2008AnnualGlobalReport

FORESIGHT

COMPETENCE

TRANSPARENCY

Rapport annuel et global 2008

FORESIGHT

COMPETENCE

TRANSPARENCY

2

2008 Highlights

BÂTIRENTE KEEPS ITS COURSE THROUGH THE STORMDespite the severe upheavals inflicted

on financial markets in 2008, every

Bâtirente diversified fund outper-

formed its benchmark portfolio. These

results show that the active manage-

ment applied by our managers helped

to limit significantly the decline in

value of Bâtirente members’ portfolios.

Bâtirente Diversified Funds’2008 Performancein %

n Patrimonial Fundn Provident Fundn Intrepid Fundn Canadian Equity Multi Fundn Global Equity Fundn Bond Fundn Benchmark Portfolio

-22.0

-15.8-16.7

-12.3

-9.2

-7.0

3.74.6

2.7

6.06.15.35.8

4.34.7

Bâtirente Funds’Ten-Year Performance as at December 31, 2008, in %

Note: Past returns are not an indication of returns to be expected in the future.Created in 2006, the Patrimonial Fund does not appear on this chart.

-2.1

3

Total Assetsunder Managementin millions of dollars

2004 2005 2006 2007 2008

CashInflow:An UpwardTrend

Contributions to theBâtirente retirement systemhave been increasing overthe past few years. Thistrend is due in large part tothe increased contributionlevels negotiated by unionsand to the arrival of newgroups. Regular contribu-tions reached 35.2 milliondollars in 2008.

Average Fee Rate in %

Bâtirente funds’ management fee rate compares veryfavourably to that of retail investment funds. In addition, 1.1 million dollar discounts further reduced these fees in 2008. After moving from 1.60 percent to 1.49 percent between 2003 and 2008, our average fee rate increased to 1.55 percent in 2009 pursuant to the decline in asset value. Nonetheless, 40 percent of our members are still enjoyingfee discounts this year.

2003 2004 2005 2006 2007 2008 20091.60 1.56 1.57 1.50 1.51 1.49 1.55

AssetDistributionbetweenInvestmentOptions

Members of the Bâtirente retirement system allocate72 percent of their assets to diversified funds. The vast majority of themchoose the Provident Fundwhile the less volatile Patrimonial Fund barely re-ceives 1 percent of assets.

Provident:86.2%

Intrepid:12.8%

Patrimonial:1.0%

561.1659.4

740.0803.0

744.2

200423,730

200524,330

200625,240

200724,930

200825,700

Membership: Steady Growth

BâtirenteRetirementSystemAssetBreakdown in millions of dollars

CapitalAccumulationPlans:242.9

AuxiliaryPlans:12.8

RetirementBenefit Plans:8.5

Table of Contents

Statement of The Chair of the Board 5Bâtirente’s Profile 8Statement of The General Co-ordinator 16Financial Review 21Extrafinancial Risks Management 26Corporate Social and Environmental Performance 31GRI Index 35Board of Directors 40

Implementation of The Six Principles for Responsible Investment

Bâtirente was oneof the first signatories to the Principlesfor Responsible Investment (PRI), an ini-tiative launched under the aegis of theUnited Nations.

To preserve the credibility of the initia-tive, the PRI request signatories to submittheir implementation of the six principlescovered by the declaration to yearly assessments. This performance reportinghelps to assess the global performance of signatories and to measure theirprogress.

In 2008, Bâtirente led the pack, with afirst quartile placement, for its implemen-tation of five out of six principles.

This PRI table of contents will help youto browse the report and see how Bâtirenteapplies each of these principles.

1. We will consider environmental, socialand governance (ESG) issues in our investment analysis and decision-making processes. 13, 26-29

2. We will be active investors and we willconsider ESG issues in our share-holder policies and practices. 13, 26-29

3. We will require the entities in whichwe invest to publish appropriate information on ESG issues. 26-29

4. We will promote the acceptance andapplication of the Principles with asset managers. 34

5. We will work together to increase our efficiency in applying the Principles. 27, 29

6. We will individually report on our activities and on our progress in applying the Principles. 4

4

We are going through an un-precedented global financial crisiswhose consequences on the real economy have not yet com-pletely come to light.

In this context, and althoughnegative yields are nothing torejoice about, we find solace inthe fact that our diversified funds,in which our members invest the larger part of their portfolios,far outperformed their markets.Indeed, the returns of Bâtirente’sdiversified funds beat those ofmost equivalent funds availableto retirement plans, and were byfar superior to their benchmarkportfolios.

This being said, we need toexamine the causes of the sys-temic financial dislocation lyingat the source of the economiccrisis that is crushing so manyworkers, as well as savers.

Fuelled by the weakness ofinterest rates and the relaxationof credit requirements, theAmerican real estate crisis wasthe trigger of a chain reactionthat went through the global financial system before propa-gating itself to the worldwideeconomy.

Like a dog chasing its tail, theincrease in the price of residen-tial properties, maintained bybuyer demand and credit access,helped to support consumptionand economic growth throughindebtedness, thus creating anillusion of wealth.

Taking advantage of this godsend, lending financial insti-tutions were progressively elud-ing the risks resulting from this relaxation in credit conditions.Bankers and their intermediarieswere paid to market loans, andthen to resell them to other mar-ket participants in the form ofgenerally not very transparentbundles. Along this chain, theywere making gains, but it wasother investors that were beingexposed to risks.

These products still entailedgenuine payment default risks.“Credit enhancers” then joinedin to underwrite these risks andin turn, concocted credit insur-ance products on which theypocketed their share of premi-ums, commissions and bonuses.

This model, developed in theabode of Uncle Sam, was adoptedby many non-American institu-tions. And for a very good reason:risk-free enrichment unfailinglybreeds avidity.

5

Statement of The Chair

of The Board

Pierre Patry, Chair of the Board of Directors of Bâtirente

Meanwhile, regulatory authoritieswere applauding the triumph of liberalism, confident that theywere proving that less marketsupervision leads to greaterwealth. For them, trickling downrisks among very large numbersof asset holders guaranteed the system’s capacity to absorbfinancial shocks. There was noneed to look any further.

Other behaviours came withthis destructive trend: opacity of financial structures; financialproduct manufacturers’, inter-mediaries’ and credit agencies’conflicts of interest; executivecompensation formulas based onshort-term results; speculativestrategies of participants exemptof any transparency; and regula-tor abdication.

Although all of us, pensionplan sponsors and administrators,members and savers, contributedto erecting this fragile pyramid,there is no reason, in our opinion,to assume any responsibilitywhatsoever for this failure inwhich we are cast more in therole of victim than in that of tormentor. Indeed, our pensionplans have a duty to grow theassets entrusted to them, andthe only way they can do this isthrough financial markets.

We must, however, take heedof this unprecedented crisis andcontinue to work to implement a framework that will allow usever better to look after ourmembers’ financial interests. Webelieve that we must devote ourefforts to those stakes over whichwe have a direct hold.

Working onEmployer Contribution Levels

Reaching high returns cannotsingly suffice to compensate forthe weakness of contributionsmade to retirement plans. Manylabour unions have not yet man-aged to negotiate employer con-tributions that are high enoughto reach long-term accumulationsthat, given reasonable and real-istic returns, provide for a decentretirement income.

Defined contribution pen-sion plans place the totality of financial risks on workers. Whileemployers are increasingly elim-inating defined benefit plans so as to back out of their obliga-tion to finance deficits, we mustat least gain sufficient levels for their defined contributions.

On the occasion of the up-coming collective agreement renewals, our unions should, depending on circumstances,seek to increase employer con-tributions. They could serve torecoup the major setbacks re-cently incurred by participantsand to improve the long-term viability of their accumulationcapacity.

Working onRetention

Once again this year, the GeneralCo-ordinator’s statement reportsunbridled growth in the cashwithdrawals requested by ourmembers. It clearly appears thatwe are not escaping the reflexesof improvidence typical of ourconsumer society. The retirementplan withdrawal phenomenon is neither new nor unique toBâtirente. These are behavioursobserved by other plan sponsorsand well documented by Statis-tics Canada.

Unfortunately, in addition tomortgaging their financial secu-rity and incurring fees and taxpenalties, members who makefrequent withdrawals weakentheir union’s position when thetime comes to request employercontribution increases. Further-more, group assets accrue moreslowly and as a consequence, thegroup’s ability to obtain reducedmanagement fees is handicapped.

Working on Management Fees

Management fee levels representone of the main long-term re-turn determinants. A reductionin management fees of half apercentage point allows for anequal increase in the return obtained and thus, maximizesthe chances of reaching accruedretirement capital goals. Thisrepresents assured, risk-free, returns.

We can collectively work onthis issue. The many groups that proceeded over the pastfew years to convert their groupRRSPs into simplified pensionplans (SIPPs) can vouch for this. In the vast majority of cases,this conversion allows for in-creases in employer contributions

through cost recuperations related to payroll taxes which, in group RRSPs, indirectly affectemployer contributions.

Retaining our retired mem-bers is another way that we canwork on asset growth and man-agement fee reduction. In fact,when members retire, they mayremain within the Bâtirente retirement system to draw theirRRIF or LIF income. Unfortu-nately, not enough retired mem-bers are taking advantage of thisvaluable benefit at this point.

Our situation is paradoxical:we are letting our retired mem-bers leave, those that are holdingthe largest sums because of theiraccrued service, and replacingthem with new salaried employ-ees who have not yet accumu-lated any assets. Bâtirente hasdeveloped products specificallyadapted to retired individualswith a very low risk tolerance.We must work harder at inform-ing our members, before theyretire, of their right and of theirinterest to consider maintain-ing their Bâtirente membershipat the onset of their disburse-ment phase.

6

Working onExtrafinancial Risks

The chapter of this annual globalreport covering extrafinancialrisks shows the extent to whichBâtirente has become a leaderof socially responsible finance.We believe that if we pursue ourefforts with others, we will leadincreasing numbers of financeparticipants on this route andthat our cumulative impact willcontribute to rehabilitate finan-cial markets.

To see a sustainable economicdevelopment emerge and to prevent financial markets fromtaking back with one hand whatthey give away with the other, it is imperative that we makesure that the companies to whomwe entrust our capital managesocial, environmental and gov-ernance issues efficiently. Webelieve that the interest of ourmembers in growing their savingswithout sacrificing returns must involve neither the devalu-ation nor the depletion of ourcommunities’ social and environ-mental capital.

Size Brings: The Capacity forBetter Service

We will strive, to the best of ourability, for stricter regulations to be implemented to correctthe severe deficiencies of the financial system. This beingsaid, these regulations will notdispense us from continuing ourclose monitoring of the evolutionof increasingly sophisticatedmarkets.

In the area of finance and re-tirement, the means to do betternecessarily come with size. Ourcapacity to act will be strength-ened by the growth of our assets.Through growth, we will be ableto further improve diversifica-tion, risk management and long-term returns. The giant stepsthat we have taken over the lastfew years and our recent resultsprove it. We must take stock of this reality and mobilize our-selves to increase our assets and,as a consequence, our capacityto serve our members better.

