29297 3024 E FS 2014 Semi Annual
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Semi-Annual Financial Statements
BMO Harris Private Portfolios
June 30, 2014
BMO Harris International Equity Portfolio
NOTICE OF NO AUDITOR REVIEW OF THE SEMI-ANNUAL FINANCIAL STATEMENTS
BMO Harris Investment Management Inc., the Manager of the Portfolios, appoints independent auditors to audit the
Portfolio’s Annual Financial Statements. Under Canadian securities laws (National Instrument 81-106), if an auditor has not
reviewed the Semi-Annual Financial Statements, this must be disclosed in an accompanying notice.
The Portfolio’s independent auditors have not performed a review of these Semi-Annual Financial Statements in accordance
with standards established by the Canadian Institute of Chartered Accountants.
BMO Harris International Equity Portfolio
(unaudited)
STATEMENT OF FINANCIAL POSITION
(All amounts in thousands of Canadian dollars, except per unit data)
The accompanying notes are an integral part of these financial statements.
June 30 December 31 January 1
As at 2014 2013 2013
Assets
Current Assets
Cash 71,870 51,126 26,162
Investments
Non-derivative financial assets 1,076,073 932,533 527,636
Derivative assets — 261 —
Receivable for investments sold 1,251 563 511
Subscriptions receivable 1,585 2,207 411
Interest receivable — — 4
Dividends receivable 1,808 571 465
Total assets 1,152,587 987,261 555,189
Liabilities
Current Liabilities
Payable for investments purchased 5,123 497 678
Redemptions payable 430 375 175
Derivative liabilities 295 — 311
Distributions payable — 0 —
Accrued expenses 1,934 1,643 607
Total liabilities 7,782 2,515 1,771
Net assets attributable to holders of redeemable
units 1,144,805 984,746 553,418
Net assets attributable to holders of redeemable
units per unit $ 11 .38 $ 10 .98 $ 8 .77
BMO Harris International Equity Portfolio
(unaudited)
STATEMENT OF COMPREHENSIVE INCOME
(All amounts in thousands of Canadian dollars, except per unit data)
The accompanying notes are an integral part of these financial statements.
June 30 June 30
For the periods ended 2014 2013
Income
Interest income 158 11
Dividend income 21,448 11,961
Other changes in fair value of investments and derivatives
Net realized gain 28,891 22,459
Change in unrealized (depreciation) appreciation (6,370 ) 26,474
Net gain in fair value of investments and derivatives 44,127 60,905
Foreign exchange loss on cash (12 ) (14 )
Total other loss (12 ) (14 )
Total income 44,115 60,891
Expenses
Sub-advisory fees 2,734 1,483
Audit fees 10 10
Independent review committee fees 4 1
Withholding taxes 3,384 1,803
Custodian fees 223 141
Legal and filing fees 36 25
Unitholder servicing fees 221 215
Printing and stationery fees 7 10
Commissions and other portfolio transaction costs (note 6) 1,032 625
Operating expenses absorbed by the Manager (887 ) (447 )
Total expenses 6,764 3,866
Increase in net assets attributable to holders of redeemable units 37,351 57,025
Increase in net assets attributable to holders of redeemable units per unit
(note 3) 0 .39 0 .87
BMO Harris International Equity Portfolio
(unaudited)
STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS
(All amounts in thousands of Canadian dollars)
The accompanying notes are an integral part of these financial statements.
June 30 June 30
For the periods ended 2014 2013
Net assets attributable to holders of redeemable units at beginning of period 984,746 553,418
Increase in net assets attributable to holders of redeemable units 37,351 57,025
Redeemable unit transactions
Proceeds from redeemable units issued 181,612 131,316
Redemption of redeemable units (58,904 ) (77,786 )
Net increase from redeemable unit transactions 122,708 53,530
Net increase in net assets attributable to holders of redeemable units 160,059 110,555
Net assets attributable to holders of redeemable units at end of period 1,144,805 663,973
BMO Harris International Equity Portfolio
(unaudited)
STATEMENT OF CASH FLOWS
(All amounts in thousands of Canadian dollars)
The accompanying notes are an integral part of these financial statements.
June 30 June 30
For the periods ended 2014 2013
Cash flows from operating activities
Increase in net assets attributable to holders of redeemable units 37,351 57,025
Adjustments for:
Foreign exchange loss on cash 12 14
Net realized gain on sale of investments and derivatives (28,891 ) (22,459 )
Change in unrealized depreciation (appreciation) of investments and
derivatives 6,370 (26,474 )
Increase in receivable for investments sold (688 ) (324 )
Decrease in interest receivable — 4
Increase in dividends receivable (1,237 ) (649 )
Increase (decrease) in payable for investments purchased 4,626 (183 )
Increase in accrued expenses 292 1,014
Return of capital distributions received 989 452
Dividend reinvestments (194 ) (105 )
Purchases of investments (332,223 ) (192,735 )
Proceeds from sale and maturity of investments 212,721 156,055
Net derivative settlements (1,757 ) (851 )
Net cash from operating activities (102,629 ) (29,216 )
Cash flows used in financing activities
Proceeds from issuances of redeemable units 182,234 129,659
Amounts paid on redemption of redeemable units (58,849 ) (77,439 )
Net cash used in financing activities 123,385 52,220
Foreign exchange loss on cash (12 ) (14 )
Net increase in cash 20,756 23,004
Cash at beginning of period 51,126 26,162
Cash at end of period 71,870 49,152
Supplementary Information
Interest received, net of withholding taxes* 158 15
Dividends received, net of withholding taxes* 16,827 9,509
*These items are from operating activities
BMO Harris International Equity Portfolio
(unaudited)
SCHEDULE OF INVESTMENT PORTFOLIO
As at June 30, 2014 (All amounts in thousands of Canadian dollars, unless otherwise noted)
The accompanying notes are an integral part of these financial statements.
Security
Number of
Shares or Units
Cost+*
($)
Fair Value
($)
EQUITIES
Australia — 5.2%
BC Iron Limited 1,001,370 4,984 3,230
Brambles Industries Limited 791,604 5,838 7,325
Computershare Limited 542,971 5,047 6,823
Insurance Australia Group Limited 1,271,500 7,377 7,476
Newcrest Mining Limited 317,170 3,816 3,424
QBE Insurance Group Limited 361,859 5,187 3,960
Rio Tinto Limited, Australian Stock Exchange 53,254 3,331 3,181
Telstra Corporation Limited 1,001,564 3,959 5,253
Westpac Banking Corporation 217,250 6,497 7,412
Woodside Petroleum Ltd. 152,196 5,603 6,293
Woolworths Limited 153,925 4,444 5,454
56,083 59,831
Belgium — 2.3%
Anheuser-Busch InBev NV/SA 125,770 14,595 15,426
Arseus NV 35,094 1,877 2,141
Belgacom SA 105,715 3,379 3,740
Colruyt SA 91,343 4,694 4,949
24,545 26,256
Brazil — 0.1%
Embraer Empresa Brasileira de Aeronutica S.A., ADR 42,722 1,418 1,661
China — 1.8%
Baidu, Inc., ADR 25,982 3,221 5,178
CNOOC Limited 3,744,400 6,683 7,171
Industrial and Commercial Bank of China, H Shares 6,647,730 4,812 4,488
Tencent Holdings Limited 237,098 3,841 3,869
18,557 20,706
Denmark — 2.6%
Jyske Bank A/S 117,265 6,104 7,103
Novo Nordisk A/S, Class B 194,445 5,113 9,578
Pandora A/S 103,020 3,640 8,435
Vestas Wind Systems A/S 87,700 4,818 4,726
19,675 29,842
Finland — 1.0%
KONE Oyj, B Shares 163,229 6,404 7,272
Orion Oyj, B Shares 103,070 3,781 4,097
10,185 11,369
France — 9.2%
Accor SA 78,297 4,324 4,342
Altran Technologies SA 250,930 3,016 2,859
Compagnie Generale des Etablissements Michelin, Class B 38,567 3,513 4,923
Euler Hermes S.A. 25,140 3,196 3,221
L'Air Liquide S.A. 79,820 8,696 11,499
Legrand S.A. 70,693 2,910 4,611
BMO Harris International Equity Portfolio
(unaudited)
SCHEDULE OF INVESTMENT PORTFOLIO (cont’d)
As at June 30, 2014 (All amounts in thousands of Canadian dollars, unless otherwise noted)
The accompanying notes are an integral part of these financial statements.
