You Invest We Invest and Québec Prospers

You invest We invest And Québec prospers

JOBS - NET VALUE PER SHARE $23.74 - 2006 ANNUAL REPORT MISSION

CREATE, MAINTAIN OR PROTECT JOBS Invest in companies impacting the Québec economy and offer them services to further their development and create, maintain or protect jobs.

TRAIN WORKERS Promote economic training for workers so they can increase their inﬂuence on the economic development of Québec.

DEVELOP THE QUÉBEC ECONOMY Stimulate the Québec economy through strategic investments that beneﬁt both Québec workers and companies alike.

PREPARE FOR RETIREMENT Make workers aware of the need to save for retirement and encourage them to do so, as well as encourage them to participate in the development of the economy by purchasing Fund shares.

- PROMOTE EMPLOYMENT, TRAIN WORKERS, DEVELOP THE QUÉBEC

TABLE OF CONTENTS

(01 ) … Highlights (02 ) … Message from the Chairman of the Board (04 ) … Report of the President and Chief Executive Ofﬁcer (06 ) … Shareholder Base (10 ) … Training (14 ) … Investments (19 ) … Financial Information (82 ) … Glossary (84 ) … Board of Directors and Management Committee (85 ) … Special Boards and Committees, Permanent Employees and Union HIGHLIGHTS

KEY DATA

For the years ended June 30 May 31 (in millions of dollars, except Class A shares, in thousands) 2002 2003 2004 2005 2006 (11 months) Statement of earnings Revenues (432.9) (209.1) 347.0 386.3 477.8 Net earnings (net loss) (551.5) (325.5) 247.3 271.1 366.5 Balance Sheet Net assets 4,533.9 4,620.2 5,233.3 5,955.2 6,607.1 Class A shares outstanding 204,999 225,956 243,946 264,845 277,466 Ratio2 Operating expenses/Average net assets 2.1% 2.1% 2.0%1 1.8% 1.7%

1. Annualized. 2. The operating expenses ratio does not include capital tax.

As at May 31 (except 2002 and 2003, as at June 30)

Net value per share Rate of return of the Fund 1, 2 Number of partner companies 3 Number of jobs created, (in dollars) (as a percentage) (Fund and network) maintained or protected in Québec by the Fund and its partners

2002 22.02 2002 (11.4) 2002 1,664 2002 96,641 2003 20.36 2003 (6.9) 2003 1,666 2003 91,694 2004 21.37 2004* 5.2 2004 1,722 2004 96,000 2005 22.41 2005 5.0 2005 1,683 2005 105,596 2006 23.74 2006 6.0 2006 1,681 2006 116,644

Average annual return since inception: 5.0% *(11 months)

1. Earnings (loss) per share divided by the share price at the beginning of the ﬁscal year. 2. This rate of return does not take into account tax credits for shareholders. 3. In 2006, we reviewed the compilation method of the partner companies, especially in the SOLIDE, and the comparative data was adjusted. However, the effect on jobs is negligible and no adjustment was made.

ECONOMY AND HELP WORKERS PREPARE FOR RETIREMENT - - - -

Number of shareholders Share issues Redemptions Fair value of investments (in millions of dollars) (in millions of dollars) in partner companies (in millions of dollars)

2002 536,429 2002 869.9 2002 385.3 2002 2,768.6 2003 550,119 2003 724.7 2003 313.0 2003 2,633.5 2004 554,796 2004* 554.2 2004* 188.5 2004 2,695.4 2005 568,383 2005 706.5 2005 255.6 2005 2,544.1 2006 573,086 2006 613.8 2006 328.7 2006 3,006.7

*(11 months) * (11 months)

SOLIDARITY FUND QFL ( HIGHLIGHTS ) PAGE 01 MESSAGE FROM THE CHAIRMAN OF THE BOARD Putting words into action

THE SOLIDARITY FUND QFL Only government intervention will change things. And it is urgent. The government could, among other things, take full IS FARING WELL, AND WE ARE advantage of the transitional measures already provided for in the World Trade Organization framework to contend with the VERY PROUD TO NOTE JUST lifting of quotas on imports from China, notably. The U.S. is already taking advantage of these measures and the European HOW INVALUABLE THE Union is exerting pressure to force renegotiations or extensions of such transitional measures. We believe that if the ORGANIZATION HAS BECOME governments decided to immediately support manufacturing companies, there would be a little bit more hope for the FOR QUÉBEC’S ECONOMIC workers suffering from the de-industrialization of this sector. During the pre-budget consultation last winter, Minister DEVELOPMENT. Michel Audet stated that, even though jobs had increased slightly in Québec, the public revenues generated by employment had decreased. This precarious situation has a While many people have contributed to this success, this year, clear effect on our quality of life and is a major problem for I would like to especially thank Pierre Genest for his excellent government finances. The less people are paid, the less they work at the helm of the Fund over the past four years. A top- contribute to the State’s coffers and at the same time, the less notch manager, Pierre Genest allowed the Fund to get back on they contribute to improve Québec’s collective wealth. the growth track. Although Mr. Genest retired in February, he We must continue to promote the creation, maintenance and still holds, among other things, the position of Chairman of the protection of quality jobs if we do not want a hardship economy. Board of Directors of SSQ Groupe Financier, one of the Fund’s This is why the Fund exists. And if it did not already exist, we partner companies. I would also like to mention Yvon Bolduc’s would have to create it, because the current economic situation appointment as the Fund’s President and CEO. A member of is, in some respects, very similar to the one that prevailed when the organization since 2002, his expertise, human approach the Fund was created. The Fund’s economic development and keen business sense made Yvon Bolduc the ideal mission, focused on employment, is therefore more relevant candidate to replace Pierre Genest. Gaétan Morin, who has than ever. been outstanding in the various positions he has held since 1989, has taken over from Yvon Bolduc as Executive Vice- And, as though these troubles were not enough, the Canadian President, Investments. dollar continues to rise, and gas has never been so expensive. Things are not looking good, and honestly, I do not see how, in Thanks to men and women of action, the Fund continued to a context of such fierce global competition, Québec companies grow during the past year. However, while significant and vital, in the lumber, clothing, textile, sports equipment and furniture our investments alone could not boost economic activity in the industries can survive unless emergency measures are taken Québec manufacturing sector. And regardless of our best to help them. intentions, we will not, on our own, be able to stem the disturbing erosion of quality jobs in this industry. In my view, At this time, Canada is split in two: western Canada is booming Québec’s biggest economic problem today is its struggling and its economy is heating up while eastern Canada is manufacturing industry. suffering major economic woes, precisely because the Bank of Canada’s decisions are made based on the wealth enjoyed

PAGE 02 SOLIDARITY FUND QFL ( MESSAGE FROM THE CHAIRMAN OF THE BOARD ) by the West. These decisions, notably with regards to interest companies under loan guarantee programs, for example, they rate hikes, are, in some respects, sabotaging our economic could help them renew their technology equipment so that they growth efforts. can become more productive and competitive. Without help, our companies will not be able to take this step, and while this The problems have been caused more by the speed of the kind of support would not solve all their problems, it would at dollar’s ascent than its actual rise. Still, we continue to hope least allow them to take some of the necessary measures. We that some of our companies will be able to benefit from a are not losing hope. strong dollar, for example, to buy more energy-efficient equipment that promotes sustainable development and In closing, I would like to thank everyone who contributed protects the environment. We also hope that training in the this year to the successes of the Solidarity Fund QFL and its workplace will continue to remain a priority, because this is the vast regional, local and specialized investment network. only way we will be able to meet the challenges of providing a Thank you, because without you, these successes would not new generation of qualified labour in certain sectors. have been possible.

I reiterate, it is clear that in this context, the Fund’s role is critical. The Fund is there for companies that want to modernize, grow and put odds in their favour. Québec’s economic development remains our priority and it will continue to dictate our investment decisions. Henri Massé Chairman of the Board of Directors Our entrepreneurs are creative, ingenious and seasoned, and most of our companies are solid. If the two levels of government would adopt certain measures to support the manufacturing sector, we could get our heads above water. By supporting

SOLIDARITY FUND QFL ( MESSAGE FROM THE CHAIRMAN OF THE BOARD ) PAGE 03 REPORT OF THE PRESIDENT AND CHIEF EXECUTIVE OFFICER Our vision, the key to our future success

OUR VISION Our successes are owed to the vision we have adopted and that will greatly influence the development of our organization over PLACE PRIORITY ON the next few years. Moreover, our other investments portfolio (bonds, listed CREATING AND MAINTAINING shares and others) yielded a return of 7.1% during the past year. As well, our efforts to keep our operating expense ratio JOBS AS WELL AS below 2% continued to bear fruit: this ratio was 1.7% for the fiscal year ended May 31, 2006. I would like to thank all our GENERATING A RETURN employees for their efforts in this regard. FOR OUR SHAREHOLDERS Another major priority has always been shareholder satisfaction. I would like to congratulate the Shareholder BY BECOMING THE PARTNER Services team for the work they performed this year. Investing in the services we offer our shareholders is investing in the OF CHOICE FOR COMPANIES future of the Fund. With regards to share issue, the lump-sum contribution limit was reached on February 9, 2006. With a IMPACTING THE QUÉBEC similar limit this year, our total share issue should be in the order of $555 million for the year ending May 31, 2007. ECONOMY. We also worked hard to raise awareness of the benefits of contributing through payroll deduction and pre-authorized

The year 2006 was marked by a series of successes and withdrawals because we want as many shareholders as positive results that demonstrate the soundness of the Fund possible to benefit from the advantages of systematic saving. and attest to our perseverance, ongoing efforts and To this end, we relied on the dedication of our LRs (local dedicated teamwork. representatives), who make an extraordinary contribution to the Fund’s development. We owe them a lot, and I would like to We continued with our reflection and discussions begun in take this opportunity to thank them for their invaluable work. 2005 in order to set clear action priorities to achieve our objectives. Our employees again pooled their efforts and used THE FUND, A GOOD PLACE TO INVEST! their creativity and skills to maximize the effectiveness of our On February 1, 2006, I had the honour of being appointed to the practices and ensure the Fund’s growth. And the results are position of President and Chief Executive Officer of the nothing short of remarkable. Solidarity Fund QFL. I would like to thank the Board of

For ﬁscal 2006, the Fund posted record net earnings of Directors for placing their trust in me. $366 million for an overall annual return of 6.0%. The Fund’s In the course of my work, I have the opportunity to speak with net assets amounted to $6.6 billion as at May 31, 2006. We also many people, including decision makers, government invested a record $643 million in 97 partner companies. We are representatives, our shareholders and entrepreneurs. I very proud of the work performed by our Investment teams to consider it essential to explain to them why the Fund is a good achieve these results. Thanks to their efforts, we again boosted place to invest and to what extent it contributes to job and our presence in the development capital industry in Québec wealth creation in Québec. and strategically positioned ourselves close to entrepreneurs.

PAGE 04 SOLIDARITY FUND QFL ( REPORT OF THE PRESIDENT AND CHIEF EXECUTIVE OFFICER ) The Fund has developed a unique approach with regards to grant our shareholders within 2.9 years for the federal investment. We offer entrepreneurs patient capital, because government and within 2 years for the Québec government. It we want to help them innovate, build solid long-term is a most profitable investment, particularly since it provides an foundations and grow. We assume risks that other institutions immediate financial advantage to thousands of middle-class are not ready to take. We support sectors in transition and that tax payers. greatly need assistance, such as the lumber industry. We also In short, the Fund is good for our shareholders, for workers help develop sectors that promote sustainable development and for entrepreneurs. Indeed, the Fund is good for Québec. and other promising sectors like the crucial biotech industry. In closing, I would like to thank my predecessor, Pierre Genest, Besides an economic impact, the Fund’s work has a social who managed the Fund with all the necessary rigour to return impact that is less widely known and that merits discussion. the organization to profitability. Today, Québec has five workers for every retired person, but within the next 15 to 20 years that number will drop to two. The Lastly, I would like to thank all the Fund’s employees for their role that we will have played in creating retirement savings commitment, dedication and desire to always do better. habits among hundreds of thousands of workers will prove to be critically important for retirees and for reducing the State’s financial burden.

I also wanted to say a few words on the tax credits associated with the Fund. Research1 conducted in 2005 has shown that the Yvon Bolduc governments recover the value of the income tax credits they President and Chief Executive Ofﬁcer

1. According to a study conducted by SECOR and Regional Data Corporation of Ottawa, based on the estimated gross cost for governments, of income tax credits, and based on the evaluation of economic spin-offs of the Fund’s investments in Québec SMEs and on the direct, indirect and induced effects these investments have on the Québec economy, the income tax credit granted to Fund shareholders is more than ever a proﬁtable tax expense for the Québec economy and for the Québec and federal governments.

SOLIDARITY FUND QFL ( REPORT OF THE PRESIDENT AND CHIEF EXECUTIVE OFFICER ) PAGE 05 SHAREHOLDER BASE Shareholders, our priority

ONCE AGAIN THIS YEAR, THE When a shareholder calls the Fund, an agent, rather than an automated system, replies. And as soon as a call is received, PRIORITY AT SHAREHOLDER the agent has the shareholder’s file at hand. Establishing this kind of personalized and efficient contact with our SERVICES HAS BEEN TO KEEP shareholders is vital for us. Indeed, this concern has become second nature in all our communication practices: our A HUMAN TOUCH ON THE approach is focused on meeting shareholder needs and expectations. In our publications and the customer service we PROGRESSIVELY MORE provide, communication is efficient and simple: shareholders must always have rapid access to the information they need, PERSONALIZED SERVICES WE and this information must be easy to understand. OFFER OUR SHAREHOLDERS. In 2006, we focused on redemption requests: we wanted to process them faster. And we reached our goal, since most of the requests were processed in less than eight days. The testimonial of Mrs. Richère Miron (on page 9) is a good example of what we accomplished in this regard.

During the fiscal year ended May 31, our agents fielded over 333,000 calls from shareholders, including almost 115,000 during the RRSP campaign. In all, 64,500 people came to our offices during the year, including 36,000 to our 53 field offices during the RRSP campaign.

- - PROVIDING SHAREHOLDERS WITH EFFICIENT, PERSONALIZED

ACIER POINTE-CLAIRE CORPORATION FINANCIÈRE BROME INC. FRANÇOIS GAGNÉ MICHEL GRATTON, PRESIDENT

PAGE 06 SOLIDARITY FUND QFL ( SHAREHOLDER BASE ) As at May 31, 2006, the Fund had 573,086 shareholders. The REDEMPTION BREAKDOWN BY CRITERION limit for lump-sum contributions for the year was reached on For the year ended May 31, 2006 February 9, 2006. The commitment of our local representatives Criteria Number Millions $ % largely contributed to this success. Retirement and early The work of our local representatives in their workplace also retirement 29,845 249.7 76.0 helped encourage people to make their contributions through Access to home ownership 4,961 35.4 10.8 payroll deduction and pre-authorized withdrawals. And with a Unforeseen events 4,655 14.3 4.3 (job loss or others) view to allowing as many shareholders as possible to benefit Death, disability, redemption from the advantages of systematic saving, we developed and within 60 days 1,959 19.9 6.1 applied a relational marketing method during the year. This Return to studies 399 2.1 0.6 allowed us to streamline our approach with shareholders Other criteria 671 7.3 2.2 according to very specific criteria in order to reach them in a (capital injection into a business, more targeted manner and better respond to their specific emigration, redemption of pension credits, ineligibility needs. It certainly worked because almost 67% of the year’s for tax credits) contributions, i.e., $412 million, were made through systematic Total 42,490 328.7 100.0 saving. Increasing this percentage is one of our main objectives for the upcoming year.

SERVICE AND EASY-TO-UNDERSTAND INFORMATION ------

SHAREHOLDER PROFILE As at May 31, 2006

Number of shareholders 573,086 Average age 47 years

STATUS SEX Unionized Non-unionized Male Female 58% 42% 55% 45% 329,656 243,430 315,095 257,991

SOLIDARITY FUND QFL ( SHAREHOLDER BASE ) PAGE 07 THE MISSION COMES FIRST “ I have been an LR for the past 20 years and I’m still just as enthusiastic. It’s really quite amazing because I’m enjoying some very nice “dividends” from all these years. I take great pleasure in seeing some of my colleagues take their retirement or early retirement without any financial worries. I am proud to have introduced them to the Fund. When they do their ﬁnancial planning, they realize that even if they have a good pension plan, having the Fund RRSP as a supplement will help them pay for extras they could not have otherwise afforded.

I can’t believe that there are still people who do not take advantage of the Fund’s systematic saving. They could put substantial amounts aside without even seeing a major difference in their net pay. That’s why I keep going: I want to convince as many new people as possible to take advantage of these beneﬁts so they can enjoy a better retirement.

However, I have to say that I would have never been an LR for so long if I only believed in the Fund’s tax credit, no matter how attractive it is. What motivates me more than anything else is the Fund’s mission, which remains strongly focused on employment and economic development in Québec.”

PIERRE MORIN, LOCAL REPRESENTATIVE

------PROFITABLE TAX CREDITS AND SYSTEMATIC SAVING

CHÂTEAU BONNE ENTENTE INC. AIR DATA INC. METHYLGENE INC. MÉLANIE CHÂTEAUNEUF, ANNE-SOPHIE MATHIEU JEAN-PIERRE LEPAGE, PRESIDENT MARTIN ALLAN

PAGE 08 SOLIDARITY FUND QFL ( SHAREHOLDER BASE ) REALIZING YOUR DREAMS THROUGH THE FUND “I thought it was very important to tell people about my experience: I am a Fund shareholder and I have redeemed my shares on two separate occasions. I had a good job in the aerospace ﬁeld, but I dreamed of owning my own company. In 2004, I made the leap: I redeemed a part of my Fund shares and went back to school to specialize in massotherapy. I was able to study without worrying about money. It was wonderful!

Two years later, I was ready to start my company. An agent at Shareholder Services sent me the necessary forms for this second redemption. I returned them a few days later and believe it or not, during the same week, I had the money in my bank account! I invested all the funds in my new company and I’m in the process of building a good customer base.

You have to believe in your dreams. As far as I’m concerned, I’m on the road to success. And it’s thanks to the Fund. For me, the Fund is like an old friend, and I take full advantage of the beneﬁts it offers. I am currently repaying my HBP (Home Buyers’ Plan) withdrawal from another institution to the Fund, and I will soon once again begin contributing to my RRSP so I can have a comfortable retirement.”

RICHÈRE MIRON, SHAREHOLDER

MEAN SOME DREAMS CAN COME TRUE ------

GROUPE CANATAL INC. ÉQUIPEMENTS COMACT INC. AIR DATA INC. MARTIN DROUIN MICHEL TURCOTTE LYSANNE DUMAIS

SOLIDARITY FUND QFL ( SHAREHOLDER BASE ) PAGE 09 TRAINING Training... that combines knowledge and motivation

OVER THE PAST YEAR, More speciﬁcally, courses were tailored to business needs— both those of workers and entrepreneurs—to ensure that THE ECONOMIC TRAINING employees of the Fund’s partner companies receive economic training that better meets the objectives of transparency and FOUNDATION TEAM FOCUSED communication, and also to ensure the survival of businesses and jobs.

ON ADAPTING THE TRAINING To this end, the Foundation did extensive ﬁeld work and met with each Fund Investment team. With the relevant advisors, it PROGRAM USED IN identiﬁed the needs of the entrepreneurs and employees, the pace of the sessions and the best way to implement the new THE WORKPLACE. program in the workplace.

We thus developed several new 90-minute courses, offered in the months following the Fund’s investment and during which the entrepreneur presents his business plan and partnership with the Solidarity Fund QFL to the participants. For its part, the Fund explains its presence in the company and the reasons why it has invested in the company. The interest employees

------ECONOMIC TRAINING HELPS DEVELOP

Number of participants: 5,493

Number of courses: 388

SOLACOM TECHNOLOGIES INC. ACIER POINTE-CLAIRE CHANNY TREMBLAY LÉO GROULX

PAGE 10 SOLIDARITY FUND QFL ( TRAINING ) show during this presentation allows the entrepreneur to TRAINING ACTIVITIES immediately realize just how mobilizing such communication For the year ended May 31, 2006 can be. Participants Courses Moreover, the courses and different tools created last year Local representatives 2,746 206 for the LRs were immensely successful in 2006 and were In the workplace 1,653 130 widely used. Network members 574 29 We are also reviewing certain other courses, namely, those Students 520 23 intended for members of the Fund network, such as local and Total 5,493 388 regional funds, as well as those aimed at members of private pension plan committees.

Finally, after ﬁve years of great use, the Foundation reprinted Jacques Keable’s book La vraie vie, which provides students with a straight-forward explanation of the working world.

A number of new courses are in production, but the top priority in 2006 was to work with the Investment sector to adapt the economic training program to business reality.

REWARDING COMMUNICATION PRACTICES ------

METHYLGENE INC. SKI-MODE BERNARD TROTTIER INC. NATALIE NGUYEN MARC BISAILLON

SOLIDARITY FUND QFL ( TRAINING ) PAGE 11 ECONOMIC TRAINING, SIMPLY INVALUABLE “We now have 2,300 employees and offer a multitude of complementary services in addition to our trucking operations. We owe the quality of our services to the creativity of our employees, as well as their efﬁciency and ability to adapt to the needs of our customers. We therefore understood that, to grow our company, we had to train our people, and we now allocate at least 2.5% of our budget to training.

The Fund’s economic training program began at the same time as its initial investment in the company. This was something that we had to get used to. I was afraid that the analysis of the financial information would not reflect reality. However, the Fund did an excellent job: the instructors clearly explained the audited financial statements and the importance of profits for a company that wants to pay decent wages, reinvest and position itself well in a highly competitive market. My concerns vanished. If the Fund did not provide economic training, I would!

In 2005, Groupe Robert was ranked the 22nd best company in Canada in terms of management and the 6th best in terms of human resources. We have certainly done something right to deserve this honour! As far as I’m concerned, economic training is no stranger to this success. ”

CLAUDE ROBERT, PRESIDENT, GROUPE ROBERT INC.

- - - - - A WELL-TRAINED STAFF WILL HELP A COMPANY GROW,

GROUPE ROBERT INC. ÉQUIPEMENTS COMACT INC. CHARLES-ANDRÉ ROY JEAN-CHARLES VACHON

PAGE 12 SOLIDARITY FUND QFL ( TRAINING ) HIGHLY TRAINED AND MOTIVATED “I like to promote the Solidarity Fund QFL. People come to see me to increase their contribution or to ask questions about spousal RRSPs, for example. Others ask questions about the HBP (very popular among young shareholders) and if they can repay HBP withdrawals from another institution to the Fund. I’m always happy to tell them that yes, they can, and more importantly, that they are entitled to the two 15% tax credits associated with labour-sponsored funds.

Of course to become an LR, I received excellent training; otherwise, how could I possibly answer all these questions? And when I’m asked a question for which I do not have the immediate answer, I consult the LR Services online or refer to my LR “bible,” a reference book that contains all the information we need.

Once they become shareholders, people are always proud to read in the newspapers that the Fund makes investments across Québec. They’re happy to participate in job creation and in increasing Québec’s collective wealth. For me, this is extremely motivating! ”

MANON BERTRAND, LOCAL REPRESENTATIVE

BUT IT WILL ALSO HELP BUILD QUÉBEC’S FUTURE ------

CAFÉ VITTORIA GROUPE CANATAL INC. STELLA-JONES INC. DAVE CÔTÉ NORMAN BILODEAU, ÉRIC HAMEL

SOLIDARITY FUND QFL ( TRAINING ) PAGE 13 INVESTMENTS Investing today… for a better tomorrow

WITH THE RESULTS POSTED expertise that offer entrepreneurs much more than just financing. It bears mentioning that in addition to the capital we THIS YEAR, WE CAN inject, we provide Québec companies with a vast range of expertise. This has allowed many of these companies to adopt CONGRATULATE OURSELVES a better structure, grow and gain an enviable position in their market, both here and outside Québec. More and more of the ON THE REMARKABLE CEOs who have become our partners attest to the Fund’s qualities as an integrator and consolidator, as well as its ability WORK PERFORMED BY to accompany them on the path to growth. Our efforts this year in acquisition financing were also OUR INVESTMENT TEAMS. noteworthy. The $100 million injected in Metro is an excellent example of the type of investment that the Fund can make. Indeed, by supporting Metro in its acquisition efforts outside In fact, for the fiscal year ended May 31, 2006, the Solidarity Québec, the Fund is carving an excellent reputation as a Fund QFL directly invested $643 million in 97 companies, preferred partner to finance acquisitions. We were also proud including 37 new ones. These results clearly exceeded our of the acquisition made by our partner company Allianz budget. At 8.9%, the gross return on investments is also worthy Madvac at the end of fiscal 2005. Thanks to the Fund, the of mention. company was able to purchase the Canadian and U.S. We can proudly say that in accordance with the vision that we mechanical broom production divisions of the European have adopted, we are a partner of choice, indeed, the best company Johnston Group. This investment made 2006 a year partner, for Québec entrepreneurs. To achieve this goal, we set of substantial growth for Allianz Madvac and allowed the up multidisciplinary teams with varied and complementary company to bring back many quality jobs to Québec.

