BMO Investments Inc. et al.

Headnote

NP 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Approval of mutual fund mergers -- approval required because merger does not meet the criteria for pre-approved reorganizations and transfers in National Instrument 81-102 -- certain merging funds do not have substantially similar investment objectives and fee structure -- some mergers not a "qualifying exchange" or a tax-deferred transaction under the Income Tax Act -- current simplified prospectus or the most recently filed fund facts document of certain series of the Continuing Fund are not sent -- securityholders provided with timely and adequate disclosure regarding the mergers.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 5.5(1)(b), 5.5(3), 5.6, 5.7(1)(b), 19.1.

May 24, 2012

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the Jurisdiction)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

BMO INVESTMENTS INC.

(the Manager)

AND

BMO CANADIAN LARGE CAP EQUITY CLASS

BMO ENTERPRISE CLASS

BMO RESOURCE CLASS

BMO GLOBAL ENERGY CLASS

BMO GUARDIAN DIVIDEND GROWTH FUND

BMO U.S. GROWTH FUND

BMO GLOBAL MONTHLY INCOME FUND

BMO GUARDIAN GLOBAL BOND FUND

BMO JAPANESE FUND

BMO U.S. SPECIAL EQUITY FUND

BMO GUARDIAN GLOBAL TECHNOLOGY FUND

BMO GUARDIAN GLOBAL EQUITY FUND

BMO GLOBAL ABSOLUTE RETURN CLASS

BMO EMERGING MARKETS CLASS

BMO GLOBAL SMALL CAP CLASS

BMO GLOBAL TECHNOLOGY CLASS AND

BMO T-BILL FUND

(each, a Terminating Fund and collectively, the

Terminating Funds, and with the Manager, the Filers)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Manager on behalf of the Terminating Funds for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) approving the mergers (the Mergers) of the Terminating Funds into the Continuing Funds (defined below) pursuant to paragraph 5.5(1)(b) of National Instrument 81-102 Mutual Funds (NI 81-102) (the Approval Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) the Manager has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the provinces and territories of Canada, other than the province of Ontario (Other Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined. The following additional terms shall have the following meanings:

Classic Class Mergers means the Merger of BMO Guardian Global Bond Fund into BMO World Bond Fund and the Merger of BMO Guardian Global Technology Fund into BMO Guardian Global Small Cap Fund;

Continuing Funds means BMO Canadian Equity Class, BMO Dividend Fund, BMO U.S. Equity Fund, BMO Diversified Income Portfolio, BMO World Bond Fund, BMO Guardian Asian Growth and Income Fund, BMO Guardian Global Small Cap Fund, BMO Global Equity Class and BMO Money Market Fund;

Corporation means BMO Global Tax Advantage Funds Inc.;

Continuing Corporate Class Fund means each of BMO Global Equity Class and BMO Canadian Equity Class;

Corporate Class Funds means each of BMO Canadian Large Cap Equity Class, BMO Enterprise Class, BMO Resource Class, BMO Global Energy Class, BMO Global Absolute Return Class, BMO Emerging Markets Class, BMO Global Small Cap Class, BMO Global Technology Class, BMO Canadian Equity Class and BMO Global Equity Class, each of which are separate classes of securities of the Corporation;

Fee Structure Mergers means the Merger of:

(a) BMO Resource Class into BMO Canadian Equity Class;

(b) BMO Guardian Dividend Growth Fund into BMO Dividend Fund;

(c) BMO Guardian Global Bond Fund into BMO World Bond Fund;

(d) BMO Japanese Fund into BMO Guardian Asian Growth and Income Fund;

(e) BMO U.S. Special Equity Fund into BMO Guardian Global Small Cap Fund; and

(f) BMO Guardian Global Equity Fund into BMO Global Equity Class;

Fund or Funds means, individually or collectively, the Terminating Funds and the Continuing Funds;

Investment Objective Mergers means each Merger, other than the Merger of BMO Guardian Dividend Growth Fund into BMO Dividend Fund;

IRC means the independent review committee for the Funds;

NI 81-107 means National Instrument 81-107 -- Independent Review Committee for Investment Funds;

Tax Act means the Income Tax Act (Canada);

Taxable Mergers means the Merger of:

(a) BMO Global Monthly Income Fund into BMO Diversified Income Portfolio;