Security
Number of
Shares or Units
Cost+*
($)
Fair Value
($)
LVMH Moet Hennessy Louis Vuitton S.A. 44,594 6,948 9,166
Orpea S.A. 67,760 5,036 5,068
Publicis Groupe SA 83,419 5,294 7,556
Rubis 36,056 2,270 2,456
Safran SA 109,430 5,201 7,641
Sanofi 56,739 5,036 6,440
Technicolor SA 331,295 2,789 2,863
Total S.A. 323,847 20,773 24,966
Valeo SA 56,480 5,029 8,082
84,031 105,693
Germany — 6.7%
adidas AG 86,149 7,593 9,311
BASF SE 30,940 2,882 3,843
Brenntag AG 14,365 2,256 2,738
Deutsche Bank AG 91,941 4,031 3,452
Deutsche Post AG 308,602 9,236 11,909
Drillisch AG 55,310 1,763 2,352
freenet AG 56,610 1,762 1,922
Fresenius Medical Care AG & Co. KGaA 82,971 5,534 5,958
Fuchs Petrolub SE, Preference 69,580 1,997 3,358
GEA Group Aktiengesellschaft 60,656 3,027 3,066
Henkel AG & Co. KGaA 29,297 2,495 3,616
ProSiebenSat.1 Media AG 102,010 4,487 4,850
SAP SE 105,206 6,886 8,671
Symrise AG 52,683 1,818 3,062
United Internet AG 67,370 2,955 3,167
Wincor Nixdorf AG 98,310 6,332 5,984
65,054 77,259
Hong Kong — 4.7%
AIA Group Limited 2,489,525 10,092 13,367
ASM Pacific Technology Limited 433,100 4,711 5,051
China Mobile Limited 1,273,640 13,991 13,194
Hong Kong Exchanges & Clearing Ltd. 251,271 4,598 5,005
HSBC Holdings PLC 249,005 2,514 2,696
Man Wah Holdings Limited 2,076,000 2,521 3,540
Power Assets Holdings Limited 625,500 4,768 5,839
VTech Holdings Limited 347,900 3,866 4,934
47,061 53,626
Ireland — 0.8%
Accenture PLC, Class A 70,077 5,095 6,045
CRH Plc 119,886 2,659 3,294
7,754 9,339
Israel — 0.5%
Bezeq The Israel Telecommunication Corp., Ltd. 860,648 1,317 1,720
Teva Pharmaceutical Industries Ltd. 67,830 3,250 3,797
4,567 5,517
BMO Harris International Equity Portfolio
(unaudited)
SCHEDULE OF INVESTMENT PORTFOLIO (cont’d)
As at June 30, 2014 (All amounts in thousands of Canadian dollars, unless otherwise noted)
The accompanying notes are an integral part of these financial statements.
Security
Number of
Shares or Units
Cost+*
($)
Fair Value
($)
Italy — 1.7%
Azimut Holdings SpA 181,210 3,136 4,984
Gtech S.p.A. 141,999 3,904 3,703
Intesa Sanpaolo S.p.A. 1,420,623 3,620 4,673
UnipolSai S.p.A. 1,827,650 4,237 6,272
14,897 19,632
Japan — 14.2%
Dowa Mining Company Ltd. 484,000 4,884 4,884
FANUC Corporation 29,392 4,181 5,420
Haseko Corporation 818,700 5,757 7,044
ITOCHU Corporation 393,300 4,642 5,399
Japan Airlines Co., Ltd. 133,300 6,990 7,872
Japan Tobacco Inc. 130,061 4,731 5,068
KDDI Corp. 173,300 8,284 11,303
KOSE Corporation 88,000 2,505 3,593
Kubota Corporation 471,055 7,064 7,141
Makita Corporation 68,700 2,890 4,528
Marubeni Corp. 481,000 3,730 3,760
Minebea Company Ltd. 497,000 5,919 5,972
Mitsubishi Electric Corporation 458,000 4,259 6,046
Mitsubishi Estate Company Ltd. 180,030 5,178 4,753
Mitsubishi UFJ Financial Group, Inc. 861,859 5,211 5,649
Mizuho Financial Group, Inc. 2,705,800 5,991 5,935
Nihon Kohden Corporation 104,200 4,404 5,574
Oriental Land Co., Ltd. 19,500 2,598 3,567
Pigeon Corporation 83,100 4,260 4,680
Softbank Corp. 55,833 3,091 4,433
Sumitomo Mitsui Financial Group, Inc. 157,500 6,945 7,058
Sumitomo Mitsui Trust Holdings, Inc. 1,235,367 6,409 6,037
Sumitomo Rubber Industries, Ltd. 432,200 5,518 6,669
Toyota Motor Corporation 333,213 17,568 21,389
Toyota Tsusho Corporation 205,100 4,774 6,306
Zenkoku Hosho Co. Ltd. 67,100 1,707 1,952
139,490 162,032
Macau — 0.5%
Sands China Ltd. 720,058 6,022 5,804
Malaysia — 1.6%
Axiata Group Berhad 3,213,500 6,668 7,445
Lafarge Malaysia Berhad 584,860 1,412 1,914
Magnum Berhad 1,667,200 1,663 1,690
Malayan Banking Berhad 2,283,588 6,817 7,461
16,560 18,510
Netherlands — 4.3%
ASML Holding N.V. 55,257 4,308 5,487
ING Groep N.V. 511,026 6,518 7,651
Koninklijke (Royal) Philips Electronics N.V. 56,596 1,996 1,914
BMO Harris International Equity Portfolio
(unaudited)
SCHEDULE OF INVESTMENT PORTFOLIO (cont’d)
As at June 30, 2014 (All amounts in thousands of Canadian dollars, unless otherwise noted)
The accompanying notes are an integral part of these financial statements.