------THE FUND CONTINUES TO HOLD A CONSIDERABLE

GROUPE PIERRE BELVÉDÈRE INC. SOLACOM TECHNOLOGIES INC. GUY BÉLANGER, PRESIDENT PATRICK SHOONER

PAGE 14 SOLIDARITY FUND QFL ( INVESTMENTS ) The Fund places great importance on supporting the private the Growth Loan, entrepreneurs continued for the second year venture capital industry. In 2006, we increased our in a row to show interest in this regard. These two products commitment in investment funds such as FCPR Aerofund, a combined accounted for 43% of investments disbursed during French investment fund specialized in the aerospace the year. It should be noted that the Regional Solidarity Funds industry. In this regard, and under the investment rules of alone added 59 new companies to their portfolio in which private funds outside Québec, we fulfilled our mission by $30.3 million was invested during their fiscal year ended attracting foreign investment and encouraging local March 31, 2006. investors. The Fund also made a US$17.6 million investment We must underscore the fact that the Fund continues to hold in Rho Canada Ventures, L.P., the first Canadian fund set up the largest Québec investment portfolio in the crucial biotech by Rho Capital Partners Inc., a highly reputable New York sector. As at May 31, 2006, we had invested $457.4 million. As fund manager. well, we continue to play a major role in aerospace and Moreover, we created two new financial products that meet information technology companies. Our investments in the very targeted and clearly expressed needs of the companies of the aerospace sector will support the business community, i.e., the Productivity and Trademark development of market integrators, which is essential in this Loans, which have been very well received by business highly competitive sector. associations thus far. The Productivity Loan, especially, Lastly, the Fonds Relève PME continued its work with family provides financing for improving the productivity of Québec businesses, beacons of our economy and providers of manufacturing companies. immense wealth. Since it was started, the Fonds Relève PME With regards to the Regional Solidarity Funds, the new Equity has invested more than $50 million in some fifteen companies. Loan product launched this year was highly successful. As for

SHARE OF THE DEVELOPMENT CAPITAL MARKET ------

NUMBER OF JOBS CREATED, MAINTAINED OR PROTECTED IN QUÉBEC BY THE FUND AND ITS PARTNERS

Distribution

Direct jobs Indirect jobs Induced jobs

62,393 29,346 24,905

TOTAL 116,644

SOLIDARITY FUND QFL ( INVESTMENTS ) PAGE 15 THE FUND, MUCH MORE THAN A FINANCIAL PARTNER “ In the field of marketing research, Léger Marketing is the only company in the country to make acquisitions. After five successful acquisitions of competent companies, we have become a sort of “consolidator” in our market. Not only are we the only company of its kind to have a presence outside Québec, we are also the only one to do business in the United States. Today, the company has 650 employees, seven offices in North America and one in Morocco.

Léger Marketing is the largest Canadian-owned company in the ﬁeld. We owe these results to the very clear business plan we have adopted and follow to the letter. The relationship of candour we have with our employees and customers also counts for a lot: it is one of our building blocks.

Our partnership with the Solidarity Fund QFL allowed us to make a major acquisition in Toronto, but that’s not all. We can ﬁnd money anywhere. The Fund’s contribution allowed us to improve our administrative organization and better structure our board of directors, now comprised of high-quality managers. These Fund requirements were an annoyance at the beginning, but they soon became an incalculable advantage. ”

JEAN-MARC LÉGER, PRESIDENT AND CEO, LÉGER MARKETING INC.

------BY HELPING FINANCE OUR ACQUISITIONS, THE FUND

CHÂTEAU BONNE ENTENTE INC. BIOSYNTECH INC. MARIA ANJOS RENGUINHA MARIANA ANCA

PAGE 16 SOLIDARITY FUND QFL ( INVESTMENTS ) THE FUND, PRESENT AT ALL STAGES OF OUR GROWTH “ For the past five years, Stella-Jones has enjoyed remarkable growth. The management team and all the employees have committed to a common market consolidation and positioning strategy, allowing us to be even more efficient in our field.

We have concentrated our activities in the key markets that we know best, namely railway ties and utility poles. This approach allowed us to make good strategic acquisitions in the U.S. where we make 15% of our sales.

The impression I had of the Solidarity Fund QFL was that it was a source of ﬁnancing of last resort…what a mistake! I quickly learned that for the Fund, there are no insurmountable problems, only solutions and growth opportunities. With the Fund, we reviewed all our practices in depth and enjoyed outstanding growth. Stella-Jones is a ﬁnancially sound company. Our management team is strong and we have created quality jobs. We’re bustling with activity and this is very encouraging. All the elements are in place to allow us to continue on this path and become, in the next few years, the biggest player in our market in North America. ”

BRIAN McMANUS, PRESIDENT AND CEO, STELLA-JONES INC.

STRENGTHENS OUR FOUNDATION AND FURTHERS OUR GROWTH - -

LABOPHARM INC. STELLA-JONES INC. ROGER MORIN

SOLIDARITY FUND QFL ( INVESTMENTS) PAGE 17 INVESTMENTS

NUMBER OF JOBS CREATED, MAINTAINED OR PROTECTED IN QUÉBEC BY THE FUND AND ITS PARTNERS As at May 31, 2006

Direct jobs Solidarity Fund QFL 39,690 Regional and local funds 18,827 Specialty funds 3,876 62,393 1 Indirect jobs 29,346 Induced jobs 24,905 Total 116,644

1. With its partners, the Fund has helped create, maintain or protect more than 95,000 direct jobs since inception.

CHANGE IN UNCONSOLIDATED INVESTMENTS (AT COST) 2005-2006 1

Balance as at Balance as at May 31, 2005 2 Investments Disinvestments May 31, 2006 Regions 3 No. Millions $ % No. Millions $ % No. Millions $ % No. Millions $ % Western Québec 17 77.9 2.7 5 7.0 1.1 3 2.8 0.7 15 82.1 2.6 Montréal Region 136 1,100.8 37.9 47 297.2 46.2 48 175.7 41.8 140 1,222.3 39.1 Central Québec 16 104.6 3.6 8 11.4 1.8 3 4.4 1.0 16 111.6 3.6 Québec City Region 33 335.6 11.5 13 42.8 6.7 11 14.6 3.5 34 363.8 11.6 Eastern Québec 28 307.1 10.6 8 22.1 3.4 13 115.1 27.4 27 214.1 6.8 All of Québec 36 756.8 26.1 10 187.6 29.2 11 75.8 18.0 43 868.6 27.8 Outside Québec 34 221.4 7.6 6 74.7 11.6 9 31.9 7.6 35 264.2 8.5 Total 300 2,904.2 100.0 97 642.8 100.0 98 420.3 100.0 310 3,126.7 100.0 Sectors Real estate 9 251.4 8.7 1 53.9 8.4 1 9.8 2.4 9 295.5 9.5 Regional development4 30 355.9 12.2 16 22.5 3.5 4 1.8 0.4 28 376.6 12.0 Industries, services, natural resources and consumer 142 1,536.2 52.9 38 309.8 48.2 63 297.2 70.7 147 1,548.8 49.5 Technology investments5 119 760.7 26.2 42 256.6 39.9 30 111.5 26.5 126 905.8 29.0 Total 300 2,904.2 100.0 97 642.8 100.0 98 420.3 100.0 310 3,126.7 100.0

1. Excludes stock held in Entreprises publiques québécoises à faible capitalisation and includes funds committed but not disbursed as well as funds for guarantees and suretyships. 2. The distribution of regions and sectors as at May 31, 2005 has changed to reﬂect restructuring in partner companies. 3. Regional groupings: Western Québec: Abitibi-Témiscamingue/Outaouais. Montréal region: Montréal/Laval/Laurentides/Montérégie/Lanaudière. Central Québec: Estrie/Mauricie/ Centre du Québec. Québec City Region: Capitale-Nationale/Chaudière-Appalaches. Eastern Québec: Bas-Saint-Laurent/Saguenay-Lac-Saint-Jean/Gaspésie-Îles-de-la-Madeleine/ Côte-Nord/Nord-du-Québec. All of Québec: Investments impacting more than one region. Outside Québec: Investments in companies headquartered outside Québec. 4. Regional Funds, local funds and regional investment partnerships. 5. Life sciences, information technologies, telecommunications, industrial innovations and bio-food.

PAGE 18 SOLIDARITY FUND QFL ( INVESTMENTS ) FINANCIAL INFORMATION

FONDS DE SOLIDARITÉ DES TRAVAILLEURS DU QUÉBEC (F.T.Q.) FONDATION DE LA FORMATION ÉCONOMIQUE DU FONDS (20 ) … Management’s Discussion and Analysis DE SOLIDARITÉ DES TRAVAILLEURS DU QUÉBEC (F.T.Q.) Consolidated Financial Statements as at May 31, 2006 and 2005 Financial Statements as at May 31, 2006 and 2005 (35 ) … Management’s Report (78 ) … Auditors’ Report (35 ) … Auditors’ Report (78 ) … Statements of Operations (36 ) … Consolidated Balance Sheets (79 ) … Balance Sheets (37 ) … Consolidated Statements of Earnings (79 ) … Statements of Changes in Net Assets (38 ) … Consolidated Statements of Changes in Net Assets (80 ) … Notes to Financial Statements (39 ) … Consolidated Statements of Cash Flows (40 ) … Notes to Consolidated Financial Statements Investments made as at May 31, 2006 (58 ) … Auditors’ Report (59 ) … Consolidated Schedule of Investments at Cost Investments made by the Specialty Funds as at May 31, 2006 (unaudited) (73 ) … List of Investments at Cost SOLIDARITY FUND QFL ( FINANCIAL INFORMATION ) PAGE 19 MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED MAY 31, 2006

This management’s discussion and analysis is intended to enable the reader to assess the Fund’s financial condition and any material changes in its financial condition that occurred during the year ended May 31, 2006. For a complete understanding of events and uncertainties, this report should be read together with our consolidated financial statements.

This management’s discussion and analysis contains forward-looking statements about the Fund’s activities, results and strategies. By their very nature, such statements involve assumptions, risks and uncertainties, and it is therefore possible that the forecasts made do not materialize because of a number of factors. For example, legislative or regulatory changes, economic and business conditions, and the degree of competition are just a few of the major factors that could inﬂuence the accuracy of the forecasts in this report. This management’s discussion and analysis is dated June 20, 2006.

Analysis of Results

TOTAL RESULTS

The Fund turned in a solid performance for the year ended May 31, 2006, posting record net earnings of $366 million, up $95 million or 35% from the $271 million recorded last year. The Fund thus generated a return of 6.0% for the year, a result above the 5.0% return recorded last year and exceeding expectations stated last year.

This performance is attributable mainly to the Fund’s two main sectors, investments and other investments. The assets managed by the investments sector consist of mission-driven investments in private and public partner companies in the form of shares, units or loans. The gross return of this sector was 8.9%, a substantial improvement over the negative return of 0.9% recorded a year earlier. The average assets in this portfolio account for 36% of the Fund’s average assets under management, i.e., $2.2 billion.

Our other investments sector manages the remaining assets not invested in partner companies and consists of bonds, money market securities, sector-based shares, derivative products and funds of hedge funds. The gross return for this sector was 7.1% in ﬁscal 2006, down from the 11.6% posted last year. Average assets represent $4.0 billion or 64% of the Fund’s average assets under management.

Our focus on operational efﬁciency and control of operating expenses also had a signiﬁcant impact on results, as attested by the ratio of operating expenses to average net assets, which stood at 1.7% for the year ended May 31, 2006, better than the 1.8% ratio recorded last year.

The Fund’s overall return is calculated by taking the average return of each asset class, weighted to take into account their relative weight in relation to average assets under management, minus the operating expenses, income taxes and minority interest expressed as a percentage of average net assets.

Return by Sector Years ended May 31

2006 2005 Average Average Assets Weighting Return Contribution Assets Weighting Return Contribution M$ % % % M$ % % %

Investments 2,217 35.7 8.9 3.2 2,023 36.7 (0.9) (0.3) Other investments 3,986 64.3 7.1 4.6 3,491 63.3 11.6 7.4 Assets under management 6,203 100.0 7.8 7.8 5,514 100.0 7.1 7.1 Operating expenses, income taxes and minority interest (1.8) (1.8) (2.1) (2.1) FUND’S RATE OF RETURN 6.0 6.0 5.0 5.0

PAGE 20 SOLIDARITY FUND QFL ( MANAGEMENT’S DISCUSSION AND ANALYSIS ) SECTOR RESULTS

The performance of the investments sector is inﬂuenced by various factors, including the behaviour of the ﬁnancial markets, economic and business conditions in which our partner companies operate, and active management of our investments. The investments sector’s return of 8.9% for the year is largely explained by the following elements:

• the performance of our private securities and external funds portfolio continued to improve in ﬁscal 2006, returning 3.7% on average assets of $1.6 billion, compared to a negative return of 0.6% in ﬁscal 2005. Considering the consistent and substantial increase in investment volume over the last three years, this performance attests to our rigorous management of this portfolio;

• a bull stock market last year, particularly in the life sciences sector, which boosted the yield of our listed shares portfolio to 21.6% on average assets of $639 million, an excellent improvement over the negative return of 1.4% recorded last year on this portfolio.

The performance of the other investments sector is tied to the behaviour of the ﬁnancial markets and conditions affecting the economic environment in which the Fund operates. Thus, interest rate movement and stock market performance are the two most important factors to consider when analyzing this sector’s performance of 7.1% in ﬁscal 2006, which is largely explained by the following elements:

• thanks to the bull stock market, the sector-based strategy implemented last year to convert our holdings in shares listed on major exchanges into publicly traded securities in four speciﬁc sectors1 returned 21.0% on assets averaging $855 million, compared with 20.3% in ﬁscal 2005. Implemented in order to reduce portfolio volatility, this strategy’s yield continues to exceed expectations;

• a 3.0% yield on our ﬁxed-income securities portfolio on an average outstanding of $3.0 billion achieved in a Canadian market characterized by rising interest rates, which means a reduction in the fair value of the bonds held. The hedging strategy implemented to mitigate the effect of the anticipated interest hike allowed us to considerably lower the reduction in value of the bond portfolio. This performance follows last year’s excellent result of 9.1%, achieved in an environment of decidedly more favourable interest rates.

Return by Asset Class Years ended May 31

2006 2005 Average Average Assets Weighting Return Contribution Assets Weighting Return Contribution M$ % % % M$ % % %

Investments Private securities and external funds 1,578 25.4 3.7 1.0 1,387 25.2 (0.6) (0.2) Listed shares 639 10.3 21.6 2.2 636 11.5 (1.4) (0.1) Other investments Fixed-income securities 3,036 49.0 3.0 1.5 2,677 48.5 9.1 4.5 Sector-based shares1 and funds of hedge funds 950 15.3 20.0 3.1 814 14.8 19.6 2.9 Assets under management 6,203 100.0 7.8 7.8 5,514 100.0 7.1 7.1

1. Sectors are materials, energy, consumer staples and utilities.

SOLIDARITY FUND QFL ( MANAGEMENT’S DISCUSSION AND ANALYSIS ) PAGE 21 Analysis of Cash Flows, Balance Sheet and Off-Balance Sheet Items

Operating and ﬁnancing cash ﬂows totalled $424 million in 2005-2006, down from the $632 million recorded a year earlier. This decrease stems primarily from the reduction in share issues to $614 million during the year in order to comply with the lower contribution limit in effect and an increase in shares redeemed, which reached $324 million for the year. Share issues and redemptions were $706 million and $256 million respectively in 2004-2005.

Direct investments in partner companies reached $643 million during the year, an increase of $151 million or 31% over the $492 million recorded last year. The investments sector thus enjoyed its best year since the Fund’s inception and signiﬁcantly surpassed the objectives set at the beginning of the year. Including the regional funds, investments were made in 181 partner companies, notably, Metro inc., Équipement Labrie ltée and Stella-Jones inc. Proceeds from direct disinvestments were $248 million, down from the $273 million recorded a year ago.

On a consolidated basis, balance sheet investments increased from $2.1 billion as at May 31, 2005 to $2.4 billion as at May 31, 2006. This increase is explained by the net investments made (investments made less disinvestments) and the portfolio appreciation recorded during the year.

Following the classiﬁcation proposed by the Canadian Venture Capital Association (CVCA), private placements can be broken down into three categories: buyout capital, venture capital and mezzanine capital investments2. Applying this deﬁnition to our $2.2 billion investment portfolio3, at cost, as at May 31, 2006, 44.6% was invested in buyout capital, 25.6% in venture capital, and 29.8% in mezzanine capital.

Breakdown of Investment Portfolio by Category As at May 31, 2006

BUYOUT CAPITAL MEZZANINE CAPITAL VENTURE CAPITAL 44.6% 29.8% 25.6%

Total other investments advanced $214 million in 2005-2006 to $4.2 billion as at May 31, 2006. This increase is mainly attributable to cash ﬂows generated by net cash inﬂows (share issues less redemptions) and interest and dividends earned on the Fund’s assets, net of the depreciation recorded in the bond portfolio following the interest rate hike and the appreciation recorded on shares thanks to the bull stock market.

Thus, net assets rose $652 million to $6.6 billion as at May 31, 2006. The net value per Class A share outstanding continued to increase during the year, rising $1.33 to $23.74.

2. Based on the classiﬁcation proposed by the CVCA, a buyout capital investment involves purchasing shares of an established private or public company that is seeking to grow organically or by acquisition. A venture capital investment usually involves purchasing shares of an unlisted company at the start-up stage or in the early stages of its development. Mezzanine capital is subordinated debt or preferred stock with or without a variable portion consisting of equity warrants.

3. On a fund disbursement basis, excluding investment in real estate funds and in listed shares acquired on the secondary market.

PAGE 22 SOLIDARITY FUND QFL ( MANAGEMENT’S DISCUSSION AND ANALYSIS ) Change in Net Value Per Class A Share Years ended May 31 (in dollars)

2006 2005

NET VALUE AT BEGINNING 22.41 21.37 Increase due to operations Interest and dividends 0.93 0.90 Realized gains 0.01 0.60 Unrealized gains 0.83 0.02 Operating expenses (0.41) (0.41) Income taxes and minority interest (0.01) 1.35 (0.04) 1.07 Variance due to share issues and redemptions (0.02) (0.03) NET VALUE AT END 23.74 22.41

VALUATION OF FINANCIAL ASSETS

Investments and other investments are recorded on the balance sheet at their fair value. The fair value of other investments was established as at May 31, 2006 based on the closing market price on that day on stock or bond markets, or in the case of unlisted derivative ﬁnancial instruments, established by professionals using appropriate and acknowledged pricing models.

With regards to investments, listed shares are also valued based on their closing market price on May 31, 2006. Private securities or listed shares whose closing market price exceptionally does not reﬂect their fair value, are valued on a semi-annual basis on November 30 and May 31 by seasoned valuators specialized in business valuation using recognized valuation techniques that follow international guidelines aimed at ensuring that fair value4 is established in a reliable manner. These valuators report to the Executive Vice-President, Finance, and follow a structured process comprising several veriﬁcation and validation steps to ensure the quality, uniformity and integrity of the work performed and therefore of the fair value thus established.

The fair value of our investments in external funds is based on the value set by their respective managers on the date closest to the Fund’s year-end and subsequently adjusted by the Fund’s valuators if necessary to account for the effect of recent events. Accounting Policies

New accounting policies issued by the Canadian Institute of Chartered Accountants (CICA) resulted in modifications to the Fund’s accounting policies and were applied effective June 1, 2004. These changes are described in Note 3 to the Fund’s financial statements. Since they are applicable to the two years presented in the financial statements, these changes in no way affect the comparison between the years ended May 31, 2005 and May 31, 2006.

The Fund does not plan to adopt changes to accounting policies that would signiﬁcantly affect net earnings next year or the value of its net assets as at May 31, 2007.

4. Using fair value is a best practice recognized by venture capital firms and private equity funds. Fair value is defined as the amount at which a financial instrument could be exchanged between willing parties as part of an arms-length transaction.

SOLIDARITY FUND QFL ( MANAGEMENT’S DISCUSSION AND ANALYSIS ) PAGE 23 Contribution to Québec’s Economic Development

Concerned with economic growth, particularly in the manufacturing sector, the most vulnerable to currency ﬂuctuations, international competition and commodity prices, the Fund has launched numerous initiatives aimed at stimulating industries that create well-paying jobs. We have also established priority sectors that our specialized teams are targeting proactively. For example, we opted for an “integrator” approach for the aerospace sector, and created Solifor in response to the challenges in the forestry industry. Through these initiatives the Fund did its part to help Québec’s economic development and asserted itself as a major economic player.

In the aerospace sector, notably, the Fund made a strategic investment5 of $15 million in Mecachrome international inc. during the year to back this European company’s development in North America using Québec as a platform. Mecachrome purchased a plant in Montréal North and built another in Mirabel as part of its strategy to become an integrator in the industry.

The Fund is a patient investor that accompanies its partner companies over a long period, through the different stages of their development. The Fund is also an innovator that seeks to adapt its ﬁnancial product offering to business needs. For example, the Fund pioneered the Fonds Relève PME in Québec a few years ago and during the year also introduced the Productivity Loan and the Trademark Loan.

In addition, the investments made by the Fund over the years under its policy for investment outside Québec6 have generated considerable economic spin-offs for Québec, as required by this policy. And some still continue to generate spin-offs in the form of purchases of Québec goods and services.

In ﬁscal 2006, the Fund made only one new commitment of $100 million under the policy for investment outside Québec to help Metro inc. expand in Ontario by acquiring A&P Canada. This acquisition should generate spin-offs of at least $100 million for Metro’s Québec suppliers.

During the year, the policy for investment outside Québec was amended to include two new categories of eligible foreign investments: investment in certain private funds outside Québec that invest in Québec, and investment in major productivity- related projects carried out in Québec by certain companies outside Québec. By investing in private funds outside Québec, the Fund is seeking, among other things, to facilitate the expansion of its partner companies abroad. Thus, during the year, the Fund invested a total of CAD$113 million in seven private funds outside Québec with the expectation that these funds not only support the Fund’s economic development efforts in Québec but also invest in Québec-based companies an amount at least equal to the sums received.

With regards to the second new eligible investment category, the Fund has not yet made any investment in companies outside Québec that execute large-scale productivity-related projects in Québec.

5. The Québec 2003-2004 budget granted the Fund permission to make strategic investments in large Québec companies with assets under $500 million or a net worth of less than $200 million.

6. Since 1998, the Fund has been authorized by the Québec Minister of Finance to invest outside Québec provided certain clearly deﬁned conditions are respected, notably, with regards to economic spin-offs.

PAGE 24 SOLIDARITY FUND QFL ( MANAGEMENT’S DISCUSSION AND ANALYSIS ) THE FUND NETWORK

Since its inception in 1983, the Fund has built a solid investment network that provides ambitious entrepreneurs with patient capital according to their needs. A veritable business hub brimming with ideas, talent and knowledge, this network offers the Fund’s partner companies the opportunity to share common concerns with other SMEs, learn from past experiences and forge new business ties. The Fund’s investment network revolves around four levels of investment:

The Solidarity Fund QFL offers $2 million and up for large companies;

The 16 Regional Solidarity Fund QFL, created by the Fund with the backing of the Québec government, offer $100,000 to $2 million to meet the needs of businesses in every region of Québec.

The 86 SOLIDE (sociétés locales d'investissement dans le développement de l'emploi), created by the Fund and the Fédération québécoise des municipalités, offer $5,000 to $100,000 for small businesses.

The specialty funds form a network that invests in assorted industries in Québec and abroad.

Venture Capital Industry, Trends and Competition

Following a slowdown that spanned more than five years, the Québec venture capital (VC) market finally turned around in 2005, with investments increasing 12% over 2004, showing a first annual increase since the tech bubble burst in 2001.

During this period, the Québec VC industry underwent a restructuring that began in December 2003, prompted by the Brunet Report on the role of the Québec government in venture capital. Finding that government funding dominated this industry to the detriment of private funds and that weaknesses existed in some links of the investment chain, this report recommended that the government back out of the VC market, promote the creation of private funds, and refocus the activities of crown corporations.

The Fund took advantage of this restructuring period to raise its proﬁle and boost its market share by investing more than $1.5 billion over three years. In fact, the Fund played a large part in the restructuring of this market – in keeping with the recommendations of the Brunet Report – by helping many private funds get off the ground and helping create regional economic intervention funds (FIER).

