MESSAGE FROM THE PRESIDENTOn behalf of our officers, I am pleased to present a review of the year2016 for Caisse Desjardins du Secteur industriel de Montréal.

This is the first annual general meeting of the new Caisse Desjardins duSecteur industriel de Montréal, which was created by combining thestrengths of the Caisse Desjardins du Secteur industriel de Montréal andRail Credit Union. We now benefit from much greater economic andfinancial vibrancy for our community and our members benefit from accessto greater expertise. Once again, we would like to thank you for yourcontribution to the success of this merger.

AN INSTITUTION AT THE HEART OF ITS MEMBERS’ LIVESThe year 2016 was a turning point in Desjardins history. One of the mostimportant events was the election of Guy Cormier as President ofDesjardins Group. The youngest president in our history quickly rallied employees and officers around his ambitious ideas. The first of those ideas involves reconnecting Desjardins with its purpose, which is to enhance people’s lives and the communities in which they live bymaking active and significant contributions to the development of asustainable economy.

For example, a new $100 million development fund has been created tosupport projects in the regions where we are active, in entrepreneurship, inbusiness development and in economic and social innovation. This fundwill complement the Caisses’ Community Development Funds and Capitalrégional et coopératif Desjardins shares.

In addition, so we can be better attuned to the needs of young people, aYouth Advisory Board with a Desjardins-wide scope has been put in place,to be made up of Desjardins members, elected caisse officers andemployees between ages 18 and 35. We even reserved a special place foryoung people during 2016 Cooperation Week focused on academicsuccess. On October 20, 2016, thousands of Desjardins employeesparticipated in volunteer events in support of the cause.

This is a testament to the variety of actions we put in place, in order tohold the top position in the hearts of our members.

INSPIRING MOMENTUMIn 2016, our caisse recorded operating surplus earnings of $1,780,000.These results are an indicator of the caisse’s sound business management.Based on this performance, we will be staying the course, by offering youservices and solutions that continue to meet your expectations.

I would like to thank our members for these excellent results. Yourcontinued loyalty is the key to our success. Increased use of the caisse’sproducts and services has a direct, positive impact on its profitability. Thevitality created by this loyalty will not only benefit the caisse and itsmembers, but also the entire community.

CONTINUED IMPROVEMENT OF PRODUCTS AND SERVICESYour satisfaction remains our priority when it comes to the quality of ourproducts and the excellence of our services. We will continue to adoptsimple, people-focused, modern and high-performing approaches, in orderto maintain our special place in your financial life. Thanks to our modernapproaches, including a range of virtual services, we can be moreaccessible than ever. Desjardins mobile payment solutions and Apple Pay,mobile cheque deposit and Interac transfers are only a few of the newfeatures currently at your disposal.

To round out our virtual offer, certain financial products are availableexclusively on AccèsD: in just a few clicks, you can open a high interestsavings account with no service fees, or access market-linked guaranteedinvestments. It’s simple and exclusive to Desjardins members.

As a member, you can play a role in your caisse’s evolution to help boostits performance, especially by sharing your ideas, impressions andconstructive comments. We can work together to share and celebrate thedeeply human and distinctive nature of our caisse.

AT THE HEART OF YOUR FINANCIAL LIFEThe caisse redefined its business model in 2015 and 2016 to better adaptto your reality and to the ever-increasing use of technologies by memberssuch as AccèsD, mobile deposit, payments between individuals, andinternet and mobile Interact. These changes in members’ behaviorregarding their transactional service led us to focus on expert services thatare deployed, by appointment, in your workplaces. Our business model ismodern and will hopefully meet your needs.

In order to better assist you in the achievement of your financial goals, our advisors are on hand to help you every step of the way whether it isthe beginning of your financial life, the middle of your active life, yourpreparation for retirement, or your retirement. They will guide you knowingdreams and challenges associated to each of these specific moments andwill also provide you with peace of mind allowing you to make the bestdecisions to realize your projects.

1st ANNUAL REPORT

OLIVIER GAUDETTE, muraliste

(CONTINUED ON PAGE 2) —>

MERGER BY ABSORPTION IN 2016In 2016, we reached an agreement on a merger by absorption with CaisseDesjardins des Travailleurs de la cour Saint-Luc. This approach will allowcaisse members to join a larger and stronger organization that is able tooffer a wider range of financial services. This merger completed the CaisseDesjardins du Secteur industriel de Montréal’s initiative to serve the entirerailway industry of the Province of Québec.

