DFS GUARANTEED INVESTMENT FUNDS MAY 2017

2016 Annual Report

Financial Information as of December 31, 2016

DFS Guaranteed Investment Funds are established by Desjardins Financial Security Life Assurance Company.

Desjardins refers to Desjardins Financial Security Life Assurance Company. TABLE OF CONTENTS

DFS GUARANTEED INVESTMENT FUNDS Investment Solutions What’s a DFS GIF? DFS GIF – Conservative ...... 4 DFS GIF – Moderate ...... 12 DFS stands for Desjardins Financial DFS GIF – Balanced ...... 20 Security. DFS GIF – Growth ...... 28 GIF stands for Guaranteed DFS GIF – Maximum Growth ...... 36 Investment Fund. Individual Funds Income A Guaranteed Investment Fund (GIF), DFS GIF – Money Market ...... 46 commonly known as “segregated DFS GIF – Income – Fiera Capital ...... 53 fund“ is an investment fund created and issued exclusively by DFS GIF – Canadian Bond ...... 65 companies. It is offered through Balanced and Asset Allocation Contracts which provide maturity DFS GIF – Diversified Income – Franklin Quotential ...... 72 and death benefit guarantees. DFS GIF – Balanced Income – Franklin Quotential ...... 79 DFS GIF – Canadian Balanced – Fidelity ...... 86 DFS GIF – U S. . Monthly Income – Fidelity ...... 93 Is this document DFS GIF – Balanced – Desjardins Societerra ...... 100 available online? DFS GIF – Global Balanced – Jarislowsky Fraser ...... 107 DFS GIF – Canadian Balanced – Fiera Capital ...... 114 Yes, at DFS GIF – Canadian Balanced – Franklin Bissett ...... 129 desjardinslifeinsurance.com/ DFS GIF – Balanced Growth – Franklin Quotential ...... 136 GIFreports. DFS GIF – Canadian Balanced – CI Signature ...... 143 DFS GIF – Income And Growth – CI Signature ...... 150 DFS GIF – Growth And Income – NEI Northwest ...... 157 Is it possible to opt out DFS GIF – Global Growth – NEI Select ...... 164 of receiving paper copies DFS GIF – Canadian Asset Allocation – CI Cambridge ...... 171 of this financial report? DFS GIF – Growth – Franklin Quotential ...... 178 Yes. Please send a letter to: Canadian Equity DFS GIF – Dividend Income – Franklin Bissett ...... 185 Desjardins Financial Security DFS GIF – Canadian Dividend – NEI Northwest ...... 192 GIF Administration DFS GIF – Canadian Equity – Jarislowsky Fraser ...... 199 1 Complexe Desjardins P.O. Box 9000 DFS GIF – Canadian Equity – Fidelity True North® ...... 206 Montreal, QC H5B 1H5 DFS GIF – Canadian Equity – Franklin Bissett ...... 213 DFS GIF – Specialty Equity – NEI Northwest ...... 220 Or send an email to: DFS GIF – Small Cap – Franklin Bissett ...... 227 Foreign Equity [email protected]. DFS GIF – American Equity – MFS ...... 234 Please include your name, mailing DFS GIF – American Equity Value – Desjardins ...... 241 address, telephone number, email DFS GIF – Global Dividend – Desjardins ...... 248 address and client number in your DFS GIF – Global Equity – MFS ...... 255 request, and indicate whether DFS GIF – International Equity – MFS ...... 262 your request applies to the annual DFS GIF – International Equity Growth – Desjardins ...... 269 financial report and/or the semi- NOTES TO THE FINANCIAL STATEMENTS ...... 276 annual financial report. INDEPENDENT AUDITOR’S REPORT ...... 294 MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING IN THE AUDITED ANNUAL FINANCIAL STATEMENTS ...... 295

DFS GUARANTEED INVESTMENT FUNDS 1

DFS GUARANTEED INVESTMENT FUNDS

Investment Solutions DFS GIF – CONSERVATIVE*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio DGIA Canadian Bond Fund 55% 5. Desjardins Enhanced Bond Fund 23 7%. BlackRock CDN US Equity Index Fund 6 4%. Desjardins Overseas Equity Value Fund 3 0%. Desjardins Overseas Equity Growth Fund 2 9%. Franklin Bissett Canadian Equity Fund 2 9%. BlackRock Active Canadian Equity DC Fund 2% 8. Fidelity True North® Fund 2% 8.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 5Series** 5**Series 5** Series Series6 6Series 6 Series Series7 7Series 7

$10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value

1 Year 10,102 1% 0. 10,113 1 1%. 10,176 1% 8. Since Inception 10,185 1% 5. 10,577 2% 0. 10,713 2% 4.

* This Fund is composed of units of the corresponding underlying investment funds. ** Beginning of operations in October 2015.

4 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Interest for attribution purposes 267,322 160,624 Cash 75,146 70,175 Dividends 66,274 33,044 Investments at fair value through profit Changes in fair value: or loss (FVTPL) 14,278,214 8,395,967 Net realized gain (loss) on Premiums receivable 85,122 — investments 149,650 (13,233) Receivable for securities sold 108 31,167 Net unrealized gain (loss) on 14,438,590 8,497,309 investments (112,885) (31,061) 370,361 149,374 LIABILITIES Current Liabilities EXPENSES Accrued expenses 27,947 16,359 Management fees and guarantee charge 248,244 130,439 Withdrawals payable 125,416 32,351 Operating expenses 25,645 13,417 Payable for securities purchased 1,298 399 273,889 143,856 154,661 49,109 Withholding taxes 3,077 1,599 276,966 145,455 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 14,283,929 8,448,200 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO NET ASSETS PER UNIT CONTRACT OWNERS 93,395 3,919 Series 5 5.09 5 04. Series 6 5.29 5 23. DATA PER SERIES Series 7 5.36 5 26. SERIES 5* Increase (Decrease) in Net Assets from Operations (3,440) 349 - per unit (0.03) 0 07. Average Number of Units 105,251 4,845 SERIES 6 Increase (Decrease) in Net Assets from Operations 65,918 (4,339) - per unit 0.04 — Average Number of Units 1,776,661 987,539 SERIES 7 Increase (Decrease) in Net Assets from Operations 30,917 7,909 - per unit 0.11 0 06. Average Number of Units 283,127 136,776

* Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 5 DFS GIF – CONSERVATIVE (cont.)

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 8,448,200 2,870,803 to contract owners 93,395 3,919 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 93,395 3,919 Net realized gain (loss) (149,650) 13,233 Net unrealized gain (loss) 112,885 31,061 Premiums Non-cash distribution from Series 5* 1,098,525 82,376 investments (330,519) (192,069) Series 6 7,496,140 5,123,094 Proceeds from sale/maturity Series 7 1,973,253 1,252,778 of investments 2,874,806 3,502,457 10,567,918 6,458,248 Investments purchased (8,389,769) (8,882,795) Withdrawals Receivable for securities sold 31,059 (31,167) Series 5* (229,161) (15,189) Accrued expenses 11,588 11,162 Series 6 (2,917,657) (843,441) Payable for securities purchased 899 (272) Series 7 (1,678,766) (26,140) NET CASH FLOWS FROM (USED IN) (4,825,584) (884,770) OPERATING ACTIVITIES (5,745,306) (5,544,471) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, CASH FLOWS FROM (USED IN) END OF YEAR 14,283,929 8,448,200 FINANCING ACTIVITIES Premium payments 10,482,796 6,467,716 Amounts paid on withdrawals (4,732,519) (853,597) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES 5,750,277 5,614,119 Increase (Decrease) in cash/bank overdraft 4,971 69,648 Cash (bank overdraft), beginning of year 70,175 527 CASH (BANK OVERDRAFT), END OF YEAR 75,146 70,175

* Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements.

6 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.0%) BlackRock Active Canadian Equity DC Fund 12,432 408,586 406,896 BlackRock CDN US Equity Index Fund, Class D 47,059 843,423 920,809 Desjardins Enhanced Bond Fund, I-Class 307,341 3,471,569 3,382,594 Desjardins Overseas Equity Growth Fund, I-Class 22,928 428,345 414,951 Desjardins Overseas Equity Value Fund, I-Class 30,240 429,841 431,337 DGIA Canadian Bond Fund 785,085 8,094,712 7,918,147 Fidelity True North® Fund, Series O 8,301 378,705 396,370 Franklin Bissett Canadian Equity Fund, Series O 2,747 367,923 407,110 TOTAL INVESTMENTS 14,423,104 14,278,214 OTHER NET ASSETS (0.0%) 5,715 NET ASSETS (100%) 14,283,929

The accompanying Notes are an integral part of these financial statements.

TOP FIVE HOLDINGS OF THE UNDERLYING FUNDS – unaudited

Percentage Security Name of Portfolio DGIA CANADIAN BOND FUND 55.5% Canada Housing Trust, 1 .25%, June 15, 2021 6 8%. Province of Ontario, 2 60%,. June 2, 2025 4 .1% Province of Ontario, 2 10%,. September 8, 2019 4 .0% Canada Housing Trust, 2 00%,. December 15, 2019 3 8%. NHA MBS Merrill Lynch, 1 35%,. May 1, 2020 3 .1% DESJARDINS ENHANCED BOND FUND 23.7% Government of Canada, 1 50%,. June 1, 2026 8 .7% Government of Canada, 2 .25%, June 1, 2025 3 .0% Province of British Columbia, 2 70%,. December 18, 2022 2 .7% Province of Quebec, 3 50%,. December 1, 2048 2 .5% Province of Ontario, 2 40%,. June 2, 2026 2 4%. BLACKROCK CDN US EQUITY INDEX FUND 6.4% Apple 3 2%. Microsoft Corporation 2 .5% Exxon Mobil Corporation 1 9%. Johnson & Johnson 1 6%. Berkshire Hathaway 1 6%. DESJARDINS OVERSEAS EQUITY VALUE FUND 3.0% Novartis AG 4 .2% Roche Holding AG 4 .0% Nestlé SA 3 .5% Japan Tobacco 3 4%. Royal Dutch Shell 3 .1%

DFS GUARANTEED INVESTMENT FUNDS 7 DFS GIF – CONSERVATIVE (cont.)

TOP FIVE HOLDINGS OF THE UNDERLYING FUNDS – unaudited (cont.) Percentage Security Name of Portfolio DESJARDINS OVERSEAS EQUITY GROWTH FUND 2.9% Tencent Holdings 5 2%. Inditex 5 .0% AIA Group 4 .9% Softbank Corporation 4 .7% ASML Holding 4 .5% FRANKLIN BISSETT CANADIAN EQUITY FUND 2.9% Brookfield Asset Management 5 8%. Canadian National Railway Company 5 2%. Royal Bank of Canada 5 .1% Toronto-Dominion Bank 5 .0% Canadian Imperial Bank of Commerce 4 .6% BLACKROCK ACTIVE CANADIAN EQUITY DC FUND 2.8% Royal Bank of Canada 7 5%. Toronto-Dominion Bank 7 2%. Scotiabank 5 .3% Canadian National Railway Company 4 .5% Canadian Imperial Bank of Commerce 3 2%. FIDELITY TRUE NORTH® FUND 2.8% Toronto-Dominion Bank 8 .8% Canadian National Railway Company 4 .1% Suncor Energy 3 6%. CGI Group 3 4%. Rogers Communications 3 3%.

8 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To generate a consistent flow of income with an emphasis on the preservation of capital by investing in a number of different fixed income and equity underlying funds . Investment Strategy To invest in a wide array of underlying funds managed by using a multi-manager approach provided by acclaimed fund managers and sub-advisors .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 5,032,362 9,245,852 — 14,278,214 TOTAL 5,032,362 9,245,852 — 14,278,214

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 2,945,828 5,450,139 — 8,395,967 TOTAL 2,945,828 5,450,139 — 8,395,967

Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Funds Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying funds . Detailed disclosure about the currency risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying funds . Detailed disclosure about the interest rate risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) .

DFS GUARANTEED INVESTMENT FUNDS 9 DFS GIF – CONSERVATIVE (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying funds . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying funds . Detailed disclosure about the price risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, with all other variables held constant, is as follows:

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada Universe (80%) 1 00. 114,271 67,586 S&P/TSX (8%) 3 00. 34,281 20,276 S&P 500 (6%) 3 00. 25,711 15,207 MSCI EAFE Net (6%) 3 00. 25,711 15,207 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying funds . Detailed disclosure about the credit risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying funds . Detailed disclosure about the liquidity risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

10 DFS GUARANTEED INVESTMENT FUNDS FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past three years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016 2015 2014

Series 5* 5.09 5.04 — Series 6 5.29 5.23 5.18 Series 7 5.36 5.26 5.19 Ratios and Supplemental Data Net Asset Value ($000’s) Series 5* 933 68 — Series 6 11,770 7,126 2,850 Series 7 1,580 1,255 20 Number of units outstanding (000) Series 5* 183 13 — Series 6 2,226 1,363 550 Series 7 295 238 4 Management expense ratio (MER)1 (%) Series 5* 2.59 2 .59 — Series 6 2.47 2 .49 2 .51 Series 7 1.88 2 .01 2 .01 Portfolio turnover rate2 (%) 26.04 60 .19 11 .83

* Beginning of operations in October 2015. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of daily average net asset value during the year. The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

DFS GUARANTEED INVESTMENT FUNDS 11 DFS GIF – MODERATE*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio DGIA Canadian Bond Fund 44 0%. Desjardins Enhanced Bond Fund 18% 8. BlackRock CDN US Equity Index Fund 10% 9. Desjardins Overseas Equity Value Fund 5% 2. Desjardins Overseas Equity Growth Fund 5 0%. Franklin Bissett Canadian Equity Fund 4 9%. BlackRock Active Canadian Equity DC Fund 4% 8. Fidelity True North® Fund 4 7%. Cash and Cash Equivalents 1% 7.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 5Series** 5**Series 5** Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value

1 Year 10,187 1% 9. 10,210 2 1%. 10,267 2 7%. Since Inception 10,270 2% 2. 10,792 2 7%. 10,963 3% 3.

* This Fund is composed of units of the corresponding underlying investment funds. ** Beginning of operations in October 2015.

12 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Interest for attribution purposes 370,712 201,172 Cash 391,377 453,973 Dividends 201,484 90,740 Investments at fair value through profit Changes in fair value: or loss (FVTPL) 26,582,702 13,580,031 Net realized gain (loss) on Premiums receivable 437,404 18,755 investments 305,481 41,868 27,411,483 14,052,759 Net unrealized gain (loss) on investments (10,368) (67,411) LIABILITIES 867,309 266,369 Current Liabilities Accrued expenses 51,363 27,384 EXPENSES Withdrawals payable 122,636 7,033 Management fees and guarantee charge 428,554 212,407 Payable for securities purchased 265,043 77,584 Operating expenses 43,147 20,939 439,042 112,001 471,701 233,346 Withholding taxes 9,246 4,403 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 26,972,441 13,940,758 480,947 237,749 NET ASSETS PER UNIT INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO Series 5 5.14 5 04. CONTRACT OWNERS 386,362 28,620 Series 6 5.40 59 2. Series 7 5.48 5 34. DATA PER SERIES SERIES 5* Increase (Decrease) in Net Assets from Operations 15,897 424 - per unit 0.18 0 03. Average Number of Units 89,078 14,617 SERIES 6 Increase (Decrease) in Net Assets from Operations 314,789 14,479 - per unit 0.10 0 01. Average Number of Units 3,116,323 1,682,360 SERIES 7 Increase (Decrease) in Net Assets from Operations 55,676 13,717 - per unit 0.12 0 16. Average Number of Units 452,088 87,656

* Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 13 DFS GIF – MODERATE (cont.)

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 13,940,758 5,361,120 to contract owners 386,362 28,620 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 386,362 28,620 Net realized gain (loss) (305,481) (41,868) Net unrealized gain (loss) 10,368 67,411 Premiums Non-cash distribution from Series 5* 669,622 113,021 investments (562,950) (287,509) Series 6 12,168,567 8,876,039 Proceeds from sale/maturity Series 7 3,414,873 805,967 of investments 2,697,410 4,241,797 16,253,062 9,795,027 Investments purchased (14,842,018) (12,248,020) Withdrawals Accrued expenses 23,979 17,135 Series 5* (125,108) (15,215) Payable for securities purchased 187,459 68,141 Series 6 (3,011,529) (1,228,789) NET CASH FLOWS FROM (USED IN) Series 7 (471,104) (5) OPERATING ACTIVITIES (12,404,871) (8,154,293) (3,607,741) (1,244,009) CASH FLOWS FROM (USED IN) NET ASSETS ATTRIBUTABLE FINANCING ACTIVITIES TO CONTRACT OWNERS, END OF YEAR 26,972,441 13,940,758 Premium payments 15,834,413 9,818,235 Amounts paid on withdrawals (3,492,138) (1,239,697) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES 12,342,275 8,578,538 Increase (Decrease) in cash/bank overdraft (62,596) 424,245 Cash (bank overdraft), beginning of year 453,973 29,728 CASH (BANK OVERDRAFT), END OF YEAR 391,377 453,973

* Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements.

14 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (98.6%) BlackRock Active Canadian Equity DC Fund 39,988 1,327,562 1,308,762 BlackRock CDN US Equity Index Fund, Class D 151,409 2,717,021 2,962,696 Desjardins Enhanced Bond Fund, I-Class 461,926 5,227,730 5,083,955 Desjardins Overseas Equity Growth Fund, I-Class 74,275 1,389,126 1,344,218 Desjardins Overseas Equity Value Fund, I-Class 97,773 1,398,912 1,394,644 DGIA Canadian Bond Fund 1,179,500 12,154,443 11,896,108 Fidelity True North® Fund, Series O 26,802 1,229,546 1,279,892 Franklin Bissett Canadian Equity Fund, Series O 8,857 1,198,187 1,312,427 TOTAL INVESTMENTS 26,642,527 26,582,702 OTHER NET ASSETS (1.4%) 389,739 NET ASSETS (100%) 26,972,441

The accompanying Notes are an integral part of these financial statements.

TOP FIVE HOLDINGS OF THE UNDERLYING FUNDS – unaudited

Percentage Security Name of Portfolio DGIA CANADIAN BOND FUND 44.0% Canada Housing Trust, 1 .25%, June 15, 2021 6 8%. Province of Ontario, 2 60%,. June 2, 2025 4 .1% Province of Ontario, 2 10%,. September 8, 2019 4 .0% Canada Housing Trust, 2 00%,. December 15, 2019 3 8%. NHA MBS Merrill Lynch, 1 35%,. May 1, 2020 3 .1% DESJARDINS ENHANCED BOND FUND 18.8% Government of Canada, 1 50%,. June 1, 2026 8 .7% Government of Canada, 2 .25%, June 1, 2025 3 .0% Province of British Columbia, 2 70%,. December 18, 2022 2 .7% Province of Quebec, 3 50%,. December 1, 2048 2 .5% Province of Ontario, 2 40%,. June 2, 2026 2 4%. BLACKROCK CDN US EQUITY INDEX FUND 10.9% Apple 3 2%. Microsoft Corporation 2 .5% Exxon Mobil Corporation 1 9%. Johnson & Johnson 1 6%. Berkshire Hathaway 1 6%. DESJARDINS OVERSEAS EQUITY VALUE FUND 5.2% Novartis AG 4 .2% Roche Holding AG 4 .0% Nestlé SA 3 .5% Japan Tobacco 3 4%. Royal Dutch Shell 3 .1%

DFS GUARANTEED INVESTMENT FUNDS 15 DFS GIF – MODERATE (cont.)

TOP FIVE HOLDINGS OF THE UNDERLYING FUNDS – unaudited (cont.) Percentage Security Name of Portfolio DESJARDINS OVERSEAS EQUITY GROWTH FUND 5.0% Tencent Holdings 5 2%. Inditex 5 .0% AIA Group 4 .9% Softbank Corporation 4 .7% ASML Holding 4 .5% FRANKLIN BISSETT CANADIAN EQUITY FUND 4.9% Brookfield Asset Management 5 8%. Canadian National Railway Company 5 2%. Royal Bank of Canada 5 .1% Toronto-Dominion Bank 5 .0% Canadian Imperial Bank of Commerce 4 .6% BLACKROCK ACTIVE CANADIAN EQUITY DC FUND 4.8% Royal Bank of Canada 7 5%. Toronto-Dominion Bank 7 2%. Scotiabank 5 .3% Canadian National Railway Company 4 .5% Canadian Imperial Bank of Commerce 3 2%. FIDELITY TRUE NORTH® FUND 4.7% Toronto-Dominion Bank 8 .8% Canadian National Railway Company 4 .1% Suncor Energy 3 6%. CGI Group 3 4%. Rogers Communications 3 3%.

16 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To generate income while leaving room for some capital appreciation by investing in a number of different fixed income and equity underlying funds . Investment Strategy To invest in a wide array of underlying funds managed by using a multi-manager approach provided by acclaimed fund managers and sub-advisors .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 10,415,136 16,167,566 — 26,582,702 TOTAL 10,415,136 16,167,566 — 26,582,702

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 5,259,929 8,320,102 — 13,580,031 TOTAL 5,259,929 8,320,102 — 13,580,031

Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Funds Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying funds . Detailed disclosure about the currency risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) .

DFS GUARANTEED INVESTMENT FUNDS 17 DFS GIF – MODERATE (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying funds . Detailed disclosure about the interest rate risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying funds . Detailed disclosure about the concentration risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying funds . Detailed disclosure about the price risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, with all other variables held constant, is as follows:

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada Universe (65%) 1 00. 175,321 90,615 S&P/TSX (14%) 3 00. 113,284 58,551 S&P 500 (10 5%). 3 00. 84,963 43,913 MSCI EAFE Net (10 5%). 3 00. 84,963 43,913 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying funds . Detailed disclosure about the credit risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying funds . Detailed disclosure about the liquidity risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

18 DFS GUARANTEED INVESTMENT FUNDS FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past three years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016 2015 2014

Series 5* 5.14 5 .04 — Series 6 5.40 5 .29 5 .21 Series 7 5.48 5 .34 5 .23 Ratios and Supplemental Data Net Asset Value ($000’s) Series 5* 659 98 — Series 6 22,168 12,696 5,035 Series 7 4,146 1,146 327 Number of units outstanding (000) Series 5* 128 19 — Series 6 4,108 2,402 967 Series 7 756 215 62 Management expense ratio (MER)1 (%) Series 5* 2.70 2 .64 — Series 6 2.49 2 .51 2 .54 Series 7 1.90 1 .90 2 .07 Portfolio turnover rate2 (%) 15.07 46 .64 5 .15

* Beginning of operations in October 2015.

1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of daily average net asset value during the year. The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

DFS GUARANTEED INVESTMENT FUNDS 19 DFS GIF – BALANCED*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio DGIA Canadian Bond Fund 33% 8. BlackRock CDN US Equity Index Fund 15% 7. Desjardins Enhanced Bond Fund 14% 5. Desjardins Overseas Equity Value Fund 7% 4. Desjardins Overseas Equity Growth Fund 7% 1. Franklin Bissett Canadian Equity Fund 6 9%. BlackRock Active Canadian Equity DC Fund 6 9%. Fidelity True North® Fund 6% 8. Cash and Cash Equivalents 0 9%.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 5Series** 5**Series 5** Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value

1 Year 10,306 3 1%. 10,325 3% 2. 10,372 3 7%. Since Inception 10,404 3% 3. 10,988 3% 4. 11,153 3 9%.

* This Fund is composed of units of the corresponding underlying investment funds. ** Beginning of operations in October 2015.

20 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Interest for attribution purposes 603,390 315,733 Cash 423,802 329,916 Dividends 608,461 269,807 Investments at fair value through profit Changes in fair value: or loss (FVTPL) 54,212,097 30,993,618 Net realized gain (loss) on Premiums receivable 304,070 59,798 investments 681,873 182,073 Receivable for securities sold — 3,797 Net unrealized gain (loss) on 54,939,969 31,387,129 investments 679,574 (212,494) 2,573,298 555,119 LIABILITIES Current Liabilities EXPENSES Accrued expenses 108,345 62,246 Management fees and guarantee charge 935,563 417,102 Withdrawals payable 36,562 19,248 Operating expenses 92,349 40,796 Payable for securities purchased 268,943 25,847 1,027,912 457,898 413,850 107,341 Withholding taxes 28,205 12,919 1,056,117 470,817 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 54,526,119 31,279,788 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO NET ASSETS PER UNIT CONTRACT OWNERS 1,517,181 84,302 Series 5 5.20 5 05. Series 6 5.49 5 32. DATA PER SERIES Series 7 5.58 5 38. SERIES 5* Increase (Decrease) in Net Assets from Operations 24,092 823 - per unit 0.26 0 10. Average Number of Units 94,128 8,454 SERIES 6 Increase (Decrease) in Net Assets from Operations 1,271,874 70,826 - per unit 0.19 0 02. Average Number of Units 6,561,526 2,998,597 SERIES 7 Increase (Decrease) in Net Assets from Operations 221,215 12,653 - per unit 0.21 0 03. Average Number of Units 1,068,692 404,650

* Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 21 DFS GIF – BALANCED (cont.)

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 31,279,788 9,596,683 to contract owners 1,517,181 84,302 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 1,517,181 84,302 Net realized gain (loss) (681,873) (182,073) Net unrealized gain (loss) (679,574) 212,494 Premiums Non-cash distribution from Series 5* 604,836 63,359 investments (1,183,646) (572,621) Series 6 22,781,945 18,174,904 Proceeds from sale/maturity Series 7 1,888,777 4,859,189 of investments 3,354,247 6,918,597 25,275,558 23,097,452 Investments purchased (24,027,633) (27,812,818) Withdrawals Receivable for securities sold 3,797 (3,797) Series 5* (3,973) — Accrued expenses 46,099 43,436 Series 6 (2,917,073) (1,317,109) Payable for securities purchased 243,096 5,870 Series 7 (625,362) (181,540) NET CASH FLOWS FROM (USED IN) (3,546,408) (1,498,649) OPERATING ACTIVITIES (21,408,306) (21,306,610) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, CASH FLOWS FROM (USED IN) END OF YEAR 54,526,119 31,279,788 FINANCING ACTIVITIES Premium payments 25,031,286 23,063,157 Amounts paid on withdrawals (3,529,094) (1,484,417) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES 21,502,192 21,578,740 Increase (Decrease) in cash/bank overdraft 93,886 272,130 Cash (bank overdraft), beginning of year 329,916 57,786 CASH (BANK OVERDRAFT), END OF YEAR 423,802 329,916

* Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements.

22 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (99.4%) BlackRock Active Canadian Equity DC Fund 115,678 3,809,754 3,786,023 BlackRock CDN US Equity Index Fund, Class D 438,005 7,864,568 8,570,641 Desjardins Enhanced Bond Fund, I-Class 719,057 8,120,344 7,913,940 Desjardins Overseas Equity Growth Fund, I-Class 214,720 4,032,159 3,886,003 Desjardins Overseas Equity Value Fund, I-Class 282,862 4,047,983 4,034,739 DGIA Canadian Bond Fund 1,835,995 18,877,659 18,517,328 Fidelity True North® Fund, Series O 77,565 3,549,100 3,703,876 Franklin Bissett Canadian Equity Fund, Series O 25,641 3,420,568 3,799,547 TOTAL INVESTMENTS 53,722,135 54,212,097 OTHER NET ASSETS (0.6%) 314,022 NET ASSETS (100%) 54,526,119

The accompanying Notes are an integral part of these financial statements.

TOP FIVE HOLDINGS OF THE UNDERLYING FUNDS – unaudited

Percentage Security Name of Portfolio DGIA CANADIAN BOND FUND 33.8% Canada Housing Trust, 1 .25%, June 15, 2021 6 8%. Province of Ontario, 2 60%,. June 2, 2025 4 .1% Province of Ontario, 2 10%,. September 8, 2019 4 .0% Canada Housing Trust, 2 00%,. December 15, 2019 3 8%. NHA MBS Merrill Lynch, 1 35%,. May 1, 2020 3 .1% BLACKROCK CDN US EQUITY INDEX FUND 15.7% Apple 3 2%. Microsoft Corporation 2 .5% Exxon Mobil Corporation 1 9%. Johnson & Johnson 1 6%. Berkshire Hathaway 1 6%. DESJARDINS ENHANCED BOND FUND 14.5% Government of Canada, 1 50%,. June 1, 2026 8 .7% Government of Canada, 2 .25%, June 1, 2025 3 .0% Province of British Columbia, 2 70%,. December 18, 2022 2 .7% Province of Quebec, 3 50%,. December 1, 2048 2 .5% Province of Ontario, 2 40%,. June 2, 2026 2 4%. DESJARDINS OVERSEAS EQUITY VALUE FUND 7.4% Novartis AG 4 .2% Roche Holding AG 4 .0% Nestlé SA 3 .5% Japan Tobacco 3 4%. Royal Dutch Shell 3 .1%

DFS GUARANTEED INVESTMENT FUNDS 23 DFS GIF – BALANCED (cont.)

TOP FIVE HOLDINGS OF THE UNDERLYING FUNDS – unaudited (cont.) Percentage Security Name of Portfolio DESJARDINS OVERSEAS EQUITY GROWTH FUND 7.1% Tencent Holdings 5 2%. Inditex 5 .0% AIA Group 4 .9% Softbank Corporation 4 .7% ASML Holding 4 .5% FRANKLIN BISSETT CANADIAN EQUITY FUND 6.9% Brookfield Asset Management 5 8%. Canadian National Railway Company 5 2%. Royal Bank of Canada 5 .1% Toronto-Dominion Bank 5 .0% Canadian Imperial Bank of Commerce 4 .6% BLACKROCK ACTIVE CANADIAN EQUITY DC FUND 6.9% Royal Bank of Canada 7 5%. Toronto-Dominion Bank 7 2%. Scotiabank 5 .3% Canadian National Railway Company 4 .5% Canadian Imperial Bank of Commerce 3 2%. FIDELITY TRUE NORTH® FUND 6.8% Toronto-Dominion Bank 8 .8% Canadian National Railway Company 4 .1% Suncor Energy 3 6%. CGI Group 3 4%. Rogers Communications 3 3%.

24 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide investors with an attractive balance of current income and capital appreciation by investing in a number of different fixed income and equity underlying funds . Investment Strategy To invest in a wide array of underlying funds managed by using a multi-manager approach provided by acclaimed fund managers and sub-advisors .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 23,338,105 30,873,992 — 54,212,097 TOTAL 23,338,105 30,873,992 — 54,212,097

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 13,356,447 17,637,171 — 30,993,618 TOTAL 13,356,447 17,637,171 — 30,993,618

Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Funds Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying funds . Detailed disclosure about the currency risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying funds . Detailed disclosure about the interest rate risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) .

DFS GUARANTEED INVESTMENT FUNDS 25 DFS GIF – BALANCED (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying funds . Detailed disclosure about the concentration risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying funds . Detailed disclosure about the price risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, with all other variables held constant, is as follows:

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada Universe (50%) 1 00. 272,631 156,399 S&P/TSX (20%) 3 00. 327,157 187,679 S&P 500 (15%) 3 00. 245,368 140,759 MSCI EAFE Net (15%) 3 00. 245,368 140,759 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying funds . Detailed disclosure about the credit risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying funds . Detailed disclosure about the liquidity risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

26 DFS GUARANTEED INVESTMENT FUNDS FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past three years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016 2015 2014

Series 5* 5.20 5 .05 — Series 6 5.49 5 .32 5 .21 Series 7 5.58 5 .38 5 .24 Ratios and Supplemental Data Net Asset Value ($000’s) Series 5* 689 64 — Series 6 46,933 25,797 8,868 Series 7 6,904 5,419 729 Number of units outstanding (000) Series 5* 132 13 — Series 6 8,543 4,848 1,703 Series 7 1,238 1,008 139 Management expense ratio (MER)1 (%) Series 5* 2.76 2 .70 — Series 6 2.54 2 .57 2 .57 Series 7 2.08 2 .13 2 .13 Portfolio turnover rate2 (%) 9.21 39 .42 10 .00

* Beginning of operations in October 2015. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of daily average net asset value during the year. The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

DFS GUARANTEED INVESTMENT FUNDS 27 DFS GIF – GROWTH*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio DGIA Canadian Bond Fund 23 5%. BlackRock CDN US Equity Index Fund 20% 4. Desjardins Enhanced Bond Fund 10% 0. Desjardins Overseas Equity Value Fund 9 5%. Desjardins Overseas Equity Growth Fund 9 1%. BlackRock Active Canadian Equity DC Fund 9% 0. Franklin Bissett Canadian Equity Fund 8 9%. Fidelity True North® Fund 8 7%. Cash and Cash Equivalents 0 9%.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 5Series** 5**Series 5** Series Series6 6Series 6 Series Series7 7Series 7

$10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value

1 Year 10,407 4 1%. 10,431 4 3%. 10,478 4% 8. Since Inception 10,526 4 3%. 11,284 4 3%. 11,417 4% 8.

* This Fund is composed of units of the corresponding underlying investment funds. ** Beginning of operations in October 2015.

28 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Interest for attribution purposes 286,016 132,097 Cash 396,843 110,798 Dividends 541,734 212,835 Investments at fair value through profit Changes in fair value: or loss (FVTPL) 40,818,802 18,843,250 Net realized gain (loss) on Premiums receivable 621,550 105,745 investments 525,104 175,094 Receivable for securities sold — 34,057 Net unrealized gain (loss) on 41,837,195 19,093,850 investments 693,151 (174,861) 2,046,005 345,165 LIABILITIES Current Liabilities EXPENSES Accrued expenses 83,053 39,847 Management fees and guarantee charge 636,201 260,152 Withdrawals payable 287,183 18,356 Operating expenses 60,160 24,463 Payable for securities purchased 418,064 36,091 696,361 284,615 788,300 94,294 Withholding taxes 24,772 10,258 721,133 294,873 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 41,048,895 18,999,556 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO NET ASSETS PER UNIT CONTRACT OWNERS 1,324,872 50,292 Series 5 5.26 5 06. Series 6 5.64 5 41. DATA PER SERIES Series 7 5.71 5 45. SERIES 5* Increase (Decrease) in Net Assets from Operations 110,291 431 - per unit 0.30 0 04. Average Number of Units 367,809 10,944 SERIES 6 Increase (Decrease) in Net Assets from Operations 1,102,785 26,770 - per unit 0.26 0 01. Average Number of Units 4,231,018 1,875,976 SERIES 7 Increase (Decrease) in Net Assets from Operations 111,796 23,091 - per unit 0.28 0 23. Average Number of Units 392,559 100,183

* Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 29 DFS GIF – GROWTH (cont.)

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 18,999,556 5,290,481 to contract owners 1,324,872 50,292 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 1,324,872 50,292 Net realized gain (loss) (525,104) (175,094) Net unrealized gain (loss) (693,151) 174,861 Premiums Non-cash distribution from Series 5* 4,239,029 161,010 investments (802,975) (334,674) Series 6 17,244,265 14,121,829 Proceeds from sale/maturity Series 7 3,597,009 716,800 of investments 3,119,664 3,035,281 25,080,303 14,999,639 Investments purchased (23,073,986) (16,271,510) Withdrawals Receivable for securities sold 34,057 (34,057) Series 5* (429,141) (78,976) Accrued expenses 43,206 30,084 Series 6 (3,426,521) (1,011,364) Payable for securities purchased 381,973 (11,154) Series 7 (500,174) (250,516) NET CASH FLOWS FROM (USED IN) (4,355,836) (1,340,856) OPERATING ACTIVITIES (20,191,444) (13,535,971) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, CASH FLOWS FROM (USED IN) END OF YEAR 41,048,895 18,999,556 FINANCING ACTIVITIES Premium payments 24,564,498 14,951,507 Amounts paid on withdrawals (4,087,009) (1,326,458) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES 20,477,489 13,625,049 Increase (Decrease) in cash/bank overdraft 286,045 89,078 Cash (bank overdraft), beginning of year 110,798 21,720 CASH (BANK OVERDRAFT), END OF YEAR 396,843 110,798

* Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements.

30 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (99.4%) BlackRock Active Canadian Equity DC Fund 113,991 3,757,274 3,730,850 BlackRock CDN US Equity Index Fund, Class D 431,493 7,866,410 8,443,241 Desjardins Enhanced Bond Fund, I-Class 374,209 4,216,037 4,118,543 Desjardins Overseas Equity Growth Fund, I-Class 207,670 3,921,057 3,758,415 Desjardins Overseas Equity Value Fund, I-Class 273,322 3,914,935 3,898,670 DGIA Canadian Bond Fund 955,346 9,847,759 9,635,348 Fidelity True North® Fund, Series O 74,825 3,442,054 3,573,029 Franklin Bissett Canadian Equity Fund, Series O 24,705 3,340,419 3,660,706 TOTAL INVESTMENTS 40,305,945 40,818,802 OTHER NET ASSETS (0.6%) 230,093 NET ASSETS (100%) 41,048,895

The accompanying Notes are an integral part of these financial statements.

TOP FIVE HOLDINGS OF THE UNDERLYING FUNDS – unaudited

Percentage Security Name of Portfolio DGIA CANADIAN BOND FUND 23.5% Canada Housing Trust, 1 .25%, June 15, 2021 6 8%. Province of Ontario, 2 60%,. June 2, 2025 4 .1% Province of Ontario, 2 10%,. September 8, 2019 4 .0% Canada Housing Trust, 2 00%,. December 15, 2019 3 8%. NHA MBS Merrill Lynch, 1 35%,. May 1, 2020 3 .1% BLACKROCK CDN US EQUITY INDEX FUND 20.4% Apple 3 2%. Microsoft Corporation 2 .5% Exxon Mobil Corporation 1 9%. Johnson & Johnson 1 6%. Berkshire Hathaway 1 6%. DESJARDINS ENHANCED BOND FUND 10.0% Government of Canada, 1 50%,. June 1, 2026 8 .7% Government of Canada, 2 .25%, June 1, 2025 3 .0% Province of British Columbia, 2 70%,. December 18, 2022 2 .7% Province of Quebec, 3 50%,. December 1, 2048 2 .5% Province of Ontario, 2 40%,. June 2, 2026 2 4%. DESJARDINS OVERSEAS EQUITY VALUE FUND 9.5% Novartis AG 4 .2% Roche Holding AG 4 .0% Nestlé SA 3 .5% Japan Tobacco 3 4%. Royal Dutch Shell 3 .1%

DFS GUARANTEED INVESTMENT FUNDS 31 DFS GIF – GROWTH (cont.)

TOP FIVE HOLDINGS OF THE UNDERLYING FUNDS – unaudited (cont.) Percentage Security Name of Portfolio DESJARDINS OVERSEAS EQUITY GROWTH FUND 9.1% Tencent Holdings 5 2%. Inditex 5 .0% AIA Group 4 .9% Softbank Corporation 4 .7% ASML Holding 4 .5% BLACKROCK ACTIVE CANADIAN EQUITY DC FUND 9.0% Royal Bank of Canada 7 5%. Toronto-Dominion Bank 7 2%. Scotiabank 5 .3% Canadian National Railway Company 4 .5% Canadian Imperial Bank of Commerce 3 2%. FRANKLIN BISSETT CANADIAN EQUITY FUND 8.9% Brookfield Asset Management 5 8%. Canadian National Railway Company 5 2%. Royal Bank of Canada 5 .1% Toronto-Dominion Bank 5 .0% Canadian Imperial Bank of Commerce 4 .6% FIDELITY TRUE NORTH® FUND 8.7% Toronto-Dominion Bank 8 .8% Canadian National Railway Company 4 .1% Suncor Energy 3 6%. CGI Group 3 4%. Rogers Communications 3 3%.

32 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To emphasize appreciation of capital while still generating some income by investing in a number of different fixed income and equity underlying funds . Investment Strategy To invest in a wide array of underlying funds managed by using a multi-manager approach provided by acclaimed fund managers and sub-advisors .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 19,009,363 21,809,439 — 40,818,802 TOTAL 19,009,363 21,809,439 — 40,818,802

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 8,852,119 9,991,131 — 18,843,250 TOTAL 8,852,119 9,991,131 — 18,843,250

Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Funds Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying funds . Detailed disclosure about the currency risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying funds . Detailed disclosure about the interest rate risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) .

DFS GUARANTEED INVESTMENT FUNDS 33 DFS GIF – GROWTH (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying funds . Detailed disclosure about the concentration risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying funds . Detailed disclosure about the price risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, with all other variables held constant, is as follows:

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada Universe (35%) 1 00. 143,671 66,498 S&P/TSX (26%) 3 00. 320,181 148,197 S&P 500 (19 5%). 3 00. 240,136 111,147 MSCI EAFE Net (19 5%). 3 00. 240,136 111,147 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying funds . Detailed disclosure about the credit risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying funds . Detailed disclosure about the liquidity risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

34 DFS GUARANTEED INVESTMENT FUNDS FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past three years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016 2015 2014

Series 5* 5.26 5 .06 — Series 6 5.64 5 .41 5 .26 Series 7 5.71 5 .45 5 .28 Ratios and Supplemental Data Net Asset Value ($000’s) Series 5* 4,003 82 — Series 6 32,851 17,931 4,794 Series 7 4,195 986 497 Number of units outstanding (000) Series 5* 761 16 — Series 6 5,823 3,315 911 Series 7 735 181 94 Management expense ratio (MER)1 (%) Series 5* 2.82 2 .76 — Series 6 2.59 2 .68 2 .68 Series 7 2.10 2 .18 2 .18 Portfolio turnover rate2 (%) 12.65 29 .85 26 .92

* Beginning of operations in October 2015. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of daily average net asset value during the year. The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

DFS GUARANTEED INVESTMENT FUNDS 35 DFS GIF – MAXIMUM GROWTH*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio BlackRock CDN US Equity Index Fund 25 4%. DGIA Canadian Bond Fund 13% 3. Desjardins Overseas Equity Value Fund 11% 6. BlackRock Active Canadian Equity DC Fund 11% 2. Desjardins Overseas Equity Growth Fund 11% 2. Franklin Bissett Canadian Equity Fund 10% 9. Fidelity True North® Fund 10% 6. Desjardins Enhanced Bond Fund 5 7%. Cash and Cash Equivalents 0 1%.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 5Series** 5**Series 5** Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value

1 Year 10,552 5 5%. 10,568 5 7%. 10,605 6 0%. Since Inception 10,688 5 7%. 11,472 4 9%. 11,621 5 4%.

* This Fund is composed of units of the corresponding underlying investment funds. ** Beginning of operations in October 2015.

36 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Interest for attribution purposes 13,614 9,921 Cash 5,680 5,689 Dividends 54,127 30,906 Investments at fair value through profit Changes in fair value: or loss (FVTPL) 3,006,549 1,887,056 Net realized gain (loss) on Premiums receivable 4,261 1,540 investments 53,601 29,842 3,016,490 1,894,285 Net unrealized gain (loss) on investments 94,416 (13,151) LIABILITIES 215,758 57,518 Current Liabilities Accrued expenses 6,592 4,251 EXPENSES Withdrawals payable 432 275 Management fees and guarantee charge 57,630 37,528 Payable for securities purchased 1,207 1,174 Operating expenses 5,271 3,420 8,231 5,700 62,901 40,948 Withholding taxes 2,498 1,503 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 3,008,259 1,888,585 65,399 42,451 NET ASSETS PER UNIT INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO Series 5 5.34 5 06. CONTRACT OWNERS 150,359 15,067 Series 6 5.74 5 43. Series 7 5.81 5 48. DATA PER SERIES SERIES 5* Increase (Decrease) in Net Assets from Operations 10,847 2 - per unit 0.48 0 01. Average Number of Units 22,517 208 SERIES 6 Increase (Decrease) in Net Assets from Operations 135,877 14,255 - per unit 0.34 0 05. Average Number of Units 399,409 273,881 SERIES 7 Increase (Decrease) in Net Assets from Operations 3,635 810 - per unit 0.34 0 21. Average Number of Units 10,820 3,854

* Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 37 DFS GIF – MAXIMUM GROWTH (cont.)

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 1,888,585 1,027,853 to contract owners 150,359 15,067 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 150,359 15,067 Net realized gain (loss) (53,601) (29,842) Net unrealized gain (loss) (94,416) 13,151 Premiums Non-cash distribution from Series 5* 129,447 2,003 investments (65,243) (39,324) Series 6 891,994 959,772 Proceeds from sale/maturity Series 7 438,703 — of investments 618,528 356,128 1,460,144 961,775 Investments purchased (1,524,761) (1,160,949) Withdrawals Accrued expenses 2,341 1,980 Series 5* (11,468) — Payable for securities purchased 33 965 Series 6 (479,361) (116,110) NET CASH FLOWS FROM (USED IN) Series 7 — — OPERATING ACTIVITIES (966,760) (842,824) (490,829) (116,110) CASH FLOWS FROM (USED IN) NET ASSETS ATTRIBUTABLE FINANCING ACTIVITIES TO CONTRACT OWNERS, END OF YEAR 3,008,259 1,888,585 Premium payments 1,457,423 962,719 Amounts paid on withdrawals (490,672) (115,963) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES 966,751 846,756 Increase (Decrease) in cash/bank overdraft (9) 3,932 Cash (bank overdraft), beginning of year 5,689 1,757 CASH (BANK OVERDRAFT), END OF YEAR 5,680 5,689

* Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements.

38 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (99.9%) BlackRock Active Canadian Equity DC Fund 10,337 345,548 338,341 BlackRock CDN US Equity Index Fund, Class D 39,140 689,170 765,855 Desjardins Enhanced Bond Fund, I-Class 15,496 174,691 170,544 Desjardins Overseas Equity Growth Fund, I-Class 18,550 345,226 335,722 Desjardins Overseas Equity Value Fund, I-Class 24,466 353,815 348,981 DGIA Canadian Bond Fund 39,582 406,111 399,209 Fidelity True North® Fund, Series O 6,698 304,221 319,845 Franklin Bissett Canadian Equity Fund, Series O 2,214 297,138 328,052 TOTAL INVESTMENTS 2,915,920 3,006,549 OTHER NET ASSETS (0.1%) 1,710 NET ASSETS (100%) 3,008,259

The accompanying Notes are an integral part of these financial statements.

TOP FIVE HOLDINGS OF THE UNDERLYING FUNDS – unaudited

Percentage Security Name of Portfolio BLACKROCK CDN US EQUITY INDEX FUND 25.4% Apple 3 2%. Microsoft Corporation 2 .5% Exxon Mobil Corporation 1 9%. Johnson & Johnson 1 6%. Berkshire Hathaway 1 6%. DGIA CANADIAN BOND FUND 13.3% Canada Housing Trust, 1 .25%, June 15, 2021 6 8%. Province of Ontario, 2 60%,. June 2, 2025 4 .1% Province of Ontario, 2 10%,. September 8, 2019 4 .0% Canada Housing Trust, 2 00%,. December 15, 2019 3 8%. NHA MBS Merrill Lynch, 1 35%,. May 1, 2020 3 .1% DESJARDINS OVERSEAS EQUITY VALUE FUND 11.6% Novartis AG 4 .2% Roche Holding AG 4 .0% Nestlé SA 3 .5% Japan Tobacco 3 4%. Royal Dutch Shell 3 .1% BLACKROCK ACTIVE CANADIAN EQUITY DC FUND 11.2% Royal Bank of Canada 7 5%. Toronto-Dominion Bank 7 2%. Scotiabank 5 .3% Canadian National Railway Company 4 .5% Canadian Imperial Bank of Commerce 3 2%.

DFS GUARANTEED INVESTMENT FUNDS 39 DFS GIF – MAXIMUM GROWTH (cont.)

TOP FIVE HOLDINGS OF THE UNDERLYING FUNDS – unaudited (cont.) Percentage Security Name of Portfolio DESJARDINS OVERSEAS EQUITY GROWTH FUND 11.2% Tencent Holdings 5 2%. Inditex 5 .0% AIA Group 4 .9% Softbank Corporation 4 .7% ASML Holding 4 .5% FRANKLIN BISSETT CANADIAN EQUITY FUND 10.9% Brookfield Asset Management 5 8%. Canadian National Railway Company 5 2%. Royal Bank of Canada 5 .1% Toronto-Dominion Bank 5 .0% Canadian Imperial Bank of Commerce 4 .6% FIDELITY TRUE NORTH® FUND 10.6% Toronto-Dominion Bank 8 .8% Canadian National Railway Company 4 .1% Suncor Energy 3 6%. CGI Group 3 4%. Rogers Communications 3 3%. DESJARDINS ENHANCED BOND FUND 5.7% Government of Canada, 1 50%,. June 1, 2026 8 .7% Government of Canada, 2 .25%, June 1, 2025 3 .0% Province of British Columbia, 2 70%,. December 18, 2022 2 .7% Province of Quebec, 3 50%,. December 1, 2048 2 .5% Province of Ontario, 2 40%,. June 2, 2026 2 4%.

40 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To maximize the appreciation of capital while still generating some income by investing in a number of different fixed income and equity underlying funds . Investment Strategy To invest in a wide array of underlying funds managed by using a multi-manager approach provided by acclaimed fund managers and sub-advisors .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 1,503,144 1,503,405 — 3,006,549 TOTAL 1,503,144 1,503,405 — 3,006,549

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 963,301 923,755 — 1,887,056 TOTAL 963,301 923,755 — 1,887,056

Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Funds Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying funds . Detailed disclosure about the currency risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying funds . Detailed disclosure about the interest rate risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) .

DFS GUARANTEED INVESTMENT FUNDS 41 DFS GIF – MAXIMUM GROWTH (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying funds . Detailed disclosure about the concentration risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying funds . Detailed disclosure about the price risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, with all other variables held constant, is as follows:

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada Universe (20%) 1 00. 6,017 3,77 S&P/TSX (32%) 3 00. 28,879 18,130 S&P 500 (24%) 3 00. 21,659 13,598 MSCI EAFE Net (24%) 3 00. 21,659 13,598 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying funds . Detailed disclosure about the credit risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying funds . Detailed disclosure about the liquidity risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

42 DFS GUARANTEED INVESTMENT FUNDS FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past three years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016 2015 2014

Series 5* 5.34 5 .06 — Series 6 5.74 5 .43 5 .24 Series 7 5.81 5 .48 5 .27 Ratios and Supplemental Data Net Asset Value ($000’s) Series 5* 131 2 — Series 6 2,414 1,865 1,008 Series 7 463 21 20 Number of units outstanding (000) Series 5* 24 1 — Series 6 421 344 192 Series 7 80 4 4 Management expense ratio (MER)1 (%) Series 5* 2.87 2 .81 — Series 6 2.67 2 .71 2 .71 Series 7 2.24 2 .24 2 .24 Portfolio turnover rate2 (%) 27.37 25 .70 3 .75

* Beginning of operations in October 2015. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of daily average net asset value during the year. The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

DFS GUARANTEED INVESTMENT FUNDS 43 DFS GUARANTEED INVESTMENT FUNDS

Individual Funds Income DFS GIF – MONEY MARKET*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Royal Bank of Canada, 2 3. 64%, September 21, 2017 8 6%. Société de transport de Montréal, Notes, March 15, 2017 7% 7. Canadian Imperial Bank of Commerce, Floating Rate, February 9, 2018 6 5%. National Bank of Canada, 2 6. 89%, August 21, 2017 5 5%. Daimler Canada Finance, 2 .28%, February 17, 2017 5 4%. Toyota Credit Canada, Notes, May 16, 2017 4 7%. Scotiabank, Notes, January 19, 2017 4 6%. Gaz Métro, Notes, January 6, 2017 4 6%. Toronto-Dominion Bank, Notes, November 6, 2017 4 5%. Bank of Montreal, Floating Rate, March 29, 2018 4 3%.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 1Series 1Series 1 Series 3Series 3Series 3 Series Series5 5Series 5 Series Series6 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value Value

1 Year 9,964 -0% 4. 9,964 -0% 4. 9,998 0 0%. 10,024 0% 2. 10,075 0 7%. 3 Years 9,896 -0% 3. 9,897 -0% 3. 9,996 0 0%. — — — — 5 Years 9,853 -0% 3. 9,856 -0% 3. 10,019 0 0%. — — — — 10 Years 10,149 0 1%. 10,147 0 1%. — — — — — — Since 13,170 Inception 1% 3. 12,103 1 1%. 10,207 0% 2. 10,052 0% 2. 10,204 0 7%.

Series SeriesIGP IGPSeries IGP

$10,000 Lump Total Gain Sum (Annualized) Value

1 Year 9,970 -0% 3. 3 Years — — 5 Years — — 10 Years — — Since -0 3. % Inception 9,927

* This Fund is composed of units of the corresponding underlying investment funds.