To conclude, I wish to salutethe arrival of Louise Charette as a member of our InvestmentCommittee (see opposite). I alsowish to thank every labour unionand every member participat-ing in the Bâtirente retirementsystem for the trust they placein us year after year. This trustrepresents an ever-present en-couragement for our team andour Board of Directors to main-tain their unflagging efforts.

Pierre Patry

7

Governance

Appointment of Louise Charette

to The Investment Committee

In February 2009, the Board of Directors of Bâtirente appointedLouise Charette as an external member of the InvestmentCommittee. An Economist by training, Ms. Charette is an experienced pension fund manager. This appointment furtherconsolidates the governance and risk management ofBâtirente funds.

Fund Offer Improvement

The year 2008 gave rise to the conclusion of the biennal review of the diversified funds investment policy. In the wakeof this review, it was decided to rationalize the fund offer. It is indeed demonstrated that most members tend to remaininactive when faced with an overabundance of investment options. For this reason, the Canadian Equity LODH and MBIFunds were removed from the fund offer, while the most diversified of them, the Canadian Equity Multi Fund, continuesto be offered to members who wish to count directly on thisasset category.

Bâtirente also ended the asset allocation managementmandate, preferring to allocate its resources to diversifying its asset categories and managers. Actually, on April 1, 2008, a new North-American Small-Cap Equity category was intro-duced in the portfolio of each diversified fund. The North-American Small-Cap Equity Fund is also available to allmembers. Nonetheless, Bâtirente recommends that memberswho choose to personalize their portfolio allocation limit theweight they would apportion to the North-American Small-CapEquity Fund to a maximum of 15 percent.

Bâtirente pension plan

members agreed to offer

us their best smile on

the occasion of our Web

site redesign. In order,

we find members of

the CSN labour unions

representing the em-

ployees of the Loews

Hôtel Québec, Station-

nement Québec, the

Pavillon Saint-Joseph,

ABB, Bacon Inter-America

and Emballage Mitchel-

Lincoln. We wish to

thank all of them.

8

Created pursuant to the 1984 CSN Conven-tion, the Comité Bâtirente’s first goal was toestablish a group RRSP for CSN members.Twenty-five years later, Bâtirente offers mem-bers of labour unions affiliated to the CSN a complete retirement system integrating accumulation plans and retirement incomeplans. These plans benefit from a state-of-the-art investment programme comprisingnine investment funds, three of which are diversified.

Bâtirente is mandated by the CSN to develop and promote a quality retirementsavings service offer and to ensure that its chosen partners administer it soundly.Bâtirente has been registered with the Auto-rité des marchés financiers as a financialservice firm since 2003, when it elected totake over the distribution of its products and services that had thus far been impartedto an insurance company.

Bâtirente is a non-profit corporation incorporated under Chapter III of the QuébecCompanies Act. As such, it is inalienable.However, its regulations and its by-laws stip-ulate that upon dissolution or liquidation,any assets remaining after debts and otherobligations have been paid must revert tothe Confédération des syndicats nationaux.

9

Bâtirente’sProfile

10

CAPITAL

ACCUMULATION

PLANS

AUXILIARY

CAPITAL

ACCUMULATION

PLANS

RETIREMENT

BENEFIT

PLANS

GROUP

MEMBERSHIP*

GROUP

RRSP

GROUP

RRSP

LOCKED-IN

RETIREMENT ACCOUNT

(LIRA)

REGISTERED RETIREMENT

INCOME FUND

(RRIF)

SIMPLIFIED

PENSION PLAN

(SIPP)

LOCKED-IN

RRSP

LIFE

INCOME FUND

(LIF)

SIMPLIFIED

PENSION PLAN

(FEDERAL SPP)

TAX-FREE

SAVINGS ACCOUNT

(TFSA)

NON-REGISTERED

SAVINGS

DEFERRED

PROFIT-SHARING PLAN

(DPSP)

CO-OPERATIVE

RRSP

* Plans are group

membership plans

when employee and

employer contributions

are established by

collective agreement.

Nonetheless, all CSN

members and their

spouses may partici-

pate in individual

membership plans.

INDIVIDUAL

MEMBERSHIP*

BÂTIRENTE RETIREMENT PLANSProducts and Services

Bâtirente retirement plans areusually implemented upon thesigning of collective agreementsthat establish capital accumu-lation plans featuring employerand employee contributions.Concerned labour unions thengive mandates to the ComitéBâtirente to establish one ormore retirement plans and toprovide other related services.

Upon retirement, memberswho are participating in Bâtirenteaccumulation plans may decideto continue enjoying the benefitsof this group retirement system.They then transfer their capitalto registered retirement incomefunds (RRIFs) or to life incomefunds (LIFs), from which theirretirement benefits will be drawn.

Even if their labour unionshave not established group mem-bership plans in their workplaces,members of the CSN and theirspouses may still voluntarily andindividually enroll in Bâtirente’sretirement benefit plans andauxiliary accumulation plans.

Institutional Accounts

Various organizations such asFondaction, le fonds de déve-loppement de la CSN pour lacoopération et l’emploi, SSQ’sAstra Funds and pension plansoffered by other promoters areinvesting assets in Bâtirentefunds. In addition, Bâtirente alsosigns agreements with associa-tive organizations wishing tobenefit from the retirement system that it established. Forinstance, various organizationsinvolved with developing work-ers’ co-operatives have alreadyconcluded such agreements.

11

BÂTIRENTE INVESTMENT SYSTEM

BÂTIRENTE GLOBALEQUITYFUND

BÂTIRENTE CANADIAN

EQUITYMULTIFUND

BÂTIRENTE NORTH-

AMERICANSMALL-CAP

EQUITYFUND

BÂTIRENTE

DIVERSIFIED PROVIDENTFUND

BÂTIRENTE

DIVERSIFIED INTREPIDFUND

Bâtirente funds available to individuals and institutions

Bâtirente funds available to institutions only

Undistributed funds

BÂTIRENTE

DIVERSIFIED PATRIMONIALFUND

BÂTIRENTE CANADIAN

EQUITYMBI

FUND

BÂTIRENTEMONEYMARKET

FUND

BÂTIRENTEBONDFUND

BÂTIRENTETREASURY

FUND

GUARANTEEDINTEREST

ACCOUNTS

US, EUROPEAND PACIFIC

EQUITY

GLOBALREAL ESTATE

FUND

COMMODITIESFUND

BÂTIRENTE CANADIAN

EQUITYLODHFUND

PORTFOLIO MANAGERS

Addenda Capital

Lombard Odier

Montrusco Bolton Investments

Van Berkom and Associates

Hexavest Asset Management

Presima

CIBC Asset Management

SSQ Financial Group

Composition of The Board of Directors

Member group representativeselect six out of the eleven mem-bers of the Board of Directors on the occasion of a triennialmeeting held during the regularconvention of the Confédérationdes syndicats nationaux.

The Confédération des syn-dicats nationaux appoints theremaining five directors. TheTreasurer of the CSN has gen-erally been one of the five

appointed individuals and, tra-ditionally, has been assumingthe chairmanship of the Boardof Directors.

To ensure continuity in rep-resentation, these mandates are renewed alternately everythree years.

The officers of the Board of Directors are as follows: the Chair, the Vice-Chair, theSecretary and the General Co-ordinator, who also assumes thefunction of Treasurer and whohas no voting right.

Origin of Directors

The six members of the ComitéBâtirente representing mem-ber groups are Jean-ClaudeBoucher, Order Picker withMetro-Richelieu; Réjean Gouin,Labourer with Olymel; Jean-PaulThibault, retired General Dy-namics Operator; Serge Fournier,Treasurer of the Fédération ducommerce CSN; Patrick Jean,De-inking Operator with Cas-cades Groupe Tissu; and AlainLampron, President of theFédération de la métallurgieCSN. They have on average an experience of twenty years as active union members and a dozen years in charge of theirlocal retirement plans. Theytake turns attending variousseminars and training sessionson retirement plans and on investment.

The five members of theBoard appointed by the CSN arePierre Patry, Treasurer of theCSN; Léopold Beaulieu, Presidentand Chief Executive Officer ofFondaction; Nathalie Joncas,Actuary with the Labour Rela-tions Department of the CSN;Marcel Pepin, Assistant to theExecutive Committee of theCSN; and Andrée De Serres,Lawyer and Tenured Professorat the Université du Québec à Montréal (UQAM) École dessciences de la gestion.

The 2008 average Boardmeeting attendance rate for di-rectors was 80 percent.

12

Above, CSN President

Claudette Carbonneau

in the company of Pierre

Patry, Daniel Simard

and Marcel Pepin, respec-

tively Bâtirente’s Chair

of the Board, General Co-

ordinator and Secretary

of the Board, during the

corporation’s triennial

meeting held in Québec

City in May 2008.

Opposite, the structure

of the corporation.

TRIENNIAL MEETING OF MEMBER UNION

AND GROUP REPRESENTATIVES

(6 members)

EXECUTIVE COMMITTEE OF THE CONFÉDÉRATION

DES SYNDICATS NATIONAUX (5 members)

GENERAL MEETING OF THE CORPORATION

BOARD OF DIRECTORS

OF THE CORPORATION

(11 members)

EXTRAFINANCIALRISKS

MANAGEMENTCOMMITTEE

INVESTMENT COMMITTEE

MEMBER SERVICES

COMMITTEE

AUDIT COMMITTEE

Composition and Roleof Committees

Bâtirente strives to practicewhat it preaches when it comesto sound governance. It endeav-oured to reform its manage-ment processes in 2006, and wasthus prompted to establish, inaddition to its Investment Com-mittee, three new committeesthat broaden the Board members’participation and allow Bâti renteto take advantage of the contri-bution of external experts.

The Investment Committee is now composed of three mem-bers appointed among BâtirenteBoard members, one of which at least must be a group repre-sentative, of two members ap-pointed by the Board of Directorsof Fondaction and of one or twoexternal members called uponto sit as independent experts.The mandate of the Committeeis to complete works, studiesand analyses on the investmentpolicies of the funds and to carryout any other investment-relatedmandate the Board of Directorsof Bâtirente may wish to give it.

For its part, the Audit Com-mittee is composed of threemembers appointed amongBâtirente Board members, oneof which at least must be a grouprepresentative, and of one ortwo external members with accounting or financial manage-ment expertise and knowledgeof the regulatory requirementsapplicable to Bâtirente. Themandate of the Committee is toassure the Board of Directors of the efficacious, efficient andeconomical conduct of business,of the adequacy and efficiencyof the controls implemented bymanagement and of a presenta-tion of financial information thatfaithfully reflects activities andoperating results.

The Member Services Committeeis composed of three membersappointed among BâtirenteBoard members, two of which at least must be group repre-sentatives. The mandate of theCommittee is to assure the Boardof Directors of the relevance and the quality of the servicesoffered and of the adequacy andthe appropriateness of informa-tion, to review the fee and servicepolicy, to conduct studies onmember needs, to support thedevelopment of training policiesfor group agents and to reviewthe main contracts.