EXPRESSING OUR HEARTFELT THANKSI want to extend my sincere appreciation to my fellow officers, to themanagers and to the employees of the caisse for their unflaggingcommitment. Under the dynamic management of Claude Demers, theydraw on their skills and great adaptability, so that our cooperative canmeet your needs effectively. Thanks also to our Desjardins subsidiary

partners for supporting our mission to serve our members. By joiningforces, we are in a position to offer you a range of comprehensive andcompetitive financial products and services.

Lastly, even greater thanks to our 13,772 members for placing their trust in us.

Steve MichelChair of the Board of Directors

MESSAGE FROM THE PRESIDENT (CONTINUED)

2

The board of supervision makes sure the caisse fulfills its responsibilities interms of ethics, professional conduct and cooperation.

SUPERVISION OF ETHICAL ASPECTSEvery year, caisse officers and employees renew their commitment tocomply with the Desjardins Code of Professional Conduct. The Code sets out the behaviours that are expected, as well as, those that are not acceptable.

The Board of Supervision ensured that the caisse, officers and employeestook the values of Desjardins into account to guide their conduct.

Here is a supervision report for the past year concerning three rules ofprofessional conduct:

• No conflict of interest situations were noted.

• Deposits from and loans to restricted parties of the caisse, caisseofficers and general manager, officers of the Federation des caissesDesjardins du Quebec and their associated persons, were granted inaccordance with the caisse’s code of ethics and applicable rules ofprofessional conduct. Loans granted to restricted parties totalled$2,491,141.

• The caisse and its centres did not grant any contract for the supply ofgoods and services to restricted parties subject to the Code, such as,restricted parties, caisse employees and centre managers and theirassociated persons.

SUPERVISION OF COOPERATIVE ASPECTSWith regard to the supervision of cooperative aspects, the Board ofSupervision must ensure that Desjardins’ values are an integral part of thecaisse’s business and management practices. It must also make sure thatthe caisse contributes to the development of its community and theeconomic and financial education of its members. Lastly, it ensures thatmembers are informed about topics of importance to them.

Over the past year, the board's activities focused on the following:• Activities and resources made available to members to assist them withfinancial management

• Strategies established by the caisse to improve member satisfaction andmeet member needs

• Caisse support of community development, in particular, through theCommunity Development Fund and the granting of donations andsponsorships

• Intercooperation between the caisse and other types of cooperatives

The Board of Supervision is satisfied with the work carried out in the past year.

I would like to thank the members of the board for their contribution, andthe general manager for helping us deliver on our mandate.

Martin PlamondonChair of the Board of Supervision

REPORT FROM THE BOARD OF SUPERVISION

In 2016, your caisse continued its mission to meet all your financial needs,by offering you access to a comprehensive range of products and services.

Offering members a first-rate business experience remains one of ourprimary objectives for this year. In addition to ensuring you are providedwith excellent service, your caisse and Desjardins Group will continue todevelop financial tools and exclusive new benefits for members. Everyeffort is being made to ensure that Desjardins is your financial institutionpar excellence.

Below are the financial results of Caisse Desjardins du Secteur industrielde Montréal and the share of net income from business at DesjardinsGroup subsidiaries as at December 31, 2016.

These results are directly related to your trust in us, for which we are verygrateful. Thanks to the loyalty of our members, we can all benefit from thepower of cooperation and support our business development.

BUSINESS UNDER MANAGEMENTBacked by $951,000,000 in business under management, up 1.9% over 2015, the caisse will take action to improve its position in the market. Through its membership in Desjardins Group and participation inDesjardins Group subsidiaries, the caisse has access to a wide range of financial products and services to meet the ever-growing needs of its members.

COMMENTS ON THE FINANCIAL REPORTThese comments on the financial report constitute an overview of thecomplete report, which is available upon request. Required financialdisclosures are presented in the appendix to this annual report.

BALANCE SHEETChange in balance sheet items ($M)

Your financial cooperative’s assets totalling $449,046,000, remainedstable compared to last year. Loans to individuals and businesses stand at$394,331,000, an increase of 1.5%. Refer to Additional Information tablesfor more information about loan and deposit portfolios.

Caisse liabilities total $408,917,000, representing a decrease of 0.6%.Deposits currently amount to $364,589,000, up 2.2%, whereas yourcaisse’s borrowing decreased by 20% and now totals $37,463,000.

As at December 31, 2016, your cooperative’s equity posted very stronggrowth, rising to $40,129,000, an 8.1% increase. Equity comprised$3,201,000 in social capital, $2,647,000 in surplus earnings to bedistributed, $857,000 in accumulated other comprehensive income, and$33,424,000 in reserves.

The reserve for future dividends represents $143,000. Your caisse has alsoaccumulated $195,000 in the Community Development Fund.