Security
Number of
Shares or Units
Cost+*
($)
Fair Value
($)
Koninklijke Vopak NV 103,891 6,047 5,416
Reed Elsevier NV 246,008 3,835 6,018
Royal Dutch Shell PLC, A Shares, London Exchange 277,620 12,228 12,256
Royal Dutch Shell plc, Class B 126,908 4,299 5,889
Unilever N.V. 101,260 3,976 4,726
43,207 49,357
Norway — 1.6%
DnB ASA 304,260 4,390 5,931
Statoil ASA 138,350 4,633 4,554
Telenor ASA 150,706 2,679 3,659
Yara International ASA 78,450 3,961 4,197
15,663 18,341
Philippines — 0.4%
Alliance Global Group, Inc. 6,821,000 2,817 4,851
Singapore — 1.8%
ComfortDelGro Corporation Limited 2,453,000 3,251 5,238
Ezion Holdings Limited 1,352,000 2,105 2,404
Sembcorp Industries Ltd 727,000 3,168 3,333
Singapore Technologies Engineering Ltd. 769,000 2,352 2,497
United Overseas Bank Limited 238,400 3,793 4,597
Venture Corporation Limited 440,000 2,758 2,915
17,427 20,984
Spain — 2.0%
Amadeus IT Holding S.A., Class A 239,489 7,491 10,528
Banco Bilbao Vizcaya Argentaria, S.A. 444,730 5,486 6,041
Bolsas y Mercados Espanoles 123,820 5,711 6,310
18,688 22,879
Sweden — 3.9%
Assa Abloy AB, B Shares 95,144 3,589 5,160
Atlas Copco AB, A Shares 156,187 3,919 4,811
Billerud Aktiebolag 306,810 4,745 4,751
H & M Hennes & Mauritz AB, B Shares 118,063 4,147 5,501
NCC AB, B Shares 196,460 5,901 7,214
Skanska AB, B Shares 248,410 5,166 6,045
Svenska Cellulosa AB (SCA), Class B 176,131 5,383 4,894
Swedbank AB 204,210 4,082 5,775
36,932 44,151
Switzerland — 9.2%
Adecco S.A. 54,430 4,921 4,776
Aryzta AG 48,110 4,919 4,859
Givaudan SA 1,312 1,160 2,335
Holcim Ltd. 26,332 2,592 2,470
Julius Baer Group Ltd. 92,131 3,321 4,054
Nestle S.A. 266,790 17,159 22,057
Novartis AG 210,824 13,941 20,378
Panalpina Welttransport Holding AG 17,065 1,790 2,883
BMO Harris International Equity Portfolio
(unaudited)
SCHEDULE OF INVESTMENT PORTFOLIO (cont’d)
As at June 30, 2014 (All amounts in thousands of Canadian dollars, unless otherwise noted)
The accompanying notes are an integral part of these financial statements.
Security
Number of
Shares or Units
Cost+*
($)
Fair Value
($)
Roche Holding AG 61,810 13,523 19,681
Schindler Holding Ltd. 14,069 1,757 2,281
Swiss Re AG 60,370 3,478 5,733
Syngenta AG 5,427 1,919 2,164
UBS AG 345,930 7,864 6,763
Zurich Financial Services AG 15,599 3,413 5,018
81,757 105,452
Taiwan — 1.6%
Advantech Co., Ltd. 398,300 1,062 3,632
Chunghwa Telecom Co., Ltd. 1,140,165 3,503 3,920
MediaTek Inc. 215,669 2,275 3,897
Taiwan Semiconductor Manufacturing Company Limited, ADR 280,359 5,619 6,399
12,459 17,848
United Kingdom — 15.3%
Ashtead Group Public Limited Company 304,290 2,476 4,856
Aviva plc 519,282 4,898 4,856
Berkeley Group Holdings PLC, The, 88,340 3,267 3,917
BP p.l.c. 528,601 4,440 4,967
British American Tobacco p.l.c. 73,203 3,230 4,648
British Sky Broadcasting Group plc 235,939 2,536 3,891
BT Group plc 562,884 3,954 3,951
Burberry Group PLC 153,380 3,395 4,150
Carnival PLC 124,593 5,163 5,016
Compass Group PLC 298,300 4,317 5,557
Ensco plc, Class A 56,798 3,242 3,368
Experian plc 358,173 6,942 6,455
GlaxoSmithKline plc 197,174 5,142 5,622
Hays plc 1,036,150 2,227 2,760
Interserve Plc 390,540 3,363 4,273
ITV plc 1,378,860 3,192 4,482
Kentz Corporation Limited 210,890 2,813 3,574
Kingfisher plc 1,173,853 5,086 7,687
Legal & General Group Plc 1,342,863 3,065 5,528
National Grid plc 304,041 3,523 4,661
Pace PLC 345,520 2,954 2,251
Pearson plc 180,432 3,169 3,799
Persimmon PLC 219,210 3,470 5,086
Persimmon PLC, C Shares** 216,830 — 277
Prudential plc 306,870 4,815 7,510
Reckitt Benckiser Group plc 98,012 6,511 9,121
Rio Tinto plc, London Stock Exchange 68,924 3,851 3,968
Rolls-Royce Holdings PLC 46,185 670 900
Rolls-Royce Holdings Plc, C Shares** 26,451,466 — 48
Royal Dutch Shell PLC, Class A, Euronext Amsterdam Exchange 179,449 6,128 7,923
SABMiller plc 94,295 3,719 5,830
Shire plc 77,700 3,454 6,501
SSE plc 167,496 3,893 4,790
Standard Chartered PLC 193,885 4,578 4,228
BMO Harris International Equity Portfolio
(unaudited)
SCHEDULE OF INVESTMENT PORTFOLIO (cont’d)
As at June 30, 2014 (All amounts in thousands of Canadian dollars, unless otherwise noted)
The accompanying notes are an integral part of these financial statements.
Security
Number of
Shares or Units
Cost+*
($)
Fair Value
($)
Tesco PLC 745,667 4,638 3,865
United Utilities Group Plc 307,102 3,668 4,943
Victrex PLC 53,720 1,845 1,668
Vodafone Group Public Limited Company 1,116,771 4,500 3,983
WPP plc 134,803 2,490 3,132
140,624 174,042
United States — 1.0%
Liberty Global plc, Class C 118,443 2,880 5,347
Schlumberger Limited 45,639 3,661 5,744
6,541 11,091
Total Investment Portfolio — 94.0% 892,014 1,076,073
Total Unrealized Loss on Forward Currency Contracts — (0.0)% (295 )
Other Assets Less Liabilities — 6.0% 69,027
NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS — 100.0% 1,144,805
+ Where applicable, distributions received from holdings as a return of capital are used to reduce the adjusted cost base of the
securities in the portfolio
* For the purpose of the Statement of Investment Portfolio, cost includes commissions and other portfolio transaction cost (note 2).
** These securities have no quoted market value and are valued using valuation techniques (note 3).
UNREALIZED LOSS ON FORWARD CURRENCY CONTRACTS
As at June 30, 2014, the Portfolio had the following open positions:
Settlement
Date
Currency
Buy
Position
(000s)
Currency
Sell
Position
(000s)
Contract
Rates Counterparty
Credit
Rating**
Unrealized
Loss
16-Sep-14 CA$ 36,611 AUD (36,817) 0.9944 State Street Corp. A-1 (295)
Total Unrealized Loss on Forward Currency Contracts (295)
**Credit rating provided by Standard & Poor's.
NOTES TO FINANCIAL STATEMENTS
(All amounts in thousands of Canadian dollars, except per unit data)
June 30, 2014
BMO Harris International Equity Portfolio
(unaudited)
1. The Portfolio
BMO Harris International Equity Portfolio (“the
Portfolio”) is an open-ended mutual fund trust
established by a Declaration of Trust under the laws
of the Province of Ontario, most recently amended
on September 18, 2007. BMO Harris Investment
Management Inc. (“the Manger”) is the Manager of the
Portfolio. The address of the Portfolio’s registered office
is 1 First Canadian Place, 41st Floor, Toronto, Ontario.
The information provided in theseinterim financial
statements is for the periods ended June 30, 2014 and
June 30, 2013, except for the comparative information
in the Statement ofFinancial Positionand the related
notes, which are as at December 31, 2013and January
1, 2013.
These financial statements were authorized for issue by
BMO Trust Company, the trustee, on August 12, 2014.
2. Basis of preparation and presentation
These interim financial statements have been prepared
in accordance with International Accounting Standards
(“IAS”) IAS 34 Interim Financial Reporting. These
are the Portfolio’s first interim financial statements
during the first year of reporting in accordance with
International Financial Reporting Standards (“IFRS”) as
issued by the International Accounting Standards Board
(“IASB”).