46 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Interest for attribution purposes 684,077 718,683 Cash 431,954 35,298 Changes in fair value: Investments at fair value through profit Net realized gain (loss) on or loss (FVTPL) 36,019,646 35,251,601 investments (443,915) (407,864) Premiums receivable 133,906 469,927 Net unrealized gain (loss) on 36,585,506 35,756,826 investments 224,963 64,491 LIABILITIES 465,125 375,310 Current Liabilities EXPENSES Accrued expenses 37,058 38,465 Management fees and guarantee charge 304,199 277,262 Withdrawals payable 146,581 584,009 Operating expenses 148,934 147,731 Payable for securities purchased 81,033 17,606 453,133 424,993 264,672 640,080 INCREASE (DECREASE) IN NET ASSETS NET ASSETS ATTRIBUTABLE TO FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 36,320,834 35,116,746 CONTRACT OWNERS 11,992 (49,683) NET ASSETS PER UNIT DATA PER SERIES Series 1 6.59 6 61. SERIES 1 Series 3 6.60 6 62. Increase (Decrease) in Net Assets Series 5 6.80 6 80. from Operations (1,538) (2,186) Series 6 5.03 5 01. - per unit (0.02) (0 03). Series 7 5.10 5 .06 Average Number of Units 64,923 76,382 Series IGP 9.93 9 .96 SERIES 3 Increase (Decrease) in Net Assets from Operations (10,059) (16,737) - per unit (0.02) (0 03). Average Number of Units 413,414 487,481 SERIES 5 Increase (Decrease) in Net Assets from Operations (5,356) (28,573) - per unit — (0 .01) Average Number of Units 2,815,157 2,940,129 SERIES 6 Increase (Decrease) in Net Assets from Operations 22,405 (1,081) - per unit 0.01 — Average Number of Units 1,872,093 1,032,466 SERIES 7 Increase (Decrease) in Net Assets from Operations 11,792 5,298 - per unit 0.04 0 03. Average Number of Units 308,340 172,366 SERIES IGP Increase (Decrease) in Net Assets from Operations (5,252) (6,404) - per unit (0.03) (0 .04) Average Number of Units 175,484 172,098

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 47 Income

DFS GIF – MONEY MARKET (cont.)

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 35,116,746 28,154,690 to contract owners 11,992 (49,683) Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 11,992 (49,683) Net realized gain (loss) 443,915 407,864 Net unrealized gain (loss) (224,963) (64,491) Premiums Non-cash distribution from Series 1 54,933 9,355 investments (684,077) (718,689) Series 3 926,487 1,636,996 Proceeds from sale/maturity Series 5 7,956,100 9,801,187 of investments 15,797,003 9,717,910 Series 6 10,940,251 11,405,791 Investments purchased (16,099,923) (16,266,931) Series 7 3,420,916 1,217,195 Accrued expenses (1,407) 6,234 Series IGP 329,539 421,480 Payable for securities purchased 63,427 (95,374) 23,628,226 24,492,004 NET CASH FLOWS FROM (USED IN) Withdrawals OPERATING ACTIVITIES (694,033) (7,063,160) Series 1 (118,668) (136,401) Series 3 (1,875,372) (1,386,131) CASH FLOWS FROM (USED IN) Series 5 (9,399,717) (9,634,371) FINANCING ACTIVITIES Series 6 (8,739,316) (4,517,664) Premium payments 23,964,247 24,073,532 Series 7 (1,750,945) (1,243,713) Amounts paid on withdrawals (22,873,558) (17,097,241) Series IGP (552,112) (561,985) NET CASH FLOWS FROM (USED IN) (22,436,130) (17,480,265) FINANCING ACTIVITIES 1,090,689 6,976,291 NET ASSETS ATTRIBUTABLE Increase (Decrease) in cash/bank TO CONTRACT OWNERS, overdraft 396,656 (86,869) END OF YEAR 36,320,834 35,116,746 Cash (bank overdraft), beginning of year 35,298 122,167 CASH (BANK OVERDRAFT), END OF YEAR 431,954 35,298 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Interest paid — 10

The accompanying Notes are an integral part of these financial statements.

48 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (99.2%) DGIA Money Market Fund 3,743,767 34,692,836 36,019,646 TOTAL INVESTMENTS 34,692,836 36,019,646 OTHER NET ASSETS (0.8%) 301,188 NET ASSETS (100%) 36,320,834

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Royal Bank of Canada, 2 364%,. September 21, 2017 8 .6% Société de transport de Montréal, Notes, March 15, 2017 7 7%. Canadian Imperial Bank of Commerce, Floating Rate, February 9, 2018 6 .5% National Bank of Canada, 2 689%,. August 21, 2017 5 .5% Daimler Canada Finance, 2 .28%, February 17, 2017 5 .4% Toyota Credit Canada, Notes, May 16, 2017 4 .7% Scotiabank, Notes, January 19, 2017 4 .6% Gaz Métro, Notes, January 6, 2017 4 .6% Toronto-Dominion Bank, Notes, November 6, 2017 4 .5% Bank of Montreal, Floating Rate, March 29, 2018 4 .3% BMW Canada, Floating Rate, June 14, 2019 3 .9% Province of Newfoundland and Labrador, Stripped, October 17, 2017 3 8%. Scotiabank, 4,10%, June 8, 2017 3 .1% Bank of Montréal, 2 39%,. July 12, 2017 3 .1% Daimler Canada Finance, Floating Rate, July 8, 2019 2 .7% Province of Ontario, Stripped, December 2, 2017 2 .5% Toyota Credit Canada, Floating Rate, January 22, 2018 2 .5% Province of Nova Scotia, Stripped, June 1, 2017 2 4%. Toronto-Dominion Bank, Floating Rate, March 28, 2018 2 3%. Gaz Métro, Notes, January 26, 2017 2 .1% Ontario Treasury Bills, March 22, 2017 1 9%. Ontario Treasury Bills, May 10, 2017 1 9%. Lower Mattagami Energy, 2 .228%, October 23, 2017 1 6%. Toyota Credit Canada, Floating Rate, February 25, 2019 1 6%. Province of Ontario, Stripped, August 7, 2017 1 5%.

DFS GUARANTEED INVESTMENT FUNDS 49 Income

DFS GIF – MONEY MARKET (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide a higher level of interest income than can normally be obtained from savings accounts, combined with a high level of liquidity and safety of capital . Investment Strategy To invest primarily in Canadian government treasury bills and in bankers’ acceptances, which have a maximum maturity of 12 months . The Fund’s modified duration may not exceed 180 days .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds — 36,019,646 — 36,019,646 TOTAL — 36,019,646 — 36,019,646

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds — 35,251,601 — 35,251,601 TOTAL — 35,251,601 — 35,251,601 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

50 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, with all other variables held constant, is as follows:

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada 91 Day Treasury Bills 0 25. 90,802 87,792 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

DFS GUARANTEED INVESTMENT FUNDS 51 Income

DFS GIF – MONEY MARKET (cont.)

FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements . The net assets per unit presented in the financial statements may differ from the net asset value calculated for fund pricing purposes .

Net Assets Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012 Series 1 6.59 6 .61 6 .64 6 .65 6 .66 Series 3 6.60 6 .62 6 .65 6 .66 6 .67 Series 5 6.80 6 .80 6 .81 6 .80 6 .78 Series 6 5.03 5 .01 5 .01 — — Series 7 5.10 5 .06 5 .03 — — Series IGP 9.93 9 .96 10 .00 — — Net Asset Value Per Unit as at December 31st ($) Series 1 6.59 6 .61 6 .64 6 .65 6 .66 Series 3 6.60 6 .62 6 .65 6 .66 6 .67 Series 5 6.80 6 .80 6 .81 6 .80 6 .78 Series 6 5.03 5 .01 5 .01 — — Series 7 5.10 5 .06 5 .03 — — Series IGP 9.93 9 .96 10 .00 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 1 388 453 582 642 642 Series 3 2,273 3,232 2,997 4,012 5,158 Series 5 18,941 20,390 20,252 25,127 30,543 Series 6 10,738 8,515 1,628 — — Series 7 2,503 821 843 — — Series IGP 1,478 1,706 1,853 — — Number of units outstanding (000) Series 1 59 69 88 96 96 Series 3 345 488 451 602 773 Series 5 2,787 2,999 2,975 3,695 4,502 Series 6 2,137 1,698 325 — — Series 7 491 162 167 — — Series IGP 149 171 185 — — Management expense ratio (MER)1 (%) Series 1 1.72 1 .72 1 .72 1 .72 1 .55 Series 3 1.71 1 .72 1 .73 1 .72 1 .55 Series 5 1.38 1 .39 1 .39 1 .40 1 .25 Series 6 1.12 1 .10 1 .11 — — Series 7 0.61 0 .63 0 .63 — — Series IGP 1.66 1 .66 1 .67 — — Portfolio turnover rate2 (%) 43.22 27 .15 287 .24 n/a n/a

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

52 DFS GUARANTEED INVESTMENT FUNDS Income

DFS GIF – INCOME – FIERA CAPITAL*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Government of Canada, 0 .25%, May 1, 2018 12% 9. Fiera Active Short Term Canadian Municipal Bond Fund 9% 2. Province of Ontario, 2 .85%, June 2, 2023 8 0%. Province of Ontario, 3 5. 0%, June 2, 2024 4 0%. Ontario School Boards Financing Corporation, 7 .20%, June 9, 2025 2 9%. Government of Canada, 0 5. 0%, February 1, 2019 2 9%. Royal Office Finance, 5 .209%, November 12, 2032 2% 3. Province of Ontario, 2 .80%, June 2, 2048 2% 2. Province of Ontario, 2 9. 0%, December 2, 2046 2% 2. Province of Quebec, 3 5. 0%, December 1, 2045 2% 0.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 1Series 1Series 1 Series 3Series 3Series 3 Series 5Series 5Series 5 Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value Value

1 Year 9,890 -1 1%. 9,922 -0% 8. 9,988 -0 1%. 10,008 0 1%. 10,055 0 5%. 3 Years 10,479 1% 6. 10,578 1% 9. 10,786 2% 6. — — — — 5 Years 10,184 0% 4. 10,351 0 7%. 10,691 1% 3. — — — — 10 Years 12,583 2% 3. 12,979 2% 6. — — — — — — Since Inception 20,068 3% 4. 17,196 3 0%. 13,711 3 5%. 10,602 2 1%. 10,748 2% 6.

* This Fund is composed of units of the corresponding underlying investment funds.

DFS GUARANTEED INVESTMENT FUNDS 53 Income

DFS GIF – INCOME – FIERA CAPITAL (cont.)

STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Interest for attribution purposes 3,143,932 3,372,242 Investments at fair value through profit Revenue from securities lending and or loss (FVTPL) 84,355,749 95,095,603 repurchase transactions 17,033 15,798 Investments at fair value through profit Changes in fair value: or loss (FVTPL) pledged as collateral 14,399,694 12,171,098 Net realized gain (loss) on Premiums receivable 148,258 49,071 investments 860,210 4,184,355 Receivable for securities sold 1,229,118 — Net unrealized gain (loss) on Cash guarantee received for repurchase investments (1,990,455) (3,966,417) transactions 13,421,407 12,107,884 2,030,720 3,605,978 Interest, dividends and other receivables 468,394 521,404 EXPENSES 114,022,620 119,945,060 Management fees and guarantee charge 1,423,048 1,461,291 LIABILITIES Operating expenses 690,707 733,763 Current Liabilities 2,113,755 2,195,054 Bank overdraft 35,818 10,221 INCREASE (DECREASE) IN NET ASSETS Accrued expenses 166,273 182,647 FROM OPERATIONS ATTRIBUTABLE TO Withdrawals payable 695,862 287,615 CONTRACT OWNERS (83,035) 1,410,924 Payable for securities purchased 1,158,574 — DATA PER SERIES Commitments related to repurchase transactions 13,421,407 12,107,884 SERIES 1 15,477,934 12,588,367 Increase (Decrease) in Net Assets NET ASSETS ATTRIBUTABLE TO from Operations (18,053) 11,176 CONTRACT OWNERS 98,544,686 107,356,693 - per unit (0.09) 0 .04 Average Number of Units 211,414 285,253 NET ASSETS PER UNIT Series 1 10.03 10 .15 SERIES 3 Series 3 10.61 10 69. Increase (Decrease) in Net Assets Series 5 11.22 11 24. from Operations (43,607) 84,403 Series 6 5.30 5 .30 - per unit (0.04) 0 .10 Series 7 5.37 5 .34 Average Number of Units 974,555 811,166 SERIES 5 Increase (Decrease) in Net Assets from Operations 53,635 1,285,549 - per unit 0.01 0 .16 Average Number of Units 7,283,321 8,184,237 SERIES 6 Increase (Decrease) in Net Assets from Operations (63,631) 28,398 - per unit (0.04) 0 .04 Average Number of Units 1,440,762 780,453 SERIES 7 Increase (Decrease) in Net Assets from Operations (11,379) 1,398 - per unit (0.15) 0 .06 Average Number of Units 78,181 23,723

The accompanying Notes are an integral part of these financial statements.

54 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 107,356,693 109,764,083 to contract owners (83,035) 1,410,924 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners (83,035) 1,410,924 Net realized gain (loss) (860,210) (4,184,355) Net unrealized gain (loss) 1,990,455 3,966,417 Premiums Non-cash distribution from Series 1 99,059 47,904 investments (182,155) (29,257) Series 3 599,692 4,944,743 Proceeds from sale/maturity Series 5 8,330,614 8,579,411 of investments 324,156,081 246,450,648 Series 6 5,055,842 4,109,975 Investments purchased (316,592,879) (244,048,159) Series 7 1,358,442 233,964 Receivable for securities sold (1,229,118) 2,305,571 15,443,649 17,915,997 Cash guarantee received for Withdrawals repurchase transactions (1,313,523) 16,273,444 Series 1 (707,419) (510,786) Interest, dividends and other Series 3 (2,721,479) (1,953,239) receivables 53,010 98,230 Series 5 (18,991,379) (18,419,640) Accrued expenses (16,374) (3,417) Commitments related to repurchase Series 6 (1,238,813) (846,561) transactions 1,313,523 (16,273,444) Series 7 (513,531) (4,085) Payable for securities purchased 1,158,574 (2,281,104) (24,172,621) (21,734,311) NET CASH FLOWS FROM (USED IN) NET ASSETS ATTRIBUTABLE OPERATING ACTIVITIES 8,394,349 3,685,498 TO CONTRACT OWNERS, END OF YEAR 98,544,686 107,356,693 CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES Premium payments 15,344,462 18,070,228 Amounts paid on withdrawals (23,764,374) (21,750,493) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (8,419,912) (3,680,265) Effect of exchange rate changes on foreign cash (34) 188 Increase (Decrease) in cash/bank overdraft (25,597) 5,421

Cash (bank overdraft), beginning of year (10,221) (15,642) CASH (BANK OVERDRAFT), END OF YEAR (35,818) (10,221) SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Interest received 3,014,804 3,441,250 Interest paid 17 38

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 55 Income

DFS GIF – INCOME – FIERA CAPITAL (cont.)

ScheduleSCHEDULE of Investment OF INVESTMENT Portfolio PORTFOLIO as at Decemberas at 31, December 2016 31, 2016 For ease of comprehension to the reader, for the DFS GIF – Income – Fiera Capital, the entire portfolioPar of securities in the Schedule of InvestmentFair Portfolio as at June 30, 2016, has not been disclosed . Instead, the major categories of assets areValue listed along with the percentagesCost that each ofValue these categories hold . The total costs, fair values, number of units, total investments and net assets are also listed . $ $ BONDS (89.3%) Canadian Bonds (89.2%) Government of Canada (19.9%) Broadcast Center Trust 7 .530%, 2027-05-01 CAD 174,678 172,361 224,496 Government of Canada 0 .250%, 2018-05-01* CAD 12,818,000 12,734,521 12,745,201 Series G401, 0 .500%, 2019-02-01* CAD 2,853,000 2,835,126 2,837,184 Series WL43, 5 750%,. 2029-06-01* CAD 109,000 161,756 153,806 5 .750%, 2033-06-01 CAD 478,000 756,009 711,371 2 .750%, 2048-12-01 CAD 324,000 349,110 356,014 PSP Capital Series 7, 3 .290%, 2024-04-04 CAD 345,000 330,135 368,046 Royal Office Finance Series A, 5 209%,. 2032-11-12 CAD 1,847,691 1,675,726 2,220,370 19,014,744 19,616,488 Provincial Governments and Crown Corporations (32.4%) New Brunswick (F-M) Project Company 6 .470%, 2027-11-30 CAD 446,324 467,511 547,376 Ontario Infrastructure 4 .700%, 2037-06-01 CAD 80,000 71,858 93,194 Ontario School Boards Financing Corporation Series 00A1, 7 .200%, 2025-06-09 CAD 2,342,740 2,500,436 2,850,874 Series 01A3, 6 .550%, 2026-10-19 CAD 1,491 1,527 1,788 Private Placement, Series 06A1, 5 .070%, 2031-04-18 CAD 506,045 453,985 570,462 Ornge Issuer Trust 5 .727%, 2034-06-11 CAD 264,768 242,425 309,541 Province of British Columbia 3 .200%, 2044-06-18* CAD 640,000 565,375 644,864 2 .800%, 2048-06-18 CAD 441,000 420,804 412,160 Province of Ontario 3 .150%, 2022-06-02* CAD 694,000 705,308 740,495 2 .850%, 2023-06-02 CAD 7,544,000 6,809,058 7,904,703 3 .500%, 2024-06-02 CAD 3,610,000 3,597,186 3,920,678 2 .600%, 2025-06-02 CAD 1,864,000 1,933,614 1,894,178 2 .400%, 2026-06-02* CAD 729,000 748,683 723,734 2 .900%, 2046-12-02 CAD 2,302,000 2,240,763 2,157,590 2 .800%, 2048-06-02 CAD 2,403,000 2,262,082 2,212,657 Province of Québec 3 .500%, 2022-12-01* CAD 190,000 208,282 206,596 2 .750%, 2025-09-01* CAD 933,000 986,001 957,614 2 .500%, 2026-09-01 CAD 970,000 1,020,710 969,090 5 .750%, 2036-12-01 CAD 296,000 407,829 405,415 4 .250%, 2043-12-01 CAD 796,000 777,244 935,082 3 .500%, 2045-12-01 CAD 1,887,000 1,935,590 1,970,670 3 .500%, 2048-12-01 CAD 276,000 311,138 290,827

*Securities pledged as collateral, in part or in whole, through the securities lending program. The accompanying Notes are an integral part of these financial statements.

56 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Par Fair Value Cost Value $ $ Provincial Governments and Crown Corporations (cont.) TCHC Issuer Trust 4 .877%, 2037-05-11 CAD 287,000 238,639 335,881 Series B, 5 395%,. 2040-02-22 CAD 690,000 637,841 875,759 29,543,889 31,931,228 Corporations (36.9%) Bank of Montreal 2 .390%, 2017-07-12 CAD 33,000 31,161 33,243 2 .240%, 2017-12-11 CAD 529,000 502,045 534,676 3 .340%, (floating rate from 2020-12-08), 2025-12-08 CAD 775,000 774,713 789,627 3 .320%, (floating rate from 2021-06-01), 2026-06-01 CAD 637,000 636,911 647,581 Blackbird Infrastructure 407 General Partners 1 .713%, (floating rate from 2020-01-08), 2021-10-08 CAD 229,000 227,216 226,520 Caisse centrale Desjardins 2 .443%, 2019-07-17 CAD 840,000 805,831 858,650 Canadian Imperial Bank of Commerce 2 .350%, 2017-10-18 CAD 578,000 552,315 583,736 2 .350%, 2019-06-24 CAD 56,000 53,675 57,161 3 .000%, (floating rate from 2019-10-28), 2024-10-28* CAD 88,000 88,208 88,789 3 .420%, (floating rate from 2021-01-26), 2026-01-26 CAD 697,000 699,458 710,470 Canadian Utilities 4 .543%, 2041-10-24 CAD 556,000 579,901 623,504 4 .722%, 2043-09-09 CAD 223,000 251,453 257,413 4 .085%, 2044-09-02 CAD 184,000 188,443 193,054 Capital City Link Series A, 4 386%,. 2046-03-31 CAD 847,000 759,585 867,958 Cominar Real Estate Investment Trust Series 9, 4 .164%, 2022-06-01 CAD 645,000 645,000 657,557 Series 10, 4 247%,. 2023-05-23 CAD 342,000 342,190 345,807 CSS (FSCC) Partnership 6 .915%, 2042-07-31 CAD 95,376 110,111 126,341 CU 3 .763%, 2046-11-19 CAD 196,000 196,000 195,296 Enbridge 3 .940%, 2023-06-30* CAD 425,000 401,286 451,587 7 .220%, 2030-07-24 CAD 150,000 157,438 189,467 4 .570%, 2044-03-11 CAD 958,000 884,436 947,370 Grand Renewable Solar Series 1A, 3 .926%, 2035-01-31 CAD 282,034 282,034 279,486 Health Montréal Collective, Private Placement Series 144A, 6 .721%, 2049-09-30 CAD 1,370,000 1,575,576 1,702,805 Hospital Infrastructure Series A, 5 439%,. 2045-01-31 CAD 431,313 396,895 481,448 Integrated Team Solutions SJHC 5 .946%, 2042-11-30 CAD 198,997 183,931 243,979 Laurentian Bank of Canada 2 .750%, 2021-04-22 CAD 285,000 284,393 287,689 Melancthon Wolfe Wind 3 .834%, 2028-12-31 CAD 308,502 308,539 314,932

*Securities pledged as collateral, in part or in whole, through the securities lending program. The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 57 Income

DFS GIF – INCOME – FIERA CAPITAL (cont.)

SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Par Fair Value Cost Value $ $ Corporations (cont.) North West Redwater Partnership Series A, 3 200%,. 2024-07-22 CAD 505,000 484,491 524,440 3 .200%, 2026-04-24 CAD 263,000 262,440 268,042 Series F, 4 250%,. 2029-06-01 CAD 310,000 309,138 331,906 Northland Power Solar Finance Limited Partnership Series A, 4 958%,. 2032-12-31 CAD 387,671 369,540 427,514 Plenary Properties 6 .288%, 2044-01-31 CAD 828,759 804,246 1,059,616 Reliance Series 2, 5 .187%, 2019-03-15 CAD 394,000 371,084 411,212 Royal Bank of Canada 2 .364%, 2017-09-21 CAD 802,000 757,861 809,472 2 .260%, 2018-03-12 CAD 515,000 486,798 521,346 2 .820%, 2018-07-12 CAD 250,000 239,188 255,671 1 .400%, 2019-04-26 CAD 1,095,000 1,094,650 1,095,244 2 .860%, 2021-03-04 CAD 8,000 7,670 8,292 2 .030%, 2021-03-15 CAD 865,000 864,671 868,251 1 .583%, 2021-09-13 CAD 510,000 510,000 499,714 3 .040%, (floating rate from 2019-07-17), 2024-07-17 CAD 165,000 158,228 166,715 2 .990%, (floating rate from 2019-12-06), 2024-12-06 CAD 1,070,000 1,008,613 1,104,319 2 .480%, (floating rate from 2020-06-04), 2025-06-04 CAD 825,000 824,843 816,991 Scotiabank 2 .370%, 2018-01-11* CAD 1,510,000 1,439,255 1,528,959 2 .242%, 2018-03-22 CAD 916,000 865,789 927,426 3 .270%, 2021-01-11 CAD 1,105,000 1,063,793 1,164,123 2 .898%, (floating rate from 2017-08-03), 2022-08-03 CAD 734,000 700,439 740,103 3 .367%, (floating rate from 2020-12-08), 2025-12-08* CAD 1,301,000 1,301,000 1,326,652 2 .620%, 2026-12-02 CAD 463,000 462,921 459,327 SGTP Highway Bypass Series A, 4 105%,. 2045-01-31 CAD 435,000 435,000 438,167 SNC-Lavalin Innisfree McGill Finance 6 .632%, 2044-06-30 CAD 401,344 423,672 512,092 Teranet Holdings 3 .646%, 2022-11-18 CAD 300,000 300,000 307,471 Teranet Income Fund 5 .754%, 2040-12-17 CAD 560,000 542,786 601,378 6 .100%, 2041-06-17 CAD 964,000 917,870 1,080,995 Toronto-Dominion Bank 2 .447%, 2019-04-02 CAD 805,000 772,170 822,502 2 .563%, 2020-06-24 CAD 250,000 239,817 256,985 1 .680%, 2021-06-08 CAD 270,000 269,897 268,138 3 .226%, 2024-07-24* CAD 468,000 451,175 492,018 2 .692%, (floating rate from 2020-06-24), 2025-06-24 CAD 456,000 456,000 455,149 2 .982%, (floating rate from 2020-09-30), 2025-09-30* CAD 386,000 386,000 388,695 5 .763%, (floating rate from 2017-12-18), 2106-12-18 CAD 1,456,000 1,517,281 1,514,854 TransCanada PipeLines 6 .890%, 2028-08-07 CAD 500,000 409,578 636,494 8 .050%, 2039-02-17 CAD 356,000 529,596 540,932 33,956,244 36,327,351 TOTAL CANADIAN BONDS 82,514,877 87,875,067

*Securities pledged as collateral, in part or in whole, through the securities lending program. The accompanying Notes are an integral part of these financial statements.

58 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Par Fair Value Cost Value $ $ U.S. Bonds (0.1%) Sinai Health System Series A, 3 527%,. 2056-06-09 CAD 151,000 151,000 140,302 TOTAL BONDS 82,665,877 88,015,369

Number of Units INVESTMENT FUNDS (9.2%) Fiera Active Short Term Canadian Municipal Bond Fund 909,475 9,096,577 9,103,703

Par Value

MONEY MARKET SECURITIES (0.8%) Canada Treasury Bills 2017-01-04 CAD 110,000 109,974 109,974 2017-03-09 CAD 680,000 679,387 679,387 TOTAL MONEY MARKET SECURITIES 789,361 789,361 ASSET-BACKED SECURITIES (0.7%) CHIP Mortgage Trust 3 .663%, 2038-09-25 CAD 626,000 598,829 643,947 MORTGAGE-BACKED SECURITIES (0.2%) Merrill Lynch Financial Assets Series 2007-CA22, Class A3, 4 878%,. 2017-04-12 CAD 250,000 185,130 203,063 TOTAL INVESTMENTS (100.2%) 93,335,774 98,755,443 OTHER NET ASSETS (-0.2%) (210,757) NET ASSETS (100%) 98,544,686

The accompanying Notes are an integral part of these financial statements.

TOP FIVE HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio FIERA ACTIVE SHORT TERM CANADIAN MUNICIPAL BOND FUND 9.2% Province of Ontario, 1 90%,. September 8, 2017 2 4%. City of Magog, 2 00%,. September 2, 2020 2 3%. Province of Quebec, 4 50%,. December 1, 2017 2 2%. City of Beloeil, 2 00%,. September 8, 2020 1 5%. City of Côte St-Luc, 2 00%,. August 25, 2020 1 4%.

DFS GUARANTEED INVESTMENT FUNDS 59 Income

DFS GIF – INCOME – FIERA CAPITAL (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide above-average interest income with some potential for capital growth by investing primarily in bonds and other interest-bearing instruments of Canadian federal and provincial governments and investment-grade corporations . Investment Strategy To place emphasis primarily on medium and long-term maturities . Such maturities normally provide higher returns and better potential for capital gains but also higher variability of performance during periods of rapidly changing interest rates .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Bonds 47,577,216 40,438,153 — 88,015,369 Investment Funds — 9,103,703 — 9,103,703 Mortgage-Backed Securities — 203,063 — 203,063 Asset-Backed Securities — 643,947 — 643,947 Money Market Securities 789,361 — — 789,361 TOTAL 48,366,577 50,388,866 — 98,755,443

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Bonds 47,190,319 48,296,032 — 95,486,351 Investment Funds — 8,938,322 — 8,938,322 Mortgage-Backed Securities — 1,305,466 — 1,305,466 Asset-Backed Securities — 657,388 — 657,388 Money Market Securities 879,174 — — 879,174 TOTAL 48,069,493 59,197,208 — 107,266,701

Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Currency Risk As at December 31, 2016 and 2015, the majority of the Fund’s financial assets and liabilities are denominated in Canadian dollars . As a result, the Fund is not significantly exposed to currency risk .

60 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Interest Rate Risk The following table summarizes the Fund’s exposure to interest rate risk . It includes the Fund’s financial assets and liabilities at fair value, categorized by the earlier of contractual re-pricing or maturity dates . The table also illustrates the impact on the Net Assets Attributable to Contract Owners, had prevailing interest rates changed by 0 .25%, assuming a parallel shift in the yield curve, with all other variables held constant .

Impact on Net Assets Less than Greater than Attributable to 1 Year 1 to 5 Years 5 to 10 Years 10 Years Total Contract Owners $ $ $ $ $ $ December 31, 2016 5,172,690 32,135,256 24,044,045 28,263,931 89,615,922 1,459,471 December 31, 2015 4,627,791 36,027,633 28,039,485 29,623,249 98,318,158 1,616,019 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Concentration Risk The following table summarizes the concentration risk, as a percentage of the Net Assets Attributable to Contract Owners:

MARKET SEGMENT December 31, 2016 MARKET SEGMENT December 31, 2015 % % Canadian Bonds Canadian Bonds Corporations 36 .9 Corporations 40 .9 Provincial Governments Provincial Governments and Crown Corporations 32 4. and Crown Corporations 32 5. Government of Canada 19 9. Government of Canada 15 6. U S. . Bonds 0 .1 Income Investment Funds 8 .3 Income Investment Funds 9 2. Mortgage-Backed Securities 1 2. Money Market Securities 0 8. Money Market Securities 0 8. Asset-Backed Securities 0 .7 Asset-Backed Securities 0 6. Mortgage-Backed Securities 0 2. Other Net Assets 0 .1 Other Net Assets (0 2). TOTAL 100 TOTAL 100

Price Risk The Fund may trade in financial instruments and take positions in over-the-counter instruments . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada Universe 1 00. 919,997 1,021,326 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant .

DFS GUARANTEED INVESTMENT FUNDS 61 Income

DFS GIF – INCOME – FIERA CAPITAL (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Credit Risk The Fund’s credit risk is mainly concentrated in fixed-income securities . Their fair values include consideration of the issuers’ creditworthiness and accordingly, represent the Fund’s maximum exposure to credit risk .

Portfolio’s Fixed-Income Securities by Credit Rating Category

Credit Rating Percentage of Percentage of Fixed-Income Securities Fixed-Income Securities December 31, 2016 December 31, 2015 % % AAA 26 20 AA 39 44 A 21 26 BBB 14 10 Total 100 100

Securities Lending and Repurchase Transactions As part of its securities lending against cash and repurchase transactions, the Fund is exposed to counterparty credit risk . The carrying amount of financial assets lent as part of repurchase transactions is:

$ December 31, 2016 13,449,419 December 31, 2015 12,113,751 As part of its reverse repurchase transactions, the Fund is permitted to sell or repledge in the absence of default the financial assets held as collateral . The fair value of those financial assets is:

$ December 31, 2016 9,655,994 December 31, 2015 5,988,222

Liquidity Risk For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

DERECOGNITION OF FINANCIAL ASSETS Securities Lending and Repurchase Transactions As part of transactions involving securities lending or repurchase transactions, the Fund transfers financial assets under terms and conditions providing for their future repurchase . These financial assets remain recognized in the "Investments at fair value through profit or loss pledged as collateral" of the Statement of Financial Position as the Fund retains substantially all the risks and rewards related to these assets .

December 31, 2016 December 31, 2015 $ $ Investments at FVTPL pledged as Collateral 14,399,694 12,171,098 Value of Collateral received 14,687,688 12,414,521 The Funds require collateral in the form of cash or such other securities as may be acceptable to Desjardins Financial Security and that have an aggregate value of no less than 102% of the loaned securities fair value .

62 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 The following table presents the carrying amount and the fair value of financial assets transferred by the Fund but not derecognized as well as the related liabilities recognized in ”Commitments related to repurchase transactions” and ”Commitments related to securities lending” of the Statement of Financial Position .

Fair Value* Fair Value* December 31, 2016 December 31, 2015 $ $ Financial Assets 13,449,419 12,113,751 Related Liabilities 13,421,407 12,107,884 *The fair value equals the carrying amount .

RECONCILIATION OF INCOME FROM SECURITY LENDING AND REPURCHASE TRANSACTION (Note 2) The following table shows a reconciliation of the total income generated from securities lending transactions of the Fund and the revenue from securities lending and repurchase transactions disclosed in the Fund’s Statement of Comprehensive Income .

December 31, December 31, December 31, December 31, 2016 2016 2015 2015 $ % $ % Total Income 28,388 100 26,330 100 Net Income received by the Fund 17,033 60 15,798 60 Net Income received by Desjardins Trust 11,355 40 10,532 40

DFS GUARANTEED INVESTMENT FUNDS 63 Income

DFS GIF – INCOME – FIERA CAPITAL (cont.)

FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements . The net assets per unit presented in the financial statements may differ from the net asset value calculated for fund pricing purposes .

Net Assets Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 1 10.03 10 .15 10 .11 9 .58 9 .99 Series 3 10.61 10 .69 10 .63 10 .03 10 .43 Series 5 11.22 11 .24 11 .09 10 .40 10 .75 Series 6 5.30 5 .30 5 .22 — — Series 7 5.37 5 .34 5 .24 — — Net Asset Value Per Unit as at December 31st ($) Series 1 10.03 10 .15 10 .11 9 .58 10 .00 Series 3 10.61 10 .69 10 .63 10 .03 10 .44 Series 5 11.22 11 .24 11 .09 10 .40 10 .76 Series 6 5.30 5 .30 5 .22 — — Series 7 5.37 5 .34 5 .24 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 1 1,967 2,593 3,045 3,557 4,258 Series 3 9,265 11,430 8,354 10,367 14,161 Series 5 76,630 87,237 95,792 114,786 143,038 Series 6 9,559 5,805 2,513 — — Series 7 1,124 291 60 — — Number of units outstanding (000) Series 1 196 256 301 371 426 Series 3 873 1,069 786 1,034 1,356 Series 5 6,829 7,765 8,637 11,034 13,292 Series 6 1,803 1,096 482 — — Series 7 209 54 11 — — Management expense ratio (MER)1 (%) Series 1 2.93 2 .93 2 .94 2 .93 2 .65 Series 3 2.61 2 .61 2 .62 2 .61 2 .33 Series 5 1.96 1 .96 1 .96 1 .95 1 .75 Series 6 1.77 1 .79 1 .80 — — Series 7 1.22 1 .31 1 .32 — — Portfolio turnover rate2 (%) 289.12 180 .62 198 .10 209 .96 260 .24

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

64 DFS GUARANTEED INVESTMENT FUNDS Income

DFS GIF – CANADIAN BOND*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the period ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Canada Housing Trust, 1 .25%, June 15, 2021 6% 8. Province of Ontario, 2 6. 0%, June 2, 2025 4 1%. Province of Ontario, 2 1. 0%, September 8, 2019 4 0%. Canada Housing Trust, 2 0. 0%, December 15, 2019 3% 8. NHA MBS Merrill Lynch, 1 3. 5%, May 1, 2020 3 1%. Government of Canada, 1 5. 0%, June 1, 2026 2% 6. Financement-Québec, 2 4. 5%, December 1, 2019 2% 6. Province of Ontario, 2 .85%, June 2, 2023 2 5%. Canada Housing Trust, 2 9. 0%, June 15, 2024 2% 4. Government of Canada, 5 0. 0%, June 1, 2037 2% 3.

PERFORMANCE INFORMATION FOR THE PERIOD ENDING DECEMBER 31, 2016

Series 5Series** 5**Series 5** Series 6Series** 6**Series 6** Series 7Series** 7**Series 7**

$10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value

1 Year 9,995 0 0%. 10,016 0% 2. 10,067 0 7%. Since Inception 10,083 0 7%. 10,109 0 9%. 10,169 1% 4.

* This Fund is composed of units of the corresponding underlying investment funds. ** Beginning of operations in October 2015.

DFS GUARANTEED INVESTMENT FUNDS 65 Income

DFS GIF – CANADIAN BOND (cont.)

STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Periods Ended December 31 2016 2015 2016 2015* $ $ (12 months) (3 months) ASSETS $ $ Current Assets INCOME Cash 6,230 — Interest for attribution purposes 1,084,074 264,572 Investments at fair value through profit Changes in fair value: or loss (FVTPL) 40,138,962 41,285,987 Net realized gain (loss) on Premiums receivable 166,413 21,713 investments 232,642 151,068 Receivable for securities sold 58,765 54,840 Net unrealized gain (loss) on 40,370,370 41,362,540 investments (499,642) 108,110 LIABILITIES 817,074 523,750 Current Liabilities EXPENSES Bank overdraft — 14,263 Management fees and guarantee charge 533,230 109,926 Accrued expenses 63,066 66,808 Operating expenses 265,899 55,734 Withdrawals payable 269,234 108,098 799,129 165,660 332,300 189,169 INCREASE (DECREASE) IN NET ASSETS NET ASSETS ATTRIBUTABLE TO FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 40,038,070 41,173,371 CONTRACT OWNERS 17,945 358,090 NET ASSETS PER UNIT DATA PER SERIES Series 5 5.04 5 .04 SERIES 5 Series 6 5.05 5 .05 Increase (Decrease) in Net Assets Series 7 5.08 5 .05 from Operations 63,786 333,838 - per unit 0.01 0 .04 Average Number of Units 7,315,219 7,726,622 SERIES 6 Increase (Decrease) in Net Assets from Operations (47,018) 22,686 - per unit (0.06) 0 .05 Average Number of Units 762,350 477,927 SERIES 7 Increase (Decrease) in Net Assets from Operations 1,177 1,566 - per unit 0.04 0 .05 Average Number of Units 30,999 30,978

* Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements.

66 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Periods Ended December 31 Periods Ended December 31 2016 2015* 2016 2015* (12 months) (3 months) (12 months) (3 months) $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF PERIOD 41,173,371 — to contract owners 17,945 358,090 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 17,945 358,090 Net realized gain (loss) (232,642) (151,068) Net unrealized gain (loss) 499,642 (108,110) Premiums Non-cash distribution from Series 5 3,809,938 39,915,913 investments (1,071,082) (264,589) Series 6 3,862,779 2,596,812 Proceeds from sale/maturity Series 7 13,423 154,948 of investments 5,287,903 995,716 7,686,140 42,667,673 Investments purchased (3,336,796) (41,757,936) Withdrawals Receivable for securities sold (3,925) (54,840) Series 5 (7,911,331) (1,785,192) Accrued expenses (3,742) 66,808 Series 6 (927,429) (67,052) NET CASH FLOWS FROM (USED IN) Series 7 (626) (148) OPERATING ACTIVITIES 1,157,303 (40,915,929) (8,839,386) (1,852,392) CASH FLOWS FROM (USED IN) NET ASSETS ATTRIBUTABLE FINANCING ACTIVITIES TO CONTRACT OWNERS, END OF PERIOD 40,038,070 41,173,371 Premium payments 7,541,440 42,645,960 Amounts paid on withdrawals (8,678,250) (1,744,294) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (1,136,810) 40,901,666 Increase (Decrease) in cash/bank overdraft 20,493 (14,263) Cash (bank overdraft), beginning of period (14,263) — CASH (BANK OVERDRAFT), END OF PERIOD 6,230 (14,263) SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Interest paid — 14

* Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 67 Income

DFS GIF – CANADIAN BOND (cont.)

SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.3%) DGIA Canadian Bond Fund 3,979,781 40,530,493 40,138,962 TOTAL INVESTMENTS 40,530,493 40,138,962 OTHER NET ASSETS (-0.3%) (100,892) NET ASSETS (100%) 40,038,070

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Canada Housing Trust, 1 .25%, June 15, 2021 6 8%. Province of Ontario, 2 60%,. June 2, 2025 4 .1% Province of Ontario, 2 10%,. September 8, 2019 4 .0% Canada Housing Trust, 2 00%,. December 15, 2019 3 8%. NHA MBS Merrill Lynch, 1 35%,. May 1, 2020 3 .1% Government of Canada, 1 50%,. June 1, 2026 2 6%. Financement-Québec, 2 45%,. December 1, 2019 2 6%. Province of Ontario, 2 .85%, June 2, 2023 2 .5% Canada Housing Trust, 2 90%,. June 15, 2024 2 4%. Government of Canada, 5 00%,. June 1, 2037 2 3%. NHA Laurentian Bank of Canada, 1 30%,. October 1, 2021 2 2%. Province of Ontario, 6 50%,. March 8, 2029 2 .1% Province of Ontario, 3 15%,. June 2, 2022 1 8%. Scotiabank, 1 33%,. May 1, 2018 1 8%. Province of Quebec, 3 50%,. December 1, 2045 1 7%. Toronto-Dominion Bank, 2 447%,. April 2, 2019 1 7%. Canada Housing Trust, 2 40%,. December 15, 2022 1 6%. Province of Ontario, 4 65%,. June 2, 2041 1 6%. Royal Bank of Canada, 1 92%,. July 17, 2020 1 5%. Government of Canada, 2 75%,. December 1, 2048 1 5%. Province of British Columbia, 2 .80%, June 18, 2048 1 3%. Government of Canada, 5 75%,. June 1, 2029 1 3%. Province of Quebec, 3 75%,. September 1, 2024 1 3%. Canadian Imperial Bank of Commerce, 2 35%,. June 24, 2019 1 2%. Province of Ontario, 2 90%,. December 2, 2046 1 2%.

68 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide regular income and capital security by investing in a portfolio of fixed-income securities from the Canadian bond market . Investment Strategy This Fund, actively managed, aims to provide regular income and capital security by investing in a portfolio of fixed-income securities from the Canadian bond market . The Fund employs a fundamental investment approach targeting a consistent allocation of value added sources . The strategy seeks to add value through management of duration, yield curve and credit risk .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Period, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds — 40,138,962 — 40,138,962 TOTAL — 40,138,962 — 40,138,962

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds — 41,285,987 — 41,285,987 TOTAL — 41,285,987 — 41,285,987 Transfers between Levels 1 and 2 During the periods ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

DFS GUARANTEED INVESTMENT FUNDS 69 Income

DFS GIF – CANADIAN BOND (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, with all other variables held constant, is as follows:

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada Universe 1 00. 400,381 411,734 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

70 DFS GUARANTEED INVESTMENT FUNDS FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past two years . This information is derived from the Fund’s audited annual financial statements . Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016 2015*

Series 5 5.04 5 .04 Series 6 5.05 5 .05 Series 7 5.08 5 .05 Ratios and Supplemental Data Net Asset Value ($000’s) Series 5 34,427 38,465 Series 6 5,441 2,552 Series 7 170 156 Number of units outstanding (000) Series 5 6,829 7,626 Series 6 1,076 506 Series 7 34 31 Management expense ratio (MER)1 (%) Series 5 1.96 1 .96 Series 6 1.77 1 .75 Series 7 1.22 1 .32 Portfolio turnover rate2 (%) 10.91 2 .80

* Beginning of operations in October 2015. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of daily average net asset value during the year. The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

DFS GUARANTEED INVESTMENT FUNDS 71 Balanced and Asset Allocation DFS GIF – DIVERSIFIED INCOME – FRANKLIN QUOTENTIAL*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Names of Portfolio Franklin Bissett Core Plus Bond Fund 24 4%. Franklin Strategic Income Fund 9% 9. Franklin Bissett Canadian Short Term Bond Fund 9% 7. Templeton Global Bond Fund 8% 9. Cash and Cash Equivalents 7 7%. Franklin Bissett Canadian Dividend Fund 5% 3. iShares TIPS Bond ETF 4% 1. Franklin U S. . Rising Dividends Fund 3% 7. Franklin Bissett Canadian Governement Fund 3 3%. iShares Intermediate Credit Bond ETF 2 6%.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 3Series 3Series 3 Series 5Series 5Series 5 Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value

1 Year 10,080 0 8%. 10,103 1 0%. 10,122 1 2%. 10,174 1 7%. 3 Years 10,697 2 3%. 10,768 2% 5. — — — — 5 Years 11,822 3 4%. 11,952 3 6%. — — — — 10 Years 13,083 2% 7. — — — — — — Since 2 4%. 13,537 3 4%. 10,563 1 9%. 10,717 2% 5. Inception 14,587

* This Fund is composed of units of the corresponding underlying investment funds.

72 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Dividends 3,261,100 3,936,151 Cash 40,306 — Changes in fair value: Investments at fair value through profit Net realized gain (loss) on or loss (FVTPL) 200,163,092 201,049,294 investments 4,816,376 10,947,671 Premiums receivable 172,271 130,612 Net unrealized gain (loss) on Receivable for securities sold 121,686 37,434 investments (93,603) (5,289,596) 200,497,355 201,217,340 7,983,873 9,594,226 LIABILITIES EXPENSES Current Liabilities Management fees and guarantee charge 4,630,175 4,535,987 Bank overdraft — 37,246 Operating expenses 1,083,571 1,113,891 Accrued expenses 476,436 480,766 5,713,746 5,649,878 Withdrawals payable 506,981 246,484 Withholding taxes 155,281 151,411 Payable for securities purchased 99,805 104,011 5,869,027 5,801,289 1,083,222 868,507 INCREASE (DECREASE) IN NET ASSETS NET ASSETS ATTRIBUTABLE TO FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 199,414,133 200,348,833 CONTRACT OWNERS 2,114,846 3,792,937 NET ASSETS PER UNIT DATA PER SERIES Series 3 7.29 7 24. SERIES 3 Series 5 7.44 7 36. Increase (Decrease) in Net Assets Series 6 5.28 5 22. from Operations 40,483 122,370 Series 7 5.36 5 27. - per unit 0.05 0 .14 Average Number of Units 827,285 901,834 SERIES 5 Increase (Decrease) in Net Assets from Operations 1,642,995 3,584,536 - per unit 0.07 0 .15 Average Number of Units 22,294,862 23,324,422 SERIES 6 Increase (Decrease) in Net Assets from Operations 384,391 86,194 - per unit 0.08 0 03. Average Number of Units 4,817,438 2,611,878 SERIES 7 Increase (Decrease) in Net Assets from Operations 46,977 (163) - per unit 0.08 — Average Number of Units 571,375 197,341

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 73 Balanced and Asset Allocation

DFS GIF – DIVERSIFIED INCOME – FRANKLIN QUOTENTIAL (cont.)

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 200,348,833 186,729,222 to contract owners 2,114,846 3,792,937 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 2,114,846 3,792,937 Net realized gain (loss) (4,816,376) (10,947,671) Net unrealized gain (loss) 93,603 5,289,596 Premiums Non-cash distribution from Series 3 1,148,716 1,147,562 investments (3,105,819) (3,784,740) Series 5 15,145,898 22,791,206 Proceeds from sale/maturity Series 6 12,881,179 14,827,674 of investments 18,639,476 15,018,787 Series 7 1,258,484 2,502,588 Investments purchased (9,924,682) (19,211,471) 30,434,277 41,269,030 Receivable for securities sold (84,252) 10,233 Withdrawals Accrued expenses (4,330) 30,413 Series 3 (1,896,086) (1,530,887) Payable for securities purchased (4,206) (5,785) Series 5 (28,182,037) (27,964,661) NET CASH FLOWS FROM (USED IN) Series 6 (3,221,098) (1,940,969) OPERATING ACTIVITIES 2,908,260 (9,807,701) Series 7 (184,602) (5,839) (33,483,823) (31,442,356) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES NET ASSETS ATTRIBUTABLE Premium payments 30,392,618 41,283,084 TO CONTRACT OWNERS, END OF YEAR 199,414,133 200,348,833 Amounts paid on withdrawals (33,223,326) (31,484,282) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (2,830,708) 9,798,802 Increase (Decrease) in cash/bank overdraft 77,552 (8,899) Cash (bank overdraft), beginning of year (37,246) (28,347) CASH (BANK OVERDRAFT), END OF YEAR 40,306 (37,246)

The accompanying Notes are an integral part of these financial statements.

74 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.4%) Franklin Quotential Diversified Income Portfolio 27,457,215 173,376,768 200,163,092 TOTAL INVESTMENTS 173,376,768 200,163,092 OTHER NET ASSETS (-0.4%) (748,959) NET ASSETS (100%) 199,414,133

The accompanying Notes are an integral part of these financial statements.

TOP HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Franklin Bissett Core Plus Bond Fund 24 4%. Franklin Strategic Income Fund 9 .9% Franklin Bissett Canadian Short Term Bond Fund 9 .7% Templeton Global Bond Fund 8 .9% Cash and Cash Equivalents 7 7%. Franklin Bissett Canadian Dividend Fund 5 .3% iShares TIPS Bond ETF 4 .1% Franklin U S. . Rising Dividends Fund 3 .7% Franklin Bissett Canadian Governement Fund 3 3%. iShares Intermediate Credit Bond ETF 2 6%. Franklin Bisset All Canadian Focus Fund 2 2%. Franklin Global Listed Infrastructure Fund 2 0%. S&P Depositary Receipt Gold Trust ETF 2 0%. Franklin U S. . Core Equity Fund 2 0%. Franklin Mutual European Fund 2 0%. BMO Mid Federal Bond Index ETF 1 8%. Franklin Global Real Estate Fund 1 5%. Templeton Emerging Markets Fund 1 5%. PowerShares Senior Loan Portfolio ETF 1 4%. iShares S&P/TSX 60 Index ETF 1 3%. Franklin Japan Fund 1 0%. iShares MSCI Japan ETF 0 .9% BMO MSCI Europe High Quality Hedged to CAD Index ETF 0 8%.

DFS GUARANTEED INVESTMENT FUNDS 75 Balanced and Asset Allocation

DFS GIF – DIVERSIFIED INCOME – FRANKLIN QUOTENTIAL (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide a balance of capital growth and interest income by investing primarily in units of an underlying fund in order to gain the desired exposure to the equity and fixed income markets . Investment Strategy To emphasize investments in fixed income underlying funds in order to provide income and capital preservation . The Fund also invests, to a lesser extent, in equity underlying funds in order to increase the potential for capital appreciation over a longer investment horizon .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 200,163,092 — — 200,163,092 TOTAL 200,163,092 — — 200,163,092

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 201,049,294 — — 201,049,294 TOTAL 201,049,294 — — 201,049,294 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

76 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada Universe (55%) 10 0. 1,220,923 1,177,847 Bloomberg Barclays Multiverse Bond (25%)* 10 0. 554,965 535,385 S&P/TSX (15%) 3 00. 998,937 963,693 MSCI All Country World Net (5%) 3 00. 332,979 321,231 * On August 24, 2016, “Barclays Capital” was renamed “Bloomberg Barclays” . When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

DFS GUARANTEED INVESTMENT FUNDS 77 Balanced and Asset Allocation

DFS GIF – DIVERSIFIED INCOME – FRANKLIN QUOTENTIAL (cont.)

FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 3 7.29 7 .24 7 .11 6 .82 6 .52 Series 5 7.44 7 .36 7 .22 6 .91 6 .59 Series 6 5.28 5 .22 5 .10 — — Series 7 5.36 5 .27 5 .13 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 3 5,643 6,349 6,610 6,977 6,893 Series 5 159,398 170,791 172,380 173,963 167,962 Series 6 30,636 20,592 7,619 — — Series 7 3,737 2,616 120 — — Number of units outstanding (000) Series 3 774 878 930 1,023 1,058 Series 5 21,424 23,191 23,884 25,177 25,480 Series 6 5,801 3,947 1,494 — — Series 7 697 497 23 — — Management expense ratio (MER)1 (%) Series 3 3.14 3 .13 3 .14 3 .15 2 .80 Series 5 2.91 2 .92 2 .92 2 .92 2 .60 Series 6 2.71 2 .68 2 .72 — — Series 7 2.20 2 .27 2 .30 — — Portfolio turnover rate2 (%) 6.52 10 .74 8 .36 8 11. 5 24.

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

78 DFS GUARANTEED INVESTMENT FUNDS Balanced and Asset Allocation DFS GIF – BALANCED INCOME – FRANKLIN QUOTENTIAL*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Franklin Bissett Core Plus Bond Fund 27% 9. Franklin Strategic Income Fund 7% 4. Templeton Global Bond Fund 6 4%. Franklin Bissett Canadian Equity Fund 4 3%. Franklin U S. . Rising Dividends Fund 4 0%. iShares TIPS Bond ETF 3 9%. Franklin U S. . Core Equity Fund 3 7%. Franklin Bisset All Canadian Focus Fund 3% 4. Franklin Mutual European Fund 2% 8. Franklin U S. . Opportunities Fund 2 7%.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 3Series 3Series 3 Series 5Series 5Series 5 Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value

1 Year 10,092 0 9%. 10,116 1% 2. 10,133 1% 3. 10,182 1% 8. 3 Years 11,049 3% 4. 11,130 3% 6. — — — — 5 Years 12,613 4% 8. 12,774 5 0%. — — — — 10 Years 12,630 2% 4. — — — — — — Since Inception 13,444 1% 8. 12,991 2 9%. 10,894 3 0%. 11,029 3 5%.

* This Fund is composed of units of the corresponding underlying investment funds.

DFS GUARANTEED INVESTMENT FUNDS 79 Balanced and Asset Allocation

DFS GIF – BALANCED INCOME – FRANKLIN QUOTENTIAL (cont.)

STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 As at December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Dividends 3,953,064 5,043,653 Investments at fair value through profit Changes in fair value: or loss (FVTPL) 252,666,664 259,869,458 Net realized gain (loss) on Premiums receivable 100,579 15,808 investments 12,127,098 18,890,498 Receivable for securities sold 413,617 87,783 Net unrealized gain (loss) on 253,180,860 259,973,049 investments (5,603,172) (6,281,089) LIABILITIES 10,476,990 17,653,062 Current Liabilities EXPENSES Bank overdraft 9,852 12,448 Management fees and guarantee charge 5,946,948 6,085,794 Accrued expenses 614,329 630,536 Operating expenses 1,435,857 1,526,503 Withdrawals payable 704,383 295,171 7,382,805 7,612,297 Payable for securities purchased 4,329 114,512 Withholding taxes 258,615 329,987 1,332,893 1,052,667 7,641,420 7,942,284 NET ASSETS ATTRIBUTABLE TO INCREASE (DECREASE) IN NET ASSETS CONTRACT OWNERS 251,847,967 258,920,382 FROM OPERATIONS ATTRIBUTABLE TO NET ASSETS PER UNIT CONTRACT OWNERS 2,835,570 9,710,778 Series 3 6.72 6 .66 DATA PER SERIES Series 5 6.90 6 82. SERIES 3 Series 6 5.45 5 .38 Increase (Decrease) in Net Assets Series 7 5.51 5 .42 from Operations 61,945 380,951 - per unit 0.05 0 25. Average Number of Units 1,373,128 1,537,516 SERIES 5 Increase (Decrease) in Net Assets from Operations 2,286,421 9,100,940 - per unit 0.07 0 26. Average Number of Units 32,292,191 34,412,931 SERIES 6 Increase (Decrease) in Net Assets from Operations 414,192 130,749 - per unit 0.11 0 .08 Average Number of Units 3,774,722 1,690,658 SERIES 7 Increase (Decrease) in Net Assets from Operations 73,012 98,138 - per unit 0.08 0 21. Average Number of Units 932,969 477,120

The accompanying Notes are an integral part of these financial statements.

80 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 258,920,382 250,871,553 to contract owners 2,835,570 9,710,778 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 2,835,570 9,710,778 Net realized gain (loss) (12,127,098) (18,890,498) Net unrealized gain (loss) 5,603,172 6,281,089 Premiums Non-cash distribution from Series 3 862,723 1,013,502 investments (3,694,449) (4,713,666) Series 5 17,954,598 18,438,082 Proceeds from sale/maturity Series 6 9,733,502 12,149,558 of investments 24,238,852 20,500,719 Series 7 1,226,532 3,936,749 Investments purchased (6,817,683) (11,528,400) 29,777,355 35,537,891 Receivable for securities sold (325,834) 34,226 Withdrawals Accrued expenses (16,207) 16,378 Series 3 (2,120,497) (1,948,513) Payable for securities purchased (110,183) 106,707 Series 5 (32,718,474) (34,334,425) NET CASH FLOWS FROM (USED IN) Series 6 (2,812,251) (871,710) OPERATING ACTIVITIES 9,586,140 1,517,333 Series 7 (2,034,118) (45,192) (39,685,340) (37,199,840) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES NET ASSETS ATTRIBUTABLE Premium payments 29,692,584 35,766,791 TO CONTRACT OWNERS, END OF YEAR 251,847,967 258,920,382 Amounts paid on withdrawals (39,276,128) (37,328,215) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (9,583,544) (1,561,424) Increase (Decrease) in cash/bank overdraft 2,596 (44,091) Cash (bank overdraft), beginning of year (12,448) 31,643 CASH (BANK OVERDRAFT), END OF YEAR (9,852) (12,448)

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 81 Balanced and Asset Allocation

DFS GIF – BALANCED INCOME – FRANKLIN QUOTENTIAL (cont.)

SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.3%) Franklin Quotential Balanced Income Portfolio 26,568,524 200,922,874 252,666,664 TOTAL INVESTMENTS 200,922,874 252,666,664 OTHER NET ASSETS (-0.3%) (818,697) NET ASSETS (100%) 251,847,967

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Franklin Bissett Core Plus Bond Fund 27 9%. Franklin Strategic Income Fund 7 4%. Templeton Global Bond Fund 6 .4% Franklin Bissett Canadian Equity Fund 4 .3% Franklin U S. . Rising Dividends Fund 4 .0% iShares TIPS Bond ETF 3 .9% Franklin U S. . Core Equity Fund 3 .7% Franklin Bisset All Canadian Focus Fund 3 4%. Franklin Mutual European Fund 2 8%. Franklin U S. . Opportunities Fund 2 .7% Franklin Templeton Canadian Large Cap Fund 2 .5% Franklin Bissett Canadian Governement Fund 2 3%. iShares Intermediate Credit Bond ETF 2 .1% S&P Depositary Receipt Gold Trust ETF 2 0%. iShares Russell 1000 Value ETF 2 0%. Franklin Japan Fund 1 9%. Templeton Asian Growth Fund 1 8%. iShares MSCI Japan ETF 1 7%. Franklin Bissett Small Cap Fund 1 7%. PowerShares Senior Loan Portfolio ETF 1 .1% BMO MSCI Europe High Quality Hedged to CAD Index ETF 1 .1% BMO Mid Federal Bond Index ETF 1 0%. Templeton Emerging Markets Smaller Companies Fund 0 .9% S&P Depositary Receipt EURO STOXX 50 ETF 0 8%. iShares S&P/TSX 60 Index ETF 0 8%.

82 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide a balance of capital growth and interest income by investing primarily in units of an individual underlying fund in order to gain the desired exposure to the equity and fixed income markets . Investment Strategy To invest in fixed income underlying funds in order to provide income and capital preservation . The Fund also invests in equity underlying funds in order to increase the potential for capital appreciation over a longer investment horizon .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 252,666,664 — — 252,666,664 TOTAL 252,666,664 — — 252,666,664

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 259,869,458 — — 259,869,458 TOTAL 259,869,458 — — 259,869,458 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

DFS GUARANTEED INVESTMENT FUNDS 83 Balanced and Asset Allocation

DFS GIF – BALANCED INCOME – FRANKLIN QUOTENTIAL (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada Universe (45%) 10 0. 1,340,927 1,279,171 Bloomberg Barclays Multiverse Bond (15%)* 10 0. 446,976 426,390 S&P/TSX (20%) 3 00. 1,787,902 1,705,561 MSCI All Country World Net (20%) 3 00. 1,787,902 1,705,561 * On August 24, 2016, “Barclays Capital” was renamed “Bloomberg Barclays” . When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

84 DFS GUARANTEED INVESTMENT FUNDS FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 3 6.72 6 .66 6 .43 6 .08 5 .59 Series 5 6.90 6 .82 6 .57 6 .20 5 .68 Series 6 5.45 5 .38 5 .17 — — Series 7 5.51 5 .42 5 .19 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 3 8,650 9,846 10,400 10,967 11,850 Series 5 215,069 227,546 234,342 233,894 223,830 Series 6 23,360 16,024 4,616 — — Series 7 4,770 5,504 1,515 — — Number of units outstanding (000) Series 3 1,287 1,478 1,617 1,803 2,121 Series 5 31,189 33,382 35,692 37,751 39,436 Series 6 4,289 2,981 893 — — Series 7 865 1,016 292 — — Management expense ratio (MER)1 (%) Series 3 3.20 3 .20 3 .20 3 .20 2 .85 Series 5 2.95 2 .95 2 .95 2 .94 2 .60 Series 6 2.76 2 .75 2 .74 — — Series 7 2.30 2 .30 2 .30 — — Portfolio turnover rate2 (%) 5.26 10 .44 4 .80 3 26. 5 94.

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

DFS GUARANTEED INVESTMENT FUNDS 85 Balanced and Asset Allocation DFS GIF – CANADIAN BALANCED – FIDELITY*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Royal Bank of Canada 4 9%. Toronto-Dominion Bank 3 7%. Restaurant Brands International 2 7%. Scotiabank 2% 6. Canadian Pacific Railway 2% 6. Enbridge 2 1%. Sun Life Financial 1% 9. Canadian Natural Resources 1% 7. Waste Connections 1% 5. Brookfield Asset Management 1% 4.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 3Series 3Series 3 Series 5Series 5Series 5 Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value

1 Year 10,411 4 1%. 10,454 4 5%. 10,468 4 7%. 10,522 5% 2. 3 Years 11,674 5 3%. 11,825 5 7%. — — — — 5 Years 13,622 6 4%. 13,900 6% 8. — — — — Since Inception 18,653 8 0%. 19,244 8 4%. 11,463 4 9%. 11,620 5 4%.

* This Fund is composed of units of the corresponding underlying investment funds.

86 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Interest for attribution purposes 1,236,995 2,102,512 Cash — 102,954 Dividends 23,750,288 21,500,951 Investments at fair value through profit Changes in fair value: or loss (FVTPL) 878,642,563 882,313,517 Net realized gain (loss) Premiums receivable 910,928 929,481 on investments 60,236,122 83,360,750 Receivable for securities sold 571,131 195,137 Net unrealized gain (loss) 880,124,622 883,541,089 on investments (20,540,064) (55,997,599) LIABILITIES 64,683,341 50,966,614 Current Liabilities EXPENSES Bank overdraft 137,055 — Management fees and guarantee charge 20,772,117 21,576,240 Accrued expenses 2,163,067 2,169,456 Operating expenses 5,052,305 5,312,352 Withdrawals payable 2,036,216 1,356,538 25,824,422 26,888,592 Payable for securities purchased 19,774 610,271 Withholding taxes 247,399 233,706 4,356,112 4,136,265 26,071,821 27,122,298 NET ASSETS ATTRIBUTABLE TO INCREASE (DECREASE) IN NET ASSETS CONTRACT OWNERS 875,768,510 879,404,824 FROM OPERATIONS ATTRIBUTABLE TO NET ASSETS PER UNIT CONTRACT OWNERS 38,611,520 23,844,316 Series 3 9.33 8 .96 DATA PER SERIES Series 5 9.62 9 20. SERIES 3 Series 6 5.73 5 .48 Increase (Decrease) in Net Assets Series 7 5.81 5 .52 from Operations 435,940 171,151 - per unit 0.37 0 .15 Average Number of Units 1,174,299 1,156,140 SERIES 5 Increase (Decrease) in Net Assets from Operations 36,739,711 23,861,110 - per unit 0.41 0 25. Average Number of Units 88,645,028 93,583,380 SERIES 6 Increase (Decrease) in Net Assets from Operations 1,370,618 (179,117) - per unit 0.26 (0 .06) Average Number of Units 5,354,045 2,922,612 SERIES 7 Increase (Decrease) in Net Assets from Operations 65,251 (8,828) - per unit 0.27 (0 .06) Average Number of Units 242,903 141,100

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 87 Balanced and Asset Allocation

DFS GIF – CANADIAN BALANCED – FIDELITY (cont.)

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 879,404,824 881,597,021 to contract owners 38,611,520 23,844,316 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 38,611,520 23,844,316 Net realized gain (loss) (60,236,122) (83,360,750) Net unrealized gain (loss) 20,540,064 55,997,599 Premiums Non-cash distribution from Series 3 2,259,276 2,591,373 investments (24,739,884) (23,370,598) Series 5 85,809,811 86,012,903 Proceeds from sale/maturity Series 6 13,462,909 23,196,679 of investments 74,966,111 69,407,253 Series 7 926,248 906,865 Investments purchased (6,859,215) (16,617,065) 102,458,244 112,707,820 Receivable for securities sold (375,994) 6,159 Withdrawals Accrued expenses (6,389) 12,963 Series 3 (2,559,803) (1,881,705) Payable for securities purchased (590,497) 587,478 Series 5 (136,493,502) (131,863,810) NET CASH FLOWS FROM (USED IN) Series 6 (5,123,857) (4,980,819) OPERATING ACTIVITIES 41,309,594 26,507,355 Series 7 (528,916) (17,999) (144,706,078) (138,744,333) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES NET ASSETS ATTRIBUTABLE Premium payments 102,476,797 112,044,274 TO CONTRACT OWNERS, END OF YEAR 875,768,510 879,404,824 Amounts paid on withdrawals (144,026,400) (138,553,129) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (41,549,603) (26,508,855) Increase (Decrease) in cash/bank overdraft (240,009) (1,500) Cash (bank overdraft), beginning of year 102,954 104,454 CASH (BANK OVERDRAFT), END OF YEAR (137,055) 102,954 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Interest paid — 842

The accompanying Notes are an integral part of these financial statements.

88 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.3%) Fidelity Canadian Balanced Fund, Series O 39,269,995 757,763,944 878,642,563 TOTAL INVESTMENTS 757,763,944 878,642,563 OTHER NET ASSETS (-0.3%) (2,874,053) NET ASSETS (100%) 875,768,510

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Royal Bank of Canada 4 .9% Toronto-Dominion Bank 3 .7% Restaurant Brands International 2 .7% Scotiabank 2 6%. Canadian Pacific Railway 2 6%. Enbridge 2 .1% Sun Life Financial 1 9%. Canadian Natural Resources 1 7%. Waste Connections 1 5%. Brookfield Asset Management 1 4%. EOG Resources 1 3%. Constellation Software 1 2%. Suncor Energy 1 2%. Morgan Stanley 1 0%. CGI Group 1 0%. Manulife Financial Corporation 1 0%. Alimentation Couche-Tard 1 0%. Methanex Corporation 0 .9% ARC Resources 0 .9% National Bank of Canada 0 .9% Bank of America Corporation 0 .9% Province of Ontario, 3 15%,. June 2, 2022 0 .9% First Quantum Minerals 0 .9% Province of Ontario, 4 .20%, June 2, 2020 0 8%. Ball Corporation 0 8%.

DFS GUARANTEED INVESTMENT FUNDS 89 Balanced and Asset Allocation

DFS GIF – CANADIAN BALANCED – FIDELITY (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To achieve high total investment return using a diversified portfolio targeting long-term capital appreciation and a regular income stream through investment in any kind of equity or fixed-income security or money market instrument . The fundamental investment objective of the Fund is to provide investors with a balanced asset mix with the potential for capital growth . Investment Strategy Target fixed asset allocation to deliver superior long-term growth potential and reduced levels of risk . The Fund invests primarily in a mix of Canadian equity securities, investment grade bonds, high yield securities and money market instruments . The equity investment decisions are based on a thorough examination of the company, financial conditions and long-term earnings potential .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 878,642,563 — — 878,642,563 TOTAL 878,642,563 — — 878,642,563

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 882,313,517 — — 882,313,517 TOTAL 882,313,517 — — 882,313,517 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

90 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada Universe (40%) 1 00. 3,492,586 3,477,627 Merrill Lynch High Yield Master II (10%) 2 00. 1,746,293 1,738,814 S&P/TSX Capped (50%) 3 .00 13,097,197 13,041,103 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

DFS GUARANTEED INVESTMENT FUNDS 91 Balanced and Asset Allocation

DFS GIF – CANADIAN BALANCED – FIDELITY (cont.)

FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 3 9.33 8 .96 8 .77 7 .99 7 .17 Series 5 9.62 9 .20 8 .97 8 .14 7 .28 Series 6 5.73 5 .48 5 .33 — — Series 7 5.81 5 .52 5 .34 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 3 10,941 10,805 9,925 9,205 9,577 Series 5 827,435 841,379 863,369 839,998 793,312 Series 6 35,640 25,930 7,893 — — Series 7 1,753 1,290 410 — — Number of units outstanding (000) Series 3 1,173 1,206 1,132 1,152 1,335 Series 5 85,995 91,416 96,289 103,238 109,001 Series 6 6,218 4,736 1,482 — — Series 7 302 234 77 — — Management expense ratio (MER)1 (%) Series 3 3.39 3 .41 3 .41 3 .40 3 .00 Series 5 2.96 2 .96 2 .96 2 .96 2 .65 Series 6 2.81 2 .82 2 .83 — — Series 7 2.28 2 .34 2 .36 — — Portfolio turnover rate2 (%) 9.00 10 .64 7 .09 2 .74 5 .33

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

92 DFS GUARANTEED INVESTMENT FUNDS Balanced and Asset Allocation DFS GIF – U.S. MONTHLY INCOME – FIDELITY*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the period ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio JPMorgan Chase & Company 1% 7. Freddie Mac, 3 5. 0%, 30 Year 1% 3. Williams Companies 1% 2. Cisco Systems 1% 2. General Electric Company 1 1%. U S. . Treasury Note, 1,25 %, October 31, 2021 1 1%. U S. . Treasury Note, 1 .25%, March 31, 2021 1% 0. U S. . Treasury Note, 0 3. 75%, July 15, 2025 1% 0. Chevron Corporation 1% 0. Procter & Gamble Company 1% 0.

PERFORMANCE INFORMATION FOR THE PERIOD ENDING DECEMBER 31, 2016

Series Series5** 5**Series 5** Series Series6** 6**Series 6** Series Series7** 7**Series 7**

$10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value

1 Year 10,495 5 0%. 10,500 5 0%. 10,564 5 6%. Since Inception 11,088 8 9%. 11,087 8 9%. 11,169 9% 6.

* This Fund is composed of units of the corresponding underlying investment funds. ** Beginning of operations in October 2015.

DFS GUARANTEED INVESTMENT FUNDS 93 Balanced and Asset Allocation

DFS GIF – U.S. MONTHLY INCOME – FIDELITY (cont.)

STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Periods Ended December 31 2016 2015 2016 2015* $ $ (12 months) (3 months) ASSETS $ $ Current Assets INCOME Cash — 11,337 Interest for attribution purposes — 12,544 Investments at fair value through profit Dividends 262,269 14,035 or loss (FVTPL) 9,226,163 2,641,839 Changes in fair value: Premiums receivable 113,114 34,992 Net realized gain (loss) Receivable for securities sold 14,695 — on investments (3,277) 111,142 9,353,972 2,688,168 Net unrealized gain (loss) LIABILITIES on investments 451,729 (62,342) Current Liabilities 710,721 75,379 Bank overdraft 14,695 — EXPENSES Accrued expenses 21,190 5,288 Management fees and guarantee charge 178,199 7,801 Withdrawals payable 34,741 393 Operating expenses 14,851 661 Payable for securities purchased 41,570 46,330 193,050 8,462 112,196 52,011 Withholding taxes 32,218 1,969 225,268 10,431 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 9,241,776 2,636,157 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO NET ASSETS PER UNIT CONTRACT OWNERS 485,453 64,948 Series 5 5.54 5 28. Series 6 5.54 5 28. DATA PER SERIES Series 7 5.58 59 2. SERIES 5 Increase (Decrease) in Net Assets from Operations 151,250 14,972 - per unit 0.32 05 2. Average Number of Units 473,443 60,545 SERIES 6 Increase (Decrease) in Net Assets from Operations 298,549 39,447 - per unit 0.43 0 23. Average Number of Units 696,194 170,938 SERIES 7 Increase (Decrease) in Net Assets from Operations 35,654 10,529 - per unit 0.34 09 2. Average Number of Units 104,056 36,010

* Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements.

94 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Periods Ended December 31 Periods Ended December 31 2016 2015* (12 months) (3 months) 2016 2015* (12 months) (3 months) $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF PERIOD 2,636,157 — to contract owners 485,453 64,948 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 485,453 64,948 Net realized gain (loss) 3,277 (111,142) Net unrealized gain (loss) (451,729) 62,342 Premiums Non-cash distribution from Series 5 2,668,804 650,588 investments (230,051) (24,610) Series 6 4,046,860 1,693,215 Proceeds from sale/maturity Series 7 675,257 229,884 of investments 617,085 — 7,390,921 2,573,687 Investments purchased (6,522,906) (2,568,429) Withdrawals Receivable for securities sold (14,695) — Series 5 (517,878) (1,934) Accrued expenses 15,902 5,288 Series 6 (463,906) (544) Payable for securities purchased (4,760) 46,330 Series 7 (288,971) — NET CASH FLOWS FROM (USED IN) (1,270,755) (2,478) OPERATING ACTIVITIES (6,102,424) (2,525,273) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, CASH FLOWS FROM (USED IN) END OF PERIOD 9,241,776 2,636,157 FINANCING ACTIVITIES Premium payments 7,312,799 2,538,695 Amounts paid on withdrawals (1,236,407) (2,085) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES 6,076,392 2,536,610 Increase (Decrease) in cash/bank overdraft (26,032) 11,337 Cash (bank overdraft), beginning of period 11,337 — CASH (BANK OVERDRAFT), END OF PERIOD (14,695) 11,337

* Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 95 Balanced and Asset Allocation

DFS GIF – U.S. MONTHLY INCOME – FIDELITY (cont.)

SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (99.8%) Fidelity U .S . Monthly Income Fund, Series O 395,643 8,836,777 9,226,163 TOTAL INVESTMENTS 8,836,777 9,226,163 OTHER NET ASSETS (0.2%) 15,613 NET ASSETS (100%) 9,241,776

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio JPMorgan Chase & Company 1 7%. Freddie Mac, 3 50%,. 30 Year 1 3%. Williams Companies 1 2%. Cisco Systems 1 2%. General Electric Company 1 .1% U S. . Treasury Note, 1,25 %, October 31, 2021 1 .1% U S. . Treasury Note, 1 .25%, March 31, 2021 1 0%. U S. . Treasury Note, 0 375%,. July 15, 2025 1 0%. Chevron Corporation 1 0%. Procter & Gamble Company 1 0%. iShares TIPS Bond ETF 1 0%. Johnson & Johnson 1 0%. U S. . Treasury Bill, 3 00%,. May 15, 2045 0 8%. Chubb 0 8%. Wells Fargo & Company 0 8%. Fannie Mae, 3 00%,. 30 Year 0 .7% M&T Bank Corporation 0 .7% US Bancorp 0 .7% CVS Health Corporation 0 .7% Verizon Communications 0 .7% United Technologies Corporation 0 .7% Bank of America Corporation 0 .7% Comcast Corporation 0 .7% Ginnie Mae, 3 50%,. 30 Year 0 6%. Qualcomm 0 6%.

96 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To achieve a combination of a steady flow of income and the potential for capital gains by investing in a mix of U S. . income-producing securities . Investment Strategy The Fund invests primarily in a mix of U S. . income-producing securities, either directly or indirectly through investments in underlying funds . The Fund’s neutral mix is 50% exposure to equity securities and 50% exposure to fixed-income securities . These securities may be U S. . securities or non-U S. . securities but at least 70% of the Fund’s net assets will be invested in U S. . dollar-denominated investments .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Period, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 9,226,163 — — 9,226,163 TOTAL 9,226,163 — — 9,226,163

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 2,641,839 — — 2,641,839 TOTAL 2,641,839 — — 2,641,839 Transfers between Levels 1 and 2 During the periods ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

DFS GUARANTEED INVESTMENT FUNDS 97 Balanced and Asset Allocation

DFS GIF – U.S. MONTHLY INCOME – FIDELITY (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, with all other variables held constant, is as follows:

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ Bloomberg Barclays U S. . Aggregate Bond (31%)* 10 5. 42,974 12,258 Bank of America ML all US Convertibles (5%) 10 5. 6,931 1,977 Bank of America ML High Yield Master II Constrained (12%) 20 0. 22,180 6,327 JP Morgan EMBI Global Diversified (5%) 20 0. 9,242 2,636 Russell 3000 Value (40%) 3 00. 110,901 31,634 FTSE NAREIT Equity REITs (7%) 3 00. 19,408 5,536 * On August 24, 2016, “Barclays Capital” was renamed “Bloomberg Barclays” . When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

98 DFS GUARANTEED INVESTMENT FUNDS FINANCIAL HIGHLIGHTS — UNAUDITED

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past two years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016 2015*

Series 5 5.54 5 .28 Series 6 5.54 5 .28 Series 7 5.58 5 .29 Ratios and Supplemental Data Net Asset Value ($000’s) Series 5 2,966 664 Series 6 5,614 1,732 Series 7 662 240 Number of units outstanding (000) Series 5 535 126 Series 6 1,013 328 Series 7 119 45 Management expense ratio (MER)1 (%) Series 5 3.10 3 .04 Series 6 2.99 2 .93 Series 7 2.47 2 .42 Portfolio turnover rate2 (%) 9.39 6 .80

* Beginning of operations in October 2015. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of daily average net asset value during the year. The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

DFS GUARANTEED INVESTMENT FUNDS 99 Balanced and Asset Allocation DFS GIF – BALANCED – DESJARDINS SOCIETERRA*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the period ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Desjardins SocieTerra Canadian Bond Fund 47% 4. NEI Ethical Canadian Equity Fund 12% 5. Desjardins SocieTerra American Equity Fund 11% 7. NEI Ethical International Equity Fund 10% 8. Desjardins SocieTerra Environment Fund 7% 5. Desjardins SocieTerra Environmental Bond Fund 5 3%. NEI Ethical Special Equity Fund 2% 8. Desjardins SocieTerra Cleantech Fund 1% 6. Cash and Cash Equivalents 0% 4.

PERFORMANCE INFORMATION FOR THE PERIOD ENDING DECEMBER 31, 2016

Series 5Series** 5**Series 5** Series Series6** 6**Series 6** Series 7Series** 7**Series 7**

$10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value

1 Year 10,222 2% 2. 10,227 2% 3. 10,272 2 7%. Since Inception 10,388 3% 2. 10,395 3% 3. 10,451 3 7%.

* This Fund is composed of units of the corresponding underlying investment funds. ** Beginning of operations in October 2015.

100 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Periods Ended December 31 2016 2015 2016 2015* $ $ (12 months) (3 months) ASSETS $ $ Current Assets INCOME Cash 9,585 — Dividends 257,841 18,870 Investments at fair value through profit Changes in fair value: or loss (FVTPL) 15,688,599 8,142,045 Net realized gain (loss) Premiums receivable 1,091 109,603 on investments 3,310 662,294 Receivable for securities sold — 349 Net unrealized gain (loss) 15,699,275 8,251,997 on investments 391,075 (507,386) LIABILITIES 652,226 173,778 Current Liabilities EXPENSES Bank overdraft — 355 Management fees and guarantee charge 264,857 36,379 Accrued expenses 34,371 18,806 Operating expenses 54,733 9,597 Withdrawals payable 11,887 6,385 319,590 45,976 Payable for securities purchased 10,548 13,507 INCREASE (DECREASE) IN NET ASSETS 56,806 39,053 FROM OPERATIONS ATTRIBUTABLE TO NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 332,636 127,802 CONTRACT OWNERS 15,642,469 8,212,944 DATA PER SERIES NET ASSETS PER UNIT SERIES 5 Series 5 5.19 5 08. Increase (Decrease) in Net Assets Series 6 5.20 5 08. from Operations 164,390 114,462 Series 7 5.23 5 09. - per unit 0.12 0 08. Average Number of Units 1,397,565 1,406,947 SERIES 6 Increase (Decrease) in Net Assets from Operations 141,884 12,989 - per unit 0.18 0 08. Average Number of Units 783,730 164,784 SERIES 7 Increase (Decrease) in Net Assets from Operations 26,362 351 - per unit 0.31 0 09. Average Number of Units 86,097 4,046

* Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 101 Balanced and Asset Allocation

DFS GIF – BALANCED – DESJARDINS SOCIETERRA (cont.)

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Periods Ended December 31 Periods Ended December 31 2016 2015* (12 months) (3 months) 2016 2015* (12 months) (3 months) $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF PERIOD 8,212,944 — to contract owners 332,636 127,802 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 332,636 127,802 Net realized gain (loss) (3,310) (662,294) Net unrealized gain (loss) (391,075) 507,386 Premiums Non-cash distribution from Series 5 908,130 7,112,836 investments (257,841) (18,870) Series 6 6,549,104 1,125,320 Proceeds from sale/maturity Series 7 1,375,603 20,232 of investments 826,982 109,884 8,832,837 8,258,388 Investments purchased (7,721,310) (8,078,151) Withdrawals Receivable for securities sold 349 (349) Series 5 (1,004,817) (171,342) Accrued expenses 15,565 18,806 Series 6 (688,303) (1,904) Payable for securities purchased (2,959) 13,507 Series 7 (42,828) — NET CASH FLOWS FROM (USED IN) (1,735,948) (173,246) OPERATING ACTIVITIES (7,200,963) (7,982,279) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, CASH FLOWS FROM (USED IN) END OF PERIOD 15,642,469 8,212,944 FINANCING ACTIVITIES Premium payments 8,941,349 8,148,785 Amounts paid on withdrawals (1,730,446) (166,861) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES 7,210,903 7,981,924 Increase (Decrease) in cash/bank overdraft 9,940 (355) Cash (bank overdraft), beginning of period (355) — CASH (BANK OVERDRAFT), END OF PERIOD 9,585 (355)

* Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements.

102 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.3%) SocieTerra Balanced Portfolio, I-Class 1,628,800 15,804,911 15,688,599 TOTAL INVESTMENTS 15,804,911 15,688,599 OTHER NET ASSETS (-0.3%) (46,130) NET ASSETS (100%) 15,642,469

The accompanying Notes are an integral part of these financial statements.

TOP HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Desjardins SocieTerra Canadian Bond Fund 47 4%. NEI Ethical Canadian Equity Fund 12 5%. Desjardins SocieTerra American Equity Fund 11 7%. NEI Ethical International Equity Fund 10 8%. Desjardins SocieTerra Environment Fund 7 5%. Desjardins SocieTerra Environmental Bond Fund 5 .3% NEI Ethical Special Equity Fund 2 8%. Desjardins SocieTerra Cleantech Fund 1 6%. Cash and Cash Equivalents 0 4%.

DFS GUARANTEED INVESTMENT FUNDS 103 Balanced and Asset Allocation

DFS GIF – BALANCED – DESJARDINS SOCIETERRA (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To achieve a balance between long-term capital appreciation and income by investing primarily in Canadian, and to a lesser extent, foreign equity and fixed-income securities and/or in units of mutual funds which themselves invest primarily in Canadian or foreign equity and fixed-income securities . The Fund follows a socially responsible approach to investing . Investment Strategy To reach the Fund’s investment objective, selection of the securities and/or the underlying funds as well as the percentage of the assets that will be invested in each of these securities or underlying funds will be based on the following target weightings: Fixed-income (55%) and Growth (45%) .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Period, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 15,688,599 — — 15,688,599 TOTAL 15,688,599 — — 15,688,599

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 8,142,045 — — 8,142,045 TOTAL 8,142,045 — — 8,142,045 Transfers between Levels 1 and 2 During the periods ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

104 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, with all other variables held constant, is as follows:

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada Universe (55%) 1 00. 86,034 45,171 S&P/TSX (14%) 3 .00 65,698 34,494 MSCI World Net (31%) 3 .00 145,475 76,380 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

DFS GUARANTEED INVESTMENT FUNDS 105 Balanced and Asset Allocation

DFS GIF – BALANCED – DESJARDINS SOCIETERRA (cont.)

FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past two years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016 2015*

Series 5 5.19 5 .08 Series 6 5.20 5 .08 Series 7 5.23 5 .09 Ratios and Supplemental Data Net Asset Value ($000’s) Series 5 7,124 7,056 Series 6 7,139 1,136 Series 7 1,380 21 Number of units outstanding (000) Series 5 1,371 1,389 Series 6 1,374 224 Series 7 264 4 Management expense ratio (MER)1 (%) Series 5 2.81 2 .81 Series 6 2.76 2 .74 Series 7 2.30 2 .30 Portfolio turnover rate2 (%) 7.74 9 .64

* Beginning of operations in October 2015. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of daily average net asset value during the year. The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

106 DFS GUARANTEED INVESTMENT FUNDS Balanced and Asset Allocation DFS GIF – GLOBAL BALANCED – JARISLOWSKY FRASER*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Jarislowsky Fraser International Pooled Fund 18% 5. Toronto-Dominion Bank 2% 0. Jarislowsky Fraser Special Equity Fund 1% 7. Province of Ontario, 2 4. 0%, June 2, 2026 1% 7. Royal Bank of Canada 1% 6. Scotiabank 1% 4. Enbridge 1% 2. Canadian Natural Resources 1 1%. Microsoft Corporation 1 1%. Canadian National Railway Company 1% 0.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 3Series 3Series 3 Series 5Series 5Series 5 Series Series6** 6**Series 6** Series Series7** 7**Series 7**

$10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value

1 Year 10,248 2 5%. 10,300 3 0%. 10,317 3% 2. 10,358 3% 6. 3 Years 11,706 5 4%. 11,888 5 9%. — — — — 5 Years 14,466 7% 7. 14,826 8 2%. — — — — 10 Years 13,377 3 0%. — — — — — — Since 3 9%. 14,581 4 2%. 10,573 4 7%. 10,629 5% 2. Inception 16,442

* This Fund is composed of units of the corresponding underlying investment funds. ** Beginning of operations in October 2015.

DFS GUARANTEED INVESTMENT FUNDS 107 Balanced and Asset Allocation

DFS GIF – GLOBAL BALANCED – JARISLOWSKY FRASER (cont.)

STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Interest for attribution purposes 2,479,988 1,810,243 Cash 828,727 732,788 Dividends 3,438,148 2,708,739 Investments at fair value through profit Changes in fair value: or loss (FVTPL) 238,765,804 203,872,147 Net realized gain (loss) on Premiums receivable 981,144 635,608 investments 7,996,641 11,824,467 240,575,675 205,240,543 Net unrealized gain (loss) on LIABILITIES investments 268,163 (1,164,405) Current Liabilities 14,182,940 15,179,044 Accrued expenses 558,452 481,607 Withdrawals payable 763,626 448,188 EXPENSES Payable for securities purchased 671,418 54,296 Management fees and guarantee charge 4,624,777 3,430,240 1,993,496 984,091 Operating expenses 1,723,134 1,392,185 6,347,911 4,822,425 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 238,582,179 204,256,452 Withholding taxes 281,822 214,967 6,629,733 5,037,392 NET ASSETS PER UNIT Series 3 8.22 8 02. INCREASE (DECREASE) IN NET ASSETS Series 5 8.60 8 35. FROM OPERATIONS ATTRIBUTABLE TO Series 6 5.29 5 12. CONTRACT OWNERS 7,553,207 10,141,652 Series 7 5.31 5 13. DATA PER SERIES SERIES 3 Increase (Decrease) in Net Assets from Operations 232,111 488,061 - per unit 0.19 04 4. Average Number of Units 1,221,029 1,096,920 SERIES 5 Increase (Decrease) in Net Assets from Operations 6,001,864 9,564,693 - per unit 0.26 0 50. Average Number of Units 22,972,431 19,134,339 SERIES 6* Increase (Decrease) in Net Assets from Operations 1,209,618 84,982 - per unit 0.30 0 11. Average Number of Units 3,989,025 773,611 SERIES 7* Increase (Decrease) in Net Assets from Operations 109,614 3,916 - per unit 0.33 0 12. Average Number of Units 336,560 32,494

* Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements.

108 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 204,256,452 152,384,435 to contract owners 7,553,207 10,141,652 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 7,553,207 10,141,652 Net realized gain (loss) (7,996,641) (11,824,467) Net unrealized gain (loss) (268,163) 1,164,405 Premiums Non-cash distribution from Series 3 1,284,309 2,880,260 investments (5,636,314) (4,302,745) Series 5 38,200,658 58,363,706 Proceeds from sale/maturity Series 6* 26,374,106 7,901,781 of,investments 12,849,758 11,300,138 Series 7* 4,087,605 596,583 Investments purchased (33,842,297) (47,833,903) 69,946,678 69,742,330 Accrued expenses 76,845 117,527 Withdrawals Payable for securities purchased 617,122 (117,939) Series 3 (2,085,661) (1,557,555) NET CASH FLOWS FROM (USED IN) Series 5 (37,615,906) (26,424,518) OPERATING ACTIVITIES (26,646,483) (41,355,332) Series 6* (3,052,621) (29,627) Series 7* (419,970) (265) CASH FLOWS FROM (USED IN) (43,174,158) (28,011,965) FINANCING ACTIVITIES Premium payments 69,601,142 69,141,651 NET ASSETS ATTRIBUTABLE Amounts paid on withdrawals (42,858,720) (27,957,271) TO CONTRACT OWNERS, END OF YEAR 238,582,179 204,256,452 NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES 26,742,422 41,184,380 Increase (Decrease) in cash/bank overdraft 95,939 (170,952) Cash (bank overdraft), beginning of year 732,788 903,740 CASH (BANK OVERDRAFT), END OF YEAR 828,727 732,788

* Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 109 Balanced and Asset Allocation

DFS GIF – GLOBAL BALANCED – JARISLOWSKY FRASER (cont.)

SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.1%) Jarislowsky Fraser Global Balanced Fund 18,101,340 202,706,806 238,765,804 TOTAL INVESTMENTS 202,706,806 238,765,804 OTHER NET ASSETS (-0.1%) (183,625) NET ASSETS (100%) 238,582,179

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Jarislowsky Fraser International Pooled Fund 18 5%. Toronto-Dominion Bank 2 0%. Jarislowsky Fraser Special Equity Fund 1 7%. Province of Ontario, 2 40%,. June 2, 2026 1 7%. Royal Bank of Canada 1 6%. Scotiabank 1 4%. Enbridge 1 2%. Canadian Natural Resources 1 .1% Microsoft Corporation 1 .1% Canadian National Railway Company 1 0%. Manulife Financial Corporation 0 .9% Canada Housing Trust, 1 .20%, June 15, 2020 0 8%. Government of Canada, Floating Rate, December 1, 2047 0 8%. Government of Canada, 3 50%,. December 1, 2045 0 8%. Open Text Corporation 0 8%. Alimentation Couche-Tard 0 8%. Canadian Imperial Bank of Commerce, 1 70%,. October 9, 2018 0 8%. Berkshire Hathaway 0 .7% JPMorgan Chase & Company 0 .7% Province of Ontario, 2 .85%, June 2, 2023 0 .7% Comcast Corporation 0 .7% Bank of Montréal, 2 12%,. March 16, 2022 0 .7% National Bank of Canada, 2 794%,. August 9, 2018 0 .7% Alphabet 0 .7% Walgreens Boots Alliance 0 .7%

110 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide investors with an opportunity to achieve a high rate of return by investing in a diversified portfolio consisting of a balance of equity and fixed-income securities of issuers located throughout the world . Investment Strategy To provide such an opportunity through a diversified portfolio consisting of a balance of mainly large cap equity and mainly investment grade fixed- income securities of issuers located throughout the world .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds — 238,765,804 — 238,765,804 TOTAL — 238,765,804 — 238,765,804

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds — 203,872,147 — 203,872,147 TOTAL — 203,872,147 — 203,872,147 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

DFS GUARANTEED INVESTMENT FUNDS 111 Balanced and Asset Allocation

DFS GIF – GLOBAL BALANCED – JARISLOWSKY FRASER (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada 91 Day Treasury Bills (6%) 0 25. 37,932 31,196 FTSE TMX Canada Universe (40%) 1 00. 1,011,519 831,884 S&P/TSX (22%) 3 00. 1,669,006 1,372,609 S&P 500 (16%) 3 00. 1,213,823 998,261 MSCI EAFE Net (16%) 3 00. 1,213,823 998,261 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

112 DFS GUARANTEED INVESTMENT FUNDS FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016** 2015** 2014** 2013** 2012

Series 3 8.22 8 .02 7 .60 7 .02 6 .10 Series 5 8.60 8 .35 7 .87 7 .23 6 .25 Series 6* 5.29 5 .12 — — — Series 7* 5.31 5 .13 — — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 3 9,346 9,915 8,104 8,869 9,120 Series 5 192,371 185,784 144,280 135,404 111,607 Series 6* 32,488 7,957 — — — Series 7* 4,377 600 — — — Number of units outstanding (000) Series 3 1,137 1,236 1,066 1,263 1,495 Series 5 22,370 22,251 18,342 18,719 17,850 Series 6* 6,145 1,553 — — — Series 7* 824 117 — — — Management expense ratio (MER)1 (%) Series 3 3.39 3 .40 3 .40 3 .40 3 .00 Series 5 2.85 2 .85 2 .86 2 .86 2 .55 Series 6* 2.63 2 .59 — — — Series 7* 2.24 2 .24 — — — Portfolio turnover rate2 (%) 9.73 8 .87 5 .64 8 .68 7 .47

* Beginning of operations in October 2015. ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

DFS GUARANTEED INVESTMENT FUNDS 113 Balanced and Asset Allocation DFS GIF – CANADIAN BALANCED – FIERA CAPITAL*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Fiera Global Equity Fund 20% 3. Canada Treasury Bills, March 9, 2017 5 1%. Royal Bank of Canada 4 0%. Toronto-Dominion Bank 3 9%. Scotiabank 3% 2. Government of Canada, 0 .25%, May 1, 2018 2% 8. Canadian Natural Resources 2% 4. Manulife Financial Corporation 2% 3. CGI Group 2% 3. Canadian National Railway Company 1% 9.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 1Series 1Series 1 Series Series3 3Series 3 Series Series5 5Series 5 Series Series6 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value Value

1 Year 10,532 5 3%. 10,597 6 0%. 10,661 6 6%. 10,656 6 6%. 10,706 7% 1. 3 Years 11,523 4% 8. 11,738 5 5%. 11,961 6 2%. — — — — 5 Years 13,030 5 4%. 13,431 6 1%. 13,820 6 7%. — — — — 10 Years 11,965 1% 8. 12,674 2% 4. — — — — — — Since Inception 20,176 3% 4. 17,710 3% 2. 13,075 3 0%. 11,602 5 4%. 11,766 5 9%.

* This Fund is composed of units of the corresponding underlying investment funds.

114 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Interest for attribution purposes 1,316,490 1,514,193 Investments at fair value through profit Dividends 3,141,981 2,941,033 or loss (FVTPL) 157,480,174 161,011,034 Revenue from securities lending and Investments at fair value through profit repurchase transactions 17,601 21,334 or loss (FVTPL) pledged as collateral 27,680,152 21,876,504 Foreign exchange gain (loss) on cash 1,690 10,554 Premiums receivable 320,025 64,188 Changes in fair value: Receivable for securities sold 923,434 2,346,923 Net realized gain (loss) on Cash guarantee received for repurchase investments 8,534,276 9,540,425 transactions 13,316,482 5,685,138 Net unrealized gain (loss) on Interest, dividends and other receivables 344,050 379,735 investments 3,488,247 (5,008,855) 200,064,317 191,363,522 16,500,285 9,018,684 LIABILITIES Current Liabilities EXPENSES Bank overdraft 52,020 785 Management fees and guarantee charge 3,717,943 3,987,026 Accrued expenses 403,497 410,645 Operating expenses 1,068,776 1,172,768 Withdrawals payable 441,040 67,850 4,786,719 5,159,794 Payable for securities purchased 1,171,869 — Withholding taxes 125,220 115,489 Commitments related to repurchase Commissions and other portfolio transactions 13,316,482 5,685,138 transaction costs 240,181 137,016 15,384,908 6,164,418 5,152,120 5,412,299 NET ASSETS ATTRIBUTABLE TO INCREASE (DECREASE) IN NET ASSETS CONTRACT OWNERS 184,679,409 185,199,104 FROM OPERATIONS ATTRIBUTABLE TO NET ASSETS PER UNIT CONTRACT OWNERS 11,348,165 3,606,385 Series 1 10.09 9 .58 DATA PER SERIES Series 3 11.16 10 53. Series 5 11.78 11 .05 SERIES 1 Increase (Decrease) in Net Assets Series 6 5.80 5 .44 from Operations 380,182 95,244 Series 7 5.88 5 .50 - per unit 0.50 0 11. Average Number of Units 764,215 888,699 SERIES 3 Increase (Decrease) in Net Assets from Operations 863,155 282,078 - per unit 0.61 0 .16 Average Number of Units 1,406,870 1,749,182 SERIES 5 Increase (Decrease) in Net Assets from Operations 9,424,417 3,310,920 - per unit 0.72 0 .23 Average Number of Units 13,150,646 14,322,443 SERIES 6 Increase (Decrease) in Net Assets from Operations 640,441 (84,571) - per unit 0.38 (0 .10) Average Number of Units 1,691,660 842,377 SERIES 7 Increase (Decrease) in Net Assets from Operations 39,970 2,714 - per unit 0.39 0 03. Average Number of Units 101,393 92,935

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 115 Balanced and Asset Allocation

DFS GIF – CANADIAN BALANCED – FIERA CAPITAL (cont.)

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 185,199,104 193,380,159 to contract owners 11,348,165 3,606,385 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 11,348,165 3,606,385 Foreign exchange gain (loss) on cash (1,690) (10,554) Net realized gain (loss) (8,534,276) (9,540,425) Premiums Net unrealized gain (loss) (3,488,247) 5,008,855 Series 1 270,205 313,763 Non-cash distribution from Series 3 563,256 1,066,937 investments (894,429) (824,913) Series 5 12,420,755 13,646,307 Proceeds from sale/maturity of Series 6 5,999,460 6,309,713 investments 364,035,763 309,235,438 Series 7 347,734 281,335 Investments purchased (353,390,993) (293,365,766) 19,601,410 21,618,055 Receivable for securities sold 1,423,489 (1,799,689) Withdrawals Cash guarantee received for repurchase Series 1 (1,145,032) (1,867,231) transactions (7,631,344) 8,245,830 Series 3 (3,379,193) (4,430,779) Interest, dividends and other receivables 35,685 (51,435) Series 5 (25,908,495) (26,593,356) Accrued expenses (7,148) (15,019) Series 6 (1,023,185) (450,868) Commitments related to repurchase Series 7 (13,365) (63,261) transactions 7,631,344 (8,245,830) (31,469,270) (33,405,495) Payable for securities purchased 1,171,869 (553,776) NET ASSETS ATTRIBUTABLE NET CASH FLOWS FROM (USED IN) TO CONTRACT OWNERS, OPERATING ACTIVITIES 11,698,188 11,689,101 END OF YEAR 184,679,409 185,199,104 CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES Premium payments 19,345,573 21,683,230 Amounts paid on withdrawals (31,096,080) (33,455,747) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (11,750,507) (11,772,517) Effect of exchange rate changes on foreign cash 1,084 5,371 Increase (Decrease) in cash/bank overdraft (51,235) (78,045) Cash (bank overdraft), beginning of year (785) 77,260 CASH (BANK OVERDRAFT), END OF YEAR (52,020) (785) SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Interest received 1,344,194 1,436,771 Dividends received, net of withholding taxes 2,123,043 1,931,447 Interest paid — 95

The accompanying Notes are an integral part of these financial statements.

116 DFS GUARANTEED INVESTMENT FUNDS Schedule of Investment Portfolio as at December 31, 2016 For ease of comprehensionSCHEDULE to theOF reader, INVESTMENT for the DFS GIF PORTFOLIO – Income – Fiera Capital, the entire portfolio of securities in the Schedule of Investment Portfolio as at June 30, 2016, has not been disclosed . Instead, the major categories of assets are listed along with the percentages that each of these categories holdas . Theat December total costs, 31, fair 2016 values, number of units, total investments and net assets are also listed . Number Fair of Shares Cost Value $ $ EQUITIES (48.9%) Energy (12.2%) Canadian Natural Resources 105,094 4,054,814 4,496,972 Cenovus Energy 78,030 1,543,930 1,584,009 Enbridge* 54,486 2,892,578 3,078,459 Husky Energy* 87,917 1,384,985 1,432,168 Peyto Exploration & Development 49,142 1,588,136 1,632,006 Raging River Exploration 154,556 1,607,086 1,632,111 Seven Generations Energy 92,400 2,846,089 2,893,044 Spartan Energy 468,900 1,572,550 1,561,437 Suncor Energy 39,420 1,397,424 1,730,538 TransCanada* 40,382 1,926,331 2,444,726 20,813,923 22,485,470 Materials (5.4%) Agnico Eagle Mines 25,000 1,607,355 1,411,250 Agrium 13,389 1,658,510 1,806,979 CCL Industries, Class B 10,449 1,420,912 2,756,446 Detour Gold 55,121 1,448,249 1,008,163 First Quantum Minerals 121,273 1,273,055 1,618,995 Guyana Goldfields 234,463 2,127,215 1,434,914 9,535,296 10,036,747 Industrials (4.3%) Canadian National Railway Company 38,940 2,491,897 3,518,618 Canadian Pacific Railway 10,095 1,709,712 1,933,798 Waste Connections 23,521 2,005,008 2,477,702 6,206,617 7,930,118 Consumer Discretionary (4.6%) Dollarama 14,730 746,091 1,449,137 Gildan Activewear* 85,462 2,805,569 2,913,400 Magna International, Class A 43,627 2,173,670 2,543,454 Quebecor, Class B 43,115 1,459,869 1,609,052 7,185,199 8,515,043 Consumer Staples (1.9%) Alimentation Couche-Tard, Class B 37,251 1,841,675 2,267,841 Loblaw Companies 16,532 924,590 1,171,127 2,766,265 3,438,968 Health Care (0.2%) Valeant Pharmaceuticals International* 17,065 3,450,499 332,256 Financials (17.4%) Brookfield Asset Management, Class A 45,617 2,013,996 2,020,833 ECN Capital 181,641 559,490 599,415 Element Fleet Management Corporation 169,641 1,988,079 2,113,727 Intact Financial Corporation 14,930 1,274,186 1,434,773 Manulife Financial 178,993 3,620,819 4,279,723 Royal Bank of Canada 80,319 5,442,665 7,298,588

*Securities pledged as collateral, in part or in whole, through the securities lending program. The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 117 Balanced and Asset Allocation

DFS GIF – CANADIAN BALANCED – FIERA CAPITAL (cont.)

SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Shares Cost Value $ $ Financials (cont.) Scotiabank* 78,213 4,779,142 5,847,204 Sun Life Financial 27,600 1,196,752 1,422,780 Toronto-Dominion Bank 107,762 4,967,277 7,136,000 25,842,406 32,153,043 Information Technology (2.3%) CGI Group, Class A 65,153 3,327,012 4,198,459 Utilities (0.6%) Algonquin Power & Utilities Corp .* 98,726 1,111,372 1,124,489 TOTAL EQUITIES 80,238,589 90,214,593

Par Value BONDS (20.3%) Canadian Bonds (20.3%) Government of Canada (5.1%) Broadcast Center Trust 7 .530%, 2027-05-01 CAD 198,363 214,979 254,936 Canada Housing Trust 2 .350%, 2018-12-15 CAD 488,000 511,188 501,535 Government of Canada 0 .250%, 2018-05-01* CAD 5,122,000 5,088,891 5,092,910 Series G401, 0 .500%, 2019-02-01 CAD 1,644,000 1,633,317 1,634,886 5 .750%, 2033-06-01* CAD 133,000 215,492 197,934 2 .750%, 2048-12-01 CAD 761,000 858,556 836,192 PSP Capital Series 7, 3 .290%, 2024-04-04 CAD 120,000 119,939 128,016 Royal Office Finance Series A, 5 209%,. 2032-11-12 CAD 711,440 705,399 854,938 9,347,761 9,501,347 Provincial Governments and Crown Corporations (7.9%) Ontario Infrastructure 4 .700%, 2037-06-01 CAD 70,000 70,093 81,545 Ontario School Boards Financing Corporation Series 00A1, 7 .200%, 2025-06-09 CAD 314,363 381,354 382,547 Series 04A1, 5 .483%, 2029-11-26 CAD 374,651 399,833 443,562 Private Placement, Series 06A1, 5 .070%, 2031-04-18 CAD 361,461 361,461 407,472 Province of British Columbia 3 .200%, 2044-06-18 CAD 206,000 190,344 207,566 2 .800%, 2048-06-18 CAD 212,000 201,081 198,136 Province of Ontario 4 .400%, 2019-06-02* CAD 651,000 734,099 701,114 4 .000%, 2021-06-02* CAD 24,000 26,238 26,426 3 .150%, 2022-06-02* CAD 1,322,000 1,348,465 1,410,568 2 .850%, 2023-06-02 CAD 2,171,000 2,137,575 2,274,802 3 .500%, 2024-06-02 CAD 950,000 1,006,992 1,031,757 2 .600%, 2025-06-02 CAD 848,000 880,012 861,729 2 .400%, 2026-06-02* CAD 251,000 257,777 249,187 *Securities pledged as collateral, in part or in whole, through the securities lending program. The accompanying Notes are an integral part of these financial statements.

