EXHIBIT1

FOURSEASONS HOTELS INC.

FORM51-102F2ANNUAL INFORMATIONFORM

March  9,2006

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Table ofContents

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|                                                              |  | Page |
| Businessof Four Seasons                                           |  | 1    |
| ManagementOperations                                              |  | 2    |
| Hotels andResorts                                                 |  | 2    |
| Management                                                        |  | 2    |
| Sales,Marketing, Advertising andReservations                      |  | 3    |
| Branded ResidentialProperties                                     |  | 4    |
| ManagementResources                                               |  | 4    |
| Employees                                                         |  | 4    |
| OwnershipOperations                                               |  | 5    |
| IntellectualProperty                                              |  | 5    |
| Business and GrowthStrategy                                       |  | 5    |
| Growth from ExistingProperties                                    |  | 6    |
| RevPAR Statistics — CoreHotels                              |  | 6    |
| New Hotel and ResortOpportunities                                 |  | 6    |
| Branded ResidentialProperties                                     |  | 7    |
| CapitalDeployment                                                 |  | 7    |
| CompetitiveStrengths                                              |  | 8    |
| Strong BrandRecognition                                           |  | 8    |
| Superior Hotel OperatingResults                                   |  | 8    |
| StrategicRelationships                                            |  | 8    |
| ManagementFocus                                                   |  | 9    |
| GlobalPresence                                                    |  | 9    |
| Strong ManagementTeam                                             |  | 9    |
| Four SeasonsPortfolio                                             |  | 9    |
| Description of Hotels andResorts                                  |  | 10   |
| Properties under Construction orDevelopment                       |  | 13   |
| Summary Hotel OperatingData                                       |  | 15   |
| OperatingRisks                                                    |  | 17   |
| Geopolitical, Economic and LodgingIndustryConditions              |  | 17   |
| Competition                                                       |  | 17   |
| Dependenceon Management Agreements                                |  | 18   |
| Dependence onProperty Owners                                      |  | 19   |
| Risk Associated withExpansion, Growth and NewConstruction         |  | 19   |
| Investments in and Advancesto Managed and Owned Properties        |  | 19   |
| DebtRating Risks                                                  |  | 20   |
| GovernmentRegulation                                              |  | 20   |
| PoliticalRisk                                                     |  | 21   |
| Insurance                                                         |  | 21   |
| LegalProceedings                                                  |  | 21   |
| CurrencyExposure                                                  |  | 21   |
| Seasonality/QuarterlyPredictability                               |  | 22   |
| IntellectualProperty                                              |  | 23   |
| Risks Associated with the FourSeasons Branded ResidentialBusiness |  | 23   |
| Dependence on KeyEmployees                                        |  | 23   |
| MaterialContracts                                                 |  | 23   |
| CorporateInformation                                              |  | 24   |
| Description of ShareCapital                                       |  | 24   |
| Dividends                                                         |  | 24   |
| Rightson Dissolution                                              |  | 24   |
| VotingRights                                                      |  | 24   |
| Take-Over BidProtection                                           |  | 25   |
| Conversion                                                        |  | 25   |
| Modifications,Subdivisions and Consolidation                      |  | 25   |
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|                                     |  |    |  |  |  |  |
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| Transfer Agent andRegistrar         |  | 25 |
| Market forSecurities                |  | 26 |
| DividendPolicy                      |  | 26 |
| Convertible SeniorNotes             |  | 26 |
| Ratings                             |  | 26 |
| DirectorsandOfficers                |  | 27 |
| Experts                             |  | 30 |
| AuditCommittee Information          |  | 30 |
| Audit CommitteeCharter              |  | 30 |
| Composition of AuditCommittee       |  | 30 |
| Education andExperience             |  | 30 |
| Pre-Approval Policies andProcedures |  | 31 |
| Audit and Audit-RelatedFees         |  | 31 |
| TaxFees                             |  | 31 |
| All otherFees                       |  | 31 |
| CorporateChart                      |  | 32 |
| AdditionalInformation               |  | 32 |
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Forward-LookingStatements

This document contains‘‘forward-looking statements’’ within themeaning of applicable securities laws, including RevPAR, profit marginand earning trends; statements concerning the number of lodgingproperties expected to be added in this and future years; expectedinvestment spending; and similar statements concerning anticipatedfuture events, results, circumstances, performance or expectations thatare not historical facts. Various factors and assumptions were appliedor taken into consideration in arriving at these statements, which donot take into account the effect that non-recurring or other specialitems announced after the statements are made may have on our business.These statements are not guarantees of future performance and,accordingly, you are cautioned not to place undue reliance on thesestatements. These statements are subject to numerous risks anduncertainties, including those described in our management’sdiscussion and analysis and in this document. (See discussion under‘‘Operating Risks’’ at page 17.) Thoserisks and uncertainties include adverse factors generally encounteredin the lodging industry; the risks associated with world events,including war, terrorism, international conflicts, natural disasters,extreme weather conditions and infectious diseases; general economicconditions, fluctuations in relative exchange rates of variouscurrencies, supply and demand changes for hotel rooms and residentialproperties, competitive conditions in the lodging industry, the risksassociated with our ability to maintain and renew management agreementsand expand the portfolio of properties that we manage, relationshipswith clients and property owners and the availability of capital tofinance growth. Many of these risks and uncertainties can affect ouractual results and could cause our actual results to differ materiallyfrom those expressed or implied in any forward-looking statement madeby us or on our behalf. All forward-looking statements in this documentare qualified by these cautionary statements. These statements are madeas of the date of this document and, except as required by applicablelaw, we undertake no obligation to publicly update or revise anyforward-looking statement, whether as a result of new information,future events or otherwise. Additionally, we undertake no obligation tocomment on analyses, expectations or statements made by third partiesin respect of Four Seasons, its financial or operating results or itssecurities or any of the properties that we manage or in which we mayhave aninterest.

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Effectivethe first quarter of 2005, we have adopted US dollars as our reportingcurrency. All amounts disclosed in this annual information form(including amounts for prior periods) are in US dollars unlessotherwise noted. Our financial statements are prepared in accordancewith Canadian generally accepted accountingprinciples.

The consolidated financialstatements in Canadian dollars have been translated to US dollars usingthe foreign exchange rates applicable at each balance sheet date forassets and liabilities, and the weighted average exchange rates of thecorresponding quarters for the consolidated statements of operations,consolidated statements of cash provided by operations and consolidatedstatements of cash flow. Equity transactions have been translated to USdollars at the historical exchange rates for 2005 and 2004 with openingequity accounts on January  1,  2004 translated at theexchange rate on that date. Any resulting exchange gain or loss wascharged or credited to ‘‘Equity adjustment from foreigncurrency translation’’, which is included as a separatecomponent of shareholders’ equity.

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We have not changed thefunctional currencies of our entities. As a result, while US dollarreporting will minimize the currency fluctuations related to themajority of our US dollar management fee revenues, it will noteliminate foreign currency fluctuations related to our management feesin other currencies or the majority of our management operationsgeneral and administrative expenses, which are incurred in Canadiandollars. It also will not eliminate foreign currency gains and lossesrelated to unhedged net monetary asset and liabilitypositions.

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FourSeasons Hotels Inc.

Four Seasons Hotels Inc. wasincorporated under the Business Corporations Act (Ontario) onJanuary  6,1978.1 Our registered and principal office is located at 1165 LeslieStreet, Toronto, Ontario, Canada M3C 2K8. Our Limited Voting Shares arelisted on the Toronto Stock Exchange under the symbol FSH.SV and on theNew York Stock Exchange under the symbol FS.

Business ofFour Seasons

Four Seasons is one of the world’sleading managers of luxury hotels and resorts. We endeavour to offerbusiness and leisure travelers the finest accommodations andexperiences beyond compare in each destination in which weoperate.

Four Seasons has a portfolio of 70 luxury hoteland resort properties (containing approximately 17,300 guest rooms),several of which include a residential component. These properties areoperated primarily under the Four Seasons brand name in principalcities and resort destinations in 31 countries in North America, theCaribbean, Europe, Asia, Australia, the Middle East and South America.In addition, 27 properties are under construction or development in afurther nine countries around the world. Of these, 18 new propertiesare to include a residential component. (For a chart summarizing thehotels, resorts, and Four Seasons branded residential projects that aremanaged by us and under construction or development to be managed byus, see ‘‘Four Seasons Portfolio’’.)

We earn income primarily from our management operations.Under our management agreements, we generally oversee, as agent for theproperty owner, all aspects of the day-to-day operations of each hoteland resort. In addition, we generally provide owners with advice withrespect to the design, construction and furnishing of new or renovatedhotels, resorts and residences, assistance with the refurbishment ofhotels and resorts, support and advice with respect to informationtechnology systems and database applications, and a centralizedpurchasing system for goods. For providing these services, we generallyreceive a variety of fees, comprised of hotel management fees,including a base fee and an incentive fee, other fees includingpurchasing and pre-opening fees, and reimbursable costs including asales and marketing charge, an advertising charge and a reservationcharge. The base fee usually is calculated as a percentage of the totalrevenues of the property. Incentive fees typically are based on theproperty’s profitability. (See ‘‘ManagementOperations’’.)

To further capitalize on thevalue of the Four Seasons brand name, we license and manage FourSeasons branded residential projects, including whole ownership andfractional ownership. We generally receive fees for the use of the FourSeasons brand in connection with the sale of the interests in theseprojects. In addition, we receive fees from the owners of the interestsfor services provided in the ongoing management of theseprojects.

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| 1 | Thearticles of Four Seasons Hotels Inc. were restated in 1986 toconsolidate prior amendments and were amended in 1989 to subdivide eachSubordinate Voting Share and each Multiple Voting Share on a 2:1 basisand to create an unlimited number of special shares designated as FirstPreference Shares and Second Preference Shares. In 1996 the articleswere further amended to re-designate the Subordinate Voting Shares asLimited Voting Shares and to create 4,171,924 special shares designatedas Variable Multiple Voting Shares, which replaced and havesubstantially the same rights, privileges, restrictions and conditionsas did the Multiple Voting Shares, except that the number of votes perVariable Multiple Voting Share generally increases as Limited VotingShares are issued and dividends on the Variable Multiple Voting Shareswill be in an amount per share equal to 50% of the dividends perLimited Voting Share. |

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As part of our ongoing business, wemake investments in, or advances in respect of or to owners of,properties with a view to obtaining new management agreements orenhancing existing management agreements where we believe the overallreturns will justify the investment or advance. We generally seek tolimit our total long-term capital exposure to no more than 20%of the total equity required for a property and typically can choose tohave our equity interest diluted if additional capital is required. Weattempt to structure our equity interests separately from ourmanagement interests to enable us to dispose of equity interests asopportunities arise, without affecting our managementinterests.

Management Operations

Hotels andResorts

Management

We are principally amanagement company. We generally manage our hotels and resorts onbehalf of our property owners pursuant to separate managementagreements for each property. Under our management agreements, wegenerally oversee, as agent for the property owner, all aspects of theday-to-day operations of the hotels and resorts, including sales andmarketing, advertising, reservations, accounting, purchasing, budgetingand the hiring, training and supervising of staff. In addition, wegenerally provide owners with advice with respect to informationtechnology systems and development of certain database applications, aswell as, advice with respect to the design, construction and furnishingof new or renovated hotels, resorts and residences. We also provide acentralized purchasing system for goods. We generally perform theseservices within the guidelines contained in annual operating andcapital plans that are submitted to the owners of the hotels andresorts during the last quarter of the preceding year for their reviewand approval. For providing these services, we generally receive avariety of fees, including management fees (comprised of a base fee andan incentive fee), other fees (including royalty and management feesfrom our residential business, fees we earn during the development ofour hotels and resorts and other miscellaneous fees) and reimbursedcosts (including a sales and marketing charge, an advertising chargeand a reservation charge).

We currently have the abilityto earn incentive fees in virtuallyall2of the hotels and resorts that we manage. Incentive fees are based onthe profits of the hotel or resort as determined in accordance with therelevant management agreement. In 2005, incentive fees were earned from453of our management agreements, as compared to 35 of our managementagreements in 2004.

We generally supervise purchasing atthe hotels and resorts that we manage to maintain a uniform quality ofgoods purchased and to control hotel operating costs. We maintain acentralized purchasing system and receive a fee generally calculated asa percentage of the cost of goods purchased when this system isutilized by the hotels and resorts undermanagement.

Although the hotel and resort owners aregenerally responsible for financing and managing the development of thehotels and resorts, we typically play a significant pre-opening role.We provide advice with respect to the design, construction and fittingout specifications of the hotels and resorts during the developmentstage to ensure that they meet Four Seasons’ standards and weearn fees for these pre-opening services. We may also assist owners inconnection with the refurbishment of the hotels and resorts afteropening in return for a refurbishing fee.

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| 2 | Wehave this ability in 66 of the 70 hotels and resorts that wemanage. |

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| 3 | IncludesThe Pierre in New York and Four Seasons Hotel Newport Beach, which areno longer managed by Four Seasons. |

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Under our management agreements, thehotel or resort owner is responsible for funding the hotel’s orresort’s operating costs, capital expenditures and workingcapital requirements, including the salaries and benefits of allemployees. The owner typically is required to set aside a percentage ofthe gross revenue of the hotel or resort each year as a reserve forcapital expenditures. Those percentages typically range from 3%to 5% of hotel or resort annual gross operating revenues. Wepropose an operating plan and capital expenditure budget to the ownerfor approval on an annual basis. All structural changes, majorrefurbishing programs and major repairs generally require the separateapproval of owners prior to implementation and may be carried out by usor a third party.

Total fee revenues are geographicallydiversified around the world. The United States is the only geographicsegment that contributed more than 40% of all our fee revenuesin 2005 and 2004. The diversification of our fee revenues has increasedsignificantly over the past 10 years. With the opening of hotels andresorts currently under construction and development around the world,we expect diversification of our fee revenues to continue in thefuture.

Sales, Marketing, Advertising andReservations

We are responsible for the development ofoverall sales and marketing strategies for our portfolio of brandedhotels and resorts, which includes enhancing international awareness ofthe Four Seasons brand and developing local market potential forspecific hotels and resorts. Our marketing efforts are coordinatedthrough our headquarters in Toronto and are exclusively targeted at theluxury segment of the market worldwide. Our customer mix consists ofbusiness travelers, groups (including corporate and incentive), andleisure travelers. These customer segments accounted for an estimated33%, 31% and 36%, respectively, of total roomnights in 2005. Our corporate marketing staff oversees planning andimplementation of hotel and resort marketing programs and also thetraining and development of the global sales force and the hotel salesand marketing staff. We also provide supplementary oversight salessupport to the four Regent hotels in our system (see‘‘Intellectual Property’’), with coremarketing services for the Regent brand being provided by CarlsonHospitality Group of Minneapolis.

We have a global salesforce of approximately 50 sales professionals in 16 offices worldwidelocated in, Atlanta, Bahrain, Chicago, Dallas, Dubai, Frankfurt, HongKong, London, Los Angeles, New York, Paris, Singapore, Sydney, Tokyo,San Francisco and Washington, D.C. Key objectives of our sales forceare to attract groups and corporate business travelers for the hotelsand resorts, as well as to establish personal contact with nationallyrecognized travel agencies. In addition, a total of more than 450 salesprofessionals are employed locally at the hotels and resorts that wemanage. Our local marketing strategy is concentrated on developingrooms and food and beverage business for hotels and resorts locally andregionally, and promoting the hotel or resort as a centre of communityactivity with a view to increasing revenues from localsources.

We also provide an international corporateadvertising program that develops and places advertising for FourSeasons branded hotels and resorts and oversees promotional programsthat benefit all the properties. Our advertisements are designed toenhance consumer awareness of our luxury services and the value thatsuch services provide to the business and leisuretraveler.

