Montréal, January 4, 2011 (6:00 p.m.) – Posting a six-month return of 5.0%, the Fonds de solidarité FTQ (the “Fonds”) is off to a solid start this year despite a still fragile, volatile and tenuous economic context. Net earnings for the period amounted to $366 million and share value is now $25.03, up $1.19 over the price published on July 5, bringing the Fonds’ 12-month return to its shareholders to 6.5%.
“Our over half a million shareholders can be proud of the Fonds’ very good work, which is reflected in the results of the past six months. The RRSP season is kicking off at time when Quebecers, who have a low savings rate, are still having a hard time setting money aside. The Fonds plays an important role by encouraging workers to save for retirement. With 30% in additional tax credits, the Fonds RRSP is accessible and worthwhile. Therefore, our teams and some 2,000 local representatives are hard at work encouraging workers, especially young people, to adopt good savings habits,” stated Fonds’ Chairman of the Board of Directors and FTQ President’s Michel Arsenault.
“Despite fragile economic context, the Fonds managed to achieve an overall return of 5.0% for the first half of its fiscal year. As a result of the stock market recovery and lower interest rates, our marketable securities generated a 6.9% return while our private equities portfolio, which invests in Québec companies, returned 4.9%. I’m very proud of what our employees have accomplished in the past six months. The work they do each and every day allows the Fonds to continue playing a key socio-economic role in Québec,” said Fonds’ President and CEO Yvon Bolduc.
Investments that contribute to Québec’s economic growth
In the past six months, the Fonds’ investment teams have capitalized on opportunities to back promising projects in Québec companies. For example, the Fonds made a $41.5 million investment in the buyout of IPL as part of a succession and privatization project. The Fonds also invested $11 million in Fonds d’investissement Réal, one of the three IT seed funds announced in the Québec government’s 2009-2010 budget.
Companies expanding outside Québec post 27% increase in sales and an almost 5% growth in the number of jobs in Québec
The Fonds understands that SMEs must often go outside Québec to grow. “Québec would not be where it is today if the Fonds, like other players in the financial ecosystem for that matter, financed only local projects. We want our partners to become world-class companies,” asserted Mr. Bolduc. By expanding abroad, SMEs not only solidify their Québec operations, which in turn has a positive impact on jobs in Québec, they become even stronger and more competitive, which helps keep decision-making centres here at home. This is why the Fonds continues to support growth projects in markets outside the province. In fact, in the last five years, SME partner companies that have expanded outside Québec have seen their total sales increase by 27% and the number of jobs they created in Québec grow by almost 5%.
2011 subscription campaign
For the current fiscal year, the Fonds can issue an unlimited number of shares, which are available to all and can be purchased in three easy ways: payroll deduction, preauthorized withdrawal and lump-sum payment.
An accessible RRSP: save $1,000 and lay out just $316
For example, for Fonds shareholders taxable income between $41,545 and $78,120 a year, it only costs $316 for each $1,000 contribution to their RRSP thanks to the RRSP deduction and the additional labour-sponsored fund tax credits for subscription of up to $5,000 per year.
Fonds RRSP contribution |
Amount saved per year |
Example: $1,000 |
RRSP deductions based on taxable income of $41,545 to $78,1201 |
$384 |
Additional labour-sponsored fund tax credits: 30% for Fonds de solidarité FTQ |
$300 |
Net cost to shareholder |
$316 per year or $6.08 per week |
An RRSP that pays off
Factoring in the additional 30% in tax credits, a Fonds shareholder who invests the same amount each year by way of payroll deduction would have earned a compound annual return of 10.5%2 over 7 years and 7.9%2 over 10 years.
Comparing the Fonds’ return with that of market indices is made difficult by the fact that under its mission, the Fonds must invest a substantial portion of its portfolio in private equity and specialized funds in Québec. This requirement limits its return potential in a bull market, as was the case these last six months, but by the same token, limits its losses in a bear market. As such, including the effect of the tax credits over 10 years, the shareholder return is greater than the 4.1% average return generated by Canadian balanced mutual funds.3
Financial highlights
|
As at November 30,2010 |
As at November 30, 2009 |
Share value |
$25.03 |
$23.51 |
Net assets |
$7.7 billion |
$7.0 billion |
Six-month net earnings |
$366 million |
$515 million |
Six-month shareholder return |
5.0% |
7.9% |
12-month shareholder return |
6.5% |
10.9% |
As at May 31, 2010, share value was $23.84 and net assets stood at $7.3 billion.
1 The taxable income bracket and tax rate are based on the tax rules in effect on January 1, 2011.
2 As at November 30, 2010; these returns do not factor in the RRSP tax deductions.
3 Canadian neutral balanced funds compiled by globefund.com.
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Information:
Source: Josée Lagacé
Senior Advisor, Press Relations and Communications
Fonds de solidarité FTQ
Telephone: 514 850-4835
Cellular: 514 707-5180
E-mail: jlagace@fondsftq.com