AGF Management Limited Reports Fiscal 2009 Results

AGF MANAGEMENT LIMITED

Fiscal 2009 Report To Shareholders for the year ended November 30, 2009

AGF ends fiscal year 2009 with strong fourth quarter results, higher assets under management and announces dividend increase

TORONTO, Jan. 27 /CNW/ - AGF Management Limited (AGF) today announced financial results for the year ended November 30, 2009, reporting net income of $97.7 million or $1.09 per share diluted, an increase in total assets under management (AUM) of 25.5%, significant gains in the institutional markets and improved fourth quarter results at AGF Trust. AGF also announced that it intends to increase the quarterly dividend on its Class A voting common and Class B non-voting shares from 25 cents per share to 26 cents per share, effective March 2010.

Fiscal 2009 net income of $97.7 million or $1.09 per share diluted compares with net income of $128.6 million, or $1.41 per share diluted in fiscal 2008. Excluding a $9.8 million reduction in income taxes related to substantively enacted tax rates, net income in fiscal 2009 was $87.9 million or $0.98 per share diluted. In fiscal 2008, excluding non-cash impairment charges, net of tax, of $37.7 million and a $19.5 million reduction in income taxes related to substantively enacted tax rates, the Company reported net income of $146.8 million or $1.61 per share diluted.

As a result of free cash flow from operations (defined as cash flow from operations before net changes in non-cash balances related to operations less selling commissions paid) of $151.6 million, the Company paid out cash dividends of $86.2 million and maintained its quarterly dividend during fiscal 2009 at $0.25 per share.

"Despite extraordinary instability that characterized financial markets in the early part of 2009, our results reflect our growth strategy at AGF. Our total AUM increased by 25.5% since the end of 2008 and we made significant in-roads in the institutional space winning new clients both domestically and internationally. I am also pleased with the results at AGF Trust, a profitable contributor to AGF, as we improved our capital position and reduced our balance sheet risk," said AGF Chairman and Chief Executive Officer Blake C. Goldring. "AGF is well positioned in 2010 as we leverage our world class investment management expertise across target markets in both the retail and institutional space."

Total AUM increased 25.5% to $44.6 billion at November 30, 2009 from $35.6 billion at November 30, 2008. The increase was due to market appreciation, as well as approximately $4.0 billion in net institutional sales. In addition, the level of mutual fund net redemptions declined to approximately half of the previous year's level. Mutual fund AUM increased 15.1% to $22.7 billion at the end of fiscal 2009, compared to $19.8 billion at the end of fiscal 2008. Institutional, strategic accounts and high-net-worth AUM increased 38.5% to $21.9 billion at November 30, 2009 from $15.8 billion at November 30, 2008.

Consolidated revenue declined 19.2% to $586.1 million in fiscal 2009 compared to $725.6 million in the prior year. Revenue in the Investment Management Operations segment declined 21.6% for the year ended November 30, 2009, corresponding to a 21.3% decline in average levels of assets under management (AUM) in fiscal 2009. The Trust Company Operations segment reported a 4.2% decrease in revenue in fiscal 2009 versus 2008 with average loan balances declining by 5.3% on a year-over-year basis.

Expenses for the year ended November 30, 2009 declined 11.0% to $366.6 million from the previous year. Expenses in the Investment Management Operations segment declined 13.3% mainly due to lower trailing commissions and investment advisory fees attributable to the decline in average AUM levels. Expenses at AGF Trust were relatively flat as higher provision for loan losses was offset by lower selling, general and administrative expenses.

EBITDA (defined as earnings before interest, taxes, depreciation and amortization, non-controlling interest, impairment of goodwill and customer contracts and impairment of asset available for sale) decreased 30.0% to $219.5 million in fiscal 2009 driven by declining revenues compared to $313.7 million in fiscal 2008. EBITDA margin was 37.5% in fiscal 2009 compared with 43.2% in fiscal 2008.

During the fourth quarter of 2009, the Company recorded net income of $45.5 million or $0.50 per share diluted compared to a net loss of $19.3 million or $0.21 loss per share diluted in the fourth quarter of 2008. Excluding a $9.8 million reduction in income taxes related to substantively enacted tax rates, net income in the fourth quarter 2009 was $35.7 million or $0.40 per share diluted. For the fourth quarter of 2008, excluding the impairment charges, net of tax, of $37.7 million, net income was $18.4 million or $0.20 per share diluted.

Consolidated EBITDA increased 32.6% to $71.6 million in the fourth quarter of 2009 compared with $54.0 million in the fourth quarter of 2008 due to strong results at AGF Trust. EBITDA in the Investment Management Operations segment increased 7.1% to $59.2 million as the year-over-year increase in average mutual fund AUM led to higher revenue in the fourth quarter of 2009 compared to 2008. EBITDA at AGF Trust was $10.4 million compared to a loss of $3.8 million in the fourth quarter of 2008. The increase was primarily attributable to an 80.5% decline in the provision for loan losses expense to $4.0 million in the fourth quarter of 2009 compared to $20.5 million in the fourth quarter of 2008.

Conference Call

AGF will host a conference call to review its earnings results today at 11:00 a.m. ET. The live audio webcast with supporting materials will be available in the Investor Relations section of AGF's website at www.agf.com or at http://events.startcast.com/events/233/B0040. Alternatively, the call can be accessed by dialling 1-866-300-4047 (toll-free in North America). A complete archive of this discussion along with supporting materials will be available at the same webcast address within 24 hours of the end of the conference call.

About AGF Management Limited

AGF Management Limited is one of Canada's premier investment management companies with offices across Canada and subsidiaries around the world. AGF's products and services include a diversified family of award-winning mutual funds, AGF Elements portfolios, the Harmony asset management program, services for institutional and private clients, as well as AGF Trust GICs, loans and mortgages. With approximately $45.0 billion in total assets under management, AGF serves more than one million investors. AGF trades on the Toronto Stock Exchange under the symbol AGF.B.

AGF Management Limited

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For the year ended November 30, 2009

Management's Discussion and Analysis

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis (MD&A) includes forward-looking statements about the Company, including its business operations, strategy and expected financial performance and condition. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as 'expects', 'anticipates', 'intends', 'plans', 'believes' or negative versions thereof and similar expressions, or future or conditional verbs such as 'may', 'will', 'should', 'would' and 'could'. In addition, any statement that may be made concerning future financial performance (including revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future action on our part, is also a forward-looking statement. Forward-looking statements are based on certain factors and assumptions, including expected growth, results of operations, business prospects, business performance and opportunities. While we consider these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about our operations, economic factors and the financial services industry generally. They are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied by forward-looking statements made by us due to, but not limited to, important risk factors such as level of assets under our management, volume of sales and redemptions of our investment products, performance of our investment funds and of our investment managers and advisors, competitive fee levels for investment management products and administration, and competitive dealer compensation levels, size and default experience on our loan portfolio and cost efficiency in our loan operations, as well as interest and foreign exchange rates, taxation, changes in government regulations, unexpected judicial or regulatory proceedings, and our ability to complete strategic transactions and integrate acquisitions. We caution that the foregoing list is not exhaustive. The reader is cautioned to consider these and other factors carefully and not place undue reliance on forward-looking statements. Other than specifically required by applicable laws, we are under no obligation (and expressly disclaim any such obligation) to update or alter the forward-looking statements, whether as a result of new information, future events or otherwise. For a more complete discussion of the risk factors that may impact actual results, please refer to the 'Risk Factors and Management of Risk' section of this MD&A.

Consolidated Performance

This Management's Discussion and Analysis (MD&A) presents an analysis of the financial condition of AGF Management Limited (AGF) and its subsidiaries as at November 30, 2009, compared with November 30, 2008. The MD&A also includes the results of operations for the year ended November 30, 2009 compared with the corresponding period of 2008. A discussion of the results for the three months ended November 30, 2009 compared with the three months ended November 30, 2008 is also included under the section 'Fourth Quarter Analysis'. This discussion should be read in conjunction with our audited Consolidated Financial Statements and Notes for the year ended November 30, 2009. The financial information presented herein has been prepared on the basis of Canadian Generally Accepted Accounting Principles (GAAP). We also utilize non-GAAP financial measures to assess each of our operating segments and our overall performance. Details of non-GAAP measures used are outlined in the 'Key Performance Indicators and Non-GAAP Measures' section, which provides calculations of the non-GAAP measures along with reconciliation of non-GAAP financial measures to GAAP financial statements. Certain prior-year data has been reclassified to conform to current-year presentation. All dollar amounts are in Canadian dollars unless otherwise indicated. Throughout this discussion, percentage changes are calculated based on results rounded to the nearest thousand. Results, except per share information, are presented in millions of dollars. Percentage changes are calculated using numbers, rounded to the decimals that appear in this MD&A.

Our Business

With $44.6 billion in assets under management (AUM) as at November 30, 2009, AGF is a premier Canadian-based investment solutions firm, with operations and investments in Canada, the United States, the United Kingdom, Ireland and Asia. To better serve the needs of a wide range of diversified clients worldwide, the firm consists of two distinct businesses: AGF Investments and AGF Trust.

The origin of our Company dates back to 1957 with the introduction of the American Growth Fund (AGF), the first mutual fund available to Canadians seeking to invest in the United States. As of November 30, 2009, our products and services include a diversified family of award-winning mutual funds, AGF Elements portfolios, the Harmony asset management program, services for institutional and high-net-worth clients, as well as AGF Trust GICs, loans and mortgages.

For purposes of this discussion, the operations of AGF and our subsidiary companies are referred to as "we", "us", "our" or "the Company". The financial results relating to the operations have been reported in three segments: Investment Management Operations, Trust Company Operations and Other.

The Investment Management Operations segment includes the results of our retail, institutional and high-net-worth client businesses. The Trust Company Operations segment includes the results of AGF Trust Company, and the Other segment includes our equity interest in Smith and Williamson Holdings Limited (S&WHL).

The principal subsidiaries and associated companies included within each of our reportable segments, collectively referenced to as the AGF Group of Companies (AGF), include:

Investment Management Operations Segment

The Investment Management Operations segment, referred to as AGF Investments, consists of the legal entities listed in the 'Government Regulations' section on page 34 of this MD&A under the section 'Investment Management Operations'. The Investment Management Operations segment dates back to 1957 and in the 52 years of operations, has evolved from a Canadian-based mutual fund operation to a global investment management firm with $44.6 billion of AUM. AGF Investments serves the financial needs of a wide range of diversified clients worldwide through its retail mutual funds, institutional and high-net-worth businesses.

Our retail mutual fund business provides investment management and advisory services and is responsible for the sales and marketing of AGF mutual funds. We manage approximately 40 mutual funds, the Harmony managed asset program and the AGF Elements portfolios.

Our institutional business provides investment management services for institutions, corporations, endowments, estates and sovereign wealth funds. We offer a diverse range of investment strategies and have sales and client service offices in Toronto, London (Ontario), Boston and Dublin. We also recently opened an office in Hong Kong which we are in the process of getting registered to do business in 2010.

Our high-net-worth business provides investment management and counselling services for high-net-worth clients in local markets. It includes the operations of Cypress Capital Management Limited in Vancouver, Highstreet Asset Management Inc. in London, Ontario and Doherty & Associates Limited in Ottawa and Montreal. On December 1, 2009, the operations of Doherty & Associates Limited and Magna Vista Investment Management Limited were amalgamated and will carry on business as Doherty & Associates.

Our multi-disciplined investment management teams have expertise across the balanced, fixed income, equity and speciality asset categories and are located in Toronto, Dublin and Singapore. Our teams work collaboratively to provide excellence in money management and each has a clearly stated investment philosophy and a unique, research-driven investment process.

Trust Company Operations Segment

AGF Trust Company (AGF Trust) - The Trust Company Operations segment began in 1988. Complementary to our core business of investment management, AGF Trust has $3.6 billion in loan assets and offers a range of web-enabled products and services including GICs, term deposits, real estate secured loans and investment loans. AGF Trust is federally incorporated, licensed across Canada and is a member of the Canada Deposit Insurance Corporation (CDIC) and Canada Mortgage and Housing Corporation (CMHC).

Other Segment

Smith & Williamson Holdings Limited (S&WHL) - is a leading, independent private client investment management, financial advisory and accounting group based in the U.K., with (pnds stlg) 9.1 billion of AUM. We hold a 30.7% interest in this company as at November 30, 2009.

Our Strategy

AGF Management Limited fosters the development of best-in-class operating segments to provide world-class financial solutions to clients in Canada and internationally. We will continue to identify opportunities within our business segments, ensuring that the appropriate resources are allocated to each of these segments so that shareholder value is maximized over the long term. We will strive to provide investment and other financial products that serve our clients' investment needs and strategies. We are committed to providing excellence in money management and client service.

    
    Measuring long-term shareholder growth, we look to the following key
indicators of achievement:

    -   Revenue growth driven by new sales, market performance and client
        retention

    -   Earnings before interest, taxes, depreciation, amortization, non-
        controlling interest, impairment of goodwill and customer contracts
        and impairment of asset available for sale (EBITDA) growth

    -   Improvement in our EBITDA and pre-tax margins
    

Our strategy also recognizes that both our investment management and trust businesses will experience cycles related to the global stock markets, credit availability, employment levels and other economic factors. We believe that a successful strategy is founded on the ability of our operations to emerge from downturns positioned to capitalize on the economic upturns.

Year-over-year improvement in these measures is expected to result in improved cash flows as well as improved return on equity. Our objective is the return of a fair share of the annual cash flow to shareholders in the form of dividends and through share buybacks, with the remaining cash flow being invested in a manner intended to support our future growth.

2009 Overview

Global stock markets rallied in 2009 after reaching their lows for the year in March. The appreciating global stock markets positively impacted our AUM and, together with cost management, our corresponding financial results improved steadily as fiscal 2009 progressed. The economic downturn that accelerated in the fall of 2008 presented significant challenges which continued to impact our investment management and trust businesses in fiscal 2009. To conserve capital we limited the amount of new lending business at AGF Trust and saw pressure on loan loss provisions ease in the latter part of 2009 as economic conditions improved. While our AUM has recovered significantly since the end of 2008, they remain well below their highs reached in 2007. The following summarizes the key financial and operational highlights during the year:

    
    -   EBITDA for fiscal 2009 was $219.5 million compared with EBITDA of
        $313.7 in fiscal 2008. Consolidated EBITDA margins were 37.5% in
        fiscal 2009 compared with 43.2% fiscal 2008. Return on equity
        declined to 8.7% in fiscal 2009 compared with 11.8% in fiscal 2008.

    -   Cash flow from operations in fiscal 2009 was $206.1 million compared
        with $278.7 million in fiscal 2008.

    -   There was a marginal increase in our total debt to $156.7 million as
        at November 30, 2009 compared with $144.9 million as at November 30,
        2008.

    -   We brought together our retail, institutional and high-net-worth
        operations under a new banner 'AGF Investments' to better reflect our
        core business of investment management, our commitment to clients and
        our excellence in money management.

    -   We opened a new sales office in Boston to support our business
        development efforts in the institutional space.

    -   At the 2009 Canadian Investment Awards, AGF Emerging Markets Fund won
        the Emerging Markets Equity Fund Award for the fourth time. AGF also
        won three Silver awards and one Bronze, spanning a broad spectrum of
        investments.

    -   We were honoured with nine recognitions at the 2009 Canadian Lipper
        Awards including two prestigious group awards - Best Overall Fund
        Family and Best Mixed Asset Fund Family.

    -   We delivered value directly to our shareholders through dividend
        payments with the dividend paid in fiscal 2009 increasing 5.3% to
        $1.00 per share from $0.95 per share in 2008.

    -   We returned 56.9% of our free cash flow to shareholders in the form
        of cash dividends. We define free cash flow as cash flow from
        operations before net change in non-cash balances related to
        operations less selling commissions paid.

    -   Reflective of our stated strategy to ensure that AGF Trust was well
        capitalized from a regulatory perspective and no funding was required
        from AGF Management Limited (2008 - $35.0 million), AGF Trust real
        estate secured loans declined 29.4% over the prior year and
        investment loans declined 9.9%. AGF Trust now has $3.6 billion in
        loan assets and remains an important contributor to the financial
        results of AGF, representing 24.5% of AGF Management Limited's
        pre-tax income in fiscal 2009.

    -   Our overall balance sheet remains strong with a long-term debt to
        EBITDA ratio of 65.4% and we have undrawn capacity of $137.9 million
        on our $300 million credit facility.
    

Key Performance Indicators and Non-GAAP Measures

We measure the success of our business strategies using a number of key performance indicators (KPIs), which are outlined below. With the exception of revenue, the following KPIs are non-GAAP measures which are not defined under Canadian GAAP. They should not be considered as an alternative to net income or any other measure of performance under Canadian GAAP. Segment discussions include a review of KPIs that are relevant to each segment.

a) Consolidated Operations

Revenue

Revenue is a measurement defined by Canadian GAAP and is recorded net of fee rebates, sales taxes and distribution fees paid to limited partnerships. Revenue is indicative of our potential to deliver cash flow.

    
    We derive our revenue principally from a combination of:

    -   management and advisory fees based on AUM

    -   deferred sales charges (DSC) earned from investors when mutual fund
        securities sold on a DSC basis are redeemed

    -   net interest income earned on AGF Trust's loan portfolio
    

EBITDA

We define EBITDA as earnings before interest, taxes, depreciation, amortization, non-controlling interest, impairment of goodwill and customer contracts, and impairment of asset available for sale. EBITDA is a standard measure used in the mutual fund industry by management, investors and investment analysts to understand and compare results. We believe this is an important measure as it allows us to assess our investment management businesses without the impact of non-operational items. EBITDA for the Trust Company Operations segment includes interest expense related to deposits. These deposits fund our investment loan and real estate secured loan programs, and are therefore considered an operating cost directly related to generating interest revenue. We include this interest expense in Trust Company Operations EBITDA to provide a meaningful comparison to our other business segments and our competitors.

Please see the Consolidated Operating Results section on page 19 of this MD&A for a schedule showing how EBITDA reconciles to our GAAP financial statements.

Cash Flow from Operations

We report cash flow from operations before net changes in non-cash balances related to operations. Cash flow from operations helps to assess the ability of the business to generate cash, which is used to pay dividends, repurchase shares, pay down debt and fund other needs.