(b) BMO Japanese Fund into BMO Guardian Asian Growth and Income Fund;

(c) BMO U.S. Special Equity Fund into BMO Guardian Global Small Cap Fund;

(d) BMO Guardian Global Technology Fund into BMO Guardian Global Small Cap Fund; and

(e) BMO Guardian Global Equity Fund into BMO Global Equity Class;

Terminating Corporate Class Fund means each of BMO Canadian Large Cap Equity Class, BMO Enterprise Class, BMO Resource Class, BMO Global Energy Class, BMO Global Absolute Return Class, BMO Emerging Markets Class, BMO Global Small Cap Class and BMO Global Technology Class;

Terminating Trust Fund means each of BMO Guardian Dividend Growth Fund, BMO U.S. Growth Fund, BMO Global Monthly Income Fund, BMO Guardian Global Bond Fund, BMO Japanese Fund, BMO U.S. Special Equity Fund, BMO Guardian Global Technology Fund, BMO Guardian Global Equity Fund and BMO T-Bill Fund; and

Transition Manager Mergers means the Merger of:

(a) BMO U.S. Special Equity Fund into BMO Guardian Global Small Cap Fund;

(b) BMO Guardian Global Technology Fund into BMO Guardian Global Small Cap Fund;

(c) BMO Guardian Global Equity Fund into BMO Global Equity Class;

(d) BMO U.S. Growth Fund into BMO U.S. Equity Fund;

(e) BMO Global Energy Class into BMO Canadian Equity Class; and

(f) BMO Global Monthly Income Fund into BMO Diversified Income Portfolio;

Trust Funds means each of BMO Guardian Dividend Growth Fund, BMO U.S. Growth Fund, BMO Global Monthly Income Fund, BMO Guardian Global Bond Fund, BMO Japanese Fund, BMO U.S. Special Equity Fund, BMO Guardian Global Technology Fund, BMO Guardian Global Equity Fund, BMO T-Bill Fund, BMO Dividend Fund, BMO U.S. Equity Fund, BMO Diversified Income Portfolio, BMO World Bond Fund, BMO Guardian Asian Growth and Income Fund, BMO Guardian Global Small Cap Fund and BMO Money Market Fund.

Representations

This decision is based on the following facts represented by the Filers:

The Manager

1. The Manager is a corporation governed by the laws of Canada with its head office in Toronto, Ontario.

2. The Manager is the investment fund manager of the Funds and is registered as an investment fund manager in Ontario and as a mutual fund dealer in Ontario and the Other Jurisdictions.

The Funds

3. The Funds are either open-ended mutual fund trusts established under the laws of Ontario or separate classes of securities of the Corporation, a mutual fund corporation governed under the laws of Canada.

4. Securities of the Funds are currently qualified for sale under one or more of the simplified prospectus, annual information form and fund facts each dated March 26, 2012, as amended (collectively, theRetail Offering Documents), the simplified prospectus, annual information form and fund facts each dated June 16, 2011, as amended (collectively, the Guardian Offering Documents) and/or the simplified prospectus, annual information form and fund facts each dated September 20, 2011, as amended (collectively, the Advisor Offering Documents and together with the Retail Offering Documents and the Guardian Offering Documents, the Offering Documents).

5. Each of the Funds is a reporting issuer under the applicable securities legislation of Ontario and the Other Jurisdictions.

6. Neither the Manager nor the Funds is in default under the applicable securities legislation of Ontario or the Other Jurisdictions.

7. Other than circumstances in which the securities regulatory authority of a province or territory of Canada has expressly exempted a Fund therefrom, each of the Funds follows the standard investment restrictions and practices established under NI 81-102.

8. The net asset value for each class or series of the Funds, as applicable, is calculated on a daily basis in accordance with the Funds' valuation policy and as described in the applicable Offering Documents.