We staff one reservation centre for all FourSeasons branded hotels and resorts, while Carlson Hospitality Groupprovides core reservation services for our Regent hotels. In addition,our global reservation network provides reservation services in thelocal language in 31 markets in North America, Asia/Pacific, Europe andthe Middle East. Electronic reservations are another key part of ourglobal distribution network, as our reservation systems are fullyintegrated with international airline booking systems. The Internet isa growing distribution channel which is supported by ourwebsite—www.fourseasons.com. Our website acceptson-line reservations and also refers guests to other reservationchannels.

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We receive corporate sales andmarketing charges, centralized reservation service charges andcorporate advertising charges from our hotels and resorts, therebyenabling us to recover substantially all of the costs of providingthese services.

Branded Residential Properties

Wereceive royalty fees for the use of our name in association with thesale of Four Seasons branded real estate. These royalties are typicallybased on the sales proceeds of the residences sold. We also manage FourSeasons branded and serviced residential projects pursuant tomanagement agreements under which we oversee the management of theday-to-day operations of the completed projects in return for ongoingmanagement fees from the owners of interests in theseprojects.

Management Resources

Each of ourproperties is managed by a General Manager and supported by a RegionalVice President (who is also a General Manager), and other corporateVice Presidents. The size of each property’s management team andits hourly staff varies, based on the size and business volume of theparticular property. These management teams monitor staffing levels onan ongoing basis to optimize service standards and labour productivityat the properties.

A General Manager is responsible forsupervising the day-to-day operations of a single property, is afull-time employee at that property, and is compensated in part basedon the operational performance of that property. Our General Managersreport directly to one of 16 Regional Vice Presidents or directly tothe Senior Vice President, Operations — North America, thePresident Europe, Middle East and Africa, or the Executive VicePresident, Operations — Asia/Pacific. Area Directors of Financeand Regional IT Directors, each of whom is also a full-time employee ata property that we manage, devote a portion of their time to regionalactivities and providing assistance to other properties that we manage.Corporate Area Directors or Vice Presidents of Human Resources andMarketing complete each regional support team. We believe that ourregional management structure is a key component in our ability todeliver and maintain the highest and most consistent standards ofproduct quality and service at each of our properties in a costeffective manner, especially as we continue to expandglobally.

From the corporate level, we provide each of ourproperties with the benefits of management services delivered by ournetwork of highly experienced executives, corporate personnel and areamanagers. We also provide, or arrange for the provision of, assistanceand training to each property’s employees for administration,operations, rooms and guest service, reservations, maintenance andengineering, human resources and benefits. Other services arranged byus include assistance with accounting, tax, legal, risk management,treasury, information technology, internal audit and creditservices.

Employees

We directly employ and arefinancially responsible for approximately 520 individuals at thevarious corporate offices, the worldwide sales offices and the centralreservations office. In addition, there are approximately 30,900employees located at the 70 hotels and resorts that we manage, severalof which include a residential component. All costs relating toproperty-based employees, including wages, salaries and health andinsurance benefits, are the responsibility of the property owners andare generally paid out of the operating cash flow of the property.Management and corporate staff share responsibility for the selectionand training of property-based employees and for ensuring, throughprogressive career development, an adequate supply of mobile, qualifiedand experienced staff to match the growth of our operationsinternationally. Maintenance of employee communication, motivation andmorale at high levels is necessary to meet the expectations of ourclientele. In this context, we have devoted significant effort todeveloping customized hiring practices, training and career developmentprograms and approaches.

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At 22 hotels and resorts that wemanage, including 11 in North America, various groups of employees arecovered by collective bargaining agreements.

OwnershipOperations

We hold ownership interests in, or have madeadvances in respect of or to owners of, 33 of the 70 hotels and resortsand the branded residential projects that we currently manage,including a 100% leasehold interest in the Four Seasons HotelVancouver. Our investment strategy is not to hold any additionalmajority investments in hotels and resorts. However, Four Seasons HotelVancouver is a long-term leasehold interest that was established at anearlier stage in ourdevelopment4.. We are continuing to review options in respect of Four Seasons HotelVancouver to determine what, if any, alternatives may be available tomodify or restructure our operation of, or investment in, this hotel.There can be no assurance that acceptable alternative arrangements canbe found with respect to this hotel or as to the terms of any suchalternative arrangements.

IntellectualProperty

In the highly competitive service industry inwhich we operate, trade names, trademarks, service marks and logos arevery important in the sales and marketing of those services. We have asignificant number of trade names, trademarks, service marks and logos,and significant time and effort are expended each year on surveillance,registration and protection of our trade names, trademarks, servicemarks and logos, which we believe have become synonymous in the lodgingindustry with a standard of attention to detail and an unwaveringdedication to excellence.

We have an arrangement withCarlson Hospitality Group pursuant to which Carlson owns and has theexclusive right to use the Regent name, and related names, trademarks,service marks and logos for new development. Pursuant to thisarrangement, we retain the right to use the Regent name and relatedmarks and logos at the four Regent properties we manage and, inconsideration for the transfer of the ownership rights in the Regentname and related marks and logos, we receive fixed annual payments fromCarlson. The costs associated with the maintenance of the Regent brandand marks are the obligation of Carlson.

Business andGrowth Strategy

Our core strategic goal is to berecognized as the undisputed global leader in luxury lodging. A corestrategy underlying that goal is to enhance our industry positionthrough a focused, international portfolio expansion and refinementprogram that capitalizes on the strengths of our core managementoperations and the value of our brand name. We will continue to focuson sustainable growth and seek to utilize our competitive strengths toincrease earnings, cash flow, property owners’ returns, andshareholder value. We intend to do this by continuing to improve theoperating performance of the portfolio of properties that we manage, byacquiring new management contracts, by pursuing strategic enhancementsto established properties and strategic divestitures of propertieswhere appropriate opportunities arise, and by capitalizing onopportunities to leverage our luxury brand name through complementarybusiness extensions such as Four Seasons branded residentialproducts.

We believe that the strength of our brand name,our global marketing presence and our operational expertise result inaverage room revenue per available room(RevPAR)5premiums and strong operating 

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| 4 | Wehave leased and managed Four Seasons Hotel Vancouver since 1976. Thelease on Four Seasons Hotel Vancouver expires in2020. |

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| 5 | RevPARis a non-GAAP measure. We use RevPAR because it is a commonly usedindicator of market performance for hotels and resorts and representsthe combination of the average daily room rate and the averageoccupancy rate achieved during the period. RevPAR does not include foodand beverage or other ancillary revenues generated by a hotel orresort. RevPAR is the most commonly used measure in the lodgingindustry to measure the period-over-period performance of comparableproperties. Our calculation of RevPAR may be different than thecalculation used by other lodging companies. |

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profitability for luxury hotels and resortsthat we manage and provide us with a competitive advantage in obtainingnew management contracts worldwide. RevPAR for CoreHotels6in the United States during 2005 was $273, 55% higher than theRevPAR of the United States luxury segment as compiled by Smith TravelResearch.

Growth from Existing Properties

Webelieve opportunities will exist for growth within our existing andnewly opened properties by increasing overall market share and RevPAR,thereby improving the properties’ profitability and, in turn,our management fee revenues and ownership earnings. From 2004 to 2005,RevPAR for all Core Hotels increased by 11.4%. During thisperiod, RevPAR for Core Hotels in the United States, OtherAmericas/Caribbean, Europe, the Middle East and Asia/Pacific increased13.3%, 13.8%, 4.5%, 19.3% and 9.5%,respectively. On a local currency basis, as compared to 2004, RevPAR in2005 for Other Americas/Caribbean, Europe, the Middle East andAsia/Pacific Core Hotels increased 10.5%, 4.4%,15.1% and 9.5%, respectively.

RevPAR Statistics— CoreHotels

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| Region                  |  | Occupancy |  | AverageRoomRate |  | RevPAR |
|                    |  | 2005      |  | 2004            |  | 2005   |  | 2004 |  | 2005 |  | 2004 |
| Worldwide               |  | 69.0%     |  | 66.1%           |  | $349   |  | $328 |  | $226 |  | $203 |
| UnitedStates            |  | 73.0%     |  | 69.4%           |  | $374   |  | $349 |  | $273 |  | $241 |
| OtherAmericas/Caribbean |  | 67.7%     |  | 63.8%           |  | $345   |  | $323 |  | $217 |  | $191 |
| Europe                  |  | 63.7%     |  | 63.5%           |  | $527   |  | $507 |  | $351 |  | $336 |
| MiddleEast              |  | 68.3%     |  | 65.6%           |  | $210   |  | $184 |  | $142 |  | $119 |
| Asia/Pacific            |  | 65.3%     |  | 62.7%           |  | $238   |  | $228 |  | $118 |  | $107 |
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NewHotel and Resort Opportunities

Having established anetwork of luxury hotels in many of the world’s key financialcentres, we expect our future expansion to occur primarily in locationsthat satisfy our objectives of better servicing the travel needs of ourexisting customer base and attracting new international businesstravelers to our managed hotels and resorts worldwide. We expect thatfuture growth will primarily be in the form of new hotels and resorts,or the conversion of existing hotels and resorts, in Europe, the MiddleEast, South America and Asia/India, as well as selected urban andresort locations in the United States and the Caribbean. We plan toincrease the number of resorts that we manage to serve the leisuretravel needs of our customers,

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| 6 | Theterm ‘‘Core Hotels’’ means hotels andresorts under management for the full year of both 2005 and 2004.However, if a ‘‘Core Hotel’’ has undergoneor is undergoing an extensive renovation program in one of those yearsthat materially affects the operation of the property in that year, itceases to be included as a ‘‘Core Hotel’’in either year. Changes from the 2004/2003 Core Hotels are theadditions of Four Seasons Resort Jackson Hole, Four Seasons HotelMiami, Four Seasons Resort Great Exuma at Emerald Bay, Four SeasonsHotel Prague, Four Seasons Hotel Riyadh and Four Seasons Hotel Jakarta,and the deletions of Four Seasons Resort Maldives at Kuda Huraa (due toits temporary closure caused by the tsunami), The Pierre in New York(due to its disposition on June  30,  2005) and FourSeasons Hotel Newport Beach (due to the owner’s decision tomanage that property independently). |

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which is expected to reduce the seasonality ofour cash flows. We currently have 27 new properties under constructionor development and are evaluating numerous other managementopportunities in various locations around the world.

Webelieve that we will continue to have the opportunity to consider andenter into appropriate new hotel and resort management agreements as aresult of our competitive strengths. In 2005, we began operations atFour Seasons Hotel Damascus, Four Seasons Hotel Hampshire, Four SeasonsResort Lana’i at Manele Bay, Four Seasons Resort Langkawi, FourSeasons Hotel Doha, Four Seasons Hotel Hong Kong and Four Seasons HotelGeneva. In early 2006, we began operations at Four Seasons HotelSilicon Valley at East Palo Alto and Four Seasons Tented Camp, GoldenTriangle, Thailand. We expect to open nine new hotels and resorts overthe remainder of 2006 and 2007. (For details on these and other hotelsand resorts under construction or advanced stages of development, see‘‘Four Seasons Portfolio — Properties underConstruction or Development’’.)

BrandedResidential Properties

As part of our program tocapitalize on the value of the Four Seasons brand, we have embarked onopportunities relating to branded and serviced residential projects.Typically, these residential projects will be integrated with ourmanaged hotels and resorts. (See discussion under‘‘Management Operations — Branded ResidentialProperties’’.) During 2005, interests wereavailable for initial sale in branded and serviced residential projectsin Aviara, Scottsdale, Punta Mita, San Francisco, Nevis, Jackson Hole,Miami, Great Exuma, Seattle, Houston, and Sharm el Sheikh. Weanticipate pursuing similar initiatives in a number of our futureresort and urban developments.

CapitalDeployment

Consistent with our business strategy, we donot generally require large amounts of capital to maintain existingmanagement agreements or our minority ownership positions. To theextent required, we will make investments or advances to securelong-term management contracts with a view to expanding or enhancingour management business where we believe the overall returns willjustify the investment or advance. We generally seek to limit our totallong-term capital exposure to no more than 20% of the totalequity required for a property and typically can choose to have ourequity interest diluted if additional capital is required. We attemptto structure our equity interests separately from our managementinterests so as to be able to dispose of an equity interest as saleopportunities arise, without affecting our management interests. Wehold secured cash flow loans in connection with Four Seasons HotelLondon7and have advances outstanding in connection with various properties,including Four Seasons Hotel George V Paris, Four Seasons Hotel Sydney,Four Seasons Hotel Toronto, Four Seasons Hotel Geneva and Four SeasonsHotel Hampshire. As at December  31,  2005 we had$242.2  million in cash and cash equivalents and additionalfinancing available under our bank credit facilities. (For details ofthose credit facilities see ‘‘Liquidity and CapitalResources’’ in Management’s Discussion andAnalysis.)

We work closely with owners and investors indeveloping new properties and acquiring existing luxury properties thatwe will manage. Further information regarding capital commitments andcapital funding for properties under development or construction isprovided under ‘‘Four Seasons Portfolio —Properties under Construction orDevelopment’’.

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| 7 | Seenote 3(a) and (b) to Four Seasons’ consolidated financialstatements. |

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CompetitiveStrengths

The hotel industry is highly competitive. Webelieve that our competitive position is strengthened by the barriersto entry into the luxury segment of the hotel management business.Those barriers to entry include the time and significant capitalresources required to establish a well recognized and respected luxurybrand name and to obtain management contracts for luxury properties instrategic markets worldwide. We also believe that we have developed aunique service culture, depth of management expertise, and multiplecapital sources over our more than 40-year history that would bedifficult for others to replicate.

Strong BrandRecognition

Our properties are widely recognized for theexceptional quality of their guest facilities, service and atmosphere,and have been named more frequently than any other competitor among theworld’s best hotels and travel experiences by InstitutionalInvestor, Condé Nast Traveler, Zagat andothers. We believe that our brand name recognition cannot easily bereplicated by others, as it has been created over more than 40 yearsthrough the exceptional experiences provided by Four Seasons’global list of unique properties of the highestquality.

Superior Hotel Operating Results

Wegenerally achieve RevPAR and, we believe operating profit margins, forhotels and resorts that we manage that are above the average achievedin the luxury segment of the lodging industry. We believe that weattract owners and developers of luxury hotels and resorts worldwide asa result of the generally superior financial performance of the hotelsand resorts that we manage.

StrategicRelationships

Strategic relationships are an importantsource of financing for the development opportunities required toexpand our management operations. We have established relationshipswith numerous institutional and private equity sources that invest inand develop luxury properties. Several of the existing owners have anownership interest in more than one Four Seasons hotel or resort,including four owners that have interests in four or moreproperties.

In 1994, a company controlled by His RoyalHighness Prince Alwaleed Bin Talal Bin Abdulaziz Al Saud purchased asignificant minority position in Four Seasons Hotels Inc. PrinceAlwaleed or companies controlled by him (collectively,‘‘Kingdom’’), own a majority interest inFour Seasons Hotel London, Four Seasons Hotel George V Paris, FourSeasons Hotel Geneva, Four Seasons Hotel Toronto, the Four SeasonsResidence Club Scottsdale at Troon North and Four Seasons Hotel Riyadh,with Four Seasons having made advances in respect of the first fiveproperties. Kingdom also has a significant interest in a company thatholds interests in the Four Seasons Hotel Amman, Four Seasons ResortSharm el Sheikh, Four Seasons Hotel Cairo at Nile Plaza and FourSeasons Hotel Damascus. Kingdom has invested, or is expected to makeinvestments, either directly or indirectly, in a number of additionalproperties at various stages of development that we expect to manageunder the Four Seasons brand name, such as the Four Seasons hotels orresorts being developed in Alexandria, Beirut, Marrakech and Mauritius.All of our transactions with Kingdom are conducted at arm’slength and in the ordinary course of business. During 2005, Kingdompurchased our minority equity interests in our hotels in Amman, Cairoat Nile Plaza and Damascus, as well as a majority of our equityinterest in our residence club in Scottsdale, for aggregate proceeds ofapproximately $18.9 million. We also agreed to make advances to Kingdomin respect of our hotels in Toronto and Geneva to assist with therenovation of those properties. We continue to manage all of theseproperties.