With the restructuring soon completed, 2006-2007 will see our main competitors become much more active. Now that most of the key players in Québec have ﬁnished reorienting their investment targets, they are poised to be more visible on the market. The heightened presence of local and private investors—particularly foreign funds—as well as FIERs should make capital more readily available to Québec companies for all types of projects, ranging from start-up to expansion and acquisition.

SOLIDARITY FUND QFL ( MANAGEMENT’S DISCUSSION AND ANALYSIS ) PAGE 25 Economic Conditions and Financial Markets

2005-2006 REVIEW

The year ended May 31, 2006 was characterized by a robust North-American economy despite rising interest rates. Consumer, investment, and government spending continued to drive the expansion for a fourth consecutive year. The past two years have been similar in terms of job creation, with the number of jobs created hovering around the average for expansion periods, unlike the difficult times observed from 2001 to 2003. Consumer confidence, bolstered by the historic heights reached by the real estate market, especially, led to a sharp increase in spending. Commodity prices, particularly for oil, natural gas, copper, gold, aluminium, nickel and zinc, spiralled upward with the result that some of the increases were passed on to consumers. In response, both the Federal Reserve and the Bank of Canada continued the monetary tightening policy begun in 2004. Thus, official interest rates rose from 3.0% to 5.0% in the U.S. and from 2.5% to 4.25% in Canada. Reflecting the moves by the central banks, the rates for short-term bonds rose more sharply than for long-term securities. Thus, the Canadian two-year rate rose from 2.92% to 4.18% while the ten-year rate increased from 3.92% to 4.45%.

The global increase in energy prices boosted economic growth in oil- and natural gas-producing provinces and sent the Canadian dollar up against the U.S. currency. This situation has created an economic imbalance between the provinces in the West, which are operating at full capacity, and the central provinces (Ontario and Québec) where the manufacturing industry is feeling the fallout of the rising dollar. This asymmetry complicates the Bank of Canada’s job since its monetary policy is applied uniformly across the country.

Stock markets generated remarkable returns for shareholders in the year ended May 31, 2006, fuelled by earnings growth of more than 15%, which although high, was less than last year. The Canadian stock market beneﬁted from the global appetite for commodity stocks (energy and raw materials). In this context, the Canadian stock market (S&P/TSX composite) rose 24.6%, U.S. technology stocks (NASDAQ composite) returned a negative 2.5% (+10.8% in local currency), and the MSCI World gained 5.5% in Canadian dollars (18.4% in local currencies). Reﬂecting the interest rate hikes, the Canadian bond market trailed the Canadian stock market, yielding 1.2% for the 12 months ended May 31, 2006.

ECONOMIC AND FINANCIAL OUTLOOK

After two years of above-potential growth, the U.S. economy is expected to slow in the next year as consumers begin to reign in spending. The 4.0% increase in short-term interest rates over the last two years, along with the measures adopted by the authorities to limit the growth of inducive mortgage financing, has begun to curb the real estate market. The interest rate hikes, combined with a lower wealth effect than in past years, could slow consumer spending in the coming months. It bears mentioning that favourable tax measures aimed at American taxpayers are having an increasingly difficult time getting congressional approval and their effects on the U.S. economy will increasingly wane. In Europe, according to the leading indicators and business confidence indices, the economic situation should continue to improve. The unemployment rate is down, and this trend is expected to continue. The anticipated interest rate hikes by the European Central Bank will not be enough to really dampen consumer spending. The equally favourable situation in Japan should also continue as consumer confidence rises steadily, driven by a declining unemployment rate. Moreover, the numerous economic, social and financial reforms launched several years ago are beginning to bear fruit. And finally, the fact that deflation has been replaced by a slight increase in prices is the ultimate sign that the turnaround is solid.

The world’s strong demand for natural resources should play in Canada’s favour in the near term. Thus, economic growth should hover between 2.5% and 3.0% next year. After feeling the pinch of the Canadian dollar’s appreciation in early 2005, the trade balance is slowly recovering as exporters have since recovered, having taken steps to boost productivity and become more innovative.

PAGE 26 SOLIDARITY FUND QFL ( MANAGEMENT’S DISCUSSION AND ANALYSIS ) Although the prices of many raw materials remain historically high, some are expected to fall to reﬂect supply and demand, and speculation should decrease on some commodities such as energy products. Lower prices on many goods and services imported by the West from Asian countries with extensive production capacity and a lower cost structure, notably, China and India, should cause inﬂation to decrease slightly in North America over the coming months.

With the slight increase in long-term interest rates and moderate earnings growth, stock markets should generate more modest returns in 2007 compared to 2006. This economic and ﬁnancial backdrop could be revised based on certain risk factors, namely, higher U.S. interest rates and a weaker U.S. dollar in relation to the world’s major currencies. This alternate scenario could materialize if the budget and current-account deﬁcits, which have plagued the U.S. for many years, continue to grow. Other factors such as oil prices or major geopolitical or climate events could also alter the outlook.

2006-2007 Outlook7

In light of the economic outlook, the Fund has implemented a strategy using derivative instruments to soften the impact of the anticipated interest rate hikes on its bond portfolio, which makes more than 45% of its assets. Given the protection this strategy provides, we must forgo part of the increase in the bond portfolio’s value in the event interest rates fall. This strategy is a response to shareholder expectations in order to avoid a drop in share price. Although we also use other measures to reduce the probability of share price decreasing, this risk cannot however be eliminated.

For the year ending May 31, 2007, the Fund is projecting a lower return than the 6.0% achieved in 2006 and less than the 5.0% and 5.2% posted, respectively, in the two previous years. This decrease will primarily stem from lower anticipated stock market returns. The yield of our private securities may also be less than this past year, notably due to higher interest rates, a stronger Canadian dollar in relation to the U.S. currency, and foreign competition. The Fund is aiming for a ratio of operating expenses to average net assets of 1.7%, similar to this past year.

If we add the share issues of $555 million8 and the estimated $375 million in redemptions to projected earnings, net assets should increase from $6.6 billion as at May 31, 2006 to $7.0 billion as at May 31, 2007.

In the longer term, based on the anticipated economic and ﬁnancial outlook, and considering our mission and investment strategies, we are projecting an average annual return of between 3% and 4% for the next few years. This return does not take into account the tax credits granted to shareholders for purchasing Fund shares.

60% Rule

The 60% rule set out in the Fund’s incorporating act stipulates that the Fund’s average unsecured investments made in qualified business enterprises must represent at least 60% of its average net assets for the previous fiscal year. The remaining assets may be invested in other financial vehicles for asset diversification and sound management practices. The calculation method for this rule is based on the value of the Fund’s assets, which depends in part on interest rate movements and the performance of the stock market and the economy in general.

7. The outlook presented in this annual report reﬂects the Fund’s expectations with respect to future events, is based on information available to the Fund at the time of writing, and presupposes certain risks, uncertainties and assumptions. Many factors, several of which are beyond our control, may cause the Fund’s actual results, performance or achievements to differ materially from explicit or implicit expected future results, performance or achievements.

8. This amount is limited based on the rules governing non-compliance with the 60% rule.

SOLIDARITY FUND QFL ( MANAGEMENT’S DISCUSSION AND ANALYSIS ) PAGE 27 The Québec 2006-2007 budget clarified some of the changes made in the previous year’s budget to our investment rules in order to allow the Fund to make full use of them. It will be recalled that the government made significant changes to our investment rules in the last few years, allowing the Fund to have a greater impact on the Québec economy. More specifically, eligibility was broadened to allow investments in: • larger companies with assets of under $100 million or a net worth of less than $50 million (previously $50 million and $20 million, respectively); • private funds outside Québec, up to the amounts invested by these funds in Québec companies; • major investment projects, particularly those associated with productivity improvements; • Québec venture capital funds whose core mission is to invest in Québec companies.

Moreover, these changes allowed the Fund to make strategic investments in large Québec companies with assets of less than $500 million or a net worth of up to $200 million. The changes were in addition to those announced in 2003 that increased the amount we can reinvest in companies with assets that can henceforth be as high as $350 million or with a net worth of as much as $150 million.

As at May 31, 2006, qualified investments amounted to $3,144 million while average qualified investments stood at $2,937 million or 53.2% of the average net assets of the previous year (55.6% as at May 31, 2005). Although qualified investments rose a substantial $414 million in 2005-2006, an increase sufficient to allow the ratio to improve, the full effect will only be felt next year since when calculating the 60% rule, only 50% of new investments are taken into account in the year in which they are made.

Given that the 60% threshold was not reached, the Fund will have to limit its lump-sum share issue for ﬁscal 2007 to 75% of the value of the lump-sum shares issued in 2005-2006. The total value of Class A shares giving rise to labour fund tax credits will be approximately $555 million for 2006-2007. The Fund does not expect to reach the 60% threshold by May 31, 2007.

Vision and Priorities

In order to fulﬁll its mission, the Fund adopted a vision that allows all its employees to work towards a common goal. This medium-term vision can be described as follows:

Place priority on creating and maintaining jobs as well as generating a return for our shareholders by becoming the partner of choice for companies impacting the Québec economy.

Priorities were set at the beginning of ﬁscal 2005-2006. The following sets out the proposed actions as well as last year’s achievements for each priority.

Increase investments impacting the Québec economy and gradually eliminate the shortfall from the 60% threshold Key actions: Seize exceptional business opportunities associated with the competitive environment, increase proﬁtable investment volume, meet the needs of companies, and review our disinvestment process. Key achievements: Fiscal 2006 was a record year in terms of investment volume. Thus, $643 million was invested, up 31% over last year and 59% over 2003-2004. With these investments, the Fund consolidated its position in the development capital market, afﬁrming its role as a structuring partner for the Québec economy. Moreover, disinvestments were limited to $248 million, a reduction of 10% in relation to the last three-year average.

PAGE 28 SOLIDARITY FUND QFL ( MANAGEMENT’S DISCUSSION AND ANALYSIS ) Continuously improve our services to shareholders and employers Key actions: Develop online tools to personalize service, optimize work processes and continue work on the “Service Quality” site, integrating quality assurance. Key achievements: We completely overhauled our process for contributing through payroll deductions and ﬁnalized our sector-based service quality processes, integrating a computerized quality monitoring and control system.

Offer more attractive products with a view to creating added value for our partners Key actions: Develop and offer new ﬁnancial products and management tools and put the Fund’s human capital at the service of our partner companies. Key achievements: In this regard, we developed new ﬁnancial products, namely, the Trademark Loan and the Productivity Loan, both designed to better align our offering with entrepreneurs’ needs. We also implemented a pilot project to increase the value of our partner companies which should bear fruit in the coming years.

Pursue development opportunities for sustained growth in systematic saving by our shareholders Key actions: Continue developing payroll deduction opportunities in unionized and non-unionized workplaces, target non-traditional markets and implement marketing approaches aimed at winning shareholder loyalty. Key achievements: We continue to develop systematic saving despite plant closures in the lumber, textile and processing industries. We studied the reasons why shareholders cancel payroll deduction and developed a response plan that calls for the active involvement of our LRs.

Generate an acceptable return for our shareholders Key actions: Help our partners overcome the challenges posed by the economic environment and back their growth plans, ensure our portfolio is fully diversiﬁed, implement risk management tools and respect our operating expenditure budget. Key achievements: Operating expenses were below budget. We used effective hedging strategies on our assets, especially in the bond portfolio. Beyond that, our internal and external advisors guide our partner companies, notably by serving on their boards of directors. A new policy regarding this aspect was implemented.

Enhance organizational efﬁciency and mobilize our employees and local representatives Key actions: Implement measures to improve the Fund’s strategic business processes, continue developing our management tools and focus on development, training and employee recognition at all levels: unionized staff, management and LRs. Key achievements: We continued to help our managers develop their leadership, partnership and change management skills. With a view to realizing our vision, we also helped all our unionized employees and LRs develop their technical and relational skills. We reviewed our training programs and made adjustments where necessary.

SOLIDARITY FUND QFL ( MANAGEMENT’S DISCUSSION AND ANALYSIS ) PAGE 29 Make the Fondation de la formation économique (FFE) an added-value service for our partners Key actions: Deploy new training programs, strengthen cooperation between the Fondation and its collaborators and continue the LR training program. Key achievements: With the deployment of the new training programs, the FFE aimed to systematically analyze all the evaluations completed by participants and instructors, make the necessary adjustments and proactively respond to emerging LR needs in order to keep them mobilized.

Adjust to regulatory changes Key actions: Monitor draft legislation and regulations, particularly those that relate to securities, and, where necessary, call attention to the Fund’s specific situation. Implement a process to meet new requirements for internal controls and financial disclosure. Key achievements: Regulatory monitoring is performed mainly under the jurisdiction of the Vice-President, Legal Affairs. We also launched a project with a view to implementing best practices with regards to controls and procedures used to produce and communicate financial information.

In conclusion, the activities relating to our vision will continue throughout the 2006-2007 ﬁscal year. In addition, six committees comprising managers and unionized employees were formed to develop action plans aimed at helping us become the partner of choice for companies impacting the Québec economy. These committees will report to management on their work in fall 2006. Their priorities are as follows: to be internal partners and service oriented, focused on creating added value; emphasize employee development; leverage our investment markets; simplify and become more efﬁcient in our ways of doing things; communicate effectively, internally and externally; and coordinate corporate monitoring.

Risk Management

Sound risk management practices are vital to the success of ﬁnancial institutions. We manage our risk effectively, taking into account the nature of the Fund’s activities and the level of risk we can reasonably assume in light of the desired risk/return ratio and shareholder expectations. To this end, a structured risk management process is used to determine, measure and control the substantial risks with which the Fund must contend.

Our ﬁnancial assets are managed in an integrated, comprehensive manner. Our aim is to optimize the risk/return ratio while respecting the Fund’s mission and enabling our shareholders to achieve their goals.

Our risk management approach did not change materially during the year ended May 31, 2006. In the normal course of business, the Fund is exposed to different risks; the main ones are presented below.

MARKET RISK

Market risk is inherent to the Fund’s participation in financial markets and manifests itself in the form of fluctuations in interest rates, exchange rates and stock prices, all of which can lead to losses. More specifically, this risk relates to the potential negative effects of market conditions on the organization’s balance sheet or statement of earnings as well as variations in market parameters, such as volatility, that may lower the value of its financial assets, which are sensitive to fluctuations in bond interest rates and stock prices. Since most of its transactions are in Canadian dollars, the Fund’s direct exposure to exchange risk is low.

PAGE 30 SOLIDARITY FUND QFL ( MANAGEMENT’S DISCUSSION AND ANALYSIS ) The Fund manages market risk by allocating its ﬁnancial assets across several classes (money market, bonds, income trusts, preferred shares, equity stakes in private companies, listed shares, funds of hedge funds, etc.) and by diversifying the industries (life sciences, ﬁnancial services, industrial goods and services, etc.) and geographic areas in which it invests.

The overall ﬁnancial assets management policy sets guidelines, procedures and controls that ensure the target risk/return proﬁle is met on an operational basis. Sensitivity analyses and simulations are used to inform senior management of our level of market risk exposure.

Sensitivity of Fund Performance to Market Risk (based on net assets as at May 31) (in percentage)

2006 2005

1% increase in bond interest rates* (0.9) (1.6) 1% decrease in bond interest rates* 0.9 1.2 10% increase in the stock market 2.6 2.6 10% decrease in the stock market (2.6) (2.6)

* At the end of 2004, the Fund implemented a hedging strategy using derivatives to reduce the sensitivity of the Fund’s return to rising interest rates.

As part of our strategy, during the year we hedged an average of $1.7 billion of bonds against the consequences of an interest rate hike. Thus, when the hike did materialize, this strategy generated a $33 million gain, offsetting some of the $97 million loss on the fair value of our bond portfolio due to the rate increase.

CREDIT AND COUNTERPARTY RISK

The Fund’s exposure to credit risk stems mainly from development capital activities associated with its mission. However, its other investment activities entail less of this risk since the parties concerned are typically more ﬁnancially solid (governments, banks, etc.).

Credit risk is the potential for loss due to the failure of a partner company, issuer or counterparty to honour its ﬁnancial obligations. The Fund manages this risk through its overall ﬁnancial assets management policy by setting guidelines and limits by asset class. This policy also allows us to manage the concentration risk associated with exposure to an issuer or group of issuers with common characteristics (regions, industries, credit ratings).

Sector-based targets are set each year for the investment sector. These targets will henceforth be set according to risk budgets. Based on an optimal risk level deﬁned for the entire investment portfolio, management by risk budget will allow us to more effectively monitor and control the portfolio proﬁle and sector allocation by risk level. The investment portfolio’s risk-return balance is thus achieved through sector-based allocation of risk budgets in order to offset the high risk of our investments in certain sectors.

Over the last years, the Executive Vice-President, Investments, formed multi-disciplinary teams and a due diligence committee to ensure an acceptable level of credit risk for the Fund. The Fund acquired specialized tools to calculate the probability of default by our debt-financed partners, thus improving our ability to assess credit risk for these instruments. Moreover, to deal with more difficult situations, the Senior Vice-President, Turnaround and Special Mandates, works with the Vice-President, Legal Affairs, to keep a close eye on files that entail greater credit risk.

SOLIDARITY FUND QFL ( MANAGEMENT’S DISCUSSION AND ANALYSIS ) PAGE 31 In the case of the other investments portfolio, our assets are carefully diversiﬁed following strict criteria pertaining to issuer and counterparty credit ratings and exposure limits by borrower or counterparty, thus ensuring that our results will not be materially affected in the event of a default.

Exposure to Credit and Counterparty Risk (as a percentage of net assets as at May 31)

2006 2005

Weight of the ﬁve largest investments 11.1 10.9 Weight of the ﬁve largest issuers or counterparties (other investments) 26.7* 30.3*

* Of this percentage, the governments of Canada, Québec and the other Canadian provinces represent 24.7% (28.4% as at May 31, 2005).

LIQUIDITY RISK

The Fund must honour certain disbursements on a daily basis, for example, when shareholders redeem their Class A shares or when the Fund invests in companies. The Fund must be able to obtain the cash or its equivalent required to meet its commitments. Liquidity risk is therefore tied to the possibility of incurring a loss if the Fund cannot meet its obligations as they fall due.

The Fund’s incorporating act stipulates that part of the ﬁnancial assets may be invested in publicly-traded securities that are easily converted into cash. In addition, the annual value of the Fund’s Class A share issue currently exceeds redemptions, and this situation is expected to continue for the next few years. The Fund also has access to bank credit facilities for additional sources of liquidity.

As at May 31, 2006, the ratio of liquid ﬁnancial assets as a percentage of aggregate ﬁnancial assets was 64.0% (66.2% as at May 31, 2005).

OPERATIONAL RISK

Inherent to all the Fund’s activities, operational risk is the risk of sustaining losses as a result of the inadequacy or failure of certain processes or systems in place or due to human factors or external events. This risk also includes legal risk.

Effective policies, standards and procedures help us manage this risk. Processes and controls are continuously monitored and periodically revised with a purpose of continuous improvement. The Fund’s operational risk management and the efﬁciency of its management framework are underpinned by the following guiding principles: • competent, well-trained staff; • a culture of integrity; • segregation of incompatible responsibilities and delegation of decision-making authority; • monitoring of technology development and information security; • a planning process for resumption of activities in the event of business interruption; • monitoring of changes in applicable legislation, regulations and standards as well as our compliance in this regard; • risk identiﬁcation and assessment when new products and activities are introduced.

To diversify its ﬁnancial assets management, the Fund also calls upon the services of specialized external managers and acquires equity stakes in specialty funds. Where appropriate, the Fund purchases insurance that transfers certain components of operational risk to insurers.

PAGE 32 SOLIDARITY FUND QFL ( MANAGEMENT’S DISCUSSION AND ANALYSIS ) OTHER RISKS

The Fund is also subject to other risks such as reputation and strategic risks, which could result in unfavourable ﬁnancial consequences.

Reputation risk is the risk that negative publicity, whether founded or unfounded, will or may cause financial losses, a decrease in liquidity or a decline in the customer base. In order to mitigate reputation risk, the Fund has formulated and implemented a Code of Ethics and Conduct for its directors, officers and employees. It also ensures its employees are properly trained, and applies sound governance practices, policies and procedures. The Fund is a responsible corporate citizen that takes ethical, social and environmental aspects into consideration when making investment decisions. We have also adopted a voting rights policy with regards to partner companies and a code of conduct for international business dealings. The Fund also ensures that any financial information released outside the organization is accurate and validated beforehand.

Strategic risk, which includes competitive risk and risk associated with regulatory changes, refers to the possibility of incurring losses as a result of ineffective strategies, lack of integrated business strategies or the inability to adapt the strategies to changes in the business environment. We manage this risk through strategic and operational planning processes that seek input from all levels of the organization before being submitted to the Board of Directors for approval. The Management Committee then periodically monitors each sector’s business plan. Any strategic decision or change to the Company’s orientations that could have a material impact must be authorized beforehand by the appropriate level of authority.

Governance

RISK GOVERNANCE

Because risk management is an essential part of overall ﬁnancial assets management, the Fund has put in place a management framework to ensure that its risk management and control strategies and resulting operational decisions take into account the established level of acceptable risk.

Board of Directors

Financial Assets Audit Committee Ethics Committee Delegate Boards Management Committee

Shareholder expectations Risks inherent to the Overall ﬁnancial in terms of return Fund’s activities as a result assets management and volatility of its mission

Overall ﬁnancial assets management policy, procedures, standards, etc.

Our risk governance structure comprises a series of policies approved by the Board of Directors. Policies, standards and procedures are continuously reassessed to ensure that we rely on only the best possible practices. It should be noted that the functions of Chairman of the Board and President and CEO are separate.

The overall financial assets management policy is key for the Fund, defining a target allocation of financial assets that allows the Fund to fulfill its mission while carefully selecting a sound investment mix. This policy also provides guidelines that our managers and professionals must follow in their functions as they fulfill their mandate.

SOLIDARITY FUND QFL ( MANAGEMENT’S DISCUSSION AND ANALYSIS ) PAGE 33 The Fund’s Board of Directors is responsible for making investment decisions and for adopting risk management policies and procedures. To this end, it delegates part of its responsibilities to the following committees:

Audit Committee Comprised entirely of independent members, the Audit Committee recommends approval of the audited ﬁnancial statements by the Board of Directors, reviews internal controls, the compliance process and risk management, and provides feedback. It ensures the Fund’s compliance with the statutes, regulations and agreements that govern its operations and that have a material ﬁnancial impact.

Financial Assets Management Committee The Financial Assets Management Committee is responsible for implementing and ensuring compliance with the overall financial assets management policy. Its primary mandate is to coordinate and oversee asset management. In this capacity, it recommends the financial vision and orientation for financial assets management to the Board of Directors. This committee also monitors performance and changes in the risk/return ratio.

Ethics Committee The Ethics Committee oversees the application of the Fund’s Code of Ethics, which defines, among other things, rules of conduct for employees, officers and directors to prevent, for example, conflicts of interest. The Code prohibits the use of any advantage, information or interest in relation to the Fund that would be incompatible with that person’s duties and responsibilities.

Delegate Boards In addition to the Board of Directors, investment decisions are entrusted to delegate boards such as the Executive Committee and the Mining Portfolio Steering Committee, and special boards created for the Turnaround and Technology Investments sectors.

FINANCIAL GOVERNANCE

The Fund is currently in the process of developing a regulatory compliance program. While not required to apply MI 52-109 issued by the Canadian Securities Administrators, the Fund has decided to comply with the principles contained in this rule, thereby demonstrating its willingness to respect best practices in ﬁnancial governance. This program will apply to all the controls and procedures pertaining to the production and disclosure of reliable, up-to-date ﬁnancial information.

In the coming months, the Fund will finish documenting its overall control environment as well as its processes and controls associated with the production and disclosure of financial information, including computer and data processing controls. Afterwards it will evaluate the effectiveness of such processes and controls. A consulting firm has been retained to help with this work and to provide the required methodological support.

PAGE 34 SOLIDARITY FUND QFL ( MANAGEMENT’S DISCUSSION AND ANALYSIS ) MANAGEMENT’S REPORT

The consolidated ﬁnancial statements of the Fonds de solidarité des travailleurs du Québec (F.T.Q.) and the other ﬁnancial information in this annual report are the responsibility of the Board of Directors which has delegated the responsibility of their preparation to management.

The Board of Directors carries out its responsibility for consolidated ﬁnancial statements through the Audit Committee, made up of outside, unrelated directors. The auditors mandated by shareholders have unrestricted access to the Audit Committee, with or without management’s presence.