The Proposed Mergers

9. The Manager intends to reorganize the Funds as follows:

(a) BMO Canadian Large Cap Equity Class will merge into BMO Canadian Equity Class;

(b) BMO Enterprise Class will merge into BMO Canadian Equity Class;

(c) BMO Resource Class will merge into BMO Canadian Equity Class;

(d) BMO Global Energy Class will merge into BMO Canadian Equity Class;

(e) BMO Guardian Dividend Growth Fund will merge into BMO Dividend Fund;

(f) BMO U.S. Growth Fund will merge into BMO U.S. Equity Fund;

(g) BMO Global Monthly Income Fund will merge into BMO Diversified Income Portfolio;

(h) BMO Guardian Global Bond Fund will merge into BMO World Bond Fund;

(i) BMO Japanese Fund will merge into BMO Guardian Asian Growth and Income Fund;

(j) BMO U.S. Special Equity Fund will merge into BMO Guardian Global Small Cap Fund;

(k) BMO Guardian Global Technology Fund will merge into BMO Guardian Global Small Cap Fund;

(l) BMO Guardian Global Equity Fund will merge into BMO Global Equity Class;

(m) BMO Global Absolute Return Class will merge into BMO Global Equity Class;

(n) BMO Emerging Markets Class will merge into BMO Global Equity Class;

(o) BMO Global Small Cap Class will merge into BMO Global Equity Class;

(p) BMO Global Technology Class will merge into BMO Global Equity Class; and

(q) BMO T-Bill Fund will merge into BMO Money Market Fund.

10. In accordance with National Instrument 81-106 -- Investment Fund Continuous Disclosure, a press release announcing the proposed Mergers was issued and filed on SEDAR on March 23, 2012. Amendments to the Advisor Offering Documents and the Guardian Offering Documents with respect to the proposed Mergers were filed on SEDAR on March 26, 2012 and a material change report was filed on SEDAR on March 29, 2012. The Retail Offering Documents contained this disclosure in their final simplified prospectus and annual information form dated March 26, 2012.

11. As required by NI 81-107, the Manager presented the potential conflict of interest matters related to the proposed Mergers to the IRC for a recommendation. On March 7, 2012, the IRC reviewed the potential conflict of interest matters related to the proposed Mergers and provided its positive recommendation for each of the Mergers, after determining that each proposed Merger, if implemented, would achieve a fair and reasonable result for each applicable Fund.

12. Regulatory approval of the Mergers is required because each Merger does not satisfy all of the criteria for pre-approved reorganizations and transfers set out in section 5.6 of NI 81-102. The pre-approval criteria are not satisfied in the following ways:

(a) In the case of the Investment Objective Mergers, the fundamental investment objectives of the Continuing Funds are not, or may be considered not to be, "substantially similar" to the investment objectives of their corresponding Terminating Funds;

(b) In the case of the Fee Structure Mergers, the fee structure of the Continuing Funds are not, or may be considered not to be, "substantially similar" to the fee structure of their corresponding Terminating Funds;

(c) In the case of the Taxable Mergers, these Mergers will not be completed as a "qualifying exchange" or a tax deferred transaction under the Tax Act; and

(d) In the case of the Classic Class Mergers, the materials to be sent to securityholders of each applicable Terminating Fund will not include the current simplified prospectus or the most recently filed fund facts documents of Classic series securities for each applicable Continuing Fund, as these Classic series securities will not be qualified for distribution under a prospectus.

13. Except as described in this decision, the proposed Mergers comply with all of the other criteria for pre-approved reorganizations and transfers set out in section 5.6 of NI 81-102.

14. Securityholders of the Terminating Funds will be asked to approve the Mergers at special meetings to be held on or about May 25, 2012.

15. In accordance with corporate law requirements, securityholders of the Continuing Corporate Class Funds will be asked to approve an amendment to the articles of the Corporation in connection with the exchange of securities relating to the applicable Mergers for the Continuing Corporate Class Funds at special meetings to be held on or about May 25, 2012.

16. The Mergers involving an exchange of securities of the Corporation have also been approved by the Manager as the sole common voting shareholder of the Corporation, as required under applicable corporate law.

17. A notice of meeting, a management information circular and a proxy in connection with special meetings of securityholders (collectively, the Meeting Materials) were mailed to securityholders of each Terminating Fund and Continuing Corporate Class Fund commencing on or about May 2, 2012 and were concurrently filed via SEDAR.

18. The tax implications of the Mergers as well as the differences between the investment objectives and fee structures of the Terminating Funds and the Continuing Funds and the IRC's recommendation of the Mergers are described in the Meeting Materials so that the securityholders of the Terminating Funds may consider this information before voting on the Mergers. The Meeting Materials also describe the various ways in which investors can obtain a copy of the simplified prospectus, annual information form and fund facts for the Continuing Fund and its most recent interim and annual financial statements and management reports of fund performance.