8

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Management Focus

We areprincipally a global hotel and resort management company. Managementagreements for the hotels and resorts that we manage generally arelong-term, having remaining terms averaging approximately 52 years,including extension periods available at our option. The average termof the management contracts for the nine new hotels and resorts weexpect to open over the remainder of 2006 and 2007 is 58 years. (For achart summarizing, among other things, the hotels and resorts underconstruction or development by Four Seasons that are expected to openover the remainder of 2006 and 2007 see ‘‘Four SeasonsPortfolio — Properties under Construction orDevelopment’’.)

Global Presence

Wemanage a global portfolio of 70 luxury hotels and resorts, many ofwhich include a residential component, in 31 countries with 27additional properties under construction or development in a furthernine countries around the world. Of these, 18 new properties are toinclude a residential component. Hotels that we currently manage arelocated in major international financial centres, such as London, NewYork, Paris, Geneva, Chicago, Washington, Los Angeles, Tokyo, Milan,Shanghai, Singapore, Hong Kong, Toronto and Sydney, as well as inemerging international markets, such as Dublin and Mexico City. We alsomanage resorts in world-class leisure destinations, such as Bali,California, Costa Rica, Hawaii, Mexico, Nevis, Malaysia and Whistlerand have residential products in active sales and operation in theUnited States, Caribbean and Egypt. We anticipate that we will continueto expand in urban and resort destinations where consumer demandwarrants a luxury property. In 2005, approximately 47%,12%, 18%, 9% and 14% of all fee revenueswere derived from hotels and resorts in the United States,Asia/Pacific, Europe, Middle East, and Other Americas/Caribbean,respectively. We maintain a fully integrated global reservation andsales office system that provides international sales coverage for ourproperties.

Strong Management Team

Our corporateexecutive management team consists of nine individuals who areresponsible for our global strategic direction and who have an averagetenure of approximately 22 years with Four Seasons. This team issupported by 25 corporate Vice Presidents, who are responsible forvarious aspects of our daily operations, as well as by 70 GeneralManagers and Regional Vice Presidents, who together have an averagetenure of approximately 15 years with Four Seasons. We have afundamental strategy of developing our senior management team, to theextent possible, from within in order to ensure consistency of ourservice culture and work ethic.

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Four Seasons Portfolio

Ourproperties are comprised of luxury hotels and resorts, many of whichinclude a residential component, whose target customers are principallybusiness travelers, corporate and incentive groups and discerningleisure travelers. Our urban hotels generally are centrally located inthe commercial and financial districts of the world’s leadingcities in North America, South America, Asia, Europe and the MiddleEast. Our luxury resorts and serviced and branded residential projectsare located in world-class leisure destinations and provide extensiverecreational and meeting facilities to attract upscale leisuretravelers and groups.

Description of Hotels and Resorts

The following table provides an overview of the propertiesthat we currently manage, many of which include a residentialcomponent:

|                                                                  |  |                           |        |                             |  |            |         |          |  |  |
|------------------------------------------------------------------|--|---------------------------|--------|-----------------------------|--|------------|---------|----------|--|--|
| Hotel/Resortand Location                                         |  | ApproximateNumber ofRooms |        | ApproximateEquity Interest1 |
| **UnitedStates**                                                 |  |                      |   |                        |  |       |    |     |
| Four Seasons HotelAtlanta, Georgia                               |  |                      | 245    |                        |  | —    |
| FourSeasons Hotel Austin, Texas                                  |  |                      | 290    |                        |  | —    |
| Four SeasonsResort Aviara, California2                           |  |                      | 330    |                        |  | 7.3%3      |
| TheRegent Beverly Wilshire (Beverly Hills), California           |  |                      | 395    |                        |  | —    |
| Four SeasonsBiltmore Resort (Santa Barbara),California           |  |                      | 205    |                        |  | —    |
| FourSeasons Hotel Boston, Massachusetts2                         |  |                      | 275    |                        |  | —    |
| FourSeasons Hotel Chicago, Illinois                              |  |                      | 345    |                        |  | —    |
| The Ritz-Carlton HotelChicago, Illinois                          |  |                      | 435    |                        |  | —    |
| Four Seasons Resort andClub Dallas at Las Colinas, Texas         |  |                      | 355    |                        |  | —    |
| Four Seasons Hotel Houston,Texas2                                |  |                      | 405    |                        |  | —    |
| FourSeasons Resort Hualalai at Historic Ka’upulehu,Hawaii  |  |                      | 245    |                        |  | —    |
| FourSeasons Resort Jackson Hole, Wyoming2                        |  |                      | 140    |                        |  |       | — | 4   |
| FourSeasons Resort Lana’i at Manele Bay,Hawaii             |  |                      | 235    |                        |  | —    |
| FourSeasons Hotel Las Vegas, Nevada                              |  |                      | 425    |                        |  | —    |
| Four Seasons Hotel LosAngeles, California                        |  |                      | 285    |                        |  |       | — | 4   |
| FourSeasons Resort Maui at Wailea, Hawaii                        |  |                      | 375    |                        |  | —    |
| Four Seasons Hotel Miami,Florida                                 |  |                      | 220    |                        |  |       | 4.7     | %3  |
| FourSeasons Hotel New York, NewYork                              |  |                      | 370    |                        |  | —    |
| Four SeasonsResort Palm Beach, Florida                           |  |                      | 210    |                        |  | —    |
| Four Seasons HotelPhiladelphia, Pennsylvania                     |  |                      | 365    |                        |  | —    |
| Four Seasons Hotel SanFrancisco, California2                     |  |                      | 275    |                        |  | —    |
| FourSeasons Resort Scottsdale at Troon North, Arizona2           |  |                      | 210    |                        |  | 3.9%3, 4,5 |
| Four Seasons Hotel Silicon Valley at EastPalo Alto,California    |  |                      | 200    |                        |  | 15%3       |
| FourSeasons Hotel Washington, District of Columbia               |  |                      | 210    |                        |  | —    |
| **OtherAmericas/Caribbean**                                      |  |                      |   |                        |  |       |
| FourSeasons Hotel Buenos Aires, Argentina                        |  |                      | 165    |                        |  | —    |
| Four Seasons ResortCarmelo, Uruguay2                             |  |                      | 45     |                        |  | —    |
| FourSeasons Resort Costa Rica at Peninsula Papagayo, Costa Rica3 |  |                      | 165    |                        |  | 11.4%6     |
| FourSeasons Resort Great Exuma at Emerald Bay, The Bahamas3      |  |                      | 185    |                        |  | —    |
| FourSeasons Hotel Mexico City, Mexico                            |  |                      | 240    |                        |  | —    |
| Four Seasons Resort Nevis,West Indies2                           |  |                      | 195    |                        |  | —    |
| FourSeasons Resort Punta Mita, Mexico2                           |  |                      | 140    |                        |  | —    |
|                                                                  |

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|                                                                                                    |  |                           |        |                             |  |              |  |  |  |  |
|----------------------------------------------------------------------------------------------------|--|---------------------------|--------|-----------------------------|--|--------------|--|--|--|--|
| Hotel/Resortand Location                                                                           |  | ApproximateNumber ofRooms |        | ApproximateEquity Interest1 |
| Four Seasons Hotel Toronto,Ontario, Canada                                                         |  |                      | 380    |                        |  | —      |
| Four Seasons HotelVancouver, British Columbia, Canada                                              |  |                      | 375    |                        |  | 100%6        |
| Four SeasonsResort Whistler, British Columbia, Canada2                                             |  |                      | 275    |                        |  | —4     |
| **Asia/Pacific**                                                                                   |  |                      |   |                        |  |         |
| FourSeasons Resort Bali at Jimbaran Bay, Indonesia                                                 |  |                      | 145    |                        |  | —      |
| Four Seasons Resort Bali atSayan, Indonesia2                                                       |  |                      | 60     |                        |  | —      |
| FourSeasons Hotel Bangkok,Thailand                                                                 |  |                      | 340    |                        |  | —      |
| FourSeasons Resort Chiang Mai,Thailand                                                             |  |                      | 80     |                        |  | —      |
| FourSeasons Tented Camp, Golden Triangle,Thailand                                                  |  |                      | 15     |                        |  | —      |
| FourSeasons Hotel Hong Kong, Special Administrative Region of thePeople’s Republic of China2 |  |                      | 400    |                        |  | —      |
| FourSeasons Hotel Jakarta, Indonesia2                                                              |  |                      | 365    |                        |  | 2%3          |
| TheRegent Kuala Lumpur, Malaysia7                                                                  |  |                      | 470    |                        |  | —      |
| FourSeasons Resort Langkawi,Malaysia                                                               |  |                      | 90     |                        |  | —      |
| FourSeasons Resort Maldives at Kuda Huraa, Maldives                                                |  |                      | 95     |                        |  | —      |
| Four Seasons Hotel Shanghai,People’s Republic of China                                       |  |                      | 440    |                        |  | 10%3, 4      |
| FourSeasons Hotel Singapore, Singapore                                                             |  |                      | 255    |                        |  | —      |
| The Regent Singapore,Singapore                                                                     |  |                      | 440    |                        |  | —      |
| FourSeasons Hotel Sydney,Australia                                                                 |  |                      | 530    |                        |  | 15.2%6       |
| GrandFormosa Regent Taipei, Taiwan                                                                 |  |                      | 540    |                        |  | —      |
| Four Seasons Hotel Tokyo atChinzan-so, Japan                                                       |  |                      | 285    |                        |  | —      |
| Four Seasons Hotel Tokyo atMarunouchi, Japan                                                       |  |                      | 55     |                        |  | —      |
| **MiddleEast**                                                                                     |  |                      |   |                        |  |         |
| Four Seasons Hotel Amman,Jordan                                                                    |  |                      | 195    |                        |  |         |
| Four SeasonsHotel Cairo at The First Residence, Egypt2                                             |  |                      | 270    |                        |  | —      |
| FourSeasons Hotel Cairo at Nile Plaza, Egypt2                                                      |  |                      | 365    |                        |  |         |
| Four SeasonsHotel Damascus, Syria8                                                                 |  |                      | 295    |                        |  | —      |
| FourSeasons Hotel Doha,Qatar                                                                       |  |                      | 230    |                        |  | —      |
| FourSeasons Hotel Riyadh, SaudiArabia                                                              |  |                      | 250    |                        |  | —      |
| Four SeasonsResort Sharm el Sheikh, Egypt2                                                         |  |                      | 135    |                        |  | —      |
| **Europe**                                                                                         |  |                      |   |                        |  |         |
| FourSeasons Hotel Gresham Palace Budapest, Hungary                                                 |  |                      | 180    |                        |  | 18.3%3       |
| FourSeasons Hotel Dublin, Ireland                                                                  |  |                      | 195    |                        |  | —      |
| Four Seasons Hotel Geneva,Switzerland                                                              |  |                      | 105    |                        |  | —      |
| FourSeasons Hotel Hampshire,England                                                                |  |                      | 135    |                        |  | —4     |
| FourSeasons Hotel Istanbul, Turkey                                                                 |  |                      | 65     |                        |  | —9     |
| Four SeasonsHotel The Ritz Lisbon, Portugal                                                        |  |                      | 280    |                        |  | —      |
| Four Seasons Hotel CanaryWharf, England                                                            |  |                      | 140    |                        |  | —      |
| Four Seasons Hotel London,England                                                                  |  |                      | 220    |                        |  | 12.5%4, 6,10 |
| Four Seasons Hotel Milan, Italy                                                                    |  |                      | 120    |                        |  | —      |
| Four Seasons Hotel George VParis, France                                                           |  |                      | 245    |                        |  | —      |
| Four Seasons Hotel Prague,CzechRepublic                                                            |  |                      | 160    |                        |  | —4     |
| FourSeasons Resort Provence at Terre Blanche, France2                                              |  |                      | 115    |                        |  | —      |
|                                                                                                    |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1 | Inthe ordinary course, we make investments in, or advances in respect ofor to owners of, properties to obtain new management agreements or toenhance existing management agreements where we believe the overallreturns will justify the investment or advance. We generally seek tolimit our total long-term capital exposure to no more than 20%of the total equity required for a property. For a description of ourinvestments in, or advances made in respect of or to owners, ofproperties and other |

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|  |                                                                                                                                                                                                                                                                                    |
|--|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | commitments in respect of existingproperties, including the equity investments listed in this chart, see‘‘Balance Sheet Review and Analysis’’ and‘‘Liquidity and Capital Resources’’ inManagement’s Discussion and Analysis. |

|   |                                                                                               |
|---|-----------------------------------------------------------------------------------------------|
| 2 | This project includes, or is expected toinclude, a Four Seasons branded residentialcomponent. |

|   |                   |
|---|-------------------|
| 3 | Freeholdinterest. |

|   |                                                                                                                                                                                                                                                                 |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4 | In addition to providingmanagement services to this property, we have a guarantee or otheroff-balance sheet commitment in respect of this property. See‘‘Off-Balance Sheet Arrangements’’ inManagement’s Discussion and Analysis. |

|   |                                                                                                                                                                                                                                                                                   |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 5 | We have a preferred profits interestderived from previously existing subordinated loans to the resort orproperty of approximately $17.4  million in aggregate plus a loanin the amount of $6.0  million to an entity that ownsapproximately 85% of the entity that owns thehotel. |

|   |                    |
|---|--------------------|
| 6 | Leaseholdinterest. |

|   |                                                                                                                                                                                                                                                          |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 7 | We have entered into anagreement to manage a new 140 room Four Seasons hotel in Kuala Lumpurand have reached agreement with the owner of the existing Kuala Lumpurhotel to transition out of managing that Regent property over the next12 to 18 months. |

|   |                                                                                                                                                                                                                                                                                                                                                                                               |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 8 | The Four SeasonsHotel Damascus is located in Damascus, Syria, a country that is on theU.S. list of state sponsors of terrorism and that is subject to U.S.regulations (including prohibitions on dealings with specifiedentities) and legislatively mandated penalties (including exportsanctions and ineligibility to receive most forms of U.S. aid or topurchase U.S. military equipment). |

|   |                                                                                                                                                                                                            |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 9 | Subject to satisfaction of certainconditions, we may invest up to $4.08 million to acquire up toan 18% interest in conjunction with a proposed expansion andrenovation of Four Seasons HotelIstanbul. |

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10 | Four Seasons HotelsLimited (‘‘FSHL’’) is the tenant of theland and premises constituting Four Seasons Hotel London. FSHL hasentered into a sublease of the hotel with the entity on whose behalf wemanage the hotel. The annual rent payable by FSHL under the lease isthe same as the annual rent that is payable by the sub-tenant pursuantto the sublease. Indirectly, we now hold a 12.5% ownershipinterest in the sub-tenant. |

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Properties under Construction orDevelopment