To fulfill its responsibility about the accuracy and reliability of the financial information, management has a system of internal controls to provide assurance that the financial information is reliable, form a proper basis for preparing the consolidated financial statements, and that the Fund’s assets are properly accounted for and safeguarded.

These consolidated ﬁnancial statements, audited by Samson Bélair/Deloitte & Touche s.e.n.c.r.l., Chartered Accountants, and Raymond Chabot Grant Thornton LLP, Chartered Accountants, present the financial information available as at June 20, 2006, and have been prepared in accordance with Canadian generally accepted accounting principles.

The financial information presented elsewhere in this annual report conforms with the Fund’s consolidated financial statements, which have been approved by the Board of Directors.

Executive Vice-President, Finance

Michel Pontbriand, CA Montréal, June 20, 2006

AUDITORS’ REPORT

To the Shareholders of the Fonds de solidarité des travailleurs du Québec (F.T.Q.)

We have audited the consolidated balance sheets of the Fonds de solidarité des travailleurs du Québec (F.T.Q.) as at May 31, 2006 and 2005, and the consolidated statements of earnings, changes in net assets and cash flows for the years then ended. These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Fund as at May 31, 2006 and 2005, and the results of its operations and its cash flows for the years then ended in accordance with Canadian generally accepted accounting principles.

Samson Bélair/Deloitte & Touche s.e.n.c.r.l. Raymond Chabot Grant Thornton LLP Chartered Accountants Chartered Accountants

Montréal, June 20, 2006

SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) PAGE 35 CONSOLIDATED BALANCE SHEETS

As at May 31 (In thousands, except for the net value per share)

2006 2005 $ $ ASSETS Investments (Note 4) 2,430,916 2,112,686 Other investments (Note 5) 4,179,735 3,965,860 Accounts receivable and other assets 169,147 108,592 Cash 13,660 21,423 Capital assets (Note 7) 69,060 71,800 Income taxes – 19,010 Future income taxes (Note 12) 9,345 2,408 6,871,863 6,301,779

LIABILITIES Loans (Note 8) 71,030 69,874 Accounts payable 160,403 250,915 Income taxes 22,547 – Minority interest 10,801 25,787 264,781 346,576

NET ASSETS 6,607,082 5,955,203

Number of outstanding Class A shares 277,466 264,845

NET VALUE PER CLASS A SHARE 23.74 22.41

Contingencies (Note 10) The accompanying notes form an integral part of these consolidated ﬁnancial statements.

On behalf of the Board of Directors,

Yvon Bolduc, Director Henri Massé, Director

PAGE 36 SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) CONSOLIDATED STATEMENTS OF EARNINGS

For the years ended May 31 (In thousands, except for the earnings per share)

2006 2005 $ $ REVENUES Realized revenues Interest (Note 11) 208,639 189,122 Dividends 43,072 38,788 Gain on disposal of investments and other investments 1,743 151,396 Change in unrealized appreciation or depreciation 224,341 (15,372) Changes in accounting policies (Note 3) – 22,331 477,795 386,265

OPERATING EXPENSES (Note 11) Corporate expenses 27,590 26,377 Investment and other investment expenses 41,830 38,744 Shareholder development and administration and economic training expenses 28,693 26,153 Capital tax 4,782 8,111 Amortization of information systems development and other capital assets 7,057 5,822 109,952 105,207

EARNINGS BEFORE INCOME TAXES AND MINORITY INTEREST 367,843 281,058 Income taxes (Note 12) 2,436 11,685

EARNINGS BEFORE MINORITY INTEREST 365,407 269,373 Minority interest (1,048) (1,678)

NET EARNINGS 366,455 271,051 Weighted average number of Class A shares 271,462 253,571 EARNINGS PER CLASS A SHARE 1.35 1.07

The accompanying notes form an integral part of these consolidated ﬁnancial statements.

SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) PAGE 37 CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

For the years ended May 31 (In thousands)

Share Contributed Capital Surplus (Note 9) (Note 9) Retained Earnings (Deﬁcit) Net Assets Realized Unrealized Total $$$$$$

2006 BALANCE AT BEGINNING OF YEAR 5,681,841 368,883 60,475 (155,996) (95,521) 5,955,203

Share issues 613,805 613,805 Share subscriptions 346 346 Realized net earnings 142,114 142,114 142,114 Change in unrealized appreciation or depreciation 224,341 224,341 224,341 Share redemptions (310,229) (18,498) (18,498) (328,727) 303,922 – 123,616 224,341 347,957 651,879 Transfers (Note 9) 80,000 (80,000) (80,000) – Net change 383,922 – 43,616 224,341 267,957 651,879 BALANCE AT END OF YEAR 6,065,763 368,883 104,091 68,345 172,436 6,607,082

2005 BALANCE AT BEGINNING OF YEAR 5,027,371 368,883 – (162,955) (162,955) 5,233,299

Share issues 706,454 706,454 Realized net earnings 264,092 264,092 264,092 Change in unrealized appreciation or depreciation 6,959 6,959 6,959 Share redemptions (246,984) (8,617) (8,617) (255,601) 459,470 – 255,475 6,959 262,434 721,904 Transfers (Note 9) 195,000 (195,000) (195,000) – Net change 654,470 – 60,475 6,959 67,434 721,904 BALANCE AT END OF YEAR 5,681,841 368,883 60,475 (155,996) (95,521) 5,955,203

The accompanying notes form an integral part of these consolidated ﬁnancial statements.

PAGE 38 SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended May 31 (In thousands)

2006 2005 $ $ OPERATING ACTIVITIES Cash inﬂow - investment income and other revenues 229,463 223,263 Cash outﬂow - suppliers and compensation (99,537) (92,397) Income taxes received (paid) 20,057 (15,402) 149,983 115,464

FINANCING ACTIVITIES Loans 78,349 144,195 Loan repayment (80,528) (78,663) Share issues and subscriptions 614,151 706,454 Shares redeemed (324,437) (256,433) Minority interest (13,645) 1,388 273,890 516,941 CASH PROVIDED BY OPERATING AND FINANCING ACTIVITIES 423,873 632,405

INVESTING ACTIVITIES Acquisition of investments (931,553) (813,952) Proceeds on disposal of investments 651,175 625,401 Acquisition of other investments (7,813,807) (7,379,143) Proceeds on disposal of other investments 7,666,866 6,948,038 Information systems development (2,218) (2,020) Other capital assets (2,099) (2,408) CASH USED IN INVESTING ACTIVITIES (431,636) (624,084)

CASH OF CONSOLIDATED INVESTMENT COMPANIES AT BEGINNING OF YEAR 9,509 INCREASE (DECREASE) IN CASH (7,763) 17,830

CASH AT BEGINNING OF YEAR 21,423 3,593 CASH AT END OF YEAR 13,660 21,423

The accompanying notes form an integral part of these consolidated ﬁnancial statements.

SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) PAGE 39 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As at May 31, 2006 and 2005

1. Incorporation Act

Statutes and objectives of the Fund The Fonds de solidarité des travailleurs du Québec (F.T.Q.) (the “Fund”), incorporated by an Act of the Québec National Assembly, is a publicly funded company with the following objectives: a) to invest in Québec business enterprises and provide them with services in order to create, maintain or protect jobs; b) to invest in business enterprises whose activities outside Québec contribute to creating or maintaining jobs or economic activity in Québec; c) to promote the training of workers in economic matters to enable them to increase their influence on Québec’s economic development; d) to stimulate the Québec economy by making strategic investments that will be of benefit to Québec workers and business enterprises; e) to promote the development of Québec business enterprises by inviting workers to participate in that development by purchasing Fund’s shares. To this end, the Fund endeavours to concentrate most of its investments in unsecured investments, mainly in small and medium- sized enterprises, granting priority to proposals from enterprises where workers are members of unions affiliated with the Québec Federation of Labour (Q.F.L.) and using a sector-based strategy. As a general rule, the Fund will take a minority interest in the projects in which it invests. 60% rule The Fund may invest in any business enterprise with or without security. However, in any given fiscal year, the proportion of unsecured investments made in qualified business enterprises must represent an average of at least 60% of the Fund’s average net assets of the previous year. In 2006, this figure is 53.2% (55.6% in 2005). Because the Fund did not satisfy the 60% rule as at May 31, 2006 and 2005, it must limit its share issue next fiscal year to 75% of the total value of shares issued in the preceding period, except for shares acquired through payroll deduction and employer contributions stipulated in agreements concluded at the end of the preceding period. For the year ending May 31, 2007, the 60% rule limits the Fund’s share issue to approximately $555 million. 2. Significant Accounting Policies

Basis of consolidation The consolidated financial statements include the accounts of the Fund and investment companies that are subsidiaries or variable interest entities of which the Fund is the primary beneficiary. Use of estimates The presentation of consolidated financial statements in accordance with Canadian generally accepted accounting principles requires management to make estimates and assumptions, in particular when determining allowances and in the valuation of investments and other investments that affect the reported amounts in the consolidated financial statements. Actual results could differ from those estimates. Recognition of financial instruments Financial instruments are recognized on the transaction date. Valuation of financial instruments All investments and other investments are valued at the fair value, established as follows: a) Unlisted financial instruments Unlisted financial instruments consist of shares, partnership units, loans and advances, guarantees and suretyships, and money market securities. These instruments are valued according to appropriate methods of valuation, including comparison to arm’s-length transactions or takeover bids and the capitalization or discounting of cash flows. Units of funds of hedged funds are valued at the value set by their respective managers at the date closest to the Fund’s year-end.

PAGE 40 SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) b) Listed financial instruments Listed financial instruments consist of shares, partnership units and bonds. These instruments are valued at their closing price. In exceptional instances, when the closing price does not adequately reflect the fair value, these securities are then valued according to appropriate methods of valuation, including methods established for unlisted securities. c) Derivative financial instruments As part of its investment and other investment activities, the Fund uses a number of derivative financial instruments mainly to hedge its exposure to market fluctuations and fluctuations in interest and foreign exchange rates. Derivative financial instruments authorized under the overall financial assets management policy are: – put or call options; – swap agreements; – futures contracts. These derivative financial instruments are valued in accordance with appropriate methods of valuation, including the use of option valuation models. For all other financial assets and liabilities for which the fair value has not been disclosed, the carrying value approximates the fair value. Security loans To generate additional income, the Fund carries out security loan transactions on its portfolio of short-term securities, stocks and bonds. This income is recorded under Fees and other income in Note 11. Capital assets Capital assets are accounted for at cost and are amortized over their estimated useful life using the following methods and annual rates: Methods Rates

Buildings straight-line 2.5% Ofﬁce furniture and equipment diminishing balance 20.0% Computer hardware and software straight-line 25.0% Information systems development straight-line 33.3%

A recoverability test is applied to capital assets when it is determined that their book value may not be recoverable due to certain events or changes in circumstances. An impairment loss is recorded when their carrying amount exceeds the undiscounted cash flows that would result from their ultimate use and disposal. The recognized impairment loss is measured as the excess of the carrying amount of the asset over its fair value. Revenue recognition a) Dividends Dividends are recorded from the date they were declared, except for cumulative dividends, which are recorded on an accrual basis. b) Gains and losses on disposal of investments and other investments Gains and losses on disposal of investments and other investments are recorded at the time of sale and represent the difference between the sale proceeds and the average cost, without taking into consideration the unrealized appreciation or depreciation recorded in previous years, which is reversed and taken into account under Change in unrealized appreciation or depreciation. c) Derivative financial instruments Realized and unrealized gains and losses on derivative financial instruments are recorded in the Statement of Earnings. Employee future benefits The cost of pensions and other retirement benefits earned by employees is actuarially determined using the projected benefit method prorated on service and management’s best estimate of expected plan performance, salary escalation, retirement ages of employees, and expected healthcare costs.

SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) PAGE 41 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ( CONTINUED)

As at May 31, 2006 and 2005

2. Significant Accounting Policies (continued)

Employee future beneﬁts (continued) For the purposes of calculating the expected return on plan assets, those assets are valued at fair value. Net actuarial gains or losses which are greater than 10% of the accrued beneﬁt obligation or the fair value of the plan assets, whichever is higher, are amortized over the average remaining service life of active employees. The average remaining service life of covered active employees is between 10 and 16.4 years for 2006 and 2005. The transitional obligation of the individual insurance plan is amortized using the straight-line method over the average remaining service period of active employees. Foreign currency translation Assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the year-end exchange rate. Revenues and expenses denominated in foreign currencies are translated at the exchange rate prevailing at the transaction date. Foreign exchange gains and losses are recognized in the Statement of Earnings. Income taxes The Fund uses the asset and liability method of accounting for income taxes. Under this method, future income taxes are recognized based on the expected future tax consequences of differences between the carrying amounts of assets or liabilities and their tax bases, using the enacted and substantively enacted income tax rates for the years in which the differences are expected to reverse. 3. Changes in Accounting Policies

Changes in the following accounting policies related to generally accepted accounting principles and to investment companies were applied on a prospective basis effective June 1, 2004. Generally accepted accounting principles On June 1, 2004, the Fund applied the requirements of Section 1100 of the CICA Handbook, “Generally Accepted Accounting Principles,” on a prospective basis. This section establishes standards for financial reporting in accordance with generally accepted accounting principles (GAAP). It also specifies the sources that should be consulted when selecting accounting policies or when determining which information to disclose in instances where a matter has not explicitly been addressed in GAAP’s primary sources. The application of this standard eliminates certain practices that could have been applied in a specific industry. The Fund therefore revised its methods of determining the fair value of its investments and other investments. Thus, as at June 1, 2004, a decrease in revenues of $5 million was recorded in the Statement of Earnings under Changes in accounting policies. This decrease stems from the discontinuation of the general allowance used to specifically provide for unidentified losses, therefore increasing revenues by $91 million, and from changes made to certain parameters for determining the fair value of investments, resulting in a decrease in revenues of $99 million. Also, the Fund uses the closing price to determine the fair value of its listed securities instead of the weighted price, which was established using the average fifty-day closing prices ending on the balance sheet date, thereby increasing revenues by $3 million. Investment companies The Fund opted for early application of the Guideline on Investment Companies. This Guideline establishes criteria for determining whether an enterprise is an investment company. It specifies that investments held by an investment company must be accounted for at the fair value. However, investment companies that are variable interest entities for which the Fund is the primary beneficiary (Guideline on Variable Interest Entities) or that are subsidiaries, must be consolidated. The bonds held by the Fund are accounted for at their fair value. Bonds were previously valued at their unamortized cost. As at June 1, 2004, this change resulted in an increase in revenues of $27.3 million, presented in earnings under Changes in accounting policies. As at June 1, 2004, the consolidation of investment companies resulted in a decrease of $215 million in investments and $232 million in loans, and created minority interest of $26 million. As well, for the year ended May 31, 2005, the consolidation increased revenues and operating expenses by $15.4 million. However, the consolidation did not have an effect on net earnings and net assets or on earnings and the net value per Class A share.

PAGE 42 SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) 4. Investments

2006 2005 Cost Fair value Cost Fair value (In thousands) $$ $$

Unsecured Listed shares and units 571,078 787,566 574,201 634,580 Unlisted shares and units 1,148,475 945,885 1,020,112 808,198 Loans and advances 727,252 670,540 720,450 633,458 Secured Loans and advances 39,508 17,542 38,172 34,011 2,486,313 2,421,533 2,352,935 2,110,247 Derivative ﬁnancial instruments – 9,383 – 2,439 2,486,313 2,430,916 2,352,935 2,112,686

The investment agreements may include clauses providing for conversion and redemption options. Investments include securities in U.S. currency with a fair value of $173.2 million ($149.4 million in 2005)

Interest rate risk

Loans and Advances at Fair Value

Variable Rates Fixed Rates

Less than 5 years Maturity 1 year 1 to 5 years and more Total (In thousands) $$$$$

2006 Unsecured 24,820 235,030 200,534 210,156 670,540 Average effective rate 9.9% 2.1% 9.0% 8.2%

Secured 2,845 6,485 6,013 2,199 17,542 Average effective rate 7.9% 13.7% 10.9% 10.1%

2005 Unsecured 10,165 197,294 169,051 256,948 633,458 Average effective rate 8.2% 3.7% 8.5% 7.8%

Secured 2,983 25,969 3,584 1,475 34,011 Average effective rate 5.7% 11.7% 11.8% 8.7%

SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) PAGE 43 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ( CONTINUED)

As at May 31, 2006 and 2005

4. Investments (continued)

Derivative ﬁnancial instruments

Less than 1 to 6 6 months Maturity 1 month months and more Total (In thousands) $$$$

2006 Fair value1 Equity contracts Written call options (472) (2,020) (2,492) Purchased put options 462 3,497 3,959 Written put options 1,068 (1,305) (237)

Bond contracts Written call options (894) (894) Purchased put options 3,815 3,815 Written put options (381) (381) – 3,598 172 3,770

Notional amount Equity contracts Written call options 23,953 21,131 45,084 Purchased put options 19,911 17,912 37,823 Written put options 20,646 13,750 34,396

Bond contracts Written call options 100,000 100,000 Purchased put options 100,000 100,000 Written put options 100,000 100,000

2005 Fair value1 Equity contracts Written call options (3,937) (6,580) (14,480) (24,997) Purchased put options – 1,798 641 2,439 Written put options – (212) (488) (700) (3,937) (4,994) (14,327) (23,258)

Notional amount Equity contracts Written call options 11,993 60,112 35,459 107,564 Purchased put options 9,844 53,805 32,793 96,442 Written put options 28,601 44,664 36,817 110,082

1. The net fair value of derivative ﬁnancial instruments is $3.8 million (-$23.3 million in 2005). The fair value of instruments with positive values is $9.4 million ($2.4 million in 2005) and is presented under Investments, whereas those with negative values is $5.6 million ($25.7 million in 2005) and is presented under Accounts payable.

PAGE 44 SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) Breakdown of investments by industry segment and maximum risk

Industry segment

Manufacturing Services Local and real Technology and primary and tourism estate funds Total (In thousands) $$$$$

2006 INVESTMENTS AT COST 723,547 582,082 901,130 279,554 2,486,313 Unrealized appreciation (depreciation) (90,676) (188,054) 170,220 53,113 (55,397) Fair value 632,871 394,028 1,071,350 332,667 2,430,916

Funds committed but not disbursed1 204,509 104,853 172,099 50,692 532,153 Guarantees and suretyships2 8,678 7,726 27,271 43,675 Maximum risk 837,380 507,559 1,251,175 410,630 3,006,744

2005 INVESTMENTS AT COST 690,395 692,543 740,346 229,651 2,352,935 Unrealized appreciation (depreciation) (246,143) (282,147) 241,569 46,472 (240,249) Fair value 444,252 410,396 981,915 276,123 2,112,686

Funds committed but not disbursed1 106,594 104,550 111,070 52,239 374,453 Guarantees and suretyships2 500 7,452 21,766 27,271 56,989 Maximum risk 551,346 522,398 1,114,751 355,633 2,544,128

1. Funds committed but not disbursed represent investments that have already been agreed to and for which amounts have been committed by the Fund but have not been disbursed as at year-end.

2. Under Section 17 of its Incorporation Act, when the Fund makes an investment in the form of a guarantee or a suretyship, it must establish and maintain a reserve equal to at least 50% of the guarantee or suretyship amount for the term thereof. This reserve has been established from Other investments.

The Fund granted guarantees and suretyships that do not generally include a specific maturity and that are irrevocable commitments by the Fund to make the payments of partner companies that cannot meet their obligations to third parties for an undiscounted total maximum amount and for the following purposes:

2006 2005 (In thousands) $ $

Loans on real estate projects 27,271 27,271 Operating activities and operating line of credit - without recourse 16,404 29,718 Maximum amount 43,675 56,989

Unrealized depreciation of guarantees and suretyships for an amount of $3.6 million as at May 31, 2006 and 2005 is presented in Accounts payable.

SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) PAGE 45 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ( CONTINUED)

As at May 31, 2006 and 2005

4. Investments (continued)

As well, in the normal course of business, the Fund concluded several indemniﬁcation agreements. Indemniﬁcation is usually related to transfers of investments for the representations and warrantees made as well as to the liability of Fund’s managers, directors or representatives toward partner companies; this liability is covered by liability insurance. Due to the nature of these agreements, it is impossible to estimate the maximum amount that the Fund may have to pay to counterparties. In management’s opinion, it is highly unlikely that these commitments will result in material expenses. 5. Other Investments

2006 2005 Cost Fair value Cost Fair value (In thousands) $$ $$

Shares and units 841,786 992,843 706,744 812,126 Units of funds of hedge funds 98,117 98,861 97,985 98,783 Bonds 2,695,239 2,691,967 2,639,343 2,734,299 Money market securities 364,188 364,228 305,511 306,068 3,999,330 4,147,899 3,749,583 3,951,276

Derivative ﬁnancial instruments (3,174) 31,836 – 14,584 3,996,156 4,179,735 3,749,583 3,965,860

Other investments include securities in foreign currencies mainly U.S. with a fair value of $211.3 million ($79 million in 2005).

PAGE 46 SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) BREAKDOWN BY MATURITY

Bonds

Less than 1 to 5 5 to 10 10 to 20 20 to 30 30 years Maturity 1 year years years years years and more Total (In thousands) $$$$$$$

2006 Fair value 248,749 1,135,932 686,513 260,022 327,693 33,058 2,691,967 Cost 249,612 1,149,552 698,512 256,343 308,358 32,862 2,695,239 Par value 248,264 1,115,216 646,249 202,727 287,225 29,768 2,529,449

Average effective rate 2.8% 4.2% 4.9% 5.4% 5.9% 5.3% 4.6% Average nominal rate 3.5% 5.0% 5.9% 8.0% 6.4% 6.0% 5.5%

2005 Fair value 241,816 1,136,421 602,172 282,698 429,902 41,290 2,734,299 Cost 253,670 1,124,660 573,416 264,727 383,814 39,056 2,639,343 Par value 241,145 1,088,123 534,132 222,144 356,204 36,158 2,477,906

Average effective rate 2.5% 3.8% 5.2% 5.5% 6.0% 5.4% 4.5% Average nominal rate 6.3% 5.1% 6.4% 7.4% 6.5% 5.9% 5.9%

Money market securities

Less than 1 to 6 6 months Maturity 1 month months and more Total (In thousands) $$$$

2006 Fair value 339,461 23,799 968 364,228 Average effective rate 4.1% 4.3% 4.1% 4.1%

2005 Fair value 123,853 182,215 306,068 Average effective rate 2.5% 2.5% 2.5%

SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) PAGE 47 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ( CONTINUED)

As at May 31, 2006 and 2005

5. Other Investments (continued)

BREAKDOWN BY MATURITY (continued) Derivative ﬁnancial instruments

Less than 1 to 6 6 months Maturity 1 month months and more Total (In thousands) $$$$

2006 Fair value1 Bond options Written call options (413) (1,751) (2,164) Purchased put options 2,708 6,347 9,055 Written put options (935) (2,139) (3,074) Bond futures and swaps (94) 1,063 9,325 10,294 Stock index futures 1,409 1,409 Stock index options Written call options 2,351 2,351 Purchased put options (3,085) (3,085) Written put options 1,417 1,417 Foreign exchange contracts 2,662 (18) 2,644 3,251 3,814 11,782 18,847

Notional amount Bond options Written call options 100,000 1,030,000 1,130,000 Purchased put options 100,000 200,000 300,000 Written put options 200,000 600,000 800,000 Bond futures and swaps 503,041 100,000 1,150,000 1,753,041 Stock index futures 25,000 25,000 Stock index options Written call options 75,000 75,000 Purchased put options 75,000 75,000 Written put options 75,000 75,000 Foreign exchange contracts 426,806 149,204 576,010

2005 Fair value1 Bond options Written call options (8,541) (32,506) (41,047) Purchased put options 2,735 9,393 12,128 Written put options (773) (509) (1,282) Bond futures and swaps (1,780) 1 (1,779) Foreign exchange contracts (1,484) (1,484) (8,359) (25,105) (33,464)

Notional amount Bond options Written call options 300,000 1,400,000 1,700,000 Purchased put options 300,000 1,400,000 1,700,000 Written put options 300,000 600,000 900,000 Bond futures and swaps 294,584 5,000 299,584 Foreign exchange contracts 77,000 77,000

1. The net fair value of derivative ﬁnancial instruments is $18.8 million (-$33.5 million in 2005). The fair value of instruments with positive values is $31.8 million ($14.6 million in 2005) and is presented under Other investments, whereas those with negative values is $13 million ($48.1 million in 2005) and is presented under Accounts payable.