19. Fund facts relating to the relevant series or class of the Continuing Funds were mailed to securityholders of the corresponding Terminating Funds, with the exception of fund facts relating to Classic series securities of BMO World Bond Fund and BMO Guardian Global Small Cap Fund. These series will not be qualified for distribution under a prospectus. In lieu of mailing the current simplified prospectus or the most recently filed fund facts document, the Manager proposes to provide fund fact level disclosure regarding Classic series of BMO World Bond Fund and BMO Guardian Global Small Cap Fund in a fund fact type document that was sent, together with the Meeting Materials, to securityholders of the applicable Terminating Funds.

20. Securityholders of each Terminating Fund will continue to have the right to redeem securities of the Terminating Fund at any time up to the close of business on the business day immediately before the effective date of the Mergers.

21. The Manager will pay for the costs of the Mergers. These costs consist mainly of brokerage charges associated with the merger related trades that occur both before and after the effective date of the Mergers and legal, proxy solicitation, printing, mailing and regulatory fees.

22. No sales charges will be payable in connection with the acquisition by a Continuing Fund of the investment portfolio of its applicable Terminating Fund.

23. Securities of each Continuing Fund received by the applicable Terminating Trust Fund will be distributed to securityholders of the Terminating Trust Fund in exchange for their securities in the Terminating Trust Fund on a dollar for dollar and class or series by class or series basis, as applicable.

24. All of the issued and outstanding securities of each Terminating Corporate Class Fund will be exchanged for securities of its applicable Continuing Corporate Class Fund on a dollar-for-dollar and series-by-series basis, so that securityholders of each Terminating Corporate Class Fund become securityholders of its applicable Continuing Corporate Class Fund.

25. The investment portfolio and other assets of each Terminating Fund to be acquired by the applicable Continuing Fund in order to effect the Mergers are currently, or will be, acceptable, on or prior to the effective date of the Mergers, to the portfolio manager(s) of the applicable Continuing Fund and are, or will be, consistent with the investment objectives of the applicable Continuing Fund. In the case of the Transition Manager Mergers, the transition manager will effect the reallocation of each applicable Terminating Fund's assets to ensure that these Terminating Funds' portfolios and other assets will be acceptable to the portfolio manager(s) of the applicable Continuing Funds prior to the effective date of each Transition Manager Merger.

26. Each Terminating Fund will merge into its applicable Continuing Fund and the Continuing Funds will continue as publicly offered open end mutual funds.

27. Each Terminating Fund will be wound up as soon as reasonably possible following the applicable Merger.

28. The Manager will terminate the following Terminating Funds and will cancel the applicable classes of the Corporation if approval for the relevant Mergers is not obtained: BMO Resource Class, BMO Global Absolute Return Class, BMO Emerging Markets Class, BMO Global Small Cap Class, BMO Global Technology Class, BMO Canadian Large Cap Equity Class and BMO Japanese Fund.

29. The Manager believes that the Mergers are beneficial to securityholders of each Terminating Fund and Continuing Fund for the following reasons:

(a) the Mergers will result in a more streamlined and simplified product line-up that is easier for investors to understand;

(b) the Mergers will eliminate duplicate fund offerings across product line-ups, thereby reducing the administrative and regulatory costs of operating each Terminating Fund and Continuing Fund as a separate mutual fund;

(c) securityholders of each Terminating Fund and Continuing Fund will enjoy increased economies of scale as part of a larger combined Continuing Fund;

(d) securityholders of a Terminating Trust Fund who become securityholders of a Corporate Class Fund will be able to switch between different funds that are classes of the Corporation without creating a disposition for income tax purposes;

(e) following the Mergers, each Continuing Fund will have a portfolio of greater value, which may allow for increased portfolio diversification opportunities if desired;

(f) in some cases, there is significant overlap between portfolio holdings of the Terminating Fund and portfolio holdings of the Continuing Fund;

(g) each Continuing Fund, as a result of its greater size, may benefit from its larger profile in the marketplace; and

(h) in some cases, management fees and/or fixed administration fees will be lower for the Continuing Funds.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Approval Sought is granted.