118 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Par Fair Value Cost Value $ $ Provincial Governments and Crown Corporations (cont.) 3 .500%, 2043-06-02 CAD 24,000 22,362 25,099 2 .900%, 2046-12-02 CAD 791,000 766,426 741,379 2 .800%, 2048-06-02 CAD 1,071,000 1,003,991 986,165 Province of Québec 4 .500%, 2019-12-01 CAD 1,110,000 1,228,858 1,211,991 3 .500%, 2022-12-01* CAD 612,000 638,452 665,455 2 .750%, 2025-09-01* CAD 314,000 329,800 322,284 2 .500%, 2026-09-01 CAD 665,000 689,111 664,376 5 .750%, 2036-12-01* CAD 103,000 141,913 141,074 4 .250%, 2043-12-01 CAD 133,000 136,103 156,238 3 .500%, 2045-12-01 CAD 1,056,000 1,100,443 1,102,823 3 .500%, 2048-12-01 CAD 52,000 58,620 54,794 TCHC Issuer Trust 4 .877%, 2037-05-11 CAD 59,000 59,000 69,049 Series B, 5 395%,. 2040-02-22 CAD 110,000 112,200 139,614 14,282,603 14,556,752 Corporations (7.3%) Bank of Montreal 2 .390%, 2017-07-12 CAD 531,000 532,638 534,911 3 .340%, (floating rate from 2020-12-08), 2025-12-08 CAD 265,000 264,902 270,002 3 .320%, (floating rate from 2021-06-01), 2026-06-01 CAD 231,000 230,968 234,837 Blackbird Infrastructure 407 General Partners 1 .713%, (floating rate from 2020-01-08), 2021-10-08 CAD 77,000 76,400 76,166 British Columbia Ferry Services 5 .021%, 2037-03-20 CAD 70,000 70,000 82,965 Caisse centrale Desjardins 2 .443%, 2019-07-17 CAD 411,000 426,236 420,125 Canadian Imperial Bank of Commerce 2 .350%, 2017-10-18 CAD 672,000 676,989 678,669 3 .000%, (floating rate from 2019-10-28), 2024-10-28 CAD 30,000 30,534 30,269 3 .420%, (floating rate from 2021-01-26), 2026-01-26* CAD 217,000 217,795 221,194 Canadian Utilities 4 .543%, 2041-10-24 CAD 154,000 168,726 172,697 4 .722%, 2043-09-09 CAD 82,000 92,659 94,654 4 .085%, 2044-09-02 CAD 68,000 69,694 71,346 Capital City Link Series A, 4 386%,. 2046-03-31 CAD 182,000 181,662 186,503 Capital Desjardins Series G, 5 187%,. 2020-05-05 CAD 160,000 184,640 175,518 Cominar Real Estate Investment Trust Series 9, 4 .164%, 2022-06-01* CAD 245,000 245,000 249,770 Series 10, 4 247%,. 2023-05-23 CAD 129,000 129,183 130,436 CSS (FSCC) Partnership 6 .915%, 2042-07-31 CAD 34,683 46,405 45,943 CU 3 .763%, 2046-11-19 CAD 71,000 71,000 70,745 Enbridge 3 .940%, 2023-06-30* CAD 120,000 120,000 127,507 7 .200%, 2032-06-18 CAD 229,000 284,550 292,284 4 .570%, 2044-03-11* CAD 194,000 179,025 191,847 Grand Renewable Solar Series 1A, 3 .926%, 2035-01-31 CAD 102,558 102,558 101,631 *Securities pledged as collateral, in part or in whole, through the securities lending program. The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 119 Balanced and Asset Allocation

DFS GIF – CANADIAN BALANCED – FIERA CAPITAL (cont.)

SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Par Fair Value Cost Value $ $ Corporations (cont.) Greater Toronto Airports Authority Series 99-1, 6 .450%, 2029-07-30 CAD 116,944 128,265 144,806 Health Montréal Collective, Private Placement Series 144A, 6 .721%, 2049-09-30 CAD 489,000 595,071 607,789 Hospital Infrastructure Series A, 5 439%,. 2045-01-31 CAD 152,634 152,632 170,375 Integrated Team Solutions SJHC 5 .946%, 2042-11-30 CAD 53,389 53,766 65,458 Laurentian Bank of Canada 2 .750%, 2021-04-22 CAD 105,000 104,776 105,991 Melancthon Wolfe Wind 3 .834%, 2028-12-31 CAD 117,250 117,264 119,694 North West Redwater Partnership Series A, 3 200%,. 2024-07-22 CAD 195,000 195,135 202,507 3 .200%, 2026-04-24 CAD 94,000 93,800 95,802 Series F, 4 250%,. 2029-06-01 CAD 110,000 109,694 117,773 Northland Power Solar Finance Limited Partnership Series A, 4 958%,. 2032-12-31 CAD 135,731 135,741 149,681 Plenary Health Care Partnerships Humber 4 .895%, 2039-05-31 CAD 126,871 126,871 140,565 Plenary Properties 6 .288%, 2044-01-31 CAD 271,692 325,743 347,374 Reliance Series 1, 4 .574%, 2017-03-15 CAD 69,000 69,000 69,337 Series 2, 5 .187%, 2019-03-15 CAD 149,000 149,000 155,509 Royal Bank of Canada 2 .364%, 2017-09-21 CAD 610,000 603,299 615,684 2 .260%, 2018-03-12 CAD 127,000 129,407 128,565 1 .400%, 2019-04-26 CAD 395,000 394,874 395,088 2 .860%, 2021-03-04* CAD 211,000 210,973 218,713 2 .030%, 2021-03-15 CAD 310,000 309,882 311,165 1 .583%, 2021-09-13 CAD 190,000 190,000 186,168 3 .040%, (floating rate from 2019-07-17), 2024-07-17* CAD 61,000 60,989 61,634 2 .990%, (floating rate from 2019-12-06), 2024-12-06 CAD 439,000 440,409 453,081 2 .480%, (floating rate from 2020-06-04), 2025-06-04* CAD 295,000 294,944 292,136 Scotiabank 2 .370%, 2018-01-11* CAD 321,000 319,058 325,030 3 .270%, 2021-01-11 CAD 325,000 351,302 342,389 2 .898%, (floating rate from 2017-08-03), 2022-08-03 CAD 412,000 416,315 415,425 3 .367%, (floating rate from 2020-12-08), 2025-12-08* CAD 457,000 457,000 466,011 2 .620%, 2026-12-02 CAD 170,000 169,971 168,651 SGTP Highway Bypass Series A, 4 105%,. 2045-01-31 CAD 164,000 164,000 165,194 SNC-Lavalin Innisfree McGill Finance 6 .632%, 2044-06-30 CAD 134,436 156,200 171,532 Teranet Holdings 3 .646%, 2022-11-18 CAD 110,000 110,000 112,739 Teranet Income Fund 5 .754%, 2040-12-17 CAD 86,000 88,754 92,354 6 .100%, 2041-06-17 CAD 425,000 473,988 476,580 Toronto-Dominion Bank 1 .680%, 2021-06-08 CAD 100,000 99,962 99,310 3 .226%, 2024-07-24* CAD 159,000 159,834 167,160

*Securities pledged as collateral, in part or in whole, through the securities lending program. The accompanying Notes are an integral part of these financial statements.

120 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Par Fair Value Cost Value $ $ Corporations (cont.) 2 .692%, (floating rate from 2020-06-24), 2025-06-24 CAD 136,000 136,000 135,746 2 .982%, (floating rate from 2020-09-30), 2025-09-30* CAD 142,000 142,000 142,991 5 .763%, (floating rate from 2017-12-18), 2106-12-18 CAD 263,000 293,076 273,631 TransCanada PipeLines 8 .050%, 2039-02-17* CAD 121,000 192,202 183,857 13,122,761 13,353,514 TOTAL CANADIAN BONDS 36,753,125 37,411,613 U.S. Bonds (0.0%) Sinai Health System Series A, 3 527%,. 2056-06-09 CAD 55,000 55,000 51,103 TOTAL BONDS 36,808,125 37,462,716

Number of Units INVESTMENT FUNDS (20.3%) Fiera Global Equity Fund 2,215,711 24,294,482 37,524,746

Par Value MONEY MARKET SECURITIES (10.7%) Canada Treasury Bills 2017-01-04 CAD 1,300,000 1,299,610 1,299,610 2017-01-05* CAD 1,820,000 1,819,854 1,819,854 2017-02-09 CAD 635,000 634,524 634,524 2017-02-23 CAD 110,000 109,880 109,880 2017-03-09* CAD 9,380,000 9,369,830 9,369,830 New Brunswick Treasury Bills 2017-02-09 CAD 1,950,000 1,947,952 1,947,952 Province of Nova Scotia, notes 2017-02-21 CAD 3,175,000 3,171,380 3,171,380 Québec Treasury Bills 2017-03-03 CAD 1,375,000 1,373,295 1,373,295 TOTAL MONEY MARKET SECURITIES 19,726,325 19,726,325 ASSET-BACKED SECURITIES (0.1%) CHIP Mortgage Trust 3 .663%, 2038-09-25 CAD 186,000 186,000 191,333 MORTGAGE-BACKED SECURITIES (0.0%) Merrill Lynch Financial Assets Series 2007-CA22, Class A3, 4 878%,. 2017-04-12 CAD 50,000 37,026 40,613 PORTFOLIO TRANSACTION COSTS INCLUDED IN THE SECURITIES’ COST (70,266) — TOTAL INVESTMENTS (100.3%) 161,220,281 185,160,326 OTHER NET ASSETS (-0.3%) (480,917) NET ASSETS (100%) 184,679,409

*Securities pledged as collateral, in part or in whole, through the securities lending program. The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 121 Balanced and Asset Allocation

DFS GIF – CANADIAN BALANCED – FIERA CAPITAL (cont.)

TOP FIVE HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio FIERA GLOBAL EQUITY FUND 20.3% Moody’s Corporation 4 .5% Becton, Dickinson and Company 4 .2% Johnson & Johnson 4 .2% Keyence Corporation 4 .0% Mastercard 3 3%.

122 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide investors with a balance of capital growth and interest income by investing primarily in Canadian fixed income and equity securities . Investment Strategy To provide such a balance by investing a portion of its assets in the common shares of medium and large cap Canadian corporations and the remainder in Canadian government and Canadian investment-grade corporate bonds and other interest-bearing instruments .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Equities 90,214,593 — — 90,214,593 Bonds 22,824,518 14,638,198 — 37,462,716 Investment Funds — 37,524,746 — 37,524,746 Mortgage-Backed Securities — 40,613 — 40,613 Asset-Backed Securities — 191,333 — 191,333 Money Market Securities 19,726,325 — — 19,726,325 TOTAL 132,765,436 52,394,890 — 185,160,326

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Equities 84,558,071 — — 84,558,071 Bonds 21,704,615 17,849,045 — 39,553,660 Investment Funds — 45,021,231 — 45,021,231 Mortgage-Backed Securities — 311,077 — 311,077 Asset-Backed Securities — 195,326 — 195,326 Money Market Securities 13,248,173 — — 13,248,173 TOTAL 119,510,859 63,376,679 — 182,887,538

Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Classification of Level 3 As at December 31, 2016 and 2015, the Fund has no financial instruments classified within Level 3 .

DFS GUARANTEED INVESTMENT FUNDS 123 Balanced and Asset Allocation

DFS GIF – CANADIAN BALANCED – FIERA CAPITAL (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Reconciliation of Level 3 Fair Value Measurement The following table summarizes a reconciliation of movements on Level 3 financial instruments between the beginning and end of the year: December 31, 2016 Total $ Balance, Beginning of Year — Proceeds from sale of investments — Investments purchased 2,799,168 Net realized gain (loss) — Net unrealized gain (loss) — Transfers to (from) Level 3 (2,799,168) Balance, End of Year —

Certain securities classified as Level 3 entailed restrictions . In April 2016, these securities valued at approximately $2,799,000 were transferred from Level 3 to Level 1 following the expiration of the restrictions . These securities are now valued at the quoted prices on the active markets . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table "Investment Measured at Fair Value within the Levels" also represent the fair value of investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Currency Risk Part of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . As at December 31, 2016 and 2015, the majority of the Fund’s financial assets and liabilities are denominated in Canadian dollars . As a result, the Fund is not significantly exposed to currency risk . Interest Rate Risk Part of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The following table summarizes the Fund’s exposure to interest rate risk . It includes the Fund’s financial assets and liabilities at fair value, categorized by the earlier of contractual re-pricing or maturity dates . The table also illustrates the impact on the Net Assets Attributable to Contract Owners, had prevailing interest rates changed by 0 .25%, assuming a parallel shift in the yield curve, with all other variables held constant .

Impact on Net Assets Less than Greater than Attributable to 1 Year 1 to 5 Years 5 to 10 Years 10 Years Total Contract Owners $ $ $ $ $ $ December 31, 2016 22,302,575 14,416,500 9,245,293 11,404,599 57,368,967 962,041 December 31, 2015 15,605,259 15,537,608 10,556,269 11,608,315 53,307,451 684,204 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant .

124 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk Part of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The following table summarizes the concentration risk, as a percentage of the Net Assets Attributable to Contract Owners:

MARKET SEGMENT December 31, 2016 MARKET SEGMENT December 31, 2015 % % Equities Equities Financials 17 4. Financials 17 3. Energy 12 2. Energy 7 9. Materials 5 .4 Materials 6 .3 Consumer Discretionary 4 .6 Industrials 4 .5 Industrials 4 .3 Consumer Staples 2 .7 Information Technology 2 3. Consumer Discretionary 2 3. Consumer Staples 1 9. Information Technology 2 .1 Utilities 0 6. Health Care 1 3. Health Care 0 2. Telecommunication Services 1 2. Bonds Growth Investment Funds 24 3. Provincial Governments Bonds and Crown Corporations 7 9. Corporations 8 .9 Corporations 7 3. Provincial Governments Government of Canada 5 .1 and Crown Corporations 8 .2 Growth Investment Funds 20 3. Government of Canada 4 .3 Money Market Securities 10 .7 Money Market Securities 7 2. Asset-Backed Securities 0 .1 Mortgage-Backed Securities 0 2. Other Net Assets (0 3). Asset-Backed Securities 0 .1 TOTAL 100 Other Net Assets 1 2. TOTAL 100

Price Risk The Fund may trade in financial instruments and take positions in traded and over-the-counter instruments . Part of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $

FTSE TMX Canada 91 Day Treasury Bills (10%) 0 25. 51,202 47,580 FTSE TMX Canada Universe (30%) 1 00. 614,429 570,958 S&P/TSX Capped (40%) 3 .00 2,457,718 2,283,832 MSCI World Net (20%) 3 .00 1,228,859 1,141,916 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant .

DFS GUARANTEED INVESTMENT FUNDS 125 Balanced and Asset Allocation

DFS GIF – CANADIAN BALANCED – FIERA CAPITAL (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Credit Risk Part of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Fund’s credit risk concentration is separated between fixed-income and money market securities . Their fair values include consideration of the issuers’ creditworthiness and accordingly, represent the Fund’s maximum exposure to credit risk .

Portfolio’s Fixed-Income Securities by Credit Rating Category

Credit Rating Percentage of Percentage of Fixed-Income Securities Fixed-Income Securities December 31, 2016 December 31, 2015 % % AAA 28 22 AA 37 39 A 23 30 BBB 12 9 TOTAL 100 100

Portfolio’s Money Market Securities by Credit Rating Category

Credit Rating Percentage of Money Percentage of Money Market Securities Market Securities December 31, 2016 December 31, 2015 % % R-1 (High) 67 62 R-1 (Middle) 33 38 TOTAL 100 100

Securities Lending and Repurchase Transactions As part of its securities lending against cash and repurchase transactions, the Fund is exposed to counterparty credit risk . The carrying amount of financial assets lent as part of repurchase transactions is:

$ December 31, 2016 13,335,314 December 31, 2015 5,688,216 As part of its reverse repurchase transactions, the Fund is permitted to sell or repledge in the absence of default the financial assets held as collateral . The fair value of those financial assets is:

$ December 31, 2016 9,580,586 December 31, 2015 2,811,681

Liquidity Risk Part of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

126 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

DERECOGNITION OF FINANCIAL ASSETS Securities Lending and Repurchase Transactions As part of transactions involving securities lending or repurchase transactions, the Fund transfers financial assets under terms and conditions providing for their future repurchase . These financial assets remain recognized in the “Investments at fair value through profit or loss pledged as collateral” of the Statement of Financial Position as the Fund retains substantially all the risks and rewards related to these assets .

December 31, 2016 December 31, 2015 $ $ Investments at FVTPL pledged as Collateral 27,680,152 21,876,504 Value of Collateral received 28,233,755 22,314,035 The Funds require collateral in the form of cash or such other securities as may be acceptable to Desjardins Financial Security and that have an aggregate value of no less than 102% of the loaned securities fair value . The following table presents the carrying amount and the fair value of financial assets transferred by the Fund but not derecognized as well as the related liabilities recognized in “Commitments related to repurchase transactions” and “Commitments related to securities lending” of the Statement of Financial Position .

Fair Value* Fair Value* December 31, 2016 December 31, 2015 $ $ Financial Assets 13,335,314 5,688,216 Related Liabilities 13,316,482 5,685,138 *The fair value equals the carrying amount .

RECONCILIATION OF INCOME FROM SECURITY LENDING AND REPURCHASE TRANSACTION (Note 2) The following table shows a reconciliation of the total income generated from securities lending transactions of the Fund and the revenue from securities lending and repurchase transactions disclosed in the Fund’s Statement of Comprehensive Income .

December 31, December 31, December 31, December 31, 2016 2016 2015 2015 $ % $ % Total Income 29,335 100 35,557 100 Net Income received by the Fund 17,601 60 21,334 60 Net Income received by Desjardins Trust 11,734 40 14,223 40

DFS GUARANTEED INVESTMENT FUNDS 127 Balanced and Asset Allocation

DFS GIF – CANADIAN BALANCED – FIERA CAPITAL (cont.)

FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements . The net assets per unit presented in the financial statements may differ from the net asset value calculated for fund pricing purposes .

Net Assets Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 1 10.09 9 .58 9 .53 8 .75 7 .91 Series 3 11.16 10 .53 10 .41 9 .51 8 .54 Series 5 11.78 11 .05 10 .85 9 .85 8 .79 Series 6 5.80 5 .44 5 .35 — — Series 7 5.88 5 .50 5 .37 — — Net Asset Value Per Unit as at December 31st ($) Series 1 10.09 9 .58 9 .53 8 .75 7 .92 Series 3 11.16 10 .53 10 .41 9 .51 8 .55 Series 5 11.78 11 .05 10 .85 9 .85 8 .80 Series 6 5.80 5 .44 5 .35 — — Series 7 5.88 5 .50 5 .37 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 1 7,258 7,752 9,210 9,743 10,555 Series 3 14,379 16,332 19,414 21,183 22,565 Series 5 148,882 152,946 162,582 159,832 158,726 Series 6 13,242 7,625 1,851 — — Series 7 918 544 323 — — Number of units outstanding (000) Series 1 719 809 967 1,113 1,333 Series 3 1,289 1,551 1,866 2,229 2,641 Series 5 12,639 13,843 14,988 16,230 18,032 Series 6 2,283 1,401 346 — — Series 7 156 99 60 — — Management expense ratio (MER)1 (%) Series 1 3.83 3 .83 3 .82 3 .82 3 .40 Series 3 3.19 3 .20 3 .19 3 .19 2 .85 Series 5 2.55 2 .55 2 .55 2 .55 2 .30 Series 6 2.57 2 .59 2 .60 — — Series 7 2.08 2 .12 2 .13 — — Portfolio turnover rate2 (%) 117.30 83 .51 92 .94 127 .12 156 .72

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP.

1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

128 DFS GUARANTEED INVESTMENT FUNDS Balanced and Asset Allocation DFS GIF – CANADIAN BALANCED – FRANKLIN BISSETT*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Franklin Bissett Canadian Equity Fund 15% 9. Franklin Bissett Corporate Bond Fund 14% 7. Franklin Bissett Core Plus Bond Fund 14% 6. Franklin Bissett Monthly Income and Growth Fund 6 4%. Franklin Bissett U S. . Focus Fund 6 3%. Franklin Bisset All Canadian Focus Fund 6 1%. Franklin Bissett Microcap Fund 5 9%. Franklin Bissett Small Cap Fund 5 3%. Templeton EAFE Developed Markets Fund 4 2%. Franklin U S. . Rising Dividends Fund 4 2%.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 3Series 3Series 3 Series 5Series 5Series 5 Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value

1 Year 11,040 10% 4. 11,081 10% 8. 11,097 11% 0. 11,147 11% 5. 3 Years 11,002 3% 2. 11,134 3% 6. — — — — 5 Years 13,836 6 7%. 14,103 7% 1. — — — — 10 Years 13,386 3 0%. — — — — — — Since 3 5%. 14,290 4 0%. 10,905 3 1%. 11,038 3 5%. Inception 14,699

* This Fund is composed of units of the corresponding underlying investment funds.

DFS GUARANTEED INVESTMENT FUNDS 129 Balanced and Asset Allocation

DFS GIF – CANADIAN BALANCED – FRANKLIN BISSETT (cont.)

STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Interest for attribution purposes 348,908 105,744 Cash 29,811 — Dividends 3,245,002 3,531,487 Investments at fair value through profit Changes in fair value: or loss (FVTPL) 206,621,422 193,040,209 Net realized gain (loss) on Premiums receivable 639,710 442,582 investments 7,450,912 12,610,257 Receivable for securities sold — 68,041 Net unrealized gain (loss) on 207,290,943 193,550,832 investments 14,122,050 (18,147,681) LIABILITIES 25,166,872 (1,900,193) Current Liabilities Bank overdraft — 67,886 EXPENSES Accrued expenses 464,549 441,042 Management fees and guarantee charge 4,079,357 4,492,189 Withdrawals payable 368,929 322,265 Operating expenses 1,210,376 1,394,478 Payable for securities purchased 247,476 175,627 5,289,733 5,886,667 1,080,954 1,006,820 Withholding taxes 104,675 105,947 NET ASSETS ATTRIBUTABLE TO 5,394,408 5,992,614 CONTRACT OWNERS 206,209,989 192,544,012 INCREASE (DECREASE) IN NET ASSETS NET ASSETS PER UNIT FROM OPERATIONS ATTRIBUTABLE TO Series 3 7.35 6 .66 CONTRACT OWNERS 19,772,464 (7,892,807) Series 5 7.62 6 88. DATA PER SERIES Series 6 5.45 4 91. SERIES 3 Series 7 5.52 4 .95 Increase (Decrease) in Net Assets from Operations 578,052 (294,604) - per unit 0.65 (0 27). Average Number of Units 884,052 1,092,829 SERIES 5 Increase (Decrease) in Net Assets from Operations 15,829,540 (6,557,000) - per unit 0.73 (0 26). Average Number of Units 21,742,549 25,455,075 SERIES 6 Increase (Decrease) in Net Assets from Operations 3,063,169 (967,948) - per unit 0.55 (0 .23) Average Number of Units 5,528,664 4,173,699 SERIES 7 Increase (Decrease) in Net Assets from Operations 301,703 (73,255) - per unit 0.58 (0 .19) Average Number of Units 524,251 387,174

The accompanying Notes are an integral part of these financial statements.

130 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 192,544,012 226,338,682 to contract owners 19,772,464 (7,892,807) Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 19,772,464 (7,892,807) Net realized gain (loss) (7,450,912) (12,610,257) Net unrealized gain (loss) (14,122,050) 18,147,681 Premiums Non-cash distribution from Series 3 635,513 547,986 investments (3,489,252) (3,531,487) Series 5 13,397,921 11,850,340 Proceeds from sale/maturity of Series 6 12,422,425 12,662,984 investments 18,941,341 35,736,775 Series 7 1,034,920 1,625,601 Investments purchased (7,460,340) (3,790,344) 27,490,779 26,686,911 Receivable for securities sold 68,041 (31,557) Withdrawals Accrued expenses 23,507 (75,020) Series 3 (1,865,715) (1,944,769) Payable for securities purchased 71,849 (51,193) Series 5 (27,458,905) (45,955,191) NET CASH FLOWS FROM (USED IN) Series 6 (3,942,221) (4,332,945) OPERATING ACTIVITIES 6,354,648 25,901,791 Series 7 (330,425) (355,869) (33,597,266) (52,588,774) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES NET ASSETS ATTRIBUTABLE Premium payments 27,293,651 26,642,782 TO CONTRACT OWNERS, END OF YEAR 206,209,989 192,544,012 Amounts paid on withdrawals (33,550,602) (52,703,000) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (6,256,951) (26,060,218) Increase (Decrease) in cash/bank overdraft 97,697 (158,427) Cash (bank overdraft), beginning of year (67,886) 90,541 CASH (BANK OVERDRAFT), END OF YEAR 29,811 (67,886) SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Interest paid 23 203

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 131 Balanced and Asset Allocation

DFS GIF – CANADIAN BALANCED – FRANKLIN BISSETT (cont.)

SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.2%) Franklin Bissett Canadian Balanced Fund, Series O 4,532,165 162,143,054 206,621,422 TOTAL INVESTMENTS 162,143,054 206,621,422 OTHER NET ASSETS (-0.3%) (411,433) NET ASSETS (100%) 206,209,989

The accompanying Notes are an integral part of these financial statements.

TOP HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Franklin Bissett Canadian Equity Fund 15 9%. Franklin Bissett Corporate Bond Fund 14 7%. Franklin Bissett Core Plus Bond Fund 14 6%. Franklin Bissett Monthly Income and Growth Fund 6 .4% Franklin Bissett U S. . Focus Fund 6 .3% Franklin Bisset All Canadian Focus Fund 6 .1% Franklin Bissett Microcap Fund 5 .9% Franklin Bissett Small Cap Fund 5 .3% Templeton EAFE Developed Markets Fund 4 .2% Franklin U S. . Rising Dividends Fund 4 .2% Franklin Bissett Canadian Dividend Fund 4 .1% Templeton Global Bond Fund 3 .9% Franklin Mutual European Fund 3 4%. Templeton Global Smaller Companies Fund 2 3%. Templeton Emerging Markets Fund 1 .1% Franklin Bissett Canadian Short Term Bond Fund 0 6%. Cash and Cash Equivalents 0 .5% Franklin Bissett Canadian Governement Fund 0 .5%

132 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide investors with a balance of current income and long-term capital appreciation primarily through the investment in Canadian fixed-income and equity securities . Investment Strategy To provide such an opportunity by investing in a diversified portfolio of Franklin Bissett mutual funds . The underlying funds may invest in foreign securities .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 206,621,422 — — 206,621,422 TOTAL 206,621,422 — — 206,621,422

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 193,040,209 — — 193,040,209 TOTAL 193,040,209 — — 193,040,209 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table "Investment Measured at Fair Value within the Levels" also represent the fair value of investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

DFS GUARANTEED INVESTMENT FUNDS 133 Balanced and Asset Allocation

DFS GIF – CANADIAN BALANCED – FRANKLIN BISSETT (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada Universe (35%) 10 0. 639,432 621,058 Bloomberg Barclays U S. . Aggregate Bond (2 5. %)* 10 0. 45,674 44,361 J .P . Morgan Global Government Bond (2 5. %) 10 0. 45,674 44,361 S&P/TSX Small Cap (5%) 3 00. 274,042 266,168 S&P/TSX (32 5. %) 3 00. 1,781,275 1,730,090 S&P 500 (10%) 3 00. 548,084 532,335 MSCI EAFE Net (10%) 3 00. 548,084 532,335 MSCI Emerging Markets Net (2 5. %) 3 00. 137,021 133,084 * On August 24, 2016, “Barclays Capital” was renamed “Bloomberg Barclays” . When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

134 DFS GUARANTEED INVESTMENT FUNDS FINANCIAL HIGHLIGHTS — UNAUDITED

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements . The net assets per unit presented in the financial statements may differ from the net asset value calculated for fund pricing purposes .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 3 7.35 6 .66 6 .96 6 .68 5 .79 Series 5 7.62 6 .88 7 .16 6 .84 5 .91 Series 6 5.45 4 .91 5 .10 — — Series 7 5.52 4 .95 5 .12 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 3 6,072 6,724 8,415 9,253 7,874 Series 5 160,715 158,946 199,608 188,334 137,213 Series 6 35,937 24,394 17,031 — — Series 7 3,487 2,480 1,284 — — Number of units outstanding (000) Series 3 826 1,010 1,209 1,385 1,361 Series 5 21,092 23,115 27,885 27,520 23,230 Series 6 6,591 4,965 3,336 — — Series 7 632 501 251 — — Management expense ratio (MER)1 (%) Series 3 3.18 3 .17 3 .19 3 .18 2 .85 Series 5 2.77 2 .77 2 .77 2 .77 2 .50 Series 6 2.60 2 .59 2 .61 — — Series 7 2.11 2 .10 2 .00 — — Portfolio turnover rate2 (%) 7.99 5 .38 6 .14 3 .49 4 .00

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

DFS GUARANTEED INVESTMENT FUNDS 135 Balanced and Asset Allocation DFS GIF – BALANCED GROWTH – FRANKLIN QUOTENTIAL*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Franklin Bissett Core Plus Bond Fund 18% 9. Franklin U S. . Rising Dividends Fund 6 4%. Franklin U S. . Core Equity Fund 6 0%. Franklin Bissett Canadian Equity Fund 5 7%. Franklin Strategic Income Fund 5 0%. Franklin Mutual European Fund 4 7%. Franklin Bisset All Canadian Focus Fund 4 5%. Franklin U S. . Opportunities Fund 4 4%. Templeton Global Bond Fund 4 3%. Franklin Templeton Canadian Large Cap Fund 3% 4.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 3Series 3Series 3 Series 5Series 5Series 5 Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value

1 Year 10,126 1% 3. 10,154 1% 5. 10,170 1% 7. 10,213 2 1%. 3 Years 11,221 3 9%. 11,318 4 2%. — — — — 5 Years 13,473 6 1%. 13,668 6 4%. — — — — 10 Years 12,612 2% 3. — — — — — — Since 2% 3. 12,846 2% 8. 11,051 3% 6. 11,194 4 0%. Inception 12,631

* This Fund is composed of units of the corresponding underlying investment funds.

136 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Dividends 6,890,976 9,013,352 Investments at fair value through profit Changes in fair value: or loss (FVTPL) 520,123,106 537,605,591 Net realized gain (loss) on Premiums receivable 415,265 297,343 investments 26,834,274 40,955,691 Receivable for securities sold 371,782 178,040 Net unrealized gain (loss) on 520,910,153 538,080,974 investments (10,144,391) (9,611,349) LIABILITIES 23,580,859 40,357,694 Current Liabilities Bank overdraft 243,546 178,117 EXPENSES Accrued expenses 1,276,662 1,320,670 Management fees and guarantee charge 12,323,826 12,816,429 Withdrawals payable 965,268 500,515 Operating expenses 2,988,666 3,170,319 Payable for securities purchased — 109,762 15,312,492 15,986,748 2,485,476 2,109,064 Withholding taxes 626,466 893,265 NET ASSETS ATTRIBUTABLE TO 15,938,958 16,880,013 CONTRACT OWNERS 518,424,677 535,971,910 INCREASE (DECREASE) IN NET ASSETS NET ASSETS PER UNIT FROM OPERATIONS ATTRIBUTABLE TO Series 3 6.32 6 24. CONTRACT OWNERS 7,641,901 23,477,681 Series 5 6.51 6 41. DATA PER SERIES Series 6 5.53 5 .43 SERIES 3 Series 7 5.60 5 .48 Increase (Decrease) in Net Assets from Operations 138,962 559,940 - per unit 0.07 0 27. Average Number of Units 1,972,602 2,077,439 SERIES 5 Increase (Decrease) in Net Assets from Operations 6,691,407 22,645,710 - per unit 0.09 0 29. Average Number of Units 75,200,258 78,598,853 SERIES 6 Increase (Decrease) in Net Assets from Operations 715,435 245,908 - per unit 0.14 0 .09 Average Number of Units 5,047,871 2,809,414 SERIES 7 Increase (Decrease) in Net Assets from Operations 96,097 26,123 - per unit 0.16 0 .17 Average Number of Units 601,863 157,967

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 137 Balanced and Asset Allocation

DFS GIF – BALANCED GROWTH – FRANKLIN QUOTENTIAL (cont.)

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 535,971,910 516,303,666 to contract owners 7,641,901 23,477,681 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 7,641,901 23,477,681 Net realized gain (loss) (26,834,274) (40,955,691) Net unrealized gain (loss) 10,144,391 9,611,349 Premiums Non-cash distribution from Series 3 999,687 1,242,079 investments (6,264,510) (8,120,087) Series 5 39,892,965 43,698,156 Proceeds from sale/maturity of Series 6 12,452,211 16,316,491 investments 47,115,452 35,138,386 Series 7 1,573,482 2,417,805 Investments purchased (6,678,574) (15,390,908) 54,918,345 63,674,531 Receivable for securities sold (193,742) 276,261 Withdrawals Accrued expenses (44,008) 46,650 Series 3 (2,340,271) (2,156,808) Payable for securities purchased (109,762) 109,762 Series 5 (73,586,549) (63,665,534) NET CASH FLOWS FROM (USED IN) Series 6 (3,748,599) (1,640,023) OPERATING ACTIVITIES 24,776,874 4,193,403 Series 7 (432,060) (21,603) (80,107,479) (67,483,968) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES NET ASSETS ATTRIBUTABLE Premium payments 54,800,423 63,660,463 TO CONTRACT OWNERS, END OF YEAR 518,424,677 535,971,910 Amounts paid on withdrawals (79,642,726) (67,930,058) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (24,842,303) (4,269,595) Increase (Decrease) in cash/bank overdraft (65,429) (76,192) Cash (bank overdraft), beginning of year (178,117) (101,925) CASH (BANK OVERDRAFT), END OF YEAR (243,546) (178,117)

The accompanying Notes are an integral part of these financial statements.

138 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.3%) Franklin Quotential Balanced Growth Portfolio 47,413,228 382,066,918 520,123,106 TOTAL INVESTMENTS 382,066,918 520,123,106 OTHER NET ASSETS (-0.3%) (1,698,429 NET ASSETS (100%) 518,424,677

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Franklin Bissett Core Plus Bond Fund 18 9%. Franklin U S. . Rising Dividends Fund 6 .4% Franklin U S. . Core Equity Fund 6 .0% Franklin Bissett Canadian Equity Fund 5 .7% Franklin Strategic Income Fund 5 .0% Franklin Mutual European Fund 4 .7% Franklin Bisset All Canadian Focus Fund 4 .5% Franklin U S. . Opportunities Fund 4 .4% Templeton Global Bond Fund 4 .3% Franklin Templeton Canadian Large Cap Fund 3 4%. iShares Russell 1000 Value ETF 3 3%. Franklin Japan Fund 2 8%. Templeton Asian Growth Fund 2 .7% iShares TIPS Bond ETF 2 .7% iShares MSCI Japan ETF 2 6%. Franklin Bissett Small Cap Fund 2 3%. S&P Depositary Receipt Gold Trust ETF 2 0%. BMO MSCI Europe High Quality Hedged to CAD Index ETF 1 8%. Franklin Bissett Canadian Governement Fund 1 5%. iShares Intermediate Credit Bond ETF 1 4%. S&P Depositary Receipt EURO STOXX 50 ETF 1 4%. Templeton Emerging Markets Smaller Companies Fund 1 3%. Franklin European Small-Mid Cap Growth Fund 1 2%. iShares S&P/TSX 60 Index ETF 1 0%. PowerShares Senior Loan Portfolio ETF 0 8%.

DFS GUARANTEED INVESTMENT FUNDS 139 Balanced and Asset Allocation

DFS GIF – BALANCED GROWTH – FRANKLIN QUOTENTIAL (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide a balance of capital growth and interest income by investing primarily in units of an individual underlying fund in order to gain the desired exposure to the equity and fixed income markets . Investment Strategy To emphasize investments in equity underlying funds in order to increase the potential for capital appreciation over a longer investment horizon . The Fund also invests, to a lesser extent, in fixed income underlying funds in order to provide stability .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 520,123,106 — — 520,123,106 TOTAL 520,123,106 — — 520,123,106

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 537,605,591 — — 537,605,591 TOTAL 537,605,591 — — 537,605,591 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

140 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada Universe (30%) 10 0. 1,790,882 1,721,526 Bloomberg Barclays Multiverse Bond (10%)* 10 0. 596,961 573,842 S&P/TSX (30%) 3 00. 5,372,647 5,164,579 MSCI All Country World Net (30%) 3 00. 5,372,647 5,164,579 * On August 24, 2016, “Barclays Capital” was renamed “Bloomberg Barclays” . When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

DFS GUARANTEED INVESTMENT FUNDS 141 Balanced and Asset Allocation

DFS GIF – BALANCED GROWTH – FRANKLIN QUOTENTIAL (cont.)

FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 3 6 .32 6 .24 5 .99 5 .63 4 .95 Series 5 6 .51 6 .41 6 .13 5 .75 5 .04 Series 6 5 .53 5 .43 5 .19 — — Series 7 5 .60 5 .48 5 .21 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 3 11,499 12,701 13,055 13,916 13,994 Series 5 470,236 497,238 494,560 485,319 432,114 Series 6 32,581 23,162 8,240 — — Series 7 4,108 2,871 449 — — Number of units outstanding (000) Series 3 1,821 2,036 2,181 2,473 2,829 Series 5 72,244 77,569 80,634 84,385 85,713 Series 6 5,896 4,263 1,588 — — Series 7 734 524 86 — — Management expense ratio (MER)1 (%) Series 3 3 .26 3 .27 3 .27 3 .29 2 .95 Series 5 2 .97 2 .97 2 .97 2 .97 2 .65 Series 6 2 .80 2 .79 2 .80 — — Series 7 2 .34 2 .36 2 .36 — — Portfolio turnover rate2 (%) 3 .18 10 .50 2 .63 2 79. 5 66.

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

142 DFS GUARANTEED INVESTMENT FUNDS Balanced and Asset Allocation DFS GIF – CANADIAN BALANCED – CI SIGNATURE*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Scotiabank 3% 2. Royal Bank of Canada 2% 6. Toronto-Dominion Bank 2% 6. Manulife Financial Corporation 2 5%. Synchrony Financial 1% 6. Canadian National Railway Company 1% 3. Province of Quebec, 4 .25%, December 1, 2021 1% 2. Suncor Energy 1% 2. Micron Technology 1% 2. Alibaba Group Holding 1 1%.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 5Series 5Series 5 Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value

1 Year 10,496 5 0%. 10,514 5 1%. 10,564 5 6%. 3 Years 11,413 4 5%. — — — — 5 Years 13,535 6 2%. — — — — Since 13,856 5 0%. 11,170 4 0%. 11,320 4 4%. Inception

* This Fund is composed of units of the corresponding underlying investment funds.

DFS GUARANTEED INVESTMENT FUNDS 143 Balanced and Asset Allocation

DFS GIF – CANADIAN BALANCED – CI SIGNATURE (cont.)

STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Interest for attribution purposes 235,743 393,670 Investments at fair value through profit Dividends 2,711,073 918,929 or loss (FVTPL) 113,628,274 110,268,316 Changes in fair value: Premiums receivable 274,341 356,582 Net realized gain (loss) on Receivable for securities sold 95,786 203,681 investments (181,267) 7,903,115 113,998,401 110,828,579 Net unrealized gain (loss) on LIABILITIES investments 5,795,689 (7,814,344) Current Liabilities 8,561,238 1,401,370 Bank overdraft 95,849 32,321 Accrued expenses 275,933 269,081 EXPENSES Withdrawals payable 162,549 358,326 Management fees and guarantee charge 2,530,617 2,497,830 Payable for securities purchased 123,900 — Operating expenses 646,814 683,924 658,231 659,728 3,177,431 3,181,754 NET ASSETS ATTRIBUTABLE TO INCREASE (DECREASE) IN NET ASSETS CONTRACT OWNERS 113,340,170 110,168,851 FROM OPERATIONS ATTRIBUTABLE TO NET ASSETS PER UNIT CONTRACT OWNERS 5,383,807 (1,780,384) Series 5 6.93 6 .60 DATA PER SERIES Series 6 5.59 5 31. SERIES 5 Series 7 5.66 5 36. Increase (Decrease) in Net Assets from Operations 3,949,926 (1,213,513) - per unit 0.31 (0 .09) Average Number of Units 12,539,699 13,312,868 SERIES 6 Increase (Decrease) in Net Assets from Operations 1,309,521 (527,911) - per unit 0.29 (0 .18) Average Number of Units 4,485,307 2,986,797 SERIES 7 Increase (Decrease) in Net Assets from Operations 124,360 (38,960) - per unit 0.33 (0 .17) Average Number of Units 377,309 233,451

The accompanying Notes are an integral part of these financial statements.

144 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 110,168,851 96,345,537 to contract owners 5,383,807 (1,780,384) Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 5,383,807 (1,780,384) Net realized gain (loss) 181,267 (7,903,115) Net unrealized gain (loss) (5,795,689) 7,814,344 Premiums Non-cash distribution from Series 5 7,202,438 16,845,424 investments (2,946,816) (1,312,753) Series 6 7,684,018 17,794,620 Proceeds from sale/maturity of Series 7 923,876 1,329,199 investments 11,056,105 8,942,776 15,810,332 35,969,243 Investments purchased (5,854,825) (21,204,656) Withdrawals Receivable for securities sold 107,895 (197,960) Series 5 (13,684,284) (16,811,940) Accrued expenses 6,852 36,927 Series 6 (3,879,857) (3,436,044) Payable for securities purchased 123,900 (336,784) Series 7 (458,679) (117,561) NET CASH FLOWS FROM (USED IN) (18,022,820) (20,365,545) OPERATING ACTIVITIES 2,262,496 (15,941,605) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, CASH FLOWS FROM (USED IN) END OF YEAR 113,340,170 110,168,851 FINANCING ACTIVITIES Premium payments 15,892,573 36,007,859 Amounts paid on withdrawals (18,218,597) (20,092,952) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (2,326,024) 15,914,907 Increase (Decrease) in cash/bank overdraft (63,528) (26,698) Cash (bank overdraft), beginning of year (32,321) (5,623) CASH (BANK OVERDRAFT), END OF YEAR (95,849) (32,321) SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Interest paid — 159

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 145 Balanced and Asset Allocation

DFS GIF – CANADIAN BALANCED – CI SIGNATURE (cont.)

SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.3%) Signature Canadian Balanced Fund, Class I 11,702,191 108,616,724 113,628,274 TOTAL INVESTMENTS 108,616,724 113,628,274 OTHER NET ASSETS (-0.3%) (288,104) NET ASSETS (100%) 113,340,170

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Scotiabank 3 2%. Royal Bank of Canada 2 6%. Toronto-Dominion Bank 2 6%. Manulife Financial Corporation 2 .5% Synchrony Financial 1 6%. Canadian National Railway Company 1 3%. Province of Quebec, 4 .25%, December 1, 2021 1 2%. Suncor Energy 1 2%. Micron Technology 1 2%. Alibaba Group Holding 1 .1% Citigroup 1 .1% UnitedHealth Group 1 0%. Alphabet 1 0%. Province of Ontario, 2 40%,. June 2, 2026 1 0%. Samsung Electronics 1 0%. Sony Corporation 1 0%. JPMorgan Chase & Company 1 0%. Alimentation Couche-Tard 0 .9% Anthem 0 .9% Power Financial Corporation 0 .9% Province of Quebec, 2 75%,. September 1, 2025 0 8%. Province of Ontario, 3 15%,. June 2, 2022 0 8%. Nestlé SA 0 8%. Saputo Group 0 8%. Wells Fargo & Company, Warrants, October 28, 2018 0 8%.

146 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide investors with an attractive balance of current income and capital appreciation by investing primarily in a combination of Canadian equity and equity-related securities and fixed income securities . Investment Strategy For the equity portion, the Fund invests primarily in companies providing a stable income or consistent dividends . For the fixed income portion, the portfolio advisor selects high-quality fixed income securities, including bank loans and floating rate debt instruments but may choose to shift the weighting of the portion of the Fund held in bonds with longer terms to maturity depending on the expected fluctuations in interest rates . The Fund may also invest in foreign securities as well as warrants, and derivatives, the latter to aid in hedging against potential losses resulting from changes in the prices of the securities that the Fund has invested in as well as any exposure from foreign currencies .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 113,628,274 — — 113,628,274 TOTAL 113,628,274 — — 113,628,274

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 110,268,316 — — 110,268,316 TOTAL 110,268,316 — — 110,268,316 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

DFS GUARANTEED INVESTMENT FUNDS 147 Balanced and Asset Allocation

DFS GIF – CANADIAN BALANCED – CI SIGNATURE (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada Universe (40%) 1 00. 377,639 387,077 S&P/TSX (30%) 3 00. 849,688 870,924 MSCI All Country World Net (30%) 3 00. 849,688 870,924 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

148 DFS GUARANTEED INVESTMENT FUNDS FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 5 6.93 6 .60 6 .69 6 .07 5 .43 Series 6 5.59 5 .31 5 .37 — — Series 7 5.66 5 .36 5 .39 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 5 83,488 86,020 87,200 81,151 67,092 Series 6 27,445 22,332 8,501 — — Series 7 2,407 1,817 645 — — Number of units outstanding (000) Series 5 12,051 13,032 13,042 13,368 12,357 Series 6 4,914 4,204 1,584 — — Series 7 425 339 120 — — Management expense ratio (MER)1 (%) Series 5 2.99 2 .99 2 .99 2 .99 2 .68 Series 6 2.79 2 .78 2 .77 — — Series 7 2.29 2 .34 2 .36 — — Portfolio turnover rate2 (%) 7.84 15 .01 14 .81 9 .57 6 .96

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

DFS GUARANTEED INVESTMENT FUNDS 149 Balanced and Asset Allocation DFS GIF – INCOME AND GROWTH – CI SIGNATURE*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Scotiabank 3 0%. Royal Bank of Canada 2% 4. Toronto-Dominion Bank 2% 4. Manulife Financial Corporation 2% 3. Synchrony Financial 1% 4. Canadian National Railway Company 1% 2. Suncor Energy 1 1%. Micron Technology 1 1%. Citigroup 1% 0. UnitedHealth Group 1% 0.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 5Series 5Series 5 Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value

1 Year 10,704 7% 0. 10,717 7% 2. 10,770 7% 7. 3 Years 11,344 4 3%. — — — — Since Inception 13,053 6 4%. 11,120 3% 8. 11,266 4 3%.

* This Fund is composed of units of the corresponding underlying investment funds.

150 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Interest for attribution purposes 1,458,336 1,293,823 Cash 9,601 — Dividends 785,042 828,449 Investments at fair value through profit Changes in fair value: or loss (FVTPL) 73,197,187 69,141,832 Net realized gain (loss) on Premiums receivable 1,212,973 232,269 investments (298,429) 2,279,667 Receivable for securities sold — 28,314 Net unrealized gain (loss) on 74,419,761 69,402,415 investments 4,631,579 (4,300,254) LIABILITIES 6,576,528 101,685 Current Liabilities Bank overdraft — 3,897 EXPENSES Accrued expenses 177,337 170,2 Management fees and guarantee charge 1,753,238 1,750,516 Withdrawals payable 116,594 82,672 Operating expenses 239,160 265,082 Payable for securities purchased 1,101,945 6,603 1,992,398 2,015,598 1,395,876 263,378 INCREASE (DECREASE) IN NET ASSETS NET ASSETS ATTRIBUTABLE TO FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 73,023,885 69,139,037 CONTRACT OWNERS 4,584,130 (1,913,913) NET ASSETS PER UNIT DATA PER SERIES Series 5 6.53 6 .10 SERIES 5 Series 6 5.56 5 .19 Increase (Decrease) in Net Assets Series 7 5.63 5 .23 from Operations 2,565,910 (1,177,760) - per unit 0.38 (0 .14) Average Number of Units 6,687,580 8,256,775 SERIES 6 Increase (Decrease) in Net Assets from Operations 1,941,452 (713,767) - per unit 0.41 (0 28). Average Number of Units 4,764,759 2,583,468 SERIES 7 Increase (Decrease) in Net Assets from Operations 76,768 (22,386) - per unit 0.39 (0 .13) Average Number of Units 197,576 166,341

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 151 Balanced and Asset Allocation

DFS GIF – INCOME AND GROWTH – CI SIGNATURE (cont.)

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 69,139,037 58,261,476 to contract owners 4,584,130 (1,913,913) Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 4,584,130 (1,913,913) Net realized gain (loss) 298,429 (2,279,667) Net unrealized gain (loss) (4,631,579) 4,300,254 Premiums Non-cash distribution from Series 5 4,139,236 9,337,232 investments (2,243,360) (2,124,330) Series 6 11,712,843 18,754,413 Proceeds from sale/maturity of Series 7 1,157,919 590,372 investments 10,515,327 6,891,566 17,009,998 28,682,017 Investments purchased (7,994,172) (17,571,276) Withdrawals Receivable for securities sold 28,314 (28,314) Series 5 (12,589,987) (13,458,440) Accrued expenses 7,131 27,274 Series 6 (4,846,788) (2,378,991) Payable for securities purchased 1,095,342 (120,203) Series 7 (272,505) (53,112) NET CASH FLOWS FROM (USED IN) (17,709,280) (15,890,543) OPERATING ACTIVITIES 1,659,562 (12,818,609) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, CASH FLOWS FROM (USED IN) END OF YEAR 73,023,885 69,139,037 FINANCING ACTIVITIES Premium payments 16,029,294 28,641,203 Amounts paid on withdrawals (17,675,358) (15,833,576) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (1,646,064) 12,807,627 Increase (Decrease) in cash/bank overdraft 13,498 (10,982) Cash (bank overdraft), beginning of year (3,897) 7,085 CASH (BANK OVERDRAFT), END OF YEAR 9,601 (3,897) SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Interest paid — 84

The accompanying Notes are an integral part of these financial statements.

152 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.2%) Signature Income & Growth Fund, Class I 7,577,348 68,532,288 73,197,187 TOTAL INVESTMENTS 68,532,288 73,197,187 OTHER NET ASSETS (-0.2%) (173,302) NET ASSETS (100%) 73,023,885

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Scotiabank 3 .0% Royal Bank of Canada 2 4%. Toronto-Dominion Bank 2 4%. Manulife Financial Corporation 2 3%. Synchrony Financial 1 4%. Canadian National Railway Company 1 2%. Suncor Energy 1 .1% Micron Technology 1 .1% Citigroup 1 0%. UnitedHealth Group 1 0%. Province of Ontario, 2 40%,. June 2, 2026 1 0%. Alibaba Group Holding 1 0%. Alphabet 1 0%. Sony Corporation 0 .9% JPMorgan Chase & Company 0 .9% Samsung Electronics 0 .9% Anthem 0 .9% Alimentation Couche-Tard 0 8%. Thermo Fisher Scientific 0 8%. Power Financial Corporation 0 8%. Nestlé SA 0 8%. Saputo Group 0 8%. Wells Fargo & Company, Warrants, October 28, 2018 0 8%. Genworth MI Canada 0 8%. Province of Quebec, 4 .25%, December 1, 2021 0 .7%

DFS GUARANTEED INVESTMENT FUNDS 153 Balanced and Asset Allocation

DFS GIF – INCOME AND GROWTH – CI SIGNATURE (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective The objective of this Fund is to provide a steady flow of current income while preserving capital by obtaining exposure primarily to equity, equity related and fixed income securities of Canadian issuers . Investment Strategy The Fund invests in a combination of equity, fixed income and derivatives . Broadly diversified by sector and style, preferred and common shares make up portions of the Fund’s investments in equity securities . The fixed income portion of the Fund’s investments is comprised of high-yielding government and corporate bonds, debentures and notes, including some securities that are unrated or have credit ratings below investment grade . The Fund may also invest in real estate investment trusts (REITs), royalty trusts, income trusts and other similar high yielding instruments .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 73,197,187 — — 73,197,187 TOTAL 73,197,187 — — 73,197,187

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 69,141,832 — — 69,141,832 TOTAL 69,141,832 — — 69,141,832 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

154 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada Universe (15%) 1 00. 88,478 86,164 Merrill Lynch High Yield Master II (15%) 2 00. 176,956 172,328 S&P/TSX Composite High Dividend (10%) 3 .00 176,956 172,328 S&P/TSX (30%) 3 .00 530,867 516,985 MSCI All Country World Net (30%) 3 .00 530,867 516,985 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

DFS GUARANTEED INVESTMENT FUNDS 155 Balanced and Asset Allocation

DFS GIF – INCOME AND GROWTH – CI SIGNATURE (cont.)

FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 5 6.53 6 .10 6 .24 5 .75 5 .09 Series 6 5.56 5 .19 5 .30 — — Series 7 5.63 5 .23 5 .31 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 5 40,197 46,082 51,381 40,521 12,732 Series 6 30,855 22,047 6,386 — — Series 7 1,972 1,010 495 — — Number of units outstanding (000) Series 5 6,159 7,558 8,232 7,043 2,502 Series 6 5,549 4,250 1,205 — — Series 7 350 193 93 — — Management expense ratio (MER)1 (%) Series 5 3.05 3 .05 3 .07 3 .07 2 .75 Series 6 2.90 2 .85 2 .84 — — Series 7 2.36 2 .32 2 .47 — — Portfolio turnover rate2 (%) 19.52 14 .11 8 .86 4 .36 1 .35

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

156 DFS GUARANTEED INVESTMENT FUNDS Balanced and Asset Allocation DFS GIF – GROWTH AND INCOME – NEI NORTHWEST*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio NEI Northwest Global Equity Fund 34 6%. NEI Canadian Bond Fund 21% 9. Toronto-Dominion Bank 4 1%. Scotiabank 3 9%. Manulife Financial Corporation 2% 6. Onex Corporation 2 5%. Quebecor 2% 3. Sun Life Financial 2% 3. FirstService Corporation 2 1%. Thomson Reuters Corporation 2 1%.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 3Series 3Series 3 Series 5Series 5Series 5 Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value

1 Year 10,695 6 9%. 10,764 7% 6. 10,771 7% 7. 10,825 8 3%. 3 Years 11,576 5 0%. 11,810 5 7%. — — — — 5 Years 14,512 7% 7. 14,975 8 4%. — — — — 10 Years 12,386 2% 2. — — — — — — Since Inception 12,418 2% 2. 13,423 3% 3. 11,522 5 1%. 11,683 5 6%.

