interest rates, credit events, market values, or other economic factors in utilizing a derivatives strategy for a Fund, the Fund might be in a worse position than if it had not entered
B-6
 
 
into the transaction at all. Also, suitable derivative transactions may not be available in all circumstances. The use of these strategies involves additional costs as well as certain special risks, including a possible imperfect correlation, or even no correlation, between price movements of derivative instruments and price movements of related investments. Although some strategies involving derivative instruments can reduce the risk of loss for a Fund, they also can reduce the opportunity for gain, or even result in losses, by offsetting favorable price movements in related investments or otherwise due to (i) the possible inability of the Fund to purchase or sell a portfolio security at a time that otherwise would be favorable, (ii) the possible need to sell a portfolio security at a disadvantageous time because the Fund is required to maintain asset coverage or offsetting positions in connection with transactions in derivative instruments, and (iii) the possible inability of the Fund to close out or to liquidate its derivatives positions. Valuation of derivatives may be more difficult and liquidity may be reduced in times of market turmoil since many investors and market makers may be reluctant to purchase complex instruments or quote prices for them. In addition, a Fund’s use of such instruments may cause the Fund to realize higher amounts of short-term capital gains (generally taxable to shareholders at ordinary income tax rates for federal income tax purposes) than if it had not used such instruments. If a Fund gains exposure to an asset class using derivative instruments backed by a collateral portfolio of fixed income instruments, changes in the value of the fixed income instruments may result in greater or lesser exposure to that asset class than would have resulted from a direct investment in securities comprising that asset class. Additionally, a loss may be sustained by a Fund as a result of the failure of a counterparty to a derivative contract to make required payments or otherwise fulfill its obligations under the derivative contract’s terms.
Each Fund is operated by a person that has claimed an exclusion from the registration as a “commodity pool operator” (CPO) in accordance with Rule 4.5 under the Commodity Exchange Act (the CEA), and, therefore, such person is not subject to registration or regulation as a CPO with respect to the Funds under the CEA. In addition, with respect to the Funds, the Adviser is relying upon a related exclusion from the definition of “commodity trading advisor” (CTA) under the CEA and the rules of the Commodities Futures Trading Commission (CFTC) thereunder. As a result, each Fund must comply with one of the exclusions set forth in Rule 4.5, which limits a Fund’s investment in commodity futures, options on commodity futures, or certain swaps (used for purposes other than “bona fide hedging,” as such term is defined in the rules of the CFTC). If a Fund is no longer operated in compliance with the exclusion, the Adviser and any Sub-Adviser would be subject to regulation under the CEA. The CFTC has neither reviewed nor approved reliance on these exclusions, or the Funds, their investment strategies, their prospectus, or this SAI.
The regulation of derivatives is a rapidly changing area of law and is subject to modification by government and judicial action. Recent legal and regulatory changes, and additional legal and regulatory changes in the future, may substantially affect over-the-counter derivatives markets, and such changes may impact the Fund's use of such instruments. In particular, the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in July 2010 (the Dodd-Frank Act), provides for new regulation of the derivatives market, including clearing, margin, reporting and registration requirements. Under the Dodd-Frank Act, certain derivatives are subject to margin requirements and swap dealers are required to collect margin from a fund with respect to such derivatives. Specifically, regulations are now in effect that require swap dealers to post and collect variation margin (comprised of specified liquid instruments and subject to a required haircut) in connection with trading of over-the-counter (OTC) swaps with a fund. Shares of investment companies (other than certain money market funds) may not be posted as collateral under these regulations. Requirements for posting of initial margin in connection with OTC swaps will be phased-in through at least 2021. In addition, on October 28, 2020, the SEC approved new Rule 18f-4 under the 1940 Act, which governs the use of derivatives by registered investment companies. New Rule 18f-4 imposes limits on the amount of derivatives a fund can enter into and replaces the asset segregation framework previously used by funds to comply with Section 18 of the 1940 Act, among other requirements. The implementation of these requirements with respect to derivatives, as well as regulations under the Dodd-Frank Act regarding clearing, mandatory trading and margining of other derivatives, may increase the costs and risks to a Fund of trading in these instruments and, as a result, may affect returns to investors in the Fund.
Futures Contracts and Options on Futures Contracts.
A futures contract is an agreement between two parties to buy or sell a specific amount of an underlying reference instrument (such as a security or commodity) for a specified price on a specified future date. An index futures contract is an agreement pursuant to which the parties agree to take or make delivery of an amount of cash equal to the difference between the value of the index at the close of the last trading day of the contract and the price at which the index futures contract was originally written. Futures contracts also are based on interest rates, securities indices, and foreign currencies. To the extent that a Fund may invest in foreign currency-denominated securities, it also may invest in foreign currency futures contracts and options thereon. These contracts are traded on exchanges so that, in most cases, either party can close out its position on the exchange for cash without delivering the security or commodity, or other underlying reference instrument.
The
Fixed Income, Target Risk
and
Disciplined International Equity Funds
may use financial futures contracts and options for various purposes including for managing duration, which measures a fixed income security’s average life and reflects the present value of the security’s cash flow. Selling futures contracts or purchasing put options can accomplish the shortening of a
B-7
 
 
portfolio’s duration in anticipation of higher interest rates. Conversely, purchasing futures contracts or call options can accomplish the lengthening of portfolio duration in anticipation of lower interest rates. The use of these instruments in this manner may be preferred to either liquidating or purchasing securities held by the Funds to achieve the portfolio’s duration targets because it reduces transaction costs to the Funds. In addition, the use of financial futures contracts and related options permits the Funds’ portfolio managers to react in a more timely manner to changes in interest rates.
A Fund may purchase or write call futures options and put futures options, to the extent specified herein or in the Prospectus. Futures options possess many of the same characteristics as options on securities and indexes (discussed above). A futures option gives the holder the right, in return for the premium paid, to assume a long position (call) or short position (put) in a futures contract at a specified exercise price at any time during the period of the option. In return for the premium paid by the buyer, the seller assumes the risk of taking a possibly adverse futures position. Upon exercise of a call option, the holder acquires a long position in the futures contract and the writer is assigned the opposite short position. In the case of a put option, the opposite is true. A call option is “in the money” if the value of the futures contract that is the subject of the option exceeds the exercise price. A put option is “in the money” if the exercise price exceeds the value of the futures contract that is the subject of the option.
Limitations on Use of Futures Contracts and Futures Options.
A Fund only will enter into futures contracts and futures options that are standardized and traded on a U.S. or foreign exchange, board of trade, or similar entity, or quoted on an automated quotation system.
When a purchase or sale of a futures contract is made by a Fund, the Fund is required to deposit with its custodian (or broker, if legally permitted) a specified amount of assets (initial margin) determined to be liquid by the Adviser. The margin required for a futures contract is set by the exchange on which the contract is traded and may be modified during the term of the contract. Margin requirements on foreign exchanges may be different than U.S. exchanges. The initial margin is in the nature of a performance bond or good faith deposit on the futures contract that is returned to the Fund upon termination of the contract, assuming all contractual obligations have been satisfied. Each Fund expects to earn interest income on its initial margin deposits. A futures contract held by a Fund is valued daily at the official settlement price of the exchange on which it is traded. Each day the Fund pays or receives cash, called “variation margin,” equal to the daily change in value of the futures contract. This process is known as “marking to market.” Variation margin does not represent a borrowing or loan by the Fund, but is instead a settlement between the Fund and the broker of the amount one would owe the other if the futures contract expired on that date. In computing daily net asset value (NAV), the Fund will mark to market its open futures positions.
A Fund also is required to deposit and maintain margin with respect to put and call options on futures contracts written by it. Such margin deposits will vary depending on the nature of the underlying futures contract (and the related initial margin requirements), the current market value of the option, and other futures positions held by the Fund.
Although some futures contracts call for making or taking delivery of the underlying securities or commodities, generally those obligations are closed out prior to delivery by offsetting purchases or sales of matching futures contracts (same exchange, underlying security or index, and delivery month). Closing out a futures contract sale is effected by purchasing a futures contract for the same aggregate amount of the specific type of financial instrument or commodity with the same delivery date. If an offsetting purchase price is less than the original sale price, the Fund realizes a capital gain, or if it is more, the Fund realizes a capital loss. Conversely, if an offsetting sale price is more than the original purchase price, the Fund realizes a capital gain, or if it is less, the Fund realizes a capital loss. The transaction costs also must be included in these calculations.
A Fund may write a covered straddle consisting of a call and a put written on the same underlying futures contract. A straddle will be covered when sufficient assets are deposited to meet the Fund’s immediate obligations. The Fund may use the same liquid assets to cover both the call and put options where the exercise price of the call and put are the same, or the exercise price of the call is higher than that of the put. In such a case, the Fund also will segregate or earmark liquid assets equivalent to the amount, if any, by which the put is “in the money.”
When purchasing a futures contract, a Fund will maintain assets determined to be liquid by the Adviser with its custodian in amounts that, when added to the amounts deposited with a futures commission merchant (FCM) as margin, are equal to the market value of the instruments underlying the futures contract; provided that for cash settled futures, a Fund may segregate or earmark only the net amount due on the contract on a mark-to-market basis. These amounts will be marked to market on a daily basis, resulting in adjustments to the amounts maintained with the custodian. Alternatively, the Fund may cover its position by purchasing a put option on the same futures contract with a strike price not lower than the price of the contract held by the Fund.
When selling a futures contract, a Fund will maintain assets determined to be liquid by the Adviser with its custodian in amounts that are equal to the market value of the instruments underlying the contract; provided that for cash-settled futures, a Fund may segregate or earmark only the net amount due on the contract on a mark-to-market basis. These amounts will be marked to
B-8
 
 
market on a daily basis, resulting in adjustments to the amounts maintained with the custodian. Alternatively, the Fund may cover its position by owning the instruments underlying the contract (or, in the case of an index futures contract, a portfolio with a volatility substantially similar to that of the index on which the futures contract is based), or by holding a call option permitting the Fund to purchase the same futures contract at a price no higher than the price of the contract written by the Fund (or at a higher price if the difference is maintained in liquid assets with a Fund’s custodian).
When selling a call option on a futures contract, a Fund will maintain assets determined to be liquid by the Adviser with its custodian in amounts that, when added to the amounts deposited with an FCM as margin, are equal to the market value of the futures contract underlying the call option. These amounts will be marked to market on a daily basis, resulting in adjustments to the amounts maintained with the custodian. Alternatively, the Fund may cover its position by entering into a long position in the same futures contract at a price no higher than the strike price of the call option, by owning the instruments underlying the futures contract, or by holding a separate call option permitting the Fund to purchase the same futures contract at a price not higher than the strike price of the call option sold by the Fund.
When selling a put option on a futures contract, a Fund will maintain assets determined to be liquid by the Adviser with its custodian in amounts that are equal to the purchase price of the futures contract, less any margin on deposit. These amounts will be marked to market on a daily basis, resulting in adjustments to the amounts maintained with the custodian. Alternatively, the Fund may cover the position either by entering into a short position in the same futures contract, or by owning a separate put option permitting it to sell the same futures contract, so long as the strike price of the purchased put option is not lower than the strike price of the put option sold by the Fund.
The requirements for qualification as a regulated investment company (RIC) under the Code also may limit the extent to which a Fund may enter into futures, futures options, or forward contracts.
Risks Associated with Futures Contracts and Futures Options Generally.
The following describes the general risks of investing in futures contracts and futures options:
•
Asset Segregation Risk.
Because a Fund typically must segregate or earmark liquid assets to cover open positions with respect to derivatives, the Fund may incur a loss if it needs to sell a futures contract or futures option at a disadvantageous time to maintain that asset coverage.
•
Management Risk
.
Financial futures contracts and related options are highly specialized instruments that require investment techniques and risk analyses different from those associated with stocks and bonds. A Fund’s use of financial futures and options may not always be a successful strategy and using them could lower a Fund’s return. Further, if the Adviser incorrectly forecasts interest rates or other economic factors and has taken positions in financial futures contracts or options contrary to prevailing market trends, a Fund could be exposed to a risk of loss.
•
Correlation Risk
.
Imperfect correlation between the change in market values of the securities held by a Fund and the prices of related futures contracts and options on futures purchased or sold by a Fund may result in losses in excess of the amount invested in these instruments.
•
Market Risk.
Financial futures contracts and related options, like most other investments, are subject to the risk that the market value of the investment will decline. Adverse movements in the value of the underlying assets can expose the Funds to losses.
•
Exchange Limit Risk
.
Futures exchanges may limit the amount of fluctuation permitted in certain futures contract prices during a single trading day. The daily limit establishes the maximum amount that the price of a futures contract may vary either up or down from the previous day’s settlement price at the end of the current trading session. Once the daily limit has been reached in a futures contract subject to the limit, no more trades may be made on that day at a price beyond that limit. The daily limit governs only price movements during a particular trading day and therefore does not limit potential losses because the limit may work to prevent the liquidation of unfavorable positions. For example, futures prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of positions and subjecting some holders of futures contracts to substantial losses.
•
Liquidity Risk.
No assurance can be made that a liquid market will exist at a time when a Fund seeks to close out a futures contract or a futures option position, in which case the Fund would remain obligated to meet margin requirements until the position is closed. In addition, many of the contracts discussed herein are relatively new instruments without a significant trading history. As a result, no assurance can be made that an active secondary market will develop or continue to exist.
B-9
 
 
•
Counterparty and FCM Risk.
A loss may be sustained as a result of the failure of another party to the contract to make required payments or otherwise fulfill its obligations under the contract’s terms. A risk exists that a Fund may lose the initial and variation margin deposits in the event of bankruptcy of an FCM with which the Fund has an open position in a futures contract. The assets of a Fund may not be fully protected in the event of the bankruptcy of the FCM or central counterparty because the Fund might be limited to covering only a pro rata share of all available funds and margin segregated on behalf of an FCM’s customers. If the FCM does not provide accurate reporting, a Fund also is subject to the risk that the FCM could use the Fund’s assets, which are held in an omnibus account with assets belonging to the FCM’s other customers, to satisfy its own financial obligations or the payment obligations of another customer to the central counterparty.
•
Volatility Risk.
Futures contracts and related options may be more volatile than investments directly in the underlying reference instrument and may be more sensitive to interest rate changes and market price fluctuations than securities or other types of investments.
•
Leverage Risk.
Futures contracts and related options may create economic leverage and can result in losses to a Fund that exceed the original amount invested.
•
Hedging Transactions Risk.
Several risks are associated with the use of futures contracts and futures options as hedging techniques. A purchase or sale of a futures contract may result in losses in excess of the amount invested in the futures contract. No guarantee exists of a correlation between price movements in the hedging vehicle and in the Fund securities being hedged. In addition, significant differences may exist between the securities and futures markets that could result in an imperfect correlation between the markets, causing a given hedge not to achieve its objectives. The degree of imperfection of correlation depends on circumstances such as variations in speculative market demand for futures and futures options on securities, including technical influences in futures trading and futures options and differences between the financial instruments being hedged and the instruments underlying the standard contracts available for trading in such respects as interest rate levels, maturities, and creditworthiness of issuers. A decision as to whether, when, and how to hedge involves the exercise of skill and judgment. Even a well-conceived hedge may be unsuccessful to some degree because of market behavior or unexpected interest rate trends.
Hybrid Instruments.
A hybrid instrument is a type of potentially high-risk derivative that combines a traditional stock, bond, or commodity with an option or forward contract. Generally, the principal amount, amount payable upon maturity or redemption, or interest rate of a hybrid is tied (positively or negatively) to the price of some commodity, currency or securities index, or another interest rate, or some other economic factor (each a benchmark). The interest rate or (unlike most fixed income securities) the principal amount payable at maturity of a hybrid security may be increased or decreased, depending on changes in the value of the benchmark. An example of a hybrid could be a bond issued by an oil company that pays a small base level of interest with additional interest that accrues in correlation to the extent to which oil prices exceed a certain predetermined level. Such a hybrid instrument would be a combination of a bond and a call option on oil.
Hybrids can be used as an efficient means of pursuing a variety of investment objectives, including currency hedging, duration management, and increased total return. Hybrids may not bear interest or pay dividends. The value of a hybrid or its interest rate may be a multiple of a benchmark and, as a result, may be leveraged and move (up or down) more steeply and rapidly than the benchmark. These benchmarks may be sensitive to economic and political events, such as commodity shortages and currency devaluations, that cannot be readily foreseen by the purchaser of a hybrid. Under certain conditions, the redemption value of a hybrid could be zero. Thus, an investment in a hybrid may entail significant market risks that are not associated with a similar investment in a traditional, U.S. dollar-denominated bond that has a fixed principal amount and pays a fixed rate or floating rate of interest. A Fund’s purchase of a hybrid also exposes the Fund to the credit risk of the issuer of the hybrid. Those risks may cause significant fluctuations in the NAV of the Fund. Each Fund will not invest more than 5% of its total assets at the time of investment in hybrid instruments.
Certain issuers of structured products such as hybrid instruments may be deemed to be investment companies as defined in the 1940 Act. As a result, a Fund’s investments in those products may be subject to limits applicable to investments in investment companies and may be subject to restrictions contained in the 1940 Act.
Options on Securities and Indexes.
A Fund may, to the extent specified herein or in the Prospectus, purchase and sell both put and call options on fixed income or other securities or indexes in standardized contracts traded on foreign or domestic securities exchanges, boards of trade or similar entities, or quoted on NASDAQ or on an over-the-counter market, and agreements, sometimes called cash puts, which may accompany the purchase of a new issue of bonds from a dealer.
An option on a security (or index) is a contract that gives the holder of the option, in return for a premium, the right to buy from (in the case of a call) or sell to (in the case of a put) the writer of the option the security underlying the option (or the cash value of the index) at a specified exercise price at any time during the term of the option. The writer of an option on a security has the
B-10
 
 
obligation upon exercise of the option to deliver the underlying security upon payment of the exercise price or to pay the exercise price upon delivery of the underlying security. Upon exercise, the writer of an option on an index is obligated to pay the difference between the cash value of the index and the exercise price multiplied by the specified multiplier for the index option. (An index is designed to reflect features of a particular financial or securities market, a specific group of financial instruments or securities, or certain economic indicators.)
A Fund will not write a call option or put option unless the option is “covered.” In the case of a call option on a security, the option is “covered” if the Fund owns the security underlying the call or has an absolute and immediate right to acquire that security without additional cash consideration upon conversion or exchange of other securities held by the Fund (or, if additional cash consideration is required, cash or other assets determined to be liquid in such amount are segregated or earmarked). For a call option on an index, the option is covered if the Fund maintains with its custodian assets determined to be liquid by the Adviser in an amount equal to the contract value of the index. A call option also is covered if the Fund holds a call on the same security or index as the call written where the exercise price of the call held is (i) equal to or less than the exercise price of the call written, or (ii) greater than the exercise price of the call written, provided the difference is maintained by the Fund in segregated or earmarked assets determined to be liquid by the Adviser. A put option on a security or an index is “covered” if the Fund segregates or earmarks assets determined to be liquid by the Adviser equal to the exercise price. A put option is also covered if the Fund holds a put on the same security or index as the put written where the exercise price of the put held is (i) equal to or greater than the exercise price of the put written, or (ii) less than the exercise price of the put written, provided the difference is maintained by the Fund in segregated or earmarked assets determined to be liquid by the Adviser.
If an option written by a Fund expires unexercised, the Fund realizes a short-term capital gain equal to the premium received at the time the option was written. If an option purchased by a Fund expires unexercised, the Fund realizes a capital loss equal to the premium paid. Prior to the earlier of exercise or expiration, an exchange traded option may be closed out by an offsetting purchase or sale of an option of the same series (type, exchange, underlying security or index, exercise price, and expiration). No assurance exists, however, that a closing purchase or sale transaction can be effected when the Fund desires.
A Fund may sell a put or call option it has previously purchased, which could result in a net gain or loss depending on whether the amount realized on the sale is more or less than the premium and other transaction costs paid on the put or call option being sold. Prior to exercise or expiration, an option may be closed out by an offsetting purchase or sale of an option of the same series. A Fund will realize a capital gain from a closing purchase transaction if the cost of the closing option is less than the premium received from writing the option or, if it is more, the Fund will realize a capital loss. If the premium received from a closing sale transaction is more than the premium paid to purchase the option, the Fund will realize a capital gain or, if it is less, the Fund will realize a capital loss. The principal factors affecting the market value of a put or a call option include supply and demand, interest rates, the current market price of the underlying security or index in relation to the exercise price of the option, the volatility of the underlying security or index, and the time remaining until the expiration date.
The premium paid for a put or call option purchased by a Fund is an asset of the Fund. The premium received for an option written by a Fund is recorded as a deferred credit. The value of an option purchased or written is marked to market daily and is valued at the closing price on the exchange on which it is traded or, if not traded on an exchange or no closing price is available, at the mean between the last bid and asked prices.
A Fund may write a covered straddle consisting of a combination of a call and a put written on the same underlying security. A straddle will be covered when sufficient assets are designated for such purpose on a Fund’s books to meet the Fund’s immediate obligation. The Fund may use the same liquid assets to cover both the call and put options where the exercise price of the call and put are the same, or the exercise price of the call is higher than that of the put. In such a case, the Fund also will segregate or earmark liquid assets equivalent to the amount, if any, by which the put is “in the money.”
Several risks are associated with transactions in options on securities and on indexes. For example, significant differences exist between the securities and options markets that could result in an imperfect correlation between these markets, causing a given transaction not to achieve its objective. A decision as to whether, when, and how to use options involves the exercise of skill and judgment. Even a well-conceived transaction may be unsuccessful to some degree because of market behavior or unexpected events.
During the option period, the covered call writer has, in return for the premium on the option, given up the opportunity to profit from a price increase in the underlying security above the exercise price, but, as long as its obligation as a writer continues, has retained the risk of loss should the price of the underlying security decline.
The writer of an option has no control over the time when it may be required to fulfill its obligation as a writer of the option. Once an option writer has received an exercise notice, it cannot effect a closing purchase transaction to terminate its obligation under the option and must deliver the underlying security at the exercise price. If a put or call option purchased by the Fund is not sold when it has remaining value and if the market price of the underlying security remains equal to or greater than the
B-11
 
 
exercise price (in the case of a put) or remains less than or equal to the exercise price (in the case of a call), the Fund will lose its entire investment in the option. Also, where a put or call option on a particular security is purchased to hedge against price movements in a related security, the price of the put or call option may move more or less than the price of the related security.
No assurance exists of a liquid market when a Fund seeks to close out an option position. If a Fund were unable to close out an option that it had purchased on a security, it would have to exercise the option to realize any profit or the option may expire worthless. If a Fund were unable to close out a covered call option that it had written on a security, it would not be able to sell the underlying security unless the option expired without exercise. As the writer of a covered call option, a Fund forgoes, during the option’s life, the opportunity to profit from increases in the market value of the security covering the call option above the sum of the premium and the exercise price of the call.
If trading were suspended in an option purchased by a Fund, the Fund would not be able to close out the option. If restrictions on exercise were imposed, the Fund might be unable to exercise an option it had purchased. Except to the extent that a call option on an index written by the Fund is covered by an option on the same index purchased by the Fund, movements in the index may result in a loss to the Fund; however, such losses may be mitigated by changes in the value of the Fund’s securities during the period the option was outstanding.
Foreign Currency Transactions.
Foreign currency transactions generally are used by the
Core Plus Bond, International and Global,
and
Target Risk Funds
to obtain foreign currencies to settle securities transactions. They also can be used as a hedge to protect assets against adverse changes in foreign currency exchange rates or regulations. When a Fund uses foreign currency exchanges as a hedge, it also may limit potential gain that could result from an increase in the value of such currencies. A Fund may be affected either favorably or unfavorably by fluctuations in the relative rates of exchange between the currencies of different nations. To the extent that a Fund invests directly in foreign currencies or in securities denominated in or that trade in foreign currencies, the Fund is subject to the risk that those currencies will decline in value relative to the U.S. dollar or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the currency being hedged. Foreign currency hedging transactions include forward foreign currency exchange contracts, foreign currency futures contracts, and purchasing put or call options on foreign currencies.
Exchange-Traded Futures Contracts.
Exchange-traded futures contracts for the purchase or sale of foreign currencies (Foreign Currency Futures) are used to hedge against anticipated changes in exchange rates that might adversely affect the value of a Fund’s portfolio securities or the prices of securities that a Fund intends to purchase in the future. The successful use of Foreign Currency Futures depends on the ability to forecast currency exchange rate movements correctly. Should exchange rates move in an unexpected manner, a Fund may not achieve the anticipated benefits of Foreign Currency Futures or may realize losses. For more information about futures contracts generally, see “Futures Contracts and Options on Futures Contracts,” “Limitations on Use of Futures Contracts and Futures Options,” “Risks Associated with Futures Contracts and Futures Options Generally,” and “Hedging Transactions Risk” above.
Forward Foreign Currency Exchange Contracts.
Forward foreign currency exchange contracts (Forward Contracts) are used to minimize the risks associated with changes in the relationship between the U.S. dollar and foreign currencies. They are used to lock in the U.S. dollar price of a foreign security. A Forward Contract is a commitment to purchase or sell a specific currency for an agreed price at a future date.
If the Adviser believes a foreign currency will decline against the U.S. dollar, a Forward Contract may be used to sell an amount of the foreign currency approximating the value of a Fund’s security that is denominated in the foreign currency. The success of this hedging strategy is highly uncertain due to the difficulties of predicting the values of foreign currencies, the challenges of precisely matching Forward Contract amounts, and because of the constantly changing value of the securities involved. A Fund will not enter into Forward Contracts for hedging purposes in a particular currency in an amount in excess of a Fund’s assets denominated in that currency. Conversely, if the Adviser believes that the U.S. dollar will decline against a foreign currency, a Forward Contract may be used to buy that foreign currency for a fixed dollar amount, which is known as cross-hedging.
In these transactions, a Fund will segregate or earmark assets with a market value equal to the amount of the foreign currency purchased. Therefore, the Fund will always have cash, cash equivalents, or high quality debt securities available to cover Forward Contracts or to limit any potential risk. The segregated or earmarked assets will be priced daily.
Forward Contracts may limit potential gain from a positive change in the relationship between the U.S. dollar and foreign currencies. Unanticipated changes in currency prices may result in poorer overall performance for a Fund than if it had not engaged in such contracts.
At the maturity of a currency or cross currency forward, a Fund may either exchange the currencies specified at the maturity of a forward contract or, prior to maturity, the Fund may enter into a closing transaction involving the purchase or sale of an offsetting contract. Closing transactions with respect to forward contracts usually are effected with the counterparty to the
B-12
 
 
original forward contract. Some Forward Contracts do not provide for physical settlement of two currencies. Instead, these contracts are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (a non-deliverable forward). Under definitions adopted by the CFTC and the Securities and Exchange Commission, non-deliverable forwards are considered swaps. Although non-deliverable forwards historically have been traded in the over-the-counter (OTC) market, as swaps, they may in the future be required to be centrally cleared and traded on public facilities. For more information on central clearing and trading of cleared swaps, see the later discussion of “Swap Agreements and Options on Swap Agreements.”
Foreign Currency Options.
A Fund that invests in foreign currency-denominated securities may buy or sell put and call options on foreign currencies, either on U.S. or foreign exchanges or in the over-the-counter market. A put option on a foreign currency gives the purchaser of the option the right to sell a foreign currency at the exercise price until the option expires. A call option on a foreign currency gives the purchaser of the option the right to purchase the currency at the exercise price until the option expires. Currency options traded on U.S. or other exchanges may be subject to position limits that may limit the ability of a Fund to reduce foreign currency risk using such options. Over-the-counter options differ from traded options in that they are two-party contracts with price and other terms negotiated between buyer and seller and generally do not have as much market liquidity as exchange-traded options.
Purchasing and writing put and call options on foreign currencies are used to protect a Fund’s portfolio against declines in the U.S. dollar value of foreign portfolio securities and against increases in the dollar cost of foreign securities to be acquired. Writing an option on foreign currency constitutes only a partial hedge, up to the amount of the premium received. A Fund could lose money if it is required to purchase or sell foreign currencies at disadvantageous exchange rates. If exchange rate movements are adverse to a Fund’s position, the Fund may forfeit the entire amount of the premium as well as incur related transaction costs.
Additional Risks of Derivatives Traded on Foreign Exchanges
.
Options on securities, futures contracts, and foreign currencies may be traded on foreign exchanges. Such transactions may not be regulated as effectively as similar transactions in the United States, may not involve a clearing mechanism and related guarantees, and are subject to the risk of governmental actions affecting trading in, or the prices of, foreign securities. The value of such positions also could be affected adversely by (i) other complex foreign political, legal, and economic factors; (ii) lesser availability than in the United States of data on which to make trading decisions; (iii) delays in a Fund’s ability to act upon economic events occurring in foreign markets during non-business hours in the United States; (iv) the imposition of different exercise and settlement terms and procedures and margin requirements than in the United States; (v) lesser trading volume; and (vi) changes in foreign currency exchange rates.
Structured Notes and Indexed Securities.
Structured notes are derivative debt securities, the interest rate or principal of which is determined by an unrelated indicator. Indexed securities include structured notes as well as securities other than debt securities, the interest rate or principal of which is determined by an unrelated indicator. Indexed securities may include a multiplier that multiplies the indexed element by a specified factor and, therefore, the value of such securities may be very volatile. To the extent a Fund (except Global Low Volatility Equity) invests in these securities, however, the Adviser analyzes these securities in its overall assessment of the effective duration of the Fund’s portfolio in an effort to monitor the Fund’s interest rate risk.
Swap Agreements and Options on Swap Agreements.
A Fund may engage in swap transactions, including, but not limited to, swap agreements on interest rates, security indexes, specific securities, and credit and event-linked swaps. To the extent a Fund may invest in foreign currency-denominated securities, it also may invest in currency exchange rate swap agreements. A Fund also may enter into options on swap agreements (swap options).
A Fund may enter into swap transactions for any purpose consistent with its investment objective and policies, such as for the purpose of attempting to obtain or preserve a particular return or spread at a lower cost than obtaining a return or spread through purchases and/or sales of instruments in other markets, to protect against currency fluctuations, as a duration management technique, to protect against any increase in the price of securities a Fund anticipates purchasing at a later date, or to gain exposure to certain markets in the most economical way possible.
Swap agreements are contracts between a Fund and another party (the swap counterparty) involving the exchange of payments on specified terms over periods ranging from a few weeks to more than one year. A swap agreement may be negotiated bilaterally and traded over-the-counter between two parties (for an uncleared swap) or, in some instances, must be transacted through an FCM and cleared through a clearing-house that serves as a central counterparty (for a cleared swap). As a result of the Dodd-Frank Act and related regulatory developments, which have imposed comprehensive new regulatory requirements on swaps and swap market participants, certain categories of swaps, such as most types of standardized interest rate and credit default swap agreements, are now subject to mandatory central clearing and some of these cleared swaps must be traded on an exchange or swap execution facility. It is expected that additional categories of swaps will be designated in the future as subject to mandatory clearing and exchange trading. Mandatory clearing and exchange-trading of additional swaps
B-13
 
 
will occur on a phased-in basis based on the type of market participant, CFTC approval of contracts for central clearing and public trading facilities making such cleared swaps available to trade. Some categories of swaps also may be cleared and traded on exchanges on a voluntary basis. While the intent of these regulatory reforms requiring clearing and exchange trading for swaps is to mitigate counterparty risk and increase liquidity and transparency in the swaps markets, mandatory clearing and exchange trading may increase trading costs and impose other risks.
In a standard swap transaction, two parties agree to exchange the returns (or differentials in rates of return) and/or cash flows earned or realized on particular predetermined investments or instruments, which may be adjusted for an interest factor. The gross returns to be exchanged or swapped between the parties are generally calculated with respect to a “notional amount,” i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a basket of securities representing a particular index. A “quanto” or “differential” swap combines both an interest rate and a currency transaction. Other forms of swap agreements include (i) interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or “cap;” (ii) interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified rate, or “floor;” and (iii) interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels. With a floating rate, the fee may be pegged to a base rate, such as the LIBOR or an alternative reference rate and is adjusted each period. Therefore, if interest rates increase over the term of the swap contract, the Fund may be required to pay a higher fee at each swap reset date.
A Fund may enter into total return swap agreements to obtain exposure to a security or market without owning or taking physical custody of such security or investing directly in such market. Total return swap agreements are contracts in which one party, the total return payer, agrees to make periodic payments to another party, the total return receiver, based on the change in market value of a particular reference asset (such as an equity or fixed-income security, a combination of such securities, or an index) during the specified period, in return for periodic payments based on a fixed or variable interest rate or the total return from another reference asset. A Fund may be either a total return receiver or total return payer, depending on the performance of the reference asset. Payments under the total return swap agreement are based upon an agreed principal amount but, since the principal amount is not exchanged, it represents neither an asset nor a liability to either party, and therefore amounts of principal are referred to as notional amounts. The total return is the capital gain or loss, plus any interest or dividend payments.
Total return swap agreements are subject to the risk that a total return payer may default on its payment obligations to a Fund, and conversely, that a Fund may not be able to meet its obligation to a total return receiver. There is no guarantee that a Fund’s investment through a total return swap agreement will deliver returns in excess of the inherent borrowing costs and accordingly, the Fund’s performance may be less than what would be achieved by a direct investment in the reference asset.
A Fund may enter into credit default swap agreements. The buyer in a credit default contract is obligated to pay the seller a periodic stream of payments over the term of the contract provided that no event of default on an underlying reference obligation has occurred. If an event of default occurs, the seller must pay the buyer the full notional value, or “par value,” of the reference obligation in exchange for the reference obligation. A Fund may be either the buyer or seller in a credit default swap transaction. If the Fund is a buyer and no event of default occurs, the Fund will lose its investment and recover nothing. However, if an event of default occurs, the Fund (as the buyer) will receive the full notional value of a reference obligation that may have little or no value. As a seller, the Fund receives a fixed rate of income throughout the term of the contract, which typically is between six months and three years, provided that there is no default event. If an event of default occurs, the seller must pay the buyer the full notional value of the reference obligation. Credit default swap transactions involve greater risks than if a Fund had invested in the reference obligation directly.
A swap option is a contract that gives a counterparty the right (but not the obligation) in return for payment of a premium, to enter into a new swap agreement or to shorten, extend, cancel, or otherwise modify an existing swap agreement at some designated future time on specified terms. A Fund may write (sell) and purchase put and call swap options.
Most swap agreements entered into by the Funds would calculate the obligations of the parties to the agreement on a net basis. Consequently, a Fund’s current obligations (or rights) under a swap agreement generally will be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the net amount). A Fund’s current obligations under a swap agreement will be accrued daily (offset against any amounts owed to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by segregating or earmarking assets determined to be liquid by the Adviser, to avoid any potential leveraging of the Fund’s portfolio. Obligations under swap agreements so covered will not be construed to be senior securities for purposes of the Fund’s investment restriction concerning senior securities. A Fund will not enter into an over-the-counter swap agreement with any single party if the net amount owed or to be received under existing contracts with that party would exceed 5% of the Fund’s total assets.
B-14
 
 
Whether a Fund’s use of swap agreements or swap options will be successful in furthering its investment objective will depend on the ability of the Adviser to predict correctly whether certain types of investments are likely to produce greater returns than other investments. Certain restrictions imposed on the Funds by the Code for qualification as a RIC may limit each Fund’s ability to use swap agreements.
Certain swaps may not be able to be disposed of in current market conditions in seven calendar days without significantly changing their market value and, therefore, they may be considered to be illiquid. If a swap transaction is particularly large or if the relevant market is illiquid, a Fund may not be able to establish or liquidate a position at an advantageous time or price, which may result in significant losses. Moreover, in an uncleared swap, the Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. In such an event, a Fund will have contractual remedies pursuant to the swap agreements, but bankruptcy and insolvency laws could affect the Fund’s rights as a creditor. The Funds will enter into uncleared swaps only with counterparties that meet certain standards of creditworthiness (generally, such counterparties would have to be eligible counterparties under the terms of a Fund’s repurchase agreement guidelines). However, in unusual or extreme market conditions, a counterparty’s creditworthiness and ability to perform may deteriorate rapidly and the availability of suitable replacement counterparties may become limited.
As noted above, certain types of swaps currently are, and more in the future will be, centrally cleared. Central clearing is designed to reduce counterparty credit risk and increase liquidity compared to uncleared swaps, but it does not eliminate those risks completely. Swaps that are centrally cleared are subject to the creditworthiness of the clearing organization involved in the transaction. For example, a Fund could lose margin payments it has deposited with its FCM as well as the net amount of gains not yet paid by the clearing organization if the FCM or clearing organization becomes insolvent or goes into bankruptcy. Credit risk of cleared swap participants is concentrated in a few clearing-houses and the consequences of insolvency of a clearing-house are not clear. In the event of bankruptcy of the clearing organization, a Fund may be entitled to the net amount of gains the Fund is entitled to receive plus the return of margin owed to it only in proportion to the amount received by the clearing organization’s other customers, potentially resulting in losses to the Fund. Finally, the Funds are subject to the risk that, after entering into a cleared swap with an executing broker, no FCM or central counterparty is willing or able to clear the transaction. In such an event, a Fund may be required to break the trade and make an early termination payment to the executing broker.
Swaps that are subject to mandatory clearing also are required to be traded on swap execution facilities (SEFs), if any SEF makes the swap available to trade. An SEF is a trading platform where multiple market participants can execute swap transactions by accepting bids and offers made by multiple other participants on the platform. Transactions executed on an SEF may increase market transparency and liquidity, but may require a Fund to incur increased expenses to access the same types of swaps that it has used in the past.
Dollar Rolls.
The Funds may invest in dollar rolls, which are transactions whereby a Fund sells mortgage-backed securities with a commitment to buy similar, but not identical, mortgage-backed securities on a future date at a lower price. Normally, one or both securities involved are “to be announced” mortgage-backed securities. Dollar rolls are subject to interest rate risks and credit risks. These transactions may create leverage risks. Dollar roll transactions will cause a Fund to have an increased portfolio turnover rate.
Duration.
The
Fixed Income Funds
utilize various investment tools to manage a portfolio’s duration. Duration is a measure of volatility in the price of a bond prior to maturity. Volatility is the magnitude of the change in the price of a bond relative to a change in the market interest rate. Volatility is based upon a bond’s coupon rate, maturity date, and the level of market yields of similar bonds. Generally, bonds with lower coupons or longer maturities will be more volatile than bonds with higher coupons or shorter maturities. Duration combines these variables into a single measure of price sensitivity to interest rate changes. For example, if interest rates decline by 1%, the market value of a portfolio with a duration of five years would rise by approximately 5%. Conversely, if interest rates increase by 1%, the market value of the portfolio would decline by approximately 5%.
Equity Securities
The
Equity,
and
International and
Global Funds
invest in equity securities, which are fundamental units of ownership in a company. The following describes the types of equity securities in which the Funds may invest:
Common Stocks.
Common stocks are the most prevalent type of equity security. Common stockholders are entitled to the net value of the issuer’s earnings and assets after the issuer pays its creditors and any preferred stockholders. As a result, changes in an issuer’s earnings directly influence the value of its common stock.
Common Stocks of Foreign Companies.
Common stocks of foreign companies are equity securities issued by a corporation domiciled outside of the United States that trade on a domestic securities exchange.
Master Limited Partnerships (MLPs) and Other Publicly Traded Partnerships
.
MLPs and other publicly traded partnerships are limited partnerships (or limited liability companies), the units of which are listed and traded on a securities exchange. The Funds may invest in publicly traded partnerships that are expected to be treated as “qualified publicly traded partnerships” for
B-15
 
 
federal income tax purposes. These include MLPs and other entities qualifying under limited exceptions in the Code. Many MLPs derive income and capital gains from the exploration, development, mining or production, processing, refining, transportation or marketing of any mineral or natural resource, or from real property. The value of MLP units fluctuates predominantly based on prevailing market conditions and the success of the MLP. The Funds may purchase common units of an MLP on an exchange as well as directly from the MLP or other parties in private placements. Unlike owners of common stock of a corporation, owners of common units have limited voting rights and have no ability to annually elect directors.
MLPs generally distribute all available cash flow (cash flow from operations less maintenance capital expenditures) in the form of quarterly distributions, but if an MLP in which a Fund invests is taxed as a partnership for federal income tax purposes, the Fund will be required for federal income tax purposes to include in its taxable income its allocable share of the MLP’s income regardless of whether any distributions are made by the MLP. Thus, if the distributions received by a Fund from an MLP are less than that Fund’s allocable share of the MLP’s income, the Fund may be required to sell other securities or utilize leverage so that it may satisfy the requirements to qualify as a RIC and avoid imposition of federal income and excise taxes at the Fund level. Common units typically have priority as to minimum quarterly distributions. In the event of liquidation, common units have preference over subordinated units, but not debt or preferred units, to the remaining assets of the MLP.
Holders of MLP units of a particular MLP also are exposed to a remote possibility of liability for the obligations of that MLP under limited circumstances not expected to be applicable to the Funds. In addition, the value of a Fund’s investment in MLPs depends largely on the MLPs being treated as “qualified publicly traded partnerships” for federal income tax purposes. Net income derived from an interest in a qualified publicly traded partnership is treated as qualifying income for purposes of satisfying the source of income requirements to be treated as a RIC. However, no more than 25% of the value of a RIC’s total assets at the end of each fiscal quarter may be invested in securities of qualified publicly traded partnerships. If an MLP does not meet current federal income tax requirements to maintain partnership status, or if it is unable to do so because of federal income tax law changes, it could be taxed as a corporation. In that case, the MLP would be obligated to pay federal income tax at the entity level and distributions received by a Fund generally would be taxed as dividend income for federal income tax purposes. As a result, a reduction in a Fund’s cash flow could occur along with a material decrease in the value of the Fund’s shares. In addition, if an MLP in which a Fund invests does not qualify as a “qualified publicly traded partnership” (and is otherwise not taxed as a corporation), income derived by the Fund will be treated as qualifying income only to the extent such income is attributable to items of income of the partnership that would be qualifying income if realized by the Fund. The receipt of non-qualifying income from such investments could jeopardize the Fund’s status as a RIC.
Preferred Stocks
.
Preferred stocks have the right to receive specified dividends or distributions before the payment of dividends or distributions on common stock. Some preferred stocks also participate in dividends and distributions paid on common stock. Preferred stocks may provide for the issuer to redeem the stock on a specified date. A Fund may treat redeemable preferred stock as a fixed income security.
Warrants.
Warrants provide an option to buy the issuer’s stock or other equity securities at a specified price. When holding a warrant, a Fund may buy the designated shares by paying the exercise price before the warrant expires. Warrants may become worthless if the price of the stock does not rise above the exercise price by the stated expiration date. Rights are the same as warrants, except they are typically issued to existing stockholders.
Exchange-Traded Funds (ETFs).
The Funds may invest in ETFs. Each share of an ETF represents an undivided ownership interest in the portfolio of stocks held by an ETF. ETFs are investment companies that are bought and sold on a securities exchange. Passively managed ETFs acquire and hold either (i) shares of all of the companies that are represented by a particular index in the same proportion that is represented in the index itself; or (ii) shares of a sampling of the companies that are represented by a particular index in a proportion meant to track the performance of the entire index. Actively managed ETFs typically do not seek to replicate the performance of a particular index. Instead, they may be designed to track a popular investment manager’s picks or pursue a specific investment strategy.
Passively managed ETFs are intended to provide investment results that, before expenses, generally correspond to the price and yield performance of the corresponding market index and the value of their shares should, under normal circumstances, closely track the value of the index’s underlying component stocks. Unlike actively managed ETFs, passively managed ETFs generally do not buy or sell securities, except to the extent necessary to conform their portfolios to the corresponding index. Because an ETF has operating expenses and transaction costs, while a market index does not, ETFs that track particular indices typically will be unable to match the performance of the index exactly.
ETFs generally do not sell or redeem their shares for cash and most investors do not purchase or redeem shares directly from an ETF at all. Instead, the ETF issues and redeems its shares in large blocks (typically 50,000 of its shares) called “creation units.” Creation units are issued to anyone who deposits a specified portfolio of the ETF’s underlying securities, as well as a cash payment generally
B-16
 
 
equal to accumulated dividends on the securities (net of expenses) up to the time of deposit. Creation units are redeemed in kind for a portfolio of the underlying securities (based on the ETF’s NAV) together with a cash payment generally equal to accumulated dividends as of the date of redemption. Most ETF investors, however, purchase and sell ETF shares in the secondary trading market on a securities exchange, in lots of any size, at any time during the trading day. ETF investors generally must pay a brokerage fee for each purchase or sale of ETF shares, including purchases made to reinvest dividends.
Because ETF shares are created from the stocks of an underlying portfolio and can be redeemed into the stocks of an underlying portfolio on any day, arbitrage traders may move to profit from any price discrepancies between the shares and the ETF’s portfolio, which in turn helps to close the price gap between the two. Of course, because of the forces of supply and demand and other market factors, an ETF share may trade at a premium or discount to its NAV.
In connection with its investment in ETF shares, a Fund will incur various costs. A Fund also may realize capital gains or losses when ETF shares are sold and the purchase and sale of the ETF shares may include a brokerage commission that may result in costs. In addition, a Fund is subject to other fees as an investor in ETFs. Generally, those fees include, but are not limited to, Trustees fees, operating expenses, licensing fees, registration fees, and marketing expenses, each of which will be reflected in the NAV of ETFs and, therefore, the shares representing a beneficial interest therein.
The underlying ETFs in which the Funds invest may terminate due to extraordinary events that may cause any of the service providers to the ETFs, such as the trustee or sponsor, to close or otherwise fail to perform their obligations to the ETF. Also, because many of the ETFs in which the Funds intend to invest are granted licenses by agreement to use the indices as a basis for determining their compositions and/or otherwise to use certain trade names, the ETFs may terminate if such license agreements are terminated. In addition, an ETF may terminate if its entire NAV falls below a certain amount. Although the Adviser believes that, in the event of the termination of an underlying ETF, it will be able to invest instead in shares of an alternate ETF tracking the same market index or another market index with the same general market, no guarantee exists that shares of an alternate ETF would be available for investment at that time.
Extraneous Risk.
The market values of securities or other investments that a Fund holds may decline, sometimes rapidly or unpredictably, due to factors that are not associated with normal market conditions. These declines may be the result of market reactions to such factors as acts of war or terrorism, recessions, national or global pandemics, or other events. Accordingly, an investment in a Fund could lose money over short or long periods of time. Furthermore, the Adviser’s ability to operate effectively, including the ability of its personnel or its service providers to function, communicate, and travel to the extent necessary to carry out the Funds’ investment strategies and objectives may be impaired.
Fixed Income Securities.
Unless specifically prohibited, the Funds may invest in fixed income securities, which generally pay interest at either a fixed or floating rate and provide more regular income than equity securities. However, the returns on fixed income securities are limited and normally do not increase with the issuer’s earnings. This limits the potential appreciation of fixed income securities as compared to equity securities. Fixed-rate securities and floating rate securities react differently as prevailing interest rates change.
Callable Securities.
Certain fixed income securities in which the Funds invest are callable at the option of the issuer. Callable securities are subject to call risks. Call risks include the risk that the securities in which the Funds invest may be redeemed by the issuer before maturity. If this occurs, a Fund may have to reinvest the proceeds in securities that pay a lower interest rate, which may decrease the Fund’s yield. Call risks increase when interest rates are declining.
Fixed Rate Debt Securities.
Debt securities that pay a fixed interest rate over the life of the security and have a long-term maturity may have many characteristics of short-term debt. For example, the market may treat fixed-rate/long-term securities as short-term debt when a security’s market price is close to the call or redemption price, or if the security is approaching its maturity date when the issuer is more likely to call or redeem the debt.
As interest rates change, the market prices of fixed-rate debt securities are generally more volatile than the prices of floating rate debt securities. As interest rates rise, the prices of fixed-rate debt securities fall, and as interest rates fall, the prices of fixed-rate debt securities rise. For example, a bond that pays a fixed interest rate of 10% is more valuable to investors when prevailing interest rates are lower; this value is reflected in a higher price, or premium. Conversely, if interest rates are over 10%, the bond is less attractive to investors, and sells at a lower price, or discount.
Floating Rate Debt Securities
.
The interest rate paid on floating rate debt securities is reset periodically (e.g., every 90 days) to a predetermined index rate. Commonly used indices include 90-day or 180-day Treasury bill rates, one month or three month LIBOR or an alternative reference rate, commercial paper rates, or the prime rate of interest of a bank. The prices of floating rate
B-17
 
 
Table of Contents
debt securities are not as sensitive to changes in interest rates as fixed rate debt securities because they behave like shorter-term securities and their interest rate is reset periodically.
In July 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that banks were no longer required to provide rate information used to calculate LIBOR after December 31, 2021. This has created uncertainty regarding the future utilization of LIBOR and the nature of any replacement rate. The potential effect of a transition away from LIBOR on a Fund or the financial instruments in which a Fund invests cannot yet be determined. LIBOR likely will be phased out for all short-term lending arrangements by June 2023. Industry initiatives are underway to identify alternative reference rates such as the Secured Overnight Funding Rate (SOFR), which the Federal Reserve Bank of New York began publishing in April 2018; however, there is no assurance that the composition or characteristics of any such alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that instruments using an alternative rate will have the same volume or liquidity. The transition process to an alternative reference rate might lead to increased volatility and reduced liquidity in markets that currently rely on LIBOR to determine interest rates. LIBOR’s deterioration may adversely affect the value of some LIBOR-based investments and result in additional costs incurred in connection with closing out positions and entering into new trades. Because the usefulness of LIBOR as a reference rate could deteriorate during the transition period, these effects could occur prior to the end of 2021.
High Yield Securities (Junk Bonds).
High-yield securities are securities rated below investment grade. A Fund may hold high yield securities if securities it holds are not rated, rated below investment grade, or are downgraded below investment grade. While generally offering higher yields than investment grade securities with similar maturities, non-investment grade debt securities involve greater risks, including the possibility of default or bankruptcy. They are regarded as predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal. The special risk considerations in connection with investments in these securities are discussed below. Refer to Appendix A of this SAI for a discussion of securities ratings. The
Money Market Funds
may not purchase high yield securities.
•
Effect of Interest Rates and Economic Changes
.
All interest-bearing securities with fixed rates typically experience price appreciation when interest rates decline and price declines when interest rates rise. The market values of high yield securities tend to reflect individual corporate developments to a greater extent than do higher rated securities, which react primarily to fluctuations in the general level of interest rates. High yield securities also tend to be more sensitive to economic conditions than are higher-rated securities. As a result, they generally involve more credit risks than securities in the higher-rated categories. During an economic downturn or a sustained period of rising interest rates, highly leveraged issuers of high yield securities may experience financial stress and may not have sufficient revenues to meet their payment obligations. The issuers of high yield securities are typically more leveraged, and the risk of loss due to default by an issuer of these securities is significantly greater than issuers of higher-rated securities because such securities are generally unsecured and are often subordinated to other creditors. Further, if the issuer of a high yield security defaulted, a Fund might incur additional expenses to seek recovery. Periods of economic uncertainty and changes would also generally result in increased volatility in the market prices of these securities and thus in the Fund’s NAV.
•
Payment Expectations
.
High yield securities typically contain redemption, call, or prepayment provisions that permit the issuer of such securities containing such provisions to redeem the securities at its discretion. During periods of falling interest rates, issuers of these securities are likely to redeem or prepay the securities and refinance them with debt securities with a lower interest rate. To the extent an issuer is able to refinance the securities, or otherwise redeem them, a Fund may have to replace the securities with a lower yielding security, which could result in a lower yield and return for the Fund.
•
Credit Ratings.
Credit ratings issued by credit-rating agencies evaluate the safety of principal and interest payments of rated securities. They do not, however, evaluate the market value risk of high yield securities and, therefore, may not fully reflect the true risks of an investment. In addition, credit rating agencies may or may not make timely changes in a rating to reflect changes in the economy or in the condition of the issuer that affect the market value of the security. Consequently, credit ratings are used only as a preliminary indicator of investment quality. Investments in high yield securities will be more dependent on the Adviser’s credit analysis than would be the case with investments in investment-grade debt securities. The Adviser employs its own credit research and analysis, which includes a study of existing debt, capital structure, ability to service debt and to pay dividends, the issuer’s sensitivity to economic conditions, its operating history, and the current trend of earnings. The Adviser continually monitors the investments of the Funds that it advises and carefully evaluates whether to dispose of or to retain high yield securities whose credit ratings or credit quality may have changed.
•
Liquidity and Valuation.
A Fund may have difficulty disposing of certain high yield securities because there may be a thin trading market for such securities. Because not all dealers maintain markets in all high yield securities, no
B-18
 
  established retail secondary market exists for many of these securities. Such securities are sold only to a limited number of dealers or institutional investors. To the extent a secondary trading market does exist, it is generally not as liquid as the secondary market for higher-rated securities. The lack of a liquid secondary market may have an adverse impact on the market price of the security. The lack of a liquid secondary market for certain securities also may make it more difficult for a Fund to obtain accurate market quotations for purposes of valuing the Fund. Market quotations are generally available on many high yield issues only from a limited number of dealers and may not necessarily represent firm bids of such dealers or prices for actual sales. During periods of thin trading, the spread between bid and asked prices is likely to increase significantly. In addition, adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of high yield securities, especially in a thinly traded market.
Treasury Inflation-Protected Securities (TIPS).
Obligations of the U.S. Treasury, commonly known as TIPS, (and comparable securities issued by governments of other countries) are inflation-protected obligations designed to provide inflation protection to investors. TIPS are income-generating instruments whose interest and principal payments are adjusted for inflation. The inflation adjustment is tied to the consumer price index (CPI), and TIPS’ principal payments are adjusted according to changes in the CPI. As inflation rises, both the principal value and the interest payments increase, which can provide investors with a hedge against inflation, as it helps preserve the purchasing power of an investment. Because of this inflation adjustment feature, inflation-protected bonds typically have lower yields than conventional fixed-rate bonds.
Foreign Securities.
The Funds (other than the
Ultra Short Tax-Free, Short Tax-Free, Intermediate Tax-Free, Government Money Market
, and
Tax-Free Money Market Funds
) may invest in foreign securities, which include securities (i) of issuers domiciled outside of the United States, including securities issued by foreign governments, (ii) that primarily trade on a foreign securities exchange or in a foreign market, or (iii) that are subject to substantial foreign risk based on factors such as whether a majority of an issuer’s revenue is earned outside of the United States and whether an issuer’s principal business operations are located outside of the United States. The
Prime Money Market Fund’s
investments in foreign securities are limited to U.S. dollar-denominated instruments.
In General.
Investing in foreign securities, including foreign corporate debt securities and foreign equity securities, involves certain risks not ordinarily associated with investments in securities of domestic issuers. Foreign securities markets have, for the most part, substantially less volume than the U.S. markets and securities of many foreign companies are generally less liquid and their prices more volatile than securities of U.S. companies. Less government supervision and regulation exist of foreign exchanges, brokers, and issuers than in the U.S. The rights of investors in certain foreign countries may be more limited than those of shareholders of U.S. issuers and investors may have greater difficulty taking appropriate legal action to enforce their rights in a foreign court than in a U.S. court. Investing in foreign securities also involves risks associated with government, economic, monetary, and fiscal policies (such as the adoption of protectionist trade measures), possible foreign withholding taxes on dividends and interest, possible taxes on trading profits, inflation, and interest rates, economic expansion or contraction, and global or regional political, economic, or banking crises. Furthermore, the risk exists of possible seizure, nationalization, or expropriation of the foreign issuer or foreign deposits, and the possible adoption of foreign government restrictions such as exchange controls. Also, foreign issuers are not necessarily subject to uniform accounting, auditing, and financial reporting standards, practices, and requirements comparable to those applicable to domestic issuers and, as a result, less publicly available information on such foreign issuers may be available than a domestic issuer. For more information regarding the risks related to foreign currency transactions, see “Derivative Instruments
–
Foreign Currency Transactions,” above.
Emerging Markets Securities.
Emerging markets securities are fixed income and equity securities of foreign companies domiciled, headquartered, or whose primary business activities or principal trading markets are located in emerging and less developed markets (emerging markets). Investments in emerging markets securities involve greater risks and uncertainties than in more established markets in addition to those generally associated with foreign investing. Many investments in emerging markets can be considered speculative and the value of those investments can be more volatile than investments in more developed foreign markets. This difference reflects the greater uncertainties of investing in less established markets and economies. Costs associated with transactions in emerging markets securities typically are higher than costs associated with transactions in U.S. securities. Such transactions also may involve additional costs for the purchase or sale of foreign currency. In addition, the securities markets of emerging market countries (and participants in those markets) are typically subject to less government supervision and regulation, and possible arbitrary and unpredictable enforcement of securities regulations and other laws, as well as differences in, or lack of, auditing and financial reporting standards, which may result in unavailability of material information about issuers and difficulty in obtaining and/or enforcing a judgement in a court outside of the United States.
Certain foreign markets (including emerging markets) may require governmental approval for the repatriation of investment income, capital, or the proceeds of sales of securities by foreign investors. A Fund could be adversely affected by delays in, or a
B-19
 
refusal to grant, required governmental approval for repatriation of capital, as well as by the application to the Fund of any restrictions on investments.
Many emerging markets have experienced substantial rates of inflation for extended periods. Inflation and rapid fluctuations in inflation rates have had and may continue to have adverse effects on the economies and securities markets of certain emerging market countries.
Governments of many emerging market countries have exercised and continue to exercise substantial influence over many aspects of the private sector through ownership or control of many companies. The future actions of those governments could have a significant effect on economic conditions in emerging markets, which, in turn, may adversely affect companies in the private sector, general market conditions and prices and yields of certain of the securities in a Fund’s portfolio. Expropriation, confiscatory taxation, nationalization and political, economic, and social instability have occurred throughout the history of certain emerging market countries and could adversely affect Fund assets should any of those conditions recur. In addition, the securities laws of emerging market countries may be less developed than those to which U.S. issuers are subject.
Funding Agreements.
The Funds may purchase Funding Agreements (Agreements), which are investment instruments issued by U.S. insurance companies. Pursuant to such Agreements, a Fund may make cash contributions to a deposit fund of the insurance company’s general or separate accounts. The insurance company then credits guaranteed interest to the Fund. The insurance company may assess periodic charges against an Agreement for expense and service costs allocable to it and the charges will be deducted from the value of the deposit fund. The purchase price paid for an Agreement becomes part of the general assets of the issuer and the Agreement is paid from the general assets of the issuer. The
Money Market Funds
will only purchase Agreements from issuers that meet quality and credit standards established by the Adviser. Generally, Agreements are not assignable or transferable without the permission of the issuing insurance companies and an active secondary market in Agreements does not currently exist. Also, the
Money Market Funds
may not have the right to receive the principal amount of an Agreement from the insurance company on seven calendar days’ notice or less. Therefore, Agreements are typically considered to be illiquid investments.
General Tax Risks.
Each Fund’s investments and investment strategies may be subject to special and complex federal income tax provisions that may, among other things: (i) disallow, suspend, or otherwise limit the allowance of certain losses or deductions; (ii) accelerate income to the Fund; (iii) convert long-term capital gain taxable at lower rates into short-term capital gain or ordinary income taxable at higher rates; (iv) convert an ordinary loss or a deduction into a capital loss (the deductibility of which is more limited); (v) treat dividends that would otherwise constitute qualified dividend income as non-qualified dividend income; or (vii) create a risk that the Fund will fail the diversification and source of income requirements under Subchapter M of the Code, which could cause the Fund to fail to qualify for the tax treatment applicable to a regulated investment company (RIC).
Initial Public Offerings.
The
Equity
Funds
may invest in securities of companies in initial public offerings (IPOs). IPOs of securities issued by unseasoned companies with little or no operating history are risky and their prices are highly volatile, but they can result in very large gains in their initial trading. Attractive IPOs are often oversubscribed and may not be available to a Fund, or only in very limited quantities. Thus, when a Fund’s size is smaller, any gains from IPOs will have an exaggerated impact on the Fund’s reported performance than when the Fund is larger. A Fund may engage in short-term trading in connection with its IPO investments, which could produce higher trading costs and adverse tax consequences. No assurance can be made that a Fund will have favorable IPO investment opportunities.
Lending of Portfolio Securities.
In order to generate additional income, the Funds (other than the
Money Market Funds
) may lend portfolio securities, although it is not a principal investment strategy for any Fund. When a Fund lends portfolio securities, it will receive either cash or securities issued or guaranteed by the U.S. government or its agencies or instrumentalities as collateral from the borrower. A Fund will reinvest cash collateral in short-term liquid securities that qualify as an otherwise acceptable investment for the Fund. If the market value of the loaned securities increases, the borrower must furnish additional collateral to a Fund. During the time portfolio securities are on loan, the borrower pays the Fund any dividends or interest paid on such securities. Loans are subject to termination at the option of the Fund or the borrower. The lending Fund may pay reasonable administrative and custodial fees in connection with a loan and may pay a negotiated portion of the interest earned on the cash or equivalent collateral to a securities lending agent or broker. Certain of the Funds currently lend their portfolio securities through BMO Harris Bank N.A. (BMO Harris Bank), as agent. Certain other Funds lend their portfolio securities through State Street Bank and Trust Company as agent.
When a Fund lends its portfolio securities, it may not be able to get them back from the borrower on a timely basis, in which case the Fund may lose certain investment opportunities, as well as the opportunity to vote the securities. A Fund also is subject to the risks associated with the investments of cash collateral, usually fixed income securities risk. If a Fund receives a payment from a borrower in lieu of the dividends on the loaned securities, such payment will generally be taxed as ordinary income for federal income tax purposes and will not be treated as “qualified dividend income.”
B-20
 
Leverage Risks.
Leverage includes the practice of borrowing money to purchase securities or borrowing securities to sell them short. Investments in derivatives also involve the use of leverage because the amount of exposure to the underlying asset is often greater than the amount of capital required to purchase the derivatives. Leverage can increase the investment returns of a Fund. However, if an asset decreases in value, the Fund will suffer a greater loss than it would have without the use of leverage. If a Fund employs leverage, the Fund will maintain long positions in assets available for collateral, consisting of cash, cash equivalents, and other liquid assets, to comply with applicable legal requirements. However, if the value of such collateral declines, margin calls by lending brokers could result in the liquidation of collateral assets at disadvantageous prices.
Liquidity Risk
. Trading opportunities are more limited for fixed income securities that have not received any credit ratings, have received ratings below investment grade, or are not widely held. These features may make it more difficult to sell or buy a security at a favorable price or time. Consequently, a Fund may have to accept a lower price to sell a security, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative effect on the Fund’s performance. Infrequent trading of securities also may lead to an increase in their price volatility.
Liquidity risk also refers to the possibility that a Fund may not be able to sell a security or close out an investment contract when it wants to. If this happens, the Fund will be required to continue to hold the security or keep the position open and the Fund could incur losses. Recent market events have caused the markets for some of the securities in which the Funds invest to experience reduced liquidity.
For the
Money Market Funds
, significant redemptions by large investors in a Fund could have a material adverse effect on a Fund’s other shareholders and the NAV could be affected by forced selling during periods of high redemption pressures and/or illiquid markets. To address this risk and as required by Rule 2a-7, the
Money Market Funds
adopted policies and procedures for the imposition by the
Tax-Free Money Market Fund
or
Prime Money Market Fund
of liquidity fees on redemptions or temporarily suspending redemptions (“gating”) if such Fund’s weekly liquid assets fall below a certain threshold and the Board determines such actions to be in the best interest of the Fund. Among other requirements, if a Fund’s weekly liquid assets fall below 10% of its total assets at the end of any business day, the Fund must impose a 1% liquidity fee on shareholder redemptions unless the Board determines that not imposing the fee, or imposing a higher or lower fee (up to 2% of the value of the shares redeemed), is in the best interests of the Fund. If the Fund’s weekly liquid assets fall below 30% of its total assets, the Board, in its discretion, may impose liquidity fees of up to 2% of the value of the shares redeemed or gate redemptions for a period of not more than 10 business days in any 90 day period. The Board has chosen not to subject the
Government Money Market Fund
to a liquidity fee or redemption gate, and may do so in the future only with advance notice to shareholders.
Liquidity Risk Management
. Rule 22e-4 under the 1940 Act (Liquidity Rule) requires open-end investment companies, such as the Funds (other than the
Money Market Funds
), to adopt a liquidity risk management program and enhance disclosures regarding fund liquidity. As required by the Liquidity Rule, the Funds have implemented a liquidity risk management program (Liquidity Program), and the Board has appointed a Liquidity Risk Management Committee (LRM Committee) as the administrator of the Liquidity Program. Under the Liquidity Program, the LRM Committee assesses, manages, and periodically reviews each Fund’s liquidity risk and classifies each investment held by a Fund as a “highly liquid investment,” “moderately liquid investment,” “less liquid investment,” or “illiquid investment.” The Liquidity Rule defines “liquidity risk” as the risk that a Fund could not meet requests to redeem shares issued by the Fund without significant dilution of the remaining investors’ interests in the Fund. The liquidity of a Fund’s portfolio investments is determined based on relevant market, trading and investment-specific considerations under the Liquidity Program. To the extent that an investment is deemed to be an illiquid investment or a less liquid investment, a Fund can expect to be exposed to greater liquidity risk.
Municipal Securities.
The Funds may invest in municipal securities, which are fixed income securities issued by states, counties, cities, and other political subdivisions and authorities. Although the income paid by most municipal securities is exempt from regular federal income tax, municipalities also may issue securities that pay income that is subject to the regular federal income tax and federal alternative minimum tax (AMT). Tax-exempt securities are generally classified by their source of payment. The ability of a governmental issuer to make payments on its municipal obligations can be adversely affected by factors such as budget shortfalls, weak economic conditions, and reduced levels of aid to governments. Other uncertainties applicable to municipal securities may include legislation or litigation that changes the taxation of municipal securities or the rights of municipal security holders in the event of bankruptcy. Certain provisions of the U.S. Bankruptcy Code governing such bankruptcies are unclear and the application of state law to municipal security issuers could provide varying results among the states or among the municipal security issuers within a state. These uncertainties could have a significant impact on the prices of the municipal securities in which a Fund invests.
B-21
 
General Obligation Bonds.
General obligation bonds are supported by the issuer’s full faith and credit. The issuer must levy and collect taxes sufficient to pay principal and interest on the bonds. However, the issuer’s authority to levy additional taxes may be limited by its charter or state law.
Special Revenue Bonds.
Special revenue bonds are payable solely from specific revenues received by the issuer. The revenues may consist of specific taxes, assessments, tolls, fees, or other types of municipal revenues. For example, a municipality may issue bonds to build a toll road and pledge the tolls to repay the bonds. Bondholders could not collect from the municipality’s general taxes or revenues. Therefore, any shortfall in the tolls normally would result in a default on the bonds.
Private Activity Bonds.
Private activity bonds are special revenue bonds used to finance private entities. For example, a municipality may issue bonds to finance a new factory to improve its local economy. The municipality would lend the proceeds to the company using the factory and the company would agree to make loan payments sufficient to repay the bonds. The bonds would be payable solely from the company’s loan payments and not from any other revenues of the municipality. Therefore, any default on the loan normally would result in a default on the bonds.
The interest on many types of private activity bonds is subject to the federal AMT for a non-corporate shareholder. The Funds may invest in bonds subject to the federal AMT. Each of
Ultra Short Tax-Free, Short Tax-Free, Intermediate Tax-Free
, and
Tax-Free Money Market Funds
is limited by its fundamental investment limitation in the amount it can invest in securities that may be subject to federal AMT (see “Fundamental Limitations
—
Tax Exempt Obligations”).
Anticipation Notes.
Anticipation notes are securities issued in anticipation of the receipt of taxes, grants, bond proceeds, or other municipal revenues. For example, many municipalities collect property taxes once a year. Such municipalities may issue tax anticipation notes to fund their operations prior to collecting these taxes. The issuers then repay the tax anticipation notes at the end of their fiscal year, either with collected taxes or proceeds from newly issued notes or bonds.
Tax Increment Financing Bonds.
Tax increment financing bonds are payable from increases in taxes or other revenues attributable to projects financed by the bonds. For example, a municipality may issue these bonds to redevelop a commercial area. The tax increment financing bonds would be payable solely from any increase in sales taxes collected from merchants in the area. The bonds could default if merchants’ sales, and related tax collections, failed to increase as anticipated.
Municipal Securities include:
• TRANs: tax and revenue anticipation notes issued to finance working capital needs in anticipation of receiving taxes or other revenues;
• TANS: tax anticipation notes issued to finance working capital needs in anticipation of receiving taxes;
• RANs: revenue anticipation notes issued to finance working capital needs in anticipation of receiving revenues;
• BANS: bond anticipation notes that are intended to be refinanced through a later issuance of longer term bonds;
• municipal commercial paper and other short-term notes;
• variable rate demand notes;
• industrial development bonds;
• municipal bonds (including bonds having serial maturities and pre-refunded bonds) and leases;
• construction loan notes insured by the Federal Housing Administration and financed by Fannie Mae or GNMA; and
• participation, trust, and partnership interests in any of the foregoing obligations.
Municipal Leases.
A Fund may purchase participation interests that represent an undivided proportional interest in lease payments by a governmental or nonprofit entity. Lease obligations may be limited by a municipal charter or by the inclusion in leases or contracts of “non-appropriation” clauses that relieve governmental issuers of any obligation to make future payments under the lease or contract unless money is appropriated for such purpose by the appropriate legislative body. If the entity does not appropriate funds for future lease or contract payments, the entity cannot be compelled to make such payments. Furthermore, a lease may provide that the participants cannot accelerate lease obligations upon default. The participants would only be able to enforce lease payments as they became due. In the event of a default or failure of appropriation, it is unlikely that the participants would be able to obtain an acceptable substitute source of payment unless the participation interests are credit enhanced.
The Adviser must consider the following factors in determining the liquidity of municipal lease securities: (1) the frequency of trades and quotes for the security; (2) the volatility of quotations and trade prices for the security; (3) the number of dealers willing to purchase or sell the security and the number of potential purchasers; (4) dealer undertakings to make a market in the
B-22
 
 
security; (5) the nature of the security and the nature of the marketplace trades; (6) the rating of the security and the financial condition and prospects of the issuer of the security; (7) such other factors as may be relevant to a Fund’s ability to dispose of the security; (8) whether the lease can be terminated by the lessee; (9) the potential recovery, if any, from a sale of the leased property upon termination of the lease; (10) the lessee’s general credit strength; (11) the likelihood that the lessee will discontinue appropriating funding for the leased property because the property is no longer deemed essential to its operations; and (12) any credit enhancement or legal recourse provided upon an event of non-appropriation or other termination of the lease.
Variable Rate Municipal Securities.
Variable interest rates generally reduce changes in the market value of municipal securities from their original purchase prices. Accordingly, as interest rates decrease or increase, the potential for capital appreciation or depreciation is less for variable rate municipal securities than for fixed rate obligations. Many municipal securities with variable interest rates purchased by a Fund are subject to repayment of principal (usually within seven days) on the Fund’s demand. For purposes of determining a Fund’s average maturity, the maturities of these variable rate demand municipal securities (including participation interests) are the longer of the periods remaining until the next readjustment of their interest rates or the periods remaining until their principal amounts can be recovered by exercising the right to demand payment. The terms of these variable rate demand instruments require payment of principal and accrued interest from the issuer of the municipal obligations, the issuer of the participation interests or a guarantor of either issuer.
Geographic Diversification
. Geographic diversification of the investments of the
Tax-Free Money Market, Ultra Short Tax-Free, Short-Tax Free
, and
Intermediate Tax-Free Funds
is achieved by purchasing issues of municipal securities representative of various areas of the U.S. and general obligations of states, cities, and school districts as well as some revenue issues that meet that Fund’s acceptable quality criteria.
Participatory Notes
.
Participatory notes are a type of equity access product, are structured as unsecured and unsubordinated debt securities designed to replicate exposure to the underlying referenced equity investment, and are sold by a bank or a broker-dealer in markets where the Funds are restricted from directly purchasing equity securities. The Funds may tender a participatory note for cash payment in an amount that reflects the current market value of the referenced underlying equity investments, reduced by program fees. Participatory notes involve risks that are in addition to the risks normally associated with a direct investment in the underlying equity securities. The issuer of a participatory note may be unable or may refuse to perform under the terms of the participatory note. While the holder of a participatory note is entitled to receive from the issuing bank or broker-dealer any dividends or other distributions paid on the underlying securities, the holder is not entitled to the same rights as an owner of the underlying securities, such as voting rights. Participatory notes also are not traded on exchanges, are privately issued, and may be illiquid. To the extent a participatory note is determined to be illiquid, it would be subject to the Funds’ limitations on investments in illiquid securities. No assurance can be made that the trading price or value of participatory notes will equal the value of the underlying equity securities they seek to replicate.
Portfolio Turnover.
A Fund’s portfolio investments may be sold for a variety of reasons, such as a more favorable investment opportunity, market conditions, or other factors. A high rate of portfolio turnover (over 100%) may involve correspondingly greater transaction costs to a Fund and its shareholders. High portfolio turnover may result in the realization of substantial capital gains, including short-term capital gains taxable to shareholders at ordinary income rates for federal income tax purposes. During the fiscal year ended August 31, 2020, the
Ultra Short Tax-Free Fund
experienced an increased portfolio turnover rate due to increased investment in floating rate notes, which generally have shorter terms, and an increase in sales and redemption activity.
Quantitative Model and Information Risks
.
Certain investment strategies
may use quantitative models (Models) and information and data (Data). If such Models and/or Data prove to be incorrect or incomplete, any investment decisions made in reliance on the Models and Data may not produce the desired results and the Fund may realize losses. The success of the Models depends on the accuracy and completeness of the analyses and assessments that were used in developing such Models. The success of Models that are predictive in nature is dependent largely upon the accuracy and reliability of the supplied historical data. Certain low probability events or factors that are assigned little weight may occur or prove to be more likely or more relevant than expected, for short or extended periods of time. All Models are susceptible to input errors that may cause the resulting information to be incorrect.
Repurchase Agreements and Reverse Repurchase Agreements.
All of the Funds may enter into a repurchase agreement or a reverse repurchase agreement. A repurchase agreement is a transaction in which a Fund buys a security from a dealer or bank and agrees to sell the security back at a mutually agreed upon time and price. The repurchase price exceeds the sale price, reflecting an agreed upon interest rate effective for the period the buyer owns the security subject to repurchase. The agreed upon interest rate is unrelated to the interest rate on that security. The Adviser will continually monitor the value of the underlying security to ensure that the value of the security always equals or exceeds the repurchase price. A Fund’s custodian is required to take possession of the
B-23
 
 
securities subject to repurchase agreements. These securities are marked to market daily. To the extent that the original seller defaults and does not repurchase the securities from the Fund, the Fund could receive less than the repurchase price for such securities. In the event that such a defaulting seller files for bankruptcy or becomes insolvent, disposition of such securities by the Fund might be delayed pending court action. The Funds believe that, under the procedures normally in effect for custody of the portfolio securities subject to repurchase agreements, a court of competent jurisdiction would rule in favor of the Funds and allow retention or disposition of such securities. The Funds will enter into repurchase agreements only with banks and other recognized financial institutions, such as broker/dealers, that the Adviser has determined to be creditworthy.
Reverse repurchase agreement transactions are similar to borrowing cash. In a reverse repurchase agreement, a Fund sells a portfolio security to another person, such as a financial institution, broker or dealer, in return for a percentage of the instrument’s market value in cash, and agrees that on a stipulated date in the future the Fund will repurchase the portfolio security at a price equal to the original sale price plus interest. A Fund may use reverse repurchase agreements for liquidity and for avoiding a sale of portfolio instruments at a time when the sale may be deemed disadvantageous. However, entering into reverse repurchase agreements may expose a Fund to leverage risks (see “Leverage Risks”).
When effecting reverse repurchase agreements, liquid assets of a Fund, in a dollar amount sufficient to make payment for the obligations to be purchased, are segregated on the trade date. These securities are marked to market daily and maintained until the transaction is settled.
During the period any reverse repurchase agreements are outstanding, but only to the extent necessary to assure completion of the reverse repurchase agreements, the
Money Market Funds
will restrict the purchase of portfolio instruments to money market instruments maturing on or before the expiration date of the reverse repurchase agreement.
Securities of Other Investment Companies.
All of the Funds may invest in the securities of other investment companies, including affiliated BMO Funds and exchange-traded funds, within the limits prescribed by the 1940 Act and the rules promulgated thereunder. Investments in the securities of other investment companies may involve duplication of advisory fees and certain other expenses. By investing in another investment company, a Fund becomes a shareholder of that investment company. As a result, Fund shareholders indirectly will bear the Fund’s proportionate share of the fees and expenses paid by shareholders of the other investment company, in addition to the fees and expenses Fund shareholders directly bear in connection with the Fund’s own operations. The Funds also may invest in investment companies that are not organized under the laws of the United States (Offshore Funds). In addition to the risks of investing in securities of other investment companies, Offshore Funds also are subject to the risks described under “Foreign Securities,” above. The
Money Market Funds
will limit their investments in other investment companies to those of money market funds having investment objectives and policies similar to their own.
The Funds are parties to a fund-of-funds exemptive order received from the SEC on June 25, 2014 that permits a Fund that relies on the order to invest in securities issued by other investment companies in amounts exceeding the statutory limits set forth in the 1940 Act that would otherwise be applicable. The exemptive order requires the Board, before approving any advisory contract, to make a determination that the fees charged under such advisory contract are based on services provided that are in addition to, rather than duplicative of, services provided under the advisory contract(s) of any underlying fund in which a Fund invests pursuant to the order. In October 2020, the SEC adopted certain regulatory changes relating to a fund’s ability to invest in another investment company. These changes include the adoption of Rule 12d1-4 and the rescission of certain related exemptive relief. These changes likely will take effect in 2021 and may negatively impact a Fund’s investment strategies and operations.
Short Sales.
The Funds (other than the
Money Market Funds
), including any underlying funds in which the Funds may invest, may sell securities, including shares of exchange-traded funds, short in anticipation of a decline in the market value of the securities. When a Fund sells a security short, the Fund does not own the security and must borrow the security to make delivery to the buyer. The Fund must then replace the borrowed security by purchasing it at the market price at the time of replacement, which may be more or less than the price at which the Fund sold the security. Any potential gain is limited to the price at which the Fund sold the security short and any potential loss is unlimited in size. Until the Fund closes its short position or replaces the borrowed security, the Fund will designate liquid assets it owns (other than the short sale proceeds) as segregated assets in an amount equal to its obligation to purchase the securities sold short, as required by the 1940 Act. Depending on arrangements made with the broker or custodian, the Fund may not receive any payments (including interest) on collateral deposited with the broker or custodian. Because the Funds’ portfolio managers may interpret the market differently, it is possible that one Fund may be short a security at the same time that another Fund is long the same security.
Small and Mid-Cap Stocks
.
The
Mid-Cap Value, Mid-Cap Growth, Pyrford International Stock, Small-Cap Value,
and
Small-Cap Growth Funds
may invest in small and mid-cap stocks. Generally, the smaller the market capitalization of a company, the
B-24
 