As required by Canadian securities legislation and the
Canadian Accounting Standards Board, the Portfolio
has adopted this basis of accounting effective January
1, 2014. The Portfolio’s financial statements were
previously prepared in accordance with Canadian
generally accepted accounting principles (“Canadian
GAAP”), as previously defined and as described in the
notes to the Portfolio’s annual financial statements for
the year ended December 31, 2013. Canadian GAAP, as
previously defined, differs in some areas from IFRS. To
comply with IFRS, the Portfolio has amended certain
accounting policies, classification, measurement and
disclosure previously applied in the Canadian GAAP
financial statements.
As required under IFRS, the Portfolio has:
• provided comparative financial information including
an opening Statement of Financial Position as at the
transition date
• retroactively applied all IFRS, other than in respect of
elections taken under IFRS 1; and
• applied all mandatory exceptions as applicable for the
first-time adopters of IFRS.
The interim financial statements should be read in
conjunction with the Portfolio’s Canadian GAAP annual
financial statements for the year-ended December 31,
2013.
Note 8(h) contains reconciliations and descriptions of
the effects of the transition to IFRS on the Portfolio's
reported financial position, financial performance and
cash flows.
The policies applied in these interim financial
statements are based on IFRS issued and outstanding
as of August 12, 2014, the date the Manager approved
the statements. Any subsequent changes to IFRS that
are given effect in the Portfolio’s annual financial
statements for the period ending December 31, 2014
could result in a restatement of these interim financial
statements, including the transition adjustments.
3. Summary of significant accounting policies
Financial instruments
The Portfolio records financial instruments at fair value.
Investment transactions are accounted for on the trade
date. The Fund’s investments are either designated as
fair value through profit or loss (“FVTPL”) at inception
or classified as held for trading. The changes in the
investment fair values and related transaction costs are
recorded in the Portfolio’s Statement of Comprehensive
Income.
Financial assets or financial liabilities held for trading
are those acquired or incurred principally for the
purpose of selling or repurchasing in the near future,
or on initial recognition, are part of a portfolio of
identified financial instruments that the Portfolio
manages together and that have a recent actual pattern
of short-term profit taking. The Portfolio classifies all
derivatives and short positions as held for trading. The
Portfolio does not designate any derivatives as hedges
in a hedging relationship.
The Portfolio designates all other investments as
FVTPL, as they have reliably measurable fair values,
are part of a group of financial assets or liabilities that
are managed and have their performance evaluated
on a fair value basis in accordance with the Fund’s
investment strategy.
The Portfolio’s redeemable units contain multiple
contractual obligations and consequently, do not meet
the conditions to be classified as equity. As a result, the
Fund’s obligations for net assets attributable to holders
of redeemable units are presented at the redemption
amounts.
NOTES TO FINANCIAL STATEMENTS (cont’d)
(All amounts in thousands of Canadian dollars, except per unit data)
June 30, 2014
BMO Harris International Equity Portfolio
(unaudited)
All other financial assets and liabilities are measured at
amortized cost. Under this method, financial assets and
liabilities reflect the amount required to be received or
paid or discounted, when appropriate, at the contract’s
effective interest rate.
Cost of investments
The cost of investments represents the amount paid
for each security and is determined on an average cost
basis.
Fair value measurement
Investments are recorded at their fair value with the
change between this amount and their average cost
being recorded as change in unrealized appreciation
(depreciation) in the Statement of Comprehensive
Income.
For exchange traded securities, close prices are
considered to be fair value if they fall within the bid-
ask spread. In circumstances where the close price is
not within the bid-ask spread, the Manager determines
the point within the bid-ask spread that is most
representative of fair value based on the specific facts
and circumstances.
Procedures are in place to fair value securities traded in
countries outside of North America daily, to avoid stale
prices and to take into account among, other things, any
significant events occurring after the close of a foreign
market.
For bonds, debentures, asset-backed securities and
other debt, securities fair value is represented by
bid prices provided by independent security pricing
services. Short-term investments, if any, are amortized
at cost which approximates fair value.
Exchange traded funds held as investments are valued
at their respective Net Asset Value (“NAV”) on each
Valuation Date (the “Valuation Date” is each day on
which the Toronto Stock Exchange is open for trading),
as these values are the most readily and regularly
available.
For securities where market quotes are not available,
unreliable or not considered to reflect the current
value, the Portfolio may determine another value
which it considers to be fair and reasonable, or using
a valuation technique that, to the extent possible,
makes maximum use of inputs and assumptions
based on observable market data, including volatility,
comparable companies and other applicable rates or
prices. These estimation techniques include discounted
cash flows, internal models that utilize observable
data, or comparisons with other securities that are
substantially similar. In limited circumstances, the
Fund uses internal models where the inputs are not
based on observable market data.
Derivative instruments
Derivative instruments are financial contracts that
derive their value from underlying changes in interest
rates, foreign exchange rates, or other financial or
commodity prices or indices.
Derivative instruments are either regulated exchange-
traded contracts or negotiated over-the-counter
contracts. The Portfolio may use these instruments for
trading purposes, as well as to manage the Portfolio’s
risk exposures.
Derivatives are marked to fair value. Realized and
unrealized gains and losses are recorded in the
Statement of Comprehensive Income.
Forward currency contracts
A forward currency contract is an agreement between
two parties (the Portfolio and the counterparty) to
purchase or sell a currency against another currency at
a set price on a future date. The Portfolio may enter into
forward currency contracts for hedging purposes, which
can include the economic hedging of all or a portion
of the currency exposure of an investment or group of
investments, either directly or indirectly. The Portfolio
may also enter into these contracts for non-hedging
purposes, which can include increasing the exposure to
a foreign currency, or shifting the exposure to foreign
currency fluctuations from one country to another. The
value of forward currency contracts entered into by the
Portfolio is recorded as the difference between the value
of the contract on the Valuation Date and the value on
the date the contract originated.
Income recognition
Dividend income and distributions from investment
trust units are recognized on the ex-dividend and ex-
distribution date, respectively.
Interest income from interest bearing investments is
recognized in the Statement of Comprehensive Income
using the effective interest rate. Interest receivable
shown in the Statement of Financial Position is accrued
based on the interest bearing instruments’ stated rates
of interest.
Interest on inflation-indexed bonds is paid based
on a principal value, which is adjusted for inflation.
NOTES TO FINANCIAL STATEMENTS (cont’d)
(All amounts in thousands of Canadian dollars, except per unit data)
June 30, 2014
BMO Harris International Equity Portfolio
(unaudited)
The inflation adjustment of the principal value is
recognized as part of interest income in the Statement
of Comprehensive Income. If held to maturity, the
Portfolio will receive, in addition to a coupon interest
payment, a final payment equal to the sum of the par
value and the inflation compensation accrued from
the original issue date. Interest is accrued on each
Valuation Date based on the inflation adjusted par value
at that time and is included in “Interest income” in the
Statement of Comprehensive Income.
Foreign currency translation
The fair value of investments and other assets and
liabilities in foreign currencies are translated into the
Portfolio’s functional currency at the rates of exchange
prevailing at the period-end date. Purchases and sales of
investments, and income and expenses are translated at
the rates of exchange prevailing on the respective dates
of such transactions. Foreign exchange gains (losses) on
completed transactions are included in “Realized gains
(losses)” and unrealized foreign exchange gains (losses)
are included in “Change in unrealized appreciation
(depreciation)” in the Statement of Comprehensive
Income. Foreign exchange gains and losses relating to
cash are included as "Foreign exchange gain (loss) on
cash".
Securities lending
A Portfolio may engage in securities lending pursuant to
the terms of an agreement, which includes restrictions
as set out in Canadian securities legislation. Collateral
held is government Treasury Bills and qualified Notes.