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Net cash provided by operating activities         $    189.5  $    351.4
    Less: net changes in non-cash balances related
     to operations                                         (16.6)       72.7
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    Cash flow from operations                         $    206.1  $    278.7
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Free Cash Flow from Operations

We define free cash flow as cash flow from operations before net changes in non-cash balances related to operations less selling commissions paid. This is a relevant measure in the investment management business since a substantial amount of cash is spent on upfront commission payments. Free cash flow represents cash available for distribution to our shareholders and for general corporate purposes.

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Cash flow from operations (defined above)         $    206.1  $    278.7
    Less: selling commissions paid                          54.5        86.8
    -------------------------------------------------------------------------
    Free cash flow                                    $    151.6  $    191.9
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EBITDA Margin

EBITDA margin provides useful information to management and investors as an indicator of our overall operating performance. We believe EBITDA margin is a valuable measure because it assesses the extent we are able to earn profit from each dollar of revenue. We define EBITDA margin as the ratio of EBITDA to revenue.

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    EBITDA                                            $    219.5  $    313.7
    Divided by revenue                                     586.1       725.6
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    EBITDA margin                                          37.5%       43.2%
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Pre-Tax Profit Margin

Pre-tax profit margin provides useful information to management and investors as an indicator of our overall operating performance. We believe pre-tax profit margin is a valuable measure because it assesses the extent we are able to earn profit from each dollar of revenue. We define pre-tax profit margin as the ratio of income before taxes to revenue.

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Net income                                        $     97.7  $    128.6
    Add: income taxes                                       18.6        12.7
    -------------------------------------------------------------------------
    Income before taxes                               $    116.3  $    141.3
    Divided by revenue                                     586.1       725.6
    -------------------------------------------------------------------------
    Pre-tax profit margin                                  19.8%       19.5%
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Return on Equity (ROE)

We monitor ROE to assess the profitability of the consolidated Company on an annual basis. We calculate ROE by dividing net income by average shareholders' equity.

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Net income                                        $     97.7  $    128.6
    Divided by average shareholders' equity              1,118.9     1,088.2
    -------------------------------------------------------------------------
    Return on equity                                        8.7%       11.8%
    -------------------------------------------------------------------------
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Long-term Debt to EBITDA Ratio

Long-term debt to EBITDA ratio provides useful information to management and investors as an indicator of our ability to service our long-term debt. We define long-term debt to EBITDA ratio as long-term debt at the end of the year divided by EBITDA for the year.

    
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    ($ millions)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Long-term debt                                    $    143.6  $    123.7
    EBITDA                                                 219.5       313.7
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    Long-term debt to EBITDA                               65.4%       39.4%
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b) Investment Management Operations

Assets Under Management (AUM)

The amount of AUM is critical to our business since these assets generate fees from our mutual fund, institutional, strategic accounts and high-net-worth relationships. AUM will fluctuate in value as a result of investment performance, sales and redemptions. Mutual fund AUM determines a significant portion of our expenses because we pay upfront commissions and trailing commissions to financial advisors as well as investment advisory fees based on the value of AUM.

Investment Performance

Investment performance, which represents market appreciation (depreciation) of fund portfolios and is shown net of management fees received, is a key driver of the level of AUM and is central to the value proposition that we offer advisors and unitholders. Growth in AUM resulting from investment performance increases the wealth of our unitholders, and, in turn, we benefit from higher revenues. Alternatively, poor investment performance will reduce our AUM levels and result in lower management fee revenues. Strong relative investment performance may also contribute to growth in gross sales or reduced levels of redemptions. Conversely, poor relative investment performance may result in lower gross sales and higher levels of redemptions. Refer to the 'Risk Factors and Management of Risk' section of this report for further information.

Net Sales

One of the goals of our mutual fund business is to generate positive net sales on an annual basis, which allows for increasing revenues. Gross sales and redemptions as a percentage of AUM are monitored separately and the sum of these two amounts comprises net sales. Net sales, together with investment performance and fund expenses, determine the level of average daily mutual fund AUM, which is the basis on which management fees are charged. The average daily mutual fund AUM is equal to the aggregate average daily net asset value of the AGF mutual funds.

We monitor inflows and outflows in our high-net-worth and institutional businesses separately. We do not compute an average daily AUM figure for them.

EBITDA Margin - Investment Management

EBITDA margin provides useful information to management and investors as an indicator of our operating performance in our Investment Management Operations segment. We believe EBITDA margin is a valuable measure since it assesses the extent we are able to earn profit from each dollar of revenue. We define EBITDA margin as the ratio of EBITDA to revenue.

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    EBITDA                                            $    181.6  $    267.6
    Divided by revenue                                     475.4       606.4
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    EBITDA margin                                          38.2%       44.1%
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Pre-Tax Profit Margin - Investment Management

Pre-tax profit margin provides useful information to management and investors as an indicator of our operating performance in our Investment Management Operations segment. We believe pre-tax profit margin is a valuable measure since it assesses the extent we are able to earn profit from each dollar of revenue. We define pre-tax profit margin as the ratio of income before taxes and non-segmented items to revenue.

    
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    ($ millions)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Income before taxes and non-segmented items       $     87.7  $    107.8
    Divided by revenue                                     475.4       606.4
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    Pre-tax profit margin                                  18.4%       17.8%
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c) Trust Company Operations

Loan Asset Growth

In the Trust Company Operations segment (AGF Trust), we focus on long-term, profitable growth and credit quality in our investment and real estate secured loans. New originations, net of repayments, drive the outstanding balance of loans on which we charge interest. Loan asset growth increases our revenue and assists with our ability to grow our profits in AGF Trust.

Net Interest Income

Net interest income is a common lending industry performance indicator. We monitor this figure to evaluate the growth of the financial contribution of AGF Trust. The figure is calculated by subtracting interest expense from interest income earned from AGF Trust loan assets.

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Interest income                                   $    226.2  $    303.0
    Less: interest expense                                 130.0       206.1
    -------------------------------------------------------------------------
    Net interest income                               $     96.2  $     96.9
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Net Interest Margin

Net interest margin is equal to net interest income for the year divided by the average yearly total loan balance.

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Net interest income                               $     96.2  $     96.9
    Divided by average yearly total loan balance         4,014.3     4,239.6
    -------------------------------------------------------------------------
    Net interest margin                                     2.4%        2.3%
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Efficiency Ratio

The efficiency ratio is a financial services industry KPI that measures the efficiency of the organization. We use this ratio to compare expenses and keep them in line from one period to another as the Trust Company grows. The ratio is calculated from AGF Trust results by dividing non-interest expenses by the total of net interest income and non-interest income.

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Selling, general and administrative expenses      $     35.2  $     42.7
    Add: amortization expense                                2.8         2.8
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    Non-interest expense                                    38.0        45.5
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    Other revenue                                     $      8.7  $     12.3
    RSP loan securitization income (loss), net
     of impairment                                          (0.6)       (0.3)
    -------------------------------------------------------------------------
    Non-interest income                                      8.1        12.0
    -------------------------------------------------------------------------

    Net interest income                               $     96.2  $     96.9
    Add: non-interest income                                 8.1        12.0
    -------------------------------------------------------------------------
    Total of net interest income and
     non-interest income                                   104.3       108.9
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    Efficiency ratio                                       36.4%       41.8%
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EBITDA Margin - Trust

EBITDA margin provides useful information to management and investors as an indicator of AGF Trust's operating performance. We believe EBITDA margin is a valuable measure because it assesses the extent we are able to earn profit from each dollar of revenue. We define EBITDA margin as the ratio of EBITDA to revenue.

    
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    ($ millions)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    EBITDA                                            $     31.5  $     35.8
    Divided by revenue                                     104.3       108.9
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    EBITDA margin                                          30.2%       32.9%
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Pre-Tax Profit Margin - Trust

Pre-tax profit margin provides useful information to management and investors as an indicator of AGF Trust's operating performance. We believe pre-tax profit margin is a valuable measure because it assesses the extent we are able to earn profit from each dollar of revenue. We define pre-tax profit margin as the ratio of income before taxes and non-segmented items to total revenue.

    
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    ($ millions)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Income before taxes and non-segmented items       $     28.7  $     33.0
    Divided by revenue                                     104.3       108.9
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    Pre-tax profit margin                                  27.5%       30.3%
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Assets-to-Capital Multiple

Federally regulated deposit-taking institutions (DTI) are expected to meet an assets-to-capital multiple test. The assets-to-capital multiple is determined by dividing the DTI's total assets by its total regulatory capital, and expresses the extent by which capital is leveraged into the assets of the DTI.

    
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    ($ millions)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Total assets per OSFI guidelines                  $  4,497.4  $  5,325.9
    Divided by adjusted Tier 1 and Tier 2 capital          375.5       354.8
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    Assets-to-capital multiple                              12.0        15.0
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    -------------------------------------------------------------------------
    

Loan-to-Value Ratio

Loan-to-value ratio on our conventional mortgage loans is calculated using outstanding balance of conventional mortgage loans divided by the estimated fair value of the real estate serving as collateral for the conventional mortgage loans as at the date the loans were funded.

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Conventional mortgage loans(1)                    $    556.5  $    766.4
    Divided by fair value of collateral                    851.7     1,153.4
    -------------------------------------------------------------------------
    Loan-to-value ratio                                    65.3%       66.4%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Includes loan provision and deferred sales commission of $9.5 million
        in 2009 and $11.5 million in 2008.
    

Impaired Loans as a Percentage of Loans Outstanding

Impaired loans as a percentage of loans outstanding is calculated by dividing total impaired loans by total loans outstanding.

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Impaired loans                                    $     48.9  $     45.4
    Total loans outstanding(1)                           3,594.8     4,430.9
    -------------------------------------------------------------------------
    Impaired loans as a percentage of
     loans outstanding                                      1.4%        1.0%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Includes loan provision and deferred sales commission of
        $34.7 million in 2009 and $27.5 million in 2008.
    

Significant Accounting Policies

The Consolidated Financial Statements have been prepared in accordance with Canadian GAAP. The Consolidated Financial Statements include the accounts of the Company and its directly and indirectly owned subsidiaries. Intercompany transactions and balances are eliminated on consolidation. For subsidiaries where the Company does not own all of the equity, the minority shareholders' interest is disclosed in the Consolidated Balance Sheet as non-controlling interest and the related income is disclosed as a separate line in the Consolidated Statement of Income. Investments over which the Company is able to exercise significant influence are accounted for by the equity method.

A summary of AGF's significant accounting policies can be found in Note 1 of the Annual Consolidated Financial Statements.

Significant Accounting Estimates

Goodwill and other intangibles are subject to impairment tests on an annual basis or more frequently if events or changes in circumstances indicate that the assets may be impaired. AGF's ongoing review of the valuation of goodwill and other intangibles resulted in a writedown of $46.3 million in 2008. During 2009, the annual impairment test was performed and no impairment was identified.

Changes in Significant Accounting Policies

a) Goodwill, Intangible Assets and Financial Statement Concepts

Effective December 1, 2008, the CICA's new accounting standard "Handbook Section 3064, Goodwill and Intangible Assets" (Section 3064) was adopted. The standard clarifies that costs can be deferred only when they relate to an item that meets the definition of an asset, and as a result, start-up costs must be expensed as incurred. "Handbook Section 1000, Financial Statements Concepts" was also amended to provide consistency with Section 3064. These standards did not have any impact on the financial position or earnings of the Company.

b) Credit Risk and Fair Value

Effective December 1, 2008, EIC-173 "Credit Risk and the Fair Value of Financial Assets and Financial Liabilities" was adopted. EIC-173 requires the Company's own credit risk and the credit risk of the counterparty to be taken into account in determining the fair value of financial assets and financial liabilities, including derivatives. The new guidance did not have a material effect on the financial position or earnings of the Company.

c) Classification and Impairment of Financial Assets

In August 2009, Section 3855 was amended. The amendment changed the definition of loans and receivables. The new definition allows debt securities not quoted in an active market to be classified as loans and receivables and carried at amortized cost, or permits the Company to designate these instruments as available-for-sale, measured at fair value with unrealized gains and losses recorded through other comprehensive income. The amendment also requires that credit-related impairment charges be recognized in the Consolidated Statement of Income for instruments carried at amortized cost as well as the reversal of impairment charges for debt instruments classified as available for sale. Impairment charges for debt securities classified as loans are recorded through the provision for credit losses. The amendment did not have any impact on the financial position or earnings of the Company.

d) Financial Instruments Disclosure

During 2009, CICA "Handbook Section 3862, Financial Instruments - Disclosures", was amended to include enhanced disclosures about inputs to fair value measurement, including their classification within a hierarchy that prioritizes the inputs to fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are:

    
    Level 1   Unadjusted quoted prices in active markets for identical assets
              or liabilities;

    Level 2   Inputs other than quoted prices that are observable for the
              asset or liability either directly or indirectly; and

    Level 3   Inputs that are not based on observable market data.
    

If different levels of inputs are used to measure a financial instrument's fair value, the classification within the hierarchy is based on the lowest level input that is significant to the fair value measurement.

The amendment only impacted our disclosures in the financial statements. Refer to Note 22.

Income Taxes

The Company follows the liability method in accounting for income taxes whereby future income tax assets and liabilities reflect the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities and their tax bases. Future income tax assets and liabilities are measured based on the enacted or substantively enacted tax rates which are expected to be in effect when the future income tax assets or liabilities are expected to be realized or settled. The effect on future income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the substantive enactment date. Future income tax assets are recognized to the extent that realization is considered more likely than not.

Deferred Selling Commissions

Selling commissions paid to brokers on mutual fund securities sold on a deferred sales charge (DSC) basis are recorded at cost and are amortized on a straight-line basis over a period that corresponds with the applicable DSC schedule (which ranges from three to seven years). Unamortized deferred selling commissions are written down to the extent that the carrying value exceeds the related expected future cash flows on an undiscounted basis. As at November 30, 2009 and 2008, no impairment losses were required.

Property, Equipment and Computer Software

Property, equipment and computer software, which is comprised of furniture and equipment, computer hardware, computer software and leasehold improvements is stated at cost, net of accumulated amortization and impairment, if any. Amortization is calculated using the following methods based on the estimated useful lives of these assets:

    
        Furniture and equipment           20% declining balance
        Computer hardware                 30% declining balance
        Leasehold improvements            straight-line over term of lease
        Computer software                 straight-line over 3 years
    

Customer Contracts

Customer contracts are stated at cost, net of accumulated amortization and impairment, if any. Amortization is computed on a straight-line basis over seven to 15 years based on the estimated useful lives of these assets.

Impairment of Long-lived Assets

Impairment of long-lived assets, which includes property, equipment and computer software and intangible assets with finite useful lives, is recognized when an event or change in circumstance causes the assets' carrying value to exceed the total undiscounted cash flows expected from their use and eventual disposition. The measurement of impairment loss is based on the amount that the carrying value exceeds the fair value.

Goodwill, Management Contracts and Trademarks

The purchase price of acquisitions accounted for under the purchase method and the purchase price of investments accounted for under the equity method are allocated based on the fair values of the net identifiable assets acquired, including management contracts and other identifiable intangible assets. The excess of the purchase price over the values of such assets is recorded as goodwill. Management contracts and trademarks have been determined to have an indefinite life.

Goodwill, management contracts and trademarks are not amortized but are subject to impairment tests on an annual basis or more frequently if events or changes in circumstances indicate that the asset may be impaired. Goodwill is allocated to the reporting units and any impairment is identified by comparing the carrying value of a reporting unit with its fair value. If any impairment is indicated, then it is quantified by comparing the carrying value of goodwill to its fair value, based on the fair value of the assets and liabilities of the reporting unit. Management contracts and trademarks are tested for impairment by comparing their fair value to their carrying amounts. An impairment loss is realized when the carrying amount of the asset exceeds its fair value.

Real Estate Secured Loans and Investment Loans

Real estate secured loans and investment loans are classified as loans and receivables and are recorded at amortized cost using the effective interest rate method and net of an allowance for loan losses. Interest income from loans is recorded on an accrual basis. Accrued but uncollected interest on uninsured real estate secured loans and investment loans is reversed when a loan is identified as impaired. Principal payments on the real estate secured loans and investment loans that are contractually due to the Company in the 12-month period from the balance sheet date are classified as current assets.

Fees that relate to the origination of loans are considered to be adjustments to loan yield and are deferred and amortized to interest income over the expected term of the loans.

Allowance for Loan Losses

The allowance for loan losses consists of both general allowances and specific allowances. General allowances are based on management's assessment of inherent, unidentified losses in the portfolio at the reporting date that have not been captured in the determination of specific allowances. The assessment takes into account portfolio-specific credit factors, general economic factors, geographic exposure, historical loss experience, as well as probability of default (PD) and loss given default (LGD) pairs.

Specific allowances consist of provision for losses on identifiable assets for which the estimated amounts recoverable are less than their carrying value and are designed to provide against the likelihood of losses for loans that are deemed to be impaired.

Specific allowances also include estimated provisions for losses on identifiable assets that are currently 1-90 days in arrears and are likely to become impaired based on a combination of historical average roll rates and LGD for a given loan portfolio.

Impaired Loans

Loans are classified as impaired when, in the opinion of management, there is reasonable doubt as to the collectability, either in whole or in part, of principal or interest, or when principal or interest is 90 days or greater past due, except where the loan is both well-secured and in the process of collection. Loans that are insured by the federal government, an agency thereof, or a third-party insurer are classified as impaired when interest or principal is past due 365 days.

When a loan is identified as impaired, the carrying amount of the loan is reduced to its estimated realizable value. In subsequent periods, recoveries of amounts previously written off and any increase in the carrying value of the loan are credited to the provision for loan losses in the Consolidated Statement of Income. Where a portion of the loan is written off and the remaining balance is restructured, the new loan is carried on an accrual basis when there is no longer any reasonable doubt about the collectability of principal or interest. Interest income is recognized on impaired loans on a cash basis only after the specific allowance for losses has been reversed and provided there is no further doubt as to the collectability of the principal. Full or partial write-offs of loans are recorded when management believes there is no realistic prospect of full recovery.

Stock-based Compensation and Other Stock-based Payments

The Company has stock-based compensation plans as described in Note 15. The Company utilizes the fair-value-based method of accounting for stock-based compensation. The fair value of stock-based compensation, determined using an option pricing model, is recorded over the vesting period as a charge to net earnings with a corresponding credit to contributed surplus.

The Company also has a share purchase plan under which employees can have a percentage of their annual earnings withheld subject to a maximum of 6% to purchase AGF's Class B Non-Voting shares. The Company matches up to 60% of the amounts contributed by the employee. The Company's contribution vests immediately and is recorded as a charge to net income in the period in which the cash contribution is made. All contributions are used by the plan trustee to purchase Class B Non-Voting shares on the open market.