 
fewer the number of shares traded daily, the less liquid its stock, and the more volatile its price. Market capitalization is determined by multiplying the number of a company’s outstanding shares by the current market price per share. Companies with smaller market capitalizations also tend to have unproven track records, a limited product or service base, and limited access to capital. These factors also increase risks and make these companies more likely to fail than companies with larger market capitalizations.
Sovereign Debt.
The Funds may purchase sovereign debt. Sovereign debt differs from debt obligations issued by private entities in that, generally, remedies for defaults must be pursued in the courts of the defaulting party. Legal recourse is therefore limited. Political conditions, especially a sovereign entity’s willingness to meet the terms of its debt obligations, are of considerable significance. Also, no assurance can be made that the holders of commercial bank loans to the same sovereign entity may not contest payments to the holders of sovereign debt in the event of default under commercial bank loan agreements. Financial markets have recently experienced increased volatility due to the uncertainty surrounding the sovereign debt of certain European countries, which may have significant adverse effects on the economies of these countries and increase the risks of investing in sovereign debt.
A sovereign debtor’s willingness or ability to repay principal and pay interest in a timely manner may be affected by a variety of factors, including among others, its cash flow situation, the extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sovereign debtor’s policy toward principal international lenders, and the political constraints to which a sovereign debtor may be subject. A country whose exports are concentrated in a few commodities could be vulnerable to a decline in the international price of such commodities. Increased protectionism on the part of a country’s trading partners, or political changes in those countries, also could adversely affect its exports. Such events could diminish a country’s trade account surplus, if any, or the credit standing of a particular local government or agency. Another factor bearing on the ability of a country to repay sovereign debt is the level of the country’s international reserves. Fluctuations in the level of these reserves can affect the amount of foreign exchange readily available for external debt payments and, thus, could have a bearing on the capacity of the country to make payments on its sovereign debt.
To the extent that a country has a current account deficit (generally when its exports of merchandise and services are less than its country’s imports of merchandise and services plus net transfers (e.g., gifts of currency and goods) to foreigners), it may need to depend on loans from foreign governments, multilateral organizations, or private commercial banks; aid payments from foreign governments; and inflows of foreign investment. The access of a country to these forms of external funding may not be certain and a withdrawal of external funding could adversely affect the capacity of a government to make payments on its obligations. In addition, the cost of servicing debt obligations can be adversely affected by a change in international interest rates, since the majority of these obligations carry interest rates that are adjusted periodically based upon international rates.
With respect to sovereign debt of emerging market issuers, investors should be aware that certain emerging market countries are among the largest debtors to commercial banks and foreign governments. At times, certain emerging market countries have declared moratoria on the payment of principal and interest on external debt.
Certain emerging market countries have experienced difficulty in servicing their sovereign debt on a timely basis, which led to defaults on certain obligations and the restructuring of certain indebtedness. Restructuring arrangements have included, among other things, reducing and rescheduling interest and principal payments by negotiating new or amended credit agreements or converting outstanding principal and unpaid interest to Brady Bonds (discussed below), and obtaining new credit to finance interest payments. Holders of sovereign debt, including a Fund, may be requested to participate in the rescheduling of such debt and to extend further loans to sovereign debtors. The interests of holders of sovereign debt could be adversely affected in the course of restructuring arrangements or by certain other factors referred to below. Furthermore, some of the participants in the secondary market for sovereign debt also may be involved directly in negotiating the terms of these arrangements and may therefore have access to information not available to other market participants, such as the Fund. Obligations arising from past restructuring agreements may affect the economic performance and political and social stability of certain issuers of sovereign debt. No bankruptcy proceeding may exist by which sovereign debt on which a sovereign has defaulted may be collected in whole or in part.
Foreign investment in certain sovereign debt is restricted or controlled to varying degrees. These restrictions or controls may at times limit or preclude foreign investment in such sovereign debt and increase the costs and expenses of a Fund. Certain countries in which the Fund may invest require governmental approval prior to investments by foreign persons, limit the amount of investment by foreign persons in a particular issuer, limit the investment by foreign persons only to a specific class of securities of an issuer that may have less advantageous rights than the classes available for purchase by domiciliaries of the countries or impose additional taxes on foreign investors. Certain issuers may require governmental approval for the repatriation of investment income, capital, or the proceeds of sales of securities by foreign investors. In addition, if a deterioration occurs in a country’s balance of payments, the country could impose temporary restrictions on foreign capital remittances. The Fund could be adversely affected by delays in, or a
B-25
 
 
refusal to grant, any required governmental approval for repatriation of capital, as well as by the application to the Fund of any restrictions on investments. Investing in local markets may require the Fund to adopt special procedures, seek local government approvals, or take other actions, each of which may involve additional costs to the Fund.
The sovereign debt in which a Fund may invest includes Brady Bonds, which are securities created through the exchange of existing commercial bank loans to public and private entities in certain emerging markets for new bonds in connection with debt restructurings under a debt restructuring plan introduced by former U.S. Secretary of the Treasury, Nicholas F. Brady. Brady Bonds may be collateralized or uncollateralized and are issued in various currencies (but primarily the dollar). Dollar-denominated, collateralized Brady Bonds, which may be fixed-rate bonds or floating-rate bonds, are generally collateralized in full as to principal by U.S. Treasury zero coupon bonds having the same maturity as the Brady Bonds. Interest payments on these Brady Bonds generally are collateralized by cash or securities in an amount that, in the case of fixed rate bonds, is equal to at least one year of rolling interest payments or, in the case of floating rate bonds, initially is equal to at least one year’s rolling interest payments based on the applicable interest rate at that time and is adjusted at regular intervals thereafter. Brady Bonds are often viewed as having several valuation components: (1) the collateralized repayment of principal, if any, at final maturity, (2) the collateralized interest payments, if any, (3) the uncollateralized interest payments, and (4) any uncollateralized repayment of principal at maturity (these uncollateralized amounts constitute the “residual risk”). In light of the residual risk of Brady Bonds and, among other factors, the history of defaults with respect to commercial bank loans by public and private entities of countries issuing Brady Bonds, investments in Brady Bonds have speculative characteristics. A Fund may purchase Brady Bonds with no or limited collateralization and will be relying for payment of interest and (except in the case of principal collateralized Brady Bonds) principal primarily on the willingness and ability of the foreign government to make payment in accordance with the terms of the Brady Bonds.
The
Money Market Funds’
investments in sovereign debt are limited to U.S. dollar-denominated instruments.
Temporary Investments.
Each Fund (other than the
Money Market Funds
) may temporarily invest without limit in short-term debt obligations (money market instruments) during times when market conditions warrant a defensive position. These investments may include commercial paper, bank instruments, U.S. government obligations, repurchase agreements, securities of other investment companies investing in short-term debt securities, and foreign short-term debt securities. Each
Money Market Fund
may, from time to time, take temporary defensive positions by holding cash, shortening the Fund’s dollar weighted average maturity, or investing in other securities that are eligible securities for purchase by money market funds as described in the “Fund Summary” section of the Prospectus and in accordance with federal laws concerning money market funds, in anticipation of, or in response to, adverse market economic, political, other conditions. The Funds’ temporary investments must be of comparable quality to their primary investments.
U.S. Government Securities.
U.S. government securities include direct obligations of the U.S. government, including U.S. Treasury bills, notes, and bonds of varying maturities, and those issued or guaranteed by various U.S. government agencies and instrumentalities. Treasury securities are direct obligations of the federal government of the United States. Agency securities are issued or guaranteed by a federal agency or other government sponsored entity acting under federal authority. Some government entities are supported by the full faith and credit of the United States. Other government entities receive support through federal subsidies, loans, or other benefits. A few government entities have no explicit financial support, but are regarded as having implied support because the federal government sponsors their activities.
A Fund treats mortgage-backed securities guaranteed by a government sponsored entity as if issued or guaranteed by a federal agency. Although such a guarantee protects against credit risks, it does not reduce the market and prepayment risks.
Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac)
.
Fannie Mae and Freddie Mac were placed into conservatorship by the Federal Housing Finance Agency (FHFA), an independent regulator, in 2008, and FHFA succeeded to all of their rights, titles, powers, and privileges. At the time Fannie Mae and Freddie Mac were placed in conservatorship, the U.S. Treasury established preferred stock purchase agreements pursuant to which the U.S. Treasury will contribute cash capital to maintain a positive net worth in each enterprise. These agreements were amended in December 2009 to permit the U.S. Treasury’s funding commitment to increase as necessary to accommodate any cumulative reduction in net worth of the enterprises for a three-year period. FHFA has the right to transfer or sell any asset or liability of Fannie Mae or Freddie Mac without any approval, assignment or consent, although FHFA has stated that it has no present intention to do so. In addition, holders of mortgage-backed securities issued by Fannie Mae or Freddie Mac may not enforce certain rights related to such securities against FHFA, or the enforcement of such rights may be delayed, during the conservatorship. As part of the FHFA’s strategic plan for the conservatorships of Fannie Mae and Freddie Mac, effective as of June 3, 2019, the FHFA has created a single, common enterprise mortgage-backed security, which is referred to as a Single Security or Uniform Mortgage-Backed Security (UMBS). The purpose of this “Single Security Initiative” is to provide additional
B-26
 
 
liquidity to the “To-Be-Announced” (TBA) market and to reduce or eliminate trading disparities between Fannie Mae and Freddie Mac TBA securities. The effects of the issuance of UMBS on the TBA market are not yet known.
When-Issued and Delayed Delivery Transactions.
The
Fixed Income Funds
may engage in when-issued and delayed delivery transactions. These transactions are made to secure what is considered to be an advantageous price or yield. Settlement dates may be a month or more after entering into these transactions and the market values of the securities purchased may vary from the purchase prices. Other than normal transaction costs, no fees or expenses are incurred. However, liquid assets of a Fund are segregated on the Fund’s records on the trade date in an amount sufficient to make payment for the securities to be purchased. These assets are marked to market daily and are maintained until the transaction has been settled.
Zero Coupon Securities.
The Funds (other than the
Global Low Volatility Equity, Pyrford International Stock, LGM Emerging Markets Equity,
and
Equity Funds
) may invest in zero coupon securities. Zero coupon securities do not pay interest or principal until final maturity, unlike debt securities that provide periodic payments of interest (referred to as a “coupon payment”). Investors buy zero coupon securities at a price below the amount payable at maturity. The difference between the purchase price and the amount paid at maturity represents interest on the zero coupon security. Investors must wait until maturity to receive interest and principal, which increases the interest rate and credit risks of a zero coupon security. An investment in zero coupon securities may cause a Fund to recognize income and make required distributions to shareholders before it receives any cash payments on its investment. A Fund may have to dispose of its portfolio investments under disadvantageous circumstances or utilize leverage to generate sufficient cash to satisfy the distribution requirements for maintaining the Fund’s status as an RIC.
NON-FUNDAMENTAL INVESTMENT OBJECTIVES
The investment objective of each Fund shown below may be changed by the Board without shareholder approval.
•
BMO Low Volatility Equity Fund:
to provide capital appreciation.
•
BMO Dividend Income Fund:
to provide capital appreciation and current income.
•
BMO Large-Cap Value Fund:
to provide capital appreciation.
•
BMO Large-Cap Growth Fund:
to provide capital appreciation.
•
BMO Mid-Cap Value Fund:
to provide capital appreciation.
•
BMO Mid-Cap Growth Fund:
to provide capital appreciation.
•
BMO Small-Cap Value Fund:
to provide capital appreciation.
•
BMO Small-Cap Growth Fund:
to provide capital appreciation.
•
BMO Global Low Volatility Equity Fund:
to provide capital appreciation.
•
BMO Disciplined International Equity Fund:
to provide capital appreciation.
•
BMO Pyrford International Stock Fund:
to provide capital appreciation.
•
BMO LGM Emerging Markets Equity Fund:
to provide capital appreciation.
•
BMO Ultra Short Tax-Free Fund:
to provide current income exempt from federal income tax consistent with preservation of capital.
•
BMO Short Tax-Free Fund:
to provide current income exempt from federal income tax consistent with preservation of capital.
•
BMO Short-Term Income Fund:
to maximize total return consistent with current income.
•
BMO Intermediate Tax-Free Fund:
to provide a high level of current income exempt from federal income tax consistent with preservation of capital.
•
BMO Strategic Income Fund:
to maximize total return consistent with current income.
•
BMO Corporate Income Fund:
to maximize total return consistent with current income.
•
BMO Core Plus Bond Fund:
to maximize total return consistent with current income.
•
BMO Government Money Market Fund:
to provide current income consistent with stability of principal.
•
BMO Tax-Free Money Market Fund:
to provide current income exempt from federal income tax consistent with stability of principal.
•
BMO Prime Money Market Fund:
to provide current income consistent with stability of principal.
•
BMO Conservative Allocation Fund:
to provide total return primarily from income, secondarily from appreciation.
•
BMO Moderate Allocation Fund:
to provide total investment return from income and appreciation.
•
BMO Balanced Allocation Fund:
to provide total investment return from income and appreciation.
•
BMO Growth Allocation Fund:
to provide total investment return from income and appreciation.
•
BMO Aggressive Allocation Fund:
to provide total investment return primarily from appreciation, secondarily from income.
B-27
 
 
Investment Policies and Limitations
With respect to each Fund’s investment policies and limitations, if a percentage limitation is adhered to at the time of investment, a later increase or decrease in percentage resulting from any change in value or net assets will not result in a violation of such limitation, except in the case of borrowing money. For purposes of such policies and limitations, each Fund considers instruments (such as certificates of deposit and demand and time deposits) issued by a U.S. branch of a domestic bank or savings and loan having capital, surplus, and undivided profits in excess of $100,000,000 at the time of investment to be cash items.
Under the 1940 Act, the authorization of a “majority of the outstanding voting securities” means the affirmative vote of the holders of the lesser of (i) 67% of the shares of a Fund represented at a meeting at which the holders of more than 50% of the Fund’s outstanding shares are represented or (ii) more than 50% of the outstanding shares of the Fund.
Fundamental Limitations
The following investment limitations are fundamental and cannot be changed for a Fund unless authorized by the “majority of the outstanding voting securities” of that Fund, as defined by the 1940 Act:
Issuing Senior Securities and Borrowing Money.
A Fund will not issue senior securities or borrow money, except as the 1940 Act, any rule, regulation or exemptive order thereunder, or any SEC staff interpretation thereof, may permit.
The 1940 Act permits the Funds to enter into options, futures contracts, forward contracts, repurchase agreements, and reverse repurchase agreements provided that these types of transactions are covered in accordance with SEC positions. Under SEC staff interpretations of the 1940 Act, such derivative transactions will not be deemed “senior securities” if a Fund segregates assets or otherwise covers its obligation to limit the Fund’s risk of loss, such as through offsetting positions.
Under the 1940 Act, in addition to borrowing from banks, a Fund may borrow from other persons an additional amount not exceeding 5% of its total assets for temporary purposes.
Lending Cash or Securities.
A Fund will not lend any of its securities, or make any other loan, in excess of one-third of the value of the Fund’s total assets. This restriction shall not prevent a Fund from purchasing or holding U.S. government obligations, money market instruments, variable rate demand notes, bonds, debentures, notes, certificates of indebtedness, or other debt securities, entering into repurchase agreements, or engaging in other transactions where permitted by the Fund’s investment goal, policies, and limitations.
Investing in Commodities.
A Fund (except for the
Disciplined International Equity Fund
) will not purchase or sell commodities unless acquired as a result of ownership of securities or other instruments and provided that this restriction shall not prevent the Fund (other than a
Money Market Fund
) from (i) purchasing or selling futures contracts, options, and other derivative instruments or (ii) investing in securities or other instruments backed by physical commodities.
With respect to
Disciplined International Equity Fund
, the Fund will not purchase or sell physical commodities, unless acquired as a result of ownership of securities or other instruments, and provided that this restriction does not prevent the Fund from (i) purchasing or selling securities or instruments of companies that purchase or sell commodities or that invest in commodities; (ii) engaging in any transaction involving currencies, options, forwards, futures contracts, options on futures contracts, swaps, hybrid instruments or other derivatives; or (iii) investing in securities, or transacting in other instruments, that are linked to or secured by physical or other commodities.
Investing in Real Estate.
A Fund will not purchase or sell real estate unless acquired as a result of ownership of securities or other instruments and provided that this restriction shall not prevent the Fund from investing in (i) securities of issuers that invest, deal, or otherwise engage in transactions in real estate or interests therein or (ii) securities or other instruments backed by real estate or interests therein.
Diversification of Investments.
With respect to securities comprising 75% of the value of its total assets, a Fund will not purchase securities issued by any one issuer (other than cash, cash items, or securities issued or guaranteed by the government of the United States or its agencies or instrumentalities, repurchase agreements collateralized by such securities, and securities of other investment companies) if, as a result, more than 5% of the value of its total assets would be invested in the securities of that issuer or if it would own more than 10% of the outstanding voting securities of such issuer.
Under this limitation, each of
Pyrford International Stock, Ultra Short Tax-Free, Short Tax-Free,
and
Intermediate Tax-Free
Funds
will consider each governmental subdivision, including states and the District of Columbia, territories, possessions of the United States or their political subdivisions, agencies, authorities, instrumentalities, or similar entities, a separate issuer if its assets and revenues are separate from those of the governmental body creating it and the security is backed only by its own assets
B-28
 
 
and revenues. Industrial developments bonds backed only by the assets and revenues of a non-governmental user are considered to be issued solely by that user. If, in the case of an industrial development bond or government-issued security, a governmental or some other entity (such as a bank that issues a letter of credit) guarantees the security, such guarantee or letter of credit would be considered a separate security issued by the guarantor or other entity, subject to a limit on investments in the guarantor of 10% of total assets. Where a security is insured by bond insurance, the security shall not be considered a security issued or guaranteed by the insurer. Instead, the issuer of such security will be determined in accordance with the first and second sentences of this paragraph. The foregoing 10% restriction does not limit the percentage of the
Ultra Short Tax-Free, Short Tax-Free,
and
Intermediate Tax-Free Funds
’ assets that may be invested in securities insured by any single insurer.
Concentration of Investments.
•
Ultra Short Tax-Free, Short Tax-Free, and Intermediate Tax-Free Funds
:
For these Funds, a Fund will not invest 25% or more of the value of its total assets in any one industry, except that the Fund may invest 25% or more of the value of its total assets in cash or cash items, securities issued or guaranteed by the U.S. government, its agencies, or instrumentalities, and repurchase agreements collateralized by such securities for temporary defensive purposes. In addition, a Fund may invest more than 25% of the value of its total assets in obligations issued by any state, territory, or possession of the United States; the District of Columbia; or any of their authorities, agencies, instrumentalities, or political subdivisions, including tax-exempt project notes guaranteed by the U.S. government, regardless of the location of the issuing municipality. This policy applies to securities that are related in such a way that an economic, business, or political development affecting one security would also affect the other securities (such as securities paid from revenues from selected projects in transportation, public works, education, or housing).
•
Target Risk Funds
:
For these Funds, a Fund will not invest 25% or more of the value of its total assets in any one industry, except that the Fund may invest 25% or more of the value of its total assets in any one affiliated underlying fund, cash or cash items, securities issued or guaranteed by the U.S. government, its agencies, or instrumentalities, and repurchase agreements collateralized by such securities for temporary defensive purposes.
•
All Other Funds
:
For these Funds, a Fund will not invest 25% or more of its total assets in any one industry or industries, except as permitted by the SEC. However, investing in U.S. government securities (and domestic bank instruments for the
Money Market Funds
) shall not be considered investments in any one industry.
Underwriting.
A Fund will not underwrite securities of other issuers, except to the extent it may be deemed to be an underwriter within the meaning of the 1933 Act in connection with the purchase and sale of portfolio securities.
Tax Exempt Obligations.
The
Tax-Free Money Market Fund
invests, under normal circumstances, its assets so that at least 80% of the annual interest income that the Fund distributes will be exempt from federal income tax, including the federal AMT.
Each of the
Ultra Short Tax-Free, Short Tax-Free,
and
Intermediate Tax-Free Funds
invests, under normal circumstances, at least 80% of the value of its net assets, plus the amount of any borrowings for investment purposes, in securities the income from which is exempt from federal income tax, including the federal AMT.
Non-Fundamental Limitations
The following investment limitations are non-fundamental and, therefore, may be changed by the Board without shareholder approval. Shareholders will be notified before any material change in these limitations becomes effective:
Selling Short and Buying on Margin.
A Fund will not sell any securities short, unless it owns or has the right to obtain securities equivalent in kind and amount to the securities sold short, or unless it covers such short sale as required by the current rules and positions of the SEC or its staff, and provided that transactions in futures contracts or other derivatives are not deemed to constitute selling securities short.
A Fund will not purchase any securities on margin, except that it may obtain such short-term credits as may be necessary for clearance of transactions, and provided that margin deposits in connection with futures contracts or other derivatives shall not constitute purchasing securities on margin.
Pledging Assets.
A Fund will not mortgage, pledge, or hypothecate any assets owned by the Fund, except as may be necessary in connection with permissible borrowings or investments and then such mortgaging, pledging, or hypothecating may not exceed 33 1/3% of the Fund’s total assets at the time of the borrowing or investment.
Investing in Illiquid and Restricted Investments.
A Fund (other than a
Money Market Fund
) will not acquire any illiquid investment if, immediately after the acquisition, the Fund would have invested more than 15% of its net assets in illiquid
B-29
 
 
investments that are assets. A
Money Market Fund
will not acquire any illiquid security if, immediately after the acquisition, the
Money Market Fund
would have invested more than 5% of its total assets in illiquid securities.
Purchasing Securities to Exercise Control.
The Funds will not purchase securities of a company for the purpose of exercising control or management.
Investing in Securities of Other Investment Companies.
Each Fund will limit its investment in other investment companies, including investment companies that may be affiliated with the Adviser, to no more than 3% of the total outstanding voting stock of any investment company, will invest no more than 5% of total assets in any one investment company, and will invest no more than 10% of its total assets in investment companies in general, unless permitted to exceed these limits by an exemptive order or rule of the SEC. The Funds will purchase securities of closed-end investment companies only in open market transactions involving only customary broker’s commissions. However, these limitations are not applicable if the securities are acquired in a merger, consolidation, reorganization or acquisition of assets. The
Money Market Funds
will limit their investments in other investment companies to those of money market funds having investment objectives and policies similar to their own.
Each Fund (excluding the
Target Risk Funds
) may invest in shares of other investment companies to the extent permitted under the 1940 Act, including the rules and regulations and any exemptive orders obtained thereunder, provided however, that no Fund that has knowledge that its shares are purchased by another investment company relying on Section 12(d)(1)(G) of the 1940 Act will acquire any securities of registered open-end management investment companies or registered unit investment trusts in reliance on Section 12(d)(1)(F) or 12(d)(1)(G) of the 1940 Act.
The Funds are parties to a fund-of-funds exemptive order received from the SEC on June 25, 2014 that permits a Fund that relies on the order to invest in securities issued by other investment companies in amounts exceeding the statutory limits set forth in the 1940 Act that would otherwise be applicable. The exemptive order requires the Board, before approving any advisory contract, to make a determination that the fees charged under such advisory contract are based on services provided that are in addition to, rather than duplicative of, services provided under the advisory contract(s) of any underlying fund in which a Fund invests pursuant to the order. In October 2020, the SEC adopted certain regulatory changes relating to a fund’s ability to invest in another investment company. These changes include the adoption of Rule 12d1-4 under the 1940 Act and the rescission of certain related exemptive relief. These changes likely will take effect in 2021 and may negatively impact a Fund’s investment strategies and operations.
Investing in Options.
Each Fund may not, except for bona fide hedging purposes, invest more than 5% of the value of its net assets in the sum of (a) premiums on open option positions on futures contracts, plus (b) initial margin deposits on financial futures contracts. A Fund will not purchase put options or write call options on securities unless the securities are held in the Fund’s portfolio or unless the Fund is entitled to them in deliverable form without further payment or has segregated liquid assets in the amount of any further payment. A Fund will not write call options in excess of 25% of the value of its total assets.
For purposes of the investment limitation regarding investment in illiquid and restricted securities, for all Funds other than the
Money Market Funds
, an “illiquid investment” means any investment that the Funds reasonably expect cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. For purposes of the investment limitation regarding investment in illiquid and restricted securities, for the
Money Market Funds
, an “illiquid security” means a security that cannot be sold or disposed of in the ordinary course of business within seven calendar days at approximately the value ascribed to it by the
Money Market Fund
.
Money Market Fund Regulatory Compliance
The
Money Market Funds
are managed to comply with the various requirements of Rule 2a-7 under the 1940 Act, which regulates money market mutual funds. The discussion of investments in this SAI as it relates to the
Money Market Funds
is qualified by Rule 2a-7 limitations. In summary, with respect to diversification, Rule 2a-7 requires that a
Money Market Fund
may not invest in the securities of any issuer if, as a result of the investment, more than 5% of the Fund’s total assets would be invested in that issuer; provided that each Fund may invest up to 25% of its total assets in the securities of a single issuer for up to three business days after acquisition. Certain securities are not subject to this diversification requirement: (a) government securities; (b) certain repurchase agreements; and (c) shares of certain money market funds. Rule 2a-7 imposes a separate diversification test upon the acquisition of a guarantee or demand feature. The Board has adopted procedures in accordance with Rule 2a-7, which govern the quality, maturity, diversity and liquidity of the
Money Market Funds’
investments. Pursuant to Rule 2a-7, the
Money Market Funds
may invest only in securities which have been determined by the Adviser to present minimal credit risks to the Fund, based on the Adviser’s consideration of a number of factors including, but not limited to, financial condition, sources of liquidity, ability to react to market-wide and issuer- or guarantor-specific events, and positions within the industry and industry strength.
B-30
 
 
Other Investment Policies
Pursuant to Rule 35d-1 under the 1940 Act, each Fund (except the
Ultra Short Tax-Free, Short Tax-Free, Intermediate Tax-Free, Strategic Income, Corporate Income, Tax-Free Money Market, Prime Money Market,
and
Target Risk Funds
) has adopted a non-fundamental investment policy to invest at least 80% of its assets (defined as net assets plus any borrowings for investment purposes) in the types of securities and investments suggested by its name. Each such Fund will provide its shareholders with at least 60 days’ prior written notice of any changes to such policy as required by Rule 35d-1. The
Ultra-Short Tax-Free, Short Tax-Free,
Intermediate Tax-Free,
and
Tax-Free Money Market Funds,
which have each adopted a fundamental policy to invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in the types of securities suggested by its name, may only change this policy with shareholder approval.
Pursuant to Rule 35d-1 under the 1940 Act the
Government Money Market Fund
has adopted a non-fundamental investment policy to invest at least 80% of its total assets in obligations issued and/or guaranteed by the U.S. government or by its agencies or instrumentalities and in repurchase agreements secured by such obligations. In addition, as a result of recent amendments to Rule 2a-7 under the 1940 Act, the
Government Money Market Fund
has adopted a non-fundamental investment policy to invest at least 99.5% of its total assets in U.S. government securities, cash and/or repurchase agreements that are collateralized fully (as defined in Rule 2a-7 under the 1940 Act). The
Government Money Market Fund
will provide its shareholders with at least 60 days’ prior written notice of any changes to such policy.
Valuation of Securities
Money Market Funds
The Board has approved the use of amortized cost for purposes of valuing portfolio instruments held by the
Money Market Funds
. Under this method, portfolio instruments are valued at the acquisition cost as adjusted for amortization of premium or accumulation of discount rather than at current market value.
The procedures adopted by the Board for the
Money Market Funds
in accordance with Rule 2a-7, are reasonably designed to stabilize the NAV per share, as computed for purposes of distribution and redemption, at $1.00 per share, taking into account current market conditions and the Funds’ investment goals. For the
Money Market Funds
using the amortized cost method of valuation, the procedures include monitoring the relationship between the amortized cost value per share and the NAV per share based upon available indications of market value. The Board will take any steps it considers appropriate (such as redemption in kind or shortening the average portfolio maturity) to eliminate or reduce to the extent reasonable such dilution or unfair results where the Board believes the extent of any deviation between the two values may result in material dilution or unfair results to investors or existing shareholders.
The
Money Market Funds
are permitted to purchase instruments that are subject to demand features or standby commitments. As defined by the Rule, a demand feature entitles a Fund to receive the principal amount of the instrument from the issuer or a third party paid within 397 calendar days of exercise. A standby commitment entitles a Fund to achieve same-day settlement and to receive an exercise price equal to the amortized cost of the underlying instrument plus accrued interest at the time of exercise.
The
Money Market Funds
acquire instruments subject to demand features and standby commitments to enhance the instruments’ liquidity. The Funds treat demand features and standby commitments as part of the underlying instruments, because the Funds do not acquire them for speculative purposes and cannot transfer them separately from the underlying instruments. Therefore, although the Funds define demand features and standby commitments as puts, the Funds do not consider them to be corporate investments for purposes of their investment policies.
Under the amortized cost method of valuation utilized by the
Money Market Funds
, neither the amount of daily income nor the NAV is affected by any unrealized appreciation or depreciation of the portfolio. In periods of declining interest rates, the indicated daily yield on shares of the
Money Market Funds
, computed based upon amortized cost valuation, may tend to be higher than a similar computation made by using a method of valuation based upon market prices and estimates. In periods of rising interest rates, the indicated daily yield on shares of the Funds computed the same way may tend to be lower than a similar computation made by using a method of calculation based upon market prices and estimates.
B-31
 
 
Target Risk Funds
Because the assets of the
Target Risk Funds
consist primarily of shares of underlying funds, the NAV is determined based on the NAV of the underlying funds. It is not anticipated that the Pricing Committee of the Board will need to fair value any of the investments of the Funds. However, an underlying fund may need to fair value one of its investments, which may require the
Target Risk Funds
to do the same because of delays in obtaining the underlying funds’ NAV.
All Other Funds
Portfolio securities of the other Funds are valued as follows:
• for equity securities traded on a securities exchange, including NASDAQ, at the last sale price or official closing price reported on the exchange on which the security is principally traded;
• securities listed on a foreign exchange are valued each trading day at the last closing price on the principal exchange on which they are traded immediately prior to the time for determination of NAV or at fair value;
• in the absence of recorded sales for equity securities, at the mean of the last bid and asked prices as furnished by an independent pricing service;
• for U.S. government securities, listed corporate bonds, private placement securities, other fixed income and asset-backed securities, and unlisted securities, at the mean of the last bid and asked prices as furnished by an independent pricing service, except that fixed income securities with remaining maturities of 60 days or less at the time of purchase generally are valued at amortized cost, which approximates fair value;
• fixed income securities that are not exchange traded are valued by an independent pricing service;
• in the absence of a market quote for asset and mortgage-backed securities for which final paydowns have been processed, par value will be used to price the security until the final payment is received and the final paydown has been removed from the fund accounting records;
• for securities of other open-end registered investment companies, at NAV; and
• for all other securities, at fair value as determined in good faith by the Board.
Prices provided by independent pricing services may be determined without relying exclusively on quoted prices and may consider institutional trading in similar groups of securities, yield, quality, stability, risk, coupon rate, maturity, type of issue, trading characteristics, and other market data or factors.
A Fund values futures contracts and options at their market values established by the exchanges on which they are traded at the close of trading on such exchanges. Options traded in the OTC market are valued according to the mean between the last bid and the last asked price for the option as provided by an investment dealer or other financial institution that deals in the option. The Board may determine in good faith that another method of valuing such investments is necessary to appraise their fair market value.
Any securities or other assets for which market valuations are not readily available or are deemed to be inaccurate are valued at fair value as determined in good faith and in accordance with procedures approved by the Board. The Board has established and appointed a Pricing Committee, which is responsible for determinations of fair value. See “Directors and Officers
–
Board of Directors.” In determining fair value, the Pricing Committee takes into account all information available and any factors it deems appropriate. Consequently, the price of securities used by a Fund to calculate its NAV may differ from quoted or published prices for the same securities. Fair value pricing involves subjective judgments and it is possible that the fair value determined for a security is materially different than the value that would be realized upon the sale of that security and the differences may be material to the NAV of the respective Fund or the financial statements presented.
Certain securities held by the Funds may be listed on foreign exchanges that trade on days when a Fund does not calculate its NAV. As a result, the market value of the Fund’s investments may change on days when you cannot purchase or sell Fund shares. In addition, a foreign exchange may not value its listed securities at the same times that the Fund calculates its NAV, giving rise to the possibility that significant events, including broad market moves, may occur in the interim, which may affect a security’s value.
The Pricing Committee may determine that a security needs to be fair valued if, among other things, it believes the value of the security might have been materially affected by events occurring after the close of the market in which the security was principally
B-32
 
 
traded, but before the time for determination of the NAV (a subsequent event). A subsequent event might include a company-specific development (for example, announcement of a merger that is made after the close of the foreign market), a development that might affect an entire market or region (for example, weather related events) or a potentially global development (such as a terrorist attack that may be expected to have an effect on investor expectations worldwide). The Fund has retained an independent fair value pricing service to assist in fair valuing foreign securities. The service utilizes statistical data based on historical performance of securities, markets, and other data in developing factors used to estimate a fair value.
Trading in Foreign Securities
Trading in foreign securities may be completed at times that vary from the closing of the New York Stock Exchange (NYSE). In computing its NAV, the Funds value foreign securities at the latest closing price on the principal exchange on which they are traded immediately prior to the closing of the NYSE. Certain foreign currency exchange rates also may be determined at the latest rate prior to the closing of the NYSE. Foreign securities quoted in foreign currencies are translated into U.S. dollars at current rates. The passage of time between when the foreign exchanges or markets close and when the Funds compute their NAVs could cause the value of foreign securities to no longer be representative or accurate, and as a result, may necessitate that such securities be fair valued. Accordingly, for foreign securities, the Funds may use an independent pricing service to fair value price the security as of the close of regular trading on the NYSE. As a result, a Fund’s value for a security may be different from the last sale price (or the latest bid price).
What do Shares Cost?
Except under certain circumstances described in the Prospectus, shares of each class of each Fund (except the
Money Market Funds
) are sold at their NAVs (plus any applicable sales charge) on days the NYSE is open for business. Shares of each class of the
Money Market Funds
are sold at their NAVs on any day the Federal Reserve Bank of New York is open for business and, alternatively, on any day the U.S. government securities markets are open and the
Money Market Funds
’ portfolio managers determine sufficient liquidity exists in those markets.
The procedure for purchasing shares is explained in a Fund’s Prospectus under “How to Buy Shares.”
How are Fund Shares Sold?
Foreside Financial Services, LLC (Distributor), located at Three Canal Plaza, Portland, Maine 04101, serves as principal distributor of the Funds’ shares effective January 1, 2020. Prior to that date, BMO Investment Distributors, LLC (BID), an affiliate of the Adviser and BMO Harris Bank, served as the distributor. Under a Distribution Agreement with the Funds, the Distributor offers the Funds’ shares on a continuous, best-efforts basis.
Sales Charge Reallowance (Class A Only)
Sales of Class A shares are subject to a front-end sales charge, which may be reallowed, as a sales commission, to broker/dealers, investment professionals, or financial institutions (Authorized Dealers) of record as a percentage of the purchase price. Typically, the Authorized Dealers of record will receive the following amount from the sales charge on such sales:
Equity Funds and International and Global Funds
Breakpoint
 
Typical Dealer
Concession as a % of
Public Offering Price
Under $50,000
  5.00%
$50,000
–
$99,999
  4.00%
$100,000
–
$249,999
  3.25%
$250,000
–
$499,999
  2.50%
$500,000
–
$999,999
  1.75%
$1,000,000
–
$4,999,999
  1.00%
$5,000,000
–
$9,999,999
  0.75%
$10,000,000
–
$49,999,999
  0.50%
$50,000,000 and above
  0.25%
    
B-33
 
 
Strategic Income Fund
Breakpoint
 
Typical Dealer
Concession as a % of
Public Offering Price
Under $100,000
  3.50%
$100,000
–
$249,999
  3.00%
$250,000
–
$499,999
  2.25%
$500,000
–
$999,999
  1.75%
$1,000,000
–
$4,999,999
  1.00%
$5,000,000
–
$9,999,999
  0.75%
$10,000,000
–
$49,999,999
  0.50%
$50,000,000 and above
  0.25%
    
Intermediate Tax-Free, Corporate Income, and Core Plus Funds
Breakpoint
 
Typical Dealer
Concession as a % of
Public Offering Price
Under $100,000
  3.50%
$100,000
–
$249,999
  3.00%
$250,000
–
$499,999
  2.25%
$500,000
–
$999,999
  1.75%
$1,000,000
–
$4,999,999
  0.55%
$5,000,000
–
$9,999,999
  0.50%
$10,000,000
–
$49,999,999
  0.40%
$50,000,000 and above
  0.25%
    
Ultra Short Tax-Free Fund, Short Tax-Free Fund, and Short-Term Income Fund
Breakpoint
 
Typical Dealer
Concession as a % of
Public Offering Price
Under $50,000
  2.00%
$50,000
–
$99,999
  1.50%
$100,000
–
$249,999
  1.00%
$250,000 and above
  0.00%
Some or all of the sales charges may be paid as concessions to Authorized Dealers, as that term is defined under “How to Buy Shares - How Do I Purchase Shares?” in the Funds’ Prospectus. Authorized Dealers may choose to waive sales charges. The Distributor receives a fee for its services from the Adviser.
For the fiscal years ended August 2018, 2019, and 2020 neither BID nor the Distributor received any commissions from the Funds.
12b-1 Plan (Class A and Class R3 Shares Only)
The Corporation has adopted two compensation-type distribution plans (one plan for the
Target Risk Funds
and one plan for all other relevant Funds) pursuant to Rule 12b-1 under the 1940 Act (each a Plan and together the Plans) for the Class A and Class R3 Shares only. The Plans allow the Funds to pay a maximum of 0.25% of the Class A and 0.50% of the Class R3 assets to the Distributor for the sale and distribution of each Fund’s Class A and Class R3 shares and for services provided to shareholders of that class.
The fees paid pursuant to the Plans are used to finance activities of the Distributor principally intended to result in the sale of shares including: (1) providing incentive to broker/dealers to sell shares and to provide administrative support services to the Funds and their shareholders; (2) compensating other participating financial institutions and other financial intermediaries for providing administrative and other support services to the Funds and their shareholders; (3) paying for the costs incurred in conjunction with advertising and marketing of shares to include expenses of preparing, printing and distributing prospectuses and sales literature to prospective shareholders, brokers, dealers, financial institutions or financial intermediaries; and (4) other costs incurred in the implementation and operation of the Plans.
B-34
 
 
The Plans provide that (i) the Distributor has the right to select, in its sole discretion, brokers (including BMO Harris Financial Advisors (member FINRA/SIPC), an affiliate of the Adviser), dealers, participating financial institutions (including BMO Harris Bank, an affiliate of the Adviser) and other persons to participate in the Plans, and (ii) payments to the Distributor under the Plans will be made pursuant to the Distribution Agreement entered into by and between the Corporation and the Distributor and that payments made by the Distributor to brokers, dealers, participating financial institutions, and other persons with funds received as compensation under the Plans will be made pursuant to a Sales and Services Agreement entered into by and between the Distributor and such entity. The Plans also provide that the Distributor may terminate without cause and in its sole discretion any Sales and Services Agreement.
Other benefits of the Plans include, but are not limited to, the following: (1) an efficient and effective administrative system; (2) a more efficient use of assets of holders of Class A and Class R3 shares by having them rapidly invested in the applicable Fund with a minimum of delay and administrative detail; and (3) an efficient and reliable records system for holders of Class A and Class R3 shares and prompt responses to shareholder requests and inquiries concerning their accounts.
For the fiscal year ended August 31, 2020, the Class A and Class R3 shares of the Funds paid the following distribution (12b-1) fees under the Plans, and BID or the Distributor waived the following amounts.
   
Distribution (12b-1) Fees
Paid/Distribution
(12b-1) Fees Waived
 
Distribution (12b-1) Fees
Paid/Distribution
(12b-1) Fees Waived
Fund
 
Class A
 
Class R3
Low Volatility Equity
  $97,755/$0   N/A
Dividend Income
  $33,216/$0   N/A
Large-Cap Value
  $42,755/$0   N/A
Large-Cap Growth
  $
1,634/$0 		  N/A
Mid-Cap Value
  $81,712/$0   N/A
Mid-Cap Growth
  $33,443/$0   N/A
Small-Cap Value
  $
6,353/$0 		  N/A
Small-Cap Growth
  $69,681/$0   N/A
Global Low Volatility Equity
  $
834/$0 		  N/A
Disciplined International Equity
  $
349/$0 		  N/A
Pyrford International Stock
  $
8,855/$0 		  N/A
LGM Emerging Markets Equity
  $10,563/$0   N/A
Ultra Short Tax-Free
  $35,062/$0   N/A
Short Tax-Free
  $
9,905/$0 		  N/A
Short-Term Income
  $56,464/$0   N/A
Intermediate Tax-Free
  $12,313/$0   N/A
Strategic Income
  $30,781/$0   N/A
Corporate Income
  $17,531/$0   N/A
Core Plus Bond
  $
9,915/$0 		  N/A
Conservative Allocation
  N/A   $
2,951/$0
Moderate Allocation
  N/A   $35,976/$0
Balanced Allocation
  N/A   $69,447/$0
Growth Allocation
  N/A   $42,883/$0
Aggressive Allocation
  N/A   $83,959/$0
Shareholder Services (Class Y Shares Only)
The Adviser is the shareholder servicing agent for the Funds. As such, it provides shareholder services to the Funds that include, but are not limited to, distributing the Prospectuses and other information, providing shareholder assistance, and communicating or facilitating purchases and redemption of shares.
The Class Y shares may pay the Adviser a shareholder servicing fee equal to 0.25% of the assets of the Class Y shares for providing shareholder services and maintaining shareholder accounts. The Adviser may select others to perform these services for
B-35
 
 
their customers and may pay them fees. The Adviser may voluntarily waive fees it receives for providing shareholder services and maintaining shareholder accounts. The Adviser may terminate such voluntary waivers at any time.
For the fiscal year ended August 31, 2020, the Class Y shares of the Funds paid the following shareholder servicing fees to the Adviser, which, unless otherwise indicated, contractually waived the following amounts.
   
Shareholder Services Fees
Paid
 
Shareholder Services
Fees Waived
Fund
 
Class Y
 
Class Y
Large-Cap Growth
  $
146,013 		  $0
Intermediate Tax-Free
  $1,210,251   $0
Strategic Income
  $
130,388 		  $0
Corporate Income
  $
243,111 		  $0
Core Plus Bond
  $
205,015 		  $0
Government Money Market
  $1,661,608   $0
Tax-Free Money Market
  $
159,697 		  $0
Prime Money Market
  $
609,648 		  $0
Conservative Allocation
  $
26,263 		  $0
Moderate Allocation
  $
8,462 		  $0
Balanced Allocation
  $
132,483 		  $0
Growth Allocation
  $
9,565 		  $0
Aggressive Allocation
  $
50,141 		  $0
How to Buy Shares
Rights of Accumulation (Class A Shares Only)
As described in the Prospectus (for all Funds other than
Target Risk Funds
), larger purchases of Class A shares reduce or eliminate the sales charge paid. For example, the Funds will combine all Class A share purchases made on the same day by the investor, the investor’s spouse, and the investor’s children under age 21 when they calculate the sales charge. In addition, the sales charge, if applicable, is reduced for purchases made at one time by a trustee or fiduciary for a single trust estate or single fiduciary account.
If additional Class A shares are purchased, the Funds will consider the previous purchase still invested in the Funds. For example, if a shareholder already owns the Class A shares of an Equity Fund having a current value of $40,000 and he or she purchases $10,000 of additional shares, the sales charge on the additional purchases according to the schedule now in effect would be 4.00%, not 5.00% (see “How to Buy Shares
—
Class A Shares - Sales Charge
—
Equity Funds and Global and International Funds” in the Prospectus).
The Funds also will consider purchases of shares of certain other mutual funds held at BMO Harris Financial Advisors. For example, if a shareholder purchases shares of a certain mutual fund having a current value of $40,000 and then purchases the Class A shares of a Fund having a current value of $10,000, the shareholder would receive a reduced sales charge on the $10,000 Class A shares purchase based on the other mutual fund’s reduced sales charge schedule applicable to a $50,000 investment in such fund’s shares.
To receive the sales charge reduction, BMO Harris Financial Advisors must be notified by the shareholder in writing or by his or her investment professional or financial institution at the time the purchase is made that the Class A shares are already owned or that purchases are being combined. The Funds will reduce or eliminate the sales charge after they confirm the purchases.
Concurrent Purchases (Class A Shares Only)
Shareholders have the privilege of combining concurrent purchases of the Class A shares of two or more BMO Funds in calculating the applicable sales charge.
B-36
 
To receive a sales charge reduction or elimination, the Distributor must be notified by the shareholder in writing or by his or her investment professional or financial institution at the time the concurrent purchases are made. The Funds will reduce or eliminate the sales charge after they confirm the purchases. Shareholders should retain records of their purchases for this purpose and may be required to provide supporting documentation to the Distributor.
Letter of Intent (Class A Shares Only)
A shareholder may sign a letter of intent committing to purchase a certain amount of a Fund’s Class A shares within a 13-month period in order to combine such purchases in calculating the applicable sales charge. The Funds’ custodian will hold shares in escrow equal to the maximum applicable sales charge. If the shareholder completes the commitment, the escrowed shares will be released to his or her account. If the commitment is not completed within 13 months, the custodian will redeem an appropriate number of escrowed shares to pay for the applicable sales charge.
While this letter of intent will not obligate the shareholder to purchase Class A shares, each purchase during the period will be at the sales charge applicable to the total amount intended to be purchased. At the time a letter of intent is established, current balances in accounts in any Class A shares of any Fund will be aggregated to provide a purchase credit towards fulfillment of the letter of intent. The letter may be dated as of a prior date to include any purchase may within the past 90 days. Prior trade prices will not be adjusted.
Reinvestment Privilege
The reinvestment privilege is available for all shares of the Funds within the same share class. The Class A shareholders who redeem from a Fund may reinvest the redemption proceeds back into the Fund’s Class A shares at the next determined NAV without any sales charge. The original shares must have been subject to a sales charge and the reinvestment must be within 90 days.
In addition, if shares were reinvested through an investment professional or financial institution, the investment professional or financial institution would not be entitled to an advanced payment from BMO Harris Financial Advisors on the reinvested shares, if otherwise applicable. BMO Harris Financial Advisors must be notified by the shareholder in writing or by his/her investment professional or financial institution of the reinvestment in order to eliminate a sales charge. If a shareholder redeems shares in a Fund, there may be federal income tax consequences.
Exchanging Securities for Shares
A shareholder may contact the Funds to request a purchase of shares in an exchange for securities owned by the shareholder. The Funds reserve the right to determine whether to accept the securities and the minimum market value to accept. The Funds will value the securities in the same manner as it values its assets. This exchange is treated as a taxable sale of a shareholder’s securities for federal income tax purposes.
Conversion Privilege
Shareholders of a Fund may elect on a voluntary basis to convert their shares in one class of a Fund into shares of a different class of the same Fund, subject to satisfying the eligibility requirements for investment in the new share class. You may be required to provide sufficient information to establish eligibility to convert to the new share class. A share conversion within the same Fund should not result in a capital gain or loss for federal income tax purposes. Please consult your own tax advisor regarding federal, state, foreign, and local tax considerations. The Fund may change, suspend, or terminate this conversion feature at any time.
Redemption In-Kind
Although the Funds intend to pay share redemptions in cash, the Funds reserve the right, as described below, to pay the redemption price in whole or in part by a distribution of a Fund’s portfolio securities.
Because the Corporation has elected to be governed by Rule 18f-1 under the 1940 Act, each Fund is obligated to pay share redemptions to any one shareholder in cash only up to the lesser of $250,000 or 1% of the Fund’s net assets represented by such share class during any 90-day period. Any share redemption payment greater than this amount will be in cash unless the Adviser determines that payment should be in-kind. In such a case, a Fund will pay all or a portion of the remainder of the redemption in portfolio securities, valued in the same way as the Fund determines its NAV. The portfolio securities will be selected in a manner that the Adviser deems fair and equitable and, to the extent available, such securities will be readily marketable.
B-37
 
A redemption in-kind is not as liquid as a cash redemption. If a redemption is made in-kind, the redeeming shareholder would incur transaction costs in selling the portfolio securities received, and the proceeds of such sales, when made, may be more or less than the value on the redemption date. Redemptions in-kind are taxable for federal income tax purposes in the same manner as redemptions for cash. The subsequent sale of securities received in-kind may result in taxable capital gains or realized losses for federal income tax purposes.
In addition, the Funds have adopted procedures, consistent with SEC guidelines, to permit a redemption in-kind to an affiliate.
Purchases and Redemptions Through Authorized Dealers
You may purchase or redeem shares of the Funds through Authorized Dealers. Certain of these Authorized Dealers are authorized to designate other intermediaries to receive purchase and redemption orders on the Funds’ behalf. The Funds will be deemed to have received a purchase or redemption order for Fund shares when such Authorized Dealer or, if applicable, such Authorized Dealer’s authorized designee, receives the order.
Money Market Fund Redemptions
The
Money Market Funds
(other than the
Government Money Market Fund
) have adopted, policies and procedures permitting the Board to impose a liquidity fee on redemptions from certain Funds (up to 2%) or temporarily restrict redemptions from certain Funds up to 10 business days during a 90 day period (a redemption gate), in the event that the Fund’s weekly liquid assets fall below the following thresholds:
• 30% weekly liquid assets
–
If the Fund’s weekly liquid assets fall below 30% of the Fund’s total assets, and the Board determines it is in the best interests of the Fund, the Board may impose a liquidity fee of no more than 2% of the amount redeemed and/or a redemption gate that temporarily suspends the right of redemption.
• 10% weekly liquid assets
–
If the Fund’s weekly liquid assets fall below 10% of the Fund’s total assets, the Fund will impose, at the beginning of the next business day, a liquidity fee of 1% of the amount redeemed, unless the Board determines that imposing such a fee would not be in the best interests of the Fund or determines that a lower or higher fee (not to exceed 2%) would be in the best interests of the Fund.
If the Fund imposes a redemption gate, the Fund will not accept redemption or exchange orders until the Fund has notified shareholders that the redemption gate has been lifted. Any redemption or exchange orders submitted while a redemption gate is in effect will be cancelled without further notice. If you still wish to redeem or exchange shares once the redemption gate has been lifted, you will need to submit a new redemption or exchange request to the Fund.
The Board generally expects that a liquidity fee or redemption gate would be imposed, if at all, during periods of extraordinary market stress. Moreover, the Board generally expects that a liquidity fee or redemption gate would be imposed, if at all, after the Fund has notified shareholders that a liquidity fee or redemption gate will be imposed (generally, as of the beginning of the next business day following the announcement that the Fund has imposed the liquidity fee or redemption gate). Announcements regarding the imposition of a liquidity fee or redemption gate, or the termination of a liquidity fee or redemption gate, will be filed with the SEC on Form N-CR and will be available on the Fund’s website (bmofunds.com). In addition, the Fund will make such announcements through a supplement to the Funds’ Prospectus and may make such announcements through a press release or by other means.
Liquidity fees and redemption gates will terminate at the beginning of the next business day once the Fund has invested 30% or more of its total assets in weekly liquid assets or when the Board, including a majority of Independent Directors, determines that imposing such liquidity fee or redemption gate is no longer in the best interest of the Fund. The Fund may only suspend redemptions for up to 10 business days in any 90-day period.
A liquidity fee imposed by a Fund will reduce the amount you will receive upon the redemption of your shares, and will generally decrease the amount of any capital gain or increase the amount of any capital loss you will recognize with respect to such redemption. Some degree of uncertainty exists with respect to the tax treatment of liquidity fees received by money market funds and such tax treatment may be the subject of future guidance issued by the Internal Revenue Service (IRS). If a Fund receives liquidity fees, it will consider the appropriate tax treatment of such fees at such time.
The Board has chosen not to subject the
Government Money Market Fund
to a liquidity fee or redemption gate, and may do so in the future only with advance notice to shareholders.
In the event that a
Money Market Fund
, at the end of a business day, (a) (i) has invested less than 10% of its total assets in weekly liquid assets, or, (ii) in the case of the government or retail money market fund (such as the
Government Money Market, Prime Money Market
and
Tax-Exempt Money Market Funds
) the Fund’s price per share as computed for the purpose of distribution, redemption and repurchase, rounded to the nearest one percent, has deviated from the stable price established by the Board or the Board, including a majority of the directors who are not interested persons of the Fund, determines that such a deviation is likely to occur, and (b) the Board, including a majority of directors who are not interested persons of the Fund, irrevocably has approved the liquidation of the Fund, the Board has the authority to suspend redemptions of the Fund.
A retail money market fund, such as the
Prime Money Market
and
Tax-Exempt Money Market Funds
, may involuntarily redeem an institutional shareholder from the fund upon 60 days’ notice.
Account and Share Information
Voting and Distribution Rights
Shareholders of each Fund are entitled: (i) to one vote per full share of common stock; (ii) to distributions declared by the Board; and (iii) upon liquidation of a Fund, to participate ratably in the assets of the Fund available for distribution. Each share of a Fund gives the shareholder one vote in the election of directors and other matters submitted to shareholders for vote and is entitled to participate equally in net income and capital gains distributions by the Fund. All shares of each Fund or class in the Corporation have equal voting rights, except that only shares of a particular Fund or class are entitled to vote on matters affecting that Fund or class. Consequently, the holders of more than 50% of the Corporation’s shares of common stock voting for the election of directors can elect the entire Board, and, in such event, the holders of the Corporation’s remaining shares voting for the election of directors will not be able to elect any person or persons to the Board.
The WBCL permits registered investment companies, such as the Corporation, to operate without an annual meeting of shareholders under specified circumstances if an annual meeting is not required by the 1940 Act. The Corporation holds meetings of shareholders as required by the 1940 Act, the Corporation’s Articles of Incorporation or By-laws. Directors may be removed by the shareholders at a special meeting. A special meeting of the shareholders may be called by the Board upon written request of shareholders owning at least 10% of the Corporation’s outstanding voting shares.
The shares are redeemable and transferable. All shares issued and sold by the Corporation will be fully paid and nonassessable.
Control Persons and Principal Shareholders
Any person who beneficially owns more than 25% of the outstanding shares of a Fund may be considered a “controlling person” of such Fund. Shareholders with a controlling interest could affect the outcome of proxy voting or the direction of management of a Fund. Any person who beneficially owns more than 5% of the outstanding shares of a class of a Fund may be considered a “principal shareholder” of such class. As of November 30, 2020 the following shareholders owned of record or are known by the Corporation to own beneficially more than 5% of a class of a Fund’s outstanding shares:
Fund Name
 
Class
 
Name and Address
 
Number of Shares
 
Percent of Class
BMO Low Volatility Equity   I   National Financial Services LLC
FBO Exclusive Benefit of our Customers
Attn: Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City NJ 07310-1995 		  3,170,878.932   22.47%
BMO Low Volatility Equity Fund   I   MAC Co Acct for customer
Attn Mutual Fund Operations
500 Grant St. RM 151-1010
Pittsburgh PA 15219-2502 		  2,598,220.743   18.41%
BMO Low Volatility Equity   I   LPL Financial
Omnibus Customer Accounts
Attn Mutual Fund Trading
4707 Executive Drive
San Diego CA 92121-3091 		  2,004,453.992   14.21%
B-39
 
Fund Name
 
Class
 
Name and Address
 
Number of Shares
 
Percent of Class
BMO Low Volatility Equity   I   Mitra & Co FBO 98
c/o Reliance Trust Company (WI)
480 Pilgrim Way Ste 1000
Green Bay WI 54304-5280 		  1,721,693.921   12.20%
BMO Low Volatility Equity   I   Pershing LLC
1 Pershing Plz
Jersey City NJ 07399-0002 		  1,030,600.815   7.30%
BMO Low Volatility Equity Fund   I   TD Ameritrade Inc for the
Exclusive Benefit of our Clients
PO Box 2226
Omaha NE 68103-2226 		  728,812.018   5.17%
BMO Low Volatility Equity   A   Charles Schwab & Co Inc
Reinvest Account
Attn: Mutual Fund Dept
211 Main St
San Francisco CA 94105-1905 		  1,143,715.342   62.08%
BMO Low Volatility Equity Fund   A   TD Ameritrade Inc for the
Exclusive Benefit of our Clients
PO Box 2226
Omaha NE 68103-2226 		  167,469.274   9.09%
BMO Dividend Income   I   Pershing LLC
PO Box 2052
Jersey City NJ 07303-2052 		  5,866,358.143   34.59%
BMO Dividend Income   I   SEI Private Trust Co
c/o Bankers Trust SWP
1 Freedom Valley Dr
Oaks PA 19456-9989 		  3,742,395.330   22.06%
BMO Dividend Income   I   National Financial Services LLC
Attn: Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City NJ 07310-1995 		  3,238,084.588   19.09%
BMO Dividend Income Fund   I   Charles Schwab & Co Inc
Special Custody A/C FBO Customers
Attn Mutual Funds
211 Main Street
San Francisco CA 94105-1905 		  901,539.663   5.32%
BMO Dividend Income   A   Charles Schwab & Co Inc
Reinvest Account
Attn: Mutual Fund Dept.
211 Main St
San Francisco CA 94105-1905 		  257,861.951   42.46%
BMO Dividend Income   A   TD Ameritrade Inc for the
Exclusive Benefit of Our Clients
PO Box 2226
Omaha NE 68103-2226 		  64,697.420   10.65%
BMO Dividend Income   A   Pershing LLC
1 Pershing Plz
Jersey City NJ 07399-0002 		  57,623.018   9.49%
BMO Large-Cap Value Fund   I   Pershing LLC
1 Pershing Plz
Jersey City NJ 07399-0002 		  11,741,905.593   76.78%
B-40
 
Fund Name
 
Class
 
Name and Address
 
Number of Shares
 
Percent of Class
BMO Large-Cap Value Fund   I   Mitra & Co FBO 98
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  1,982,070.905   12.96%
BMO Large-Cap Value Fund   A   Pershing LLC
1 Pershing Plz
Jersey City NJ 07399-0002 		  130,974.348   12.81%
BMO Large-Cap Value Fund   A   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  91,085.280   8.91%
BMO Large-Cap Value Fund   R6   BMO Funds IncBMO Aggressive Allocation Fund
790 N Water St Fl 11
Milwaukee WI 53202-3509 		  856,570.807   35.97%
BMO Large-Cap Value Fund   R6   BMO Funds Inc
BMO Balanced Allocation Fund
790 N WATER St Fl 11
Milwaukee WI 53202-3509 		  813,504.454   34.16%
BMO Large-Cap Value   R6   BMO Funds Inc
BMO Growth Allocation Fund
790 N WATER St Fl 11 Milwaukee WI 53202-3509 		  482,230.379   20.25%
BMO Large-Cap Value   R6   BMO Funds Inc
BMO Moderate Allocation Fund
790 N WATER St Fl 11
Milwaukee WI 53202-3509 		  174,780.667   7.34%
BMO Large-Cap Growth   Y   Pershing LLC
1 Pershing Plz
Jersey City NJ 07399-0002 		  212,614.558   7.54%
BMO Large-Cap Growth   Y   National Financial Services LLC
Attn: Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City NJ 07310-1995 		  172,120.173   6.11%
BMO Large-Cap Growth   Y   Charles Schwab & Co Inc
Reinvest Account
Attn: Mutual Fund Dept
211 Main St
San Francisco CA 94105-1905 		  145,789.793   5.17%
BMO Large-Cap Growth   I   Pershing LLC
1 Pershing Plz
Jersey City NJ 07399-0002 		  1,741,461.555   33.08%
BMO Large-Cap Growth   I   Mitra & Co FBO 98
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  829,939.246   15.76%
BMO Large-Cap Growth Fund   I   National Financial Services LLC
FBO Exclusive Benefit of our Customer
Attn Mutual Funds Dept 4th fl
499 Washington Blvd
Jersey City NJ 07310-1995 		  471,631.931   8.96%
BMO Large-Cap Growth Fund   I   Charles Schwab & Co Inc
Reinvest Account
Attn: Mutual Fund Dept
211 Main St
San Francisco CA 94105-1905 		  392,489.721   7.45%
B-41
 
Fund Name
 
Class
 
Name and Address
 
Number of Shares
 
Percent of Class
BMO Large-Cap Growth Fund   I   Reliance Trust Co FBO
Massmutual Registered Product
PO Box 28004
Atlanta GA 30358-0004 		  276,254.583   5.25%
BMO Large-Cap Growth   A   TD Ameritrade Inc for the
Exclusive Benefit of our Clients
PO Box 2226
Omaha NE 68103-2226 		  10,923.703   29.25%
BMO Large-Cap Growth   A   Pershing LLC
1 Pershing Plz
Jersey City NJ 07399-0002 		  10,308.474   27.6%
BMO Large-Cap Growth Fund   A   LPL Financial
Customer Acct
4707 Executive Dr
San Diego CA 92121-3091 		  2,302.522   6.16%
BMO Large-Cap Growth Fund   A   LPL Financial
Customer Acct
4707 Executive Dr
San Diego CA 92121-3091 		  2,127.748   5.7%
BMO Large-Cap Growth   R6   National Financial Services LLC
FBO Exclusive Bene of our Customers
Attn: Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City NJ 07310-1995 		  7,427,799.300   62.78%
BMO Large-Cap Growth Fund   R6   Lincoln Retirement Services Company
FBO Customer Acct
PO Box 7876
Fort Wayne IN 46801-7876 		  2,174,233.087   18.38%
BMO Mid-Cap Value Fund   I   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  170,257.895   28.8%
BMO Mid-Cap Value Fund   I   Vallee & CO FBO 98
c/o Reliance Trust Company WI
Mailcode: BD1N - Attn: MF
4900 W Brown Deer Rd
Milwaukee WI 53223-2422 		  117,789.879   19.93%
BMO Mid-Cap Value Fund   I   National Financial Services LLC
FBO Exclusive Benefit of our Customer
Attn Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City NJ 07310-1995 		  104,776.706   17.72%
BMO Mid-Cap Value   I   Pershing LLC
1 Pershing Plz
Jersey City NJ 07399-0002 		  62,621.045   10.59%
BMO Mid-Cap Value   I   Mitra & Co FBO 98
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  56,106.229   9.49%
BMO Mid-Cap Value   A   Charles Schwab & Co Inc
Reinvest Account
Attn: Mutual Fund Dept
211 Main St
San Francisco CA 94105-1905 		  295,892.359   10.07%
B-42
 
 
Fund Name
 
Class
 
Name and Address
 
Number of Shares
 
Percent of Class
BMO Mid-Cap Value   A   TD Ameritrade Inc for the
Exclusive Benefit of our Clients
PO Box 2226
Omaha NE 68103-2226 		  280,369.579   9.54%
BMO Mid-Cap Value   A   Pershing LLC
1 Pershing Plz
Jersey City NJ 07399-0002 		  276,300.668   9.4%
BMO Mid-Cap Value   A   Hartford Life Insurance Co
Attn: UIT Operations
PO Box 2999
Hartford CT 06104-2999 		  165,934.102   5.65%
BMO Mid-Cap Value Fund Fund   R6   Associated Trust Co FBO
Customer 401k
PO Box 22037
Green Bay WI 54305-2037 		  359,129.672   61.7%
BMO Mid-Cap Value   R6   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  121,962.831   20.95%
BMO Mid-Cap Value Fund Fund   R6   Voya Retirement Insurance And
Annuity Company
1 Orange WAY
Windsor CT 06095-4773 		  89,538.928   15.38%
BMO Mid-Cap Growth   I   JP Morgan Securities LLC Omnibus
Exclusive Benefit of Customers
4 Chase Metrotech Center
3rd Fl Mutual Fund Department
Brooklyn NY 11245-0003 		  601,684.276   68.36%
BMO Mid-Cap Growth   I   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
MAILCODE: BD1N - ATTN: MF
Milwaukee WI 53223-2422 		  131,970.689   14.99%
BMO Mid-Cap Growth   I   Pershing LLC
1 Pershing Plz
Jersey City NJ 07399-0002 		  44,098.205   5.01%
BMO Mid-Cap Growth   A   Pershing LLC
1 Pershing Plz
Jersey City NJ 07399-0002 		  136,257.034   14.64%
BMO Mid-Cap Growth   R6   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  1,585.699   100%
BMO Small-Cap Value   I   Pershing LLC
PO Box 2052
Jersey City NJ 07303-2052 		  2,711,061.188   68.42%
BMO Small-Cap Value   I   Mitra & Co FBO 98
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  721,953.803   18.22%
B-43
 
Fund Name
 
Class
 
Name and Address
 
Number of Shares
 
Percent of Class
BMO Small-Cap Value   A   Charles Schwab & Co Inc
Reinvest Account
Attn: Mutual Fund Dept
211 Main St
San Francisco CA 94105-1905 		  51,117.460   35.94%
BMO Small-Cap Value   A   Pershing LLC
1 Pershing Plaza
Jersey City NJ 07399-0002 		  20,732.370   14.58%
BMO Small-Cap Value   A   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  13,225.299   9.30%
BMO Small-Cap Value   R6   BMO Funds Inc
BMO Aggressive Allocation Fund
790 N Water St Fl 11Milwaukee WI 53202-3509 		  203,155.841   30.54%
BMO Small-Cap Value   R6   BMO Funds Inc
BMO Balanced Allocation Fund
790 N Water St Fl 11Milwaukee WI 53202-3509 		  191,501.063   28.79%
BMO Small-Cap Value   R6   BMO Funds Inc
BMO Growth Allocation Fund
790 N Water St Fl 11 Milwaukee WI 53202-3509 		  117,762.470   17.7%
BMO Small-Cap Value   R6   Voya Retirement Insurance and
Annuity Company
1 Orange Way
Windsor CT 06095-4773 		  87,330.180   13.13%
BMO Small-Cap Value   R6   BMO Funds Inc
BMO Moderate Allocation Fund
790 N Water St Fl 11
Milwaukee WI 53202-6672 		  39,543.792   5.94%
BMO Small-Cap Growth   I   Pershing LLC
1 Pershing Plaza
Jersey City NJ 07399-0002 		  1,925,083.337   52.65%
BMO Small-Cap Growth   I   Capinco c/o US Bank NA
1555 N Rivercenter Dr Ste 302
Milwaukee WI 53212-3958 		  356,207.434   9.74%
BMO Small-Cap Growth   I   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  326,674.976   8.93%
BMO Small-Cap Growth   I   BMO Funds Inc
BMO Aggressive Allocation Fund
111 E Kilbourn Ave Ste 200
Milwaukee WI 53202-6672 		  213,652.499   5.84%
BMO Small-Cap Growth   I   BMO Funds Inc
BMO Balanced Allocation Fund
111 E Kilbourn Ave Ste 200
Milwaukee WI 53202-6672 		  194,259.018   5.31%
BMO Small-Cap Growth   A   Pershing LLC
1 Pershing Plaza
Jersey City NJ 07399-0002 		  128,594.688   8.41%
B-44
 
Fund Name
 
Class
 
Name and Address
 
Number of Shares
 
Percent of Class
BMO Small-Cap Growth   A   Charles Schwab & Co Inc
Reinvest Account
Attn: Mutual Fund Dept
211 Main St
San Francisco CA 94105-1905 		  114,410.421   7.48%
BMO Small-Cap Growth   A   AUL American Group
Retirement annuity
One American Square
PO Box 368Indianapolis IN 46206-0368 		  77,464.178   5.07%
BMO Global Low Volatility Equity   I   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  237,563.500   56.70%
BMO Global Low Volatility Equity   I   Vallee & Co FBO 98
c/o Reliance Trust Company WI
Mailcode: BD1N - Attn: MF
4900 W Brown Deer Rd
Milwaukee WI 53223-2422 		  7,059.111   23.16%
BMO Global Low Volatility Equity   A   National Financial Services LLC
499 Washington Blvd
Jersey City NJ 07310-1995 		  1,179.562   17.84%
BMO Global Low Volatility Equity   A   LPL Financial
Customer Acct
4707 Executive Dr
San Diego CA 92121-3091 		  978.102   14.79%
BMO Global Low Volatility Equity   A   National Financial Services LLC
499 Washington Blvd
Jersey City NJ 07310-1995 		  900.394   13.62%
BMO Global Low Volatility Equity   A   National Financial Services LLC
499 WASHINGTON BLVD
Jersey City NJ 07310-1995 		  854.607   12.93%
BMO Global Low Volatility Equity   A   TD Ameritrade Inc for the
Exclusive Benefit of Our Clients
PO Box 2226
Omaha NE 68103-2226 		  627.906   9.5%
BMO Global Low Volatility Equity   A   LPL Financial
Acct Customer
4707 Executive Dr
San Diego CA 92121-3091 		  549.600   8.31%
BMO Disciplined International Equity   I   Northern Trust as Custodian
FBO Essentia Health
A/C Customer
PO Box 92956
Chicago IL 60675-2956 		  1,039,494.694   27.00%
BMO Disciplined International Equity   I   Mitra & Co FBO 98
c/o Reliance Trust Company (WI)
480 Pilgrim Way Ste 1000
Green Bay WI 54304-5280 		  653,608.368   16.98%
BMO Disciplined International Equity   I   BMO Funds Inc
BMO Aggressive Allocation Fund
790 N Water St Fl 11Milwaukee WI 53202-3509 		  522,547.379   13.58%
BMO Disciplined International Equity   I   BMO Funds Inc
BMO Balanced Allocation Fund
790 N Water St Fl 11Milwaukee WI 53202-3509 		  486,386.966   12.64%
B-45
 
Fund Name
 
Class
 
Name and Address
 
Number of Shares
 
Percent of Class
BMO Disciplined International Equity   I   Mitra & Co FBO 98
c/o Reliance Trust Company (WI)
480 Pilgrim Way Ste 1000
Green Bay WI 54304-5280 		  449,946.859   11.69%
BMO Disciplined International Equity   I   BMO Funds Inc
BMO Growth Allocation Fund
790 N Water St Fl 11Milwaukee WI 53202-3509 		  292,682.881   7.6%
BMO Disciplined International Equity   I   Maril & Co FBO 98
c/o Reliance Trust Company WI
4900 W Brown Deer RD
Milwaukee WI 53223-2422 		  252,938.310   6.57%
BMO Disciplined International Equity   A   Maril & Co FBO 98
c/o Reliance Trust Company WI
4900 W Brown Deer RD
Milwaukee WI 53223-2422 		  10,000.000   69.6%
BMO Disciplined International Equity   A   Pershing LLC
1 Pershing Plz
Jersey City NJ 07399-0002 		  3,860.638   26.87%
BMO Pyrford International Stock   I   Capinco c/o US Bank NA
1555 N Rivercenter Dr Ste 302
Milwaukee WI 53212-3958 		  7,080,568.269   21.43%
BMO Pyrford International Stock   I   National Financial Services LLC
FBO Exclusive Bene of our Customers
Attn Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City NJ 07310-1995 		  6,947,513.314   21.03%
BMO Pyrford International Stock   I   Pershing LLC
PO Box 2052
Jersey City NJ 07303-2052 		  4,250,408.535   12.87%
BMO Pyrford International Stock   I   Mitra & Co FBO 98
c/o Reliance Trust Company (WI)
480 Pilgrim Way Ste 1000
Green Bay WI 54304-5280 		  3,346,281.903   10.13%
BMO Pyrford International Stock   I   Comerica Bank FBO Customer
PO Box 75000 MSC 3446
Detroit MI 48275-0001 		  2,533,820.534   7.67%
BMO Pyrford International Stock   A   Charles Schwab & Co Inc
Reinvest Account
Attn: Mutual Fund Dept
211 Main St
San Francisco CA 94105-1905 		  25,035.994   19.67%
BMO Pyrford International Stock   A   Pershing LLC
1 Pershing Plz
Jersey City NJ 07399-0002 		  16,823.383   13.22%
BMO Pyrford International Stock   A   TD Ameritrade Inc for the
Exclusive Benefit of our Clients
PO Box 2226
Omaha NE 68103-2226 		  12,730.448   10%
BMO Pyrford International Stock   A   National Financial Services LLC
499 Washington Blvd
Jersey City NJ 07310-1995 		  11,015.357   8.66%
B-46
 
Fund Name
 
Class
 
Name and Address
 
Number of Shares
 
Percent of Class
BMO Pyrford International Stock   A   JP Morgan Securities LLC Omnibus
Exclusive Benefit of Customers
4 Chase Metrotech Center
3rd Fl Mutual Fund Department
Brooklyn NY 11245-0003 		  10,015.183   7.87%
BMO Pyrford International Stock   A   National Financial Services LLC
499 Washington Blvd
Jersey City NJ 07310-1995 		  9,786.163   7.69%
BMO Pyrford International Stock   R6   Northern Trust Company FBO
Packaging Corp of America
Master Retirement Trust
50 LaSalle St
Chicago IL 60675-0001 		  2,989,951.082   16.69%
BMO Pyrford International Stock   R6   Wells Fargo Bank FBO
Various Retirement Plans
1525 West Wt Harris Blvd
Charlotte NC 28288-1076 		  2,986,848.732   16.67%
BMO Pyrford International Stock   R6   Flexpath IndexPlus Moderate 2035
Fund I Series
1100 North Market Street
Wilmington DE 19890-1100 		  1,766,485.200   9.86%
BMO Pyrford International Stock   R6   Flexpath IndexPlus Moderate 2045
Fund I Series
1100 North Market Street
Wilmington DE 19890-1100 		  1,672,396.959   9.33%
BMO Pyrford International Stock   R6   Flexpath IndexPlus Moderate 2025
Fund I Series
1100 North Market Street
Wilmington DE 19890-1100 		  1,027,366.352   5.73%
BMO Pyrford International Stock   R6   Flexpath IndexPlus Moderate 2055
Fund I Series
1100 North Market Street
Wilmington DE 19890-1100 		  1,021,636.918   5.70%
BMO LGM Emerging Markets Equity   I   Pershing LLC
PO Box 2052
Jersey City NJ 07303-2052 		  7,634,274.449   39.92%
BMO LGM Emerging Markets Equity   I   Charles Schwab & Co Inc
Reinvest Account
Attn: Mutual Fund Dept
211 Main St
San Francisco CA 94105-1905 		  2,218,857.724   11.6%
BMO LGM Emerging Markets Equity   I   Capinco c/o US Bank NA
1555 N Rivercenter Dr Ste 302
Milwaukee WI 53212-3958 		  1,926,795.426   10.08%
BMO LGM Emerging Markets Equity   I   National Financial Services LLC
FBO Exclusive Bene of our Customers
Attn: Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City NJ 07310-1995 		  1,204,369.269   6.3%
BMO LGM Emerging Markets Equity   A   Pershing LLC
1 Pershing Plz
Jersey City NJ 07399-0002 		  132,994.308   52.32%
B-47
 
Fund Name
 
Class
 
Name and Address
 
Number of Shares
 
Percent of Class
BMO LGM Emerging Markets Equity   A   Charles Schwab & Co Inc
Reinvest Account
Attn: Mutual Fund Dept
211 Main St
San Francisco CA 94105-1905 		  35,563.791   13.99%
BMO LGM Emerging Markets Equity   A   Vanguard Brokerage Services
Acct Customer
PO Box 1170
Valley Forge PA 19482-1170 		  18,454.584   7.26%
BMO Ultra Short Tax-Free   I   SEI Private Trust Company
c/o BMO Harris SWP
One Freedom Valley Dr
Oaks PA 19456-9989 		  10,577,979.278   18.47%
BMO Ultra Short Tax-Free   I   Charles Schwab & Co Inc
Reinvest Account
Attn Mutual Fund Dept
211 Main St
San Francisco CA 94105-1905 		  9,346,459.142   16.32%
BMO Ultra Short Tax-Free   I   Newly Weds Foods Inc
4140 W Fullerton Ave
Chicago IL 60639-2198 		  5,927,589.971   10.35%
BMO Ultra Short Tax-Free   I   Kenwood Cash LLC
225 W Washington St Ste 1650
Chicago IL 60606-3486 		  5,032,596.931   8.79%
BMO Ultra Short Tax-Free   I   Mitra & Co FBO 98
c/o Reliance Trust Company (WI)
480 Pilgrim Way Ste 1000
Green Bay WI 54304-5280 		  3,811,657.079   6.66%
BMO Ultra Short Tax-Free   I   Pershing LLC
1 Pershing Plz.
Jersey City NJ 07399-0002 		  3,314,964.496   5.79%
BMO Ultra Short Tax-Free   A   Mitra & Co FBO 98
c/o Reliance Trust Company (WI)
480 Pilgrim Way Ste 1000
Green Bay WI 54304-5280 		  260,325.977   20.64%
BMO Ultra Short Tax-Free   A   Pershing LLC
1 Pershing Plz
Jersey City NJ 07399-0002 		  240,958.927   19.10%
BMO Ultra Short Tax-Free   A   Charles Schwab & Co Inc
Reinvest Account
Attn: Mutual Fund Dept
211 Main St
San Francisco CA 94105-1905 		  119,593.063   9.48%
BMO Ultra Short Tax-Free   A   TD Ameritrade Inc for the
Exclusive Benefit of our Clients
PO Box 2226
Omaha NE 68103-2226 		  106,755.779   8.46%
BMO Ultra Short Tax-Free   A   Customer JT WROS
Middleton WI 53562-5228 		  86,785.640   6.88%
BMO Ultra Short Tax-Free   A   Customer JT WROS
Sheboygan WI 53081-3124 		  76,959.256   6.10%
B-48
 