The Caisse’s capital base is at a level that is in accordance with the standard respecting capital base adequacy established by theFederation.

STATEMENT OF INCOMEDuring the last fiscal year, your caisse generated $1,780,000 in operatingsurpluses, an increase of 350% over the previous year.

Change in income statement ($M)

Interest income totalled $12,609,000, down 6% over last year. Interestexpense decreased by 11.8%, to $5,225,000. Credit losses totalled$63,000, i.e., 0.016% of the entire portfolio of loans granted to individualmembers and businesses.

Other income, generated largely from the distribution of Desjardinsproducts and services, totalled $2,712,000, down 3.6% compared to last year.

Other charges showed a major decrease overall, i.e., a 11.7% variance,and totalled $8,253,000.

This year, we propose contributing $200,000 to the CommunityDevelopment Fund in the form of a collective dividend, which enables us to contribute to the well-being of our community by supporting key projects.

The selected amounts were determined based on the importance ofstriking a balance between the distribution of surplus earnings, growthand capitalization. Like Desjardins Group in its entirety, your caisse mustmaintain strong capitalization. By ensuring the right balance betweenfinancial market rules and regulations and our members’ needs, we canensure the sustainable development of our caisse.

INVESTMENT FUNDSThe investments that caisses hold in investment funds allow the Fédérationdes caisses Desjardins du Québec to coordinate investments in DesjardinsGroup subsidiaries and regional investments.

MESSAGE FROM THE GENERAL MANAGER

3

2016 2015 Change (%)

Assets 449.0 448.6 —)Liabilities 409.9 411.5 (0.6)Equity 40.1 37.1 8.1)

December 31, December 31, MinimumCAPITAL ADEQUACY RATIOS 2016 2015 standards

Tier 1A capital over its risk assets: 14.69% 15.54% 11.0%

Tier 1 capital over its expansion assets: 4.70% 5.50% 3.5%

2016 2015 Change (%)

Interest income 12.60 13.40 (6.0)

Interest expense 5.20 5.90 (11.8)

Net interest income 7.40 7.60 (2.6)

Other income 2.70 2.80 (3.6)

Provision for credit losses 0.06 0.57 (89.5)

Other charges 8.30 9.40 (11.7)

Operating surplus earnings 1.80 0.40 350.0))

The table below indicates the caisse’s interest in and return on eachinvestment fund at the end of the fiscal year.

THE FEDERATION’S OBLIGATION TO HOLDERS OF PERMANENT SHARESFurther to a recommendation of the Autorité des marchés financiers, theFédération des caisses Desjardins du Québec guarantees to cover lossessuffered by Quebec caisse members holding permanent shares due tomisinformation in the audited Combined Financial Statements and annualDesjardins Group Management’s Discussion and Analysis available at www.sedar.com. The Federation’s obligation in this matter is subject to certain conditions. Holders of permanent shares can request moreinformation at their caisse.

The Combined Financial Statements of the Desjardins caisses in Quebecare also made available to the public on www.desjardins.com.

MODERN TOOLS AND PRODUCTSMore and more of you are adopting Desjardins mobile applications.Available 24/7, these applications offer the possibility to pay bills, transferfunds or invest in exclusive financial products. Your financial autonomygoes hand in hand with the tools we place at your disposal, and we oweour longevity and relevance to our ability to create effective tools thatmeet your needs.

Accordingly, in the coming years we will be installing new ATMs to replaceour current machines, which have become obsolete. The new models willoffer the features needed to carry out your transactions, while ensuring a simple and fast experience. This will provide an opportunity for the caisse to conduct a needs analysis of automated services, so it can positionitself based on its members’ financial habits.

A TEAM DEDICATED TO YOUOur 40 employees are ready to help you achieve your financial objectivesand carry out your projects. I am grateful for their commitment and theirengagement, which are central to the quality of our services. It is alsothanks to them that Desjardins Group continues to stand out as one of thebest employers in Canada. This recognition confirms Desjardins’ positionas a leading employer that is close and committed to its employees.

I would also like to point out the contribution of our elected officers. Theirdedication to the caisse and the community enables us to promote ourunique cooperative character.

By working together, we can build a stronger institution and a moredynamic society.