Income from securities lending, where applicable, is
included in the Statement of Comprehensive Income
and is recognized when earned. The market value of
the securities loaned and collateral held is determined
daily. Aggregate values of securities held in trust as at
June 30, 2014, and December 31, 2013 and January 1,
2013, where applicable, are disclosed in Note 8(e).
Short-term trading penalty
To discourage excessive trading, the Portfolio may,
at the Manager’s sole discretion, charge a short-term
trading penalty. This penalty is paid directly to the
Portfolio and is included in “Short-term penalty fees” in
the Statement of Comprehensive Income.
Cash
Cash is comprised of cash and deposits with banks,
which include banker acceptances and overnight
demand deposits. Cash is recorded at amortized cost.
Other assets and other liabilities
Dividend receivable, interest receivable, distributions
from investment trust units receivable, due from broker
and subscriptions receivable, are initially measured
at fair value and subsequently measured at amortized
cost. Similarly, due to broker, redemptions payable and
accrued expenses, are initially measured at amortized
cost. Other assets and liabilities are short-term in
nature, and are carried at cost or amortized cost, which
approximates fair value.
Increase or decrease in net assets attributable to holders
of redeemable units
“Increase (decrease) in net assets attributable to
holders of redeemable units” in the Statement of
Comprehensive Income represents, the increase
(decrease) in net assets attributable to holders of
redeemable units divided by the weighted average
number of units outstanding during the period.
Taxation
The Portfolio qualifies as a mutual fund trust under
the provisions of the Income Tax Act (Canada).
Distributions of all net taxable income and sufficient
amounts of net realized capital gains for each taxation
year will be paid to unitholders so that the Portfolio will
not be subject to income tax. As a result, the Portfolio
has determined that it is in substance not taxable
and therefore does not record income taxes in the
Statement of Comprehensive Income and or recognize
any deferred tax assets in the Statement of Financial
Position.
The Portfolio may incur withholding taxes imposed
by certain countries on investment income and capital
gains. Such income and gains are recorded on a gross
basis with the related withholding taxes shown as a
separate expense in the Statement of Comprehensive
Income.
Investments in subsidiaries, joint ventures and associates
Subsidiaries are entities over which the Portfolio has
control through its exposure or rights to variable returns
from its investment, and has the ability to affect those
returns through its power over the entity. The Portfolio
has determined that it is an investment entity and as
such, it accounts for subsidiaries at fair value. Joint
ventures are those where the Portfolio exercises joint
control through an agreement with other shareholders.
Associates are investments in which the Portfolio exerts
significant influence over operating, investing, and
financing decisions (such as companies in which the
NOTES TO FINANCIAL STATEMENTS (cont’d)
(All amounts in thousands of Canadian dollars, except per unit data)
June 30, 2014
BMO Harris International Equity Portfolio
(unaudited)
Portfolio owns 20% - 50% of voting shares), all of which
have been designated at FVTPL.
Accounting standards issued but not yet adopted
Below are accounting standards issued or amended
but not yet effective and not yet adopted. The Manager
does not expect the adoption of these standards
or amendments to have a significant impact to the
Portfolio’s financial statements.
In July 2014, the IASB issued the most recent version
of IFRS 9 Financial Instruments, which addresses
classification and measurement, impairment and hedge
accounting.
The new standard requires assets to be carried at
amortised cost, fair value through profit and loss or fair
value through
comprehensive income based on the entity’s business
model for managing financial assets and the contractual
cash flow characteristics of the financial asset. The
classification and measurement of liabilities remains
generally unchanged with the exception of liabilities
recorded at fair value through profit and loss. For these
liabilities, fair value changes attributable to changes in
the entity’s own credit risk are to be presented in other
comprehensive income unless they affect amounts
recorded in income.
The new standard also addresses impairment of
financial assets. It also introduced a new hedge
accounting model that expands the scope of eligible
hedged items and risks eligible for hedge accounting,
and aligns hedge accounting more closely with risk
management.
The new standard is effective for the Portfolio for its
fiscal year beginning January 1, 2018. The Portfolio is
evaluating the impact of this standard on its financial
statements.
4. Critical accounting estimates and judgments
The most significant accounting estimates and
judgments that the Portfolio has made in preparing
the financial statements relate to the fair value
measurement and classification of investments.
The Portfolio has established policies and control
procedures that are intended to ensure these judgments
are well controlled, independently reviewed, and
consistently applied from period to period. The
estimates of the value of the Portfolio’s assets and
liabilities are believed to be appropriate as at the
reporting date.
The Portfolio may hold financial instruments that are
not quoted in active markets. Note 3 discusses the
estimates used in determining fair value.
In classifying and measuring financial instruments
held by the Portfolio, the Manager is required to make
significant judgments about whether or not the business
of the Portfolio is to invest on a total return basis for the
purpose of applying the fair value options for financial
assets.
5. Units and unit transactions
The redeemable units of the Portfolio are classified as
liabilities.
The units have no par value and are entitled to
distributions, if any. Upon redemption, a unit is
entitled to a proportionate share of the Portfolio’s
NAV. The Portfolio is required to pay distributions
in an amount not less than the amount necessary to
ensure the Portfolio will not be liable for income taxes.
The Portfolio has no restrictions or specific capital
requirements on the subscriptions and redemptions
of units except as disclosed in Note 8(a). The relevant
movements in redeemable units are shown on the
Statement of Changes in Net Assets Attributable to
Holders of Redeemable Units. In accordance with
its investment objectives and strategies, and the risk
management practices outlined in Note 7, the Portfolio
endeavours to invest the subscriptions received in
appropriate investments, while maintaining sufficient
liquidity to meet redemptions, with such liquidity being
augmented by short-term borrowings or disposal of
investments where necessary.
Redeemable units of the Portfolio are offered for
sale on a continuous basis and may be purchased or
redeemed on any Valuation Date at the NAV per unit of
a particular series. The NAV per unit for the purposes of
subscription or redemption is computed by dividing the
NAV of the Portfolio (that is, the total fair value of the
assets less the liabilities) by the total number of units of
the Portfolio outstanding at such time.
6. Related party transactions
(a) Unitholder servicing, sub-advisory commissions and
other portfolio transaction costs
The Portfolio is provided with certain facilities and
services by affiliates of the Manager. Expenses incurred
in the administration of the Portfolio were paid to BMO
Trust Company (“the Trustee”) and to BMO Asset
Management Inc. (“the Registrar”) and charged to the
Portfolio. These expenses are included in “Unitholder
NOTES TO FINANCIAL STATEMENTS (cont’d)
(All amounts in thousands of Canadian dollars, except per unit data)
June 30, 2014
BMO Harris International Equity Portfolio
(unaudited)
servicing fees” in the Statement of Comprehensive
Income.
The sub-advisors (including affiliates of the Manager,
where applicable) engaged by the Manager provide
investment advice and make investment decisions
for the Portfolio. For these services, the sub-advisors
receive sub-advisory fees that are paid monthly by the
Manager. These expenses are included in “Sub-advisory
fees” in the Statement of Comprehensive Income. Any
sub-advisory fees less than or equal to 0.15% of the
net asset value of the Portfolio are absorbed by the
Manager.
The Portfolio may execute trades with and or through
BMO Nesbit Burns Inc., an affiliate of the Manager,
based on established standard brokerage agreements, at
market prices. These fees are included in “Commissions
and other portfolio transaction costs” in the Statement
of Comprehensive Income. Refer to Note 8(d) for related
party fees charged to the Portfolio for the periods ended
June 30, 2014 and June 30, 2013.