Fund Name
 
Class
 
Name and Address
 
Number of Shares
 
Percent of Class
BMO Short Tax-Free   I   SEI Private Trust Co
c/o BMO Harris SWP
One Freedom Valley Dr
Oaks PA 19456-9989 		  6,081,247.230   56.43%
BMO Short Tax-Free   I   Charles Schwab & Co Inc
Reinvest Account
Attn Mutual Fund Dept
211 Main St
San Francisco CA 94105-1905 		  1,171,818.189   10.87%
BMO Short Tax-Free   I   Vallee & Co FBO 98
c/o Reliance Trust Company (WI)
480 Pilgrim Way Ste 1000
Green Bay WI 54304-5280 		  796,041.706   7.39%
BMO Short Tax-Free   I   Mitra & Co FBO 98
c/o Reliance Trust Company (WI)
480 Pilgrim Way Ste 1000
Green Bay WI 54304-5280 		  590,308.526   5.48%
BMO Short Tax-Free   I   TD Ameritrade Inc for the
Exclusive Benefit of our Clients
PO Box 2226
Omaha NE 68103-2226 		  564,617.599   5.24%
BMO Short Tax-Free   A   TD Ameritrade Inc for the
Exclusive Benefit of our Clients
PO Box 2226
Omaha NE 68103-2226 		  62,791.212   19.61%
BMO Short Tax-Free   A   Customer Revocable Trust
Mequon WI 53092-5453 		  38,235.684   11.94%
BMO Short Tax-Free   A   Charles Schwab & Co Inc
Special Custody A/C FBO Customers
Attn: Mutual Funds
211 Main St
San Francisco CA 94105-1905 		  37,620.018   11.75%
BMO Short Tax-Free   A   National Financial Services LLC
499 Washington Blvd
Jersey City NJ 07310-1995 		  27,406.965   8.56%
BMO Short Tax-Free   A   Charles Schwab & Co Inc
Reinvest Account
Attn Mutual Fund Dept
211 Main St
San Francisco CA 94105-1905 		  24,130.801   7.54%
BMO Short-Term Income   I   Mitra & Co FBO 98
c/o Reliance Trust Company (WI)
480 Pilgrim Way Ste 1000
Green Bay WI 54304-5280 		  5,250,843.641   22.8%
BMO Short-Term Income   I   SEI Private Trust Co
c/o BMO Harris SWP
One Freedom Valley Dr
Oaks PA 19456-9989 		  3,728,718.302   16.19%
BMO Short-Term Income   I   Vallee & Co FBO 98
c/o Reliance Trust Company WI
Mailcode: BD1N - Attn: MF
4900 W Brown Deer Rd
Milwaukee WI 53223-2422 		  3,193,560.143   13.86%
B-49
 
 
Fund Name
 
Class
 
Name and Address
 
Number of Shares
 
Percent of Class
BMO Short-Term Income   I   Chicago Professional Sports LP
1901 W Madison St
Chicago IL 60612-2459 		  1,877,831.088   8.15%
BMO Short-term Income   I   Kokosing Construction Company Inc
6235 Westerville Rd
Westerville OH 43081-4041 		  1,709,575.501   7.42%
BMO Short-Term Income   A   Pershing LLC
1 Pershing Plz
Jersey City NJ 07399-0002 		  179,489.171   8.43%
BMO Short-term Income   A   Charles Schwab & Co Inc
Reinvest Account
Attn: Mutual Fund Dept
211 Main ST
San Francisco CA 94105-1905 		  108,065.141   5.07%
BMO Intermediate Tax-Free   Y   Charles Schwab & Co Inc
Reinvest Account
Attn: Mutual Fund Dept
211 Main St
San Francisco CA 94105-1905 		  18,676,167.355   48.92%
BMO Intermediate Tax-Free   Y   National Financial Services LLC
Attn Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City NJ 07310-1995 		  10,831,963.954   28.37%
BMO Intermediate Tax-Free   Y   Charles Schwab & Co Inc
Special Custody A/C FBO Customers
Attn: Mutual Funds
211 Main St
San Francisco CA 94105-1905 		  3,766,102.489   9.86%
BMO Intermediate Tax-Free   I   Charles Schwab & Co Inc
Reinvest Account
Attn: Mutual Fund Dept
211 Main St
San Francisco CA 94105-1905 		  47,790,732.771   38.03%
BMO Intermediate Tax-Free   I   National Financial Services LLC
FBO Exclusive Bene of our Customers
Attn Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City NJ 07310-1995 		  19,464,941.311   15.49%
BMO Intermediate Tax-Free   I   SEI Private Trust Co
c/o Regions Bank
1 Freedom Valley Dr
Oaks PA 19456-9989 		  14,607,213.744   11.62%
BMO Intermediate Tax-Free   I   SEI Private Trust Co
c/o BMO Harris SWP
1 Freedom Valley Dr
Oaks PA 19456-9989 		  13,979,287.862   11.12%
BMO Intermediate Tax-Free   I   Pershing LLC
1 Pershing Plz
Jersey City NJ 07399-0002 		  7,497,062.038   5.97%
BMO Intermediate Tax-Free   A   TD Ameritrade Inc for the
Exclusive Benefit of Our Clients
PO Box 2226
Omaha NE 68103-2226 		  401,621.652   87.77%
B-50
 
Fund Name
 
Class
 
Name and Address
 
Number of Shares
 
Percent of Class
BMO Intermediate Tax-Free   A   LPL Financial
Omnibus Customer Account
Attn Mutual Fund Trading
4707 Executive Drive
San Diego CA 92121-3091 		  23,202.201   5.07%
BMO Intermediate Tax-Free   A   Pershing LLC
1 Pershing Plz
Jersey City NJ 07399-0002 		  23,056.966   5.04%
BMO Strategic Income   Y   National Financial Services LLC
Attn Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City NJ 07310-1995 		  4,163,891.392   74.88%
BMO Strategic Income   I   Mitra & Co FBO 98
c/o Reliance Trust Company (WI)
480 Pilgrim Way Ste 1000
Green Bay WI 54304-5280 		  266,907.989   30.58%
BMO Strategic Income   I   LPL Financial
Omnibus Customer Account
ATTN Mutual Fund Trading
4707 Executive Dr
San Diego CA 92121-3091 		  148,882.728   17.06%
BMO Strategic Income   I   DPR Foundation
222 N 44th St
Phoenix AZ 85034-1810 		  105,596.621   12.1%
BMO Strategic Income   I   Vallee & Co FBO 98
c/o Reliance Trust Company (WI)
480 Pilgrim Way Ste 1000
Green Bay WI 54304-5280 		  70,066.109   8.03%
BMO Strategic Income   I   Maril & Co FBO 98
c/o Reliance Trust Company WI
4900 W Brown Deer RD
Milwaukee WI 53223-2422 		  64,976.399   7.44%
BMO Strategic Income   I   National Financial Services LLC
FBO Exclusive Bene of our Customers
Attn Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City NJ 07310-1995 		  48,192.097   5.52%
BMO Strategic Income   A   Pershing LLC
1 Pershing Plaza
Jersey City NJ 07399-0002 		  163,790.457   11.82%
BMO Corporate Income   Y   Charles Schwab & Co Inc
Reinvest Account
Attn Mutual Fund Dept
211 Main St
San Francisco CA 94105-1905 		  4,607,912.342   65.19%
BMO Corporate Income   Y   National Financial Services LLC
FBO Exclusive Bene of our Customers
Attn Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City NJ 07310-1995 		  2,081,305.988   29.45%
BMO Corporate Income   I   SEI Private Trust Company
c/o BMO Harris SWP
One Freedom Valley Dr
Oaks PA 19456-9989 		  5,637,396.499   26.93%
B-51
 
Fund Name
 
Class
 
Name and Address
 
Number of Shares
 
Percent of Class
BMO Corporate Income   I   National Financial Services LLC
FBO Exclusive Bene of our Customers
Attn Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City NJ 07310-1995 		  4,103,453.630   19.6%
BMO Corporate Income   I   SEI Private Trust Co
c/o Regions
Attn Mutual Funds Admin
1 Freedom Valley Dr
Oaks PA 19456-9989 		  3,005,846.790   14.36%
BMO Corporate Income   I   SEI Private Trust Company
c/o BMO Harris SWP
One Freedom Valley Dr
Oaks PA 19456-9989 		  2,151,957.510   10.28%
BMO Corporate Income   I   Charles Schwab & Co Inc
Reinvest Account
Attn Mutual Fund Dept
211 Main St
San Francisco CA 94105-1905 		  1,380,012.426   6.59%
BMO Corporate Income   I   MAC & Co A/C Customer
Attn: Mutual Fund Ops
500 Grant St.
Pittsburgh PA 15219-2502 		  1,057,669.125   5.05%
BMO Corporate Income   A   TD Ameritrade Inc
FBO Our Customers
PO Box 2226
Omaha NE 68103-2226 		  245,181.464   93.76%
BMO Core Plus Bond   Y   Charles Schwab & Co Inc
Reinvest Account
Attn Mutual Fund Dept
211 Main St
San Francisco CA 94105-1905 		  5,964,941.518   75.88%
BMO Core Plus Bond   Y   National Financial Services LLC
FBO Exclusive Bene of our Customers
Attn Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City NJ 07310-1995 		  1,000,011.858   12.72%
BMO Core Plus Bond   I   Pershing LLC
PO Box 2052
Jersey City NJ 07303-2052 		  39,013,879.552   43.54%
BMO Core Plus Bond   I   Mitra & Co FBO 98
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  9,622,992.928   10.74%
BMO Core Plus Bond   I   National Financial Services LLC
FBO Exclusive Bene of our Customers
Attn Mutual Funds Dept 4th Fl
499 Washington Blvd
Jersey City NJ 07310-1995 		  8,478,419.289   9.46%
BMO Core Plus Bond   I   Charles Schwab & Co Inc
Reinvest Account
Attn Mutual Fund Dept
211 Main St
San Francisco CA 94105-1905 		  5,840,258.797   6.52%
B-52
 
Fund Name
 
Class
 
Name and Address
 
Number of Shares
 
Percent of Class
BMO Core Plus Bond   I   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  4,663,773.634   5.2%
BMO Core Plus Bond   A   TD Ameritrade Inc for the
Exclusive Benefit of Our Clients
PO Box 2226
Omaha NE 68103-2226 		  335,775.834   86.11%
BMO Core Plus Bond   A   Mitra & Co FBO 98
c/o Reliance Trust Company (WI)
480 Pilgrim Way Ste 1000
Green Bay WI 54304-5280 		  30,355.285   7.78%
BMO Government Money Market   Premier   Maril & Co FBO BMO Harris Bank
Attn ACM Department
ACM Department
4900 W Brown Deer Rd
Brown Deer, WI 53223-2422 		  2,225,089,860.370   69.26%
BMO Government Money Market   Premier   SEI Private Trust Company
c/o BMO Harris SWP
Attn: Mutual Fund Admin
1 Freedom Valley Dr
Oaks PA 19456-9989 		  449,754,859.790   14%
BMO Government Money Market   Premier   GS Global Cash Services
Omnibus Account FBO
Goldman Sachs & Co LLC Customers
71 S Wacker Dr Ste 500
Chicago, IL 60606-4673 		  190,743,537.890   5.94%
BMO Government Money Market   Y   Maril & Co FBO BMO Harris Bank
Attn ACM Department
ACM Department
4900 W Brown Deer Rd
Brown Deer, WI 53223-2422 		  674,193,824.120   91.68%
BMO Government Money Market   Y   GS Global Cash Services
Omnibus Account FBO
Goldman Sachs & Co LLC Customers
71 S Wacker Dr Ste 500
Chicago IL 60606-4673 		  55,117,808.670   7.5%
BMO Tax-Free Money Market   Premier   SEI Private Trust Company
c/o BMO Harris SWP
Attn: Mutual Fund Admin
1 Freedom Valley Dr
Oaks PA 19456-9989 		  285,686,557.31   96.53%
BMO Tax-Free Money Market   Y   Pershing LLC
As Agent for its Brokerage Customer
Attn Cash Management Services
1 Pershing Plz
Jersey City NJ 07399-0002 		  26,141,102.350   50.28%
BMO Tax-Free Money Market   Y   Pershing LLC
1 Pershing Plaza
Jersey City NJ 07399-0002 		  18,780,552.110   36.12%
BMO Tax-Free Money Market   Y   BMO Harris Bank NA
111 W Monroe 9 E
Chicago IL 60603-4096 		  4,428,300.000   8.52%
B-53
 
Fund Name
 
Class
 
Name and Address
 
Number of Shares
 
Percent of Class
BMO Prime Money Market   Premier   SEI Private Trust Co
c/o BMO Harris SWP
Attn Mutual Fund Admin
1 Freedom Valley Dr
Oaks PA 19456-9989 		  303,736,070.010   98.35%
BMO Prime Money Market   Y   Pershing LLC
1 Pershing Plz
Jersey City NJ 07399-0002 		  246,894,951.750   89%
BMO Prime Money Market   Y   Maril & Co FBO BMO Harris Bank
Attn ACM Department
ACM Department
4900 W Brown Deer Rd
Brown Deer, WI 53223-2422 		  14,640,008.500   5.28%
BMO Conservative Allocation   Y   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  1,226,600.880   89.69%
BMO Conservative Allocation   I   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  45,576.138   84.19%
BMO Conservative Allocation   I   TD Ameritrade Inc for the
Exclusive Benefit of Our Clients
PO Box 2226
Omaha NE 68103-2226 		  6,435.006   11.89%
BMO Conservative Allocation   R3   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  70,165.041   100%
BMO Conservative Allocation   R6   MAC & Co A/C 199788
Attn: Mutual Fund Ops
500 Grant St.
Pittsburgh PA 15219-2502 		  2,887,647.684   69.68%
BMO Conservative Allocation   R6   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  960,993.450   23.19%
BMO Moderate Allocation   Y   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  339,196.063   90.64%
BMO Moderate Allocation   I   Hossley Lighting Associates Inc
1202 Dragon St Ste 100
Dallas TX 75207-4021 		  372,372.256   52.61%
BMO Moderate Allocation   I   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  282,949.163   39.98%
BMO Moderate Allocation   I   Associated Trust Co
PO Box 22037
Green Bay WI 54305-2037 		  47,999.923   6.78%
B-54
 
Fund Name
 
Class
 
Name and Address
 
Number of Shares
 
Percent of Class
BMO Moderate Allocation   R3   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  847,941.900   99.97%
BMO Moderate Allocation   R6   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  3,496,609.562   57.76%
BMO Moderate Allocation   R6   MAC & Co Customer A/C
Attn: Mutual Fund Ops
500 Grant St.
Pittsburgh PA 15219-2502 		  2,043,669.385   33.76%
BMO Moderate Allocation   R6   MAC & Co Customer Account
Attn: Mutual Fund Operations
500 Grant St. RM 151-1010
Pittsburgh PA 15219-2502 		  309,899.529   5.12%
BMO Balanced Allocation   Y   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  5,027,532.931   91.94%
BMO Balanced Allocation   I   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  2,141,323.914   50.31%
BMO Balanced Allocation   I   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  1,656,034.148   38.91%
BMO Balanced Allocation   R3   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  863,896.957   50.85%
BMO Balanced Allocation   R3   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  834,946.883   49.15%
BMO Balanced Allocation   R6   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  8,772,911.665   55.56%
BMO Balanced Allocation   R6   MAC & Co A/C 199787
Attn: Mutual Fund Ops
500 Grant St.
Pittsburgh PA 15219-2502 		  5,370,530.776   34.01%
BMO Growth Allocation   Y   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  194,678.936   79.76%
BMO Growth Allocation   Y   Pershing LLC
1 Pershing Plz
Jersey City NJ 07399-0002 		  12,773.420   5.23%
B-55
 
Fund Name
 
Class
 
Name and Address
 
Number of Shares
 
Percent of Class
BMO Growth Allocation   I   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  506,789.472   95.04%
BMO Growth Allocation   R3   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  943,893.407   100%
BMO Growth Allocation   R6   MAC & Co A/C for customer
Attn: Mutual Fund Ops
500 Grant St.
Pittsburgh PA 15219-2502 		  5,241,611.676   57.93%
BMO Growth Allocation   R6   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  2,047,241.935   22.63%
BMO Growth Allocation   R6   Matrix Trust Co Cust FBO
PHX-ONEAMERICA (WI office)
PO Box 52129
Phoenix AZ 85072-2129 		  840,385.722   9.29%
BMO Growth Allocation   R6   MAC Co Customer Account
Attn Mutual Fund Operations
500 Grant St. Rm 151-1010
Pittsburgh PA 15219-2502 		  625,404.060   6.91%
BMO Aggressive Allocation   Y   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  1,935,911.264   97.54%
BMO Aggressive Allocation   I   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  898,257.851   86.64%
BMO Aggressive Allocation   R3   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  2,089,670.589   100%
BMO Aggressive Allocation   R6   MAC & Co A/C for customer
Attn: Mutual Fund Ops
500 Grant St.
Pittsburgh PA 15219-2502 		  5,602,151.020   46.92%
BMO Aggressive Allocation   R6   Mitra & Co FBO 98 Daily Plans
c/o Reliance Trust Company WI
4900 West Brown Deer Road
Milwaukee WI 53223-2422 		  4,720,806.628   39.54%
BMO Aggressive Allocation   R6   Matrix Trust Co Cust FBO
PHX-ONEAMERICA (WI office)
PO Box 52129
Phoenix AZ 85072-2129 		  773,501.307   6.48%
The entities in the above chart are holders of record only (not beneficial owners), unless otherwise noted.
As of November 30, 2020, the current officers and directors of the Corporation, as a group, owned less than 1% of any class of each Fund’s outstanding shares.
B-56
 
Table of Contents
What are the Federal Income Tax Consequences?
This section is not intended to be a full discussion of federal income tax laws and does not discuss state, local, or foreign tax laws. Changes in income tax laws, potentially with retroactive effect, could impact a Fund’s investments or the tax consequences to you of investing in a Fund. Some of these changes could affect the timing, amount, and tax treatment of Fund distributions made to shareholders. Please consult your own tax adviser regarding federal, state, local, or foreign tax considerations.
Fund Taxation
Each Fund intends to elect to be treated and qualify each year as a RIC under Subchapter M of the Code. In order to so qualify, each Fund must, among other things, (i) derive at least 90% of its gross income from qualifying income, which includes dividends, interest, payments with respect to certain securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, other income (including but not limited to gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities, or currencies, and net income derived from interests in qualified publicly traded partnerships, (ii) distribute at least 90% of its investment company taxable income each year and 90% of its net tax-exempt income, and (iii) at the end of each fiscal quarter (a) maintain at least 50% of the value of its total assets in cash and cash items, U.S. government securities, securities of other regulated investment companies, and other securities of issuers that represent, with respect to each issuer, no more than 5% of the value of the Fund’s total assets and 10% of the outstanding voting securities of such issuer, and (b) have no more than 25% of the value of its total assets invested in the securities (other than those of the U.S. government or other RICs) of any one issuer or of two or more issuers that the Fund controls and that are engaged in the same, similar, or related trades and businesses, or the securities of one or more qualified publicly traded partnerships.
Some Fund investments may produce income that will not constitute qualifying income for the purposes of this annual gross income requirement. Although foreign currency gains currently constitute qualifying income, the U.S. Treasury Department has the authority to issue regulations excluding from the definition of qualifying income a RIC’s foreign currency gains not “directly related” to its “principal business” of investing in stock or securities (or options and futures with respect thereto). The U.S. Treasury Department has issued final regulations that treat “[g]ains from the sale or other disposition of foreign currencies” as qualifying income. No assurance can be made that any Fund will satisfy all requirements to be taxed as a RIC.
To the extent that a Fund qualifies for treatment as a RIC, it will not be subject to federal income tax on income distributed, or deemed distributed, to shareholders. In the event a Fund fails to qualify as a RIC and does not obtain relief from such failure, it will be treated as a regular corporation for federal income tax purposes. Accordingly, the Fund would be subject to federal income taxes on its taxable net income and gains and any distributions that the Fund makes would not qualify for any dividends paid deduction. This would increase the cost of investing in the Fund for shareholders and would make it more economical for shareholders to invest directly in securities held by the Fund instead of investing indirectly in such securities through the Fund.
Each Fund will be treated as a separate entity for federal income tax purposes, so that income earned and capital gains and losses realized by each Fund will be separate from those realized by the other Funds.
Each Fund generally will be subject to a 4% nondeductible federal excise tax to the extent the Fund does not meet certain minimum distribution requirements by the end of the calendar year. To avoid the imposition of the 4% excise tax, a Fund must distribute at least 98% of its taxable ordinary income for the calendar year and at least 98.2% of the excess of its capital gains over capital losses realized during the one-year period ending October 31 (in most cases) of such year as well as amounts that were neither distributed nor taxed to the Fund during the prior calendar year. Each Fund intends to make distributions during the calendar year in an amount sufficient to prevent imposition of this 4% excise tax.
If a Fund invests in certain pay-in-kind securities, zero coupon securities, deferred interest securities, or any other securities with original issue discount (or with market discount if the Fund elects to include market discount in income currently), the Fund must accrue income on such investments for each taxable year, which generally will be prior to the receipt of the corresponding cash payments. However, a Fund must distribute to shareholders, at least annually, all or substantially all of its investment company taxable income, including such accrued income, to avoid federal income and excise taxes. Therefore, a Fund may have to dispose of its portfolio securities under disadvantageous circumstances to generate cash, or may have to leverage itself by borrowing the cash, to satisfy these distribution requirements.
A Fund may acquire market discount bonds. A market discount bond is a security acquired in the secondary market at a price below its redemption value (or its adjusted issue price if it is also an original issue discount bond). If a Fund invests in a market discount bond, it will be required to treat any gain recognized on the disposition of such market discount bond as ordinary income
B-57
 
Table of Contents
(instead of capital gain) to the extent of the accrued market discount, unless the Fund elects to include the market discount in income as it accrues.
The federal income tax consequences to a Fund that holds debt securities on which the issuer defaults is not certain in all cases.
A Fund’s transactions, if any, in forward contracts, options, futures contracts, and hedged investments may be subject to special provisions of the Code that, among other things, may affect the character of gain and loss realized by a Fund (i.e., may affect whether gain or loss is treated as ordinary or capital), accelerate recognition of income to a Fund, defer a Fund’s losses, and affect whether capital gain and loss is characterized as long-term or short-term. These rules could therefore affect the character, amount, and timing of distributions to shareholders. These provisions also may require a Fund to mark-to-market certain types of positions (i.e., treat them as if they were closed out), which may cause a Fund to recognize income without receiving cash with which to make distributions in amounts necessary to satisfy the distribution requirements for maintaining the Fund’s status as a RIC and avoiding federal income and excise taxes. The Funds will monitor their transactions, make the appropriate tax elections, and make the appropriate entries in their books and records when they acquire any option, futures contract, forward contract, or hedged investment to mitigate the effect of these rules, prevent disqualification of a Fund as a RIC, and minimize the imposition of federal income and excise taxes.
Options held by a Fund at the end of each fiscal year on a broad-based stock index are treated under the Code as “Section 1256 contracts” and will be required to be marked-to-market for federal income tax purposes. Sixty percent of any net gain or loss recognized on such deemed sales or on any actual sales will be treated as long-term capital gain or loss and the remainder will be treated as short-term capital gain or loss (60/40 gain or loss). Certain other options, futures contracts, and options on futures contracts utilized by the Funds are also Section 1256 contracts. Any Section 1256 contracts held by the Funds at the end of each taxable year (and generally on October 31 of each year for purposes of the 4% excise tax) are also marked-to-market with the result that unrealized gains or losses are treated as though they were realized and the resulting gain or loss is treated as a 60/40 gain or loss.
A Fund’s entry into a short sale transaction, an option, or certain other contracts could be treated as the constructive sale of an appreciated financial position, causing the Fund to realize gain, but not loss, on the position.
The application of certain requirements for qualification as a RIC and the application of certain other federal income tax rules may be unclear in some respects in connection with investments in certain derivatives and other investments. As a result, a Fund may be required to limit the extent to which it invests in such investments and it is also possible that the IRS may not agree with a Fund’s treatment of such investments. In addition, the tax treatment of derivatives and certain other investments may be affected by future legislation, Treasury Regulations, and guidance issued by the IRS (which could apply retroactively). These authorities could (i) affect the timing, character, and amount of a Fund’s income and gains and distributions to shareholders, (ii) affect whether a Fund has made sufficient distributions and otherwise satisfied the requirements to maintain its qualification as a RIC and avoid imposition of federal income and excise taxes at the Fund level, and/or (iii) limit the extent to which a Fund may invest in certain derivatives and other investments in the future.
The
Target Risk Funds
are each a successor to the portfolio of a collective trust fund managed by the Adviser with objectives, policies, and restrictions that were, in all material respects, equivalent to those of the succeeding fund. Each such Fund has taken the position that it has succeeded to the tax basis of the assets of its predecessor collective trust fund. Shareholders should be aware that as a Fund sells portfolio securities that were acquired from a predecessor collective trust fund, any gain inherent in such securities at the time the Fund acquired such securities, along with any appreciation that occurred while the Fund held such securities, may be recognized by the Fund and any such recognized gain will be distributed to Fund shareholders and will be taxable to them for federal income tax purposes. Accordingly, a shareholder of a Fund may be taxed on appreciation that occurred before the shareholder purchased Fund shares, including appreciation that occurred prior to the Fund’s acquisition of portfolio securities from a predecessor collective trust fund.
Generally, the character of the income or capital gains that a Fund receives from another RIC will pass through to such Fund’s shareholders as long as the Fund and the other RIC each qualify as a RIC. However, to the extent that another RIC realizes net losses on its investments for a given taxable year, a Fund investing in such RIC will not be able to recognize its share of those losses until it disposes of shares of such RIC. Moreover, even when a Fund does make such a disposition, a portion of its loss may be recognized as a long-term capital loss, which will not be treated as favorably for federal income tax purposes as a short-term capital loss or ordinary deduction. In particular, a Fund will not be able to offset any capital losses from its dispositions of shares of other RICs against its ordinary income. As a result of the foregoing rules, and certain other special rules, it is possible that the amounts of investment company taxable income and net capital gain that a Fund will be required to distribute to shareholders will be greater than such amounts would have been had the Fund invested directly in the securities held by the RICs in which it invests, rather than investing in shares of the RICs. For similar reasons, the character of distributions from a Fund (e.g., long-term capital gain, qualified dividend
B-58
 
Table of Contents
income, etc.) will not necessarily be the same as it would have been had the Fund invested directly in the securities held by the RICs in which it invests.
Certain Funds may invest to a limited degree in MLPs that are treated as qualified publicly traded partnerships for federal income tax purposes. Net income derived from an interest in a qualified publicly traded partnership is treated as qualifying income for purposes of satisfying the source of income requirements to be treated as a RIC. However, no more than 25% of the value of a RIC’s total assets at the end of each fiscal quarter may be invested in securities of qualified publicly traded partnerships. If an MLP in which a Fund invests is taxed as a partnership for federal income tax purposes, the Fund will include in its taxable income its allocable share of the MLP’s income regardless of whether the Fund receives any distribution from the MLP. Thus, the Fund may be required to sell other securities or may have to use leverage to satisfy the distribution requirements to qualify as a RIC and to avoid federal income and excise taxes. In addition, if an MLP in which a Fund invests does not qualify as a qualified publicly traded partnership (and is otherwise not taxed as a corporation), income derived by the Fund from the MLP will be treated as qualifying income only to the extent such income is attributable to items of income of the MLP that would be qualifying income if realized directly by the Fund. The receipt of non-qualifying income from such investments could jeopardize a Fund’s status as a RIC. Distributions to a Fund from an MLP that is taxed as a partnership for federal income tax purposes will constitute a return of capital to the extent of the Fund’s basis in its interest in the MLP. If a Fund’s basis is reduced to zero, distributions in excess of basis will generally constitute capital gain for federal income tax purposes.
Gains or losses attributable to fluctuations in exchange rates that occur between the time a Fund accrues income or other receivables or accrues expenses or other liabilities denominated in a foreign currency and the time the Fund actually collects such receivable or pays such liabilities generally are treated as ordinary income or loss. Similarly, on disposition of debt securities denominated in a foreign currency and on disposition of certain other instruments, gains or losses attributable to fluctuations in the value of the foreign currency between the date of acquisition of the security or contract and the date of disposition also may be treated as ordinary gain or loss. These gains and losses may increase or decrease the amount of a Fund’s investment company taxable income to be distributed to its shareholders.
Distributions from a Fund may be based on estimates of book income for the year. Book income generally consists solely of the income generated by the securities in the portfolio, whereas tax basis income includes, in addition to book income, gains or losses attributable to currency fluctuation. Due to differences in the book and tax treatment of fixed income securities denominated in foreign currencies, it is difficult to project currency effects on an interim basis. Therefore, to the extent that currency fluctuations cannot be anticipated, a portion of distributions to shareholders could later be designated as a return of capital, rather than income, for federal income tax purposes, which may be of particular concern to simple trusts.
If a Fund receives an “excess distribution” with respect to the stock of a passive foreign investment company (PFIC), the Fund itself may be subject to federal income tax on a portion of the excess distribution, whether or not the corresponding income is distributed by the Fund to shareholders. In general, a foreign corporation is classified as a PFIC for a taxable year if at least 50% of its assets produce or are held to produce passive income or 75% or more of its gross income is passive income.
Under the PFIC rules, an excess distribution is treated as having been realized ratably over the period during which the Fund held the PFIC stock. A Fund itself will be subject to U.S. federal income tax (including interest) on the portion, if any, of an excess distribution that is so allocated to prior taxable PFIC years. Certain distributions from a PFIC as well as gain from the sale of PFIC stock are treated as excess distributions. Excess distributions are characterized as ordinary income even though, absent application of the PFIC rules, certain excess distributions might have been classified as capital gain.
Rather than being taxed on the PFIC income as discussed above, a Fund may be eligible to elect alternative tax treatment. Under an election that is currently available in certain circumstances, a Fund generally would be required to include in its gross income its share of the PFIC’s income and net capital gain annually, regardless of whether distributions are received from the PFIC in a given year. In addition, another election may be available that would involve marking to market a Fund’s PFIC shares at the end of each taxable year (and on certain other dates prescribed in the Code), with the result that unrealized gains are treated as though they were realized and treated as ordinary income or loss (subject to certain limitations). If this election were made, federal income tax at the Fund level under the PFIC rules would generally be eliminated, but the Fund could, in limited circumstances, incur nondeductible interest charges. A Fund’s intention to qualify annually as a RIC may limit its options with respect to PFIC shares.
Because the application of the PFIC rules may affect, among other things, the character of gains and the amount of gain or loss and the timing of the recognition of income with respect to PFIC shares, and may subject a Fund itself to tax on certain income from PFIC shares, the amount that must be distributed to shareholders and that will be taxed to shareholders as ordinary income or long-term capital gain may be increased or decreased as compared to a fund that did not invest in PFIC shares.
B-59
 
Table of Contents
Taxation of U.S. Shareholders
With respect to Funds other than the Tax-Exempt Funds (see discussion below), shareholders will be subject to federal income tax on distributions made by the Funds whether received in cash or additional shares of the Funds, unless the shareholder is investing through a tax-deferred arrangement, such as an IRA or a 401(k) plan (a shareholder may be taxed later upon withdrawal of monies from such tax-deferred arrangements or certain other tax-advantaged arrangements). Distributions of investment company taxable income (which includes any net short-term capital gain in excess of any net long-term capital loss) generally will be taxable to shareholders as ordinary income. However, for non-corporate shareholders, the portion of investment company taxable income that a Fund reports as attributable to “qualified dividend” income (generally dividends received from U.S. domestic corporations and qualified foreign corporations) generally will be taxed at the lower federal income tax rates applicable to net long-term capital gain, provided certain holding period and other requirements described below are satisfied. To the extent that distributions of investment company taxable income consist of net short-term capital gain, such gain will be taxable as ordinary income and cannot be used to offset a shareholder’s losses from other investments. Distributions of net capital gain (the excess of net long-term capital gains over net short-term capital losses), if any, will be taxable at long-term capital gain rates (for non-corporate shareholders, currently taxed at a maximum federal income tax rate of 20%), without regard to how long a shareholder has held shares of a Fund. A portion of a Fund’s distributions of investment company taxable income may qualify in part for the 50% dividends received deduction available to corporate shareholders to the extent that the Fund receives dividend income directly or indirectly from U.S. corporations and reports the amount distributed as eligible for the deduction, provided that certain holding period and other requirements under the Code are satisfied. Generally, however, dividends received on stocks of foreign issuers that are held by a Fund are not eligible for the dividends received deduction when distributed to a Fund’s shareholders. Because no portion of the income of any Fund, other than the
Global Low Volatility Equity, Pyrford International Stock, LGM Emerging Markets Equity,
and
Equity Funds
, is expected to consist of dividends from domestic corporations or qualified foreign corporations, distributions paid by the Funds, other than the
Global Low Volatility Equity, Pyrford International Stock, LGM Emerging Markets Equity,
and
Equity Funds
, are not expected to be eligible for “qualified dividend” treatment when paid to non-corporate shareholders or qualify for the dividends received deduction available to corporate shareholders.
Dividend income received by a Fund and distributed to a Fund shareholder may not be treated as “qualified dividend” income by the shareholder unless the Fund satisfies certain holding period and other requirements with respect to the stock in its portfolio generating such dividend income and the shareholder meets certain holding period and other requirements with respect to the Fund’s shares. A dividend will not be treated as qualified dividend income (at either the Fund or shareholder level) (1) if the dividend is received with respect to any share of stock held for fewer than 61 days during the 121-day period beginning on the date that is 60 days before the date on which such share becomes ex-dividend with respect to such dividend (or, in the case of certain preferred stock, fewer than 91 days during the 181-day period beginning 90 days before such date), (2) to the extent that the recipient is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property, or (3) if the recipient elects to have the dividend income treated as investment income for purposes of the limitation on deductibility of investment interest. For purposes of determining the holding period for stock on which a dividend is received, such holding period is reduced for any period the recipient has an option to sell, is under a contractual obligation to sell, or has made (and not closed) a short sale of substantially identical stock or securities and in certain other circumstances. In order for a dividend paid by a foreign corporation to constitute qualified dividend income, the foreign corporation must (1) be eligible for the benefits of a comprehensive income tax treaty with the United States (or the stock on which the dividend is paid must be readily tradable on an established securities market in the United States) and (2) not be treated as a PFIC.
In addition to the regular federal income tax, certain individuals, trusts, and estates may be subject to a Net Investment Income (NII) tax of 3.8%. The NII tax is imposed on the lesser of (i) a taxpayer’s investment income (which excludes tax-exempt interest distributions), net of deductions properly allocable to such income, or (ii) the amount by which the taxpayer’s modified adjusted gross income exceeds certain thresholds ($250,000 for married individuals filing jointly, $200,000 for unmarried individuals, and $125,000 for married individuals filing separately). The Funds’ distributions (other than tax-exempt interest distributions paid by the
Ultra Short Tax-Free, Short Tax-Free, Intermediate Tax-Free,
and
Tax-Free Money Market Funds
) are includable in a shareholder’s investment income for purposes of this NII tax. In addition, any capital gain realized on the sale, redemption, or exchange of a Fund’s shares is includable in a shareholder’s investment income for purposes of this NII tax.
In general, qualified REIT dividends that an investor receives directly from a REIT are automatically eligible for the 20% qualified business income deduction. The IRS has issued final Treasury Regulations that permit a dividend or part of a dividend paid by a RIC and reported as a “Section 199A Dividend” to be treated by the recipient as a qualified REIT dividend for purposes of the 20% qualified business income deduction if certain holding period and other requirements have been satisfied by the recipient with respect to its Fund shares. The final Treasury Regulations do not extend conduit treatment to qualified publicly traded partnership income, as defined under Section 199A of the Code, earned by a RIC. Therefore, non-corporate shareholders may not include any
B-60
 
Table of Contents
qualified publicly traded partnership income earned through a Fund in their qualified business income deduction. The IRS and Treasury Department are continuing to evaluate whether it is appropriate to provide such conduit treatment.
To the extent a Fund is unable to use its capital losses in a given taxable year, it may be entitled to carry forward the capital loss, which may reduce the taxable capital gain that the Fund would realize and on which the shareholder would be subject to federal income tax in the future. Any capital loss carried forward by a Fund will generally retain its character as short-term or long-term and may be carried forward indefinitely.
Distributions are generally taxable when received. However, distributions declared by a Fund during October, November, or December to shareholders of record and paid by January 31 of the following year will be taxable in the year they are declared, rather than the year in which they are received. Each Fund will notify its shareholders each year of the amount and type of distributions paid.
Gain or loss realized upon a sale, redemption, or other disposition (such as an exchange) of shares of a Fund by a shareholder will generally be treated as long-term capital gain or loss if the shares have been held for more than one year and, if held for one year or less, as short-term capital gain or loss. Any loss on the sale, redemption, or exchange of shares held for six months or less will be treated as a long-term capital loss to the extent of any net capital gain distributions paid or deemed to be paid to the shareholder with respect to such shares. Any loss realized upon a sale, exchange, or redemption of shares of the
Ultra Short Tax-Free, Short Tax-Free, Intermediate Tax-Free,
or
Tax-Free Money Market Funds
that were held for six months or less will be disallowed to the extent of any tax-exempt interest distributions received with respect to such shares. Any loss a shareholder realizes on a sale, redemption, or exchange of shares will be disallowed if the shareholder acquires other shares of the same Fund (whether through the automatic reinvestment of distributions or otherwise) within 30 days before or after the sale, redemption, or exchange of the shares. In such case, the shareholder’s tax basis in the shares acquired will be adjusted to reflect the disallowed loss. Capital losses may be subject to limitations on their use by a shareholder.
If shares that were purchased subject to a sales charge are exchanged for shares of a different Fund before the 91st day after the date on which such shares were acquired, the lesser of (i) the sales charge incurred on the exchanged shares or (ii) the sales charge waived on the reinvested shares is added to the basis of the reinvested shares and is not included in the basis of the exchanged shares.
Purchasing shares shortly before a distribution may not be advantageous. If the distribution is taxable, it will essentially result in a taxable return of a portion of the purchase price.
Tax-Exempt Funds
The
Ultra Short Tax-Free, Short Tax-Free, Intermediate Tax-Free,
and
Tax-Free Money Market Funds
(the Tax-Exempt Funds) each intend to qualify to pay tax-exempt interest distributions by satisfying the Code’s requirement that at the close of each quarter of its taxable year at least 50 percent of the value of its total assets consists of other RICs or obligations of a state or political subdivision thereof on which the interest is exempt from federal income tax under Section 103(a) of the Code. So long as this and certain other requirements are met, distributions consisting of each such Fund’s net tax-exempt interest income will be tax-exempt interest distributions, which are exempt from regular federal income tax in the hands of the shareholders of the Fund. As discussed below, certain tax-exempt interest distributions may be subject to federal AMT for noncorporate shareholders. Distributions of investment company taxable income made by these Funds consisting of income from taxable securities or net short-term capital gains, if any, realized by the Funds will be taxable to shareholders as ordinary income whether received in cash or additional shares of the Funds. Distributions of net capital gain made by the Funds, if any, will be taxable to shareholders as long-term capital gain. Gains of the Tax-Exempt Funds that are attributable to market discount on certain municipal obligations are treated as ordinary income to the extent of the accrued market discount on those bonds.
Interest on indebtedness incurred by a shareholder to purchase or carry shares in the Tax-Exempt Funds is generally not deductible for federal income tax purposes to the extent that the Fund makes tax-exempt interest distributions during the taxable year. If a shareholder receives tax-exempt interest distributions with respect to any share of these Funds and if such share is held by the shareholder for six months or less, then any loss on the sale or exchange of such share will be disallowed to the extent of the amount of tax-exempt interest distributions, provided, this rule does not apply to a Fund if it declares tax-exempt interest distributions daily in an amount equal to at least 90% of its net tax-exempt interest and distributes these amounts at least monthly. In addition, shareholders will have to include any tax-exempt interest distributions in determining the taxable portion of their social security and railroad retirement benefit payments. Furthermore, entities or persons who are “substantial users” (or persons related to “substantial users”) of facilities financed by “private activity bonds” or certain industrial development bonds should consult their tax
B-61
 
Table of Contents
advisers before purchasing shares in the Tax-Exempt Funds. For these purposes, the term “substantial user” is defined generally to include a “non-exempt person” who regularly uses in a trade or business a part of a facility financed from the proceeds of such bonds. Moreover, some or all of the tax-exempt interest distributions received from the Tax-Exempt Funds may be a specific preference item, or a component of an adjustment item, for purposes of the federal individual AMT. The receipt of these tax-exempt interest dividends also may affect a foreign corporate shareholder’s federal “branch profits” tax liability and an S corporation shareholder’s federal tax on “passive investment income.”
Distributions may be subject to state and local taxation despite their status as tax-exempt interest distributions for federal income tax purposes. As a result, shareholders of a Tax-Exempt Fund should consult their tax advisers to determine whether any portion of the distributions received from the Fund is considered tax-exempt in their particular states.
Issuers of securities purchased by the Tax-Exempt Funds (or the beneficiary of such bonds) may have made certain representations or covenants in connection with the issuance of such securities to satisfy certain requirements of the Code that must be satisfied subsequent to the issuance of such bonds. Shareholders should be aware that tax-exempt interest distributions may become subject to federal income taxation retroactively to the date of issuance of the bonds to which such distributions are attributable if such representations are determined to have been inaccurate or if the issuers (or the beneficiary) of the bonds fail to comply with certain covenants made at that time.
Tax legislation may, from time to time, include provisions that may affect the supply of, and demand for, tax-exempt securities, as well as the tax-exempt nature of interest paid thereon. It is not possible to predict with certainty the effect of tax law changes upon the tax-exempt market, including the availability of obligations appropriate for investment, nor is it possible to predict any additional restrictions.
Foreign Taxation
Income received by a Fund from sources within foreign countries may be subject to withholding and other taxes imposed by such countries. Tax conventions between certain countries and the U.S. may reduce or eliminate such taxes. Also, many foreign countries do not impose taxes on capital gains in respect of investments by foreign investors. The effective rate of foreign tax cannot be predicted since the amount of each Fund’s assets to be invested within various countries is uncertain.
If more than 50% of the value of a Fund’s total assets at the close of its taxable year consists of RICs or stock or securities of foreign corporations, such Fund will be eligible to and may elect to “pass through” to the Fund’s shareholders the amount of eligible foreign income and similar taxes paid by the Fund. If this election is made, a shareholder generally subject to federal income tax will be required to include in gross income (in addition to taxable distributions actually received) his or her pro rata share of foreign taxes paid by the Fund in computing his or her taxable income and to use such amount as a foreign tax credit against his or her U.S. federal income tax liability or deduct such amount in lieu of claiming a credit, subject to certain limitations. No deduction for foreign taxes may be claimed by a shareholder who does not itemize deductions. If a Fund is eligible to make this election, each shareholder will be notified after the close of the Fund’s taxable year whether the foreign taxes paid by the Fund will “pass through” for that year. The Corporation expects that only the
International and Global Funds
will qualify to pass through to Fund shareholders foreign taxes paid by the Fund.
If a Fund does not satisfy the requirements for passing through to its shareholders their proportionate shares of any foreign taxes paid by the Fund, shareholders will not be required to include such taxes in their gross income and will not be entitled to a tax deduction or credit for such taxes on their own federal income tax returns.
State and Local Taxes
Shareholders may be subject to state and local taxes on distributions received from a Fund (including tax-exempt interest distributions) and on sales, exchanges, or redemptions of Fund shares. Rules of state and local taxation of distributions from RICs often differ from rules for federal income taxation described above. You are urged to consult your tax adviser as to the consequences of these and other state and local tax rules affecting an investment in a Fund.
Backup Withholding and Other Considerations
If a shareholder does not furnish a Fund with a correct social security number or taxpayer identification number, certify that it is correct, and certify that he, she, or it is not subject to backup withholding and/or the Fund receives notification from the IRS requiring backup withholding, the Fund is required by federal law to withhold federal income tax from all distributions (including tax-exempt
B-62
 
Table of Contents
interest distributions) and redemption proceeds paid to the shareholder at the rate set forth in the Code. Amounts withheld may be applied to the shareholder’s federal income tax liability and the shareholder may obtain a refund from the IRS if withholding results in an overpayment of federal income tax for such year.
Taxation of Non-U.S. Shareholders
The foregoing discussion relates solely to U.S. federal income tax law as applied to U.S. investors. Non-U.S. investors should consult their tax advisers concerning the tax consequences of ownership of shares of the Funds, including the possibility that distributions may be subject to a 30% U.S. withholding tax (or a reduced rate of withholding provided by an applicable tax treaty).
Under the Foreign Account Tax Compliance Act (FATCA), a Fund may be required to withhold a generally non-refundable 30% tax on distributions of investment company taxable income and distributions of net capital gain and the gross proceeds of a sale, redemption, or exchange of Fund shares to (i) certain “foreign financial institutions” unless such foreign financial institution agrees to verify, monitor, and report to the IRS the identity of certain of its accountholders, among other things (or unless such entity is otherwise deemed compliant pursuant to the terms of an intergovernmental agreement between the U.S. and the entity’s country of residence), and (ii) certain “non-financial foreign entities” unless such entity certifies to the Fund that it does not have any substantial U.S. owners or provides the name, address, and taxpayer identification number of each substantial U.S. owner, among other things. In December 2018, the IRS and U.S. Treasury Department released proposed Treasury Regulations that would eliminate FATCA withholding on Fund distributions of net capital gain and the gross proceeds from a sale or redemption of Fund shares. Although taxpayers including the Funds are entitled to rely on these proposed Treasury Regulations until final Treasury Regulations are issued, these proposed Treasury Regulations have not been finalized, may not be finalized in their proposed form, and are potentially subject to change. This FATCA withholding tax also could affect a Fund’s return on its investments in foreign stocks or securities or affect a shareholder’s return if the shareholder holds its Fund shares through a foreign intermediary. You are urged to consult your tax adviser regarding the application of this FATCA withholding tax to your investment in a Fund and the potential certification, compliance, due diligence, reporting, and withholding obligations to which you may become subject in order to avoid this withholding tax.
This section is not intended to be a full discussion of federal income tax laws and the effect of such laws on an investor. Other federal, state, local, or foreign tax considerations applicable to a particular investor may exist. Investors are urged to consult their own tax advisers.
Cost Basis Reporting
Each Fund is required to report to certain shareholders and the IRS the cost basis of shares acquired on or after January 1, 2012 (covered shares) when such shareholders sell, redeem, or exchange such shares. These requirements do not apply to shares held through a tax-deferred arrangement, such as a 401(k) plan or an IRA, or to shares held by tax-exempt organizations, financial institutions, corporations (other than S corporations), banks, credit unions, and certain other entities and governmental bodies. Shares acquired before January 1, 2012 (non-covered shares) are treated as if held in a separate account from covered shares. The Funds are not required to determine or report your cost basis in non-covered shares and are not responsible for the accuracy or reliability of any information provided for non-covered shares.
The cost basis of a share is generally its purchase price adjusted for distributions, returns of capital, and other corporate actions. Cost basis is used to determine whether the sale, redemption, or exchange of a share results in a capital gain or loss. If you sell, redeem, or exchange covered shares during any year, the Fund will report the gain or loss, cost basis, and holding period of such covered shares to you and the IRS on an applicable Form 1099.
A cost basis method is the method by which a Fund determines which specific covered shares are deemed to be sold, redeemed, or exchanged when you sell, redeem, or exchange less than your entire position in the Fund and have made multiple purchases of Fund shares on different dates at differing NAVs. If you do not affirmatively elect a cost basis method, each Fund will use the average cost method, which averages the basis of all Fund shares in your account regardless of holding period, and covered shares sold, exchanged, or redeemed are deemed to be those with the longest holding period first. You may elect in writing (and not over the telephone) any alternate IRS-approved cost basis method to calculate the cost basis in your covered shares. The default cost basis method applied by a Fund or the alternate method elected by you may not be changed after the settlement date of a sale of Fund shares.
If you hold Fund shares through a broker or another nominee, please contact that broker or nominee with respect to the reporting of cost basis and available elections for your account.
B-63
 
Table of Contents
You are encouraged to consult with your tax adviser regarding the application of these cost basis reporting rules and, in particular, which cost basis calculation method you should elect.
Directors and Officers
Directors
The Board of Directors is responsible for overseeing the business and affairs of the Corporation. Information regarding the directors of the Corporation, and their age and business experience during the past five years, are shown in the following table. The address of each director is 111 East Kilbourn Avenue, Suite 200, Milwaukee, Wisconsin 53202. Current directors who are not considered to be “interested persons” of the Corporation are referred to in this SAI as “independent directors.” The Corporation currently offers 27 separate portfolios or funds. The number of portfolios in the Fund Complex overseen by a Director set forth below includes the BMO LGM Frontier Markets Equity Fund, a closed-end management investment company. The information in the following table is as of the date of this SAI.
Interested Directors
Name and Age
 
Position(s) Held
with the
Corporation
 
Term of Office
and Length of
Time Served
(1)
 
Principal Occupation(s)
During Past 5 Years
 
Number of
Portfolios in
Fund
Complex
Overseen by
Director
 
Other
Directorships
Held by
Director
John M. Blaser
(2)

Age: 64 		  Director
and
President 		  Since
May 1999 		  Managing Director of the Adviser, since June 2012.   28   None
Daniela O’Leary-Gill
(2)

Age: 55 		  Director   Since
August 2018 		  Retired; formerly, Chief Operating Officer of BMO Financial Group, from 2018 to 2020; Director of the Adviser from 2018 to 2020; Head, Communications, Government & Investor Relations from 2016 to 2018; Head, AML Program Oversight from 2014 to 2016.   28   None
(1) Each director serves an indefinite term until he or she retires or otherwise resigns, is removed, dies, or until his or her successor is duly elected. Retirement for a director occurs no later than August 31 following his or her 75th birthday.
(2) Mr. Blaser is an “interested person” of the Corporation (as defined in the 1940 Act) due to the positions that he holds with the Corporation and the Adviser. Ms. O’Leary-Gill is an “interested person” of the Corporation due to the positions that she held with the Adviser and BMO.
Independent Directors
Name and Age
 
Position(s) Held
with the
Corporation
 
Term of Office
and Length of
Time Served
(1)
 
Principal Occupation(s)
During Past 5 Years
 
Number of
Portfolios in
Fund
Complex
Overseen by
Director
 
Other
Directorships
Held by
Director
Marie-Renée Bakker
Age: 63 		  Independent
Director 		  Since September 2020   Director, National Green Fund (a Dutch “green” investment fund) since 2016; previously, Senior Finance Manager at the World Bank Group (financial institution), 2005
–
2019. 		  28   None
B-64
 
Table of Contents
Name and Age
 
Position(s) Held
with the
Corporation
 
Term of Office
and Length of
Time Served
(1)
 
Principal Occupation(s)
During Past 5 Years
 
Number of
Portfolios in
Fund
Complex
Overseen by
Director
 
Other
Directorships
Held by
Director
Ridge A. Braunschweig
Age: 67 		  Independent
Director 		  Since October 2009   President and Chief Executive Officer, CPL Industries, Inc. (a manufacturing holding company prior to May 2009 and a family office since May 2009), since January 2012.   28   None
Teresa V. Jankovic
Age: 65 		  Independent
Director 		  Since September 2020   Founder and Independent Consultant, The Independent Consultant, LLC (a financial services consulting firm), since 2016; Managing Director, Bank of New York Mellon, from 2011 to 2016.   28   None
John A. Lubs
Age: 73 		  Independent
Director 		  Since July 2004   Retired; formerly, Vice Chairman, Mason Companies, Inc. (a footwear distributor), from 2004 to 2010 and Chief Operating Officer, from 2003 to 2010.   28   None
Vincent P. Lyles
Age: 59 		  Independent
Director 		  Since September 2017   Vice President of Community Relations, Advocate Aurora Health Care, since 2019; President and Chief Executive Officer, Boys & Girls Club of Greater Milwaukee, from 2012 to 2018.   28   None
Barbara J. Pope
Age: 72 		  Independent
Director 		  Since March 1999   Retired; formerly, President of Barbara J. Pope, P.C. (a financial consulting firm), from 1992 to 2015; President of Sedgwick Street Fund LLC (a private investment partnership), from 1996 to 2015; Tax Partner, Price Waterhouse.   28   None
(1) Each director serves an indefinite term until he or she retires or otherwise resigns, is removed, dies, or until his or her successor is duly elected. Retirement for a director occurs no later than August 31 following his or her 75th birthday.
Some of the independent directors, personally or through business relationships, have banking, investment management, custodial, or borrowing relationships with BMO Harris Bank and other affiliates of the Adviser.
Officers
The officers of the Corporation are elected annually by the Board and hold the same position with all of the Funds of the Corporation. Each officer holds office for one year and until the election and qualification of his or her successor. The address of each officer is 111 East Kilbourn Avenue, Suite 200, Milwaukee, Wisconsin 53202. Officers of the Corporation, together with information as to their principal business occupation during the past five years and certain other information, are shown in the following table as of the date of this SAI.
B-65
 
Table of Contents
Principal Officers
Name and Age
 
Position(s)
Held with the
Corporation
 
Term of Office and
Length of Time Served
 
Principal
Occupation(s)
During Past 5 Years
John M. Blaser
Age: 64 		  Director and President   Elected by the Board annually; since May 1999   Managing Director of the Adviser, since June 2012.
Brett Black
Age: 48
  Chief Compliance Officer and Anti-Money Laundering Compliance Officer   Elected by the Board annually; since November 2017   Vice President and Chief Compliance Officer of BMO Harris Bank, since 2017; Assistant Vice President, Deputy Chief Compliance Officer, since 2014; Senior Compliance Officer of BMO Harris Bank, since 2012.
Timothy M. Bonin
Age: 47 		  Vice President, Chief Financial Officer and Treasurer   Elected by the Board annually; since February 2006   Vice President of the Adviser, since February 2006.
Michael J. Murphy
Age: 42 		  Secretary   Elected by the Board annually; since May 2016   Senior Counsel and Vice President of BMO Harris Bank N.A., since 2014.
Board of Directors
The primary responsibility of the Board is to provide oversight of the management of the Funds. The Board is responsible for managing the Funds’ business affairs. During the fiscal year ended August 31, 2020, the Board held four meetings. The Board has established two standing committees, the Audit Committee and the Nominating and Governance Committee, to which it has delegated certain responsibilities. These Committees are comprised solely of independent directors.
The day-to-day operations of the Funds are managed by the Adviser with assistance from other service providers approved by the Board. The Board, directly and through its Committees, oversees the services provided by the Adviser and other Fund service providers. The Board does not have a chairperson or an independent lead director. The President of the Corporation, or such other person designated by the Board, serves as the chair of the Board meetings. Counsel to the Funds and independent directors attends all Board meetings. The Board is structured to encourage equal participation by all members and to provide for and to promote open and candid communication between the Board and Adviser and the other service providers to assist the Board in fulfilling its oversight responsibilities. The Board believes that this structure is appropriate in recognition of the historical relationship between the Funds and the Adviser and its affiliates, the assets and number of the BMO Funds overseen by the Board, and the nature of the BMO Funds’ investments.
As part of its general oversight responsibilities, the Board, directly and through its Committees, is involved in the risk oversight of the Funds. The Funds, the Adviser, and other Fund service providers have adopted policies, procedures and controls to address the Funds’ operational, investment, and compliance risks. The Board and its Committees meet regularly during the year to review, among other information related to the Funds’ operations, the contractual arrangements with the Adviser and other service providers for the Funds, the Funds’ performance, investment strategies, and limitations, and compliance and regulatory matters. The Board, directly and through its Committees, reviews information from the Adviser, other Fund service providers, the Funds’ independent registered public accounting firm, and counsel to the Funds and independent directors to assist it in its oversight responsibilities. The Board reviews the Funds’ performance and meets with the Adviser and Sub-Advisers, as applicable, and the Funds’ portfolio managers. As part of its compliance oversight, the Board receives and reviews the annual report prepared by the Chief Compliance Officer (CCO) as required by Rule 38a-1 under the 1940 Act and quarterly reports regarding the operation of the compliance policies and procedures, including any material compliance issues that arose during the quarter for the Funds. The independent directors also meet quarterly with the CCO in executive session. In addition, any material changes to a Fund’s investment objective, strategies, and restrictions must be approved by the Board.
The Audit Committee serves to provide an open avenue of communication among the Board, the Funds’ independent registered public accounting firm, and the internal accounting staff serving the Funds. The Board has adopted a written charter of the Audit Committee pursuant to which the Audit Committee evaluates the independence of, and approves the retention of, the
B-66
 
Table of Contents
independent registered public accounting firm to audit the financial statements of the Funds, reviews the results of Fund audits, and preapproves, or establishes preapproval policies and procedures concerning, all audit and non-audit services provided to the Funds. The Audit Committee monitors the accounting policies of the Funds, as well as the work of the independent registered public accounting firm. Ms. Bakker, Mr. Braunschweig (Chair), Ms. Jankovic, Mr. Lubs, Mr. Lyles, and Ms. Pope currently serve as members of the Audit Committee. During the fiscal year ended August 31, 2020, the Audit Committee held two meetings.
The Nominating and Governance Committee oversees the administration of the Corporation’s Governance Guidelines and Procedures. In addition, the Board has adopted a written charter of the Nominating and Governance Committee, pursuant to which the Nominating and Governance Committee evaluates and nominates, or recommends for nomination, candidates for the Board. The Nominating and Governance Committee may consider candidates for the Board submitted by shareholders if a vacancy were to exist. Shareholders who wish to recommend a nominee may do so by submitting the appropriate information about the candidate to the Corporation’s Secretary. Ms. Bakker, Mr. Braunschweig, Ms. Jankovic, Mr. Lubs, Mr. Lyles (Chair), and Ms. Pope currently serve as members of the Nominating and Governance Committee. During the fiscal year ended August 31, 2020, the Nominating and Governance Committee held three meetings.
The Board also oversees a Pricing Committee. The Pricing Committee meets as necessary and is comprised of members of the Adviser. The Pricing Committee is responsible for monitoring the valuation of Fund securities and other investments as well as determining the fair value of securities for which market quotations are not readily available, after consideration of all relevant factors, in accordance with the pricing procedures adopted by the Board. Any determinations by the Pricing Committee are subsequently reported to and reviewed by the full Board.
Director Experience and Qualifications
Following is a brief discussion of the experiences and qualifications that led to the conclusion that, as of the date of this SAI, each current Board member should serve as a director of the Corporation. Generally, each director’s professional, business, and educational background, judgment, ability to work effectively with the other directors and commitment to act in the best interests of the Funds were considered in determining his or her qualifications to serve on the Board. With respect to each director, the Board considered, among other factors, the following experiences and qualifications:
The Board considered that Mr. Blaser has served as a director and President of the Corporation since 1999 and Managing Director of the Adviser since June 2012. He also served as Vice President of the Adviser from 1998 to 2012. The Board also considered his professional and financial industry experience serving as chief financial officer for various fund complexes. The Board considered the audit, executive, financial, investment, and operations experience that Mr. Blaser gained over the course of his career and through his financial industry experience. The Board also considered that because of Mr. Blaser’s position with the Adviser, he is involved in the day-to-day management of the Adviser and the Corporation.
The Board considered that Ms. O’Leary-Gill has served as a director of the Corporation since 2018 and served as Chief Operating Officer of BMO Financial Group from February 1, 2018 until her retirement in 2020. She also served as an executive officer of the bank since 2001. The Board also considered that Ms. O’Leary-Gill held various executive positions within BMO including Head of Small Business, Senior Vice President, and Chief Auditor at BMO Harris Bank N.A. Ms. O’Leary-Gill joined Harris Bank’s Corporate Audit department in 1996 from the Office of the Comptroller of the Currency (OCC). At the OCC, Ms. O’Leary-Gill was a commissioned National Bank Examiner supervising safety and soundness examinations of nationally chartered banks in the Chicago region beginning in 1992. Prior to joining the OCC, she was a Commercial Banker at American National Bank and Retail Banker at Merchants National Bank. The Board also considered the executive, financial, and operations experience that Ms. O’Leary-Gill gained over the course of her career.
The Board considered Ms. Bakker’s professional experience serving in various leadership positions at the World Bank Group, her extensive experience serving as a member of the board of directors of several financial and non-profit institutions, and the executive, financial, and corporate governance experience that she has gained over the course of her career.
The Board considered that Mr. Braunschweig has served as a director of the Corporation since 2009, and that he serves as Chair of the Audit Committee. The Board considered his professional experience serving in various executive positions with CPL Industries, Inc. and his auditing experience. The Board also considered Mr. Braunschweig’s experience serving as an executive and director of a private charitable foundation. The Board considered the audit, executive, financial, and operations experience that Mr. Braunschweig gained over the course of his career.
B-67
 
Table of Contents
The Board considered Ms. Jankovic’s professional experience in her role as an independent financial consultant and serving in various leadership positions at Bank of New York Mellon, her experience as a financial services audit partner at an accounting firm, and the executive, financial, operations, and technology experience that she has gained over the course of her career.
The Board considered that Mr. Lubs has served as a director of the Corporation since 2004, and that he serves as Vice Chair of the Nominating and Governance Committee. The Board considered his professional experience serving in various executive positions with Mason Companies, Inc. The Board also considered the executive, financial, and operations experience that Mr. Lubs gained over the course of his career.
The Board considered that Mr. Lyles has served as a director of the Corporation since 2017, and that he serves as Chair of the Nominating and Governance Committee. The Board considered his professional experience, including currently serving as Vice President of Community Relations at Advocate Aurora Health Care. Mr. Lyles previously served as President and CEO of the Boys and Girls Club of Greater Milwaukee, President of M&I Community Development Corporation, and a Director of Robert W. Baird & Co. The Board also considered the executive, financial, legal, and operations experience that Mr. Lyles gained over the course of his career.
The Board considered that Ms. Pope has served as a director of the Corporation since 1999. The Board considered her professional experience serving as President of Barbara J. Pope, P.C. and President of Sedgwick Street Fund LLC, as well as her experience as a tax partner at an accounting firm. The Board also considered the executive, financial, and investment experience that Ms. Pope gained over the course of her career.
References to the experience and qualifications of the directors of the Corporation are pursuant to requirements of the SEC, do not constitute holding out the Board or any director as having any special expertise and shall not impose any greater responsibility or liability on any such person or on the Board by reason thereof.
Compensation of Directors
With respect to the fiscal year ended August 31, 2020, each independent director was paid an aggregate retainer of $110,000. The Corporation does not pay any fees to Mr. Blaser or other officers. Neither the Corporation nor the Funds maintain any deferred compensation, pension or retirement plans, and no pension or retirement benefits are accrued as Corporation or Fund expenses. The following table shows the fees paid to the directors by the Corporation for the fiscal year ended August 31, 2020.
Name
 
Aggregate
Compensation
from the
Corporation
(1)
 
Total Compensation
from the Corporation
and Fund Complex
Paid to Directors
(1)
Ridge A. Braunschweig
  $116,250   $120,000
Benjamin M. Cutler
(2)
  $116,250   $120,000
John A. Lubs
  $116,250   $120,000
Vincent P. Lyles
  $116,250   $120,000
James Mitchell
(3)
  $116,250   $120,000
Barbara J. Pope
  $116,250   $120,000
Daniela O’Leary-Gill
  $
58,125 		  $
60,000
(1) The BMO Funds Complex currently consists of 28 Funds, including the BMO LGM Frontier Markets Equity Fund. Each series of the Corporation pays an equal portion of the total compensation received by each independent director, adjusted based on each Fund’s inception date, if shorter than one fiscal year.
(2) Mr. Cutler retired from the Board effective August 31, 2020.
(3) Mr. Mitchell retired from the Board effective March 20, 2020.
Board Ownership of Shares in the Funds and in the BMO Funds Family as of December 31, 2019.
Name of Director
(1)
 
Fund Name
 
Dollar Range of
Shares Owned in
Fund
 
Aggregate Dollar
Range of Shares
Owned in BMO Funds
John M. Blaser
  Ultra Short-Tax Free   Over $100,000   Over $100,000
Interested Director   Short Tax-Free   Over $100,000        
    Intermediate Tax-Free   Over $100,000        
    Short-Term Income   Over $100,000        
    Tax-Free Money Market   Over $100,000        
B-68
 
Name of Director
(1)
 
Fund Name
 
Dollar Range of
Shares Owned in
Fund
 
Aggregate Dollar
Range of Shares
Owned in BMO Funds
    Balanced Allocation   Over $100,000        
Ridge A. Braunschweig
  Core Plus Bond   Over $100,000   Over $100,000
Independent Director   Ultra Short Tax-Free   Over $100,000    
    Intermediate Tax-Free   Over $100,000        
John A. Lubs
  Large-Cap Value   $50,001 –
$100,000   Over $100,000
Independent Director   Dividend Income   $10,001 –
$50,000        
    Large-Cap Growth   $50,001 –
$100,000        
    Mid-Cap Value   $10,001 –
$50,000        
    Mid-Cap Growth   $10,001 –
$50,000        
    Small-Cap Growth   $10,001 –
$50,000        
    Corporate Income   $10,001 –
$50,000        
Vincent P. Lyles   Dividend Income   $10,001 –
$50,000   Over $100,000
Independent Director   Large-Cap Value   $10,001 –
$50,000        
    Large-Cap Growth   $10,001 –
$50,000        
    Mid-Cap Value   $10,001 –
$50,000        
    Mid-Cap Growth   $10,001 –
$50,000        
    Pyrford International Stock   $10,001 –
$50,000        
    LGM Emerging Markets Equity   $10,001 –
$50,000        
    Core Plus Bond   $10,001 –
$50,000        
Daniela O’Leary-Gill
  Moderate Allocation   $1 –
$10,000   $10,001 –
$50,000
Interested Director   Growth Allocation   $1 –
$10,000        
Barbara J. Pope
  Dividend Income   $50,001 –
$100,000   Over $100,000
Independent Director   Large-Cap Value   Over $100,000        
    Large-Cap Growth   Over $100,000        
    Mid-Cap Value   $50,001 –
$100,000        
    Mid-Cap Growth   Over $100,000        
    Small-Cap Growth   $50,001 –
$100,000        
    Pyrford International Stock   $50,001 –
$100,000        
    Strategic Income   $50,001 –
$100,000        
    Core Plus Bond   Over $100,000        
    Tax-Free Money Market   $10,001 –
$50,000        
    Prime Money Market   $10,001 –
$50,000        
Marie-Renée Bakker
  N/A                
Independent Director                    
Teresa V. Jankovic
  N/A                
Independent Director                    
(1) Dollar range of shares owned in any Fund that is not identified in this table is “None.”
Information About the Adviser and Sub-Advisers
Adviser to the Funds
The Funds’ investment adviser is BMO Asset Management Corp., a Delaware corporation headquartered in Chicago, Illinois.
The Adviser conducts investment research and makes investment decisions for the Funds, except for the
Pyrford International Stock
and
LGM Emerging Markets Equity
, for which the Adviser performs oversight of the Funds’ Sub-Advisers as described below. The Adviser provides investment management services for investment companies, financial institutions, individuals, corporations, and not-for-profit organizations and is registered as an investment adviser with the SEC. The Adviser shall not be liable to the
B-69
 
Table of Contents
Corporation, the Funds, or any shareholder of a Fund for any losses that may be sustained in the purchase, holding, or sale of any security or for anything done or omitted by it, except acts or omissions involving willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties imposed upon it by its contract with the Corporation. Because of the internal controls maintained by the Adviser’s affiliates to restrict the flow of non-public information, Fund investments are typically made without any knowledge of the lending relationships that affiliates of the Adviser may have. The control persons of the Adviser are described in the Adviser’s Uniform Application for Investment Adviser Registration (Form ADV) as filed with the SEC.
As compensation for the Adviser’s investment advisory services under the investment advisory agreement with the Corporation, each Fund (excluding the
Target Risk Funds
, as discussed below) pays the Adviser, on a monthly basis, an annual investment advisory fee based on the percentage of the average daily net assets of the Fund (ADNA) and subject to certain breakpoints as listed in the following tables:
   
Advisory Fee (as % of each Fund’s ADNA)
Fund
 
on the first
$500 million
 
on the next
$200 million
 
on the next
$100 million
 
in excess of
$800 million
Low Volatility Equity
  0.40%   0.39%   0.35%   0.30%
Dividend Income
  0.50%   0.49%   0.45%   0.40%
Mid-Cap Value
  0.685%   0.67%   0.57%   0.51%
Mid-Cap Growth
  0.685%   0.67%   0.57%   0.51%
Small-Cap Value
  0.685%   0.68%   0.62%   0.61%
Small-Cap Growth
  0.685%   0.68%   0.62%   0.61%
Global Low Volatility Equity
  0.50%   0.49%   0.45%   0.40%
Pyrford International Stock
  0.735%   0.72%   0.62%   0.56%
LGM Emerging Markets Equity
  0.90%   0.89%   0.85%   0.80%
    
   
Advisory Fee (as % of each Fund’s ADNA)
Fund
 
on the first
$100 million
 
on the next
$150 million
 
on the next
$250 million
 
in excess of
$500 million
Ultra Short Tax-Free
  0.20%   0.19%   0.17%   0.10%
Short Tax-Free
  0.20%   0.19%   0.17%   0.15%
Short-Term Income
  0.20%   0.19%   0.17%   0.10%
Intermediate Tax-Free
  0.25%   0.16%   0.12%   0.10%
Strategic Income
  0.25%   0.20%   0.20%   0.20%
Corporate Income
  0.20%   0.19%   0.15%   0.10%
Core Plus Bond
  0.25%   0.16%   0.12%   0.10%
    
   
Advisory Fee (as % of each Fund’s ADNA)
Fund
 
on the first
$1 billion
 
on the next
$1 billion
 
in excess of
$2 billion
Large-Cap Value
  0.35%   0.325%   0.30%
Large-Cap Growth
  0.35%   0.325%   0.30%
Disciplined International Equity
  0.60%   0.575%   0.55%
    
   
Advisory Fee (as % of each Fund’s ADNA)
Fund
 
on the first
$2 billion
 
on the next
$2 billion
 
on the next
$2 billion
 
on the next
$2 billion
 
in excess of
$8 billion
Government Money Market
  0.20%   0.185%   0.17%   0.155%   0.14%
Tax-Free Money Market
  0.20%   0.185%   0.17%   0.155%   0.14%
Prime Money Market
  0.15%   0.135%   0.12%   0.105%   0.09%
The Adviser does not receive an investment advisory fee for the services that it performs for the
Target Risk Funds
. However, the Adviser is entitled to receive an investment advisory fee from each of the affiliated BMO Funds that serve as underlying funds in which the
Target Risk Funds
invest. In addition, since each
Target Risk Fund
pursues its investment objective by primarily investing in other mutual funds, you will bear the proportionate share of a Fund’s operating expenses and also indirectly, the operating expenses of the underlying funds in which it invests.
B-70
 
The Adviser has agreed to waive or reduce its investment advisory fee or reimburse expenses to the extent necessary to prevent class total annual operating expenses (excluding acquired fund fees and expenses, interest, taxes, brokerage commissions, other investment-related costs, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of a Fund’s business for all Funds), from exceeding the percentage of the average daily net assets of each class of the following Funds (the Expense Limit), as set forth below. The Adviser may not terminate this arrangement prior to December 31, 2021 without the consent of the Corporation’s Board of Directors unless terminated due to the termination of the investment advisory agreement.
Fund
 
Expense Limit
(as a % of each
Fund’s ADNA)
Low Volatility Equity
   
Class I
  0.65%
Class A
  0.90%
Dividend Income
   
Class I
  0.65%
Class A
  0.90%
Large-Cap Value
   
Class I
  0.54%
Class A
  0.79%
Class R6
  0.39%
Large-Cap Growth
   
Class Y
  0.79%
Class I
  0.54%
Class A
  0.79%
Class R6
  0.39%
Mid-Cap Value
   
Class I
  0.99%
Class A
  1.24%
Class R6
  0.84%
Mid-Cap Growth
   
Class I
  0.99%
Class A
  1.24%
Class R6
  0.84%
Small-Cap Value Fund
   
Class I
  0.99%
Class A
  1.24%
Class R6
  0.84%
Small-Cap Growth
   
Class I
  0.99%
Class A
  1.24%
Global Low Volatility Equity
   
Class I
  0.85%
Class A
  1.10%
Disciplined International Equity
   
Class I
  0.90%
Class A
  1.15%
Class R6
  0.75%
Pyrford International Stock
   
Class I
  0.94%
Class A
  1.19%
Class R6
  0.79%
Fund
 
Expense Limit
(as a % of each
Fund’s ADNA)
LGM Emerging Markets Equity
   
Class I
  1.15%
Class A
  1.40%
Ultra Short Tax-Free
   
Class I
  0.30%
Class A
  0.55%
Short Tax-Free
   
Class I
  0.40%
Class A
  0.55%
Short-Term Income
   
Class I
  0.35%
Class A
  0.60%
Intermediate Tax-Free
   
Class Y
  0.54%
Class I
  0.50%
Class A
  0.54%
Strategic Income
   
Class Y
  0.80%
Class I
  0.55%
Class A
  0.80%
Corporate Income
   
Class Y
  0.59%
Class I
  0.55%
Class A
  0.59%
Core Plus Bond
   
Class Y
  0.59%
Class I
  0.55%
Class A
  0.59%
Government Money Market
   
Class Y
  0.45%
Premier Class
  0.20%
Tax-Free Money Market
   
Class Y
  0.45%
Premier Class
  0.20%
Prime Money Market
   
Class Y
  0.45%
Premier Class
  0.20%
 
B-71
 
Fund
 
Expense Limit
(as a % of each
Fund’s ADNA)
Conservative Allocation
   
Class Y
  0.33%
Class I
  0.08%
Class R3
  0.58%
Class R6
  -0.07%
Moderate Allocation
   
Class Y
  0.30%
Class I
  0.05%
Class R3
  0.55%
Class R6
  -0.10%
Balanced Allocation
   
Class Y
  0.33%
Class I
  0.08%
Class R3
  0.58%
Class R6
  -0.07%
Fund
 
Expense Limit
(as a % of each
Fund’s ADNA)
Growth Allocation
   
Class Y
  0.30%
Class I
  0.05%
Class R3
  0.55%
Class R6
  -0.10%
Aggressive Allocation
   
Class Y
  0.33%
Class I
  0.08%
Class R3
  0.58%
Class R6
  -0.07%
In addition, the Adviser may voluntarily waive any portion of its management fee for a Fund. Any such voluntary waivers by the Adviser may be terminated at any time in the Adviser’s sole discretion.
 