PAGE 48 SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) The notional value represents the determined theoretical value of the underlying principal of a derivative, set only to serve as a reference for the application of an exchange rate, interest rate, stock market price or market index value. The notional amount does not reflect the credit or market risk inherent to the contracts. The credit risk relates to the possibility that the other party involved in the transaction may not honour its commitments. The Fund reduces this risk by only dealing with institutions that have a solid credit rating, such as defined in the overall financial asset management policy approved by the Fund’s Board of Directors. The market risk relates to potential losses resulting from interest rate, foreign exchange and stock market fluctuations. The Fund manages that risk by limiting its use of derivative financial instruments mainly to preserve the value of assets, to facilitate changes in asset allocation, to manage the index-linked portion of its portfolio, to facilitate portfolio management and to enhance its yield within the limits of allowable risk.

Breakdown of fair value by sector1 Money Shares market and units Bonds securities Total (In thousands) $$$$

2006 Government and government agencies 1,621,553 3,909 1,625,462 Financial institutions 539,611 360,219 899,830 Technology 216 68,566 68,782 Manufacturing and primary 776,967 192,948 969,915 Services and tourism 314,521 269,289 100 583,910 1,091,704 2,691,967 364,228 4,147,899

2005 Government and government agencies 1,626,879 14,283 1,641,162 Financial institutions 517,438 20,155 537,593 Technology 2,597 81,777 84,374 Manufacturing and primary 686,075 224,661 131,803 1,042,539 Services and tourism 222,237 283,544 139,827 645,608 910,909 2,734,299 306,068 3,951,276

1. This breakdown does not take into account changes in asset breakdown resulting from derivative ﬁnancial instruments.

SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) PAGE 49 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ( CONTINUED)

As at May 31, 2006 and 2005

6. Securities Loans

In the normal course of business, the Fund loans securities in order to generate additional revenue. These loans are secured by guarantees or assets representing the minimum percentage prescribed by applicable law or a percentage that may vary according to best practices. As at May 31, 2006 and 2005, based on the securities loaned, this percentage was between 102% and 105%, and the fair value of all loaned securities totalled $536 million ($438 million in 2005). 7. Capital Assets

Accumulated Net book Cost amortization value (In thousands) $$$

2006 Buildings 66,767 6,609 60,158 Ofﬁce furniture and equipment 16,168 11,636 4,532 Computer hardware and software 7,420 4,753 2,667 Information systems development 16,181 14,478 1,703 106,536 37,476 69,060

2005 Buildings 66,767 4,801 61,966 Ofﬁce furniture and equipment 15,748 10,220 5,528 Computer hardware and software 17,174 14,937 2,237 Information systems development 16,922 14,853 2,069 116,611 44,811 71,800

The net book value of the portion of building held for rental amounts to $27.1 million ($27.9 million in 2005). 8. Loans

Interest on loans is determined based on the rate of return of Other investments. These loans are renewable monthly and repayable on demand. The fair value of these loans, issued mainly to related real estate companies, corresponds to their book value. The interest rate is 4.5% (5.25% in 2005). In addition, the Fund has credit facilities amounting to $40.5 million ($30.7 million in 2005) bearing interest at prime and renewable annually. As at May 31, 2006 and 2005 these facilities had not been used.

PAGE 50 SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) 9. Net Assets

SHARE CAPITAL Authorized Class A shares Unlimited number of Class A shares to be issued in Series 1 and 2, without par value, voting, redeemable, and non-transferable unless approved by a resolution of the Board of Directors. Class A shares, Series 1 and 2, can be exchanged for shares of another series and rank pari passu. However, Class A shares, Series 1, may only be issued to an individual requesting their transfer to a trustee under a registered retirement savings plan.

Class G shares Unlimited number of Class G shares, without par value, non-voting, without dividends, non-transferable and non-redeemable. In the event of a deﬁcit, Class G shareholders have priority in assuming the deﬁcit up to the amount of the consideration paid for such shares; and, in the event of a dissolution, liquidation or any distribution in whole or in part of the assets of the Fund, these shares grant their holders the right to be reimbursed after all the Class A shareholders have been reimbursed.

Class B shares Unlimited number of Class B shares, without par value, non-voting, non-participating, entitled to a preferential dividend at the rate determined by the Board of Directors. In the event of liquidation, the Class B shares rank prior to Class A and G shares. Subscribed capital Subscribed capital represents money cashed but for which no Class A share can be issued in consideration pursuant to the Fund’s purchase-by-agreement policy. These Class A shares will be issued at the moment provided in the policy at the share price in effect at that date. Terms of redemption Class A shares are generally redeemable only in cases where a shareholder who has purchased the shares from the Fund reaches the age of 55 and avails himself of his right to an early retirement or has reached 65 years of age. The redemption price is determined semi-annually based on the value of the Fund. Shareholders may also withdraw their initial investment in the Fund within 60 days of the contribution date or the date of the first payroll deduction. This withdrawal, however, will cancel the right to the tax credit. The Fund can redeem Class A shares only in cases provided under the purchase-by-agreement policy voted by the Board of Directors and approved by the Minister of Finance. Issued and paid-up capital and transfer At the annual shareholders’ meeting held on November 8, 2003, the shareholders voted to ratify Regulation No. 68 allowing directors, by simple resolution, to increase or decrease the amount of issued and paid-up capital on outstanding Series 1 Class A shares and to use any contributed surplus to eliminate or reduce the deficit. On May 21, 2004, the Board of Directors approved a resolution to reduce the issued and paid-up capital on Series 1 Class A shares by an amount of $500 million through a transfer to contributed surplus. A transfer of $164.8 million was then made from contributed surplus to eliminate the deficit. During the year, the Board of Directors approved resolutions to increase the issued and paid-up capital on Series 1 Class A shares by $80 million ($195 million in 2005) through a transfer from retained earnings. As at May 31, 2006, the Fund had transferred an aggregate of $1,024 million from retained earnings to issued and paid-up capital.

SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) PAGE 51 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ( CONTINUED)

As at May 31, 2006 and 2005

9. Net Assets (continued)

SHARE CAPITAL (continued)

Share Capital Issued Subscribed Total Class A Class G Class A Series 1 Series 2 Number

(In thousands) Number $ Number $ and $ $ $

2006 BALANCE AT BEGINNING OF YEAR 261,271 5,589,051 3,574 72,665 20,125 – 5,681,841

Share issues* 26,559 602,744 491 11,061 613,805* Share subscriptions 346 346 Share redemptions (14,076) (302,992) (353) (7,237) (310,229) 12,483 299,752 138 3,824 – 346 303,922 Transfers 80,000 80,000 Net change 12,483 379,752 138 3,824 – 346 383,922 BALANCE AT END OF YEAR 273,754 5,968,803 3,712 76,489 20,125 346 6,065,763

2005 BALANCE AT BEGINNING OF YEAR 240,637 4,940,648 3,309 66,598 20,125 5,027,371

Share issues* 32,167 694,408 560 12,046 706,454* Share redemptions (11,533) (241,005) (295) (5,979) (246,984) 20,634 453,403 265 6,067 – 459,470 Transfers 195,000 195,000 Net change 20,634 648,403 265 6,067 – 654,470 BALANCE AT END OF YEAR 261,271 5,589,051 3,574 72,665 20,125 5,681,841

* Issues include $605,974,000 million ($700,000,000 in 2005) in shares qualifying for tax credits, thus respecting the imposed limit (see Note 1), and $7,831,000 ($6,454,000 in 2005) in shares issued mainly to replace shares redeemed under the Home Buyers’ Plan (HBP).

Contributed surplus The contributed surplus results from the reduction of the issued and paid-up capital and from the excess of the average value of share capital over the redemption price.

PAGE 52 SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) 10.Contingencies

In the normal course of business, the Fund is party to claims and litigations. The Fund provisions for such eventualities when necessary. Management believes that the potential liability, net of the provisions accounted for, if any, will not have any material adverse effect on the Fund’s ﬁnancial position. 11.Operating Expenses

2006 2005 (In thousands) $ $

Salaries and beneﬁts 65,179 58,606 Occupancy expenses and rent 9,888 10,502 Advertising and information 8,879 8,964 Professional fees 7,771 8,619 Management fees 8,550 7,084 Travel and entertainment 3,189 2,938 Stationery and ofﬁce supplies 2,775 2,848 Fees and other income (4,861) (5,109) Rental income (3,257) (3,178) Capital tax 4,782 8,111 Amortization of information systems development 2,584 1,454 Amortization of other capital assets 4,473 4,368 109,952 105,207

Interest on loans amounting to $3.3 million ($1.8 million in 2005) is recorded against interest revenue and capitalized to loans. 12.Income Taxes

Income taxes are as follows:

2006 2005 (In thousands) $ $

Current 9,373 16,556 Future (6,937) (4,871) 2,436 11,685

SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) PAGE 53 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ( CONTINUED)

As at May 31, 2006 and 2005

12.Income Taxes (continued)

The above income taxes are different from the amounts that would be obtained by applying the combined basic tax rate (federal and provincial) to earnings before income taxes and minority interest. The difference is explained as follows:

2006 2005 (In thousands) $ $

Income taxes based on combined income tax rate of 45.1% (44.7% in 2005) 165,897 125,633 Non-taxable dividends (13,315) (15,994) Capital gain or loss and change in unrealized appreciation or depreciation Additional provincial income taxes 16,918 12,957 Rate difference and non-deductible (non-taxable) portion (89,309) (57,653) Refundable federal tax (43,648) (26,972) Provincial tax deduction (21,342) (14,323) Refundable dividend tax on hand (17,177) (20,403) Large corporations tax 3,000 5,200 Other items 1,412 3,240 2,436 11,685

Sources of future income tax assets are as follows:

2006 2005 (In thousands) $ $

Capital assets 180 388 Investments and other 9,165 2,020 9,345 2,408

At the federal level, the Fund is taxed according to the rules for mutual fund corporations. Income tax paid on capital gains is recoverable following share redemptions or an increase in paid-up capital when a portion of retained earnings is transferred to issued and paid-up capital. The balance of this tax paid on capital gains amounting to $7.4 million ($– in 2005) is included in Accounts receivable and other assets. As a private company, the Fund is eligible for the refundable dividend tax on hand (RDTOH). The RDTOH is recoverable by the Fund as a result of the increase in paid-up capital through transfers of a portion of retained earnings. Of the tax amount of $30.3 million ($62.8 million in 2005), $26.7 million ($62.8 million in 2005) was applied to reduce the income taxes following transfers approved by the Board of Directors during the year to recover this tax. The balance is included in Accounts receivable and other assets. 13.Employee Future Benefits

On January 1, 2001, the Fund implemented funded and unfunded defined benefit pension plans, which guarantee most of its employees pension benefits. These defined benefit pension plans are based on years of service and average annual salary. The average annual salary represents the average annual salary over 36 months of consecutive service, which results in the highest average. Also, since July 1, 2003, the Fund has had an optional personal insurance plan for retired employees. The accrued benefit obligation of these plans as determined by independent actuaries and the fair value of the plan assets are as at March 31, 2006. The most recent actuarial valuation of the pension plans for funding purposes was on January 1, 2004 and the next valuation will take place on January 1, 2007.

PAGE 54 SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) Information about the plans is as follows:

2006 2005 Plans Plans Pension Insurance Pension Insurance (In thousands) $$$$

ACCRUED BENEFIT OBLIGATION Balance at beginning of year 34,049 1,361 25,236 1,112 Current service cost 10,513 119 7,726 112 Interest cost 2,190 85 1,483 73 Beneﬁts paid (1,407) (4) (969) (4) Past service cost 23 Actuarial loss 808 180 573 68 Balance at end of year 46,176 1,741 34,049 1,361

PLAN ASSETS Balance at beginning of year 26,522 19,493 Employer contributions 3,097 4 2,597 4 Employee contributions 5,855 3,915 Beneﬁts paid (1,407) (4) (969) (4) Actual return on plan assets 3,853 1,486 Balance at end of year 37,920 – 26,522 –

RECONCILIATION OF ACCRUED BENEFIT OBLIGATION AND PLAN ASSETS Funded status – deﬁcit (8,256) (1,741) (7,527) (1,361) Unamortized transitional obligation 784 855 Unamortized net actuarial loss 3,485 213 4,593 33 Unamortized past service cost 67 50 ACCRUED BENEFIT LIABILITIES (4,704) (744) (2,884) (473) These accrued beneﬁt liabilities are included in Accounts payable.

Additional information about the plan assets: Funded plan assets are held in trust and are allocated as follows:

2006 2005 % %

Equity mutual funds 59.5 59.5 Bond mutual funds 39.9 39.7 Cash and other 0.6 0.8 100.0 100.0

SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) PAGE 55 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ( CONTINUED)

As at May 31, 2006 and 2005

13.Employee Future Benefits (continued)

Pension plan expense for the year is as follows:

2006 2005 Plans Plans Pension Insurance Pension Insurance (In thousands) $$$$

Current service cost net of employee contributions 4,658 119 3,811 112 Interest cost 2,190 85 1,483 73 Actual return on plan assets (3,853) (1,486) Past service cost 23 Actuarial loss 808 180 573 68 Cost before adjustments to recognize the long-term nature of employee future beneﬁts 3,826 384 4,381 253 Difference between actual and expected return on plan assets 1,867 246 Difference between actuarial loss recognized and actual actuarial loss on accrued beneﬁt obligation (759) (180) (438) (68) Difference between amortization of past service cost and actual plan amendments (17) 6 Amortization of transitional obligation 71 71 1,091 (109) (186) 3 PENSION PLAN EXPENSE RECOGNIZED 4,917 275 4,195 256

Cash payments for employee future benefits for 2006, which comprise contributions by the Fund to the funded pension plans and amounts paid directly to members under the unfunded pensions totalled $3.1 million ($2.6 million in 2005). Significant actuarial assumptions The significant actuarial assumptions used to determine the accrued benefit obligation and the benefit plan expense are as follows:

2006 2005 Plans Plans Pension Insurance Pension Insurance %%%%

ACCRUED BENEFIT OBLIGATION Rate at the end of the year Discount rate 5.2 5.2 5.7 and 5.2 5.7 Rate of compensation increase 3.5 3.5

ACCRUED BENEFIT COSTS Rate at the end of the previous year Discount rate 5.7 and 5.2 5.7 5.7 and 5.5 6.0 Expected rate of return on plan assets 6.5 6.5 Rate of compensation increase 3.5 3.5

PAGE 56 SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) The assumed health-care cost trend rates for medications and other services were 8% and 3% respectively for 2006 (9% and 4% in 2005). The medication rate is assumed to decline to 5% in 2009 and remain steady thereafter, while the cost of other health-care services should remain at 3%. A one percentage point change in assumed health-care cost trend rates would have the following effects:

Change +1% -1% (In thousands) $$

Effect on plan costs 58 (44) Effect on accrued beneﬁt obligation 467 (354)

14.Related Party Transactions

In the normal course of business, the Fund conducts transactions with related companies that are either controlled or subject to significant influence by the Fund. Given the amount and nature of the Fund’s investments, a substantial number of them are made in related companies. These transactions consist predominantly of interest and dividend revenues on investments and certain operating expenses, mainly, premiums paid under insurance plans. The Fund, most of whose directors are elected by the QFL, paid the latter $1.3 million each year for the years ended May 31, 2006 and 2005 under a protocol and agreements that call for compensation to be paid for services rendered in respect of economic training, social audits, shareholder development, and support and guidance of certain entities. These transactions are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. The Fund incorporated the Fondation de la formation économique du Fonds de solidarité des travailleurs du Québec (F.T.Q.) (the “Fondation”) under Part III of the Québec Companies Act and elects the members of the Fondation’s board of directors. The Fund granted the Fondation a loan of $5 million at a variable, contingent interest rate, with a fair value of $3.4 million ($3.2 million in 2005). The Fund issued non-interest-bearing loans of $20 million and a fair value of $17 million ($16.1 million in 2005) to the two Fonds étudiant solidarité travail du Québec (FESTQ), related entities because the Fund elects some of the officers jointly with the Government of Québec. These loans are presented in the Balance Sheet under Accounts receivable and other assets. 15.Comparative Figures

Certain comparative ﬁgures have been reclassiﬁed to conform with the current year’s presentation. 16.Additional Information as at May 31, 2006

The consolidated schedule of investments at cost and the list of investments at cost made by the specialty funds are available at the Fund’s head ofﬁce, on its Web site and on SEDAR.

SOLIDARITY FUND QFL ( CONSOLIDATED FINANCIAL STATEMENTS ) PAGE 57 AUDITORS’ REPORT ON THE CONSOLIDATED SCHEDULE OF INVESTMENTS AT COST

To the Directors of the Fonds de solidarité des travailleurs du Québec (F.T.Q.),

We have audited the consolidated schedule of investments at cost of the Fonds de solidarité des travailleurs du Québec (F.T.Q.) as at May 31, 2006. This ﬁnancial information is the responsibility of the management of the Fonds de solidarité des travailleurs du Québec (F.T.Q.). Our responsibility is to express an opinion on this ﬁnancial information based on our audit.

We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial information is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial information. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial information.

In our opinion, this consolidated schedule presents fairly, in all material respects, the investments at cost of the Fonds de solidarité des travailleurs du Québec (F.T.Q.) as at May 31, 2006 in accordance with Canadian generally accepted accounting principles.

Samson Bélair/Deloitte & Touche s.e.n.c.r.l. Chartered Accountants June 20, 2006

PAGE 58 SOLIDARITY FUND QFL ( INVESTMENTS ) CONSOLIDATED SCHEDULE OF INVESTMENTS AT COST

As at May 31, 2006 (In thousands $)

Unsecured Secured Investments Investments Year of Listed Unlisted Loans Loans Initial Industry Shares Shares and and Investment Segment and Units and Units Advances Advances Total 1987 Premier Tech ltée P 8,329 8,329 1988 Fonds de développement emploi-Montréal inc. F 1,338 1,338 Fonds de revenu TransForce S 18,839 18,839 Les Nordiques de Québec 1988, société en commandite S 1 1 Société en commandite Capidem Québec enr. F 128 128 1989 Entreprises publiques québécoises à faible capitalisation TI/M/P/S 265,963 265,963 Investissements Mauricie-Bois-Francs-Drummond, société en commandite F 1 1 R.P.M. Tech inc. M 241 241 1990 Bestar inc. M 1,499 925 2,424 Hyprescon inc. M 3,002 3,002 Transat A.T. inc. S 6,020 6,020 1991 B.M.B. (Îles-de-la-Madeleine) inc. S 1,274 280 1,554 Société en commandite Baseball Montréal S 7,000 7,000 Société en commandite immobilière Solim R 28,975 28,975 1992 Denharco inc. M 15,296 467 1,800 17,563 Polycor inc. P 5,646 13,071 18,717 1993 European Medical Ventures Fund S.C.A. TI 77 77 Groupe Datamark Systems inc. M 7,470 7,470 Groupe Robert inc. S 10,975 10,000 20,975 Le Devoir inc. S 1,315 1,315 Société d’investissement Capimont enr., société en commandite F 60 60 Société en commandite immobilière Solim II R 25,000 25,000 SOLIDE de la MRC d’Abitibi-Ouest S 10 10 SSQ, Société d’assurance-vie inc. S 29,413 6,100 35,513 1994 Corporation Financière Brome inc. S 2,834 4,901 7,735 Groupe Pierre Belvédère inc. S 391 1,700 2,091 Investissements 3L (Laval-Laurentides-Lanaudière), société en commandite F 61 61 Labopharm inc. TI 16,056 16,056 SOLIDE de la MRC de Beauharnois-Salaberry S 10 10 SOLIDE de la MRC de Lac-Saint-Jean-Est S 92 92 SOLIDE de la MRC de Lotbinière S 180 180 SOLIDE de la MRC de Roussillon S 125 125 1995 Château M.T. inc. S 3,000 3,000 CryoCath Technologies inc. TI 4,638 4,638 HydroSerre Mirabel inc. P 3 2,018 2,021 Icagen, inc. TI 447 447 Jonview Canada inc. S 3,156 3,156 Les Mines Opinaca ltée P 163 163 MethylGene inc. TI 16,650 16,650 Mines Virginia inc. P 186 186 RESO Investissements inc. F 1,251 1,251 Société en commandite de placements en logiciel Télésystème TI 5,291 5,291 SOLIDE de la MRC d’Abitibi S 169 169 SOLIDE de la MRC de la Matapédia S 40 40 SOLIDE de la MRC de la Mitis S 112 112 SOLIDE de la MRC de la Nouvelle-Beauce S 25 25

SOLIDARITY FUND QFL ( INVESTMENTS ) PAGE 59 CONSOLIDATED SCHEDULE OF INVESTMENTS AT COST (CONTINUED)

As at May 31, 2006 (In thousands $)

Unsecured Secured Investments Investments Year of Listed Unlisted Loans Loans Initial Industry Shares Shares and and Investment Segment and Units and Units Advances Advances Total 1995 SOLIDE de la MRC de l’Amiante S 375 375 SOLIDE de la MRC de Mékinac S 370 370 SOLIDE de la MRC de Memphrémagog S 250 250 SOLIDE de la MRC de Rouyn-Noranda S 40 40 SOLIDE de la MRC de Témiscamingue S 10 10 SOLIDE de la MRC des Basques S 10 10 1996 3552853 Canada inc. (Les Enductions Répulpables Rétec) M 823 823 AMH Canada ltée M 418 242 660 eNGENUITY Technologies inc. TI 1,166 1,166 Gestion des infrastructures pour l’entretien G.I.E. Technologies inc. TI 299 299 Gestion Renaud-Bray inc. S 1 2,923 2,924 Glendyne inc. P 71 3,666 3,737 Groupe Bocenor inc. M 24,337 24,337 Groupe Solmax inc. M 3,800 3,800 Les Vêtements de Sport Gildan inc. M 5,687 5,687 Mines Richmont inc. P 2,558 2,558 Roctest ltée M 4,124 4,124 SOLIDE de la MRC d’Acton S 10 10 SOLIDE de la MRC de Beauce-Sartigan S 225 225 SOLIDE de la MRC de Bécancour S 95 95 SOLIDE de la MRC de Bellechasse S 30 30 SOLIDE de la MRC de Charlevoix S 55 55 SOLIDE de la MRC de Charlevoix-Est S 203 203 SOLIDE de la MRC de Coaticook S 4 4 SOLIDE de la MRC de Desjardins S 10 10 SOLIDE de la MRC de Francheville S 250 250 SOLIDE de la MRC de la Côte-de-Beaupré S 113 113 SOLIDE de la MRC de L’Islet S 10 10 SOLIDE de la MRC de Maria-Chapdelaine S 336 336 SOLIDE de la MRC de Maskinongé S 60 60 SOLIDE de la MRC de Matane S 420 420 SOLIDE de la MRC de Montmagny S 60 60 SOLIDE de la MRC de Nicolet-Yamaska S 50 50 SOLIDE de la MRC de Pontiac S 10 10 SOLIDE de la MRC de Rimouski-Neigette S 85 85 SOLIDE de la MRC de Sept-Rivières S 185 185 SOLIDE de la MRC de Vallée-de-l’Or S 100 100 SOLIDE de la MRC de Vaudreuil-Soulanges S 213 213 SOLIDE de la MRC des Etchemins S 100 100 SOLIDE de la MRC des Îles-de-la-Madeleine S 99 99 SOLIDE de la MRC des Laurentides S 10 10 SOLIDE de la MRC des Pays-d’en-haut S 110 110 SOLIDE de la MRC du Haut-Saint-François S 100 100 SOLIDE de la MRC du Haut-St-Maurice S 10 10 SOLIDE de la MRC du Rocher-Percé S 10 10 SOLIDE de la MRC du Val-Saint-François S 10 10 SOLIDE de la MRC Le Centre-de-la-Mauricie S 90 90 SOLIDE de Lévis S 100 100 SOLIDE de Matagami S 5 5 Stageline Scène Mobile inc. S 1,343 1,343 Systèmes médicaux LMS inc. TI 2,367 2,367