* This Fund is composed of units of the corresponding underlying investment funds.

DFS GUARANTEED INVESTMENT FUNDS 157 Balanced and Asset Allocation

DFS GIF – GROWTH AND INCOME – NEI NORTHWEST (cont.)

STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Dividends 4,999,857 4,566,397 Cash 615,610 371,470 Changes in fair value: Investments at fair value through profit Net realized gain (loss) on or loss (FVTPL) 167,997,431 154,530,284 investments 4,238,283 5,352,155 Premiums receivable 424,464 17,148 Net unrealized gain (loss) on Receivable for securities sold 31,355 31,307 investments 7,180,142 (603,652) 169,068,860 154,950,209 16,418,282 9,314,900 LIABILITIES Current Liabilities EXPENSES Accrued expenses 408,006 378,809 Management fees and guarantee charge 3,730,113 3,746,850 Withdrawals payable 459,708 109,755 Operating expenses 831,144 863,150 Payable for securities purchased 305,167 6,388 4,561,257 4,610,000 1,172,881 494,952 Withholding taxes 145,605 175,641 NET ASSETS ATTRIBUTABLE TO 4,706,862 4,785,641 CONTRACT OWNERS 167,895,979 154,455,257 INCREASE (DECREASE) IN NET ASSETS NET ASSETS PER UNIT FROM OPERATIONS ATTRIBUTABLE TO Series 3 6.21 5 81. CONTRACT OWNERS 11,711,420 4,529,259 Series 5 6.57 6 .10 DATA PER SERIES Series 6 5.76 5 35. SERIES 3 Series 7 5.84 5 .40 Increase (Decrease) in Net Assets from Operations 134,513 62,967 - per unit 0.38 0 .13 Average Number of Units 358,100 466,474 SERIES 5 Increase (Decrease) in Net Assets from Operations 10,134,032 4,313,778 - per unit 0.46 0 .18 Average Number of Units 22,089,144 23,520,035 SERIES 6 Increase (Decrease) in Net Assets from Operations 1,354,084 137,006 - per unit 0.46 0 .08 Average Number of Units 2,918,254 1,691,431 SERIES 7 Increase (Decrease) in Net Assets from Operations 88,791 15,508 - per unit 0.53 0 .15 Average Number of Units 168,058 102,761

The accompanying Notes are an integral part of these financial statements.

158 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 154,455,257 155,407,545 to contract owners 11,711,420 4,529,259 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 11,711,420 4,529,259 Net realized gain (loss) (4,238,283) (5,352,155) Net unrealized gain (loss) (7,180,142) 603,652 Premiums Non-cash distribution from Series 3 205,013 178,955 investments (4,854,252) (4,390,756) Series 5 19,367,077 10,052,579 Proceeds from sale/maturity of Series 6 8,118,908 8,519,181 investments 12,328,256 14,974,603 Series 7 671,355 346,389 Investments purchased (9,522,726) (4,841,665) 28,362,353 19,097,104 Receivable for securities sold (48) (31,307) Withdrawals Accrued expenses 29,197 (494) Series 3 (652,234) (857,033) Payable for securities purchased 298,779 (136,050) Series 5 (23,801,196) (21,942,561) NET CASH FLOWS FROM (USED IN) Series 6 (2,160,730) (1,705,765) OPERATING ACTIVITIES (1,427,799) 5,355,087 Series 7 (18,891) (73,292) (26,633,051) (24,578,651) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES NET ASSETS ATTRIBUTABLE Premium payments 27,955,037 19,237,389 TO CONTRACT OWNERS, END OF YEAR 167,895,979 154,455,257 Amounts paid on withdrawals (26,283,098) (24,647,273) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES 1,671,939 (5,409,884) Increase (Decrease) in cash/bank overdraft 244,140 (54,797) Cash (bank overdraft), beginning of year 371,470 426,267 CASH (BANK OVERDRAFT), END OF YEAR 615,610 371,470

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 159 Balanced and Asset Allocation

DFS GIF – GROWTH AND INCOME – NEI NORTHWEST (cont.)

SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.1%) NEI Northwest Growth and Income Fund, Series I 23,938,419 121,994,645 167,997,431 TOTAL INVESTMENTS 121,994,645 167,997,431 OTHER NET ASSETS (-0.1%) (101,452) NET ASSETS (100%) 167,895,979

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio NEI Northwest Global Equity Fund 34 .6% NEI Canadian Bond Fund 21 9%. Toronto-Dominion Bank 4 .1% Scotiabank 3 .9% Manulife Financial Corporation 2 6%. Onex Corporation 2 .5% Quebecor 2 3%. Sun Life Financial 2 3%. FirstService Corporation 2 .1% Thomson Reuters Corporation 2 .1% TELUS Corporation 2 0%. Granite Real Estate Investment Trust 2 0%. Rogers Communications 1 9%. BCE 1 8%. Colliers International Group 1 7%. Vermilion Energy 1 4%. Linamar Corporation 1 3%. Bombardier 1 2%. Bonterra Energy 0 8%. Pason Systems 0 8%. Air Canada 0 8%. Badger Daylighting 0 8%. Allied Properties Real Estate Investment 0 8%. Precision Drilling Corporation 0 .7% First Quantum Minerals 0 .7%

160 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide a consistent stream of income and capital appreciation by investing primarily in a mix of Canadian equities and fixed-income securities . Investment Strategy To invest in a diversified portfolio consisting primarily of a balance of large cap equity and investment grade fixed-income securities issued principally by Canadian issuers .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 167,997,431 — — 167,997,431 TOTAL 167,997,431 — — 167,997,431

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 154,530,284 — — 154,530,284 TOTAL 154,530,284 — — 154,530,284 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

DFS GUARANTEED INVESTMENT FUNDS 161 Balanced and Asset Allocation

DFS GIF – GROWTH AND INCOME – NEI NORTHWEST (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada Universe (25%) 1 00. 372,084 316,410 S&P/TSX (55%) 3 00. 2,455,754 2,088,309 MSCI World Net (20%) 3 00. 893,001 759,385 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

162 DFS GUARANTEED INVESTMENT FUNDS FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 3 6.21 5 .81 5 .68 5 .36 4 .59 Series 5 6.57 6 .10 5 .93 5 .56 4 .73 Series 6 5.76 5 .35 5 .19 — — Series 7 5.84 5 .40 5 .21 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 3 1,998 2,311 2,926 2,686 2,285 Series 5 144,329 138,629 146,205 137,238 111,793 Series 6 20,094 12,782 5,832 — — Series 7 1,475 734 445 — — Number of units outstanding (000) Series 3 322 398 515 501 497 Series 5 21,971 22,715 24,654 24,672 23,617 Series 6 3,488 2,390 1,123 — — Series 7 253 136 85 — — Management expense ratio (MER)1 (%) Series 3 3.64 3 .64 3 .64 3 .64 3 .22 Series 5 2.94 2 .94 2 .94 2 .94 2 .65 Series 6 2.85 2 .87 2 .86 — — Series 7 2.30 2 .41 2 .41 — — Portfolio turnover rate2 (%) 8.67 6 .07 5 .44 5 .38 6 .13

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

DFS GUARANTEED INVESTMENT FUNDS 163 Balanced and Asset Allocation DFS GIF – GLOBAL GROWTH – NEI SELECT*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio NEI Northwest U S. . Dividend Fund 13% 6. NEI Ethical Global Equity Fund 10% 0. NEI Northwest Global Equity Fund 9% 8. NEI Global Value Fund 9 5%. NEI Ethical International Equity Fund 8 6%. NEI Northwest Specialty Equity Fund 7% 0. NEI Northwest Macro Canadian Asset Allocation Fund 6 7%. NEI Global Total Return Bond Fund 6 7%. NEI Northwest Canadian Equity Fund 6 2%. NEI Northwest Emerging Markets Fund 6 2%.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 3Series 3Series 3 Series Series5 5Series 5 Series Series6 6Series 6 Series Series7 7Series 7

$10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value

1 Year 10,562 5 6%. 10,632 6 3%. 10,645 6 4%. 10,697 7% 0. 3 Years 11,578 5 0%. 11,820 5 7%. — — — — 5 Years 14,360 7% 5. 14,850 8 2%. — — — — 10 Years 11,900 1% 8. — — — — — — Since Inception 15,385 2 9%. 12,786 2 7%. 11,537 5 1%. 11,661 5 5%.

* This Fund is composed of units of the corresponding underlying investment funds.

164 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Dividends 1,224,078 326,645 Cash 130,982 59,580 Changes in fair value: Investments at fair value through profit Net realized gain (loss) on or loss (FVTPL) 94,089,633 83,962,666 investments 2,314,966 26,212,397 Premiums receivable 234,983 — Net unrealized gain (loss) on Receivable for securities sold — 69,564 investments 4,678,862 (20,010,769) 94,455,598 84,091,810 8,217,906 6,528,273 LIABILITIES Current Liabilities EXPENSES Accrued expenses 239,322 215,395 Management fees and guarantee charge 2,225,991 2,024,025 Withdrawals payable 97,499 101,291 Operating expenses 475,079 459,170 Payable for securities purchased 298,611 14,672 2,701,070 2,483,195 635,432 331,358 Withholding taxes — 18,492 NET ASSETS ATTRIBUTABLE TO 2,701,070 2,501,687 CONTRACT OWNERS 93,820,166 83,760,452 INCREASE (DECREASE) IN NET ASSETS NET ASSETS PER UNIT FROM OPERATIONS ATTRIBUTABLE TO Series 3 7.69 7 28. CONTRACT OWNERS 5,516,836 4,026,586 Series 5 8.19 7 70. DATA PER SERIES Series 6 5.77 5 .42 SERIES 3 Series 7 5.83 5 .45 Increase (Decrease) in Net Assets from Operations 194,955 205,016 - per unit 0.38 0 36. Average Number of Units 512,122 569,157 SERIES 5 Increase (Decrease) in Net Assets from Operations 4,313,620 3,658,403 - per unit 0.49 0 41. Average Number of Units 8,882,502 8,930,039 SERIES 6 Increase (Decrease) in Net Assets from Operations 901,123 153,040 - per unit 0.39 0 .15 Average Number of Units 2,298,825 1,054,686 SERIES 7 Increase (Decrease) in Net Assets from Operations 107,138 10,127 - per unit 0.46 0 .14 Average Number of Units 233,177 74,044

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 165 Balanced and Asset Allocation

DFS GIF – GLOBAL GROWTH – NEI SELECT (cont.)

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 83,760,452 72,620,346 to contract owners 5,516,836 4,026,586 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 5,516,836 4,026,586 Net realized gain (loss) (2,314,966) (26,212,397) Net unrealized gain (loss) (4,678,862) 20,010,769 Premiums Non-cash distribution from Series 3 100,223 382,057 investments (1,224,078) (308,153) Series 5 9,720,624 7,051,523 Proceeds from sale/maturity of Series 6 8,131,262 8,271,603 investments 7,684,815 82,163,873 Series 7 982,579 836,381 Investments purchased (9,593,876) (86,835,794) 18,934,688 16,541,564 Receivable for securities sold 69,564 (67,944) Withdrawals Accrued expenses 23,927 26,197 Series 3 (637,538) (827,205) Payable for securities purchased 283,939 (112,676) Series 5 (11,191,107) (8,156,269) NET CASH FLOWS FROM (USED IN) Series 6 (2,470,673) (433,635) OPERATING ACTIVITIES (4,232,701) (7,309,539) Series 7 (92,492) (10,935) (14,391,810) (9,428,044) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES NET ASSETS ATTRIBUTABLE Premium payments 18,699,705 16,706,282 TO CONTRACT OWNERS, END OF YEAR 93,820,166 83,760,452 Amounts paid on withdrawals (14,395,602) (9,380,525) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES 4,304,103 7,325,757 Increase (Decrease) in cash/bank overdraft 71,402 16,218 Cash (bank overdraft), beginning of year 59,580 43,362 CASH (BANK OVERDRAFT), END OF YEAR 130,982 59,580

The accompanying Notes are an integral part of these financial statements.

166 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.3%) NEI Select Growth Portfolio, Series I 8,407,391 90,065,303 94,089,633 TOTAL INVESTMENTS 90,065,303 94,089,633 OTHER NET ASSETS (-0.3%) (269,467) NET ASSETS (100%) 93,820,166

The accompanying Notes are an integral part of these financial statements.

TOP HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio NEI Northwest U S. . Dividend Fund 13 6%. NEI Ethical Global Equity Fund 10 0%. NEI Northwest Global Equity Fund 9 8%. NEI Global Value Fund 9 .5% NEI Ethical International Equity Fund 8 .6% NEI Northwest Specialty Equity Fund 7 0%. NEI Northwest Macro Canadian Asset Allocation Fund 6 .7% NEI Global Total Return Bond Fund 6 .7% NEI Northwest Canadian Equity Fund 6 2%. NEI Northwest Emerging Markets Fund 6 2%. NEI Northwest Canadian Dividend Fund 6 .1% NEI Northwest Specialty Global High Yield Bond Fund 4 .9% NEI Canadian Bond Fund 3 8%. Cash and Cash Equivalents 0 .9%

DFS GUARANTEED INVESTMENT FUNDS 167 Balanced and Asset Allocation

DFS GIF – GLOBAL GROWTH – NEI SELECT (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide a balance of capital growth and interest income by investing primarily in units of individual underlying funds in order to gain the desired exposure to the equity and fixed income markets . Investment Strategy To emphasize investments in equity underlying funds in order to increase the potential for capital appreciation over a longer investment horizon . The Fund also invests to a lesser extent, in fixed income underlying funds in order to provide income and capital preservation .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 94,089,633 — — 94,089,633 TOTAL 94,089,633 — — 94,089,633

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 83,962,666 — — 83,962,666 TOTAL 83,962,666 — — 83,962,666 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

168 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada Universe (30%) 1 00. 280,596 254,650 S&P/TSX (14%) 3 .00 392,834 356,509 MSCI World Net (56%) 3 .00 1,571,337 1,426,037 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

DFS GUARANTEED INVESTMENT FUNDS 169 Balanced and Asset Allocation

DFS GIF – GLOBAL GROWTH – NEI SELECT (cont.)

FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 3 7.69 7 .28 6 .95 6 .64 5 .73 Series 5 8.19 7 .70 7 .30 6 .93 5 .93 Series 6 5.77 5 .42 5 .13 — — Series 7 5.83 5 .45 5 .14 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 3 3,699 4,042 4,282 5,338 5,670 Series 5 71,103 68,260 65,707 64,401 54,175 Series 6 17,041 10,479 2,488 — — Series 7 1,977 979 144 — — Number of units outstanding (000) Series 3 481 555 616 803 990 Series 5 8,683 8,862 9,004 9,296 9,133 Series 6 2,954 1,934 485 — — Series 7 339 180 28 — — Management expense ratio (MER)1 (%) Series 3 3.85 3 .85 3 .85 3 .86 3 .43 Series 5 3.13 3 .12 3 .12 3 .12 2 .80 Series 6 2.98 2 .98 3 .02 — — Series 7 2.40 2 .59 2 .59 — — Portfolio turnover rate2 (%) 11.51 108 .58 7 .15 5 .64 9 .72

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

170 DFS GUARANTEED INVESTMENT FUNDS Balanced and Asset Allocation

DFS GIF – CANADIAN ASSET ALLOCATION – CI CAMBRIDGE*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Cambridge Bond Fund 22 1%. Walgreens Boots Alliance 2% 8. Franco-Nevada Corporation 2% 2. PrairieSky Royalty 2 1%. Tourmaline Oil Corporation 2% 0. Keyera Corporation 1% 9. Brookfield Infrastructure Partners 1% 8. Chubb 1% 8. George Weston 1% 8. Roche Holding AG 1% 5.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 5Series 5Series 5 Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value

1 Year 10,607 6 1%. 10,626 6 3%. 10,683 6% 8. 3 Years 12,067 6 5%. — — — — Since Inception 14,452 9% 0. 11,740 5% 8. 11,890 6 3%.

* This Fund is composed of units of the corresponding underlying investment funds.

DFS GUARANTEED INVESTMENT FUNDS 171 Balanced and Asset Allocation

DFS GIF – CANADIAN ASSET ALLOCATION – CI CAMBRIDGE (cont.)

STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Dividends 51,865 32,055 Cash 30,109 340 Changes in fair value: Investments at fair value through profit Net realized gain (loss) on or loss (FVTPL) 13,653,520 10,642,981 investments 574,202 288,782 Premiums receivable 2,731 173,108 Net unrealized gain (loss) on Receivable for securities sold 771 150 investments 501,375 149,428 13,687,131 10,816,579 1,127,442 470,265 LIABILITIES Current Liabilities EXPENSES Accrued expenses 31,191 23,704 Management fees and guarantee charge 307,472 215,073 Withdrawals payable 4,187 21,991 Operating expenses 33,487 24,922 Payable for securities purchased 30,336 152,878 340,959 239,995 65,714 198,573 INCREASE (DECREASE) IN NET ASSETS NET ASSETS ATTRIBUTABLE TO FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 13,621,417 10,618,006 CONTRACT OWNERS 786,483 230,270 NET ASSETS PER UNIT DATA PER SERIES Series 5 7.23 6 81. SERIES 5 Series 6 5.87 5 .52 Increase (Decrease) in Net Assets Series 7 5.95 5 .57 from Operations 359,150 196,976 - per unit 0.41 0 .23 Average Number of Units 867,183 848,301 SERIES 6 Increase (Decrease) in Net Assets from Operations 393,619 33,065 - per unit 0.38 0 07. Average Number of Units 1,038,598 475,901 SERIES 7 Increase (Decrease) in Net Assets from Operations 33,714 229 - per unit 0.47 0 02. Average Number of Units 71,387 9,920

The accompanying Notes are an integral part of these financial statements.

172 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 10,618,006 6,697,420 to contract owners 786,483 230,270 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 786,483 230,270 Net realized gain (loss) (574,202) (288,782) Net unrealized gain (loss) (501,375) (149,428) Premiums Non-cash distribution from Series 5 813,127 1,284,680 investments (51,865) (32,055) Series 6 2,827,616 3,826,639 Proceeds from sale/maturity of Series 7 553,461 183,635 investments 1,142,754 721,302 4,194,204 5,294,954 Investments purchased (3,025,851) (4,180,372) Withdrawals Receivable for securities sold (621) (150) Series 5 (883,942) (972,315) Accrued expenses 7,487 8,014 Series 6 (749,029) (632,323) Payable for securities purchased (122,542) 149,588 Series 7 (344,305) — NET CASH FLOWS FROM (USED IN) (1,977,276) (1,604,638) OPERATING ACTIVITIES (2,339,732) (3,541,613) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, CASH FLOWS FROM (USED IN) END OF YEAR 13,621,417 10,618,006 FINANCING ACTIVITIES Premium payments 4,364,581 5,123,634 Amounts paid on withdrawals (1,995,080) (1,583,682) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES 2,369,501 3,539,952 Increase (Decrease) in cash/bank overdraft 29,769 (1,661) Cash (bank overdraft), beginning of year 340 2,001 CASH (BANK OVERDRAFT), END OF YEAR 30,109 340

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 173 Balanced and Asset Allocation

DFS GIF – CANADIAN ASSET ALLOCATION – CI CAMBRIDGE (cont.)

SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.2%) Cambridge Canadian Asset Allocation Corporate Class, I Shares 718,606 12,232,068 13,653,520 TOTAL INVESTMENTS 12,232,068 13,653,520 OTHER NET ASSETS (-0.2%) (32,103) NET ASSETS (100%) 13,621,417

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Cambridge Bond Fund 22 .1% Walgreens Boots Alliance 2 8%. Franco-Nevada Corporation 2 2%. PrairieSky Royalty 2 .1% Tourmaline Oil Corporation 2 0%. Keyera Corporation 1 9%. Brookfield Infrastructure Partners 1 8%. Chubb 1 8%. George Weston 1 8%. Roche Holding AG 1 5%. Fluor Corporation 1 4%. Alphabet 1 3%. Computer Sciences Corporation 1 3%. Athene Holding 1 2%. Amgen 1 2%. Loblaw Companies 1 2%. Restaurant Brands International 1 2%. Broadcom 1 2%. Cerner Corporation 1 2%. Synchrony Financial 1 2%. Wells Fargo & Company 1 .1% Canadian Pacific Railway 1 .1% Activision Blizzard 1 .1% Palo Alto Networks 1 .1% Tahoe Resources 1 0%.

174 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective The objective of this Fund is to achieve a superior total investment return directly or indirectly, in a combination of primarily equity and fixed income securities of Canadian companies . Indirect investments may include convertible securities, derivatives, equity-related securities and securities of other mutual funds . Investment Strategy The Fund is actively managed with a disciplined bottom-up selection process . The strategy uses exposure in equity, fixed income instruments and cash and cash equivalents to achieve the Fund objective . The investments in each asset class will vary dependent on market conditions . The Canadian fixed income securities portion of the portfolio will consist mainly of high quality government and corporate bonds while foreign securities can make up part of the equity portion of the portfolio .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 13,653,520 — — 13,653,520 TOTAL 13,653,520 — — 13,653,520

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 10,642,981 — — 10,642,981 TOTAL 10,642,981 — — 10,642,981 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

DFS GUARANTEED INVESTMENT FUNDS 175 Balanced and Asset Allocation

DFS GIF – CANADIAN ASSET ALLOCATION – CI CAMBRIDGE (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada Universe (40%) 1 00. 37,138 28,128 S&P/TSX (60%) 3 00. 167,121 126,578 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

176 DFS GUARANTEED INVESTMENT FUNDS FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 5 7.23 6 .81 6 .57 5 .99 5 .08 Series 6 5.87 5 .52 5 .32 — — Series 7 5.95 5 .57 5 .34 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 5 6,188 5,899 5,390 3,279 356 Series 6 6,986 4,514 1,287 — — Series 7 447 204 21 — — Number of units outstanding (000) Series 5 856 866 820 548 70 Series 6 1,190 817 242 — — Series 7 75 37 4 — — Management expense ratio (MER)1 (%) Series 5 2.90 2 .89 2 .91 2 .95 2 .65 Series 6 2.70 2 .68 2 .69 — — Series 7 2.19 2 .30 2 .30 — — Portfolio turnover rate2 (%) 13.34 11 .31 6 .47 3 .86 0 .65

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

DFS GUARANTEED INVESTMENT FUNDS 177 Balanced and Asset Allocation DFS GIF – GROWTH – FRANKLIN QUOTENTIAL*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Franklin Bissett Core Plus Bond Fund 10% 5. Franklin U S. . Rising Dividends Fund 8 1%. Franklin U S. . Core Equity Fund 7% 5. Franklin Bissett Canadian Equity Fund 7% 2. Franklin Mutual European Fund 6 2%. Franklin Bisset All Canadian Focus Fund 5% 8. Franklin U S. . Opportunities Fund 5 6%. Franklin Templeton Canadian Large Cap Fund 4 3%. iShares Russell 1000 Value ETF 4 2%. Franklin Japan Fund 3 7%.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 3Series 3Series 3 Series 5Series 5Series 5 Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value

1 Year 10,088 0 9%. 10,125 1% 2. 10,156 1% 6. 10,198 2% 0. 3 Years 11,297 4 1%. 11,427 4 5%. — — — — 5 Years 14,252 7% 3. 14,517 7% 7. — — — — 10 Years 11,922 1% 8. — — — — — — Since Inception 11,950 1 1%. 12,310 2% 3. 11,212 4 1%. 11,345 4 5%.

* This Fund is composed of units of the corresponding underlying investment funds.

178 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Dividends 724,703 892,651 Investments at fair value through profit Changes in fair value: or loss (FVTPL) 56,724,749 60,640,944 Net realized gain (loss) on Premiums receivable 2,835 17,818 investments 3,927,564 7,480,639 Receivable for securities sold 538 4,522 Net unrealized gain (loss) on 56,728,122 60,663,284 investments (2,261,153) (2,815,226) LIABILITIES 2,391,114 5,558,064 Current Liabilities Bank overdraft 142 4,124 EXPENSES Accrued expenses 151,011 162,279 Management fees and guarantee charge 1,504,241 1,668,022 Withdrawals payable 37,519 41,466 Operating expenses 298,105 335,094 Payable for securities purchased 570 3,566 1,802,346 2,003,116 189,242 211,435 Withholding taxes 77,649 88,468 NET ASSETS ATTRIBUTABLE TO 1,879,995 2,091,584 CONTRACT OWNERS 56,538,880 60,451,849 INCREASE (DECREASE) IN NET ASSETS NET ASSETS PER UNIT FROM OPERATIONS ATTRIBUTABLE TO Series 3 5.98 5 92. CONTRACT OWNERS 511,119 3,466,480 Series 5 6.20 6 .12 DATA PER SERIES Series 6 5.61 5 .52 SERIES 3 Series 7 5.67 5 .56 Increase (Decrease) in Net Assets from Operations 23,783 175,535 - per unit 0.06 0 36. Average Number of Units 423,169 493,555 SERIES 5 Increase (Decrease) in Net Assets from Operations 431,776 3,274,492 - per unit 0.05 0 35. Average Number of Units 8,514,168 9,276,240 SERIES 6 Increase (Decrease) in Net Assets from Operations 54,763 15,612 - per unit 0.10 0 .05 Average Number of Units 530,169 309,180 SERIES 7 Increase (Decrease) in Net Assets from Operations 797 841 - per unit 0.11 0 .16 Average Number of Units 7,271 5,373

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 179 Balanced and Asset Allocation

DFS GIF – GROWTH – FRANKLIN QUOTENTIAL (cont.)

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 60,451,849 59,645,394 to contract owners 511,119 3,466,480 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 511,119 3,466,480 Net realized gain (loss) (3,927,564) (7,480,639) Net unrealized gain (loss) 2,261,153 2,815,226 Premiums Non-cash distribution from Series 3 273,006 191,170 investments (647,054) (804,183) Series 5 1,869,886 2,049,559 Proceeds from sale/maturity of Series 6 826,122 2,395,618 investments 7,344,135 7,071,488 Series 7 — 19,385 Investments purchased (1,114,475) (2,395,756) 2,969,014 4,655,732 Receivable for securities sold 3,984 15,952 Withdrawals Accrued expenses (11,268) 1,863 Series 3 (404,287) (968,215) Payable for securities purchased (2,996) 3,093 Series 5 (6,498,552) (6,103,955) NET CASH FLOWS FROM (USED IN) Series 6 (490,134) (243,521) OPERATING ACTIVITIES 4,417,034 2,693,524 Series 7 (129) (66) (7,393,102) (7,315,757) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES NET ASSETS ATTRIBUTABLE Premium payments 2,983,997 4,645,357 TO CONTRACT OWNERS, END OF YEAR 56,538,880 60,451,849 Amounts paid on withdrawals (7,397,049) (7,337,518) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (4,413,052) (2,692,161) Increase (Decrease) in cash/bank overdraft 3,982 1,363 Cash (bank overdraft), beginning of period (4,124) (5,487) CASH (BANK OVERDRAFT), END OF YEAR (142) (4,124)

The accompanying Notes are an integral part of these financial statements.

180 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.3%) Franklin Quotential Growth Portfolio 5,321,271 37,995,032 56,724,749 TOTAL INVESTMENTS 37,995,032 56,724,749 OTHER NET ASSETS (-0.3%) (185,869) NET ASSETS (100%) 56,538,880

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Franklin Bissett Core Plus Bond Fund 10 5%. Franklin U S. . Rising Dividends Fund 8 .1% Franklin U S. . Core Equity Fund 7 5%. Franklin Bissett Canadian Equity Fund 7 2%. Franklin Mutual European Fund 6 2%. Franklin Bisset All Canadian Focus Fund 5 8%. Franklin U S. . Opportunities Fund 5 .6% Franklin Templeton Canadian Large Cap Fund 4 .3% iShares Russell 1000 Value ETF 4 .2% Franklin Japan Fund 3 .7% Templeton Asian Growth Fund 3 .5% iShares MSCI Japan ETF 3 4%. Franklin Bissett Small Cap Fund 2 .9% Franklin Strategic Income Fund 2 8%. BMO MSCI Europe High Quality Hedged to CAD Index ETF 2 .5% Templeton Global Bond Fund 2 3%. S&P Depositary Receipt Gold Trust ETF 2 0%. S&P Depositary Receipt EURO STOXX 50 ETF 1 8%. Franklin European Small-Mid Cap Growth Fund 1 7%. Templeton Emerging Markets Fund 1 6%. iShares TIPS Bond ETF 1 4%. iShares S&P/TSX 60 Index ETF 1 3%. iShares Core MSCI Emerging Markets ETF 0 .9% Franklin Bissett Canadian Governement Fund 0 .9% Templeton Frontier Markets Fund 0 8%.

DFS GUARANTEED INVESTMENT FUNDS 181 Balanced and Asset Allocation

DFS GIF – GROWTH – FRANKLIN QUOTENTIAL (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide a balance of capital growth and interest income by investing primarily in units of an individual underlying fund in order to gain the desired exposure to the equity and fixed income markets . Investment Strategy To emphasize investments in a diversified mix of equity underlying funds in order to increase the potential for capital appreciation over a longer investment horizon . The Fund also invests, to a lesser extent, in fixed income underlying funds in order to provide income and capital preservation .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 56,724,749 — — 56,724,749 TOTAL 56,724,749 — — 56,724,749

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 60,640,944 — — 60,640,944 TOTAL 60,640,944 — — 60,640,944 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

182 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada Universe (15%) 10 0. 94,064 95,555 Bloomberg Barclays Multiverse Bond (5%)* 10 0. 31,355 31,852 S&P/TSX (35%) 3 00. 658,448 668,886 MSCI All Country World Net (45%) 3 00. 846,576 859,996 * On August 24, 2016, “Barclays Capital” was renamed “Bloomberg Barclays” . When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

DFS GUARANTEED INVESTMENT FUNDS 183 Balanced and Asset Allocation

DFS GIF – GROWTH – FRANKLIN QUOTENTIAL (cont.)

FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 3 5.98 5 .92 5 .62 5 .29 4 .47 Series 5 6.20 6 .12 5 .79 5 .42 4 .56 Series 6 5.61 5 .52 5 .20 — — Series 7 5.67 5 .56 5 .22 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 3 2,366 2,473 3,075 3,411 3,448 Series 5 50,997 55,193 55,973 56,112 48,918 Series 6 3,135 2,744 577 — — Series 7 41 41 20 — — Number of units outstanding (000) Series 3 396 418 547 645 772 Series 5 8,230 9,018 9,673 10,348 10,719 Series 6 559 497 111 — — Series 7 7 7 4 — — Management expense ratio (MER)1 (%) Series 3 3.61 3 .61 3 .62 3 .61 3 .20 Series 5 3.22 3 .22 3 .21 3 .21 2 .85 Series 6 2.89 2 .92 2 .93 — — Series 7 2.45 2 .47 2 .47 — — Portfolio turnover rate2 (%) 3.47 11 .78 4 .74 2 .13 1 .85

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

184 DFS GUARANTEED INVESTMENT FUNDS Canadian Equity DFS GIF – DIVIDEND INCOME – FRANKLIN BISSETT*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Royal Bank of Canada 3 9%. Toronto-Dominion Bank 3 9%. Canadian Imperial Bank of Commerce 3% 8. Scotiabank 3 0%. Bank of Montreal 3 0%. Enbridge Income Fund Holdings 2% 6. IGM Financial 2% 6. Enbridge 2% 4. Canadian National Railway Company 2% 4. Power Financial Corporation 2% 2.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 3Series 3Series 3 Series 5Series 5Series 5 Series Series6 6Series 6 Series Series7 7Series 7

$10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value

1 Year 11,706 17% 1. 11,754 17% 5. 11,775 17% 7. 11,830 18% 3. 3 Years 11,054 3% 4. 11,204 3 9%. — — — — 5 Years 13,479 6 2%. 13,769 6 6%. — — — — 10 Years 14,036 3% 4. — — — — — — Since Inception 24,789 5 6%. 14,856 4 4%. 11,244 4 2%. 11,401 4 7%.

* This Fund is composed of units of the corresponding underlying investment funds.

DFS GUARANTEED INVESTMENT FUNDS 185 Canadian Equity

DFS GIF – DIVIDEND INCOME – FRANKLIN BISSETT (cont.)

STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Cash 35,337 — Dividends 6,239,402 4,868,710 Investments at fair value through profit Changes in fair value: or loss (FVTPL) 202,869,263 196,741,421 Net realized gain (loss) on Premiums receivable 51,185 59,622 investments 1,894,961 14,164,430 Receivable for securities sold 154,548 144,933 Net unrealized gain (loss) on 203,110,333 196,945,976 investments 28,656,066 (28,048,906) LIABILITIES 36,790,429 (9,015,766) Current Liabilities Bank overdraft — 52,415 EXPENSES Accrued expenses 507,139 494,769 Management fees and guarantee charge 4,398,507 3,382,743 Withdrawals payable 284,188 205,254 Operating expenses 1,422,209 1,080,671 Payable for securities purchased — 8,673 5,820,716 4,463,414 791,327 761,111 INCREASE (DECREASE) IN NET ASSETS NET ASSETS ATTRIBUTABLE TO FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 202,319,006 196,184,865 CONTRACT OWNERS 30,969,713 (13,479,180) NET ASSETS PER UNIT DATA PER SERIES Series 3 12.39 10 59. SERIES 3 Series 5 12.89 10 97. Increase (Decrease) in Net Assets Series 6 5.62 4 .77 from Operations 5,950,225 (2,925,971) Series 7 5.70 4 82. - per unit 1.76 (1 04). Average Number of Units 3,371,932 2,800,641 SERIES 5 Increase (Decrease) in Net Assets from Operations 23,814,006 (10,079,119) - per unit 1.89 (1 .05) Average Number of Units 12,605,488 9,607,240 SERIES 6 Increase (Decrease) in Net Assets from Operations 1,111,851 (440,771) - per unit 0.85 (0 43). Average Number of Units 1,302,605 1,013,343 SERIES 7 Increase (Decrease) in Net Assets from Operations 93,631 (33,319) - per unit 0.88 (0 31). Average Number of Units 105,904 107,894

The accompanying Notes are an integral part of these financial statements.

186 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 196,184,865 145,921,558 to contract owners 30,969,713 (13,479,180) Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 30,969,713 (13,479,180) Net realized gain (loss) (1,894,961) (14,164,430) Net unrealized gain (loss) (28,656,066) 28,048,906 Premiums Non-cash distribution from Series 3 1,667,652 18,174,951 investments (6,239,402) (4,868,710) Series 5 6,163,032 83,177,573 Proceeds from sale/maturity of Series 6 2,024,752 2,815,914 investments 31,266,464 34,862,458 Series 7 120,392 137,358 Investments purchased (603,877) (94,353,040) 9,975,828 104,305,796 Receivable for securities sold (9,615) (100,589) Withdrawals Accrued expenses 12,370 132,348 Series 3 (8,157,991) (7,236,271) Payable for securities purchased (8,673) (13,484) Series 5 (25,682,835) (32,254,668) NET CASH FLOWS FROM (USED IN) Series 6 (911,208) (832,496) OPERATING ACTIVITIES 24,835,953 (63,935,721) Series 7 (59,366) (239,874) (34,811,400) (40,563,309) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES NET ASSETS ATTRIBUTABLE Premium payments 9,984,265 104,288,308 TO CONTRACT OWNERS, END OF YEAR 202,319,006 196,184,865 Amounts paid on withdrawals (34,732,466) (40,409,380) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (24,748,201) 63,878,928 Increase (Decrease) in cash/bank overdraft 87,752 (56,793) Cash (bank overdraft), beginning of year (52,415) 4,378 CASH (BANK OVERDRAFT), END OF YEAR 35,337 (52,415)

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 187 Canadian Equity

DFS GIF – DIVIDEND INCOME – FRANKLIN BISSETT (cont.)

SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.3%) Franklin Bissett Dividend Income Fund, Series O 4,768,906 167,941,316 202,869,263 TOTAL INVESTMENTS 167,941,316 202,869,263 OTHER NET ASSETS (-0.3%) (550,257) NET ASSETS (100%) 202,319,006

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Royal Bank of Canada 3 .9% Toronto-Dominion Bank 3 .9% Canadian Imperial Bank of Commerce 3 8%. Scotiabank 3 .0% Bank of Montreal 3 .0% Enbridge Income Fund Holdings 2 6%. IGM Financial 2 6%. Enbridge 2 4%. Canadian National Railway Company 2 4%. Power Financial Corporation 2 2%. Inter Pipeline 2 .1% Brookfield Renewable Partners 1 8%. Russel Metals 1 7%. Brookfield Property Partners 1 7%. Fortis 1 6%. Rogers Communications 1 6%. Wells Fargo & Company 1 5%. JPMorgan Chase & Company 1 5%. Freehold Royalties 1 4%. McDonald’s Corporation 1 4%. Intel Corporation 1 4%. TELUS Corporation 1 4%. Microsoft Corporation 1 4%. The Kraft Heinz Company 1 3%. Kinder Morgan 1 3%.

188 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide the investor with a consistent return through investment in dividend paying common shares and preferred shares . Investment Strategy To invest in a diversified portfolio of large cap Canadian issuer preferred shares and common shares as well as common shares of large cap United States issuers with long histories of dividend growth . From time to time the Fund also invests in investment grade interest-bearing securities to a maximum of 25% of the total assets of the Fund .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 202,869,263 — — 202,869,263 TOTAL 202,869,263 — — 202,869,263

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 196,741,421 — — 96,741,421 TOTAL 196,741,421 — — 196,741,421 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

DFS GUARANTEED INVESTMENT FUNDS 189 Canadian Equity

DFS GIF – DIVIDEND INCOME – FRANKLIN BISSETT (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ FTSE TMX Canada Universe (15%) 1 00. 288,443 281,079 S&P/TSX Preferred Share (5%) 3 00. 288,443 281,079 S&P/TSX (60%) 3 00. 3,461,316 3,372,944 S&P 500 (20%) 3 00. 1,153,772 1,124,315 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

190 DFS GUARANTEED INVESTMENT FUNDS FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 3 12.39 10 .59 11 .58 11 .21 9 .81 Series 5 12.89 10 .97 11 .94 11 .51 10 .03 Series 6 5.62 4 .77 5 .18 — — Series 7 5.70 4 .82 5 .20 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 3 39,069 39,609 31,596 35,564 34,856 Series 5 154,556 150,261 109,418 106,196 77,534 Series 6 8,088 5,863 4,320 — — Series 7 607 452 588 — — Number of units outstanding (000) Series 3 3,152 3,741 2,729 3,172 3,551 Series 5 11,989 13,701 9,166 9,229 7,727 Series 6 1,439 1,228 833 — — Series 7 106 94 113 — — Management expense ratio (MER)1 (%) Series 3 3.40 3 .39 3 .39 3 .39 3 .05 Series 5 2.93 2 .93 2 .94 2 .94 2 .65 Series 6 2.70 2 .70 2 .72 — — Series 7 2.17 2 .13 2 .10 — — Portfolio turnover rate2 (%) 3.38 28 .48 12 .37 8 .92 9 .37

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

DFS GUARANTEED INVESTMENT FUNDS 191 Canadian Equity DFS GIF – CANADIAN DIVIDEND – NEI NORTHWEST*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Royal Bank of Canada 4 2%. Toronto-Dominion Bank 4 0%. Manulife Financial Corporation 3 1%. BCE 3 0%. Rogers Communications 2 7%. Cenovus Energy 2 7%. Husky Energy 2 7%. Molson Coors Canada 2% 6. Atea 2% 6. Power Financial Corporation 2% 4.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 5Series 5Series 5 Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value

1 Year 11,615 16 2%. 11,632 16% 3. 11,671 16% 7. 3 Years 12,499 7% 7. — — — — Since Inception 16,332 12% 2. 12,485 8 1%. 12,591 8 4%.

* This Fund is composed of units of the corresponding underlying investment funds.

192 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Dividends 692,944 690,153 Cash 68,003 72,368 Changes in fair value: Investments at fair value through profit Net realized gain (loss) on or loss (FVTPL) 23,190,369 19,246,335 investments 147,515 999,431 Premiums receivable 93,841 56,977 Net unrealized gain (loss) on 23,352,213 19,375,680 investments 2,944,286 (1,411,817) LIABILITIES 3,784,745 277,767 Current Liabilities Accrued expenses 58,305 49,268 EXPENSES Withdrawals payable 7,385 3,471 Management fees and guarantee charge 549,548 530,273 Payable for securities purchased 24,215 67,369 Operating expenses 76,976 75,986 89,905 120,108 626,524 606,259 NET ASSETS ATTRIBUTABLE TO INCREASE (DECREASE) IN NET ASSETS CONTRACT OWNERS 23,262,308 19,255,572 FROM OPERATIONS ATTRIBUTABLE TO NET ASSETS PER UNIT CONTRACT OWNERS 3,158,221 (328,492) Series 5 8.17 7 03. DATA PER SERIES Series 6 6.24 5 37. SERIES 5 Series 7 6.30 5 .39 Increase (Decrease) in Net Assets from Operations 2,681,547 (287,726) - per unit 1.13 (0 11). Average Number of Units 2,375,528 2,518,048 SERIES 6 Increase (Decrease) in Net Assets from Operations 464,111 (40,568) - per unit 0.93 (0 .12) Average Number of Units 498,255 325,294 SERIES 7 Increase (Decrease) in Net Assets from Operations 12,563 (198) - per unit 1.16 (0 .05) Average Number of Units 10,827 3,864

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 193 Canadian Equity

DFS GIF – CANADIAN DIVIDEND – NEI NORTHWEST (cont.)

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 19,255,572 18,098,252 to contract owners 3,158,221 (328,492) Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 3,158,221 (328,492) Net realized gain (loss) (147,515) (999,431) Net unrealized gain (loss) (2,944,286) 1,411,817 Premiums Non-cash distribution from Series 5 2,292,058 4,159,753 investments (692,944) (690,153) Series 6 1,799,051 1,364,610 Proceeds from sale/maturity of Series 7 95,196 — investments 1,942,576 2,209,956 4,186,305 5,524,363 Investments purchased (2,101,865) (3,091,454) Withdrawals Accrued expenses 9,037 3,497 Series 5 (2,718,957) (3,789,333) Payable for securities purchased (43,154) 61,269 Series 6 (618,592) (249,218) NET CASH FLOWS FROM (USED IN) Series 7 (241) — OPERATING ACTIVITIES (819,930) (1,422,991) (3,337,790) (4,038,551) CASH FLOWS FROM (USED IN) NET ASSETS ATTRIBUTABLE FINANCING ACTIVITIES TO CONTRACT OWNERS, END OF YEAR 23,262,308 19,255,572 Premium payments 4,149,441 5,476,352 Amounts paid on withdrawals (3,333,876) (4,038,827) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES 815,565 1,437,525 Increase (Decrease) in cash/bank overdraft (4,365) 14,534 Cash (bank overdraft), beginning of year 72,368 57,834 CASH (BANK OVERDRAFT), END OF YEAR 68,003 72,368

The accompanying Notes are an integral part of these financial statements.

194 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (99.7%) NEI Northwest Canadian Dividend Fund, Series I 1,250,215 19,539,484 23,190,369 TOTAL INVESTMENTS 19,539,484 23,190,369 OTHER NET ASSETS (0.3%) 71,939 NET ASSETS (100%) 23,262,308

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Royal Bank of Canada 4 .2% Toronto-Dominion Bank 4 .0% Manulife Financial Corporation 3 .1% BCE 3 .0% Rogers Communications 2 .7% Cenovus Energy 2 .7% Husky Energy 2 .7% Molson Coors Canada 2 6%. Atea 2 6%. Power Financial Corporation 2 4%. Scotiabank 2 4%. Shaw Communications 2 4%. TELUS Corporation 2 2%. Crescent Point Energy 2 .1% Agrium 1 9%. RioCan Real Estate Investment Trust 1 9%. Intact Financial Corporation 1 9%. Bank of Montreal 1 9%. Sun Life Financial 1 8%. Superior Plus Corporation 1 6%. Brookfield Property Partners 1 6%. H&R Real Estate Investment Trust 1 6%. First Capital Realty 1 6%. Brookfield Renewable Partners 1 3%. Hydro One 1 3%.

DFS GUARANTEED INVESTMENT FUNDS 195 Canadian Equity

DFS GIF – CANADIAN DIVIDEND – NEI NORTHWEST (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective The objective of this Fund is to achieve a balance between high dividend income and capital growth by investing mainly in a diversified portfolio of blue chip Canadian common stocks and, to a lesser extent, in high-yield preferred stocks and interest bearing securities . Investment Strategy The Fund invests in primarily blue chip common stocks but may also invest in preferred stocks, bonds, purchase warrants and rights, royalty trusts and income trusts with preference given to capital growth while still providing a high regular level of income . Quality liquid corporations whose management has built shareholder value over time not to mention a proven ability to generate free cash flow, supporting growth and profitability as well as providing management with the ability to make strategic acquisitions, buy back stock and pay increasing dividends are preferred investments for this Fund . While equity securities including preferred stocks providing stable income are favoured, any small, mid and large capitalization Canadian corporations in a variety of industries meeting these criteria will be considered .

FINANCIAL INSTRUMENTS MEASUREMENT AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 23,190,369 — — 23,190,369 TOTAL 23,190,369 — — 23,190,369

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 19,246,335 — — 19,246,335 TOTAL 19,246,335 — — 19,246,335 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

196 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ S&P/TSX 3 .00 499,808 409,830 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

DFS GUARANTEED INVESTMENT FUNDS 197 Canadian Equity

DFS GIF – CANADIAN DIVIDEND – NEI NORTHWEST (cont.)

FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 5 8.17 7 .03 7 .14 6 .53 5 .21 Series 6 6.24 5 .37 5 .44 — — Series 7 6.30 5 .39 5 .45 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 5 19,304 17,050 16,967 12,134 6,230 Series 6 3,830 2,185 1,110 — — Series 7 128 21 21 — — Number of units outstanding (000) Series 5 2,364 2,425 2,375 1,857 1,195 Series 6 613 407 204 — — Series 7 20 4 4 — — Management expense ratio (MER)1 (%) Series 5 3.08 3 .08 3 .08 3 .09 2 .70 Series 6 2.87 2 .85 2 .90 — — Series 7 2.41 2 .41 2 .41 — — Portfolio turnover rate2 (%) 9.35 15 .02 11 .75 8 .87 97 .10

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

198 DFS GUARANTEED INVESTMENT FUNDS Canadian Equity DFS GIF – CANADIAN EQUITY – JARISLOWSKY FRASER*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Toronto-Dominion Bank 8% 5. Jarislowsky Fraser Special Equity Fund 7 4%. Royal Bank of Canada 6 8%. Scotiabank 6 2%. Enbridge 5% 0. Canadian Natural Resources 4% 7. Canadian National Railway Company 4% 5. Manulife Financial Corporation 3% 9. Open Text Corporation 3 4%. Alimentation Couche-Tard 3 3%.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 3Series 3Series 3 Series 5Series 5Series 5 Series 6Series** 6**Series 6** Series 7Series** 7**Series 7**

$10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value

1 Year 11,439 14 4%. 11,506 15% 1. 11,498 15 0%. 11,560 15 6%. 3 Years 11,767 5% 6. 11,992 6 2%. — — — — 5 Years 14,838 8% 2. 15,300 8% 9. — — — — 10 Years 13,393 3 0%. — — — — — — Since 3% 7. 13,272 3% 1. 11,303 10 6%. 11,372 11 2%. Inception 14,887

* This Fund is composed of units of the corresponding underlying investment funds. ** Beginning of operations in October 2015.

DFS GUARANTEED INVESTMENT FUNDS 199 Canadian Equity

DFS GIF – CANADIAN EQUITY – JARISLOWSKY FRASER (cont.)

STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Interest for attribution purposes — 45,726 Investments at fair value through profit Dividends 4,233,940 4,955,811 or loss (FVTPL) 155,659,188 151,331,052 Changes in fair value: Premiums receivable 1,331 — Net realized gain (loss) on Receivable for securities sold 29,051 — investments 5,950,711 13,485,229 155,689,570 151,331,052 Net unrealized gain (loss) on LIABILITIES investments 15,098,093 (21,944,270) Current Liabilities 25,282,744 (3,457,504) Bank overdraft 32,889 215,940 Accrued expenses 380,917 370,726 EXPENSES Withdrawals payable 325,198 72,532 Management fees and guarantee charge 3,199,991 3,659,561 739,004 659,198 Operating expenses 1,184,804 1,352,271 NET ASSETS ATTRIBUTABLE TO 4,384,795 5,011,832 CONTRACT OWNERS 154,950,566 150,671,854 INCREASE (DECREASE) IN NET ASSETS NET ASSETS PER UNIT FROM OPERATIONS ATTRIBUTABLE TO Series 3 7.44 6 51. CONTRACT OWNERS 20,897,949 (8,469,336) Series 5 7.90 6 8. DATA PER SERIES Series 6 5.65 4 92. SERIES 3 Series 7 5.69 4 92. Increase (Decrease) in Net Assets from Operations 522,569 (283,716) - per unit 0.90 (0) 37. Average Number of Units 582,397 771,411 SERIES 5 Increase (Decrease) in Net Assets from Operations 20,305,303 (8,185,619) - per unit 1.01 (0) 35. Average Number of Units 20,056,586 23,339,415 SERIES 6* Increase (Decrease) in Net Assets from Operations 67,088 324 - per unit 0.86 0 05. Average Number of Units 78,463 6,141 SERIES 7* Increase (Decrease) in Net Assets from Operations 2,989 (325) - per unit 0.73 (0 08). Average Number of Units 4,084 4,000

* Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements.

200 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 150,671,854 188,077,063 to contract owners 20,897,949 (8,469,336) Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 20,897,949 (8,469,336) Net realized gain (loss) (5,950,711) (13,485,229) Net unrealized gain (loss) (15,098,093) 21,944,270 Premiums Non-cash distribution from Series 3 128,081 216,981 investments (4,233,940) (5,002,814) Series 5 4,071,819 3,761,592 Proceeds from sale/maturity of Series 6* 744,963 93,329 investments 21,339,365 33,962,157 Series 7* 13,423 20,001 Investments purchased (384,757) (99,239) 4,958,286 4,091,903 Receivable for securities sold (29,051) 89,196 Withdrawals Accrued expenses 10,191 (79,326) Series 3 (1,117,325) (1,510,767) NET CASH FLOWS FROM (USED IN) Series 5 (20,446,088) (31,516,958) OPERATING ACTIVITIES 16,550,953 28,859,679 Series 6* (14,110) (51) Series 7* — — CASH FLOWS FROM (USED IN) (21,577,523) (33,027,776) FINANCING ACTIVITIES Premium payments 4,956,955 4,094,267 NET ASSETS ATTRIBUTABLE Amounts paid on withdrawals (21,324,857) (33,019,129) TO CONTRACT OWNERS, END OF YEAR 154,950,566 150,671,854 NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (16,367,902) (28,924,862) Increase (Decrease) in cash/bank overdraft 183,051 (65,183) Cash (bank overdraft), beginning of year (215,940) (150,757) CASH (BANK OVERDRAFT), END OF YEAR (32,889) (215,940) SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Interest paid — 740

* Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 201 Canadian Equity

DFS GIF – CANADIAN EQUITY – JARISLOWSKY FRASER (cont.)

SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.5%) Jarislowsky Fraser Canadian Equity Fund 4,782,921 146,248,786 155,659,188 TOTAL INVESTMENTS 146,248,786 155,659,188 OTHER NET ASSETS (-0.5%) (708,622) NET ASSETS (100%) 154,950,566

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Toronto-Dominion Bank 8 .5% Jarislowsky Fraser Special Equity Fund 7 4%. Royal Bank of Canada 6 8%. Scotiabank 6 2%. Enbridge 5 .0% Canadian Natural Resources 4 .7% Canadian National Railway Company 4 .5% Manulife Financial Corporation 3 .9% Open Text Corporation 3 4%. Alimentation Couche-Tard 3 3%. SNC-Lavalin Group 2 6%. Gildan Activewear 2 .5% Canadian Tire Corporation 2 .5% Thomson Reuters Corporation 2 .5% Cenovus Energy 2 .5% Loblaw Companies 2 4%. Potash Corporation of Saskatchewan 2 3%. Intact Financial Corporation 2 3%. Metro 2 2%. Pembina Pipeline Corporation 2 2%. Vermilion Energy 2 0%. Great-West Lifeco 1 9%. Saputo 1 9%. Industrial Alliance, Insurance and Financial Services 1 8%. CGI Group 1 8%.