For the fiscal periods ended August 31, 2020, 2019, and 2018, the Adviser was entitled to receive the management fees shown below. During those same periods, the Adviser and/or its affiliates waived or reimbursed the amounts shown below.
Fund
 
2020 Fees
Paid
 
2020 Fees
Waived or
Reimbursed
 
2019 Fees
Paid
 
2019 Fees
Waived or
Reimbursed
 
2018 Fees
Paid
 
2018 Fees
Waived or
Reimbursed
Low Volatility Equity
  $1,065,888   $
80,926 		  $
768,846
(1)
  $
192,684 		  $
719,277 		  $
187,965
Dividend Income
  $1,452,423   $
323,231 		  $1,039,529   $
260,714 		  $
655,187 		  $
189,384
Large-Cap Value
  $1,060,655   $
172,256 		  $1,159,777   $
175,131 		  $
1,510,324
(2)
  $
94,728
Large-Cap Growth
  $1,595,765   $
168,971 		  $1,512,628   $
183,125 		  $
1,590,581
(2)
  $
101,728
Mid-Cap Value
  $
829,844 		  $
77,133 		  $1,154,822   $
28,301 		  $
1,403,156 		  $
13,356
Mid-Cap Growth
  $
652,553 		  $
93,065 		  $
736,873 		  $
82,492 		  $
832,345 		  $
85,334
Small-Cap Value
  $
347,783 		  $
124,247 		  $
431,698 		  $
96,838 		  $
475,449 		  $
117,810
Small-Cap Growth
  $
641,396 		  $
91,484 		  $
830,505 		  $
76,129 		  $
970,668 		  $
46,528
Global Low Volatility Equity
  $
150,205 		  $
178,516 		  $
209,592
(1)
  $
167,958 		  $
307,096 		  $
156,239
Disciplined International Equity
  $
299,917 		  $
138,108 		  $
453,290 		  $
97,532 		  $
460,337 		  $
97,375
Pyrford International Stock
  $4,713,849   $
40,585 		  $4,752,945   $
107,692 		  $
5,047,112 		  $
135,965
LGM Emerging Markets Equity
  $2,434,152   $
307,589 		  $2,168,075   $
248,190 		  $
1,746,359 		  $
284,034
Ultra Short Tax-Free
  $
958,955 		  $
433,082 		  $
991,361 		  $
415,484 		  $
1,058,435 		  $
461,283
Short Tax-Free
  $
280,500 		  $
132,972 		  $
342,299 		  $
124,429 		  $
369,033 		  $
145,559
Short-Term Income
  $
490,948 		  $
261,272 		  $
483,014 		  $
252,467 		  $
477,303 		  $
269,806
Intermediate Tax-Free
  $2,197,271   $
103,984 		  $2,087,381   $
34,042 		  $
1,953,177 		  $
5,749
Strategic Income
  $
178,870 		  $
147,776 		  $
199,680 		  $
124,989 		  $
246,258 		  $
113,491
Corporate Income
  $
638,717 		  $
70,131 		  $
542,758 		  $
82,128 		  $
487,180 		  $
40,996
Core Plus Bond
  $1,380,588   $
0 		  $1,280,810   $
0 		  $
1,345,520 		  $
0
Government Money Market
  $6,793,328   $1,607,270   $5,928,663   $1,589,294   $
6,379,345 		  $1,665,818
Tax-Free Money Market
  $
749,481 		  $
414,999 		  $
847,840 		  $
427,937 		  $
733,875 		  $
411,254
Prime Money Market
  $
830,561 		  $
298,271 		  $
695,095 		  $
294,393 		  $
639,739 		  $
300,074
Conservative Allocation
  $
0 		  $
199,611 		  $
0 		  $
180,794 		  $
0 		  $
208,216
Moderate Allocation
  $
0 		  $
211,268 		  $
0 		  $
196,769 		  $
0 		  $
235,607
Balanced Allocation
  $
0 		  $
298,815 		  $
0 		  $
325,736 		  $
0 		  $
401,493
Growth Allocation
  $
0 		  $
222,737 		  $
0 		  $
214,837 		  $
0 		  $
256,755
B-72
 
Fund
 
2020 Fees
Paid
 
2020 Fees
Waived or
Reimbursed
 
2019 Fees
Paid
 
2019 Fees
Waived or
Reimbursed
 
2018 Fees
Paid
 
2018 Fees
Waived or
Reimbursed
Aggressive Allocation
  $
0 		  $
241,560 		  $
0 		  $
235,914 		  $
0 		  $
281,981
(1) Amounts in 2019 for
Low Volatility
and
Global Low Volatility
include fees based on the prior advisory fee rates which were changed effective December 27, 2019.
(2) Amounts in 2018 for
Large-Cap Value
and
Large-Cap Growth
include fees based on the prior advisory fee rates which were changed effective February 7, 2018.
Sub-Advisers to Pyrford International Stock and LGM Emerging Markets Equity
It is the Adviser’s responsibility to select sub-advisers for
Pyrford International Stock
and
LGM Emerging Markets Equity
and to review each Sub-Adviser’s performance. Pyrford is the sub-adviser to
Pyrford International Stock
. LGM Investments is the sub-adviser to
LGM Emerging Markets Equity
. The Adviser provides investment management evaluation services by performing initial due diligence on each Sub-Adviser and, thereafter, by monitoring the Sub-Advisers’ performance through quantitative and qualitative analysis, as well as periodic in-person, telephonic, and written consultations. In evaluating the Sub-Advisers, the Adviser considers, among other factors, their level of expertise; relative performance and consistency of performance over a minimum period of time; level of adherence to investment discipline or philosophy; personnel, facilities, and financial strength; and quality of service and client communications. The Adviser has the responsibility for communicating performance expectations and evaluations to the Sub-Advisers and ultimately recommending to the Corporation’s Board whether their sub-advisory agreements should be renewed, modified, or terminated.
The Corporation and the Adviser have received an order from the SEC that permits the Adviser, subject to certain conditions, but without shareholder approval, to terminate an existing sub-adviser or hire a new, wholly-owned or non-affiliated sub-adviser for a Fund, to materially amend the terms of particular agreements with a sub-adviser, or to continue the employment of an existing sub-adviser after events that would otherwise cause an automatic termination of a sub-advisory agreement. This arrangement, which is commonly referred to as a “manager-of-managers” investment strategy, has been approved by the Board of Directors but is not currently utilized by any Fund. A Fund may rely on the exemptive order, subject to shareholder approval and so long as it (i) is advised by the Adviser; (ii) uses the manager-of managers structure that is described in the exemptive application; and (iii) complies with the terms and conditions of the exemptive application. The sole initial shareholder of the
Disciplined International Equity
Fund
has previously approved this arrangement if the Board of Directors and the Adviser choose to use it. Consequently, under the exemptive order, the Adviser has the right to hire, terminate, and replace sub-advisers when the Board of Directors and the Adviser determine that a change would benefit a Fund.
Pursuant to the conditions imposed by the exemptive order, if a new sub-adviser is retained, shareholders of the affected Fund will receive notification of the change within 90 days, and the Corporation will make available and maintain the notification on its website for 90 days thereafter. The exemptive order also exempts a Fund from certain requirements to disclose the compensation paid by the Adviser to the sub-adviser. The manager-of-managers structure enables each Fund to operate with greater efficiency and without incurring the expense and delays associated with obtaining shareholder approval of sub-advisory agreements. The structure does not permit advisory fees paid by a Fund to be increased or change the Adviser’s obligations under the investment advisory agreement, including the Adviser’s responsibility to monitor and oversee sub-advisory services furnished to the Fund, without shareholder approval.
The Adviser provides written reports to the Board regarding the results of its evaluation and monitoring functions. The Adviser also is responsible for conducting all operations of the Funds, except those operations contracted to the Sub-Advisers, the custodian, the transfer agent, and the administrator. Although the Sub-Advisers’ activities are subject to oversight by the Board and officers of the Corporation, neither the Board, the officers, nor the Adviser evaluates the investment merits of the Sub-Advisers’ individual security selections. The Sub-Advisers have complete discretion to purchase, manage, and sell portfolio securities for their respective Funds, subject to the Fund’s investment objective, policies, and limitations. The control persons of each Sub-Adviser are described in each Sub-Adviser’s Form ADV as filed with the SEC.
Pyrford.
Pyrford is a registered investment adviser that is a wholly-owned subsidiary of the Bank of Montreal Capital Markets (Holdings) Ltd, a BMO Financial Group company. As part of BMO’s private client group, Pyrford provides wealth management services to clients in North America, the Middle East, UK, and Europe. Pyrford’s address is 95 Wigmore Street, London, United Kingdom, W1U 1FD. For its services to
Pyrford International Stock
, the Adviser pays Pyrford a fee at the rate of forty percent (40%) of the gross advisory fee received by the Adviser.
B-73
 
Table of Contents
LGM Investments.
LGM Investments is an investment advisory firm founded in 1995 that specializes in Asia Pacific, global emerging market, and frontier market entities and provides investment management services to pension funds, foundations, government organizations, high net worth individuals, hedge funds, and other funds sponsored by it. LGM Investments is a wholly-owned subsidiary of BMO. LGM Investments’ address is 95 Wigmore Street, London, United Kingdom, W1U 1FD. For its services to
LGM Emerging Markets Equity
, LGM Investments, a registered investment adviser, receives a fee at the annual rate of forty percent (40%) of the gross advisory fee received by the Adviser. From December 29, 2011 to December 28, 2012, Lloyd George Management (Hong Kong) Limited, another subsidiary of LGM, served as the subadviser to
LGM Emerging Markets Equity
. The subadvisory agreement was transferred to LGM Investments effective December 28, 2012.
All fees of the Sub-Advisers are paid by the Adviser. BMO is the ultimate parent company of the Adviser, Pyrford, and LGM Investments. Accordingly, the Adviser, Pyrford, and LGM Investments are affiliates.
Portfolio Managers
Other Accounts Managed by Portfolio Managers of the Funds
As described in the Funds’ Prospectuses, the portfolio managers listed below are jointly and primarily responsible for the day-to-day management of the applicable Fund and the other accounts are generally managed jointly with the other portfolio manager(s). Unless noted otherwise, none of the mutual fund clients listed in the table pays a performance-based fee to the Adviser or Sub-Advisers.
B-74
 
Table of Contents
Other Accounts Managed by the Portfolio Managers
of the Funds as of August 31, 2020
   
Other Registered
Investment Companies
Managed by Portfolio
Manager
 
Other Pooled
Investment Vehicle
Managed by
Portfolio Manager
 
Other Accounts
Managed by
Portfolio Manager
Fund/Portfolio
Manager/Firms
 
Number
 
Total
Assets ($)
 
Number
 
Total
Assets ($)
 
Number with
Performance-
Based Fees
 
Total Assets
of
Pooled
Investment
Vehicles with
Performance-
Based Fees ($)
 
Number
 
Total
Assets ($)
 
Number
with
Performance-
Based Fees
 
Total
Assets of
Accounts
with
Performance-
Based Fees ($)
Low Volatility Equity
                                       
David A. Corris
  3   529.0 million   17   3.661 billion   —   —   92   5.482 billion   —   —
Jason C. Hans
  1   122.6 million   10   3.128 billion   —   —   61   4.592 billion   —   —
Jay Kaufman
  —   —   5   910.9 million   —   —   12   788.1 million   1   493.8 million
David Rosenblatt
  —   —   5   910.9 million   —   —   7   714.8 million   1   493.8 million
Dividend Income
                                       
Kenneth Conrad
  —   —   3   333.7 million   —   —   16   149.2 million   —   —
Casey J. Sambs
  —   —   3   333.7 million   —   —   82   564.5 million   —   —
Large-Cap Value
                                       
David A. Corris
  3   529.0 million   17   3.661 billion   —   —   92   5.482 billion   —   —
J.P. Gurnee
  1   122.6 million   10   3.128 billion   —   —   57   4.487 billion   —   —
Jason C. Hans
  1   122.6 million   10   3.128 billion   —   —   61   4.592 billion   —   —
Large-Cap Growth
                                       
David A. Corris
  3   529.0 million   17   3.661 billion   —   —   92   5.482 billion   —   —
J.P. Gurnee
  1   122.6 million   10   3.128 billion   —   —   57   4.487 billion   —   —
Jason C. Hans
  1   122.6 million   10   3.128 billion   —   —   61   4.592 billion   —   —
Mid-Cap Value
                                       
David A. Corris
  3   529.0 million   17   3.661 billion   —   —   92   5.482 billion   —   —
J.P. Gurnee
  1   122.6 million   10   3.128 billion   —   —   57   4.487 billion   —   —
Thomas Lettenberger
  2   406.4 million   7   533.0 million   —   —   31   787.6 million   —   —
Mid-Cap Growth
                                       
David A. Corris
  3   529.0 million   17   3.661 billion   —   —   92   5.482 billion   —   —
J.P. Gurnee
  1   122.6 million   10   3.128 billion   —   —   57   4.487 billion   —   —
Thomas Lettenberger
  2   406.4 million   7   533.0 million   —   —   31   787.6 million   —   —
Small-Cap Value
                                       
David A. Corris
  3   529.0 million   17   3.661 billion   —   —   92   5.482 billion   —   —
Thomas Lettenberger
  2   406.4 million   7   533.0 million   —   —   31   787.6 million   —   —
B-75
 
   
Other Registered
Investment Companies
Managed by Portfolio
Manager
 
Other Pooled
Investment Vehicle
Managed by
Portfolio Manager
 
Other Accounts
Managed by
Portfolio Manager
Fund/Portfolio
Manager/Firms
 
Number
 
Total
Assets ($)
 
Number
 
Total
Assets ($)
 
Number with
Performance-
Based Fees
 
Total Assets
of
Pooled
Investment
Vehicles with
Performance-
Based Fees ($)
 
Number
 
Total
Assets ($)
 
Number
with
Performance-
Based Fees
 
Total
Assets of
Accounts
with
Performance-
Based Fees ($)
Small-Cap Growth
                                       
David A. Corris
  3   529.0 million   17   3.661 billion   —   —   92   5.482 billion   —   —
Thomas Lettenberger
  2   406.4 million   7   533.0 million   —   —   31   787.6 million   —   —
Global Low Volatility Equity
                                       
Jay Kaufman
  —   —   5   910.9 million   —   —   12   788.1 million   1   493.8 million
David Rosenblatt
  —   —   5   910.9 million   —   —   7   714.8 million   1   493.8 million
Disciplined International Equity
                                       
Jay Kaufman
  —   —   5   910.9 million   —   —   12   788.1 million   1   493.8 million
David Rosenblatt
  —   —   5   910.9 million   —   —   7   714.8 million   1   493.8 million
Pyrford International Stock
                                       
Tony Cousins (Pyrford)
  3   847.2 million   5   4.788 billion   —   —   31   6.071 billion   1   412.2 million
Daniel McDonagh (Pyrford)
  3   847.2 million   5   4.788 billion   —   —   31   6.071 billion   1   412.2 million
Paul Simons (Pyrford)
  3   847.2 million   5   4.788 billion   —   —   31   6.071 billion   1   412.2 million
LGM Emerging Markets Equity
                                       
Irina Hunter (LGM Investments)
  —   —   8   1.552 billion   —   —   —   —   —   —
Rishikesh Patel (LGM Investments)
  —   —   14   2.535 billion   —   —   3   820.0 million   1   21.7 million
Ultra Short Tax-Free
                                       
Robert Wimmel
  —   —   —   —   —   —   77   686.1 million   —   —
Thomas Byron
  —   —   —   —   —   —   77   686.1 million   —   —
Brian Sipich
  —   —   —   —   —   —   77   686.1 million   —   —
Short Tax-Free
                                       
Robert Wimmel
  —   —   —   —   —   —   77   686.1 million   —   —
Thomas Byron
  —   —   —   —   —   —   77   686.1 million   —   —
Brian Sipich
  —   —   —   —   —   —   77   686.1 million   —   —
Short-Term Income
                                       
Peter J. Arts
  —   —   7   1.186 billion   —   —   120   7.756 billion   —   —
Boyd R. Eager
  —   —   2   322.7 million   —   —   114   5.973 billion   —   —
Don McConnell
  —   —   1   10.4 million   —   —   50   1.118 billion   —   —
B-76
 
   
Other Registered
Investment Companies
Managed by Portfolio
Manager
 
Other Pooled
Investment Vehicle
Managed by
Portfolio Manager
 
Other Accounts
Managed by
Portfolio Manager
Fund/Portfolio
Manager/Firms
 
Number
 
Total
Assets ($)
 
Number
 
Total
Assets ($)
 
Number with
Performance-
Based Fees
 
Total Assets
of
Pooled
Investment
Vehicles with
Performance-
Based Fees ($)
 
Number
 
Total
Assets ($)
 
Number
with
Performance-
Based Fees
 
Total
Assets of
Accounts
with
Performance-
Based Fees ($)
Intermediate Tax-Free
                                       
Robert Wimmel
  —   —   —   —   —   —   77   686.1 million   —   —
Thomas Byron
  —   —   —   —   —   —   77   686.1 million   —   —
Brian Sipich
  —   —   —   —   —   —   77   686.1 million   —   —
Strategic Income
                                       
Scott M. Kimball
  —   —   —   —   —   —   73   10.101 billion   —   —
Frank Reda
  —   —   —   —   —   —   73   10.101 billion   —   —
Corporate Income
                                       
Scott M. Kimball
  —   —   —   —   —   —   73   10.101 billion   —   —
Frank Reda
  —   —   —   —   —   —   73   10.101 billion   —   —
Core Plus Bond
                                       
Scott M. Kimball
  —   —   —   —   —   —   73   10.101 billion   —   —
Frank Reda
  —   —   —   —   —   —   73   10.101 billion   —   —
Conservative Allocation
                                       
Jon Adams
  —   —   —   —   —   —   10,513   5.702 billion   —   —
Michael Dowdall
  —   —   —   —   —   —   10,361   5.659 billion   —   —
Moderate Allocation
                                       
Jon Adams
  —   —   —   —   —   —   10,513   5.702 billion   —   —
Michael Dowdall
  —   —   —   —   —   —   10,361   5.659 billion   —   —
Balanced Allocation
                                       
Jon Adams
  —   —   —   —   —   —   10,513   5.702 billion   —   —
Michael Dowdall
  —   —   —   —   —   —   10,361   5.659 billion   —   —
Growth Allocation
                                       
Jon Adams
  —   —   —   —   —   —   10,513   5.702 billion   —   —
Michael Dowdall
  —   —   —   —   —   —   10,361   5.659 billion   —   —
Aggressive Allocation
                                       
Jon Adams
  —   —   —   —   —   —   10,513   5.702 billion   —   —
Michael Dowdall
  —   —   —   —   —   —   10,361   5.659 billion   —   —
B-77
 
Table of Contents
Conflicts of Interest
A conflict of interest may arise as a result of a portfolio manager being responsible for multiple accounts, including the Funds, which may have different investment guidelines and objectives. In addition to the Funds, these accounts may include other mutual funds managed on an advisory or subadvisory basis, separate accounts, and collective trust accounts. An investment opportunity may be suitable for a Fund as well as for any of the other managed accounts. However, the investment may not be available in sufficient quantity for all of the accounts to participate fully. In addition, a limited opportunity may exist to sell an investment held by a Fund and the other accounts. The other accounts may have similar investment objectives or strategies as the Funds, they may track the same benchmarks or indexes as the Funds track, and they may sell securities that are eligible to be held, sold or purchased by the Funds. A portfolio manager may be responsible for accounts that have different advisory fee schedules, which may create the incentive for the portfolio manager to favor one account over another in terms of access to investment opportunities. A portfolio manager also may manage accounts whose investment objectives and policies differ from those of the Funds, which may cause the portfolio manager to effect trading in one account that may have an adverse effect on the value of the holdings within another account, including a Fund.
To address and manage these potential conflicts of interest, each of the Adviser, Pyrford, and LGM Investments has adopted compliance policies and procedures to allocate investment opportunities and to ensure that each of their clients is treated on a fair and equitable basis. Such policies and procedures include, but are not limited to, trade allocation and trade aggregation policies, cross trading policies, portfolio manager assignment practices, and oversight by investment management, and/or compliance departments.
All of the portfolio managers for the Funds must make investment decisions without taking into consideration or being in possession of material, non-public information about the securities and other instruments in which they invest. The Adviser and each Sub-adviser have established procedures to prevent portfolio managers from trading on material, non-public information. For the portfolio managers of the
Target Risk Funds
, this prohibition applies to material, non-public information about the underlying funds. In the event that a portfolio manager of a
Target Risk Fund
comes into possession of material, non-public information about an underlying affiliated fund, the portfolio managers’ ability to initiate transactions in the underlying affiliated fund could potentially be restricted as a result of the portfolio manager’s possession of such information. The trading restriction could have an adverse effect on the ability of a fund managed by such portfolio managers to participate in any potential gains or avoid any potential losses in the restricted underlying affiliated fund. In some instances, these trading restrictions could continue in effect for a substantial period of time.
Compensation of Portfolio Managers
Compensation for the portfolio managers of the Adviser and each affiliated Sub-Adviser (LGM Investments and Pyrford) consists of base salary, discretionary performance bonuses, and other benefits. Base salaries are reviewed on an annual basis to ensure alignment with the external market. Discretionary performance bonuses vary according to business and individual performance and are provided in a combination of cash and deferred equity-based awards for employees at higher levels of compensation. Portfolio managers also may have a long-term incentive program consisting of restricted share units or other units linked to the performance of BMO.
BMO ensures that its compensation programs provide for clear alignment between pay and sustained business, client and individual performance as well as recognize behaviors which align to core values and contribute to the success of BMO and BMO clients. The compensation programs are designed to support and promote effective risk management, aligned to clients’ risk objectives and BMO’s corporate risk appetite and reflect local regulatory and legal requirements. The approach to compensation does not encourage excessive risk-taking that exceeds tolerated levels of risk.
With respect to any perceived conflicts of interest relating to the payment model, the risk management focus of the investment process drives all key decision making. Likewise, individual compensation is weighted more toward long term profit from fee-based client relationships than it is on short term performance, which further motivates the team to achieve stable long-term fee-based relationships through consistent benchmark outperformance and capital preservation. Finally, the deferred equity-linked component of the incentive compensation plan promotes a long-term interest in firm value.
As of the date of this SAI, the structures and methods described above are used to determine each portfolio manager’s compensation.
B-78
 
Table of Contents
Ownership of Fund Shares by Portfolio Managers
As of August 31, 2020, the portfolio managers beneficially owned shares of the Funds they manage having a value within the range shown below.
Fund/Portfolio Manager
 
Dollar Range of Shares Owned
Low Volatility Equity
       
David A. Corris
  $50,001 –
$100,000
Jason C. Hans
  $50,001 –
$100,000
Jay Kaufman
  $10,001 –
$50,000
David Rosenblatt
  None
Dividend Income
       
Kenneth Conrad
  $10,001 –
$50,000
Casey J. Sambs
  $10,001 –
$50,000
Large-Cap Value
       
David A. Corris
  $1 –
$10,000
J.P. Gurnee
  None    
Jason Hans
  $10,001 –
$50,000
Large-Cap Growth
       
David A. Corris
  $10,001 –
$50,000
J.P. Gurnee
  None
Jason C. Hans
  $10,001 –
$50,000
Mid-Cap Value
       
David Corris
  $1 –
$10,000
J.P. Gurnee
  None
Thomas Lettenberger
  $10,001 –
$50,000
Mid-Cap Growth
       
David Corris
  None
J.P. Gurnee
  None
Thomas Lettenberger
  $50,001 –
$100,000
Small-Cap Value
       
David Corris
  $50,001 –
$100,000
Thomas Lettenberger
  $50,001 –
$100,000
Small-Cap Growth
       
David Corris
  $10,001 –
$50,000
Thomas Lettenberger
  $50,001 –
$100,000
Global Low Volatility Equity
       
Jay Kaufman
  $10,001 –
$50,000
David Rosenblatt
  $100,001 –
$500,000
Disciplined International Equity
       
Jay Kaufman
  $10,001 –
$50,000
David Rosenblatt
  $10,001 –
$50,000
Pyrford International Stock
       
Tony Cousins (Pyrford)
(1)
  None
(1)
Daniel McDonagh (Pyrford)
(1)
  None
(1)
Paul Simons (Pyrford)
(1)
  None
(1)
LGM Emerging Markets Equity
       
Irina Hunter (LGM Investments)
(1)
  None
(1)
Rishikesh Patel (LGM Investments)
(1)
  None
(1)
Ultra Short Tax-Free
       
Robert Wimmel
  None
Thomas Byron
  None
Brian Sipich
  None
B-79
 
Fund/Portfolio Manager
 
Dollar Range of Shares Owned
Short Tax-Free
       
Robert Wimmel
  None
Thomas Byron
  None
Brian Sipich
  None
Short-Term Income
       
Peter J. Arts
  $10,001 –
$50,000
Boyd R. Eager
  None
Don McConnell
  $10,001 –
$50,000
Intermediate Tax-Free
       
Robert Wimmel
  None
Thomas Byron
  $1 –
$10,000
Brian Sipich
  None
Strategic Income
       
Scott M. Kimball
  $10,001 –
$50,000
Frank Reda
  $1 –
$10,000
Corporate Income
       
Scott M. Kimball
  $10,001 –
$50,000
Frank Reda
  $10,001 –
$50,000
Core Plus Bond
       
Scott M. Kimball
  $50,001 –
$100,000
Frank Reda
  $10,001 –
$50,000
Conservative Allocation
       
Jon Adams
  None
Michael Dowdall
  None
Moderate Allocation
       
Jon Adams
  None
Michael Dowdall
  None
Balanced Allocation
       
Jon Adams
  None
Michael Dowdall
  None
Growth Allocation
       
Jon Adams
  $100,001 –
$500,000
Michael Dowdall
  None
Aggressive Allocation
       
Jon Adams
  None
Michael Dowdall
  $100,001 –
$500,000
(1) Non-U.S. citizens are not eligible to purchase shares of BMO Funds.
As of August 31, 2020, the portfolio managers listed below beneficially owned shares of the Fund family having a value within the range shown below.
Portfolio Manager
 
Dollar Range of Shares Owned in Fund Family
Jon Adams
  $100,001 –
$500,000
Peter Arts
  $100,001 –
$500,000
Thomas Byron
  $1 –
$10,000
Kenneth Conrad
  $10,001 –
$50,000
David A. Corris
  $100,001 –
$500,000
Michael Dowdall
  $100,001 –
$500,000
Jason C. Hans
  $100,001 –
$500,000
Jay Kaufman
  $10,001 –
$50,000
Scott Kimball
  $50,001 –
$100,000
B-80
 
Table of Contents
Portfolio Manager
 
Dollar Range of Shares Owned in Fund Family
Thomas Lettenberger
  $500,001 –
$1,000,000
Don McConnell
  $1 –
$10,000
Frank Reda
  $10,001 –
$50,000
David Rosenblatt
  $100,001 –
$500,000
Casey J. Sambs
  $100,001 –
$500,000
Voting Proxies on Fund Portfolio Securities
The Board has delegated the authority to vote proxies relating to the securities held in the Funds’ portfolios to the Adviser and, in the case of
Pyrford International Stock
and
LGM Emerging Markets Equity
, has authorized the Adviser to delegate its authority to vote proxies to the respective Sub-Adviser on behalf of the Fund. Due to the Funds’ proposed investments in fixed income securities, the Adviser does not anticipate voting proxies on behalf of the
Money Market
or
Fixed Income Funds
.
Proxy Voting Policy and Guidelines
The Board of Directors has delegated proxy voting authority to the Adviser, subject to the Board’s oversight. The Adviser votes proxies for all Funds, other than those managed by a Sub-Adviser, according to the Adviser’s proxy voting policies and procedures. The Adviser’s proxy voting policies and procedures are reasonably designed to ensure that proxies are voted in the best interest of clients. The policies and procedures were developed by BMO’s Global Investment Committee established by the Adviser and affiliates of BMO Financial Corp., including LGM Investments. BMO’s Proxy Working Group administers the proxy voting framework. An independent proxy voting service has been retained to assist in the implementation of the proxy voting framework, including the provision of vote execution, research, and recordkeeping services. The Board reviews and approves all changes to the proxy policies and procedures.
The Adviser’s proxy voting policies and procedures generally follow BMO’s Corporate Governance Guidelines which set out what BMO expects of companies in terms of good governance. LGM’s proxy voting policies and procedures follow the same Corporate Governance Guidelines. Pyrford has developed separate proxy voting policies and procedures with respect to its clients. Its proxy voting policies and procedures also seek to vote proxies in the best interests of its clients. Each of the proxy policies and procedures seek to ensure, as applicable, that shareholder return and the value of Fund investments are maximized and that sound corporate governance is promoted.
Although BMO’s Proxy Working Group generally adheres to the guidelines and relies on an independent proxy voting advisory service to execute votes, any proxy issues that differ from the Corporate Governance Guidelines are considered by taking into account the particular circumstances involved. This provides needed flexibility in making prudent judgments in the proxy voting process. In situations where a conflict of interest exists, the Proxy Working Group will obtain a proxy voting recommendation from an independent proxy voting advisory service and will ultimately vote proxies in the best economic interests of clients without consideration of any benefit to the Adviser or its affiliates. Similarly, Pyrford generally follows its proxy voting guidelines with respect to all proxies other than for clients who have provided their own guidelines.
If an underlying affiliated fund in which the
Target Risk
Funds
invest has a shareholder meeting, a Fund will vote its shares in the underlying affiliated fund in the same proportion as the votes of the other shareholders of the underlying fund.
Proxy Voting Record
Each Fund is required to disclose annually its proxy voting record for the most recent 12-month period ended June 30 and files it with the SEC by August 31. Each Fund’s proxy voting record will be available at that time without charge, either upon request, by calling toll free, 1-800-236-FUND (3863), or by accessing the SEC’s website at http://www.sec.gov.
Portfolio Holdings Disclosure Policy
The Funds do not provide or permit others to provide information about the Funds’ portfolio holdings to any third party, except as permitted by the Corporation’s policy regarding disclosure of portfolio holdings (Disclosure Policy). This Disclosure Policy also
B-81
 
Table of Contents
applies to the Adviser, Sub-Advisers, and BMO Harris Bank. Pursuant to the Disclosure Policy, information about the Funds’ portfolio holdings may be disclosed as required by SEC regulations and in the following circumstances:
• As required by SEC regulations, a Fund’s portfolio holdings are disclosed in publicly available filings with the SEC including Form N-CSR, Form N-PORT, and Form N-MFP.
• The Funds’ (except the
Money Market Funds
) Form N-CSR and Form N-PORT filings are available on the Funds’ website and the SEC’s website at http://www.sec.gov. The first and third quarter portfolio holdings reports will be filed with the SEC as an exhibit to the Funds’ reports on Form N-PORT, and the second and fourth fiscal quarter portfolio holdings reports will be included with the semi-annual and annual reports, respectively, which are sent to shareholders and filed with the SEC on Form N-CSR.
• Each
Money Market Fund’s
Form N-CSR and Form N-MFP filings are available on the Funds’ website and the SEC’s website at http://www.sec.gov. The Funds file a complete schedule of portfolio holdings with the SEC monthly on Form N-MFP. The Funds’ Form N-MFP can be found on the Fund’s website and SEC's website, www.sec.gov.
• Fund portfolio holdings may be disclosed from time to time, to the Funds’ service providers, including the Sub-Advisers, administrator, sub-administrator, custodians, fund accountant, transfer agent, independent accountant, legal counsel, third-party research providers, and financial printer, in connection with the fulfillment of their duties to the Funds and the Corporation.
• Each Fund (other than the
Target Risk
and
Money Market Funds
) makes a complete list of its portfolio holdings publicly available on the Funds’ website, bmofunds.com, approximately thirty days after the end of each month.
• The Funds’ portfolio holdings as of each month end are disclosed to certain approved institutional databases and rating agencies including Lipper Inc., Morningstar, Inc., Standard & Poor’s Financial Services, LLC, Bloomberg L.P., Thompson Reuters Corporation, Vickers Stock Research Corporation, and Capital Bridge, Inc..
• Each
Target Risk Fund’s
portfolio holdings are posted on the Fund’s website approximately five days after the end of each month.
• Each
Money Market Fund’s
portfolio holdings as of the last business day of the preceding month is posted on the Funds’ website no later than five business days after the end of the month and remains posted on the website for a minimum of six months thereafter.
The Corporation is prohibited from entering into any other arrangements to disclose information regarding the Funds’ portfolio securities prior to public availability without prior approval of the Board. Third parties who receive portfolio holdings information are subject to restrictions by contract or by law that prohibit the disclosure or misuse of the holdings information to ensure that the information remains confidential. No compensation or other consideration may be received by the Funds, the Adviser, Sub-Advisers, or BMO Harris Bank in connection with the disclosure of portfolio holdings in accordance with this policy. The Corporation’s CCO monitors compliance with the Disclosure Policy and reports any violations to the Board.
The Board will review any disclosures of Fund portfolio holdings outside of the permitted disclosures described above on a quarterly basis to ensure that disclosure of information about portfolio holdings is in the best interest of Fund shareholders and to address any conflicts between the interests of Fund shareholders and those of the Adviser or any other Fund affiliate.
Brokerage Transactions
As used in this section, the term Adviser means Adviser or Sub-Adviser, as applicable.
The Adviser is responsible for decisions to buy and sell securities for the Funds and for the placement of the Funds’ securities business, the negotiation of the charges to be paid on such transactions, and the allocation of portfolio brokerage and principal business. Trades may be done with brokers, dealers and, on occasion, issuers. Remuneration for trades may include commissions, commission-equivalent charges, dealer spreads, mark-ups, and mark-downs.
In executing transactions on behalf of the Funds, the Adviser has no obligation to deal with any particular broker or dealer. Rather, the Adviser seeks to obtain the best qualitative execution. The best net price is an important factor, but the Adviser also considers the full range and quality of a broker’s services, as described below. Recognizing the value of the range of services, the Funds may not pay the lowest commission or spread available on any particular transaction.
Section 28(e) of the Securities Exchange Act of 1934, as amended, permits an investment adviser, under certain circumstances, to cause an account to pay a broker who supplies brokerage and research services a commission or commission-equivalent charge for effecting a transaction in excess of the amount of commission another broker would have charged for effecting the transaction. Brokerage and research services include:
B-82
 
Table of Contents
• furnishing advice as to the value of securities, the advisability of investing, purchasing, or selling securities, and the availability of securities or purchasers or sellers of securities;
• furnishing analyses and reports concerning issuers, industries, sectors, securities, economic factors and trends, portfolio strategy, and the performance of accounts; and
• effecting securities transactions and performing functions incidental thereto (such as clearance, settlement, and custody).
In selecting brokers, the Adviser considers quality of investment research and brokerage services; communication of such information; trade execution pricing, capability, and efficiency; and the appropriateness of the commission rate. Investment research services utilized by the Adviser include economic forecasts, industry analysis, individual company or issuer analysis and opinion, and investment strategy. In ensuring that the commission to be paid is fair compensation for the nature of the trade and the quality of the execution provided by the broker/dealer, the Adviser considers the commission rates paid by investment institutions of similar size. While the Adviser negotiates similar commission rates with all brokers and dealers, if the Adviser believes favorable prices and efficient execution is available from more than one broker or dealer, the Adviser may give consideration to placing trades with those brokers or dealers who furnish investment research and other brokerage services.
The Adviser places portfolio transactions for other advisory accounts in addition to the Funds. Research services furnished by firms through which the Funds effect their securities transactions may be used by the Adviser in servicing all of their accounts; that is, not all of such services may be used by the Adviser in connection with the Funds. The Adviser believes it is not possible to measure separately the benefits from research services received by each of the accounts (including the Funds) managed by them. Because the volume and nature of the trading activities of the accounts are not uniform, the amount of commissions in excess of those charged by another broker (if any) paid by each account for brokerage and research services will vary. The Adviser believes any such costs to the Funds, however, will not be disproportionate to the benefits received by the Funds on a continuing basis and, to the extent that receipt of these services may supplant services for which the Adviser might otherwise have paid, it would tend to reduce their expenses.
The following table shows aggregate total commissions paid by each Fund to brokers that provide brokerage and research services to the Adviser and/or Sub-Advisers and the aggregate principal value of the transactions for the fiscal year ended August 31, 2020.
Fund
 
Brokerage Commissions
Paid to
Brokers Who Provided
Brokerage
and Research Services
 
Principal Value
of Transactions
Low Volatility Equity
  $
49,065 		  $
78,075,043
Dividend Income
  $
69,546 		  $105,525,360
Large-Cap Value
  $125,237   $188,435,290
Large-Cap Growth
  $
98,563 		  $252,789,755
Mid-Cap Value
  $
39,642 		  $
54,109,826
Mid-Cap Growth
  $
30,650 		  $
58,624,747
Small-Cap Value
  $
59,776 		  $
36,765,140
Small-Cap Growth
  $
78,725 		  $
62,229,739
Global Low Volatility Equity
  $
12,727 		  $
12,049,637
Disciplined International Equity
  $
27,669 		  $
23,151,332
Pyrford International Stock
  N/A   N/A
LGM Emerging Markets Equity
  N/A   N/A
Ultra Short Tax-Free
  N/A   N/A
Short Tax-Free
  N/A   N/A
Short-Term Income
  N/A   N/A
Intermediate Tax-Free
  N/A   N/A
Strategic Income
  N/A   N/A
Corporate Income
  N/A   N/A
Core Plus Bond
  N/A   N/A
Government Money Market
  N/A   N/A
Tax-Free Money Market
  N/A   N/A
Prime Money Market
  N/A   N/A
B-83
 
Table of Contents
Fund
 
Brokerage Commissions
Paid to
Brokers Who Provided
Brokerage
and Research Services
 
Principal Value
of Transactions
Conservative Allocation
  N/A   N/A
Moderate Allocation
  N/A   N/A
Balanced Allocation
  N/A   N/A
Growth Allocation
  N/A   N/A
Aggressive Allocation
  N/A   N/A
The
Target Risk Funds
will not incur any brokerage commissions for purchasing shares of underlying funds. However, a Fund may incur brokerage commissions and/or investment dealer concessions when purchasing short-term and other securities for the Fund. Each underlying fund in which the
Target Risk Funds
invest has policies with respect to the execution of the underlying fund’s portfolio transactions, which are described in the applicable statement of additional information.
The Adviser generally seeks to allocate portfolio transactions equitably whenever concurrent decisions are made to purchase or sell securities by the Funds and other advisory accounts. No assurance can be made that a particular purchase or sale opportunity will be allocated to a Fund. In making allocations between the Funds, and between a Fund and other advisory accounts, certain factors considered by the Adviser are the respective investment objectives, the relative size of portfolio holdings of the same or comparable securities, the availability of cash for investment, and the size of investment commitments generally held.
For the periods noted below, the Funds paid the following brokerage commissions.
   
For the fiscal year ended August 31
Fund
 
2020
 
2019
 
2018
Low Volatility Equity
  $
88,860 		  $
34,473 		  $
61,418
Dividend Income
  $124,429   $107,787   $
45,385
Large-Cap Value
  $188,378   $189,450   $169,014
Large-Cap Growth
  $158,883   $171,406   $149,404
Mid-Cap Value
  $
63,822 		  $
93,495 		  $149,100
Mid-Cap Growth
  $
41,399 		  $
52,788 		  $
60,334
Small-Cap Value
  $
91,160 		  $
84,119 		  $
97,118
Small-Cap Growth
  $121,304   $138,027   $205,427
Global Low Volatility Equity
  $
30,102 		  $
19,227 		  $
42,473
Disciplined International Equity
  $
59,361 		  $
64,522 		  $121,712
Pyrford International Stock
  $155,086   $
86,604 		  $146,884
LGM Emerging Markets Equity
  $180,315   $143,453   $104,195
Ultra Short Tax-Free
  —   —   —
Short Tax-Free
  —   —   —
Short-Term Income
  —   —   —
Intermediate Tax-Free
  —   $
15,500 		  —
Strategic Income
  —   —   —
Corporate Income
  —   —   —
Core Plus Bond
  —   —   —
Government Money Market
  —   —   —
Tax-Free Money Market
  —   —   —
Prime Money Market
  —   —   —
Conservative Allocation
  $
639 		  —   —
Moderate Allocation
  $
1,088 		  —   —
Balanced Allocation
  $
3,583 		  —   —
Growth Allocation
  $
961 		  —   —
Aggressive Allocation
  $
454 		  —   —
B-84
 
Table of Contents
For each Fund that acquired securities of its regular brokers or dealers (as defined in Rule 10b-1 under the 1940 Act) during the fiscal year, the following sets forth the dollar amount held as of August 31, 2020.
Fund
 
Regular Broker or Dealer
(or Parent) Issuer
 
Value of Securities
Owned (as of 8/31/20)
Dividend Income   Morgan Stanley   $6.2 million
Large-Cap Value   Morgan Stanley   $7.1 million
Small-Cap Value   Cowen   $0.1 million
Corporate Income   Wells Fargo   $8.7 million
    Royal Bank of Canada   $5.5 million
    Morgan Stanley   $5.2 million
    JP Morgan Chase & Co.   $4.2 million
    Mizuho Bank   $2.6 million
    Goldman Sachs   $2.5 million
    Bank of America Corp.   $2.1 million
    Citigroup, Inc.   $2.0 million
Core Plus Bond   Wells Fargo   $20.3 million
    Goldman Sachs   $11.0 million
    JP Morgan Chase & Co.   $10.7 million
    Bank of America Corp.   $8.7 million
    Citigroup   $6.4 million
    Morgan Stanley   $5.7 million
    HSBC   $4.9 million
Short-Term Income   Goldman Sachs   $3.6 million
    Bank of America   $3.0 million
    Citigroup   $3.0 million
    Morgan Stanley   $2.9 million
    Fifth Third Bank   $2.7 million
    Wells Fargo Bank   $2.5 million
    Truist Bank   $2.4 million
    Bank of NY   $2.0 million
    Key Bank   $2.0 million
    Toronto Dominion Bank   $2.0 million
    JP Morgan Chase   $1.0 million
    PNC Bank   $1.0 million
    State Street   $1.0 million
    Sumitomo Mitsui Bk Corp   $1.0 million
    US Bancorp   $1.0 million
    CIBC   $0.6 million
    Royal Bank of Canada   $0.4 million
Prime Money Market   CIBC   $22.5 million
    Toronto Dominion Bank   $21.2 million
    Sumitomo Mitsui Bank Corp   $15.1 million
    Societe Generale   $10.0 million
    Royal Bank of Canada   $9.5 million
    Mitsubishi Trust and Bank Corp   $8.5 million
    Credit Agricole   $5.6 million
    Wells Fargo Bank   $5.5 million
    Mizuho Bank   $5.0 million
    Credit Suisse   $2.5 million
B-85
 
Table of Contents
Information About the Funds’ Service Providers
Code of Ethics Restrictions on Personal Trading
As required by SEC rules, the Funds, the Adviser and each Sub-Adviser have adopted codes of ethics. These codes govern securities trading activities of investment personnel, Fund directors, and certain other employees (Access Persons). Although the codes permit Access Persons to trade in securities, including those that the Funds could buy, they also contain significant safeguards designed to protect the Funds and their shareholders from abuses in this area, such as requirements to obtain prior approval for, and to report, particular transactions. The codes are available on the EDGAR database on the SEC’s website at www.sec.gov, and also may be obtained, after paying a duplicating fee, by electronic request at the following email address: publicinfo@sec.gov. The Distributor relies on the principal underwriter’s exception in Rule 17j-1(c)(3) under the 1940 Act from the requirements to adopt a code of ethics pursuant to Rule 17j-1 because the Distributor is not affiliated with the Corporation or the Adviser, and no officer, director, or general partner of the Distributor serves as an officer or director of the Corporation or the Adviser.
Administrator and Shareholder Servicing Agent
The Adviser serves as the administrator to the Funds. As administrator, the Adviser is entitled to receive fees from each of the
Equity, International and Global, Fixed Income,
and
Target Risk Funds
at an annual rate of 0.15% of the ADNA of each of Class Y, Class I, Class A, and Class R3 shares.
The Adviser, as administrator, is entitled to receive fees from the
Money Market Funds
at the following annual rates based on the aggregate ADNA of the
Money Market Funds
combined:
Fee
 
Fund’s ADNA
0.040%
  on the first $2 billion
0.030%
  on the next $2 billion
0.025%
  on the next $2 billion
0.020%
  on the next $2 billion
0.010%
  on ADNA in excess of $8 billion
The aggregate fees paid by the
Money Market Funds
are allocated to each Fund based on its assets.
For the fiscal periods noted below, the Adviser was paid (net of waivers) the following fees for services as administrator.
   
For the fiscal year ended August 31
Fund
 
2020
 
2019
 
2018
Low Volatility Equity
  $
371,688 		  $
230,654 		  $
215,783
Dividend Income
  $
435,727 		  $
311,859 		  $
196,556
Large-Cap Value
  $
388,882 		  $
392,393 		  $
483,853
Large-Cap Growth
  $
316,434 		  $
451,597 		  $
528,627
Mid-Cap Value
  $
162,781 		  $
213,255 		  $
273,945
Mid-Cap Growth
  $
131,474 		  $
135,586 		  $
164,446
Small-Cap Value
  $
64,845 		  $
77,894 		  $
93,419
Small-Cap Growth
  $
140,452 		  $
181,862 		  $
212,555
Global Low Volatility Equity
  $
39,760 		  $
48,368 		  $
70,868
Disciplined International Equity
  $
74,979 		  $
113,322 		  $
115,084
Pyrford International Stock
  $
660,013 		  $
728,215 		  $
860,622
LGM Emerging Markets Equity
  $
405,692 		  $
361,346 		  $
291,060
Ultra Short Tax-Free
  $
824,571 		  $
872,042 		  $
972,653
Short Tax-Free
  $
213,552 		  $
262,342 		  $
283,447
Short-Term Income
  $
380,875 		  $
374,197 		  $
369,595
Intermediate Tax-Free
  $2,860,906   $2,696,072   $2,494,766
Strategic Income
  $
107,322 		  $
119,808 		  $
148,969
Corporate Income
  $
528,717 		  $
432,894 		  $
377,990
Core Plus Bond
  $1,635,883   $1,486,216   $1,583,280
B-86
 
   
For the fiscal year ended August 31
Fund
 
2020
 
2019
 
2018
Government Money Market
  $1,160,022   $1,032,500   $1,112,451
Tax-Free Money Market
  $
144,039 		  $
149,273 		  $
124,679
Prime Money Market
  $
182,943 		  $
157,257 		  $
144,375
Conservative Allocation
  $
17,351 		  $
20,039 		  $
35,350
Moderate Allocation
  $
25,507 		  $
27,943 		  $
41,917
Balanced Allocation
  $
155,268 		  $
209,798 		  $
251,481
Growth Allocation
  $
33,363 		  $
47,486 		  $
64,684
Aggressive Allocation
  $
70,115 		  $
83,726 		  $
104,333
The administrator may choose voluntarily to reimburse a portion of its fee at any time.
The functions performed by the administrator include, but are not limited, to the following:
• preparation, filing, and maintenance of the Corporation’s governing documents, minutes of Board meetings, and shareholder meetings;
• preparation and filing with the SEC and state regulatory authorities, the Corporation’s registration statement and all amendments, and any other documents required for the Funds to make a continuous offering of their shares;
• preparation, negotiation, and administration of contracts on behalf of a Fund;
• supervision of the preparation of financial reports;
• preparation and filing of federal and state tax returns;
• assistance with the design, development, and operation of a Fund; and
• provision of advice to the Funds and the Board.
The Adviser also serves as the shareholder servicing agent to the Funds. The services provided by the Adviser and the fees received for these services are described under “How are Fund Shares Sold?
—
Shareholder Services (Class Y Shares Only).”
Sub-Administrator
State Street Bank and Trust Company (State Street) is the Funds’ sub-administrator pursuant to the Sub-Administration Agreement with the administrator. Under the Sub-Administration Agreement, the functions performed by State Street include and relate to, but are not limited to, the following:
• facilitating Fund expense invoice allocation and payments;
• drafting and reviewing of the Funds’ annual and semi-annual reports and certain other regulatory filings;
• various services relating to Fund compliance, including monitoring investment restrictions and diversification requirements;
• obtaining CUSIPs, NASDAQ symbols, and IRS tax identification numbers;
• coordination and facilitation of external audits by the Corporation’s independent auditors and regulatory examinations of the Corporation;
• assistance with reporting of performance for the Funds; and
• preparation of the Corporation’s tax returns.
For its services, State Street is entitled to receive from the administrator a fee based on a percentage of each Fund’s NAV, plus certain additional per-use fees. Prior to April 2, 2018, UMB Fund Services, Inc. (UMBFS) served as the Funds’ sub-administrator.
For the fiscal years ended August 31, 2018, 2019, and 2020, the Adviser (as administrator) paid UMBFS or State Street sub-administration fees of approximately $1.6 million, $1.9 million, and $1.9 million, respectively, for services related to the Funds.
B-87
 
Table of Contents
Securities Lending
Certain of the Funds participate in a securities lending program, providing for the lending of equity securities to qualified brokers, in exchange for the opportunity to earn additional income for participation. The Funds pay a portion of the net revenue earned on securities lending activities to a securities lending agent. Certain Funds use BMO Harris Bank (BHB), an affiliate of the Adviser, as securities lending agent, while certain other Funds use State Street as securities lending agent. The Funds that use BHB compensate BHB for acting as securities lending agent at a rate generally equal to BHB’s cost of providing such services plus a reasonable profit margin. The Funds that use State Street compensate State Street at a contractually negotiated rate.
Under the securities lending program of each of BHB and State Street, the Funds receive collateral in return for the securities and record a corresponding payable for collateral due to the respective broker. Collateral received consists of cash under the State Street program, and it consists of either cash or securities issued or guaranteed by the U.S. government or its agencies or instrumentalities under the BHB program. The amount of collateral received is maintained at a minimum level of 100% of the prior day’s market value of the securities loaned, plus any accrued interest. Cash collateral is generally reinvested in a money market fund.
The following Funds paid the amounts listed to BHB for its services as securities lending agent for the fiscal year ended August 31, 2020.
Fund
 
Gross Revenue
(including
collateral
reinvestment)
 
Revenue
Split
 
Cash collateral
management
services and
Indemnification fees
 
Administrative
fees
 
Rebates
to borrowers
 
Other fees
 
Aggregate
Fees
 
Net income
from securities
lending
activities
Low Volatility Equity
  $
834,035 		  –
  –
  $
33,112 		  $
723,789 		  –
  $
756,901 		  $
77,134
Dividend Income
  $
975,786 		  –
  –
  $
38,357 		  $
847,995 		  –
  $
886,352 		  $
89,434
Large-Cap Value
  $1,213,794   –
  –
  $
48,458 		  $1,052,353   –
  $1,100,811   $112,983
Large-Cap Growth
  $1,423,622   –
  –
  $
54,491 		  $1,242,036   –
  $1,296,527   $127,095
Mid-Cap Value
  $
607,568 		  –
  –
  $
23,136 		  $
530,511 		  –
  $
553,646 		  $
53,921
Mid-Cap Growth
  $
481,606 		  –
  –
  $
18,729 		  $
419,233 		  –
  $
437,961 		  $
43,644
Small-Cap Value
  $
273,602 		  –
  –
  $
10,135 		  $
239,985 		  –
  $
250,119 		  $
23,482
Small-Cap Growth
  $
496,717 		  –
  –
  $
19,905 		  $
430,537 		  –
  $
450,442 		  $
46,275
Short-Term Income
  $
421,623 		  –
  –
  $
29,738 		  $
322,548 		  –
  $
352,286 		  $
69,337
Strategic Income
  $
255,763 		  –
  –
  $
14,680 		  $
206,863 		  –
  $
221,543 		  $
34,221
Corporate Income
  $1,112,829   –
  –
  $
60,004 		  $
912,908 		  –
  $
972,912 		  $139,917
Core Plus Bond
  $1,968,225   –
  –
  $146,519   $1,479,908   –
  $1,626,427   $341,799
The following Funds paid the amounts listed to State Street for its services as securities lending agent for the fiscal year ended August 31, 2020.
Fund
 
Gross Revenue
(including
collateral
reinvestment)
 
Revenue
Split
 
Cash collateral
management
services fees
 
Administrative
and
Indemnification
fees
 
Rebates
to borrowers
 
Other fees
 
Aggregate
Fees
 
Net income
from securities
lending
activities
Global Low Volatility
  $
6,832 		  $
550 		  $
64 		  –
  $
4,007 		  –
  $
4,621 		  $
2,211
Disciplined International Equity
  $
24,388 		  $
2,237 		  $
87 		  –
  $13,116   –
  $
15,440 		  $
8,948
Pyrford International Stock
  $309,200   $48,068   $2,026   –
  $66,822   –
  $116,916   $192,284
LGM Emerging Markets Equity
  $206,044   $31,174   $
228 		  –
  $49,947   –
  $
81,349 		  $124,695
Payments to Financial Intermediaries
With respect to certain share classes, the Adviser, BMO Harris Bank, BMO Harris Financial Advisors, Inc., and/or their affiliates may make additional payments (which are often referred to as “revenue sharing” payments), out of their own assets and not as an additional charge to each Fund, to financial intermediaries, including their affiliates, from their past profits and other available sources, including profits from their relationships with the Funds. Revenue sharing payments are a form of compensation paid to a financial intermediary in addition to the sales charges paid by fund shareholders or Rule 12b-1 Plan fees paid by the Funds. No such revenue sharing payments are made with respect to the Funds’ Class R6 shares or any of the Money Market Funds.
B-88
 
Table of Contents
These payments are intended, among other things, to foster the sale of Fund shares and/or to compensate financial services firms for assisting in marketing or promotional activities in connection with the sale of Fund shares. Such payments may be for services provided to clients who hold Fund shares, for introducing new shareholders to the Funds, or for other services. In exchange for revenue sharing payments, the Adviser, BMO Harris Bank, BMO Harris Financial Advisors, Inc., and/or their affiliates generally expect to receive the opportunity for the Funds to be sold through the financial intermediaries’ sales forces or to have access to third-party platforms or other marketing programs, including but not limited to mutual fund “supermarket” platforms or other sales programs. To the extent that financial intermediaries receiving revenue sharing payments sell more shares of the Funds, the Adviser, BMO Harris Bank, BMO Harris Financial Advisors, Inc., and/or their affiliates benefit from the increase in Fund assets as a result of the fees they receive from the Funds.
The structure of these compensation arrangements, as well as the amounts paid under such arrangements, varies and may change from time to time. Payments generally range from 0.05% to 0.40%, however, the Adviser, BMO Harris Bank, BMO Harris Financial Advisors, Inc., and/or their affiliates may pay flat fees on a one-time or irregular basis for the initial set-up of a Fund or Funds on a financial intermediary’s systems, participation or attendance at a financial intermediary’s meetings, or for other reasons. In addition, new compensation arrangements may be negotiated at any time. The compensation arrangements described in this section are not mutually exclusive, and a single financial intermediary may receive multiple types of compensation.
The Adviser, BMO Harris Bank, BMO Harris Financial Advisors, Inc., and/or their affiliates currently anticipate that such payments may be made to the following financial intermediaries.
Financial Intermediaries
Alight Financial Solutions, LLC
American Portfolios Financial Services, Inc.
American United Life Insurance Co
Apex Clearing Corporation
Arvest Investments, Inc.
Ascensus Broker Dealer Services, Inc.
Ascensus Trust Company
BB&T Securities, LLC
BBVA Securities
Bel Air Securities LLC
Benefit Trust Company
Benjamin F. Edwards & Company, Inc.
BMO Harris Bank N.A.
BMO Harris Financial Advisors
BNY Mellon, N.A.
Cadaret Grant & Co Inc.
Cambridge Investment Research, Inc.
Capital Investment Brokerage, Inc.
Cetera Advisor Networks, LLC
Cetera Advisors, LLC
Cetera Financial Specialists LLC
Cetera Investment Services LLC
Charles Schwab & Co Inc.
Client One Securities, LLC
Community Bank c/o Hand Benefits & Trust Co.
Conduent HR Solutions, LLC
CRI Securities, LLC
E*TRADE Securities LLC
Eastern Point Securities
Edward D. Jones & Co. LP
First Allied Securities Inc.
First Republic Securities Co LLC
Goldman Sachs & Co,
GWFS Equities Inc.
GWN Securities, Inc.
H. C. Denison Co.
Hand Securities Inc.
Harbour Investments, Inc.
Hornor, Townsend & Kent
IFP Securities, LLC
Interactive Brokers LLC
J.P. Morgan Securities LLC
John Hancock Trust Company
JPMorgan Chase Bank, N.A. (JPM Private Bank)
Key Investment Services LLC
KeyBank NA
KMS Financial Services Inc.
Lincoln Financial Advisors Corp.
Lincoln Financial Securities Corp.
Lincoln Investment
Lincoln Retirement Services Company (Recordkeeper only)
LPL Financial LLC
Massachusetts Mutual Life Insurance Company
MassMutual Retirement Services
Merrill, Lynch, Pierce, Fenner & Smith Inc.
Mid Atlantic Capital Corp.
Mid Atlantic Clearing and Settlement Corp
MML Distributors, LLC
Money Concepts Capital Corp
Morgan Stanley Smith Barney LLC (Hold and Redeem Only)
MSCS Financial Services
National Financial Services LLC
Nationwide Financial Services, Inc.
Northwestern Mutual Investment Services LLC
 
B-89
 
Table of Contents
OneAmerica Securities, Inc.
Park Avenue Securities LLC
Pershing Advisor Solutions LLC
Pershing LLC
PGIM Investments, LLC
PNC Capital Markets LLC
Principal Securities, Inc.
ProEquities Inc
Prudential Investment Management Services LLC
Raymond James & Associates, Inc.
Raymond James Financial Services, Inc.
RBC Capital Markets, LLC
Reliance Trust Company, LLC
Richard Brothers Securities
Robert W. Baird & Co., Inc.
Securian Financial Services Inc.
Securities America Inc.
Securities Service Network LLC
SEI Private Trust Co.
Sentinel Securities, Inc.
Standard Insurance Company
Stifel Nicolaus & Co., Inc.
T. Rowe Price Investment Services, Inc.
Talcott Resolution Life Insurance Company
TD Ameritrade Clearing
TD Ameritrade Inc.
TD Ameritrade Trust Co.
TIAA, FSB
The O.N. Equity Company
TRADE-PMR Inc.
Triad Advisors LLC
U.S. Bank N.A.
UBS Financial Services Inc.(Hold and Redeem Only)
United Planners Financial Services of America
USAA Investment Management Co
Valic Financial Advisors, Inc.
Valic Retirement Services Company
Vanguard Group, Inc.
Vanguard Marketing Corporation
VOYA Financial Partners, LLC
VOYA Institutional Plan Services, LLC
VOYA Retirement Insurance & Annuity Company
Wells Fargo Bank, N.A. (Institutional Trust, Wells Fargo Advisors Financial Network Retirement Services and Trust Operations)
Transfer Agent and Dividend Disbursing Agent
SS& C Technologies, Inc. (formerly, DST Asset Manager Solutions, Inc.), 2000 Crown Colony Drive, Quincy, Massachusetts, maintains all necessary shareholder records.
Each Fund may pay amounts to third parties, such as banks, broker-dealers, or affiliated entities, including BMO Harris Bank, that provide recordkeeping services, shareholder servicing, and/or other administrative services to the Funds.
Fund Accountant
State Street, 1 Iron Street, Boston, Massachusetts, provides fund accounting services to Funds.
Custodian
State Street, 1 Iron Street, Boston, Massachusetts, has custody of all securities and cash of each Fund, delivers and receives payments for securities sold, receives and pays for securities purchased, collects income from investments, and performs other duties, all as directed by the officers of the Corporation.
Independent Registered Public Accounting Firm
The independent registered public accounting firm for the Funds, KPMG LLP (KPMG), 191 West Nationwide Blvd., Suite 500, Columbus, OH 43215, audits and reports on the Funds’ annual financial statements, reviews certain regulatory reports and the Funds’ federal income tax returns, and performs other auditing and tax services for the Funds when engaged to do so. KPMG conducts its audits in accordance with the standards of the Public Company Accounting Oversight Board (United States), which require it to plan and perform its audits to provide reasonable assurance about whether the Funds’ financial statements and financial highlights are free of material misstatements.
Please refer to
Appendix B
for a consolidated list of mailing addresses for the Funds and their service providers.
B-90
 
Table of Contents
Performance
From time to time, when available, the yield and total return of the Class Y, Class I, Class A, Class R3, Class R6, and/or Premier Class shares of a Fund may be quoted in advertisements, shareholder reports or other communications to shareholders. Performance information is generally available by calling the Funds (toll free) at 1-800-236-FUND (3863).
Financial Statements
The audited financial statements for the Funds’ fiscal year ended August 31, 2020 are incorporated herein by reference from the Funds’ Annual Report dated August 31, 2020 (File Nos. 33-48907 and 811-58433). A copy of the Annual Report for a Fund may be obtained without charge by contacting BMO Funds - U.S. Services at the address located on the back cover of the SAI or by calling BMO Funds U.S. Services at 1-414-287-8555 or 1-800-236-FUND (3863).
BMO Global Asset Management is the brand name for various affiliated entities of BMO Financial Group that provide investment management, retirement, and trust and custody services. Certain of the products and services offered under the brand name BMO Global Asset Management are designed specifically for various categories of investors in a number of different countries and regions and may not be available to all investors. Products and services are only offered to such investors in those countries and regions in accordance with applicable laws and regulations. BMO Financial Group is a service mark of Bank of Montreal.
B-91
 
Table of Contents
Appendix A
—
Ratings Definitions
S&P Global Ratings Credit Rating Definitions
An S&P Global Ratings issue credit rating is a forward-looking opinion about the creditworthiness of an obligor with respect to a specific financial obligation, a specific class of financial obligations, or a specific financial program (including ratings on medium-term note programs and commercial paper programs). It takes into consideration the creditworthiness of guarantors, insurers, or other forms of credit enhancement on the obligation and takes into account the currency in which the obligation is denominated. The opinion reflects S&P Global Ratings' view of the obligor's capacity and willingness to meet its financial commitments as they come due, and this opinion may assess terms, such as collateral security and subordination, which could affect ultimate payment in the event of default.
Issue credit ratings can be either long-term or short-term. Short-term ratings are generally assigned to those obligations considered short-term in the relevant market. Short-term ratings are also used to indicate the creditworthiness of an obligor with respect to put features on long-term obligations. Medium-term notes are assigned long-term ratings.
Short-Term Issue Credit Ratings
A-1
A short-term obligation rated 'A-1' is rated in the highest category by S&P Global Ratings. The obligor's capacity to meet its financial commitments on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor's capacity to meet its financial commitments on these obligations is extremely strong.
A-2
A short-term obligation rated 'A-2' is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor's capacity to meet its financial commitments on the obligation is satisfactory.
A-3
A short-term obligation rated 'A-3' exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to weaken an obligor's capacity to meet its financial commitments on the obligation.
B
A short-term obligation rated 'B' is regarded as vulnerable and has significant speculative characteristics. The obligor currently has the capacity to meet its financial commitments; however, it faces major ongoing uncertainties that could lead to the obligor's inadequate capacity to meet its financial commitments.
C
A short-term obligation rated 'C' is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitments on the obligation.
D
A short-term obligation rated 'D' is in default or in breach of an imputed promise. For non-hybrid capital instruments, the 'D' rating category is used when payments on an obligation are not made on the date due, unless S&P Global Ratings believes that such payments will be made within any stated grace period. However, any stated grace period longer than five business days will be treated as five business days. The 'D' rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. An obligation's rating is lowered to 'D' if it is subject to a distressed exchange offer.
App.  A-1
 
SPUR (S&P Underlying Rating)
A SPUR is an opinion about the stand-alone capacity of an obligor to pay debt service on a credit-enhanced debt issue, without giving effect to the enhancement that applies to it. These ratings are published only at the request of the debt issuer or obligor with the designation SPUR to distinguish them from the credit-enhanced rating that applies to the debt issue. S&P Global Ratings maintains surveillance of an issue with a published SPUR.
Dual Ratings
Dual ratings may be assigned to debt issues that have a put option or demand feature. The first component of the rating addresses the likelihood of repayment of principal and interest as due, and the second component of the rating addresses only the demand feature. The first component of the rating can relate to either a short-term or long-term transaction and accordingly use either short-term or long-term rating symbols. The second component of the rating relates to the put option and is assigned a short-term rating symbol (for example, 'AAA/A-1+' or 'A-1+/A-1'). With U.S. municipal short-term demand debt, the U.S. municipal short-term note rating symbols are used for the first component of the rating (for example, 'SP-1+/A-1+').
The analyses, including ratings, of S&P Global Ratings and its affiliates (together, S&P Global Ratings) are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or make any investment decisions. S&P Global Ratings assumes no obligation to update any information following publication. Users of ratings or other analyses should not rely on them in making any investment decision. S&P Global Ratings' opinions and analyses do not address the suitability of any security. S&P Global Ratings does not act as a fiduciary or an investment advisor except where registered as such. While S&P Global Ratings has obtained information from sources it believes to be reliable, it does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Ratings and other opinions may be changed, suspended, or withdrawn at any time.
Active Qualifiers
S&P Global Ratings uses the following qualifiers that limit the scope of a rating. The structure of the transaction can require the use of a qualifier such as a 'p' qualifier, which indicates the rating addresses the principal portion of the obligation only. A qualifier appears as a suffix and is part of the rating.
1. Federal deposit insurance limit: 'L' qualifier
Ratings qualified with 'L' apply only to amounts invested up to federal deposit insurance limits.
2. Principal: 'p' qualifier
This suffix is used for issues in which the credit factors, the terms, or both that determine the likelihood of receipt of payment of principal are different from the credit factors, terms, or both that determine the likelihood of receipt of interest on the obligation. The 'p' suffix indicates that the rating addresses the principal portion of the obligation only and that the interest is not rated.
3. Preliminary ratings: 'prelim' qualifier
Preliminary ratings, with the 'prelim' suffix, may be assigned to obligors or obligations, including financial programs, in the circumstances described below. Assignment of a final rating is conditional on the receipt by S&P Global Ratings of appropriate documentation. S&P Global Ratings reserves the right not to issue a final rating. Moreover, if a final rating is issued, it may differ from the preliminary rating.
• Preliminary ratings may be assigned to obligations, most commonly structured and project finance issues, pending receipt of final documentation and legal opinions.
• Preliminary ratings may be assigned to obligations that will likely be issued upon the obligor's emergence from bankruptcy or similar reorganization, based on late-stage reorganization plans, documentation, and discussions with the obligor. Preliminary ratings may also be assigned to the obligors. These ratings consider the anticipated general credit quality of the reorganized or post-bankruptcy issuer as well as attributes of the anticipated obligation(s).
• Preliminary ratings may be assigned to entities that are being formed or that are in the process of being independently established when, in S&P Global Ratings' opinion, documentation is close to final. Preliminary ratings may also be assigned to the obligations of these entities.
App.  A-2
 
• Preliminary ratings may be assigned when a previously unrated entity is undergoing a well-formulated restructuring, recapitalization, significant financing, or other transformative event, generally at the point that investor or lender commitments are invited. The preliminary rating may be assigned to the entity and to its proposed obligation(s). These preliminary ratings consider the anticipated general credit quality of the obligor, as well as attributes of the anticipated obligation(s), assuming successful completion of the transformative event. Should the transformative event not occur, S&P Global Ratings would likely withdraw these preliminary ratings.
• A preliminary recovery rating may be assigned to an obligation that has a preliminary issue credit rating.
4. Termination structures: 't' qualifier
This symbol indicates termination structures that are designed to honor their contracts to full maturity or, should certain events occur, to terminate and cash settle all their contracts before their final maturity date.
5. Counterparty instrument rating: 'cir' qualifier
This symbol indicates a counterparty instrument rating (CIR), which is a forward-looking opinion about the creditworthiness of an issuer in a securitization structure with respect to a specific financial obligation to a counterparty (including interest rate swaps, currency swaps, and liquidity facilities). The CIR is determined on an ultimate payment basis; these opinions do not take into account timeliness of payment.
Inactive Qualifiers
Inactive qualifiers are no longer applied or outstanding.
1. Contingent upon final documentation: '*' inactive qualifier
This symbol indicated that the rating was contingent upon S&P Global Ratings' receipt of an executed copy of the escrow agreement or closing documentation confirming investments and cash flows. Discontinued use in August 1998.
2. Termination of obligation to tender: 'c' inactive qualifier
This qualifier was used to provide additional information to investors that the bank may terminate its obligation to purchase tendered bonds if the long-term credit rating of the issuer was lowered to below an investment-grade level and/or the issuer's bonds were deemed taxable. Discontinued use in January 2001.
3. U.S. direct government securities: 'G' inactive qualifier
The letter 'G' followed the rating symbol when a fund's portfolio consisted primarily of direct U.S. government securities.
4. Public information ratings: 'pi' qualifier
This qualifier was used to indicate ratings that were based on an analysis of an issuer's published financial information, as well as additional information in the public domain. Such ratings did not, however, reflect in-depth meetings with an issuer's management and therefore could have been based on less comprehensive information than ratings without a 'pi' suffix. Discontinued use as of December 2014 and as of August 2015 for Lloyd's Syndicate Assessments.
5. Provisional ratings: 'pr' inactive qualifier
The letters 'pr' indicate that the rating was provisional. A provisional rating assumed the successful completion of a project financed by the debt being rated and indicates that payment of debt service requirements was largely or entirely dependent upon the successful, timely completion of the project. This rating, however, while addressing credit quality subsequent to completion of the project, made no comment on the likelihood of or the risk of default upon failure of such completion.
6. Quantitative analysis of public information: 'q' inactive qualifier
A 'q' subscript indicates that the rating is based solely on quantitative analysis of publicly available information. Discontinued use in April 2001.
App.  A-3
 
7. Extraordinary risks: 'r' inactive qualifier
The 'r' modifier was assigned to securities containing extraordinary risks, particularly market risks, that are not covered in the credit rating. The absence of an 'r' modifier should not be taken as an indication that an obligation would not exhibit extraordinary noncredit-related risks. S&P Global Ratings discontinued the use of the 'r' modifier for most obligations in June 2000 and for the balance of obligations (mainly structured finance transactions) in November 2002.
Active Identifiers
1. Unsolicited: 'unsolicited' and 'u' identifier
The 'u' identifier and 'unsolicited' designation are assigned to credit ratings initiated by parties other than the issuer or its agents, including those initiated by S&P Global Ratings.
2. Structured finance: 'sf' identifier
The 'sf' identifier shall be assigned to ratings on "structured finance instruments" when required to comply with applicable law or regulatory requirement or when S&P Global Ratings believes it appropriate. The addition of the 'sf' identifier to a rating does not change that rating's definition or our opinion about the issue's creditworthiness. For detailed information on the instruments assigned the 'sf' identifier, please see “VIII. APPENDIX: Types of Instruments Carrying the ‘sf’ Identifier.”
Local Currency and Foreign Currency Ratings
S&P Global Ratings' issuer credit ratings make a distinction between foreign currency ratings and local currency ratings. An issuer's foreign currency rating will differ from its local currency rating when the obligor has a different capacity to meet its obligations denominated in its local currency, vs. obligations denominated in a foreign currency.
Moody’s Credit Rating Definitions
Purpose
Since John Moody devised the first bond ratings more than a century ago, Moody’s rating systems have evolved in response to the increasing depth and breadth of the global capital markets. Much of the innovation in Moody’s rating system is a response to market needs for clarity around the components of credit risk or to demand for finer distinctions in rating classifications.
Rating Symbols
Gradations of creditworthiness are indicated by rating symbols, with each symbol representing a group in which the credit characteristics are broadly the same. There are nine symbols as shown below, from that used to designate least credit risk to that denoting greatest credit risk:
Aaa Aa A Baa Ba B Caa Ca C
Moody’s appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa.
Absence of a Rating
Where no rating has been assigned or where a rating has been withdrawn, it may be for reasons unrelated to the creditworthiness of the issue.
Should no rating be assigned, the reason may be one of the following:
1. An application was not received or accepted.
2. The issue or issuer belongs to a group of securities or entities that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published in Moody's publications.
App.  A-4
 
Withdrawal may occur if new and material circumstances arise, the effects of which preclude satisfactory analysis; if there is no longer available reasonable up-to-date data to permit a judgment to be formed; if a bond is called for redemption; or for other reasons.
Changes in Rating
The credit quality of most issuers and their obligations is not fixed and steady over a period of time, but tends to undergo change. For this reason changes in ratings occur so as to reflect variations in the intrinsic relative position of issuers and their obligations.
A change in rating may thus occur at any time in the case of an individual issue. Such rating change should serve notice that Moody's observes some alteration in creditworthiness, or that the previous rating did not fully reflect the quality of the bond as now seen. While because of their very nature, changes are to be expected more frequently among bonds of lower ratings than among bonds of higher ratings. Nevertheless, the user of bond ratings should keep close and constant check on all ratings
—
both high and low
—
to be able to note promptly any signs of change in status that may occur.
Limitations to Uses of Ratings*
Obligations carrying the same rating are not claimed to be of absolutely equal credit quality. In a broad sense, they are alike in position, but since there are a limited number of rating classes used in grading thousands of bonds, the symbols cannot reflect the same shadings of risk which actually exist.
As ratings are designed exclusively for the purpose of grading obligations according to their credit quality, they should not be used alone as a basis for investment operations. For example, they have no value in forecasting the direction of future trends of market price. Market price movements in bonds are influenced not only by the credit quality of individual issues but also by changes in money rates and general economic trends, as well as by the length of maturity, etc. During its life even the highest rated bond may have wide price movements, while its high rating status remains unchanged.
The matter of market price has no bearing whatsoever on the determination of ratings, which are not to be construed as recommendations with respect to "attractiveness". The attractiveness of a given bond may depend on its yield, its maturity date or other factors for which the investor may search, as well as on its credit quality, the only characteristic to which the rating refers.
Since ratings involve judgements about the future, on the one hand, and since they are used by investors as a means of protection, on the other, the effort is made when assigning ratings to look at "worst" possibilities in the "visible" future, rather than solely at the past record and the status of the present. Therefore, investors using the rating should not expect to find in them a reflection of statistical factors alone, since they are an appraisal of long-term risks, including the recognition of many non-statistical factors.
Though ratings may be used by the banking authorities to classify bonds in their bank examination procedure, Moody's ratings are not made with these bank regulations in mind. Moody's Investors Service's own judgement as to the desirability or non-desirability of a bond for bank investment purposes is not indicated by Moody's ratings.
Moody's ratings represent the opinion of Moody's Investors Service as to the relative creditworthiness of securities. As such, they should be used in conjunction with the descriptions and statistics appearing in Moody's publications. Reference should be made to these statements for information regarding the issuer. Moody's ratings are not commercial credit ratings. In no case is default or receivership to be imputed unless expressly stated.
* As set forth more fully on the copyright, credit ratings are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. Each rating or other opinion must be weighed solely as one factor in any investment decision made by or on behalf of any user of the information, and each such user must accordingly make its own study and evaluation of each security and of each issuer and guarantor of, and each provider of credit support for, each security that it may consider purchasing, selling or holding.
Short-Term Obligation Ratings
Ratings assigned on Moody’s global long-term and short-term rating scales are forward-looking opinions of the relative credit risks of financial obligations issues by non-financial corporates, financial institutions, structured finance vehicles, project finance vehicles, and public sector entities. Long-term ratings are assigned to issuers or obligations with an original maturity of one year or more and reflect both on the likelihood of a default on contractually promised payments and the expected financial loss suffered in the event
App.  A-5
 
of default. Short-term ratings are assigned to obligations with an original maturity of thirteen months or less and reflect the likelihood of a default on contractually promised payments and the expected financial loss suffered in the event of default.
Moody’s employs the following designations to indicate the relative repayment ability of rated issuers:
P-1
Issuers (or supporting institutions) rated Prime-1 have a superior ability to repay short-term debt obligations.
P-2
Issuers (or supporting institutions) rated Prime-2 have a strong ability to repay short-term debt obligations.
P-3
Issuers (or supporting institutions) rated Prime-3 have an acceptable ability to repay short-term obligations.
NP
Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime rating categories.
The following table indicates the long-term ratings consistent with different short-term ratings when such long-term ratings exist.
SHORT-TERM VS. LONG-TERM RATINGS
G4SAI1.JPG
Fitch’s National Credit Ratings
National scale ratings are an opinion of creditworthiness relative to the universe of issuers and issues within a single country. They are most commonly used in emerging market countries with sub- or low investment grade sovereign ratings on the international scale.
As creditworthiness can be expressed across the full range of the scale, a national scale can enable greater rating differentiation within a market than the international scale, particularity in highly speculative grade countries where ratings tend to cluster around the often low sovereign rating due to higher risks associated with a more volatile operating environment.
A "+" or "-" may be appended to a National Rating to denote relative status within a major rating category. Such suffixes are not added to the 'AAA(xxx)' National Rating category, to categories below 'CCC(xxx)', or to Short-Term National Ratings other than 'F1(xxx)'.
National scale ratings are assigned on the basis that the “best credits or issuers” in the country are rated ‘AAA’ on the national scale. National Ratings are then assessed using the full range of the national scale based on a comparative analysis of issuers rated under the same national scale to establish a relative ranking of credit worthiness.
App.  A-6
 
At any given point in time, there is a certain relationship between National and International Ratings but there is not a precise translation between the scales. Fitch monitors the ratings relationship of issuers rated on both the international and national scales to ensure the consistency of rating relativities across scales. In other words, if issuer “X” is rated higher than issuer “Y” on one scale, issuer “X” cannot be rated lower than issuer “Y” on the other scale.
National Ratings for local issuers exclude the effects of sovereign and transfer risk and exclude the possibility that investors may be unable to repatriate any due interest and principal repayments. Comparisons between different national scales or between an individual national scale and the international rating scale are therefore inappropriate and potentially misleading.
In certain countries, regulators have established credit rating scales to be used within their domestic markets using specific nomenclature. In these countries, the agency's National Rating definitions may be substituted by the regulatory scales. For instance Fitch's National Short Term Ratings of 'F1+(xxx)', 'F1(xxx)', 'F2(xxx)' and 'F3(xxx)' may be substituted by the regulatory scales, e.g. 'A1+', 'A1', 'A2' and 'A3'. The below definitions thus serve as a template, but users should consult the individual scales for each country listed on Fitch's regional websites to determine if any additional or alternative category definitions apply.
Fitch maintains internal mapping tables that document the current relationship between the National and International Local Currency Ratings in each jurisdiction where we maintain a National Rating scale in order to serve as a tool for analysts. Where our National rating coverage exceeds a minimum threshold and there is external demand, these mappings will be published on this site. Presently, publicly available mappings can be accessed here. Fitch currently publishes the mapping tables for Brazil and South Africa.
Limitations of the National Rating Scale
Specific limitations relevant to National Rating scale include:
• National scale ratings are only available in selected countries.
• National scale ratings are only directly comparable with other national ratings in the same country. There is a certain correlation between national and global ratings but there is not a precise translation between the scales. The implied vulnerability to default of a given national scale rating will vary over time.
• The value of default studies for National Ratings is limited. Due to the relative nature of national scales, a given national scale rating is not intended to represent a fixed amount of default risk over time. As a result, a default study using only National Ratings may not give an accurate picture of the historical relationship between ratings and default risk. Users should exercise caution in making inferences relating to the relative vulnerability to default of national scale ratings using the historical default experience with International Ratings and mapping tables to link the National and International ratings. As with ratings on any scale, the future will not necessarily follow the past.
National Short-Term Credit Ratings
F1(xxx)
Indicates the strongest capacity for timely payment of financial commitments relative to other issuers or obligations in the same country. Under the agency’s National Rating scale, this rating is assigned to the lowest default risk relative to others in the same country. Where the liquidity profile is particularly strong, a “+” is added to the assigned rating.
F2(xxx)
Indicates a good capacity for timely payment of financial commitments relative to other issuers or obligations in the same country. However, the margin of safety is not as great as in the case of the higher ratings.
F3(xxx)
Indicates an adequate capacity for timely payment of financial commitments relative to other issuers or obligations in the same country or monetary union.
B(xxx)
Indicates an uncertain capacity for timely payment of financial commitments relative to other issuers or obligations in the same country or monetary union.
App.  A-7
 
C(xxx)
Indicates a highly uncertain capacity for timely payment of financial commitments relative to other issuers or obligations in the same country or monetary union.
RD(xxx): Restricted default
Indicates an entity that has defaulted on one or more of its financial commitments, although it continues to meet other financial obligations. Applicable to entity ratings only.
D(xxx)
Indicates a broad-based default event for an entity, or the default of a short-term obligation.
Notes to Long-Term and Short-Term National Ratings:
The ISO international country code is placed in parentheses immediately following the rating letters to indicate the identity of the National market within which the rating applies. For illustrative purposes, (xxx) has been used.
“+” or “-” may be appended to a National Rating to denote relative status within a major rating category. Such suffixes are not added to the ‘AAA(xxx)’ Long-Term National Rating category, to categories below ‘CCC(xxx)’, or to Short-Term National Ratings other than ‘F1(xxx).’
LONG-TERM RATINGS
S & P Global Ratings Long-Term Issue Credit Ratings
Issue credit ratings are based, in varying degrees, on S & P Global Ratings analysis of the following considerations:
• Likelihood of payment
—
the capacity and willingness of the obligor to meet its financial commitment on an obligation in accordance with the terms of the obligation;
• Nature of and provisions of the obligation and the promise we impute; and
• Protection afforded by, and relative position of, the obligation in the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors’ rights.
An issue rating is an assessment of default risk, but may incorporate an assessment of relative seniority or ultimate recovery in the event of default. Junior obligations are typically rated lower than senior obligations, to reflect the lower priority in bankruptcy, as noted above. (Such differentiation may apply when an entity has both senior and subordinated obligations, secured and unsecured obligations, or operating company and holding company obligations.)
Long-Term Issuer Credit Ratings
AAA
An obligation rated ‘AAA’ has the highest rating assigned by S & P Global Ratings. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong.
AA
An obligation rated ‘AA’ differs from the highest-rated obligations only to a small degree. The obligor’s capacity to meet its financial commitment on the obligation is very strong.
A
An obligation rated ‘A’ is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor’s capacity to meet its financial commitment on the obligation is still strong.
App.  A-8
 