The Company has Restricted Share Unit (RSU) plans for senior employees under which certain employees are granted RSUs of Class B Non-Voting shares. These units vest three years from the grant date. AGF will redeem all of the participants' share units in cash equal to the value of one Class B share for each RSU. Compensation expense and the related liability are recorded equally over the three-year vesting period, taking into account fluctuations in the market price of Class B Non-Voting shares, dividends paid and forfeitures.

The Company has a Performance Share Unit (PSU) plan for senior employees under which certain employees are granted PSUs of Class B Non-Voting shares. Compensation expense and the related liability are recorded equally over the vesting period, taking into account the likelihood of the performance criteria being met, fluctuations in the market price of Class B Non-Voting shares, dividends paid and forfeitures. These units vest three years from the grant date provided employees meet certain performance criteria. AGF will redeem all of the participants' share units in cash equal to the value of one Class B share for each PSU.

The Company has a Deferred Share Unit (DSU) plan for non-employee Directors. The plan enables Directors of the Company to elect to receive their remuneration in DSUs. These units vest immediately and compensation expense and the related liability are charged to net income in the period the DSUs are granted. On termination, AGF will redeem all of the participants' DSUs in cash or shares equal to the value of one Class B share at the termination date for each DSU.

Accounting for Securitizations

The Company has securitized certain registered Retirement Savings Plan (RSP) loans through the sale of these loans to a securitization trust. For a securitization to be treated as a sale, the Company must surrender control over those loans included in the securitization. To surrender control, the securitized assets must be isolated from the Company and its creditors, even in the case of bankruptcy or receivership, and the Company must receive consideration other than the beneficial interest in the transferred assets.

Under terms that transfer control to third parties, the transaction is recognized as a sale and the related loan assets are removed from the Consolidated Balance Sheet. As part of the securitization, certain financial assets are retained. The retained interests, classified as AFS, are carried at fair value, determined using the present value of future expected cash flows. A gain or loss on the sale of loan receivables is recognized immediately in income. In determining the gain or loss on sale, management estimates future cash flows by relying on estimates of the amount of interest that will be collected on the securitized assets, the yield paid to investors, the portion of the securitized assets that will be prepaid before their scheduled maturity, expected credit losses, the cost of servicing the assets and the rate at which to discount these expected future cash flows. Actual cash flows may differ significantly from those estimated by management. If actual cash flows differ from the Company's estimate of future cash flows, the gains on the retained interest are recorded in OCI. Any losses are first recognized in OCI to the extent there is an offsetting gain and any excess is recognized in the Consolidated Statement of Income under RSP loan securitization income (loss), net of impairment.

Servicing fee revenues related to the securitization loan are reported within 'RSP loan securitization income (loss), net of impairment' in the Consolidated Statement of Income. Where a servicing liability is recognized, the amount is recorded in Other Liabilities in the Consolidated Balance Sheet.

Retained interests are tested regularly for other-than-temporary impairment and, if required, the retained interest's carrying value is reduced to fair value by a charge in the Consolidated Statement of Income.

Refer to Note 3 for additional disclosure regarding the securitizations and related balance sheet and income statement impacts.

AGF Elements

In November 2005, the Company launched AGF Elements, which consists of five diversified fund-of-fund portfolios. Until June 22, 2009, four of these portfolios included the Elements Advantage Commitment, which is a commitment to investors that if their portfolio does not match or outperform its customized benchmark over a three-year period, AGF will provide each individual investor up to 90 basis points in additional units. This is calculated based on the value of such investment at the end of its related three-year period. As of June 22, 2009, the Company discontinued the Elements Advantage feature on its Elements products. Eligible units purchased prior to June 22, 2009 have been grandfathered and will retain the Elements Advantage feature.

The Company records in liabilities up to 30 basis points per year of each investor's AUM, adjusted for redemptions, until the end of the three-year measurement period of each investment made by such investor. At that time, if an individual investor's returns match or exceed the corresponding benchmark, the Company will recognize the entire amount as management fee revenue. If an individual investor's actual returns are below the customized benchmark, a corresponding amount will be distributed to the investor in the form of additional units. As of November 30, 2009, the Company has recorded a liability of $8.8 million (2008 - $7.8 million).

Future Accounting Changes

Transition to International Financial Reporting Standards

Canadian public companies will be required to prepare their financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB), for fiscal years beginning on or after January 1, 2011. Effective December 1, 2011, we will adopt IFRS as the basis for preparing our consolidated financial statements. We will report our financial results for the quarter ended February 29, 2012 prepared on an IFRS basis. We will also provide comparative data on an IFRS basis, including an opening balance sheet as at December 1, 2010.

In order to meet the requirement to transition to IFRS, in 2008 we established an enterprise-wide project. We are following a transition plan comprising three phases: (1) IFRS diagnostic assessment, (2) impact analysis, evaluation and design, and (3) implementation and review. The project remains on track: we have completed the diagnostic assessment, and the impact analysis, evaluation and design phase of our transition is well advanced.

The key elements of the impact analysis, evaluation and design phase include identifying and implementing the necessary changes within our existing financial reporting or data collection processes to address the IFRS differences identified in our diagnostic assessment; developing and executing internal training and awareness programs; and selecting accounting policy options permitted under IFRS.

We are also assessing the exemptions to full restatement that are permitted under IFRS. Generally, with the adoption of IFRS, any change to our existing accounting policies must be applied retroactively and reflected in our opening balance sheet of the comparative period. There are, however, a number of exemptions from full restatement available under IFRS.

The aspects of IFRS that have the potential to be the most impactful to AGF are those that deal with provision for credit losses on loans, hedge accounting, asset securitization, and deferred sales commission. In response to financial reporting issues emerging from the global financial crisis, the IASB plans to make revisions to or to replace existing IFRS standards that address many of these areas. Some of the anticipated changes may be in effect prior to AGF's transition date, such that IFRS may differ at transition date from its current form. However, it is likely that the majority of the changes will be in effect subsequent to AGF's date of transition; with the result that the impact to AGF of adopting IFRS will extend beyond its transitional year.

Replacement of IAS 39 - Financial Instruments

The IASB's project plan reflects the replacement of its existing financial instruments standard in several phases. The first phase was recently completed with the publication of IFRS 9 - Financial Instruments, which addresses the classification and measurement of financial instruments, including securities. This new standard will not be mandatory until fiscal 2014, which is post-IFRS implementation for AGF.

The second phase of the financial instruments replacement is to replace the recognition and measurement requirement for impairment of financial instruments recorded at amortized cost, which includes loans. Based on draft papers issued by the IASB, significant changes to the existing standard are anticipated; however, the IASB indicated that the new standard is unlikely to require adoption until at least fiscal 2014.

The IASB's third phase will deal with hedge accounting. The IASB is scheduled to issue draft papers on this topic sometime in the first half of the 2010 calendar year. It is unclear when adoption will be required.

Derecognition - Replacement of Existing Requirements within IAS 39

The IASB is addressing the derecognition requirements for when a financial asset or financial liability would be removed from an entity's statement of financial position, which could impact whether securitized assets remain off-balance sheet. The IASB has provided a tentative publication date for the latter half of the 2010 calendar year. It is unclear when adoption will be required.

Risk Factors and Management of Risk

Risk is the responsibility of the Executive Committee of AGF Management Limited. The Executive Committee is made up of the Chairman and Chief Executive Officer (CEO), AGF Management Limited, the Senior Vice-President and Chief Financial Officer (CFO), AGF Management Limited, the Executive Vice-President, Chief Operating Officer and General Counsel, AGF Management Limited, the Executive Vice-President, Investments, AGF Management Limited, the Executive Vice-President and Chief Investment Officer of AGF Investments Inc., the Executive Vice-President, Retail Distribution, AGF Investments Inc., and the President and Chief Operating Officer, AGF Trust Company. The Chairman and CEO is directly accountable to the Board of Directors for all risk-related activities. The Executive Committee reviews and discusses significant risk action plans that arise in executing the enterprise-wide strategy and ensures that risk oversight and governance occur at the most senior levels of management. Each of the business units owns and assumes responsibility for managing its risk. They do this by ensuring that policies, processes and internal controls are in place and by escalating significant risk identified in the business units to the Executive Committee.

AGF Management Limited also oversees or operates key functions for each of the business units on a shared services basis. These functions include Finance, Internal Audit, Human Resources, Compensation and Benefits, Information Technology, Fund Oversight, Legal and Compliance. These functions also play a significant role in ensuring consistent risk management practices and standards across the company in areas that are common to the business units.

In addition, AGF Management Limited applies a disciplined approach to risk taking through policy formation, reporting and oversight of the operational units.

AGF's risk governance structure is designed to balance risk and reward and promote business activities consistent with our standards and risk tolerance levels, with the objective of maximizing long-term shareholder value.

As a federally regulated deposit-taking institution, AGF Trust is subject to risk management expectations of its regulators and has responsibilities to its depositors. In 2009, AGF Trust revised its management and governance framework to enhance its ability to identify, characterize and manage risk. Specific changes included the appointment of a Chief Risk Officer and implementing new management committee structures to ensure appropriate oversight and management of key risk areas: credit; operational, distribution channel and asset and liability.

Refer to Note 22 of the Consolidated Financial Statements for risks arising from the use of financial instruments.

Risk Factors that May Affect Future Results

There are many factors that may affect our ability to execute against our strategy. Some of these factors are within our control and others, because of their nature, are beyond our control. These factors apply to our corporate strategy as well as the business-specific strategies, which are included in the segment discussions that follow.

Company-Specific Risk Factors

Investment Management Operations

Demand for our products depends on the ability of our investment management team to deliver value in the form of strong investment returns, as well as the demand for specific investment products. A specific fund manager's style may fall out of favour with the market, resulting in lower sales and/or higher redemptions.

Our future financial performance will be influenced by our ability to successfully execute our strategy and generate net sales. If sales do not materialize as planned or key personnel cannot be retained, margins may erode.

Our strategy includes strategic acquisitions. There is no assurance that we will be able to complete acquisitions on the terms and conditions that satisfy our investment criteria. After transactions are completed, meeting target return objectives is contingent upon many factors, including retaining key employees and growth in AUM of the acquired companies.

Our retail AUM is obtained through third party distribution channels including financial advisors or strategic partners that offer our products to investors along with competing products. AGF's brand and investment performance have contributed to our success in the past; however, our future success is dependent on these factors as well as product mix and offerings and continued access to these distribution channels that are independent of our company.

Trust Company Operations

AGF Trust manages its business to a set of identified key risks: credit; operational; interest rate (non-trading), and funding and liquidity.

Credit Risk is the risk of loss associated with a counterparty's or client's inability to fulfill its payment obligations, after taking into account recovery values and associated costs. AGF Trust is in the business of providing loans and as a result credit risk is the largest risk exposure to the company. Credit risk and review of credit exposures is the responsibility of the President and Chief Risk Officer and reviewed regularly by the Credit Committee of AGF Trust. Credit risk is measured and monitored at the individual client level as well as on a portfolio basis.

Operational Risk is the risk of loss resulting from inadequate or failed internal processes, people and systems. Impact can be financial, loss to reputation, loss of competitive position or regulatory or legal sanction. Operational risk and review of operational processes, activities and systems are the responsibility of the Operations Committee of AGF Trust and the methodologies for measuring and monitoring operational risks reside with the Risk Management department of AGF Trust.

Funding and liquidity risk is the risk to earnings and capital if AGF Trust is unable to: i) meet its obligations due to an inability to liquidate assets or obtain adequate funding; or, ii) unwind or offset specific exposures without incurring a loss as a result of inadequate market depth or market disruptions; or iii) obtain funding at costs that are consistent with historical norms from its traditional funding sources. Funding and liquidity risk is monitored by the AGF Trust Treasury department and overseen by the AGF Trust Asset and Liability Committee.

Interest rate (non-trading) risk is the risk of adverse impact to AGF Trust's earnings and economic value due to unexpected changes in interest rates and interest rate volatility. Categories of interest rate risk include: yield curve/gap risk; basis or spread compression risk; commitment or embedded option risk; prepayment risk; and, discretionary. Interest rate (non-trading) risk is monitored by the AGF Trust Treasury department and overseen by the AGF Trust Asset and Liability Committee.

Legal and compliance risk is the risk of legal or regulatory sanctions, material financial loss, or loss to reputation that AGF Trust may suffer as a result of its failure to comply with laws, regulations, rules, related self-regulatory organisation standards, and codes of conduct applicable to AGF Trust's business activities. Legal and compliance risk is managed and monitored on a shared services basis.

Non-Company Risk Factors

Investment Management Operations

A general economic downturn, market volatility and an overall lack of investor confidence could result in lower sales and lower AUM levels. In addition, market uncertainty could result in retail investors avoiding traditional equity funds in favour of money market funds.

The level of competition in the industry is high. Sales and redemptions of mutual funds may be influenced by relative service levels, management fees, attributes of specific products in the marketplace and actions taken by competitors.

We take all reasonable measures to ensure compliance with governing statutes, regulations or regulatory policies. Failure to comply with statutes, regulations or regulatory policies could result in sanctions or fines that could adversely affect earnings and reputation. Changes to laws, statutes, regulations or regulatory policies could affect us by changing certain economic factors in our industry. See the 'Government Regulations' section for further details.

Revenues are generally not subject to significant seasonal swings, but are directly correlated to global stock market volatility. We experience somewhat higher sales during the Retirement Savings Plan (RSP) season; however, the immediate impact of the level of sales on total revenue is not significant. The Selected Quarterly Information table shows key performance statistics for the past eight quarters.

AUM are exposed to various market risks which are detailed in the 'Market Risk in Assets under Management (AUM)' section.

Trust Company Operations

A general economic downturn, increased unemployment rate, declining real estate values, adverse capital market conditions and/or an increase in personal bankruptcy rates could lead to reduced creditworthiness of AGF Trust borrowers and increased loss in the event of default.

A portion of AGF Trust's insured mortgage portfolio is insured by private mortgage insurers. AGF Trust is exposed to losses in the event private mortgage insurers fail to perform in accordance with their obligations under insurance contracts. Changes to laws, statutes, regulations or regulatory policies could affect AGF Trust by changing certain economic factors in our industry or increasing costs of compliance. See the 'Government Regulations' section for further details.

Market Risk in Assets under Management (AUM)

AUM are exposed to various market risks, including changes in equity prices, interest rates and foreign exchange rates. These risks transfer to the Company as our management fee revenue is calculated as a percentage of the average net asset value of each mutual fund or portfolio managed. The Company does not quantify these risks in isolation, however, in general, for every $1 billion reduction of mutual fund AUM, management fee revenues would decline by approximately $20 million. The Company monitors these risks as they may impact earnings, however, it is at the discretion of the fund manager to decide on the appropriate risk-mitigating strategies for each fund.

To provide additional details on the Company's exposure to these market risks, the following provides further information on our mutual fund AUM by asset type:

    
    -------------------------------------------------------------------------
    Percentage of total mutual fund AUM                     2009        2008
    -------------------------------------------------------------------------

    Domestic equity funds                                  38.4%       37.2%
    U.S. and international equity funds                    32.9%       33.8%
    Domestic balanced funds                                10.0%        9.5%
    U.S. and international balanced funds                   1.8%        2.3%
    Domestic fixed income funds                            11.4%       10.8%
    U.S. and International fixed income funds               3.3%        3.2%
    Domestic money market                                   2.2%        3.1%
    U.S. and International money market                     0.0%        0.1%
    -------------------------------------------------------------------------
                                                          100.0%      100.0%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Institutional and high-net-worth AUM are exposed to the same market risks as mutual fund AUM. In general, for every $1 billion reduction of institutional and high-net-worth AUM, management fee revenues would decline by approximately $4 million.

Foreign Exchange Risk

Our main foreign exchange risk derives from the U.S. and international portfolio securities held in the mutual fund AUM. Change in the value of the Canadian dollar relative to foreign currencies will cause fluctuations in the Canadian-dollar value of non-Canadian AUM upon which our management fees are calculated. This risk is monitored since currency fluctuation may impact the financial results of AGF. However, it is at the discretion of the fund manager to decide whether to enter into foreign exchange contracts to hedge foreign exposure on U.S. and international securities held in funds.

We are subject to foreign exchange risk on our integrated foreign subsidiaries in Ireland and Singapore, which provide investment advisory services. These subsidiaries retain minimal monetary exposure to the local currency and their revenues are calculated in Canadian dollars. The local currency expenses are comparatively small.

The Company is exposed to foreign exchange risks through its 30.7% equity interest in Smith and Williamson Holdings Limited (S&WHL), which is denominated in U.K. pounds. The investment is translated into Canadian dollars at the rate of exchange in effect at the balance sheet date. Unrealized translation gains and losses are reported in other comprehensive income. Based on the carrying value at November 30, 2009, a 5% change in the value of the Canadian dollar versus the U.K. pound would result in a change in other comprehensive income of $4.3 million.

Interest Rate Risk

Excluding the AGF Trust operations, we have exposure to the risk related to changes in interest rates on floating-rate debt and cash balances at November 30, 2009. Using average balances for the year, the effect of a 1% change in variable interest rates on our floating-rate debt and cash balances in fiscal 2009 would have resulted in a change of approximately $1.2 million in interest expense for the year ended November 30, 2009. As the amount of interest paid is small relative to our operating cash flow, such a change in interest rates would not have a material impact on the results of operations or the fair value of the related debt.

For the AGF Trust operations, interest rate risk refers to the treasury book (non-trading) and can have a potentially adverse impact on AGF Trust's earnings and economic value due to unexpected changes in interest rates and interest rate volatility. Categories of interest rate risk include: yield curve/gap risk; basis or spread compression risk; commitment or embedded option risk; prepayment risk; and, discretionary. The impact of a 1% increase in interest rates would result in an increase in annual net interest income of approximately $4.1 million. As a result of current interest rate levels, a sensitivity analysis based on a 1% decrease would not provide meaningful information.

The foregoing discussion is not an exhaustive list of all risks and uncertainties regarding our ability to execute against our strategy. Readers are cautioned to consider other potential risk factors when assessing our ability to execute against our strategy.

Controls and Procedures

Disclosure Controls and Procedures

Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by AGF Management Limited in reports filed or submitted under Canadian securities laws is recorded, processed, summarized and reported within the time periods specified under those laws and include controls and procedures that are designed to ensure that information is accumulated and communicated to management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), to allow timely decisions regarding required disclosure.