202 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To achieve long-term capital appreciation while continuing to emphasize the preservation of capital by investing primarily in large cap Canadian equity securities . Investment Strategy To invest primarily in Canadian equity securities in areas of the Canadian economy where superior rates of growth are expected .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds — 155,659,188 — 155,659,188 TOTAL — 155,659,188 — 155,659,188

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds — 151,331,052 — 151,331,052 TOTAL — 151,331,052 — 151,331,052 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

DFS GUARANTEED INVESTMENT FUNDS 203 Canadian Equity

DFS GIF – CANADIAN EQUITY – JARISLOWSKY FRASER (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ S&P/TSX 3 00. 3,716,898 3,362,033 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

204 DFS GUARANTEED INVESTMENT FUNDS FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016** 2015** 2014** 2013** 2012

Series 3 7.44 6 .51 6 .89 6 .33 5 .34 Series 5 7.90 6 .86 7 .22 6 .58 5 .52 Series 6* 5.65 4 .92 — — — Series 7* 5.69 4 .92 — — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 3 3,912 4,378 5,956 6,657 6,993 Series 5 150,111 146,180 182,121 178,606 158,237 Series 6* 892 94 — — — Series 7* 36 20 — — — Number of units outstanding (000) Series 3 526 673 864 1,052 1,310 Series 5 19,011 21,301 25,226 27,126 28,644 Series 6* 158 19 — — — Series 7* 6 4 — — — Management expense ratio (MER)1 (%) Series 3 3.59 3 .58 3 .59 3 .59 3 .20 Series 5 2.92 2 .91 2 .92 2 .91 2 .60 Series 6* 2.93 2 .87 — — — Series 7* 2.41 2 .36 — — — Portfolio turnover rate2 (%) 10.34 12 .48 2 .51 13 .78 17 .69

* Beginning of operations in October 2015. ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

DFS GUARANTEED INVESTMENT FUNDS 205 Canadian Equity DFS GIF – CANADIAN EQUITY – FIDELITY TRUE NORTH®*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Toronto-Dominion Bank 8 8%. Canadian National Railway Company 4 1%. Suncor Energy 3% 6. CGI Group 3% 4. Rogers Communications 3% 3. Royal Bank of Canada 3% 2. Loblaw Companies 3 0%. Enbridge 2 7%. Manulife Financial Corporation 2 7%. Alimentation Couche-Tard 2% 4.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 3Series 3Series 3 Series 5Series 5Series 5 Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value

1 Year 10,863 8 6%. 10,901 9% 0. 10,915 9 1%. 10,976 9% 8. 3 Years 11,783 5 6%. 11,916 6 0%. — — — — 5 Years 15,254 8 8%. 15,540 9% 2. — — — — Since Inception 21,133 9 7%. 21,751 10 1%. 11,595 5 3%. 11,769 5 9%.

® Fidelity True North is a registered trademark of FMR Corp. * This Fund is composed of units of the corresponding underlying investment funds.

206 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Dividends 573,375 316,159 Cash 1,013 15,527 Changes in fair value: Investments at fair value through profit Net realized gain (loss) on or loss (FVTPL) 34,092,540 29,987,011 investments 1,171,306 1,919,545 Premiums receivable 26,316 142,119 Net unrealized gain (loss) on 34,119,869 30,144,657 investments 2,010,530 (2,240,320) LIABILITIES 3,755,211 (4,616) Current Liabilities Accrued expenses 89,042 78,289 EXPENSES Withdrawals payable 5,750 33,027 Management fees and guarantee charge 834,454 755,996 Payable for securities purchased 20,455 125,074 Operating expenses 166,358 166,290 115,247 236,390 1,000,812 922,286 NET ASSETS ATTRIBUTABLE TO INCREASE (DECREASE) IN NET ASSETS CONTRACT OWNERS 34,004,622 29,908,267 FROM OPERATIONS ATTRIBUTABLE TO NET ASSETS PER UNIT CONTRACT OWNERS 2,754,399 (926,902) Series 3 10.57 9 .73 DATA PER SERIES Series 5 10.88 9 .98 SERIES 3 Series 6 5.80 5 31. Increase (Decrease) in Net Assets Series 7 5.88 5 36. from Operations 105,463 (43,972) - per unit 0.85 (0 39). Average Number of Units 124,081 113,895 SERIES 5 Increase (Decrease) in Net Assets from Operations 1,770,679 (601,808) - per unit 0.87 (0 28). Average Number of Units 2,036,626 2,171,035 SERIES 6 Increase (Decrease) in Net Assets from Operations 787,261 (243,959) - per unit 0.51 (0 28). Average Number of Units 1,542,222 873,976 SERIES 7 Increase (Decrease) in Net Assets from Operations 90,996 (37,163) - per unit 0.52 (0 39). Average Number of Units 175,553 96,270

® Fidelity True North is a registered trademark of FMR Corp. The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 207 Canadian Equity

DFS GIF – CANADIAN EQUITY – FIDELITY TRUE NORTH® (cont.)

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 29,908,267 26,523,266 to contract owners 2,754,399 (926,902) Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 2,754,399 (926,902) Net realized gain (loss) (1,171,306) (1,919,545) Net unrealized gain (loss) (2,010,530) 2,240,320 Premiums Non-cash distribution from Series 3 390,863 536,956 investments (573,375) (316,159) Series 5 3,418,386 3,150,430 Proceeds from sale/maturity of Series 6 4,313,162 5,301,406 investments 3,862,028 2,771,374 Series 7 157,823 951,328 Investments purchased (4,212,346) (6,169,444) 8,280,234 9,940,120 Accrued expenses 10,753 9,309 Withdrawals Payable for securities purchased (104,619) 76,260 Series 3 (316,875) (319,923) NET CASH FLOWS FROM (USED IN) Series 5 (5,091,131) (3,926,848) OPERATING ACTIVITIES (1,444,996) (4,234,787) Series 6 (1,141,697) (1,375,947) Series 7 (388,575) (5,499) CASH FLOWS FROM (USED IN) (6,938,278) (5,628,217) FINANCING ACTIVITIES Premium payments 8,396,037 9,852,851 NET ASSETS ATTRIBUTABLE Amounts paid on withdrawals (6,965,555) (5,614,861) TO CONTRACT OWNERS, END OF YEAR 34,004,622 29,908,267 NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES 1,430,482 4,237,990 Increase (Decrease) in cash/bank overdraft (14,514) 3,203 Cash (bank overdraft), beginning of year 15,527 12,324 CASH (BANK OVERDRAFT), END OF YEAR 1,013 15,527

The accompanying Notes are an integral part of these financial statements.

208 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.3%) Fidelity True North® Fund, Series O 713,951 28,071,101 34,092,540 TOTAL INVESTMENTS 28,071,101 34,092,540 OTHER NET ASSETS (-0.3%) (87,918) NET ASSETS (100%) 34,004,622

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Toronto-Dominion Bank 8 .8% Canadian National Railway Company 4 .1% Suncor Energy 3 6%. CGI Group 3 4%. Rogers Communications 3 3%. Royal Bank of Canada 3 2%. Loblaw Companies 3 .0% Enbridge 2 .7% Manulife Financial Corporation 2 .7% Alimentation Couche-Tard 2 4%. Metro 2 4%. Constellation Software 2 0%. Restaurant Brands International 2 0%. Power Financial Corporation 2 0%. Peyto Exploration & Development Corporation 1 8%. SNC-Lavalin Group 1 8%. Intact Financial Corporation 1 7%. Tahoe Resources 1 6%. Precision Drilling Corporation 1 5%. PrairieSky Royalty 1 5%. ARC Resources 1 4%. Franco-Nevada Corporation 1 4%. Canadian Natural Resources 1 3%. Fairfax Financial Holdings 1 2%. Eldorado Gold Corporation 1 .1%

DFS GUARANTEED INVESTMENT FUNDS 209 Canadian Equity

DFS GIF – CANADIAN EQUITY – FIDELITY TRUE NORTH® (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To achieve strong long-term capital growth by investing primarily in equity securities of Canadian companies that have a history of strong capital growth over the long-term . The fundamental investment of this Fund is to achieve long-term capital appreciation while still emphasizing the preservation of capital by investing primarily in Canadian equity securities . Investment Strategy To invest primarily in small, medium and large Canadian companies . The Fund may also invest in a limited portion of foreign securities . The Fund may also use, to a lesser degree, derivatives such as options, futures, forward contracts and swaps to protect against losses caused by changes in stock prices or exchange rates .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 34,092,540 — — 34,092,540 TOTAL 34,092,540 — — 34,092,540

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 29,987,011 — — 29,987,011 TOTAL 29,987,011 — — 29,987,011 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

210 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ S&P/TSX Capped 3 .00 635,546 566,307 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

DFS GUARANTEED INVESTMENT FUNDS 211 Canadian Equity

DFS GIF – CANADIAN EQUITY – FIDELITY TRUE NORTH® (cont.)

FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements . The net assets per unit presented in the financial statements may differ from the net asset value calculated for fund pricing purposes .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 3 10.57 9 .73 10 .05 8 .97 7 .41 Series 5 10.88 9 .98 10 .26 9 .13 7 .52 Series 6 5.80 5 .31 5 .45 — — Series 7 5.88 5 .36 5 .47 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 3 1,377 1,197 1,024 928 941 Series 5 21,561 21,463 22,841 20,048 14,045 Series 6 10,218 6,259 2,577 — — Series 7 849 989 81 — — Number of units outstanding (000) Series 3 130 123 102 104 127 Series 5 1,982 2,151 2,225 2,197 1,868 Series 6 1,762 1,178 473 — — Series 7 144 185 15 — — Management expense ratio (MER)1 (%) Series 3 3.56 3 .59 3 .62 3 .62 3 .20 Series 5 3.20 3 .20 3 .21 3 .20 2 .85 Series 6 3.04 3 .05 3 .04 — — Series 7 2.46 2 .58 2 .59 — — Portfolio turnover rate2 (%) 11.95 14 .18 11 .08 12 .93 13 .41

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

212 DFS GUARANTEED INVESTMENT FUNDS Canadian Equity DFS GIF – CANADIAN EQUITY – FRANKLIN BISSETT*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Brookfield Asset Management 5% 8. Canadian National Railway Company 5% 2. Royal Bank of Canada 5 1%. Toronto-Dominion Bank 5 0%. Canadian Imperial Bank of Commerce 4 6%. Bank of Montreal 4 4%. Restaurant Brands International 4 3%. Scotiabank 3 9%. Enbridge 3 5%. Canadian Pacific Railway 3% 4.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 1Series** 1**Series 1** Series 3Series 3Series 3 Series 5Series 5Series 5 Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value Value

1 Year — — 11,951 19% 5. 12,021 20% 2. 12,035 20% 3. 12,097 21% 0. 3 Years — — 11,574 5 0%. 11,788 5 6%. — — — — 5 Years — — 15,562 9% 2. 15,994 9% 8. — — — — 10 Years — — 15,134 4 2%. — — — — — — Since Inception 10,101 1% 0. 25,309 5 7%. 15,234 4 7%. 11,471 4 9%. 11,630 5 4%.

Series IGPSeries** IGP**Series IGP**

$10,000 Lump Total Gain Sum (Annualized) Value

1 Year — — 3 Years — — 5 Years — — 10 Years — — Since Inception 10,117 1% 2.

* This Fund is composed of units of the corresponding underlying investment funds. ** Beginning of operations in November 2016.

DFS GUARANTEED INVESTMENT FUNDS 213 Canadian Equity

DFS GIF – CANADIAN EQUITY – FRANKLIN BISSETT (cont.)

STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Dividends 1,343,256 650,483 Cash 90,974 88,334 Changes in fair value: Investments at fair value through profit Net realized gain (loss) on or loss (FVTPL) 67,494,746 29,600,986 investments 1,422,592 2,362,585 Premiums receivable 221,648 5,499 Net unrealized gain (loss) on Receivable for securities sold 13,996 6,974 investments 4,136,610 (5,386,397) 67,821,364 29,701,793 6,902,458 (2,373,329) LIABILITIES Current Liabilities EXPENSES Accrued expenses 192,304 81,517 Management fees and guarantee charge 922,797 939,158 Withdrawals payable 40,550 9,260 Operating expenses 183,351 201,052 Payable for securities purchased 68,845 — 1,106,148 1,140,210 301,699 90,777 INCREASE (DECREASE) IN NET ASSETS NET ASSETS ATTRIBUTABLE TO FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 67,519,665 29,611,016 CONTRACT OWNERS 5,796,310 (3,513,539) NET ASSETS PER UNIT DATA PER SERIES Series 1 5.05 — SERIES 1* Series 3 12.65 109 5. Increase (Decrease) in Net Assets Series 5 13.37 112 1. from Operations 160,406 — Series 6 5.74 4 77. - per unit 0.05 — Series 7 5.82 4 81. Average Number of Units 3,159,614 — Series IGP 10.12 — SERIES 3 Increase (Decrease) in Net Assets from Operations 2,789,864 (1,825,538) - per unit 2.00 (1 17). Average Number of Units 1,393,826 1,556,001 SERIES 5 Increase (Decrease) in Net Assets from Operations 2,269,801 (1,432,648) - per unit 2.19 (1 17). Average Number of Units 1,036,103 1,223,103 SERIES 6 Increase (Decrease) in Net Assets from Operations 536,885 (253,153) - per unit 0.96 (0 54). Average Number of Units 561,861 467,236 SERIES 7 Increase (Decrease) in Net Assets from Operations 6,784 (2,200) - per unit 0.93 (0) 55. Average Number of Units 7,334 4,027 SERIES IGP* Increase (Decrease) in Net Assets from Operations 32,570 — - per unit 0.12 — Average Number of Units 277,616 —

* Beginning of operations in November 2016. The accompanying Notes are an integral part of these financial statements.

214 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 29,611,016 39,199,401 to contract owners 5,796,310 (3,513,539) Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 5,796,310 (3,513,539) Net realized gain (loss) (1,422,592) (2,362,585) Net unrealized gain (loss) (4,136,610) 5,386,397 Premiums Non-cash distribution from Series 1* 15,937,034 — investments (1,343,256) (650,483) Series 3 12,338,702 691,411 Proceeds from sale/maturity of Series 5 5,791,880 1,183,404 investments 5,320,296 7,943,880 Series 6 2,246,595 1,121,082 Investments purchased (36,311,598) (701,193) Series 7 166,547 18,549 Receivable for securities sold (7,022) (1,297) Series IGP* 2,783,426 — Accrued expenses 110,787 (24,057) 39,264,184 3,014,446 Payable for securities purchased 68,845 (4,460) Withdrawals NET CASH FLOWS FROM (USED IN) Series 1* (236,989) — OPERATING ACTIVITIES (31,924,840) 6,072,663 Series 3 (3,346,937) (3,786,105) Series 5 (2,848,804) (4,557,027) CASH FLOWS FROM (USED IN) Series 6 (666,913) (745,064) FINANCING ACTIVITIES Series 7 (19,176) (1,096) Premium payments 39,048,035 3,022,875 Series IGP* (33,026) — Amounts paid on withdrawals (7,120,555) (9,096,914) (7,151,845) (9,089,292) NET CASH FLOWS FROM (USED IN) NET ASSETS ATTRIBUTABLE FINANCING ACTIVITIES 31,927,480 (6,074,039) TO CONTRACT OWNERS, Increase (Decrease) in cash/bank END OF YEAR 67,519,665 29,611,016 overdraft 2,640 (1,376) Cash (bank overdraft), beginning of year 88,334 89,710 CASH (BANK OVERDRAFT), END OF YEAR 90,974 88,334

* Beginning of operations in November 2016. The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 215 Canadian Equity

DFS GIF – CANADIAN EQUITY – FRANKLIN BISSETT (cont.)

SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.0%) Franklin Bissett Canadian Equity Fund, Series O 455,491 55,979,874 67,494,746 TOTAL INVESTMENTS 55,979,874 67,494,746 OTHER NET ASSETS (0.0%) 24,919 NET ASSETS (100%) 67,519,665

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Brookfield Asset Management 5 8%. Canadian National Railway Company 5 2%. Royal Bank of Canada 5 .1% Toronto-Dominion Bank 5 .0% Canadian Imperial Bank of Commerce 4 .6% Bank of Montreal 4 .4% Restaurant Brands International 4 .3% Scotiabank 3 .9% Enbridge 3 .5% Canadian Pacific Railway 3 4%. Onex Corporation 3 3%. Saputo Group 2 8%. Alimentation Couche-Tard 2 6%. Metro 2 3%. Power Financial Corporation 2 .1% Thomson Reuters Corporation 2 0%. Toromont Industries Ltd 1 9%. Inter Pipeline 1 9%. Atco Ltd 1 9%. Dollarama 1 7%. Home Capital Group 1 7%. TransCanada Corporation 1 6%. MacDonald, Dettwiler and Associates Ltd 1 6%. Stantec 1 6%. Enghouse Systems Ltd 1 6%.

216 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective The fundamental investment objective of this Fund is to achieve long-term capital appreciation while continuing to emphasize the preservation of capital by investing primarily in Canadian equity securities . Investment Strategy To invest primarily in mid to large cap Canadian equity securities of growth-oriented companies . The Fund may also have a foreign equity component .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 67,494,746 — — 67,494,746 TOTAL 67,494,746 — — 67,494,746

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 29,600,986 — — 29,600,986 TOTAL 29,600,986 — — 29,600,986 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

DFS GUARANTEED INVESTMENT FUNDS 217 Canadian Equity

DFS GIF – CANADIAN EQUITY – FRANKLIN BISSETT (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ S&P/TSX 3 00. 1,914,960 814,325 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

218 DFS GUARANTEED INVESTMENT FUNDS FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016** 2015** 2014** 2013** 2012

Series 1* 5.05 — — — — Series 3 12.65 10 .59 11 .80 10 .93 9 .18 Series 5 13.37 11 .12 12 .31 11 .34 9 .47 Series 6 5.74 4 .77 5 .27 — — Series 7 5.82 4 .81 5 .29 — — Series IGP* 10.12 — — — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 1* 15,860 — — — — Series 3 26,914 15,132 20,052 21,070 20,829 Series 5 17,245 12,032 16,838 13,848 7,284 Series 6 4,529 2,412 2,289 — — Series 7 189 35 20 — — Series IGP* 2,783 — — — — Number of units outstanding (000) Series 1* 3,140 — — — — Series 3 2,127 1,429 1,699 1,927 2,270 Series 5 1,290 1,082 1,367 1,221 769 Series 6 790 506 435 — — Series 7 33 7 4 — — Series IGP* 275 — — — — Management expense ratio (MER)1 (%) Series 1* 3.98 — — — — Series 3 3.59 3 .59 3 .59 3 .59 3 .20 Series 5 2.97 2 .97 2 .98 2 .98 2 .70 Series 6 2.80 2 .79 2 .83 — — Series 7 2.41 2 .41 2 .41 — — Series IGP* 2.38 — — — — Portfolio turnover rate2 (%) 14.66 4 .51 10 .50 11 .34 5 .63

* Beginning of operations in November 2016. ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

DFS GUARANTEED INVESTMENT FUNDS 219 Canadian Equity DFS GIF – SPECIALTY EQUITY – NEI NORTHWEST*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Parex Resources 6 2%. Premium Brands Holdings Corporation 5 6%. Home Capital Group 5 4%. Kinaxis 4 3%. Lassonde Industries 4 3%. New Flyer Industries 4 0%. Winpak Ltd 3 5%. Dollarama 3 5%. Boyd Group Income Fund 3 5%. Fortuna Silver Mines 3% 3.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 3Series 3Series 3 Series 5Series 5Series 5 Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value

1 Year 11,718 17% 2. 11,776 17% 8. 11,781 17% 8. 11,831 18% 3. 3 Years 9,928 -0% 2. 10,094 0% 3. — — — — 5 Years 11,591 3 0%. 11,905 3 5%. — — — — 10 Years 12,724 2% 4. — — — — — — Since Inception 12,830 2 5%. 11,147 1% 2. 9,698 -1 1%. 9,805 -0 7%.

* This Fund is composed of units of the corresponding underlying investment funds.

220 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Interest for attribution purposes — 5,702 Cash 26,836 38,182 Dividends 162,463 22,421 Investments at fair value through profit Changes in fair value: or loss (FVTPL) 16,701,009 15,489,484 Net realized gain (loss) on Premiums receivable 5,213 3,579 investments 9,033 89,813 Receivable for securities sold 1,149 2,523 Net unrealized gain (loss) on 16,734,207 15,533,768 investments 2,924,903 (1,588,685) LIABILITIES 3,096,399 (1,470,749) Current Liabilities Accrued expenses 46,405 43,507 EXPENSES Withdrawals payable 6,046 4,677 Management fees and guarantee charge 475,389 523,874 Payable for securities purchased 1,691 11,863 Operating expenses 63,749 70,946 54,142 60,047 539,138 594,820 NET ASSETS ATTRIBUTABLE TO INCREASE (DECREASE) IN NET ASSETS CONTRACT OWNERS 16,680,065 15,473,721 FROM OPERATIONS ATTRIBUTABLE TO NET ASSETS PER UNIT CONTRACT OWNERS 2,557,261 (2,065,569) Series 3 6.42 5 .47 DATA PER SERIES Series 5 6.80 5 .77 SERIES 3 Series 6 4.85 4 .12 Increase (Decrease) in Net Assets Series 7 4.90 4 .14 from Operations 492,296 (447,936) - per unit 0.93 (0 71). Average Number of Units 531,338 629,877 SERIES 5 Increase (Decrease) in Net Assets from Operations 1,860,412 (1,502,480) - per unit 1.01 (0 .72) Average Number of Units 1,833,395 2,075,643 SERIES 6 Increase (Decrease) in Net Assets from Operations 201,477 (113,123) - per unit 0.73 (0 .58) Average Number of Units 277,705 196,620 SERIES 7 Increase (Decrease) in Net Assets from Operations 3,076 (2,030) - per unit 0.76 (0 .50) Average Number of Units 4,054 4,054

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 221 Canadian Equity

DFS GIF – SPECIALTY EQUITY – NEI NORTHWEST (cont.)

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 15,473,721 20,047,359 to contract owners 2,557,261 (2,065,569) Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 2,557,261 (2,065,569) Net realized gain (loss) (9,033) (89,813) Net unrealized gain (loss) (2,924,903) 1,588,685 Premiums Non-cash distribution from Series 3 143,903 109,198 investments (162,463) (22,421) Series 5 1,487,577 1,592,286 Proceeds from sale/maturity of Series 6 508,080 797,418 investments 2,546,961 3,802,345 Series 7 — — Investments purchased (662,087) (684,816) 2,139,560 2,498,902 Receivable for securities sold 1,374 14,938 Withdrawals Accrued expenses 2,898 (12,150) Series 3 (615,534) (871,602) Payable for securities purchased (10,172) (6,230) Series 5 (2,509,234) (3,921,398) NET CASH FLOWS FROM (USED IN) Series 6 (365,709) (213,971) OPERATING ACTIVITIES 1,339,836 2,524,969 Series 7 — — (3,490,477) (5,006,971) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES NET ASSETS ATTRIBUTABLE Premium payments 2,137,926 2,513,342 TO CONTRACT OWNERS, END OF YEAR 16,680,065 15,473,721 Amounts paid on withdrawals (3,489,108) (5,020,793) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (1,351,182) (2,507,451) Increase (Decrease) in cash/bank overdraft (11,346) 17,518 Cash (bank overdraft), beginning of year 38,182 20,664 CASH (BANK OVERDRAFT), END OF YEAR 26,836 38,182 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Interest paid — 9

The accompanying Notes are an integral part of these financial statements.

222 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.1%) NEI Northwest Specialty Equity Fund, Series I 866,415 14,448,764 16,701,009 TOTAL INVESTMENTS 14,448,764 16,701,009 OTHER NET ASSETS (-0.1%) (20,944) NET ASSETS (100%) 16,680,065

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Parex Resources 6 2%. Premium Brands Holdings Corporation 5 .6% Home Capital Group 5 .4% Kinaxis 4 .3% Lassonde Industries 4 .3% New Flyer Industries 4 .0% Winpak Ltd 3 .5% Dollarama 3 .5% Boyd Group Income Fund 3 .5% Fortuna Silver Mines 3 3%. Element Fleet Management Corporation 3 3%. Laurentian Bank of Canada 2 8%. Andrew Peller 2 .7% FirstService Corporation 2 .7% Descartes Systems Group 2 6%. Stella-Jones 2 6%. Badger Daylighting 2 6%. Advantage Oil & Gas 2 .5% Bonterra Energy 2 .5% Parkland Fuel Corporation 2 .5% Industrial Alliance, Insurance and Financial Services 2 .5% Osisko Gold Royalties 2 4%. TORC Oil & Gas 2 3%. Callidus Capital Corporation 2 2%. Stantec 1 6%.

DFS GUARANTEED INVESTMENT FUNDS 223 Canadian Equity

DFS GIF – SPECIALTY EQUITY – NEI NORTHWEST (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To achieve capital appreciation over the longer term by investing primarily in the equity of smaller, fast growing Canadian companies with small market capitalizations under a billion dollars . Investment Strategy To invest primarily in common shares and other equity securities issued by companies that are financially strong and have distinct competitive advantages at relative valuations .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 16,701,009 — — 16,701,009 TOTAL 16,701,009 — — 16,701,009

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 15,489,484 — — 15,489,484 TOTAL 15,489,484 — — 15,489,484 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

224 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ S&P/TSX Small Cap (50%) 3 .00 191,882 231,847 S&P/TSX Completion (50%) 3 .00 191,882 154,565 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

DFS GUARANTEED INVESTMENT FUNDS 225 Canadian Equity

DFS GIF – SPECIALTY EQUITY – NEI NORTHWEST (cont.)

FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 3 6.42 5 .47 6 .21 6 .46 5 .55 Series 5 6.80 5 .77 6 .51 6 .73 5 .76 Series 6 4.85 4 .12 4 .63 — — Series 7 4.90 4 .14 4 .64 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 3 3,145 3,125 4,335 5,197 6,513 Series 5 12,083 11,244 15,076 16,912 14,787 Series 6 1,432 1,088 618 — — Series 7 20 17 19 — — Number of units outstanding (000) Series 3 490 571 698 804 1,174 Series 5 1,777 1,948 2,317 2,511 2,568 Series 6 295 264 133 — — Series 7 4 4 4 — — Management expense ratio (MER)1 (%) Series 3 3.82 3 .83 3 .83 3 .83 3 .40 Series 5 3.28 3 .27 3 .28 3 .29 2 .90 Series 6 3.21 3 .21 3 .24 — — Series 7 2.76 2 .76 2 .76 — — Portfolio turnover rate2 (%) 5.11 3 .94 14 .06 8 .73 76 .88

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

226 DFS GUARANTEED INVESTMENT FUNDS Canadian Equity DFS GIF – SMALL CAP – FRANKLIN BISSETT*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Brookfield Asset Management 5% 8. Canadian National Railway Company 5% 2. Royal Bank of Canada 5 1%. Toronto-Dominion Bank 5 0%. Canadian Imperial Bank of Commerce 4 6%. Bank of Montreal 4 4%. Restaurant Brands International 4 3%. Scotiabank 3 9%. Enbridge 3 5%. Canadian Pacific Railway 3% 4.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 3Series 3Series 3 Series 5Series 5Series 5 Series Series6 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value

1 Year 12,752 27% 5. 12,819 28% 2. 12,809 28 1%. 12,861 28% 6. 3 Years 9,508 -1% 7. 9,691 -1% 0. — — — — 5 Years 15,161 8 7%. 15,585 9% 3. — — — — 10 Years 13,450 3 0%. — — — — — — Since Inception 34,510 7% 7. 14,687 4 3%. 9,682 -1 1%. 9,754 -0 9%.

* This Fund is composed of units of the corresponding underlying investment funds.

DFS GUARANTEED INVESTMENT FUNDS 227 Canadian Equity

DFS GIF – SMALL CAP – FRANKLIN BISSETT (cont.)

STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Dividends 239,007 364,942 Cash 7,157 668 Changes in fair value: Investments at fair value through profit Net realized gain (loss) on or loss (FVTPL) 19,282,509 16,213,297 investments (37,641) 578,120 Premiums receivable 115,286 8,296 Net unrealized gain (loss) on Receivable for securities sold — 4,714 investments 4,637,655 (4,748,834) 19,404,952 16,226,975 4,839,021 (3,805,772) LIABILITIES Current Liabilities EXPENSES Accrued expenses 52,665 44,878 Management fees and guarantee charge 500,071 595,249 Withdrawals payable 19,895 — Operating expenses 76,728 93,006 Payable for securities purchased 93,264 13,653 576,799 688,255 165,824 58,531 INCREASE (DECREASE) IN NET ASSETS NET ASSETS ATTRIBUTABLE TO FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 19,239,128 16,168,444 CONTRACT OWNERS 4,262,222 (4,494,027) NET ASSETS PER UNIT DATA PER SERIES Series 3 17.26 13 53. SERIES 3 Series 5 18.27 14 .25 Increase (Decrease) in Net Assets Series 6 4.84 3 .78 from Operations 1,627,798 (1,850,577) Series 7 4.88 3 .79 - per unit 3.65 (3 45). Average Number of Units 445,547 536,786 SERIES 5 Increase (Decrease) in Net Assets from Operations 2,099,040 (2,274,177) - per unit 3.95 (3 63). Average Number of Units 530,780 627,132 SERIES 6 Increase (Decrease) in Net Assets from Operations 527,812 (363,025) - per unit 1.11 (0 .96) Average Number of Units 477,373 378,186 SERIES 7 Increase (Decrease) in Net Assets from Operations 7,572 (6,248) - per unit 1.08 (0 42). Average Number of Units 6,981 14,801

The accompanying Notes are an integral part of these financial statements.

228 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 16,168,444 25,230,156 to contract owners 4,262,222 (4,494,027) Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 4,262,222 (4,494,027) Net realized gain (loss) 37,641 (578,120) Net unrealized gain (loss) (4,637,655) 4,748,834 Premiums Non-cash distribution from Series 3 338,684 227,270 investments (239,007) (364,942) Series 5 1,250,361 968,762 Proceeds from sale/maturity of Series 6 1,087,194 863,230 investments 3,157,206 6,103,260 Series 7 300 1,000 Investments purchased (1,387,397) (803,179) 2,676,539 2,060,262 Receivable for securities sold 4,714 21,242 Withdrawals Accrued expenses 7,787 (25,506) Series 3 (1,329,570) (2,141,551) Payable for securities purchased 79,611 (207) Series 5 (2,190,131) (3,827,903) NET CASH FLOWS FROM (USED IN) Series 6 (347,697) (569,079) OPERATING ACTIVITIES 1,285,122 4,607,355 Series 7 (679) (89,414) (3,868,077) (6,627,947) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES NET ASSETS ATTRIBUTABLE Premium payments 2,569,549 2,057,165 TO CONTRACT OWNERS, END OF YEAR 19,239,128 16,168,444 Amounts paid on withdrawals (3,848,182) (6,659,989) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (1,278,633) (4,602,824) Increase (Decrease) in cash/bank overdraft 6,489 4,531 Cash (bank overdraft), beginning of year 668 (3,863) CASH (BANK OVERDRAFT), END OF YEAR 7,157 668

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 229 Canadian Equity

DFS GIF – SMALL CAP – FRANKLIN BISSETT (cont.)

SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.2%) Franklin Bissett Small Cap Fund, Series O 222,739 16,237,506 19,282,509 TOTAL INVESTMENTS 16,237,506 19,282,509 OTHER NET ASSETS (-0.2%) (43,381) NET ASSETS (100%) 19,239,128

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Brookfield Asset Management 5 8%. Canadian National Railway Company 5 2%. Royal Bank of Canada 5 .1% Toronto-Dominion Bank 5 .0% Canadian Imperial Bank of Commerce 4 .6% Bank of Montreal 4 .4% Restaurant Brands International 4 .3% Scotiabank 3 .9% Enbridge 3 .5% Canadian Pacific Railway 3 4%. Onex Corporation 3 3%. Saputo Group 2 8%. Alimentation Couche-Tard 2 6%. Metro 2 3%. Power Financial Corporation 2 .1% Thomson Reuters Corporation 2 0%. Toromont Industries Ltd 1 9%. Inter Pipeline 1 9%. Atco Ltd 1 9%. Dollarama 1 7%. Home Capital Group 1 7%. TransCanada Corporation 1 6%. MacDonald, Dettwiler and Associates Ltd 1 6%. Stantec 1 6%. Enghouse Systems Ltd 1 6%.

230 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide investors with long-term capital appreciation . The Fund invests mainly in shares of Canadian companies with small to medium market capitalizations which are expected to provide above-average returns . Investment Strategy To be fully diversified at all times to compensate for the volatility inherent in investing in small capitalization equities .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 19,282,509 — — 19,282,509 TOTAL 19,282,509 — — 19,282,509

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 16,213,297 — — 16,213,297 TOTAL 16,213,297 — — 16,213,297 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

DFS GUARANTEED INVESTMENT FUNDS 231 Canadian Equity

DFS GIF – SMALL CAP – FRANKLIN BISSETT (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ S&P/TSX Small Cap 3 00. 366,846 360,677 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

232 DFS GUARANTEED INVESTMENT FUNDS FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 3 17.26 13 .53 17 .05 18 .15 13 .68 Series 5 18.27 14 .25 17 .83 18 .85 14 .15 Series 6 4.84 3 .78 4 .73 — — Series 7 4.88 3 .79 4 .74 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 3 7,231 6,594 10,359 12,882 11,189 Series 5 9,211 8,051 13,185 12,887 5,762 Series 6 2,764 1,497 1,566 — — Series 7 34 27 121 — — Number of units outstanding (000) Series 3 419 487 607 710 818 Series 5 504 565 739 684 407 Series 6 571 396 331 — — Series 7 7 7 26 — — Management expense ratio (MER)1 (%) Series 3 3.76 3 .74 3 .75 3 .75 3 .37 Series 5 3.14 3 .13 3 .13 3 .13 2 .85 Series 6 3.14 3 .12 3 .15 — — Series 7 2.74 2 .56 2 .76 — — Portfolio turnover rate2 (%) 9.69 6 .10 15 .92 12 .40 17 .24

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

DFS GUARANTEED INVESTMENT FUNDS 233 Foreign Equity DFS GIF – AMERICAN EQUITY – MFS*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio JPMorgan Chase & Company 4 3%. Bank of America Corporation 3% 6. Visa 3 0%. Alphabet, Class A 2% 6. Goldman Sachs Group 2 5%. American Tower Corporation 2 5%. Thermo Fisher Scientific 2 5%. Broadcom 2% 3. Schlumberger 2% 3. Comcast Corporation 2% 2.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 3Series 3Series 3 Series 5Series 5Series 5 Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value

1 Year 10,219 2% 2. 10,294 2 9%. 10,300 3 0%. 10,345 3 5%. 3 Years 13,877 11% 5. 14,187 12% 4. — — — — 5 Years 21,133 16 1%. 21,871 16% 9. — — — — 10 Years 15,184 4 3%. — — — — — — Since Inception 13,896 2% 0. 17,404 6 2%. 13,611 11% 4. 13,757 11% 8.

* This Fund is composed of units of the corresponding underlying investment funds.

234 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Interest for attribution purposes — 119 Cash — 15,479 Dividends 333,056 387,819 Investments at fair value through profit Changes in fair value: or loss (FVTPL) 21,741,988 20,461,002 Net realized gain (loss) on Premiums receivable 51,399 240,009 investments 2,389,802 2,361,641 Receivable for securities sold 57,429 — Net unrealized gain (loss) on 21,850,816 20,716,490 investments (1,433,874) 325,382 LIABILITIES 1,288,984 3,074,961 Current Liabilities Bank overdraft 52,666 — EXPENSES Accrued expenses 55,061 50,948 Management fees and guarantee charge 515,865 434,204 Withdrawals payable 40,247 2,133 Operating expenses 104,620 94,894 Payable for securities purchased — 9,703 620,485 529,098 147,974 62,784 Withholding taxes 35,528 56,350 NET ASSETS ATTRIBUTABLE TO 656,013 585,448 CONTRACT OWNERS 21,702,842 20,653,706 INCREASE (DECREASE) IN NET ASSETS NET ASSETS PER UNIT FROM OPERATIONS ATTRIBUTABLE TO Series 3 6.95 6 80. CONTRACT OWNERS 632,971 2,489,513 Series 5 7.43 7 21. DATA PER SERIES Series 6 6.81 6 61. SERIES 3 Series 7 6.88 6 65. Increase (Decrease) in Net Assets from Operations 69,760 679,067 - per unit 0.11 0 .96 Average Number of Units 634,871 709,854 SERIES 5 Increase (Decrease) in Net Assets from Operations 295,254 1,435,648 - per unit 0.20 1 00. Average Number of Units 1,509,609 1,437,845 SERIES 6 Increase (Decrease) in Net Assets from Operations 259,389 358,220 - per unit 0.30 0 83. Average Number of Units 879,257 433,979 SERIES 7 Increase (Decrease) in Net Assets from Operations 8,568 16,578 - per unit 0.31 0 80. Average Number of Units 27,398 20,827

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 235 Foreign Equity

DFS GIF – AMERICAN EQUITY – MFS (cont.)

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 20,653,706 13,294,315 to contract owners 632,971 2,489,513 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 632,971 2,489,513 Net realized gain (loss) (2,389,802) (2,361,641) Net unrealized gain (loss) 1,433,874 (325,382) Premiums Non-cash distribution from Series 3 398,299 497,346 investments (297,528) (331,597) Series 5 2,357,759 3,686,345 Proceeds from sale/maturity of Series 6 2,402,842 3,863,699 investments 3,597,387 1,747,342 Series 7 69,880 109,281 Investments purchased (3,624,917) (5,865,110) 5,228,780 8,156,671 Receivable for securities sold (57,429) — Withdrawals Accrued expenses 4,113 16,481 Series 3 (1,085,302) (917,331) Payable for securities purchased (9,703) (1,924) Series 5 (2,626,648) (1,876,284) NET CASH FLOWS FROM (USED IN) Series 6 (1,036,742) (493,178) OPERATING ACTIVITIES (711,034) (4,632,318) Series 7 (63,923) — (4,812,615) (3,286,793) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES NET ASSETS ATTRIBUTABLE Premium payments 5,417,390 7,930,817 TO CONTRACT OWNERS, END OF YEAR 21,702,842 20,653,706 Amounts paid on withdrawals (4,774,501) (3,288,788) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES 642,889 4,642,029 Increase (Decrease) in cash/bank overdraft (68,145) 9,711 Cash (bank overdraft), beginning of year 15,479 5,768 CASH (BANK OVERDRAFT), END OF YEAR (52,666) 15,479 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Interest paid — 22

The accompanying Notes are an integral part of these financial statements.

236 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.2%) MFS MB U .S . Equity Core Fund 1,406,610 19,540,284 21,741,988 TOTAL INVESTMENTS 19,540,284 21,741,988 OTHER NET ASSETS (-0.2%) (39,146) NET ASSETS (100%) 21,702,842

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio JPMorgan Chase & Company 4 .3% Bank of America Corporation 3 6%. Visa 3 .0% Alphabet, Class A 2 6%. Goldman Sachs Group 2 .5% American Tower Corporation 2 .5% Thermo Fisher Scientific 2 .5% Broadcom 2 3%. Schlumberger 2 3%. Comcast Corporation 2 2%. Danaher Corporation 2 .1% Accenture 2 .1% Alphabet, Class C 2 0%. Cognizant Technology Solutions Corporation 2 0%. Mastercard 1 9%. Mondelez International 1 9%. Canadian National Railway Company 1 9%. Fidelity National Information Services 1 9%. EOG Resources 1 8%. Newell Brands 1 8%. Johnson & Johnson 1 8%. Honeywell International 1 7%. Monsanto Corporation 1 7%. BlackRock 1 6%. Crown Holdings 1 4%.

DFS GUARANTEED INVESTMENT FUNDS 237 Foreign Equity

DFS GIF – AMERICAN EQUITY – MFS (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To outperform the S&P 500 . Investment Strategy To invest mainly in large cap equity securities of corporations located in the United States .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds — 21,741,988 — 21,741,988 TOTAL — 21,741,988 — 21,741,988

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds — 20,461,002 — 20,461,002 TOTAL — 20,461,002 — 20,461,002 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

238 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ S&P 500 3 .00 644,384 620,303 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

DFS GUARANTEED INVESTMENT FUNDS 239 Foreign Equity

DFS GIF – AMERICAN EQUITY – MFS (cont.)

FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 3 6.95 6 .80 5 .85 5 .01 3 .65 Series 5 7.43 7 .21 6 .16 5 .23 3 .80 Series 6 6.81 6 .61 5 .64 — — Series 7 6.88 6 .65 5 .65 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 3 4,052 4,669 4,410 4,083 3,246 Series 5 11,107 11,080 7,834 5,724 1,617 Series 6 6,382 4,757 1,028 — — Series 7 162 148 22 — — Number of units outstanding (000) Series 3 583 687 754 815 888 Series 5 1,496 1,536 1,272 1,094 426 Series 6 938 720 182 — — Series 7 24 22 4 — — Management expense ratio (MER)1 (%) Series 3 3.75 3 .76 3 .77 3 .76 3 .34 Series 5 2.93 2 .93 2 .94 2 .97 2 .65 Series 6 2.87 2 .88 2 .87 — — Series 7 2.44 2 .47 2 .47 — — Portfolio turnover rate2 (%) 26.82 15 .88 13 .37 8 .52 6 .15

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

240 DFS GUARANTEED INVESTMENT FUNDS Foreign Equity DFS GIF – AMERICAN EQUITY VALUE – DESJARDINS*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Bank of America Corporation 4 1%. JPMorgan Chase & Company 3 9%. Exxon Mobil Corporation 3 5%. Chevron Corporation 3% 3. Citigroup 3% 2. Intel Corporation 2 7%. Wells Fargo & Company 2% 6. Cisco Systems 2 5%. Merck & Company 2% 4. Bristol-Myers Squibb Company 1% 8.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 1Series 1Series 1 Series 3Series 3Series 3 Series Series5 5Series 5 Series Series6 6Series 6 Series Series7 7Series 7

$10,000 $10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value Value

1 Year 10,720 7% 2. 10,778 7% 8. 10,793 7% 9. 10,810 8 1%. 10,878 8 8%. 3 Years 14,632 13% 5. 14,864 14 1%. 14,927 14% 3. — — — — 5 Years 20,897 15% 9. 21,456 16% 5. 21,584 16 6%. — — — — 10 Years 14,243 3% 6. 14,983 4 1%. — — — — — — Since Inception 17,192 2% 6. 12,433 1% 2. 17,340 6 2%. 14,413 13% 7. 14,634 14% 3.

* This Fund is composed of units of the corresponding underlying investment funds.

DFS GUARANTEED INVESTMENT FUNDS 241 Foreign Equity

DFS GIF – AMERICAN EQUITY VALUE – DESJARDINS (cont.)

STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Dividends 521,943 457,913 Cash 65,211 86,275 Changes in fair value: Investments at fair value through profit Net realized gain (loss) on or loss (FVTPL) 24,739,481 23,456,902 investments 1,109,594 715,627 Premiums receivable 173,457 64,526 Net unrealized gain (loss) on 24,978,149 23,607,703 investments 911,338 2,162,597 LIABILITIES 2,542,875 3,336,137 Current Liabilities Accrued expenses 63,496 59,097 EXPENSES Withdrawals payable 6,112 4,248 Management fees and guarantee charge 599,519 514,537 Payable for securities purchased 118,035 28,530 Operating expenses 110,824 99,358 187,643 91,875 710,343 613,895 NET ASSETS ATTRIBUTABLE TO Withholding taxes 64,180 45,379 CONTRACT OWNERS 24,790,506 23,515,828 774,523 659,274 NET ASSETS PER UNIT INCREASE (DECREASE) IN NET ASSETS Series 1 8.60 8 02. FROM OPERATIONS ATTRIBUTABLE TO Series 3 9.42 8 74. CONTRACT OWNERS 1,768,352 2,676,863 Series 5 9.55 8 85. DATA PER SERIES Series 6 7.21 6 67. SERIES 1 Series 7 7.32 6 .73 Increase (Decrease) in Net Assets from Operations 183,118 325,305 - per unit 0.52 1 02. Average Number of Units 354,004 318,820 SERIES 3 Increase (Decrease) in Net Assets from Operations 224,296 447,547 - per unit 0.59 1 .18 Average Number of Units 377,870 377,961 SERIES 5 Increase (Decrease) in Net Assets from Operations 867,173 1,463,273 - per unit 0.65 1 .12 Average Number of Units 1,331,830 1,302,813 SERIES 6 Increase (Decrease) in Net Assets from Operations 494,529 398,743 - per unit 0.64 0 86. Average Number of Units 777,072 464,645 SERIES 7 Increase (Decrease) in Net Assets from Operations (764) 41,995 - per unit (0.02) 0 .79 Average Number of Units 43,223 52,958

The accompanying Notes are an integral part of these financial statements.

242 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 23,515,828 14,570,374 to contract owners 1,768,352 2,676,863 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 1,768,352 2,676,863 Net realized gain (loss) (1,109,594) (715,627) Net unrealized gain (loss) (911,338) (2,162,597) Premiums Non-cash distribution from Series 1 83,611 677,205 investments (457,763) (412,534) Series 3 525,895 920,071 Proceeds from sale/maturity of Series 5 2,708,476 4,057,269 investments 4,113,908 1,317,878 Series 6 2,210,345 3,661,496 Investments purchased (2,917,609) (6,939,731) Series 7 104,099 366,111 Accrued expenses 4,399 21,496 5,632,426 9,682,152 Payable for securities purchased 89,505 (111,488) Withdrawals NET CASH FLOWS FROM (USED IN) Series 1 (337,827) (243,628) OPERATING ACTIVITIES 579,860 (6,325,740) Series 3 (878,027) (787,420) Series 5 (3,537,789) (1,717,631) CASH FLOWS FROM (USED IN) Series 6 (1,010,956) (633,242) FINANCING ACTIVITIES Series 7 (361,501) (31,640) Premium payments 5,523,495 9,758,508 (6,126,100) (3,413,561) Amounts paid on withdrawals (6,124,236) (3,427,069) NET ASSETS ATTRIBUTABLE NET CASH FLOWS FROM (USED IN) TO CONTRACT OWNERS, FINANCING ACTIVITIES (600,741) 6,331,439 END OF YEAR 24,790,506 23,515,828, Effect of exchange rate changes on foreign cash (183) 992 Increase (Decrease) in cash/bank overdraft (21,064) 6,691 Cash (bank overdraft), beginning of year 86,275 79,584 CASH (BANK OVERDRAFT), END OF YEAR 65,211 86,275

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 243 Foreign Equity

DFS GIF – AMERICAN EQUITY VALUE – DESJARDINS (cont.)

SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (99.8%) Desjardins American Equity Value Fund, I-Class 926,156 18,140,222 24,739,481 TOTAL INVESTMENTS 18,140,222 24,739,481 OTHER NET ASSETS (0.2%) 51,025 NET ASSETS (100%) 24,790,506

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Bank of America Corporation 4 .1% JPMorgan Chase & Company 3 .9% Exxon Mobil Corporation 3 .5% Chevron Corporation 3 3%. Citigroup 3 2%. Intel Corporation 2 .7% Wells Fargo & Company 2 6%. Cisco Systems 2 .5% Merck & Company 2 4%. Bristol-Myers Squibb Company 1 8%. Anadarko Petroleum Corporation 1 7%. PNC Financial Services Group 1 6%. Walgreens Boots Alliance 1 6%. Prudential Financial 1 5%. Chubb 1 5%. Ametek 1 4%. Hess Corporation 1 4%. United Parcel Service 1 4%. Verizon Communications 1 4%. CSX Corporation Inc . 1 3%. Comcast Corporation 1 3%. Total 1 3%. M&T Bank Corporation 1 3%. MetLife 1 3%. Lockheed Martin Corporation 1 3%.

244 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide investors with long-term capital growth by investing primarily in U S. . equities . Investment Strategy To invest primarily in the common shares of high quality, publicly traded mid to large United States companies across a wide range of market sectors .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 24,739,481 — — 24,739,481 TOTAL 24,739,481 — — 24,739,481

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 23,456,902 — — 23,456,902 TOTAL 23,456,902 — — 23,456,902 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

DFS GUARANTEED INVESTMENT FUNDS 245 Foreign Equity

DFS GIF – AMERICAN EQUITY VALUE – DESJARDINS (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ S&P 500 3 00. 721,182 679,820 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

246 DFS GUARANTEED INVESTMENT FUNDS FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 1 8.60 8 .02 6 .99 5 .87 4 .46 Series 3 9.42 8 .74 7 .58 6 .34 4 .79 Series 5 9.55 8 .85 7 .66 6 .40 4 .83 Series 6 7.21 6 .67 5 .76 — — Series 7 7.32 6 .73 5 .78 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 1 2,900 2,971 2,212 1,963 1,514 Series 3 3,380 3,508 2,927 2,514 2,056 Series 5 11,989 11,951 8,148 4,647 1,542 Series 6 6,237 4,543 1,116 — — Series 7 285 543 167 — — Number of units outstanding (000) Series 1 337 370 317 334 339 Series 3 359 401 386 396 429 Series 5 1,255 1,351 1,064 726 319 Series 6 865 682 194 — — Series 7 39 81 29 — — Management expense ratio (MER)1 (%) Series 1 3.82 3 .81 3 .82 3 .82 3 .41 Series 3 3.22 3 .23 3 .24 3 .24 2 .90 Series 5 3.05 3 .06 3 .07 3 .08 2 .75 Series 6 2.83 2 .79 2 .76 — — Series 7 2.27 2 .25 2 .41 — — Portfolio turnover rate2 (%) 17.24 9 .05 8 .18 13 .89 121 .02

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

DFS GUARANTEED INVESTMENT FUNDS 247 Foreign Equity DFS GIF – GLOBAL DIVIDEND – DESJARDINS*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio AT&T 1% 9. Reynolds American 1% 8. Welltower 1% 8. Verizon Communications 1% 8. PPL Corporation 1% 7. Philip Morris International 1% 7. Duke Energy Corporation 1% 7. BCE 1% 7. Altria Group 1% 7. Muenchener Rueckversicherung 1% 6.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 5Series 5Series 5 Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value

1 Year 10,214 2 1%. 10,206 2 1%. 10,256 2% 6. 3 Years 12,830 8 7%. — — — — Since Inception 16,618 12% 6. 12,214 7% 3. 12,374 7% 8.

* This Fund is composed of units of the corresponding underlying investment funds.

248 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Dividends 835,980 524,332 Cash 15,196 3,719 Changes in fair value: Investments at fair value through profit Net realized gain (loss) on or loss (FVTPL) 20,632,945 15,263,692 investments 199,122 231,218 Premiums receivable 111,206 97,889 Net unrealized gain (loss) on 20,759,347 15,365,300 investments 26,048 627,014 LIABILITIES 1,061,150 1,382,564 Current Liabilities Accrued expenses 47,144 34,373 EXPENSES Withdrawals payable 10,887 4,686 Management fees and guarantee charge 482,650 314,353 Payable for securities purchased 116,112 99,040 Operating expenses 40,926 26,662 174,143 138,099 523,576 341,015 NET ASSETS ATTRIBUTABLE TO Withholding taxes 61,924 43,296 CONTRACT OWNERS 20,585,204 15,227,201 585,500 384,311 NET ASSETS PER UNIT INCREASE (DECREASE) IN NET ASSETS Series 5 8.31 8 .13 FROM OPERATIONS ATTRIBUTABLE TO Series 6 6.11 5 .98 CONTRACT OWNERS 475,650 998,253 Series 7 6.19 6 03. DATA PER SERIES SERIES 5 Increase (Decrease) in Net Assets from Operations 201,017 707,148 - per unit 0.17 0 68. Average Number of Units 1,162,450 1,035,679 SERIES 6 Increase (Decrease) in Net Assets from Operations 253,100 281,728 - per unit 0.18 0 43. Average Number of Units 1,437,490 650,669 SERIES 7 Increase (Decrease) in Net Assets from Operations 21,533 9,377 - per unit 0.19 0 26. Average Number of Units 112,208 36,250

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 249 Foreign Equity

DFS GIF – GLOBAL DIVIDEND – DESJARDINS (cont.)