We currently have 27 properties underconstruction or development that are to be operated under the FourSeasons name. We expect 18 of those properties to include a residentialbranded component. The following table provides an overview of theseproperties:

|                                                                                                |  |                               |        |                        |  |        |        |        |  |  |
|------------------------------------------------------------------------------------------------|--|-------------------------------|--------|------------------------|--|--------|--------|--------|--|--|
| **Hotel/Resortand Location**1,2                                                                |  | **ApproximateNumber ofRooms** |        | **CapitalCommitment**3 |
| Scheduled2006/2007 Openings                                                                    |  |                          |   |                   |  |   |   |   |
| FourSeasons Hotel Alexandria, Egypt4                                                           |  |                          | 125    |                   |  |   |   |   |
| FourSeasons Hotel Beirut,Lebanon                                                               |  |                          | 235    |                   |  | X      |
| FourSeasons Hotel Florence,Italy                                                               |  |                          | 120    |                   |  | X      |
| FourSeasons Hotel Istanbul at the Bosphorus,Turkey                                             |  |                          | 170    |                   |  | X      |
| The Lodgeat Koele, Hawaii, USA5                                                                |  |                          | 100    |                   |  |   |
| Four SeasonsHotel Macau, Special Administrative Region of the People’sRepublic of China4 |  |                          | 400    |                   |  |   |
| Four SeasonsResort Maldives at Landaa Giraavaru,Maldives                                       |  |                          | 100    |                   |  | X      |
| FourSeasons Hotel Mumbai, India4                                                               |  |                          | 235    |                   |  | X      |
| FourSeasons Hotel Westlake Village, California,USA                                             |  |                          | 270    |                   |  |   |
| Beyond2007                                                                                     |  |                          |   |                   |  |   |
| Four Seasons HotelBahrain, Bahrain                                                             |  |                          | 270    |                   |  |   |
| FourSeasons Hotel Baltimore, Maryland, USA4                                                    |  |                          | 200    |                   |  | X      |
| FourSeasons Resort Barbados, Barbados4                                                         |  |                          | 117    |                   |  |   |
| Four SeasonsHotel Beijing, People’s Republic ofChina                                     |  |                          | 325    |                   |  | X      |
| Four SeasonsResort Bora Bora, FrenchPolynesia                                                  |  |                          | 105    |                   |  | X      |
| FourSeasons Hotel Dubai, United Arab Emirates4                                                 |  |                          | 375    |                   |  |   |
| Four SeasonsHotel Kuala Lumpur, Malaysia4                                                      |  |                          | 140    |                   |  |   |
| Four SeasonsHotel Marrakech, Morocco4                                                          |  |                          | 140    |                   |  | X      |
| FourSeasons Resort Mauritius, Republic of Mauritius4                                           |  |                          | 120    |                   |  | X      |
| FourSeasons Hotel Moscow, Russia4                                                              |  |                          | 215    |                   |  | X      |
| FourSeasons Hotel Moscow Kamenny Island, Russia4                                               |  |                          | 80     |                   |  | X      |
| FourSeasons Hotel New Orleans, Louisiana, USA4                                                 |  |                          | 240    |                   |  | X      |
| FourSeasons Resort Puerto Rico, Puerto Rico4                                                   |  |                          | 250    |                   |  | X      |
| FourSeasons Hotel Seattle, Washington, USA4                                                    |  |                          | 150    |                   |  | X      |
| FourSeasons Hotel Shanghai at Pudong, People’s Republic of China4                        |  |                          | 190    |                   |  | X      |
| FourSeasons Hotel Taipei, Taiwan4                                                              |  |                          | 275    |                   |  |   |
| Four SeasonsHotel Toronto, Ontario, Canada4                                                    |  |                          | 265    |                   |  |   |
| Four SeasonsResort Vail, Colorado, USA4                                                        |  |                          | 120    |                   |  | X      |
|                                                                                                |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1 | Informationconcerning hotels, resorts and branded residential components underconstruction or under development is based upon agreements and lettersof intent and may change prior to the completion of the project. Wehave estimated the dates of scheduled openings based upon informationprovided by the various developers. There can be no assurance that thedates of scheduled openings will be achieved, that estimated capitalcommitments will not change or that these projects will be completed.In particular, where a property is scheduled to open near the end of ayear there is a greater possibility that the year of opening could bechanged. |

|   |                                                                                                                                                                                                                                                           |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2 | We have made an investmentin Orlando, Florida, which we expect to include a Four Seasons brandedresidential component. The financing for this project has not yet beencompleted and therefore a scheduled opening date cannot be establishedat this time. |

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|   |                                                                                                                                                                                                                                                                                                                           |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3 | The aggregatecapital commitment for the properties indicated is $142.6million, of which $2.6  million has been funded and $19million is expected to be funded in the remainder of 2006. Theseamounts include capital commitments in respect of Four Seasons brandedresidential projects under construction ordevelopment. |

|   |                                                                               |
|---|-------------------------------------------------------------------------------|
| 4 | We expect this projectto include a Four Seasons branded residentialcomponent. |

|   |                                                                                                                                                |
|---|------------------------------------------------------------------------------------------------------------------------------------------------|
| 5 | The Lodge at Koele isexpected to be rebranded as Four Seasons Resort Lana’i at Koelein 2006 when the necessary renovations arecompleted. |

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Summary Hotel OperatingData

The following table sets forth certain summaryoperating data in the years shown for hotels and resorts that wemanage.

|                                                           |  |        |        |         |  |        |        |         |  |        |        |         |  |  |
|-----------------------------------------------------------|--|--------|--------|---------|--|--------|--------|---------|--|--------|--------|---------|--|--|
| (Unaudited)                                               |  | 2005   |        | 2004    |  | 2003   |
| **AllManaged Hotels**1                                    |  |   |   |    |  |   |   |    |  |   |   |    |
| Worldwide                                                 |  |   |   |    |  |   |   |    |  |   |   |    |
| No.of properties                                          |  |   | 68     |    |  |   | 63     |    |  |   | 60     |    |
| No.of rooms                                               |  |   | 17,300 |    |  |   | 16,375 |    |  |   | 15,726 |    |
| UnitedStates                                              |  |   |   |    |  |   |   |    |  |   |   |    |
| No.of properties                                          |  |   | 23     |    |  |   | 24     |    |  |   | 24     |    |
| No. ofrooms                                               |  |   | 6,845  |    |  |   | 7,110  |    |  |   | 7,145  |    |
| OtherAmericas/Caribbean                                   |  |   |   |    |  |   |   |    |  |   |   |    |
| No.of properties                                          |  |   | 10     |    |  |   | 10     |    |  |   | 9      |    |
| No. of rooms                                              |  |   | 2,165  |    |  |   | 2,160  |    |  |   | 1,929  |    |
| Asia/Pacific                                              |  |   |   |    |  |   |   |    |  |   |   |    |
| No.of properties                                          |  |   | 16     |    |  |   | 14     |    |  |   | 14     |    |
| No. ofrooms                                               |  |   | 4,590  |    |  |   | 4,110  |    |  |   | 4,109  |    |
| Europe                                                    |  |   |   |    |  |   |   |    |  |   |   |    |
| No.of properties                                          |  |   | 12     |    |  |   | 10     |    |  |   | 9      |    |
| No. of rooms                                              |  |   | 1,960  |    |  |   | 1,785  |    |  |   | 1,696  |    |
| MiddleEast                                                |  |   |   |    |  |   |   |    |  |   |   |    |
| No.of properties                                          |  |   | 7      |    |  |   | 5      |    |  |   | 4      |    |
| No. of rooms                                              |  |   | 1,740  |    |  |   | 1,210  |    |  |   | 847    |    |
| **ManagedHotels (excluding recently opened properties)**2 |  |   |   |    |  |   |   |    |  |   |   |    |
| Worldwide                                                 |  |   |   |    |  |   |   |    |  |   |   |    |
| No.of properties                                          |  |   | 56     |    |  |   | 51     |    |  |   | 50     |    |
| No. ofrooms                                               |  |   | 14,550 |    |  |   | 13,559 |    |  |   | 13,423 |    |
| Occupancy3                                                |  |   | 68.2   | %  |  |   | 66.8   | %  |  |   | 61.9   | %  |
| ADR4                                                      |  | $      | 329    |    |  | $      | 307    |    |  | $      | 299    |    |
| RevPAR5                                                   |  | $      | 224    |    |  | $      | 205    |    |  | $      | 185    |    |
| Grossoperating margin6                                    |  |   | 30.3   | %  |  |   | 29.1   | %  |  |   | 26.7   | %  |
| UnitedStates                                              |  |   |   |    |  |   |   |    |  |   |   |    |
| No.of properties                                          |  |   | 19     |    |  |   | 19     |    |  |   | 22     |    |
| No. ofrooms                                               |  |   | 5,985  |    |  |   | 6,108  |    |  |   | 6,800  |    |
| Occupancy3                                                |  |   | 73     | %  |  |   | 70.5   | %  |  |   | 67.6   | %  |
| ADR4                                                      |  | $      | 373    |    |  | $      | 346    |    |  | $      | 331    |    |
| RevPAR5                                                   |  | $      | 273    |    |  | $      | 244    |    |  | $      | 224    |    |
| Grossoperating margin6                                    |  |   | 28.7   | %  |  |   | 25.6   | %  |  |   | 24.9   | %  |
| OtherAmericas/Caribbean                                   |  |   |   |    |  |   |   |    |  |   |   |    |
| No.of properties                                          |  |   | 10     |    |  |   | 7      |    |  |   | 7      |    |
| No. of rooms                                              |  |   | 2,165  |    |  |   | 1,541  |    |  |   | 1,534  |    |
| Occupancy3                                                |  |   | 64.4   | %  |  |   | 64.2   | %  |  |   | 56.1   | %  |
| ADR4                                                      |  | $      | 336    |    |  | $      | 280    |    |  | $      | 271    |    |
| RevPAR5                                                   |  | $      | 216    |    |  | $      | 180    |    |  | $      | 152    |    |
| Grossoperating margin6                                    |  |   | 26.4   | %  |  |   | 29.8   | %  |  |   | 26.7   | %  |
| Asia/Pacific                                              |  |   |   |    |  |   |   |    |  |   |   |    |
| No.of properties                                          |  |   | 12     |    |  |   | 13     |    |  |   | 11     |    |
| No. ofrooms                                               |  |   | 3,465  |    |  |   | 3,571  |    |  |   | 3,149  |    |
| Occupancy3                                                |  |   | 65.3   | %  |  |   | 63.4   | %  |  |   | 56.6   | %  |
| ADR4                                                      |  | $      | 180    |    |  | $      | 183    |    |  | $      | 165    |    |
| RevPAR5                                                   |  | $      | 118    |    |  | $      | 116    |    |  | $      | 93     |    |
| Grossoperating margin6                                    |  |   | 33.2   | %  |  |   | 32.3   | %  |  |   | 29.5   | %  |
|                                                           |

15

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|                        |  |        |        |         |  |        |        |         |  |        |        |         |  |  |
|------------------------|--|--------|--------|---------|--|--------|--------|---------|--|--------|--------|---------|--|--|
| (Unaudited)            |  | 2005   |        | 2004    |  | 2003   |
| Europe                 |  |   |   |    |  |   |   |    |  |   |   |    |
| No.of properties       |  |   | 10     |    |  |   | 8      |    |  |   | 8      |    |
| No.of rooms            |  |   | 1,720  |    |  |   | 1,492  |    |  |   | 1,535  |    |
| Occupancy3             |  |   | 62.6   | %  |  |   | 63.5   | %  |  |   | 59.5   | %  |
| ADR4                   |  | $      | 534    |    |  | $      | 529    |    |  | $      | 459    |    |
| RevPAR5                |  | $      | 335    |    |  | $      | 336    |    |  | $      | 285    |    |
| Grossoperating margin6 |  |   | 31.5   | %  |  |   | 34.7   | %  |  |   | 31.2   | %  |
| MiddleEast             |  |   |   |    |  |   |   |    |  |   |   |    |
| No.of properties       |  |   | 5      |    |  |   | 4      |    |  |   | 2      |    |
| No. of rooms           |  |   | 1,215  |    |  |   | 847    |    |  |   | 405    |    |
| Occupancy3             |  |   | 67.3   | %  |  |   | 65.6   | %  |  |   | 47.7   | %  |
| ADR4                   |  | $      | 212    |    |  | $      | 182    |    |  | $      | 159    |    |
| RevPAR5                |  | $      | 143    |    |  | $      | 119    |    |  | $      | 79     |    |
| Grossoperating margin6 |  |   | 44.4   | %  |  |   | 37.9   | %  |  |   | 33.6   | %  |
|                        |

|   |                                                                                                                                                                                                                                                                                                                |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1 | SinceDecember  31,  2005, we have commenced management of FourSeasons Tented Camp, Golden Triangle, Thailand and Four Seasons HotelSilicon Valley at East Palo Alto, which have 15 and 200 rooms,respectively. These properties are not reflected in this table. Allroom numbers in this table areapproximate. |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2 | Includes hotels andresorts that were fully open and that we managed throughout aparticular year and during the last quarter of the prior year. Thisdata is used when information for more than two years is provided.However, if a ‘‘Managed Hotel’’ hasundergone or is undergoing an extensive renovation program during theaforementioned period, it ceases to be included as a‘‘Managed Hotel’’ for that particularyear. |

|   |                                                                                                                     |
|---|---------------------------------------------------------------------------------------------------------------------|
| 3 | Occupancy percentage isdefined as the total number of rooms occupied divided by the totalnumber of rooms available. |

|   |                                                            |
|---|------------------------------------------------------------|
| 4 | ADR isdefined as average daily room rate per roomoccupied. |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 5 | RevPAR is defined asaverage room revenue per available room. It is a non-GAAP measure. Weuse RevPAR because it is a commonly used indicator of marketperformance for hotels and resorts and represents the combination ofthe average daily room rate and the average occupancy rate achievedduring the period. RevPAR does not include food and beverage or otherancillary revenues generated by a hotel or resort. RevPAR is the mostcommonly used measure in the lodging industry to measure theperiod-over-period performance of comparable properties. Ourcalculation of RevPAR may be different than the calculation used byother lodging companies. |

|   |                                                                                                    |
|---|----------------------------------------------------------------------------------------------------|
| 6 | Grossoperating margin represents gross operating profit as a percentage ofgross operating revenue. |

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Operating Risks

Ourbusiness is subject to many risks and uncertainties, including thosediscussed below.

Geopolitical, Economic and Lodging IndustryConditions

We focus exclusively on the luxury segment ofthe lodging industry, which is subject to operating risks inherent inthe industry. These risks include, among otherthings:

|              |                                                                                                                |
|--------------|----------------------------------------------------------------------------------------------------------------|
| •  | changes in general, localand industry-specific economic and financial conditions, such as theairline industry, |

|              |                                                           |
|--------------|-----------------------------------------------------------|
| •  | periodicoverbuilding in the industry or a specificmarket, |

|              |                                                                                                         |
|--------------|---------------------------------------------------------------------------------------------------------|
| •  | varying levels of demandfor rooms and related services (including food and beverage andfunction space), |

|              |                                   |
|--------------|-----------------------------------|
| •  | competition fromother properties, |

|              |                            |
|--------------|----------------------------|
| •  | changes intravel patterns, |

|              |                                                                                                |
|--------------|------------------------------------------------------------------------------------------------|
| •  | the recurringneed for renovation, refurbishment and improvement of hotel and resortproperties, |

|              |                                                                                                                                           |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------|
| •  | changes in wages,benefits, prices, construction and maintenance, insurance and operatingcosts that may result from inflation orotherwise, |

|              |                        |
|--------------|------------------------|
| •  | governmentregulations, |

|              |                                     |
|--------------|-------------------------------------|
| •  | changes in taxes andinterest rates, |

|              |                       |
|--------------|-----------------------|
| •  | currencyfluctuations, |

|              |                                                                              |
|--------------|------------------------------------------------------------------------------|
| •  | the availability andcost of financing for operating or capital requirements, |

|              |                    |
|--------------|--------------------|
| •  | natural disasters, |

|              |                             |
|--------------|-----------------------------|
| •  | extreme weather conditions, |

|              |                 |
|--------------|-----------------|
| •  | labourdisputes, |

|              |                         |
|--------------|-------------------------|
| •  | infectious diseases,and |

|              |                                                                                |
|--------------|--------------------------------------------------------------------------------|
| •  | war, civil unrest, terrorism,international conflict and political instability. |

Weoperate and have interests in luxury hotels, resorts and serviced andbranded residential projects in many areas of the world and ourrevenues are dependent upon the results of the individual properties.The conditions listed above can have, and have from time to time had, asignificant adverse impact upon individual properties or particularregions. A period of economic recession or downturn in any of theworld’s primary outbound travel markets could materially andadversely affect, and have from time to time materially and adverselyaffected, our business, results of operations and financial condition,including fee revenue and ownership earnings. An economic downturngenerally affects ownership results to a significantly greater degreethan management results due to the high fixed costs associated withhotel ownership.