AGF Management Limited's management, under the direction of the CEO and CFO, has evaluated the effectiveness of AGF Management Limited's disclosure controls and procedures (as defined in National Instrument 52-109 of the Canadian Securities Commission) as at November 30, 2009, and has concluded that such disclosure controls and procedures were effective.

Internal Control over Financial Reporting

The CEO and CFO have designed, or caused to be designed under their supervision, internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian GAAP.

    
    The Company's internal control over financial reporting includes policies
and procedures that:

    -   Pertain to the maintenance of records that, in reasonable detail,
        accurately and fairly reflect transactions and dispositions of the
        Company;

    -   Provide reasonable assurance that transactions are recorded as
        necessary to permit preparation of financial statements in accordance
        with Canadian GAAP, and receipts and expenditures of the Company are
        made only in accordance with authorizations of management and
        directors of the Company; and

    -   Provide reasonable assurance regarding prevention or timely detection
        of unauthorized acquisition, use or disposition of the Company's
        assets that could have a material effect on the financial statements.
    

Internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be designed effectively can provide only reasonable assurance with respect to financial reporting and financial statement preparation.

Management, under the direction of the CEO and CFO, has evaluated the effectiveness of the Company's internal control over financial reporting as at November 30, 2009 and has concluded that internal control over financial reporting is designed and operating effectively to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian GAAP. Management's assessment was based on the framework established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Changes in Internal Controls over Financial Reporting

There have been no changes in AGF Management Limited's internal control over financial reporting during the year ended November 30, 2009, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Changes in Information Technology Systems

During 2009, there were no significant changes to Information Technology Systems.

Consolidated Operating Results

The table below summarizes our consolidated operating results for the years ended November 30, 2009 and 2008:

    
    -------------------------------------------------------------------------
    ($ millions, except per share amounts)
    Years ended November 30                     2009        2008    % change
    -------------------------------------------------------------------------

    Revenue
      Investment Management Operations    $    475.4  $    606.4      (21.6%)
      Trust Company Operations                 104.3       108.9       (4.2%)
      Other                                      6.4        10.3      (37.9%)
    -------------------------------------------------------------------------
                                               586.1       725.6      (19.2%)

    Expenses
      Investment Management Operations         293.8       338.8      (13.3%)
      Trust Company Operations                  72.8        73.1       (0.4%)
    -------------------------------------------------------------------------
                                               366.6       411.9      (11.0%)

    EBITDA(1)                                  219.5       313.7      (30.0%)
      Amortization                              96.7       114.0      (15.2%)
      Interest expense                           6.0         9.3      (35.5%)
      Impairment of asset available for sale       -         2.3           -
      Impairment of goodwill and customer
       contracts                                   -        46.3           -
      Non-controlling interest                   0.6         0.6        0.0%
      Income taxes                              18.6        12.7       46.5%
    -------------------------------------------------------------------------
    Net income                            $     97.7  $    128.6      (24.0%)
    -------------------------------------------------------------------------

    Earnings per share - diluted          $     1.09  $     1.41      (22.7%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) For the definition of EBITDA, see the 'Key Performance Indicators and
        Non-GAAP Measures' section. The items required to reconcile EBITDA to
        net income, a defined term under Canadian GAAP, are detailed above.
    

Results from Operations

Revenue for the year ended November 30, 2009, declined by 19.2% from the corresponding period in 2008. Revenue in the Investment Management Operations segment declined 21.6% for the year ended November 30, 2009. This corresponds to lower average levels of AUM. The Trust Company Operations segment reported a decrease in revenue of 4.2% in fiscal 2009 over 2008 as average loan balances declined by 5.3% on a year-over-year basis. Revenue from Other, which represents the results of our 30.7% equity interest in S&WHL, was lower for the year ended November 30, 2009 due to the impact of the economic environment in the United Kingdom.

Expenses for the year November 30, 2009 decreased 11.0% compared with fiscal 2008. The Investment Management operations' decline in expenses was primarily attributable to lower trailing commissions and investment advisory fees due to the decline in average AUM. Trust Company Operations' expenses remained flat as higher provision for loan losses in 2009 was offset by lower SG&A costs. For further details refer to each of the segment discussions.

The impact of revenue declining at a faster rate than expenses in all segments served to decrease total EBITDA by 30.0% for the year ended November 30, 2009 over the respective 2008 period. Amortization expense for the year ended November 30, 2009 decreased by 15.2% compared with the corresponding period in 2008. The decline was primarily due to lower amortization of deferred selling commissions in the Investment Management Operations segment. Amortization of deferred selling commissions for year ended November 30, 2009 accounted for $84.7 million (2008 - $ 98.1 million) of the total amortization expense.

Based on a review of goodwill, intangibles and assets available for sale it was determined for the year ended November 30, 2009 that no condition of impairment existed. During the year ended November 30, 2008, an impairment of investment available for sale of $2.3 million ($2.0 million net of tax) and an impairment of goodwill and customer contracts of $46.3 million ($35.7 million net of tax) existed.

Interest expense was $6.0 million for the year ended November 30, 2009 as compared with $9.3 million in the same period of 2008. The decline in interest expense in the year is reflective of lower interest rates.

For the year ended November 30, 2009, income tax expense increased 46.5% as compared to 2008. Income tax expense for the year ended November 30, 2009 was $18.6 million as compared to $12.7 million in 2008. Results from the year ended November 30, 2009 included a net income tax reduction of $9.8 million related to the reduction in the Ontario income tax rate from 14% to 10% by July 1, 2013. Results from the year ended November 30, 2008 included an income tax reduction of $19.5 million related to the reduction in the federal income tax rate from 18.5% to 15.0% by January 1, 2012. The effective tax rate for the year ended November 30, 2009 was 24.3% compared with 22.7% in the same period of 2008, excluding the impact of the reductions in 2009 and 2008.

The impact of the above revenue and expense items resulted in net income of $97.7 million in 2009 as compared with $128.6 million in the prior year. Diluted earnings per share were $1.09 per share in 2009 as compared with $1.41 per share in 2008. Basic earnings per share were $1.10 per share in 2009 as compared with $1.44 per share in 2009 and 2008.

Net Income

Net income for the year ended November 30, 2009 was $97.7 million compared with $128.6 million in the year ended November 30, 2008. Excluding the $9.8 million reduction in income taxes related to substantively enacted tax rates, net income in fiscal 2009 was $87.9 million. Excluding the impairment charges, net of tax, related to assets available for sale, goodwill and customer contracts of $37.7 million and the $19.5 million reduction in income taxes related to substantively enacted tax rates, net income in fiscal 2008 was $146.8 million.

For a more detailed discussion of revenue and expense items, please refer to the operating segment discussions. An analysis of the 2009 fourth-quarter results compared with the corresponding period in 2008 is included under the heading 'Fourth Quarter Analysis'.

Return on Equity

Return on equity in 2009 was 8.7% as compared with 11.8% in 2008. The decline was due to reduced earnings in 2009 which were impacted by lower average AUM levels and associated lower revenues in the Investment Management Operations segment.

Outlook

As 2009 progressed, the equity markets improved and mutual fund investors increasingly moved out of money market and into fixed income and balanced fund categories. A sustained equity market rally in fiscal 2010 may reignite the demand for domestic and international equity mutual funds which have always been a primary focus at AGF Investments. A continuation of higher equity markets may also stimulate demand for investment loans offered by AGF Trust. The Bank of Canada recently reiterated that it would hold its benchmark rate at a record low 0.25% until the end the second quarter of 2010. A continuation of historically low interest rates should support the demand for mortgages, investment and RSP loans while continued strength in Canadian home sales and prices may improve loan-to-value ratios and reduce losses in the mortgage loan portfolio at AGF Trust.

As we enter fiscal 2010, the world is slowly emerging from recession as major economies, including the United States, Japan, Canada and several countries in Europe report data showing a return to growth. While there are indicators pointing to better economic times ahead, there remains a fair amount of uncertainty. A continuation of high global unemployment rates combined with a strong Canadian dollar squeezing exports, could contribute to a sluggish recovery in Canada.

Business Segment Performance

We report on three business segments: Investment Management Operations, Trust Company Operations and Other. AGF's reportable segments are strategic business units that offer different products and services. The Investment Management Operations segment provides investment management and advisory services. It is responsible for the management and distribution of AGF investment products and services, including retail mutual fund operations, institutional investment management and high-net-worth client investment counselling services. The Trust Company Operations segment offers a range of products, including GICs, real estate secured loans and investment loans. The 'Other' segment includes the results of S&WHL, which is accounted for by the equity method, as well as interest expense.

Investment Management Operations

Business and Industry Profile

AGF is an established participant within the highly competitive Canadian investment management business. We compete with numerous domestic and foreign players serving the market. We believe our status as an independent investment management firm without distribution channel conflict will benefit us and our shareholders as the industry continues to evolve.

Our Investment Management Operations segment provides products and services across the wealth continuum, including mutual funds, wrap products, institutional investment services and high-net-worth investment management. Our products are delivered through multiple channels, including advisors, financial planners, banks, life insurance companies, brokers and consultants.

We remain focused on the retail mutual fund market in Canada, as well as building our reputation domestically and internationally as a quality institutional investment management firm that offers a diverse platform of investment strategies. We believe that there is opportunity in the institutional market and we are continuing to expand our presence globally.

During AGF's 2009 fiscal year, gross mutual fund sales were negatively impacted by market volatility and lack of investor confidence and as a result we ended the year with $0.8 billion in net redemptions. The industry as a whole saw a year over year decline in gross sales of long-term equity mutual funds in fiscal 2009. Fund categories that have traditionally been AGF's specialty - international and domestic equity - were not aligned with investor preferences for money market funds in the early part of 2009 and balanced and fixed income funds in the latter part of the year. However, we believe that if markets continue to improve, growing investor confidence will make international and domestic equity fund investing more attractive and AGF will be in a position to benefit.

Segment Strategy and Highlights

Over the past several years, we have focused on enhancing the client-centric model in our investment management business, which services the retail mutual fund, institutional and high-net-worth markets. In fiscal 2009, to reflect our core focus on investment management, we streamlined our organization and brought together our retail, institutional and high-net-worth businesses under a new banner: AGF Investments. On the retail side, we continued to maintain a high level of contact with our clients and focused on helping them navigate through the market uncertainty. On the institutional side, we focused on expanding our business globally and leveraging our investment management expertise in the institutional space. Highlights in fiscal 2009 included the following:

    
    -   At the 2009 Canadian Investment Awards, AGF Emerging Markets Fund won
        the Emerging Markets Equity Fund Award for the fourth time and was
        praised for its consistent long-term high performance. AGF also won
        three Silver awards and one Bronze, spanning a broad spectrum of
        investments, including:

        -  AGF Global High Yield Bond Fund won the Silver for the High Yield
           Fixed Income Fund Award

        -  AGF Canadian Balanced Fund won the Silver for the Canadian
           Balanced Fund Award

        -  AGF European Equity Class took home the Silver for the European
           Equity Fund Award, and

        -  AGF Global Resources Class took the Bronze award for the Natural
           Resources Equity Fund Award.

    -   We were honoured with nine recognitions at the 2009 Canadian Lipper
        Awards including two prestigious group awards - Best Overall Fund
        Family and Best Mixed Asset Fund Family.

    -   Three AGF funds - AGF Canada Class, AGF Global Equity Class and AGF
        Canadian Bond Fund - were included on Manulife Investments Guaranteed
        Investment Fund (GIF) Select platform. The product is called Manulife
        AGF Bundle.

    -   We opened a new sales office in Boston to support our business
        development efforts in the institutional space.

    -   We won several new institutional mandates which contributed to net
        sales of approximately $4.0 billion on the institutional side and a
        47.8% increase in our institutional AUM year-over-year.

    -   The strategic priorities for our investment management operations for
        2010 are to:

        -  Continue to focus on excellence in three core activities:
           investment management, relationship management and product
           management.

        -  Promote international investment management competency across
           multiple channels.

        -  Focus on growth in our institutional business.

        -  Improve financial performance.
    

Focus on Three Core Activities

We are focused on continuing to build excellence in three core areas: investment management, relationship management and product management.

Investment Management

Consistent long-term investment performance is contingent on having the correct complement of people, with the right tools and a strong team approach to fund management. As well, in-depth research, innovative thinking and rigorous fundamental analysis are key investment principles.

We also draw on our presence in international markets to bolster investment performance. In addition to investment professionals in various locations across Canada, we maintain investment management offices in Dublin and Singapore.

Relationship Management

We have a well-established reputation in the advisor channel and continue to regularly engage with and seek feedback from advisors to ensure they have access to the products and services to help their clients make the best investment choices. We are also focused on enhancing relationships with strategic distribution partners including advisor firms, banks and insurance companies.

We opened a new sales offices in Boston to complement our Toronto, Dublin and London, Ontario sales offices, with a primary focus on business development in the institutional marketplace. We believe it is important to be "on the ground" in international markets as we continue to build relationships with new institutional clients.

Product Management

Our client-centric approach includes offering a suite of products and solutions designed to meet the needs of our clients. Our product development efforts focus on identifying current and future investment trends and aligning AGF's products to meet prevailing client needs. The launch of our focused funds strategy in fiscal 2009 is an example of us being more responsive to investment trends and investor preferences.

To simplify and improve our product lineup and focus on core mandates, we merged or terminated several mutual funds and internalized the portfolio management and portfolio advisory responsibilities on certain funds. In the fourth quarter of fiscal 2009, three AGF funds - AGF Canada Class, AGF Global Equity Class and AGF Canadian Bond Fund - were added to Manulife Investments' GIF Select platform. Guaranteed minimum withdrawal benefit (GMWB) products remain an attractive investment choice for conservative investors and their advisors and we continue to pursue partnerships with firms offering these products.

On the institutional side, we offer a robust platform of 14 investment strategies and our emerging markets, global core, Canadian equity and Canadian balanced strategies have all won institutional mandates.

Assets Under Management

The primary sources of revenue for AGF's Investment Management Operations segment are management and advisory fees. The amount of management and advisory fees depend on the level and composition of AUM. Under the management and investment advisory contracts between AGF and each of the mutual funds, we are entitled to monthly fees. These fees are based on a specified percentage of the average daily net asset value of the respective fund. In addition, we earn fees on our institutional, strategic accounts and high-net-worth client AUM. As a result, the level of AUM has a significant influence on financial results.

The following table illustrates the composition of the changes in total AUM during the years ended November 30, 2009 and 2008:

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                     2009        2008    % change
    -------------------------------------------------------------------------
    Mutual fund AUM, beginning of year    $   19,761  $   30,052      (34.2%)

    Gross sales of mutual funds                2,606       3,578      (27.2%)
    Redemptions of mutual funds               (3,381)     (5,159)     (34.5%)
    -------------------------------------------------------------------------
    Net mutual fund sales                       (775)     (1,581)     (51.0%)

    Market appreciation (depreciation) of
     fund portfolios                           3,760      (8,710)          -
    -------------------------------------------------------------------------

    Mutual fund AUM, end of year          $   22,746  $   19,761       15.1%

    Institutional and strategic accounts
     AUM                                      18,921      12,802       47.8%
    High-net-worth AUM                         2,951       2,995       (1.5%)
    -------------------------------------------------------------------------

    Total AUM, end of year                $   44,618  $   35,558       25.5%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Average daily mutual fund AUM for
     the year                             $   20,733  $   26,346      (21.3%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

The recovery in global markets resulted in an increase in mutual fund AUM to $22.7 billion at November 30, 2009, from $19.8 billion as at November 30, 2008. The average daily mutual fund AUM for the year ended November 30, 2009, decreased 21.3% to $ 20.7 billion, compared with $26.3 billion for the year ended 2008. During the past 12 months, institutional and strategic accounts AUM increased by $6.1 billion to $18.9 billion as a result of market appreciation and net sales of approximately $4.0 billion. High-net-worth AUM remained relatively stable declining by 1.5% to $3.0 billion. This resulted in a total AUM increase of 25.5% to $44.6 billion.

Investment Performance

Stock market performance influences the level of AUM. During the year ended November 30, 2009, the Canadian-dollar-adjusted S&P 500 Index increased 7.0%, the Canadian-dollar-adjusted NASDAQ Index increased 19.3%, and the S&P/TSX Composite Index increased 27.8%. The aggregate market appreciation of our mutual fund portfolios for the year ended November 30, 2009, divided by the average daily mutual fund AUM for the period was 18.1% after management fees and expenses paid by the funds.

The impact of the U.S. dollar depreciation relative to the Canadian dollar on the market value of AGF mutual funds for the year ended November 30, 2009, has been a decrease in AUM of approximately $0.8 billion.

Consistent with the increase in the stock market, market appreciation net of management fees increased mutual fund AUM by $3.8 billion since November 30, 2008. For the one-year period ended November 30, 2009, 27% of ranked AUM performed above median. Over the three-year period ended November 30, 2009, 41% of ranked AUM performed above median.

The composition of AUM as outlined on page 17 of this MD&A has direct influence on our revenues. Generally, equity funds have higher management fees than fixed income funds and international funds have higher management fees than domestic funds.

Financial and Operational Results

The table below highlights the Investment Management Operations segment results for the years ended November 30, 2009 and 2008.

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                     2009        2008    % change
    -------------------------------------------------------------------------
    Revenue
      Management and advisory fees        $    447.8  $    576.8      (22.4%)
      Deferred sales charges                    21.6        25.6      (15.6%)
      Investment income and other revenue        6.0         4.0       50.0%
    -------------------------------------------------------------------------
                                               475.4       606.4      (21.6%)

    Expenses
      Selling, general and administrative      158.4       166.6       (4.9%)
      Trailing commissions                     125.3       157.2      (20.3%)
      Investment advisory fees                  10.1        15.0      (32.7%)
    -------------------------------------------------------------------------
                                               293.8       338.8      (13.3%)
    -------------------------------------------------------------------------

    EBITDA(1)                                  181.6       267.6      (32.1%)
    Amortization                                93.9       111.2      (15.6%)
    Impairment of asset available for sale         -         2.3           -
    Impairment of goodwill and customer
     contracts                                     -        46.3           -
    -------------------------------------------------------------------------
    Income before taxes and non-segmented
     items                                $     87.7  $    107.8      (18.6%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) As previously defined, see the 'Key Performance Indicators and
        Non GAAP Measures - EBITDA' section.
    