BBB
An obligation rated ‘BBB’ exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
BB; B; CCC; CC; and C
Obligations rated ‘BB’, ‘B’, ‘CCC’, ‘CC’, and ‘C’ are regarded as having significant speculative characteristics. ‘BB’ indicates the least degree of speculation and ‘C’ the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions.
BB
An obligation rated ‘BB’ is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation.
B
An obligation rated ‘B’ is more vulnerable to nonpayment than obligations rated ‘BB’, but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor’s capacity or willingness to meet its financial commitment on the obligation.
CCC
An obligation rated ‘CCC’ is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.
CC
An obligation rated ‘CC’ is currently highly vulnerable to nonpayment. The ‘CC’ rating is used when a default has not yet occurred, but S & P Global Ratings expects default to be a virtual certainty, regardless of the anticipated time to default.
C
An obligation rated ‘C’ is currently highly vulnerable to nonpayment, and the obligation is expected to have lower relative seniority or lower ultimate recovery compared with obligations that are rated higher.
D
An obligation rated ‘D’ is in default or in breach of an imputed promise. For non-hybrid capital instruments, the ‘D’ rating category is used when payments on an obligation are not made on the date due, unless S&P Global Ratings believes that such payments will be made within five business days in the absence of a stated grace period or within the earlier of the stated grace period or 30 calendar days. The ‘D’ rating also will be used upon the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. An obligation's rating is lowered to ‘D’ if it is subject to a distressed exchange offer.
Plus (+) or minus (-)
The ratings from ‘AA’ to ‘CCC’ may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.
See active and inactive qualifiers following S & P Global Ratings Short-Term Issue Credit Ratings beginning on pages A-2 and A-3.
App.  A-9
 
Moody’s Long-Term Obligation Ratings
Long-Term Obligation Ratings
Long-term ratings are assigned to issuers or obligations with an original maturity of one year or more and reflect both on the likelihood of a default or impairment on contractual financial obligations and the expected financial loss suffered in the event of default or impairment. Short-term ratings are assigned to obligations with an original maturity of thirteen months or less and reflect both on the likelihood of a default or impairment on contractual financial obligations and the expected financial loss suffered in the event of default or impairment.
Moody’s Long-Term Rating Definitions:
Aaa
Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.
Aa
Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.
A
Obligations rated A are considered upper-medium grade and are subject to low credit risk.
Baa
Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.
Ba
Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.
B
Obligations rated B are considered speculative and are subject to high credit risk.
Caa
Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk.
Ca
Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.
C
Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest.
Note:
Moody’s appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aaa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. Additionally, a “(hyb)” indicator is appended to all ratings of hybrid securities issued by banks, insurers, finance companies, and securities firms.*
*
By their terms, hybrid securities allow for the omission of scheduled dividends, interest, or principal payments, which can potentially result in impairment if such an omission occurs. Hybrid securities may also be subject to contractually allowable write-downs of principal that could result in impairment.
App.  A-10
 
 
Together with the hybrid indicator, the long-term obligation rating assigned to a hybrid security is an expression of the relative credit risk associated with that security.
Fitch’s National Long-Term Credit Ratings
AAA(xxx)
‘AAA’ National Ratings denote the highest rating assigned by the agency in its National Rating scale for that country. This rating is assigned to issuers or obligations with the lowest expectation of default risk relative to all other issuers or obligations in the same country or monetary union.
AA(xxx)
‘AA’ National Ratings denote expectations of very low default risk relative to other issuers or obligations in the same country or monetary union. The default risk inherent differs only slightly from that of the country’s highest rated issuers or obligations.
A(xxx)
‘A’ National Ratings denote expectations of low default risk relative to other issuers or obligations in the same country or monetary union.
BBB(xxx)
‘BBB’ National Ratings denote a moderate default risk relative to other issuers or obligations in the same country or monetary union.
BB(xxx)
‘BB’ National Ratings denote an elevated default risk relative to other issuers or obligations in the same country or monetary union.
B(xxx)
‘B’ National Ratings denote a significantly elevated default risk relative to other issuers or obligations in the same country or monetary union.
CCC(xxx)
‘CCC’ National Ratings denote very high default risk relative to other issuers or obligations in the same country or monetary union.
CC(xxx)
‘CC' National Ratings denote default risk is among the highest relative to other issuers or obligations in the same country or monetary union.
C(xxx)
A default or default-like process has begun, or the issuer is in standstill, or for a closed funding vehicle, payment capacity is irrevocably impaired. Conditions that are indicative of a 'C' category rating for an issuer include:
a. the issuer has entered into a grace or cure period following non-payment of a material financial obligation;
b. the issuer has entered into a temporary negotiated waiver or standstill agreement following a payment default on a material financial obligation;
c. the formal announcement by the issuer or their agent of a distressed debt exchange; and
d. a closed financing vehicle where payment capacity is irrevocably impaired such that it is not expected to pay interest and/or principal in full during the life of the transaction, but where no payment default is imminent
App.  A-11
 
RD(xxx): Restricted default.
‘RD’ ratings indicated that an issuer that in Fitch Ratings’ opinion has experienced an uncured payment default on a bond, loan or other material financial obligation but which has not entered into bankruptcy filings, administration, receivership, liquidation or other formal winding-up procedure, and which has not otherwise ceased business. This would include:
a. the selective payment default on a specific class or currency of debt;
b. the uncured expiry of any applicable grace period, cure period or default forbearance period following a payment default on a bank loan, capital markets security or other material financial obligation;
c. the extension of multiple waivers or forbearance periods upon a payment default on one or more material financial obligations either in series or in parallel; or
d. execution of a distressed debt exchange on one or more material financial obligations.
D(xxx)
‘D’ National Ratings denote an issuer or instrument that is currently in default.
Notes to Long-Term and Short-Term National Ratings:
The ISO International Country Code is placed in parentheses immediately following the rating letters to indicate the identity of the National market within which the rating applies. For illustrative purposes, (xxx) has been used.
“+” or “-” may be appended to a National Rating to denote relative status within a major rating category. Such suffixes are not added to the ‘AAA(xxx)’ Long-Term National Rating category, to categories below ‘CCC(xxx)’, or to Short-Term National Ratings other than ‘F1(xxx).’
MUNICIPAL NOTE RATINGS
S & P Global Ratings Municipal Short-Term Note Ratings Definitions
An S & P Global Ratings U.S. municipal note rating reflects S & P Global Ratings' opinion about the liquidity factors and market access risks unique to the notes. Notes due in three years or less will likely receive a note rating. Notes with an original maturity of more than three years will most likely receive a long-term debt rating. In determining which type of rating, if any, to assign, S & P Global Ratings analysis will review the following considerations:
• Amortization schedule
—
the larger the final maturity relative to other maturities, the more likely it will be treated as a note; and
• Source of payment
—
the more dependent the issue is on the market for its refinancing, the more likely it will be treated as a note.
Note rating symbols are as follows:
SP-1
Strong capacity to pay principal and interest. An issue determined to possess a very strong capacity to pay debt service is given a plus (+) designation.
SP-2
Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes.
SP-3
Speculative capacity to pay principal and interest.
App.  A-12
 
D
'D' is assigned upon failure to pay the note when due, completion of a distressed exchange offer, or the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions.
See active and inactive qualifiers following S & P Global Ratings Short-Term Issue Credit Ratings beginning on page A-2.
Moody’s US Municipal Short-Term Debt And Demand Obligation Ratings
Short-Term Obligation Ratings
The global short-term ‘prime’ rating scale is applied to US municipal tax-exempt commercial paper issued by US municipalities and non-profits. These commercial paper programs are typically backed by external letters of credit or liquidity facilities, or by an issuer’s self-liquidity, and their short-term prime ratings usually map to the long-term rating of the enhancing bank or financial institution and not to the municipality’s rating. Other short-term municipal obligations, which generally have different funding sources for repayment, are rated using two additional short-term rating scales (i.e., the MIG and VMIG scales discussed below).
The Municipal Investment Grade (MIG) scale is used to rate US municipal cash flow notes, bond anticipation notes, and certain other short-term obligations of up to three years maturity. Municipal notes rated on the MIG scale may be secured by either pledged revenues or proceeds of a take-out financing received prior to note maturity. MIG ratings expire at the maturity of the obligation, and the issuer’s long-term rating is only one consideration in assigning the MIG rating. MIG ratings are divided into three levels
— MIG 1 through MIG 3
—
while speculative grade short-term obligations are designated SG.
MIG 1
This designation denotes superior credit quality. Excellent protection is afforded by established cash flows, highly reliable liquidity support, or demonstrated broad-based access to the market for refinancing.
MIG 2
This designation denotes strong credit quality. Margins of protection are ample, although not as large as in the preceding group.
MIG 3
This designation denotes acceptable credit quality. Liquidity and cash-flow protection may be narrow, and market access for refinancing is likely to be less well-established.
SG
This designation denotes speculative-grade credit quality. Debt instruments in this category may lack sufficient margins of protection.
Demand Obligation Ratings
In the case of variable rate demand obligations (VRDOs), a two-component rating is assigned: a long or short-term debt rating and a demand obligation rating. The first element represents Moody’s evaluation of risk associated with scheduled principal and interest payments. The second element represents Moody’s evaluation of risk associated with the ability to receive purchase price upon demand (“demand feature”). The second element uses a rating from a variation of the MIG scale called the Variable Municipal Investment Grade (VMIG) scale. VMIG ratings of demand obligations with unconditional liquidity support are mapped from the short-term debt rating (or counterparty assessment) of the support provider, or the underlying obligor in the absence of third party liquidity support, with VMIG 1 corresponding to P-1, VMIG 2 to P-2, VMIG 3 to P-3 and SG to not prime. For example, the VMIG rating for an industrial revenue bond with Company XYZ as the underlying obligor would normally have the same numerical modifier as Company XYZ’s prime rating. Transitions of VMIG ratings of demand obligations with conditional liquidity support, as shown in the diagram below, differ from transitions on the Prime scale to reflect the risk that external liquidity support will terminate if the issuer’s long-term rating drops below investment grade.
App.  A-13
 
VMIG 1
This designation denotes superior credit quality. Excellent protection is afforded by the superior short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand.
VMIG 2
This designation denotes strong credit quality. Good protection is afforded by the strong short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand.
VMIG 3
This designation denotes acceptable credit quality. Adequate protection is afforded by the satisfactory short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand.
SG
This designation denotes speculative-grade credit quality. Demand features rated in this category may be supported by a liquidity provider that does not have an investment grade short-term rating or may lack the structural and/or legal protections necessary to ensure the timely payment of purchase price upon demand.
US MUNICIPAL SHORT-TERM VS. LONG-TERM RATINGS
G4SAI4.JPG
* For VRDBs supported with conditional liquidity support, short-term ratings transition down at higher long-term ratings to reflect the risk of termination of liquidity support as a result of a downgrade below investment grade.
  VMIG ratings of VRDBs with unconditional liquidity support reflect the short-term debt rating (or counterparty assessment) of the liquidity support provider with VMIG 1 corresponding to P-1, VMIG 2 to P-2, VMIG 3 to P-3 and SG to not prime.
  For SBPA-backed VRDBs, The rating transitions are higher to allow for distance to downgrade to below investment grade due to the presence of automatic termination events in the SBPAs.
App.  A-14
 
Appendix B
—
Addresses
The Funds:
BMO Funds, Inc.
790 North Water Street, Suite 1100
Milwaukee, Wisconsin 53202
Distributor:
Foreside Financial Services, LLC
Three Canal Plaza
Portland, Maine 04101
Adviser, Administrator, and Shareholder Servicing Agent:
BMO Asset Management Corp.
115 South LaSalle Street
Chicago, Illinois 60603
Sub-Adviser to Pyrford International Stock:
Pyrford International Ltd.
95 Wigmore Street
London, United Kingdom, W1U 1FD
Sub-Adviser to LGM Emerging Markets Equity:
LGM Investments Limited
95 Wigmore Street
London, United Kingdom, W1U 1FD
Sub-Administrator and Fund Accounting Services Agent:
State Street Bank and Trust Company
1 Iron Street
Boston, Massachusetts 02116
Custodian:
State Street Bank and Trust Company
1 Iron Street
Boston, Massachusetts 02116
Transfer Agent and Dividend Disbursing Agent:
SS&C Technologies, Inc.
2000 Crown Colony Drive
Quincy, Massachusetts 02171
Legal Counsel:
Stradley Ronon Stevens & Young, LLP
2005 Market Street, Suite 2600
Philadelphia, Pennsylvania 19103
App.  B-1
 
Independent Registered Public Accounting Firm:
KPMG LLP
191 West Nationwide Blvd., Suite 500
Columbus, Ohio 43215
App.  B-2
BMO FUNDS, INC.
PART C
OTHER INFORMATION
Item 28.    Exhibits.
     
(a)(1)  
(a)(2)  
(a)(3)  
(a)(4)  
(a)(5) Amendment No. 4 to Articles of Incorporation dated November 1, 1993
1
 
(a)(6)  
(a)(7)  
(a)(8)  
(a)(9)  
(a)(10)  
(a)(11)  
(a)(12)  
(a)(13)  
(a)(14)  
(a)(15)  
(a)(16)  
(a)(17)  
(a)(18)  
(a)(19)  
(a)(20)  
(a)(21)  
(a)(22)  
(a)(23)  
(a)(24)  
(a)(25)  
(a)(26)  
(a)(27)  
(a)(28)  
(a)(29)  
(a)(30)  
(a)(31)  
(a)(32)  
C-1
 
(a)(33)  
(a)(34)  
(a)(35)  
(a)(36)  
(a)(37)  
(a)(38)  
(a)(39)  
(a)(40)  
(a)(41)  
(a)(42)  
(a)(43)  
(a)(44)  
(a)(45)  
(a)(46)  
(a)(47)  
(a)(48)  
(a)(49)  
(a)(50)  
(a)(51)  
(a)(52)  
(a)(53)  
(a)(54)  
(a)(55)  
(a)(56)  
(a)(57)  
(a)(58)  
(a)(59)  
(a)(60)  
(a)(61)  
(a)(62)  
(b)  
(c) Instruments Defining Rights of Security Holders — Incorporated by reference to the Articles of Incorporation and By-Laws  
(d)(1)  
(d)(2)  
(d)(3)  
C-2
 
(d)(4)  
(d)(5)  
(e)(1)  
(e)(2)  
(e)(3)  
(e)(4)  
(e)(5)  
(e)(6)  
(f) Bonus or Profit Sharing Contracts—None  
(g)(1)  
(g)(2)  
(h)(1)  
(h)(2)  
(h)(3)  
(h)(4)  
(h)(5)  
(h)(6)  
(h)(7)  
(h)(8)  
(h)(9)  
(h)(10)  
(h)(11)  
(h)(12)  
(h)(13)  
(h)(14)  
(i) Opinion and Consent of counsel–None  
(j)  
(k) Omitted Financial Statements—None  
(l)  
(m)(1)  
(m)(2)  
(n)(1)  
C-3
 
EX-101.INS XBRL Instance Document – the instance document does not appear on the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
EX-101.SCH XBRL Taxonomy Extension Schema Document
EX-101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
EX-101.DEF XBRL Taxonomy Extension Definition Linkbase Document
EX-101.LAB XBRL Taxonomy Extension Label Linkbase Document
EX-101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
# Filed herewith.
1 Exhibit to PEA No. 8 filed December 28, 1993.*
2 Exhibit to PEA No. 33 filed October 30, 2000.*
3 Exhibit to PEA No. 37 filed October 30, 2003.*
4 Exhibit to PEA No. 42 filed December 30, 2004.*
5 Exhibit to PEA No. 46 filed October 31, 2005.*
6 Exhibit to PEA No. 49 filed June 1, 2007.*
7 Exhibit to PEA No. 52 filed January 29, 2008.*
8 Exhibit to PEA No. 55 filed December 15, 2008.*
9 Exhibit to PEA No. 56 filed July 16, 2009.*
10 Exhibit to PEA No. 64 filed August 30, 2010.*
11 Exhibit to PEA No. 66 filed December 15, 2010.*
12 Exhibit to PEA No. 70 filed February 28, 2011.*
13 Exhibit to PEA No. 72 filed October 14, 2011.*
14 Exhibit to PEA No. 75 filed December 23, 2011.*
15 Exhibit to PEA No. 76 filed December 29, 2011.*
16 Exhibit to PEA No. 79 filed September 27, 2012.*
17 Exhibit to PEA No. 81 filed December 27, 2012.*
18 Exhibit to PEA No. 84 filed June 28, 2013.*
19 Exhibit to PEA No. 87 filed August 29, 2013.*
20 Exhibit to PEA No. 89 filed September 27, 2013.*
21 Exhibit to PEA No. 92 filed December 27, 2013.*
22 Exhibit to PEA No. 95 filed May 27, 2014.*
23 Exhibit to Proxy Statement/Prospectus on Form N-14 filed November 5, 2014.*
24 Exhibit to PEA No. 102 filed December 15, 2014.*
25 Exhibit to PEA No. 103 filed December 29, 2014.*
26 Exhibit to PEA No. 107 filed April 28, 2015.*
27 Exhibit to PEA No. 110 filed August 26, 2015.*
28 Exhibit to PEA No. 112 filed December 29, 2015*
29 Exhibit to PEA No. 116 filed June 1, 2016*
30 Exhibit to PEA No. 120 filed March 1, 2017*
31 Exhibit to PEA No. 124 filed May 8, 2017*
32 Exhibit to PEA No. 125 filed May 8, 2017*
33 Exhibit to PEA No. 128 filed December 21, 2017*
34 Exhibit to PEA No. 130 filed August 24, 2018*
35 Exhibit to PEA No. 131 filed October 23, 2018*
36 Exhibit to PEA No. 133 filed December 21, 2018*
37 Exhibit to PEA No. 139 filed December 23, 2019*
38 Exhibit to PEA No. 141 filed February 26, 2020*
* Incorporated by reference.
C-4
 
Item 29.    Persons Controlled by or Under Common Control with Registrant.
The information in the Statement of Additional Information captions “Account and Share Information – Control Persons and Principal Shareholders” and “Information About the Adviser and Sub-Advisers – Adviser to the Funds” is incorporated by reference.
Item 30.    Indemnification.
Reference is made to Article IX of the Registrant’s By-Laws and Section 7 of the Distribution Agreement between the Registrant and Foreside Financial Services, LLC.
The Registrant’s By-Laws provide for indemnification of its officers and directors to the fullest extent permitted by Wisconsin Business Corporation Law and applicable federal and state securities laws. Notwithstanding the foregoing, the By-Laws state that this indemnification will not protect any officer or director against liability to the Registrant or any shareholder by reason of his/her willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such officer’s or director’s office.
The Distribution Agreement between the Registrant and the Distributor provides that the Registrant will indemnify the Distributor, its affiliates, and each of their respective members, managers, directors, officers, employees and control persons against certain losses, claims, demands, liabilities, damages, and expenses incurred under the securities laws or otherwise, arising out of or based upon (i) the Registrant’s failure to comply with applicable securities laws or regulations or (ii) any alleged untrue statement or omission of a material fact contained in the Registrant’s SEC filings or other documents and in certain other circumstances.
In addition, the Wisconsin Business Corporation Law requires the Registrant to indemnify each of its officers and directors against liability incurred by the officer or director in any proceeding to which the officer or director was a party because he or she is an officer or director, unless liability was incurred because the officer or director breached or failed to perform a duty owed to the Registrant and the breach or failure to perform constitutes (i) a willful failure to deal fairly with the Registrant or its shareholders in connection with a matter in which the officer or director has a material conflict of interest; (ii) a violation of criminal law, unless the officer or director had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe it was unlawful; (iii) a transaction from which the officer or director derived an improper personal profit; or (iv) willful misconduct.
The Registrant’s directors and officers are insured under a policy of insurance maintained by the Registrant against certain liabilities that might be imposed as a result of actions, suit or proceedings to which they are parties by reason of being or having been such directors or officers.
In addition, each of the directors who is not an “interested person” (as defined under the Investment Company Act of 1940) of Registrant (a “Non-interested Director”) has entered into an indemnification agreement with Registrant, which agreement provides that the Registrant shall indemnify the Non-interested Director against certain liabilities which such Director may incur while acting in the capacity as a director, officer or employee of the Registrant to the fullest extent permitted by law, now or in the future, and requires indemnification and advancement of expenses unless prohibited by law. The indemnification agreement cannot be altered without the consent of the Non-interested Director and is not affected by amendment of the Articles of Incorporation. In addition, the indemnification agreement adopts certain presumptions and procedures which may make the process of indemnification and advancement of expenses more timely, efficient and certain. In accordance with Section 17(h) of the Investment Company Act of 1940, the indemnification agreement does not protect a Non-interested Director against any liability to the Registrant or its shareholders to which such Non-interested Director would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office.
Item 31.    Business and Other Connections of the Investment Adviser.
BMO Asset Management Corp. (the “Adviser”) serves as the investment adviser for the Registrant. The Adviser’s principal business address is 115 South LaSalle Street, 11th Floor, Chicago, Illinois 60603. The Adviser is a registered investment adviser and wholly-owned subsidiary of BMO Financial Corp., a financial services company headquartered in Chicago, Illinois, and an indirect wholly-owned subsidiary of the Bank of Montreal (“BMO”), a Canadian bank holding company. The business and other connections of the Adviser, as well as the names and titles of the executive officers and directors of the Adviser, are further described in the Adviser’s Uniform Application for Investment Adviser Registration (“Form ADV”) as filed with the SEC.
Pyrford International Ltd. (“Pyrford”) serves as the sub-adviser with respect to the Registrant’s Pyrford International Stock Fund. Pyrford’s principal business address is 95 Wigmore Street, London, United Kingdom. Pyrford is a registered investment adviser.
C-5
 
The business and other connections of Pyrford, as well as the names and titles of the executive officers and directors of Pyrford, are further described in Pyrford’s Form ADV as filed with the SEC.
LGM Investments Limited (formerly, Lloyd George Management (Europe) Limited) (“LGM Investments”) serves as a sub-adviser with respect to the Registrant’s LGM Emerging Markets Equity Fund. LGM Investments is a registered investment adviser. LGM Investments’ principal business address is 95 Wigmore Street, London, United Kingdom. The business and other connections of LGM Investments, as well as the names and titles of the executive officers and directors of LGM Investments, are further described in LGM Investments’ Form ADV as filed with the SEC.
BMO is the ultimate parent company of the Adviser, Pyrford, and LGM Investments. Accordingly, the Adviser, Pyrford, and LGM Investments are affiliates. To the best of Registrant’s knowledge, none of the Adviser’s directors or executive officers is or has been engaged in any other business, profession, vocation, or employment of a substantial nature for the past two fiscal years, except as noted in the “Directors and Officers” section of the Registrant’s Statement of Additional Information, which is incorporated herein by reference.
Item 32.    Principal Underwriter.
Foreside Financial Services, LLC (f/k/a/ BHIL Distributors, LLC) (the “Distributor”) serves as principal underwriter for the following investment companies registered under the Investment Company Act of 1940, as amended:
1.    13D Activist Fund, Series of Northern Lights Fund Trust
2.     2nd Vote Funds
3.     AAMA Equity Fund, Series of Asset Management Fund
4.     AAMA Income Fund, Series of Asset Management Fund
5.     Advisers Investment Trust
6.     AltShares Trust
7.     BMO Funds, Inc.
8.     BMO LGM Frontier Markets Equity Fund
9.     Boston Trust Walden Funds (f/k/a The Boston Trust & Walden Funds)
10.     Conversus StepStone Private Markets
11.     Cook & Bynum Funds Trust
12.     Datum One Series Trust
13.     Diamond Hill Funds
14.     Driehaus Mutual Funds
15.     Emles Trust
16.     FlowStone Opportunity Fund
17.     Inspire 100 ETF, Series of Northern Lights Fund Trust IV
18.    Inspire Corporate Bond Impact ETF, Series of Northern Lights Fund Trust IV
19.     Inspire Global Hope ETF, Series of Northern Lights Fund Trust IV
20.     Inspire International ESG ETF, Series of Northern Lights Fund Trust IV
21.     Inspire Small Mid Cap Impact ETF, Series of Northern Lights Fund Trust IV
22.     Inspire Tactical Balanced ESG ETF, Series of Northern Lights Fund Trust IV
23.     Praxis Mutual Funds
24.     Primark Private Equity Investments Fund
25.     Rimrock Funds Trust
26.     SA Funds – Investment Trust
27.     Sequoia Fund, Inc.
28.     Simplify Exchange Traded Funds
29.     Siren ETF Trust.
The following are the Officers and Manager of the Distributor. The Distributor’s main business address is Three Canal Plaza, Suite 100, Portland, Maine 04101.
Name   Address   Position with Underwriter   Position with Registrant
Richard J. Berthy   Three Canal Plaza, Suite 100
Portland, ME 04101 		  President, Treasurer and Manager   None
Mark A. Fairbanks   Three Canal Plaza, Suite 100
Portland, ME 04101 		  Vice President   None
C-6
 
Name   Address   Position with Underwriter   Position with Registrant
Jennifer K. DiValerio   899 Cassatt Road,
400 Berwyn Park, Suite 110
Berwyn, PA 19312 		  Vice President   None
Susan K. Moscaritolo   899 Cassatt Road,
400 Berwyn Park, Suite 110
Berwyn, PA 19312 		  Vice President and Chief Compliance Officer   None
Jennifer E. Hoopes   Three Canal Plaza, Suite 100
Portland, ME 04101 		  Secretary   None
(c) Not applicable.
Item 33.    Location of Accounts and Records.
The books and records required to be maintained by Section 31(a) of the Investment Company Act of 1940, as amended, and the rules under that section are maintained in the following locations:
Records Relating to:   Are located at:
Registrant’s Transfer Agent and Dividend Disbursing Agent   SS&C Technologies, Inc.
2000 Crown Colony Drive
Quincy, MA 02171
Registrant’s Sub-Administrator and Portfolio Accounting Services Agent   State Street Bank & Trust Company
1 Iron Street
Boston, Massachusetts 02116
Registrant’s Investment Adviser, Administrator, and Shareholder Servicing Agent   BMO Asset Management Corp.
790 N. Water Street, Suite 1100
Milwaukee, Wisconsin 53202
Registrant’s Sub-Adviser to Pyrford International Stock Fund   Pyrford International Ltd.
95 Wigmore Street
London
United Kingdom
Registrant’s Sub-Adviser to LGM Emerging Markets Equity Fund   LGM Investments Limited
95 Wigmore Street
London
United Kingdom
Registrant’s Custodian and Fund Accounting Services Agent   State Street Bank & Trust Company
1 Iron Street
Boston, Massachusetts 02116
Registrant’s Distributor   Foreside Financial Services, LLC
Three Canal Plaza, Suite 100
Portland, Maine 04101
Item 34.    Management Services.
None.
Item 35.    Undertakings.
Not applicable.
C-7
 
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement under Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-Effective Amendment No. 142 to the Registration Statement on Form N-1A to be signed on its behalf by the undersigned, duly authorized, in the City of Milwaukee and the State of Wisconsin on the 23rd day of December, 2020.
BMO FUNDS, INC.
(Registrant)
By: /s/ John M. Blaser
John M. Blaser
President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 142 to the Registration Statement on Form N-1A has been signed below on December 23, 2020 by the following persons in the capacities indicated.
SIGNATURE TITLE
/s/ John M. Blaser
President (principal executive officer) and Director
John M. Blaser
/s/ Timothy M. Bonin
Chief Financial Officer and Treasurer
(principal financial and accounting officer)
Timothy M. Bonin
*
Director
Marie-Renée Bakker
*
Director
Ridge A. Braunschweig
*
Director
Teresa V. Jankovic
*
Director
John A. Lubs
*
Director
Vincent P. Lyles
*
Director
Daniela O’Leary-Gill
*
Director
Barbara J. Pope
    
*By: /s/ John M. Blaser
John M. Blaser
Attorney in fact pursuant to Power of Attorney filed herewith
 
EXHIBIT INDEX
(a)(1) Articles of Incorporation dated July 30, 1992
(a)(2) Amendment No. 1 to Articles of Incorporation dated August 11, 1992
(a)(3) Amendment No. 2 to Articles of Incorporation dated September 14, 1992
(a)(4) Amendment No. 3 to Articles of Incorporation dated April 23, 1993
(a)(6) Amendment No. 5 to Articles of Incorporation dated July 25, 1994
(a)(7) Amendment No. 6 to Articles of Incorporation dated October 24, 1994
(a)(8) Amendment No. 7 to Articles of Incorporation dated July 22, 1996
(a)(9) Amendment No. 8 to Articles of Incorporation dated April 28, 1997
(a)(10) Amendment No. 9 to Articles of Incorporation dated October 26, 1998
(a)(11) Amendment No. 10 to Articles of Incorporation dated June 7, 1999
(a)(12) Amendment No. 11 to Articles of Incorporation dated January 31, 2000
(a)(61) Amendment No. 60 to Articles of Incorporation dated August 28, 2020
(a)(62) Amendment No. 61 to Articles of Incorporation dated December 23, 2020
(d)(1) Form of Investment Advisory Contract with BMO Asset Management Corp. (f/k/a M&I Investment Management Corp.)
(d)(2) Amended and Restated Schedules A and B to the Investment Advisory Agreement
(e)(3) Second Amendment to Distribution Agreement dated June 30, 2020
(e)(4) Third Amendment to Distribution Agreement dated October 7, 2020
(e)(5) Form of Dealer Agreement
(h)(2) Amendment to Administrative Services Agreement
(h)(6) Amendment to Transfer Agency and Service Agreement dated December 28, 2012
(h)(7) Amendment to Transfer Agency and Service Agreement dated June 1, 2018
(h)(8) Amendment to Transfer Agency and Service Agreement dated August 3, 2018
(h)(9) Amendment to Transfer Agency and Service Agreement dated April 6, 2020
(h)(10) Amendment to Transfer Agency and Service Agreement dated May 27, 2020
(h)(13) Amended and Restated Expense Limitation Agreement
(h)(14) Power of Attorney
(j) Consent of Independent Registered Public Accounting Firm
(l) Initial Capital Understanding
(m)(1) Amended and Restated Rule 12b-1 Plan
(n)(1) Amended and Restated Multiple Class Plan
(p)(1) Code of Ethics for BMO Asset Management Corp., BMO Funds, Inc. and certain affiliated entities dated October 2019
(p)(2) Pyrford International Ltd. Code of Ethics dated March 2020
(p)(3) LGM Investments Limited Code of Ethics dated November 2019
EX-101.INS XBRL Instance Document – the instance document does not appear on the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
I-1
 
EX-101.SCH XBRL Taxonomy Extension Schema Document
EX-101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
EX-101.DEF XBRL Taxonomy Extension Definition Linkbase Document
EX-101.LAB XBRL Taxonomy Extension Label Linkbase Document
EX-101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
I-2

ARTICLES OF INCORPORATION

OF

MARSHALL FUNDS, INC.

The undersigned, for the purpose of forming a Wisconsin corporation under Chapter 180 of the Wisconsin Statutes, adopts the following Articles of Incorporation:

Article I

The name of the corporation is Marshall Funds, Inc. (“Corporation”)

Article II

The period of existence shall be perpetual.

Article III

The purpose for which the Corporation is formed is to act as an open-end investment company of the management type registered as such with the Securities and Exchange Commission pursuant to the Investment Company Act of 1940 and to exercise and generally to enjoy all of the powers, rights and privileges granted to, or conferred upon, corporations by Chapter 180 of the Wisconsin Statutes, as amended from time to time (the “WBCL”).

Article IV

(a) The Corporation is authorized to issue fifty billion (50,000,000,000) shares of common stock, par value $.0001 per share. Subject to the following paragraph, the authorized shares are classified as follows:

 

            Class         Series    Authorized Number
of Shares

Marshall     Money Market Fund

 

Investment Shares

   5,000,000,000

Marshall     Money Market Fund

 

Trust Shares

   5,000,000,000

Marshall     Government Income Fund                     

     1,000,000,000

Marshall     Stock Fund

     1,000,000,000

Marshall     Tax-Exempt Money Market Fund

   2,500,000,000

Marshall     Short-Term Income Fund

     1,000,000,000

Marshall     Intermediate Bond Fund

     1,000,000,000

The remaining 33,500,000,000 shares shall remain unclassified until action is taken by the Board of Directors pursuant to the following paragraph.

(b) The Board of Directors is authorized to classify or to reclassify

(i.e. into classes and series of classes), from time to time, any unissued shares of stock of the Corporation, whether now or hereafter authorized, by setting, changing or eliminating the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or terms or conditions of redemption of the stock to the fullest extent permissible under the WBCL.

Unless otherwise provided by the Board of Directors prior to the issuance of the stock, the shares of any and all classes and series of stock shall be subject to the following:

(i) The Board of Directors may redesignate a class or series of stock whether or not shares of such class or series are issued and outstanding, provided that such redesignation does not affect the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or terms or conditions of redemption of such class or series of stock.

(ii) The assets and liabilities and the income and expenses for each class shall be attributable to that class. The assets and liabilities and the income and expenses of each series within a class of the Corporation’s stock shall be determined separately and, accordingly, the net asset value of shares of the Corporation’s stock may vary from series to series within a class. The income or gain and the expense or liabilities of the Corporation shall be a located to each class or series of stock as determined by or under the direction of the Board of Directors.

(iii) Shares of each class or series of stock shall be entitled to such dividends or distributions, in stock or in cash or both, as may be declared from time to time by the Board of Directors with respect to such class or series. Dividends or distributions shall be paid on shares of a class or series of stock only out of the assets belonging to that class or series.

(iv) Any shares of stock of the Corporation redeemed by the Corporation shall be deemed to be cancelled and restored to the status of authorized but unissued shares of the particular class or series.

(v) In the event of the liquidation or dissolution of the Corporation (the stockholders of a class or series of the Corporation’s stock shall be entitled to receive, as a class or series, out of the assets of the Corporation available for distribution to stockholders, the assets belonging to that class or series less the liabilities allocated to that class or series. The assets so distributable to the stockholders of a class or series shall be distributed among such stockholders in proportion to the number of shares of that class or series held by them and recorded on the books of the Corporation. In the event that there are any assets available for distribution that are not attributable to any particular class or series of stock, such assets shall be allocated to all classes or series in proportion to the net asset value of the respective class or series.

(vi) All holders of shares of stock shall vote as a single series or class except with respect to any matter which affects only one or more series or class of stock, in which case only the holders of shares of the series or class affected shall be entitled to vote.

(vii) For purposes of the Corporation’s Registration Statement filed with the Securities and Exchange Commission under the Securities Act of 1933 and the Investment Company Act of 1940, including all prospectuses and Statements of Additional Information, references therein to “classes” of the Corporation’s common stock shall mean “series”, as used in these Articles of Incorporation and the WBCL, and references therein to “series” shall mean “class”, as used in these Articles of Incorporation and the WBCL.

(c) The Corporation may issue fractional shares. Any fractional share shall carry proportionately all the rights of a whole share, excepting any right to receive a certificate evidencing such fractional share, but including, without. limitation, the right to vote and the right to receive dividends.

ARTICLE V

(a) The number of Directors of the Corporation shall initially be three. The number may be changed by the By-Laws of the Corporation or by the Board of Directors pursuant to the By-Laws.

(b) The name of the Directors who shall act until the initial meeting of shareholders and until their successors are elected and qualify, are:

J. Christopher Donahue

Frank Polefrone

Peter J. Germain

Article VI

(a) To the extent the Corporation has funds or property legally available therefor, each shareholder shall have the right at such times as may be permitted by the Corporation, but no less frequently than as required under the Investment Company Act of 1940, to require the Corporation to redeem all or any part of its shares at a redemption price equal to the net asset value per share next determined after the shares are tendered for redemption, less any applicable redemption charges as determined by the Board of Directors, which payment may be made in funds or in assets of the class or series. The Board of Directors may adopt requirements and procedures for redemption of shares.

Notwithstanding the foregoing, the Corporation may postpone payment or deposit of the redemption price and may suspend the right of the shareholders to require the Corporation to redeem shares of any series or class pursuant to the applicable rules and regulations, or any order, of the Securities and Exchange Commission.

(b) The Corporation shall have the right, exercisable at the discretion of the Board of Directors, to redeem any shareholder’s shares of any class or series for their then current net asset value per share if at such time the shareholders owns shares having an aggregate net asset value of less than an amount described in the relevant prospectus for such class or series set forth in the current Registration Statement of the Corporation filed with the Securities and Exchange Commission.

(c) Each share is subject to redemption by the Corporation at the redemption price computed in the manner set forth in subparagraph (a) of Article VI of these Articles of Incorporation at any time if the Board of Directors, in its sole discretion, determines that failure to so redeem may result in the Corporation being classified as a personal holding company as defined in the Internal Revenue Code, as amended.

Article VII

The following provisions are hereby adopted for the purpose of defining, limiting, and regulating the powers of the Corporation and of the Directors and shareholders:

(a) The presence in person or by proxy of the holders of one-third of the shares of stock of the Corporation entitled to vote without regard to class or series shall constitute a quorum at any meeting of the shareholders, except with respect to any matter which by law requires the approval of one or more classes or series of stock, in which case the presence in person or by proxy of the holders of one-third of the shares of stock of each class or series entitled to vote on the matter shall constitute a quorum.

(b) In addition to its other powers explicitly or implicitly granted under these Articles of Incorporation, by law or otherwise, the Board of Directors of the Corporation (i) is expressly authorized to make, alter, amend or repeal the By-Laws of the Corporation, (ii) may from time to time determine whether, to what extent, at what times and places, and under what conditions and regulations the accounts and books of the Corporation, or any of them, shall be open to the inspection of the shareholders, and no shareholder shall have any right to inspect any account, book or document of the Corporation except as conferred by statute or as authorized by the Board of Directors of the Corporation, (iii) is empowered to authorize, without shareholder approval, the issuance and sale from time to time of shares of stock of the Corporation whether now or hereafter authorized, and (iv) is authorized to adopt procedures where appropriate for determination of and, to the extent deemed desirable by the Board of Directors, to maintain constant the net asset value of shares of the Corporation’s stock.

(c) The Corporation reserves the right from time to time to make any amendment of its Articles of Incorporation now or hereafter authorized by law, including any amendment which alters the contract rights, as expressly set forth in its Articles of Incorporation, of any outstanding shares or any class or series.

(d) The Board of Directors is expressly authorized to declare and pay dividends and distributions in cash, securities or other property from any funds legally available therefor, at such intervals (which may be as frequently as daily) or on such other periodic basis, as it shall determine, for any class or series of the Corporation; to declare such dividends or distributions for any class or series of the Corporation by means of a formula or other method of determination, at meetings held less frequently than the frequent of the effectiveness of such declarations; to establish payment dates for dividends or any other distributions for any class or series of the Corporation on any basis, including dates occurring less frequently than the effectiveness of declarations thereof; and to provide for the payment of declared

dividends on a date earlier or later than the specified payment date in the case of shareholders of such class or series redeeming their entire ownership of shares.

(e) Any determination made in good faith by or pursuant to the direction of the Board of Directors as to the amount of the assets, debts, obligations or liabilities of the Corporation, as to the amount of any reserves or charges set up and the propriety thereof, as to the time of or purpose for creating such reserves or charges, as to the use, alteration or cancellation of any reserves or charges (whether or not any debt, obligation or liability for which such reserves or charges shall have been created shall have been paid or discharged or shall be then or thereafter required to be paid or discharged), as to the value of or the method of valuing any investment or other asset owned or held by the Corporation, as to the number of shares of any class or series of stock outstanding, as to the income of the Corporation or as to’ any other matter relating to the determination of net asset value, the declaration of dividends or the issue, sale, redemption or other acquisition of shares of the Corporation, shall be final and conclusive and shall be binding upon the Corporation and all holders of its shares, past, present and future, and shares of the Corporation are issued and sold on the condition and understanding that any and all such determinations shall be binding as aforesaid.

Article VIII

(a) To the fullest extent that limitations on the liability of directors and officers are permitted by the WBCL, no director or officer of the Corporation shall have any liability to the Corporation or its shareholders for damages. This limitation on liability applies to events occurring at the time a person serves as a director or officer of the Corporation whether or not such person is a director or officer at the time of any proceeding in which liability is asserted.

(b) The Corporation shall indemnify and advance expenses to its currently acting and its former directors and officers to the fullest extent that indemnification of directors and officers is permitted by the WBCL. The Board of Directors may by by-law, resolution or agreement make further provision for indemnification of directors, officers, employees and agents to the fullest extent permitted by the WBCL.

(c) No provision of this Article shall be effective to protect or purport to protect any director or officer of the Corporation against any liability to the Corporation or its security holders which is impermissible under the Investment Company Act of 1940.

(d) No amendment to the Articles of Incorporation of the Corporation shall affect any right of any person under this Article based on any event, omission or proceeding prior to the amendment.

Article IX

The address of the initial resident agent of the Corporation is 770 North Water Street, Milwaukee, Wisconsin 53202. The resident agent at such address is Michael A. Hatfield.

Article X

The name and address of the Sole Incorporator is:

 

            Name   Address
Scott A. Moehrke  

Godfrey & Kahn, S.C.

 

780 North Water Street

 

Milwaukee, Wisconsin 53202

IN WITNESS WHEREOF, I have signed these Articles of Incorporation and acknowledge them to be my act on the 30th day of July, 1992.

 

/s/ Scott A. Moehrke
SCOTT A. MOEHRKE
SOLE INCORPORATOR

This instrument was drafted by:

Scott A. Moehrke

Godfrey & Kahn, S.C.

780 North Water Street

Milwaukee, WI 53202

MARSHALL FUNDS, INC.

Amendment No. 1

to

ARTICLES OF INCORPORATION

Dated July 30, 1992

THESE Articles of Incorporation are amended as follows:

Delete Section (a) of Article IV and substitute in its place the following:

“(a) The Corporation is authorized to issue fifty billion (50,000,000,000) shares of common stock, par value $.0001 per share. Subject to the following paragraph, the authorized shares are classified as follows:

 

Class

   Series   

Authorized Number

of Shares

Marshall Money Market Fund

   Investment Shares    5,000,000,000

Marshall Money Market Fund

   Trust Shares    5,000,000,000

Marshall Government Income Fund

      1,000,000,000

Marshall Stock Fund

      1,000,000,000

Marshall Tax-Free Money Market Fund

      2,500,000,000

Marshall Short-Term Income Fund

      1,000,000,000

Marshall Intermediate Bond Fund

      1,000,000,000

The remaining 33,500,000,000 shares shall remain unclassified until action is taken by the Board of Directors pursuant to the following paragraph.”

The undersigned Secretary of Marshall Funds, Inc. certifies that the above stated amendment is a true and correct Amendment to the Articles of Incorporation, as adopted by the Directors of the Corporation as of the 11th day of August, 1992 in accordance with Section 180.1002 of the Wisconsin Statutes.

WITNESS the due execution hereof this 11th day of August, 1992.

 

/s/ Peter J. Germain
Peter J. Germain
Secretary

This document was drafted by:

James E. Banks, Jr.

Federated Administrative Services, Inc.

Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

MARSHALL FUNDS, INC.

Amendment No. 2

to

ARTICLES OF INCORPORATION

Dated July 30, 1992

THESE Articles of Incorporation are amended as follows:

Delete Section (b) of Article V in its entirety and substitute in its place the following:

“(b) The names of the Directors who shall act until the initial meeting of shareholders and until their successors are elected and qualify, are:

Ody J. Fish

Edward C. Gonzales

Paul E. Hassett

Len E. Ivarson

Warren P. Knowles”

The undersigned Secretary of Marshall Funds, Inc. hereby certifies that the above-stated amendment is a true and correct Amendment to the Articles of Incorporation, as adopted by the Directors of the Corporation as of the 14th day of September, 1992 pursuant to Section 180.1002 of the Wisconsin Statutes.

WITNESS the due execution hereof this 14th day of September, 1992.

 

/s/ Peter J. Germain
Peter J. Germain
Secretary

Amendment No. 3

to

ARTICLES OF INCORPORATION

Dated July 30, 1992

THESE Articles of Incorporation are amended as follows:

Delete Section (a) of Article IV and substitute in its place the following:

“(a) The Corporation is authorized to issue fifty billion (50,000,000,000) shares of common stock, par value $.0001 per share. Subject to the following paragraph, the authorized shares are classified as follows:

 

Class

   Series    Authorized Number
of Shares

Marshall Balanced Fund

     

1,000,000,000

Marshall Equity Income Fund

     

1,000,000,000

Marshall Government Income Fund

     

1,000,000,000

Marshall Intermediate Bond Fund

     

1,000,000,000

Marshall Mid-Cap Stock Fund

     

1,000,000,000

Marshall Money Market Fund

   Investment Shares   

5,000,000,000

Marshall Money Market Fund

   Trust Shares   

5,000,000,000

Marshall Short-Term Income Fund

     

1,000,000,000

Marshall Stock Fund

     

1,000,000,000

Marshall Tax-Free Money Market Fund

     

2,500,000,000

Marshall Value Equity Fund

     

1,000,000,000

The remaining 29,500,000,000 shares shall remain unclassified until action is taken by the Board of Directors pursuant to the following paragraph.”

The undersigned Secretary of Marshall Funds, Inc. certifies that the above stated amendment is a true and correct Amendment to the Articles of Incorporation, as adopted by the Directors of the Corporation as of the 26th day of April, 1993, in accordance with Section 180.1002 of the Wisconsin Business Corporation Law.

WITNESS the due execution hereof this 26th day of April, 1993.

 

/s/ Peter J. Germain
Peter J. Germain
Secretary

This document was drafted by:

Victor R. Siclari

Federated Administrative Services

Federated Investors Tower

Pittsburgh, PA 15222-3779

MARSHALL FUNDS, INC.

Amendment No. 5

to

ARTICLES OF INCORPORATION

Dated July 30, 1992

THESE Articles of Incorporation are amended as follows:

Delete Section (a) of Article IV and substitute in its place the following:

“(a) The Corporation is authorized to issue fifty billion (50,000,000,000) shares of common stock, par value $.0001 per share. Subject to the following paragraph, the authorized shares are classified as follows:

 

Class

   Series     


Authorized

Number of
Shares


 
 

Marshall Balanced Fund

        1,000,000,000  

Marshall Equity Income Fund

        1,000,000,000  

Marshall Government Income Fund

        1,000,000,000  

Marshall Intermediate Bond Fund

        1,000,000,000  

Marshall Mid-Cap Stock Fund

        1,000,000,000  

Marshall Money Market Fund

   Investment Shares      5,000,000,000  

Marshall Money Market Fund

   Trust Shares      5,000,000,000  

Marshall Short-Term Income Fund

        1,000,000,000  

Marshall Stock Fund

        1,000,000,000  

Marshall Tax-Free Money Market Fund

        2,500,000,000  

Marshall Value Equity Fund

        1,000,000,000  

Marshall Short-Term Tax-Free Fund

        1,000,000,000  

Marshall Intermediate Tax-Free Fund

     1,000,000,000  

Marshall International Stock Fund

        1,000,000,000  

The remaining 26,500,000,000 shares shall remain unclassified until action is taken by the Board of Directors pursuant to the following paragraph.”

The undersigned Secretary of Marshall Funds, Inc. certifies that the above stated amendment is a true and correct Amendment to the Articles of Incorporation, as adopted by the Directors of the Corporation as of the 25th day of July, 1994, in accordance with Section 180.1002 of the Wisconsin Business Corporation Law.

WITNESS the due execution hereof this 25th day of July, 1994.

 

/s/ Peter J. Germain
Peter J. Germain
Secretary

This document was drafted by:

Victor R. Siclari

Federated Administrative Services

Federated Investors Tower

Pittsburgh, PA 15222-3779

MARSHALL FUNDS, INC.

Amendment No. 6

to

ARTICLES OF INCORPORATION

Dated July 30, 1992

THESE Articles of Incorporation are amended as follows:

Delete Section (a) of Article IV and substitute in its place the following:

“(a) The Corporation is authorized to issue fifty billion (50,000,000,000) shares of common stock, par value $.0001 per share. Subject to the following paragraph, the authorized shares are classified as follows:

 

Class

 

  

Series

 

    

Authorized

Number

of

Shares


 

 

 

Marshall Balanced Fund

        1,000,000,000  

Marshall Equity Income Fund

        1,000,000,000  

Marshall Government Income Fund

        1,000,000,000  

Marshall Intermediate Bond Fund

        1,000,000,000  

Marshall Mid-Cap Stock Fund

        1,000,000,000  

Marshall Money Market Fund

   A Shares      5,000,000,000  

Marshall Money Market Fund

   B Shares      5,000,000,000  

Marshall Short-Term Income Fund

        1,000,000,000  

Marshall Stock Fund

        1,000,000,000  

Marshall Value Equity Fund

        1,000,000,000  

Marshall Short-Term Tax-Free Fund

        1,000,000,000  

Marshall Intermediate Tax-Free Fund

        1,000,000,000  

Marshall International Stock Fund

        1,000,000,000  

The remaining 29,000,000,000 shares shall remain unclassified until action is taken by the Board of Directors pursuant to the following paragraph.”

The undersigned Secretary of Marshall Funds, Inc. certifies that the above stated amendment is a true and correct Amendment to the Articles of Incorporation, as adopted by the Directors of the Corporation as of the 24th day of October, 1994, in accordance with Section 180.1002 of the Wisconsin Business Corporation Law.

WITNESS the due execution hereof this 24th day of October, 1994.

 

/s/ Peter J. Germain
Peter J. Germain
Secretary

Prepared by:    Victor R. Siclari

Federated Administrative Services

  Federated Investors Tower

MARSHALL FUNDS, INC.

Amendment No. 7

to

ARTICLES OF INCORPORATION

Dated July 30, 1992

THESE Articles of Incorporation are amended as follows:

Delete Section (a) of Article IV and substitute in its place the following:

“(a) The Corporation is authorized to issue fifty billion (50,000,000,000) shares of common stock, par value $.0001 per share. Subject to the following paragraph, the authorized shares are classified as follows:

 

Class

 

  

Series

 

    

Authorized

Number

of

Shares


 

 

Marshall   Balanced Fund

        1,000,000,000  

Marshall   Equity Income Fund

        1,000,000,000  

Marshall   Government Income Fund

        1,000,000,000  

Marshall   Intermediate Bond Fund

        1,000,000,000  

Marshall   Mid-Cap Stock Fund

        1,000,000,000  

Marshall   Money Market Fund

   A Shares      5,000,000,000  

Marshall   Money Market Fund

   B Shares      5,000,000,000  

Marshall   Short-Term Income Fund

        1,000,000,000  

Marshall   Stock Fund

        1,000,000,000  

Marshall   Value Equity Fund

        1,000,000,000  

Marshall   Short-Term Tax-Free Fund

        1,000,000,000  

Marshall   Intermediate Tax-Free Fund

        1,000,000,000  

Marshall   International Stock Fund

        1,000,000,000  

Marshall   Small-Cap Stock Fund

        1,000,000,000  

The remaining 28,000,000,000 shares shall remain unclassified until action is taken by the Board of Directors pursuant to the following paragraph.”

The undersigned Secretary of Marshall Funds, Inc. certifies that the above stated amendment is a true and correct Amendment to the Articles of Incorporation, as adopted by the Directors of the Corporation as of the 22nd day of July, 1996, in accordance with Section 180.1002 of the Wisconsin Business Corporation Law.

WITNESS the due execution hereof this 22nd day of July, 1996.

 

/s/ Peter J. Germain

Peter J. Germain

Secretary

Prepared by:  C. Todd Gibson

Federated Administrative Services

Federated Investors Tower

Amendment No. 8

to

ARTICLES OF INCORPORATION

Dated July 30, 1992

THESE Articles of Incorporation are amended as follows:

Delete Section (a) of Article IV and substitute in its place the following:

“(a) The Corporation is authorized to issue fifty billion (50,000,000,000) shares of common stock, par value $.0001 per share. Subject to the following paragraph, the authorized shares are classified as follows:

 

Class    Series      Authorized Number
of Shares

Marshall   Balanced Fund

      1,000,000,000

Marshall   Equity Income Fund

      1,000,000,000

Marshall   Government Income Fund

      1,000,000,000

Marshall   Intermediate Bond Fund

      1,000,000,000

Marshall   Mid-Cap Growth Fund

      1,000,000,000

Marshall   Money Market Fund

     A Shares              5,000,000,000

Marshall   Money Market Fund

     B Shares              5,000,000,000

Marshall   Short-Term Income Fund

      1,000,000,000

Marshall   Large-Cap Growth & Income Fund

      1,000,000,000

Marshall   Mid-Cap Value Fund

      1,000,000,000

Marshall   Short-Term Tax-Free Fund

      1,000,000,000

Marshall   Intermediate Tax-Free Fund

      1,000,000,000

Marshall   International Stock Fund

      1,000,000,000

Marshall   Small-Cap Growth Fund

      1,000,000,000

The remaining 28,000,000,000 shares shall remain unclassified until action is taken by the Board of Directors pursuant to the following paragraph.”

The undersigned Secretary of Marshall Funds, Inc. certifies that the above stated amendment is a true and correct Amendment to the Articles of Incorporation, as adopted by the Directors of the Corporation as of the 28th day of April, 1997, in accordance with Section 180.1002 of the Wisconsin Business Corporation Law.

WITNESS the due execution hereof this 28th day of April, 1997.

 

/s/ Peter J. Germain

Peter J. Germain

Secretary

Prepared by:            C. Todd Gibson

Federated Administrative Services

Federated Investors Tower

Pittsburgh, PA 15222-3779

MARSHALL FUNDS, INC.

Amendment No. 9

to

ARTICLES OF INCORPORATION

Dated July 30, 1992

THESE Articles of Incorporation are amended as follows:

Delete Section (a) of Article IV and substitute in its place the following:

“(a) The Corporation is authorized to issue an indefinite number of shares of common stock, par value $.0001 per share. Subject to the following paragraph, the authorized shares are classified as follows:

 

                    CLASS    SERIES   

Authorized Number
of

SHARES

Marshall   Equity Income Fund

   Series A    Indefinite

Marshall   Equity Income Fund

   Series Y    Indefinite

Marshall   Government Income Fund

   Series A    Indefinite

Marshall   Government Income Fund

   Series Y    Indefinite

Marshall   Intermediate Bond Fund

   Series A    Indefinite

Marshall   Intermediate Bond Fund

   Series Y    Indefinite

Marshall   Mid-Cap Growth Fund

   Series A    Indefinite

Marshall   Mid-Cap Growth Fund

   Series Y    Indefinite

Marshall   Money Market Fund

   Series A    Indefinite

Marshall   Money Market Fund

   Series B    Indefinite

Marshall   Short-Term Income Fund

   Series Y    Indefinite

Marshall   Large-Cap Growth & Income Fund

   Series A    Indefinite

Marshall   Large-Cap Growth & Income Fund

   Series Y    Indefinite

Marshall   Mid-Cap Value Fund

   Series A    Indefinite

Marshall   Mid-Cap Value Fund

   Series Y    Indefinite

Marshall   Short-Term Tax-Free Fund

   Series Y    Indefinite

Marshall   Intermediate Tax-Free Fund

   Series Y    Indefinite

Marshall   International Stock Fund

   Series A    Indefinite

Marshall   International Stock Fund

   Series Y    Indefinite

Marshall   Small-Cap Growth Fund

   Series A    Indefinite

Marshall   Small-Cap Growth Fund

   Series Y    Indefinite

Article III shall be amended to read:

The purpose for which the Corporation is formed is to act as an open-end investment company of the management type registered as such with the Securities and Exchange Commission pursuant to the Investment Company Act of 1940 (15 USC 80a - 1 to 80a - 64) and to exercise and generally enjoy all of the powers, rights and privileges granted to, or conferred upon, corporations by Chapter 180 of the Wisconsin Statues, as amended from time to time (the “WBCL”).

The undersigned Secretary of Marshall Funds, Inc. certifies that the above stated amendment is a true and correct Amendment to the Articles of Incorporation, as adopted by the Directors of the Corporation as of the 27th day of July, 1998, and that shareholder action is not required, all in accordance with Section 180.1002 of the Wisconsin Business Corporation Law.

WITNESS the due execution hereof this 26th day of October, 1998.

 

/S/ PETER J. GERMAIN

Peter J. Germain

Secretary

 

Prepared by:

  

C. Todd Gibson

  

Federated Administrative Services

  

Federated Investors Tower

  

Pittsburgh, PA 15222-3779

MARSHALL FUNDS, INC.

Amendment No. 10

to

ARTICLES OF INCORPORATION

Dated July 30, 1992

THESE Articles of Incorporation are amended as follows:

Delete Section (a) of Article IV and substitute in its place the following:

“(a) The Corporation is authorized to issue an indefinite number of shares of common stock, par value $.0001 per share. Subject to the following paragraph, the authorized shares are classified as follows:

 

                    CLASS    SERIES    Authorized Number of
SHARES 		 

Marshall   Equity Income Fund

   Series A      Indefinite  

Marshall   Equity Income Fund

   Series Y      Indefinite  

Marshall   Government Income Fund

   Series A      Indefinite  

Marshall   Government Income Fund

   Series Y      Indefinite  

Marshall   Intermediate Bond Fund

   Series A      Indefinite  

Marshall   Intermediate Bond Fund

   Series Y      Indefinite  

Marshall   Mid-Cap Growth Fund

   Series A      Indefinite  

Marshall   Mid-Cap Growth Fund

   Series Y      Indefinite  

Marshall   Money Market Fund

   Series A      Indefinite  

Marshall   Money Market Fund

   Series B      Indefinite  

Marshall   Short-Term Income Fund

   Series Y      Indefinite  

Marshall   Large-Cap Growth & Income Fund

   Series A      Indefinite  

Marshall   Large-Cap Growth & Income Fund

   Series Y      Indefinite  

Marshall   Mid-Cap Value Fund

   Series A      Indefinite  

Marshall   Mid-Cap Value Fund

   Series Y      Indefinite  

Marshall   Short-Term Tax-Free Fund

   Series Y      Indefinite  

Marshall   Intermediate Tax-Free Fund

   Series Y      Indefinite  

Marshall   International Stock Fund

   Series A      Indefinite  

Marshall   International Stock Fund

   Series Y      Indefinite  

Marshall   International Stock Fund

   Series I      Indefinite  

Marshall   Small-Cap Growth Fund

   Series A      Indefinite  

Marshall   Small-Cap Growth Fund

   Series Y      Indefinite  

The undersigned Secretary of Marshall Funds, Inc. certifies that the above stated amendment is a true and correct Amendment to the Articles of Incorporation, as adopted by the Directors of the Corporation as of the 24th day of May, 1999, and that shareholder action is not required, all in accordance with Section 180.1002 of the Wisconsin Business Corporation Law.

WITNESS the due execution hereof this 7th day of June, 1999.

 

/S/ BROOKE J. BILLICK

Brooke J. Billick

Secretary

Prepared by:

  

C. Todd Gibson

  

Federated Administrative Services

  

Federated Investors Tower

  

Pittsburgh, PA 15222-3779

MARSHALL FUNDS, INC.

Amendment No. 11

to

ARTICLES OF INCORPORATION

Dated July 30, 1992

THESE Articles of Incorporation are amended as follows:

Delete Section (a) of Article IV and substitute in its place the following:

“(a) The Corporation is authorized to issue an indefinite number of shares of common stock, par value $.0001 per share. Subject to the following paragraph, the authorized shares are classified as follows:

 

                    CLASS    SERIES    Authorized Number of
SHARES

Marshall   Equity Income Fund

   Series A    Indefinite

Marshall   Equity Income Fund

   Series Y    Indefinite

Marshall   Government Income Fund

   Series A    Indefinite

Marshall   Government Income Fund

   Series Y    Indefinite

Marshall   Intermediate Bond Fund

   Series A    Indefinite

Marshall   Intermediate Bond Fund

   Series Y    Indefinite

Marshall   Mid-Cap Growth Fund

   Series A    Indefinite

Marshall   Mid-Cap Growth Fund

   Series Y    Indefinite

Marshall   Money Market Fund

   Series A    Indefinite

Marshall   Money Market Fund

   Series Y    Indefinite

Marshall   Money Market Fund

   Series I    Indefinite

Marshall   Short-Term Income Fund

   Series Y    Indefinite

Marshall   Large-Cap Growth & Income Fund

   Series A    Indefinite

Marshall   Large-Cap Growth & Income Fund

   Series Y    Indefinite

Marshall   Mid-Cap Value Fund

   Series A    Indefinite

Marshall   Mid-Cap Value Fund

   Series Y    Indefinite

Marshall   Short-Term Tax-Free Fund

   Series Y    Indefinite

Marshall   Intermediate Tax-Free Fund

   Series Y    Indefinite

Marshall   International Stock Fund

   Series A    Indefinite

Marshall   International Stock Fund

   Series Y    Indefinite

Marshall   International Stock Fund

   Series I    Indefinite

Marshall   Small-Cap Growth Fund

   Series A    Indefinite

Marshall   Small-Cap Growth Fund

   Series Y    Indefinite

The undersigned Secretary of Marshall Funds, Inc. certifies that the above stated amendment is a true and correct Amendment to the Articles of Incorporation, as adopted by the Directors of the Corporation as of the 24th day of January, 2000, and that shareholder action is not required, all in accordance with Section 180.1002 of the Wisconsin Business Corporation Law.

WITNESS the due execution hereof this 31st day of January, 2000.

 

/s/Brooke J. Billick

Secretary

 

Prepared by:

 

        

  

Brooke J. Billick

 

Vice President & Securities Counsel

 

Marshall & Ilsley Trust Company

 

1000 North Water Street, 13th Floor

 

Milwaukee, WI 53202

TO BE EFFECTIVE AT 3:00 P.M. CENTRAL TIME, ON AUGUST 28, 2020

BMO FUNDS, INC.

AMENDMENT NO. 60

TO

ARTICLES OF INCORPORATION

The undersigned officer of BMO Funds, Inc. (the “Corporation”) hereby certifies that in accordance with Section 180.1003 of the Wisconsin Statutes, the following Amendment to the Corporation’s Articles of Incorporation, as amended (the “Articles”), was duly adopted to remove each of BMO Alternative Strategies Fund, BMO High Yield Bond Fund, and BMO Small-Cap Core Fund as a class of the Corporation.

“The Articles are hereby amended as follows:

Section (a) of Article IV is hereby amended by deleting section (a) thereof and inserting the following as a new paragraph:

‘(a)    The Corporation is authorized to issue an indefinite number of shares of common stock, par value $.0001 per share. Subject to the following paragraph, the authorized shares are classified as follows:

 

CLASS    SERIES    AUTHORIZED NUMBER
OF SHARES
Investor Class      

BMO Strategic Income Fund

   Series Y    Indefinite

BMO Prime Money Market Fund

   Series Y    Indefinite

BMO Government Money Market Fund

   Series Y    Indefinite

BMO Large-Cap Growth Fund

   Series Y    Indefinite

BMO Intermediate Tax-Free Fund

   Series Y    Indefinite

BMO Tax-Free Money Market Fund

   Series Y    Indefinite

BMO Core Plus Bond Fund

   Series Y    Indefinite

BMO Corporate Income Fund

   Series Y    Indefinite

BMO Growth Allocation Fund

   Series Y    Indefinite

BMO Aggressive Allocation Fund

   Series Y    Indefinite

BMO Conservative Allocation Fund

   Series Y    Indefinite

BMO Balanced Allocation Fund

   Series Y    Indefinite

BMO Moderate Allocation Fund

   Series Y    Indefinite

BMO Institutional Prime Money Market Fund

   Series Y    Indefinite
Institutional Class      

BMO Strategic Income Fund

   Series I    Indefinite

BMO Short-Term Income Fund

   Series I    Indefinite

BMO Small-Cap Growth Fund

   Series I    Indefinite

BMO Mid-Cap Growth Fund

   Series I    Indefinite

BMO Mid-Cap Value Fund

   Series I    Indefinite

BMO Large-Cap Growth Fund

   Series I    Indefinite

BMO Large-Cap Value Fund

   Series I    Indefinite

BMO LGM Emerging Markets Equity Fund

   Series I    Indefinite

BMO Core Plus Bond Fund

   Series I    Indefinite

BMO Corporate Income Fund

   Series I    Indefinite

BMO Ultra Short Tax-Free Fund

   Series I    Indefinite

BMO Intermediate Tax-Free Fund

   Series I    Indefinite

BMO Small-Cap Value Fund

   Series I    Indefinite

BMO Dividend Income Fund

   Series I    Indefinite

BMO Pyrford International Stock Fund

   Series I    Indefinite

CLASS    SERIES    AUTHORIZED NUMBER
OF SHARES

BMO Low Volatility Equity Fund

   Series I    Indefinite

BMO Short Tax-Free Fund

   Series I    Indefinite

BMO Growth Allocation Fund

   Series I    Indefinite

BMO Aggressive Allocation Fund

   Series I    Indefinite

BMO Conservative Allocation Fund

   Series I    Indefinite

BMO Balanced Allocation Fund

   Series I    Indefinite

BMO Moderate Allocation Fund

   Series I    Indefinite

BMO Global Low Volatility Equity Fund

   Series I    Indefinite

BMO Disciplined International Equity Fund

   Series I    Indefinite
Class A      

BMO Low Volatility Equity Fund

   Series A    Indefinite

BMO Dividend Income Fund

   Series A    Indefinite

BMO Large-Cap Value Fund

   Series A    Indefinite

BMO Large-Cap Growth Fund

   Series A    Indefinite

BMO Mid-Cap Value Fund

   Series A    Indefinite

BMO Mid-Cap Growth Fund

   Series A    Indefinite

BMO Small-Cap Value Fund

   Series A    Indefinite

BMO Small-Cap Growth Fund

   Series A    Indefinite

BMO Global Low Volatility Equity Fund

   Series A    Indefinite

BMO Pyrford International Stock Fund

   Series A    Indefinite

BMO LGM Emerging Markets Equity Fund

   Series A    Indefinite

BMO Ultra Short Tax-Free Fund

   Series A    Indefinite

BMO Short Tax-Free Fund

   Series A    Indefinite

BMO Short-Term Income Fund

   Series A    Indefinite

BMO Intermediate Tax-Free Fund

   Series A    Indefinite

BMO Strategic Income Fund

   Series A    Indefinite

BMO Corporate Income Fund

   Series A    Indefinite

BMO Core Plus Bond Fund

   Series A    Indefinite

BMO Disciplined International Equity Fund

   Series A    Indefinite
Class R3      

BMO Growth Allocation Fund

   Series R3    Indefinite

BMO Aggressive Allocation Fund

   Series R3    Indefinite

BMO Conservative Allocation Fund

   Series R3    Indefinite

BMO Balanced Allocation Fund

   Series R3    Indefinite

BMO Moderate Allocation Fund

   Series R3    Indefinite
Class R6      

BMO Growth Allocation Fund

   Series R6    Indefinite

BMO Aggressive Allocation Fund

   Series R6    Indefinite

BMO Conservative Allocation Fund

   Series R6    Indefinite

BMO Balanced Allocation Fund

   Series R6    Indefinite

BMO Moderate Allocation Fund

   Series R6    Indefinite

BMO Mid-Cap Value Fund

   Series R6    Indefinite

BMO Mid-Cap Growth Fund

   Series R6    Indefinite

BMO Small-Cap Value Fund

   Series R6    Indefinite

BMO Pyrford International Stock Fund

   Series R6    Indefinite

BMO Disciplined International Equity Fund

   Series R6    Indefinite

BMO Large-Cap Value Fund

   Series R6    Indefinite

BMO Large-Cap Growth Fund

   Series R6    Indefinite

CLASS    SERIES    AUTHORIZED NUMBER
OF SHARES
Premier Class      

BMO Prime Money Market Fund

   Premier Class    Indefinite

BMO Government Money Market Fund

   Premier Class    Indefinite

BMO Tax-Free Money Market Fund

   Premier Class    Indefinite

BMO Institutional Prime Money Market Fund

   Premier Class        Indefinite’”

This Amendment to the Articles of Incorporation of the Corporation was authorized by the Board of Directors on July 8, 2020 and by shareholders of each of BMO Alternative Strategies Fund, BMO High Yield Bond Fund and BMO Small-Cap Core Fund on August 21, 2020 in accordance with Section 180.1003 of the Wisconsin Statutes.

Executed this 21st day of August, 2020.

 

BMO FUNDS, INC.
By:  

/s/ John M. Blaser

  John M. Blaser
  President

This instrument was drafted by:

Michael J. Murphy

BMO Financial Corp.

790 North Water Street

Milwaukee, Wisconsin 53202

TO BE EFFECTIVE AT 3:00 P.M. CENTRAL TIME, ON DECEMBER 23, 2020

BMO FUNDS, INC.

AMENDMENT NO. 61

TO

ARTICLES OF INCORPORATION

The undersigned officer of BMO Funds, Inc. (the “Corporation”) hereby certifies that in accordance with Section 180.1003 of the Wisconsin Statutes, the following Amendment to the Corporation’s Articles of Incorporation, as amended (the “Articles”), was duly adopted to remove the BMO Institutional Prime Money Market Fund as a class of the Corporation.

“The Articles are hereby amended as follows:

Section (a) of Article IV is hereby amended by deleting section (a) thereof and inserting the following as a new paragraph:

‘(a)    The Corporation is authorized to issue an indefinite number of shares of common stock, par value $.0001 per share. Subject to the following paragraph, the authorized shares are classified as follows:

 

CLASS    SERIES    AUTHORIZED NUMBER
OF SHARES
Investor Class      

BMO Strategic Income Fund

   Series Y    Indefinite

BMO Prime Money Market Fund

   Series Y    Indefinite

BMO Government Money Market Fund

   Series Y    Indefinite

BMO Large-Cap Growth Fund

   Series Y    Indefinite

BMO Intermediate Tax-Free Fund

   Series Y    Indefinite

BMO Tax-Free Money Market Fund

   Series Y    Indefinite

BMO Core Plus Bond Fund

   Series Y    Indefinite

BMO Corporate Income Fund

   Series Y    Indefinite

BMO Growth Allocation Fund

   Series Y    Indefinite

BMO Aggressive Allocation Fund

   Series Y    Indefinite

BMO Conservative Allocation Fund

   Series Y    Indefinite

BMO Balanced Allocation Fund

   Series Y    Indefinite

BMO Moderate Allocation Fund

   Series Y    Indefinite
Institutional Class      

BMO Strategic Income Fund

   Series I    Indefinite

BMO Short-Term Income Fund

   Series I    Indefinite

BMO Small-Cap Growth Fund

   Series I    Indefinite

BMO Mid-Cap Growth Fund

   Series I    Indefinite

BMO Mid-Cap Value Fund

   Series I    Indefinite

BMO Large-Cap Growth Fund

   Series I    Indefinite

BMO Large-Cap Value Fund

   Series I    Indefinite

BMO LGM Emerging Markets Equity Fund

   Series I    Indefinite

BMO Core Plus Bond Fund

   Series I    Indefinite

BMO Corporate Income Fund

   Series I    Indefinite

BMO Ultra Short Tax-Free Fund

   Series I    Indefinite

BMO Intermediate Tax-Free Fund

   Series I    Indefinite

BMO Small-Cap Value Fund

   Series I    Indefinite

BMO Dividend Income Fund

   Series I    Indefinite

BMO Pyrford International Stock Fund

   Series I    Indefinite

BMO Low Volatility Equity Fund

   Series I    Indefinite

CLASS    SERIES    AUTHORIZED NUMBER
OF SHARES

BMO Short Tax-Free Fund

   Series I    Indefinite

BMO Growth Allocation Fund

   Series I    Indefinite

BMO Aggressive Allocation Fund

   Series I    Indefinite

BMO Conservative Allocation Fund

   Series I    Indefinite

BMO Balanced Allocation Fund

   Series I    Indefinite

BMO Moderate Allocation Fund

   Series I    Indefinite

BMO Global Low Volatility Equity Fund

   Series I    Indefinite

BMO Disciplined International Equity Fund

   Series I    Indefinite
Class A      

BMO Low Volatility Equity Fund

   Series A    Indefinite

BMO Dividend Income Fund

   Series A    Indefinite

BMO Large-Cap Value Fund

   Series A    Indefinite

BMO Large-Cap Growth Fund

   Series A    Indefinite

BMO Mid-Cap Value Fund

   Series A    Indefinite

BMO Mid-Cap Growth Fund

   Series A    Indefinite

BMO Small-Cap Value Fund

   Series A    Indefinite

BMO Small-Cap Growth Fund

   Series A    Indefinite

BMO Global Low Volatility Equity Fund

   Series A    Indefinite

BMO Pyrford International Stock Fund

   Series A    Indefinite

BMO LGM Emerging Markets Equity Fund

   Series A    Indefinite

BMO Ultra Short Tax-Free Fund

   Series A    Indefinite

BMO Short Tax-Free Fund

   Series A    Indefinite

BMO Short-Term Income Fund

   Series A    Indefinite

BMO Intermediate Tax-Free Fund

   Series A    Indefinite

BMO Strategic Income Fund

   Series A    Indefinite

BMO Corporate Income Fund

   Series A    Indefinite

BMO Core Plus Bond Fund

   Series A    Indefinite

BMO Disciplined International Equity Fund

   Series A    Indefinite
Class R3      

BMO Growth Allocation Fund

   Series R3    Indefinite

BMO Aggressive Allocation Fund

   Series R3    Indefinite

BMO Conservative Allocation Fund

   Series R3    Indefinite

BMO Balanced Allocation Fund

   Series R3    Indefinite

BMO Moderate Allocation Fund

   Series R3    Indefinite
Class R6      

BMO Growth Allocation Fund

   Series R6    Indefinite

BMO Aggressive Allocation Fund

   Series R6    Indefinite

BMO Conservative Allocation Fund

   Series R6    Indefinite

BMO Balanced Allocation Fund

   Series R6    Indefinite

BMO Moderate Allocation Fund

   Series R6    Indefinite

BMO Mid-Cap Value Fund

   Series R6    Indefinite

BMO Mid-Cap Growth Fund

   Series R6    Indefinite

BMO Small-Cap Value Fund

   Series R6    Indefinite

BMO Pyrford International Stock Fund

   Series R6    Indefinite

BMO Disciplined International Equity Fund

   Series R6    Indefinite

BMO Large-Cap Value Fund

   Series R6    Indefinite

BMO Large-Cap Growth Fund

   Series R6    Indefinite

CLASS    SERIES    AUTHORIZED NUMBER
OF SHARES
Premier Class      

BMO Prime Money Market Fund

   Premier Class    Indefinite

BMO Government Money Market Fund

   Premier Class    Indefinite

BMO Tax-Free Money Market Fund

   Premier Class    Indefinite

This Amendment to the Articles of Incorporation of the Corporation was authorized by the Board of Directors on November 11, 2020 and by shareholders of the BMO Institutional Prime Money Market Fund on December 21, 2020 in accordance with Section 180.1003 of the Wisconsin Statutes.

Executed this 21st day of December, 2020.

 

BMO FUNDS, INC.
By:  

/s/John M. Blaser

  John M. Blaser
  President

This instrument was drafted by:

Michael J. Murphy

BMO Financial Corp.

790 North Water Street

Milwaukee, Wisconsin 53202

INVESTMENT ADVISORY AGREEMENT

AGREEMENT made this 6th day of October, 2011 by and between M&I Investment Management Corp., an investment adviser registered under the Investment Advisers Act of 1940, organized under the laws of Wisconsin and having its principal place of business in Milwaukee, WI (the “Adviser”), and Marshall Funds, Inc., a Wisconsin corporation having its principal place of business in Milwaukee, WI (the “Fund”), on behalf of each portfolio of the Fund set forth on Schedule A, as may be amended from time to time (each, a “Portfolio” and collectively, the “Portfolios”).

WHEREAS, the Fund is an “open-end company” as that term is defined in the Investment Company Act of 1940 (the “1940 Act”) and is registered as such with the Securities and Exchange Commission (“SEC”);

WHEREAS, as used herein “Portfolio” refers to a class of the Fund’s common stock;

WHEREAS, the Adviser is engaged in the business of rendering investment advisory and management services; and

WHEREAS, the Fund wishes to retain the Adviser to render investment advisory services to each Portfolio, and the Adviser is willing to furnish such services to each Portfolio.

NOW, THEREFORE, in consideration of the promises and mutual covenants herein, the

Fund and the Adviser, intending to be legally bound, hereby agree as follows:

1.         The Fund hereby appoints the Adviser as investment adviser for each Portfolio on whose behalf the Fund executes Schedule B to this Agreement, for the period and on the terms set forth in this Agreement. The Adviser, by execution of Schedule B, accepts such appointment and agrees to furnish the services for the compensation as herein provided.

2.         Subject to the oversight of the Board of Directors of the Fund (the “Board” or the “Directors”), the Adviser shall provide a continuous investment program for each Portfolio, including investment research and management of the investment and reinvestment of the assets of each Portfolio. The Adviser shall determine the securities and other investments to be purchased, retained, sold or exchanged under each Portfolio’s investment program, and shall implement such decisions in accordance with and subject to such Portfolio’s applicable investment objectives, policies and limitations set forth in the Portfolio’s then current prospectus and statement of additional information, any investment policies and restrictions contained in the Fund’s Articles of Incorporation and By-Laws, as amended from time to time, the 1940 Act and the applicable rules and regulations promulgated thereunder by the SEC and interpretive guidance issued by the SEC staff, and any other applicable federal and state laws. The Adviser shall exercise voting rights, rights to consent to corporate action and any other rights pertaining to a Portfolio’s securities subject to such direction as the Board may provide, and shall perform such other functions of investment management and supervision as may be directed by the Board.

3.         Subject to the Board’s approval, at its own expense, the Adviser may enter into provided that in each case the Adviser shall supervise the activities of each such subadviser and further provided that such agreements are entered into in accordance with and meet all applicable requirements of the 1940 Act and rules thereunder. Any such delegation shall not relieve the Adviser of any of its duties hereunder. The Adviser also shall have the authority, upon the approval of the Board and subject to applicable provisions of the 1940 Act and the regulations thereunder, to select one or more subadvisers to provide day-to-day portfolio management with respect to all or a portion of the assets of any of the Portfolios and to allocate and reallocate the assets of a Portfolio between and among any subadvisers so selected pursuant to a “manager of managers” structure. The Fund acknowledges that under this structure, the Adviser would have the authority to retain and terminate subadvisers, engage new subadvisers and make material revisions to the terms of the subadvisory agreements for a Portfolio subject to approval of the Board and such other terms and conditions of the SEC exemptive order or rule, but not shareholder approval, provided shareholders of such Portfolio previously approved the “manager of managers” structure.