(b) Other related party transactions
From time to time, the Manager may on behalf of the
Portfolio enter into transactions or arrangements
with or involving subsidiaries or affiliates of Bank of
Montreal group, or certain other persons or companies
that are related or connected to the Manager of the
Portfolio. These transactions or arrangements may
include transactions or arrangements with or involving
subsidiaries or affiliates of Bank of Montreal, BMO
Trust Company, BMO Nesbitt Burns Inc., Harris
Investment Management Inc., BMO Asset Management
Inc., BMO Investments Inc., Pyrford International
Ltd, Lloyd George Management Inc., F&C Asset
Management plc, or other investment funds offered by
BMO, and may involve the purchase or sale of portfolio
securities through or from a subsidiary or affiliate of
Bank of Montreal, the purchase or sale of securities
issued or guaranteed by a subsidiary or affiliate of
Bank of Montreal, entering into forward contracts with
a subsidiary or affiliate of Bank of Montreal acting as
counterparty, the purchase or redemption of units of
other BMO Harris Private Portfolios or the provision of
services to the Manager.
7. Financial instrument risk
The Portfolio’s activities expose it to a variety of risks
associated with the financial instruments, as follows:
market risk (including currency risk, interest rate risk
and other market risk), credit risk and liquidity risk.
The concentration table groups securities by asset
type, geographic location and/or market segment.
The Portfolio’s risk management practice outlines the
monitoring of compliance to investment guidelines.
The Manager manages the potential effects of
these financial risks on the Portfolio’s performance
by employing and overseeing professional and
experienced portfolio managers that regularly monitor
the Portfolio’s positions, market events and diversify
investment portfolios within the constraints of the
investment guidelines.
(a) Currency risk
Currency risk is the risk that the value of financial
instruments denominated in currencies, other than
the functional currency of the Portfolio, will fluctuate
due to changes in foreign exchange rates. Investments
in foreign markets are exposed to currency risk as the
prices denominated in foreign currencies are converted
to the Portfolio’s functional currency in determining fair
value. The Portfolio may enter into forward currency
contracts for hedging purposes to reduce foreign
currency exposure or to establish exposure to foreign
currencies. The Portfolio’s exposure to currency risk, if
any, is further disclosed in Note 8(e).
(b) Interest rate risk
Interest rate risk is the risk that the fair value of the
Portfolio's interest-bearing investments will fluctuate
due to changes in market interest rates. The Portfolio's
exposure to interest rate risk is concentrated in its
investment in debt securities (such as bonds, money
market instruments, short-term investments and
debentures) and interest rate derivative instruments, if
any. Other assets and liabilities are short-term in nature
and/or non-interest bearing. The Portfolio's exposure
to interest rate risk, if any, is further discussed in Note
8(e).
(c) Other market risk
Other market risk is the risk that the fair value of a
financial instrument will fluctuate as a result of changes
in market prices (other than those arising from interest
rate risk or currency risk), whether those changes are
caused by factors specific to the individual financial
instrument or its issuer, or factors affecting all similar
financial instruments traded in a market or market
segment. Other assets and liabilities are monetary items
that are short-term in nature, and as such they are not
subject to other market risk. The Portfolio's exposure
to other market risk, if any, is further discussed in Note
8(e).
NOTES TO FINANCIAL STATEMENTS (cont’d)
(All amounts in thousands of Canadian dollars, except per unit data)
June 30, 2014
BMO Harris International Equity Portfolio
(unaudited)
(d) Credit risk
Credit risk is the risk that a loss could arise from a
security issuer or counterparty to a financial instrument
not being able to meet its financial obligations. The
fair value of debt securities includes consideration of
the credit worthiness of the debt issuer. Credit risk
exposure for over-the-counter derivative instruments
is based on the Portfolio's unrealized gain of the
contractual obligations with the counterparty as at the
reporting date. The credit exposure of other assets is
represented by its carrying amount. The Portfolio's
exposure to credit risk, if any, is further discussed in
Note 8(e).
The Portfolio may enter into securities lending
transactions with approved counterparties. Credit
risk associated with these transactions is considered
minimal as all counterparties have a sufficient approved
credit rating and the market value of collateral held by
the Portfolio must be at least 102% of the fair value of
securities loaned, as disclosed in Note 8(e).
(e) Liquidity risk
The Portfolio's exposure to liquidity risk is concentrated
in the daily cash redemptions of units. The Portfolio
primarily invests in securities that are traded in active
markets and can be readily disposed. In addition, the
Portfolio retains sufficient cash and cash equivalent
positions to maintain liquidity. The Portfolio may, from
time to time, enter into over-the-counter derivative
contracts or invest in unlisted securities, which are
not traded in an organized market and may be illiquid.
The proportion of illiquid securities to the NAV of
the Portfolio is monitored by the Manager to ensure
it does not exceed the regulatory limit and does not
significantly affect the liquidity required to meet the
Portfolio's financial obligations.
NOTES TO FINANCIAL STATEMENTS (cont’d)
(All amounts in thousands of Canadian dollars, except per unit data)
June 30, 2014
BMO Harris International Equity Portfolio
(unaudited)
8. Portfolio specific information
(a) Portfolio information and change in units
The Portfolio’s inception date was January 28, 1998.
The number of units that have been issued and are
outstanding are disclosed in the table below.
For the periods ended
(in thousands of units)
Jun. 30,
2014
Jun. 30,
2013
Units issued and outstanding, beginning
of period 89,703 63,099
Issued for cash 16,078 13,951
Redeemed during the period (5,191 ) (8,280 )
Units issued and outstanding, end of
period 100,590 68,770
(b) Increase (decrease) in net assets attributable to hold-
ers of redeemable units per unit
The increase (decrease) in net assets attributable to
holders of redeemable units per unit for theperiods
ended June 30, 2014 and June 30, 2013 is calculated as
follows:
Jun. 30, Jun. 30,
2014 2013
Increase in net assets attributable to holders of
redeemable units 37,351 57,025
Weighted average units outstanding during the
period 95,888 65,496
Increase in net assets attributable to holders of
redeemable units per unit 0.39 0.87
(c) Income taxes
Asat the tax year-endedDecember 2013, thePortfolio
had the following capital and non-capital losses for
income tax purposes:
Total Capital
Losses
($)
Total Non-
Capital Losses
($) Non-Capital Losses That Expire in
2014
($)
2015
($)
2026 and
thereafter
($)
181,320 — — — —
(d) Related party transactions
Unitholder servicing
The related party fees charged for unitholder servicing
fees are as follows:
Jun. 30, Jun. 30,
2014 2013
Unitholder servicing ($) 149 147
Brokerage commissions and soft dollars
Brokerage commissions paid on securities transactions
and amounts paid to related parties of the Manager for
brokerage services provided to thePortfolio for the
periods are as follows:
Jun. 30, Jun. 30,
2014 2013
Total brokerage amounts paid ($) 643 438
Total brokerage amounts paid to related
parties ($) — —
The Manager may select brokers who charge a
commission in “soft dollars” if they determine in good
faith that the commission is reasonable in relation to the
order execution and research services utilized. There
were no ascertainable soft dollars paid or payable to
dealers by the Portfolio during the periods.
(e) Financial instrument risk
The Portfolio’s objective is to provide a long term
capital appreciation by investing in a diversified
portfolio of primarily equity securities of issuers
throughout the world, other than in Canada and the
United States.
No changes affecting the overall level of risk of
investing in the Portfolio were made during the period.
Currency risk
The tables below summarize the Portfolio’s exposure
to currency risk. Amounts shown are based on the
carrying value of monetary and non-monetary assets
(including derivatives and the underlying principle
(notional) amount of forward currency contracts, if
any).