Finally, the ExtrafinancialRisks Management Committee iscomposed of three members ap-pointed among Bâtirente Boardmembers, one of which at leastmust be a group representative,and of one or two external mem-bers with expertise in one of the following areas: economics,human rights, labour relations,environment, corporate gover-nance, international law. Themandate of this Committee is to assure the Board of Directors of the updating of the Lignes

directrices sur la gestion des

risques extrafinanciers, tomonitor the conformity of theexercise of voting rights, toassess ESG performance in in-vestment activities and to checkthe quality of Bâtirente’s per-formance reporting.

Convergence of Interests

The fact that the members ofthe Bâtirente Board of Directorsand of other committees hold individual savings in Bâtirentefunds represents a proof thattheir personal interest convergeswith the interest of the mem-bers who entrust their assets toBâtirente.

In this regard, of the twelvemembers of the Board of Direc-tors and the five members of external committees, eleven areholding close to $600,000’sworth in Bâtirente fund units orin guaranteed interest accounts.The average value of their hold-ings reaches $35,400 per direc-tor, which is above the averagesavings account of members. Thevalue of the savings accumu-lated by the directors is entirelymade up of their own contribu-tions and Bâtirente is making nocontributions to their retirementor savings plans.

Above, a Member

Services Committee

meeting. From left

to right: Michèle Fre-

nette, Réjean Gouin,

Daniel Simard, Patrick

Jean, Nathalie Joncas

and Pierre Patry.

External Member

Compensation

In order to attract experiencedexperts, Bâtirente adopted acompensation policy for externalmembers of the Board of Direc-tors and of committees. However,Board members who are grouprepresentatives elected at thetriennial meeting or who are officers or employees of the CSNor of its collective tools are ex-cluded from this policy.

13

14

The BâtirenteTeam

The Bâtirente team comprisesseven salaried employees and anumber of contract professionals.The team is responsible for: general administration, recruit-ment, distribution and groupservices; internal and externalcommunication activities; devel-opment, monitoring and reviewof investment policies and pre-vention of extrafinancial risks.

The team, in the usual

order: François Meloche,

Extrafinancial Risks

Manager (replacing

Laëtitia Tankwe); Mari-

lyne Champagne, Office

Agent; Martin Blais,

Group-Annuity Advisor;

Guylaine Proulx, Com-

munications Manager,

Daniel Simard, General

Co-ordinator; Marie-

Diane Deslauriers, As-

sistant Co-ordinator –

Institutional Markets;

and Danick Lessard,

Group-Annuity Advisor.

Capital and Income

As a non-profit corporation,Bâtirente does not have a sharecapital structure. In addition to its intangible assets (custom,trademark and other goodwill),its owner’s equity stems fromaccrued operational surpluses.

The larger part of Bâtirente’sincome is generated by the management fees collected byBâtirente funds. These manage-ment fees are established ac-cording to internal policies or toagreements signed with membergroups or institutions.

With its standard 1.95 percentbefore-tax management fee,Bâtirente advantageously sus-tains comparison with similar

funds that financial institutionsoffer in the retail sector. Bâti-rente’s policy provides for man-agement fee reductions in theform of refunds based on groupasset size. This is why approxi-mately half of the groups enjoyreduced fee rates that may beless than 1 percent in some cases.

This income helps Bâtirenteto support the activities requiredto ensure the sound manage-ment of its retirement plans andinvestment funds. One third ofrevenues are allocated to themanagement of funds. The sameproportion covers expenses related to communications andgroup services. Account admin-istration, and governance andgeneral administration, respec-tively represent 23 percent and5 percent of the budget.

FUNDS FLOW

CYCLE

Outsourced Activitiesand Partners

Operations required by assetmanagement are delegated toprofessional portfolio managersand to recognized financial insti-tutions, namely SSQ FinancialGroup and Desjardins Trust.

Seven portfolio managementfirms are each responsible formanaging a portion of Bâtirentefunds’ assets. These firms areAddenda Capital, HexavestAsset Management, LombardOdier, Montrusco Bolton Invest-ments, Presima, CIBC AssetManagement, as well as VanBerkom and Associates. Pleasenote that the managementteams of all those firms, as wellas all of their head offices butone, are located in Montréal.

Bâtirente entrusts SSQ FinancialGroup, a Québec insurance com-pany rooted in a long tradition ofmutualism, with a set of strategicresponsibilities including: • Administering member, groupand employer accounts and financial activities;• Keeping records and produc-ing statements; • Maintaining a member serv-ices department accessible byphone and the Internet;• Accounting and assessingdaily unit values for Bâtirentefunds;• Regulatory and fiscal authori-ties relations.

The insurer is also responsiblefor opening accounts with guar-anteed capital and interest uponmember request. Finally, as de positary of Bâtirente Funds,Desjardins Trust has the cus-tody of the securities held bythe funds.

National and International Association Memberships

• Canadian Pension and Bene-fits Institute (CPBI)• International Foundation for Employee Benefits Plan(IFEBP)• Question Retraite• Chambre de la sécurité financière• Social Investment Organiza-tion (SIO)• Committee on Workers’ Capital (CWC), delegated bythe CSN• Mouvement pour l’éducationet la défense des actionnaires(MÉDAC)• Principles for ResponsibleInvestment (PRI)

Our Group-Annuity Advisorsand our General Co-ordinatorare members of the Chambrede la sécurité financière. Theyare subject to its code of ethics.

15

DESJARDINS TRUST

PORTFOLIO MANAGERS

SSQ FINANCIAL GROUP

Under the responsibility of:

Transfer of liquiditiesto Bâtirente’s accountwith Desjardins Trust

or with the external fund’sasset custodian

Purchase/saleof securities on markets

and paymentorders to the asset

custodian

Execution of orders,cashing of revenue,

transmission of requireddocuments and production

of accounting reports

Reportingof transactions,

establishment of unitvalue, calculation

of distributions, collectionof fees and payment

of refunds

Registrationof new securities

in accounts, productionof reports to unitholders

and of financialstatements

Receptionand cashing of employee

and employercontributions

Executionof purchases/redemptions

in member accountsand allocation

of liquidities to funds

Assets under Management

Afters years of sustained growth,total assets under managementcontracted in 2008. This stepback was mainly due to the se-vere correction of financial mar-kets in the second half of 2008.Total assets under management,including guaranteed interestaccounts and Co-op RRSPs,ended the year at $744.2 million,for a 7 percent decrease com-pared to the end of 2007.

Because of their higher ex-posure to securities markets,the assets of retirement plansshowed a sharper decline (-11percent) than those of institu-tional accounts (-5 percent).With investments more concen-trated in the bond market, thelatter were less affected by the correction. Moreover, someretirement plan assets werewithdrawn following the closureof three major groups.

The assets of the retirementsystem, including capital accu-mulation plans, auxiliary plansand retirement benefit plans,closed the year at $264.2 million,thus representing 35.5 percentof total assets. With investmentsvalued at $480.0 million, our as-sociated institutions accountedfor 64.5 percent of total assets.

Retirement System

Asset Allocation

The assets of our capital accu-mulation plans ($242.9 million)moved back to their mid-2006level, while the value of retire-ment benefit plans ($8.5 million)fell back to its early 2007 level.For their part, moving from$11.5 million to $12.8 million,the assets of auxiliary plansshowed progress, partly due tothe Co-op RRSP increase.

With 74.2 percent of assets,group RRSPs still represent themost important capital accumu-lation plans. Simplified pensionplans (SIPPs) continued theirprogression, moving from 22.0percent to 25.3 percent.

Statement of The General

Co-ordinator

2004 2005 2006 2007 2008

TOTAL ASSETS UNDER

MANAGEMENT

in millions of dollars

561.1

659.4740.0

803.0744.2

Daniel Simard, General Co-ordinator of Bâtirente

BâtirenteRetirement SystemMembership

Thanks to the efforts made byour labour partners to implementnew plans, membership grew by 3 percent in 2008. At the endof the year, there were 25,700unionized individuals affiliatedto the CSN participating to oneor more Bâtirente plans. Thismembership increase bodes wellfor the future development ofour retirement system.

Among the nine groups joiningBâtirente, we find the Syndicatdes Opérateurs de BétonnièreMontréal–Rive-Nord (groupRRSP) and the Syndicat nationaldes travailleurs d’Inter-Cité Construction (SIPP), both be-longing to the Fédération de la métallurgie.

Within the Fédération desservices publics, group RRSPswere established for the Syndicatdes travailleuses et travailleursde Philip Environnement andthe Syndicat national destravail leuses et travailleurs dePompage Claubert. The Syndicatdes travailleuses et travailleursd’Intégration-Travail Laurentides,belonging to the Fédération des professionnèles, also optedfor a Bâtirente group RRSP.

From the Fédération du commerce, the Syndicat des travailleuses et travailleurs desAliments Vermont and the Syn -dicat des travailleurs du Manoirdu Lac Delage also chose a simplified pension plan (SIPP).

The Syndicat national destravailleurs des pâtes et papierKenogami asked Bâtirente to establish a group RRSP as wellas a registered retirement in-come fund (RRIF). Finally, theCoopérative des travailleursCHNC (Fédération des commu-nications) implemented a co-opRRSP and a group RRSP.

Research conducted by Bâtirentein 2007-2008 showed that half of the CSN private sector labourunions that benefited from cap-ital accumulation plans had chosen the Bâtirente retirementsystem. This study, producedwith the co-operation of CSNfederations, also helped to showthat 28 percent of their privatesector labour unions still had noaccess to retirement plans.

Contributions, Withdrawals and Payments

With a rising membership, cashinflow within capital accumula-tion plans and auxiliary plans hasbeen increasing for a few years.This trend was also due to theincreased contribution levels negotiated by unions and to thearrival of new groups.

Unlike year 2006, with its re-markable cash inflow increase,no asset transfer from externalretirement plans was added toregular contributions. Includingretirement benefit plans, regularcontributions to the Bâtirenteretirement system reached$35.2 million in 2008.

For their part, withdrawalsfrom, and payments by, the retirement system increasedmarkedly. An amount of $32.6million was withdrawn from capital accumulation plans andauxiliary plans in 2008 comparedto $22.3 million in 2007. Thissad peak requires consideration.

17

TOTAL ASSETS UNDER

MANAGEMENT BREAKDOWN

in millions of dollars

n Retirement System (35.5%)

n Associated Institutions (64.5%)

264,2

480,0

RETIREMENT SYSTEM

ASSET BREAKDOWN

in millions of dollars

n Capital Accumulation Plans

n Auxiliary Plans

n Retirement Benefit Plans

16%17%

CapitalAccumulation Plans (39%)

Defined BenefitPlans

Hybrid -Unascertained

No Plan

Other

20%

Bâtirente

19% 28%

RETIREMENT PLANS – CSN PRIVATE SECTOR LABOUR UNIONS, 2007

Source: Study conducted by Bâtirente in 2007-2008 in co-operation with CSN federations.