Revenue

For the year ended November 30, 2009, revenue for the Investment Management Operations segment decreased by 21.6% over the previous year, with changes in the categories as follows:

Management and Advisory Fees

Management and advisory fees are directly related to our AUM levels. The 21.3% decline in average daily mutual fund AUM for the year ended November 30, 2009 contributed to a 22.4% decline in management and advisory fee revenue compared to 2008.

Deferred Sales Charges (DSC)

We receive deferred sales charges upon redemption of securities sold on the contingent DSC or low-load commission basis for which we finance the selling commissions paid to the dealer. The DSC ranges from 2.5% to 5.0%, depending on the commission option, of the original subscription price of the funds purchased if the funds are redeemed within the first two years, and declines to zero after three or seven years. DSC revenue fluctuates based on the level of redemptions, the age of the assets being redeemed and the proportion of redemptions composed of back-end assets. DSC revenues decreased by 15.6% in 2009 compared with 2008, reflecting lower retail mutual fund redemptions of DSC AUM.

Investment Income and Other Revenue

Investment income and other revenue increased by 50.0% in fiscal 2009 over 2008 primarily as a result of the discontinuing of hedge accounting related to stock compensation in 2008, which resulted in a $5.0 million loss for the year ended November 30, 2008.

Expenses

For the year ended November 30, 2009, expenses for the Investment Management Operations segment decreased 13.3% from the previous year. Changes in specific categories are described in the discussion that follows:

Selling, General and Administrative Expenses

Selling, general and administrative expenses (SG&A) decreased by $8.2 million or 4.9% in 2009 compared with 2008. Excluding severance which is a one-time charge and fund absorption expenses which are dependent on AUM levels, selling, general and administrative expenses declined by 7.3%. The decrease is made up of the following amounts:

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                                             2009
    -------------------------------------------------------------------------

    Increase (decrease) in severance and restructuring expenses   $      1.7
    Increase (decrease) in compensation-related expenses                (7.0)
    Increase (decrease) in other expenses                               (5.2)
    Increase (decrease) in fund absorption expenses                      2.3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                                  $     (8.2)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

The following explains expense changes in 2009 compared with the prior year:

    
    -   Severance and restructuring expenses increased $1.7 million for the
        year ended November 30, 2009. The increase is as a result of
        longer-term cost savings initiatives.

    -   Compensation-related expenses decreased primarily due to staff
        reductions and stock-based compensation expense. Bonus expense in the
        twelve months ended November 30, 2009 across all groups within the
        Investment Management Operations segment was up by $2.8 million.

    -   Other expenses decreased $5.2 million due to continued cost savings
        initiatives in travel, meals and entertainment and other expense
        categories.

    -   Absorption expense increased by $2.3 million reflecting lower average
        AUM levels in 2009 as compared to 2008. The aggregate unitholder
        service costs absorbed and management and advisory fees waived by the
        company on behalf of the funds were approximately $15.0 million for
        the year ended November 30, 2009 compared to $12.7 million in 2008.
        The increase of 18.1% is attributable to lower average year-over-year
        AUM levels (which were down 21.3%), our desire to maintain expense
        ratio levels relatively on par with 2008 levels and the fact that,
        due to the continuing low interest rate environment, absorption on
        money market and short-term income funds increased in 2009 over 2008.
    

Trailing Commissions

Trailing commissions paid to distribution depend on total AUM, the proportion of mutual fund AUM sold on a front-end versus back-end commission basis and the proportion of equity fund AUM versus fixed-income fund AUM. Trailing commissions as a percentage of average daily mutual fund AUM were 0.60% for the 12 months ended November 30, 2009, compared to 0.60% in the same period in 2008.

Investment Advisory Fees

External investment advisory fees decreased by 32.7% in 2009 as compared to 2008. The decrease relates to the reduced level of AUM combined with repatriation of certain mandates.

EBITDA and EBITDA margin

EBITDA for the Investment Management Operations segment were $181.6 million for the year ended November 30, 2009, a 32.1% decrease from $267.6 million for the same period of fiscal 2008. The decrease is directly attributable to lower revenue levels resulting from lower average AUM.

EBITDA margins were 38.2% in fiscal 2009 compared with 44.1% in 2008.

Amortization

The most significant component in this category is amortization of deferred selling commissions. The category also represents amortization of property, equipment, customer contracts and other intangible assets. We internally finance all selling commissions paid. These selling commissions are capitalized and amortized on a straight-line basis over a period that corresponds with their applicable DSC schedule. Amortization expense related to deferred selling commissions was $84.7 million in 2009, compared with $98.1 million in 2008.

During fiscal 2009, we paid $54.5 million in selling commissions, compared with $86.8 million in 2008. The decline in DSC paid is due to lower gross sales of retail funds and a slightly higher percentage of funds paid on a front-end basis in 2009 compared to 2008. As at November 30, 2009, the unamortized balance of deferred selling commissions financed was $274.0 million, a decrease of $30.4 million from the prior-year balance of $304.4 million. The contingent deferred sales charges that would be received if all of the DSC securities were redeemed at November 30, 2009, were estimated to be approximately $373.6 million (2008 - $406.8 million).

Pre-Tax Profit Margin

Pre-tax profit margin was relatively unchanged at 18.4% for fiscal 2009 compared with 17.8% in 2008. Pre-tax profit margin in 2008 excluding the impairment charge related to goodwill, intangibles and available for sale assets was 25.8%.

Segment Outlook

There has been a marked improvement in economic and market conditions over the course of 2009 and the recovery is expected to continue in 2010. A continuation of more stable or improving markets combined with near-zero yields on short-term investments will likely stimulate investor demand for equities and equity funds. We expect that, over the longer term, demand for investment products will remain healthy due to factors such as Canada's projected population growth, the significant amount of unused Registered Retirement Savings Plan contribution room, the introduction of the Tax-Free Savings Account in 2009, as well as the large amount of un-invested cash or near-cash holdings that Canadians are reportedly sitting on. Mutual funds remain a very accessible and attractive investment solution for investors. We expect that guaranteed investment products will continue to grow in importance and remain an attractive investment option for conservative investors. We also see growth opportunities in the institutional investment management space, both domestically and abroad.

Trust Company Operations

Business and Industry Profile

Through AGF Trust, we offer financial solutions, including GICs, real estate secured and investment loans.

AGF Trust investment loans consist of secured investment loans and RSP loans distributed through financial advisors who continue to broaden their suite of products to meet the needs of their clients. AGF Trust has a competitive edge in the advisor channel as we leverage AGF's mutual fund wholesaler relationships. Our mutual fund wholesalers have operated successfully in the advisor channel for many years and have a well-established reputation for quality service.

We offer real estate secured loans to Canadians who have sound credit, but whose circumstances may not meet the traditional requirements of Canada's large banks to qualify for their lowest rate real estate secured loan products. Real estate secured loan products are distributed primarily through the mortgage broker channel. Borrowers have chosen to deal with mortgage brokers to take advantage of independent advice and competitive rates. Lenders have provided real estate secured loans in this channel to reduce distribution costs.

Segment Strategy and Highlights

AGF Trust, similar to other financial institutions in Canada, was impacted by the recession in the latter half of 2008 and throughout fiscal 2009. Our strategy to effectively manage through the economic downturn was to effectively reduce loan balances with the objective of improving our regulatory capital position. In the latter part of 2008, we repositioned our lending programs to focus on higher margin products and suspended new originations of certain business lines. Throughout 2009, we focused on responsible management of our loan portfolio and improved our credit, underwriting and collections' policies and procedures to mitigate default risk and reduce potential losses. The majority of funding for the lending and investment activity continues to be through the sale of GICs and we remain confident in our ability to raise funds through this channel.

For the year ended November 30, 2009, loan originations were $88.4 million compared to $1,578.1 million in the previous year. Net loan writeoffs were $34.9 million for the year ended November 30, 2009, compared to $10.4 million in the previous year.

As at November 30, 2009, collateral value declines have resulted in approximately $315 million of unsecured exposures in our secured investment loan portfolio compared to approximately $550 million of unsecured exposures as at November 30, 2008. This improvement was directly related to rising equity markets. Our investment loan program is used by independent investment advisors as part of their overall investment strategy for their clients. We believe that the investment advisor is an integral part of their clients' investment strategies. Combined with other mitigating factors such as relatively high credit scores, sound underwriting and historical experience of other financial institutions with this type of product with little evident correlation between collateral values and propensity to default, we expect that clients will continue to service their debt despite a decline in equity values. The weighted average loan-to-value ratio on our conventional mortgage loan portfolio, as at November 30, 2009, was 65.3%.

Financial and Operational Results

The Trust Company Operations segment results for the years ended November 30, 2009 and 2008, are as follows:

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                     2009        2008    % change
    -------------------------------------------------------------------------

    Interest income
      Loan interest                       $    211.2  $    270.8      (22.0%)
      Investment interest                       15.0        32.2      (53.4%)
    -------------------------------------------------------------------------
                                               226.2       303.0      (25.3%)

    Interest expense
      Deposit interest                         175.4       200.9      (12.7%)
      Hedging interest income                  (68.5)      (18.6)     268.3%
      Other interest expense (income)           23.1        23.8       (2.9%)
    -------------------------------------------------------------------------
                                               130.0       206.1      (36.9%)
    -------------------------------------------------------------------------
    Net interest income                         96.2        96.9       (0.7%)
    Other revenue                                8.7        12.3      (29.3%)
    RSP loan securitization income (loss),
     net of impairment                          (0.6)       (0.3)     100.0%
    -------------------------------------------------------------------------
    Total revenue                              104.3       108.9       (4.2%)

    Expenses
      Selling, general and administrative       35.2        42.7      (17.6%)
      Provision for loan losses                 37.6        30.4       23.7%
    -------------------------------------------------------------------------
                                                72.8        73.1       (0.4%)

    EBITDA(1)                                   31.5        35.8      (12.0%)
    Amortization                                 2.8         2.8        0.0%
    -------------------------------------------------------------------------
    Income before taxes and non-segmented
     items                                $     28.7  $     33.0      (13.0%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) For the definition of EBITDA, see the "Key Performance Indicators and
        Non-GAAP Measures" section. The items required to reconcile EBITDA to
        net income, a defined term under Canadian GAAP, are detailed above.
    

Revenue, Net Interest Income and Net Interest Margin

Net interest income, which is expressed net of interest on deposits and other interest expenses, was relatively unchanged compared to 2008. The average net interest margin on lending products was 2.4% in fiscal 2009 (2008 - 2.3%). The change resulted primarily from an increase in the spread between AGF Trust's Prime rate and the Banker's Acceptance rate, offset by an increase in the average cost of funds relative to the BA based swap rate. AGF Trust manages its interest rate risk through the use of interest rate swaps. Interest expense includes hedging interest income of $68.5 million related to changes in fair value on interest rate swaps for the year ended November 30, 2009 (2008 - $18.6 million). Other revenue decreased 29.3% in the year ended November 30, 2009 primarily due to a $4.0 million decrease related to hedge ineffectiveness. During the year, the Trust Company recognized a $4.1 million writedown of its retained interest in securitized RSP loans compared to $4.7 million in 2008. These factors resulted in an overall revenue decrease of 4.2% in the year ended November 30, 2009 as compared with 2008.

Securitization Income (Loss), Net of Impairment

As at November 30, 2009, the balance of all securitized loans outstanding was equal to $108.3 million (2008 - $166.6 million). As part of the securitization, certain financial assets are retained and a servicing liability is incurred relating to the amortization of retained interest and servicing liability as well as a write-down of approximately $4.1 million (2008 - $4.7 million). The total loss related to the RSP loan securitization was $0.6 million (2008 - loss of $0.3 million) as a result of higher than anticipated prepayment and loss rates, and lower than anticipated excess spread earned on securitized assets.

Selling, General and Administrative Expenses

SG&A expenses decreased $7.5 million to $35.2 million compared with $42.7 million in 2008, primarily due to reduced staffing levels.

Provision for Loan Losses

The total provision for loan losses increased to $37.6 million in 2009 compared to $30.4 million in 2008. During the fourth quarter of 2008, AGF Trust reviewed its methodology for allowance for loan losses as a result of the current market and economic conditions. We refined the methodology to be more responsive to changes in the economy and increases in delinquency. The allowance for specific loan losses was refined to include specific allowances for loans past due but not impaired. Previously, this allowance only included loans identified as impaired. As a result of this change, combined with increases in arrears and impaired loans, the total provision for loan losses increased by $7.2 million in 2009, compared with 2008.

Based on our analysis of the RSP portfolio, we had approximately $25.0 million of loan accounts which, based on certain loan characteristics, were assessed as having a significantly higher risk of default. Accordingly, we have recorded an allowance for loan losses of $4.2 million against these accounts and in addition, we have written off $14.0 million of these loans as at November 30, 2009, resulting in an existing net exposure of approximately $6.8 million.

Loan writeoffs, net of recoveries for the twelve months ended November 30, 2009 were $34.9 million compared with $10.4 million for the fiscal period ended November 30, 2008, with the increase attributable to RSP, secured investment loan and mortgage loan writeoffs. Loan writeoffs, net of recoveries, for the twelve months ended November 30, 2009, were $23.6 million in the RSP loan portfolio, $5.8 million in the secured investment loan portfolio and $5.4 million in the mortgage loan portfolio and $0.1 million in HELOC receivables, compared to $6.3 million, $1.7 million, $2.3 million, and $0.01 million, respectively, for the twelve months ended November 30, 2008. Impaired loans expressed as a percentage of loans outstanding were 1.4% as at November 30, 2009, compared with 1.0% at November 30, 2008 due to the negative change in economic conditions.

EBITDA and EBITDA margin

A decline in revenue and an increase in the loan loss provision, partly offset by a decline in SG&A costs, contributed to a decline in EBITDA for the fiscal year ended November 30, 2009 of 12.0% to $31.5 million compared to fiscal 2008. EBITDA margin declined to 30.2% from 32.9% over the same period of 2008.

Pre-Tax Profit Margin

As a result of the factors outlined above, pre-tax margin of 27.5% in 2009 declined from 30.3% in 2008.

Operational Performance

The table below highlights our key operational measures for the segment for the years ended November 30, 2009 and 2008:

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                     2009        2008    % change
    -------------------------------------------------------------------------

    Real estate secured loans(1)
      Insured mortgage loans              $    497.7  $    618.1      (19.5%)
      Conventional mortgage loans              556.5       766.4      (27.4%)
      HELOCs                                   387.2       656.3      (41.0%)
    -------------------------------------------------------------------------
                                             1,441.4     2,040.8      (29.4%)

    Investment loans(1)
      Secured investment loans               1,734.0     1,805.4       (4.0%)
      RSP loans                                414.2       573.7      (27.8%)
      Other loans                                5.1        11.1      (54.1%)
    -------------------------------------------------------------------------
                                             2,153.3     2,390.2       (9.9%)
    Other assets                               905.6       895.8        1.1%
    -------------------------------------------------------------------------
    Total Assets                          $  4,500.3  $  5,326.8      (15.5%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net interest income                   $     96.2  $     96.9       (0.7%)
    RSP loan securitization income (loss),
     net of impairment                          (0.6)       (0.3)     100.0%
    Other revenue                                8.7        12.3      (29.3%)
    Non-interest expenses(2)                   (38.0)      (45.5)     (16.5%)
    Provision for loan losses                  (37.6)      (30.4)      23.7%
    -------------------------------------------------------------------------
    Income before taxes and non-segmented
     items                                $     28.7  $     33.0      (13.0%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Efficiency ratio(3)                        36.4%       41.8%
    Assets-to-capital multiple(3)               12.0        15.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Includes loan provision and deferred sales commission.

    (2) Includes SG&A and amortization expenses.

    (3) For the definition of efficiency ratio and assets-to-capital
        multiple, see the "Key Performance Indicators and Non-GAAP Measures"
        section.
    

Loan Asset Growth

Loan originations decreased significantly compared to fiscal 2008 as a result of amendments to our lending programs. Real estate secured loan assets decreased by 29.4% year-over-year. Secured investment loans decreased 4.0% to $1.7 billion as at November 30, 2009, compared with fiscal 2008 while RSP loan balances and other loans decreased $165.5 million or 28.3%.

Efficiency Ratio

The efficiency ratio is defined as non-interest expenses divided by the total of net interest income and non-interest income. It is a key industry performance indicator used to ensure expenses are contained as the Trust business grows. During 2009, the efficiency ratio experienced a favourable change to 36.4% from 41.8% in 2008.

Balance Sheet

Total assets decreased 15.5% to $4.5 billion as at November 30, 2009, compared with the previous year. As at November 30, 2009, our asset-to-capital multiple stood at 12.0 times, compared with 15.0 times at the same time last year. Our risk-based capital ratio was 19.0% as at November 30, 2009 compared to 14.7% at November 30, 2008. During fiscal 2008, AGF Trust received $35.0 million in debt and equity capital from AGF Management to support increased asset levels. AGF Trust has not required capital from AGF Management since the first quarter of 2008. Liquid assets were high with $773.1 million in cash and cash equivalents as well as investments available for sale as at November 30, 2009 (2008 - $728.7 million).

Loan Portfolio Credit

The credit risk factors considered when assessing the collectability of the various loan portfolios are primarily based on the individuals' ability and willingness to make future loan payments, coupled with the underlying collateral security held for each of the loan categories. The key risk factors considered include:

    
    -   Employment rates: higher unemployment rates will likely result in
        higher default rates as individuals' ability to pay deteriorates.

    -   Residential property prices and sales volume: declining residential
        property prices and reduced volumes of residential property sales may
        result in lower resale prices and longer disposal times, therefore,
        increasing losses incurred on the disposition of the property.

    -   Equity market performance: declining global equity markets present
        increased risk on the secured investment loan portfolio as the value
        of the underlying collateral is lower. While the Trust Company has
        recourse to the personal assets of clients with respect to investment
        loans, the global macro-economic situation and employment levels may
        impede the Trust Company's ability to realize on the full value of
        the loan.
    

The general allowance for real estate secured loan losses increased to $10.3 million as compared to $9.3 million a year ago. This included a general allowance for insured mortgage loans of $4.0 million (2008 - nil) which was set up in response to certain mortgage insurers taking a stricter interpretation of policy exclusions for fraud and misrepresentation as a result of the current environment. The general allowance for investment loan losses increased to $14.5 million from $13.7 million in 2008 due to higher experience of loan writeoffs. Approximately 47.2% of real estate secured loan assets, excluding HELOCs, are insured. We have security for non-RSP investment loans, consisting of mutual funds and other investments. The value of this collateral fluctuates with the changes in the underlying investments. The amount of RSP loans written off, net of recoveries (excluding securitized RSP loans) was $23.6 million for the year ended November 30, 2009 (2008 - $6.3 million). For the balance of our loan products, the amount written off net of recoveries was $11.3 million (2008 - $4.0 million).

