## Overview of the Structure of the MD&A 

Management’s Discussion and Analysis of Operations and Finan- cial Condition (MD&A) comments on BMO Financial Group (BMO) operations for the years ended October 31, 2002 and 2001. The MD&A is presented in ten sections: 

Objectives, Measures and Targets (page 11) provides an over- view of the relationship between the most important measures used by management to assess financial performance and con- dition, our targets for 2002 and 2003, and our objectives. 

Financial Performance and Condition at a Glance (pages 12 to 14) provides high-level commentary and graphs related to our seven primary financial performance and four primary financial condition measures. The section also provides commentary on those measures relative to the results of our Canadian and North American peer groups. More detailed discussion of the measures is provided in other sections of the MD&A, as indicated below. 

Value Measures (pages 15 to 17) reviews financial performance in terms of four of our primary financial performance measures: five-year total shareholder return, diluted earnings per share growth, return on common shareholders’ equity and net eco- nomic profit growth. 

Financial Statement Analysis (pages 18 to 25) provides an analysis of our financial performance by focusing on the state- ment of income and the balance sheet that are included within the consolidated financial statements, which are presented start- ing on page 67 of this report. The section includes an analysis of our performance on another two of our primary financial performance measures: revenue growth and the expense-to- revenueratio.Italsoincludesadiscussionofourmoresignificant accounting policies, which is intended to enhance investors’ understanding regarding the sensitivity of reported financial results to the methods, assumptions and estimates that underlie the preparation of financial statements in accordance with generally accepted accounting principles (GAAP). 

## Caution Regarding Forward-Looking Statements 

Enterprise-Wide Strategic Management (page 26) provides an overview of our enterprise strategy, strategic milestones and strategic management function. 

Enterprise-Wide Risk Management (pages 27 to 34) provides an overview of risk management in the organization and a discus- sion of our objectives and approach to managing credit, market, liquidity and funding, and operational risks. It includes analysis of another of our primary financial performance measures, provision for credit losses as a percentage of average loans and acceptances, and two of our primary financial condition measures: the ratio of gross impaired loans and acceptances to equity and allowances for credit losses, and the ratio of cash and securities- to -total assets. 

Enterprise-Wide Capital Management (page 35) provides an overview of our approach to managing capital. It also includes an analysis of changes in the Tier 1 Capital Ratio, another of our primary financial condition measures. 

Review of Operating Groups Performance (pages 36 to 50) provides an overview of BMO’s operating groups. The section describes each group, its objectives and accomplishments for 2002 and its objectives for 2003. It also provides an analysis of financial results by group and insight into the operations of the lines of business within each group. A separate analysis of Harris Bank is also provided. Its financial results are included within each of the four operating groups. 

Economic and Financial Services Developments (page 51) reviews Canadian and U.S. economic and financial services developments in 2002 and comments on 2003. 

Supplemental Information (pages 52 to 66) aggregates many useful financial tables that are referred to in sections of the MD&A and can be reviewed separately. 

Bank of MontrealGLYPH<213>s public communications often include written or oral forward-looki ng statements. Statements of this type are included in this Annual Report, and may be included in filings with Canadian securities regulators or the U.S. Securiti es and Exchange Commission, press releases or other communications. All such statements are made pursuant to the GLYPH<210>safe harborGLYPH<211> provisions of the Unit ed States Private Securities Litigation Reform Act of 1995. Forward-looking statements may involve, but are not limited to, comments with respect to our o bjectives for 2003 and beyond, our strategies or future actions, our targets, expectations for our financial condition or share price, the results of or outlook for ou r operations or for the Canadian and U.S. economies. 

By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that predictions and other forward-looking statements will not prove to be accurat e. We caution readers of this report not to place undue reliance on our forward-looking statements as a number of factors could cause actual future resu lts, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements. 

The future outcomes that relate to forward-looking statements may be influenced by  many factors, including but not limited to: global capital market activities; interest rate and currency value fluctuations; industry and worldwide economic and political conditions; regulatory and statutory developments; the effects of competition in the geographic and business areas in which we operate; managemen t actions; and technological changes. We caution that the foregoing list of factors is not exhaustive and that when relying on forward-looking statements to  make decisions with respect to Bank of Montreal, investors and others should carefully consider these factors, as well as other uncertainties and potential e vents, and the inherent uncertainty of forward-looking statements. Bank of Montreal does not undertake to update any forward-looking statement, whether written or oral, that may be made, from time to time, by the organization or on its behalf. 