Claude Demers, CPA, CGAGeneral Manager

4

HIGHLIGHTS

CAISSE DESJARDINS DU SECTEUR INDUSTRIEL DE MONTRÉAL INCLUDES:

Shares held as at Average PROVINCIAL FUND December 31, 2016 return

Caisse centrale Desjardins (CCD) $9,244,093 9.04%

Société de Services des caisses Desjardins (SER) $(258) —%

Desjardins Venture Capital (INV) $120,880 16.93%

Desjardins Financial Holding (FIN5A) $13,876,548 11.80%

13,772 MEMBERS

20 ELECTED OFFICERS

40 EMPLOYEES

$951,000,000IN ASSETS OR BUSINESS VOLUME

SEVERAL FINANCIALCONFERENCES EVERY YEARWITH OUR GROUPS

MESSAGE FROM THE GENERAL MANAGER (CONTINUED)

5

SUMMARY OF LOAN PORTFOLIOAs at December 31, 2016, the loan portfolio of the Caisse continued to be of high quality. Gross loans past due but not impaired and gross impaired loansonly represented 3.1% and 0.3%, respectively, of gross loans.

The following table presents the distribution of loans by borrower category, with the proportion of gross impaired loans past due but not impaired, gross impaired loans and the related individual and collective allowances.

(IN THOUSANDS OF CANADIAN DOLLARS)

SUMMARY OF DEPOSIT PORTFOLIOAs at December 31, 2016, caisse member deposits amounted to $364,589,000, up $8,004,000, or 2.2%, since the end of the previous year. Please notethat deposits from individuals represent the caisse’s main source of financing to ensure growth. Theses represented 89.9% of total deposits as atDecember 31, 2016.

The table below presents the distribution of deposits by depositor category with proportions based on type of savings.

Gross loansSUMMARY OF LOAN Gross past due but Gross impaired Individual Collective

Net loans as at December 31,

PORTFOLIO ($) loans not impaired loans allowances allowances 2016 2015

PERSONAL Residential mortgages 288,038Consumer and other 71,554Subtotal 359,592 12,185 1,228 415 201 358,976 356,560

BUSINESS Commercial and industrial 35,389 Agriculture, forestry and fisheries Public administrations and institutions Subtotal 35,389 34 35,355 31,812

TOTAL 394,981 12,185 1,228 415 235 394,331 388,372

* Refer to Note 2 to the Combined Financial Statements of the Desjardins caisses in Quebec available on www.desjardins.com for additional information on the basis of presentation andsignificant accounting policies.

SUMMARY OF DEPOSIT Chequing Tiered savings Regular Term Registered Total as at December 31,

PORTFOLIO ($) accounts accounts savings savings plan savings 2016 2015

Personal 34,008 20,835 32,272 59,629 181,155 327,899 321,974Business 13,761 8,864 1,428 9,554 — 33,607 29,368Public sector and other 1,739 143 44 1,152 5 3,083 5,243

TOTAL 49,508 29,842 33,744 70,335 181,160 364,589 356,585

* Refer to Note 2 to the Combined Financial Statements of the Desjardins caisses in Quebec available on www.desjardins.com for additional information on the basis of presentation andsignificant accounting policies.

ADDITIONAL INFORMATION TO THE FINANCIAL REPORT

YOU MAKE US PROUD!Supporting the personal and professional development of members, inaddition to the initiatives, activities and structuring projects for groups in the workplace, are our real driving forces.

For your caisse, donations and sponsorships are essential levers,contributing to the improvement of the socio-economic quality of life ofthe community. At the latest Annual General Meeting and following aproposal by the Board of Directors, the members voted that part of thesurplus earned by our cooperative be redistributed to the communitythrough the Community Development Fund (CDF). The balance of the CDF now totals $195,000, enabling you to support initiatives that areimportant to you in collaboration with caisse groups.

Thanks to your generosity, we can now make a real difference in thecommunity and contribute to a more prosperous society!

TOGETHER, LET’S BUILD SOMETHING STRONGBelieving that education is a key condition for social enrichment and a powerful tool for a sustainable economy, caisse officers have approvedthe creation of two scholarships for professional development andeducation, totalling $55,000. As a result, 14 members shared just over$12,000, in order to start or continue their education and development. A number of these scholarship holders acknowledged that this financialcontribution enabled them to concentrate on their studies, as well as,represented an outstanding recognition in the pursuit of their objectives.

Your caisse recognizes the efforts and work of many organizations andco-operatives working to improve living conditions. This year, more than$20,000 has been allocated for the implementation of various projectsand programs, including: Breakfast for Learning, Atelier d’histoire desdébardeurs du Port de Montréal, Appart à moi – résidences de réinsertion,and several others!