PAGE 60 SOLIDARITY FUND QFL ( INVESTMENTS ) Unsecured Secured Investments Investments Year of Listed Unlisted Loans Loans Initial Industry Shares Shares and and Investment Segment and Units and Units Advances Advances Total 1997 9003-4349 Québec inc. (Mode Ézé Plus) M 50 50 Biorthex inc. TI 12,392 12,392 Compositech inc. M 225 225 Corporation GMAT Capital S 500 500 Cowan Dynamics inc. M 120 120 ESI Ecosystem International ltée S 200 200 400 Fonds de capital de risque GeneChem Technologies, société en commandite TI 6,823 6,823 Fonds d’investissement de Montréal (F.I.M.), société en commandite R 2,170 52 2,222 Gespro Technologies inc. TI 1,676 1,676 Graphisme Alpha Vision M.L. inc. TI 80 80 GSM Capital Limited Partnership TI 1,571 1,571 Hôtel du Havre inc. S 18 18 ITF Technologies Optiques inc. TI 3,791 3,791 Les Mines McWatters inc. P 3,444 1,343 4,787 Menuiserox inc. M 460 460 Mines Aurizon ltée P 683 683 Oxford Bioscience Partners II L.P. TI 1,416 1,416 Polyvalor, société en commandite TI 4,632 4,632 Précicast ltée M 559 88 647 Préimpression Ad-Hoc – Le Groupe inc. M 19 19 ProVance Technologies inc. TI 6,825 5,344 12,169 Réseau Telmatik inc. S 126 126 Ressources minières Radisson inc. P 41 41 Ross-Finlay 2000 inc. P 1,923 1,923 Société de développement du magnésium, société en commandite M 13,201 13,201 SOLIDE Ahuntsic-Cartierville S 10 10 SOLIDE Centre-Sud/Plateau Mont-Royal S 10 10 SOLIDE Chibougamau S 5 5 SOLIDE Côte-des-Neiges/Notre-Dame-de-Grâce S 10 10 SOLIDE de la MRC d’Argenteuil S 20 20 SOLIDE de la MRC D’Avignon S 130 130 SOLIDE de la MRC de Bonaventure S 10 10 SOLIDE de la MRC de Drummond S 460 460 SOLIDE de la MRC de la Haute-Côte-Nord S 10 10 SOLIDE de la MRC de la Jacques-Cartier S 10 10 SOLIDE de la MRC de la Rivière-du-Nord S 150 150 SOLIDE de la MRC de la Vallée-du-Richelieu S 226 226 SOLIDE de la MRC de l’Île d’Orléans S 10 10 SOLIDE de la MRC des Jardins-de-Napierville S 10 10 SOLIDE de la MRC du Bas-Richelieu S 110 110 SOLIDE de la MRC du Domaine-du-Roy S 387 387 SOLIDE de la MRC du Fjord-du-Saguenay S 100 100 SOLIDE de la MRC Les Maskoutains S 10 10 SOLIDE de la Ville de Longueuil S 250 250 SOLIDE de Laval S 80 80 SOLIDE de Lebel-sur-Quévillon S 5 5 SOLIDE de Mercier/Hochelaga-Maisonneuve S 10 10 SOLIDE de Rosemont/Petite-Patrie S 177 177

SOLIDARITY FUND QFL ( INVESTMENTS ) PAGE 61 CONSOLIDATED SCHEDULE OF INVESTMENTS AT COST (CONTINUED)

As at May 31, 2006 (In thousands $)

Unsecured Secured Investments Investments Year of Listed Unlisted Loans Loans Initial Industry Shares Shares and and Investment Segment and Units and Units Advances Advances Total 1997 SOLIDE de Villeray/St-Michel/Parc-Extension S 10 10 SOLIDE du Sud-Ouest de Montréal S 90 90 SOLIDE Rivière-des-Prairies/Pointe-aux-Trembles S 110 110 1998 9058-2222 Québec inc. (Club Cap Natashquan) S 78 33 111 9069-4654 Québec inc. (Supervac 2000) M 30 30 ADF Industries Lourdes inc. M 2,063 2,063 Air Saguenay (1980) inc. S 1,299 204 1,503 Asia Equity Infrastructure Fund, L.P. S 3,249 3,249 Beckwith Bemis inc. M 717 717 BioArtiﬁcial Gel Technologies inc. TI 2,571 2,571 Biotechnologies ConjuChem inc. TI 2,579 2,579 Champions Consultants inc. S 75 15 90 Complexe Hôtelier St-Jovite / Mont-Tremblant inc. S 750 750 Concentrés Scientiﬁques Bélisle inc. M 655 655 Concept Éco-Plein-Air Le Baluchon inc. S 672 672 Consorcio TransMantaro S.A. S 19,305 2,241 21,546 Corporation d’exploitation minière Globestar P 486 486 Corporation Eatsleepmusic.com TI 5,430 5,430 Distributions Jacques-Cartier inc. S 283 78 361 Exploration Azimut inc. P 756 756 HQI Latin America ltd S 20,368 20,368 Kemestrie inc. M 600 600 Le Groupe Tecnum inc. TI 1,750 253 2,003 Le Holding Angelcare inc. S 125 684 809 Le Paradis des Orchidées inc. P 70 22 92 Les Enceintes Acoustiques Unisson inc. M 50 50 Librairie Ulysse inc. S 427 100 527 Madelimer inc. M 679 1,620 1,064 3,363 Manoir Richelieu, société en commandite S 40,388 40,388 Minéraux Maudore ltée P 412 412 Mines Dynacor inc. P 54 54 Mode Avalanche inc. M 319 319 MRT Robotique inc. S 6 77 83 Multi-Ind Capital inc. S 2 2 Niocan inc. P 371 371 Pec Nord inc. M 300 300 Pêcheries Vilo inc. P 15 15 Société en commandite Soccrent 1 F 1,539 1,539 Société en commandite Soccrent 2 F 1,511 1,511 Société en commandite Soccrent 3 F 1,666 1,666 SOLIDE de la Basse Côte-Nord Kégaska-Blanc-Sablon S 10 10 SOLIDE de la MRC de Minganie S 10 10 SOLIDE de la MRC de Rivière-du-Loup S 10 10 Tranzyme Pharma inc. TI 6,287 6,287 TSO3 inc. TI 6,300 6,300 Ultravia Aéro International inc. M 775 318 1,093 1999 9038-3944 Québec inc. (Portes et fenêtres Boréal) M 13 3 16 A. & R. Belley inc. S 392 1,462 1,854 Advitech inc. TI 1,904 376 2,280 Aeterna Zentaris inc. TI 57,000 57,000 Aurélium BioPharma inc. TI 2,403 200 2,603

PAGE 62 SOLIDARITY FUND QFL ( INVESTMENTS ) Unsecured Secured Investments Investments Year of Listed Unlisted Loans Loans Initial Industry Shares Shares and and Investment Segment and Units and Units Advances Advances Total 1999 Auto-Chem inc. M 230 230 Aventures Norpaq inc. S 150 150 Biovet inc. TI 65 65 Édiﬁce Club Soda inc. S 200 14 214 Fonderie Ouellet inc. M 319 319 Foraction Chili inc. S 1,304 1,304 FSTQ Australia PTY Limited S 7,526 13,923 21,449 Gestion Lange inc. M 81 81 Globale Géomatique inc. TI 338 338 Groupe Canexfor inc. et 2734-1197 Québec inc. M 69 69 Harmonium International inc. TI 390 758 1,148 Kanada Polska Kabaty S.P. Z.O.O. R 2,897 2,897 La Financière des Entreprises Culturelles (FIDEC), société en commandite S 4,000 4,000 Le Groupe Cambium inc. M 256 1,250 1,506 Les Canneberges St-Augustin inc. P 242 85 327 Les Placements G.M.R. Maltais inc. S 345 338 683 Les systèmes de gestion Raymark Xpert inc. TI 9,525 500 10,025 Maison des Futailles, société en commandite S 23,723 4,000 27,723 Manitoba Science & Technology Fund, Limited Partnership TI 1,000 1,000 Nolicam Location de camions inc. S 488 375 863 Osisko Exploration ltée P 84 84 Rémac innovateurs industriels inc. M 310 95 405 Réseaux Simpler inc. TI 32,369 32,369 Ressources Metco inc. P 320 200 520 SNF inc. S 16,000 9,000 25,000 Société en commandite Foraction Chili S 8,357 8,357 SOLIDE de la MRC des Collines-de-l’Outaouais S 10 10 Soya Excel inc. M 195 68 263 Systèmes Stekar inc. M 100 100 Targanta Thérapeutiques inc. TI 5,000 5,000 Tubes Images inc. TI 200 153 400 753 Ventilex inc. M 36 36 2000 2861-0467 Québec inc. (Notre Hôtel) S 286 76 362 9052-0651 Québec inc. (Logistik 22) S 200 428 628 Acier Picard inc. S 534 534 Alfred Lamontagne inc. P 35 35 Alliances ArtQuest International inc. TI 3,100 1,010 1,517 5,627 ARGO II: The Wireless-Internet Fund - Limited Partnership TI 12,983 12,983 Arpida ltd TI 2,753 2,753 Atelier d’usinage Quenneville inc. M 440 440 Audisoft Technologie inc. TI 725 725 AVANCE Pharma inc. TI 5,400 5,400 Bioxel Pharma inc. TI 4,914 4,914 Cronus BioPharma inc. TI 250 250 De Marque inc. S 1,528 1,528 Écono-Porte inc. M 168 168 Ecopia Biosciences inc. TI 3,775 3,775 Elix inc. TI 1,000 1,000 Équipements récréatifs Jambette inc. et Gestion ParceQue inc. M 450 450 Fonds de revenu Hélicoptères canadiens S 26,423 26,423

SOLIDARITY FUND QFL ( INVESTMENTS ) PAGE 63 CONSOLIDATED SCHEDULE OF INVESTMENTS AT COST (CONTINUED)

As at May 31, 2006 (In thousands $)

Unsecured Secured Investments Investments Year of Listed Unlisted Loans Loans Initial Industry Shares Shares and and Investment Segment and Units and Units Advances Advances Total 2000 GeminX Biotechnologies inc. TI 3,094 3,094 Génopole Premier Jour S.A. TI 136 136 Gentec Électro-Optique inc. TI 2,400 757 3,157 Gestion H. Dickner ltée S 200 170 370 Gestion S.S.G. inc. S 125 125 Groupe Riotel Hospitalité inc. S 405 695 1,100 Groupe VR2 inc. M 6 6 GTI V, société en commandite TI 5,950 5,950 ImPath Networks inc. TI 550 550 In Extremis Images inc. S 426 426 Indra Ogronowa S.P. Z.O.O. R 16 16 Industries Keystone (1970) ltée M 2,125 2,125 Léger Marketing inc. S 1,000 1,000 Les Ateliers B.G. inc. M 50 50 Les Biotechnologies Atrium inc. TI 6,500 13,407 19,907 Les Consultants de l’Arctique inc. S 220 220 Les entreprises Maska-Laforo inc. M 5,000 3,000 8,000 Les Moules de Culture des îles inc. P 61 61 Les Productions par ici inc. S 100 93 193 Les Productions Phaneuf inc. S 300 450 750 MSDS Solutions Fiches Signalétiques Intégrales inc. TI 2,060 2,060 Multicorpora R&D inc. TI 926 926 Multi-Portions inc. M 250 250 Papiers Gaspésia, société en commandite M 75,000 3,375 78,375 Philippe Day inc. S 216 216 Placements Accu-Sol inc. S 1 14,254 14,255 Planchers des Appalaches ltée M 875 360 1,235 PureCell Technologies inc. TI 125 125 Réseau Gomedica inc. TI 1 1,169 1,170 Ressources Majescor inc. P 552 552 Ressources Strateco inc. P 118 118 Sarbakan inc. TI 480 480 Scierie Norbois inc. M 602 59 661 Simard-Beaudry Construction inc. S 2,501 18,500 21,001 Société en commandite GeneChem Thérapeutique TI 8,730 8,730 SOLIDE de la MRC de Caniapiscau S 10 10 SOLIDE Ville-Marie S 10 10 Systèmes Pran inc. M 200 76 276 TGN Biotech inc. TI 2,000 2,000 Theratechnologies inc. TI 1,391 1,391 Turbo Images inc. M 190 190 Visuel Corporation Canada inc. TI 159 250 409 Yamana Gold inc. P 351 351 2001 2639-1862 Québec inc. (Les Planchers de Bois Francs Wickham) M 400 95 495 2880512 Canada inc. (Gestion Bio-Plex) TI 1 1 3812057 Canada inc. (Fruits & passion) TI 17 17 9019-8144 Québec inc. (Cinémaria) S 75 75 9052-2756 Québec inc. (ProVance Technologies) TI 250 250 Aegera Thérapeutique inc. TI 3,000 1,000 4,000 Aéro Technique Canadien R.M. inc. S 150 350 500

PAGE 64 SOLIDARITY FUND QFL ( INVESTMENTS ) Unsecured Secured Investments Investments Year of Listed Unlisted Loans Loans Initial Industry Shares Shares and and Investment Segment and Units and Units Advances Advances Total 2001 Atkins et frères inc. M 176 176 Cactus Commerce inc. TI 1,000 1,000 Caméra E-Motion inc. TI 125 25 150 Cam-Trac Sag-Lac inc. S 300 38 338 Capimont Technologies, société en commandite TI 5,298 5,298 Cardianove inc. TI 2,157 375 2,532 Cleyn & Tinker inc. M 6,678 6,678 Corporation DataCom Wireless TI 5,150 249 5,399 GSM Capital Annex Fund, L.P. TI 948 948 Hôtel Carrefour St-Jérôme inc. S 350 350 Impression Paragraph inc. M 488 488 Interplast inc. M 1,650 747 2,397 Investissement premières nations du Québec, société en commandite F 860 860 IPS Pharma inc. TI 1 1,958 1,959 Kruger Wayagamack inc. M 11,000 11,000 Les Reboiseurs de la Péninsule inc. M 60 50 110 Les Ressources Campbell inc. P 1,722 1,722 Magistral Biotech inc. M 98 98 Mirazed inc. M 483 483 Nanox inc. TI 2,100 2,100 Novabrik International inc. S 900 410 1,310 Novacap II, société en commandite S 14,204 14,204 Novik inc. M 242 242 Palmapor inc. P 150 154 304 Partenaires MidCap S 6,975 6,975 Pâtisserie Chevalier inc. M 1,000 883 1,883 Pétoncles 2000 inc. M 33 64 97 Pro Aviation inc. S 307 307 Ressources MSV inc. P 667 667 Ressources Sirios inc. P 127 127 Ryshco Média inc. S 500 500 SBV Venture Partners L.P. TI 6,292 6,292 Serres Jardins-Nature inc. M 278 278 SIDEX, société en commandite P 15,000 15,000 Société de gestion Trois-Trois-Trois inc. TI 350 350 Sofame Technologies inc. M 730 730 SolaCom Technologies inc. TI 1,250 3,000 4,250 SOLIDE de la MRC de Joliette S 10 10 SOLIDE de l’Ouest de la ville de Québec S 5 5 T2C2/Bio2000, société en commandite TI 7,159 7,159 Tekna Systèmes Plasma inc. M 680 680 Tomoye Corporation TI 550 250 800 Triotech Amusement inc. M 100 124 224 Venture Coaches Fund LP TI 3,651 3,651 2002 Atlantica Residential S.A. R 2,616 2,616 Auvents Multiples (2002) inc. M 100 725 825 Axcan Pharma inc. TI 9,743 22,110 31,853 BGT Biographic Technologies inc. TI 69 69 BioAxone Thérapeutique inc. TI 3,000 3,750 6,750 Diadem Digital inc. TI 219 219

SOLIDARITY FUND QFL ( INVESTMENTS ) PAGE 65 CONSOLIDATED SCHEDULE OF INVESTMENTS AT COST (CONTINUED)

As at May 31, 2006 (In thousands $)

Unsecured Secured Investments Investments Year of Listed Unlisted Loans Loans Initial Industry Shares Shares and and Investment Segment and Units and Units Advances Advances Total 2002 Divertissements Séville inc. S 700 200 900 DK-SPEC inc. M 3,300 4,195 7,495 Dynapix Intelligence Imaging inc. TI 250 250 Enerkem Technologies inc. S 1,250 1,500 2,750 FinTaxi, société en commandite S 6,800 27,200 34,000 Focus Manufacture inc. M 367 367 Fonds immobilier du Fonds de solidarité FTQ inc. R 1 208,177 208,178 FRV Média inc. S 2,400 600 3,000 Groupe Cathédra inc. M 100 100 Groupe Star Suites inc. S 92 488 580 Hydro Mobile inc. M 2,500 2,500 Isumi Précision ltée M 58 58 J. Y. Moreau Électrique inc. M 200 200 Junex inc. P 487 487 Les Croisières 2001 inc. S 100 33 133 Les Industries Harnois inc. M 12 330 342 Les machines Roger ltée M 200 760 960 Les Pétroles C. Poirier inc. S 23 23 MC2 Entertainment TI 6,005 6,005 Nstein Technologies inc. TI 8,000 1,300 9,300 Revenue Intégrés Avior inc. M 1,250 938 2,188 Réseaux Versatel inc. TI 6,000 7,889 13,889 S.G.D.L. Systèmes inc. TI 1,500 1,500 3,000 SAM Electron Technologies inc. TI 750 134 884 SiteBrand.com TI 500 500 SOLIDE de Gatineau S 10 10 Technologies D-Box inc. TI 66 66 Technologies LTRIM inc. TI 3,302 1,667 4,969 Thermetco inc. M 1,800 1,500 3,300 TLD (Canada) inc. M 900 900 Topigen Pharmaceutiques inc. TI 7,400 7,400 TORR Canada inc. TI 4,284 500 4,784 Tricot Richelieu inc. M 2,000 1,833 3,833 Usital Canada inc. M 300 300 600 VIMAC Early Stage Fund L.P. TI 10,331 10,331 Wilson & Laﬂeur, limitée S 625 403 1,028 2003 2954-7490 Québec inc. (Excel Technologies) M 71 77 148 3484734 Canada inc. (Les Pâtisseries de l’Outaouais) M 94 94 9011-6641 Québec inc. S 285 285 9020-2292 Québec inc. (Decacer) M 2,210 2,210 9031-9898 Québec inc. (Micro Experts Canada) TI 137 137 9096-2952 Québec inc. (Magnov inc.) M 1 32 33 ActivBiotics, Inc. TI 1,858 1,858 Allégorie Marketing TI 82 82 Ambrilia Biopharma inc. TI 376 300 676 Archemix Corp. TI 1,201 1,201 Bellerose Capital inc. M 75 75 Biogentis inc. TI 5,220 78 310 5,608 Construction L.F.G. inc. S 179 179 Corus Pharma, Inc. TI 1,705 1,705 Enobia Pharma inc. TI 5,600 5,600

PAGE 66 SOLIDARITY FUND QFL ( INVESTMENTS ) Unsecured Secured Investments Investments Year of Listed Unlisted Loans Loans Initial Industry Shares Shares and and Investment Segment and Units and Units Advances Advances Total 2003 Forage Eenou inc. P 110 110 Forage Orbit inc. P 138 138 Gestion Lancap (Canada) inc. M 3,000 530 3,530 Golden Valley Mines ltée P 535 535 Groupe C.D.P. inc. et Transport C.D.P. inc. S 1,955 1,955 Groupe E.D.S. inc. M 202 202 Guava Technologies, Inc. TI 1,053 1,053 Hexago inc. TI 3,050 3,050 IatroQuest Corporation TI 4,000 4,000 Joseph Ribkoff inc. M 15,625 15,625 Le Fonds Entrepia Nord, s.e.c. TI 7,909 7,909 Le Groupe Logitrans inc. S 458 458 Les Aliments 2000 inc. S 492 492 Les Bouteilles Recyclées du Québec (B.R.Q.) inc. S 1,000 1,000 Les Productions Horticoles Demers inc. M 150 413 563 Les Productions Modulation inc. S 370 370 Les Ressources minières Normabec ltée P 16 16 Les Séchoirs Ste-Monique inc. M 937 937 Les Vêtements Perlimpinpin inc. M 100 133 233 Mafor inc. TI 500 500 Matamec Explorations inc. P 126 150 276 Planchers Ancestral inc. M 400 573 973 Renovis, Inc. TI 262 262 Ressources Métanor inc. P 133 133 Ressources Plexmar inc. P 6 150 156 SCP 89 inc. M 297 297 Service de Pneus Lavoie Outaouais inc. S 612 612 Solutions Originales inc. TI 2,325 2,325 Sonaca Amérique du Nord inc. M 6,000 4,500 10,500 Stella-Jones inc. M 5,895 5,000 10,895 Technologies Harfang inc. TI 2,000 1,000 3,000 Technologies Microbridge Canada inc. TI 2,604 2,604 TelcoBridges inc. TI 1,500 1,650 3,150 Tranzyme, inc. TI 2 2 U-Systems, Inc. TI 295 295 Vimac Milestone Medica Fund North L.P. TI 1,703 1,703 Vivavision inc. TI 300 450 750 2004 3091779 Compagnie Nouvelle-Écosse (Laura Secord) S 2,000 5,000 7,000 4262280 Canada inc. S 4,647 4,647 4268822 Canada inc. (Astroﬂex) M 67 67 9099-7768 Québec inc. (E.B.M. Laser) M 200 94 294 9143-4423 Québec inc. (Gestion MSBI inc.) TI 154 154 Above Sécurité inc. TI 2,250 2,250 Aéroport International de Mont-Tremblant inc. S 286 286 Alexis Minerals Corporation P 380 300 680 Beauﬁeld Consolidated Resources inc. P 137 137 Biocean Novatech inc. TI 400 400 Blais & Langlois inc. S 419 419 Bois B.S.L. Matane inc. M 1,820 1,820 Champlain Capital Partners LP S 7,903 7,903 CO2 Solution inc. TI 68 68

SOLIDARITY FUND QFL ( INVESTMENTS ) PAGE 67 CONSOLIDATED SCHEDULE OF INVESTMENTS AT COST (CONTINUED)

As at May 31, 2006 (In thousands $)

Unsecured Secured Investments Investments Year of Listed Unlisted Loans Loans Initial Industry Shares Shares and and Investment Segment and Units and Units Advances Advances Total 2004 Construction C.D.P. inc. S 219 219 Corporation Wavesat TI 2,520 2,520 Créa Biopharma inc. TI 338 338 Création VISU inc. M 600 690 1,290 De Ball inc. M 3,750 3,750 Distribution CMP MaGaDa International inc. et Production Magada International inc. TI 545 545 Ébénisterie de la Chaudière inc. M 150 150 Équipement et Outillage Côte-Nord inc. S 25 300 325 Exploration Dios inc. P 340 200 540 Fonds Brightspark II, s.e.c. TI 1,543 1,543 Fonds d’investissement en développement durable (FIDD), s.e.c. S 1,285 1,285 Geo-3D inc. S 79 79 Groupe de scieries G.D.S. inc. M 10,001 6,558 16,559 Groupe LAR inc. M 4,000 4,000 Groupe Plafolift inc. M 3,000 3,000 GrowthWorks Atlantic ltd S 76 76 Industries Perron inc. M 1,500 500 2,000 Inotech Fabrication Normandin inc. M 146 146 ISACSOFT inc. S 4,257 4,257 KCLM Recherche en Nutrition inc. TI 350 350 La Petite Bretonne inc. M 225 225 Le Groupe Blue Mountain Wallcoverings inc. M 10,000 13,000 23,000 Le Groupe Cegerco inc. S 2,625 2,625 Le Maître Saladier inc. M 183 183 Les Biotechnologies Océanova inc. TI 166 833 999 Les Emballages Trium inc. M 640 640 Les Gestions Gastier inc. S 2,250 2,250 Les Industries Flexipak inc. M 256 256 Les Industries Touch inc. S 910 910 Les Jardins du Saguenay inc. S 192 192 Lucien Senneville (2002) inc. S 225 225 Maintenance Sept-îles inc. S 127 127 Manac inc. M 10,000 12,500 22,500 MasséNor inc. M 50 894 944 Métal Bernard inc. M 1,368 1,368 Niram-Fab inc. M 210 210 Octasic inc. TI 1,242 4,800 6,042 Omni-Med.com inc. TI 1,000 1,000 2,000 ORTHOsoft inc. TI 2,000 2,000 Pétrolex St-Félicien inc. S 255 255 Placements les Mélèzes inc. M 240 240 Planteck inc. TI 500 250 750 Pourvoirie Mirage inc. S 390 415 805 Quartz Industrie inc. P 173 173 Rechapage Longue-Rive inc. M 126 126 Sciences de la vie Bioniche inc. M 12,000 12,000 Scierie Thomas-Louis Tremblay inc. M 750 1,350 2,100 Service Alimentaire Desco inc. M 175 175 Service sérigraphique professionnel S.S.P. inc. M 293 293

