Press release

$197 million in net earnings

Montréal, July 6, 2009 – Despite the severe global economic crisis and recession gripping Canada and Québec, the Solidarity Fund QFL (the “Fund”) posted net earnings of $197 million in the second half of its fiscal year, ended May 31, 2009, for a 3.2% return. Share value increased to $21.78, up $0.58 over the price published on January 5, 2009.

The Fund’s net assets stood at $6.4 billion at May 31, 2009. Throughout the fiscal year, the Fund continued to tightly manage its operations, achieving an operating expense ratio of 1.7% of average net assets, a solid performance compared to that of companies operating in the same industry.

As a result of the financial and economic meltdown during its first half of its fiscal year from June 1 to November 30, 2008, followed by the deep recession, the Fund posted an overall annual return of -12.6%. However, this performance compares favourably with the principal stock indices¹ and Canadian balanced funds,² which returned an average of between -34.5% and -16.6% for the same period, i.e., June 1, 2008 to May 31, 2009.

“We have just come out of a year that will leave an imprint on the Québec economy and its business owners. During such volatile times, we should be proud that we can rely on the Solidarity Fund QFL, which through its business investments that create and preserve quality jobs, continues to play a structuring role in the Québec economy. For our 571,000 shareholders, the Fund’s RRSP is a profitable investment for retirement that earns them 30% in tax credits. The Fund also continues to be a profitable investment for the governments since they recover the cost of the tax credits in less than three years. I would like to commend the work of all the Fund’s teams and network, as well as our local representatives, who continue to believe in our mission and invest their energy day after day to promote the Fund as a unique model and symbol of Québec pride,” stated Michel Arsenault, Chairman of the Board and President of the QFL.

“The stock market rebound in the second half of the year, along with the performance of our private investments, allowed us to turn a profit and increase our share value. Our record investment of $848 million, not including the $542 million that will be allocated to three new financing programs introduced in the last Québec budget, demonstrates that the Fund executes its mission with courage, determination and rigour. In all, the Fund will inject $1.3 billion into the economy during this liquidity crunch. With net assets of $6.4 billion, the Fund is solid and ready to continue backing businesses at all stages of development. We always strive to do better, and in this new fiscal year, we will keep on innovating, growing and supporting our partners so as to create wealth for Québec and our shareholders,” said Fund President and CEO Yvon Bolduc.

The Fund forges ahead with its mission
In terms of investments, the Fund and its network of regional funds and SOLIDEs forged ahead with their mission, investing in over 280 companies. In addition to supporting its partner companies’ growth and backing new businesses across all of Québec and in all industries, the Fund is participating in the following three major financing programs: $250 million have been committed to a fund together with Société générale de financement to help mid-sized and large businesses struggling with liquidity problems caused by the financial crisis; $250 million have been committed to the Teralys Capital fund of funds, which will invest in private venture capital funds that in turn will invest in new-economy companies; and up to $42 million will be invested to create three new seed funds to continue backing Québec ingenuity.

On the shareholder side, the Fund collected $655 million in contributions, an increase of more than 7% over the previous year. Of this amount, over two thirds were collected through systematic saving, either through payroll deduction or pre-authorized withdrawals. This increase is owed to the unrelenting efforts of our internal teams and local representatives to promote the merits of the Fund’s RRSP and its value for Québec.

Share limit for the next year
For the fiscal year ending May 31, 2010, the Fund’s Board of Directors has capped at $700 million, the value of shares the Fund can issue that give rise to labour-sponsored fund tax credits.

Financial Highlights	6 months ended May 31, 2009 (in millions of $)	6 months ended November 30, 2008 (in millions of $)	Fiscal year ended May 31, 2009 (in millions of $)	Fiscal year ended May 31, 2008 (in millions of $)
Net assets	6,375	6,171	6,375	7,285
Revenues	113	126	239	261
Net earnings (loss)	197	(1,116)	(919)	(89)
Return	3.2%	(15.3)%	(12.6)%	(1.2)%
	(in dollars)	(in dollars)	(in dollars)	(in dollars)
Net assets per share	21.78	21.20	21.78	25.05

Source: Josée Lagacé
Senior Advisor, Press Relations and Communications
Fonds de solidarité FTQ
Telephone: 514 850-4835

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For the same period, i.e., June 1, 2008, to May 31, 2009, the BMO Québec-based small cap index returned –34.5%, the S&P 500, –34.4%, the Nasdaq, –29.7%, the Russell 2000, –33.0%, and the S&P/TSX composite, –29.5%.
² For the same period, i.e. June 1, 2008 to May 31, 2009, the average return of Canadian balanced funds was -16.6% (source: global neutral balanced funds as compiled by globefund.com).