264.2480.0

12.8242.9

8.5

2004 2005 2006 2007 2008

23,730 24,330 25,240 24,930 25,700

MEMBERSHIP

n Capital

n Accumulation Plans

n and Auxiliary Plans

n Retirement Benefit Plans

As mentioned earlier, assetswere withdrawn from the retire-ment system following the clo-sure of three groups. Theseexceptional events, often linkedto unforeseen economic orlabour unknowns, are usuallyendured rather than provoked.Moreover, we see that with-drawals made by members ofpre-retirement age have beenincreasing. Bâtirente’s mem-bership is not escaping an alarm-ing trend observed with allRRSP participants throughoutCanada.

Indeed, according to a Statis-tics Canada study, the number ofindividuals making withdrawalsfrom their registered retirementsavings plans (RRSP) increasedby 84 percent between 1993 and 2001. Over the same period,the number of individuals con-tributing to RRSPs only grew by18.4 percent.

Still according to this study,close to 40 percent of saving individuals drew sums fromtheir RRSPs between 1993 and2001. Even more alarming, halfof savers repeated their with-drawals more than once, andtheir subsequent contributionswere far from replacing the sumswithdrawn.

When RRSPs become nomore and no less than regularsavings accounts, participantsreduce their disposable incomeat retirement, in addition to hav-ing to pay income tax and trans-action fees in the short term.Reducing their capital means

giving up long-term returns ontheir investments and having tosupport higher managementfees, which reduce their returnseven further. To contain thisphenomenon, we will be work-ing harder to raise our mem-bers’ awareness of the negativeeffects of repeated withdrawals.

Management Fees

Bâtirente funds’ managementfees remained below those of retail market mutual funds.Indeed, in all fund categories except for bonds, the level ofour base fee is below the levelcharged by the institutions thatoccupy this market. With diver-sified funds and Canadian equityfunds, our members enjoy truebargains with discounts of closeto 40 basis points (0.4 percent)compared to market medianrates. In the case of the GlobalEquity Fund, this discountreaches 66 basis points, that is25 percent below the medianrate charged by commercial enterprises.

Moreover, refunds allocatedbased on member group assetshelp to further reduce our stan-dard management fees. In 2008,these refunds reached $1.1 mil-lion dollars. After moving from1.60 percent to 1.49 percent between 2003 and 2008, our average after refund fee rate is increasing to 1.55 percent in2009 pursuant to the decline inasset value. Nonetheless, 40 per-cent of our members are still enjoying reduced managementfees in 2009.

18

AVERAGE MANAGEMENT FEE RATE in %

2003 2004 2005 2006 2007 2008 2009

1.60 1.56 1.57 1.50 1.51 1.49 1.55

Member Services

New

Decision-Making Tools

Over the past two years,Bâtirente has developed severaltools to help members makeeven better advised decisionswhen managing their capital accumulation plans. In 2007, we introduced the Quick Test

and the Retirement Calculator. Momentum was maintained in2008 with the publication of the Participant’s Guide. TheGuide presents, in a simple andwell-illustrated design, the main elements to consider when developing a retirement savingstrategy. It is accompanied by the Plannuity calculator.Starting with four pieces of in-formation–planned retirementage, present age, annual salaryand accrued savings–the cal-culator helps to figure out the percentage of one’s salary thatshould be invested in one’s planto get an income representing 70 percent of one’s salary afterretirement.

Copies of the French versionof the Guide and of the calcu-lator were sent to all Bâtirentegroups, and members were invited to contact our MemberServices Department to requesttheir copy.

2004 2005 2006 2007 2008

RETIREMENT SYSTEM

CONTRIBUTIONS

in millions of dollars

RETIREMENT SYSTEM

WITHDRAWALS AND PAYMENTS

in millions of dollars

31.0 30.5

34.832.9 33.1

2.6 2.8 2.3 3.0 2.1

2004 2005 2006 2007 2008

-17.5-19.1

-21.4 -22.3

-32.6

-0.8 -1.3 -2.3 -2.1 -2.0

them. In this regard, we weredelighted to learn that close to half of the members who re-sponded to the survey wereaware of the communiqué onthe financial crisis that we sentto all groups in November of2008. Finally, 90 percent of re-spondents deemed it importantfor Bâtirente to take social and environmental issues intoaccount when choosing andmonitoring investments. More-over, one out of two surveyedmembers indicated that theyknew that Bâtirente is a leaderin responsible investment.

These results confirm thatour orientations meet the needsand the preoccupations of ourmembers. This makes us proudand motivates us to continue de-veloping our retirement system.

Member Investment

Behaviour

The women and the men whoare members of the Bâtirente retirement system allocate 72percent of their assets to diver-sified funds. The ProvidentFund is by far the most popularof them, receiving 86.2 percentof assets granted to diversi-fied funds. Second in rank, the Intrepid Fund counts for 12.8percent of assets. For its part,the Patrimonial Fund, the leastvolatile, is only receiving 1 per-cent of assets.

Pursuant to the steep mar-ket depreciation, the weight ofassets invested in guaranteed interest accounts moved from11 percent in 2007 to 13.2 per-cent in 2008. For its part, theshare of equity funds fell backslightly, moving from 10 percentto 8.4 percent. With 6.4 percentof the retirement system assets,the proportion of fixed-incomesecurities remained stable.

Bâtirente TFSA

On January 1, 2009, Bâtirentemade available to all membersits new tax-free savings account(Bâtirente TSFA), which can receive up to $5,000 per year.Investment income earned withinTFSAs (including capital gain) is not taxable, unlike incomeearned from non-registered in-vestments. TFSAs are particu-larly interesting for individualswishing to accumulate reservefunds or to save for short-termprojects (traveling, renovating,and so on). Individuals who areseeking additional ways to savefor retirement after using uptheir RRSP contribution room,or retired individuals who areable to save their mandatoryRRIF or LIF withdrawals, canalso take advantage of TFSAs.

19

ASSET BREAKDOWN

PER INVESTMENT

OPTION

n Fixed Income (6.4%)

n Equity (8.4%)

n Guaranteed Interest (13.2%)

Diversified Funds:

n Patrimonial (0.7%)

n Provident (62.1%)

n Intrepid (9.2%)

Finally, the revised and ex-panded version of Bâtirente’sWeb site was put on line in early2009. It now provides informa-tion on Bâtirente retirementplans, on how to enroll and howto contribute, for instance, aswell as e-versions of all decision-making tools developed for ourmembers.

Member Satisfaction

In January of each year, we takeadvantage of the six-monthstatement mailing to conduct a member survey. The resultsobtained for the 2009 survey areworth examining.

Year after year, the proportionof respondents stating that theyare satisfied or highly satisfiedconsistently remains above 90percent. In 2008 and 2009, over85 percent of respondents in-dicated they were satisfied orhighly satisfied with the types of funds offered and with theinformation available about them.The comprehension, the quan-tity and the relevance of com-munications were also judgedfavourably by 92 percent of

20

21

RetrospectiveThe year 2008 witnessed a 180-degreeturn in financial and economic scenarios.Looking back to the end of 2007, fore-casting took into account the recessionemerging in the United States, as a conse-quence of the abrupt end of a real estateboom that had put enormous pressure on credit markets. Subprime mortgageshad represented, as early as the previoussummer, the most publicized manifesta-tion of this pressure.

Many analysts were then predictingthat this recession would be limited tothe abode of Uncle Sam. In their opinion,Canada, Europe and Japan would bespared, despite growth levels below theirpotential. Their prognostics also indicatedthat emerging countries, with China firstin line, would take up the slack and pro-vide the global economy with sufficientgrowth to ward off the risk of crisis propa-gation, thanks to their abundant liquidi-ties, infrastructure needs and expandingmiddle classes.

As we know, 2008 unfolded totally differently. The financial crisis spread tothe entire global financial system and, ultimately, to the real economy. The crash

of American colossusLehman Brothers,and the takeover ofinvestment banksMorgan Stanley andMerrill Lynch, alongwith the rescue of insurance giant AIG,showed the scope of the failure of anAmerican financialsystem underminedby unsustainable,short-sighted strate-gies, and by the abdi-

cation of the regulation system as a whole.Globalization oblige, many financial in-stitutions in Great Britain and continentalEurope also got caught in the tangle.

Mistrust crept in, each financial institutiondoubting the other’s solidity, and creditmarkets, the fuel of the economic system,dried up. The drying up of credit led tothe postponement of productive invest-ment projects and to the loss of jobs, theabdication of consumers and businesses,the decline of prices, in short, the trigger-ing of a stall and risk-aversion circle witheconomic participants.

This could do no good for the finan-cial securities in which the assets of ourretirement plans and those of our in-stitutional partners are invested. Equity markets took their worst plunge since the1930’s and interest rates reached histori-cally low levels. So high was uncertaintythat during the last quarter, financial assetprice volatility indexes reached unparal-leled summits. Virtually no one escapedunscathed.

Fearing the worst, the governmentsand monetary authorities of developedcountries and of the biggest emergingeconomies reacted with vigour and con-certation. They injected capital into finan-cial institutions, reduced interest rates,launched public spending programmesand supported floundering businesses, in order to break the fall and to reviveconfidence.

In the early months of 2009, signs thatthe deterioration cycle of economic con-ditions was abating started to appear.Dabblers on the stock market saw themas a portent of continued recovery, soeager were they to propel market indexes.The Canadian market indeed gained over17 percent between January 1 and May 31.Still, by the end of the first half of 2009,rare were the analysts predicting a short-term, sustained return to bull markets.

Financial Review

The financial

crisis then

spread

to the entire

global

financial

system and,

ultimately,

to the real

economy.

Revue financière

Main Strategies for 2008 Bâtirente funds weathered this financialstorm particularly well. Their managersimplemented strategies that helped toadd value to several funds. These fineperformances are indeed reflected in thereturns of Bâtirente’s three diversifiedfunds, all of which outperformed theirbenchmark portfolio.

Among the sources of added value,allow us first to point out the defensivepositioning of managers during the periodof strong market depreciation. The latteroverweighted consumer staple stocks, aless cyclical, and thus more stable, sector.The global equity (Hexavest) and North-American small-cap equity (MontruscoBolton Investment and Van Berkom) managers particularly distinguished them-selves with this strategy.

Currency non-hedging was a value-added factor for asset categories issuedin foreign currencies within diversifiedfunds, namely global equity, North-American small-cap equity, real estateand commodities.

The tactical asset allocation strategywithin diversified funds also turned out to be constructive during the first half of the year. At any rate, this approach wasabandoned in July of 2008, after failingfor eight years to provide convincing results.

Finally, were it not for the weak per-formance of the Bond Fund, the results of Bâtirente funds would have been excellent all along. In the next pages, theperformance of each fund will be pre-sented in detail.