Competition

The luxury segment ofthe hotel and resort industry is subject to intense competition, bothfor guests and for the acquisition of new management agreements.Competition for guests arises primarily from other luxury hotel chains,individual luxury hotels and resorts and a limited number of luxuryproperties operated by larger hotel chains. That competition isprimarily based on, among other things, brand name

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recognition, location, room rates andquality of service and accommodations. Demographic, geographic andother changes in specific market conditions could materially andadversely affect the convenience or desirability of the locales inwhich hotels and resorts that we manage are located.

Wecompete for management opportunities with other operators of luxuryhotels. We believe that our ability to obtain management agreements isbased primarily on the value and quality of our management services,brand name recognition and the economic advantages to the hotel ownerof retaining our management services and using our brand name. We alsobelieve that an owner’s assessment of the economic advantages ofretaining our management services and using our brand name is, in part,a function of the success of the hotels and resorts currently undermanagement by us. Competitive factors also include relationships withhotel owners and investors, marketing support, reservation systemcapacity and the ability to make investments that may be necessary toobtain management agreements. Our failure to compete successfully forexpansion opportunities or to attract and maintain relationships withcurrent hotel owners could materially and adversely affect ourbusiness, results of operations and financial condition.

Dependence on Management Agreements

Managementagreements expire in the ordinary course, and may in certaincircumstances be renegotiated and be subject to termination upon theoccurrence of specified events. Failure to obtain new managementagreements or maintain existing management agreements could materiallyand adversely affect our business, results of operations and financialcondition. We manage hotels and resorts for various owners subject tothe terms of each property’s management agreements. Thoseagreements generally can be terminated by the non-defaulting party upondefault in payment or unremedied failure to comply with the terms ofthe agreements unless, in most cases, such default or unremediedfailure was caused by typical force majeure events. Most of themanagement agreements are subject to performance tests that, if notmet, could allow the agreements to be terminated by the owner prior tothe expiration of their respective terms. The failure to maintain thestandards specified in the agreement or to meet the other terms andconditions of an agreement, including a performance test, could resultin the loss or cancellation of a management agreement. Typically, butnot in all cases, we have certain rights to cure a default to avoidtermination. Substantially all of the management agreements includetypical force majeure events, which, if they were to occur wouldprevent the termination of the management agreements. Some managementagreements also can be terminated, subject in certain cases, to apayment to us, upon a change in use of the property or upon a sale bythe owner to a new owner who does not wish to retain the existingagreement.

In the event of bankruptcy involving a propertyand foreclosure, a management agreement may be terminated in mostjurisdictions, unless the lender has executed a non-disturbanceagreement that is enforceable under applicable bankruptcy laws. Wegenerally have non-disturbance agreements with the lenders to owners ofhotels and resorts that we manage. Where no non-disturbance agreementis in place or where it is not enforceable under applicable bankruptcylaws, the risk of loss of a management agreement increases where theowner incurs debt at the property level that cannot be servicedadequately. In some jurisdictions, particularly in the United States,management agreements have been construed by courts to create an agencyrelationship that is terminable by the owner, notwithstanding anyprovision of the agreement that purports to make the agreement notterminable under such circumstances. In such circumstances, we wouldgenerally have an unsecured claim for breach of contract against theowner of the hotel or its trustee in bankruptcy.

Management agreements for hotels and resorts we manage havevarying remaining terms (including extension periods that we may elect)and have remaining terms averaging of approximately 52 years. Renewalof management agreements at the end of their term is the subject ofnegotiation between us and the relevant owners. There can be noassurance that any particular management agreement or agreements willbe renewed or with respect to the terms and conditions of anyrenewal.

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Dependence on PropertyOwners

As a result of our strategic decision to focus onmanagement as opposed to ownership of hotel and resort properties, ourgrowth opportunities are dependent in part on our ability to establishand maintain satisfactory relationships and enhance those relationshipswith existing and new property owners. Those growth opportunities arealso dependent on access to capital by these investors. In 2005, oneowner had an ownership interest in a combination of hotels, resorts andserviced and branded residential properties managed by Four Seasonsthat represented in excess of 10% of our hotel management fees.A failure by us to maintain satisfactory relationships with any owneror owners of a significant number of properties could have a materialadverse effect on our business, results of operations and financialcondition.

Risk Associated with Expansion, Growth and NewConstruction

An element of our business strategy is toincrease the number of hotels and resorts under management. Thatexpansion is dependent upon a number of factors, including theidentification of appropriate management opportunities, competingsuccessfully for the management agreements relating to thoseopportunities, availability of financing for new developments andtimely completion of construction of new hotels and resorts (or therefurbishment of existing properties) that are, or are to be, managedby us.

From time to time, the hotel industry hasexperienced periods during which financial institutions generally havebeen reluctant to provide financing for the construction of real estateproperties, including hotels and resorts. There can be no assurancethat we will be able to obtain financing for projects or that the termson which such financing can be obtained will be acceptable to us. Theinability to obtain financing for a project could cause cancellationof, or short-term interruption in, the progress or completion ofproperties under construction or development.

Additionally, any construction project entails significantconstruction risks that could delay or result in a substantial increasein the cost of construction. The opening of newly constructedproperties, in particular, is contingent upon, among other things,receipt of all required licences, permits and authorizations, includinglocal land use permits, building and zoning permits, health and safetypermits and liquor licences. Changes or concessions required byregulatory authorities could also involve significant additional costsand delays or prevent completion of construction or opening of aproject. As a result of the global nature of our business, theseregulatory matters arise in a number of jurisdictions, many of whichhave distinctive regulatory regimes.

Investments in and Advancesto Managed and Owned Properties

We have made investmentsin, and/or advances in respect of or to owners of, hotels and resortsthat we manage, to enable us to acquire the management agreements forthose properties or to enhance the terms of those agreements.Currently, we hold an ownership interest in, or have made advances inrespect of, 33 of the 70 hotels and resorts that we manage. We alsohave one remaining leasehold interest in the Four Seasons HotelVancouver. We also have made, or expect to make in the near term,investments in, or advances in respect of or to owners of, 17 of the 27properties under construction or development. The book value of totalinvestments and advances as at December  31,  2005 wasapproximately $409  million.

In addition to therisks associated with the operation of a hotel, we are subject to risksgenerally related to owning and leasing real estate in connection withthese properties. These risks include, among others, adverse changes ingeneral or local economic conditions, local real estate marketconditions, property and income taxes, interest rates, theavailability, cost and terms of financing, the financial stability ofthe property owner, liability for long-term lease obligations, theavailability and costs of insurance coverage, the potential foruninsured casualty and other losses, the impact of present or futurelegislation or regulation (including those relating to theenvironment), adverse changes in zoning laws and other regulations,civil unrest, terrorism, war and political instability. In addition,these investments in real

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estate are relatively illiquid and ourability to dispose of our ownership interests, particularly ourleasehold interests, in response to changes in economic or otherconditions may be limited. Further, advances to owners of propertiesare typically subordinated and, in any event, may be subject to loss inthe event of insolvency of the owner to which an advance was made. Anyof these factors could result in material operating losses by us or aparticular hotel or resort and possibly the whole or partial loss ofour investment in the property or the inability to collect advancesoutstanding. Holding an interest in a hotel also introduces risksassociated with funding of capital expenditures and incurring ourproportionate share of any operating losses. Where cash and workingcapital reserves provided by hotel operations are insufficient, debtservice, major repairs, renovations, refurbishments, alterations orother capital expenditures generally must be funded by the owners ofthe hotels and resorts, including us in some cases.

Debt RatingRisks

Our corporate rating is currently investment grade(BBB–) as rated by Standard & Poor’s. Our seniorunsecured debt is currently rated by three debt rating agencies(Standard & Poor’s: BBB– with stable outlook;Moody’s: Baa3 with stable outlook; Dominion Bond Rating Service:BBB with stable outlook). A negative change in either global economicor political events may result in the rating agencies downgrading therating and/or outlook for many of the lodging companies, including us,which would result in an increase in our borrowing costs. In addition,pricing of any amounts drawn under our syndicated bank creditfacilities (which are undrawn but under which $1.6 million ofletters of credit were issued at December 31, 2005) includes aspread to LIBOR ranging between 0.875% and 2.25%,depending upon the ratings from Standard & Poor’s andMoody’s and certain financial ratios.

GovernmentRegulation

We are subject to laws, ordinances andregulations relating to, among other things, taxes, environmentalmatters, the preparation and sale of food and beverages, accessibilityfor disabled persons and general building and zoning requirements inthe various jurisdictions in which we manage hotels and resorts. Ownersand managers of hotels and resorts also may be subject to lawsgoverning the relationship with employees, including minimum wagerequirements, overtime, working conditions and work permitrequirements. In addition, the properties we manage (and in, or inrespect of which, we may have made advances or investments) may belocated in countries (such as Syria), which may from time to time besubject to international trade restrictions, regulations or other formsof economic or political sanction. Compliance with these laws canaffect the revenues and profits of properties managed by us or couldmaterially and adversely affect our business, results of operations andfinancial condition.

Four Seasons, as the current orprevious owner or operator of certain hotels, could be liable forinvestigation and clean-up of contamination and other corrective orremedial action under various laws, ordinances and regulations relatingto environmental matters. These laws often impose liability withoutregard to whether the owner or operator knew of, or was responsiblefor, the condition requiring environmental response and whether theparty is currently or formerly the owner or manager of the property.The presence of contamination from hazardous or toxic substances, orthe failure to properly remediate a contaminated property, may affectthe ability to use the property for its intended purpose, to sell orrent the property, or to borrow using the property as collateral.Persons who arrange for the disposal or treatment of hazardous or toxicsubstances also may be liable for the cost of removal or remediation ofsubstances at the disposal or treatment facility. In connection withthe operation and ownership of various properties, we could be heldliable for the cost of remedial action with respect to environmentalmatters. We are not aware of any potential material environmentalliabilities for which we will be responsible with respect to any of theproperties which we currently manage or previouslymanaged.

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Pursuant to the managementagreements to which we are a party, the owner is responsible for thecosts and expenses of the employees at each hotel and for all costs,expenses and liabilities incurred in connection with the operation ofthe hotel, including compliance with government regulations. However,as the manager, we may be contingently liable for certain liabilitiesin respect of which we do not maintain insurance, including certainworkers’ compensation claims, environmental liabilities and, inrespect of hotels in the United States, claims arising under theAmericans with Disabilities Act.

We generallyobtain indemnities from the owners of the hotels that we manage inrespect of these liabilities. The value of those indemnities isdependent upon, among other things, the financial condition of theowners who have provided them.

Political Risk

Wecurrently manage and in some cases have an ownership interest in hotelsand resorts in 31 countries and currently have development plans toopen hotels and resorts in nine additional countries around the world.In certain of these countries, from time to time, the related assetsand revenues may be exposed to political and other risks associatedwith foreign investment. In some jurisdictions, at certain times, theremay be a risk that we may have difficulty enforcing our contractualrights relating to our assets including our non-disturbance agreementsand any security relating to our loan receivables if due process of lawis not respected.

Insurance

Our managementagreements require the hotels and resorts that we manage to be insuredagainst property damage, business interruption and liability at theexpense of the owner of the property. Under these policies we are alsotypically insured against loss of fee income in the event of atemporary business interruption at any of the hotels and resorts thatwe manage. We also maintain our own insurance coverage in respect ofliability, in excess of that obtained at the property level. Inaddition, we obtain indemnities from the owners of the hotels andresorts that we manage in respect of damages caused by acts, omissionsand liabilities of the employees of the property or of Four Seasons,other than damages resulting from certain actions of Four Seasons andcertain senior management personnel. Insurance premiums are continuingto increase and underwriters are imposing increasingly restrictiveterms and conditions. All lines of coverage generally have beenaffected; however, commercial properties generally continue to be themost difficult to insure. Exposures for terrorism, cyber perils andtoxic mould are now common exclusions. If we were held liable foramounts exceeding the limits of our insurance coverage or for claimsoutside the scope of that coverage or if the indemnities wereinsufficient for any reason, including as a result of theowner’s or indemnitor’s financial condition, ourbusiness, results of operations and financial condition could bematerially and adversely affected.

LegalProceedings

In the ordinary course of our business, weare named as a defendant in legal proceedings resulting from incidentstaking place at properties we manage or in which we have an ownershipinterest. We maintain comprehensive liability insurance and alsorequire owners to maintain adequate insurance coverage as describedabove under ‘‘Insurance’’. We believe suchcoverage to generally be of a nature and amount sufficient to ensurethat we are adequately protected from suffering material financial lossas a result of such claims.

Currency Exposure

Wehave entered into management agreements with respect to hotelsthroughout the world and accordingly, earn revenue and make investmentsand advances in many foreign currencies. Our most significant currencyis US dollars, as more than half of our revenues and assets currentlyare US dollar-

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denominated, as are the majority of ourinvestment commitments. However, we incur the majority of our costs inCanadian dollars and our most significant liability (which is relatedto our convertible senior notes) is a Canadian dollarobligation.

In 2005, we adopted US dollars as ourreporting currency. This means that our Canadian dollar consolidatedfinancial statements are translated into US dollars for reportingpurposes. Our consolidated statements of operations, consolidatedstatements of cash provided by operations and consolidated statementsof cash flow are translated using the weighted average exchange ratesfor the period, and assets and liabilities are converted from Canadiandollars into US dollars at the foreign exchange rate applicable at thebalance sheet date.

We have not changed our functionalcurrency, which remains Canadian dollars, or the functional currenciesof any of our subsidiaries. As a result, while US dollar reporting willminimize the currency fluctuations related to the majority of our USdollar management fee revenues, it will not eliminate the impact offoreign currency fluctuations related to our management fees in othercurrencies, or our general and administrative expenses, which areincurred primarily in Canadian dollars. It will also not eliminateforeign currency gains and losses related to un-hedged net monetaryassets and liability positions. As such, our consolidated results willcontinue to include gains and losses related to foreign currencyfluctuations. The impact of foreign currency gains and losses has beenmaterial in the past and could continue to be material in thefuture.

We endeavour to match foreign currency revenues tocosts and investment commitments to provide a natural hedge againstcurrency fluctuations, although there can be no assurance that thesemeasures will be effective in the management of those risks. We alsoendeavour to manage our currency exposure through, among other things,the use of foreign exchange forward contracts. As at December31,  2005, we held $21.2  million in foreign exchangeforward contracts for the sale of US dollars into Canadian dollars tomeet our operating needs. In addition, certain currencies are subjectto exchange controls or are not freely tradeable and as a result arerelatively illiquid. We attempt to minimize our foreign currency riskby monitoring our cash position, keeping fee receivables current,monitoring the political and economic climate and considering whetherto insure convertibility risk in each country in which we manage aproperty. In certain properties, the foreign currency risk is furthermitigated by pricing room rates in US dollars. However, no assurancescan be given as to whether our strategies relating to currency exposurewill be successful or that foreign exchange fluctuations will notmaterially adversely affect our business, results of operations andfinancial condition.

Seasonality/QuarterlyPredictability

Our hotels and resorts are generallyaffected by normally recurring seasonal patterns and, for most of theproperties, demand is typically lower in December through March thanduring the remainder of the year.