4.        The Adviser, pursuant to its determinations, will select, monitor and place orders with or through such brokers or dealers and seek best execution of Portfolio securities transactions in conformity with the brokerage policies set forth in the Fund’s then effective Registration Statement. In accordance with Section 28(e) of the Securities Exchange Act of 1934, as amended, and interpretive guidance issued by the SEC thereunder, the Adviser may cause a Portfolio to pay a broker or a dealer a commission in excess of the amount of commission another broker or dealer would have charged if the Adviser determines in good faith that the commission paid was reasonable in relation to the brokerage or research services received. The Adviser will promptly communicate to Fund officers and the Board such information relating to Portfolio transactions as they may reasonably request.

5.         The Adviser shall bear all expenses, and shall furnish all necessary services, facilities and personnel, in connection with its responsibilities under this Agreement. The Adviser shall not be responsible for a Portfolio’s expenses and each Portfolio shall pay or cause to be paid all of the Portfolio’s expenses and the Portfolio’s allocable share of Fund expenses, including, without limitation: the expenses of organizing a Portfolio and continuing its existence; fees and expenses of Directors and officers of the Fund; fees for investment advisory services and administrative personnel and services; distribution fees; fees and expenses of preparing and filing the Fund’s Registration Statements and qualifying the Fund, the Portfolios, and shares of the Portfolios (“Shares”) under federal and state laws and regulations; expenses of preparing, printing, and distributing prospectuses and statements of additional information (and any amendments thereto) and shareholder reports; interest expense, taxes, fees, and commissions of every kind; expenses in connection with the issue, purchase, repurchase, and redemption of Shares, including expenses attributable to a program of periodic issue; expenses in connection with the purchase or sale of the Portfolio’s securities and other investments; loan commitment fees; charges and expenses of custodians, transfer agents, dividend disbursing agents, shareholder servicing agents, independent pricing vendors and registrars; printing and mailing costs, auditing, accounting, and legal expenses; reports to governmental

 

2

officers and commissions; expenses of meetings of Directors and shareholders and proxy solicitations therefor; fidelity bond and other insurance expenses; association membership dues; and such nonrecurring items as may arise, including all losses and liabilities incurred in administering the Fund and the Portfolios. A Portfolio will also pay its allocable share of such extraordinary expenses as may arise, including expenses incurred in connection with litigation, proceedings, and claims and the legal obligations of the Fund to indemnify its officers, Directors, employees, distributors, and agents with respect thereto.

6.         Each Portfolio shall pay to the Adviser, for all services rendered to each Portfolio by the Adviser hereunder, the fees set forth in Schedule B attached hereto. The net asset value of each Portfolio’s Shares as used herein shall be determined as provided in the Portfolio’s then current prospectus and statement of additional information and shall be calculated to the nearest 1/10th of one cent. The Adviser, in its sole discretion, may from time to time and for such periods as it deems appropriate reduce its compensation (and assume expenses) for one or more of the Portfolios.

7.         The Fund and the Adviser agree to furnish to each other such information regarding their operations with regard to their affairs as each may reasonably request. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Adviser hereby agrees that any records that it maintains for a Portfolio are the property of the Portfolio, and further agrees to surrender promptly to the Portfolio any of such records upon the Portfolio’s request; provided, however, that the Adviser may retain for its records copies of the records so surrendered. The Adviser further agrees to arrange for the preservation of any such records for the periods prescribed by Rule 31a-2 under the 1940 Act.

8.         The Adviser shall at all times conform to, and act in accordance with, the Fund ‘s Articles of Incorporation, By-Laws and Registration Statement, as each may be amended from time to time, the instructions and directions of the Board, any requirements imposed by the provisions of the 1940 Act and the Investment Advisers Act of 1940, as amended (the “Advisers Act”), all applicable rules and regulations of the SEC and all other applicable federal and state laws and regulations applicable to the Fund. Consequently, the Adviser has (i) adopted a written code of ethics complying with the requirements of Rule 17j-1 under the 1940 Act and (ii) adopted and implemented written policies and procedures, as required by Rule 206(4)-7 under the Advisers Act, which are reasonably designed to prevent violations of federal securities laws by the Adviser, its employees, officers and agents.

9.         The Adviser acknowledges that the Fund may disclose shareholder nonpublic personal information (“NPI”) to the Adviser solely in furtherance of fulfilling the Adviser’s contractual obligations under this Agreement in the ordinary course of business to support the Fund and its shareholders. The Adviser agrees to be bound to use and redisclose such NPI only for the limited purposes of processing and servicing transactions; for specified law enforcement and miscellaneous legally permitted purposes; and as a Fund service provider or in connection with joint marketing arrangements solely at the direction and discretion of the Fund, in accordance with the limited exceptions set forth in applicable state privacy laws and Regulation S-P. The Adviser further represents and warrants that, in accordance with applicable state privacy laws and Regulation S-P, it has implemented safeguards by adopting policies and procedures reasonably designed to insure the security and confidentiality of

 

3

records and NPI of Fund shareholders; protect against any anticipated threats or hazards to the security or integrity of Fund shareholder records and NPI; and protect against unauthorized access to or use of such Fund shareholder records or NPI that could result in substantial harm or inconvenience to any Fund shareholder. The Adviser agrees to maintain the confidentiality of any NPI it receives from the Fund in connection with this Agreement or any joint marketing arrangement beyond the termination date of this Agreement.

10.         This Agreement shall begin for each Portfolio as of the effective date set forth on Schedule A and shall continue in effect with respect to each Portfolio for the initial term set forth on Schedule A, unless sooner terminated as hereinafter provided, so long as this Agreement is approved for each Portfolio in the manner required by the 1940 Act and the rules and regulations thereunder. This Agreement shall continue in effect for successive periods of one year with respect to each Portfolio, unless the Adviser shall have notified a Portfolio in writing at least sixty (60) days prior to the end of the applicable term that it does not desire such continuation with respect to that Portfolio, but only so long as such continuance is specifically approved for each Portfolio at least annually in the manner required by the 1940 Act and the rules and regulations thereunder. This Agreement may be terminated at any time with respect to any Portfolio, without the payment of any penalty, by the Directors of the Fund or by a vote of a majority of the outstanding voting securities of that Portfolio on sixty (60) days’ written notice to the Adviser. This Agreement may not be assigned by the Adviser and shall automatically terminate in the event of any assignment. As used in this paragraph, the terms “assignment” and “a vote of a majority of the outstanding voting securities” shall have the respective meanings set forth in 1940 Act and the rules and regulations thereunder, subject to such exemptions as may be granted by the SEC by any rule, regulation, order or interpretive guidance.

11.         In the absence of willful misfeasance, bad faith, gross negligence, or reckless disregard of the obligations or duties under this Agreement on the part of the Adviser, the Adviser shall not be liable to the Fund or to any of the Portfolios or to any shareholder for any act or omission in the course of or connected in any way with rendering services or for any losses that may be sustained in the purchase, holding, or sale of any security or other investment of a Portfolio. Notwithstanding the foregoing, federal securities laws and certain state laws impose liabilities under certain circumstances on persons who have acted in good faith, and, therefore, nothing herein shall in any way constitute a waiver or limitation of any rights which the Fund or any shareholder of the Fund may have under any federal securities or state law.

12.         With respect to a Portfolio, this Agreement may be amended only by an instrument in writing signed by the parties, with such approvals as required by applicable law.

13.         If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby.

14.         The services of the Adviser to the Fund are not to be deemed exclusive and the Adviser shall be free to render similar services to others as long as its services to others

 

4

does not in any way hinder, preclude or prevent the Adviser from performing its duties under this Agreement. In addition, nothing in this Agreement shall limit or restrict the right of any director, officer or employee of the Adviser who may also be a Director or officer of the Fund, to engage in any other business or to devote his or her time and attention in part to the management or other aspects of any other business, whether of a similar nature or a dissimilar nature.

15.         This Agreement shall be construed in accordance with and governed by the internal laws of the State of Wisconsin; provided, however, that nothing herein shall be construed in a manner inconsistent with the 1940 Act, the Advisers Act, or the rules and regulations promulgated pursuant to such respective Acts.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date hereof.

 

Marshall Funds, Inc.

    

M&I Investment Management Corp.

  

                    

By: /s/ John M. Blaser                

    

By: /s/ Tommy O. Huie                

  

Name: John M. Blaser

 

                         

  

Name: Tommy O. Huie

  

Title:   President

    

Title:   President

  

 

5

SCHEDULE A

(as of October 6, 2011)

Portfolio    Effective Date    Initial Term

Large-Cap Value Fund

     

August 31, 2012

Large-Cap Growth Fund

     

August 31, 2012

Large-Cap Focus Fund

     

August 31, 2012

Mid-Cap Value Fund

     

August 31, 2012

Mid-Cap Growth Fund

     

August 31, 2012

Small-Cap Value Fund

     

August 31, 2012

Small-Cap Growth Fund

     

August 31, 2012

International Stock Fund

     

August 31, 2012

Emerging Markets Equity Fund

     

August 31, 2012

Ultra Short Tax-Free Fund

     

August 31, 2012

Short-Term Income Fund

     

August 31, 2012

Short-Intermediate Bond Fund

     

August 31, 2012

Intermediate Tax-Free Fund

     

August 31, 2012

Government Income Fund

     

August 31, 2012

Corporate Income Fund

     

August 31, 2012

Aggregate Bond Fund

     

August 31, 2012

Core Plus Bond Fund

     

August 31, 2012

Government Money Market Fund

     

August 31, 2012

Tax-Free Money Market Fund

     

August 31, 2012

Prime Money Market Fund

     

August 31, 2012

SCHEDULE B

For all services rendered by the Adviser pursuant to the Agreement, each Portfolio of the Fund shall pay to the Adviser and the Adviser agrees to accept as full compensation for all services rendered, an annual investment advisory fee calculated by applying the applicable annual rate to the average daily net assets of the Portfolio as set forth below.

 

     Annual Investment Advisory Fee as a Percentage of
Each Portfolio’s Aggregate Daily Net Assets
     on the first    on the next    on the next    in excess of

Portfolio                             

   $500 million    $200 million    $100 million    $800 million

Large-Cap Value Fund

   0.75%    0.74%    0.70%    0.65%

Large-Cap Growth Fund

   0.75%    0.74%    0.70%    0.65%

Large-Cap Focus Fund

   0.50%    0.49%    0.45%    0.40%

Mid-Cap Value Fund

   0.75%    0.74%    0.70%    0.65%

Mid-Cap Growth Fund

   0.75%    0.74%    0.70%    0.65%

Small-Cap Value Fund

   0.75%    0.75%    0.75%    0.75%

Small-Cap Growth Fund

   1.00%    1.00%    1.00%    1.00%

International Stock Fund

   1.00%    0.99%    0.95%    0.90%

Emerging Markets Equity Fund

   1.00%    0.99%    0.95%    0.90%

Ultra Short Tax-Free Fund

   0.20%    0.19%    0.10%    0.10%

Short-Term Income Fund

   0.20%    0.19%    0.10%    0.10%

Short-Intermediate Bond Fund

   0.40%    0.39%    0.30%    0.25%

Intermediate Tax-Free Fund

   0.30%    0.29%    0.20%    0.15%

Government Income Fund

   0.40%    0.39%    0.30%    0.25%

Corporate Income Fund

   0.25%    0.24%    0.15%    0.10%

Aggregate Bond Fund

   0.40%    0.39%    0.30%    0.25%

Core Plus Bond Fund

   0.25%    0.24%    0.15%    0.10%

 

     Annual Investment Advisory Fee as a Percentage of Each
Portfolio’s Aggregate Daily Net Assets
     on the first    on the next    on the next    on the next    in excess

Portfolio                             

   $2 billion    $2 billion    $2 billion    $2 billion    of $8 billion

Government Money Market Fund

   0.200%    0.185%    0.170%    0.155%    0.140%

Tax-Free Money Market Fund

   0.200%    0.185%    0.170%    0.155%    0.140%

Prime Money Market Fund

   0.150%    0.135%    0.120%    0.105%    0.090%

The investment advisory fee shall accrue daily at the rate of 1/365th of the applicable annual rate applied to the daily net assets of the Portfolio. The investment advisory fee so accrued shall be paid to the Adviser monthly.

Effective this 6th day of October, 2011.

 

Marshall Funds, Inc.

 

            

  

M&I Investment Management Corp.

  

            

By: /s/ John M. Blaser            

    

By: /s/Tommy O. Huie            

  

Name: John M. Blaser

    

Name: Tommy O. Huie

  

Title:   President

    

Title:    President

  

AMENDED AND RESTATED

SCHEDULE A

to the

Investment Advisory Agreement

(as of December 23, 2020)

BMO Funds

 

Portfolio

  

Effective Date

  

Initial Term*

BMO Low Volatility Equity Fund

   September 27, 2012    August 31, 2013

BMO Large-Cap Value Fund

   October 6, 2011    August 31, 2012

BMO Dividend Income Fund

   December 29, 2011    August 31, 2012

BMO Large-Cap Growth Fund

   October 6, 2011    August 31, 2012

BMO Mid-Cap Value Fund

   October 6, 2011    August 31, 2012

BMO Mid-Cap Growth Fund

   October 6, 2011    August 31, 2012

BMO Small-Cap Value Fund

   October 6, 2011    August 31, 2012

BMO Small-Cap Growth Fund

   October 6, 2011    August 31, 2012

BMO Pyrford International Stock Fund

   December 29, 2011    August 31, 2012

BMO LGM Emerging Markets Equity Fund

   October 6, 2011    August 31, 2012

BMO Ultra Short Tax-Free Fund

   October 6, 2011    August 31, 2012

BMO Short Tax-Free Fund

   September 27, 2012    August 31, 2013

BMO Short-Term Income Fund

   October 6, 2011    August 31, 2012

BMO Intermediate Tax-Free Fund

   October 6, 2011    August 31, 2012

BMO Strategic Income Fund

   October 6, 2011    August 31, 2012

BMO Corporate Income Fund

   October 6, 2011    August 31, 2012

BMO Core Plus Bond Fund

   October 6, 2011    August 31, 2012

BMO Government Money Market Fund

   October 6, 2011    August 31, 2012

BMO Tax-Free Money Market Fund

   October 6, 2011    August 31, 2012

BMO Prime Money Market Fund

   October 6, 2011    August 31, 2012

BMO Global Low Volatility Equity Fund

   September 30, 2013    August 31, 2015

BMO Conservative Allocation Fund

   May 30, 2014    August 31, 2015

BMO Moderate Allocation Fund

   May 30, 2014    August 31, 2015

BMO Balanced Allocation Fund

   May 30, 2014    August 31, 2015

BMO Growth Allocation Fund

   May 30, 2014    August 31, 2015

BMO Aggressive Allocation Fund

   May 30, 2014    August 31, 2015

BMO Disciplined International Equity Fund

   August 26, 2015    August 26, 2017

* After the Initial Term, the Agreement may continue in effect for successive periods of one year as provided in Section 10 of the Agreement.

AMENDED AND RESTATED

SCHEDULE B

to the

Investment Advisory Agreement

For all services rendered by the Adviser pursuant to the Agreement, each Portfolio of the Fund shall pay to the Adviser and the Adviser agrees to accept as full compensation for all services rendered, an annual investment advisory fee calculated by applying the applicable annual rate to the average daily net assets of the Portfolio as set forth below.

 

     Annual Investment Advisory Fee as a Percentage of
Each Portfolio’s Aggregate Daily Net Assets

Portfolio                                                                                          

   on the first
$500 million 		   on the next
$200 million 		   on the next
$100 million 		   in excess of
$800 million

BMO Low Volatility Equity Fund

   0.40%    0.39%    0.35%    0.30%

BMO Dividend Income Fund

   0.50%    0.49%    0.45%    0.40%

BMO Mid-Cap Value Fund

   0.685%    0.67%    0.57%    0.51%

BMO Mid-Cap Growth Fund

   0.685%    0.67%    0.57%    0.51%

BMO Small-Cap Value Fund

   0.685%    0.68%    0.62%    0.61%

BMO Small-Cap Growth Fund

   0.685%    0.68%    0.62%    0.61%

BMO Pyrford International Stock Fund

   0.735%    0.72%    0.62%    0.56%

BMO LGM Emerging Markets Equity Fund

   0.90%    0.89%    0.85%    0.80%

BMO Global Low Volatility Equity Fund

   0.50%    0.49%    0.45%    0.40%
     Annual Investment Advisory Fee as a Percentage of
Each Portfolio’s Aggregate Daily Net Assets

Portfolio                                                                                          

   on the first
$100 million 		   on the next
$150 million 		   on the next
$250 million 		   in excess of
$500 million

BMO Ultra Short Tax-Free Fund

   0.20%    0.19%    0.17%    0.10%

BMO Short Tax-Free Fund

   0.20%    0.19%    0.17%    0.15%

BMO Short-Term Income Fund

   0.20%    0.19%    0.17%    0.10%

BMO Intermediate Tax-Free Fund

   0.25%    0.16%    0.12%    0.10%

BMO Strategic Income Fund

   0.25%    0.20%    0.20%    0.20%

BMO Corporate Income Fund

   0.20%    0.19%    0.15%    0.10%

BMO Core Plus Bond Fund

   0.25%    0.16%    0.12%    0.10%

 

     Annual Investment Advisory Fee as a Percentage of
Each Portfolio’s Aggregate Daily Net Assets

Portfolio                                                                                          

   on the first
$1 billion 		   on the next
$1 billion 		   in excess
of $2 billion

BMO Large-Cap Value Fund

   0.35%    0.325%    0.30%

BMO Large-Cap Growth Fund

   0.35%    0.325%    0.30%

BMO Disciplined International Equity Fund

   0.60%    0.575%    0.55%

     Annual Investment Advisory Fee as a Percentage of
Each Portfolio’s Aggregate Daily Net Assets

Portfolio                                     

   on the first
$2 billion 		   on the next
$2 billion 		   on the next
$2 billion 		   on the next
$2 billion 		   in excess
of $8 billion

BMO Government Money Market Fund

   0.200%    0.185%    0.170%    0.155%    0.140%

BMO Tax-Free Money Market Fund

   0.200%    0.185%    0.170%    0.155%    0.140%

BMO Prime Money Market Fund

   0.150%    0.135%    0.120%    0.105%    0.090%

The investment advisory fee shall accrue daily at the rate of 1/365th of the applicable annual rate applied to the daily net assets of the Portfolio. The investment advisory fee so accrued shall be paid to the Adviser monthly.

No investment advisory fee shall be payable to the Adviser with respect to the following portfolios of the Fund:

 

                                                                                            Portfolio                                 
  BMO Conservative Allocation Fund
  BMO Moderate Allocation Fund
  BMO Balanced Allocation Fund
  BMO Growth Allocation Fund
  BMO Aggressive Allocation Fund

Effective this 23rd day of December, 2020.

 

BMO Funds, Inc.       BMO Asset Management Corp.
By:   

/s/John M. Blaser

      By:   

/s/Steve Arquilla

Name:    John M. Blaser            Name:    Steve Arquilla
Title:    President       Title:    Head, U.S. Global Asset Management Governance
            and BMO Institutional Trust Services
        

BMO Asset Management Corp.

         By:   

/s/Pete Papageorgakis

         Name:    Pete Papageorgakis
         Title:    Head of Product

SECOND AMENDMENT TO

DISTRIBUTION AGREEMENT

This second amendment (“Amendment”) to the Distribution Agreement (the “Agreement”) dated as of November 7, 2019 by and between BMO Funds, Inc. (the “Client”) and Foreside Financial Services, LLC (“Foreside”) is entered into as of June 30, 2020 (the “Effective Date”).

WHEREAS, Client has requested that Foreside, under certain circumstances, enter into an Addendum to the Standard Dealer Agreement (the “Addendum”). The Addendum may contain certain duties and obligations that the Client, and not Foreside, agrees to perform or cause to perform. The Addendum may also contain fees that the Client, and not Foreside, agrees to pay or cause to be paid. In order to induce Foreside to enter into the Addendum to the Standard Dealer agreement, the Client agrees to perform any and all duties and obligations, including the payment of any fees, under the Addendum and to indemnify and hold harmless Foreside for any Losses Foreside may incur as a result of being a party to any Addendum to the Standard Dealer Agreement. In order to memorialize this understanding, Foreside and the Client agree to amend the Agreement as set forth herein.

WHEREAS, Client and Foreside (“Parties”) desire to amend the Agreement by: (i) adding a new Exhibit C to the Agreement; (ii) adding language in Section 2 (F) of the Agreement defining the Standard Dealer Agreement as the agreement attached to Exhibit C and clarifying that the definition of the Standard Dealer Agreement does not include any Addendum that may be attached, or related to the Standard Dealer Agreement; and (iii) additional language in Section 8(B) clarifying that any Addendum attached or related to the Standard Dealer Agreement shall be considered a Non-Standard Dealer Agreement.

WHEREAS, Section 16 of the Agreement requires that all amendments and modifications to the Agreement be in writing and executed by the Parties.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

1.

Capitalized terms not otherwise defined herein shall have the meanings set forth in Agreement.

 

2.

Exhibit C, in the form attached hereto, shall be added to the Agreement.

 

3.

Section 2(F) of the Agreement is hereby modified by adding the following language additional language to the end of the section:

The Standard Agreement is attached hereto for reference on Exhibit C. For the avoidance of doubt, the Standard Dealer Agreement shall not include any Addendum attached or related to the Standard Dealer Agreement.

 

4.

Section 8(B) of the Agreement is hereby modified by deleting the last sentence of Section 8(B) entirely and replacing it with the following sentence:

For the avoidance of doubt any Addendum to the Standard Dealer or any dealer or selling agreement that materially deviates from the Standard Agreement shall be considered a “Non-Standard Dealer Agreement.”

 

1

5.

Except as expressly amended hereby, all of the provisions of the Agreement shall remain unamended and in full force and effect to the same extent as if fully set forth herein.

 

6.

This Amendment shall be governed by, and the provisions of this Amendment shall be construed and interpreted under and in accordance with, the laws of the State of Delaware.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed in their names and on their behalf by and through their duly authorized officers, as of the Effective Date.

 

BMO FUNDS, INC.

     

FORESIDE FINANCIAL SERVICES, LLC

By:

  

/s/ John M. Blaser

  

            

  

By:

  

/s/ Mark A. Fairbanks

  

John M. Blaser, President

        

Mark A. Fairbanks, Vice President

 

2

EXHIBIT C

FORESIDE FINANCIAL SERVICES, LLC

DEALER AGREEMENT

 

Re: BMO FUNDS   Date:                             

Ladies and Gentlemen:

As the distributor of the shares (“Shares”) of each investment company portfolio (“Fund”), of the investment company or companies referenced above and set forth on Appendix A (collectively, “Company”) which may be amended by us from time to time, Foreside Financial Services, LLC (“Distributor”) hereby invites you to participate in the selling group on the following terms and conditions. In this agreement, the terms “we,” “us,” and similar words refer to the Distributor, and the terms “you,” “your,” and similar words and “Dealer” refer to the dealer executing this agreement, including its associated persons.

1.    Dealer. You hereby represent that you are a broker-dealer properly registered and qualified under all applicable federal, state and local laws to engage in the business and transactions described in this agreement, and that you are a member in good standing of the Financial Industry Regulatory Authority (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”). You agree that it is your responsibility to determine the suitability of any Fund Shares as investments for your customers, and that we have no responsibility for such determination. You further agree to maintain all records required by Applicable Laws (as defined below) or that are otherwise reasonably requested by us relating to your transactions in Fund Shares. In addition, you agree to notify us immediately in the event your status as a member of FINRA or SIPC changes. You agree that you will at all times comply with (i) the provisions of this agreement related to compliance with all applicable rules and regulations; and (ii) the terms of each registration statement and prospectus for the Funds.

2.    Qualification of Shares. The Fund will make available to you a list of the states or other jurisdictions in which Fund Shares are registered for sale or are otherwise qualified for sale, which may be revised by the Fund from time to time. You will make offers of Shares to your customers only in those states, and you will ensure that you (including your associated persons) are appropriately licensed and qualified to offer and sell Shares in any state or other jurisdiction that requires such licensing or qualification in connection with your activities.

3.    Orders. All orders you submit for transactions in Fund Shares shall reflect orders received from your customers or shall be for your account for your own bona fide investment, and you will date and time-stamp your customer orders and forward them promptly each day and in any event prior to the time required by the applicable Fund prospectus (the “Prospectus,” which for purposes of this agreement includes the Statement of Additional Information incorporated therein). As agent for your customers, you shall not withhold placing customers’ orders for any Shares so as to profit yourself or your customer as a result of such withholding. You are hereby authorized to: (i) place your orders directly with the Company for the purchase of Shares and (ii) tender Shares directly to the Company for redemption, in each case subject to the terms and conditions set forth in the Prospectus and any operating procedures and policies established by us or the Fund (directly or through its Transfer Agent) from time to time. All purchase orders you submit are subject to acceptance or rejection, and we reserve the right to suspend or limit the sale of Shares. You are not authorized to make any representations concerning Shares of any Fund except

 

3

such representations as are contained in the Prospectus and in such supplemental written information that the Fund or the Distributor (acting on behalf of the Fund) may provide to you with respect to a Fund. All orders that are accepted for the purchase of Shares shall be executed at the next determined public offering price per share (i.e., the net asset value per share plus the applicable sales load, if any) and all orders for the redemption of Shares shall be executed at the next determined net asset value per share and subject to any applicable redemption fee or contingent deferred sales load, in each case as described in the Prospectus.

4.    Compliance with Applicable Laws; Distribution of Prospectus and Reports; Confirmations. In connection with its respective activities hereunder, each party agrees to abide by the Conduct Rules of FINRA and all other rules of self-regulatory organizations of which the relevant party is a member, as well as all laws, rules and regulations, including federal and state securities laws, that are applicable to the relevant party (and its associated persons) from time to time in connection with its activities hereunder (“Applicable Laws”). You are authorized to distribute to your customers the current Prospectus, as well as any supplemental sales material received from the Fund or the Distributor (acting on behalf of the Fund) (on the terms and for the period specified by us or stated in such material). You are not authorized to distribute, furnish or display any other sales or promotional material relating to a Fund without our prior written approval, but you may identify the Funds in a listing of mutual funds available through you to your customers. Unless otherwise mutually agreed in writing, you shall deliver or cause to be delivered to each customer who purchases shares of any Funds from or through you, copies of all annual and interim reports, proxy solicitation materials, and any other information and materials relating to such Funds and prepared by or on behalf of the Funds or us. If required by Rule 10b-10 under the Securities Exchange Act or other Applicable Laws, you shall send or cause to be sent confirmations or other reports to your customers containing such information as may be required by Applicable Laws.

5.    Sales Charges and Concessions. On each purchase of Shares by you (but not including the reinvestment of any dividends or distributions), you shall be entitled to receive such dealer allowances, concessions, sales charges or other compensation, if any, as may be set forth in the Prospectus. Sales charge reductions and discounts may be available as provided in the Prospectus. To obtain any such reductions, the Company or its transfer agent must be notified promptly when a transaction or transactions would qualify for the reduced charge and you must submit information that is sufficient (in the discretion of the Company) to substantiate qualification therefor. The foregoing shall include advising us of any Letter of Intent signed by your customer or of any Right of Accumulation available to such customer. If you fail to so advise the Fund, you will be liable for the return of any commissions plus interest thereon. Rights of Accumulation (including rights under a Letter of Intent) are available, if at all, only as set forth in the Prospectus, and you authorize any adjustment to your account (and will be liable for any refund) to the extent any allowance, discount or concession is made and the conditions therefor are not fulfilled. Each price is always subject to confirmation, and will be based upon the net asset value next determined after receipt of an order that is in good form. If any Shares purchased are tendered for redemption or repurchased by the Fund for any reason within seven business days after confirmation of the purchase order for such Shares, you agree to promptly refund the full sales load or other concession and you will forfeit the right to receive any compensation allowable or payable to you on such Shares. The Fund reserves the right to waive sales charges. You represent that you are eligible to receive any such sales charges and concessions paid to you under this section.

6.    Transactions in Fund Shares. With respect to all orders you place for the purchase of Fund Shares, unless otherwise agreed, settlement shall be made with the Company within three (3) business days after acceptance of the order. If payment is not so received or made, the transaction may be cancelled. In this event or in the event that you cancel the trade for any reason, you agree to be responsible for any loss resulting to the Funds or to us from your failure to make payments as aforesaid. You shall not be entitled to any gains generated thereby. You also assume responsibility for any loss to a Fund caused by any order placed by you on an “as-of” basis subsequent to the trade date for the order,

 

4

and will immediately pay such loss to the Fund upon notification or demand. Such orders shall be acceptable only as permitted by the Company and shall be subject to the Company’s policies pertaining thereto, which may include receipt of an executed Letter of Indemnity in a form acceptable to the Fund and /or to us prior to the Company’s acceptance of any such order.

7.    Accuracy of Orders; Customer Signatures. You shall be responsible for the accuracy, timeliness and completeness of any orders transmitted by you on behalf of your customers by any means, including wire or telephone. In addition, you agree to guarantee the signatures of your customers when such guarantee is required by the Company and you agree to indemnify and hold harmless all persons, including us and the Funds’ transfer agent, from and against any and all loss, cost, damage or expense suffered or incurred in reliance upon such signature guarantee.

8.    Indemnification. You agree to indemnify and hold harmless us and our officers, directors, agents and employees from and against any claims, liabilities, expenses (including reasonable attorneys’ fees) and losses resulting from (i) any failure by you to comply with Applicable Laws in connection with activities performed under this agreement, or (ii) any unauthorized representation made by you concerning an investment in Fund Shares.

We agree to indemnify and hold harmless you and your officers, directors, agents and employees from and against any claims, liabilities, expenses (including reasonable attorneys’ fees) and losses resulting from (i) any failure by us to comply with Applicable Laws in connection with our activities as Distributor under this agreement, or (ii) any untrue statement of a material fact set forth in a Fund’s Prospectus or supplemental sales material provided to you by us (and used by you on the terms and for the period specified by us or stated in such material), or omission to state a material fact required to be stated therein to make the statements therein not misleading.

9.    Multi-Class Distribution Arrangements. You understand and acknowledge that the Funds may offer Shares in multiple classes, and you represent and warrant that you have established compliance procedures designed to ensure that your customers are made aware of the terms of each available class of Fund Shares, to ensure that each customer is offered only Shares that are suitable investments for him or her, to ensure that each customer is availed of the opportunity to obtain sales charge break points as detailed in the Prospectus, and to ensure proper supervision of your representatives in recommending and offering the Shares of multiple classes to your customers.

10.    Anti-Money Laundering Compliance. Each party to this agreement acknowledges that it is a financial institution subject to the USA PATRIOT Act of 2001 and the Bank Secrecy Act (collectively, the “AML Acts”), which require, among other things, that financial institutions adopt compliance programs to guard against money laundering. Each party represents and warrants that it is in compliance and will continue to comply with the AML Acts and applicable rules thereunder (“AML Laws”), including FINRA Rule 3310, in all relevant respects. You agree to cooperate with us to satisfy AML due diligence policies of the Company and Distributor, which may include annual compliance certifications and periodic due diligence reviews and/or other requests deemed necessary or appropriate by us or the Company to ensure compliance with AML Laws. Dealer also agrees to provide for screening its own new and existing customers against the Office of Foreign Assets Control (“OFAC”) list and any other government list that is or becomes required under the AML Acts.

11.    Privacy. The parties agree that any Non-Public Personal Information, as the term is defined in Regulation S-P (“Reg S-P”) of the Securities and Exchange Commission, that may be disclosed hereunder

 

5

is disclosed for the specific purpose of permitting the other party to perform the services set forth in this agreement. Each party agrees that, with respect to such information, it will comply with Reg S-P and that it will not disclose any Non-Public Personal Information received in connection with this agreement to any other party, except to the extent required to carry out the services set forth in this agreement or as otherwise permitted by law.

12.    Distribution and/or Service Fees. Subject to and in accordance with the terms of each Prospectus and the Distribution Plan and/or Service Plan, if any, adopted by resolution of the Board pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the “1940 Act”), we may pay financial institutions with which we have entered into an agreement in substantially the form annexed hereto as Appendix B or such other form as may be approved from time to time by the Funds’ Board (the “Fee Agreement”) such fees as may be determined in accordance with such Fee Agreement, for distribution, shareholder or administrative services, as described therein.

13.    Order Processing. In accordance with NASD Notice to Members 03-50 (reminding members of their responsibility to ensure that they have in place policies and procedures reasonably designed to detect and prevent the occurrence of mutual fund transactions that would violate Rule 22c-1 under the 1940 Act, FINRA Rule 2010 and other applicable rules and regulations), you represent that you have reviewed your policies and procedures to ensure that they are adequate with respect to preventing violations of law and prospectus requirements related to timely order-taking and market timing activity, in that such policies and procedures (i) prevent the submission of any order received after the deadline for submission of orders in each day that are eligible for pricing at that day’s net asset value per share (“NAV”); and (ii) prevent the purchase of Fund Shares by an individual or entity whose stated objectives are not consistent with the stated policies of a Fund in protecting the best interests of longer-term investors, particularly where such investor may be seeking market timing or arbitrage opportunities through such purchase. You represent that you will be responsible for the collection and payment to the Company of any Redemption Fees based upon the terms outlined in the Company’s prospectus.

14.    Amendments. This agreement may be amended from time to time by the following procedure. We will mail a copy of the amendment to you at your address shown below or as registered as your main office from time to time with FINRA. If you do not object to the amendment within fifteen (15) days after its receipt, the amendment will become a part of this agreement. Your objection must be in writing and be received by us within such fifteen (15) days. All amendments shall be in writing and except as provided above shall be executed by both parties.

15.    Termination. This agreement may be terminated by either party, without penalty, upon ten days’ prior written notice to the other party. Dealer’s expulsion from FINRA will automatically terminate this agreement without notice. Dealer’s suspension from FINRA or Dealer’s violation of Applicable Laws will terminate this agreement effective upon the date of Distributor’s mailing notice to Dealer of such termination. Any unfulfilled obligations hereunder, and all obligations of indemnification, shall survive the termination of this agreement.

16.    Assignment. This agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. No party may assign this agreement nor any rights, privileges, duties or obligations hereunder without the prior written consent of the other parties, except that we may assign or transfer this agreement to any broker-dealer which becomes the underwriter of the Company without obtaining your written consent. For the avoidance of doubt, the parties agree that a change of control of the Distributor shall not constitute an assignment of this agreement.

 

6

17.    Notices. All notices and communications to us shall be sent to us at Three Canal Plaza, Suite 100, Portland, ME 04101, Attn: Legal Dept., or at such other address as we may designate in writing. All notices and other communication to you shall be sent to you at the address set forth below or at such other address as you may designate in writing. All notices required or permitted to be given pursuant to this agreement shall be given in writing and delivered by personal delivery, by postage prepaid mail, electronic mail, or by facsimile or similar means of same-day delivery, with a confirming copy by mail.

18.    Authorization. Each party represents to the other that all requisite corporate proceedings have been undertaken to authorize it to enter into and perform under this agreement as contemplated herein, and that the individual that has signed this agreement below on its behalf is a duly elected officer that has been empowered to act for and on behalf of such party with respect to the execution of this agreement.

19.    Directed Brokerage Prohibitions. The Distributor and Dealer agree that neither of them shall direct Fund portfolio securities transactions or related remuneration to satisfy any compensation obligations under this agreement. The Distributor also agrees that it will not directly or indirectly compensate the Dealer executing this agreement in contravention of Rule 12b-1(h) of the 1940 Act.

20.    Shareholder Information. The Dealer executing this agreement agrees to comply with the requirements set forth on Appendix C attached hereto regarding the provision of shareholder information pursuant to Rule 22c-2 of the 1940 Act. The requirements set forth in Appendix C are applicable to all Funds not identified as a money market fund on Appendix A.

21.    Money Market Funds. The Dealer executing the agreement agrees to comply with the requirements set forth in Appendix D for each Fund identified as a money market fund on Appendix A.

22.    Miscellaneous. This agreement supersedes any other agreement between the parties with respect to the offer and sale of Fund Shares and other matters covered herein. The invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of any other term or provision hereof. This agreement may be executed in any number of counterparts, which together shall constitute one instrument. This agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to conflict of laws principles, and shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. This agreement has been negotiated and executed by the parties in English. In the event any translation of this agreement is prepared for convenience or any other purpose, the provisions of the English version shall prevail.

[The Balance of this Page is Intentionally Left Blank]

*            *              *            *

 

7

If the foregoing corresponds with your understanding of our agreement, please sign this document and the accompanying copies thereof in the appropriate space below and return the same to us, whereupon this agreement shall be binding upon each of us.

 

FORESIDE FINANCIAL SERVICES, LLC   

By:                                                                                                         

  

Name:                                                                                                   

  

Title:                                                                                                   

  
Agreed to and Accepted:   

                                                                                                               

  

[Insert Dealer Name]

By:                                                                                                         

  

Name:                                                                                                   

  

Title:                                                                                                   

  

Address of Dealer:

  

                                                                                                               

  

                                                                                                               

  

Operations Contact:

  

Name:                                                                                                   

  

Phone:                                                                                                   

  

Email:                                                                                                   

  

 

8

APPENDIX A

 

9

APPENDIX B

FORESIDE FINANCIAL SERVICES, LLC

DISTRIBUTION/SERVICE FEE AGREEMENT

 

Re: BMO FUNDS   Date:                         

Ladies and Gentlemen:

This Fee Agreement (“Agreement”) confirms our understanding and agreement with respect to Rule 12b- 1 payments to be made to you in accordance with the Dealer Agreement between you and us (the “Dealer Agreement”), which entitles you to serve as a selected dealer of certain Funds for which we serve as Distributor. Capitalized terms used but not defined herein shall have the respective meanings set forth in the Dealer Agreement.

1.    From time to time during the term of this Agreement, we may make payments to you pursuant to one or more distribution and service plans (the “Plans”) adopted by certain of the Funds pursuant to Rule 12b- 1 of the Investment Company Act of 1940 (the “1940 Act”). You agree to furnish sales and marketing services and/or shareholder services to your customers who invest in and own Fund Shares, including, but not limited to, answering routine inquiries regarding the Funds, processing shareholder transactions, and providing any other shareholder services not otherwise provided by a Fund’s transfer agent. With respect to such payments to you, we shall have only the obligation to make payments to you after, for as long as, and to the extent that, we receive from the Fund an amount equivalent to the amount payable to you. The Fund reserves the right, without prior notice, to suspend or eliminate the payment of such Rule 12b-1 Plan payments or other dealer compensation by amendment, sticker or supplement to the then-current Prospectus of the Fund or other written notice to you.

2.    Any such fee payments shall reflect the amounts described in the Fund’s prospectus. Payments will be based on the average daily net assets of Fund Shares which are owned by those customers of yours whose records, as maintained by the Funds or the transfer agent, designate your firm as the customer’s dealer of record. No such fee payments will be payable to you with respect to shares purchased by or through you and redeemed by the Funds within seven business days after the date of confirmation of such purchase. You represent that you are eligible to receive any such payments made to you under the Plans.

3.    You agree that all activities conducted under this Agreement will be conducted in accordance with the Plans, as well as all applicable state and federal laws, including the 1940 Act, the Securities Exchange Act of 1934, the Securities Act of 1933 and any applicable rules of FINRA.

4.    Upon request, on a quarterly basis, you shall furnish us with a written report describing the amounts payable to you pursuant to this Agreement and the purpose for which such amounts were expended. We shall provide quarterly reports to the Funds’ Board of amounts expended pursuant to the Plans and the purposes for which such expenditures were made. You shall furnish us with such other information as shall reasonably be requested by us in connection with our reports to the Board with respect to the fees paid to you pursuant to this Agreement.

 

10

5.    This Agreement shall continue in effect until terminated in the manner prescribed below or as provided in the Plans or in Rule 12b-1. This Agreement may be terminated, with respect to one or more Funds, without penalty, by either of us, upon ten days’ prior written notice to the other party. In addition, this Agreement will be terminated with respect to any Fund upon a termination of the relevant Plan or the Dealer Agreement, if a Fund closes to new investments, or if our Distribution Agreement with the Funds terminates.

6.    This Agreement may be amended by us from time to time by the following procedure. We will mail a copy of the amendment to you at your address shown below or as registered from time to time with FINRA. If you do not object to the amendment within fifteen (15) days after its receipt, the amendment will become a part of this Agreement. Your objection must be in writing and be received by us within such fifteen days.

7.    This Agreement shall become effective as of the date when it is executed and dated by us below. This Agreement and all the rights and obligations of the parties hereunder shall be governed by and construed under the laws of the State of Delaware, without regard to conflict of laws principles.

8. All notices and other communications shall be given as provided in the Dealer Agreement.

If the foregoing is acceptable to you, please sign this Agreement in the space provided below and return the same to us.

 

FORESIDE FINANCIAL SERVICES, LLC     
     Agreed to and Accepted:
 

                    

  

[Name and Address of Dealer]

By:                                                                           

                                                                                  

Name:                                                                      

                                                                                  

Title:                                                                        

                                                                                  
    

By:                                                                           

    

Name:                                                                      

    

Title:                                                                       

 

11

APPENDIX C

Information Regarding the Provision of Shareholder Information Pursuant to Rule 22c-2

(a).    Agreement to Provide Information. Dealer agrees to provide the Fund, upon request, the taxpayer identification number (“TIN”), if known, (or in the case of a non U.S. shareholder, if the TIN is unavailable, the International Taxpayer Identification Number or other government issued identifier) of any or all Shareholder(s) who have purchased, redeemed, transferred, or exchanged fund shares held through an account with Dealer and the amount, date, name or other identifier of any investment professional(s) associated with the Shareholder(s) or account (if known), and transaction type (purchase, redemption, transfer, or exchange) of every purchase, redemption, transfer, or exchange of Shares held through an account maintained by the Dealer during the period covered by the request.

i.    Period Covered by Request. Requests must set forth a specific period, not to exceed 90 days from the date of the request, for which transaction information is sought. The Fund may request transaction information older than 90 days from the date of the request as it deems necessary to investigate compliance with policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of the outstanding shares issued by the Fund.

ii.    Form and Timing of Response. Dealer agrees to transmit the requested information that is on its books and records to the Fund or its designee promptly, but in any event not later than five business days, after receipt of a request. If the requested information is not on the Dealer’s books and records, Dealer agrees to use best efforts to: (x) provide or arrange to provide to the Fund the requested information from shareholders who hold an account with an indirect intermediary, including a determination on whether any specific person about whom Dealer has received information, is itself a financial intermediary; or (y) if directed by the Fund, restrict or prohibit further purchases or exchanges of Fund Shares by a shareholder who has been identified by the Fund as having engaged in transactions of Fund shares (directly or indirectly) that violate policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of the outstanding securities issued by the Fund. In such instance, Dealer agrees to inform the Fund whether it plans to perform (x) or (y). Responses required by this paragraph must be communicated in writing and in a format mutually agreed upon by the parties. To the extent practicable, the format for any transaction information provided to the Fund should be consistent with the NSCC Standardized Data Reporting Format. For purposes of this provision, an “indirect intermediary” has the same meaning as in SEC Rule 22c-2 under the Investment Company Act.

iii.    Limitations on Use of Information. The Fund agrees not to use the information received for marketing or any other similar purpose without the prior written consent of the Dealer.

(b)    Agreement to Restrict Trading. Dealer agrees to execute written instructions from the Fund to restrict or prohibit further purchases or exchanges of Fund shares by a Shareholder who has been identified by the Fund as having engaged in transactions of the Fund’s Shares (directly or indirectly through the Dealer’s account) that violate policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of the outstanding Shares issued by the Fund.

i.    Form of Instructions. Instructions must include the TIN, if known, and the specific restriction(s) to be executed. If the TIN is not known, the instructions must include an equivalent

 

12

identifying number of the Shareholder(s) or account(s) or other agreed upon information to which the instruction relates.

ii.    Timing of Response. Dealer agrees to execute instructions as soon as reasonably practicable, but not later than five business days after receipt of the instructions by the Dealer.

iii.    Confirmation by Dealer. Dealer must provide written confirmation to the Fund that instructions have been executed. Dealer agrees to provide confirmation as soon as reasonably practicable, but not later than ten business days after the instructions have been executed.

(c)     Definitions. For purposes of this Appendix C:

i.    The term “Fund” includes the fund’s investment adviser, principal underwriter and transfer agent. The term does not include any “excepted funds” as defined in SEC Rule 22c-2(b) under the Investment Company Act of 1940.1

ii.    The term “Shares” means the interests of Shareholders corresponding to the redeemable securities of record issued by the Fund under the Investment Company Act of 1940 that are held by the Dealer.

iii.    The term “Shareholder” means the beneficial owner of Shares, whether the Shares are held directly or by the Dealer in nominee name or, alternatively, for use with retirement plan recordkeepers, the term means the Plan participant notwithstanding that the Plan may be deemed to be the beneficial owner of Shares.

iv.     The term “written” includes electronic writings and facsimile transmissions.

v.     The term “Dealer” shall mean a “financial intermediary” as defined in SEC Rule 22c-2.

1. As defined in SEC Rule 22c-2(b), the term “excepted fund” means any: (1) money market fund; (2) fund that issues securities that are listed on a national exchange; and (3) fund that affirmatively permits short-term trading of its securities, if its prospectus clearly and prominently discloses that the fund permits short-term trading of its securities and that such trading may result in additional costs for the fund.

 

13

APPENDIX D

The following is applicable with respect to each of the Funds identified as a money market fund (“MMF”) on Appendix A:

General

(a) You covenant and agree to comply with all applicable terms and conditions of the applicable MMF prospectus, including, but not limited to:

  (i)

the placing or processing of purchase, redemption, and exchange orders and the timing thereof,

  (ii)

the implementation of liquidity fees and/or redemption gates, and

  (iii)

with respect to retail money market funds (as such term is used or interpreted by the SEC or its staff) (“Retail MMFs”), compliance with shareholder eligibility requirements as disclosed in the applicable MMF prospectus or as otherwise required by Rule 2a-7 or as interpreted by the SEC or its staff.

(b) Upon any MMF’s reasonable request, you agree to promptly provide such MMF, or its designee, with information separating customer orders received before and after the calculation of NAV or a time after which an MMF imposed, lifted, or modified a liquidity fee or redemption gate for the applicable MMF, or its designee, to validate the timing of your receipt of orders to purchase, redeem, or exchange the MMF’s shares (“MMF Orders”) in good form.

(c) You will maintain all records:

(iv)     required by state and federal law relating to the provision of the services contemplated under this Dealer Agreement,

(v) necessary or appropriate to demonstrate your compliance with the terms and conditions of the applicable MMF prospectus or this Dealer Agreement, or

(vi) necessary to make required regulatory reports.

Liquidity Fees and Gates

(a) You agree to promptly take such actions reasonably requested by the applicable MMF, to impose, lift, or modify a liquidity fee or redemption gate, or assist us in imposing, lifting, or modifying a liquidity fee or redemption gate.

(b) If an MMF implements a liquidity fee (unless you undertake to calculate and remit liquidity fees in accordance with the MMFs’ reasonable directions) you authorize the liquidity fees owed to the MMF, as a result of redemptions submitted through you, (the “Fee Amount”) to be calculated following the imposition of the liquidity fee and to withhold an amount equal to the Fee Amount from any redemption proceeds or other payments that you are owed.

(c) You may be notified by an MMF that a liquidity fee or redemption gate has been implemented via email, phone call, website disclosure, or the filing of a supplement to the applicable MMF’s prospectus. To facilitate the applicable MMF’s ability to calculate the Fee Amount, following such notification, you agree to provide the applicable MMF, before each NAV Calculation Time (as described in the applicable MMF prospectus), with the gross dollar amount and number of MMF shares that your customers tendered for redemption before the NAV Calculation Time and, if requested, after the time at which the liquidity fee was imposed or before the time at which the liquidity fee was terminated or modified, as applicable.

 

14

(d)         If a redemption gate is implemented by an MMF, you agree to reject any redemption and exchange MMF Orders in the MMF that you receive in good form while the redemption gate is in effect. To the extent required under applicable law or the terms of a MMF’s prospectus, you further agree to promptly re-confirm with your customers their intent to execute trades submitted during the implementation of a liquidity fee or redemption gate.

You acknowledge that an MMF may pay a redemption request that the MMF determines, in its sole discretion, has been received in good order by the MMF or its designee before the imposition of a liquidity fee or redemption gate, provided, however, that you may be required to provide evidence of receipt of the redemption request in good order prior to the applicable implementation

THIRD AMENDMENT TO

DISTRIBUTION AGREEMENT

This third amendment (the “Amendment”) to the Distribution Agreement (the “Agreement”) dated as of November 7, 2019 by and between BMO Funds, Inc. (the “Client”) and Foreside Financial Services, LLC (“Foreside”) is entered into as of October 7, 2020 (the “Effective Date”).

WHEREAS, Client and Foreside have agreed to correct a typo on the Agreement introduced by the Second Amendment to the Agreement; and

WHEREAS, Section 16 of the Agreement requires that all amendments and modifications to the Agreement be in writing and executed by the Parties.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

  1.

Capitalized terms not otherwise defined herein shall have the meanings set forth in Agreement.

 

  2.

Section 2 of the Second Amendment to the Agreement is modified to read:

 

  ●  

“Section 2(F) of the Agreement is hereby modified by adding the following language to the end of the section:

The Standard Agreement is attached hereto for reference on Exhibit C. For the avoidance of doubt, the Standard Dealer Agreement shall not include any Addendum attached or related to the Standard Dealer Agreement.”

 

  3.

Except as expressly amended hereby, all of the provisions of the Agreement shall remain unamended and in full force and effect to the same extent as if fully set forth herein.

 

  4.

This Amendment shall be governed by, and the provisions of this Amendment shall be construed and interpreted under and in accordance with, the laws of the State of Delaware.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed in their names and on their behalf by and through their duly authorized officers, as of the Effective Date.

 

BMO FUNDS, INC.

   

FORESIDE FINANCIAL SERVICES, LLC

By:    

 

  /s/John M. Blaser

   

By:    

 

  /s/Mark A. Fairbanks

 

John M. Blaser, President

     

Mark A. Fairbanks, Vice President

FORESIDE FINANCIAL SERVICES, LLC

DEALER AGREEMENT

 

Re: BMO FUNDS   Date:                     

Ladies and Gentlemen:

As the distributor of the shares (“Shares”) of each investment company portfolio (“Fund”), of the investment company or companies referenced above and set forth on Appendix A (collectively, “Company”) which may be amended by us from time to time, Foreside Financial Services, LLC (“Distributor”) hereby invites you to participate in the selling group on the following terms and conditions. In this agreement, the terms “we,” “us,” and similar words refer to the Distributor, and the terms “you,” “your,” and similar words and “Dealer” refer to the dealer executing this agreement, including its associated persons.

1.        Dealer. You hereby represent that you are a broker-dealer properly registered and qualified under all applicable federal, state and local laws to engage in the business and transactions described in this agreement, and that you are a member in good standing of the Financial Industry Regulatory Authority (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”). You agree that it is your responsibility to determine the suitability of any Fund Shares as investments for your customers, and that we have no responsibility for such determination. You further agree to maintain all records required by Applicable Laws (as defined below) or that are otherwise reasonably requested by us relating to your transactions in Fund Shares. In addition, you agree to notify us immediately in the event your status as a member of FINRA or SIPC changes. You agree that you will at all times comply with (i) the provisions of this agreement related to compliance with all applicable rules and regulations; and (ii) the terms of each registration statement and prospectus for the Funds.

2.        Qualification of Shares. The Fund will make available to you a list of the states or other jurisdictions in which Fund Shares are registered for sale or are otherwise qualified for sale, which may be revised by the Fund from time to time. You will make offers of Shares to your customers only in those states, and you will ensure that you (including your associated persons) are appropriately licensed and qualified to offer and sell Shares in any state or other jurisdiction that requires such licensing or qualification in connection with your activities.

3.        Orders. All orders you submit for transactions in Fund Shares shall reflect orders received from your customers or shall be for your account for your own bona fide investment, and you will date and time-stamp your customer orders and forward them promptly each day and in any event prior to the time required by the applicable Fund prospectus (the “Prospectus,” which for purposes of this agreement includes the Statement of Additional Information incorporated therein). As agent for your customers, you shall not withhold placing customers’ orders for any Shares so as to profit yourself or your customer as a result of such withholding. You are hereby authorized to: (i) place your orders directly with the Company for the purchase of Shares and (ii) tender Shares directly to the Company for redemption, in each case subject to the terms and conditions set forth in the Prospectus and any operating procedures and policies established by us or the Fund (directly or through its Transfer Agent) from time to time. All purchase orders you submit are subject to acceptance or rejection, and we reserve the right to suspend or limit the sale of Shares. You are not authorized to make any representations concerning Shares of any Fund except such representations as are contained in the Prospectus and in such supplemental written information that the Fund or the Distributor (acting on behalf of the Fund) may provide to you with respect to a Fund. All orders that are accepted for the purchase of Shares shall be executed at the next determined public offering price per share (i.e., the net asset value per share plus the applicable sales load, if any) and all

 

1

orders for the redemption of Shares shall be executed at the next determined net asset value per share and subject to any applicable redemption fee or contingent deferred sales load, in each case as described in the Prospectus.

4.        Compliance with Applicable Laws; Distribution of Prospectus and Reports; Confirmations. In connection with its respective activities hereunder, each party agrees to abide by the Conduct Rules of FINRA and all other rules of self-regulatory organizations of which the relevant party is a member, as well as all laws, rules and regulations, including federal and state securities laws, that are applicable to the relevant party (and its associated persons) from time to time in connection with its activities hereunder (“Applicable Laws”). You are authorized to distribute to your customers the current Prospectus, as well as any supplemental sales material received from the Fund or the Distributor (acting on behalf of the Fund) (on the terms and for the period specified by us or stated in such material). You are not authorized to distribute, furnish or display any other sales or promotional material relating to a Fund without our prior written approval, but you may identify the Funds in a listing of mutual funds available through you to your customers. Unless otherwise mutually agreed in writing, you shall deliver or cause to be delivered to each customer who purchases shares of any Funds from or through you, copies of all annual and interim reports, proxy solicitation materials, and any other information and materials relating to such Funds and prepared by or on behalf of the Funds or us. If required by Rule 10b-10 under the Securities Exchange Act or other Applicable Laws, you shall send or cause to be sent confirmations or other reports to your customers containing such information as may be required by Applicable Laws.

5.        Sales Charges and Concessions. On each purchase of Shares by you (but not including the reinvestment of any dividends or distributions), you shall be entitled to receive such dealer allowances, concessions, sales charges or other compensation, if any, as may be set forth in the Prospectus. Sales charge reductions and discounts may be available as provided in the Prospectus. To obtain any such reductions, the Company or its transfer agent must be notified promptly when a transaction or transactions would qualify for the reduced charge and you must submit information that is sufficient (in the discretion of the Company) to substantiate qualification therefor. The foregoing shall include advising us of any Letter of Intent signed by your customer or of any Right of Accumulation available to such customer. If you fail to so advise the Fund, you will be liable for the return of any commissions plus interest thereon. Rights of Accumulation (including rights under a Letter of Intent) are available, if at all, only as set forth in the Prospectus, and you authorize any adjustment to your account (and will be liable for any refund) to the extent any allowance, discount or concession is made and the conditions therefor are not fulfilled. Each price is always subject to confirmation, and will be based upon the net asset value next determined after receipt of an order that is in good form. If any Shares purchased are tendered for redemption or repurchased by the Fund for any reason within seven business days after confirmation of the purchase order for such Shares, you agree to promptly refund the full sales load or other concession and you will forfeit the right to receive any compensation allowable or payable to you on such Shares. The Fund reserves the right to waive sales charges. You represent that you are eligible to receive any such sales charges and concessions paid to you under this section.

6.        Transactions in Fund Shares. With respect to all orders you place for the purchase of Fund Shares, unless otherwise agreed, settlement shall be made with the Company within three (3) business days after acceptance of the order. If payment is not so received or made, the transaction may be cancelled. In this event or in the event that you cancel the trade for any reason, you agree to be responsible for any loss resulting to the Funds or to us from your failure to make payments as aforesaid. You shall not be entitled to any gains generated thereby. You also assume responsibility for any loss to a Fund caused by any order placed by you on an “as-of” basis subsequent to the trade date for the order,

 

2

and will immediately pay such loss to the Fund upon notification or demand. Such orders shall be acceptable only as permitted by the Company and shall be subject to the Company’s policies pertaining thereto, which may include receipt of an executed Letter of Indemnity in a form acceptable to the Fund and /or to us prior to the Company’s acceptance of any such order.

7.        Accuracy of Orders; Customer Signatures. You shall be responsible for the accuracy, timeliness and completeness of any orders transmitted by you on behalf of your customers by any means, including wire or telephone. In addition, you agree to guarantee the signatures of your customers when such guarantee is required by the Company and you agree to indemnify and hold harmless all persons, including us and the Funds’ transfer agent, from and against any and all loss, cost, damage or expense suffered or incurred in reliance upon such signature guarantee.

8.        Indemnification. You agree to indemnify and hold harmless us and our officers, directors, agents and employees from and against any claims, liabilities, expenses (including reasonable attorneys’ fees) and losses resulting from (i) any failure by you to comply with Applicable Laws in connection with activities performed under this agreement, or (ii) any unauthorized representation made by you concerning an investment in Fund Shares.

We agree to indemnify and hold harmless you and your officers, directors, agents and employees from and against any claims, liabilities, expenses (including reasonable attorneys’ fees) and losses resulting from (i) any failure by us to comply with Applicable Laws in connection with our activities as Distributor under this agreement, or (ii) any untrue statement of a material fact set forth in a Fund’s Prospectus or supplemental sales material provided to you by us (and used by you on the terms and for the period specified by us or stated in such material), or omission to state a material fact required to be stated therein to make the statements therein not misleading.

9.        Multi-Class Distribution Arrangements. You understand and acknowledge that the Funds may offer Shares in multiple classes, and you represent and warrant that you have established compliance procedures designed to ensure that your customers are made aware of the terms of each available class of Fund Shares, to ensure that each customer is offered only Shares that are suitable investments for him or her, to ensure that each customer is availed of the opportunity to obtain sales charge break points as detailed in the Prospectus, and to ensure proper supervision of your representatives in recommending and offering the Shares of multiple classes to your customers.

10.      Anti-Money Laundering Compliance. Each party to this agreement acknowledges that it is a financial institution subject to the USA PATRIOT Act of 2001 and the Bank Secrecy Act (collectively, the “AML Acts”), which require, among other things, that financial institutions adopt compliance programs to guard against money laundering. Each party represents and warrants that it is in compliance and will continue to comply with the AML Acts and applicable rules thereunder (“AML Laws”), including FINRA Rule 3310, in all relevant respects. You agree to cooperate with us to satisfy AML due diligence policies of the Company and Distributor, which may include annual compliance certifications and periodic due diligence reviews and/or other requests deemed necessary or appropriate by us or the Company to ensure compliance with AML Laws. Dealer also agrees to provide for screening its own new and existing customers against the Office of Foreign Assets Control (“OFAC”) list and any other government list that is or becomes required under the AML Acts.

11.      Privacy. The parties agree that any Non-Public Personal Information, as the term is defined in Regulation S-P (“Reg S-P”) of the Securities and Exchange Commission, that may be disclosed hereunder

 

3

is disclosed for the specific purpose of permitting the other party to perform the services set forth in this agreement. Each party agrees that, with respect to such information, it will comply with Reg S-P and that it will not disclose any Non-Public Personal Information received in connection with this agreement to any other party, except to the extent required to carry out the services set forth in this agreement or as otherwise permitted by law.

12.      Distribution and/or Service Fees. Subject to and in accordance with the terms of each Prospectus and the Distribution Plan and/or Service Plan, if any, adopted by resolution of the Board pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the “1940 Act”), we may pay financial institutions with which we have entered into an agreement in substantially the form annexed hereto as Appendix B or such other form as may be approved from time to time by the Funds’ Board (the “Fee Agreement”) such fees as may be determined in accordance with such Fee Agreement, for distribution, shareholder or administrative services, as described therein.

13.      Order Processing. In accordance with NASD Notice to Members 03-50 (reminding members of their responsibility to ensure that they have in place policies and procedures reasonably designed to detect and prevent the occurrence of mutual fund transactions that would violate Rule 22c-1 under the 1940 Act, FINRA Rule 2010 and other applicable rules and regulations), you represent that you have reviewed your policies and procedures to ensure that they are adequate with respect to preventing violations of law and prospectus requirements related to timely order-taking and market timing activity, in that such policies and procedures (i) prevent the submission of any order received after the deadline for submission of orders in each day that are eligible for pricing at that day’s net asset value per share (“NAV”); and (ii) prevent the purchase of Fund Shares by an individual or entity whose stated objectives are not consistent with the stated policies of a Fund in protecting the best interests of longer-term investors, particularly where such investor may be seeking market timing or arbitrage opportunities through such purchase. You represent that you will be responsible for the collection and payment to the Company of any Redemption Fees based upon the terms outlined in the Company’s prospectus.

14.      Amendments. This agreement may be amended from time to time by the following procedure. We will mail a copy of the amendment to you at your address shown below or as registered as your main office from time to time with FINRA. If you do not object to the amendment within fifteen (15) days after its receipt, the amendment will become a part of this agreement. Your objection must be in writing and be received by us within such fifteen (15) days. All amendments shall be in writing and except as provided above shall be executed by both parties.

15.      Termination. This agreement may be terminated by either party, without penalty, upon ten days’ prior written notice to the other party. Dealer’s expulsion from FINRA will automatically terminate this agreement without notice. Dealer’s suspension from FINRA or Dealer’s violation of Applicable Laws will terminate this agreement effective upon the date of Distributor’s mailing notice to Dealer of such termination. Any unfulfilled obligations hereunder, and all obligations of indemnification, shall survive the termination of this agreement.

16.      Assignment. This agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. No party may assign this agreement nor any rights, privileges, duties or obligations hereunder without the prior written consent of the other parties, except that we may assign or transfer this agreement to any broker-dealer which becomes the underwriter of the Company without obtaining your written consent. For the avoidance of doubt, the parties agree that a change of control of the Distributor shall not constitute an assignment of this agreement.

 

4

17.      Notices. All notices and communications to us shall be sent to us at Three Canal Plaza, Suite 100, Portland, ME 04101, Attn: Legal Dept., or at such other address as we may designate in writing. All notices and other communication to you shall be sent to you at the address set forth below or at such other address as you may designate in writing. All notices required or permitted to be given pursuant to this agreement shall be given in writing and delivered by personal delivery, by postage prepaid mail, electronic mail, or by facsimile or similar means of same-day delivery, with a confirming copy by mail.

18.      Authorization. Each party represents to the other that all requisite corporate proceedings have been undertaken to authorize it to enter into and perform under this agreement as contemplated herein, and that the individual that has signed this agreement below on its behalf is a duly elected officer that has been empowered to act for and on behalf of such party with respect to the execution of this agreement.

19.      Directed Brokerage Prohibitions. The Distributor and Dealer agree that neither of them shall direct Fund portfolio securities transactions or related remuneration to satisfy any compensation obligations under this agreement. The Distributor also agrees that it will not directly or indirectly compensate the Dealer executing this agreement in contravention of Rule 12b-1(h) of the 1940 Act.

20.      Shareholder Information. The Dealer executing this agreement agrees to comply with the requirements set forth on Appendix C attached hereto regarding the provision of shareholder information pursuant to Rule 22c-2 of the 1940 Act. The requirements set forth in Appendix C are applicable to all Funds not identified as a money market fund on Appendix A.

21.      Money Market Funds. The Dealer executing the agreement agrees to comply with the requirements set forth in Appendix D for each Fund identified as a money market fund on Appendix A.

22.      Miscellaneous. This agreement supersedes any other agreement between the parties with respect to the offer and sale of Fund Shares and other matters covered herein. The invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of any other term or provision hereof. This agreement may be executed in any number of counterparts, which together shall constitute one instrument. This agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to conflict of laws principles, and shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. This agreement has been negotiated and executed by the parties in English. In the event any translation of this agreement is prepared for convenience or any other purpose, the provisions of the English version shall prevail.

[The Balance of this Page is Intentionally Left Blank]

*                      *                       *                       *

 

5

If the foregoing corresponds with your understanding of our agreement, please sign this document and the accompanying copies thereof in the appropriate space below and return the same to us, whereupon this agreement shall be binding upon each of us.

 

FORESIDE FINANCIAL SERVICES, LLC

 

By:

 

             

 

Name:

 

             

 

Title:

 

             

 

Agreed to and Accepted:

 

 

 

[Insert Dealer Name]

By:

 

             

 

 

Name:

 

             

 

 

Title:

 

             

 

Address of Dealer:

 

 

 

 

 

Operations Contact:

 

 

Name:

 

             

 

 

Phone:

 

             

 

 

Email:

 

             

 

 

6

APPENDIX A

[redacted]

 

7

APPENDIX B

FORESIDE FINANCIAL SERVICES, LLC

DISTRIBUTION/SERVICE FEE AGREEMENT

 

Re: BMO FUNDS   Date:                     

Ladies and Gentlemen:

This Fee Agreement (“Agreement”) confirms our understanding and agreement with respect to Rule 12b- 1 payments to be made to you in accordance with the Dealer Agreement between you and us (the “Dealer Agreement”), which entitles you to serve as a selected dealer of certain Funds for which we serve as Distributor. Capitalized terms used but not defined herein shall have the respective meanings set forth in the Dealer Agreement.

1.  From time to time during the term of this Agreement, we may make payments to you pursuant to one or more distribution and service plans (the “Plans”) adopted by certain of the Funds pursuant to Rule 12b- 1 of the Investment Company Act of 1940 (the “1940 Act”). You agree to furnish sales and marketing services and/or shareholder services to your customers who invest in and own Fund Shares, including, but not limited to, answering routine inquiries regarding the Funds, processing shareholder transactions, and providing any other shareholder services not otherwise provided by a Fund’s transfer agent. With respect to such payments to you, we shall have only the obligation to make payments to you after, for as long as, and to the extent that, we receive from the Fund an amount equivalent to the amount payable to you. The Fund reserves the right, without prior notice, to suspend or eliminate the payment of such Rule 12b-1 Plan payments or other dealer compensation by amendment, sticker or supplement to the then-current Prospectus of the Fund or other written notice to you.

2.  Any such fee payments shall reflect the amounts described in the Fund’s prospectus. Payments will be based on the average daily net assets of Fund Shares which are owned by those customers of yours whose records, as maintained by the Funds or the transfer agent, designate your firm as the customer’s dealer of record. No such fee payments will be payable to you with respect to shares purchased by or through you and redeemed by the Funds within seven business days after the date of confirmation of such purchase. You represent that you are eligible to receive any such payments made to you under the Plans.

3.  You agree that all activities conducted under this Agreement will be conducted in accordance with the Plans, as well as all applicable state and federal laws, including the 1940 Act, the Securities Exchange Act of 1934, the Securities Act of 1933 and any applicable rules of FINRA.

4.  Upon request, on a quarterly basis, you shall furnish us with a written report describing the amounts payable to you pursuant to this Agreement and the purpose for which such amounts were expended. We shall provide quarterly reports to the Funds’ Board of amounts expended pursuant to the Plans and the purposes for which such expenditures were made. You shall furnish us with such other information as shall reasonably be requested by us in connection with our reports to the Board with respect to the fees paid to you pursuant to this Agreement.

 

8

5.  This Agreement shall continue in effect until terminated in the manner prescribed below or as provided in the Plans or in Rule 12b-1. This Agreement may be terminated, with respect to one or more Funds, without penalty, by either of us, upon ten days’ prior written notice to the other party. In addition, this Agreement will be terminated with respect to any Fund upon a termination of the relevant Plan or the Dealer Agreement, if a Fund closes to new investments, or if our Distribution Agreement with the Funds terminates.

6.  This Agreement may be amended by us from time to time by the following procedure. We will mail a copy of the amendment to you at your address shown below or as registered from time to time with FINRA. If you do not object to the amendment within fifteen (15) days after its receipt, the amendment will become a part of this Agreement. Your objection must be in writing and be received by us within such fifteen days.

7.  This Agreement shall become effective as of the date when it is executed and dated by us below. This Agreement and all the rights and obligations of the parties hereunder shall be governed by and construed under the laws of the State of Delaware, without regard to conflict of laws principles.

8.  All notices and other communications shall be given as provided in the Dealer Agreement. If the foregoing is acceptable to you, please sign this Agreement in the space provided below and return the same to us.

 

FORESIDE FINANCIAL SERVICES, LLC   
   Agreed to and Accepted:
  

[Name and Address of Dealer]

By:                                                                                    

  

                                                                                    

Name:                                                                               

  

                                                                                    

Title:                                                                                

  

                                                                                    

  

By:                                                                              

  

Name:                                              

  

Title:                                                                          

 

9

APPENDIX C

Information Regarding the Provision of Shareholder Information Pursuant to Rule 22c-2

(a).      Agreement to Provide Information. Dealer agrees to provide the Fund, upon request, the taxpayer identification number (“TIN”), if known, (or in the case of a non U.S. shareholder, if the TIN is unavailable, the International Taxpayer Identification Number or other government issued identifier) of any or all Shareholder(s) who have purchased, redeemed, transferred, or exchanged fund shares held through an account with Dealer and the amount, date, name or other identifier of any investment professional(s) associated with the Shareholder(s) or account (if known), and transaction type (purchase, redemption, transfer, or exchange) of every purchase, redemption, transfer, or exchange of Shares held through an account maintained by the Dealer during the period covered by the request.

i.    Period Covered by Request. Requests must set forth a specific period, not to exceed 90 days from the date of the request, for which transaction information is sought. The Fund may request transaction information older than 90 days from the date of the request as it deems necessary to investigate compliance with policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of the outstanding shares issued by the Fund.

ii.      Form and Timing of Response. Dealer agrees to transmit the requested information that is on its books and records to the Fund or its designee promptly, but in any event not later than five business days, after receipt of a request. If the requested information is not on the Dealer’s books and records, Dealer agrees to use best efforts to: (x) provide or arrange to provide to the Fund the requested information from shareholders who hold an account with an indirect intermediary, including a determination on whether any specific person about whom Dealer has received information, is itself a financial intermediary; or (y) if directed by the Fund, restrict or prohibit further purchases or exchanges of Fund Shares by a shareholder who has been identified by the Fund as having engaged in transactions of Fund shares (directly or indirectly) that violate policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of the outstanding securities issued by the Fund. In such instance, Dealer agrees to inform the Fund whether it plans to perform (x) or (y). Responses required by this paragraph must be communicated in writing and in a format mutually agreed upon by the parties. To the extent practicable, the format for any transaction information provided to the Fund should be consistent with the NSCC Standardized Data Reporting Format. For purposes of this provision, an “indirect intermediary” has the same meaning as in SEC Rule 22c-2 under the Investment Company Act.

iii.      Limitations on Use of Information. The Fund agrees not to use the information received for marketing or any other similar purpose without the prior written consent of the Dealer.

(b)      Agreement to Restrict Trading. Dealer agrees to execute written instructions from the Fund to restrict or prohibit further purchases or exchanges of Fund shares by a Shareholder who has been identified by the Fund as having engaged in transactions of the Fund’s Shares (directly or indirectly through the Dealer’s account) that violate policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of the outstanding Shares issued by the Fund.

i.      Form of Instructions. Instructions must include the TIN, if known, and the specific restriction(s) to be executed. If the TIN is not known, the instructions must include an equivalent

 

10

identifying number of the Shareholder(s) or account(s) or other agreed upon information to which the instruction relates.

ii.      Timing of Response. Dealer agrees to execute instructions as soon as reasonably practicable, but not later than five business days after receipt of the instructions by the Dealer.

iii.      Confirmation by Dealer. Dealer must provide written confirmation to the Fund that instructions have been executed. Dealer agrees to provide confirmation as soon as reasonably practicable, but not later than ten business days after the instructions have been executed.

(c)       Definitions. For purposes of this Appendix C:

i.      The term “Fund” includes the fund’s investment adviser, principal underwriter and transfer agent. The term does not include any “excepted funds” as defined in SEC Rule 22c-2(b) under the Investment Company Act of 1940.1

ii.      The term “Shares” means the interests of Shareholders corresponding to the redeemable securities of record issued by the Fund under the Investment Company Act of 1940 that are held by the Dealer.

iii.      The term “Shareholder” means the beneficial owner of Shares, whether the Shares are held directly or by the Dealer in nominee name or, alternatively, for use with retirement plan recordkeepers, the term means the Plan participant notwithstanding that the Plan may be deemed to be the beneficial owner of Shares.

iv.       The term “written” includes electronic writings and facsimile transmissions.

v.       The term “Dealer” shall mean a “financial intermediary” as defined in SEC Rule 22c-2.

 

1. As defined in SEC Rule 22c-2(b), the term “excepted fund” means any: (1) money market fund; (2) fund that issues securities that are listed on a national exchange; and (3) fund that affirmatively permits short-term trading of its securities, if its prospectus clearly and prominently discloses that the fund permits short-term trading of its securities and that such trading may result in additional costs for the fund.

 

11

APPENDIX D

The following is applicable with respect to each of the Funds identified as a money market fund (“MMF”) on Appendix A:

General

(a) You covenant and agree to comply with all applicable terms and conditions of the applicable MMF prospectus, including, but not limited to:

  (i)

the placing or processing of purchase, redemption, and exchange orders and the timing thereof,

  (ii)

the implementation of liquidity fees and/or redemption gates, and

  (iii)

with respect to retail money market funds (as such term is used or interpreted by the SEC or its staff) (“Retail MMFs”), compliance with shareholder eligibility requirements as disclosed in the applicable MMF prospectus or as otherwise required by Rule 2a-7 or as interpreted by the SEC or its staff.

(b) Upon any MMF’s reasonable request, you agree to promptly provide such MMF, or its designee, with information separating customer orders received before and after the calculation of NAV or a time after which an MMF imposed, lifted, or modified a liquidity fee or redemption gate for the applicable MMF, or its designee, to validate the timing of your receipt of orders to purchase, redeem, or exchange the MMF’s shares (“MMF Orders”) in good form.

(c) You will maintain all records:

(i) required by state and federal law relating to the provision of the services contemplated under this Dealer Agreement,

(ii) necessary or appropriate to demonstrate your compliance with the terms and conditions of the applicable MMF prospectus or this Dealer Agreement, or

(iii) necessary to make required regulatory reports.

Liquidity Fees and Gates

(a) You agree to promptly take such actions reasonably requested by the applicable MMF, to impose, lift, or modify a liquidity fee or redemption gate, or assist us in imposing, lifting, or modifying a liquidity fee or redemption gate.

(b) If an MMF implements a liquidity fee (unless you undertake to calculate and remit liquidity fees in accordance with the MMFs’ reasonable directions) you authorize the liquidity fees owed to the MMF, as a result of redemptions submitted through you, (the “Fee Amount”) to be calculated following the imposition of the liquidity fee and to withhold an amount equal to the Fee Amount from any redemption proceeds or other payments that you are owed.

(c) You may be notified by an MMF that a liquidity fee or redemption gate has been implemented via email, phone call, website disclosure, or the filing of a supplement to the applicable MMF’s prospectus. To facilitate the applicable MMF’s ability to calculate the Fee Amount, following such notification, you agree to provide the applicable MMF, before each NAV Calculation Time (as described in the applicable MMF prospectus), with the gross dollar amount and number of MMF shares that your customers tendered for redemption before the NAV Calculation Time and, if requested, after the time at which the liquidity fee was imposed or before the time at which the liquidity fee was terminated or modified, as applicable.

 

12

(d) If a redemption gate is implemented by an MMF, you agree to reject any redemption and exchange MMF Orders in the MMF that you receive in good form while the redemption gate is in effect. To the extent required under applicable law or the terms of a MMF’s prospectus, you further agree to promptly re-confirm with your customers their intent to execute trades submitted during the implementation of a liquidity fee or redemption gate.

(e) You acknowledge that an MMF may pay a redemption request that the MMF determines, in its sole discretion, has been received in good order by the MMF or its designee before the imposition of a liquidity fee or redemption gate, provided, however, that you may be required to provide evidence of receipt of the redemption request in good order prior to the applicable implementation time.

 

13

AMENDMENT TO

ADMINISTRATIVE SERVICES AGREEMENT

This Amendment to the Administrative Services Agreement is effective as of this 1st day of June, 2015, between BMO Funds, Inc., a Wisconsin corporation (the “Funds”), and BMO Asset Management Corp., a Delaware corporation and the investment adviser to the Funds (the “Adviser”).

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.        No Modification of Agreement. The Administrative Services Agreement dated January 1, 2000, as amended, (the “Agreement”) is hereby incorporated by reference. Nothing in this Amendment shall be deemed to modify, alter, negate, supersede or otherwise change in any manner or form any provision of the Agreement, except as may be specifically set forth herein.

2.        Section 4 of the Agreement, Compensation, is hereby amended to read in its entirety as follows:

4.        Compensation. For the Administrative Services provided, the Funds hereby agree to pay and the Adviser hereby agrees to accept as full compensation for its services rendered hereunder an administrative fee:

 

  (a)

With respect to all Funds (excluding the MONEY MARKET FUNDS (as such term is defined in the Funds’ current prospectus) at the flat rate of 0.15% of each portfolio’s average daily net assets (“ADNA”), payable daily.

 

  (b)

With respect to the MONEY MARKET FUNDS (as such term is defined in the Funds’ current prospectus) at the following annual rates based on the aggregate ADNA of the MONEY MARKET FUNDS combined, payable daily, as specified below:

 

Fee

 

ADNA

0.040%

  on the first $2 billion

0.030%

  on the next $2 billion

0.025%

  on the next $2 billion

0.020%

  on the next $2 billion

0.010%

  on ADNA in excess of $8 billion

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written.

 

BMO FUNDS, INC.     BMO ASSET MANAGEMENT CORP.
By:  

/s/ John M. Blaser

    By:  

/s/ Barry S. McInerney

Name: John M. Blaser     Name: Barry S. McInerney
Title:   President     Title:   Chief Executive Officer
    BMO ASSET MANAGEMENT CORP.
    By:  

/s/Steven J. Arquilla

    Name: Steven J. Arquilla
    Title:   Chief Operating Officer

 

2

AMENDMENT

To Transfer Agency and Service Agreement

between

Marshall Funds, Inc. (d/b/a “BMO Funds”)

and

Boston Financial Data Services, Inc.