Bond Market In 2008, the Canadian fixed-income securi-ties market was marked by unprecedentedvolatility. During the first quarter, fears related to the subprime mortgage marketpushed the American Federal Reserve to soften its monetary policy significantlyand to intervene in rescuing the BearStearns investment bank, so as to increaseliquidities and boost market confidence.

During the second quarter, inflationistfears took precedence over recession and consumer withdrawal anxieties. Infla-tion, mainly spurred by energy and foodprices, was to rise to 4.2 percent annuallyin the United States and to 2.2 percent in Canada, moving the Bank of Canada toabstain from further interventions on theleading rate after lowering it by a total of1.25 percent with its successive January,March and April interventions.

However, pursuant to the last quarter’scomplete reversal in the economic sce-nario, the Bank proceeded with three newcuts in October and in December. Addedto the earlier cuts, these new reductionstotalizing 1.50 percent meant that theleading rate moved down from 4.25 to 1.5percent over the year. The cuts that tookplace at the end of the year helped bondsto post their best monthly returns.

Added to the crisis of confidence in the financial system, fears related to theeconomy spurred a migration of capitaltowards high-quality liquid securities.Government bonds were widely favouredto the detriment of corporate bonds. Con-sequently, over one year, the corporatebond sector of the DEX Universe indexcleared a 0.2 percent yield, while federalbonds closed the year at 11.5 percent.

22

LEADING MARKET RETURNS FOR 2008 (in %)

n Canadian Bond

n Money Market

n US Equity (Small-Cap)

n US Equity (Large-Cap)

n Commodities

n Global Equity

n Canadian Equity (Large-Cap)

n Global Real Estate

n Canadian Equity (Small-Cap)

3.0

6.4

-33.0

-53,3

-21.2

-25.1

-17.2

-25.9

-34.6

23

Over the year as a whole, the Money Market, Treasury and Bond Funds pro-duced respective performances of 3.4, 3.7 and 3.0 percent. Although positive, thereturns of these funds are below the re-turns of their market indexes. The DEXUniverse bond index closed 2008 with a 6.4 percent return, while the short-termindex ended with 8.6 percent and the DEX 91-day T-Bill index registered a totalreturn of 3.3 percent.

The defensive positioning adopted bythe manager explains this result. Expect-ing a rate increase, the manager hadraised the short-term bond weighting.Unfortunately, on the contrary and for allmaturities, interest rates showed sharpdecreases in December. In addition, long-term rates declined by 78 basis points to end the year at 3.46 percent, which inturn drove the market index up by closeto 30 percent for that single month.

GLOBAL EQUITY FUND

GROSS ANNUALIZED RETURNS (in %)

BÂTIRENTE FUND MSCI World Index ($ CA)

-8.5

-25.9

-5.9

-0.4

3.6

-0.7-2.1

2.7

1 year 3 years 5 years 10 years

CANADIAN EQUITY MULTI FUND

GROSS ANNUALIZED RETURNS (in %)

BÂTIRENTE FUND S&P/TSX INDEX

-31.2-33.0

-4.8-2.7

2.94.2

5.35.81 year 3 years 5 years 10 years

BOND FUND

GROSS ANNUALIZED RETURNS (in %)

BÂTIRENTE FUND DEX UNIVERSE INDEX

3.0

6.44.73.9 4.9 5.5 6.06.1

1 year 3 years 5 years 10 years

Global EquityForeign capital markets closed year 2008on negative ground. Small consolationfor Canadian investors: in contrast withyear 2007 when the strong progression of the Canadian dollar had sliced into theperformance of investments issued in foreign currencies, in 2008, it was foreigninvestments that benefited from theCanadian dollar’s decline. Consequently,the MSCI World index ended the yearwith a return of -38.7 percent in local cur-rencies and of -25.9 percent in Canadiandollars. Out of the ten sectors of the index,only the basic consumption and healthsectors ended on positive ground.

For year 2008, the performance of theGlobal Equity Fund (-8.5 percent) beat its benchmark index by 17.3 percent. Thedefensive strategy adopted by the man-ager with the maintenance of high cashon hand, the overweighting of defensivesectors such as health, basic consumptionand services for communities, as well as the underweighting of cyclical sectors(energy, basic materials and technology),explains this result, which is excellent in the circumstances.

Note that on April 1, 2008, the GlobalEquity Fund adopted a new benchmarkindex, the MSCI World. The benchmarkwas previously made up for 60 percent ofthe international MSCI EAFE index and for40 percent of the S&P500 American index.

Canadian Equity During the first six months of 2008, American and international markets wereundermined by the implosion of the resi-dential real estate sector and by the creditcrisis. For its part, despite a negative firsthalf-year, the Canadian market reachednew heights in June, buoyed by climbingoil and commodities prices.

Nonetheless, with the mid-SeptemberLehman Brothers’ bankruptcy, securitiesmarkets declined sharply, as did metaland energy prices. Nine out of ten S&P/TSX index sectors fell back by more than 20 percent. The information technol-ogy (-54.2 percent), financial services (-36.4 percent), consumer discretionary (-35.4 percent) and energy (-34.8 percent)sectors suffered the steepest declines.The Canadian equity market ended theyear on negative ground with a -33.0 percent return.

As at December 31, 2008, the CanadianEquity Multi Fund posted an annual yield of -31.2 percent, that is 1.8 percentabove market. This performance was due to the management results of itsthree constituting Canadian equity funds. The underlying funds provided returns of -31.3 percent in the case of the LODH, of -34.8 percent in the case of the MBI and of -24.1 percent in the case of theHexavest-managed Fund.

Revue financière

CommoditiesCommodities witnessed a first half-yearmarked by strong price increases, fol-lowed by equally dramatic decreases inthe second half-year. In 2008, oil, gold,platinum, copper, aluminium, iron andlead prices reached historical heights.With the exception of gold, however, theprice of most of these products closed the year on sharp declines. For year 2008,the Commodities Pooled Fund yielded a -24.8 percent return, slightly below itsmarket index (-24.3 percent).

Global Real EstateLike global securities markets, the real estate securities market was marked byhigh volatility throughout year 2008. Theslackening of financial markets and thecredit market freeze of the second half of the year acted as a major let-down onthis market. Negatively affected since thesummer of 2007 by anxieties related tohigher inflation and the credit crisis, realestate securities registered significantlosses in all regions, such as in Asia-Pacific,where many development projects can be found. The Global Equity Fund endedthe year with a -32.3 percent return ($ CA),that is 2.2 percent above its benchmarkindex. The defensive positioning of thefund, which started during the year, helpedto boost performance compared to mar-ket returns.

24

GOLDMAN SACHS COMMODITY LIGHT

ENERGY INDEX

2008 RETURNS

n Energy

n Precious metals

n Basic Metals

n Agriculture

n Livestock

n Total

-40.4

25.7

-36.2

-9.2

-25.1

-11.0

FTSE EPRA/NAREIT INDEX

2008 RETURNS

n Asia

n North America

n Europe

n Total

-40.6-38.9

-34.6

-25.7

31.9 %

SECTORAL WEIGHTS

7.5 %

12.6 %

36.8 %

11.3 %

39.1 %

41.9 %

19.0 %

SECTORAL WEIGHTS

25

Diversified Funds Bâtirente’s three diversified funds out-performed their respective benchmarkportfolios. This positive return variationdemonstrates that the active managementmaintained by our managers through this brutal financial storm helped to curblosses significantly. Consequently, foryear 2008 as a whole, the PatrimonialFund yielded a return of -7.0 percent, thatis 2.1 percent above the return of itsbenchmark portfolio. The Provident Fundproduced a return of -12.3 percent, a performance 4.4 percent above its targetportfolio, while the yield of the IntrepidFund reached -15.8 percent, that is 6.2 per-cent above a strictly passive management.

The returns yielded by the three diver-sified funds, which rank from -7.0 percentfor the Patrimonial Fund to -15.8 percentfor the Intrepid Fund, show that their risk/return profiles are properly graduated.Thus, even in the worst imaginable finan-cial scenario, Bâtirente was able to pro-vide various types of saving individuals,from the most cautious to the most am-bitious, with well-calibrated investmentoptions.

According to a study conducted forBâtirente by Aon Consulting, Bâtirente’sdiversified funds ranked among the bestin their category in Canada for 2008. ThePatrimonial Fund and the Provident Fundwere in the lead, in the first quartile, whilethe Intrepid Fund placed in the secondquartile. Although it is quite normal forour most defensive fund, the Patrimonial,to perform very well in a year marked by severe equity market corrections, weare still justified to rejoice at the sight of Bâtirente’s two remaining diversifiedfunds’ outperforming half of the diver-sified funds available to Canadian institu-tional investors.

Having said that, this excellent resultwas also due to the increased diversifica-tion that characterizes Bâtirente’s diver-sified funds.

Indeed, for the past few years, Bâtirentehas elected to add non-traditional assetcategories such as commodities and realestate to these funds to improve portfoliorisk profiles. Furthermore, increasing thenumber of management teams for a cate-gory as strategic as Canadian equity, whichis currently entrusted to three distinctmanagement firms, reinforces diversifica-tion and improves global risk manage-ment accordingly.

Note, moreover, that diversified fundsstarted allocating assets to Canadian andUS small-cap equity markets in April of2008. As illustrated by the chart below, forthe nine months ending on December 31,the North-American Small-Cap EquityFund yielded a performance of -21.7 per-cent, that is 10.6 percent above its bench-mark portfolio (-32.2 percent), which ismade up for 50 percent of the US Russell2000 index ($ CA) and for 50 percent ofthe BMO Nesbitt Burns index.

-7.0-9.1

-4.0-2.5

1 year 2 years

PROVIDENT FUND

-12.3

-16.7

-2.0-0.7

2.9 2.84.34.7

1 year 3 years 5 years 10 years

BÂTIRENTE DIVERSIFIED FUNDS

GROSS ANNUALIZED RETURNS (in %)

BÂTIRENTE FUND BENCHMARK PORTFOLIO

PATRIMONIAL FUND

INTREPID FUND

-15.8

-22.0

-3.4-1.2

3.0 2.53.74.6

1 year 3 years 5 years 10 years

NORTH-AMERICAN SMALL-CAP

EQUITY FUND

BÂTIRENTE FUND BENCHMARK PORTFOLIO*

-22.9

-32.4 -32.2

-21.7

6 months 9 months

*Benchmark Portfolio: 50%BMO Nesbitt Burns weighted(ex. trusts), 50% Russell 2000 ($ CA)

26

Bâtirente has developed a recognized ex-

pertise in the area of socially responsible

finance. Its Lignes directrices sur la gestiondes risques extrafinanciers (GRIEF) allow it

to assess methodically the risks that enter-

prises in its portfolios are exposed to due to

their environmental, social and governance

(ESG) practices.

These Lignes directrices or guidelines

take into account, for instance, the adoption

and respect of codes of conduct complying

with international environment and labour

treaties. In matters of governance, assess-

ment covers director independence, election

process, executive compensation and share-

holder rights, amongst others. Matters of

financial ethics are also broached: corruption,

tax havens, economic transparency, and

so on. In addition, the Lignes directrices attach great importance to the quality of

enterprises’ performance reporting on their

environmental and social impacts and their

governance practices.

