Fondaction announces a return of 22.7% over the last twelve months

Press release

        Fondaction announces a return of 22.7% over the last twelve months
    The Fund is developing its sustainable finance approach without compromising its return.

Highlights of the 2020–2021 fiscal year, ended on May 31, 2021:
    • A net shareholder return of 22.7% for the fiscal year, bringing the share value up to
        $15.45;
    • An increase in net assets of 30.7% to $2.96 billion ($B), compared to $2.26 billion as at
         May 31, 2020;
    •    A total of 10,902 new individuals contributed to the Fund, and the number of
         shareholders reached 182,234;
    •    More than $257 million of new investments in development capital deployed in Quebec
         businesses that contribute to the positive transformation of the economy;
    •    Creation of a team entirely devoted to impact investment.

Montréal, June 23, 2021: Fondaction is announcing that as of today, its share value is set at
$15.45. The Fund produced a shareholder return of 22.7% during the fiscal year beginning on
June 1, 2020, compared to 3.6% for its previous fiscal year. This return does not take into
account the tax credits granted to taxpayers when they purchase Fondaction shares.

This impressive financial performance is due to favourable market conditions and Fondaction’s
investment choices, which are centred on sustainable finance.

“These results demonstrate that taking into consideration the impact that our economic activity
has on society and the environment is the right thing to do to ensure better risk management
and return,” stated Geneviève Morin, President and Chief Executive Officer of Fondaction.

“The expertise we have been developing for over 25 years enables us to create value by
supporting businesses that contribute to the economy’s transformation, making it more
equitable, inclusive, green and productive. The economy has to be transformed. It will be
transformed. Businesses that contribute to this transformation will be in a better position to
prosper.”

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Net assets have increased by 30.7% during the fiscal year, rising to $2.96 billion as at May 31,
2021. The issuance of shares totalled $287.1 million (+1.1%). The systematic savings methods,
payroll deduction and pre-authorized debits, also continued to grow, and are still our
shareholders’ most popular choices.

The redemption of shares, which total $133.9 million, a decrease from $153.6 million, is
considerably lower than the previous year, despite the fact that the health crisis had resulted in
exceptionally high redemption levels. Nearly 11,000 new shareholders joined the Fund. As at
May 31, 2021, Fondaction had 182,234 shareholders (+3.3%), a new record.

High returns in every investment category

While continuing to develop its investment strategy, Fondaction generated an overall result of
$542.4 million, an increase from $456.7 million the previous fiscal year.

Both investment portfolios delivered good returns:

    •   +32.6% for investments in development capital (IDC);
    •   +17.0% for other investments, surpassing comparable portfolio indexes.
The Fund formed a new investment committee within its Board of Directors. Its mandate is to
either authorize or recommend to the Board of Directors, as the case may be, investment
projects according to financial, sustainability and impact criteria. It aims to make choices of
great societal importance to transform our economy in a positive way. (More information here-
Link available in French only)

This year, Fondaction has also become the first institutional investor to create a team entirely
dedicated to impact investment in Quebec. (Read the news release -Link available in French
only)

On the financial markets, Fondaction requires its external investment advisers to integrate the
environmental, social and governance (ESG) factors into their investment processes. Fondaction
applies sustainable development principles to its portfolio in several ways. For example, it
invests in green bonds and fossil-fuel-free stocks and deploys efforts to reduce its carbon
footprint.

The conviction that the economy must change

Fondaction is currently realizing its best financial performance in the past 25 years while it
reviewed its strategic planning this year, consulting all of its stakeholders in the process.

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Fondaction is aiming for the positive transformation of society, taking action to make Quebec’s
economy more equitable, inclusive, green and productive. Fondaction is mobilizing tens of
thousands of savers and hundreds of companies committed to helping Quebec progress.

“Our role in finance is to anticipate changes and trends. At Fondaction, what we see as the main
trend in the coming years, what underlies our investment strategy, is the conviction that the
economy will have no choice but to change to be able to meet the growing population’s needs
while respecting the planet’s limits,” said Geneviève Morin.

Fuelling the sustainable growth of Quebec companies

Stepping up to the plate to support Quebec businesses in their sustainable growth projects,
even with the economic situation caused by the COVID-19 pandemic, Fondaction deployed this
year more than $257 million of new investments in development capital, venture capital,
mezzanine debt and in real estate. At the heart of Fondaction’s mission, investments in
development capital including the commitments reached $1.94 billion as at May 31, 2021.