This Amendment is dated December 28, 2012 and is made effective as of November 30, 2012 and amends the Transfer Agency and Service Agreement dated as of June 30, 2011, as amended (the “Agreement”), by and between each of the BMO Funds listed on Schedule A to the Agreement (the “Funds”) and Boston Financial Data Services, Inc. (“Boston Financial”). In accordance with Section 16.1 (Amendment) of the Agreement, the parties desire to amend the Agreement as set forth herein.

NOW THEREFORE, the parties agree as follows:

1. Section 1 of the Agreement shall be amended by adding the following new Section 1.6 immediately following Section 1.5:

“1.6 Certain Accounts. With respect to certain tax-deferred or tax-exempt plans or accounts (such as individual retirement accounts (“IRAs”), SIMPLE IRAs, SEP IRAs, Roth IRAs, Coverdell Education Savings Accounts, and 403(b) arrangements), the Transfer Agent, at the request of the Funds, shall make arrangements with State Street Bank and Trust Company (“State Street”) to act as named custodian for such plans and/or accounts and for the provision of appropriate plan and/or account documents; and the Transfer Agent shall provide various services to such plans and/or accounts, as custodial agent to State Street, including account set-up and maintenance, disbursements, and such other services as the parties hereto shall mutually agree upon.”

2. All defined terms and definitions in the Agreement shall be the same in this Amendment except as specifically revised by this Amendment; and

3. Except as specifically set forth in this Amendment, all other terms and conditions of the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed in their names and on their behalf by and through their duly elected officers, as of the day and year first above written.

 

BMO FUNDS    BOSTON FINANCIAL DATA SERVICES, INC.
By: /s/John M. Blaser    By: /s/Richard J. Johnson
Name: John M. Blaser    Name: Richard J. Johnson
Title: President    Title: Managing Director

AMENDMENT

To

Transfer Agency and Service Agreement

Between

Each of the Entities, Individually and not Jointly, as Listed on Schedule A

And

DST Asset Manager Solutions, Inc. (f/k/a Boston Financial Data Services, Inc.)

This Amendment is entered into as of this 1st day of June, 2018, between DST Asset Manager Solutions, Inc. (f/k/a Boston Financial Data Services, Inc.) (the “Transfer Agent”) and each of the entities, individually and not jointly, as listed on Schedule A (collectively, the “Funds” and individually, the “Fund”). In accordance with Section 16.1 (Amendment) of the Transfer Agency and Service Agreement between the parties dated June 30, 2011, as amended (the “Agreement”), the parties desire to amend the Agreement as set forth herein.

NOW THEREFORE, for good and valuable consideration, the sufficiency of which is hereby acknowledged, and in consideration of the mutual covenants of the parties herein contained, the parties acknowledge and agree as follows:

 

  1.

Name Change. All references throughout the Agreement to “Boston Financial Data Services, Inc.,” which has changed its name to “DST Asset Manager Solutions, Inc.,” effective January 1, 2018, shall be deemed to be replaced with such new name. Additionally, all references in the Agreement and in any exhibits or schedules thereto to the “Transfer Agent” shall be deemed to refer to DST Asset Manager Solutions, Inc.

 

  2.

Additional Services.

 

  a.

“Blue Sky” Reporting. Section 1.2(c) of the Agreement is hereby deleted and replaced in its entirety by the following new Section 1.2(c):

“The Transfer Agent shall be responsible for the daily transmission of a sales data file in industry standard format to such vendor as identified in writing by the Fund or its Administrator.”

 

  b.

Blue Sky Services. Section 1.2 of the Agreement is hereby amended by adding the following new sub section (j):

“Blue Sky Services. At the direction of the Funds, the Transfer Agent will perform the Blue Sky Services set forth on the attached schedule (“Schedule 1.2(j) entitled “Blue Sky Services”). In connection therewith, the Funds shall be responsible for determining and advising Transfer Agent with respect to (i) those jurisdictions in which Notice Filings are to be submitted and (ii) the dollar amount to be permitted to be sold in each such jurisdiction. Unless otherwise specified in writing by the parties, the Funds shall also be responsible for determining the availability of any exemptions under a jurisdiction’s blue sky laws and ensuring the proper application of any such exemptions by the Funds and its intermediaries. In the event that the Transfer Agent becomes aware of (a) the sale of the Funds’ shares in a jurisdiction in which no Notice Filing has been made or (b) the sale of the Funds’ shares in excess of the number of shares of the Funds permitted to be sold in such jurisdiction, the Transfer Agent shall report such information to the Funds and the Funds shall instruct the Transfer Agent with respect to the corrective action to be taken. In connection with the services described herein, the Funds shall issue in favor of the Transfer Agent a limited power of attorney to submit Notice Filings and payments with respect thereto on

behalf of the Funds which power of attorney shall be substantially in the form of Appendix A attached to Schedule 1.2(j) In consideration of the performance of the duties by the Transfer Agent pursuant to this Section 1.2(j), the Funds agree to pay the Transfer Agent the Blue Sky Service fees set forth on Schedule 3.1, as amended by the parties from time to time, and any expenses associated with such additional duties.”

 

  3.

Blue Sky Services Schedule. The Agreement is hereby amended to add new Schedule 1.2(j) – entitled “Blue Sky Services,” which is attached to this amendment and incorporated into the Agreement hereby.

 

  4.

Fee Schedule. Schedule 3.1 (Fees) to the Agreement is hereby amended to add the following new section:

 

  [Reserved.]

 

  5.

All defined terms and definitions in the Agreement shall be the same in this Amendment except as specifically revised hereby and

 

  6.

Except as specifically set forth in this Amendment, all other terms and conditions of the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed in their names and on their behalf by and through their duly authorized officers, as of the day and year first above written.

 

EACH OF THE ENTITIES,    DST ASSET MANAGER SOLUTIONS,
INDIVIDUALLY AND NOT JOINTLY,    INC.
AS LISTED ON SCHEDULE A   
By: /s/Timothy M. Bonin                            By: /s/Craig B. Hollis                            
Name: Timothy M. Bonin                           Name: Craig B. Hollis                             
Title: CFO                                                     Title: Head of Compliance                    
As an Authorized Officer on behalf of each of   
the Funds indicated on Schedule A   

SCHEDULE 1.2(j)

BLUE SKY SERVICES

Fund Responsibilities

In connection with the provision of the Services by the Transfer Agent, Fund shall:

 

  1.

Serve as liaison between the Funds’ existing Blue Sky provider and Transfer Agent to facilitate the conversion of the Funds’ existing files and sales feeds to Transfer Agent’s Blue Sky Solution database;

 

  2.

With respect to each Fund, identify the states and territories where the Fund’s shares will be offered for sale;

 

  3.

Determine the availability of any exemptions under a jurisdiction’s Blue Sky laws with the assistance of Transfer Agent;

 

  4.

Work with Transfer Agent to identify what systematic exemptions will be taken by the Funds;

 

  5.

Provide written instructions in Transfer Agent’s standard format to implement systematic exemptions and exclusions from reporting where practicable on the Transfer Agent’s Blue Sky database;

 

  6.

Provide written instructions to Transfer Agent to remove current permit period sales from Transfer Agent’s Blue Sky database upon determination that such sales qualify for exemptions or exclusion from reporting to the applicable states where registration fees are based on sales;

 

  7.

Facilitate the issuance of a limited power of attorney in favor of Transfer Agent in the form set forth in Appendix A to this Schedule in order that Transfer Agent may submit Notice Filings and other filings required by the states and territories and payments with respect thereto on behalf of each Fund;

 

  8.

To the extent Fund is notified by an intermediary of new sales data feeds, notify Transfer Agent in writing of any changes to or additions of Blue Sky sales data feeds and work with Transfer Agent to facilitate the necessary updates;

 

  9.

Facilitate the transmission of wire transfers for payment by the Funds for invoiced state fees as needed; and

 

  10.

Provide written instruction detailing action to be taken upon receipt of written notification from Transfer Agent that a direct broker Blue Sky sales feed is available for activation.

Transfer Agent Responsibilities

Transfer Agent will perform the Services set forth below.

 

  1.

Coordinate the conversion, including any and all related state filings, from the Funds’ existing Blue Sky service provider to Transfer Agent including all state permits and all activated sales feeds identified by Fund;

 

  2.

File Initial Notice Filings, as applicable, in all states and territories in which the applicable Fund’s shares will be offered, in the form of and as required by the applicable laws of the states and territories;

  3.

File each Fund’s renewals and amendments to reflect correspondent changes, name changes, terminations, domicile changes, issuer address changes, fiscal year end changes, distributor changes, as applicable, in all states and territories in which the applicable Fund’s shares will be offered, in the form of and as required by the applicable laws of the states and territories;

 

  4.

File each Fund’s sales reports to the extent required by applicable law, in the form of and as required by the applicable laws of the states and territories;

 

  5.

Invoice each Fund for fees owed to each state in accordance with procedures agreed upon in writing by Fund and Transfer Agent;

 

  6.

At the direction of Fund, make payments, at the expense of the applicable Fund, of Notice Filing fees;

 

  7.

File all necessary notices to permit each Fund or class of a Fund that is eligible for reduced fees applicable to money market funds or otherwise to qualify for reduced fees in a state or territory;

 

  8.

File all correspondence and related documentation so as to provide notice of the applicable Fund’s intent to take exemptions if such notice is required by the state or territory in order to permit the Fund to utilize such exemptions;

 

  9.

Advise Fund prior to communicating with the states and territories regarding any sales in excess of the registered amount for a permit so Fund can advise in writing the action to be taken;

 

  10.

Provide Fund information regarding the Sales to Existing Shareholders Exemptions and the Institutional Investor Exemptions available in the states and territories;

 

  11.

Include in sales report filings, all sales reported to Transfer Agent via (i) transfer agency Blue Sky sales feed and; (ii) broker Blue Sky sales feeds, including, without limitation, feeds that (a) were transferred as part of the conversion from the Funds’ prior Blue Sky vendor, or (b) confirmed in writing by Fund to be activated, less any exempt sales Fund has directed Transfer Agent in writing to remove prior to such filing.

 

  12.

At the direction of Fund, serve as liaison between the Funds, and the applicable Blue Sky jurisdiction:

 

  13.

Conduct annual due diligence reviews;

 

  14.

In the event that Transfer Agent becomes aware of the sale of a Fund’s shares in a jurisdiction in which no Notice Filing has been made, Transfer Agent shall report such information to Fund and Fund shall instruct Transfer Agent with respect to the corrective action to be taken;

 

  15.

File all additional amendments to increase registered amounts in accordance with agreed upon procedures in all states and territories in which the applicable Fund’s shares will be offered, in the form of and as required by the applicable laws of the states and territories;

 

  16.

Perform such additional services as Transfer Agent and Fund may agree upon in writing and added to this Agreement by amendment.

APPENDIX A

To

SCHEDULE 1.2(j)

LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, as of                              , 20__, that (the “Trust”) on behalf of its currently existing series and all future series (the “Funds”), with principal offices at                                                      , makes, constitutes, and appoints DST Asset Manager Solutions, Inc. (“DST AMS”) with principal offices at 2000 Crown Colony Drive, Quincy, Massachusetts 02169 its lawful attorney-in-fact for it to do as if it were itself acting, the following:

1.    NOTICE FILINGS FOR FUND SHARES. The power to submit (in any format accepted) notice filings for the Funds in each jurisdiction in which each Fund’s shares are offered or sold and in connection therewith the power to prepare, execute, and deliver and file (in any format accepted) any and all of the Fund’s applications including without limitation, applications to provide notice for the Fund’s shares, consents, including consents to service of process, reports, including without limitation, all periodic reports, or other documents and instruments now or hereafter required or appropriate in the judgment of DST AMS in connection with the notice filings of the Fund’s shares.

2.    CUSTODY ACCOUNTS AND FILING FEE TRANSMISSION. The power to draw, endorse, and deposit checks and/or transmit electronic payments on behalf of the Funds in connection with making notice filings for the Funds’ shares with state securities administrators.

3.    AUTHORIZED SIGNERS. Pursuant to this Limited Power of Attorney, DST AMS employees authorized at the discretion of DST AMS shall have authority to act on behalf of the Funds with respect to items 1 and 2 above.

The execution of this Limited Power of Attorney shall be deemed coupled with an interest and shall be revocable only upon receipt by DST AMS of such termination of authority. Nothing herein shall be construed to constitute the appointment of DST AMS as or otherwise authorize DST AMS to act as an officer, director or employee of the Fund.

IN WITNESS WHEREOF, the Trust has caused this Agreement to be executed in its name and on its behalf by and through its duly authorized officer, as of the date first written above.

BMO FUNDS

 

By:                                                                                                                           

Name:                                                                                                                     

Title:                                                                                                                       

Subscribed and sworn to before me this                      day of                     , 20         .

 

                                                                                                                                 

Notary Public

State of                                                                                                                   

In and for the County of                                                                                        

My Commission Expires                                                                                        

AMENDMENT

To

Transfer Agency and Service Agreement

Between

Each of the Entities, Individually and not Jointly, as Listed on Schedule A

And

DST Asset Manager Solutions, Inc.

This Amendment is entered into as of this 3rd day of August, 2018, between DST Asset Manager Solutions, Inc. (the “Transfer Agent”) and each of the entities, individually and not jointly, as listed on Schedule A (collectively, the “Funds” and individually, the “Fund”) to the Transfer Agency and Service Agreement between the parties dated June 30, 2011, as amended (the “Agreement”).

WHEREAS, the Transfer Agent and the Funds wish to amend the Agreement to update certain provisions;

NOW THEREFORE, for good and valuable consideration, the sufficiency of which is hereby acknowledged, and in consideration of the mutual covenants of the parties herein contained, the parties acknowledge and agree as follows:

1.    Section 1.6 (Individual Retirement Accounts).    Section 1 of the Agreement is hereby amended by deleting Section 1.6, which was added by prior amendment, in its entirety and replacing it with the following:

“1.6    Individual Retirement Accounts. With respect to retirement plans or accounts for which the Funds offer a custodial account, such as individual retirement accounts (“IRAs”), SIMPLE IRAs, SEP IRAs, Roth IRAs and Coverdell Education Savings Accounts (“Individual Retirement Accounts”) to the Funds’ shareholders, the Transfer Agent shall provide certain administrative and recordkeeping services, including but not limited to: establishing new accounts in the name of UMB Bank, n.a. (“UMB”) as the named custodian on the Individual Retirement Accounts; receiving and processing contributions to such accounts; processing redemptions, transfers and exchanges; preparing, filing and distributing tax forms for each account; and processing and reporting applicable withholdings.    The Transfer Agent shall perform such services as service agent to UMB. The Fund may change the custodian at its discretion.”

2.    Section 11.5 (SOC 1 Reports).    Section 11 of the Agreement is hereby amended by deleting Section 11.5 in its entirety and replacing it with the following:

“11.5    SOC 1 Reports. The Transfer Agent will furnish to the Fund, on a semi-annual basis, a SOC 1 (Type 2) Report in accordance with the Auditing Standard Board, Attestation Standards -AT Section 801, as well as such other reports and information relating to the Transfer Agent’s policies and procedures, as the parties may mutually agree upon.”

3. Section 14 (Subcontractors). Section 14 of the Agreement is hereby amended by revising the first sentence of Section 14.1 to delete the phrase “or, with regard to print/mail services, to DST Output, Inc., an affiliate of the Transfer Agent.”

4. Schedule 1.2(f) (AML Delegation).    Schedule 1.2(f) to the Agreement is hereby replaced with new Schedule 1.2(f), which is attached hereto and incorporated herein.

5. All defined terms and definitions in the Agreement shall be the same in this Amendment except as specifically revised by this Amendment; and

6. Except as specifically set forth in this Amendment, all other terms and conditions of the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed in their names and on their behalf by and through their duly authorized officers, as of the day and year first above written.

 

EACH OF THE ENTITIES, INDIVIDUALLY

AND NOT JOINTLY, AS LISTED ON

SCHEDULE A

  

DST ASSET MANAGER SOLUTIONS,

INC.

By: /s/ John M. Blaser                                                         

  

By: /s/ Brandon Anderson                                                     

Name: John M. Blaser                                                         

  

Name: Brandon Anderson                                                     

Title: President                                                                     

  

Title: Managing Director                                                      

As an Authorized Officer on behalf of each of

the Funds indicated on Schedule A

  

SCHEDULE 1.2(f)

AML DELEGATION

Dated: August 3, 2018

1.

Delegation.

 

  1.1

In order to assist the Fund with the Fund’s AML responsibilities under applicable AML laws, the Transfer Agent offers certain risk-based AML Procedures that are reasonably designed to: (i) promote the detection and reporting of potential money laundering activities; and (ii) assist in the verification of persons opening accounts with the Fund.    The Fund has had an opportunity to review the AML Procedures with the Transfer Agent and desires to implement the AML Procedures as part of the Fund’s overall AML program (the “AML Program”).

 

  1.2

Accordingly, subject to the terms and conditions set forth in this Agreement, the Fund hereby instructs and directs the Transfer Agent to implement the AML Procedures as set forth in Section 4 below on the Fund’s behalf and delegates to the Transfer Agent the day-to-day operation of the AML Procedures. The AML Procedures set forth in Section 4 may be amended, from time to time, by mutual agreement of the Fund and the Transfer Agent upon the execution by such parties of a revised Schedule 1.2(f) bearing a later date than the date hereof.

 

  1.3

The Transfer Agent agrees to perform such AML Procedures, with respect to the ownership of Shares in the Fund for which the Transfer Agent maintains the applicable shareholder information, subject to and in accordance with the terms and conditions of this Agreement.

 

2.

Consent to Examination. In connection with the performance by the Transfer Agent of the AML Procedures, the Transfer Agent understands and acknowledges that the Fund remains responsible for assuring compliance with the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”) and that the records the Transfer Agent maintains for the Fund relating to the AML Program may be subject, from time to time, to examination and/or inspection by federal regulators in order that the regulators may evaluate such compliance. The Transfer Agent hereby consents to such examination and/or inspection and agrees to cooperate with such federal examiners in connection with their review. For purposes of such examination and/or inspection, the Transfer Agent will use its best efforts to make available, during normal business hours and on reasonable notice all required records and information for review by such examiners.

 

3.

Limitation on Delegation. The Fund acknowledges and agrees that in accepting the delegation hereunder, the Transfer Agent is agreeing to perform only the AML Procedures, as may be amended from time to time, and is not undertaking and shall not be responsible for any other aspect of the AML Program or for the overall compliance by the Fund with the USA PATRIOT Act or for any other matters that have not been delegated hereunder. Additionally, the parties acknowledge and agree that the Transfer Agent shall only be responsible for performing the AML Procedures with respect to the ownership of, and transactions in, Shares in the Fund for which the Transfer Agent maintains the applicable Shareholder information.

4.

AML Procedures1

 

  4.1

Consistent with the services provided by the Transfer Agent and with respect to the ownership of Shares in the Fund for which the Transfer Agent maintains the applicable Shareholder information, the Transfer Agent shall:

(a)    on a daily basis, submit all new customer account registrations and registration changes against the Office of Foreign Assets Control (“OFAC”) database, the Politically Exposed Persons (“PEP”) database, and such other lists or databases as may be required from time to time by applicable regulatory authorities;

(b)    submit all account registrations through OFAC database, the PEP database, and such other lists or databases as may be required from time to time by applicable regulatory authorities;

(c)    on a daily basis, submit special payee information from checks, outgoing wires and systematic withdrawal files through the OFAC database;

(d)    review certain types of redemption transactions that occur within thirty-four (34) days of an account establishment, registration change, or banking information change (e.g. redemption by wire within 34 days of banking information change; rapid depletion of account balance after establishment; and redemption by check within 34 days of address change);

(e)    review wires sent pursuant to banking instructions other than those on file with the Transfer Agent;

(f)    review accounts with small balances followed by large purchases;

(g)    review accounts with frequent activity within a specified date range followed by a large redemption;

(h)    review purchase and redemption activity by check that meets or exceeds $100,000 threshold on any given day;

(i)    in accordance with, 31 C.F.R. 1024.320, determine when a suspicious activity report (“SAR”) should be filed as required by regulations applicable to mutual funds; prepare and file the SAR; provide the Fund with a copy of the SAR within a reasonable time after filing; and notify the Fund if any further communication is received from the U.S. Department of the Treasury or other law enforcement agencies regarding such filing (31 C.F.R. 1024.320);

(j)    compare account information to any FinCEN request received by the Fund and provided to the Transfer Agent pursuant to USA PATRIOT Act Sec. 314(a); provide the

 

1 

The accounts, transactions, items and activity reviewed in each case are subject to certain standard exclusions as set forth in written procedures of the Transfer Agent, which have been made available to the Fund and which may be modified from time to time.

Fund with the necessary information for it to respond to such request within required time frame (31 C.F.R. 1010.520);

(k)    (i) take reasonable steps to verify the identity of any person seeking to become a new customer of the Fund and notify the Fund in the event such person cannot be verified, (ii) maintain records of the information used to verify the person’s identity, as required, and (iii) determine whether the person appears on any lists of known or suspected terrorists or terrorist organizations provided to the Fund by any government agency;

(l)    except with respect to any entities excluded under applicable regulation: (i) take reasonable steps to verify the identity of legal entities seeking to become new customers of the Funds, including verifying the identity of the natural person(s) retaining ownership or controlling interest in such legal entity (the “ Beneficial Owner(s)”), as such ownership and controlling interests are defined in 31 C.F.R. 1010.230, (ii) notify the Fund in the event that the identity of such Beneficial Owner(s) is not provided upon request to such entity or cannot be verified, (iii) maintain records of the information used to verify such Beneficial Owners, as required, and (iv) determine whether such persons appear on any lists of known or suspected terrorists or terrorist organizations provided to the Fund by any government agency;

(m)    conduct due diligence and if required, enhanced due diligence in accordance with 31 C.F.R. 1010.610(b) for new and existing correspondent accounts for foreign financial institutions (as defined in 31 C.F.R. 1010.605(f)); perform an assessment of the money laundering risk presented by the account based on a consideration of relevant factors in accordance with applicable law and information provided by the foreign financial institution in a financial institution questionnaire. If an account is determined to have a risk ranking at a level of medium or above, the Transfer Agent will monitor the account on a monthly basis for unusual activity. In the situation where due diligence cannot be completed with respect to an account, the Transfer Agent will contact the Fund’s AML Officer for further instruction;

(n)    upon request by the Fund, conduct due diligence to determine if the Fund is involved with any foreign jurisdiction, institution, class of transactions and a type of account designated, from time to time, by the U.S. Department of Justice in order to identify and take certain “special measures” against such entities as required under Section 311 of the USA PATRIOT Act; and

(o)    Create and retain records required under 31 C.F.R. 1010.410 in connection with the transmittals of funds in amounts equal to or in excess of $3,000, and transmit such information on the transactions to the receiving financial institutions.

 

4.2

In the event that the Transfer Agent detects activity as a result of the foregoing procedures, which necessitates the filing by the Transfer Agent of a SAR or other similar report or notice to OFAC, then the Transfer Agent shall also immediately notify the Fund, unless prohibited by applicable law.

EACH OF THE ENTITIES, INDIVIDUALLY

AND NOT JOINTLY, AS LISTED ON

SCHEDULE A

  

DST ASSET MANAGER SOLUTIONS,

INC.

  By: /s/John M. Blaser                                

  

  By: /s/Brandon Anderson                                

  Name: John M. Blaser                              

  

  Name: Brandon Anderson                              

  Title: President                                           

  

  Title: Managing Director                                

As an Authorized Officer on behalf of each of the Funds indicated on Schedule A

  

AMENDMENT

To

Transfer Agency and Service Agreement

between

Each of the Entities, Individually and Not Jointly, as Listed on Schedule A

and

DST Asset Manager Solutions, Inc.

This amendment (the “Amendment”), effective as of April 6, 2020 (the “Amendment Effective Date”), is by and between DST Asset Manager Solutions, Inc. (“DST”) and each of the entities, individually and not jointly, as identified on Schedule A (collectively, the “Funds” and individually, the “Fund”). In accordance with Section 16.1 (Amendment) of the Transfer Agency and Service Agreement between the parties dated June 30, 2011, as amended (the “Agency Agreement”), the parties desire to amend the Agreement as set forth herein.

WHEREAS, the parties intend to include additional products under the Agency Agreement and amend the Agency Agreement to provide additional services for those products.

NOW, THEREFORE, for good and valuable consideration the parties agree as follows:

1. Notwithstanding the definition of “Fund” in the Agency Agreement, the additional product (the “Interval Fund”) identified below is a “Fund” under the Agency Agreement and such Fund shall receive the Services provided by DST under the Agency Agreement in accordance with the Fees detailed on Exhibit B to this Amendment:

 

Fund Name
BMO LGM Frontier Markets Equity Fund

 

  2.

The following language is added as a new Section 1.1(q) of the Agency Agreement:

“(q) additionally, with respect to each Interval Fund, provide the following additional interval fund services: (1) creation of mailing list upon request of the Interval Fund for share repurchase notifications to all securityholders within the Interval Fund on the requested date as instructed; and (2) manage share repurchase program, including: (a) receipt and processing of transactions submitted as specified in the Interval Fund prospectus, including any repurchase fee processing; (b) communicating and tallying the total shares requested for repurchase; (c) if applicable, applying the proration percentage as provided by the Interval Fund to each transaction within a repurchase event; and (d) supporting and maintaining the DTCC Alternative Investment Platform (AIP) on behalf of the Interval Fund. These functions may be updated as mutually agreed upon by DST and the Funds in writing.”

 

  3.

The Fees detailed on Exhibit B attached hereto are hereby adopted and added to Schedule 3.1 (Fees and Expenses) as a new “Section II. TRANSFER AGENCY – ADDITIONAL PRODUCTS”.

 

  4.

Schedule A. The current Schedule A to the Agency Agreement is hereby replaced and superseded with the Schedule A attached hereto, effective as of the date of this Amendment.

 

  5.

Term. The term of this Amendment will coincide with and automatically be extended by any renewal of the Agency Agreement, and this Amendment will terminate automatically upon the termination of the Agency Agreement

 

  6.

In the event of a conflict between the provisions of the Agency Agreement and this Amendment, the terms of this Amendment shall prevail.

  7.

Subject to the specific modifications made herein, all terms and conditions of the Agency Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed in their names and on their behalf by and through their duly authorized officers, as of the day and year first above written.

 

ON BEHALF OF EACH OF THE

ENTITIES, INDIVIDUALLY AND NOT

JOINTLY, AS LISTED ON SCHEDULE A

  

DST ASSET MANAGER

SOLUTIONS, INC.

  By: /s/ John M. Blaser                                          By: /s/ Rahul Kanwar                                    
  Name: John M. Blaser                                          Name: Rahul Kanwar                                    
  Title: President                                                      Title: Authorized Representative                  
As an Authorized Officer on behalf of each of the Funds indicated on Schedule A   

SCHEDULE A

Effective Date: April 6, 2020

BMO Funds

BMO Aggressive Allocation Fund

BMO Alternative Strategies Fund

BMO Balanced Allocation Fund

BMO Conservative Allocation Fund

BMO Disciplined International Equity

BMO Dividend Income Fund

BMO Global Low Volatility Equity Fund

BMO Government Money Market Fund

BMO Growth Allocation Fund

BMO High Yield Bond Fund

BMO Institutional Prime Money Market Fund

BMO Intermediate Tax-Free Fund

BMO Large-Cap Growth Fund

BMO Large-Cap Value Fund

BMO LGM Emerging Markets Equity Fund

BMO Low Volatility Equity Fund

BMO Mid-Cap Growth Fund

BMO Mid-Cap Value Fund

BMO Moderate Allocation Fund

BMO Prime Money Market Fund

BMO Pyrford International Stock Fund

BMO Short Tax-Free Fund

BMO Short-Term Income Fund

BMO Small-Cap Core Fund

BMO Small-Cap Growth Fund

BMO Small-Cap Value Fund

BMO Strategic Income Fund

BMO Tax-Free Money Market Fund

BMO Core Plus Bond Fund

BMO Corporate Income Fund

BMO Ultra Short Tax-Free Fund

BMO LGM Frontier Markets Equity Fund

AMENDMENT

To

Transfer Agency and Service Agreement

Between

Each of the Entities, Individually and not Jointly, as Listed on Schedule A

And

DST Asset Manager Solutions, Inc.

This Amendment is entered into as of this 4th day of June, 2020, to be effective May 27, 2020, between DST Asset Manager Solutions, Inc. (the “Transfer Agent”) and each of the entities, individually and not jointly, as listed on Schedule A (collectively, the “Funds” and individually, the “Fund”). In accordance with Section 16.1 (Amendment) and Section 17 (Additional Portfolios/Funds) of the Transfer Agency and Service Agreement between the parties dated June 30, 2011, as amended (the “Agreement”), the parties desire to amend the Agreement as set forth herein.

NOW THEREFORE, the parties agree as follows:

 

1.

Schedule A. The current Schedule A to the Agreement is hereby replaced and superseded with the Schedule A attached hereto, effective as of May 27, 2020; and

 

2.

All defined terms and definitions in the Agreement shall be the same in this Amendment (the “May 27, 2020 Amendment”) except as specifically revised by this Amendment; and

 

3.

Except as specifically set forth in this May 27, 2020 Amendment, all other terms and conditions of the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this May 27, 2020 Amendment to be executed by a duly authorized officer on one or more counterparts as of the date and year first above written.

 

ON BEHALF OF EACH OF THE ENTITIES, INDIVIDUALLY AND NOT JOINTLY, AS LISTED ON SCHEDULE A   

DST ASSET MANAGER

SOLUTIONS, INC.

By: /s/ Timothy M. Bonin                                                     By: /s/ Mark Sleightholme                                
Name: Timothy M. Bonin                                                     Name: Mark Sleightholme                                
Title: CFO                                                                             Title: Vice President                                           
As an Authorized Officer on behalf of each of the Funds indicated on Schedule A   

BMO Funds

SCHEDULE A

Effective Date: May 27, 2020

BMO Funds

BMO Aggressive Allocation Fund

BMO Alternative Strategies Fund

BMO Balanced Allocation Fund

BMO Conservative Allocation Fund

BMO Disciplined International Equity

BMO Dividend Income Fund

BMO Global Long/Short Equity

BMO Global Low Volatility Equity Fund

BMO Government Money Market Fund

BMO Growth Allocation Fund

BMO High Yield Bond Fund

BMO Institutional Prime Money Market Fund

BMO Intermediate Tax-Free Fund

BMO Large-Cap Growth Fund

BMO Large-Cap Value Fund

BMO LGM Emerging Markets Equity Fund

BMO LGM Frontier Markets Equity Fund

BMO Low Volatility Equity Fund

BMO Mid-Cap Growth Fund

BMO Mid-Cap Value Fund

BMO Moderate Allocation Fund

BMO Prime Money Market Fund

BMO Pyrford International Stock Fund

BMO Short Tax-Free Fund

BMO Short-Term Income Fund

BMO Small-Cap Core Fund

BMO Small-Cap Growth Fund

BMO Small-Cap Value Fund

BMO Strategic Income Fund

BMO Tax-Free Money Market Fund

BMO Core Plus Bond Fund

BMO Corporate Income Fund

BMO Ultra Short Tax-Free Fund

BMO Funds

AMENDED AND RESTATED EXPENSE LIMITATION AGREEMENT

This Amended and Restated Expense Limitation Agreement (the “Agreement”), is effective as of August 14, 2013 by and between BMO Asset Management Corp., a Delaware corporation (the “Adviser”) and BMO Funds, Inc., a Wisconsin corporation (the “Corporation”), on behalf of each portfolio reflected in Schedule A hereto, as may be amended from time to time (each a “Fund” and collectively the “Funds”).

WHEREAS, the Corporation, on behalf of each Fund, and the Adviser have entered into an investment advisory agreement (the “Advisory Agreement”), pursuant to which the Adviser provides investment management services to each Fund for compensation based on the value of the average daily net assets of that Fund;

WHEREAS, each Fund may have one or more classes of shares (each, a “Class” and collective, the “Classes”); and

WHEREAS, the Corporation and the Adviser have determined that it is appropriate and in the best interests of each Fund and its shareholders to maintain the expenses of each Class of such Fund at a level below that to which such Class may otherwise be subject;

NOW THEREFORE, the parties hereto agree as follows:

1.    EXPENSE LIMITATION.

1.1    Applicable Expense Limit. To the extent that the ordinary operating expenses incurred by a Class of a Fund in any fiscal year, excluding interest, taxes, brokerage commissions, other investment-related costs and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of a Fund’s business, and Acquired Fund Fees and Expenses (“Operating Expenses”), exceed the percentage of the average daily net assets of a Class of a Fund, as set forth in Schedule A (the “Expense Limit”), such excess amount (the “Excess Amount”) shall be the liability of the Adviser to the extent set forth in this Agreement. The Corporation may offset amounts owed to a Fund pursuant to this Agreement against the advisory fee payable to the Adviser subject to Rule 18f-3 under the Investment Company Act of 1940 (the “1940 Act”). Furthermore, to the extent that the Excess Amount exceeds such waived or reduced advisory fees, the Adviser shall reimburse such Class’s Operating Expenses.

1.2    Duration of Expense Limit. The Expense Limit with respect to each Class of a Fund shall remain in effect through the Date of Expiration of Expense Limit as set forth in Schedule A, as amended from time to time, unless this Agreement is terminated pursuant to Section 2 below.

2.       TERM.

This Agreement shall become effective with respect to a Fund at the time the Fund commences operations pursuant to an effective amendment to the Corporation’s Registration

 

1

Statement under the 1940 Act and the Securities Act of 1933, as amended, and shall continue until terminated by either of the parties hereto in accordance with Paragraph 3 of this Agreement.

3.         TERMINATION OF AGREEMENT.

This Agreement shall terminate with respect to any Fund upon the earlier of termination of the Advisory Agreement or the date set forth in Schedule A. This Agreement may not be terminated prior to the date set forth in Schedule A without the consent of the Board of Directors of the Corporation, unless terminated due to termination of the Advisory Agreement. The obligation of the Adviser under Section 1 of this Agreement shall survive the termination of the Agreement solely as to expenses and obligations incurred prior to the date of such termination.

4.         MISCELLANEOUS.

4.1       Captions. The captions in this Agreement are included for convenience of reference only and in no other way define or delineate any of the provisions hereof or otherwise affect their construction or effect.

4.2       Interpretation. Nothing herein contained shall be deemed to require the Corporation or a Fund to take any action contrary to the Corporation’s Articles of Incorporation or By-Laws, or any applicable statutory or regulatory requirement to which it is subject or by which it is bound, or to relieve or deprive the Corporation’s Board of Directors of its responsibility for and control of the conduct of the affairs of the Corporation or the Funds.

4.3       Definitions. Any question of interpretation of any term or provision of this Agreement, including but not limited to the investment-advisory fee, the computations of net asset values, and the allocation of expenses, having a counterpart in or otherwise derived from the terms and provisions of the Advisory Agreement or the 1940 Act, shall have the same meaning as and be resolved by reference to such Advisory Agreement or the 1940 Act.

4.4       Amendments. This Agreement may be amended only by a written agreement signed by each of the parties hereto. Schedule A to this Agreement may be amended from time to time by mutual agreement of the parties, subject to the approval of the Board of Directors of the Corporation.

[Signature Page Follows}

 

2

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their respective officers thereunto duly authorized, as of the day and year first above written.

 

BMO FUNDS, INC.     BMO ASSET MANAGEMENT CORP.
By: /s/John M. Blaser     By: /s/Barry S. McInerney
Name:   John M. Blaser     Name:   Barry S. McInerney
Title:   President     Title:   Chief Executive Officer
      BMO ASSET MANAGEMENT CORP
      By: /s/Steven J. Arquilla
      Name:   Steven J. Arquilla
      Title:   Chief Operating Officer

 

3

AMENDED AND RESTATED

SCHEDULE A

to the

Expense Limitation Agreement

(as of December 27, 2020)

 

Fund    Expense
Limit (%) 		    Date of
Expiration of
Expense Limit 		 

BMO Core Plus Bond Fund

                

Investor Class (Class Y)

     0.59%       12/31/2021  

Institutional Class (Class I)

     0.55%       12/31/2021  

Adviser Class (Class A)

     0.59%       12/31/2021  

BMO Corporate Income Fund

                

Investor Class (Class Y)

     0.59%       12/31/2021  

Institutional Class (Class I)

     0.55%       12/31/2021  

Adviser Class (Class A)

     0.59%       12/31/2021  

BMO LGM Emerging Markets Equity Fund

                

Institutional Class (Class I)

     1.15%       12/31/2021  

Adviser Class (Class A)

     1.40%       12/31/2021  

BMO Strategic Income Fund

                

Investor Class (Class Y)

     0.80%       12/31/2021  

Institutional Class (Class I)

     0.55%       12/31/2021  

Adviser Class (Class A)

     0.80%       12/31/2021  

BMO Government Money Market Fund

                

Investor Class (Class Y)

     0.45%       12/31/2021  

Premier Class

     0.20%       12/31/2021  

BMO Intermediate Tax-Free Fund

                

Investor Class (Class Y)

     0.54%       12/31/2021  

Institutional Class (Class I)

     0.50%       12/31/2021  

Adviser Class (Class A)

     0.54%       12/31/2021  

BMO Large-Cap Value Fund

                

Institutional Class (Class I)

     0.54%       12/31/2021  

Adviser Class (Class A)

     0.79%       12/31/2021  

R6 Class

     0.39%       12/31/2021  

BMO Large-Cap Growth Fund

                

Investor Class (Class Y)

     0.79%       12/31/2021  

Institutional Class (Class I)

     0.54%       12/31/2021  

Adviser Class (Class A)

     0.79%       12/31/2021  

R6 Class

     0.39%       12/31/2021  

BMO Mid-Cap Value Fund

                

Institutional Class (Class I)

     0.99%       12/31/2021  

Adviser Class (Class A)

     1.24%       12/31/2021  

R6 Class

     0.84%       12/31/2021  

BMO Mid-Cap Growth Fund

                

Institutional Class (Class I)

     0.99%       12/31/2021  

Adviser Class (Class A)

     1.24%       12/31/2021  

R6 Class

     0.84%       12/31/2021  

BMO Prime Money Market Fund

                

Investor Class (Class Y)

     0.45%       12/31/2021  

Premier Class

     0.20%       12/31/2021  

BMO Short-Term Income Fund

                

Institutional Class (Class I)

     0.35%       12/31/2021  

Adviser Class (Class A)

     0.60%       12/31/2021  

BMO Small-Cap Value Fund

                

Institutional Class (Class I)

     0.99%       12/31/2021  

Adviser Class (Class A)

     1.24%       12/31/2021  

R6 Class

     0.84%       12/31/2021  

BMO Small-Cap Growth Fund

                

Institutional Class (Class I)

     0.99%       12/31/2021  

Adviser Class (Class A)

     1.24%       12/31/2021  

BMO Tax-Free Money Market Fund

                

Investor Class (Class Y)

     0.45%       12/31/2021  

Premier Class

     0.20%       12/31/2021  

BMO Ultra Short Tax-Free Fund

                

Institutional Class (Class I)

     0.30%       12/31/2021  

Adviser Class (Class A)

     0.55%       12/31/2021  

BMO Dividend Income Fund

                

Institutional Class (Class I)

     0.65%       12/31/2021  

Adviser Class (Class A)

     0.90%       12/31/2021  

BMO Pyrford International Stock Fund

                

Institutional Class (Class I)

     0.94%       12/31/2021  

Adviser Class (Class A)

     1.19%       12/31/2021  

R6 Class

     0.79%       12/31/2021  

BMO Low Volatility Equity Fund

                

Institutional Class (Class I)

     0.65%       12/31/2021  

Adviser Class (Class A)

     0.90%       12/31/2021  

BMO Short Tax-Free Fund

                

Institutional Class (Class I)

     0.40%       12/31/2021  

Adviser Class (Class A)

     0.55%       12/31/2021  

BMO Conservative Allocation Fund

                

Investor Class (Class Y)

     0.33%       12/31/2021  

Institutional Class (Class I)

     0.08%       12/31/2021  

R3 Class

     0.58%       12/31/2021  

R6 Class

     (0.07)%       12/31/2021  

BMO Moderate Allocation Fund

                

Investor Class (Class Y)

     0.30%       12/31/2021  

Institutional Class (Class I)

     0.05%       12/31/2021  

R3 Class

     0.55%       12/31/2021  

R6 Class

     (0.10)%       12/31/2021  

BMO Balanced Allocation Fund

                

Investor Class (Class Y)

     0.33%       12/31/2021  

Institutional Class (Class I)

     0.08%       12/31/2021  

R3 Class

     0.58%       12/31/2021  

R6 Class

     (0.07)%       12/31/2021  

BMO Growth Allocation Fund

                

Investor Class (Class Y)

     0.30%       12/31/2021  

Institutional Class (Class I)

     0.05%       12/31/2021  

R3 Class

     0.55%       12/31/2021  

R6 Class

     (0.10)%       12/31/2021  

BMO Aggressive Allocation Fund

                

Investor Class (Class Y)

   0.33%   12/31/2021

Institutional Class (Class I)

   0.08%   12/31/2021

R3 Class

   0.58%   12/31/2021

R6 Class

   (0.07)%   12/31/2021

BMO Global Low Volatility Equity Fund

        

Institutional Class (Class I)

   0.85%   12/31/2021

Adviser Class (Class A)

   1.10%   12/31/2021

BMO Disciplined International Equity Fund

        

Institutional Class (Class I)

   0.90%   12/31/2021

Adviser Class (Class A)

   1.15%   12/31/2021

R6 Class

   0.75%   12/31/2021

POWER OF ATTORNEY

Each of the undersigned directors of BMO Funds, Inc. (the “Company”) hereby constitutes and appoints John M. Blaser, Timothy M. Bonin, Brett Black, and Michael J. Murphy, and each of them, his or her true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign the Registration Statement of the Company on Form N-1A, and any and all amendments thereto, and to file the same, with all exhibits, and any other documents in connection therewith, with the Securities and Exchange Commission and any other regulatory body. Each of the undersigned grants to each said attorney-in-fact and agent full power and authority to do and perform each and every act necessary to be done in order to effectuate the same as fully, to all intents and purposes, as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney as of this 1st day of September, 2020.

 

/s/Marie-Renée Bakker

Marie-Renée Bakker

/s/Ridge A. Braunschweig

Ridge A. Braunschweig

/s/Teresa V. Jankovic

Teresa V. Jankovic

/s/John A. Lubs

John A. Lubs

/s/Vincent P. Lyles

Vincent P. Lyles

/s/Daniela O’Leary-Gill

Daniela O’Leary-Gill

/s/Barbara J. Pope

Barbara J. Pope

Consent of Independent Registered Public Accounting Firm

The Shareholders and Board of Directors

BMO Funds, Inc.:

We consent to the use of our reports dated October 27, 2020, incorporated by reference herein, for BMO Funds, Inc., and to the references to our Firm under the headings “Financial Highlights” in the Prospectuses and “Information About The Funds’ Service Providers – Independent Registered Public Accounting Firm” in the Statement of Additional Information.

/s/ KPMG LLP

Columbus, Ohio

December 23, 2020

FEDERATED ADMINISTRATIVE SERVICES

Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

(412) 288-1900

September 23, 1992

Marshall Funds, Inc.

Federated Investors Tower

Pittsburgh, PA 15222-3779

Gentlemen:

Federated Administrative Services agrees to purchase 100,000 shares of Marshall Money Market Fund (a portfolio of Marshall Funds, Inc.) at the cost of $1.00 each. Federated Administrative Services also agrees to purchase 100 shares of Marshall Stock Fund at the cost of $10.00 each and 100 shares of Marshall Government Income Fund at the cost of $10.00 each. These shares are purchased for investment purposes and Federated Administrative Services has no present intention of redeeming these shares.

 

Very truly yours,
/s/ John W. McGonigle
John W. McGonigle
Executive Vice President

BMO FUNDS, INC.

AMENDED AND RESTATED RULE 12B-1 PLAN

This Rule 12b-1 Plan (the “Plan”), adopted on November 6, 2019, and effective January 1, 2020, by the Board of Directors of BMO Funds, Inc. (the “Corporation”), a Wisconsin corporation, relates to certain classes of shares (the “Classes”) of the portfolios of the Corporation (the “Funds”) set forth in the exhibit hereto as may be amended from time to time.

1.        This Plan is adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the “Act”) so as to allow the Corporation to make payments as contemplated herein, in conjunction with the distribution of certain Classes of the Funds (the “Shares”).

2.        This Plan is designed to finance activities of Foreside Financial Services, LLC (the “Distributor”) principally intended to result in the sale of Shares to include: (a) providing incentive to broker/dealers (the “Brokers”) to sell Shares and to provide administrative support services to the Funds and their shareholders; (b) compensating other participating financial institutions and other persons (the “Financial Intermediaries”) for providing administrative and other support services to the Funds and their shareholders; (c) paying for the costs incurred in conjunction with advertising and marketing of Shares to include expenses of preparing, printing, and distributing prospectuses and sales literature to prospective shareholders, Brokers, or Financial Intermediaries; and (d) other costs incurred in the implementation and operation of the Plan. In compensation for services provided pursuant to this Plan, the Distributor will be paid a fee in the amount and in respect of the Classes set forth on the applicable exhibit.

3.        Any payment to the Distributor in accordance with this Plan will be made pursuant to the Distribution Agreement entered into by and between the Corporation, the Corporation’s administrator, and the Distributor. Any payments made by the Distributor to Brokers and Financial Intermediaries with funds received as compensation under this Plan will be made pursuant to a Sales and Services Agreement entered into by the Distributor and the Broker or Financial Intermediaries.

4.        The Distributor has the right (i) to select, in its sole discretion, the Brokers and Financial Intermediaries to participate in the Plan, and (ii) to terminate without cause and in its sole discretion any Sales and Services Agreement.

5.        Quarterly, in each year that this Plan remains in effect, the Distributor shall prepare and furnish to the Board of Directors of the Corporation, and the Board of Directors shall review, a written report of the amounts expended under the Plan and the purpose for which such expenditures were made.

6.        This Plan shall become effective with respect to each Class (i) after approval by majority votes of: (a) the Corporation’s Board of Directors; and (b) the Directors of the Corporation who are not interested persons of the Corporation and who have no direct or indirect financial interest in the Plan (“Disinterested Directors”), cast in person at a meeting called for the purpose of voting on the Plan.

7.          This Plan shall remain in effect with respect to each Class presently set forth on an exhibit and any subsequent Classes added pursuant to an exhibit during the initial year of this Plan for the period of one year from the date set forth on Exhibit A and may be continued thereafter if this Plan is approved with respect to each Class at least annually by a majority of the Corporation’s Board of Directors and a majority of the Disinterested Directors, cast in person at a meeting called for the purpose of voting on such Plan. If this Plan is adopted with respect to a Class after the first annual approval by the Directors as described above, this Plan will be effective as to that Class upon the date of the applicable exhibit (and after shareholder approval, if required under the Act) and will continue in effect until the next annual approval of this Plan by the Directors and thereafter for successive periods of one year subject to approval as described above.

8.          All material amendments to this Plan must be approved by a vote of the Board of Directors of the Corporation and of the Disinterested Directors, cast in person at a meeting called for the purpose of voting on it.

9.          This Plan may not be amended in order to increase materially the costs that the Classes may bear for distribution pursuant to the Plan without being approved by a majority vote of the outstanding voting securities of the Classes as defined in Section 2(a)(42) of the Act.

10.        This Plan may be terminated with respect to a particular Class at any time by: (a) a majority vote of the Disinterested Directors; or (b) a vote of a majority of the outstanding voting securities of the particular Class as defined in Section 2(a)(42) of the Act; or (c) by the Distributor on 60 days’ notice to the Corporation. In the event of termination of the Plan, the Distributor shall be reimbursed only for permitted amounts incurred to the date of termination and within the limits set forth in the exhibits hereto.

11.        While this Plan shall be in effect, the selection and nomination of Disinterested Directors of the Corporation shall be committed to the discretion of the Disinterested Directors then in office. Nothing herein shall prevent the involvement of others in such selection and nomination if the final decision on any such selection and nomination is approved by a majority of such Disinterested Directors.

12.        All agreements with any person relating to the implementation of this Plan shall be in writing and any agreement related to this Plan shall be subject to termination, without penalty, pursuant to the provisions of Paragraph 10 herein.

13.        This Plan shall be construed in accordance with and governed by the laws of the State of Wisconsin.

 

2

EXHIBIT A

to the

Rule 12b-1 Plan

BMO FUNDS, INC.

Class A Shares

of the

BMO Low Volatility Equity Fund

BMO Dividend Income Fund

BMO Large-Cap Value Fund

BMO Large-Cap Growth Fund

BMO Mid-Cap Growth Fund

BMO Mid-Cap Value Fund

BMO Small-Cap Value Fund

BMO Small-Cap Growth Fund

BMO Global Low Volatility Equity Fund

BMO Disciplined International Equity Fund

BMO Pyrford International Stock Fund

BMO LGM Emerging Markets Equity Fund

BMO Ultra Short Tax-Free Fund

BMO Short Tax-Free Fund

BMO Short-Term Income Fund

BMO Intermediate Tax-Free Fund

BMO Strategic Income Fund

BMO Corporate Income Fund

BMO Core Plus Bond Fund

Effective as of August 28, 2020

This Plan is adopted by BMO Funds, Inc. with respect to the Class of Shares of its portfolios set forth above.

In compensation for the services provided pursuant to this Plan, the Distributor will be paid an annual fee equal to a maximum of 0.25 of 1% of the net assets of the Class A Shares of the portfolios of BMO Funds, Inc. set forth above.

 

A-1

BMO FUNDS, INC.

AMENDED AND RESTATED MULTIPLE CLASS PLAN

(For all Funds except the Target Date Funds and Target Risk Funds)

This Multiple Class Plan (“Plan”) is adopted on November 4, 2015 by the Board of Directors of BMO Funds, Inc. (the “Corporation”), a Wisconsin corporation, with respect to the classes of shares (“Classes”) of certain of its portfolios (the “Funds”) set forth in exhibits hereto (the “Class Exhibits”).

1.      PURPOSE

This Plan is adopted pursuant to Rule 18f-3 under the Investment Company Act of 1940, as amended (the “Rule”), in connection with the issuance by the Corporation of more than one class of shares of any or all of the Funds in reliance on the Rule.

2.      SEPARATE ARRANGEMENTS / CLASS DIFFERENCES

The arrangements for shareholder services, administrative services, and the distribution of securities for each Class shall be as set forth in the applicable Class Exhibit hereto.

3.      EXPENSE ALLOCATIONS

Each Class shall be allocated their allocable portion of Fund-level and Corporation-level expenses. Each Class shall be allocated those expenses attributable specifically to the Class, which are described in the applicable Class Exhibit hereto (“Class Expenses”). Class Expenses may include distribution expenses; shareholder services expenses; transfer agent fees; printing and postage expenses related to preparing and distributing materials such as shareholder reports, prospectuses, and proxies to current shareholders; blue sky registration fees; SEC registration fees; the expense of administrative personnel and services as required to support the shareholders of a specific class; litigation or other legal expenses relating solely to one Class; or directors’ fees incurred as a result of issues relating to one Class of shares.

4.      CONVERSION FEATURES

The conversion features for shares of each Class shall be as set forth in the applicable Class Exhibit hereto.

5.      EXCHANGE FEATURES

The exchange features for shares of each Class shall be as set forth in the applicable Class Exhibit hereto.

6.      AMENDMENT

Any material amendment of this Plan or any Class Exhibit hereto by the Corporation is subject to the approval of a majority of the directors of the Corporation, and a majority of the directors of the Corporation who are not interested persons of the Corporation, pursuant to the Rule.

EXHIBIT A

to the

Multiple Class Plan

BMO FUNDS, INC.

CLASS Y SHARES

BMO Prime Money Market Fund

BMO Government Money Market Fund

BMO Tax-Free Money Market Fund

BMO Large-Cap Growth Fund

BMO Core Plus Bond Fund

BMO Corporate Income Fund

BMO Strategic Income Fund

BMO Intermediate Tax-Free Fund

Effective December 23, 2020

This Exhibit to the Multiple Class Plan (the “Plan”) is hereby adopted by the above-listed portfolios of the Corporation (“Funds”) pursuant to Sections 2, 3, 4, and 5 of the Plan with regard to the Class Y Shares of the Fund.

1.      SEPARATE ARRANGEMENTS

CHANNEL/TARGET CUSTOMERS

Class Y Shares are primarily designed for sale to retail customers and others who prefer to invest in open-end investment company securities without a sales load.

SALES LOAD

None

DISTRIBUTION FEES

None

SHAREHOLDER SERVICES FEES

Maximum shareholder service fee: 0.25 of 1% of the average daily net asset value of the Class Y Shares. All or any portion of this fee may be waived by the shareholder servicing agent from time to time.

ADMINISTRATION FEES

 

A-1

Class Y Shares are subject to an administration fee equal to 0.15% of the average daily net asset value of the Class Y Shares.

MINIMUM INVESTMENTS

The minimum initial investment in Class Y Shares is set forth in the currently effective prospectus(es) applicable to the Funds.

VOTING RIGHTS

Each Class Y Share gives the shareholder one vote in Director elections and other matters submitted to shareholders of the entire Corporation for vote. All shares have equal voting rights, except that only shares of a particular Fund or class are entitled to vote in matters affecting that Fund or class.

2.      EXPENSE ALLOCATION

DISTRIBUTION FEES

None

SHAREHOLDER SERVICE FEES

Shareholder Service Fees are allocated equally among the Class Y Shares of each Fund.

ADMINISTRATION FEES

Administration Fees are allocated equally among the Class Y Shares of each Fund.

3.      CONVERSION FEATURES

Class Y Shares are not convertible into shares of any other class.

 

A-2

4.      EXCHANGE FEATURES

Class Y Shares of any Fund may be exchanged for Shares of other Funds of the Corporation pursuant to the conditions described in the applicable prospectus. Class Y shares of any Fund may be exchanged for a different Class of shares offered by the same Fund, provided in each circumstance that the shareholder meets the eligibility requirements and any minimum initial or subsequent investment requirements of the Class into which the shareholder seeks to exchange. These requirements are described from time to time in a Fund’s prospectus or statement of additional information.

 

A-3

EXHIBIT B

to the

Multiple Class Plan

BMO FUNDS, INC.

CLASS I SHARES

BMO Large-Cap Value Fund

BMO Large-Cap Growth Fund

BMO Mid-Cap Value Fund

BMO Mid-Cap Growth Fund

BMO Small-Cap Value Fund

BMO Small-Cap Growth Fund

BMO LGM Emerging Markets Equity Fund

BMO Core Plus Bond Fund

BMO Corporate Income Fund

BMO Strategic Income Fund

BMO Intermediate Tax-Free Fund

BMO Short-Term Income Fund

BMO Ultra Short Tax-Free Fund

BMO Dividend Income Fund

BMO Pyrford International Stock Fund

BMO Low Volatility Equity Fund

BMO Short Tax-Free Fund

BMO Global Low Volatility Equity Fund

BMO Disciplined International Equity Fund

Effective August 28, 2020

This Exhibit to the Multiple Class Plan (the “Plan”) is hereby adopted by the above-listed portfolios of the Corporation (“Funds”) pursuant to Sections 2, 3, 4, and 5 of the Plan with regard to the Class I Shares of the Funds.

1.      SEPARATE ARRANGEMENTS

CHANNEL/TARGET CUSTOMERS

Class I Shares are designed for sale to institutional investors and employees of BMO Financial Corp. and its subsidiaries (“BMO Employees”), their spouse or domestic partner, and their children.

SALES LOAD

 

B-1

None

DISTRIBUTION FEES

None

SHAREHOLDER SERVICE FEES

None

ADMINISTRATION FEES

Class I Shares are subject to an administration fee equal to 0.15% of the average daily net asset value of the Class I Shares.

MINIMUM INVESTMENTS

The minimum initial investment in Class I Shares is set forth in the currently effective prospectus(es) applicable to the Funds.

VOTING RIGHTS

Each Class I Share gives the shareholder one vote in Director elections and other matters submitted to shareholders of the entire Corporation for vote. All shares have equal voting rights, except that only shares of a particular Fund or class are entitled to vote in matters affecting that Fund or class.

2.      EXPENSE ALLOCATION

DISTRIBUTION FEES

None

SHAREHOLDER SERVICE FEES

None

ADMINISTRATION FEES

Administration Fees are allocated equally among the Class I Shares of each Fund.

3.      CONVERSION FEATURES

If a shareholder’s investment in the Class I Shares of a Fund falls below the minimum investment for such Fund as set forth above, the Corporation may, in its discretion, convert the shareholder’s Class I Shares to Class Y Shares of the same Fund.

 

B-2

4.      EXCHANGE FEATURES

Class I Shares of any Fund may be exchanged for Shares of other Funds of the Corporation pursuant to the conditions described in the applicable prospectus. Class I shares of any Fund may be exchanged for a different Class of shares offered by the same Fund, provided in each circumstance that the shareholder meets the eligibility requirements and any minimum initial or subsequent investment requirements of the Class into which the shareholder seeks to exchange. These requirements are described from time to time in a Fund’s prospectus or statement of additional information.

 

B-3

EXHIBIT C

to the

Multiple Class Plan

BMO FUNDS, INC.

PREMIER CLASS SHARES

BMO Prime Money Market Fund

BMO Government Money Market Fund

BMO Tax-Free Money Market Fund

Effective December 23, 2020

This Exhibit to the Multiple Class Plan (the “Plan”) is hereby adopted by the above-listed portfolios of the Corporation (“Funds”) pursuant to Sections 2, 3, 4, and 5 of the Plan with regard to the Class I Shares of the Funds.

1.      SEPARATE ARRANGEMENTS

CHANNEL/TARGET CUSTOMERS

Premier Class Shares are designed for sale to investors who qualify for investment in such shares as set forth in the currently effective prospectus applicable to the Funds.

SALES LOAD

None

DISTRIBUTION FEES

None

SHAREHOLDER SERVICE FEES

None

ADMINISTRATION FEES

Premier Class Shares are subject to an administration fee equal to 0.15% of the average daily net asset value of the Premier Class Shares.

 

C-1

MINIMUM INVESTMENTS

The minimum initial investment in Premier Class Shares is set forth in the currently effective prospectus applicable to the Funds.

VOTING RIGHTS

Each Premier Class Share gives the shareholder one vote in Director elections and other matters submitted to shareholders of the entire Corporation for vote. All shares have equal voting rights, except that only shares of a particular Fund or class are entitled to vote in matters affecting that Fund or class.

2.      EXPENSE ALLOCATION

DISTRIBUTION FEES

None

SHAREHOLDER SERVICE FEES

None

ADMINISTRATION FEES

Administration Fees are allocated equally among the Premier Class Shares of each Fund.

3.      CONVERSION FEATURES

If a shareholder’s investment in the Premier Class Shares of a Fund falls below the minimum investment for such Fund as set forth above, the Corporation may, in its discretion, convert the shareholder’s Premier Class Shares to Class Y Shares of the same Fund.

4.    EXCHANGE FEATURES

Premier Class Shares of any Fund may be exchanged for Shares of other Funds of the Corporation pursuant to the conditions described in the applicable prospectus. Premier Class shares of any Fund may be exchanged for a different Class of shares offered by the same Fund, provided in each circumstance that the shareholder meets the eligibility requirements and any minimum initial or subsequent investment requirements of the Class into which the shareholder seeks to exchange. These requirements are described from time to time in a Fund’s prospectus or statement of additional information.

 

C-2

EXHIBIT D

to the

Multiple Class Plan

BMO FUNDS, INC.

CLASS A SHARES

BMO Low Volatility Equity Fund

BMO Dividend Income Fund

BMO Large-Cap Value Fund

BMO Large-Cap Growth Fund

BMO Mid-Cap Growth Fund

BMO Mid-Cap Value Fund

BMO Small-Cap Value Fund

BMO Small-Cap Growth Fund

BMO Global Low Volatility Equity Fund

BMO Pyrford International Stock Fund

BMO LGM Emerging Markets Equity Fund

BMO Ultra Short Tax-Free Fund

BMO Short Tax-Free Fund

BMO Short-Term Income Fund

BMO Intermediate Tax-Free Fund

BMO Strategic Income Fund

BMO Corporate Income Fund

BMO Core Plus Bond Fund

BMO Disciplined International Equity Fund

Effective December 23, 2020

This Exhibit to the Multiple Class Plan (the “Plan”) is hereby adopted by the above-listed portfolios of the Corporation (“Funds”) pursuant to Sections 2, 3, 4, and 5 of the Plan with regard to the Class A Shares of the Fund.

1.      SEPARATE ARRANGEMENTS

CHANNEL/TARGET CUSTOMERS

Class A Shares are primarily designed for sale to retail customers and others who prefer to receive consultation services in connection with their investment in open-end investment company securities.

SALES LOAD

 

D-1

5.00% - Equity Funds and Global, International Funds (excluding the TCH Emerging Markets Bond Fund), and Alternative Strategies Fund.

3.50% - Fixed Income Funds (excluding Ultra Short Tax-Free Fund, Short Tax-Free Fund and Short-Term Income Fund) and TCH Emerging Markets Bond Fund.

2.00% - Ultra Short Tax-Free Fund, Short Tax-Free Fund, and Short-Term Income Fund.

DISTRIBUTION FEES

0.25 of 1% of the average daily net asset value of the Class A Shares of each Fund.

SHAREHOLDER SERVICES FEES

None

ADMINISTRATION FEES

Class A Shares are subject to an administration fee equal to 0.15% of the average daily net asset value of the Class A Shares.

MINIMUM INVESTMENTS

The minimum initial investment in Class A Shares is set forth in the currently effective prospectus(es) applicable to the Funds.

VOTING RIGHTS

Each Class A Share gives the shareholder one vote in Director elections and other matters submitted to shareholders of the entire Corporation for vote. All shares have equal voting rights, except that only shares of a particular Fund or class are entitled to vote in matters affecting that Fund or class.

2.      EXPENSE ALLOCATION

DISTRIBUTION FEES

Distribution fees are allocated equally among the Class A Shares of the Fund.

SHAREHOLDER SERVICE FEES

None

ADMINISTRATION FEES

Administration Fees are allocated equally among the Class A Shares of each Fund.

 

D-2

3.      CONVERSION FEATURES

Class A Shares are not convertible into shares of any other class.

4.      EXCHANGE FEATURES

Class A Shares of any Fund may be exchanged for Shares of other Funds of the Corporation pursuant to the conditions described in the applicable prospectus. Class A shares of any Fund may be exchanged for a different Class of shares offered by the same Fund, provided in each circumstance that the shareholder meets the eligibility requirements and any minimum initial or subsequent investment requirements of the Class into which the shareholder seeks to exchange. These requirements are described from time to time in a Fund’s prospectus or statement of additional information.

 

D-3

EXHIBIT E

to the

Multiple Class Plan

BMO FUNDS, INC.

CLASS R6 SHARES

BMO Mid-Cap Growth Fund

BMO Mid-Cap Value Fund

BMO Small-Cap Value Fund

BMO Pyrford International Stock Fund

BMO Disciplined International Equity Fund

BMO Large-Cap Value Fund

BMO Large-Cap Growth Fund

Effective December 27, 2019

This Exhibit to the Multiple Class Plan (the “Plan”) is hereby adopted by the above-listed portfolios of the Corporation (“Funds”) pursuant to Sections 2, 3, 4, and 5 of the Plan with regard to the Class R6 Shares of the Fund.

1.      SEPARATE ARRANGEMENTS

CHANNEL/TARGET CUSTOMERS

Class R6 Shares are designed for certain categories of investors who qualify for investment in such shares as set forth in the currently effective prospectus(es) applicable to the Funds.

SALES LOAD

None

DISTRIBUTION FEES

None

SHAREHOLDER SERVICES FEES

None

ADMINISTRATION FEES

None

 

E-1

VOTING RIGHTS

Each Class R6 Share gives the shareholder one vote in Director elections and other matters submitted to shareholders of the entire Corporation for vote. All shares have equal voting rights, except that only shares of a particular Fund or class are entitled to vote in matters affecting that Fund or class.

2.      EXPENSE ALLOCATION

DISTRIBUTION FEES

None

SHAREHOLDER SERVICE FEES

None

ADMINISTRATION FEES

None

3.      CONVERSION FEATURES

Class R6 Shares are not convertible into shares of any other class.

4.      EXCHANGE FEATURES

Class R6 Shares of any Fund may be exchanged for Shares of other Funds of the Corporation pursuant to the conditions described in the applicable prospectus. Class R6 shares of any Fund may be exchanged for a different Class of shares offered by the same Fund, provided in each circumstance that the shareholder meets the eligibility requirements and any minimum initial or subsequent investment requirements of the Class into which the shareholder seeks to exchange, which are described from time to time in a Fund’s prospectus or statement of additional information.

 

E-2

BMO Wealth Management US

Unified Code of Ethics

 

 

BMO Asset Management Corp.

BMO Delaware Trust Co.

BMO Harris Bank N.A.

BMO Harris Financial Advisors, Inc.

BMO Investment Distributors, LLC

BMO Family Office, LLC

BMO Funds, Inc.

Stoker Ostler Wealth Advisors, Inc.

Taplin, Canida & Habacht, LLC

Effective October 30, 2019

BMO U.S. Wealth Management

Unified Code of Ethics

 

Unified Code of Ethics

 

Effective:

  

October 30, 2019

Updated:

  

October 30, 2019

Review Date:

  

October 30, 2019

Content Owner:

  

WMUS Chief Compliance Officers/Compliance Team Leads

    I.     Introduction

Persons Covered by the Code

Any Access Person and any Bank and Trust employee of certain divisions of BMO Harris Bank N.A. and BMO Delaware Trust Company is a “Covered Employee” subject to this Code of Ethics (Code).

All Covered Employees are required to abide by the Code and all policies and procedures applicable to those Covered Employees. Together, the Code and the compliance-based policies and procedures set forth the standards of business conduct for Covered Employees and also specify personal securities transaction procedures designed to prevent unethical trading practices.

Compliance implemented and maintains the Code pursuant to regulatory requirements applicable to BMO Wealth Management U.S. (WMUS), which includes the following entities:

 

  •  

BMO Asset Management Corp.;

  •  

BMO Delaware Trust Co.;

  •  

BMO Harris Bank N.A.;

  •  

BMO Harris Financial Advisors, Inc.;

  •  

BMO Investment Distributors, LLC;

  •  

BMO Family Office, LLC;

  •  

BMO Funds, Inc.;

  •  

Stoker Ostler Wealth Advisors, Inc.; and

  •  

Taplin, Canida & Habacht, LLC.

These regulatory requirements indicate the areas that the Code should cover or address along with supporting practices as they relate to the business activities of WMUS.

The Code outlines the broad requirements and considerations relating to sound and ethical business conduct and practices that Covered Employees must observe.

An important tenant to this Code is that it strives to implement and give substance to the fundamental fiduciary principles and the laws that govern investment managers and securities related activities. WMUS is committed to upholding its fiduciary responsibilities to clients, including the duties of honesty, good faith and fair dealing, and acting in the clients’ best interests while avoiding or disclosing conflicts of interest. This Code reflects the highest standards of professional conduct and the ethical behavior required to merit WMUS clients’ trust and confidence.

 

pg.  1

BMO U.S. Wealth Management

Unified Code of Ethics

 

The Code:

  •  

Protects clients by deterring misconduct;

  •  

Educates persons covered by the Code regarding WMUS expectations and the laws governing their conduct;

  •  

Reminds persons covered by the Code that they are in a position of trust and must act in accordance with this position of trust and responsibility;

  •  

Protects WMUS reputation;

  •  

Guards against violations of the securities laws, rules and regulations; and

  •  

Establishes procedures for Covered Employees to follow so that WMUS may determine whether persons covered by the Code are complying with BMO’s Code of Conduct.

It is a WMUS goal that the Code be a clear statement of WMUS’ purpose and values and a guiding and evolving document to meet these high standards. The Code summarizes the values, principles, and business practices that guide WMUS’ business conduct. It also addresses conduct related to securities rules and regulations by focusing on fiduciary duty, personal securities transactions, insider trading, gifts and business entertainment, conflicts of interest, antitrust, and employment practices. The WMUS’ respective entity’s compliance based policies (Compliance Manuals), where applicable, address other topics, controls, and procedures. The Compliance Manuals are available through each respective entity’s compliance departments.

II.    Definitions and Applicability

Definitions

Access Person includes any Employee of WMUS:

 

  1.

who has access to non-public information regarding WMUS purchases or sales of securities, or non-public information regarding the portfolio holdings of any fund or account; or

 

  2.

who is involved in making securities recommendations for WMUS or who has access to such recommendations that are non-public.

All employees and contractors of WMUS and any other WMUS affiliated employees that Compliance determines fall under either of the two categories referenced directly above are Access Persons unless it can be clearly demonstrated that they do not.

All WMUS Investment Advisor and Broker/Dealer employees, contractors, associated persons, and any affiliated employees that Compliance deems as such, are Access Persons of their respective entities. For regulatory purposes, each entity that is registered with the SEC as an Investment Adviser maintains its own list of Access Persons.

Immediate family living in a Covered Employee’s household, including any relative by blood or marriage, and any domestic partner or significant other (collectively, Immediate Family), are not considered Access Persons, however, the Code does extend to their personal brokerage accounts, transactions and holdings.

Brokerage Accounts include those accounts for which a Covered Employee or Immediate Family has control over even if the account is not in the Covered Employee’s or Immediate Family member’s name. Examples include where a Covered Employee or Immediate Family member has power of attorney over

 

pg.  2

BMO U.S. Wealth Management

Unified Code of Ethics

 

an account, is a trustee of an account, or has control over a business brokerage account (e.g., Corporation, LLC, LP).

Compliance includes the Business Unit Compliance Officer, Chief Compliance Officer, Compliance Team Lead, Director of Central Wealth Compliance or their delegates.

Financial Support shall mean any individual for which a covered employee provides greater than 50% of the individual’s living expenses.

Material information includes any information that a reasonable investor would consider in making an investment decision.

Non-public information is information that has not been disseminated in a manner that would make it generally available to investors.

Temporary Exemption from the Code

The Chief Compliance Officer (CCO) or Compliance Team Lead (CTL) of each WMUS entity may use his or her discretion to grant temporary exemption from the Code to Covered Employees for an approved leave of absence, provided the Covered Employees are not involved in the day-to-day activities of WMUS during their leave. The CCOs/CTLs should structure exceptions as narrowly as is reasonably practicable with the appropriate safeguards designed to prevent abuse of the exception.

Accounts and Securities Covered by the Code

Except for the exempted account types described below, Covered Employees must disclose all personal securities accounts in which they have direct or indirect beneficial ownership (i.e., an economic interest). A Covered Employee has beneficial ownership in any securities held by:

 

  •  

Member(s) of the Covered Employee’s Immediate Family sharing the same household; or

  •  

Others for whom the Covered Employee provides financial support.

Covered Employees may only hold personal securities accounts at firms listed on the Approved Broker List maintained by Central Wealth Compliance (CWC).*

The following account types are exempt from the disclosure requirement:

 

  •  

401(k) accounts including BMO 401k accounts and 403(b) retirement plan accounts;

  •  

Direct to mutual fund accounts;

  •  

529 plans;

  •  

Pension funds;

  •  

Deferred compensation plans;

  •  

Employee Stock Purchase Plans (ESPP);

  •  

Dividend Reinvestment Plans; and

  •  

Any other employer sponsored retirement plans.

*Covered Employees must disclose discretionary (managed) accounts but such accounts are not required to be held at an approved broker and transactions in such accounts are exempt from the reporting requirements set forth in this Code.

 

pg.  3

BMO U.S. Wealth Management

Unified Code of Ethics

 

All securities in non-discretionary disclosable personal securities accounts are reportable with the exception of the following:

 

  •  

Direct obligations of the Government of the United States;

  •  

Bankers’ acceptances, bank certificates of deposit, commercial paper and high quality short- term debt instruments, including repurchase agreements (high quality short-term debt instrument is defined as any instrument having a maturity at issuance of fewer than 366 days and which is rated in one of the highest two rating categories by a nationally recognized statistical rating organization, or which is unrated but is of comparable quality);

  •  

Shares issued by open-end U.S. registered investment companies (i.e., mutual funds); and

  •  

Shares issued by money market funds.

No Covered Employee may acquire a security in a private placement without submitting a case for Compliance approval through the Managing Conflicts of Interest (MCOI) link: https://gtscmcoi.bmogc.net. Covered Employees who own securities acquired in a private placement may not discuss such investment with Clients or solicit Clients to invest in such security.

No Covered Employee may:

  •  

Acquire a Security in an initial public offering (IPO);

  •  

Make a wrongful arrangement or a wrongful quid pro quo of any kind with clients in exchange for IPO allocations; and

  •  

Share in profits or losses with a client who receives an IPO allocation or allocations.

Please contact CWC regarding any questions on accounts or securities.

Roles and Responsibilities

As noted in the introduction, WMUS has an overarching fiduciary duty to its clients.     All Covered Employees must understand and uphold that duty. Neither WMUS nor its employees may engage in fraudulent, deceptive or manipulative conduct.

Below is a set of basic principles that apply to all Covered Employees. It is not an exhaustive list of all detailed rules, regulations, and legal requirements that may apply. These general principles govern all conduct, whether or not the conduct is also covered by more specific standards and procedures. Failure to comply with any aspect of this Code, including these principles, may result in disciplinary action, including termination of employment. These general principles include:

 

  •  

Placing, at all times, the interests of clients first. Covered Employees must avoid serving their own personal interests ahead of the interests of WMUS clients.

  •  

Conducting all personal securities transactions in such a manner as to be consistent with the Code and to avoid any actual or potential conflict of interest or any abuse of a Covered Employee’s position of trust and responsibility.

  •  

Not taking inappropriate advantage of their positions.

  •  

Maintaining as confidential all information concerning the identity of security holdings and financial circumstances of clients.

  •  

Conducting business with honesty, integrity, and professionalism.

  •  

Observing and engaging in the proper standards of market conduct.

 

pg.  4

BMO U.S. Wealth Management

Unified Code of Ethics

 

  •  

Acting with due skill, care and diligence.

  •  

Refraining from any deliberate acts, omissions or business practices that one could reasonably expect to cause harm to one or more clients.

  •  

Avoiding making any untrue statement, omitting material facts or otherwise being misleading, including the use or misuse of false rumors.

III.    Code Principles and Requirements

Standards of Business Conduct

WMUS is committed to conducting its business in accordance with best practices and within regulatory rules, regulations and legal requirements, in a manner that identifies and manages conflicts of interest appropriately and seeks to avoid even the appearance of a conflict of interest. These practices are essential for maintaining client confidence, WMUS’ reputation, and the regulatory licenses upon which WMUS businesses depend. Covered Employees must observe a high standard of business and personal ethics and exercise proper judgement in conducting WMUS’ business.

Compliance with Laws and Regulations

Covered Employees may not engage in any activity that might involve BMO, including WMUS and its employees, in a violation of applicable laws or regulations. Covered Employees must adhere to legal standards and prohibitions applicable to their assigned duties and conduct themselves accordingly. Compliance, and where appropriate, the services of WMUS internal legal counsel, are available for advice and consultation.

Prohibitions

Covered Employees must not:

  •  

Defraud a client in any manner;

  •  

Mislead a client, including making a statement that omits material facts;

  •  

Engage in any act, practice, or course of conduct that operates or would operate as a fraud or deceit upon a client, including inappropriate conduct like front-running, scalping, insider trading or other misuses of confidential client information;

  •  

Engage in any manipulative practice with respect to a client; and

  •  

Engage in any manipulative practice with respect to securities.

Other Policies and Procedures

Covered Employees must adhere to all applicable WMUS entities’ Compliance Manuals, applicable Lines of Business (LOB) policies, and the BMO Code of Conduct.

Conflicts of Interest

WMUS entities, as fiduciaries, must act in the best interests of their clients and make full and fair disclosure of any material facts, particularly where WMUS interests may conflict with clients’ interests. To accomplish this, WMUS will disclose all material facts concerning any potential conflict that may arise with respect to any client.

Senior Management of WMUS, Compliance and Legal are closely involved in discharging WMUS duties regarding conflicts of interest. Each line of business must also monitor and report any new conflicts or potential conflicts that have, or may have, arisen in the course of normal business. In addition, Covered Employees must try to avoid situations that have even the appearance of conflict or impropriety.

 

pg.  5

BMO U.S. Wealth Management

Unified Code of Ethics

 

BMO created a Managing Conflicts of Interest Operating Directive regarding disclosure of conflicts of interest, including outside business activities. The Managing Conflicts of Interest Operating Directive takes into account circumstances, of which BMO is or should be aware, that may give rise to a conflict of interest as a result of the structure and business activities of BMO affiliates, including WMUS. See Other Outside Business Activities section below for further details. Also, please refer to WMUS entities’ Compliance Manuals or applicable LOB policies for additional information and requirements.

Material Non-Public Information

In the course of normal business activities, Covered Employees may receive confidential information concerning clients and potential clients. To maintain client confidence and trust, this information must be handled with integrity and discretion. As a general rule, confidential information pertaining to a client of WMUS should never be communicated to anyone other than the authorized individual(s) of WMUS who need to know, and where appropriate, to the participants involved in a specific transaction.

A judgment concerning who needs to know about particular client information depends on the facts and circumstances, and should be discussed by the Covered Employee with his or her supervisor and Compliance as appropriate. Examples of persons within WMUS who may need to know include senior management and compliance staff.

In the event a Covered Employee communicates confidential client information, the Covered Employee should advise the recipient of the information’s confidential nature, that it is being given solely for the purpose of fulfilling his or her responsibilities with the client, and it is not to be disclosed in any other form to any other person.

In accordance with insider trading laws and SEC rules, Covered Employees may not transact in a security while in the possession of material non-public information about the security. Additionally, Covered Employees should not disseminate or tip such information to others who may trade the security. A Covered Employee who has reason to believe that he or she, or a customer, is in possession of inside information should contact Compliance or Legal immediately, prior to taking any action.