PAGE 68 SOLIDARITY FUND QFL ( INVESTMENTS ) Unsecured Secured Investments Investments Year of Listed Unlisted Loans Loans Initial Industry Shares Shares and and Investment Segment and Units and Units Advances Advances Total 2004 Simpler Networks Corp. TI 4 4 Socater S.A. M 112 888 1,000 TDM International inc. M 250 250 500 TransMolecular, Inc. TI 872 872 Trencap, s.e.c. S 132,250 132,250 Tuyauterie LG.4 inc. M 78 78 Unitrail inc. S 275 275 Vimac ESF Annex Fund L.P. TI 1,194 1,194 ViroChem Pharma inc. TI 4,000 4,000 Vision Villégiature inc. S 300 300 Zeligsoft inc. S 1,250 1,250 2005 119803 Canada inc. (BMI Canada) S 208 208 2947-5399 Québec inc. (Boutique Mobilité B-C) S 193 193 2973-8648 Québec inc. (Le Groupe R.G.F.M.) S 650 650 3149773 Canada inc. (Les Cafés Vittoria) M 1,700 1,700 3523462 Canada inc. (Délices de la forêt) S 500 500 9068-3848 Québec inc. (Les Productions Danse Sing) S 183 183 9075-5349 Québec inc. (Fenêtres Météo) M 187 187 9097-1599 Québec inc. (Groupe Calum) M 231 231 A.M. Pappas Life Science Ventures III, L.P. TI 2,670 2,670 Accovia inc. TI 1,487 2,000 3,487 Adaly Opportunity Fund S 1,800 1,800 Addenda Capital inc. S 12,112 12,112 Advantech technique de pointe pour faisceaux hertziens inc. TI 12,844 12,844 Air Data inc. TI 1,000 750 1,750 Alex Pneu et Mécanique (Canada) inc. M 1,000 758 1,758 Alexza Molecular Delivery Corp. TI 783 783 Allianz Madvac inc. M 1,200 7,800 9,000 Alveolus Inc. TI 2,005 2,005 Amethyst Arbitrage Fund S 2,125 2,125 Ani-Mat inc. M 467 467 Asmacure ltée TI 500 500 Attraction Média inc. TI 750 750 Aupel inc. et Reliure Unirel inc. M 269 269 Bioetik inc. M 150 150 Bluestreak Network, inc. TI 1 1 Boulangerie Les Moulins La Fayette inc. M 250 310 560 Bousquet Frères Limitée, B.M.B. Technologie du bâtiment inc. et Technologies échangeurs gaz-air (TEGA) inc. M 1,000 1,000 Bush Marine inc. M 500 500 Camoplast inc. M 32,950 32,950 Canadian Royalties inc. P 500 500 Centre d’équipement orthopédique St-Eustache inc. S 380 380 Château Bonne Entente inc. S 3,200 331 3,531 Colorex inc. et 171279 Canada inc. M 170 170 Conception Technic inc. M 300 300 Corporation Nuvolt inc. M 500 500 Entretien M. Perron inc. S 738 738 Epic Limited Partnership S 1,500 1,500 Everton Resources inc. P 77 77 Excavation Michel Paradis inc. S 271 271

SOLIDARITY FUND QFL ( INVESTMENTS ) PAGE 69 CONSOLIDATED SCHEDULE OF INVESTMENTS AT COST (CONTINUED)

As at May 31, 2006 (In thousands $)

Unsecured Secured Investments Investments Year of Listed Unlisted Loans Loans Initial Industry Shares Shares and and Investment Segment and Units and Units Advances Advances Total 2005 Exploration Fieldex inc. P 100 100 Ferox inc. M 250 250 FIER Partenaires, société en commandite F 727 727 Fondrinor inc. M 173 173 Fonds d’investissement MSBI, société en commandite TI 460 460 Fruit d’Or inc. M 482 482 Garage Redmond inc. S 245 245 Genizon Biosciences inc. TI 4,750 4,750 Gestion Pro-Conversion inc. M 561 561 Gomark Corp. M 202 202 Gro-Mec inc. S 595 595 Groupe C.N.P. inc. M 1,500 1,500 Groupe Canatal inc. M 1,501 2,125 3,626 Groupe de mode Inizio inc. M 300 300 Groupe Lachar inc. TI 500 500 Groupe Qualinet inc. S 481 481 GVGS inc. S 200 328 528 Industrie Bois Lamontagne inc. M 479 479 Industries Lignico inc. S 100 100 IR Photonique inc. TI 2,500 2,500 Jemekk Long Short Fund Limited Partnership S 1,000 1,000 Jeux Alary inc. S 393 393 KAI Pharmaceuticals Inc. TI 1,050 1,050 Lajoie Réfrigération inc. S 125 125 Le Fonds Goodwood S 1,603 1,603 Les Brosses Lacasse inc. M 397 397 Les Entreprises d’hôtellerie Duquette inc. S 103 103 Les entreprises Léo Leblanc & ﬁls inc. S 311 311 Les Pétroles Paul Larouche inc. S 264 264 Les Réseaux Accedian inc. TI 2,347 2,347 Load Systems International inc. M 400 400 LxSix Photoniques inc. TI 4,877 4,877 M.G.B. Électrique inc. et Gestion M.G.B. inc. M 303 303 Mako Surgical Corp. TI 1,317 1,317 Marret High Yield Hedge Limited Partnership S 1,800 1,800 Martin inc. S 280 280 Mecachrome international inc. M 15,000 15,000 Média Groupe inc. S 1,000 1,000 2,000 Metro inc. S 99,930 99,930 Microbridge Technologies Corp. TI 2 2 Motorisés Star Suites inc. S 424 424 Motrec inc. M 245 245 Papiers Domco inc. et 9115-1589 Québec inc. M 87 87 Parkwood Limited Partnership Fund S 1,100 1,100 Pharmesset Inc. TI 2,063 2,063 Plastiques Secco inc. M 137 137 Prochaps équipement équestre inc. M 250 250 Prophagia inc. TI 300 300 ProQuest Investments - Fund III TI 4,459 4,459 Recy-Clone inc. M 150 150 Replidyne Inc. TI 1,850 1,850

PAGE 70 SOLIDARITY FUND QFL ( INVESTMENTS ) Unsecured Secured Investments Investments Year of Listed Unlisted Loans Loans Initial Industry Shares Shares and and Investment Segment and Units and Units Advances Advances Total 2005 RHO Fund Investors 2005, L.P. S 386 386 Rosseau Société en commandite S 997 997 S.R.A.D. Communications inc. (and others) S 280 280 Saegis Pharmaceuticals Inc. TI 1,211 1,211 Savard Ortho confort inc. et Gestion Anira inc. M 400 400 Serti informatique inc. S 288 288 Servotech B.V. R 508 508 Ski-Mode Bernard Trottier inc. S 1,000 3,750 4,750 Société en commandite Gladiator S 1,250 1,250 SOLIDE de la MRC de d’Autray S 10 10 SOLIDE du Centre de la ville de Québec S 10 10 Spécialités chimiques Syntetica inc. M 350 350 Sprott Opportunities Hedge Fund S 1,250 1,250 Stedfast inc. M 975 975 Stornoway Recovery Fund S 750 750 Structures AmeriCan Industries inc. M 250 250 Système de Rechapage Ardon Canada inc. M 190 326 516 Targanta Thérapeutiques Corporation TI 2 2 Technologie Bluestreak (Canada) inc. TI 2,706 859 859 4,424 Technologies Positron inc. M 8,000 8,000 Toon Boom Animation inc. TI 100 100 Topocom Technologie inc. et Asselin et Asselin, S.N.C. S 179 179 Transformateur Bemag inc. M 217 217 VersaDrill Canada inc. M 200 200 Vertex Fund S 1,506 1,506 Waterfall Vanilla LP S 1,000 1,000 Woodruff Capital Management inc. P 150 150 2006 2023671 Ontario inc. (Acier Pointe-Claire) M 4,500 4,500 6550568 Canada inc. (ConjuchemBio) TI 1 1 9118-5066 Québec inc. (Atelier Val d’Or) M 540 540 Biosyntech, inc. TI 4,000 4,000 Bois B.S.L. Énergie inc. M 650 650 Capital Financière Agricole inc. S 1,400 1,400 Centre de transformation de véhicules Lanaudière inc. M 215 215 Corporation EEDO Knowledgeware M 500 500 Corporation minière Rocmec inc. P 200 200 CVC / RDS inc. et 9136-7748 Québec inc. M 350 350 Dismed inc. S 3,352 3,352 Éditions FICC s.e.n.c. (Viamédias) TI 100 75 175 Emerald Canadian Equity Market Neutral Fund S 2,500 2,500 Entreprises SMD ltée S 3,500 3,500 Équipements Comact inc. M 500 3,000 3,500 Équipements d’incendie Levasseur inc. M 300 300 Estrimont Suites & Spa Orford inc. et 2850-1799 Québec inc. S 300 300 Europe Cosmétiques inc. et Europelab inc. et 4190777 Canada inc. S 496 496 Excavation René St-Pierre inc. S 500 500 Fonds ID s.e.c. TI 1,000 1,000 Fonds Propulsion III s.e.c. TI 200 200 Garage Technologie Capital-Risque Canada, s.e.c. S 400 400 Gestion C.I.A. inc. et Centre d’Informatique Abitibi inc. S 300 300

SOLIDARITY FUND QFL ( INVESTMENTS ) PAGE 71 CONSOLIDATED SCHEDULE OF INVESTMENTS AT COST (CONTINUED)

As at May 31, 2006 (In thousands $)

Unsecured Secured Investments Investments Year of Listed Unlisted Loans Loans Initial Industry Shares Shares and and Investment Segment and Units and Units Advances Advances Total 2006 Innodia inc. TI 1,500 1,500 Les Aciers Blais Québec inc. M 3,000 3,000 6,000 Les armoires de cuisine Denis Couture (2002) inc. M 350 350 Les Revenue pharmaceutiques Ulysses inc. TI 500 500 LODH Opus Canadian Long/Short Equity Pooled Fund S 1,000 1,000 Médical Resonant inc. TI 1,172 1,172 Oxygène Dolbeau inc. M 500 500 OZ (USA), inc. TI 1 1 Oz Communications inc. TI 785 785 Promobois G.D.S. inc. M 1,000 1,000 Réfrigération Noël inc. et 2422-8827 Québec inc. S 483 483 Remises Réal Lamontagne inc. M 483 483 Remorque Leblanc inc. S 250 250 Rho Canada Capital de Risque, s.e.c. TI 1,930 1,930 Signalisation de l’Estrie inc. S 750 750 Silverstar Holdings ltd TI 66 66 Société en commandite Agechem TI 1,000 1,000 Spinal Kinetics Inc. TI 1,825 1,825 Superior Diamonds inc. P 150 150 13 general partners of limited partnerships S 2 2 Total 571,078 1,148,475 727,252 39,508 2,486,313

This consolidated schedule of investments at a total cost of $2,486,313,000 itemizes by company the amounts invested by the Fonds de solidarité des travailleurs du Québec (F.T.Q.). This amount appears in Note 4 to the consolidated ﬁnancial statements as at May 31, 2006.

Industry segment legend: F: Local funds R: Real estate M: Manufacturing (lumber and paper, food and beverage, steel, textile, other) P: Primary S: Services/tourism TI: Technology investments (technology and data processing, telecommunications, life sciences and bio-food industry)

PAGE 72 SOLIDARITY FUND QFL ( INVESTMENTS ) LIST OF INVESTMENTS AT COST MADE BY THE SPECIALTY FUNDS (UNAUDITED)

As at May 31, 2006 (In thousands)

Information from Equity Interest Shares Loans and Annual Financial of the Fund and Units Advances Total Report dated %$$$ 12-31-05 Société de développement du magnésium, 33.3 société en commandite 9154-7265 Québec inc. (before Intermag-Modelex inc.) 82 82 82 – 82 12-31-05 Argo II: The Wireless-Internet Fund - Limited Partnership 3.7 12snap A.G. 9,724 9,724 Amperion, inc. 289 289 ArgNor Wireless Ventures B.V. 16,566 16,566 Birdstep Technology ASA 232 232 Bytemobile, inc. 9,382 9,382 Calypso Wireless, inc. 40 40 Casero, inc. 4,176 4,176 Chinatron Group Holdings ltd 13,252 4,166 17,418 Digital Bridges ltd 20,552 20,552 Empower Interactive Group ltd 8,497 8,497 inCode Telecom Group, inc. 268 268 Innotech Industries ltd 577 577 IPeria, inc. 11,824 11,824 Narad Networks, inc. 10,456 10,456 NT Cubed ltd 38,866 38,866 Nuera Communications, inc. 3,772 3,772 OnMobile Systems, inc. 12,768 12,768 Q-go.com B.V. 4,877 4,877 RV Technology ltd 462 462 SurfKitchen, inc. 5,961 5,961 Sylantro Systems Corporation 5,220 5,220 uReach Technologies, inc. 12,722 12,722 Volubill S.A. 7,977 7,977 World Wide Packets, inc. 10,013 10,013 208,473 4,166 212,639 12-31-05 Société en commandite GeneChem Thérapeutique 11.0 Aégera Thérapeutique inc. 3,011 1,600 4,611 Ambit Biosciences Corp. 3,626 3,626 Argos Therapeutics, inc. 3,133 260 3,393 Avalon Pharmaceuticals, inc. 6,652 6,652 BioVex ltd 6,869 6,869 Celmed BioSciences inc. 4,893 4,893 Cyclacel ltd 5,521 5,521 Koronis Pharmaceuticals, inc. 4,492 4,492 Lymphosign inc. 5,500 5,500 Osprey Pharmaceuticals ltd 3,055 3,055 Paratek Pharmaceuticals, inc. 4,784 4,784 Scion Pharmaceuticals, inc. 3,538 1,149 4,687 Targeted Molecules Corporation 3,213 793 4,006 Xanthus Life Sciences inc. 3,276 3,276 61,563 3,802 65,365

SOLIDARITY FUND QFL ( INVESTMENTS MADE BY THE SPECIALTY FUNDS ) PAGE 73 LIST OF INVESTMENTS AT COST MADE BY THE SPECIALTY FUNDS (UNAUDITED) (CONTINUED)

As at May 31, 2006 (In thousands)

Information from Equity Interest Shares Loans and Annual Financial of the Fund and Units Advances Total Report dated %$$$ 12-31-05 Novacap II, société en commandite 9.6 Corporation de développement MCL inc. 970 36,426 37,396 Corporation de Développement Tradition inc. 11,250 2,250 13,500 Corporation Développement Knowlton inc. 3,680 7,033 10,713 Dense Optique inc. 55 Développement Demers Ambulances inc. 4,644 4,644 Groupe Coractive inc. 2,000 2,000 Groupe Royal Mat inc. 680 14,050 14,730 Holding LiquidXstream inc. 100 100 Intelligent Photonics Control Corp. 264 264 Les Systèmes LiquidXstream inc. 861 861 Octasic inc. 1,340 7,390 8,730 Pneumat inc. 1,500 1,500 Royal Mat inc. 400 400 Ryma Solutions Technologiques inc. 2,987 2,987 Scies B.G.R. inc. 2,594 2,594 Seaway Networks Delaware inc. 921 921 Tenrox inc. 4,578 4,578 ViXS Systems inc. 6,819 6,819 42,563 70,179 112,742 03-31-06 SIDEX, société en commandite 30.0 Canadian mining companies securities 17,853 100 17,953 17,853 100 17,953 12-31-05 VIMAC Early Stage Fund L.P. 9.4 Atlantis Components, inc. 7,173 7,173 Datacom Wireless Corporation 1,601 1,601 GEOCOMtms, inc. 2,325 2,325 iMPath Networks inc. 951 50 1,001 Kubi Software, inc. 3,655 3,655 Megawheels Technologies, inc. 4,105 4,105 MessageOne inc. 1,679 1,679 Natural Convergence, inc. 3,448 101 3,549 Net Integration Technologies inc. 574 574 Seniorlink inc. 4,424 2,107 6,531 Signiant, inc. 4,646 4,646 Spectalis Corp. 3,082 3,082 TKS, inc. 8,815 491 9,306 webHancer Corporation 1,556 622 2,178 48,034 3,371 51,405 12-31-05 Le Fonds Entrepia Nord, s.e.c. 36.2 Aura Communications Technology, inc. 1,385 92 1,477 Business Search Technologies Corp. 312 312 Corporation Réseaux VoiceAge 1,382 1,382 HelloSoft, inc. 1,039 1,039 Les Technologies Terrascale inc. 1,629 156 1,785 Net Intégration Technologies (Québec) inc. 693 693 NetContinuum, inc. 1,423 1,423 SolVision inc. 2,036 2,036 StrataLight Communications, inc. 1,385 1,385 World Wide Packets, inc. 2,106 2,106 12,697 941 13,638

PAGE 74 SOLIDARITY FUND QFL ( INVESTMENTS MADE BY THE SPECIALTY FUNDS ) Information from Equity Interest Shares Loans and Annual Financial of the Fund and Units Advances Total Report dated %$$$ 05-31-05 Fonds d’investissement MSBI, société en commandite 32.0 Callio Technologies inc. 527 527 CarboPur Technologies inc. 1,098 1,098 DFT MicroSystems inc. 779 779 Médical Resonant inc. 851 851 MOXXI Medical inc. 665 665 Réﬂex Photonique inc. 587 587 Silk Displays inc. 181 181 SiXtron Matériaux avancés inc. 145 145 3,393 1,440 4,833 12-31-05 ProQuest Investments - Fund III 5.0 Cadence Pharmaceuticals, inc. 7,076 7,076 Cytogen Corporation 5,723 5,723 Gloucester Pharmaceuticals inc. 6,051 6,051 Mersana Therapeutics, inc. 3,789 3,789 Novadel Pharma, inc. 4,485 4,485 Palkion, inc. 148 148 Sopherion Therapeutics, inc. 5,829 5,829 33,101 – 33,101 12-31-05 FIER Partenaires, société en commandite 27.8 Fonds Propulsion III, s.e.c. 200 200 200 – 200 A.M. Pappas Life Science Ventures III, L.P. 16.0 First ﬁscal year

Garage Technology Capital Risque Canada, s.e.c. 40.0 First ﬁscal year

La Fiducie d’économie sociale First ﬁscal year

RHO Fund Investors 2005, L.P. 3.3 First ﬁscal year

Société en commandite Agechem 26.7 First ﬁscal year

SOLIDARITY FUND QFL ( INVESTMENTS MADE BY THE SPECIALTY FUNDS ) PAGE 75 LIST OF INVESTMENTS AT COST MADE BY THE SPECIALTY FUNDS (UNAUDITED) (CONTINUED)

As at May 31, 2006 (In thousands)

Equity Share in Real Estate Information from Interest of Property and Property Annual Financial the Fund Under Development Report dated %$

03-31-06 Société en commandite immobilière Solim 99.9 C.C.L. II Société en commandite 1,573 C.C.L. Société en commandite 1,306 Centre de ressources du Parc Technologique du Québec Métropolitain inc. 2,975 Société en commandite Alphonse T. Lépine 1,729 Société en commandite Claude Baillif 3,511 Société en commandite de La Dauversière 6,551 Société en commandite Édifice 255 St-Jacques 968 Société en commandite Édifice 261 St-Jacques 2,108 Société en commandite Émilie-Gamelin 641 Société en commandite Godefroy de Lintôt 513 Société en commandite Inspecteur-William 2,960 Société en commandite Les Tours des terrasses du Golf 226 Société en commandite Les Tours des terrasses du Golf Phase ll 157 Société en commandite Milton 1,985 Société en commandite Place Dunant 2,704 Terrains de stationnement de Montréal 5,871 35,778 Total funds disbursed by the Partnership for these investments is $29,228,162. 03-31-06 Société en commandite immobilière Solim II 99.9 Hôtel Particulier: Le Ste-Hélène, société en commandite 2,371 Immeuble 9001 L’Acadie, Société en commandite 11,327 Société en commandite 75 boulevard Québec 1,006 Société en commandite Cavelier de LaSalle 6,198 Société en commandite CDTI de Hull 1,458 Société en commandite Daniel Palmer 686 Société en commandite du 1400 1,802 Société en commandite Mansfield 2,047 Société en commandite RMI 216 Trois A, Société en commandite 2,718 29,829 Total funds disbursed by the Partnership for these investments is $15,262,420.

PAGE 76 SOLIDARITY FUND QFL ( INVESTMENTS MADE BY THE SPECIALTY FUNDS ) Equity Share in Real Estate Information from Interest of Property and Property Annual Financial the Fund Under Development Report dated %$

03-31-06 Fonds immobilier du Fonds de solidarité FTQ inc. 100.0 Bio Sherbrooke Phase 1 s.e.c. 12,967 Brossard-sur-le-Fleuve s.e.c. 3,841 Centre de développement des Biotechnologies de Laval s.e.c. 16,857 Condominiums Le George V s.e.c. 2,619 Côte de Terrebonne s.e.c. 2,465 Développements Wilfrid-Carrier s.e.c. 6,976 Montée des Pionniers Phase I s.e.c. 1,108 Montée des Pionniers Phase II s.e.c. 4,021 Société en commandite 1111 Saint-Laurent 2,711 Société en commandite Angus s.e.c. Phase I 179 Société en commandite Angus s.e.c. Phase II 34,519 Société en commandite Bourassa-Pelletier 19,185 Société en commandite Château Hymus 7,634 Société en commandite Clairevue 1,541 Société en commandite CVL 2,868 Société en commandite Daniel Palmer 9,015 Société en commandite Édiﬁce Le Soleil 23,728 Société en commandite Héritage Pointe-Claire 16,754 Société en commandite Laurin / St-Louis 5,869 Société en commandite Laurin / St-Louis Phase I 12,501 Société en commandite Sanctuaire de la Rive 2,464 Société en commandite Viau Ontario 3,079 192,901

This unaudited list provides details of the investments made by the specialty funds in which the Fonds de solidarité des travailleurs du Québec (F.T.Q.) has invested more than $10,000,000 and which are not consolidated in the Consolidated Schedule of Investments at Cost.

SOLIDARITY FUND QFL ( INVESTMENTS MADE BY THE SPECIALTY FUNDS ) PAGE 77 FONDATION DE LA FORMATION ÉCONOMIQUE DU FONDS DE SOLIDARITÉ DES TRAVAILLEURS DU QUÉBEC (F.T.Q.)

AUDITORS’ REPORT

To the Directors of the Fondation de la formation économique du Fonds de solidarité des travailleurs du Québec (F.T.Q.)

We have audited the balance sheet of the Fondation de la formation économique du Fonds de solidarité des travailleurs du Québec (F.T.Q.) as at May 31, 2006, and the statements of operations and changes in net assets for the year then ended. These ﬁnancial statements are the responsibility of the Fondation’s management. Our responsibility is to express an opinion on these ﬁnancial statements based on our audit.

We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the Fondation as at May 31, 2006, and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.

Samson Bélair/Deloitte & Touche s.e.n.c.r.l. Chartered Accountants Montréal, June 22, 2006

STATEMENTS OF OPERATIONS

Years ended May 31 2006 2005 $ $ REVENUES Financial contributions 768,594 559,964 Interest Fonds de solidarité des travailleurs du Québec (F.T.Q.) 122,957 109,351 Other 141,391 139,659 Other 126,066 – 1,159,008 808,974 EXPENSES Education and training Education and training - enterprises 713,241 683,400 Education and training - other 73,701 – 786,942 683,400 Administrative Salaries and beneﬁts 42,281 42,712 Rent and occupancy costs 10,920 10,920 Advertising and information – 2,716 Professional fees 72,822 68,165 Travel and entertainment 5,130 8,618 Stationery and ofﬁce supplies 3,539 5,431 Education and training 2,520 249 Amortization of capital assets 987 1,275 138,199 140,086 Financing costs Loan interest (Note 5) Fonds de solidarité des travailleurs du Québec (F.T.Q.) 233,867 - 1,159,008 823,486 EXCESS OF EXPENSES OVER REVENUES – (14,512)

PAGE 78 SOLIDARITY FUND QFL ( FONDATION DE LA FORMATION ÉCONOMIQUE DU FONDS ) BALANCE SHEETS

As at May 31

2006 2005 $ $ ASSETS Current assets Cash 293,999 111,967 Accounts receivable 159,559 292,631 453,558 404,598

Investments (Note 3) 5,125,137 4,984,669 Capital assets (Note 4) 3,947 4,934 5,582,642 5,394,201

LIABILITIES Current liabilities Accounts payable and accrued expenses Fonds de solidarité des travailleurs du Québec (F.T.Q.) 223,432 50,459 Other 149,205 133,737 372,637 184,196

Loan (Note 5) 5,000,000 5,000,000 5,372,637 5,184,196

NET ASSETS Net assets invested in capital assets 3,947 4,934 Unrestricted net assets 206,058 205,071 210,005 210,005 5,582,642 5,394,201

On behalf of the Board of Directors,

Denis Leclerc, Director STATEMENTS OF CHANGES IN NET ASSETS

Years ended May 31

Net assets invested in Unrestricted capital assets net assets Total $$$ 2006 BALANCE AT BEGINNING 4,934 205,071 210,005 Excess of revenues over expenses (expenses over revenues) (987) 987 – BALANCE AT END 3,947 206,058 210,005

2005 BALANCE AT BEGINNING 6,209 218,308 224,517 Excess of expenses over revenues (1,275) (13,237) (14,512) BALANCE AT END 4,934 205,071 210,005

SOLIDARITY FUND QFL ( FONDATION DE LA FORMATION ÉCONOMIQUE DU FONDS ) PAGE 79 FONDATION DE LA FORMATION ÉCONOMIQUE DU FONDS DE SOLIDARITÉ DES TRAVAILLEURS DU QUÉBEC (F.T.Q.) ( CONTINUED)

NOTES TO FINANCIAL STATEMENTS

As at May 31, 2006 and 2005

1. Statutes and Nature of Activities

The Fondation is incorporated under Part III of the Québec Companies Act. The main purpose of the Fondation is to collect and manage ﬁnancial contributions from various social and economic groups in order to promote the education and training of the working people of Québec. 2. Significant Accounting Policies

Valuation of investments The demand promissory note is recorded at cost and its fair value approximates the carrying value since the interest rate is equivalent to the current rate for investments with similar terms and conditions. Bonds are recorded at their unamortized cost. The fair value presented in Note 3 is based on the market value at year-end. Capital assets Capital assets are recorded at cost and amortized over their estimated useful life using the following methods and annual rates: Methods Rates

Data processing equipment straight line 33.3% Furniture and ﬁxtures, ofﬁce equipment diminishing balance 20.0%

Revenue recognition Premiums and discounts Premiums and discounts on bonds are amortized as revenue using the effective interest method up to the maturity date of these investments. 3. Investments

2006 2005 $ $ Demand promissory note to Fonds de solidarité des travailleurs du Québec (F.T.Q.), at cost 2,602,035 2,512,079 Government agency bonds 2,464,422 2,416,317 5,066,457 4,928,396 Accrued interest 58,680 56,273 5,125,137 4,984,669

Interest on the promissory note, renewed monthly, at variable rate, is determined according to the rate of return of Other investments of the Fonds de solidarité des travailleurs du Québec (F.T.Q.). As at May 31, 2006, the interest rate is 4.50% (2005: 5.25%) and the interest amounts to $122,957 (2005: $109,351). The average interest rate for the year is 4.84% (2005: 4.33%). The government agency bonds, for which the average nominal rate and return at maturity are respectively 8.23% and 5.49% in 2006 (2005: 8.16% and 5.50%) expire at various dates between 2012 and 2035. As at May 31, 2006, the market value of these bonds is $2,633,470 (2005: $2,669,031).