The following are some of the companies that were added to Fondaction’s transformative
portfolio this year:
    • Société Laurentide (paint manufacturer recognized as the world leader in the recycling
        and repurposing of paint; from Shawinigan);
    • Mabarex (decentralized wastewater treatment; from Montréal);
    • Maple 3 (maple product development; from Québec);
    • Dion Herbs & Spices (herbs and spices, non-irradiated products with no MSG, many of
        which are organic, contributing to healthy eating; largest distributor in Quebec, with more
        than 1,000 retailers in Canada and in the US; from Saint-Jérôme.);
    • Logibec and Medfar (two businesses offering technological solutions to promote the
        digital transformation in the healthcare sector, including the public sector; both from
        Montréal).
Fondaction also continued to innovate by creating several structuring investment vehicles,
bringing together the best partners:

    •   Fonds économie circulaire: launched in partnership with RECYC-QUÉBEC and Ville de
        Montréal, this fund is the first of its kind in Canada and aims to accelerate the ecological
        transition in our agri-food, recycling, construction and resource development sectors (Click
        on this link for more information.- Link available in French only);
    •   SOFIAC: developed and implemented with Econoler and the support of the Ministère de
        l’Énergie et des Ressources naturelles, the Société de financement et d’accompagnement
        en performance énergétique helps Quebec businesses achieve and accelerate their
        structuring energy efficiency projects (Click on this link for more information.- Link
        available in French only);
    •   FCAP: developed with the Confédération québécoise des coopératives d’habitation
        (CQCH), le Fonds Coop Accès Proprio makes home ownership easier for moderate income

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families, thanks to an innovative cooperative business model; following its pilot project
        near Sherbrooke, the Fund deployed a project this year in Waterville, also in the Eastern
        Townships (Click on this link for more information.- Link available in French only).

(Discover Fondaction's investment portfolio)

Tax credits now totalling 30%

Since June 1, 2021, the tax credits granted to Fondaction shareholders total 30%. On March 25,
2021, the Quebec government’s budget confirmed that the tax credit rate would be 15% as of
June 1, 2021. Furthermore, the annual limit to the issuance of Fondaction shares has not been
renewed. Fondaction will therefore be able to independently manage its issuance level. A
growing number of Quebecers will be able to participate in a more sustainable economy and
have access to an accessible and effective savings vehicle, with tax credits of 30% in addition to
the normal RRSP deduction.

Fondaction ceased to accept lump sum contributions as of January 14, 2021, to respect the
annual limit imposed by the Quebec government on the capital that the Fund may raise. This
savings method became available once again on June 1, 2021. The systematic savings methods,
i.e., payroll deductions and pre-authorized debits, remain available and are encouraged.
Contribution methods are described online on our website at fondaction.com. (Link available in
French only)

By taking into account the tax credits applied at different periods and without considering the
advantage that the RRSP deduction could procure, a shareholder that purchases shares regularly
by systematic savings, deducted every two weeks and at the beginning of the period, will have
generated the equivalent of an annual compound return of 15.9% over ten years as at May 31,
2021.

Without taking into account the tax credits, Fondaction’s compound shareholder returns are at
a rate of 22.7% for one year, 9.3% for three years, 8.2% for five years and 4.9% for ten years,
calculated based on the variation of the share value between its value at the start of each
indicated period and the value of $15.45 as at May 31, 2021.

Each indicated rate of return is the historical annual compounded total return including changes
in share value and reinvestment of all dividends, as applicable, and does not take into account
income taxes payable by any security holder that would have reduced the return. The rate of
return serves only to illustrate the effects of the historic growth rate and is not intended to
reflect any future share values or the return on an investment in the shares. There are ongoing
fees and expenses associated with owning investment fund securities. Fondaction’s shares are
not guaranteed. The value and performance of this investment fluctuate; past performance is
not an indicator of future results. Before investing, please consult the prospectus at
fondaction.com/prospectus.

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Media contact:
Julie Cailliau
Director, Communications and Marketing
Cell phone: 514 462-5512
Email: julie.cailliau@fondaction.com

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