Segment Outlook

We anticipate that AGF Trust will experience net growth in loans in fiscal 2010 compared to decreased loan originations in 2009 due to the disruptions in financial markets and our desire to conserve capital. Stock market prices influence the levels of lending activities for investment-based loan products, and we believe that a continuation of higher equity markets in 2010 may result in growth in these products. A continuation of relatively low interest rates and stability in housing prices, combined with improving consumer confidence, could positively affect secured real estate loan portfolio performance. A continuation of high rates of unemployment may have a negative impact on this portfolio, as well as our investment loan portfolio by increasing the risk of loan defaults.

In fiscal 2010, we will continue to focus on strengthening client relationships and realizing operational efficiencies through aggressive cost management. AGF Trust uses disciplined underwriting and sound risk management practices, and we are employing the lessons learned during the economic downturn to improve credit quality and profitability of our lending portfolios.

After experiencing decreased loan originations in fiscal 2009, we are focused on "controlled growth" in our lending programs in fiscal 2010. We launched our 2010 RSP loan program late in fiscal 2009, increased our mortgage lending and plan a re-launch of our investment loan program in 2010.

AGF Management Limited

Liquidity and Capital Resources

Consolidated cash flow generated from operating activities, before net change in non-cash balances related to operations, was $206.1 million for the year ended November 30, 2009, compared with $278.7 million in the prior year.

In fiscal 2009, we paid $54.5 million in selling commissions, which were capitalized and amortized for accounting purposes, compared with $86.8 million in 2008. Accordingly, our free cash flow (defined as cash flow from operations less selling commissions paid) was $151.6 million for the year ended November 30, 2009, compared with $191.9 million in the prior year.

In addition to our free cash flow, the following items impacted our change in cash position and bank indebtedness:

    
    -------------------------------------------------------------------------
    ($ millions)                                              Source (use)
                                                     ------------------------
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Net change in non-cash balances related to
     operations                                       $    (16.6) $     72.8
    Net cash change in Class B Non-Voting shares             2.5        (5.3)
    Dividends                                              (86.2)      (80.2)
    Acquisition of subsidiaries                            (19.9)      (25.2)
    Purchase of property, equipment and computer
     software                                               (2.1)       (6.8)
    Purchase of investments(1)                            (345.5)     (174.8)
    Trust deposits, net of loans                           (26.8)     (179.8)
    -------------------------------------------------------------------------
                                                      $   (494.6) $   (399.3)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Includes $351.0 million of cash invested by AGF Trust into
        investments available for sale during the year ended November 30,
        2009 (2008 - $ 171.4 million).
    

During the year ended November 30, 2009, our revolving term loan balance increased $33.0 million to $156.7 million (2008 - decreased $36.2 million). Consolidated cash and cash equivalents of $274.9 million decreased by $309.3 million from November 30, 2008 levels of $584.2 million (2008 - decreased by $243.7 million). This was primarily due to an increase in investments available for sale held at AGF Trust of $351.0 million.

We have a three-year prime rate-based revolving term loan facility to a maximum of $300.0 million, of which $137.9 million was available to be drawn as at November 30, 2009. Aside from cash held in the Trust Company Operations segment, which is held to fund loans to clients and GIC maturities, AGF had $32.6 million of cash as at November 30, 2009 (November 30, 2008 - $23.9 million). The loan facility will be available to meet future operational and investment needs. We anticipate that cash flow from operations, together with the available loan facility, will be sufficient in the foreseeable future to implement our business plan, finance selling commissions, satisfy regulatory requirements, service debt repayment obligations, meet capital spending needs and pay quarterly dividends.

Limited Partnership Financing

Prior to 2005, the Company financed certain deferred selling commissions using limited partnerships (LPs). The Company is obligated to pay these LPs an annual fee of 0.45% to 0.90% of the net asset value of DSC securities. This obligation will continue as long as such DSC securities remain outstanding except for certain of the LPs, in which case the obligation terminates at various dates from December 31, 2009 to December 31, 2020. For certain LPs, the obligation is secured by the Company's mutual fund management contracts to the extent of the particular obligation.

The Company is responsible for the management and administration of the LPs. These services are provided in the normal course of operations and are recorded at the amount of consideration agreed to by the parties. The amount of fees received in 2009 was $0.3 million (2008 - $0.3 million). As at November 30, 2009, the net asset value of DSC securities financed by the LPs was $0.7 billion (2008 - $0.8 billion).

Contractual Obligations

The table below is a summary of our contractual obligations at November 30, 2009. See also Notes 10 & 24 of the Consolidated Financial Statements.

    
    -------------------------------------------------------------------------
                                                                      There-
    ($ millions)           Total       2010  2011-2012  2013-2014      after
    -------------------------------------------------------------------------

    Long-term debt      $  156.7   $   13.1   $  143.6   $      -   $      -
    Operating leases        57.3        9.7       17.7       12.8       17.1
    Purchase obligations    34.2       12.6       12.5        6.3        2.8
    -------------------------------------------------------------------------
    Total contractual
     obligations        $  248.2   $   35.4   $  173.8   $   19.1    $  19.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

In addition to the contractual obligations detailed above, the following obligations exist that vary depending upon business volume and other factors:

    
    -   AGF Trust is required to pay depositors amounts representing
        principal and interest on funds on deposit.

    -   A portion of our selling commissions paid on a DSC basis has been
        financed by LPs held by third-party investors. As at November 30,
        2009, the net asset value of DSC securities financed by the LPs was
        $0.7 billion and amounts paid to these partnerships in 2009 were
        $3.9 million.

    -   We pay trailing commissions to financial advisors based on AUM of
        their respective clients. This obligation varies based on fund
        performance, sales and redemptions, and in 2009 we paid
        $125.3 million in trailing commissions.

    -   We have committed to 2015 to reimburse Citigroup if minimum levels of
        services and related fees are not achieved.

    -   In conjunction with the Elements Advantage Commitment on certain
        Elements portfolios, AGF has committed to investors that if a
        portfolio does not match or outperform its customized benchmark over
        a three-year average annualized period, investors will receive up to
        90 basis points in new units. Payments related to this began in
        fiscal 2009 for the applicable funds. AGF capped the AGF Elements
        Advantage feature on its Elements Products to new purchases effective
        June 22, 2009. Eligible units purchased prior to June 22, 2009 have
        been grandfathered.
    

Intercompany and Related Party Transactions

The Company has entered into certain transactions with entities or senior officers who are directors of the Company. During 2009, total amounts paid by the Company to these related parties aggregated $0.1 million (2008 - $0.1 million).

Capital Management Activities

We actively manage our capital to maintain a strong and efficient capital base to maximize risk-adjusted returns to shareholders, invest in future growth opportunities, including acquisitions, and to ensure that the regulatory capital requirements are met for each of our subsidiary companies.

AGF capital consists of shareholders' equity. On an annual basis, AGF prepares a five-year plan detailing projected operating budgets and capital requirements. Each of AGF's operating segments are required to prepare and submit a five-year operating plan and budget to AGF's Finance Committee for approval prior to seeking Board approval. AGF's Finance Committee consists of the Chairman and CEO, the Vice-Chairman, Senior Vice-President and CFO, and the General Counsel, Executive Vice-President and Chief Operating Officer. Once approved by the Finance Committee, the five-year plans are reviewed and approved by AGF's Board of Directors. These plans become the basis for the payment of dividends to shareholders, the repurchase of Class B Non-Voting shares and, combined with the reasonable use of leverage, the source of funds for acquisitions.

Investment Management Operations - Regulatory Capital

A significant objective of the Capital Management program is to ensure regulatory requirements are met for capital. Our Investment Management businesses, in general, are not subject to significant regulatory capital requirements in each of the jurisdictions in which they are registered and operate. The cumulative amount of minimum regulatory capital across all of our investment management operations is approximately $6.0 million.

AGF Trust - Capital Management Framework

AGF Trust's regulatory capital consists primarily of common shareholders' equity, preferred shares and subordinated debentures. Regulatory capital is a factor that allows the AGF Trust Board of Directors (Trust Board) to assess the stability and security in relation to the overall risks inherent in AGF Trust's activities.

AGF Trust actively manages regulatory capital levels in conjunction with management's internal assessment of capital. Consideration is given to many factors including regulatory guidance, strategic planning, shareholder interests, interests of depositors and internally generated target capital ratios. Regulatory capital is set by regulatory authorities. Effective January 1, 2008, AGF Trust calculates and reports regulatory capital ratios in accordance with the framework specified by the Bank for International Settlements (BIS) (commonly known as Basel II). AGF Trust adopted the Standardized Approach for credit risk and the Basic Indicator Approach for operational risk.

A key component of AGF Trust's capital framework is its internal capital adequacy assessment process (ICAAP). This process attributes capital for identified risks in proportion to the assessed risk. Risks are assessed using both qualitative and quantitative factors. The process also incorporates a variety of stress testing approaches to evaluation the income and capital impacts of potential stress events.

AGF Trust - Basel II Capital Accord

Capital measures at AGF Trust are detailed as follows:

    
    -------------------------------------------------------------------------
    ($ thousands, except for risk-weighted assets
     in $ millions)                                             Basel II
                                                     ------------------------
    November 30                                             2009        2008
    -------------------------------------------------------------------------
    Risk-weighted assets(1)
      Credit risk                                     $  1,754.8  $  2,244.3
      Operational risk                                     216.6       172.6
    -------------------------------------------------------------------------
    Total risk-weighted assets                           1,971.4     2,416.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Tier 1 capital
      Common shares                                   $   82,768  $   82,768
      Contributed surplus                                  1,476       1,338
      Retained earnings                                  120,646     101,432
      Non-cumulative preferred shares                     64,000      64,000
      Less: securitization and other                     (11,378)    (15,567)
    -------------------------------------------------------------------------
                                                         257,512     233,971

    Tier 2 capital
      Subordinated debentures                            109,500     109,500
      General allowances                                  15,355      19,638
      Less: securitization and other                      (6,902)     (8,295)
    -------------------------------------------------------------------------
                                                         117,953     120,843

    -------------------------------------------------------------------------
    Total capital                                     $  375,465  $  354,814
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) For operational risk, AGF Trust uses the Basic Indicator Approach -
        calculated as 15% of the previous three-year average of net interest
        income and other income, excluding gain or loss on investments. The
        risk-weighted equivalent is determined by multiplying the capital
        requirement for operational risk by 12.5.
    

Dividends

The holders of Class B Non-Voting and Class A shares are entitled to receive cash dividends. Dividends are paid in equal amounts per share on all the Class B Non-Voting shares and all the Class A shares at the time outstanding without preference or priority of one share over another. No dividends may be declared in the event that there is a default of a condition of our loan facility or where such payment of dividends would create a default.

Our Board of Directors may determine that Class B Non-Voting shareholders shall have the right to elect to receive part or all of such dividend in the form of a stock dividend. They also determine whether a dividend in Class B Non-Voting shares is substantially equal to a cash dividend. This determination is based on the weighted average price at which the Class B Non-Voting shares traded on the Toronto Stock Exchange during the 10 trading days immediately preceding the record date applicable to such dividend.

The following table sets forth the dividends paid by AGF on Class B Non-Voting shares and Class A shares for the years indicated:

    
    -------------------------------------------------------------------------
    Years ended
     November 30            2009       2008       2007       2006       2005
    -------------------------------------------------------------------------

    Per share           $   1.00   $   0.95   $   0.78   $   0.69   $   0.56
    -------------------------------------------------------------------------
    Percentage
     increase                 5%        22%        13%        23%        37%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

We review our dividend distribution policy on a quarterly basis, taking into account our financial position, profitability, cash flow and other factors considered relevant by our Board of Directors. The quarterly dividend paid on January 21, 2010 was $0.25 per share.

Normal Course Issuer Bid

In February 2009, the Company's Board of Directors authorized the renewal of AGF's normal course issuer bid for the purchase of up to 7,108,630 Class B Non-Voting shares, or 10% of the public float for such shares. The Company received approval from the Toronto Stock Exchange on February 24, 2009, for the renewal of its normal course issuer bid. This allows AGF to purchase up to 7,108,630 Class B Non-Voting shares through the facilities of the Toronto Stock Exchange (or as otherwise permitted by the Toronto Stock Exchange) between February 26, 2009 and February 25, 2010. The Class B Non-Voting shares may be repurchased from time to time at prevailing market prices or such other price as may be permitted by the Toronto Stock Exchange.

As at November 30, 2009, under this current normal course issuer bid, no Class B Non-Voting shares have been repurchased. AGF's previous normal course issuer bid allowed for the repurchase of up to 7,253,822 Class B Non-Voting shares between February 26, 2008, and February 25, 2009, at prevailing market prices. Under the previous normal course issuer bid, AGF purchased an aggregate of 1,000,000 Class B Non-Voting shares, for a total consideration of $7.8 million at an average price of $7.79 per share.

Outstanding Share Data

Set out below is our outstanding share data as at November 30, 2009. For additional detail, see Notes 14 and 15 to the 2009 Consolidated Financial Statements.

    
    -------------------------------------------------------------------------
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Shares
    Class A Voting Common Shares                          57,600      57,600
    Class B Non-Voting Shares                         89,097,400  88,480,104

    Stock Options
    Outstanding options                                6,627,398   6,576,948
    Exercisable options                                3,315,368   2,543,337
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

Government Regulations

AGF Management Limited

AGF Management Limited (AGF) is incorporated under the laws of the Province of Ontario and is a reporting issuer in each province and territory of Canada. Accordingly, AGF is subject to applicable securities laws in each jurisdiction. In addition, the Class B Non-Voting common shares of AGF are listed for trading on the Toronto Stock Exchange under the trading symbol AGF.B. AGF is also subject to oversight from other government and regulatory agencies.

AGF Mutual Funds

To qualify for continuous distribution, each of the mutual funds managed by AGF Investments Inc. (AGFI) must file each year an annual information form and simplified prospectus in every province and territory of Canada in which it intends to distribute securities. It must also obtain a receipt for the same from provincial and territorial securities regulatory authorities. Certain funds are offered in overseas jurisdictions, each of which has its own filing requirements.

Each mutual fund is managed by AGFI and as such AGFI is liable for any misrepresentation in the offering documents of the funds. Pursuant to securities legislation in certain of the provinces and territories of Canada, none of the mutual funds managed by AGFI can make portfolio investments in substantial security holders of the funds, in AGF or in corporations in which the directors or officers of the funds, or their substantial security holders, have a significant interest.

Investment Management Operations

AGF Investments Inc.

During 2009, AGF Funds Inc. and AGF Asset Management Group Limited were amalgamated to form AGF Investments Inc. (AGFI). AGFI is registered with the Ontario Securities Commission (OSC) as a portfolio manager and maintains equivalent registrations in each of the other provinces and territories of Canada in which AGFI carries on business. AGFI is also registered as a Mutual Fund Dealer, Exempt Market Dealer and Commodity Trading Manager in certain jurisdictions and is subject to oversight by the federal and provincial Privacy Commissions and Financial Transactions Reports Analysis Centre of Canada (FINTRAC). In its capacity as portfolio manager, AGFI is subject to conflict of interest regulations made pursuant to the Securities Act (Ontario) and certain other provincial and territorial securities legislation. Amongst other things, these regulations impose limitations on the ability of AGFI to advise or make recommendations with respect to its own securities or securities of a related or connected issuer. AGFI is also subject to certain restrictions that are imposed by applicable provincial and territorial securities legislation on advertising and sales incentives. In response to National Instrument 31-103, during Fiscal 2010, AGFI will submit an application to be registered as an Investment Fund Manager.

AGF International Advisors Company Limited

AGF International Advisors Company Limited is incorporated under the laws of the Republic of Ireland and is authorized by the Irish Financial Services Regulatory Authority (IFSRA), under Regulation 11 of the European Communities (Markets in Financial Instruments) Regulations 2007, to provide a range of financial services including the provision of investment advice and the managing of portfolios. As an authorized entity, AGF International Advisors Company Limited is subject to a range of Irish and EU regulations. AGF International Advisors Company Limited also holds an Australian Financial Services Licence granted by the Australian Securities & Investments Commission (ASIC) and is subject to the relevant ongoing requirements of this licence.

AGFIA Limited

AGFIA Limited is a private limited company incorporated under the laws of the Republic of Ireland and is authorized by the Irish Financial Services Regulatory Authority (IFSRA), under Regulation 11 of the European Communities (Markets in Financial Instruments) Regulations 2007, to provide a range of financial services including the provision of investment advice and the managing of portfolios, primarily to institutional accounts. As an authorized entity, AGFIA Limited is subject to a range of Irish and EU regulations. AGFIA Limited is registered with the OSC as a non-resident portfolio manager and maintains equivalent registrations in each of the other provinces and territories of Canada in which AGFIA carries on business.

AGF Asset Management (Asia) Limited

Established in 1996, AGF Asset Management (Asia) Limited provides investment research and advisory services on Asian markets for AGF mutual funds and other clients. AGF Asset Management (Asia) Limited is regulated by the Monetary Authority of Singapore (MAS) under the Securities and Futures Act. The company holds a Capital Markets Services licence which permits it to offer fund management services to accredited investors. AGF Asset Management (Asia) Limited is required to obtain the prior approval of MAS for any significant change of its members or shareholdings of its members.

AGF Investments America Inc

AGF Investments America Inc. (AGFA) is registered with the U.S. Securities and Exchange Commission as an Adviser and provides investment management services to (U.S.) institutional clients.

AGF Investments Asia Limited

AGF Investments Asia Limited is incorporated as a limited liability company in Hong Kong.

Highstreet Asset Management Inc.

Highstreet Asset Management Inc. (Highstreet) is registered with the OSC as a portfolio manager and maintains equivalent registrations in each of the other provinces and territories of Canada in which it does business. Highstreet is also registered with the OSC as exempt market dealer for the purpose of facilitating the distribution of certain securities to clients and is subject to oversight by federal and provincial Privacy Commissions and FINTRAC. In addition, Highstreet is registered in Ontario as a Commodity Trading Manager.

Highstreet Asset Management U.S. Inc.

Highstreet Asset Management U.S. Inc. is a wholly owned subsidiary of Highstreet and is registered with the U.S. Securities Exchange Commission as an Adviser and provides investment management services to (U.S.) institutional clients.