NOTES TO FINANCIAL STATEMENTS (cont’d)
(All amounts in thousands of Canadian dollars, except per unit data)
June 30, 2014
BMO Harris International Equity Portfolio
(unaudited)
As at Jun. 30, 2014
Cash and
other
current
receivables
& payables
($)
Invest-
ments
($)
Forward
currency
contracts
($)
Net
currency
exposure
($)
As a %
of Net
Assets
(%)
Australian
Dollar 187 59,831 (36,906) 23,112 2.0
Chinese
Yuan 269 – – 269 0.0
Danish
Krone — 29,842 – 29,842 2.6
Euro 539 305,520 – 306,059 26.7
Hong Kong
Dollar 501 74,957 – 75,458 6.6
Israel Shekel — 5,517 – 5,517 0.5
Japanese
Yen 938 162,032 – 162,970 14.2
Malaysian
Ringgit 41 18,510 – 18,551 1.6
Norwegian
Krone — 18,341 – 18,341 1.6
Philippine
Peso — 4,851 – 4,851 0.4
Pound
Sterling 453 180,893 – 181,346 15.8
Singapore
Dollar — 20,984 – 20,984 1.8
Swedish
Krona — 44,151 – 44,151 3.9
Swiss Franc (363) 105,452 – 105,089 9.2
Taiwan
Dollar 192 11,449 – 11,641 1.0
U.S. Dollar 2,037 33,743 – 35,780 3.1
Total 4,794 1,076,073 (36,906) 1,043,961 91.0
All amounts in Canadian Dollars
As at Dec. 31, 2013
Cash and
other
current
receivables
& payables
($)
Invest-
ments
($)
Forward
currency
contracts
($)
Net
currency
exposure
($)
As a %
of Net
Assets
(%)
Australian
Dollar 161 48,624 (26,473) 22,312 2.3
Brazilian
Real — 1,462 – 1,462 0.1
Danish
Krone — 27,567 – 27,567 2.8
Euro 208 265,657 – 265,865 27.0
Hong Kong
Dollar 59 64,000 – 64,059 6.5
Israel Shekel — 4,031 – 4,031 0.4
Japanese
Yen (324) 151,474 – 151,150 15.3
Malaysian
Ringgit 27 15,060 – 15,087 1.5
Mexican
Peso — 1,568 – 1,568 0.2
Norwegian
Krone — 9,690 – 9,690 1.0
Philippine
Peso — 3,695 – 3,695 0.4
Pound
Sterling 419 144,022 – 144,441 14.7
Singapore
Dollar — 19,163 – 19,163 1.9
South
Korean
Won 425 4,064 – 4,489 0.5
Swedish
Krona 138 43,476 – 43,614 4.4
Swiss Franc — 84,158 – 84,158 8.5
Taiwan
Dollar 151 9,215 – 9,366 1.0
U.S. Dollar 1,172 35,596 – 36,768 3.7
Total 2,436 932,522 (26,473) 908,485 92.2
All amounts in Canadian Dollars
NOTES TO FINANCIAL STATEMENTS (cont’d)
(All amounts in thousands of Canadian dollars, except per unit data)
June 30, 2014
BMO Harris International Equity Portfolio
(unaudited)
As at Jan. 1, 2013
Cash and
other
current
receivables
& payables
($)
Invest-
ments
($)
Forward
currency
contracts
($)
Net
currency
exposure
($)
As a %
of Net
Assets
(%)
Australian
Dollar 60 30,582 (16,656) 13,986 2.5
Brazilian
Real — 3,169 – 3,169 0.6
Danish
Krone — 4,890 – 4,890 0.9
Euro 41 145,172 – 145,213 26.2
Hong Kong
Dollar (17) 44,382 – 44,365 8.0
Indonesia
Rupiah — 1,508 – 1,508 0.3
Israel Shekel — 2,626 – 2,626 0.5
Japanese
Yen 31 59,771 – 59,802 10.8
Malaysian
Ringgit 11 7,340 – 7,351 1.3
Mexican
Peso — 2,111 – 2,111 0.4
Norwegian
Krone — 6,742 – 6,742 1.2
Philippine
Peso — 2,619 – 2,619 0.5
Pound
Sterling 551 92,716 – 93,267 16.9
Singapore
Dollar — 13,699 – 13,699 2.5
South
Korean
Won 56 5,654 – 5,710 1.0
Swedish
Krona 244 18,584 – 18,828 3.4
Swiss Franc 8 49,438 – 49,446 8.9
Taiwan
Dollar 1,611 5,771 – 7,382 1.3
Thai Baht — 1,896 – 1,896 0.3
U.S. Dollar 286 28,964 – 29,250 5.3
Total 2,882 527,634 (16,656) 513,860 92.8
All amounts in Canadian Dollars
As at the periods ended June 30, 2014, December 31,
2013 and January 1, 2013, if the Canadian dollar had
strengthened or weakened by 5% in relation to all
foreign currencies, with all factors remaining constant,
Net Assets could possibly have increased or decreased,
respectively, by approximately $52,198 (December 31,
2013 – $45,424; January 1, 2013 – $25,693). In practice,
actual results may differ from this sensitivity analysis
and the difference could be material.
Interest rate risk
As at June 30, 2014, December 31, 2013 and January 1,
2013, the Portfolio did not have any significant exposure
to interest rate risk.
Other market risk
ThePortfolio has a significant exposure to other
market risk arising from its investment in equity
securities.The Portfolio's exposure toequity securities
determine the extent to which thePortfolio reacts to the
movements in the relevant Benchmark. Using historical
correlation between the Portfolio'sreturn and the
return of its Benchmark,if the Benchmark,MSCI EAFE
Index (CAD),had increased or decreased by10%,
with all other variables held constant, the Net Assets
of thePortfolio would haveincreased or decreased,
respectively,by $81,749 (December 31, 2013 - $70,956;
January 1, 2013 - $40,153). Historical correlation
may not be representative of future correlation,
and accordingly,actual results may differ and the
difference could be material.
Credit risk
As at June 30, 2014, December 31, 2013 and January 1,
2013, the Portfolio did not have any significant exposure
to credit risk.
Securities lending
There were no assets involved in securities lending
transactions as at June 30, 2014, December 31, 2013 and
January 1, 2013.
NOTES TO FINANCIAL STATEMENTS (cont’d)
(All amounts in thousands of Canadian dollars, except per unit data)
June 30, 2014
BMO Harris International Equity Portfolio
(unaudited)
Concentration risk
The following is a summary of the Portfolio's
concentration risk:
Jun. 30,
2014
Dec. 31,
2013
Jan. 1,
2013
Equities
Australia 5.2% 4.9% 5.3%
Austria —% 0.6% —%
Belgium 2.3% 1.8% 1.6%
Brazil 0.1% 0.6% 1.2%
China 1.8% 2.4% 2.9%
Denmark 2.6% 2.8% 0.9%
Finland 1.0% 0.6% 0.6%
France 9.2% 9.1% 7.9%
Germany 6.7% 7.7% 11.5%
Hong Kong 4.7% 5.0% 5.9%
Indonesia —% —% 0.3%
Ireland 0.8% 0.8% 1.4%
Israel 0.5% 0.4% 1.4%
Italy 1.7% 2.7% 0.9%
Japan 14.2% 15.4% 10.8%
Macau 0.5% 0.1% —%
Malaysia 1.6% 1.5% 1.3%
Mexico —% 0.2% 0.4%
Netherlands 4.3% 2.3% 2.3%
New Zealand —% 0.0% 0.2%
Norway 1.6% 1.0% 1.2%
Peru —% —% 0.4%
Philippines 0.4% 0.4% 0.5%
Russia —% 0.4% 0.2%
Singapore 1.8% 1.9% 2.5%
South Korea —% 0.4% 1.0%
Spain 2.0% 1.2% 0.4%
Sweden 3.9% 4.4% 3.4%
Switzerland 9.2% 8.5% 8.9%
Taiwan 1.6% 1.2% 1.0%
Thailand —% —% 0.3%
United Kingdom 15.3% 15.3% 17.9%
United States 1.0% 1.1% 0.8%
Other Assets Less
Liabilities 6.0% 5.3% 4.7%
100.0% 100.0% 100.0%
(f) Financial assets and financial liabilities
Categories of financial assets and financial liabilities
The table below shows the categories of financial
assets and financial liabilities.