During the 2008-20091 fiscalyear, Bâtirente intervened withapproximately thirty corpora-tions to open talks on ESG is-sues and associated risks. Onpages 28 and 29, you will find a number of cases that markedthe last year. A more completereport of our interventions withcorporations in our portfolioswill soon be available in the“Responsible Investment” sec-tion of our Web site.

1. To link with the annual shareholdermeeting cycle, the period covered by theGRIEF report starts on June 1, 2008 andends on May 31, 2009.

Initiatives Endorsed by Bâtirente

Boreal Forest Conservation Framework, 2008UN Principles for Responsible Investment (PRI), 2006Joint Declaration of Investors and Financial Analysts on Freedom of Expression and the Internet (Reporters without Borders), 2005Extractive Industries Transparency Initiative (EITI), 2004Global Reporting Initiative (GRI), 2004Carbon Disclosure Project (CDP), 2004Committee on Workers’ Capital (CWC), 2001

In the fall of 2008, Bâtirente gave the Groupe Investissement Responsable inc. the mandate to exercise its voting rights in accor-dance with its Lignes directrices sur la gestion des risques extrafinan-ciers. Quarterly voting rights exercise reports can be consulted on Batirente’s Web site atwww.batirente.qc.ca.

% Analysis and integration by external

managers of environmental, social and

governance (ESG) risks in the Canadian

equity portfolio construction process.

% Identification of most significant ESG

risks and formulation of mitigation

measures by the internal extrafinancial

risks manager.

Constructive dialogue with corporations

to have them adopt the proposed meas-

ures and take advantage of new business

opportunities.

% Exercise of voting rights on proposals

submitted to shareholders at annual

general meetings and, when needed,

filing of shareholder proposals at such

meetings.

% Active participation in leading national

and international initiatives in this area.

Bâtirente’s Strategy

The implementation of the GRIEF Lignes directrices is divided into five parts:

27

Extrafinancial Risks Management

Main ShareholderEngagementCampaigns

Industrial Sector

Executive Compensation

The excessively high compensa-tion packages awarded to seniorexecutives by boards of directorsare widely regarded as sympto-matic of the ills of the financialsystem that contributed to therecent crisis. Unfortunately, fewinvestors are prepared to tacklethis serious problem by bring-ing it up with board members.Bâtirente’s Lignes directrices

extensively discuss matters ofcorporate governance and exec-utive compensation. Pursuant to these guidelines, we maderepresentations to a Canadianmanufacturer we held shares of,and who allegedly had backdatedoptions at the expense of itsshareholders. After months ofexchanges through our lawyers,the company agreed to reviewits governance rules in order tomanage its senior managementstock option and variable com-pensation plan better. In the re-lease that we recently agreed towith the company, we acceptednot to disclose its name.

Extractive Industries

Human Rights

Preoccupied with Power Corpo-ration’s interest in the Total oilcompany, which is present inBurma, Bâtirente requested theformer to inform its shareholdersof the means used to fulfil itscorporate social responsibilitystatement. The statement callsfor taking human rights into account when making and over-seeing investments. Against theBoard’s and controlling share-holders’ recommendation, 47percent of external shareholdersvoted for our proposal. Notethat the International LabourOrganization recommends thatcorporations reconsider theireconomic activities in Burma.

Relations with Indigenous

Communities

Many conflicts are opposing oilcompanies and indigenous com-munities. This is why Bâtirentepersuaded Talisman Energy toassess the feasibility of imple-menting a process to obtain the“free, prior and informed con-sent” of communities affectedby its activities. The subsequentcompany report will be submittedto an independent review andmade available in 2010.

Ecosystem Protection and

Water Supply

Bâtirente presented Barrick Goldshareholders with a proposal requesting the company to estab-lish a committee of experts toprovide exhaustive scientificmonitoring for its controversialPascua Lama, Chile, miningproject.

Freedom of Expression

Purporting to be the victim of a “carefully orchestrated defama-tion campaign”, Barrick Goldfiled a six million dollar lawsuitagainst the small publishinghouse Écosociété and the au-thors of the book entitled Noir

Canada. Bâtirente expressed its disagreement with this lawsuitand demanded its withdrawal bythe company. This lawsuit, con-sidered by many to be a SLAPP(strategic lawsuit against publicparticipation), is likely to tarnishthe reputation of the companyand to hinder its business devel-opment. It also represents a frivolous expense in legal fees.Bâtirente believes that the freecirculation of independent in-formation is vital to the develop-ment of public corporations’extrafinancial risks analysis.

Tar Sands

The negative impacts of tar sand operations have become a preoccupying issue in Canadaas well as on the internationalscene. In co-operation with otherCanadian, American and Euro-pean investors, Bâtirente is contributing to the development of a strategy aimed at threemajor issues linked to the ex-ploitation of this resource: climate change, relations withindigenous communities and impact on ecosystems.

Retail Industry

Fair Trade

Bâtirente also opened a dialoguewith Tim Hortons regarding the sale of fair trade coffee in itsestablishments. The companymaintains that fair trade entailsmore constraints than benefitsand thus prefers to make charitydonations to coffee producers.Bâtirente pointed out that boththese approaches might veryeasily cohabit, while remindingthem that their competitors,Starbucks, Second Cup and VanHoutte, are all offering fair tradecoffee to their clients.

Fisheries

With the adoption of a new policy,Loblaw agreed to be buying itsseafood exclusively from sus-tainable sources by the end of2013. Despite our recommenda-tions to follow suit, Metro stillremains uncommitted.

28

Talisman, Foley Hoag,

WRI, RRSE and

Bâtirente representa-

tives at a meeting

held in Washington

to discuss the CLPE

feasibility study.

Forest Products

Sustainable Forestry

For the past few years, Bâtirentehas been discussing with Abitibi-Bowater and RONA the matterof producing and offering ForestStewardship Council (FSC) certified forest products. In De-cember of 2008, RONA adopteda timber procurement policythat favours FSC lumber. Thisinitiative was applauded by allobservers.

Furthermore, prior to startinga reorganization process, Abitibi-Bowater joined the movementstarted by the industry to adoptthe FSC certification by launch-ing a pilot project in three forestslocated in New Brunswick,Québec and Ontario. UnlikeDomtar and Tembec, Abitibi-Bowater had up to then beenbanking on CSA standards that,according to many specialists,are less demanding.

Travel Industry

Sustainable Tourism

Bâtirente is pursuing talks withtour operator Transat A.T. Inc. re-garding issues related to climatechange, governance and, morerecently, sustainable and respon-sible tourism. On this subject,the company has spent the lastyear preparing a compilation ofthe best sustainable developmentpractices in effect in the hotelindustry. The company shoulduse its results to encourage itshotel partners to adopt thesepractices. Let’s also note thatBâtirente invited Transat to en-dorse the code of conduct aimedat curbing sex travel.

National andInternationalInitiatives

Bâtirente’s shareholder engage-ment is completed by a moreglobal approach whose goal is toestablish and consolidate strate-gic alliances with key financialindustry actors. This concertedapproach lets all organizationspool their efforts to maximizetheir influence and to gain mar-ket leverage. In addition to beinga signatory to these initiatives,Bâtirente is actively involved intheir development.

Boreal Forest Conservation

Framework

In 2008, Bâtirente joined the Boreal Leadership Council (BLC)and signed the Boreal ForestConservation Framework.

UN Principles for

Responsible Investment

(PRI)

In May of 2009, Bâtirente GeneralCo-ordinator Daniel Simard wasre-elected to the PRI board ofdirectors for a three-year man-date. Previ, a major Brazilianpension plan, had proposed hiscandidacy. Bâtirente is also par-ticipating to the Small FundsCommittee and, under the SeoulInitiative, is promoting the UNGlobal Compact with corpora-tions included in its portfolios.

Extractive Industries

Transparency Initiative (EITI)

In 2008, Bâtirente opened talkswith six mining or oil companiesto encourage them to supportthe EITI. The meetings held in-cluded First Quantum and AnvilMining, two Canadian corpora-tions present in the DemocraticRepublic of the Congo.

Talisman Energy Inc., a com-pany that officially supports theEITI, was also approached byBâtirente concerning the meansused to put its commitment intoconcrete form. Finally, Bâtirenteco-signed letters sent to aboutfifty corporations to recommendtheir adoption of the EITI.

Global Reporting Initiative

(GRI)

The Global Reporting Initiativeestablishes standards framingthe production of sustainabledevelopment reports. Whenopening a dialogue with a corpo-ration, Bâtirente generally takesthe opportunity to broach topicsregarding the quality of theirperformance reporting and topromote the adoption of thesestandards.

Carbon Disclosure Project

(CDP)

The Carbon Disclosure Projectis an initiative specifically dedi-cated to performance reportingon greenhouse gas emissions.Bâtirente is presently holdingdiscussions with more than fifteen corporations to encour-age them to answer the CDPquestionnaire.

Committee on Workers’

Capital (CWC)

Bâtirente is participating in theCommittee on Workers’ Capital(CWC), which brings togetherrepresentatives of the interna-tional labour movement to de-velop strategies for joint actionin the field of workers' capital,including such areas as share-holder activism. Bâtirente alsocontributed to the Statement by The Global Unions on Re-sponsible Approaches to TheStewardship of Workers’ Capital,published at the end of 2007.

In July of 2008, Bâtirentetook part in a CWC meeting inLondon, England, where matterssuch as the strategies to deployto fight human rights repressionin Burma were discussed. TheCSN and the FTQ will be hostingthe next meeting of the Commit-tee to be held in the fall of 2009.The CWC is celebrating its tenthanniversary this year.

29

Social andEnvironmentalPerformance

In 2004, Bâtirente began reporting its environmental and social performance inits annual global report based on the GlobalReporting Initiative (GRI) guidelines. Overthe years, it intends to improve its perform-ance reporting to comply with the GRI standards.

This year, with the integration of the financial services sector supplement indica-tors, one more step has been taken in thisdirection. The index on pages 35 to 39 canbe used to locate GRI indicators throughoutthis report.

31

EnvironmentalPerformance

For a retirement system such asBâtirente, paper consumptionand transport-related greenhousegas emissions represent the twomain environmental impactsgenerated by its activities.

GHG Emissions

As a financial services firm, allour greenhouse gas (GHG) emis-sions are indirect and essentiallystem from our employees’ com-muting and our business travels.Since 2006, Bâtirente has beenassessing GHG emissions relatedto our employees’ travels, aswell as those related to our Boardmembers’ travels to attend various Board and committeemeetings.

With a 19 percent decreaseover the previous year, Bâtirente’stotal greenhouse gas emissionsreached 25.2 metric tons in 2008.

The 4.2 metric ton reduction of emissions related to businesstravels explains this marked decrease. Rather than being dueto changes in Bâtirente’s habitsand practices, it was associatedto the triennial convention cyclewithin the CSN. The year 2008–a CSN national convention year–occasioned a lot less travelingthan years 2006 and 2007, whenBâtirente’s group-annuity advi-sors had traveled to variousQuébec regions to attend theconventions of federations andcentral councils.