Please refer to the BMO Operating Directive: Personal Trading in Securities and the Prevention of Insider Trading, and WMUS individual entities’ policies for additional information on the prevention of insider trading.

Personal Securities Trading

WMUS entities have adopted principles governing personal investment activity which apply to all Covered Employees. All Covered Employees, except for those specifically identified as non-preclear, must pre-clear transactions that are not subject to the exemption set forth below.

 

pg.  6

BMO U.S. Wealth Management

Unified Code of Ethics

 

Pre-clearance is not required on personal securities transactions if such transactions meet both of the following conditions:

 

  •  

Less than 2,000 shares of the security is proposed to be bought or sold; and

  •  

The security proposed to be bought or sold has a market capitalization of 5 Billion Dollars or more.

Notwithstanding the two bullets above, all proposed transactions with market values greater than 1 million dollars must be pre-cleared (i.e., the amount proposed to be bought or sold is greater than $1 million dollars).

Except for private placements, pre-clearance approval expires at the close of regular trading on the same trading day as the day of approval. This is true for all other types of orders, including market and limit orders. If approval expires prior to execution, a Covered Employee must submit another pre•clearance request and obtain approval to continue with the transaction. Failure to cancel an order that executes after the expiration of a pre-clearance request is a violation of this Code of Ethics.

Covered Employees cannot modify an existing pre-clearance request. I instead, the Covered Employee should submit an entirely new pre-clearance request.

Compliance may reject or rescind an approved pre-clearance request. Upon notification of rescission, Covered Employees must cancel all open orders immediately and must keep knowledge of the recession confidential.

Gifts and Business Entertainment

The potential for a conflict of interest occurs when personal interests of Covered Employees interfere or could potentially interfere with their responsibilities to WMUS and its clients. Covered Employees should never encourage a quid pro quo (“favor for favor”) business transaction or feel beholden to a person or firm. The overriding principle is that Covered Employees should not accept inappropriate gifts, favors, entertainment, special accommodations, or other items or gestures of material value that could be construed to lead to an actual or perceived conflict of interest. Similarly, Covered Employees should not offer gifts, favors, entertainment, or other items or gestures of value that could be viewed as excessive or lavish or aimed at influencing decision making. Please refer to BMO’s Anti-Bribery and Anti- Corruption Operating Directive regarding BMO’s Gifts and Business Entertainment policy. In addition, see the Compliance Manuals or applicable LOB policy for each WMUS entity for further guidance regarding gifts and entertainment.

Political Contributions

Neither BMO nor any director, officer, or employee, including all Covered Employees, may make any payment of any kind, either directly or indirectly, to any official of any government or government instrumentality, or to any political party or official, or any candidate for any political office, for the purpose of influencing an act or decision in order to help BMO obtain or retain business from, or direct business to, any person.

All activities of BMO and its employees, including all Covered Employees, must comply with the provisions of any applicable laws and may require pre-approval from Compliance. Covered Employees are responsible for being familiar with the laws governing the jurisdiction in which they wish to make a

 

pg.  7

BMO U.S. Wealth Management

Unified Code of Ethics

 

political contribution.    Covered Employees, unless specifically exempted, must preclear all political contributions through Managing Conflicts of Interest (MCOI) link: https://gtscmcoi.bmogc.net

Where applicable, please refer to the US Political Contribution Preclearance Operating Directive, Corporate Political Activity Operating Directive, and Political Contributions (Pay-to-Play) policies in the Compliance Manuals or applicable LOB policy of each WMUS entity for additional information and requirements.

Confidentiality

Covered Employees may not disclose or use confidential information (or remove confidential information from any premises of BMO) for any purpose other than in the performance of their duties for BMO.

Please refer to BMO Financial Groups Information Security Manual for Business (ISM) for what is considered confidential and additional information and requirements. The ISM can be located on BMO Financial Groups Global Information & Technology Risk Management intranet page.

Service on a Board of Directors - Public or Private Company

Because of the potential for conflicts of interest and insider trading issues, Covered Employees must obtain pre-approval from their manager and Compliance, prior to accepting a position on a private organization’s board of directors (including the boards of non-profit entities) or serving as a director of a public company. Covered Employees must represent to their managers and to Compliance that the opportunity of the position arose as a result of activities unrelated to their position at WMUS’ entities, and that the position and the time dedicated to the position will not create a conflict of interest.

Please refer to the Managing Conflicts of Interest Operating Directive along with each WMUS entity’s Compliance Manual or applicable LOB policy regarding disclosure of conflicts of interest, including outside business activities.

Marketing and Promotional Activities

All oral and written statements, including those made to clients, prospective clients, client representatives, or the media by Covered Employees, must be professional, accurate, balanced, and not misleading in any material manner. Please refer to each entity’s Compliance Manual or applicable LOB policy for additional information regarding marketing and promotional activities.

Corporate Opportunities and Resources

Covered Employees have a duty to advance BMO’s legitimate interests when the opportunity to do so arises and to use corporate resources exclusively for that purpose. Covered Employees may not use corporate opportunities and resources for personal gain. All BMO employees, including all Covered Employees, are prohibited from using company property, information, resources or their company position for personal gain or personal advancement.

Improper Influence or Conduct on Audits

Covered Employees and persons acting under their direction may not take any action to coerce, manipulate, mislead, hinder, obstruct or fraudulently influence any external auditor, internal auditor or regulator engaged in the performance of an audit or examination of BMO’s activities.     Covered Employees are required to cooperate fully with any such audit or exam.

 

pg.  8

BMO U.S. Wealth Management

Unified Code of Ethics

 

The following is a non-exhaustive list of actions that might constitute improper influence:

  •  

Offering any form of financial incentive to an auditor including future employment or contracts for non-audit services;

  •  

Knowingly providing an auditor with any misleading data, information or analysis;

  •  

Seeking or threatening to have an audit engagement cancelled or partner removed because the auditor/partner objects to the firms accounting methods or other practices;

  •  

Knowingly altering, tampering or destroying company documents;

  •  

Knowingly withholding pertinent information; and

  •  

Knowingly providing incomplete information.

Compliance Procedures

Certification of Compliance with the Code

Initial Certification - WMUS is required to provide all newly Covered Employees with a copy of the Code and each Covered Employee must certify within the appropriate Code of Ethics system that they:

  •  

Received a copy of the Code;

  •  

Read and understand all provisions of the Code;

  •  

Agree to comply with the terms of the Code; and

  •  

Received and completed all certifications to the best of their knowledge.

Acknowledgment of Amendments - Compliance must provide Covered Employees with notice of any material amendments to the Code.

Annual Certification – Covered Employees must certify at least annually that they have read, understand and have complied with the Code as well as other compliance-based firm policies to which they are subject.

If Covered Employees are unable to make such a representation, they are required to immediately report any violations to Compliance.

Certification Requirements

Initial and Annual Holdings Reports - WMUS Compliance requires Covered Employees to submit to Compliance, a report of all holdings in covered securities (covered securities are all securities in personal securities accounts other than those listed on page 3) in which Covered Employees or their Immediate Family have any direct or indirect beneficial ownership, within 10 days of becoming an Covered Employee.

Covered Employees must also initially disclose their account(s) holding the covered securities.

  •  

For newly designated Covered Employees, the holdings information must be current as of a date no more than 45 days before the person became a Covered Employee.

  •  

Covered Employees must disclose initial account and holdings information in the appropriate Code of Ethics system.

  •  

Compliance will confirm completion of the initial holdings report for each new Covered Employee within 10 days of hire.

Then on an annual basis thereafter, Covered Employees must report their holdings in covered securities and certify to the accuracy of these holdings.

 

pg.  9

BMO U.S. Wealth Management

Unified Code of Ethics

 

Quarterly Brokerage Accounts Report - WMUS requires Covered Employees to disclose in the appropriate Code of Ethics system the following information about any personal securities account opened during the quarter:

  •  

Name of the entity (i.e., broker, dealer, or bank) with whom the Covered Employee established the account;

  •  

Account ID and name (registration); and

  •  

Date the account was established.

Covered Employees that are associated persons of WMUS entities that are FINRA member firms (e.g., BHFA) must obtain prior consent to open any personal securities account. If applicable, Covered Employees should contact CWC to obtain this consent.

Quarterly Transaction Reports - Within 30 calendar days of the end of each calendar quarter, each Covered Employee is required to certify to all transactions in covered securities during the quarter in the appropriate Code of Ethics system. The following information is required when completing quarterly transaction certifications:

  •  

Account(s) in which the transaction(s) occurred;

  •  

Security name and/or ticker;

  •  

Date of the transaction (trade date);

  •  

Security type (e.g., equity, fixed income, option);

  •  

Nature of the transaction (e.g., buy, sell, cover);

  •  

Price of security at which the transaction was effected; and

  •  

Number of shares.

Every Covered Employee shall certify quarterly regardless of whether reportable transactions occurred during the quarter.

Confidentiality of Reports – WMUS and Compliance assures Covered Employees that their transactions and holdings reports will be maintained in confidence, except to the extent necessary to implement and enforce the provisions of the Code or to comply with requests for information from regulatory or government agencies.

Disclosure

Form ADV Disclosure

Investment Advisors are required to include in their Form ADV Part 2A a description of the Code and a statement that the firm will provide a copy of the Code to any client or prospective client upon request.

Accuracy of Disclosure

Securities regulations and other laws impose public disclosure requirements on BMO and WMUS entities and require them to regularly file reports, financial information disclosures, and make other submissions to various regulators. Such reports and submissions must comply with all applicable legal requirements and may not contain misstatements or omit material facts.

Covered Employees who are directly or indirectly involved in preparing such reports and submissions, or who regularly communicate with the press, investors and analysts concerning BMO and WMUS, must ensure, within the scope of the Covered Employee’s job activities, that such reports, submissions, and communications are full, fair, timely, accurate and understandable, and meet applicable legal

 

pg.  10

BMO U.S. Wealth Management

Unified Code of Ethics

 

requirements. This applies to all public disclosures, oral statements, visual presentations, press conferences and media calls concerning BMO and WMUS and BMO’s subsidiaries or affiliates, its financial performance and similar matters.

Administration and Enforcement of the Code

Training and Education

Compliance is responsible for training and educating Covered Employees regarding the Code.     All Covered Employees are required to attend and/or complete any required training sessions, including reading applicable materials.

Staff Awareness

It is important that all Covered Employees fully understand their responsibilities as outlined in the Code. Covered Employees should contact Compliance if they do not understand any of the responsibilities outlined in this Code.

Review

Compliance is required to review, at least annually, the adequacy of the Code and the effectiveness of its implementation.

Reporting to the Board of Directors

Compliance will report their annual review of the Code to each WMUS legal entity’s Board of Directors, if applicable. Compliance will also escalate and report any material Code violations to the respective Board of Directors, if applicable.

Reporting Violations of the Code

All Covered Employees must report violations of WMUS’ Code promptly to their respective Compliance Officer. Covered Employees are required to report “apparent” or “suspected” violations in addition to actual or known violations of the Code. Covered Employees should also refrain from any action or transaction that might lead to the appearance of a violation.

Retaliation

BMO protects from retaliation any Covered Employee that reports in good faith any practices or actions that they believe to be inappropriate or inconsistent with the Code or other WMUS compliance policies. BMO prohibits retaliation against an individual for reporting a violation and such an act constitutes a further violation of the Code.

Type of Reporting – Covered Employees are required to Report:

  •  

Noncompliance with or violation of applicable laws, rules, and regulations;

  •  

Fraud or illegal acts involving any aspect of WMUS’ business;

  •  

Material misstatements in regulatory filings, internal books and records, and clients’ records or reports;

  •  

Activity that is harmful to clients;

  •  

Breach of fiduciary duty; and

  •  

Deviations from required controls and procedures that safeguard clients and WMUS.

This list is not exhaustive and does not limit the types of reporting required.

 

pg.  11

BMO U.S. Wealth Management

Unified Code of Ethics

 

Confidentiality - Such reports will be treated confidentially to the extent permitted by law and will be investigated promptly and appropriately.

Alternate Designee - In the event that Compliance is unreachable, Covered Employees may report violations to any member of the executive management team (provided that Compliance is subsequently notified of the reported violation(s)) or the BMO Ombudsman’s Office.

Advice - Covered Employees should seek advice from Compliance with respect to any action or transaction that might violate the Code.

Sanctions

Any violation of the Code may result in disciplinary action that WMUS deems appropriate, including, but not limited to:

 

  •  

A verbal or written warning;

  •  

Disgorgement of profits;

  •  

Suspension of personal trading rights;

  •  

Suspension of employment (with or without compensation);

  •  

Demotion; and

  •  

Termination of employment.

In addition, WMUS may require the Covered Employee to reverse any personal trade at issue and forfeit any profit or absorb any loss from the trade. Violations of the Code may result in referral to civil or criminal authorities where appropriate.

Questions related to the Code and appeals

Covered Employees should contact Compliance regarding ethics-related questions.

Covered Employees can appeal any decision made pursuant to the Code. CWC will work with the appropriate entity CCO/CTL on a case by case basis to review the appeal request. Decisions regarding appeals are final.

Records Maintenance and Retention

CWC will maintain the following records in a readily accessible place:

  •  

A copy of this Code of Ethics (beginning with v2019.1) and each subsequent Code that has been in effect at any time within the CWC record retention policy. Versions prior to v2019.1 are maintained by each respective WMUS CCO.

  •  

A record of any violation of the Code and any action taken as a result of such violation during the applicable quarter in which the violation occurred.

  •  

A record of all acknowledgments of receipt of the Code and amendments for each person who is currently or has been a Covered Employee within CWC record retention policy.

  •  

Holdings and transactions reports made pursuant to this Code, including brokerage confirmations and account statements made in lieu of these reports.

  •  

A list of the names of persons who are currently or have been Covered Employees of WMUS.

  •  

A record of any decision and supporting reasons to approve the acquisition of securities by Covered Employees in limited or initial public offerings.

 

pg.  12

BMO U.S. Wealth Management

Unified Code of Ethics

 

All applicable documentation relating to the Code, record retention, or personal trading, shall be maintained in accordance with the CWC record retention policy.

Annual Review

This Code may be revised as needed to accommodate any changes in practices consistent with applicable regulations. Compliance, with the assistance of the lines of business, will review this Code annually pursuant to regulatory requirements requiring WMUS to have written policies and procedures in place to detect and prevent violations of the federal securities laws and to review policies at least annually to ensure that they remain adequate and effective.

 

pg.  13

SECTION 5

CODE OF ETHICS AND PERSONAL ACCOUNT DEALING POLICY

 

5.1

  SCOPE      59  

5.2

  GENERAL      59  

5.3

  STANDARD OF BUSINESS CONDUCT      59  

5.4

  REPORTING REQUIREMENTS      60  

5.5

  PERSONAL ACCOUNT DEALING      60  

5.6

  ROLES AND RESPONSIBILITIES      63  

5.7

  RELATED POLICIES, PROCESS, PROCEDURES AND DOCUMENTS      63  

5.8

  PERSONAL ACCOUNT DEALING APPROVAL FORM      64  

5.9

  INITIAL CERTIFICATION AND RECORDING OF HOLDINGS      65  

5.10

  QUARTERLY SECURITIES TRANSACTION REPORT      66  

5.11

  ANNUAL CERTIFICATION OF COMPLIANCE WITH THE CODE OF ETHICS AND PERSONAL   
  ACCOUNT DEALING POLICY AND ANNUAL HOLDINGS REPORT      67  

 

        

   Revised: 24.03.2020    Page 58 of 163

SECTION 5: CODE OF ETHICS AND PERSONAL ACCOUNT DEALING POLICY

 

5.1    SCOPE

This policy applies to all staff of Pyrford International Ltd. The policy reflects our fiduciary obligation to clients and the value we place on conduct and ethics to meet these obligations. Any questions regarding the interpretation or application of this policy should be directed to the Chief Compliance Officer or Business Unit Compliance Officer.

5.2    GENERAL

All financial services regulators from whom Pyrford has obtained permissions to offer investment services make it unlawful for us to engage in conduct which is deceitful, fraudulent, manipulative, or which involves false or misleading statements in connection with the regulatory activities we perform.

These regulators also require us to manage conflicts of interest within our business and prohibit members of staff from using information concerning investment intentions from portfolio management activities, or their ability to influence such investment intentions, for personal gain or in a manner detrimental to the interests of our clients.

Being registered as an Investment Adviser with the SEC, pursuant to rule 17j-1 under the Investment Company Act 1940, Pyrford is required to establish standards and procedures for the detection and prevention of activities by which members of staff may abuse their fiduciary duties to clients. FCA conduct of business rules in the UK require us to put in place arrangements which prevent personal transactions from giving rise to conflicts of interest or making use of confidential information relating to clients or transactions with or for clients.

This policy is designed to ensure we meet with these regulatory requirements.

5.3    STANDARD OF BUSINESS CONDUCT

All members of staff must adhere to SEC federal securities law and FCA principles for approved persons as well as BMO’s Code of Conduct. Pyrford expects all members of staff to adhere to the FCA Statements of Principle:

 

  §

Staff must act with act with integrity in carrying out their accountable functions;

 

  §

Staff must act with due skill, care and diligence;

 

  §

Staff must observe proper standards of market conduct;

 

  §

Staff must deal with regulators in an open cooperative way and must not disclose any information which they would not reasonably expect;

 

  §

Members of staff performing an accountable significant influence function must take reasonable steps to ensure that the business of the firm for which they are responsible is organised so that it can be controlled effectively;

 

 

        

   Revised: 24.03.2020    Page 59 of 163

Staff members must not:

–     Employ any device or scheme to defraud clients;

–     Mislead clients by making any untrue statements of fact or omit to state a material fact;

–     Engage in any act or practice which operates or would operate as a fraud or deceit;

–     Engage in manipulative practices.

5.4       REPORTING REQUIREMENTS

5.4.1    Initial certification and recording of holdings

Every new member of staff must submit a record of holdings held either by themselves or a connected individual within ten days of joining. A form to be used to file this report is attached as Appendix 2.

5.4.2    Quarterly Reports

Within ten days after the end of each calendar quarter, every member of staff shall submit a report to Compliance of all transactions occurring during the quarter in securities they had any direct or indirect beneficial ownership.

5.4.3    Annual reports

Annually, by January 30 of each year, every member of staff must submit an Annual Certification of Compliance and an Annual Holdings Report to Compliance.

5.5       PERSONAL ACCOUNT DEALING

Staff members are permitted to undertake personal transactions subject to the requirements set out in this policy. When undertaking personal transactions the interests of our clients must take priority. Staff are expected to give due care and attention in ensuring they avoid personal transactions interfering with the performance of their duties of employment.

5.5.1    Personal transactions

A ‘personal transaction’ is defined in the FCA handbook as a trade in a designated investment effected by or on behalf of the following individuals:

 

  §

A relevant person (a director or employee of Pyrford);

 

  §

Spouse or civil partner of a relevant person;

 

  §

A dependent child or stepchild of the relevant person;

 

  §

Any other relative of the relevant person who has shared the same household as that person for at least one year on the date of the personal transaction;

 

  §

Any person with whom the relevant person has close links (this include members of investment clubs);

 

  §

Any other person with whom the relevant person has a direct or indirect interest in the outcome of the trade.

 

        

   Revised: 24.03.2020    Page 60 of 163

5.5.2    Types of personal transactions

All relevant persons must follow this policy when they effect personal transactions in the following capacities:

 

  §

Deal on own account;

 

  §

Dealing as a representative or another person; as an attorney, adviser, executor, trustee;

 

  §

Providing advice to a third party not mentioned above, unless done so in the course of employment;

 

  §

Personal transactions in most types of designated investments are within scope of this policy. This includes transactions undertaken through all types of tax wrappers such as Stock and Shares ISAs, General Investment Accounts, Personal Pensions, SIPP, Investment bonds etc.

5.5.3    Pre-clearance requirements

All members of staff are required to pre-clear personal transactions and must obtain approval from Compliance.

Transaction pre-clearances must be obtained no more than 3 days prior to make a purchase or sale of a security. If the trade is not made within 3 days of the date of clearance, a new request must be submitted.

Pre-clearance must be obtained in writing by completing a Personal Account Dealing approval form.

The CCO or his designate will approve or reject a personal transaction giving consideration to a number of factors, including but not limited to:

 

  §

whether the securities are held, or would qualify to be held, in client portfolios;

 

  §

the individual’s personal transactions history over a period;

 

  §

specifying a minimum holding period;

 

  §

dealing dates on client portfolios including unexecuted orders;

 

  §

whether there are any restrictions on trading in the security;

 

  §

whether the amount or nature of the transaction is likely to affect the price and market of the security.

As part of regulatory requirements the CCO will maintain a record of every personal transaction which has been approved and rejected.

5.5.4    Execution of transactions

Once consent has been obtained for a personal transaction, staff may deal with a broker of their choice. Staff must inform their broker to send a duplicate copy of all contract notes to the CCO

 

        

   Revised: 24.03.2020    Page 61 of 163

directly. Where this is not possible confirmation of trade completion must be provided by the member of staff to the CCO within five days of trade date.

5.5.5    Exceptions

There are some instances where notification or consent approval of a personal transaction will not be required:

 

  §

Buying, or changing participation levels, in BMO shares as part of the AESOP;

 

  §

Sale and purchases of units in open ended collective investment schemes (other than BMO Investments Ireland I plc and third party schemes were Pyrford has sub advisory or investment management agreements);

 

  §

Purchases which are part of an automatic dividend reinvestment plan;

 

  §

Compulsory sales

 

  §

Where the individual is a beneficiary of a trust;

 

  §

Purchases, sales for an account over which the member of staff has no direct influence or control and does not exercise indirect influence or control (excluding trusts and investment clubs).

5.5.6    BMO corporate trading windows

BMO restricts trading of Bank of Montreal securities by certain individuals to four periods of approximately 30 days. These periods are the called the Trading Windows and commence on the third business day following the release of the quarterly results of BMO Financial Group. Trading by affected employees and their related parties outside the Trading Windows is strictly prohibited and subject to potential disciplinary action.

In the case of BMO Financial Group, Trading Window procedures are one of a number of controls used by BMO to protect material confidential information. The Trading Window restriction is intended to apply to Directors of Pyrford.

5.5.7    Prohibited transactions

Transactions in the following investments are not permitted from a personal account dealing perspective:

 

  §

Futures, options, forwards or contracts for differences;

 

  §

Spread betting on any investment detailed in this Code of Ethics;

 

  §

Participating in new public issues which are not genuinely open to the public and where the potential allocation to the employee would affect any proposed client orders;

 

  §

Dealing in stocks on the Pyrford restricted list;

 

  §

Leveraged structured products;

 

        

   Revised: 24.03.2020    Page 62 of 163

  •  

Short term and speculative personal transactions (defined as the purchase and then the sale and vice versa) of the same security within thirty calendar days is not permitted;

 

  •  

Excessive or inappropriate trading that interferes with job performance or compromises the duty Pyrford owes to its clients will not be permitted. More than 25 trades a quarter constitutes as excessive trading;

 

  •  

Staff members are prohibited from personal transactions five days from a client order in the same security unless dealing for an amount less than £25,000 in equities or £50,000 in fixed income in G7 markets.

5.5.8    Breach

Staff must report breaches or possible breaches of this policy. A breach of the personal account dealing rules is a breach of an employee’s contract of employment which may also affect an employee’s fit and proper status and consequently may lead to the removal of approved person status. Individual breaches of these rules may be penalised by:

 

  §

Reversal of a trade, with any loss (including dealing costs, tax etc.) being borne by the employee and any profit being to donated to charity; or

 

  §

Where the reversal itself might constitute a breach of these rules, the donation of a sum representing the profit on a trade being donated to charity;

 

  §

As an alternative, at the discretion of the CCO a prohibition on any personal account dealing for a specified period can be issued.

5.6    ROLES AND RESPONSIBILITIES

 

 

Department / Individual(s)

 

  

 

Responsi bilities

 

Chief Executive Officer

  

Maintaining this policy and reviewing it at least annually

All staff

  

Confirm they have read and understood with the requirement outlined in this policy; Comply with all aspects of this policy

Business Unit Compliance

Officer

  

Reporting on the appropriateness of this policy and associated

processes

Compliance

  

Establish a compliance monitoring plan which ensures oversight and control arrangement for this policy

5.7       RELATED POLICIES, PROCESS, PROCEDURES AND DOCUMENTS

This policy should be read in conjunction with:

 

  §

Conflicts of interest policy;

  §

Market abuse prevention policy;

  §

Personal account dealing approval form;

  §

BMO’s Code of Conduct.

 

        

   Revised: 24.03.2020    Page 63 of 163

5.8      PERSONAL ACCOUNT DEALING APPROVAL FORM

 

  Security name

 

 

Security identifier

 

 

No. of shares

 

 

Book cost

 

 

Buy / sell

 

           
           
           
           
           
                 

I hereby request permission to effect a personal transaction as indicated above in which I will acquire direct or indirect beneficial ownership in the securities. I understand that by being an employee of Pyrford International I am subject to the market abuse prevention policy, and the code of ethics and personal account dealing policy. I certify that my investments meet the minimum holding period specified in the policy, are not of a speculative nature and do not constitute as excessive trading.

Signed:                                                                                                  

Name:                                                                                                   

Date submitted:                                                                                   

For use by Compliance only

Decision:                                                                                               

Signed:                                                                                                  

Name:                                                                                                    

Date:                                                                                                       

 

        

   Revised: 24.03.2020    Page 64 of 163

5.9      INITIAL CERTIFICATION AND RECORDING OF HOLDINGS

I have read and I understand the code of ethics and personal account dealing policy. I recognise that the provisions of the policy apply to me and agree to comply in all respects with the procedures described therein.

I certify that I have listed the title, number of shares and principal amount of each security in which I had any beneficial ownership as of the day I joined Pyrford and the name of each broker or bank at which any account is maintained through which any securities in which I have any beneficial ownership are held, purchased or sold, and the title and number of each such account; which shall constitute my Initial Holdings Report. I hereby authorise Pyrford to obtain copies of contract notes directly from brokers / banks with whom I hold investments as mentioned below.

 

  Security name   

Security

identifier

  

No. of

shares

   Book cost   

Name of broker

/ bank

   Account number
                  
                  
                  
                  
                  
                  
                          

I certify that I have listed all investment accounts held by relevant persons (as defined in this policy).

 

 

Broker / bank name and address

 

  

 

        Account number

 

  

 

Account name

 

         
         
         
         
           

Signed:                                                                                                                       

Name:                                                                                                                         

Date submitted:                                                                                                         

 

        

   Revised: 24.03.2020    Page 65 of 163

5.10    QUARTERLY SECURITIES TRANSACTION REPORT

I certify that this report identifies all transactions during the calendar quarter in which I acquired or disposed of any security in which I had any beneficial ownership that are required to be reported by me.

For calendar quarter:

 

  Date

 

  

Security name

 

  

No. of shares

 

  

Total price

 

  

Broker

 

  

Buy / Sell

 

                  
                  
                  
                  
                  
                  
                  
                          

Signed:                                                                                          

Name:                                                                                            

Date submitted:                                                                           

 

        

   Revised: 24.03.2020    Page 66 of 163

5.11

ANNUAL CERTIFICATION OF COMPLIANCE WITH THE CODE OF ETHICS AND PERSONAL ACCOUNT DEALING POLICY AND ANNUAL HOLDINGS REPORT.

I have read and I understand the Code of ethics and personal account dealing policy. I recognize that the provisions of the policy apply to me and agree to comply in all respects with the procedures described therein. I certify that I have complied in all respects with the requirements of the policy as in effect during the past year.

I also certify that all transactions during the past year that were required to be reported by me pursuant to the policy have been reported in Quarterly Securities Transactions Reports that I have submitted to Compliance.

I certify that I have listed below the title, number of shares and principal amount of each security in which I had any beneficial ownership as of December 31 and the name of each broker or bank at which any account is maintained through which any securities in which I have any beneficial ownership are held, purchased or sold, and the title and number of each such account; which shall constitute my Annual Holdings Report.

 

  Security name   

Security

identifier

  

No. of

shares

   Book cost    Name of broker / bank    Account number
                  
                  
                  
                  
                  
                          

Name:                                                                                                                                

Date submitted:                                                                                                              

Signed:                                                                                                                            

 

        

   Revised: 24.03.2020    Page 67 of 163

LOGO

 

      

Code of Ethics

BMO’s Code of Conduct represents the five principles that reflect BMO’s commitment to high standards of business conduct and ethics. These principles give us a framework for ethical behaviour and decision-making.

BMO Global Asset Management EMEA holds a unique place of trust in the lives of our clients. BMO Global Asset Management EMEA has adopted this Code of Ethics, in support of BMO’s

Code of Conduct, to safeguard this position.

The Code aims to ensure that BMO Global Asset Management EMEA Employees place the interests of clients and BMO Global Asset Management EMEA’s reputation above their own, so helping to avoid potential conflicts of interest that may arise from their actions.

To meet this objective, the Code sets out procedures on personal account dealing and providing and receiving gifts and Hospitality. Employees should comply with the spirit as well as the letter of this Code.

All Employees must read and understand the Code

 

 

 

LOGO

LOGO

 

      

Contents

 

Definitions

     3  

Application

     6  

Statement of General Principles

     6  

SEC registration

     6  

Exceptions/Escalations

     6  

Personal Account Dealing

     7  

Investment Clubs

     7  

Initial Certification and Recording of Holdings

     7  

Annual Certification

     7  

Transactions in Covered Securities

     8  

Exempt Transactions

     8  

Third Party Discretionary Managed Portfolios

     8  

Fund Manager Commitments

     8  

Timing Limit on pre-clearance

     8  

Rules Prior to Seeking Consent

     8  

Dealings by Connected Persons

     9  

Execution and Disclosure

     9  

Dealing after a Client Deal (Piggy Backing)

     9  

Dealing before a Client Order (Front Running)

     9  

Short-term, speculative trading

     9  

Initial Public Offerings

     9  

Excessive Trading

     9  

Insider Dealing

     10  

Short Selling

     10  

Unquoted and Illiquid Stocks

     10  

Price Limits

     10  

Encouraging Others

     10  

Closed Periods

     10  

Restricted List

     10  

Restricted Dealing in Bank of Montreal Securities

     10  

Prohibited Transactions

     10  

Gifts & Hospitality

     11  

Over-Riding Principle

     11  

Gifts

     11  

Gifts – Notification, Approval Process & Time Limit

     12  

Hospitality

     12  

Entertained by a client, supplier

     12  

Exemption

     12  

Accompanying your spouse/partner to an event

     12  

Your spouse/partner accompanying you to an event

     12  

Review of Gifts and Hospitality Submissions

     13  

Hospitality- Notification, Approval Process & Time Limit

     13  

Networking events/drinks

     13  

Hospitality and expenses

     13  

Broker Interactions

     13  

Social Interactions

     13  

Financial Adviser Product Information

     14  

Personal Conflicts of Interest

     15  

Conflicts of Interest defined

     15  

Potential Conflict situations

     15  

Examples of Potential Conflicts

     15  

Avoidance of Conflicts

     15  

Compliance and Enforcement

     16  

Personal Account Dealing breaches

     16  

Gifts & Hospitality breaches

     16  

Reporting breaches of the Code

     16  
Appendix A – Enforcement Procedures for Personal Account Dealing      17  

Dealing

     17  

Contract Notes

     17  

Initial Holdings

     17  

Annual Holdings

     17  
 
 

 

LOGO

LOGO

 

      

Definitions

 

Access Person   

An Access Person is any supervised person who

 

•  has access to non-public information regarding clients’ securities or transactions, or regarding the portfolio holdings of any fund; or

 

•  is involved in making securities recommendations to clients or has access to such recommendations.

   Approved Indices    Approved Indices are FTSE 350, FTSE Eurotop 300 Index, Dow Jones Industrial Average, S&P 500 Index, PSI All-Share Index, NYSE Composite Index, NASDAQ Composite Index, S&P/Toronto Stock Exchange Index, Euro Stoxx 50 Index, CAC 40 Index, DAX Index, AEX Index, Euronext Top 100 Index, Topix, Nikkei 225, Hang Seng Index, and ISEQ 20.
   Access Person includes portfolio management personnel and all other Employees who have information about investment transactions whose effect may not yet be felt in the market; as such, they may be in    BMO GAM EMEA or Group    BMO Global Asset Management (EMEA). This is the group of entities made up of BMO Asset Management (Holdings) plc and all its subsidiaries and LGM.
   a position to take advantage of this information. Access Persons may include contractors, temporary staff, and interns.    BMO’s Code of Conduct    The five principles that reflect BMO Financial Group’s commitment to high standards of business conduct and ethics.
Anything of Value   

In relation to Bribery, Anything of Value includes but is not limited to:

 

•  Gifts and Entertainment,

 

•  Donations,

 

•  Political Contributions,

 

•  Sponsorships,

 

•  Cash or cash equivalents,

 

•  Favourable terms on a product or service,

 

•  Travel expenses,

 

•  Hospitality

 

•  Business or employment opportunities (including internships and the opportunity to be considered for them).

 

•  Intangible benefits, such as material benefits of monetary value (e.g., exemption of debt) and other benefits for which payment is made in exchange (e.g., memberships or paid travel).

  

Bribery

 

Business Associates

 

Cash or cash equivalents

  

The act of giving, promising, offering, soliciting or receiving, directly or indirectly, a benefit or Anything of Value in order to:

 

•  improperly influence the judgement or conduct of any person who owes a duty of good faith, impartiality or trust

 

•  induce or reward the improper performance of a function of activity

 

An individual or organisation who performs certain functions or activities on behalf of BMO GAM EMEA.

 

Includes but is not limited to:

 

•  Gift cards,

 

•  Gift certificates,

 

•  Securities,

 

•  Jewellery

 

 

LOGO

LOGO

 

      

Connected Persons

 

Corruption

  

Includes immediate family members such as spouse or civil partner, a child or stepchild under the age of 18, and any other relative sharing the same household. It also includes Business Associates and any other relationships where the Access Person has direct or indirect influence or control over the personal dealings of the connected person e.g. investment clubs.

 

The abuse of public or private office for personal gain. It occurs when individuals misuse their positions to improperly and unlawfully enrich themselves or those close to them, or induce others to do so.

  

 

Entertainment/ Hospitality

  

 

All Hospitality/entertainment offered to, or accepted from, an existing or prospective client or supplier including the following:

 

•  social, Hospitality, charitable, investor events, conferences, seminars, site visits, or other events of a similar nature of purpose;

•  meals (for example working breakfasts and lunches);

•  drinks and paid-for outings of all kinds;

•  any transportation related to such activity or events; and

•  tea, coffee or light refreshments

Covered Securities    Investment instruments, which are not permitted or require pre-clearance request through the Cordium ELF system as described in the personal account dealing rules in this Code of Ethics.       For an activity to be considered Hospitality, someone representing the providing party must be present at the event, irrespective of whether any business is conducted. Otherwise, entertainment activities or events are to be considered Gifts.
De minimis Provisions   

Personal trades in:

 

•  companies in Approved Indices for an amount less than or equal to a value of £25,000 or local equivalent, or

•  G7 Government Bonds for an amount less than or equal to a value of £50,000

 

will be automatically approved by the system providing other control conditions are met.

  

Gift

 

G7 Governments

  

Anything of value given to or received from, voluntarily or without recompense, an existing or prospective customer or supplier that does not qualify as Hospitality

 

The governments of Canada, France, Germany, Italy, Japan, UK and US

Employee    Employees are employees, partners, officers, directors, contractors, and Access Persons of BMO GAM (EMEA), including full-time and part- time Employees. For the purposes of this Code, employee does not include those employees of the unregulated BMO REP businesses, based in Munich and Paris.    Inside Information   

Inside Information is information of a Precise nature which:

 

•  is not generally available,

 

•  relates, directly or indirectly, to an issuer, and

 

•  would, if generally available, be likely to have a Significant Effect on the Price of an investment or on the price of related investment.

 

In relation to a person charged with the execution of orders, Inside Information includes information relating to pending client orders

      Insider    An Insider is any person who has Inside Information
 

 

LOGO

LOGO

 

      

  

•  as a result of his membership in the administrative, management or supervisory bodies of an issuer of qualifying investments;

 

•  as a result of his holding in the capital of an issuer of qualifying investments;

 

•  as a result of having access to the information through the exercise of his employment; profession or duties;

 

•  as a result of his criminal activities; or

 

•  which he has obtained by other means and which he knows, or could reasonably be expected to know, is Inside Information.

     

•  a political party or candidate

 

•  a regulatory, judicial, legislative or law enforcement body

 

•  state owned enterprises (e.g. Crown corporations, sovereign wealth funds, export development agencies)

 

•  a company or other business entity in which a governmental body has an ownership interest even if the company is engaged in commercial, rather than governmental, activities

 

•  Employees and representatives of public international organisations

Intermediaries    In the context of anti-bribery and corruption, an Intermediary Includes suppliers that provide services for, or on behalf of, BMO GAM EMEA (such as consultants, external lawyers, outsourcers) and other third parties, including but not limited to agents, lobbyists, representatives, joint ventures and legal entities where BMO GAM EMEA has a business interest but does not exercise control, and business parties working with or on behalf of BMO GAM EMEA.   

Significant Effect on the Price

 

Supervised Person

  

Information is likely to have a significant effect on price if and only if it is information of the kind which a reasonable investor would likely use as part of the basis of his investment decisions

 

Any partner, officer, director, contractor or Employee of BMO GAM EMEA.

LGM    LGM Investments Limited      
Precise    Information is precise if it:      
  

•  indicates circumstances that exist or may reasonably be expected to come into existence or an event that has occurred or may reasonably be expected to occur; and

     
  

•  is specific enough to enable a conclusion to be drawn as to the possible effect of those circumstances or that event on the price of investments or related investments

     
Public Officials    An officer, Employee, representative or other person acting on behalf of:      
  

•  a government department or agency

     
 

 

LOGO

LOGO

 

      

Application

 

The Code of Ethics (“the Code”) applies to all Employees of BMO GAM EMEA wherever located and any other persons as designated from time to time. The BMO GAM EMEA Compliance Department administers this Code. You should contact them if you have any questions concerning the meaning or interpretation of any provision of this Code.

All jurisdictions, in which BMO GAM EMEA operates, have regulatory requirements on managing conflicts of interest. This policy applies to Employees across BMO GAM EMEA locations. However if local requirements are more stringent than this Code, those local requirements will apply.

Statement of General Principles

BMO GAM EMEA owes an overriding duty to its clients to treat them fairly and to exercise its business with integrity. The following general principles apply when we conduct our business:

 

•   at all times, Employees must avoid placing personal interest ahead of the interests of the clients of BMO GAM EMEA;
•   Employees must avoid actual and potential conflicts of interests between personal activities and activities carried out for clients;
•   Employees must not misappropriate investment opportunities from clients;
•   all Employees must familiarise themselves with and abide by the Financial Conduct Authority’s eleven principles of business as noted in the BMO GAM EMEA Compliance Manual;
•   all Employees should exercise honesty, objectivity, and diligence in performing their duties and fulfilling their responsibilities;
•   all Employees must be loyal to the BMO GAM EMEA and its clients;
•   no Employee should act in a manner which will discredit any client or BMO GAM EMEA;
•   all Employees should avoid any conflicts of interest with clients or BMO GAM EMEA and, if such a conflict arises, declare it and involve an independent third party from within BMO GAM EMEA to ensure that fair treatment is applied to all parties;
•   no Employee should place himself or herself in a position where he/she contravenes any law, or regulation relevant to BMO GAM EMEA’s business or in connection with his/her employment with the firm;
•   no Employee should use confidential information for personal gain nor should confidential information be divulged to persons not authorised to receive such confidential information, including without limitation, third parties;
•   no Employee should personally accept any gift of significant1 value from a Business Associate except in accordance with this Code;
•   no Employee should offer, request, persuade or otherwise induce another person to offer a bribe to any

 

 

1 The term “significant” is not quantified, but judgement needs to be exercised as based on the “Self-testing Principles” noted in the Gifts and Hospitality section.

  third party which the Employee intends will obtain or retain an advantage in the conduct of business for BMO GAM EMEA;
•   all Employees should at all times maintain the highest standards of dignity and competence and should encourage all others with whom they deal to adopt the same standards; and
•   BMO GAM EMEA and its Employees should seek to do business with third parties who place a high degree of importance on ethics and integrity in respect of their business dealings2 and agree to comply with BMO’s Supplier Code of Ethics.

SEC registration

Both BMO Asset Management Limited and LGM are registered with the Securities and Exchange Commission as an investment adviser. As such all Employees must comply with US federal laws regulating the securities industry to the extent applicable to them — in particular, relevant provisions of the Securities Act of 1933, the Investment Advisers Act of 1940 the Securities Exchange Act of 1934, and the Investment Company Act of 1940, as well as with applicable rules of the Financial Conduct Authority. Specifically, Employees are not permitted to:

 

•   defraud a client in any manner;
•   mislead a client, including making a statement that omits material facts;
•   engage in any act, practice or course of conduct which operates or would operate as a fraud or deceit upon a client;
•   engage in any manipulative practice with respect to a client; or
•   engage in any manipulative practice with respect to securities, including price manipulation.

Exceptions/Escalations

Waivers or exceptions to this process will only be granted in the most unusual and compelling circumstances. Unless otherwise provided for in this process, the BMO GAM EMEA Head of Compliance must approve any exception. Any unapproved exceptions to Personal Account Dealing should be escalated immediately to the BMO GAM EMEA Head of Compliance or, if relating to Gifts and Entertainment, should be escalated immediately to the Criminal Risk Officer, Europe.

The reputation of BMO GAM EMEA could be put at risk by a personal investment transaction of an Employee. For this reason, BMO GAM EMEA has adopted the following Personal Account Dealing Rules.

2 When entering any new relationship the individual and the approving Group Management Team member needs to be mindful of the reputation of the third party as well as any issues that have come to light when interacting with them. Consideration should also be given to ongoing relationships.

 

 

 

 

LOGO

LOGO

 

      

Personal Account Dealing

 

The overriding principle in all our dealings for clients is that we place their interests first. To help make sure we comply with this principle, BMO GAM EMEA has adopted these Personal Account Dealing Rules. They have been designed to ensure that:

 

•   the personal dealings of Employees do not disadvantage clients;

 

•   Employees carry out personal account deals in a manner which avoids actual or potential conflicts of interest;

 

•   personal account deals conform with regulatory and legal requirements and best practice;

 

•   Employees do not take inappropriate advantage of their position or abuse their position of trust and responsibility;

 

•   Employees are fully informed of what is expected of them;

 

•   We maintain the highest standards of ethics and integrity; and

 

•   We maintain appropriate controls and monitoring arrangements.

Employees can carry out personal dealing subject to the requirements of this Code. All Employees who wish to deal for their own account should familiarise themselves with these rules and abide by them.

These Personal Account Dealing Rules also apply to persons who are Connected Persons of Employees.

Investment Clubs

Investment Clubs can be for the purpose of sharing of investment ideas or the pooling of assets for investment purposes.

Where an Employee inputs into the decision making process of an Investment Club, it falls under the Connected Person definition and all of its deals must comply with this Code. If you are unclear about whether your participation in an investment group falls within the category of an investment club, please seek compliance advice. If you receive any Inside Information, through participation in an investment club, please contact Compliance immediately so any relevant stocks can be restricted from dealing.

Full disclosure of investment transactions can help mitigate any perceived conflicts of interest created through personal account dealing activity.

Initial Certification and Recording of Holdings

During the first week of employment, each new Employee must certify that they

 

•   have read, understand, and will comply with the Code

 

•   will promptly report breaches or possible breaches

 

•   recognise that a breach of the Code may be grounds for disciplinary action.

All new Employees must record holdings in Covered Securities held either by themselves or by Connected Persons, within thirty calendar days of employment at BMO GAM EMEA.

Employee share options that have not yet vested or been exercised do not need to be disclosed.

All certifications are to be done through the Cordium ELF system. All initial requirements will show on your “Action Items” Dashboard once you login to the system.

Annual Certification

On an annual basis, Employees must submit an annual update of all holdings in Covered Securities, where a pre- clearance is required, within thirty calendar days following calendar year end. Each Employee must certify that the Covered Securities listed in the report are the only Covered Securities they own directly or indirectly.

All certifications are to be submitted through the Cordium ELF system. All annual requirements will be shown on your “Action Items” Dashboard once you login to the system.

Exempt transactions do not need to be recorded at all. Please see Page 8 for full details on exempt transactions.

For advice and guidance on Personal Account Dealing, including if you are unsure whether a personal transaction needs approval or is not permitted, please consult with the Compliance Oversight team at Compliance.Oversight@bmogam.com.

Please see Appendix A for detail of enforcement procedures should an Employee fail to complete Initial or Annual or certifications/reports.

 
 

 

LOGO

LOGO

 

      

Transactions in Covered Securities

The Personal Account Dealing rules apply to transactions in Covered Securities.

(A) Not permitted

Transactions in the following investments are not permitted from a personal account dealing perspective:

 

•   futures, options, forwards or contracts for differences;

 

•   spread betting on any investment detailed in this Code of Ethics;

 

•   participation in new public issues which are not genuinely open to the public and where the potential allocations to the Employee would affect any proposed client orders;

 

•   dealing in US IPOs or US private placement offerings;

 

•   dealing in stocks on the BMO GAM EMEA restricted list; and

 

•   leveraged structured products.

(B) Pre-clearance request required

Transactions in the following investments require a pre- clearance request to be submitted via the Cordium ELF system (by clicking the “Submit Pre-Clear” button on your Dashboard):

 

•   shares in listed companies, including shares of listed investment trusts and exchange traded funds;

 

•   exchange traded commodities & currencies (ETC’s)

 

•   exchange traded notes (ETN’s)

 

•   government bonds, corporate bonds and convertible bonds;

 

•   warrants;

 

•   commencing payments into or selling out of an BMO GAM EMEA managed closed ended savings scheme (e.g. BMO GAM EMEA investment trust related Individual Savings Account (ISA)) and/or changing funds within that savings scheme;

 

•   dealing in open ended funds managed by BMO GAM EMEA, including through a savings scheme;

 

•   exercise of discretion over exercise of share scheme options;

 

•   dealing in nil-paid-rights;

 

•   shares in unlisted companies;

 

•   transactions in Self Invested Personal Pension Schemes or similar pension schemes, where staff have discretion over the individual underlying investments of the pension scheme (except where the underlying investments are exempt).

Equity trades in stocks from Approved Indices below £25,000 and G7 Government bond trades below £50,000 are automatically approved by the Cordium ELF system.

Exempt Transactions

Transactions in the following investments are exempt from the personal account dealing rules and require no pre- clearance request to be completed:

 

•   spot foreign exchange transactions of an investment nature;

 

•   direct investments in crypto-currencies

 

•   commodities (physical as opposed to funds or derivatives);

 

•   transactions in open ended funds including through savings plan that are not managed by BMO GAM EMEA;

 

•   increasing or decreasing a regular savings payment into any open or closed ended fund savings scheme whether managed by BMO GAM EMEA or not;

 

•   regular and lump sum payments into cash backed investments (e.g. cash ISA);

 

•   commencing, continuing or ceasing regular payments into Employee Share Schemes;

 

•   transactions in index tracking open ended exchange traded funds (where no one particular stock in the fund is more than 35% of the total fund);

 

•   transactions in life and pensions policies, where the Employee does not exercise discretion as to the individual underlying investments which can be included in the policy or where the Employee can select from a range of available funds, including funds managed by BMO GAM EMEA;

 

•   Corporate actions in existing holdings.

Third Party Discretionary Managed Portfolios

Where an Employee has appointed a reputable, independent fund manager or other person to act on their behalf under a full discretionary management agreement and the Employee does not initiate or influence individual investment decisions within a broad policy or strategy, prior approval to deal is not required. The Employee will still however be required to provide an annual declaration of their investments. In addition, the Employee may be required to provide information on and copies of any discretionary investment management contract entered into with a third party.

Fund Manager Commitments

Where a fund manager is expected as part of his/her role as manager, to make a personal commitment to a fund, when seeking approval please highlight that you are the fund manager in the free text box marked ‘Conflicts’.

Timing Limit on Pre-clearance

Pre-clearance is valid for a period of twenty-four hours after it has been obtained. If the deal has not been submitted for execution before this period expires, pre-clearance must be obtained again.

Rules Prior to Seeking Consent

No Employee may deal on their own behalf or on behalf of a Connected Person if they know or ought reasonably to know that:

 
 

 

LOGO

LOGO

 

      

•   BMO GAM EMEA has an unexecuted client order in the investment concerned or any other investment whose price is likely to be influenced by the price of that investment e.g. warrants or convertibles;

 

•   the relevant Employee possesses any Inside Information regarding the investment;

 

•   BMO GAM EMEA possesses research and analysis relating to an investment, or any other investment whose price is likely to be influenced by the price of that investment e.g. warrants or convertibles, and intends to publish investment recommendations based on them;

 

•   a client or any other party to the deal (if known at the time) is prohibited from dealing in an investment, or any other investment whose price is likely to be influenced by the price of that investment, by any applicable law, and the deal would involve the person wishing to deal, facing a conflict of interest with any BMO GAM EMEA client.

Dealings by Connected Persons

Employees shall take all reasonable steps to ensure that Connected Persons, when they are dealing on their own account, observe the above requirements. However, this Code does not apply to a Connected Person who is a director, officer, or employee of another firm or company, which is authorised under the Financial Services and Markets Act, 2000, when that Connected Person is acting on their own account. This is because such a director, officer or employee will be subject to the personal account dealing rules of their respective employer. In the event of any uncertainty as to whether a person is a Connected Person under the Code, please seek advice from Compliance.

Execution and Disclosure

All personal account transactions must be placed through an external bank/broker. Where Employees choose not to use Broker electronic feeds to the Cordium ELF system, contract notes relating to executed deals must be uploaded into the Cordium ELF system in a timely manner (within five days unless otherwise agreed with Compliance).

Where contract notes are not provided by the executing bank or broker, Employees must provide some other form of confirmation within the Cordium ELF system that the transaction has completed and the terms under which it has completed on (e.g. screen print if dealt over internet, copy of confirmation email, copy monthly transaction statement etc). Confirmations must at least contain details of the stock, price, monetary value, date and time of the execution.

If the contract note differs from the original personal account pre-clearance request. (E.g., where the deal is traded over two days or the amount traded differs from the personal account deal request) the Employee should account for this difference to Compliance. Whilst not a requirement, to minimise the impact on Employees we would recommend that prior to any dealing, Employees notify their broker of their requirements under this Code and send a copy of this notification to the Compliance team at Compliance.Oversight@bmogam.com.

Please see Appendix A for detail of enforcement procedures should an Employee fail to provide contract notes or equivalent.

Employees’ personal account dealing activity should not put at risk the integrity of financial markets in any way.

Dealing after a Client Deal (Piggy Backing)

No Employee is permitted to deal if a client order has been executed in the previous five business days unless the Employee trades meets the De minimis Provisions

For example, if a client order is executed on a Monday, as long as no further client orders in that stock are executed, an Employee would have to wait until the following Tuesday before approval to deal is given.

However, where an Employee has a pre-clearance request rejected, the Employee must wait until the 5-day period has elapsed before making any further related requests. This restriction includes placing smaller trades which would fall under the De minimis Provisions.

Dealing before a Client Order (Front Running)

No Employee is permitted to deal where a client order is outstanding. In addition, no Employee is permitted to deal before a client order is placed or where they are aware that an order is under consideration for a client fund (e.g. front running a personal account deal in front of a large programme trade and therefore benefiting from any resultant price uplift). It should be noted that such action could be perceived as market abuse.

Excessive trading can jeopardise the good judgement necessary to maintain independence and objectivity in professional activities.

Short-term, speculative trading

Short-term, speculative trading typically involves a quick trading pattern to capitalise on a short-lived market impact of a particular client trade or series of trades. Short term, speculative personal account trading, which is defined as the purchase and then the sale (or the sale and then the purchase) of the same Covered Security within 30 calendar days is not permitted by BMO GAM EMEA Employees. Where the price of a security undergoes a significant fall, exceptions to the thirty-day holding requirement may be granted by compliance in extreme situations. Dealing within thirty days of a bonus issue is also permitted, subject to making a pre-clearance request.

Initial Public Offerings

Employees are permitted to participate in IPOs save for US IPOs. Authorisation from Compliance is required through the Cordium ELF system for participation in an initial public offering of any equity stock. No minimum holding period applies to shares acquired through an Initial Public Offering. The personal account dealing rules apply to any subsequent purchase of shares, which have been subject to an Initial Public Offering.

Excessive Trading

Excessive or inappropriate trading that interferes with job performance or compromises the duties BMO GAM EMEA owes to its clients is not permitted. More than 25 trades a rolling quarter or 100 trades in a rolling 12 months constitutes excessive trading. A breach of this limit may lead to disciplinary action under the Code.

 
 

 

LOGO

LOGO

 

      

Insider Dealing

Employees must not engage in dealings as a result of being an Insider, market abuse or activities that may contravene the provisions of any relevant local law. If in any doubt, these personal account-dealing rules should be read in conjunction with the BMO GAM EMEA Market Abuse Handbook and the BMO GAM EMEA Restricted Dealing Process.

Short Selling

Neither selling short nor purchasing, where an Employee has insufficient funds for settlement, are permitted.

Unquoted and Illiquid Stocks

Illiquidity of stocks significantly increases the potential risk of conflict of interest between personal dealing and BMO GAM EMEA’s investment activities. Employees are discouraged from dealing in unquoted or illiquid stocks. Employees should be aware that there might be significant delays in realising investments in illiquid stock, resulting in holding such stocks for periods longer than desirable.

Price Limits

Employees must remember that pre-clearance to deal is only valid for a period of twenty-four hours after it has been obtained. Therefore, after gaining pre-clearance for a price- limit transaction, employees must provide documentation to evidence that the instruction was submitted to their broker within the twenty-four hour approval period, regardless of the date of the actual transaction

Encouraging Others

If an Employee is prohibited from dealing due to any of the circumstances described in this Code, they must not:

 

•   encourage any other person to carry out the deal in question, or
•   communicate any confidential information to any third party.

Closed Periods

Where particular funds managed by BMO GAM EMEA are also listed on a local stock exchange, Employees must ensure that they comply with restrictions on dealing in closed periods prescribed by local Stock Exchange rules. These periods are calculated by reference to expected results announcement dates (e.g. prior to the issue of the annual and interim accounts).

Employees cannot deal in a BMO GAM EMEA investment trust, either directly or via a savings scheme, during the its closed periods except where those transactions are regular ongoing savings transactions initiated by the savings plan administrator. Any closed period restrictions are included in the BMO GAM EMEA restricted list. Compliance will check this restricted list on behalf of an Employee prior to authorising any personal account deal.

Personal account dealing in a BMO GAM EMEA investment trust during a buy back may be permitted. Approval to deal at such times must be authorised by the respective trust’s company secretary.

Restricted List

The nature of our business as a fund management company means that, from time to time Inside Information will come

into BMO GAM EMEA’s possession. When Employees receive Inside Information, it is imperative that Employees within BMO GAM EMEA do not deal for their own account in a security for which Inside Information has been received. To ensure this does not occur, a Group dealing restriction is effected until the information either is out of date, or is publicly announced. All restricted stocks are maintained in the BMO GAM EMEA restricted list, and the policy is detailed in the BMO GAM EMEA Restricted Dealing Process.

Restricted Dealing in Bank of Montreal securities

All Directors of BMO Asset Management (Holdings) plc are restricted from trading Bank of Montreal securities for four periods of approximately thirty days. These periods are called the Trading Windows and commence on the third business day following the release of the quarterly results of BMO Financial Group.

This restriction includes:

 

•   exercising options or selling other Bank of Montreal Securities granted under any Employee or Directors’ stock option plan;
•   selling shares of Bank of Montreal acquired through any Employee Share Ownership Plan (ESOP) or Dividend Reinvestment Plan (DRIP); and
•   enrolling, making changes or terminating participation in any such plan.

This restriction does not apply to purchases made under an ESOP or DRIP. Trading in securities of Bank of Montreal by Employees of BMO GAM EMEA, other than the Directors of BMO Asset Management (Holdings) plc and its Company Secretary, are subject to the normal Personal Account Dealing Rules in this Code of Ethics.

Prohibited Transactions

All Directors of BMO Asset Management (Holdings) plc are prohibited from engaging in transactions in Bank of Montreal Securities or related financial instruments (such as stock options, deferred share units, restricted share units or other similar instruments) that are:

 

•   Call or put options or short selling (selling directly or indirectly, Bank of Montreal Securities or related financial instruments that they do not own); or

 

•   Transactions (e.g., monetization transactions, forward sale contracts, equity swaps, collars, purchases of units of exchange funds, entering into exchange contracts or limited recourse loans secured primarily by Bank of Montreal Securities, etc.) if those transactions are designed to hedge or offset the economic risk of holding Bank of Montreal Securities or related financial instruments.

Please see Appendix A for detail of enforcement procedures should an Employee fail to comply with these Personal Account Dealing rules.

 
 

 

LOGO

LOGO

 

      

Gifts & Hospitality

 

All BMO GAM EMEA Employees, and jurisdictions where BMO GAM EMEA operates, are captured by laws and regulations that prohibit Bribery and Corruption, including the U.K.’s Bribery Act 2010, which has extra-territorial reach.

The Bribery Act makes it a criminal offence to offer or accept improper payments (e.g. bribes or other inducements). It also makes a firm potentially liable to prosecution if a person associated with it, including an Employee, commits Bribery

on its behalf.

The nature of the business means that BMO GAM EMEA has an obligation to ensure that we prevent Bribery and

Corruption and actively manage any potential conflicts of interest in respect of our duties and regulatory responsibilities

towards our clients. We are therefore required to have policies and procedures in place to prevent Employees, and other persons who perform services for BMO GAM EMEA, from engaging in corrupt activities, including Bribery.

BMO’s Code of Conduct and Criminal Risk Corporate Standard (the “Standard”) prohibits the offer, acceptance and approval of Gifts, Hospitality, or similar types of benefits where prohibited by law or where it would compromise or create the perception that the recipient’s judgement or honest performance of his/her duties might be compromised. BMO’s Anti-Bribery and Anti-Corruption Operating Directive (the “Directive”) sets out the key principles to ensure compliance with Anti-Corruption legislation and regulation in jurisdictions where BMO GAM EMEA operates. It applies to all

Employees of BMO GAM EMEA, wherever located.

This Code, which should be read in conjunction with the Directive, outlines the reporting and approval processes that Employees must follow in relation to the offer or acceptance of a Gift or Hospitality. No Employee or Connected Person may offer or accept any Gift or Hospitality to or from an existing or prospective client or supplier of BMO GAM EMEA except in accordance with the Directive and the processes detailed within this Code. Compliance with the spirit is just as important as observing the detail of the Code.

Over-Riding Principle

Employees and Connected Persons may not give, promise, offer, solicit, or accept, directly or indirectly, something of value to or from an existing or prospective client or Intermediary of BMO GAM EMEA which intends to compromise or creates the perception that it is intended to compromise the judgement or conduct of any person who owes a duty of good faith, impartiality or trust. ‘Something of value’ includes, but is not limited to Gifts and Hospitality.

For advice and guidance on Gifts and Hospitality, please consult with the Advisory Compliance team (complianceeadvisory@bmogam.com) or the Criminal Risk Officer Europe (aco@bmo.com)

Gifts

Deciding whether a Gift is appropriate often depends on the circumstance e.g. timing, frequency and nature of the Gift. Before offering or accepting a Gift, Employees and Connected Persons should consider the following principles:

•   Gifts should be of nominal value, with a cumulative value not exceeding £100 (or local currency equivalent) from or to any one supplier/client in any calendar year.
•   Gifts conferred for illegal or improper purposes such as bribes or other illegal or corrupt activities are strictly prohibited
•   the Gift must be consistent with accepted business practice in the relevant sector, jurisdiction or market segment
•   prior approval is required from the Criminal Risk Officer Europe before offering gifts to or accepting gifts from Public Officials
•   the Gift may only be offered or accepted in the spirit of business courtesy or in furtherance of a business relationship
•   the Gift must not be intended to compromise or create the perception that it is intended to compromise the recipient’s honest performance of his/her employment duties (i.e. given or received openly and directly)
•   the Gift must not be perceived to create a sense of obligation
•   the type or circumstances in which a Gift is offered or accepted must not have the potential, if publicly disclosed, to adversely affect the reputation of BMO GAM EMEA or its Employees
•   The Gift conforms in all other respects with the principles outlined in the Policy and BMO’s Code of Conduct and Anti-Bribery and Anti-Corruption Operating Directive.

Examples of prohibited Gifts include (non-exhaustive):

 

•   Cash or cash equivalents (e.g. Gift cards, Gift certificates, securities, jewellery) in any amount
•   Gifts to or from Public Officials
•   Travel arrangements, meals, refreshments or accommodations unrelated to business discussions or for which BMO GAM EMEA would not reimburse as a reasonable expense
•   Discounts or rebates on merchandise or services not available to the public or customers of the offering party
•   Solicited gifts from customers of suppliers for personal use or benefit

Examples of permissible Gifts include (non-exhaustive):

 

•   Gifts of nominal value to commemorate holiday or religious celebrations (e.g., Gift baskets received during the festive season)

 

•   Advertising or promotional material with a token value (e.g., pens, notepads, golf umbrellas, calendars, etc.)
•   Non-monetary awards of recognition of service or accomplishment e.g. civic, charitable, educational, or religious organisations

The offer or acceptance of a Gift that is not otherwise permitted must be jointly approved by your line manager and the Criminal Risk Officer Europe (aco@bmo.com) via the notification and approval process outlined below.

 
 

 

LOGO

LOGO

 

      

Gifts – Notification, Approval Process & Time Limit

All Gifts offered to or by Employees, regardless of their value, must be notified to the Employee’s line manager and via the Cordium ELF system to Compliance. The value of all Gifts must be evidentially supported (e.g. a receipt from the provider, or for Gifts received, a like for like example via a screenshot.). A copy of the evidence should be provided to your line manager and a copy uploaded into the Cordium ELF system and submitted before the offer or acceptance of the Gift (or where not feasible within two business days of acceptance of a Gift).

Gifts with an evidenced value exceeding £100 (or local currency equivalent) from any one supplier/client in any calendar year or Gifts that are not permitted under the Policy require the documented approval of both the Employee’s line manager and the Criminal Risk Officer Europe (aco@bmo.com).

Should a Connected Person offer or be offered a Gift from a prospective or existing client or Intermediary of BMO GAM EMEA, guidance may be sought from the Criminal Risk Officer Europe (aco@bmo.com) as to whether the Gift is permissible. Approval is required in these circumstances as if the Gift were offered to or by an Employee.

Where a Gift is not approved, it should be promptly recorded in the Cordium ELF system and returned to the donor or, where this is not feasible, donated to charity.

Cash or cash equivalents (e.g. Gift cards, Gift certificates, securities, jewellery) gifted to an Employee or Connected Person, should be promptly recorded in the Cordium ELF system, and returned to the source as quickly as possible.

Hospitality

For the purposes of BMO GAM EMEA’s Code of Ethics, Hospitality may only be accepted if it is directly linked to developing the business relationship and has a benefit to our clients.

Where there is no benefit to our clients, i.e. there is no quantifiable business element included, no matter how valuable the relationship with the third party, Hospitality cannot be offered or accepted.

Any transportation and accommodation related to Hospitality received, must be paid by BMO GAM EMEA Employee.

For an activity to be considered as Hospitality, someone representing the providing party must be present, otherwise, the activity is considered a Gift.

Before offering or accepting Hospitality, Employees and Connected Persons should consider the following principles:

 

•   Hospitality of nominal tangible (reasonable) value is acceptable, unless it violates the letter or spirit of any of the other general principles outlined below
•   Hospitality must not be intended or perceived to be intended to compromise the recipient’s honest performance of his/her employment duties
•   Hospitality that would cause embarrassment if details were made public must not be offered or accepted
•   When entertainment is being offered by BMO GAM EMEA, the event must not knowingly violate the policies of the guest’s employer
•   Prior approval is required from the Criminal Risk Officer Europe before offering hospitality to or accepting hospitality from Public Officials Hospitality must be consistent with accepted business practices in the relevant sector, jurisdiction or market segment
•   The frequency of Hospitality offered or accepted should be considered to determine if it could be viewed as excessive
•   Hospitality at venues requiring extensive travel is typically not acceptable. Also, any venue that would exclude individuals based on race, gender, nationality, religion or any other discriminatory factor or that would be considered lewd or obscene are unacceptable
•   Accommodation must not be provided to or accepted from prospective or existing clients or Intermediaries.
•   Transportation (other than local transportation such as taxis) should not be provided to or accepted from prospective or existing clients or intermediaries – please seek advice from either the Criminal Risk Officer Europe (aco@bmo.com) or the Advisory Compliance team (complianceadvisory@bmogam.com) if in any doubt.

Entertained by a client, supplier.

Employees should avoid lavish or frequent Hospitality from persons with whom BMO GAM EMEA deals, in order to avoid placing themselves in a position of obligation.

Exemption

The offer or acceptance of Hospitality that would not ordinarily be permitted (i.e. not directly linked to developing the business relationships and having a benefit to our clients) may be accepted if it is jointly approved by your line manager and the Criminal Risk Officer Europe (aco@bmo.com) via the notification and approval process outlined below.

Where these are specific local practices that are not permitted under the Code, it is possible to apply for an exemption. This must be approved by the BMO GAM CEO, Criminal Risk Officer Europe (aco@bmo.com) and the Head of Compliance.

Accompanying your spouse/partner to an event

If your spouse/partner is invited to an event, which is specific to the financial services industry, and you accompany them, then you will need to treat this as a gift. Please ensure that you follow the normal process under the section Gifts – Notification, Approval Process and Time Limit.

Your spouse/partner accompanying you to an event

If you are invited to an event, which meets the Hospitality requirements and your spouse/partner is invited to accompany you, this should be logged within the Cordium ELF system under the normal process.

In any case, where doubts arise on the above, please consult with the Advisory Compliance team (complianceadvisory@bmogam.com) or the Criminal Risk Officer Europe (aco@bmo.com).

 
 

 

LOGO

LOGO

 

      

Review of Gift and Hospitality submissions

Oversight of the submissions will be made on a periodic basis to ensure that any Gifts and Entertainment offered or accepted by Employees and Connected Persons are:

 

•   Reasonable and proportionate
•   In line with market practice
•   Could not be seen to incentivise poor behaviours

This will include reviews to ensure the volume, nature and cost of Gifts and Entertainment received from any third party are appropriate.

Individuals will be required to confirm that all Gifts and Entertainment that they have offered or accepted have been submitted on a timely basis. Summary reports will also be provided to Criminal Risk Officer Europe/Department Heads.

Hospitality: Notification, Approval Process & Time Limit

All Hospitality offered to or by Employees, regardless of value, must be notified and recorded in the Cordium ELF system.

The acceptance or offer of permissible business related Hospitality does not require prior approval; however prior notification is always advised where possible. Notification, via email, should be made to the Employee’s Line Manager and via the Cordium ELF system within two business days of the event.

Receiving Hospitality: Details of the event are required to be uploaded into the Cordium ELF system. Estimated costs are required to be submitted under “value of event” when recording into the Cordium ELF system. The cost provided should be in multiples of £50 such as £0-£50, £50-£100 etc.

Providing Hospitality: Evidence showing the value and details of the event are required to be uploaded into the Cordium ELF system.

Where Hospitality is provided to parties as a frequent part of an Employee’s role, alternative reporting in the Cordium ELF system can be agreed with the Criminal Risk Officer Europe.

Networking events/drinks

Although generally prohibited, these events may be attended case by case based on the below criteria and processes.

Those employees who are not directly authorised by the FCA and work in unregulated firms may attend with their Senior Managers pre-approval which must be uploaded to ELF.

For those employees who are directly authorised by the FCA and work in unregulated firms, and all employees who work in regulated firms, pre-approval from the employees Line Manager must be uploaded to ELF. In addition, a statement from the employees Line Manager must be uploaded to Elf indicating what the employee gained from attending the event. This must be uploaded within 5 business days from the event taking place.

It should be noted however that those employees directly authorised by the FCA or work in regulated firms are still prohibited from Hosting these types of events.

 

Hospitality and Expenses

If either party will be claiming the Hospitality through expenses, the event must be recorded in the Cordium ELF system. This includes a situation whereby the bill is split between Employees and external parties. There is no requirement to record an event if neither party will be claiming the Hospitality through expenses. However, consideration should be made to recording the event as a Social Interaction.

Social Interactions

Situations may arise where an Employee socialises with individuals who they know socially outside work and with whom BMO GAM EMEA may have a working relationship. Examples include attending a sporting event with a former colleague/school friend who happens to work for a broker. These events are permitted as long as each person pays for their own attendance.

Although it is not mandatory, Employees are encouraged to log these particular social interactions in the Cordium ELF system to protect themselves from any future regulatory investigations.

Broker interactions

MiFID II introduces the requirement to explicitly pay for all non-execution services we receive from brokers. As a result of these changes, Employees are required to record all their broker interactions via the Investment Management Support Team. These include analyst meetings, corporate access and conferences.

As BMO GAM EMEA are paying for all broker interactions, any lunch or dinner received during those meetings does not need to be recorded in the Cordium ELF system.

 
 

 

LOGO

LOGO

 

      

Financial Adviser Product Information

 

BMO GAM EMEA must compete on the price and quality of our products to secure distribution.

BMO GAM EMEA may assist financial advisers to promote packaged products with a view to enhancing the quality of the service they provide to customers. However, the assistance provided by BMO GAM EMEA should not compromise or impair the financial adviser’s ability to act independently and to provide advice on a range of products available in the market as a whole.

Any assistance provided by BMO GAM EMEA to financial advisers should:

 

•   be reasonable and proportionate;

 

•   of a limited scale and nature;

 

•   not need to be relied upon by the adviser in the future to service his clients

 

•   not reasonably be expected to result in the channelling of business from the adviser to BMO GAM EMEA; and

 

•   not result in the adviser recovering more than his reasonable costs.

We may therefore provide generic product literature (including letterhead, leaflets, forms and envelopes) which is suitable for use and distribution by a financial adviser. The literature must not feature the financial adviser’s name and cannot be used to promote the financial adviser’s business. Moreover, the financial adviser must meet the total costs (packaging, postage, mailing lists etc) of distributing the literature to its customers.

However, we can provide the financial adviser with freepost envelopes, in which the investor or financial adviser can forward completed applications or client’s agreements. These should be generally available to all financial advisers.

We may reimburse an individual financial adviser’s reasonable travel expenses in certain circumstances. There may be grounds for such reimbursement if the financial adviser is attending an annual national event of a UK trade association, hosted by BMO GAM EMEA.

BMO GAM EMEA may pay, or contribute to, any reasonable travelling expenses of a financial adviser who visits BMO GAM EMEA’s offices for training purposes, to receive information about our administration systems, or to attend a meeting with a prospective customer of the financial adviser. The location of any training, provided by BMO GAM EMEA, for a UK based adviser should be in the UK. BMO GAM EMEA may supply a financial adviser with training facilities (including lectures, written material and software), provided BMO GAM EMEA makes such facilities generally available for all financial advisers.

 
 

 

LOGO

LOGO

 

      

Personal Conflicts of Interest

 

Conflict of Interest defined

As part of BMO’s Code of Conduct (Principle 5), a conflict of interest is any circumstance where an individual’s personal interest interferes with the interests of BMO GAM EMEA and/or its customers. All Access Persons have a duty to avoid financial, business or other relationships outside of their employment that might be opposed to BMO’s interests or those of its customers and might cause a conflict with the performance of their duties.

Potential Conflict Situations

A conflict can arise when an Access Person takes actions or has interests that may impair, or appear to impair, their judgement, loyalty, objectivity or impartiality in dealing with BMO Global Asset Management EMEA or with current or prospective clients, counterparties or suppliers.

Conflicts also may arise when an Access Person, or a Connected Person, receives improper personal benefits because of his or her position within BMO GAM EMEA.

Examples of Potential Conflicts

Some areas where a conflict could arise include:

 

•   Employment with a competitor, regardless of the nature of the employment, while employed by the Group;
•   Association with a vendor, service provider or client of BMO, or a personal, financial or other relationship with another employee which may interfere with an employee’s responsibilities;
•   Placement of business with any firm or organisation in which an Access Person, or any member of the Access Person’s family, has a substantial ownership interest or management responsibility;
•   Making endorsements or testimonials for third parties;
•   Disclosing the Group’s confidential information to a third party without the prior consent of their line manager.

This list is non-exhaustive.

Avoidance of Conflicts

Without prior consent, no Employee is allowed, directly or indirectly, to act as an Employee, consultant or director of any company outside of BMO GAM EMEA.

Requests for consent to participate in external directorships, consultancy or employment should be submitted to Compliance via the Cordium ELF system (click the “Submit Notification” button on your main Dashboard to select the proper form), for approval by the Group Management Team.

For advice, guidance and questions on Conflicts of Interest and whether a particular situation constitutes a conflict of interest should be directed to the Advisory Compliance team (Compliance.Advisory@bmogam.com)

 
 

 

LOGO

LOGO

 

      

Compliance and Enforcement

 

Adhering to the Code of Ethics forms part of an Employee’s contract of employment. Any Employee whose actions breach the letter or spirit of this Code may be subjected to action under the company’s disciplinary process. Such behaviour may also be taken into consideration during the annual performance review.

Once a year, the Compliance Department will seek confirmation from Employees that they have complied in full with the Code of Ethics and other regulatory policies in the previous calendar year.

Compliance with these rules forms part of the Employee’s contract of employment. An annual certification via the Cordium ELF system is required from each Supervised Person confirming that he or she has received and read a copy of this Code of Ethics. This includes certifying that they

 

•   have complied with the Code during the course of their association with BMO GAM EMEA;

 

•   will continue to comply with the Code in the future;

 

•   will promptly report breaches or possible breaches;

 

•   recognise that a breach of the Code may be grounds for disciplinary action.

Any abuse or attempt to circumvent the Code will be considered as grounds for disciplinary action in accordance with the normal BMO GAM EMEA procedures. Failure to comply with the Code is a serious disciplinary offence and may result in dismissal.

Each case will be reviewed and, where the action is determined to be a repeat or non-accidental, further disciplinary action may be taken.

All Employees in breach of the code will also be required to attend a refresher Cordium ELF training course.

Please be advised that repeat offenders who breach the policy guidelines will:

 

•   be required to undergo refresher training;

 

•   be reported to line management;

 

•   have the issue recorded as a breach;

 

•   be subject to disciplinary action.

 

Personal Account Dealing breaches

For details of the Enforcement procedures that will be applied for Personal Dealing Account breaches are set out in Appendix A

Gifts & Hospitality breaches

The Code of Ethics stipulates that Gifts & Hospitality have to be logged within two business days of the event or receiving of a gift. Prior notification via the Cordium ELF system of Hospitality is always advised, where possible. It is also the responsibility of the Employee receiving the Hospitality to ensure they have informed their line manager in writing. Late submission of notification forms without a valid reason may be recorded as a breach of the code and will reported to the line manager.

For Networking events/drinks, approval must be uploaded prior to the event and the Line Managers statement must be uploaded within 5 business days of attendance. Late submission may again be recorded as a breach of the code.

Reporting breaches of the Code

Employees are often the first to know when something goes wrong or is inappropriate in an organisation. It is recognised that Employees can be reluctant to report any wrongdoing in the workplace, or raise matters of genuine concern, for fear of reprisal or victimisation. However, BMO GAM EMEA maintains an Error and Incident Policy and Procedure and a Whistle Blowing Procedure, which apply to all Employees. The latter procedure reinforces the importance of openness and ensures that Employees are protected from being victimised for bringing issues and problems to the attention of management. BMO GAM EMEA management supports this procedure and believes it:

 

•   encourages a culture of openness, accountability and integrity;

 

•   contributes to the efficient running of the organisation and the delivery of services; and

 

•   helps uphold the reputation of the organisation, and maintain public confidence.

Supervised Persons must promptly report any breach, or suspected breach, of the Code of Ethics to the Compliance Oversight team at complianceoversight@bmogam.com and to the Criminal Risk Officer, Europe

All persons who report breaches are protected under the BMO GAM (EMEA) Whistleblowing Policy.

 
 

 

LOGO

LOGO

 

      

Appendix A – Enforcement Procedures for Personal Account Dealing

 

Dealing

 

•   Any trading in covered securities performed without permission will be an automatic breach regardless of circumstances. Breaches will result in the Employee having to re-attend the Cordium ELF training session and their Line Manager will be informed.

 

•   Any trading in covered securities performed outside the 24-hour window will be a breach.

Exceptions may be given for Postal applications/IPOs/ Non-daily dealing funds etc, but the Employee will have to add the relevant information in a comment to the pre- clearance request, including when the trade instruction will be given/shares applied for

 

•   If an Employee trades materially more shares/units then they state on their pre-clearance request, a breach will be recorded.

 

•   Genuine mistakes such as stating “buy” instead of “sell” etc can be dealt with via a warning.

Each case will be reviewed and where the action is determined to be a repeat or non-accidental, further disciplinary action may be taken.

Contract Notes

 

•   If any are outstanding for over 1 week since the deal date, a breach may be recorded against the employee.

Each case will be reviewed and where the action is determined to be a repeat or non-accidental, further disciplinary action may be taken including:

 

  •   Personal Account Dealing ban imposed;
  •   Request to reverse the transaction out

 

Initial Holdings

 

•   If any are outstanding for over 1 week since the Employees start date, the Employee will be reminded to submit.

 

•   If still outstanding after 2 weeks, a reminder will be sent giving a week more otherwise a breach will be logged.

 

•   If still outstanding after 3 weeks, a breach will be recorded and the Employees Line Manager informed.

Each case will be reviewed and where the action is determined to be a repeat or non-accidental, further disciplinary action may be taken including

 

  •   Personal Account Dealing ban imposed.

Annual Holdings

 

•   Emails to be sent at the beginning of January asking Employees to log their holdings as 31 December. This needs to be completed by the end of January.

 

•   A reminder will be sent the third week in January

 

•   Those outstanding on the 1st February will be issued with a final reminder to log their holdings in the following week.

 

•   A breach will be recorded against Employees with outstanding declarations after this time and Line Managers notified.

Each case will be reviewed and where the action is determined to be a repeat or non-accidental, further disciplinary action may be taken including:

Personal Account Dealing ban imposed

 
 

 

LOGO

LOGO

 

      

 

 

LOGO