Management operationsare seasonal in nature, as fee revenues are affected by the seasonalityof hotel and resort revenues and operating results. Urban hotelsgenerally experience lower revenues and operating results in the firstquarter, which has a negative impact on management revenues. However,this negative impact on management revenues generally is offset, tosome degree, by increased travel to resorts in that quarter and may beoffset to a greater extent as the portfolio of resort properties thatwe manage increases. However, seasonality can be affected by specificlocal events that can cause, and from time to time have caused,unanticipated disruptions to the operations of certain of theproperties we manage.

In addition, certain managementfees, in particular incentive fees and residential royalty fees, aredifficult to predict both in terms of timing and amount and can beimpacted to a greater extent than other elements of our business byeconomic cycles, interest rate levels and other external factors.Although the majority of our management fees are based on the totalrevenues of the properties we manage and as a result are

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easier to predict, fluctuations in ourincentive fees and residential royalty fees can cause volatility in ourearnings, particularly as measured from quarter toquarter.

Our hotel ownership position is also affected byseasonal fluctuations, with lower revenue, operating profit and cashflow in the first quarter; ownership positions typically incur anoperating loss in the first quarter of each year. Typically, the thirdquarter has been the strongest quarter for the Four Seasons HotelVancouver.

Intellectual Property

In the highlycompetitive service industry in which we operate, trade names,trademarks, service marks and logos are very important in the sales andmarketing of those services. We have a significant number of tradenames, trademarks, service marks and logos, and significant time andeffort are expended each year on surveillance, registration andprotection of our trade names, trademarks, service marks and logos. Theloss or infringement of any of our trade names, trademarks, servicemarks or logos could have a material and adverse effect on ourbusiness, results of operations and financial condition.

RisksAssociated with the Four Seasons Branded ResidentialBusiness

We currently license and manage Four Seasonsbranded residential projects, including whole ownership and fractionalownership, in many of our existing hotel and resort locations. We areexpanding our presence in the luxury segment of the whole ownership andfractional ownership business with a number of other projects underdevelopment. Our ability to successfully develop and sell interests inthe residential units that are built, and the various fees earned by usfrom each residential project, could be materially and adverselyaffected by one or any combination of the factors described in this‘‘Operating Risks’’ section. Although webelieve that we are in compliance in all material respects withapplicable laws and regulations to which the marketing, sale andoperation of Four Seasons branded residential projects are currentlysubject, changes in these requirements or a determination by aregulatory authority that we are not in compliance could materially andadversely affect our business, results of operations and financialcondition.

Dependence on Key Employees

Oursuccess depends in part on the continued service of our seniorexecutives, who have an average tenure of approximately 22 years withFour Seasons. In particular, our senior management is responsible forthe development and/or maintenance of ongoing relationships with newand existing investors in the properties that are managed by us. Theunanticipated departure of individuals responsible for thoserelationships could have a material and adverse effect on, among otherthings, relationships affecting properties that are, or that may be,managed by us.

Material Contracts

Except for thefollowing, since January  1,  2002, we did not enter intoany material contracts, other than contracts in the ordinary course ofbusiness that still are in effect and material to FourSeasons:

|              |                                                                                                                                                                                                                                                                                    |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Indenture dated as ofJune  18,  2004 between Four Seasons and the Bank of NovaScotia Trust Company of New York, as trustee, under which we may fromtime to time issue unsecured debentures, notes or other evidences ofindebtedness in an unlimited amount, issuable in series,and |

|              |                                                                                                                                                                    |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | a First Supplemental Indenturedated as of June  18,  2004 relating to the issue of our1.875% Convertible Senior Notes due 2024 in the aggregateprincipal amount of |

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|        |                                                                                                                                                     |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
|   | $250,000,000, all of which were issuedpursuant to a prospectus supplement dated June  14,  2004to a prospectus of Four Seasons dated April  6,2004. |

See ‘‘Corporate Information —Convertible Senior Notes’’ for details of the terms ofconvertibility of these notes. Copies of the documents referred toabove are available onwww.sedar.com.

CorporateInformation

Description of Share Capital

Ourauthorized share capital consists of an unlimited number of FirstPreference Shares, issuable in series, an unlimited number of SecondPreference Shares, issuable in series, 3,725,698 Variable MultipleVoting Shares and an unlimited number of Limited Voting Shares. AtMarch 8, 2006, 3,725,698 Variable Multiple Voting Shares, 33,018,768Limited Voting Shares and options to purchase 4,358,823 Limited VotingShares were outstanding.

The following is a summary ofthe material attributes of our Variable Multiple Voting Shares andLimited Voting Shares.

Dividends

The dividendsdeclared and paid on our Variable Multiple Voting Shares will be inamounts per share equal to 50% of the dividends declared andpaid on our Limited Voting Shares, regardless of whether the number ofvotes attaching to the Variable Multiple Voting Shares is furtherincreased.

Rights on Dissolution

In the event ofthe liquidation, dissolution or winding up of FSHI, the holders ofLimited Voting Shares and Variable Multiple Voting Shares will beentitled, share for share, to receive, on a pro rata basis, allof the assets of FSHI remaining after payment of all of itsliabilities, subject to the preferential rights of any shares rankingprior to the Limited Voting Shares and Variable Multiple VotingShares.

Voting Rights

The holders of LimitedVoting Shares and Variable Multiple Voting Shares will be entitled toreceive notice of any meeting of our shareholders and to attend andvote thereat, except those meetings where only the holders of shares ofanother class or of a particular series are entitled to vote. EachLimited Voting Share will entitle the holder to one vote. Each VariableMultiple Voting Share currently entitles the holder to that number ofvotes that results in the aggregate votes attaching to the VariableMultiple Voting Shares representing approximately 64.55% of thevotes attaching to the Variable Multiple Voting Shares and the LimitedVoting Shares, in the aggregate. The number of votes attaching to theVariable Multiple Voting Shares adjusts concurrently with the issue ofadditional Limited Voting Shares in order to maintain this votingcontrol. Holders of Limited Voting Shares are entitled, votingseparately as a class, to elect two members of our board of directorsannually.

Under the provisions attaching to the VariableMultiple Voting Shares, beginning with the annual meeting held in 2000and every three years thereafter, the continued application of thisadjusting mechanism is subject to ratification by the holders of ourLimited Voting Shares. The adjusting mechanism was last ratified byshareholders at the annual and special meeting of shareholders in 2003and will be subject to ratification at this year’s annual andspecial meeting of shareholders. If the maintenance of the adjustmentmechanism is not confirmed by a simple majority of the votes cast bythe holders of Limited Voting Shares (other than‘‘prescribed holders’’ of Limited VotingShares), any issue of Limited Voting Shares after that time (other thanthe issue of Limited Voting Shares pursuant to a right, option orsimilar

24

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obligation granted prior to that time) willnot result in a further adjustment in the number of votes attaching tothe Variable Multiple Voting Shares. Additionally, the continuedapplication of the adjustment mechanism will be subject to ratificationafter any transfer of Variable Multiple Voting Shares that results in aperson other than a member of the Sharp Family (as defined in thearticles of FSHI) holding Variable Multiple Voting Shares or afterIsadore Sharp ceases to be the Chief Executive Officer. For thesepurposes, the ‘‘prescribed holders’’ ofLimited Voting Shares shall be: (a) any person or company thatbeneficially owns, directly or indirectly, Variable Multiple VotingShares; (b) any person or company that beneficially owns,directly or indirectly, securities carrying more than 20% of thevotes attaching to all of our outstanding voting securities;(c) any associate, insider or affiliate (as defined in theSecurities Act (Ontario)) of any person or company referred toin (b); (d) any of our affiliates (as defined in theSecurities Act (Ontario)); (e) any person or companythat, alone or in concert with others, effectively controls FSHI; and(f) if all of (b), (d) and (e) are inapplicable, all directorsand officers of FSHI and their associates (as defined in theSecurities Act (Ontario)). To our knowledge, the prescribedholders are Triples Holdings Limited, Isadore Sharp and RosalieSharp.

Take-Over Bid Protection

Variable MultipleVoting Shares will be converted automatically into Limited VotingShares upon any transfer thereof, except (i) a transfer withinthe immediate family of Isadore Sharp (so long as the familybeneficially owns a majority of the outstanding Variable MultipleVoting Shares) or (ii) a transfer of a majority of theoutstanding Variable Multiple Voting Shares to a purchaser who hasoffered to purchase all outstanding Variable Multiple Voting Shares andwill, as a result, have acquired a majority of the outstanding VariableMultiple Voting Shares and who offers to purchase all outstandingLimited Voting Shares for a per share consideration equal to thatoffered for the Variable Multiple Voting Shares.

TriplesHoldings Limited, which owns all of the outstanding Variable MultipleVoting Shares, has entered into an agreement with Montreal TrustCompany of Canada, as trustee for the benefit of the holders of theLimited Voting Shares, that has the effect of preventing transactionsthat otherwise would deprive the holders of Limited Voting Shares ofrights under applicable provincial take-over bid legislation to whichthey would have been entitled if the Variable Multiple Voting Shareshad been Limited VotingShares.

Conversion

Variable Multiple Voting Sharesare convertible into Limited Voting Shares on a one-for-one basis atany time at the option of the holder.

Modifications,Subdivisions and Consolidation

Modifications to theprovisions attaching to the Variable Multiple Voting Shares as a class,or to the Limited Voting Shares as a class, will require the separateaffirmative vote of two-thirds of the votes cast at a meeting of theholders of the shares of the respective class. No subdivision orconsolidation of the Variable Multiple Voting Shares or of the LimitedVoting Shares may take place unless the Limited Voting Shares or theVariable Multiple Voting Shares, as the case may be, are concurrentlysubdivided or consolidated in the same proportion. If we propose togrant rights to holders of shares of any class, as a class, to acquireadditional voting or participating securities (or securitiesconvertible into voting or participating securities), the holders ofthe Limited Voting Shares and the Variable Multiple Voting Shares shallfor the purposes of that distribution be deemed to be holders of sharesof the same class.

Transfer Agent andRegistrar

The registrar and transfer agent for ourLimited Voting Shares in Canada is Computershare Trust Company ofCanada, Toronto, Ontario, Canada.

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Market for Securities

OurLimited Voting Shares are listed on the Toronto and New York stockexchanges. The following table sets forth the high and low closingprices and trading volumes of the Limited Voting Shares as reported bythese exchanges during the periods indicated, according to publishedreports:

|            |  |        |  |            |  |           |  |         |  |        |  |         |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|------------|--|--------|--|------------|--|-----------|--|---------|--|--------|--|---------|--|--|--|--|--|--|--|--|--|--|--|--|--|--|
| 2005       |  | NYSE   |  | TSX        |
| PriceRange |  |   |  | PriceRange |  |      |
| High       |  | Low    |  | Volume     |  | High(C$)  |  | Low(C$) |  | Volume |
| January    |  | $82.15 |  | $75.16     |  | 3,775,500 |  | $99.63  |  | $92.15 |  | 986,458 |
| February   |  | $82.20 |  | $71.00     |  | 5,151,200 |  | $101.90 |  | $87.36 |  | 749,941 |
| March      |  | $72.14 |  | $68.10     |  | 5,306,600 |  | $89.50  |  | $81.63 |  | 956,188 |
| April      |  | $72.79 |  | $62.93     |  | 4,047,200 |  | $90.15  |  | $79.05 |  | 680,736 |
| May        |  | $72.47 |  | $61.81     |  | 4,875,300 |  | $92.50  |  | $77.50 |  | 678,335 |
| June       |  | $75.22 |  | $66.10     |  | 4,530,500 |  | $94.00  |  | $80.92 |  | 438,263 |
| July       |  | $69.60 |  | $65.23     |  | 2,954,000 |  | $84.88  |  | $80.30 |  | 421,881 |
| August     |  | $67.20 |  | $58.25     |  | 8,454,200 |  | $81.40  |  | $69.14 |  | 650,755 |
| September  |  | $60.65 |  | $54.66     |  | 4,553,400 |  | $72.07  |  | $63.88 |  | 671,598 |
| October    |  | $59.08 |  | $51.75     |  | 3,702,100 |  | $69.93  |  | $60.80 |  | 352,596 |
| November   |  | $57.19 |  | $49.26     |  | 6,413,300 |  | $67.79  |  | $57.92 |  | 584,004 |
| December   |  | $50.66 |  | $46.89     |  | 4,350,100 |  | $59.29  |  | $54.21 |  | 546,511 |
|            |

OnMarch 8, 2006 the last reported sale prices of the Limited VotingShares on the NYSE and TSX were $54.10 and C$62.63 per share,respectively.

Dividend Policy

It is our policy topay a semi-annual dividend to holders of our Limited Voting Shares andVariable Multiple Voting Shares. In each of the years 2003, 2004 and2005 we paid semi-annual cash dividends of C$0.055 per Limited VotingShare and C$0.0275 per Variable Multiple Voting Share. There are norestrictions currently that prevent us from continuing to pay dividendson this basis. We do not expect to change our dividend policy in2006.

Convertible Senior Notes

On June18,  2004, we completed a public offering of $250  millionprincipal amount of 1.875% convertible senior notes dueJuly  30,  2024. The notes will be convertible into LimitedVoting Shares at an initial conversion rate of 13.9581 shares per$1,000 principal amount in certain circumstances, including those inwhich the Limited Voting Shares have traded for more than 130%of the conversion price for a specified period, the notes have had atrading price of less than 95% of the market price of theLimited Voting Shares into which they may be converted for a specifiedperiod, the notes have been called for redemption, or a specifiedcorporate transaction or a fundamental change hasoccurred.

Ratings

Our $250  million ofconvertible senior notes have been assigned the followingratings:

Standard & Poor’s: BBB− with astable rating outlook. As defined by Standard & Poor’s, anobligation rated BBB exhibits adequate protection parameters. However,adverse economic conditions or changing circumstances are more likelyto lead to a weakened capacity of the obligor to meet its financialcommitment on the obligation. The rating is modified by a minus sign,which is used to show relative standing within this rating category.The rating outlook, which assesses the potential direction of thecredit rating over the intermediate to longer term, is stable, whichmeans the rating is not likely to change. Moody’s InvestorsService: Baa3 with a stable rating outlook. As defined byMoody’s, obligations rated

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Baa are subject to moderate credit risk.They are considered medium-grade and as such may possess certainspeculative characteristics. The modifier 3 indicates a ranking in thelower end of the rating category. The rating outlook means the ratingis not likely to change in the medium term (18 to 36months).

Dominion Bond Rating Service(‘‘DBRS’’): BBB with a stable rating trend.As defined by DBRS, long-term debt rated BBB is of adequate creditquality. Protection of interest and principal is considered acceptable,but the entity is fairly susceptible to adverse changes in financialand economic conditions, or there may be other adverse conditionspresent which reduce the strength of the entity and its ratedsecurities. The absence of either a‘‘high’’ or‘‘low’’ designation indicates the rating isin the middle of the rating category. The rating trend is designed togive the investor an understanding of DBRS’ opinion regardingthe outlook for the rating.

Credit ratings are meant togive an indication of the risk that a borrower will not fulfill itsfull obligations in a timely manner, with respect to both interest andprincipal commitments. The ratings are current opinions of the relativecredit risk of fixed-income obligations with an original maturity ofone year or more. Such ratings reflect both the likelihood of defaultand any financial loss suffered in the event of default. Credit ratingsmay be changed, suspended, or withdrawn as a result of changes in, orunavailability of, such information, or based on other circumstances.The issued credit rating is not a recommendation to purchase, sell, orhold a financial obligation, inasmuch as it does not comment as tomarket price or suitability for a particular investor.