The 1.6 metric ton GHG re-duction recorded for employeecommuting and for board mem-ber travels also contributed tothese good results. Althoughmodest, this reduction is proba-bly more sustainable since it islikely to be more linked tochanges in transportation habits.

Let us point out that employ-ees and board members weresurveyed with regard to theirtransportation habits. The datathus collected was convertedinto GHG emissions using thePlanetair.ca calculator, whichbases its calculations on theGreenhouse Gas Protocol stan-dard and on the vehicle fuelconsumption ratings of NaturalResources Canada’s Office ofEnergy Efficiency.

Reduction Goal

Last year, Bâtirente adopted thegoal to bring back its GHG per$100 M emissions below their2006 level. The 2006 target yearis maintained but the comparisonratio was modified.

It seems more relevant to us,in fact, to monitor the evolutionof GHG emissions based on thenumber of members served thanbased on assets under manage-ment. This ratio is more repre-sentative since the number ofbusiness travels is determinedby the number of members,especially by the number of newmember groups.

Thus, based on this newratio, Bâtirente emitted 98 kg ofGHG per 100 members in 2008,a 21 percent decrease comparedto 2007. This ratio places us atonly 5 kg per 100 members aboveour 2006 level. As we did lastyear, we compensated our 1.3metric ton surplus emissions by purchasing Gold Standardcertified carbon credits.

CarboPOINT Programme

Since 2008, the women and menworking at the Carrefour finan-cier solidaire who are using publictransit, car pooling or activemeans of transportation such ascycling or walking have beenable to accrue carboPOINTS andthus receive prizes worth up to $200.

Once a year, carboPOINTScan be redeemed against giftcertificates to purchase fair trade,organic or outdoors products.Employees can also elect to do-nate them to their preferredcharities. The CarboPOINT pro-gramme, which was created in 2008, is made possible by the financial contribution of the various organizations residing at the Carrefour.

This innovative programmewas recognized by the City ofMontréal when it gave it the 3rd

place in the 2008 Leaders in Sus-tainable Transportation Awards(see photo above). The initiativewas also rewarded at the thirdGala de reconnaissance en

environnement et développe-

ment durable de Montréal or-ganized by the Conseil régionalde l’environne ment de Montréal,the Confé rence régionale desélus de Montréal and the City of Montréal.

Let us also note, to conclude,that in addition to providing indoor parking, the Carrefourfinancier solidaire offers employ-ees free annual bicycle tune-ups.

32

GHG EMISSIONS RELATED TO BÂTIRENTE ACTIVITIES

2007 to 2008GHG EMISSIONS (MtCO2e) 2006 2007 2008 VariationBoard and Committee Activities 1.6 2.9 2.4 -0.4

Bâtirente Employees’ Business Travel 15.6 21.7 17.5 -4.2

Bâtirente Employees’ Commuting 6.3 6.5 5.3 -1.2

Total 23.5 31.1 25.2

Kg of GHG per 100 Members 93 125 98 -21%

Paper Consumption

In 2008, Bâtirente’s overall paperconsumption represented closeto 1.1 million 8.5” x 11” sheetsof paper, a 19 percent reductionover the previous year.

Paper consumption relatedto Bâtirente office activities rep-resented close to 76,000 sheets.The consumption rate per em-ployee moved from 13,500 to10,800 sheets, for a 20 percentreduction.

External paper consumption,including all documents, reports,statements and forms for ourmembers, is also decreasing. Thepaper consumption per memberratio moved from 50 to 40 sheets.This decrease is due in part tochanges made by our fiduciary,SSQ Financial Group, in the pro-duction of biannual investmentand transaction statements.

More external paper con-sumption savings remain to bemade. A relevant strategy will be implemented in 2009-2010.Bâtirente also plans to increaseits use of FSC certified paperand/or paper made with recycledmaterials. In 2008, 7 percent of the paper used by Bâtirentewas FSC certified.

Energy, WaterEmissions and Effluents

In 2004, Bâtirente and six otherfinancial organizations estab-lished at the initiative of the CSNmoved into the Carrefour finan-cier solidaire, a new buildingrecognized by Natural ResourcesCanada’s Office of Energy Efficiency. The organizations regrouped therein pay particularattention to their environmentalperformances and work togetheron innovative projects.

Fondaction, the main occu-pant of the Carrefour financiersolidaire, publishes a biennalGRI-compliant sustainable de-velopment report documentingthe Carrefour’s performancewith regard to its energy andwater consumption, and itsemission, effluent and wastemanagement. The 2006-2008 report is available on line inFrench, at www.fondaction.com.

Residual MaterialManagement

In 2004, the Carrefour financiersolidaire adopted a residual ma-terial management programme.The following year, it was grantedthe Recyc-Québec “Ici on recycle”certificate. According to the requirements of the programme,this certification was renewedthree years later. In 2008, theaverage residual output recu-peration rate was 84 percent,compared to its 2005 level of 70 percent.

InternalSocialPerformance

All Bâtirente employees areunionized. Their first collectiveagreement was signed in early2009. The agreement provides a framework for their workingconditions comprising a bene-fits package including a retire-ment plan, group insurance,supplemental parental leaveprogramme, and access to pro-fessional training.

Salary conditions are estab-lished according to a specificsalary scale and vary with thelevel of competence, experienceand seniority. Bâtirente’s entry-level salary is $18.98 per hour,which represents 2.1 times theminimum wage applicable inQuébec. The coverage of retire-ment plan benefit liabilities was104.1 percent according to themost recent actuarial valuationconducted on July 1, 2007.

In a work-life balance per-spective, employees have accessto confidential support servicesto help them in case of seriousillnesses, conjugal violence, orother problems of a private na-ture. They also enjoy a certainlevel of flexibility and autonomyin the organization of their workschedule.

The regulations of the Autoritédes marchés financiers and ofthe CFA Institute require financeprofessionals to accumulate 30to 40 professional developmentunits (hours) per two-year period.Bâtirente covers related trainingfees for concerned employees in addition to contributing toother tuition fees. In 2008, Bâti-rente thus provided 1,400 train-ing hours for 5 of its 7 employees,representing a 180 percent in-crease over the previous year.

Bâtirente’s staff includes fourwomen and three men. For 2008,the ratio of men’s basic salaryover women’s was 0.94. Fourwomen and thirteen men have a seat on the Board of Directorsand on the various committees.

There were no layoffs or res-ignations at Bâtirente in 2008.Furthermore, once again thisyear, we need deplore no work-place accidents or occupationaldiseases.

33

PAPER SHEET CONSUMPTION

USE 2007 2008External 1,246,000 1,023,200

Internal 94,600 75,700

Total (-19%) 1,340,700 1,098,900

External paper/memberratio (-20%) 50 40

Internal paper/employee ratio (-20%) 13,500 10,800

ExternalSocialPerformance

Protecting Retirement

Income

While 82 percent of the CSN private sector unionized workershave access to pension plans,this proportion is no more than40 percent for the labour marketas a whole. Protecting the retire-ment income of larger numbersof women and men workerssurely is Bâtirente’s first positivesocial impact.

Bâtirente serves 19 percentof all CSN private sector labourunions with regard to retirementplans. Of all CSN private sectorlabour unions having imple-mented capital accumulationplans, 50 percent did it withBâtirente.

Unlike commercial corpora-tions, Bâtirente refuses no group.It thus helps workers from smallbusinesses to improve their retirement conditions. Further-more, Bâtirente works closelywith unions in their collectivebargaining process to improvetheir existing plans.

Information and Education

With the production of variousdecision-making tools for mem-bers and the upgrading of itsWeb site, Bâtirente showed theimportance it gives to its retire-ment savings information andeducation duty.

This commitment is furtherconfirmed by Bâtirente’s par-ticipation to groups such as the Mouvement d’éducation etde défense des actionnaires(MÉDAC) and Question Retraite.

A Structuring Influence

on The Financial Market

Bâtirente promotes various international responsible invest-ment initiatives to mobilizegreater numbers of institutionalinvestors. For instance, Bâtirentegave evidence to its accom-plishments in the area of extra-financial risks management onthe occasion of a meeting of the Montréal CFA Society andof the Business & BiodiversityConference held in Montréal in April of 2008. During the visit of David Russell from the UKUniversities SuperannuationScheme, Bâtirente organized a seminar that provided localuniversities with the opportunityto exchange on the theme of responsible investment.

Bâtirente also took part in aprovincial government consulta-tion on the reform of the QuébecCompanies Act. In this frame-work, Bâtirente recommendedthat the Québec governmentmodify the Act to improve accessto shareholder proposal filings.

Sponsorships and Local

Involvement

Over the past year, Bâtirentesponsored several labour unionevents such as the 100th an-niversary of the Fédération destravailleurs et des travailleusesdu papier et de la forêt and the 25th anniversary of the Syndicat des travailleurs-eusesde la station Mont-Tremblant.

For a fifth year, Bâtirentetook part in the benefit auctionsale of the Écomusée du fiermonde, a folk museum interestedin the work-industry-culturetriad. It also sponsored theHabiter une ville durable cir-culating exhibition, presentedby the Centre d’écologie urbaine

de Montréal as well as a boothkept by the CSN collective toolsat the Salon de l’environnementheld in the Old Port of Montréal.

Finally, Bâtirente provided financial support for a numberof social and community organi-zations, including the CanadianCancer Society, Leucan, theFondation pour l’éducation à lacoopération et à la mutualitéand the Université de MontréalSchool of Industrial RelationsScholarship Fund.

34

The indicators documented in this report are part ofthe GRI financial services sector supplement. Indicatorswere selected based on their relevance with regard to the types of activities conducted by Bâtirente andto the expectations of the stakeholders which the report is addressing, including retirement systemmembers, labour unions and employers, associatedinstitutions investing assets in Bâtirente funds, em-ployees, as well as managers and business partners.

This report covers the period from January 1,2008 to December 31, 2008. In the case of extrafinan-cial risks management and shareholder engagementdata, however, the period ends on May 31, 2009 totake into account the annual general meeting cycle.This is the fourth edition of the GRI report, the firsthaving been produced for year 2005.

With the exception of indicators EN1 and EN2, forwhich we took into account the paper consumption ofour main supplier, this report is limited to Bâtirente’sactivities. The organization, whose head office is locatedin Montréal, offers services mainly in Québec and has no subsidiaries or joint ventures.

If you have questions concerning this report,please contact Bâtirente’s Extrafinancial Risks Manager,François Meloche.