PAGE 80 SOLIDARITY FUND QFL ( FONDATION DE LA FORMATION ÉCONOMIQUE DU FONDS ) 4. Capital Assets

Accumulated Net book Cost amortization value $$$ 2006 Furniture and ﬁxtures, ofﬁce equipment 19,092 15,145 3,947

2005 Data processing equipment 44,009 44,009 – Furniture and ﬁxtures, ofﬁce equipment 19,092 14,158 4,934 63,101 58,167 4,934

5. Loan

The loan from Fonds de solidarité des travailleurs du Québec (F.T.Q.) is repayable on demand and bears interest at the Laurentian Bank prime rate, as determined periodically, plus 2%. However, payment of interest must never result in placing the Fondation in a deﬁcit position in any year. 6. Financial Instruments

Given the short-term maturity of these ﬁnancial instruments, the fair value of cash, accounts receivable and accounts payable and accrued expenses approximates their carrying value. The fair value of the loan cannot be determined as the repayment conditions are not ﬁxed. 7. Cash Flows

No statements of cash flows were prepared since the information on cash flows is available from other financial statements and related notes. 8. Related Party Transactions

The Fonds de solidarité des travailleurs du Québec (F.T.Q.) appoints the members of the Fondation’s Board of Directors and manages the Fondation’s investments. The majority of the expenses incurred and other revenues of the Fondation are with the Fonds de solidarité des travailleurs du Québec (F.T.Q.). These transactions are measured at their exchange value.

SOLIDARITY FUND QFL ( FONDATION DE LA FORMATION ÉCONOMIQUE DU FONDS ) PAGE 81 GLOSSARY

Appreciation (depreciation) Increase (reduction) in the value of an asset or portfolio in relation to its value of reference.

Average assets Sum of the averages of assets of the beginning and end of each six-month period, divided by two.

Derivative ﬁnancial instrument or derivative product Financial instrument whose price or return is tied to an underlying asset. The most common derivative instruments are swaps, futures and options. Derivative instruments are used to limit market risk and to preserve asset value, to facilitate changes in asset allocation, to use an indexed management strategy for part of the portfolio, to facilitate portfolio management, and to improve returns within established risk limits.

Direct jobs Jobs held by workers working directly in the Fund’s, Regional Funds’, local Funds’ or specialty funds’ partner companies and their subsidiaries.

Equity Loan Unsecured loan of up to $2 million considered as quasi equity by most financial institutions. Offered at a fixed or variable interest rate and requires no capital repayment for three to five years.

External or private fund Private fund whose assets are managed by an external manager following a mandate granted by the Fund.

FIER Regional economic intervention fund (FIER) set up by the Government of Québec, the Solidarity Fund QFL, Fondaction and Desjardins. With a capitalization of $180 million, the FIER is committed to creating sector-based and seed funds as well as ﬁnancing structuring projects.

Fixed-income security Security that pays a pre-determined ﬁxed income until maturity. Fixed-income securities comprise bonds, mortgages, preferred shares and money market securities.

Fond Relève PME Program to help family-run and other SMEs grow, diversify and transfer the mantle. Services cover four key subjects: ﬁnancing, tax and estate planning, business management and succession.

Funds committed but not disbursed Investments agreed to and for which funds have been committed but not yet disbursed.

Future contract Agreement between two parties to buy or sell a security (short-term securities, bonds, stocks, stock indices and currencies) at a pre-agreed future point in time for a price agreed to in advance.

Growth loan Unsecured loan of up to $500,000, available at any time and that is ﬂexible, fast and easy to use since it only requires 15 business days to process. Offered at competitive rates, this loan is designed to increase working capital or to complete a ﬁnancing stage.

Hedge fund Investment fund comprised of buy or sell positions on securities, markets, etc. These positions reﬂect the manager’s opinion on the probable price trend of the securities or markets. A fund of hedge funds is a fund mostly made up of hedge funds.

Hedging strategy Strategy used to reduce variations in the Fund’s return following changes in interest rates or stock prices.

Income trust Legal structure under which a company can raise capital by selling trust units to the public. Income trusts are transfer mechanisms generally structured to allocate income to unitholders, such that the trust pays no income taxes. However, the amounts allocated to unitholders are taxable.

PAGE 82 SOLIDARITY FUND QFL ( GLOSSARY ) Indirect jobs Jobs associated with economic spin-offs generated by partner companies located in Québec. The number of indirect jobs is calculated by taking the number of direct jobs and applying a factor based on the co-efﬁcient of indirect jobs by productive sector (published by the Institut de la statistique du Québec). The factor depends on the industry in which the partner company operates.

Induced jobs Jobs created, maintained or preserved as a result of spending by workers holding direct and indirect jobs. The calculation of consumer spending takes tax collection and the level of worker savings into account. The number of induced jobs is a function of personal disposable income spent to which a ratio of 921 jobs for each $100 million is applied, based on the intersector model developed by the Institut de la statistique du Québec.

Investment Acquisition of securities or commitment to acquire securities, generally from Québec SMEs, and purchased as part of the Fund’s mission. Most investments are eligible under the 60% rule set out in the Fund’s incorporating act.

Limited partnership Business consisting of two types of partners: limited partners and a general partner. Only the general partner is authorized to manage and represent the company. The general partner works at the company, providing expertise and skills and his liability is unlimited with regards to the company’s debts and obligations. Limited partners provide the capital required for the company to operate and are liable for its debts up to the amount they invested. The limited partnership is a legal structure designed to meet speciﬁc needs and to separate investment from the company’s management.

Local representative (LR) In QFL-affiliated unions (and in unions with which the Fund has entered into agreements), the Fund has developed a network of LRs who work on a voluntary basis to promote the Fund in their workplace. Their work consists mainly of explaining the objectives of the Fund and promoting contributions by members of those unions.

Minority interest Portion of net assets and net earnings attributable to other shareholders or unitholders in investment companies consolidated in the Fund’s ﬁnancial statements.

Money market security Security with a pre-determined return that matures in less than one year. Easily negotiable and highly liquid, these securities include T-bills, bankers’ acceptances and commercial paper.

Overall financial assets management Management technique of financial assets aimed at diversifying the Fund’s risk while allowing it to fulfill its mission.

Option Contract that gives the holder the right to buy or sell a security (short-term securities, bonds, shares, stock indices, currencies and futures) at a pre- determined price. The seller of the option is bound to buy or sell the security if the option holder exercises his right.

Other investments Invested capital consisting mainly of large-cap securities acquired on organized markets, i.e., money market securities, bonds, shares acquired as part of the sector-based strategy, security and index derivatives and fund of hedge funds.

Private security Direct investment in an unlisted company or in a listed company whose stock price exceptionally does not reﬂect its fair value at the time of valuation.

Productivity loan Unsecured loan of at least $2 million, offered at a competitive rate and designed to back companies with projects to improve productivity, set up or develop management information systems or implement systems to obtain and maintain certiﬁcation or to achieve regulatory compliance.

SWAP Agreement used to exchange a security, income or currency for another security, income or currency at pre-determined conditions and for a given duration. The parties sign an agreement that respects international standards for this type of transaction.

Trademark loan Unsecured loan for a minimum of $2 million offered at a competitive rate and aimed at helping companies acquire or maintain a trademark or prepare and implement a marketing plan.

SOLIDARITY FUND QFL ( GLOSSARY ) PAGE 83 BOARD OF DIRECTORS AND MANAGEMENT COMMITTEE

BOARD OF DIRECTORS As at May 31, 2006 12345

A Member of the Executive Committee B Member of the Audit Committee C Member of the Technology 67891011 Investment Special Board D Member of the Turnaround Special Board E Member of the Financial Assets Management Committee F Member of the Mining Portfolio Steering Committee 12 13 14 15 16 17

1 MICHEL ARSENAULT F 5 RAYMOND FORGET E 8 DENISE MARTIN A, B, D 13 RÉJEAN ROY † Director, United Steel Workers President, Québec Service Employee Vice-President and General Manager National Representative, of America, and Vice-President Union (QSEU), Local 298, and of McMahon Distributeur President of Joint Council 91, of the QFL Vice-President of the QFL pharmaceutique inc., and Vice-Chair Teamsters Canada, and of the Board of Directors of the Fund Vice-President of the QFL 2 LOUIS BOLDUC D 6 JEAN LAVALLÉE Québec Assistant to the Canadian General Director and Secretary 9 HENRI MASSÉ A, D 14 RENÉ ROY A, C Director, United Food and of Finance, Inter-Provincial President, QFL, and Chairman General Secretary, QFL, Commercial Workers International Brotherhood of Electrical Workers of the Board of Directors and Secretary of the Board Union CLC, ASL-CIO, and (FIPOE), and Vice-President of the Fund of Directors of the Fund Vice-President of the QFL of the QFL 10 RÉJEAN PARENT 15 LOUISE ST-CYR A, B 3 YVON BOLDUC A, E 7 CLÉMENT L’HEUREUX President, Centrale des syndicats Chairholder, Chair of Small and President and Chief Executive Ofﬁcer, Executive Vice-President, du Québec (CSQ) Medium-Sized Business, HEC Fonds de solidarité FTQ Québec Region, Communications, 11 LUCIE RICHARD 16 JÉRÔME TURCQ Energy and Paperworkers Union 4 LUC DESNOYERS Québec Director, Canadian Union Regional Executive Vice-President, of Canada (CEP), and Québec Director, National of Public Employees (CUPE), and Québec Region, Public Service Vice-President of the QFL Automobile, Aerospace, Vice-President of the QFL Alliance of Canada (PSAC), and Transportation and General Workers Vice-President of the QFL 12 ROLAND ROBICHAUD B, E Union of Canada (CAW-Canada), Corporate Director 17 PIERRE-MAURICE VACHON D and Vice-President of the QFL Corporate Director

† Mr. Réjean Roy passed away on August 25, 2006.

Standing: MANAGEMENT COMMITTEE DANNY LE BRACEUR Vice-President, Human Resources As at August 23, 2006 JANIE C. BÉÏQUE Vice-President, Legal Affairs, and Corporate Secretary DENIS LECLERC Executive Vice-President, Shareholder Services MARIO TREMBLAY Vice-President, Public Affairs and Communications MICHEL PONTBRIAND E Executive Vice-President, Finance Sitting: GAÉTAN MORIN E Executive Vice-President, Investments YVON BOLDUC A, E President and CEO

PAGE 84 SOLIDARITY FUND QFL ( BOARD OF DIRECTORS AND MANAGEMENT COMMITTEE ) SPECIAL BOARDS AND COMMITTEES

As at May 31, 2006 SPECIAL BOARDS

Technology Investments FUND DIRECTOR AND ADVISORS René Roy (President), Jean Martin, Jean Perron OUTSIDE REPRESENTATIVES J.V. Raymond Cyr, Chairman of the Board, Polyvalor Inc. and Corporate Director Gilles Mourette, Senior Vice-President, Technologies, SSQ Groupe financier Jacques Simard, Professor, Department of Anatomy and Physiology, Laval University, and Director, Cancer Genomic Laboratory, CHUL Research Centre André Monette, Management Advisor

Turnaround FUND DIRECTORS AND ADVISOR Henri Massé (President), Louis Bolduc, Denise Martin, Jean Martin, Pierre-Maurice Vachon OUTSIDE REPRESENTATIVE Michel M. Lessard, Corporate Director COMMITTEES

Financial Assets Management Committee FUND DIRECTORS, OFFICERS AND ADVISOR Yvon Bolduc (President), Raymond Forget, Pierre Genest, Gaétan Morin, Michel Pontbriand, Roland Robichaud OUTSIDE REPRESENTATIVES Michel Thérien, Strategic Advisor and Corporate Director

Mining Portfolio Steering Committee DIRECTOR Michel Arsenault (President) OUTSIDE REPRESENTATIVES Pierre Boudreau, Strategic Advisor Michel Gauthier, Strategic Advisor

- - - - - EDITORS FUND EMPLOYEES Suzanne Hamel, André McDonald WRITERS Suzanne Hamel, Sylvain Paré COLLABORATORS Roch Dutil, Sylvain Masse, Louise Sauvé DESIGNER AND PRODUCER www.dyade.com PHOTOGRAPHERS Bruno Beauregard, Jean-Sébastien Cossette We would like to thank everyone who contributed to the production of this annual report. Printed by the unionized workers of Groupe Datamark Systems inc., on recyclable paper. Legal Deposit – 3rd Quarter 2006, Bibliothèque nationale du Québec, National Library of Canada Ce document est également disponible en français. B-08-00-0173 PERMANENT EMPLOYEES As at May 31, 2006

Nathalie Albert, Daniel Allaire, Claudette Allard, Jean Archambault, Dominique Arsenault, Pierre Arseneault, Danielle Asselin, Patrice Aubin, Raynald Aubin, Louis Aubuchon, Danielle Auclair, Gilles Audette, Bruno Baril, Michel A. Bastien, Georges Bazinet, Annie Beaudry, Josée Beaulieu, Johanne Beauparlant, Rosage Beauzil, Monique Bédard, Steves Bégin, Janie C. Béïque, Nicole Béland, Christian Bélanger, Normand Bélanger, Suzanne Benoit, Louise Bergeron, Marie Bergeron, Conrad Bernadel, Natacha Bernier, Délisca Berthelot, France Berthiaume, Josée Bilodeau, Nathalie Bilodeau, Nathalie Bilodeau, Pierre Blaising, Simon Blanchard, Josée Bolduc, Julie Bolduc, Yvon Bolduc, Philippe Bonin, Fabien Bouchard, David Boucher, André Bougie, Claudine Boulais, Normand Boulay, Jacques Boulva, Daniel Bourcier, Sylvie Boutet, Charles Boutin, Guy Boutin, Jean-Claude Brault, Hélène Brien, Guylaine Brousseau, François Brulotte, François Caisse, Linda Call, Johanne Carignan, Lise Carignan, Hubert Carrier, Robert Charpentier, France Chassé, Frédérique Chatain-Collinet, Normand Chouinard, Marie-Claude Clermont, Richard Cloutier, Ina Corbin, Jean-Sébastien Cossette, Gilles Côté, Line Côté, Lise Côté, Michel Coulombe, Roland Courtois, Louise Cousineau, Manon Cousineau, Éric Coutu, Luc Couture, Guy Croteau, Aubin D’Amours, Tania D’Anjou, Jocelyne Dansereau, Joanne Daviault, Daniel David, Danielle Day, Anne De Bellefeuille, Gilles de Montigny, Denis Dean, Claude Delâge, Nathalie Denommée, Yves Derosby, Martine Desforges, Maryse Deshaies, Marie-Josée Desjardins, Michel Desjardins, Nathalie Desjardins, Sylvie Deslières, Alain Desrochers, Serge Desrochers, Lisette Dezainde, Chantal Dionne, Linda Di Quinzio, Chantal Doré, Michel Dorion, Sylvie Drouin, Diane du Tremble, Louise Dubreuil, Jean-Denis Dufort, Isabelle Duguay, Karyn Duguay, Isabelle Duhaime, Hélène Dumont, France Dumontier, Jocelyne Dupont, Johanne Dupont, Francine Dupuis, Roch Dutil, Roxanne Émond, Christian Fecteau, Sylvain Flynn, Alain Foisy, Annie Forget, Carole Forget, Daniel Fortier, Manon Fortier, André Fortin, Hélène Fortin, Louise Fréchette, Danny Gagné, Gérard Gagné, André Gagnon, Jocelyne Gagnon, Lucie Gagnon, Mireille Gagnon, Véronique Gagnon, Louise Galipeau, Nathalie Gallant, Christiane Gamache, Marie-Josée Gamache, Benoît Gariépy, Ginette Gaudreau-Lessard, Alain Gauthier, François Gauvin, Louis Gendron, Gilles Genest, François Geoffrion, Jean Germain, Carole Gignac, Carole Giguère, Guylaine Giguère, Alain Gilbert, Daniel Gilbert, Louise Gingras, François Girard, Manon Girard, Dominique Glass, Diane Gosselin, Marie-Hélène Gosselin, Nancy Goudreau, Louis Gourdeau, Gaétan Gravel, Jacques Grégoire, Claude Grenier, Suzanne Grenier, Francine Grenon, Jean-Pierre Guay, Marie-Noëlle Guertin, Gilles Guilbault, Louise Hamel, Suzanne Hamel, Lucie Hamiaux, Louise Harvey, Daniel Hébert, Éric G. Hébert, Marie-Thérèse Hébert, Daniel Hinse, Alain Houle, Angèle Houle, Claude Jarret, Guy Jasmin, Sylvie Jeannotte, Gilles Jolivet, Patrice Jolivet, Colette Julien, Sophie Julien, Michel Kirouac, René Kurth, Marc La Grenade, Linda Lachance, Josée Lachapelle, Josée Lachapelle, Diane Lacharité, Jodi A. Lackman, Hugues Lacroix, Diane Ladurantaye, Sylvie Laferrière, Daniel Lafrenière, Dominic Lainesse, Alain Lamanque, Marie-Josée Lamarche, Pascal Lamarche, Michel Lambert, Odile Landry, Véronique Landry, Yvan Landry, Gaétan Langlois, Julie Langlois, Monique Langlois, Denis Lapalme, Jean-François Laplante, Serge Lapointe, Daniel Laporte, Martin Latreille, Michèle Laurion, Michel Lauzon, Réjean Lavigne, Hubert Lavigueur, Normand Lavoie, France Le Bourdais, Danny Le Braceur, Éric Lebel, Lucie Lebeuf, Réjean Leblanc, Anne Leclerc, Chantal Leclerc, Denis Leclerc, Diane Lecompte, Ginette Lecours, Chantal Leduc, Liette Leduc, Pierre Leduc, Chantal Lefebvre, Hélène Lefebvre, Lynda Lefebvre, Jean-François Legault, Josée Legault, Sylvain Lemarbre, Christian Lemay, Claudine Lemay, Sylvie Lemay, Fabiola Lépine, Élise Lessard, Jocelyn Levasseur, Sonia Lévêque, Mario Lévesque, Michel Lévesque, Michèle Levesque, Rollande Lévesque, François L’Heureux, Daniel Lignon, Stéphane Lortie, Sylvie Losier, Hafida Lounis, Manon Lussier, Yves Mackay, Grazia Maion, André Mallet, Madeleine Manseau, Diane Marcotte, Suzel Marcotte, Carole Marcoux, Nathalie Marino, Benoit Martin, Mélanie Martineau, Sylvain Masse, André McDonald, Louise McQuillan, Chantal Ménard, Élaine Ménard, Marie-Claude Ménard, Pascale Ménard, Fréderic Mercier, Michel Messier, Steve Messier, Marie-Claude Michaud, Serge Michaud, Julie Migneault, Paul-André Moisan, Chantal Mongeau, Lyne Mongeau, Robert Montpetit, Nathalie Morand, Jocelyn Moreau, Thérèse Morel, Gaétan Morin, Jean Morin, Normand Morin, Guylaine Morneau, Richard Moss, Noël Nadeau, François Nadon, Gabriel Nadon, Jean-Claude Nadon, Yvan Nantel, Diane Nother, Martin Ostiguy, Chantal Ouellet, Georges Panitchersky, Annick Paquet, Laurent Paquette, Luce Paquette, Monique Paquette, Lyne Paquin, Antoinette Paradis, Robert Paradis, Sylvain Paré, Carole Parent, Daniel Pelletier, Dany Pelletier, Nathalie Pelletier, Michèle Péloquin, Guy Perreault, Lise Perreault, Marie-Noëlle Perrier, Joan Pierre, Danielle Pigeon, Gisèle Pigeon, Claire Pitre, Michel Pontbriand, Julie Poudrette, Geneviève Poulin, Gilles Poulin, Marco Poulin, Martine Pratte, Julie Proulx, Steve Rayes, Andréa Raymond, Isabelle Raymond, Marie-Josée Reed, Mario Renaud, Claire Richard, Manon Riendeau, Suzanne Rippeur, Marie-Claude Rivest, Sylvie Robitaille, Nicole Rochon, Éric Roger, Marie-Claude Rouleau, Suzanne Roussel, Lise Routhier, André Roy, Colette Roy, Sébastien Roy, Sylvain Roy, André Rudnicki, Carole Ruel, Michel Sabourin, Nathalie Sabourin, Guy Sanscartier, Lorraine Saumure, Sébastien Sauvageau, Louise Sauvé, Renée Sauvé, Lina Scarpellini, Patrick Schumann, Carmen Shaw, Dany Sirois, Pierre Soulière, Annie St-Arnaud, Éric St-Jacques, Manon St-Jean, Roch St-Louis, Miville St-Onge, Mélanie St-Pierre, Julie Marie Strutt, Pierre Surprenant, André Sylvain, Jean Sylvestre, Michel Taylor, Pierre Tellier, Laurent Themens, Francine Théorêt, Johanne Thériault, Josée Théroux, Denis Thibault, Johanne Thibault, Jean Thifault, Pierre Thompson, Éric Tourangeau, Quang Xuan Tran, Bruce Tremblay, Élyse Tremblay, Jean-Denis Tremblay, Mario Tremblay, Monique Tremblay-Côté, Guy Trépanier, Louise Trudeau, Sylvie Trudeau, Christine Turcotte, Céline Turgeon, Michèle Vachon, Yolande Vaillancourt, Nathalie Vallières, Hélène Valois, Gilles Veilleux, Hélène Vézina, André Viau, Madeleine Vignola, Jean-Marc Wassef, Jean Wilhelmy, Joanne Zakaïb The Fund also owes its success to its part-time and former employees, as well as all its outside partners.

UNION As at May 31, 2006 Unionized employees of the Solidarity Fund QFL are members of the Service Employees Union, Local 800 (QFL).

EXECUTIVE COMMITTEE LABOUR COUNCIL AND SOCIAL DELEGATES Guy Trépanier, President Louise Bergeron, Gilles de Montigny, Linda Di Quinzio, Johanne Dupont, Jacques Grégoire, Claude Grenier, Marie-Claude Rouleau, First Vice-President Marie-Thérèse Hébert, Julie Migneault, Valérie Morin, Michèle Péloquin, Danielle Pigeon, Julie Proulx, Robert Charpentier, Second Vice-President Francine Théorêt, Pierre Thompson David Boucher, Treasurer Joanne Daviault, Secretary

SOLIDARITY FUND QFL ( SPECIAL BOARDS AND COMMITTEES, PERMANENT EMPLOYEES AND UNION ) PAGE 85 Suite 200 Telephone: 514 383-8383 545 Crémazie Blvd. East Toll free: 1 800 361-5017 Montréal, Québec H2M 2W4 Fax: 514 383-2502 www.fondsftq.com

SOLIDARITY FUND QFL: NET ASSETS OF $6.6 BILLION - 116,644