Cypress Capital Management Ltd.

Cypress Capital Management Limited (Cypress) is registered with the British Columbia Securities Commission as a portfolio manager and maintains equivalent registrations in each of the other provinces and territories of Canada in which it does business. Cypress is also subject to oversight by federal and provincial Privacy Commissions and FINTRAC.

Cypress Capital Management US Limited

Cypress Capital Management US Limited (Cypress US) is a wholly owned subsidiary of Cypress and is registered with the U.S. Securities Exchange Commission as an Adviser. Cypress US provides investment management services to (U.S.) high net worth, corporate, endowment and foundation clients.

Doherty & Associates Limited and Magna Vista Investment Management Limited

Doherty & Associates Limited (Doherty) and Magna Vista Investment Management Limited (Magna) are each registered with the OSC as portfolio managers, and maintain equivalent registrations in each of the other provinces and territories of Canada in which they respectively do business. Doherty and Magna are also registered with the OSC as exempt market dealers for the purpose of facilitating the distribution of certain securities to their clients and are subject to oversight by federal and provincial Privacy Commissions and FINTRAC.

Doherty and Magna amalgamated on December 1, 2009.

AGF Private Investment Advisors Inc.

AGF Private Investment Advisors Inc. (PIA), a wholly owned subsidiary of Magna, is registered as an Investment Advisor with the U.S. Securities and Exchange Commission (SEC).

AGF Securities (Canada) Limited

AGF Securities (Canada) Limited is a member of the Investment Industry Regulatory Organization of Canada (IIROC). IIROC is the national self-regulatory organization created through the consolidation of the Investment Dealers Association of Canada and Market Regulation Services Inc. AGF Securities (Canada) Limited is registered as an investment dealer with the securities regulatory authorities in each of Alberta, British Columbia, Ontario and Saskatchewan. AGF Securities (Canada) Limited is also a member of the Canadian Investor Protection Fund and is subject to oversight by the federal and provincial Privacy Commissions and FINTRAC.

AGF Securities Inc.

AGF Securities Inc. is registered as a broker-dealer with the SEC.

Trust Company Operations

AGF Trust Company

AGF Trust Company (AGF Trust) is incorporated under and governed by the federal Trust and Loan Companies Act (Canada) and is extra-provincially licensed and registered under applicable legislation in all provinces and territories of Canada. The Trust and Loan Companies Act (Canada) specifies the powers of and imposes investment restrictions on federally regulated trust companies. The legislation provides for regular reports to be filed on the financial condition of the trust company; periodic examinations of the trust company's affairs by appropriate regulatory authorities; restrictions on transactions with related parties; corporate governance provisions; and minimum capital adequacy standards based on the total assets and risk-weighted assets of the trust company. As a federally regulated financial institution, AGF Trust is supervised by the federal Office of the Superintendent of Financial Institutions (OFSI). AGF Trust is also subject to oversight from the Financial Consumer Agency of Canada, the Office of the Privacy Commissioner of Canada, FINTRAC, and other government agencies, including provincial authorities.

AGF Trust is a member of the Canadian Deposit Insurance Corporation (CDIC), which provides a statutory scheme for the insurance of certain qualifying deposits made and payable in Canada in Canadian currency. AGF Trust is also a member of the Canadian Payments Association, the Ombudsman for Banking Services and Investments and is an approved Canadian Mortgage and Housing Corporation (CMHC) lender.

Fourth Quarter Analysis

Summary of Consolidated Operating Results

The table below highlights our results for the three months ended November 30, 2009 and 2008:

    
    -------------------------------------------------------------------------
    ($ millions, except per share amounts)
    Three months ended November 30              2009        2008    % change
    -------------------------------------------------------------------------

    Revenue
      Investment Management Operations    $    132.1  $    123.1        7.3%
      Trust Company Operations                  23.6        26.6      (11.3%)
      Other                                      2.0         2.5      (20.0%)
    -------------------------------------------------------------------------
                                               157.7       152.2        3.6%

    Expenses
      Investment Management Operations          72.9        67.8        7.5%
      Trust Company Operations                  13.2        30.4      (56.6%)
    -------------------------------------------------------------------------
                                                86.1        98.2      (12.3%)

    EBITDA(1)                                   71.6        54.0       32.6%
      Amortization                              23.6        27.6      (14.5%)
      Interest expense                           1.3         1.8      (27.8%)
      Impairment of asset available for sale       -         2.3           -
      Impairment of goodwill and customer
       contracts                                   -        46.3           -
      Non-controlling interest                   0.2         0.1      100.0%
      Income taxes                               1.1        (4.8)          -
    -------------------------------------------------------------------------
    Net income                            $     45.5  $    (19.3)          -
    -------------------------------------------------------------------------

    Earnings per share - diluted          $     0.50  $    (0.21)          -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) As previously defined, see 'Key Performance Indicators and Non-GAAP
        Measures - EBITDA'. The items required to reconcile EBITDA to Net
        Income, a defined term under Canadian GAAP, are detailed above.
    

Results from Operations

Revenue for the fourth quarter ended November 30, 2009 increased 3.6% to $157.7 million, compared to $152.2 million in the same period in 2008. The Investment Management segment increased $9.0 million as a result of a 4.8% increase in average mutual fund AUM levels in the fourth quarter of 2009 compared to 2008. Revenues in the Trust segment decreased $3.0 million due to declines in net interest income and other revenue. Revenues from the Other segment decreased $0.5 million to $2.0 million.

Expenses in the fourth quarter ended November 30, 2009 decreased $12.1 million over the same period a year ago. Expenses in Investment Management Operations increased $5.1 million or 7.5%. This increase was due to higher bonus amounts in the fourth quarter of 2009 as compared to the fourth quarter of 2008 which included a $6.0 million reversal of bonus provision reflecting the decline in markets during the fourth quarter of 2008. Expenses in Trust Company Operations segment decreased $17.2 million primarily due to lower loan provision related costs. In the fourth quarter of last year, the methodology related to the calculation of the allowance for loan losses was changed resulting in a substantially higher expense.

EBITDA for the quarter ended November 30, 2009, compared with the respective quarter in 2008, was higher predominantly due to lower loan provisions at the Trust Company.

Our income tax expense, including the impact of tax rate reductions, for the three months ended November 30, 2009 was $1.1 million, as compared to an income tax recovery of $4.8 million in the three months ended November 30, 2008.

The impact of the above revenue and expense items resulted in net income of $45.5 million in the three months ended November 30, 2009 compared with a net loss of $19.3 million in fiscal 2008. Basic and fully diluted earnings per share were $0.51 and $0.50 per share, respectively, in the three months ended November 30, 2009 as compared with a loss of $0.21 and $0.21 per share in 2008. Excluding a $9.8 million reduction in income taxes related to substantively enacted tax rates, net income in the fourth quarter of 2009 was $35.7 million. In the fourth quarter of 2008, excluding the impairment charges, net of tax, of $37.7 million, we had net income of $18.4 million. Excluding the impact of the reduction in income taxes, basic and fully diluted earnings per share in the fourth quarter of 2009 were $0.40 and $0.40 per share, respectively. In the fourth quarter of 2008, excluding the impact of the impairment charges, net of tax, basic and fully diluted earnings per share were $0.21 and $0.20, respectively.

On a diluted per share basis, cash flow from operations for the three months ended November 30, 2009 was $0.73 per share (2008 - $0.63).

Investment Management Operations

Assets Under Management

The following table illustrates the composition of the changes in mutual fund AUM during the three months ended November 30, 2009 and 2008:

    
    -------------------------------------------------------------------------
    ($ millions)
    Three months ended November 30              2009        2008    % change
    -------------------------------------------------------------------------

    Mutual fund AUM, beginning of
     period                               $   22,142  $   26,371      (16.0%)

    Gross sales of mutual funds                  676         651        3.8%
    Redemptions of mutual funds                 (945)     (1,176)     (19.6%)
    -------------------------------------------------------------------------
    Net mutual fund sales                       (269)       (525)     (48.8%)

    Market appreciation (depreciation) of
     fund portfolios                             873      (6,085)          -
    -------------------------------------------------------------------------

    Mutual fund AUM, end of period        $   22,746  $   19,761       15.1%

    Institutional and strategic accounts
     AUM                                      18,921      12,802       47.8%
    High-net-worth AUM                         2,951       2,995       (1.5%)
    -------------------------------------------------------------------------

    Total AUM, end of period              $   44,618  $   35,558       25.5%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Average daily mutual fund AUM for the
     period                               $   22,723  $   21,682        4.8%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

During the three months ended November 30, 2009, the Canadian-dollar-adjusted S&P 500 Index increased 4.1%, the Canadian-dollar-adjusted NASDAQ Index increased 3.0% and the S&P/TSX Composite Index increased 6.1%.

The impact of the U.S. dollar depreciation relative to the Canadian dollar on the market value of AGF mutual funds since August 31, 2009 has been a decrease in AUM of approximately $0.2 billion (2008 - increase of $0.6 billion).

Financial and Operational Results

The table below highlights the Investment Management Operations segment results for the three months ended November 30, 2009 and 2008:

    
    -------------------------------------------------------------------------
    ($ millions)
    Three months ended November 30              2009        2008    % change
    -------------------------------------------------------------------------

    Revenue
      Management and advisory fees        $    125.1  $    119.6        4.6%
      Deferred sales charges                     5.1         7.0      (27.1%)
      Investment income and other revenue        1.9        (3.5)          -
    -------------------------------------------------------------------------
                                               132.1       123.1        7.3%

    Expenses
      Selling, general and administrative       35.7        31.3       14.1%
      Trailing commissions                      35.0        33.0        6.1%
      Investment advisory fees                   2.2         3.5      (37.1%)
    -------------------------------------------------------------------------
                                                72.9        67.8        7.5%
    -------------------------------------------------------------------------

    EBITDA(1)                                   59.2        55.3        7.1%
    Amortization                                23.0        26.7      (13.9%)
    Impairment of asset available for sale       0.0         2.3           -
    Impairment of goodwill and customer
     contracts                                   0.0        46.3           -
    -------------------------------------------------------------------------
    Income before taxes and non-segmented
     items                                $     36.2  $    (20.0)          -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) As previously defined, see the 'Key Performance Indicators and
        Non-GAAP Measures - EBITDA' section.
    

Revenue

For the three months ended November 30, 2009, revenue for the Investment Management Operations segment increased by 7.3% over the previous year, with changes in the categories as follows:

Management and Advisory Fees

Management and advisory fees are directly related to our AUM levels. The 4.8% increase in average daily mutual fund AUM for the quarter ended November 30, 2009 contributed to a 4.6% increase in management and advisory fee revenue compared to the fourth quarter of 2008.

Deferred Sales Charges (DSC)

We receive deferred sales charges upon redemption of securities sold on the contingent DSC or low-load commission basis for which we finance the selling commissions paid to the dealer. The DSC ranges from 2.5% to 5.0% depending on the commission option, of the original subscription price of the funds purchased if the funds are redeemed within the first two years, and declines to zero after three or seven years. DSC revenue fluctuates based on the level of redemptions, the age of the assets being redeemed and the proportion of redemptions composed of back-end assets. DSC revenues decreased by 27.1% to $5.1 million in the fourth quarter of 2009 compared with 2008, reflecting lower retail mutual fund redemptions of DSC AUM.

Investment Income and Other Revenue

Investment income and other revenue was $1.9 million in three months ended November 30, 2009 compared with a loss of $3.5 million in the three months ended November 30, 2008.

Expenses

For the three months ended November 30, 2009, expenses for the Investment Management Operations segment increased 7.5% from the previous year. Changes in specific categories are described in the discussion that follows:

Selling, General and Administrative Expenses

Selling, general and administrative expenses (SG&A) increased by $4.4 million or 14.1% in 2009 compared with 2008. The increase is made up of the following amounts:

    
    -------------------------------------------------------------------------
    ($ millions)
    Three months ended November 30                                      2009
    -------------------------------------------------------------------------

    Increase (decrease) in severance and restructuring expenses   $     (2.4)
    Increase (decrease) in compensation-related expenses                 7.5
    Increase (decrease) in other expenses                               (1.2)
    Increase (decrease) in fund absorption expenses                      0.5
    -------------------------------------------------------------------------
                                                                  $      4.4
    -------------------------------------------------------------------------
    

The following explains expense changes in three months ended November 30, 2009 compared with the same period in the prior year:

    
    -   Severance and restructuring expenses decreased $2.4 million as
        restructuring activities commenced in late 2008 and were minimal in
        the fourth quarter of 2009.

    -   Compensation-related expenses increased $7.5 million due to higher
        bonus amounts in the fourth quarter of 2009 compared to 2008. In the
        latter half of fiscal 2008 the Company was experiencing down markets
        whereas in the latter half of 2009 markets were improving.
        Accordingly bonus amounts were higher on a quarter-over-quarter
        comparison.

    -   Other expenses decreased $1.2 million due to continued cost savings
        initiatives.

    -   Absorption expense increased by $0.5 million.
    

Trailing Commissions

Trailing commissions paid to distribution depend on total AUM, the proportion of mutual fund AUM sold on a front-end versus back-end commission basis and the proportion of equity fund AUM versus fixed-income fund AUM. Trailing commissions as a percentage of average daily mutual fund AUM were 0.62% for the three months ended November 30, 2009, compared to 0.61% in the same 2008 period.

Investment Advisory Fees

External investment advisory fees decreased by 37.1% in 2009 as compared to 2008. The decrease relates primarily to repatriation of certain mandates.

EBITDA and EBITDA margin

EBITDA for the Investment Management Operations segment were $59.2 million for the three months ended November 30, 2009, a 7.1% increase from $55.3 million for the same period of fiscal 2008.

EBITDA margins were 44.8% in fiscal 2009 compared with 44.9% in 2008.

Amortization

The most significant component in this category is amortization of deferred selling commissions. The category also represents amortization of property, equipment, customer contracts and other intangible assets. We internally finance all selling commissions paid. These selling commissions are capitalized and amortized on a straight-line basis over a period that corresponds with their applicable DSC schedule. Amortization expense related to deferred selling commissions was $20.6 million in 2009, compared with $23.3 million in 2008.

During the fourth quarter of 2009, we paid $13.5 million in selling commissions, compared with $14.5 million in 2008. The decline in DSC paid is due to lower gross sales of retail funds and a slightly higher percentage of funds paid on a front-end basis in 2009 compared to 2008. As at November 30, 2009, the unamortized balance of deferred selling commissions financed was $274.0 million, a decrease of $30.4 million from the prior-year balance of $304.4 million. The contingent deferred sales charges that would be received if all of the DSC securities were redeemed at November 30, 2009, were estimated to be approximately $373.6 million (2008 - $406.8 million).

Pre-Tax Profit Margin

Pre-tax profit margin was at 27.4% for three months ended November 30, 2009 compared with a pre-tax loss for the three months ended November 30, 2008. Pre-tax profit margin in 2008 excluding the impairment charge related to goodwill, intangibles and available for sale assets was 23.2%.

Trust Company Operations

Financial and Operational Results

The table below highlights the results for the three months ended November 30, 2009 and 2008:

    
    -------------------------------------------------------------------------
    ($ millions)
    Three months ended November 30              2009        2008    % change
    -------------------------------------------------------------------------

    Interest income
      Loan interest                       $     46.1  $     67.0      (31.2%)
      Investment interest                        2.6         7.0      (62.9%)
    -------------------------------------------------------------------------
                                                48.7        74.0      (34.2%)

    Interest expense
      Deposit interest                          38.3        51.0      (24.9%)
      Hedging interest income                  (16.3)       (6.6)     147.0%
      Other interest expense (income)            5.0         6.1      (18.0%)
    -------------------------------------------------------------------------
                                                27.0        50.5      (46.5%)
    -------------------------------------------------------------------------
    Net interest income                         21.7        23.5       (7.7%)
    Other revenue                                2.1         3.7      (43.2%)
    RSP loan securitization income (loss),
     net of impairment                          (0.2)       (0.6)     (66.7%)
    -------------------------------------------------------------------------
    Total revenue                               23.6        26.6      (11.3%)

    Expenses
      Selling, general and administrative        9.2         9.9       (7.1%)
      Provision for loan losses                  4.0        20.5      (80.5%)
    -------------------------------------------------------------------------
                                                13.2        30.4      (56.6%)

    EBITDA(1)                                   10.4        (3.8)          -
    Amortization                                 0.6         0.9      (33.3%)
    -------------------------------------------------------------------------
    Income before taxes and non-segmented
     items                                $      9.8  $     (4.7)          -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) As previously defined, see the 'Key Performance Indicators and
        Non-GAAP Measures - EBITDA' section.
    

Revenue, Net Interest Income and Net Interest Margin

Net interest income, which is expressed net of interest on deposits and other interest expenses, declined 7.7% compared to the same period in 2008. The average net interest margin on lending products was 2.4% in the fourth quarter of 2009 (2008 - 2.1%). AGF Trust manages its interest rate risk through the use of interest rate swaps. Interest expense includes hedging interest income of $16.3 million related to changes in fair value on interest rate swaps for the three months ended November 30, 2009 (2008 - $6.6 million). Other revenue decreased $1.6 million during the three months ended November 30, 2009 primarily due to a loss related to hedge ineffectiveness. During the fourth quarter of 2009, the Trust Company recognized a $1.0 million writedown of its retained interest in securitized RSP loans compared to $1.5 million in the fourth quarter of 2008. These factors resulted in an overall revenue decrease of 11.3% in the quarter ended November 30, 2009 as compared with 2008.

Selling, General and Administrative Expenses

SG&A expenses decreased $0.7 million to $9.2 million compared with $9.9 million in 2008, primarily due to reduced staffing levels.

Provision for Loan Losses

The total provision for loan losses in the fourth quarter decreased to $4.0 million in 2009 from $20.5 million in 2008. In the fourth quarter of last year, the methodology related to the calculation of the allowance for loan losses was refined resulting in a substantially higher expense.

Loan writeoffs, net of recoveries for the three months ended November 30, 2009 were $8.3 million compared with $3.7 million for the fiscal period ended November 30, 2008, with the increase attributable to RSP, secured investment loan and mortgage loan writeoffs. Loan writeoffs, net of recoveries, for the three months ended November 30, 2009, were $5.2 million in the RSP loan portfolio, $1.7 million in the secured investment loan portfolio and $1.4 million in the mortgage loan portfolio and $0.1 million in HELOC receivables, compared to $2.5 million, $0.5 million, $0.7 million, and nil, respectively, for the three months ended November 30, 2008. Impaired loans expressed as a percentage of loans outstanding were 1.4% as at November 30, 2009, compared with 1.0% at November 30, 2008 due to the negative change in economic conditions.