Directorsand Officers

The following table sets forth certaininformation regarding each of FSHI’s executive officers anddirectors:

|                                                    |  |                                               |  |                                                                      |  |  |  |  |  |  |
|----------------------------------------------------|--|-----------------------------------------------|--|----------------------------------------------------------------------|--|--|--|--|--|--|
| Nameand Residence                                  |  | Position with FSHI                            |  | PrincipalOccupation                                                  |
| IsadoreSharpOntario, Canada                        |  | Chairman, Chief ExecutiveOfficer and Director |  | Chairman and Chief Executive Officer,Four Seasons Hotels Limited     |
| William D. Anderson1, 2Quebec,Canada               |  | Director                                      |  | Corporate Director                                                   |
| Brent Belzberg 1, 2Ontario,Canada                  |  | Director                                      |  | Senior Managing Partner, TorquestPartners Inc. 3                     |
| H. Roger GarlandOntario, Canada                    |  | Director                                      |  | CorporateDirector                                                    |
| Nan-b de Gaspé Beaubien 1,4,5Quebec, Canada |  | Director                                      |  | President, Business Families Foundation6 and Co-Chair,Philbeau Inc.7 |
| Charles S. Henry 5,8New York, USA                  |  | Director                                      |  | President,Hotel Capital Advisers, Inc. 9                             |
| HeatherMunroe-Blum 5Quebec, Canada                 |  | Director                                      |  | Principal and Vice Chancellor, McGill University10                   |
| Ronald W. Osborne2Ontario,Canada                   |  | Director                                      |  | Chairman of the Board, Sun LifeFinancial Inc. 11                     |
| J. Robert S. Prichard4, 5Ontario, Canada           |  | LeadDirector                                  |  | President and Chief Executive Officer, TorstarCorporation 12         |
| Lionel H. Schipper 1,2Ontario, Canada              |  | Director                                      |  | President, Schipper Enterprises Inc.7                                |
|                                                    |

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|                                   |  |                                                          |  |                                                                                      |  |  |  |  |  |  |
|-----------------------------------|--|----------------------------------------------------------|--|--------------------------------------------------------------------------------------|--|--|--|--|--|--|
| Nameand Residence                 |  | Position with FSHI                                       |  | PrincipalOccupation                                                                  |
| Anthony SharpOntario,Canada       |  | Director                                                 |  | President, Sharpwise Ltd.13                                                          |
| Simon M.  Turner 1,8New York, USA |  | Director                                                 |  | Principal,Hotel Capital Advisers, Inc. 9                                             |
| SarahCohenOntario, Canada         |  | Vice President, CorporateCounsel and Assistant Secretary |  | Vice President, CorporateCounsel and Assistant Secretary, Four Seasons HotelsLimited |
| John M.  DavisonOntario,Canada    |  | Executive Vice President, Chief FinancialOfficer         |  | Executive Vice President, Chief Financial Officer, FourSeasons Hotels Limited        |
| Wolf H. HengstOntario, Canada     |  | President, Worldwide HotelOperations                     |  | President, Worldwide Hotel Operations, Four SeasonsHotels Limited                    |
| Craig O. ReithOntario,Canada      |  | Vice President, Finance and Treasurer                    |  | VicePresident, Finance and Treasurer, Four Seasons HotelsLimited                     |
| Kathleen TaylorOntario,Canada     |  | President, Worldwide Business Operations                 |  | President, Worldwide Business Operations, Four Seasons HotelsLimited                 |
| Randolph WeiszOntario,Canada      |  | Executive Vice President, General Counsel andSecretary   |  | Executive Vice President, General Counsel andSecretary, Four Seasons HotelsLimited   |
|                                   |

|   |                                         |
|---|-----------------------------------------|
| 1 | Member of theHuman Resources Committee. |

|   |                               |
|---|-------------------------------|
| 2 | Memberof the Audit Committee. |

|   |                             |
|---|-----------------------------|
| 3 | Privateequity fund manager. |

|   |                                                    |
|---|----------------------------------------------------|
| 4 | Elected by theholders of the Limited VotingShares. |

|   |                                              |
|---|----------------------------------------------|
| 5 | Member of the CorporateGovernance Committee. |

|   |                       |
|---|-----------------------|
| 6 | Non-profitfoundation. |

|   |                            |
|---|----------------------------|
| 7 | Investment holdingcompany. |

|   |                                                                                                                                                                      |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 8 | Nominee of Kingdom, whichhas the right pursuant to an agreement with Triples Holdings Limitedand Isadore Sharp to elect two directors to the FSHI Board ofDirectors. |

|   |                                |
|---|--------------------------------|
| 9 | Hotel investmentadvisory firm. |

|    |                       |
|----|-----------------------|
| 10 | Educationalinstitute. |

|    |                   |
|----|-------------------|
| 11 | Insurancecompany. |

|    |                              |
|----|------------------------------|
| 12 | Media and publishingcompany. |

|    |                                        |
|----|----------------------------------------|
| 13 | Real estate/resortdevelopment company. |

Isadore Sharp has served as adirector of FSHI and its predecessor corporation since January9,  1978. H. Roger Garland was elected to the board ofdirectors of FSHI’s predecessor corporation on October1,  1985. Lionel H. Schipper was appointed to the board ofdirectors on February  18,  1988. Charles S. Henry wasappointed to the board of directors on November  11,  1994.J. Robert S. Prichard was appointed to the board of directors onMarch  6,  1996. Nan-b de Gaspé Beaubien was electedto the board of directors on May  23,  1997. Anthony Sharpwas appointed to the board of directors on August  25,1999. Simon M.  Turner was re-appointed to the board of directorson February  14,  2002. Brent Belzberg and HeatherMunroe-Blum were appointed to the board of directors on November7,  2002. Ronald W.

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Osborne was elected to the board ofdirectors on May  21,  2003. William D. Anderson waselected to the board of directors on May  25,2005.

All of the directors will hold office until the nextannual meeting of shareholders, or until their successors are electedor appointed.

All our executive officers and directorshave held their principal occupations for more than five years with theexception of the following. William Anderson was President of BCEVentures Inc. until December  31,  2005. Brent Belzberg wasPresident and CEO of Harrowston Inc. prior to February  2002.Heather Munroe-Blum was a Professor at the University of Toronto priorto December  31,  2002 and was Vice-President, Research andInternational Relations at the University of Toronto prior toJune  1,  2002. Ronald W. Osborne was President and ChiefExecutive Officer of Ontario Power Corporation prior to December4,  2003. J. Robert S. Prichard was Professor of Law andPresident Emeritus, University of Toronto prior to July1,  2001 and President, University of Toronto prior toJune  30,  2000. Kathleen Taylor was President, WorldwideBusiness Operations and Secretary prior to February  15,2001. Randolph Weisz was Senior Vice President and General Counsel ofFour Seasons Hotels Limited prior to August  6,  2002.Sarah Cohen was Corporate Counsel of Four Seasons Hotels Limited priorto February  15,  2001. Craig O. Reith was Vice President,Finance and Assistant Treasurer of Four Seasons Hotels Limited prior toMay 17, 2005. John Davison was Senior Vice President of Four SeasonsHotels Limited prior to August 23, 2005, an independent consultantprior to August 26, 2002 and President and Chief Operating Officer ofImax Corporation prior to June 30, 2001.

HeatherMunroe-Blum served on the board of directors of Livent Inc. fromJune  1998 through November  27,  1998. OnNovember  18,  1998, Livent Inc. filed a voluntary petitionunder Chapter 11 of the US Bankruptcy Code. On November19,  1998, Livent Inc. filed for protection under theCompanies Creditors Arrangement Act. Additionally, onAugust  28,  1998 the Ontario Securities Commission made anorder pursuant to section 127(5) of the Securities Act (Ontario)that trading in securities of Livent Inc. cease immediately for aperiod of 15 days on the grounds that there was not sufficientinformation in the marketplace on which investors could make informeddecisions as to the purchase or sale of the securities of Livent Inc.That order was extended, with the consent of Livent Inc., onSeptember  11,  1998. That cease trade order was revoked bythe Ontario Securities Commission on November  19,1998.

Ronald W. Osborne served on the board of directorsof Air Canada from May of 1999 to September of 2004. In September of2004, Air Canada completed a court-sanctioned restructuring process andimplemented a plan of arrangement under the corporate and insolvencylaws of Canada.

Kathleen Taylor was formerly a director ofThe T. Eaton Company Limited which, in 1999, completed acourt-sanctioned reorganization pursuant to a plan of compromise andarrangement under the corporate and insolvency laws of Ontario andCanada, respectively. As a result of this situation, trading of thecommon shares of Eaton’s was suspended by the Toronto StockExchange on August  23,  1999 and the common shares wereultimately delisted in connection with the implementation of thereorganization.

Our directors and executive officers, as agroup, own beneficially, directly or indirectly, or exercise control ordirection over, the following number of Limited Voting Shares andVariable Multiple Voting Shares:

|                                |  |                  |           |                    |  |        |       |         |  |  |
|--------------------------------|--|------------------|-----------|--------------------|--|--------|-------|---------|--|--|
| Descriptionof Class            |  | Number of Shares |           | Percentage ofClass |
| Limited Voting Shares          |  |             | 173,875   |               |  |   | 0.526 | %  |
| VariableMultiple Voting Shares |  |             | 3,725,698 |               |  |   | 100   | %  |
|                                |

Webelieve that our corporate governance policies, procedures andpractices are in substantive compliance with the guidelines, rules andrequirements that are applicable to Four Seasons and are appropriatefor Four Seasons in the current circumstances.

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We believe that there are nosignificant differences in our corporate governance practices fromthose required to be followed by U.S. domestic issuers (including theNYSE listing standards), other than the membership on each of ourCorporate Governance Committee and Human Resources Committee of onedirector who may be deemed not to be independent for certain purposesand the approval of the Chief Executive Officer's compensationlevel, upon the recommendation of the Compensation Committee, by theindependent directors and those two directors. We believe that thecontinued involvement of those directors on those Committees and theirparticipation in the process of approving the level of CEO compensationis of significant benefit to the Committees, the Board and Four Seasonsand does not compromise the independence of those Committees or theprocess for approval of CEOcompensation.

Experts

Our auditors are KPMG LLP,who have prepared the auditors report to our shareholders on ourconsolidated financial statements for the year ended December31,  2005.

Audit Committee Information

AuditCommittee Charter

Our Board of Directors has approved awritten charter for the Audit Committee, the text of which is set outin Schedule ‘‘A’’. Our Audit Committeecharter may also be viewed on our website atwww.fourseasons.com.

Composition of AuditCommittee

The members of the Audit Committee are RonaldOsborne (Chair), Lionel H. Schipper, William Anderson and BrentBelzberg. Our Board of Directors, upon the recommendation of theCorporate Governance Committee, has determined that all members of theAudit Committee are financially literate andindependent.

Education and Experience

Ronald W.Osborne (Chair), B.A., F.C.A. — Mr.  Osborne is a formerpartner and employee of a prominent Canadian Chartered Accountants firmand its Brazilian affiliate and has held positions as President, ChiefExecutive Officer and Chief Financial Officer at four Canadian publiccompanies. Mr.  Osborne currently serves on the board of a numberof Canadian public companies and community organizations. In additionto serving as the Chair of the Audit Committee at Four Seasons,Mr.  Osborne is the Chair of the Audit Committee at one ofCanada’s largest real estate investment trusts, and a member ofthe Audit Committee at three other Canadian publiccompanies.

Lionel H. Schipper, C.M., Q.C. —Mr.  Schipper received his B.A. and L.L.B. from the University ofToronto and is a former partner of a major Toronto law firm, where hespecialized in corporate finance and securities law. Since retiringfrom the firm he has been actively involved in the investment businessas President of a private firm. Mr.  Schipper has for more than20 years served as a director of numerous public companies some ofwhose shares have been listed on the New York Stock Exchange and theToronto Stock Exchange. Mr.  Schipper currently serves on theboard of directors of two other Canadian public companies and on theboard of directors and audit committee of one United States publiccompany, is the Vice-Chair of the Centre for Research inNeurodegenerative Diseases at the University of Toronto and is anHonourary Director of the Baycrest CentreFoundation.

William Anderson, C.A. — Mr.Anderson is a corporate director. Mr.  Anderson was the presidentof BCE Ventures Inc. until December  31,  2005 and has heldpositions as the Chief Financial Officer at BCE Inc., Bell Canada andBell Cablemedia plc. Mr.  Anderson is a former partner of KPMGLLP (having left the firm in 1989). He also is a director of TransAltaCorporation, Bell Canada International Inc., Sears Canada Inc. andSears Canada Bank.

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Brent Belzberg, B.Comm., J.D.— Mr.  Belzberg is the Senior Managing Partner of TorquestPartners Inc., a private equity fund manager. Mr.  Belzberg wasthe President and Chief Executive Officer of Harrowston Inc., aninvestment company and has more than 20 years of executive managementexperience in finance, acquisitions, corporate restructuring andoperations. He is a director and serves as a member of the riskmanagement committee of a Canadian chartered bank. Mr.  Belzbergserves as an advisor to faculties at the University ofToronto.

Pre-Approval Policies and Procedures

TheAudit Committee has considered whether the provision of services byKPMG LLP other than audit services is compatible with maintaining theindependence of KPMG LLP. The Audit Committee has determined that theprovision of certain services is consistent with that independence andhas adopted a policy that restricts us from engaging KPMG LLP forcertain categories of non-audit services and requires pre-approval bythe Audit Committee of audit services and other services that KPMG LLPis not restricted by this policy from providing. The services providedby, and fees paid to, KPMG LLP in 2005 were in compliance with thispolicy.

Audit and Audit-Related Fees

Audit feescharged by KPMG LLP totalled $736,056 in 2005 and $1,128,868 in2004.

Audit-related fees charged by KPMG LLP totalled$234,209 in 2005 and $79,934 in 2004. Audit-related fees include feesfor assurance and related services that are reasonably related to theperformance of the audit or review of our annual financial statementsand are not reported as part of audit fees, including audit of employeeretirement benefit plan, advice with respect to internal controls andother assurance reports.

Tax Fees

Fees charged byKPMG LLP for tax services, including tax compliance, tax advice and taxplanning, totalled approximately $111,824 in 2005 and $195,687 in 2004.These services consisted of tax compliance (including the review of taxreturns, assistance with questions regarding tax audits and preparationof certain employee tax returns), and tax planning and advisoryservices relating to common forms of domestic and internationaltaxation.

All other Fees

Fees charged by KPMG LLPfor other services not described above totalled nil in 2005 and nil in2004.

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Corporate Chart

Thefollowing chart illustrates our corporate structure, and includescorporations in which we have a significant interest, either directlyor indirectly, and their jurisdictions of incorporation ororganization.

Notes

|  |          |                                                                                                              |
|--|----------|--------------------------------------------------------------------------------------------------------------|
|  | A.  | Themanagement of Four Seasons hotels in North America is generally carriedout by Four Seasons HotelsLimited. |

|  |    |         |
|--|----|---------|
|  | B. | Direct. |

|  |          |                                                                                                                                                                                                      |
|--|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | C.  | Themanagement of Four Seasons hotels outside North America and Regenthotels is generally carried out by Four Seasons Hotels and Resorts B.V.and Four Seasons Hotels and Resorts Asia Pacific PteLtd. |

|  |          |           |
|--|----------|-----------|
|  | D.  | Indirect. |

AdditionalInformation

Additional information about us, includingdirectors’ and officers’ remuneration and indebtedness,principal holders of our securities and options to purchase securitiesis contained in our Management Information Circular prepared for themost recent annual meeting of our shareholders. Additional financialinformation is provided in our Consolidated Financial Statements forthe year ended December  31,  2005 and relatedManagement’s Discussion and Analysis. Such information and otherinformation about us may be found atwww.sedar.com.

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SCHEDULE‘‘A’’

FOURSEASONS HOTELS INC.