35

GRI Index

INDICATORS DESCRIPTION OF INDICATORS COVERED BY THE REPORT PAGES

Strategy and Profile

• STRATEGY AND ANALYSIS

1.1 Statement of most senior decision-maker in the organization 5-7

1.2 Description of main impacts, risks and business opportunities 5-7, 16-19, 26-29, 31-34

• ORGANIZATION PROFILE

2.1 – 2.8 Name of the organization; main products, services and corresponding brands; 8-15, 16-19 operational structure of the organization; head office location; country of implementation of the organization; capital structure and legal form; markets and geographic areas covered; industry sectors and types of clients served; size of organization

2.9 Changes in size, structure None

2.10 Prizes received None

• SCOPE OF REPORT

3.1 - 3.8 Period covered; date of previous report; reporting cycle considered, person to be 35 contacted for questions on the report; process used to determine report contents and materiality, topic prioritization, report user-stakeholder identification; scope of the report; limitations; reporting on subsidiaries and joint ventures

3.9 – 3.11 Measurement methods, explanation of any re-statements of information in previous 22-25, 31-34 reports and reasons for such re-statements

3.12 GRI Index 35-39

3.13 External report audit policy and practices None

• GOVERNANCE, ENGAGEMENT AND DIALOGUE WITH STAKEHOLDERS

4.1-4.5 Governance structure; role of Chair of the Board as executive officer; number of 12-13 independent or non-executive directors, mechanism for shareholders and employees to make recommendations or to communicate instructions to the board of directors; relationship between board member, executive and executive officer compensation and the performance of the organization

4.6 Process implemented by the board of directors to avoid conflicts of interest None 4.7 Process to establish the qualification and expertise of board members, to determine 12-13 organizational strategies related to economic, environmental and social issues

4.8 Missions or values, codes of conduct internally developed with regard to economic, 9, 15, 26-27, 31-34 environmental and social performances, and level of implementation

4.9 Economic, environmental and social performance assessment procedures 4, 13, 22-25, 31-34

4.10 Governance structure performance assessment process 12-13

4.11 Precautionary principle Not applicable. The services offered by Bâtirente have no direct environment or health incidence.

4.12 Charters, principles and other external initiatives Bâtirente adheres to or supports 15, 27, 29

4.13 Membership in associations or enrollment in advocacy organizations in which it plays an 15, 27, 29, 34 active and strategic role

4.14 - 4.17 List of stakeholders Bâtirente is interacting with; selection criteria for stakeholders, 9-10, 18-19, 26-29, 34 process and frequency of dialogues; key topics broached

36

INDICATORS DESCRIPTION OF INDICATORS COVERED BY THE REPORT PAGES

Performance Indicators

• ECONOMIC PERFORMANCES

EC1 Economic value generated and distributed 2-3, 16-18, 33-34

EC2 Risks and opportunities related to climate changes 26-29, 32

EC3 Coverage of liabilities related to defined benefit pension plan 33

EC4 Significant subsidies and financial support received from government None

EC5 Ratio of entry-level salary over legal minimum wage 33

EC6 Policy, practices and proportion of expenses made at local suppliers 15

EC7 Procedures to hire from local communities None. Our employees all reside in the Montréal or Québec City area.

EC8 Development of infrastructures and services benefiting the community 17, 34

• ENVIRONMENTAL PERFORMANCES

EN1 – EN2 Material consumption; percent of consumed material from recycled material 33

EN3 – EN4 Energy 33

EN8 Water 33

EN11-15 Biodiversity Not applicable. Bâtirente is developing no real estate, facility or infrastructure, and has no direct impact on biodiversity.

EN16-EN18 GHG emissions 32

EN19-EN21 Emissions, effluents and waste 33

EN22 Total waste per type and treatment method 33

EN23 Discharges Not applicable. Bâtirente manages no industrial processes.

EN26 Initiatives to manage environmental impacts of products and services 26-29, 32

EN27 Percent of packaging recycled or reused Not applicable. Bâtirente produces no packaged consumer goods.

EN28 Financial penalties or sanctions for breaking an environmental law None

• SOCIAL PERFORMANCES

Employment, Social Relations and Decent Work

LA1 - LA2 Manpower per job type; labour turnover 33

LA4 Percent of employees covered by a collective agreement 100%

LA5 Prior notice given employees in case of major changes in the nature of activities Covered by collective agreement

LA7 Workplace accidents and occupational diseases None

LA8 Employee assistance programme in case of serious illness 33

LA9 Occupational health and safety topics covered by formal agreement with labour unions 33

LA10 Number of training hours per year and per employee 33LA13 Composition of governance committees and breakdown of employees per gender 33

LA14 Ratio of men’s basic salary over women’s per occupational category 0.94

37

INDICATORS DESCRIPTION OF INDICATORS COVERED BY THE REPORT PAGES

Performance Indicators

• SOCIAL PERFORMANCES – cont’d

Society

SO1-SO4 Corruption and community Not applicable. Bâtirente has no foreign operations.

SO5 Taking of strong line on public policies and participating in lobbying activities 34

SO6 Total contributions made in kind and in cash to political parties, politicians and related None institutions, per country

SO7 Total number of lawsuits for anticompetitive behaviour, transgression of antitrust None legislation and monopolistic practices

SO8 Amount of significant financial penalties and total number of non-financial sanctions for $0 breaking laws and regulations

Product Responsibility

PR1 Life cycle Not applicable since Bâtirente develops no products that could have a direct incidence on the environment.

PR3 Type of information on products and services required by regulatory bodies Capital accumulation plan guidelines

PR4, PR7 Incidents of non-compliance with regulations and voluntary codes on product and None services information (labelling, promotion, advertising, etc.)

PR5 Practices aimed at assessing client satisfaction Annual survey

PR6 Watch programme on compliance with laws, standards, voluntary codes regarding 13, 18-19, 34 marketing and communication

PR8 Substantiated complaints for invasion of privacy and client data loss None

PR9 Financial penalties for non-compliance with laws and regulations regarding the provision None and the use of products and services

Supplement–Financial Services*

FS1 Environmental and social policies regarding financial services 26-29

FS2 Procedures to assess and screen environmental and social risks 26-29

FS3 Procedures to control client compliance with environmental and social standards Not applicable since Bâtirente manages its clients’ assets but does not grant them credit.

FS4 Procedures to improve employee’s competence to implement environmental and social 33 policies and practices

FS5 Interactions with clients/contributors/business partners with regard to environmental and 18-19, 26-29 social risks and business opportunities

FS6 Portfolio breakdown by sector, area and size www.unpri.org/files/ rpt09/Comitc.html

FS7 Value of products and services with social spin-offs 0

FS8 Value of products and services with environmental spin-offs 0

FS9 Scope and frequency of audits aimed at assessing the implementation of social and 4, 7 environmental policies and risk evaluation procedures

38

INDICATORS DESCRIPTION OF INDICATORS COVERED BY THE REPORT PAGES

Supplement–Financial Services

FS10 Percent and number of companies held in portfolio with whom the organization www.unpri.org/files/ interacted with regard to environmental or social issues rpt09/Comitc.html

FS11 Percent of assets subjected to environmental and social screenings 0%

FS12 Voting policy applied to environmental or social issues voted on at annual general meetings 26-27 of enterprises in portfolios

FS13 Access points in sparsely populated or economically disadvantaged areas Not applicable. Bâtirente has no branches or access points.

FS14 Initiatives to improve accessibility to financial services for disadvantaged populations 34

FS15 Policies framing the financial product and service offer 5-7, 13, 15

FS16 Initiatives to educate contributors and beneficiaries 18-19, 34

*Note that indicators HR1-HR9 have been replaced with the financial services supplement indicators.

Bâtirente’s 2008 Annual Global Report qualifies as a level A report. All fundamental performance indicators have been dealt with, or omissions have been explained.

39

Membersof The Boardof Directors

COMITÉ SYNDICAL

NATIONAL DE RETRAITE

BÂTIRENTE INC.

40

CHAIRPierre Patry •*MontréalTreasurerConfédération des syndicats nationaux

VICE-CHAIRLéopold Beaulieu •+LanoraiePresident and Chief ExecutiveOfficerFondaction

SECRETARYMarcel Pepin •*MontréalAssistant to the Executive CommitteeConfédération des syndicats nationaux

GENERAL CO-ORDINATORDaniel Simard •Montréal

INVESTMENT COMMITTEEEXTERNAL MEMBERSLouise Charette

MontréalPortfolio Managementand Governance Consultant

Jean-Jacques Pelletier

LévisRetired TeacherMember of the RREGOP Investment Committee

MEMBERS APPOINTED BY FONDACTIONGeneviève Morin

Saint-LambertDirector, Finance andCorporate DevelopmentFondaction

Luc Verville

MontréalChief Investment Officer – Public Markets Fondaction

AUDIT COMMITTEEEXTERNAL MEMBERYvan Duceppe

LongueuilChartered AccountantMCE Conseils

BOARD MEMBERS

Jean-Claude Boucher •°+QuébecRetirement CommitteeSyndicat des travailleurs et travail leuses des Épiciers-unisMétro Richelieu Québec (CSN)

Serge Fournier •°Saint-NicolasTreasurerFédération du commerce (CSN)

Réjean Gouin •%

PrincevilleBâtirente AgentSyndicat des employés du Groupe Olymel (CSN)

Patrick Jean •%

Saint-ConstantVice-PresidentSyndicat national des employés du papier de Candiac (CSN)

Nathalie Joncas •%

MontréalActuaryLabour Relations DepartmentConfédération des syndicats nationaux

Alain Lampron •+RepentignyPresident Fédération de la métallurgie (CSN)

Andrée De Serres •Ville Mont-RoyalLawyer and Tenured Professor École des sciences de la gestion de l’UQAM

Jean-Paul Thibault •*Salaberry-de-ValleyfieldRetiredSyndicat national des travailleurs des produits chimiques de Valleyfield (CSN)

• Member appointed by the Executive Committee of the CSN

• Non-voting ex-officio member

• Member elected by the Assembly of Representatives of Bâtirente Groups

* Member of the Investment Committee

° Member of the Audit Committee + Member of the Extrafinancial Risks Management Committee

% Member of the Member Services Committee

Annual Global Report

We elected to produce an annual globalreport inspired by the Global ReportingInitiative (GRI) guidelines, with the inten-tion of perfecting its conformity over theyears. The French version was printedin 1,000 copies and the English versionis available on Bâtirente’s Web site.

Annual Financial Report

The annual financial report is availableon Bâtirente’s Web site. It contains the audited financial statements ofBâtirente funds.

Contributors

Marie-Diane Deslauriers, François Meloche, Guylaine Proulx,Daniel Simard

Translation

Claudette TurgeonGraphic Design

France Tardif designIllustrations

Alain Massicotte, GarnottePhotos

Pages 5, 12, 13, 14 and 16:Alain ChagnonPage 8: Pierre SoulardCover, pages 26 and 30: France Tardif

To Reach Us

Comité syndical national de retraite Bâtirente inc.Suite 2032175 East De Maisonneuve BoulevardMontréal (Québec) H2K 4S3Telephone: (514) 525-5740Toll free: 1 800 253-0131Fax : (514) 525-2199info@batirente.qc.cawww.batirente.qc.ca

Member Services Department

SSQ Financial Group: 1 800 463-6984

BAT0

005A

(200

8)