Jun. 30, Dec. 31, Jan. 1,
2014 2013 2013
Financial assets designated
at FVTPL 1,076,073 932,533 527,636
Financial assets designated as
held for trading — 261 —
Loans and receivables 4,644 3,341 1,391
Financial liabilities designated
as held for trading 295 — 311
Financial liabilities measured
at amortized cost 7,487 2,515 1,460
Net gains and losses on financial assets and financial
liabilities at fair value
Jun. 30, Jun. 30,
2014 2013
Net realized gains on financial assets
at FVTPL
Designated at FVTPL 52,253 35,283
52,253 35,283
Net realized losses on financial
liabilities at FVTPL
Held for trading (1,756) (852)
(1,756) (852)
Total net realized gains on financial
assets and financial liabilities at
FVTPL 50,497 34,431
Change in unrealized gains (losses) on
financial assets at FVTPL
Held for trading — 2,205
Designated at FVTPL (5,814) 24,269
(5,814) 26,474
Change in unrealized losses on financial
liabilities at FVTPL
Held for trading (556) —
(556) —
Total change in unrealized gains
(losses) on financial assets and
financial liabilities at FVTPL (6,370) 26,474
NOTES TO FINANCIAL STATEMENTS (cont’d)
(All amounts in thousands of Canadian dollars, except per unit data)
June 30, 2014
BMO Harris International Equity Portfolio
(unaudited)
(g) Fair value hierarchy
The Portfolio classifies its financial instruments
into three levels based on the inputs used to value
the financial instruments. Level 1 securities are
valued based on quoted prices in active markets for
identical securities. Level 2 securities are valued
based on significant observable market inputs, such
as quoted prices from similar securities and quoted
prices in inactive markets or based on observable
inputs to models. Level 3 securities are valued
based on significant unobservable inputs that reflect
the Manager's determination of assumptions that
market participants might reasonably use in valuing
the securities. The tables below show the relevant
disclosure.
As at Jun. 30, 2014
Financial assets Level 1 Level 2 Level 3 Total
Equity Securities 20,504 1,055,569 — 1,076,073
Financial liabilities
Derivatives — (295) — (295)
As at Dec. 31, 2013
Financial assets Level 1 Level 2 Level 3 Total
Equity Securities 23,280 909,253 — 932,533
Derivatives — 261 — 261
Total 23,280 909,514 — 932,794
As at Jan. 1, 2013
Financial assets Level 1 Level 2 Level 3 Total
Equity Securities 14,945 512,691 — 527,636
Financial liabilities
Derivatives — (311) — (311)
Transfers between levels
There were no transfers between levels during the
periods.
(h) Transition to IFRS
The differences between the Portfolio’s Canadian GAAP
accounting policies and IFRS requirements resulted
in measurement and classification differences on
transition to IFRS. The net impact of these differences
was recorded in opening Net Assets as of January 1,
2013.
The following information reflects the Portfolio’s
transition elections under IFRS 1, First-time Adoption of
International Financial Reporting Standards (“IFRS 1”),
the standard for first-time adoption and the significant
accounting changes resulting from our adoption of
IFRS. The general principle under IFRS 1 is retroactive
application, such that the Portfolio’s Statement of
Financial Position as at January 1, 2013 was restated
as though the Portfolio has always applied IFRS with
the net impact shown as an adjustment to opening Net
Assets.
Transition elections
The fund had applied the voluntary exemption upon
transition to designate financial assets or financial
liabilities at FVTPL. All financial assets designated at
FVTPL upon transition were previously recorded at fair
value under Canadian GAAP as required by Accounting
Guideline 18, Investment Companies.
Statement of cash flows
Under Canadian GAAP, the Portfolio was exempt
from providing a Statement of Cash Flows. IAS 1,
Presentation of Financial Statements (“IAS 1”), requires
that a Statement of Cash Flows to be presented as part
of a complete set of financial statements. As such, the
Portfolio has presented a Statement of Cash Flows in the
interim financial statements for the periods ended June
30, 2014 andJune 30, 2013.
Classification of redeemable units issued by the Portfolio
Under Canadian GAAP, redeemable units of the
Portfolio were presented as Net Assets. IAS 32,
Financial Instruments: Disclosure and Presentation
(“IAS 32”), however, requires an assessment to
determine whether the units issued to unitholders
are puttable instruments that qualify for equity
classification. The Portfolio’s units do not meet the
criteria in IAS 32 for equity classification and therefore,
have reclassified as financial liabilities on transition
to IFRS and presented on the Statement of Financial
Position as Net Assets.
Revaluation of investments at FVTPL
Canadian GAAP required the use of bid prices for
long positions and ask prices for short positions in
determining fair valuation of investments traded in
an active market, rather than the use of close prices
used for the purpose of determining NAV. IFRS 13,
Fair Value Measurement (“IFRS 13”), requires that if
an asset or a liability has a bid price and an ask price,
then its fair value is to be based on a price within
the bid-ask spread that is most representative of fair
value. The standard also allows the use of mid-market
pricing or other pricing conventions that are used by
market participants as a practical expedient for fair
NOTES TO FINANCIAL STATEMENTS (cont’d)
(All amounts in thousands of Canadian dollars, except per unit data)
June 30, 2014
BMO Harris International Equity Portfolio
(unaudited)
value measurements within a bid-ask spread. Upon
adoption of IFRS, the fund has determined that for
traded securities, close prices on the reporting date
are considered to be fair value, if they fall within the
bid-ask spread. See Note 3 for the Portfolio’s fair value
measurement policy.
Reconciliation of Net Assets as reported under Canadian GAAP
to IFRS
Dec. 31, Jun. 30, Jan. 1,
2013 2013 2013
Net assets representing
unitholders' equity under
Canadian GAAP 984,736 663,943 553,416
Revaluation of investments
at FVTPL 10 30 2
Net assets attributable to
holders of redeemable units 984,746 663,973 553,418
Reconciliation of increase (decrease) in net assets reported
under Canadian GAAP to IFRS
Dec. 31, Jun. 30,
2013 2013
Increase in net assets from operations under
Canadian GAAP 177,245 56,997
Revaluation of investments at FVTPL 8 28
Increase in net assets attributable to holders of
redeemable units 177,253 57,025
Manager
BMO Harris Investment
Management Inc.
1 First Canadian Place
100 King St. W., 41st Floor
Toronto, Ontario M5X 1H3
Trustee
BMO Trust Company
1 First Canadian Place
100 King St. W., 41st Floor
Toronto, Ontario M5X 1H3
Independent Auditors
PricewaterhouseCoopers LLP
PwC Tower
18 York Street, Suite 2600
Toronto, Ontario M5J 0B2
www.bmoharrisprivatebanking.com
®”BMO (M-bar roundel symbol) Harris Private Banking” is a registered trade-mark of Bank of Montreal, used under licence. BMO Harris
Private Banking is comprised of Bank of Montreal, BMO Harris Investment Management Inc., and BMO Trust Company. Banking services
are offered through Bank of Montreal. Investment management services are offered through BMO Harris Investment Management Inc.,
an indirect subsidiary of Bank of Montreal. Estate, trust, planning, administration and custodial services are offered through BMO Trust
Company, a wholly owned subsidiary of Bank of Montreal.