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 15,227,201 8,042,397 to contract owners 475,650 998,253 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners 475,650 998,253 Net realized gain (loss) (199,122) (231,218) Net unrealized gain (loss) (26,048) (627,014) Premiums Non-cash distribution from Series 5 1,888,363 3,931,230 investments (774,056) (481,036) Series 6 6,030,211 4,155,351 Proceeds from sale/maturity of Series 7 845,232 388,971 investments 2,201,724 1,235,494 8,763,806 8,475,552 Investments purchased (6,571,751) (7,098,854) Withdrawals Accrued expenses 12,771 16,377 Series 5 (1,904,303) (1,869,155) Payable for securities purchased 17,072 91,126 Series 6 (1,599,960) (399,366) NET CASH FLOWS FROM (USED IN) Series 7 (377,190) (20,480) OPERATING ACTIVITIES (4,863,760) (6,096,872) (3,881,453) (2,289,001) CASH FLOWS FROM (USED IN) NET ASSETS ATTRIBUTABLE FINANCING ACTIVITIES TO CONTRACT OWNERS, END OF YEAR 20,585,204 15,227,201 Premium payments 8,750,489 8,384,017 Amounts paid on withdrawals (3,875,252) (2,285,468) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES 4,875,237 6,098,549 Increase (Decrease) in cash/bank overdraft 11,477 1,677 Cash (bank overdraft), beginning of year 3,719 2,042 CASH (BANK OVERDRAFT), END OF YEAR 15,196 3,719

The accompanying Notes are an integral part of these financial statements.

250 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.2%) Desjardins Global Dividend Fund, I-Class 1,068,511 19,117,581 20,632,945 TOTAL INVESTMENTS 19,117,581 20,632,945 OTHER NET ASSETS (-0.2%) (47,741) NET ASSETS (100%) 20,585,204

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio AT&T 1 9%. Reynolds American 1 8%. Welltower 1 8%. Verizon Communications 1 8%. PPL Corporation 1 7%. Philip Morris International 1 7%. Duke Energy Corporation 1 7%. BCE 1 7%. Altria Group 1 7%. Muenchener Rueckversicherung 1 6%. National Grid 1 6%. Total 1 5%. Royal Dutch Shell 1 4%. WEC Energy Group 1 4%. Vodafone Group 1 4%. Siemens AG 1 4%. Terna – Rete Elettricita Nazionale 1 4%. Entergy Corporation 1 4%. Qualcomm 1 3%. GlaxoSmithKline 1 3%. British American Tobacco 1 3%. Occidental Petroleum Corporation 1 3%. Exxon Mobil Corporation 1 3%. Imperial Brands 1 3%. Ameren Corporation 1 3%.

DFS GUARANTEED INVESTMENT FUNDS 251 Foreign Equity

DFS GIF – GLOBAL DIVIDEND – DESJARDINS (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective The objective of this Fund is to provide dividend income and long term capital appreciation through the investment in equity and equity related securities of companies around the world, including, when deemed appropriate, emerging markets . Investment Strategy In order to achieve its investment objective, the Fund invests in companies with high dividend yields and whose management teams optimize their balance sheets through the redemption of shares or reducing debt or by opting to increase cash flows sufficiently to allow for the opportunity for dividend growth . Companies are selected which show stable or high profit growth, a lower than average debt in comparison to their industry average and whose securities are traded at a reasonable price in relation to other companies with similar characteristics . Equity related securities such as American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs) may be used to gain exposure to a particular stock or sector .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 20,632,945 — — 20,632,945 TOTAL 20,632,945 — — 20,632,945

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 15,263,692 — — 15,263,692 TOTAL 15,263,692 — — 15,263,692 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

252 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ MSCI World Net 3 .00 513,734 437,431 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

DFS GUARANTEED INVESTMENT FUNDS 253 Foreign Equity

DFS GIF – GLOBAL DIVIDEND – DESJARDINS (cont.)

FINANCIAL HIGHLIGHTS — UNAUDITED

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 5 8.31 8 .13 7 .35 6 .48 5 .01 Series 6 6.11 5 .98 5 .41 — — Series 7 6.19 6 .03 5 .43 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 5 9,170 8,985 6,216 3,293 437 Series 6 10,511 5,827 1,790 — — Series 7 904 415 37 — — Number of units outstanding (000) Series 5 1,104 1,105 846 508 87 Series 6 1,721 974 331 — — Series 7 146 69 7 — — Management expense ratio (MER)1 (%) Series 5 2.80 2 .79 2 .78 2 .90 2 .55 Series 6 2.87 2 .83 2 .86 — — Series 7 2.34 2 .47 2 .47 — — Portfolio turnover rate2 (%) 12.24 10 .21 5 .06 8 .23 1 .54

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

254 DFS GUARANTEED INVESTMENT FUNDS Foreign Equity DFS GIF – GLOBAL EQUITY – MFS*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Citigroup 1% 7. Alphabet 1% 7. Charter Communications 1% 6. Honeywell International 1% 4. US Bancorp 1% 4. Facebook 1% 4. EOG Resources 1% 3. Visa 1% 2. Goldman Sachs Group 1% 2. Cisco Systems 1% 2.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 3Series 3Series 3 Series 5Series 5Series 5 Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value

1 Year 9,918 -0% 8. 9,960 -0% 4. 9,957 -0% 4. 9,996 0 0%. 3 Years 12,427 7% 5. 12,606 8 0%. — — — — 5 Years 16,662 10% 8. 17,060 11% 3. — — — — Since Inception 16,551 6 4%. 9,164 -0 9%. 12,145 7% 1. 12,291 7% 5.

* This Fund is composed of units of the corresponding underlying investment funds.

DFS GUARANTEED INVESTMENT FUNDS 255 Foreign Equity

DFS GIF – GLOBAL EQUITY – MFS (cont.)

STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Interest for attribution purposes — 311 Cash 17,381 23,690 Dividends 1,248,698 793,957 Investments at fair value through profit Changes in fair value: or loss (FVTPL) 55,724,843 62,025,234 Net realized gain (loss) on Premiums receivable 2,270 48,000 investments 6,762,468 4,650,269 Receivable for securities sold 7,844 1,617 Net unrealized gain (loss) on 55,752,338 62,098,541 investments (6,789,873) 893,583 LIABILITIES 1,221,293 6,338,120 Current Liabilities Accrued expenses 134,652 149,485 EXPENSES Withdrawals payable 54,434 63,529 Management fees and guarantee charge 1,245,698 730,368 189,086 213,014 Operating expenses 376,236 224,112 NET ASSETS ATTRIBUTABLE TO 1,621,934 954,480 CONTRACT OWNERS 55,563,252 61,885,527 Withholding taxes 133,822 91,340 1,755,756 1,045,820 NET ASSETS PER UNIT Series 3 4.42 4 .46 INCREASE (DECREASE) IN NET ASSETS Series 5 4.59 4 61. FROM OPERATIONS ATTRIBUTABLE TO Series 6 6.07 6 .10 CONTRACT OWNERS (534,463) 5,292,300 Series 7 6.15 6 .15 DATA PER SERIES SERIES 3 Increase (Decrease) in Net Assets from Operations (36,393) 150,910 - per unit (0.06) 0 81. Average Number of Units 656,033 185,279 SERIES 5 Increase (Decrease) in Net Assets from Operations (524,104) 5,073,491 - per unit (0.05) 0 .72 Average Number of Units 11,621,487 7,061,133 SERIES 6 Increase (Decrease) in Net Assets from Operations 17,419 64,453 - per unit 0.06 0 60. Average Number of Units 310,017 107,159 SERIES 7 Increase (Decrease) in Net Assets from Operations 8,615 3,446 - per unit 0.41 0 87. Average Number of Units 20,768 3,940

The accompanying Notes are an integral part of these financial statements.

256 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 61,885,527 23,174,744 to contract owners (534,463) 5,292,300 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners (534,463) 5,292,300 Net realized gain (loss) (6,762,468) (4,650,269) Net unrealized gain (loss) 6,789,873 (893,583) Premiums Non-cash distribution from Series 3 413,874 2,873,729 investments (1,114,876) (702,924) Series 5 1,715,382 32,722,724 Proceeds from sale/maturity of Series 6 666,209 1,418,433 investments 8,294,319 2,822,202 Series 7 150,392 — Investments purchased (906,457) (35,395,097) 2,945,857 37,014,886 Receivable for securities sold (6,227) (1,617) Withdrawals Accrued expenses (14,833) 93,484 Series 3 (623,503) (94,643) Payable for securities purchased — (6,898) Series 5 (7,904,035) (3,413,672) NET CASH FLOWS FROM (USED IN) Series 6 (205,900) (88,088) OPERATING ACTIVITIES 5,744,868 (33,442,402) Series 7 (231) — (8,733,669) (3,596,403) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES NET ASSETS ATTRIBUTABLE Premium payments 2,991,587 36,966,911 TO CONTRACT OWNERS, END OF YEAR 55,563,252 61,885,527 Amounts paid on withdrawals (8,742,764) (3,533,175) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (5,751,177) 33,433,736 Increase (Decrease) in cash/bank overdraft (6,309) (8,666) Cash (bank overdraft), beginning of year 23,690 32,356 CASH (BANK OVERDRAFT), END OF YEAR 17,381 23,690 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Interest paid — 35

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 257 Foreign Equity

DFS GIF – GLOBAL EQUITY – MFS (cont.)

SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.3%) MFS Global Research Fund 3,224,184 54,750,440 55,724,843 TOTAL INVESTMENTS 54,750,440 55,724,843 OTHER NET ASSETS (-0.3%) (161,591) NET ASSETS (100%) 55,563,252

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Citigroup 1 7%. Alphabet 1 7%. Charter Communications 1 6%. Honeywell International 1 4%. US Bancorp 1 4%. Facebook 1 4%. EOG Resources 1 3%. Visa 1 2%. Goldman Sachs Group 1 2%. Cisco Systems 1 2%. SBA Communications Corporation 1 2%. Amazon com. 1 .1% Nestlé SA 1 .1% Novartis AG 1 .1% KDDI Corporation 1 .1% Broadcom 1 0%. Roche Holding AG 1 0%. Medtronic 1 0%. Schneider Electric 1 0%. Union Pacific Corporation 1 0%. UBS Group AG 1 0%. Johnson Controls International 1 0%. Aon 1 0%. UnitedHealth Group 1 0%. PPG Industries 1 0%.

258 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To achieve long-term capital growth by investing primarily in equity securities . Investment Strategy To control the level of volatility of return relative to the overall stock markets by maintaining strong geographic diversification and by investing in attractively-valued securities . The Fund will primarily invest in common stocks of American, European, and Asian corporations .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds — 55,724,843 — 55,724,843 TOTAL — 55,724,843 — 55,724,843

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds — 62,025,234 — 62,025,234 TOTAL — 62,025,234 — 62,025,234 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

DFS GUARANTEED INVESTMENT FUNDS 259 Foreign Equity

DFS GIF – GLOBAL EQUITY – MFS (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ MSCI All Country World Net 3 00. 1,644,891 1,775,679 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

260 DFS GUARANTEED INVESTMENT FUNDS FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements . The net assets per unit presented in the financial statements may differ from the net asset value calculated for fund pricing purposes .

Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 3 4.42 4 .46 3 .86 3 .56 2 .75 Series 5 4.59 4 .61 3 .97 3 .64 2 .80 Series 6 6.07 6 .10 5 .25 — — Series 7 6.15 6 .15 5 .27 — — Net Asset Value Per Unit as at December 31st ($) Series 3 4.42 4 .46 3 .88 3 .56 2 .75 Series 5 4.59 4 .61 3 .99 3 .64 2 .80 Series 6 6.07 6 .10 5 .28 — — Series 7 6.15 6 .15 5 .30 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 3 2,850 3,096 167 143 84 Series 5 50,538 57,250 22,984 21,840 17,000 Series 6 1,993 1,515 121 — — Series 7 183 24 21 — — Number of units outstanding (000) Series 3 645 695 43 40 30 Series 5 11,014 12,426 5,764 6,000 6,071 Series 6 328 248 23 — — Series 7 30 4 4 — — Management expense ratio (MER)1 (%) Series 3 3.36 3 .39 3 .39 3 .47 3 .05 Series 5 2.92 2 .92 2 .92 2 .92 2 .60 Series 6 2.93 2 .95 3 .00 — — Series 7 2.53 2 .53 2 .53 — — Portfolio turnover rate2 (%) 10.45 8 .57 4 .28 4 .14 100 .93

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

DFS GUARANTEED INVESTMENT FUNDS 261 Foreign Equity DFS GIF – INTERNATIONAL EQUITY – MFS*

SUMMARY FACTS STATEMENT — unaudited

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Nestlé SA 3 9%. Bayer AG 3% 2. WPP 3 0%. Hoya Corporation 2% 8. Roche Holding AG 2% 8. Compass Group 2% 6. SAP SE 2% 4. Air Liquide 2% 4. ING Groep 2% 3. Schneider Electric 2% 3.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 1Series 1Series 1 Series 3Series 3Series 3 Series 5Series 5Series 5 Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value Value Value

1 Year 9,409 -5 9%. 9,423 -5% 8. 9,505 -4 9%. 9,481 -5% 2. 9,523 -4% 8. 3 Years 10,853 2% 8. 10,912 3 0%. 11,203 3 9%. — — — — 5 Years 14,651 7% 9. 14,808 8 2%. 15,441 9 1%. — — — — 10 Years 7,255 -3% 2. 7,372 -3 0%. — — — — — — Since Inception 12,073 0 9%. 9,848 -0 1%. 8,607 -1% 6. 10,802 2 7%. 10,943 3% 2.

* This Fund is composed of units of the corresponding underlying investment funds.

262 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Interest for attribution purposes — 256 Cash 7,591 5,443 Dividends 372,029 298,732 Investments at fair value through profit Changes in fair value: or loss (FVTPL) 10,519,036 12,617,872 Net realized gain (loss) on Premiums receivable 5,318 17,684 investments 625,444 1,075,912 Interest, dividends and other receivables 257 272 Net unrealized gain (loss) on 10,532,202 12,641,271 investments (1,318,749) 781,607 LIABILITIES (321,276) 2,156,507 Current Liabilities Accrued expenses 28,372 34,159 EXPENSES Withdrawals payable 73,127 2,677 Management fees and guarantee charge 290,950 322,407 Payable for securities purchased 4,305 2,275 Operating expenses 72,998 84,010 105,804 39,111 363,948 406,417 NET ASSETS ATTRIBUTABLE TO Withholding taxes 33,804 27,220 CONTRACT OWNERS 10,426,398 12,602,160 397,752 433,637 NET ASSETS PER UNIT INCREASE (DECREASE) IN NET ASSETS Series 1 6.04 6 42. FROM OPERATIONS ATTRIBUTABLE TO Series 3 6.25 6 .64 CONTRACT OWNERS (719,028) 1,722,870 Series 5 6.80 7 15. DATA PER SERIES Series 6 5.40 5 .70 SERIES 1 Series 7 5.47 5 .75 Increase (Decrease) in Net Assets from Operations (143,753) 306,371 - per unit (0.45) 0 87. Average Number of Units 319,715 352,828 SERIES 3 Increase (Decrease) in Net Assets from Operations (307,984) 817,536 - per unit (0.42) 0 97. Average Number of Units 733,295 846,077 SERIES 5 Increase (Decrease) in Net Assets from Operations (216,054) 583,468 - per unit (0.38) 1 01. Average Number of Units 573,051 577,125 SERIES 6 Increase (Decrease) in Net Assets from Operations (45,534) 2,435 - per unit (0.29) 0 .04 Average Number of Units 158,699 68,236 SERIES 7 Increase (Decrease) in Net Assets from Operations (5,703) 13,060 - per unit (0.22) 0 .56 Average Number of Units 26,317 23,181

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 263 Foreign Equity

DFS GIF – INTERNATIONAL EQUITY – MFS (cont.)

STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 12,602,160 11,116,981 to contract owners (719,028) 1,722,870 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners (719,028) 1,722,870 Net realized gain (loss) (625,444) (1,075,912) Net unrealized gain (loss) 1,318,749 (781,607) Premiums Non-cash distribution from Series 1 50,934 180,034 investments (338,225) (271,574) Series 3 262,395 360,860 Proceeds from sale/maturity of Series 5 515,701 1,050,848 investments 2,243,411 2,340,321 Series 6 272,685 976,196 Investments purchased (499,655) (1,705,538) Series 7 53,696 58,000 Receivable for securities sold — 634 1,155,411 2,625,938 Interest, dividends and other receivables 15 61 Withdrawals Accrued expenses (5,787) 2,925 Series 1 (529,522) (258,988) Payable for securities purchased 2,030 1,365 Series 3 (999,763) (1,387,084) NET CASH FLOWS FROM (USED IN) Series 5 (802,663) (1,107,634) OPERATING ACTIVITIES 1,376,066 233,545 Series 6 (280,144) (109,923) Series 7 (53) — CASH FLOWS FROM (USED IN) (2,612,145) (2,863,629) FINANCING ACTIVITIES Premium payments 1,167,777 2,609,295 NET ASSETS ATTRIBUTABLE Amounts paid on withdrawals (2,541,695) (2,861,064) TO CONTRACT OWNERS, END OF YEAR 10,426,398 12,602,160 NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES (1,373,918) (251,769) Increase (Decrease) in cash/bank overdraft 2,148 (18,224) Cash (bank overdraft), beginning of year 5,443 23,667 CASH (BANK OVERDRAFT), END OF YEAR 7,591 5,443 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Interest paid — 13

The accompanying Notes are an integral part of these financial statements.

264 DFS GUARANTEED INVESTMENT FUNDS SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.9%) MFS International Equity Fund 901,374 9,290,434 10,519,036 TOTAL INVESTMENTS 9,290,434 10,519,036 OTHER NET ASSETS (-0.9%) (92,638) NET ASSETS (100%) 10,426,398

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Nestlé SA 3 .9% Bayer AG 3 2%. WPP 3 .0% Hoya Corporation 2 8%. Roche Holding AG 2 8%. Compass Group 2 6%. SAP SE 2 4%. Air Liquide 2 4%. ING Groep 2 3%. Schneider Electric 2 3%. UBS Group AG 2 3%. AIA Group 2 2%. Taiwan Semiconductor Manufacturing Company 2 2%. Pernod-Ricard 2 2%. Reckitt Benckiser Group 2 2%. Canadian National Railway Company 2 .1% Randstad Holding 2 0%. Moet Hennessy Louis Vuitton 2 0%. Terumo Corporation 1 9%. Danone 1 8%. Beiersdorf AG 1 8%. Novartis AG 1 8%. DBS Group Holdings Ltd 1 7%. Denso Corporation 1 7%. Amadeus IT Holding 1 7%.

DFS GUARANTEED INVESTMENT FUNDS 265 Foreign Equity

DFS GIF – INTERNATIONAL EQUITY – MFS (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective The fundamental investment objective of this Fund is to provide investors with long-term capital growth based on an internationally diversified equity portfolio by investing primarily in Europe and the Far East . Investment Strategy To invest its assets primarily in the common shares of large corporations with attractive relative valuations located in many countries .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Period, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds — 10,519,036 — 10,519,036 TOTAL — 10,519,036 — 10,519,036

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds — 12,617,872 — 2,617,872 TOTAL — 12,617,872 — 12,617,872 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

266 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ MSCI EAFE Net 3 .00 332,558 392,372 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

DFS GUARANTEED INVESTMENT FUNDS 267 Foreign Equity

DFS GIF – INTERNATIONAL EQUITY – MFS (cont.)

FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements . The net assets per unit presented in the financial statements may differ from the net asset value calculated for fund pricing purposes .

Net Assets Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 1 6.04 6 .42 5 .57 5 .56 4 .57 Series 3 6.25 6 .64 5 .75 5 .73 4 .70 Series 5 6.80 7 .15 6 .15 6 .07 4 .94 Series 6 5.40 5 .70 4 .91 — — Series 7 5.47 5 .75 4 .93 — — Net Asset Value Per Unit as at December 31st ($) Series 1 6.04 6 .42 5 .45 5 .56 4 .57 Series 3 6.25 6 .64 5 .62 5 .73 4 .70 Series 5 6.80 7 .15 6 .01 6 .07 4 .94 Series 6 5.40 5 .70 4 .80 — — Series 7 5.47 5 .75 4 .82 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 1 1,617 2,240 1,967 2,171 1,892 Series 3 4,112 5,158 5,249 6,171 6,105 Series 5 3,672 4,175 3,566 3,922 2,437 Series 6 830 883 14 — — Series 7 195 147 74 — — Number of units outstanding (000) Series 1 268 349 361 390 414 Series 3 658 777 934 1,077 1,300 Series 5 540 584 594 646 493 Series 6 154 155 3 — — Series 7 36 26 15 — — Management expense ratio (MER)1 (%) Series 1 3.82 3 .83 3 .85 3 .85 3 .50 Series 3 3.65 3 .64 3 .65 3 .65 3 .25 Series 5 2.75 2 .76 2 .76 2 .77 2 .45 Series 6 3.01 3 .05 3 .03 — — Series 7 2.55 2 .59 2 .59 — — Portfolio turnover rate2 (%) 10.33 20 .58 9 .95 12 .01 141 .69

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

268 DFS GUARANTEED INVESTMENT FUNDS Foreign Equity DFS GIF – INTERNATIONAL EQUITY GROWTH – DESJARDINS*

SUMMARY FACTS STATEMENT — unauditedd

The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, 2016 . The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2016 section of this document under the section heading “Strategy in using Financial Instruments” . For a detailed description of each Fund’s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1 Complexe Desjardins, P O. . Box 9000, Montreal, Quebec, H5B 1H5 .

TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2016

Percentage Security Name of Portfolio Tencent Holdings 5% 2. Inditex 5 0%. AIA Group 4 9%. Softbank Corporation 4 7%. ASML Holding 4 5%. Baidu, ADR 4 5%. Alibaba Group Holding 3% 6. Atlas Copco 3% 4. Zalando 2 9%. M3 2 7%.

PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2016

Series 5Series 5Series 5 Series 6Series 6Series 6 Series 7Series 7Series 7

$10,000 $10,000 $10,000 Lump Total Gain Lump Total Gain Lump Total Gain Sum (Annualized) Sum (Annualized) Sum (Annualized) Value Value Value

1 Year 9,452 -5 5%. 9,468 -5% 3. 9,504 -5% 0. 3 Years 10,706 2% 3. — — — — Since Inception 15,212 10% 3. 10,426 1% 5. 10,533 1% 8.

* This Fund is composed of units of the corresponding underlying investment funds.

DFS GUARANTEED INVESTMENT FUNDS 269 Foreign Equity

DFS GIF – INTERNATIONAL EQUITY GROWTH – DESJARDINS (cont.)

STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ ASSETS INCOME Current Assets Dividends 81,270 27,316 Cash 5,494 496 Changes in fair value: Investments at fair value through profit Net realized gain (loss) on or loss (FVTPL) 2,514,232 2,531,545 investments 130,108 86,840 Premiums receivable 3,115 160 Net unrealized gain (loss) on Receivable for securities sold 925 2,078 investments (261,427) 206,862 2,523,766 2,534,279 (50,049) 321,018 LIABILITIES Current Liabilities EXPENSES Accrued expenses 6,175 6,375 Management fees and guarantee charge 67,565 62,125 Withdrawals payable 1,585 2,397 Operating expenses 7,946 7,575 Payable for securities purchased 6,410 135 75,511 69,700 14,170 8,907 Withholding taxes 4,600 1,547 NET ASSETS ATTRIBUTABLE TO 80,111 71,247 CONTRACT OWNERS 2,509,596 2,525,372 INCREASE (DECREASE) IN NET ASSETS NET ASSETS PER UNIT FROM OPERATIONS ATTRIBUTABLE TO Series 5 7.61 8 .05 CONTRACT OWNERS (130,160) 249,771 Series 6 5.21 5 51. DATA PER SERIES Series 7 5.27 5 .54 SERIES 5 Increase (Decrease) in Net Assets from Operations (82,377) 169,080 - per unit (0.42) 0 89. Average Number of Units 195,491 189,405 SERIES 6 Increase (Decrease) in Net Assets from Operations (46,643) 77,888 - per unit (0.23) 0 55. Average Number of Units 198,743 142,802 SERIES 7 Increase (Decrease) in Net Assets from Operations (1,140) 2,803 - per unit (0.27) 0 68. Average Number of Units 4,150 4,150

The accompanying Notes are an integral part of these financial statements.

270 DFS GUARANTEED INVESTMENT FUNDS STATEMENT OF CHANGES IN NET ASSETS STATEMENT OF CASH FLOWS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December 31 Years Ended December 31 2016 2015 2016 2015 $ $ $ $ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES NET ASSETS ATTRIBUTABLE Increase (Decrease) in Net Assets TO CONTRACT OWNERS, from operations attributable BEGINNING OF YEAR 2,525,372 1,865,037 to contract owners (130,160) 249,771 Increase (Decrease) in Net Assets from operations attributable Adjustments for: to contract owners (130,160) 249,771 Net realized gain (loss) (130,108) (86,840) Net unrealized gain (loss) 261,427 (206,862) Premiums Non-cash distribution from Series 5 186,696 293,300 investments (76,670) (25,769) Series 6 552,505 377,424 Proceeds from sale/maturity of Series 7 — — investments 503,631 243,083 739,201 670,724 Investments purchased (540,967) (585,765) Withdrawals Receivable for securities sold 1,153 (2,078) Series 5 (341,507) (167,424) Accrued expenses (200) 1,719 Series 6 (283,310) (92,736) Payable for securities purchased 6,275 50 Series 7 — — NET CASH FLOWS FROM (USED IN) (624,817) (260,160) OPERATING ACTIVITIES (105,619) (412,691) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, CASH FLOWS FROM (USED IN) END OF YEAR 2,509,596 2,525,372 FINANCING ACTIVITIES Premium payments 736,246 670,649 Amounts paid on withdrawals (625,629) (257,958) NET CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES 110,617 412,691 Increase (Decrease) in cash/bank overdraft 4,998 — Cash (bank overdraft), beginning of year 496 496 CASH (BANK OVERDRAFT), END OF YEAR 5,494 496

The accompanying Notes are an integral part of these financial statements.

DFS GUARANTEED INVESTMENT FUNDS 271 Foreign Equity

DFS GIF – INTERNATIONAL EQUITY GROWTH – DESJARDINS (cont.)

SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2016 Number Fair of Units Cost Value $ $ INVESTMENT FUNDS (100.2%) Desjardins Overseas Equity Growth Fund, I-Class 138,923 2,411,520 2,514,232 TOTAL INVESTMENTS 2,411,520 2,514,232 OTHER NET ASSETS (-0.2%) (4,636) NET ASSETS (100%) 2,509,596

The accompanying Notes are an integral part of these financial statements.

TOP 25 HOLDINGS OF THE UNDERLYING FUND – unaudited

Percentage Security Name of Portfolio Tencent Holdings 5 2%. Inditex 5 .0% AIA Group 4 .9% Softbank Corporation 4 .7% ASML Holding 4 .5% Baidu, ADR 4 .5% Alibaba Group Holding 3 6%. Atlas Copco 3 4%. Zalando 2 .9% M3 2 .7% L’Oréal 2 6%. Genmab 2 6%. Rolls-Royce Holdings 2 .5% Svenska Handelsbanken 2 4%. Illumina 2 4%. Ferrari 2 4%. Amazon com. 2 2%. Tesla Motors 2 .1% Rakuten 2 0%. Kering 2 0%. Fiat Chrysler Automobiles 1 9%. Investment AB Kinnevik 1 8%. SMC Corporation 1 7%. Compagnie Financière Richemont 1 7%. New Oriental Education & Technology Group 1 5%.

272 DFS GUARANTEED INVESTMENT FUNDS NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016

STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective The objective of this Fund is to achieve long-term capital growth by investing in equity and equity related securities of companies located or operating outside of North America, while when appropriate, also investing in equity and equity related securities of companies located or operating in emerging markets . Investment Strategy Investment decisions are backed by extensive research and analysis with preference given to those companies that can sustain above average growth in earnings and cash flow and whose securities are traded at a reasonable price . The investment approach involves a bottom-up, stock driven approach to country and sector allocation and more specifically, those companies with sustainable competitive advantages and strong management teams operating in a favourable market background and display solid financial characteristics .

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE (Note 7) Hierarchy of Financial Instruments Measured at Fair Value The following tables categorize the Fund’s financial assets fair value measurement according to a three-level hierarchy . The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities . Fair value measurement is described in the “Significant Accounting Policies” section of Note 2 . Investment Measured at Fair Value at the End of the Year, within the Following Levels: December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 2,514,232 — — 2,514,232 TOTAL 2,514,232 — — 2,514,232

December 31, 2015 Level 1 Level 2 Level 3 Total $ $ $ $ Financial Assets at FVTPL Investment Funds 2,531,545 — — 2,531,545 TOTAL 2,531,545 — — 2,531,545 Transfers between Levels 1 and 2 During the years ended December 31, 2016 and 2015, there were no transfers of securities between Levels 1 and 2 . Investment Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds (including limited partnerships) and master asset vehicles (included in the bonds) in the table “Investment Measured at Fair Value within the Levels” also represent the fair value of the investments in structured entities .

FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds’ performance to similar funds as well as to the related benchmarks . Quarterly, this team makes an analysis of the Funds’ performance . This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector . It also ensures the compliance with the Funds’ investment policies . Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification . Annually, this team reviews the practices and processes used by the Funds’ managers through an exhaustive questionnaire and periodic meetings . Currency Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk . As a result, the Fund may be exposed to currency risk related to the current underlying fund . Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) .

DFS GUARANTEED INVESTMENT FUNDS 273 Foreign Equity

DFS GIF – INTERNATIONAL EQUITY GROWTH – DESJARDINS (cont.)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION as at December 31, 2016 Interest Rate Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk . As a result, the Fund may be exposed to interest rate risk related to the current underlying fund . Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Concentration Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk . As a result, the Fund is exposed to concentration risk related to the current underlying fund . Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk . As a result, the Fund is exposed to price risk related to the current underlying fund . Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . The Manager’s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund’s return as compared to the return of the Fund’s benchmarks, with all other variables held constant, is included in the following table . A 36-month regression analysis has been utilized to estimate the historical beta coefficient . The regression analysis uses data based on the monthly returns of the Fund .

Impact on Net Assets Impact on Net Assets Attributable to Contract Owners Attributable to Contract Owners Change in Price December 31, 2016 December 31, 2015 Benchmarks % $ $ MSCI EAFE Net 3 00. 79,330 79,143 When there is more than one benchmark, the effect of each benchmark must be considered individually, as each benchmark might fluctuate independently from the others . In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant . Credit Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk . As a result, the Fund may be exposed to credit risk related to the current underlying fund . Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . Liquidity Risk As at December 31, 2016 and 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk . As a result, the Fund is exposed to liquidity risk related to the current underlying fund . Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7) . For further information on maturities of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 “Financial Instruments Disclosures” .

274 DFS GUARANTEED INVESTMENT FUNDS FINANCIAL HIGHLIGHTS — unaudited

The following table shows selected key financial information about the Fund and is intended to help you understand the Fund’s financial performance for the past five years . This information is derived from the Fund’s audited annual financial statements .

Net Assets and Net Asset Value Per Unit as at December 31st ($) 2016* 2015* 2014* 2013* 2012

Series 5 7.61 8 .05 7 .11 7 .10 5 .26 Series 6 5.21 5 .51 4 .85 — — Series 7 5.27 5 .54 4 .87 — — Ratios and Supplemental Data Net Asset Value ($000’s) Series 5 1,334 1,571 1,276 936 158 Series 6 1,154 931 569 — — Series 7 22 23 20 — — Number of units outstanding (000) Series 5 175 195 180 132 30 Series 6 221 169 117 — — Series 7 4 4 4 — — Management expense ratio (MER)1 (%) Series 5 3.10 3 .11 3 .10 3 .22 2 .80 Series 6 2.93 2 .92 2 .94 — — Series 7 2.53 2 .53 2 .53 — — Portfolio turnover rate2 (%) 24.69 13 .03 13 .94 9 .11 0 .79

* For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years’ ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund’s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund.

DFS GUARANTEED INVESTMENT FUNDS 275 NOTES TO THE FINANCIAL STATEMENTS

Years Ended December 31, 2016 and 2015

1. ESTABLISHMENT OF THE FUNDS The Desjardins Financial Security Guaranteed Investment Funds (the “Funds”) consist of thirty-six Funds established by Desjardins Financial Security Life Assurance Company (“Desjardins Financial Security” or the “Company”) in respect of individual variable insurance contracts issued under the Desjardins Financial Security Guaranteed Investment Funds Plan – Helios, Helios2, the Millennia III Plan and the Imperial Growth Plan . The assets of each Fund are segregated from the Company’s other assets and are owned by Desjardins Financial Security . The Funds are not separate legal entities . The Company’s head office is located at 200, rue des Commandeurs, Lévis, Québec, Canada G6V 6R2 . The Funds were established on the following dates by resolutions of the Board of Directors: Series 1 Series 3 Series 5 Series 6 Series 7 Series IGP INVESTMENT SOLUTIONS Conservative — — Oct . 19, 2015 Feb . 24, 2014 Feb . 24, 2014 — Moderate — — Oct . 19, 2015 Feb . 24, 2014 Feb . 24, 2014 — Balanced — — Oct . 19, 2015 Feb . 24, 2014 Feb . 24, 2014 — Growth — — Oct . 19, 2015 Feb . 24, 2014 Feb . 24, 2014 — Maximum Growth — — Oct . 19, 2015 Feb . 24, 2014 Feb . 24, 2014 — INDIVIDUAL FUNDS Income Money Market Nov . 15, 1995 Dec . 14, 1998 Oct . 29, 2007 Feb . 24, 2014 Feb . 24, 2014 Nov . 7, 2014 Income – Fiera Capital Nov . 15, 1995 Dec . 14, 1998 Oct . 29, 2007 Feb . 24, 2014 Feb . 24, 2014 — Canadian Bond — — Oct . 19, 2015 Oct . 19, 2015 Oct . 19, 2015 — Balanced and Asset Allocation Diversified Income – Franklin Quotential — Oct . 30, 2000 Oct . 29, 2007 Feb . 24, 2014 Feb . 24, 2014 — Balanced Income – Franklin Quotential — Oct . 30, 2000 Oct . 29, 2007 Feb . 24, 2014 Feb . 24, 2014 — Canadian Balanced – Fidelity — Dec . 1, 2008 Dec . 1, 2008 Feb . 24, 2014 Feb . 24, 2014 — U S. . Monthly Income – Fidelity — — Oct . 19, 2015 Oct . 19, 2015 Oct . 19, 2015 — Balanced – Desjardins SocieTerra — — Oct . 19, 2015 Oct . 19, 2015 Oct . 19, 2015 — Global Balanced – Jarislowsky Fraser — Nov . 17, 2003 Oct . 29, 2007 Oct . 19, 2015 Oct . 19, 2015 — Canadian Balanced – Fiera Capital Nov . 15, 1995 Dec . 14, 1998 Oct . 29, 2007 Feb . 24, 2014 Feb . 24, 2014 — Canadian Balanced – Franklin Bissett — Dec . 5, 2005 Oct . 29, 2007 Feb . 24, 2014 Feb . 24, 2014 — Balanced Growth – Franklin Quotential — Dec . 11, 2006 Oct . 29, 2007 Feb . 24, 2014 Feb . 24, 2014 — Canadian Balanced – CI Signature — — May 3, 2010 Feb . 24, 2014 Feb . 24, 2014 — Income and Growth – CI Signature — — Sep . 24, 2012 Feb . 24, 2014 Feb . 24, 2014 — Growth and Income – NEI Northwest — Dec . 11, 2006 Oct . 29, 2007 Feb . 24, 2014 Feb . 24, 2014 — Global Growth – NEI Select — Jan . 14, 2002 Oct . 29, 2007 Feb . 24, 2014 Feb . 24, 2014 — Canadian Asset Allocation – CI Cambridge — — Sep . 24, 2012 Feb . 24, 2014 Feb . 24, 2014 — Growth – Franklin Quotential — Oct . 30, 2000 Oct . 29, 2007 Feb . 24, 2014 Feb . 24, 2014 — Canadian Equity Dividend Income – Franklin Bissett — Apr . 17, 2000 Oct . 29, 2007 Feb . 24, 2014 Feb . 24, 2014 — Canadian Dividend – NEI Northwest — — Sep . 24, 2012 Feb . 24, 2014 Feb . 24, 2014 — Canadian Equity – Jarislowsky Fraser — Dec . 5, 2005 Oct . 29, 2007 Oct . 19, 2015 Oct . 19, 2015 — Canadian Equity – Fidelity True North® — Dec . 1, 2008 Dec . 1, 2008 Feb . 24, 2014 Feb . 24, 2014 — Canadian Equity – Franklin Bissett Nov . 25, 2016 Apr . 17, 2000 Oct . 29, 2007 Feb . 24, 2014 Feb . 24, 2014 Nov . 25, 2016 Specialty Equity – NEI Northwest — Dec . 11, 2006 Oct . 29, 2007 Feb . 24, 2014 Feb . 24, 2014 — Small Cap – Franklin Bissett — Apr . 17, 2000 Oct . 29, 2007 Feb . 24, 2014 Feb . 24, 2014 — Foreign Equity American Equity – MFS — Apr . 17, 2000 Oct . 29, 2007 Feb . 24, 2014 Feb . 24, 2014 — American Equity Value – Desjardins Nov . 15, 1995 Dec . 14, 1998 Oct . 29, 2007 Feb . 24, 2014 Feb . 24, 2014 — Global Dividend – Desjardins — — Sep . 24, 2012 Feb . 24, 2014 Feb . 24, 2014 — Global Equity – MFS — Dec . 1, 2008 Oct . 29, 2007 Feb . 24, 2014 Feb . 24, 2014 — International Equity – MFS Nov . 15, 1995 Dec . 14, 1998 Oct . 29, 2007 Feb . 24, 2014 Feb . 24, 2014 — International Equity Growth – Desjardins — — Sep . 24, 2012 Feb . 24, 2014 Feb . 24, 2014 —

The annual financial statements (“financial statements”) of the Funds are presented in Canadian dollars (CAD), the Funds’ functional and presentation currency . The main activities of the Funds are disclosed in the section “Strategy in Using Financial Instruments” in the section “Notes to the Financial Statements – Specific Information” pertaining to each Fund .

276 DFS GUARANTEED INVESTMENT FUNDS In November 2016, the Company closed the following Fund: FUND NAME DFS GIF – Canadian Equity – Fiera Capital

2. BASIS OF PRESENTATION International Financial Reporting Standards (“IFRS“) These financial statements have been prepared in compliance with International Financial Reporting Standards (“IFRS”), applicable to the preparation of financial statements . Statement of Compliance The policies applied in these financial statements are based on IFRS in effect as of April 13, 2017, the date on which financial statements have been approved for publication by the Audit and Risk Management Committee of the Company . Significant Accounting Policies The significant measurement and presentation policies applied to prepare these financial statements are described below . Financial Assets and Liabilities The Funds’ financial assets consist primarily of investments in non-derivative financial instruments and derivative financial instruments presented in the schedule of investment portfolio . Financial liabilities consist primarily of derivative financial instruments . Financial assets and liabilities are recognized on the date the Funds become a party to the contractual provisions of the instrument, namely the trade date . Classification of Financial Instruments The Funds classify their financial assets and liabilities in the following categories: Financial assets at fair value through profit or loss (“FVTPL”): • Held for trading: derivative financial instruments; • Designated at FVTPL: all other investments including equity and fixed-income securities . Financial assets at amortized cost: • Loans and receivables: cash and all other receivables . Financial liabilities at FVTPL: • Held for trading: derivative financial instruments and short positions . Financial liabilities at amortized cost: • Bank overdraft and all other payables . A financial instrument is designated at FVTPL if it eliminates or significantly reduces a measurement or a recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases . The Funds’ obligation concerning net assets attributable to Contract Owners is recorded at the redemption amount that approximates fair value . The accounting policies used to measure the fair value of investments and derivative financial instruments are identical to those used in measuring the net asset value for transactions with Contract Owners except where the closing price for financial assets and liabilities is not within the bid-ask spread . As at December 31, 2016 and 2015, there are no differences between the Funds’ net asset value per unit for transactions and their net assets attributable to Contract Owners per unit, in accordance with IFRS . Determination of the Fair Value of Financial Instruments Fair value is the price that would be received from selling an asset or paid to transfer a liability in an ordinary transaction between market participants at the valuation date . The fair value of financial assets and liabilities traded in active markets are based on quoted market prices at the close of trading on the disclosure date and there is little subjectivity in its determination . The Funds use the closing price for both financial assets and financial liabilities where this price falls within the bid-ask spread . In circumstances where the closing price is not within the bid-ask spread, the Company determines the point within the bid-ask spread that is most representative of fair value based on the specific facts and circumstances . The fair value of financial assets and liabilities that are not traded in an active market, including over-the-counter derivative financial instruments, is determined using valuation techniques . The Funds use a variety of methods and make assumptions that are based on existing market conditions at each valuation date . Valuation techniques include the use of comparable recent arm’s length transactions, the fair value of other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other techniques commonly used by market participants and which make the maximum use of observable inputs . Refer to Note 7, “Financial Instruments Disclosures” for further information about the Funds’ fair value measurements .

DFS GUARANTEED INVESTMENT FUNDS 277 NOTES TO THE FINANCIAL STATEMENTS (cont.)

Liquidity Cash (bank overdraft) is measured at cost, which closely approximates fair value . Money Market Securities Money market securities are recorded at cost, together with accrued interest, which closely approximates fair value . Equities and Index-Based Investments Equity securities and index-based investments securities are recorded at the closing price of the accredited stock exchange on which the corresponding security is principally traded . Unlisted warrants are valued with a recognized valuation model, including Black & Scholes . Bonds, Mortgage-Backed Securities and Asset-Backed Securities Bonds, mortgage-backed securities and asset-backed securities are valued based on prices obtained from recognized securities dealers . Investment Funds Units of underlying funds are generally valued based on the net asset value per unit provided by the underlying fund’s manager at the end of each valuation day . Derivative Financial Instruments Certain Funds may use an array of derivative financial instruments such as foreign currency forward contracts, forward contracts and futures contracts for hedging purposes or purposes other than hedging, or both . The fair value of derivative financial instruments takes into account the impact of legally binding master netting agreements, if applicable . Refer to the section “Offsetting Financial Assets and Liabilities” for further information about the Fund’s offsetting section . Foreign Currency Forward Contracts and Forward Contracts The fair value of these instruments corresponds to the gains or losses that would result from the contract close-out on the valuation date; this value is recorded in “Unrealized appreciation (depreciation) on derivatives” in the Statement of Financial Position . Futures Contracts Futures contracts are valued at fair value and are settled daily through brokers acting as intermediaries . Any amounts receivable (payable) from the settlement of futures contracts are recorded in “Receivable (Payable) on futures contracts” in the Statement of Financial Position . Valuation of Unlisted Securities and Other Investments When the valuation principles of the aforementioned investments are not appropriate, fair value is determined according to the Company’s best estimates, based on established valuation procedures and on prevailing market conditions on each valuation date . These procedures cover, among others, securities no longer traded, securities issued by private corporations and illiquid securities . For further information, refer to Note 3 "Critical Accounting Judgments, Estimates and Assumptions" . Investment Transactions Investment transactions are accounted for on the trade date . Cost is determined on an average cost basis except for money market securities, for which the cost is determined using the First In First Out method . The average cost does not include amortization of premiums or discounts on fixed-income securities with the exception of stripped bonds . Transaction costs, such as brokerage commissions, incurred in the purchase and sale of securities by the Funds are recognized in the Statement of Comprehensive Income . The difference between the unrealized appreciation (depreciation) of investments at the beginning and at the end of the year is included in “Net unrealized gain (loss) on investments” in the Statement of Comprehensive Income . On disposal of an investment, the difference between the fair value and the cost of the investment is included in “Net realized gain (loss) on investments” in the Statement of Comprehensive Income . Securities Lending and Repurchase Transactions Certain Funds may enter into securities lending and repurchase transactions through the securities lending program of the Funds’ custodian, Desjardins Trust Inc . (Trust) . The securities loaned and repurchase transactions are not derecognized in the Statement of Financial Position as substantially all the risks and advantages of ownership of these securities are kept . To limit the risk that the counterparty fails to fulfill its obligations, the Funds obtain collateral, representing at least 102% of the contract amount, determined daily based on the fair value of the previous business day’s securities loaned or repurchase transactions . Securities received as collateral in securities lending transactions are not recognized in the Statement of Financial Position as substantially all the risks and advantages of ownership of these securities have not been transferred to the Funds . Cash guarantees received for securities lending and repurchase transactions are recognized as financial assets in “Cash guarantee received for securities lending” and “Cash guarantee received for repurchase transactions”, as appropriate in the Statement of Financial Position . A liability representing the obligation to return the securities is recognized in “Commitments related to securities lending” and “Commitments related to repurchase transactions”, as appropriate . Revenue generated through the securities lending program is shared by the Fund and the Trust at a the rate presented in the “Notes to the Financial Statements – Specific Information” pertaining to each Fund . This revenue is included in “Revenue from securities lending and repurchase transactions” in the Statement of Comprehensive Income . Offsetting Financial Assets and Financial Liabilities Financial assets and liabilities are offset in the Statement of Financial Position for the Funds if and only if a Fund has: • a legally enforceable and unconditional right to offset the recognized amounts and • an intention to settle on a net amount, or to close-out the asset and settle the liability simultaneously .

278 DFS GUARANTEED INVESTMENT FUNDS The Funds have a legally enforceable and unconditional right to offset a financial asset and liability when they meet the following criteria: • the right is enforceable in the normal course of business and • the right is enforceable in the event of default, insolvency or bankruptcy . Over-the-counter derivative financial instruments, securities lending, repurchase transactions and receivable for investments sold and payable for investments purchased that are subject to master netting or similar agreements do not meet the criteria for offsetting in the Statement of Financial Position, as they give a right to an offset that is enforceable only in the event of default, insolvency or bankruptcy . Other Assets and Liabilities Premiums receivable, receivable for securities sold, interest, dividends and other receivables and cash guarantee received for securities lending and repurchase transactions are classified as loans and receivables and are recorded at cost . Similarly, accrued expenses, withdrawals payable, payable for securities purchased and interest, dividends and others payables, as well as commitments related to securities lending and repurchase transactions, are classified as financial liabilities and recorded at amortized cost . Given their short-term maturity, their carrying amount approximates their fair value Income Interest for attribution purposes from investments in debt securities and presented in the Statement of Comprehensive Income is recognized as it is earned . The Funds do not amortize premiums paid or discounts received on the purchase of debt securities except for stripped bonds, which are amortized on a straight line basis . Dividends are recognized as income on the ex-dividend date . Interest and dividend distributions received from underlying funds are recorded at the date of distribution . Distributions received from income and royalty trust investments are classified as income, capital gains or return of capital based on amounts reported by the management of these trusts . If such specific information is not available, the Company will determine the split at its discretion . Foreign income is accounted for on a gross amount received and is included in the income section in the Statement of Comprehensive Income . Distributions received in the form of units from underlying funds are presented as a separate line item called “Non-cash distribution from investments” on the statement of cash flows and its equivalent has been removed from the “Investments purchased” line item . For the purposes of presentation, the comparative information has been revised accordingly . On derivative financial instruments contract close-out, the gains and losses from financial derivative financial instruments held for hedging purposes are included in “Net realized gain (loss) on derivatives” in the Statement of Comprehensive Income . Gains and losses from derivative financial instruments held for purposes other than hedging are included in "Net income (loss) from derivatives" in the Statement of Comprehensive Income . Foreign Currency Translation The Funds’ premiums and withdrawals are denominated in Canadian dollars . Foreign currency assets and liabilities denominated in a foreign currency are translated into the functional currency at the exchange rate on each valuation date . Purchases and sales of securities, as well as income and expenses denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates . Foreign exchange gains and losses relating to cash are presented as “Foreign exchange gain (loss) on cash” and those relating to other financial assets and liabilities are presented within “Net realized gain (loss) on investments” and “Net unrealized gain (loss) on investments” in the Statement of Comprehensive Income . Increase (Decrease) in Net Assets per Unit from Operations Attributable to Contract Owners The increase (decrease) in net assets per unit from operations attributable to Contract Owners, presented in the Statement of Comprehensive Income is calculated by dividing the increase (decrease) in net assets from operations attributable to Contract Owners per unit by the average number of units outstanding during the year . Income Taxes Under the Income Tax Act (Canada), each Fund is treated as a segregated fund trust . The Fund’s income, as well as gains or losses realized, if any, are allocated to Contract Owners on a regular basis . In the case of interest that accumulates in a registered account, Contract Owners will not receive annual tax slips . However, any amount paid to Contract Owners or former Contract Owners may be subject to be taxed in their hands . On the other hand, for interest that accumulates in a non-registered account, Contract Owners will receive an annual tax slip for any income, gains or losses allocated . Under current tax laws, Funds do not pay income taxes, with the exception of foreign tax withholdings that may apply . In certain circumstances, to avoid double taxation to the Contract Owners, the Funds adjust the cost of the investments held to properly reflect the adjusted cost base for tax purposes . Investments in Entities The Funds meet the definition of IFRS 10, Consolidated Financial Statements, for investment entities and account for their investments in underlying funds at FVTPL . According to IFRS 12, Disclosure of Interests in Other Entities, the Funds must disclose specific information on their investments in other entities, such as Subsidiaries, Associates and Structured Entities . Subsidiaries An entity, including investments in any other investment entity, is considered as a subsidiary when it is controlled by another entity . The Fund controls an entity when it has the right to variable returns from its involvement with the entity and through its power over the entity . Associates Associates are investments in entities over which the Fund exercises significant influence without, however, exercising control .

DFS GUARANTEED INVESTMENT FUNDS 279 NOTES TO THE FINANCIAL STATEMENTS (cont.)

Structured Entities Structured Entities are conceived in a way that the right to vote and other similar rights are not determining factors in who exercises control . The Company has determined that its investments in underlying funds (including limited partnerships), index-based investments, asset-backed securities, mortgage-backed securities and master asset vehicles (included in the bonds) are structured entities, unless the specified relationship is different . Refer to the section “Notes to the Financial Statements – Specific Information” pertaining to each Fund for more information on Investments in Entities . Accounting Standard Issued but not yet Applied In July 2014, the International Accounting Standards Board (“IASB”) issued the complete and final version of IFRS 9, Financial Instruments (“IFRS 9”), which will replace IAS 39, Financial Instruments: Recognition and Measurement (“IAS 39”) . IFRS 9 includes, among others, the requirements for the classification and measurement of financial assets and liabilities . IFRS 9 sets out a new classification and measurement model for financial assets to determine whether a financial asset should be classified at amortized cost, at FVTPL or at fair value through other comprehensive income . This model is based on the contractual cash flow characteristics of the financial asset and the business model under which the financial asset is held . The valuation basis of financial assets, namely amortized cost or fair value, may need to be changed, as well as the recognition of unrealized gains and losses arising from changes in fair value . For the classification and measurement of financial liabilities, the new standard essentially carries forward the current requirements under IAS 39 . The Funds will have to adopt IFRS 9 retrospectively for annual periods beginnning on or after January 1, 2018 . However, the restatement of comparative periods is not mandatory as an exemption from applying the standard allows comparative periods to be presented in accordance with the previous GAAP under certain conditions . A team has been assigned to the project to highlight the following: the changes in disclosure and financial reporting as well as in systems and processes, disclosures and training . The project is progressing according to the proposed implementation schedule . The Manager continues to assess the impact of adopting IFRS 9 .

3. CRITICAL ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS The preparation of financial statements requires the Management of the Company to use judgment in applying its accounting policies and to make estimates and assumptions about the future . Actual results may differ from these estimates . The following paragraphs discuss the most significant accounting judgments and estimates that the Funds have made in preparing the financial statements . Fair Value Measurement of Derivatives Financial Instruments and Securities not Quoted in an Active Market The Funds may hold financial instruments that are not quoted in active markets, including derivative financial instruments . Fair value is determined based on models that make maximum use of observable inputs and rely as little as possible on unobservable inputs . The Funds consider the data observable if market data is readily available, distributed or updated on a regular basis, reliable and verifiable, not proprietary and provided by independent sources that are actively involved in the relevant market . The models used to determine fair values are validated and periodically reviewed by experienced personnel of the Company . When no quoted prices are available, the fair value is estimated using present value or other valuation methods, which are influenced by the assumptions used concerning the amount and timing of estimated future cash flows and discount rates, which reflect varying degrees of risk, including liquidity risk, credit risk, risks related to interest rates, exchange rates, and price and rate volatility . The calculation of the fair values may differ given the role that judgment plays in applying the valuation techniques and the acceptable estimation . Estimated fair value reflects market conditions on a given date and for this reason, it may not be representative of future fair values . Refer to Note 7, “Financial Instruments Disclosures” for further information on fair value measurement of financial instruments . Classification and Measurement of Investments and Application of the Fair Value Option In classifying and measuring financial instruments held by the Funds, the Company is required to make significant judgments about whether or not the business of the Funds is to invest on a total return basis for the purpose of applying the fair value option for financial assets under IAS 39 . The most significant judgment lies in determining if certain investments are held-for-trading, and if the fair value option can be applied to those which are not . For further information on financial instruments, refer to Note 2, “Basis of Presentation” .

4. NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Structure of the Funds and the Units attributed The Funds are wholly owned assets of Desjardins Financial Security, which have been segregated from the Company’s other assets . Except for instances where the Company has acquired an interest in a Fund, the Funds’ assets may only be used to pay benefits under the Contracts . Each Fund has a series of units, which are attributed to Contracts for the purpose of determining the value of benefits to the units attributable to those Contracts . A Contract Owner acquires no direct claim on the units or assets of a Fund by purchasing a Contract but only the benefits that are provided under the Contract . Units within the same series of Funds have the same net asset value per unit . Subject to the Company’s administrative rules, Contract Owners have the right to make transactions under their Contracts such as premiums, withdrawals and switches between units of Funds . As a result of these transactions, units are attributed to and withdrawn from the Contract based on each Contract’s terms and conditions or as provided by law . Since the Contract Owner does not own units of a Fund, ownership of units cannot be sold or transferred to another party . There are no voting rights associated with the units of the Fund .

280 DFS GUARANTEED INVESTMENT FUNDS Classification of Units Attributable to Contract Owners The Funds’ outstanding units qualify as “puttable instruments” as required by the IAS 32: Financial Instruments: Presentation (“IAS 32”) . IAS 32 states that units that include a contractual obligation for the issuer to repurchase or redeem them for cash or another financial asset should be classified as financial liabilities . The Funds issue different series of units attributable to Contract Owners that are equally subordinated but have different features . The Funds issue series of units to Contract Owners that include a contractual obligation for the issuer to repurchase or redeem them for cash or another financial asset . These series of units attributable to Contract Owners have different characteristics and are therefore classified as financial liabilities . Valuation of the Units The units of a Fund are valued according to the administrative rules established by the Company and in accordance with the Contract and all laws and regulations applicable to the Funds . These units differ with respect to redemption charges and management fees charged to each series (See Note 5) . The net asset value per unit is determined on each market day by dividing the net assets attributable to Contract Owners by its outstanding units . Series of units available The Desjardins Financial Security Guaranteed Investment Funds Plan, the Millennia III Plan, and the Imperial Growth Plan, as well as the various Contract versions offered under each of these Plans, offers different Series providing different guarantees and provisions as well as varying Management Expense Ratios (MERs) . Series 1: This Series was offered under the Millennia III Plan through two different Contracts: the Millennia lll and Millennia lll - New Era Contracts . The Millennia III Plan was offered from November 15, 1995 to October 28, 2007 . Series 3: This Series was offered under the Millennia III Plan through two different Contracts: the Millennia lll - Classic and Millennia lll - New Era Contracts . The Millennia III Plan was offered from November 15, 1995 to October 28, 2007 . Series 5: This Series was offered under the Desjardins Financial Security Guaranteed Investment Funds Plan through the Helios Contract . The Desjardins Financial Security Guaranteed Investment Funds Plan was first offered starting on October 29, 2007 and currently, the only Contract available is the Helios2 Contract . Series 6: This Series was offered under the Desjardins Financial Security Guaranteed Investment Funds Plan through the Helios2 Contract . The Desjardins Financial Security Guaranteed Investment Funds Plan was first offered starting on October 29, 2007 and currently, the only Contract available is the Helios2 Contract . Series 7: This Series was offered under the Desjardins Financial Security Guaranteed Investment Funds Plan through the Helios2 Contract . The Desjardins Financial Security Guaranteed Investment Funds Plan was first offered starting on October 29, 2007 and currently, the only Contract available is the Helios2 Contract . Series IGP: This Series was offered under the Imperial Growth Plan through the three remaining Contracts (C71, C81, and C88) . The Imperial Growth Plan was offered pre-1995 . Number of Units The number of units outstanding in each Fund as at December 2016 and 2015, and the number of units attributed to and withdrawn from Contracts during the years are as follows:

Outstanding Attributed Attributed Attributed Withdrawn Withdrawn Units Units Units Units Units Units 2016 2015 2016 2015 2016 2015 INVESTMENT SOLUTIONS Conservative Series 5 ...... 183,305 13,397 215,110 16,435 45,202 3,038 Series 6 ...... 2,225,539 1,362,535 1,415,148 972,195 552,144 159,946 Series 7 ...... 295,034 238,400 369,268 239,440 312,634 4,958 Moderate Series 5 ...... 128,260 19,486 133,194 22,517 24,420 3,031 Series 6 ...... 4,108,123 2,402,133 2,268,131 1,666,281 562,141 230,959 Series 7 ...... 756,324 214,703 628,007 152,214 86,386 1 Balanced Series 5 ...... 132,469 12,714 120,529 12,714 774 — Series 6 ...... 8,542,921 4,848,127 4,235,287 3,393,702 540,493 248,236 Series 7 ...... 1,237,946 1,007,847 344,994 902,201 114,895 33,531 Growth Series 5 ...... 760,517 16,307 831,433 32,041 87,223 15,734 Series 6 ...... 5,822,595 3,315,070 3,137,859 2,591,622 630,334 187,302 Series 7 ...... 734,846 181,018 645,550 133,455 91,722 46,537

DFS GUARANTEED INVESTMENT FUNDS 281 NOTES TO THE FINANCIAL STATEMENTS (cont.)

Outstanding Attributed Attributed Attributed Withdrawn Withdrawn Units Units Units Units Units Units 2016 2015 2016 2015 2016 2015 Maximum Growth Series 5 ...... 24,483 396 26,354 396 2,267 — Series 6 ...... 420,858 343,690 164,889 172,920 87,721 21,372 Series 7 ...... 79,759 3,854 75,905 — — — INDIVIDUAL FUNDS Income Money Market Series 1 ...... 58,891 68,554 8,321 1,415 17,984 20,545 Series 3 ...... 344,552 488,180 140,201 246,533 283,829 209,065 Series 5 ...... 2,786,782 2,999,289 1,170,328 1,438,897 1,382,835 1,414,488 Series 6 ...... 2,136,504 1,698,198 2,179,282 2,273,533 1,740,976 900,530 Series 7 ...... 490,651 162,210 672,592 240,940 344,151 246,187 Series IGP ...... 148,910 171,344 33,120 42,202 55,554 56,208 Income – Fiera Capital Series 1 ...... 196,001 255,586 9,540 4,666 69,125 50,176 Series 3 ...... 873,227 1,068,946 55,756 464,491 251,475 181,784 Series 5 ...... 6,829,023 7,764,680 731,495 761,944 1,667,152 1,633,950 Series 6 ...... 1,803,271 1,096,049 937,616 774,203 230,394 159,683 Series 7 ...... 209,174 54,411 250,007 43,819 95,244 767 Canadian Bond Series 5 ...... 6,828,827 7,626,091 747,537 7,983,886 1,544,801 357,795 Series 6 ...... 1,076,426 505,813 752,213 519,193 181,600 13,380 Series 7 ...... 33,502 30,960 2,663 30,990 121 30 Balanced and Asset Allocation Diversified Income – Franklin Quotential Series 3 ...... 773,659 877,559 159,528 156,926 263,428 209,611 Series 5 ...... 21,423,908 23,190,596 2,066,494 3,075,265 3,833,182 3,768,989 Series 6 ...... 5,800,954 3,946,703 2,469,131 2,822,916 614,880 369,868 Series 7 ...... 697,375 496,674 235,433 474,483 34,732 1,109 Balanced Income – Franklin Quotential Series 3 ...... 1,286,827 1,478,170 131,261 150,219 322,604 288,983 Series 5 ...... 31,189,042 33,381,738 2,670,090 2,700,920 4,862,786 5,010,885 Series 6 ...... 4,288,524 2,980,915 1,832,387 2,250,076 524,778 162,267 Series 7 ...... 864,960 1,016,353 223,700 732,580 375,093 8,310 Canadian Balanced – Fidelity Series 3 ...... 1,173,069 1,206,178 249,823 280,656 282,932 206,583 Series 5 ...... 85,994,696 91,416,057 9,190,958 9,199,383 14,612,319 14,072,082 Series 6 ...... 6,218,135 4,735,977 2,401,845 4,159,132 919,687 905,271 Series 7 ...... 301,726 233,707 164,025 160,143 96,006 3,234 U S. . Monthly Income – Fidelity Series 5 ...... 534,960 125,627 507,465 125,998 98,132 371 Series 6 ...... 1,012,639 328,093 773,096 328,197 88,550 104 Series 7 ...... 118,603 45,476 127,530 45,476 54,403 — Balanced – Desjardins SocieTerra Series 5 ...... 1,371,478 1,388,622 179,534 1,422,454 196,678 33,832 Series 6 ...... 1,373,583 223,620 1,284,302 223,996 134,339 376 Series 7 ...... 264,048 4,046 268,491 4,046 8,489 — Global Balanced – Jarislowsky Fraser Series 3 ...... 1,136,796 1,235,932 162,578 365,049 261,714 195,577 Series 5 ...... 22,370,171 22,251,488 4,661,446 7,115,465 4,542,763 3,206,127 Series 6 ...... 6,145,340 1,552,841 5,183,768 1,558,652 591,269 5,811 Series 7 ...... 823,648 116,990 787,610 117,042 80,952 52

282 DFS GUARANTEED INVESTMENT FUNDS Outstanding Attributed Attributed Attributed Withdrawn Withdrawn Units Units Units Units Units Units 2016 2015 2016 2015 2016 2015 Canadian Balanced – Fiera Capital Series 1 ...... 719,420 809,324 27,268 32,454 117,172 189,934 Series 3 ...... 1,288,779 1,551,148 52,678 98,613 315,047 413,194 Series 5 ...... 12,639,284 13,842,680 1,100,927 1,217,005 2,304,323 2,362,091 Series 6 ...... 2,282,707 1,400,752 1,064,871 1,135,988 182,916 81,471 Series 7 ...... 156,066 98,956 59,443 50,290 2,333 11,468 Canadian Balanced – Franklin Bissett Series 3 ...... 826,113 1,009,984 94,285 78,877 278,156 278,189 Series 5 ...... 21,091,996 23,114,831 1,865,375 1,661,612 3,888,210 6,432,032 Series 6 ...... 6,591,171 4,964,550 2,400,042 2,478,482 773,421 850,191 Series 7 ...... 631,723 500,958 192,536 319,487 61,771 69,365 Balanced Growth – Franklin Quotential Series 3 ...... 1,820,823 2,036,476 166,914 195,374 382,567 340,206 Series 5 ...... 72,243,781 77,569,281 6,365,859 6,788,994 11,691,359 9,853,319 Series 6 ...... 5,896,446 4,262,879 2,330,105 2,977,327 696,538 302,270 Series 7 ...... 734,025 523,873 290,166 441,744 80,014 3,935 Canadian Balanced – CI Signature Series 5 ...... 12,050,504 13,031,694 1,101,281 2,480,240 2,082,471 2,490,626 Series 6 ...... 4,914,035 4,204,058 1,445,683 3,258,074 735,706 637,546 Series 7 ...... 425,233 339,186 171,732 241,205 85,685 21,601 Income and Growth – CI Signature Series 5 ...... 6,159,138 7,558,081 678,868 1,471,848 2,077,811 2,146,096 Series 6 ...... 5,549,406 4,249,549 2,209,526 3,494,017 909,669 449,612 Series 7 ...... 350,144 193,152 210,253 109,890 53,261 9,979 Growth and Income – NEI Northwest Series 3 ...... 321,805 398,030 35,623 30,669 111,848 147,825 Series 5 ...... 21,971,082 22,715,281 3,118,142 1,649,411 3,862,341 3,588,533 Series 6 ...... 3,488,121 2,389,822 1,494,126 1,584,984 395,827 318,030 Series 7 ...... 252,511 135,977 119,959 64,394 3,425 13,810 Global Growth – NEI Select Series 3 ...... 480,868 554,876 13,697 52,599 87,705 113,830 Series 5 ...... 8,682,507 8,861,708 1,261,749 917,718 1,440,950 1,060,449 Series 6 ...... 2,954,214 1,933,861 1,477,165 1,529,047 456,812 80,514 Series 7 ...... 339,013 179,684 176,468 153,709 17,139 2,018 Canadian Asset Allocation – CI Cambridge Series 5 ...... 856,329 865,988 117,544 188,483 127,203 142,482 Series 6 ...... 1,190,156 817,140 506,711 689,016 133,695 113,765 Series 7 ...... 75,235 36,731 99,374 32,884 60,870 — Growth – Franklin Quotential Series 3 ...... 395,965 417,589 48,898 31,766 70,522 161,097 Series 5 ...... 8,229,743 9,017,907 313,682 334,399 1,101,846 989,603 Series 6 ...... 559,251 497,195 154,437 429,558 92,381 43,183 Series 7 ...... 7,258 7,282 — 3,397 24 12 Canadian Equity Dividend Income – Franklin Bissett Series 3 ...... 3,152,141 3,740,873 146,126 1,658,377 734,858 646,017 Series 5 ...... 11,989,330 13,700,901 521,960 7,330,662 2,233,531 2,796,200 Series 6 ...... 1,438,617 1,227,867 388,611 559,077 177,861 164,659 Series 7 ...... 106,441 93,825 23,287 26,905 10,671 46,070 Canadian Dividend – NEI Northwest Series 5 ...... 2,363,941 2,425,115 320,105 576,982 381,279 526,706 Series 6 ...... 613,456 407,125 314,933 248,403 108,602 45,314 Series 7 ...... 20,389 3,864 16,565 — 40 —

DFS GUARANTEED INVESTMENT FUNDS 283 NOTES TO THE FINANCIAL STATEMENTS (cont.)

Outstanding Attributed Attributed Attributed Withdrawn Withdrawn Units Units Units Units Units Units 2016 2015 2016 2015 2016 2015 Canadian Equity – Jarislowsky Fraser Series 3 ...... 525,503 672,818 18,364 32,225 165,679 223,505 Series 5 ...... 19,010,823 21,300,878 549,242 531,873 2,839,297 4,456,573 Series 6 ...... 157,756 19,043 141,355 19,053 2,642 10 Series 7 ...... 6,347 4,000 2,347 4,000 — — Canadian Equity – Fidelity True North® Series 3 ...... 130,305 123,106 39,133 52,672 31,934 31,538 Series 5 ...... 1,982,460 2,151,295 339,315 302,310 508,150 376,441 Series 6 ...... 1,762,367 1,178,327 791,335 955,009 207,295 249,270 Series 7 ...... 144,347 184,500 27,986 170,777 68,139 982 Canadian Equity – Franklin Bissett Series 1 ...... 3,140,265 — 3,187,394 — 47,129 — Series 3 ...... 2,126,841 1,429,085 991,347 59,613 293,591 329,421 Series 5 ...... 1,290,202 1,082,089 448,310 97,929 240,197 383,301 Series 6 ...... 789,520 506,089 412,874 215,688 129,443 144,175 Series 7 ...... 32,538 7,293 28,944 3,766 3,699 218 Series IGP ...... 275,089 — 278,342 — 3,253 — Specialty Equity – NEI Northwest Series 3 ...... 490,284 570,744 23,573 18,132 104,033 145,769 Series 5 ...... 1,777,315 1,947,641 255,755 248,686 426,081 617,971 Series 6 ...... 295,281 264,328 112,096 178,018 81,143 47,005 Series 7 ...... 4,054 4,054 — — — — Small Cap – Franklin Bissett Series 3 ...... 419,060 487,334 22,187 14,560 90,461 134,683 Series 5 ...... 504,184 564,968 79,697 57,627 140,481 231,977 Series 6 ...... 570,922 396,001 257,189 192,590 82,268 127,811 Series 7 ...... 6,921 7,003 76 224 158 18,780 Foreign Equity American Equity – MFS Series 3 ...... 583,110 686,632 61,838 77,396 165,360 144,640 Series 5 ...... 1,495,810 1,536,194 338,882 541,201 379,266 277,207 Series 6 ...... 937,829 719,947 380,331 615,674 162,449 77,952 Series 7 ...... 23,598 22,229 11,264 18,347 9,895 — American Equity Value – Desjardins Series 1 ...... 337,351 370,492 10,662 85,832 43,803 31,957 Series 3 ...... 358,641 401,147 61,263 111,163 103,769 96,288 Series 5 ...... 1,255,338 1,350,585 318,215 494,744 413,462 208,211 Series 6 ...... 865,487 681,502 339,233 588,079 155,248 100,407 Series 7 ...... 38,937 80,739 15,020 57,405 56,822 5,501 Global Dividend – Desjardins Series 5 ...... 1,103,658 1,104,542 235,868 494,512 236,752 236,032 Series 6 ...... 1,721,134 973,851 1,016,603 711,253 269,320 68,327 Series 7 ...... 146,153 68,742 141,505 65,525 64,094 3,565 Global Equity – MFS Series 3 ...... 644,982 694,899 97,508 673,482 147,425 21,658 Series 5 ...... 11,013,684 12,426,283 391,526 7,429,907 1,804,125 767,442 Series 6 ...... 328,119 248,381 115,312 240,538 35,574 15,004 Series 7 ...... 29,778 3,940 25,877 — 39 — International Equity – MFS Series 1 ...... 267,901 349,063 8,598 28,607 89,760 40,827 Series 3 ...... 657,646 777,249 43,163 55,309 162,766 211,784 Series 5 ...... 540,118 583,714 77,419 149,430 121,015 159,408 Series 6 ...... 153,698 155,017 51,419 171,781 52,738 19,696 Series 7 ...... 35,573 25,532 10,051 10,175 10 —

284 DFS GUARANTEED INVESTMENT FUNDS Outstanding Attributed Attributed Attributed Withdrawn Withdrawn Units Units Units Units Units Units 2016 2015 2016 2015 2016 2015 International Equity Growth – Desjardins Series 5 ...... 175,373 195,236 25,466 36,954 45,329 21,285 Series 6 ...... 221,349 169,152 107,853 68,620 55,656 16,649 Series 7 ...... 4,150 4,150 — — — —

5. MANAGEMENT FEES AND OTHER EXPENSES Management fees IIn return for investment management, Desjardins Financial Security is paid a management fee from the Funds based on the net asset value of the units attributed to each series of each Fund and calculated daily . The management fees, as a percentage of the daily average net assets, are as follows: Series 1 Series 3 Series 5 Series 6 Series 7 Series IGP % % % % % % INVESTMENT SOLUTIONS Conservative — — 2 .05 1 95. 1 50. — Moderate — — 2 .05 2 00. 1 55. — Balanced — — 2 .10 2 00. 1 55. — Growth — — 2 .15 2 .05 1 60. — Maximum Growth — — 2 .15 2 .05 1 60. — INDIVIDUAL FUNDS Income Money Market 0 .75 0 .75 0 .75 0 80. 0 35. 1 30. Income – Fiera Capital 1 50. 1 38. 1 09. 1 35. 0 .90 — Canadian Bond — — 1 09. 1 35. 0 .90 — Balanced and Asset Allocation Diversified Income – Franklin Quotential — 1 90. 1 96. 2 20. 1 75. — Balanced Income – Franklin Quotential — 1 90. 1 96. 2 .15 1 70. — Canadian Balanced – Fidelity — 2 02. 2 02. 2 20. 1 75. — U S. . Monthly Income – Fidelity — — 2 40. 2 30. 1 85. — Balanced – Desjardins SocieTerra — — 1 88. 2 .15 1 70. — Global Balanced – Jarislowsky Fraser — 2 .10 1 69. 2 .10 1 65. — Canadian Balanced – Fiera Capital 2 00. 1 65. 1 68. 2 00. 1 55. — Canadian Balanced – Franklin Bissett — 1 95. 1 75. 2 00. 1 55. — Balanced Growth – Franklin Quotential — 1 90. 1 96. 2 .15 1 70. — Canadian Balanced – CI Signature — — 1 89. 2 .15 1 70. — Income and Growth – CI Signature — — 2 20. 2 20. 1 75. — Growth and Income – NEI Northwest — 2 22. 2 03. 2 20. 1 75. — Global Growth – NEI Select — 2 33. 2 .10 2 30. 1 85. — Canadian Asset Allocation – CI Cambridge — — 2 20. 2 .05 1 60. — Growth – Franklin Quotential — 2 .15 2 21. 2 20. 1 75. — Canadian Equity Dividend Income – Franklin Bissett — 2 06. 1 75. 2 .15 1 70. — Canadian Dividend – NEI Northwest — — 2 20. 2 .15 1 70. — Canadian Equity – Jarislowsky Fraser — 2 .15 1 69. 2 .10 1 65. — Canadian Equity – Fidelity True North® — 2 02. 2 02. 2 25. 1 80. — Canadian Equity – Franklin Bissett 2 .75 2 .18 1 75. 2 .10 1 65. 1 95. Specialty Equity – NEI Northwest — 2 35. 2 .16 2 40. 1 95. — Small Cap – Franklin Bissett — 2 25. 2 01. 2 40. 1 95. — Foreign Equity

DFS GUARANTEED INVESTMENT FUNDS 285 NOTES TO THE FINANCIAL STATEMENTS (cont.)

Series 1 Series 3 Series 5 Series 6 Series 7 Series IGP % % % % % % American Equity – MFS — 2 25. 1 71. 2 .15 1 70. — American Equity Value – Desjardins 2 00. 1 69. 2 06. 2 .10 1 65. — Global Dividend – Desjardins — — 2 20. 2 20. 1 75. — Global Equity – MFS — 1 78. 1 78. 2 25. 1 80. — International Equity – MFS 2 00. 1 95. 1 69. 2 25. 1 80. — International Equity Growth – Desjardins — — 2 20. 2 20. 1 75. —

Operating expenses In addition to management fees, a charge is applied to each Fund for operating and administrative expenses relating to the Fund . Each Fund is also responsible for all applicable taxes, including Goods and Services Tax (“GST”) and Harmonized Sales Tax (“HST”) if any, and all brokerage commissions incurred by a Fund in buying and selling investments on behalf of a Fund . Management Expense Ratios Some expenses (audit fees, legal fees, custodial fees, marketing costs, etc) have been absorbed by the Company . Management expense ratios for all the Funds would be five basis points higher if these expenses had been charged to the Funds . The Company does not intend to change its method of allocating costs . The management expense ratios for each of the past five years, which includes management, guarantee and operating expenses, are as follows*:

December 31 December 31 December 31 December 31 December 31 2016 2015 2014 2013 2012 % % % % % INVESTMENT SOLUTIONS Conservative Series 5 ...... 2.59 2 59. ** — — — Series 6 ...... 2.47 2 49. 2 51. ** — — Series 7 ...... 1.88 2 01. 2 01. ** — — Moderate Series 5 ...... 2.70 2 64. ** — — — Series 6 ...... 2.49 2 51. 2 .54** — — Series 7 ...... 1.90 1 90. 2 07. ** — — Balanced Series 5 ...... 2.76 2 .70** — — — Series 6 ...... 2.54 2 .57 2 .57** — — Series 7 ...... 2.08 2 .13 2 .13** — — Growth Series 5 ...... 2.82 2 .76** — — — Series 6 ...... 2.59 2 68. 2 68. ** — — Series 7 ...... 2.10 2 .18 2 .18** — — Maximum Growth Series 5 ...... 2.87 2 81. ** — — — Series 6 ...... 2.67 2 71. 2 71. ** — — Series 7 ...... 2.24 2 24. 2 24. ** — — INDIVIDUAL FUNDS Income Money Market*** Series 1 ...... 1.72 1 72. 1 72. 1 72. 1 55. Series 3 ...... 1.71 1 72. 1 73. 1 72. 1 55. Series 5 ...... 1.38 1 39. 1 39. 1 40. 1 25. Series 6 ...... 1.12 1 .10 1 11. ** — — Series 7 ...... 0.61 0 63. 0 63. ** — — Series IGP ...... 1.66 1 66. 1 67. ** — —

286 DFS GUARANTEED INVESTMENT FUNDS December 31 December 31 December 31 December 31 December 31 2016 2015 2014 2013 2012 % % % % % Income – Fiera Capital Series 1 ...... 2.93 2 .93 2 .94 2 .93 2 65. Series 3 ...... 2.61 2 61. 2 62. 2 61. 2 33. Series 5 ...... 1.96 1 96. 1 96. 1 95. 1 75. Series 6 ...... 1.77 1 79. 1 80. ** — — Series 7 ...... 1.22 1 31. 1 32. ** — — Canadian Bond Series 5 ...... 1.96 1 96. ** — — — Series 6 ...... 1.77 1 75. ** — — — Series 7 ...... 1.22 1 32. ** — — — Balanced and Asset Allocation Diversified Income – Franklin Quotential Series 3 ...... 3.14 3 .13 3 .14 3 .15 2 80. Series 5 ...... 2.91 2 92. 2 92. 2 92. 2 60. Series 6 ...... 2.71 2 68. 2 .72** — — Series 7 ...... 2.20 2 27. 2 30. ** — — Balanced Income – Franklin Quotential Series 3 ...... 3.20 3 20. 3 20. 3 20. 2 85. Series 5 ...... 2.95 2 .95 2 .95 2 .94 2 60. Series 6 ...... 2.76 2 .75 2 74. ** — — Series 7 ...... 2.30 2 30. 2 30. ** — — Canadian Balanced – Fidelity Series 3 ...... 3.39 3 41. 3 41. 3 40. 3 .00 Series 5 ...... 2.96 2 .96 2 .96 2 .96 2 65. Series 6 ...... 2.81 2 82. 2 83. ** — — Series 7 ...... 2.28 2 34. 2 36. ** — — U S. . Monthly Income – Fidelity Series 5 ...... 3.10 3 .04** — — — Series 6 ...... 2.99 2 .93** — — — Series 7 ...... 2.47 2 42. ** — — — Balanced – Desjardins SocieTerra Series 5 ...... 2.81 2 81. ** — — — Series 6 ...... 2.76 2 74. ** — — — Series 7 ...... 2.30 2 30. ** — — — Global Balanced – Jarislowsky Fraser Series 3 ...... 3.39 3 40. 3 40. 3 40. 3 .00 Series 5 ...... 2.85 2 85. 2 86. 2 86. 2 55. Series 6 ...... 2.63 2 59. ** — — — Series 7 ...... 2.24 2 24. ** — — — Canadian Balanced – Fiera Capital*** Series 1 ...... 3.83 3 83. 3 82. 3 82. 3 40. Series 3 ...... 3.19 3 20. 3 .19 3 .19 2 85. Series 5 ...... 2.55 2 55. 2 55. 2 55. 2 30. Series 6 ...... 2.57 2 59. 2 60. ** — — Series 7 ...... 2.08 2 .12 2 .13** — — Canadian Balanced – Franklin Bissett Series 3 ...... 3.18 3 .17 3 .19 3 .18 2 85. Series 5 ...... 2.77 2 .77 2 .77 2 .77 2 .50 Series 6 ...... 2.60 2 59. 2 61. ** — — Series 7 ...... 2.11 2 .10 2 00. ** — — Balanced Growth – Franklin Quotential Series 3 ...... 3.26 3 27. 3 27. 3 29. 2 .95 Series 5 ...... 2.97 2 97. 2 97. 2 97. 2 65. Series 6 ...... 2.80 2 .79 2 80. ** — — Series 7 ...... 2.34 2 36. 2 36. ** — —

DFS GUARANTEED INVESTMENT FUNDS 287 NOTES TO THE FINANCIAL STATEMENTS (cont.)

December 31 December 31 December 31 December 31 December 31 2016 2015 2014 2013 2012 % % % % % Canadian Balanced – CI Signature Series 5 ...... 2.99 2 .99 2 .99 2 .99 2 68. Series 6 ...... 2.79 2 .78 2 .77** — — Series 7 ...... 2.29 2 34. 2 36. ** — — Income and Growth – CI Signature Series 5 ...... 3.05 3 .05 3 .07 3 .07 2 .75** Series 6 ...... 2.90 2 85. 2 84. ** — — Series 7 ...... 2.36 2 32. 2 47. ** — — Growth and Income – NEI Northwest Series 3 ...... 3.64 3 64. 3 64. 3 64. 3 22. Series 5 ...... 2.94 2 .94 2 .94 2 .94 2 65. Series 6 ...... 2.85 2 87. 2 86. ** — — Series 7 ...... 2.30 2 41. 2 41. ** — — Global Growth – NEI Select Series 3 ...... 3.85 3 85. 3 85. 3 86. 3 43. Series 5 ...... 3.13 3 .12 3 .12 3 .12 2 80. Series 6 ...... 2.98 2 .98 3 .02** — — Series 7 ...... 2.40 2 59. 2 59. ** — — Canadian Asset Allocation – CI Cambridge Series 5 ...... 2.90 2 89. 2 91. 2 .95 2 65. ** Series 6 ...... 2.70 2 68. 2 69. ** — — Series 7 ...... 2.19 2 30. 2 30. ** — — Growth – Franklin Quotential Series 3 ...... 3.61 3 61. 3 62. 3 61. 3 20. Series 5 ...... 3.22 3 22. 3 21. 3 21. 2 85. Series 6 ...... 2.89 2 92. 2 .93** — — Series 7 ...... 2.45 2 47. 2 47. ** — — Canadian Equity Dividend Income – Franklin Bissett Series 3 ...... 3.40 3 39. 3 39. 3 39. 3 .05 Series 5 ...... 2.93 2 .93 2 .94 2 .94 2 65. Series 6 ...... 2.70 2 .70 2 .72** — — Series 7 ...... 2.17 2 .13 2 .10** — — Canadian Dividend – NEI Northwest Series 5 ...... 3.08 3 .08 3 .08 3 .09 2 .70** Series 6 ...... 2.87 2 85. 2 .90** — — Series 7 ...... 2.41 2 41. 2 41. ** — — Canadian Equity – Jarislowsky Fraser Series 3 ...... 3.59 3 .58 3 .59 3 .59 3 .20 Series 5 ...... 2.92 2 91. 2 92. 2 91. 2 60. Series 6 ...... 2.93 2 87. ** — — — Series 7 ...... 2.41 2 36. ** — — — Canadian Equity – Fidelity True North® Series 3 ...... 3.56 3 .59 3 62. 3 62. 3 .20 Series 5 ...... 3.20 3 20. 3 21. 3 .20 2 .85 Series 6 ...... 3.04 3 .05 3 .04** — — Series 7 ...... 2.46 2 .58 2 59. ** — — Canadian Equity – Franklin Bissett Series 1 ...... 3.98** — — — — Series 3 ...... 3.59 3 .59 3 .59 3 .59 3 .20 Series 5 ...... 2.97 2 97. 2 .98 2 .98 2 .70 Series 6 ...... 2.80 2 .79 2 83. ** — — Series 7 ...... 2.41 2 41. 2 41. ** — — Series IGP ...... 2.38** — — — —

288 DFS GUARANTEED INVESTMENT FUNDS December 31 December 31 December 31 December 31 December 31 2016 2015 2014 2013 2012 % % % % % Specialty Equity – NEI Northwest Series 3 ...... 3.82 3 8. 3 8. 3 .83 3 4. 0 Series 5 ...... 3.28 3 27. 38 2. 3 .29 2 90. Series 6 ...... 3.21 3 21. 3 24. ** — — Series 7 ...... 2.76 2 76. 2 76. ** — — Small Cap – Franklin Bissett Series 3 ...... 3.76 3 74. 3 75. 3 75. 3 37. Series 5 ...... 3.14 3 13. 3 13. 3 13. 2 .85 Series 6 ...... 3.14 3 12. 3 15. ** — — Series 7 ...... 2.74 2 56. 2 76. ** — — Foreign Equity American Equity – MFS*** Series 3 ...... 3.75 3 76. 3 77. 3 76. 3 3. 4 Series 5 ...... 2.93 2 93. 2 94. 2 97. 2 65. Series 6 ...... 2.87 28 8. 2 87. ** — — Series 7 ...... 2.44 2 47. 2 47. ** — — American Equity Value – Desjardins Series 1 ...... 3.82 3 81. 3 82. 3 .82 3 41. Series 3 ...... 3.22 3 23. 3 24. 3 .24 2 90. Series 5 ...... 3.05 3 06. 3 07. 3 08. 2 75. Series 6 ...... 2.83 2 79. 2 76. ** — — Series 7 ...... 2.27 25 2. 2 41. ** — — Global Dividend – Desjardins Series 5 ...... 2.80 2 79. 2 78. 2 90. 2 55. ** Series 6 ...... 2.87 23 8. 26 8. ** — — Series 7 ...... 2.34 2 47. 2 47. ** — — Global Equity – MFS*** Series 3 ...... 3.36 39 3. 39 3. 3 47. 3 05. Series 5 ...... 2.92 2 92. 2 92. 2 92. 2 6. 0 Series 6 ...... 2.93 2 95. 3 00. ** — — Series 7 ...... 2.53 2 53. 2 53. ** — — International Equity – MFS*** Series 1 ...... 3.82 3 8. 3 85. 3 .85 3 50. Series 3 ...... 3.65 34 6. 3 65. 3 65. 3 .25 Series 5 ...... 2.75 2 76. 2 76. 2 77. 2 45. Series 6 ...... 3.01 3 05. 3 03. ** — — Series 7 ...... 2.55 2 59. 2 59. ** — — International Equity Growth – Desjardins Series 5 ...... 3.10 3 11. 3 10. 3 .22 02 .8 ** Series 6 ...... 2.93 2 92. 2 94. ** — — Series 7 ...... 2.53 2 53. 2 53. ** — — * Starting in 2013, management expense ratios include all applicable sales taxes (sales taxes not included before 2013) . ** Annualized . *** The management expense ratios for these Funds include underlying fund managers’ fees, ranging from 0 0. 1 to 0 0. 5% .

DFS GUARANTEED INVESTMENT FUNDS 289 NOTES TO THE FINANCIAL STATEMENTS (cont.)

6. RELATED PARTY TRANSACTIONS The Funds pay management fees and operating expenses to the Company, which are presented in the Statement of Comprehensive Income . Those fees are calculated on a daily basis with the net asset value of the Fund . The management fees are paid monthly at the annual rate specified in Note 5 . Accrued expenses, presented in the statement of Financial Position, are to be paid to the Company . Some Funds have investments in underlying funds from related parties . As at December 31, 2016 and 2015, the Company had the following seed capital investments: December 31, 2016 December 31, 2015 $ $ Conservative 143,646 141,919 Moderate 173,479 169,802 Balanced 204,025 197,511 Growth 237,492 227,584 Maximum Growth 270,102 255,521 Money Market 83,075 82,464 Income – Fiera Capital 22,000 21,886 Canadian Bond 21,589 21,451 Diversified Income – Franklin Quotential 22,170 21,797 Balanced Income – Franklin Quotential 22,656 22,256 Canadian Balanced – Fidelity 23,496 22,336 U S. . Monthly Income – Fidelity 466,822 443,758 Balanced – Desjardins SocieTerra 142,727 139,525 Global Balanced – Jarislowsky Fraser 79,581 77,425 Canadian Balanced – Fiera Capital 23,668 22,113 Canadian Balanced – Franklin Bissett 128,864 116,535 Balanced Growth – Franklin Quotential 22,914 22,440 Canadian Balanced – CI Signature 230,310 219,294 Income and Growth – CI Signature 218,302 203,815 Growth and Income – NEI Northwest 65,489 60,970 Global Growth – NEI Select 24,083 22,518 Canadian Asset Allocation – CI Cambridge 240,824 226,885 Growth – Franklin Quotential 23,224 22,777 Dividend Income – Franklin Bissett 43,674 36,927 Canadian Dividend – NEI Northwest 269,361 231,804 Canadian Equity – Jarislowsky Fraser 23,874 20,657 Canadian Equity – Fidelity True North® 145,294 133,480 Canadian Equity – Franklin Bissett 67,325 18,612 Specialty Equity – NEI Northwest 287,713 245,362 Small Cap – Franklin Bissett 20,220 15,725 American Equity – MFS 28,065 27,133 American Equity Value – Desjardins 879,208 819,806 Global Dividend – Desjardins 274,376 268,529 Global Equity – MFS 245,840 247,098 International Equity – MFS 23,218 24,386 International Equity Growth – Desjardins 251,082 265,511 The related parties transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of

290 DFS GUARANTEED INVESTMENT FUNDS consideration established and agreed to by the related parties .

7. FINANCIAL INSTRUMENTS DISCLOSURES DFS Preliminary Information The net assets of the DFS Guaranteed Investment Funds are held by the Company on behalf of all Contract Owners . These Funds are not separate legal entities . The Contract Owners do not own any of the assets of the Funds nor own an interest in the Funds . However, the financial instrument risks resulting from the Funds are assumed by the Contract Owners . The value of the segregated fund’s value may increase or decrease according to market fluctuations . Moreover, the Funds are offered with a deposit guarantee of 75 to 100% that protects the deposits until specific maturity dates . For the Fund of funds, details regarding the top holdings of the underlying fund(s) are shown in the appendix of the schedule of investment portfolio . Hierarchy of Financial Instruments at Fair Value The fair value measurement of financial instruments is determined using the following three levels of the fair value hierarchy: • Level 1 – Measurement based on quoted prices (unadjusted) in active markets for identical assets or liabilities; • Level 2 – Valuation techniques based primarily on observable market data; • Level 3 – Valuation techniques not based primarily on observable market data . If inputs of different levels are used to measure the fair value of an asset or liability, the classification within the hierarchy is based on the lowest level input that is significant to the measurement of fair value . Measurement Monitoring The Company is responsible for establishing the fair value measurements included in the Funds’ financial statements, including Level 3 measurements . The Company obtains prices from a pricing agency, monitors and analyzes these prices on a daily basis . A Measurement Monitoring Committee established by the Company ensures that appropriate operating procedures and a proper monitoring structure are in place and followed . Monthly monitoring reports are prepared and sent to each member for approval . The Measurement Monitoring Committee verifies the measurements on a monthly basis . On a quarterly basis, this committee examines and approves the Level 3 measurements after obtaining confirmation of the measurements from each portfolio manager, as needed . The committee signs off on any adjustments made to prices or estimates provided by the pricing agency . Classification within the Fair Value Hierarchy A change in the fair value measurement method could result in a transfer between levels . The Funds’ policy is to record the implications of transfers between levels on the date of the event or change in circumstances behind the transfer . The following types of investments may be classified Level 3 if their prices are no longer based on observable inputs . a) Money Market Securities Money market securities primarily include public sector and corporate securities, which are valued using models with inputs including interest rate curves, credit spreads and volatilities . The inputs that are significant to valuation are generally observable . Public sector money market securities guaranteed by the federal and provincial government have been classified as Level 1 . Other money market securities have been classified as Level 2 . b) Equities Equities are classified as Level 1 when the security is actively traded and a reliable price is observable . Certain equities do not trade frequently and therefore observable prices may not be available . In such cases, fair value is determined using observable market data and the fair value is classified as Level 2, unless the determination of fair value requires significant unobservable data, in which case the measurement is classified as Level 3 . Unlisted warrants are generally classified as Level 2 . c) Index-Based Investments Index-based Investments are classified as Level 1 when the security is actively traded and a reliable price is observable . d) Bonds Public sector bonds guaranteed by the federal and provincial government are classified as Level 1 . Corporate bonds, which are valued using models with inputs including interest rate curves, credit spreads and volatilities are usually classified as Level 2 . e) Mortgage-backed Securities and Asset-backed Securities Mortgage-backed securities and asset-backed securities consist primarily of corporate securities . Since the inputs that are significant to valuation are generally observable, mortgage-backed securities and asset-backed securities are usually classified as Level 2 . f) Investment Funds Public investment funds are classified as Level 1 when their prospectus is unrestricted and their price is reliable and observable . Since some investment funds are not public, their price is determined using observable market data and fair value is classified as Level 2, unless the measurement of fair value requires the use of significant unobservable inputs, in which case it is classified as Level 3 .

DFS GUARANTEED INVESTMENT FUNDS 291 NOTES TO THE FINANCIAL STATEMENTS (cont.) g) Derivative Financial Instruments Derivative financial instruments consist of foreign currency forward contracts for which counterparty credit spreads are observable and reliable or for which the credit-related inputs are determined to be significant to fair value, are classified as Level 2 . Detailed information concerning the fair value hierarchy of each Fund is available in their respective Notes to the Financial Statements pertaining to each Fund . For securities classified as Level 3, the valuation techniques and assumptions are also presented in their respective notes . Management of Risks Arising from Financial Instruments During the course of their activities, the Funds are exposed to a variety of risks associated with financial instruments such as market risk (including currency risk, interest rate risk and price risk), concentration risk, credit risk and liquidity risk . The overall strategy of the Funds’ risk management focuses on the unpredictability of financial markets and optimizes the Funds’ financial performance, in accordance with the risk level established for the Fund . Most investments involve a risk of loss . For the purpose of the financial statements, certain risks detailed in the Contract and Information Folder are associated with other risks . The market risk, the special equity risk and the sovereign risk are presented under price risk . The credit risk and the derivative risk are presented under credit risk . In accordance with the Funds’ investment policy, the Company monitors the Funds’ risks on a quarterly basis . Market Risk Market risk is the risk that the fair value or future cash flows associated with a financial instrument will fluctuate because of a change in the relevant risk variables, such as interest rates and equity prices . The Funds’ market risk is managed through diversification of the investment portfolio’s exposure ratios . The return on investments held by the Funds is monitored by the Company on a monthly basis and reviewed by the investment committee on a quarterly basis . Currency Risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in foreign exchange rates . Currency risk is composed of monetary items (usually including cash, receivable amounts in foreign currencies, and investments in fixed-income and money market securities) and non-monetary items (usually including investments in equities and investment funds) . The non-monetary assets are classified according to the currency in which the security was purchased . The Funds are exposed to the currency risk in holding assets and/or liabilities denominated in currencies other than the Canadian dollar, the Funds’ functional currency, as the value of the securities denominated in other currencies will fluctuate according to the prevailing exchange rates . The Funds may enter into foreign currency forward contracts to reduce their exposure to currency risk . The Funds’ exposure to currency risk is shown based on the carrying value of financial assets and financial liabilities (including the notional amount of foreign currency forward contracts and foreign currency futures, if any) . If the Canadian dollar decreases in relation to foreign currencies, the value of foreign investments increases . Conversely, if the value of the Canadian dollar increases, the value of foreign investments decreases . Interest Rate Risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in market interest rates . Interest rate risk occurs when an investment fund invests in interest-bearing financial instruments . Generally, the value of these securities increases if interest rates decrease, and decreases if interest rates increase . The Company manages this risk by calculating and monitoring the average effective duration of the portfolio of these securities and the exposures on different points along the interest rate yield curve . The Funds also hold a limited amount of cash subject to variable interest rates, which expose them to cash flow interest rate risk . Price Risk Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in market prices, other than those arising from currency risk or interest rate risk . The Company manages this risk by carefully selecting securities and other financial instruments, in accordance with defined limits . The maximum risk resulting from financial instruments is determined by the fair value or contract value of the financial instruments . The Funds’ overall market positions are monitored on a monthly basis by the Company and reviewed on a quarterly basis by the investment committee . The Funds’ financial instruments are exposed to price risk arising from uncertainties about the future prices of instruments . Concentration Risk Concentration risk arises as a result of the concentration of exposures within the same category, whether it is geographical location or industry sector . For Funds with an international investment strategy, the concentration by geographic location is presented according to, among other things, the country of incorporation or region . For Funds with a domestic investment strategy, the concentration by industry sector is presented according to, among other things, their investments in the financial, healthcare or energy sectors, etc . The concentration risk is managed through portfolio diversification within the framework of the Funds’ objective and strategy . Credit Risk Credit risk is the risk that the financial instrument counterparty will be unable to pay the full amount at maturity . The Funds’ credit risk is managed through an independent credit analysis from the Manager/sub-advisor, in addition to credit rating agencies analysis .

292 DFS GUARANTEED INVESTMENT FUNDS Financial Instrument Transactions The Funds are exposed to credit risk . The Funds’ and counterparty’s respective credit risks are taken into account when determining the fair value of financial assets and liabilities . Transactions are settled or paid on delivery using approved brokers . The risk of default is considered limited as delivery of the securities sold is made once the broker has received payment . Payment is made on a purchase once the securities have been received by the broker . The trade will fail if either party fails to meet its obligations . However, there are risks involved in dealing with custodians or prime brokers who settle trades and, in rare circumstances, the securities and other assets deposited with the custodian or broker may be exposed to credit risk with regard to such parties . In addition, there may be practical problems or time delays associated with enforcing the Funds’ rights to their assets in the case of an insolvency of any such party . The investment grade for fixed-income securities and money market securities is rated by credit rating agencies, such as the Dominion Bond Rating Service (“DBRS”), Standard & Poor’s and Moody’s . In cases where the credit rating agencies do not agree on a credit rating for fixed-income securities and money market securities, they will be classified following these rules: • If two credit ratings are available, but the ratings are different, the lowest rating is used; • If three credit ratings are available, the most common credit rating is used; • If all three credit rating agencies have different ratings, the middle credit rating is used . The credit rating is then converted to DBRS format . Generally, the greater the credit rating of a security, the lower the probability of it defaulting on its obligations . Derivative financial instruments are financial contracts whose value depends on underlying assets, including interest rates and foreign exchange rates . The vast majority of derivative financial instruments is negotiated by mutual agreement between the Funds and their counterparties, and include foreign currency forward contracts, swaps and options . Other transactions are carried out as part of trades and mainly consist of futures contracts . Securities Lending and Repurchase Transactions Securities lending and repurchase transactions expose the Funds to credit risk . These transactions are governed by Investment Industry Regulatory Organization of Canada participation agreements . The Funds also use netting agreements with counterparties to mitigate credit risk and require a percentage of collateralization (a pledge) on these transactions . The Funds only accept pledges from counterparties that comply with the eligibility criteria defined in their policies . These criteria promote quick realization, if necessary, of collateral in case of default . The collateral received and given by the Funds are mainly cash and government securities . Further information on assets pledged and received as collateral is presented in the “Notes to the Financial Statements – Specific Information” pertaining to each Fund . Liquidity Risk Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with financial liabilities . The Funds are exposed to daily cash redemptions of units . Most of their assets are therefore invested in liquid investments (i e. . investments that are traded in an active market and that can be readily disposed of) . Some Funds may invest in derivative financial instruments, debt securities and unlisted equity investments that are not traded in an active market . As a result, some Funds may not be able to quickly liquidate their investments at amounts approximating their fair values, or be able to respond to specific effects such as deterioration in the creditworthiness of any particular issuer . Units attributable to Contract Owners are redeemable on demand at the owner’s option . However, the Company does not expect that the contractual maturity disclosed will be representative of the actual cash outflows, as Contract Owners of the instruments typically retain them for a longer period . The majority of the remaining liabilities are due within the next 3 months . Balances due within 12 months equal their carrying balances as the impact of discounting is not significant . Management of Risks from Units Attributable to Contract Owners Units attributed and outstanding are considered as the Funds’ capital . The Funds are not subject to specific capital requirements on the premiums and withdrawals, other than certain minimum subscription requirements . Contract Owners are entitled to require payment of the net asset value per unit for all or any of the units they hold by giving an official notice to the Company within the prescribed time period . Units attributable to Contract Owners are redeemable for cash equal to a pro rata share of the Funds’ net asset value . Additional Information For further information regarding the hierarchy of financial instruments at fair value measurement and risk exposure of each Fund, please refer to the “Notes to the Financial Statements – Specific Information” pertaining to each Fund . Details on risks and various documents on underlying funds (detailed description of each Fund’s investment policy and, where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s)) are available upon request by writing to the Company at its address: 1 Complexe Desjardins P O. . Box 9000 Montreal, Quebec H5B 1H5

DFS GUARANTEED INVESTMENT FUNDS 293 INDEPENDENT AUDITOR’S REPORT To the Contract Owners of: DFS GIF – Conservative DFS GIF – Income and Growth – CI Signature DFS GIF – Moderate DFS GIF – Growth and Income – NEI Northwest DFS GIF – Balanced DFS GIF – Global Growth – NEI Select DFS GIF – Growth DFS GIF – Canadian Asset Allocation – CI Cambridge DFS GIF – Maximum Growth DFS GIF – Growth – Franklin Quotential DFS GIF – Money Market DFS GIF – Dividend Income – Franklin Bissett DFS GIF – Income – Fiera Capital DFS GIF – Canadian Dividend – NEI Northwest DSF GIF – Canadian Bond DFS GIF – Canadian Equity – Jarislowsky Fraser DFS GIF – Diversified Income – Franklin Quotential DFS GIF – Canadian Equity – Fidelity True North® DFS GIF – Balanced Income – Franklin Quotential DFS GIF – Canadian Equity – Franklin Bissett DFS GIF – Canadian Balanced – Fidelity DFS GIF – Specialty Equity – NEI Northwest DSF GIF – U S. . Monthly Income – Fidelity DFS GIF – Small Cap – Franklin Bissett DSF GIF – Balanced – Desjardins SocieTerra DFS GIF – American Equity – MFS DFS GIF – Global Balanced – Jarislowsky Fraser DFS GIF – American Equity Value – Desjardins DFS GIF – Canadian Balanced – Fiera Capital DFS GIF – Global Dividend – Desjardins DFS GIF – Canadian Balanced – Franklin Bissett DFS GIF – Global Equity – MFS DFS GIF – Balanced Growth – Franklin Quotential DFS GIF – International Equity – MFS DFS GIF – Canadian Balanced – CI Signature DFS GIF – International Equity Growth – Desjardins (collectively the “Funds”) We have audited the accompanying financial statements of each of the Funds, which comprise the statement of financial position of the Funds as at December 31, 2016 and December 31, 2015 and the statements of comprehensive income, changes in net assets attributable to contract owners and cash flows for years or periods then ended, as indicated in the statements of comprehensive income of each of the Funds, and the related notes, which comprise a summary of significant accounting policies and other explanatory information .

THE COMPANY’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS The Company is responsible for the preparation and fair presentation of the financial statements of each of the Funds in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error .

AUDITOR’S RESPONSIBILITY Our responsibility is to express an opinion on the financial statements of each of the Funds based on our audits . We conducted our audits in accordance with Canadian generally accepted auditing standards . Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement . An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements . The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error . In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control . An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Company, as well as evaluating the overall presentation of the financial statements . We believe that the audit evidence we have obtained in each of our audits is sufficient and appropriate to provide a basis for our audit opinion .

OPINION In our opinion, the financial statements of each of the Funds present fairly, in all material respects, the financial position of each of the Funds as at December 31, 2016 and December 31, 2015 and the financial performance and cash flows of each of the Funds for the years or periods then ended, as indicated in the statements of comprehensive income of each of the Funds in accordance with International Financial Reporting Standards .1

Montreal, Quebec 1 CPA auditor, CA, public accountancy permit No . A123633 April 13, 2017

PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l. 1250 René-Lévesque Boulevard West, Suite 2500, Montréal, Quebec, Canada H3B 4Y1 T: +1 514 205 5000, F: +1 514 876 1502, www.pwc.com/ca “PwC” refers to PricewaterhouseCoopers LLP/s .r .l ./s .e .n c. .r .l ,. an Ontario limited liability partnership .

294 DFS GUARANTEED INVESTMENT FUNDS MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING IN THE AUDITED ANNUAL FINANCIAL STATEMENTS

Management The accompanying financial statements have been prepared by the management of the Funds’ trustee, Desjardins Financial Security Life Assurance Company (“Desjardins Financial Security”), in accordance with International Financial Reporting Standards . Management is responsible for the information contained in the financial statements . Desjardins Financial Security maintains an appropriate system of internal control to ensure that relevant and reliable financial information is produced and that the Funds’ assets are appropriately accounted for and safeguarded . A summary of the significant accounting policies applicable to the Funds can be found in Note 2 of the Notes to the Financial Statements . External Auditor PricewaterhouseCoopers LLP have been appointed by the shareholder, Desjardins Financial Corporation Inc ,. as the external auditor of the Funds . Their responsibility is to audit the annual financial statements in accordance with Canadian generally accepted auditing standards and to report to the contract owners of the fairness of the Funds’ financial position and results of operations as reflected in the annual financial statements .

Gregory Chrispin François Drouin Éric Landry President and Chief Operating Officer Senior Vice-President, Finance Vice-President, Investment Solutions

Lévis, Québec April 13, 2017

DFS GUARANTEED INVESTMENT FUNDS 295 DFS GUARANTEED INVESTMENT FUNDS

Thank you. Thank you for choosing the strength and stability of a company specialized in providing individual insurance and retirement savings products to over five million Canadians, every day, to ensure their financial security. Thank you for also choosing , the largest cooperative financial group in Canada, whosefinancial stability is recognized by the following credit ratings which are comparable, if not superior to those of the five largest Canadian banks and insurance companies:

• Standard and Poor’s A+ • Moody’s Aa2 • Dominion Bond Rating Service AA • Fitch AA-

The Contract and Information Folder contains important information on the DFS Guaranteed Investment Funds. Please read it carefully before investing. DFS Guaranteed Investment Funds is a registered trademark owned by Desjardins Financial Security Life Assurance Company. DFS Guaranteed Investment Funds are established by Desjardins Financial Security Life Assurance Company. DFS stands for Desjardins Financial Security.

This Document is also available on our website: desjardinslifeinsurance.com

Desjardins Insurance refers to Desjardins Financial Security Life Assurance Company. 07345E (2017-05)