There is no doubt that the Caisse wishes to cooperate in the achievementsof its members and the development of its community. We are alsoconvinced that the establishment of the Community Development Fundlooks promising for years to come, so that we can work together on a solid foundation:• $32,376 in donations through the Community Development Fund• Close to thirty projects benefited from financial support• 11 support scholarships for members’ children• 3 professional development support scholarships

COMMUNITY DEVELOPMENT FUND

PROFESSIONAL DEVELOPMENT SUPPORTAWARDS – Edition 2016

STUDENT SCHOLARSHIPS FOR MEMBERS' CHILDREN – Edition 2016

COMMUNITY DEVELOPMENT FUND

6

Mr. SYLVAIN ARPIND.E.P. – Trucking

ALEX BRISSON JULIE DUBUC

MATHIEU DUBUC GENEVIÈVE GAUTHIER

AMÉLIELABELLE-BARBEAU

MARJORIE LAROCQUE

MARC-ANDRÉDESROCHERS

ANNE GADEBOIS

PHILIPPE LAGUË

MARIE-FRANCELOISEAU

MARIE-PIER MICHEL

Mrs KAREENA ST-HILAIREAcademic – Health

Mrs ALA VACARCIUC URSUD.E.P. – Payroll Specialist

$32,376 Education 32% Humanitarian 29% Cooperation 18% Culture 15% Economic 6%

COCKTAIL PARTY DINNER

It was in a festive atmosphere, when more than 300members of the caisse met on May 19, 2016 for a cocktailreception in the LOCOSHOP ANGUS, the premises wherethe caisse was founded.

ARTISTIC REPRESENTATION OF OUR ENVIRONMENT

Painting of de Board of DirectorsPainting by muralist artist, Olivier Gaudette,representing a meeting of the Board of Directors ofthe Caisse Desjardins du Secteur industriel deMontréal, the caisse of yesterday overlookingtomorrow.

Paintings of members’ workplacesPaintings by muralist artist, Olivier Gaudette,representing workplaces of members of the CaisseDesjardins du Secteur industriel de Montréal. Thecaisse is present in each of these environments.

7

88

APPROVAL OF THE ANNUAL REPORTWe certify that the 1st annual report of Caisse Desjardins du Secteur industriel de Montréal meets the requirements of the Act respecting financial services cooperatives and has been duly approved by the caisse’s board of directors.

Steve Michel Édouard ViauChair Secretary

Head Office5705 Sherbrooke Street EastMontreal (Quebec)H1N 1A8514 253-0610 / 1-800 813-6275

FINANCIAL CENTERSGaz Metro1717 du Havre StreetMontreal (Quebec)H2K 2X3

Rail935 de la Gauchetière Street WestMontreal (Quebec)H3B 2M9

COUNSELLING OFFICES BY APPOINTMENTMolson Coors - Factory1670 Notre-Dame Street EastMontreal (Quebec)H2L 2R4

Molson Coors - Molson Distribution Center1900 Dickson StreetMontreal (Quebec)H1N 2H8

Labatt50 Labatt AvenueLaSalle (Quebec)H8R 3E7

Kraft-Heinz8600 Devonshire RoadMont-Royal (Quebec)H4P 2K9

Pfizer1025 Marcel-Laurin Blvd.Saint-Laurent (Quebec)H4R 1J6

THE OFFICERSBOARD OF DIRECTORSSTEVE MICHEL, CPA, CA* . . . . . . . . . . ChairMICHEL BEAUDRY. . . . . . . . . . . . . . . Vice-ChairÉDOUARD VIAU* . . . . . . . . . . . . . . . SecretarySERGE BARBEAU . . . . . . . . . . . . . . . OfficerJEAN CASTONGUAY . . . . . . . . . . . . . OfficerMARTIN GAUDREAU . . . . . . . . . . . . . OfficerRICHARD GUY* . . . . . . . . . . . . . . . . OfficerFRANCE LABELLE . . . . . . . . . . . . . . . OfficerÉTIENNE LAGUË, CPA, CGA. . . . . . . . . OfficerAUDREY LAPALME, CPA, CMA . . . . . . OfficerLLOYD J. MEGIN . . . . . . . . . . . . . . . . OfficerMICHEL MORIN* . . . . . . . . . . . . . . . OfficerJO ANN RAYMOND* . . . . . . . . . . . . . OfficerGAÉTAN SAVOIE . . . . . . . . . . . . . . . . OfficerJASON ST-HILAIRE. . . . . . . . . . . . . . . Officer

BOARD OF SUPERVISIONMARTIN PLAMONDON* . . . . . . . . . . ChairCLAUDE LAVIOLETTE. . . . . . . . . . . . . SecretaryLISA FRABASILE, CPA, CGA . . . . . . . . . AdvisorCHARLES LABERGE-MILOT . . . . . . . . AdvisorSIMON ROBERGE . . . . . . . . . . . . . . . Advisor

* Outgoing officers eligible for re-election