AUDIT COMMITTEECHARTER

PURPOSE

The Audit Committee is appointedby the Board of Directors of the Company to assist the Board ofDirectors in its oversight and evaluationof:

|              |                                                                      |
|--------------|----------------------------------------------------------------------|
| •  | the quality and integrity ofthe financial statements of the Company, |

|              |                                                                                                        |
|--------------|--------------------------------------------------------------------------------------------------------|
| •  | the compliance by the Company withlegal and regulatory requirements in respect of financialdisclosure, |

|              |                                                                                               |
|--------------|-----------------------------------------------------------------------------------------------|
| •  | the qualification,independence and performance of the Company’s independentauditor, and |

|              |                                                                               |
|--------------|-------------------------------------------------------------------------------|
| •  | the performance of theCompany's Chief Financial Officer and internal auditor. |

In addition, the Audit Committee provides an avenue forcommunication between the internal auditor, the independent auditor,financial management, other employees and the Board of Directorsconcerning accounting and auditing matters.

The AuditCommittee is directly responsible for the appointment, compensation,retention (and termination) and oversight of the work of theindependent auditor (including oversight of the resolution of anydisagreements between management and the independent auditor regardingfinancial reporting) for the purpose of preparing audit reports orperforming other audit, review or attest services for theCompany.

The Audit Committee is not responsiblefor:

|              |                               |
|--------------|-------------------------------|
| •  | planning or conductingaudits, |

|              |                                                                                                                                                                                                        |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | certifying or determiningthe completeness or accuracy of the Company’s financialstatements or that those financial statements are in accordance withgenerally accepted accounting principles, or |

|              |                                                                    |
|--------------|--------------------------------------------------------------------|
| •  | guaranteeing the report of theCompany’s independent auditor. |

The fundamentalresponsibility for the Company’s financial statements anddisclosure rests with management. It is not the duty of the AuditCommittee to conduct investigations, to itself

As ineffect March 2006

----

resolve disagreements (if any)between management and the independent auditor or to assure compliancewith applicable legal and regulatory requirements.

Indischarging its obligations under this Charter, the Audit Committeeshall act in accordance with its fiduciaryduties.

REPORTS

The Audit Committee shall reportto the Board of Directors of the Company on a regular basis and, in anyevent, before the public disclosure by the Company of its quarterly andannual financial results. The reports of the Audit Committee shallinclude any issues of which the Audit Committee is aware with respectto the quality or integrity of the Company’s financialstatements, its compliance with legal or regulatory requirements, andthe performance and independence of the Company’s internalauditor and independent auditor.

The Audit Committee alsoshall prepare, as required by applicable law, any audit committeereport required for inclusion in the Company's publicly fileddocuments.

COMPOSITION

The members of the AuditCommittee shall be three or more individuals who are appointed (and maybe replaced) by the Board of Directors of the Company on therecommendation of the Company's Corporate Governance Committee.The appointment of members of the Audit Committee shall take placeannually at the first meeting of the Board of Directors of the Companyafter a meeting of shareholders at which directors are elected,provided that if the appointment of members of the Audit Committee isnot so made, the directors who are then serving as members of the AuditCommittee shall continue as members of the Audit Committee until theirsuccessors are appointed. The Board of Directors may appoint a memberto fill a vacancy that occurs in the Audit Committee between annualelections of directors. Any member of the Audit Committee may beremoved from the Audit Committee by a resolution of the Board ofDirectors. Each of the members of the Audit Committee shall meet theCompany’s categorical standards for director independence andshall be financially literate (or acquire that familiarity within areasonable period after appointment) in accordance with applicablelegislation and stock exchange requirements. At least one member of theAudit Committee shall be a ‘‘financialexpert’’ with accounting or related financial managementexpertise, as contemplated by applicable legislation and stock exchangerequirements. No member of the Audit Committeeshall:

|              |                                                                                                                                                                                                                                                                                                                               |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | accept (directly orindirectly) any consulting, advisory or other compensatory fee from theCompany or any of its subsidiaries8 (other than remunerationfor acting in his or her capacity as a director or committee member) orbe an ‘‘affiliated person’’9 ofthe Company or any of its subsidiaries,or |

|  |
|--|
|  |  |
|  |

|   |                                                                                                                                                                 |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 8 | A company is asubsidiary of another company if it is controlled, directly orindirectly, by that other company (through one or more intermediariesor otherwise). |

|   |                                                                                                                                                                                                                |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 9 | An‘‘affiliate’’ of a person is a person that,directly or indirectly through one or more intermediaries, controls, oris controlled by, or is under common control with the firstperson. |

As in effect March 2006

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|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | concurrentlyserve on the audit committee of more than three other public companieswithout the prior approval of the Audit Committee, the CorporateGovernance Committee and the Board of Directors and their determinationthat such simultaneous service would not impair the ability of themember to effectively serve on the Audit Committee (which determinationshall be disclosed in the Company’s annual managementinformation circular). |

A majority of the members of theAudit Committee shall be "residentCanadians", as contemplated by the BusinessCorporations Act(Ontario).

RESPONSIBILITIES

IndependentAuditor

The Audit Committeeshall:

|              |                                                                                                                                                                                                                                                 |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Recommend the appointmentand the compensation of, and, if appropriate, terminate the independentauditor, subject to such Board of Directors and shareholder approval asis required under applicable legislation and stock exchangerequirements. |

|              |                                                                                                                                                                              |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Obtain confirmationfrom the independent auditor that it ultimately is accountable, andwill report directly, to the Audit Committee and the Board of Directorsof the Company. |

|              |                                                                                                                                                                       |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Oversee the work ofthe independent auditor, including the resolution of any disagreementsbetween management and the independent auditor regarding financialreporting. |

|              |                                                                                                                                                                                                                                                                                                           |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Pre-approve all auditand non-audit services (including all internal control-relatedservices) provided by the independent auditor (subject to anyrestrictions on such non-audit services imposed by applicablelegislation, regulatory requirements and policies of the CanadianSecurities Administrators). |

|              |                                                                                                                                                                                                                                                                                                                                         |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Adoptsuch policies and procedures as it determines appropriate for thepre-approval of the retention of the independent auditor by the Companyand any of its subsidiaries for any audit or non-audit services,including procedures for the delegation of authority to provide suchapproval to one or more members of the AuditCommittee. |

|              |                                                                                                                                                                                                                |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | At least annually,review the qualifications, performance and independence of theindependent auditor. In doing so, the Audit Committee shall, amongother things, undertake the measures set forth in AppendixA. |

|              |                                                                                   |
|--------------|-----------------------------------------------------------------------------------|
| •  | Provide notice to theindependent auditor of every meeting of the Audit Committee. |

TheAudit Process, Financial Statements and RelatedDisclosure

The Audit Committeeshall:

|              |                                                                          |
|--------------|--------------------------------------------------------------------------|
| •  | Meet with management and/orthe independent auditor to review anddiscuss, |

|               |                                                                   |
|---------------|-------------------------------------------------------------------|
| –  | the planning andstaffing of the audit by the independent auditor, |

Asin effect March 2006

3

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|               |                                                                                                                                                                                                                                                                                                                                                               |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| –  | beforepublic disclosure, the Company’s annual audited financialstatements and quarterly financial statements, the Company'saccompanying disclosure of Management’s Discussion and Analysisand earnings press releases and make recommendations to the Board ofDirectors as to their approval and dissemination of those statementsand disclosure, |

|               |                                                                                                                                                                                                                                                                                                                             |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| –  | financialinformation and earnings guidance provided to analysts and ratingagencies: this review need not be done on a case by case basis but maybe done generally (consisting of a discussion of the types ofinformation disclosed and the types of presentations made) and need nottake place in advance of thedisclosure, |

|               |                                                                                                                                                                                                                                                                                                                                                                                                                  |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| –  | any significantfinancial reporting issues and judgments made in connection with thepreparation of the Company’s financial statements, including anysignificant changes in the selection or application of accountingprinciples, any major issues regarding auditing principles andpractices, and the adequacy of internal controls that couldsignificantly affect the Company’s financialstatements, |

|               |                                                    |
|---------------|----------------------------------------------------|
| –  | all criticalaccounting policies and practicesused, |

|               |                                                                                                                                                                                                                                        |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| –  | all alternativetreatments of financial information within GAAP that have beendiscussed with management, ramifications of the use of such alternativedisclosures and treatments, and the treatment preferred by theindependent auditor, |

|               |                                                                                                              |
|---------------|--------------------------------------------------------------------------------------------------------------|
| –  | theuse of ‘‘pro forma’’ or‘‘adjusted’’ non-GAAP information, |

|               |                                                            |
|---------------|------------------------------------------------------------|
| –  | the effect of new regulatoryand accounting pronouncements, |

|               |                                                                                                                                                                         |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| –  | the effect of any materialoff-balance sheet structures, transactions, arrangements andobligations (contingent or otherwise) on the Company’s financialstatements, |

|               |                                                                                                                                                                                                                                                                                                                              |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| –  | any disclosuresconcerning any weaknesses or any deficiencies in the design oroperation of internal controls or disclosure controls made to the AuditCommittee in connection with certification of forms by the ChiefExecutive Officer and/or the Chief Financial Officer for filing withapplicable securities regulators,and |

|               |                                                                                                                                                                                                                                                                                                                                                                               |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| –  | the adequacy of theCompany’s internal accounting controls and managementinformation systems and its financial, auditing and accountingorganizations and personnel (including any fraud involving anindividual with a significant role in internal controls or managementinformation systems) and any special steps adopted in light of anymaterial controldeficiencies. |

|              |                                                                                                                                                                          |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Establish andperiodically assess, adequate procedures for the review of disclosuresof financial information extracted or derived from the Company'sfinancial statements. |

|              |                                                                                                                                                                                                                                  |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Review withmanagement, the Company’s guidelines and policies with respectto risk assessment and the Company’s major financial riskexposures and the steps management has taken to monitor and controlsuch exposures. |

|              |                                     |
|--------------|-------------------------------------|
| •  | Review with theindependent auditor, |

As in effect March2006

4

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|               |                                                                                              |
|---------------|----------------------------------------------------------------------------------------------|
| –  | thequality, as well as the acceptability of the accounting principles thathave been applied, |

|               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| –  | anyproblems or difficulties the independent auditor may have encounteredduring the provision of its audit services, including any restrictionson the scope of activities or access to requested information and anysignificant disagreements with management, any management letterprovided by the independent auditor or other material communication(including any schedules of unadjusted differences) to management andthe Company’s response to that letter or communication,and |

|               |                                                                                                                                                                                     |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| –  | any changes to theCompany’s significant auditing and accounting principles andpractices suggested by the independent auditor, internal auditor orother members of management. |

Internal AuditFunction

The Audit Committeeshall:

|              |                                                                                                                                               |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Review the experience andqualifications, and consider the appointment and replacement bymanagement, of the senior internal auditingpersonnel. |

|              |                                                           |
|--------------|-----------------------------------------------------------|
| •  | Review the scope ofinternal audit work plans for theyear. |

|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Review the significantreports to management prepared by the internal auditor andmanagement’s responses, including a summary report of majorfindings by the internal auditor (including an explanation of thefactors considered in determining the audit scope), major risk factors,a list and the circumstances of any occurrences of fraud that have beenidentified, and confirmation that no limitations have been placed onthe scope for, or nature of, the internalaudit. |

|              |                                                                 |
|--------------|-----------------------------------------------------------------|
| •  | Discuss with the independentauditor the internal auditfunction. |

|              |                                                                                                                                                                   |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Discuss with the internalauditor the adequacy of the Company's internal accountingcontrols and its financial, auditing and accounting organizations andpersonnel. |

Compliance

The Audit Committeeshall:

|              |                                                                                                                                                                                                                                                                                                                                    |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Obtain reports frommanagement and the Company’s senior internal auditing personnelthat the Company’s subsidiary/foreign affiliated entities are inconformity with applicable legal requirements and the Company'sCode of Business Conduct and Ethics including disclosures of insiderand affiliated partytransactions. |

|              |                                                                                                                                                                                                                                                                    |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Review withmanagement and the independent auditor any correspondence withregulators or governmental agencies and any employee complaints orpublished reports, which raise material issues regarding theCompany’s financial statements or accountingpolicies. |

As in effect March 2006

5

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|              |                                                                                                                                                                                                                                  |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Advise theBoard of Directors of the Company with respect to the Company’spolicies and procedures regarding compliance with applicable laws andregulations and with the Company’s Code of Business Conduct andEthics. |

|              |                                                                                                                                                                                                                                                         |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Review with theCompany’s General Counsel legal matters that may have a materialimpact on the financial statements, the Company’s compliancepolicies and any material reports or inquiries received from regulatorsor governmental agencies. |

|              |                          |
|--------------|--------------------------|
| •  | Establishprocedures for, |

|               |                                                                                                                             |
|---------------|-----------------------------------------------------------------------------------------------------------------------------|
| –  | the receipt,retention and treatment of complaints regarding accounting, internalaccounting controls or auditing matters,and |

|               |                                                                                                                             |
|---------------|-----------------------------------------------------------------------------------------------------------------------------|
| –  | the confidential,anonymous submission by employees of the Company with concernsregarding any accounting or auditingmatters. |

Delegation

To avoid any confusion, theAudit Committee responsibilities identified above are the soleresponsibility of the Audit Committee and may not be allocated to adifferent committee.

MEETINGS

The Audit Committeeshall meet at least quarterly and more frequently as circumstancesrequire. All members of the Audit Committee should strive to be at allmeetings. The Audit Committee shall meet separately, periodically, withmanagement, the internal auditor and the independent auditor and mayrequest any member of the Company’s Management Committee or theCompany’s outside counsel or independent auditor to attendmeetings of the Audit Committee or with any members of, or advisors to,the Audit Committee. The Audit Committee also may meet with theinvestment bankers, financial analysts and rating agencies that provideservices to, or follow, the Company.

The Audit Committeemay form and delegate authority to individual members and subcommitteesof the Audit Committee where the Audit Committee determines it isappropriate to do so.

INDEPENDENT ADVICE

Indischarging its mandate, the Audit Committee shall have the authorityto retain (and authorize the payment by the Company of) and receiveadvice from special legal, accounting or other advisors as the AuditCommittee determines to be necessary to permit it to carry out itsduties.

ANNUAL EVALUATION

At least annually, theAudit Committee shall:

|              |                                                                                                                                                            |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Conduct areview and evaluation of the performance of the Audit Committee and itsmembers, including the compliance of the Audit Committee with thisCharter. |

As in effect March2006

6

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|              |                                                                                                                                                                            |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Review andassess the adequacy of its Charter and recommend to the Board ofDirectors any improvements to this Charter that the Audit Committeedetermines to be appropriate. |

As in effect March2006

7

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AppendixA

|              |                                                                                                       |
|--------------|-------------------------------------------------------------------------------------------------------|
| •  | Review the experience andqualifications of the senior members of the independentauditor’s team. |

|              |                                                                             |
|--------------|-----------------------------------------------------------------------------|
| •  | Discuss withthe independent auditor its internal quality-controlprocedures. |

|              |                                                                                                                                                           |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Confirm with theindependent auditor that it is in compliance with applicable legal,regulatory and professional standards relating to auditorindependence. |

|              |                                                                                                                                                                                             |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Confirm with theindependent auditor that it is a participating audit firm of theCanadian Public Accountability Board in compliance with allrestrictions or sanctions imposed on it (ifany). |

|              |                                                                                                                                                                      |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Review and approve clearpolicies for the hiring by the Company of partners, employees andformer partners and employees of the present and former independentauditor. |

|              |                                                                                                                                                                                                                                                                                                                                                                                         |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Review periodic reportsfrom the independent auditor regarding its independence and considerwhether there are any non-audit services or relationships that mayaffect the objectivity and independence of the independent auditor and,if so, recommend that the Board of Directors of the Company takeappropriate action to satisfy itself of the independence of theindependent auditor. |

|              |                                                                                                                                |
|--------------|--------------------------------------------------------------------------------------------------------------------------------|
| •  | Obtain andreview such report(s) from the independent auditor as may be requiredby applicable legal and regulatoryrequirements. |

A-1

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