EBITDA and EBITDA margin

A significant decline in the provision for loan losses led to an increase in EBITDA for the three months ended November 30, 2009 to $10.4 million compared to a loss of $3.8 million in the fourth quarter of 2008. EBITDA margin in the fourth quarter of 2009 was 44.1%.

Pre-Tax Profit Margin

As a result of the factors outlined above, AGF Trust had a pre-tax profit margin of 41.5% in the fourth quarter of 2009. AGF Trust reported a pre-tax loss in the fourth quarter of last year.

Selected Quarterly Information

    
    -------------------------------------------------------------------------
    ($ millions, except per
     share amounts)
    For the three-month       Nov. 30,     Aug. 31,      May 31,     Feb. 28,
     period ended                2009         2009         2009         2009
    -------------------------------------------------------------------------

    Revenue               $     157.7  $     146.9  $     143.5  $     138.0
    Cash flow(1)                 65.7         49.0         44.7         46.7
    EBITDA(2)                    71.6         56.1         49.0         42.8
    Pre-tax income               46.6         30.4         23.0         16.3
    Net income                   45.5         22.8         17.2         12.2

    Earnings per share
      Basic               $      0.51  $      0.26  $      0.19  $      0.14
      Diluted             $      0.50  $      0.25  $      0.19  $      0.14

    Weighted average
     basic shares          89,072,123   88,914,200   88,826,605   88,564,160
    Weighted average
     fully diluted shares  90,331,497   89,931,517   89,234,015   88,564,160
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    ($ millions, except per
     share amounts)
    For the three-month       Nov. 30,     Aug. 31,      May 31,     Feb. 29,
     period ended                2008         2008         2008         2008
    -------------------------------------------------------------------------

    Revenue               $     152.2  $     184.7  $     194.3  $     194.3
    Cash flow(1)                 57.4         66.3         71.5         83.5
    EBITDA(2)                    54.0         81.5         88.6         89.5
    Pre-tax income              (24.1)        51.1         57.7         56.5
    Net income                  (19.3)        41.1         44.0         62.7

    Earnings per share
      Basic               $     (0.21) $      0.46  $      0.49  $      0.70
      Diluted             $     (0.21) $      0.46  $      0.49  $      0.70

    Weighted average
     basic shares          89,446,562   89,451,578   89,349,275   89,039,394
    Weighted average
     fully diluted shares  90,679,048   89,870,475   89,785,796   89,807,506
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Cash flow from operations before net change in non-cash balances
        related to operations.

    (2) As previously defined, see 'Key Performance Indicators and Non-GAAP
        Measures - EBITDA' section.
    

Selected Annual Information

    
    -------------------------------------------------------------------------
    ($ millions, except
     per share amounts)
    Years ended
     November 30            2009       2008       2007       2006       2005
    -------------------------------------------------------------------------

    Revenue (continuing
     operations)       $   586.1  $   725.6  $   780.3  $   607.2  $   546.6
    Cash flow from
     continuing
     operations(1)         206.1      278.7      318.9      214.2      219.0
    EBITDA (continuing
     operations)(2)        219.5      313.7      357.2      248.5      246.6
    Pre-tax income         116.3      141.3      222.6      113.7      105.8
    Net income
     (continuing
     operations)            97.7      128.6      175.9      102.1       76.6
    Earnings per share
     (continuing
     operations)
      Basic            $    1.10  $    1.44  $    1.96  $    1.15  $    0.85
      Diluted          $    1.09  $    1.41  $    1.93  $    1.14  $    0.85
    Cash flow from
     continuing
     operations
      Basic            $    2.32  $    3.12  $    3.55  $    2.40  $    2.43
      Diluted          $    2.30  $    3.05  $    3.49  $    2.38  $    2.42
    Dividends per
     share             $    1.00  $    0.95  $    0.78  $    0.69  $    0.56
    Total assets       $ 5,675.9  $ 6,534.0  $ 5,876.8  $ 3,919.8  $ 2,709.7
    Total long-term
     debt              $   143.6  $   123.7  $   184.5  $    56.0  $    17.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Cash flow from operations before net change in non-cash balances
        related to operations.

    (2) As previously defined, see 'Key Performance Indicators and Non-GAAP
        Measures - EBITDA' section.
    

Additional Information

Additional information relating to the Company can be found in the Company's Consolidated Financial Statements and accompanying notes for year ended November 30, 2009, the Company's 2009 AIF and other documents filed with applicable securities regulators in Canada and may be accessed at www.sedar.com.

AGF Management Limited

CONSOLIDATED FINANCIAL STATEMENTS

For the year ended November 30, 2009

Management's Responsibility for Financial Reporting

Toronto, January 27, 2010

The accompanying consolidated financial statements of AGF Management Limited (the Company) were prepared by management, which is responsible for the integrity and fairness of the information presented, including the amounts based on estimates and judgments. These consolidated financial statements were prepared in accordance with Canadian generally accepted accounting principles. Financial information appearing throughout this Annual Report is consistent with these consolidated financial statements.

In discharging its responsibility for the integrity and fairness of the consolidated financial statements and for the accounting systems from which they are derived, management maintains internal controls designed to ensure that transactions are authorized, assets are safeguarded and proper records are maintained. The system of internal controls is supported by a compliance function, which ensures that the Company and its employees comply with securities legislation and conflict of interest rules, and by an internal audit staff, which conducts periodic audits of all aspects of the Company's operations.

The Board of Directors oversees management's responsibilities for financial reporting through an Audit Committee, which is comprised entirely of independent directors. This Committee reviews the consolidated financial statements of the Company and recommends them to the Board for approval.

PricewaterhouseCoopers LLP, independent auditors appointed by the shareholders of the Company upon the recommendation of the Audit Committee, has performed an independent audit of the consolidated financial statements, and its report follows. The shareholders' auditors have full and unrestricted access to the Audit Committee to discuss their audit and related findings.

    
    (signed)

    Blake C. Goldring, M.S.M., CFA
    Chairman & Chief Executive Officer

    (signed)

    Gregory J. Henderson, CA
    Senior Vice-President & Chief Financial Officer
    

Auditors' Report

January 27, 2010

To the Shareholders of AGF Management Limited:

We have audited the consolidated balance sheet of AGF Management Limited as at November 30, 2009 and 2008 and the consolidated statements of income, changes in shareholders' equity, comprehensive income and cash flow for each of the years in the two-year period ended November 30, 2009. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at November 30, 2009 and 2008 and the results of its operations and its cash flows for each of the years in the two-year period then ended in accordance with Canadian generally accepted accounting principles.

    
    (signed)

    PricewaterhouseCoopers LLP
    Chartered Accountants, Licensed Public Accountants
    Toronto, Canada



                           AGF Management Limited
                         Consolidated Balance Sheet

    -------------------------------------------------------------------------
    ($ thousands)
    November 30                                             2009        2008
    -------------------------------------------------------------------------

    Assets
      Current Assets
        Cash and cash equivalents                    $   274,870 $   584,168
        Investments available for sale (note 2(a))       550,480     188,435
        Accounts receivable, prepaid expenses and
         other assets                                     98,745      91,148
        Current portion of retained interest from
         securitization (note 3)                           3,550       5,487
        Real estate secured and investment loans
         due within one year (note 6)                    537,683     606,844
    -------------------------------------------------------------------------
                                                       1,465,328   1,476,082

      Retained interest from securitization (note 3)      36,898      39,460
      Real estate secured and investment
       loans (note 6)                                  3,057,072   3,824,006
      Investment in associated company (note 2(b))        90,447      98,338
      Management contracts                               504,269     504,269
      Customer contracts, net of accumulated
       amortization (note 7)                              14,221      18,783
      Goodwill (note 7)                                  173,708     172,985
      Trademarks                                           1,935       1,935
      Deferred selling commissions, net of
       accumulated amortization                          273,959     304,406
      Property, equipment and computer software, net
       of accumulated amortization (note 8)               14,127      19,423
      Other assets (note 9)                               43,958      74,272
    -------------------------------------------------------------------------
        Total assets                                 $ 5,675,922 $ 6,533,959
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    ($ thousands)
    November 30                                             2009        2008
    -------------------------------------------------------------------------

    Liabilities and shareholders' equity
      Current Liabilities
        Accounts payable and accrued liabilities     $   284,043 $   302,401
        Future income taxes (note 13)                     22,190      26,240
        Long-term debt due within one year (note 10)      13,083      21,171
        Deposits due within one year (note 6(f))       1,884,235   2,486,635
    -------------------------------------------------------------------------
                                                       2,203,551   2,836,447

      Deposits (note 6(f))                             2,034,328   2,275,426
      Long-term debt (note 10)                           143,648     123,740
      Future income taxes (note 13)                      146,909     171,293
      Other long-term liabilities (note 11)               16,675      19,428
    -------------------------------------------------------------------------
    Total liabilities                                  4,545,111   5,426,334
    -------------------------------------------------------------------------

      Non-controlling interest                               408         203

      Shareholders' equity
        Capital stock (note 14)                          438,612     431,897
        Contributed surplus                               19,964      17,127
        Retained earnings                                685,063     676,190
        Accumulated other comprehensive income (loss)    (13,236)    (17,792)
    -------------------------------------------------------------------------
      Total shareholders' equity                       1,130,403   1,107,422
    -------------------------------------------------------------------------
      Total liabilities and shareholders' equity     $ 5,675,922 $ 6,533,959
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Commitments (note 24)
    Guarantees (note 25)
    Contingent Liabilities (note 26)

    (The accompanying notes are an integral part of these Consolidated
    Financial Statements.)


    Approved by the Board:

    (signed)                                      (signed)

    Blake C. Goldring, M.S.M., CFA                Douglas L. Derry, FCA
    Director                                      Director



                           AGF Management Limited
                      Consolidated Statement of Income

    -------------------------------------------------------------------------
    ($ thousands)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Revenue
      Management and advisory fees (note 17)         $   447,821 $   576,761
      Deferred sales charges                              21,647      25,591
      RSP loan securitization income (loss), net
       of impairment (note 3)                               (585)       (279)
      Investment income and other revenue                 20,982      26,624
    -------------------------------------------------------------------------
                                                         489,865     628,697
    -------------------------------------------------------------------------
        AGF Trust interest income (note 20)              226,204     302,981
        AGF Trust interest expense (note 20)            (129,955)   (206,108)
    -------------------------------------------------------------------------
      AGF Trust net interest income                       96,249      96,873
    -------------------------------------------------------------------------
    Total Revenue                                        586,114     725,570
    -------------------------------------------------------------------------
    Expenses
      Selling, general and administrative                193,653     209,326
      Trailing commissions                               125,257     157,161
      Investment advisory fees                            10,104      15,034
      Amortization of deferred
       selling commissions                                84,719      98,064
      Amortization of customer contracts                   4,562       7,791
      Amortization of property, equipment and computer
       software                                            7,421       8,142
      Interest expense                                     5,983       9,252
      Provision for AGF Trust loan losses (note 6(e))     37,562      30,374
      Impairment of asset available for sale (note 2(a))       -       2,286
      Impairment of goodwill and customer contracts
       (note 7)                                                -      46,305
    -------------------------------------------------------------------------
                                                         469,261     583,735

    Income before income taxes and non-controlling
     interest                                            116,853     141,835

    Income tax expense (recovery) (note 13)
      Current                                             49,473      63,504
      Future                                             (30,896)    (50,818)
    -------------------------------------------------------------------------
                                                          18,577      12,686
    -------------------------------------------------------------------------

    Non-controlling interest (note 5)                        582         557

    -------------------------------------------------------------------------
    Net income for the year                          $    97,694 $   128,592
    -------------------------------------------------------------------------

    Earnings per share (note 16)
      Basic                                          $      1.10 $      1.44
      Diluted                                        $      1.09 $      1.41
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (The accompanying notes are an integral part of these Consolidated
    Financial Statements.)



                           AGF Management Limited
          Consolidated Statement of Changes in Shareholders' Equity

    -------------------------------------------------------------------------
    ($ thousands)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Common shares
      Balance, beginning of year                     $   431,897 $   421,923
      Issued through dividend reinvestment plan            2,627       4,618
      Stock options exercised                              2,552       5,121
      Issued on acquisition of Highstreet Partners
       Limited (note 5)                                    1,536       5,116
      Purchased for cancellation                               -      (4,881)
    -------------------------------------------------------------------------
      Balance, end of year                               438,612     431,897
    -------------------------------------------------------------------------

    Contributed surplus
      Balance, beginning of year                          17,127      14,948
      Stock options                                        2,837       2,179
    -------------------------------------------------------------------------
      Balance, end of year                                19,964      17,127
    -------------------------------------------------------------------------

    Retained earnings
      Balance, beginning of year                         676,190     635,369
      Net income for the year                             97,694     128,592
      Dividends on AGF Class A voting common shares
       and AGF Class B non-voting shares                 (88,821)    (84,860)
      Excess paid over book value of AGF Class B
       non-voting shares purchased for cancellation
       (note 14(c))                                            -      (2,911)
    -------------------------------------------------------------------------
      Balance, end of year                               685,063     676,190
    -------------------------------------------------------------------------

    Accumulated other comprehensive income (loss)
      Balance, beginning of year                         (17,792)     (3,238)
      Other comprehensive income (loss)                    4,556     (14,554)
    -------------------------------------------------------------------------
      Balance, end of year                               (13,236)    (17,792)
    -------------------------------------------------------------------------

    Total shareholders' equity                       $ 1,130,403 $ 1,107,422
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (The accompanying notes are an integral part of these Consolidated
    Financial Statements.)



                           AGF Management Limited
               Consolidated Statement of Comprehensive Income
    -------------------------------------------------------------------------
    ($ thousands)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Net income for the year                          $    97,694 $   128,592
    -------------------------------------------------------------------------
    Other comprehensive income (losses), net of tax
      Foreign currency translation adjustments related
       to net investments in self-sustaining foreign
       operations(1)                                      (7,360)     (7,188)
    -------------------------------------------------------------------------
                                                          (7,360)     (7,188)
    -------------------------------------------------------------------------
      Net unrealized gains (losses) on available for
       sale securities
        Unrealized gains (losses)(2)                      10,610      (9,428)
        Reclassification of realized loss or other
         than temporary impairment to earnings             1,088       2,077
    -------------------------------------------------------------------------
                                                          11,698      (7,351)
    -------------------------------------------------------------------------
      Net unrealized gains (losses) on cash flow
       hedges
        Unrealized gains (losses)(3)                           -        (945)
        Reclassification of realized loss on cash
         flow hedges                                         218         930
    -------------------------------------------------------------------------
                                                             218         (15)
    -------------------------------------------------------------------------
    Total other comprehensive income (loss), net of
     tax                                             $     4,556 $   (14,554)
    -------------------------------------------------------------------------

    Comprehensive income                             $   102,250 $   114,038
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Net of income tax recovery of $1.2 million for the year ended
        November 30, 2009. Net of income tax recovery of $1.2 million for the
        year ended November 30, 2008.

    (2) Net of income tax expense of $3.4 million for the year ended November
        30, 2009. Net of income tax recovery of $2.1 million for the year
        ended November 30, 2008.

    (3) Net of income tax recovery of $0.5 million for the year ended
        November 30, 2008.

    (The accompanying notes are an integral part of these Consolidated
    Financial Statements.)



                           AGF Management Limited
                     Consolidated Statement of Cash Flow

    -------------------------------------------------------------------------
    ($ thousands)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Operating Activities
      Net income for the year                        $    97,694 $   128,592

      Items not affecting cash
        Amortization                                      96,702     113,997
        Future income taxes                              (30,896)    (50,818)
        RSP loan securitization income (loss), net
         of impairment                                       585         279
        Provision for AGF Trust loan losses               37,562      30,374
        Impairment of asset available for sale                 -       2,286
        Impairment of goodwill and customer contracts          -      46,305
        Stock-based compensation                           4,810       5,548
        Equity investment in S&WHL                        (6,399)    (10,256)
        Dividends from S&WHL                               5,786       6,387
        Other                                                285       5,990
    -------------------------------------------------------------------------
                                                         206,129     278,684
      Net change in non-cash balances related to
       operations (note 19)                              (16,615)     72,719
    -------------------------------------------------------------------------
      Net cash provided by operating activities          189,514     351,403
    -------------------------------------------------------------------------

    Financing Activities
      Purchase of Class B non-voting shares for
       cancellation                                            -      (7,792)
      Issue of Class B non-voting shares                   2,531       2,483
      Dividends paid                                     (86,194)    (80,242)
      Increase (decrease) in revolving term loan          32,991     (36,152)
      Net increase (decrease) in AGF Trust deposits     (818,145)    601,574
    -------------------------------------------------------------------------
      Net cash provided by (used in) financing
       activities                                       (868,817)    479,871

    Investing Activities
      Deferred selling commissions paid                  (54,495)    (86,791)
      Proceeds from sale of discontinued operations          702           -
      Acquisition of subsidiaries, net of cash
       acquired                                          (19,924)    (25,224)
      Purchase of property, equipment and computer
       software                                           (2,125)     (6,753)
      Net purchase of investments available for sale    (345,514)   (174,838)
      Net decrease (increase) in AGF Trust real
       estate secured and investment loans               791,361    (781,374)
    -------------------------------------------------------------------------
      Net cash provided by (used in) investing
       activities                                        370,005  (1,074,980)
    -------------------------------------------------------------------------

    Decrease in cash and cash equivalents               (309,298)   (243,706)

    Balance of cash and cash equivalents, beginning
     of year                                             584,168     827,874
    -------------------------------------------------------------------------

    Balance of cash and cash equivalents, end of
     year                                            $   274,870 $   584,168
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Represented by:
      Cash and cash equivalents                      $    32,569 $    23,927
      AGF Trust cash and cash equivalents                242,301     560,241
    -------------------------------------------------------------------------
                                                     $   274,870 $   584,168
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Refer to Note 19 for supplemental cash flow information.

    (The accompanying notes are an integral part of these Consolidated
    Financial Statements.)


    Notes to Consolidated Financial Statements

    Years ended November 30, 2009 and 2008

    Description of Business

    AGF Management Limited (AGF or the Company) is incorporated under the
    Business Corporations Act (Ontario). The Company is an integrated, global
    wealth management corporation whose principal subsidiaries provide
    investment management for mutual funds, institutions and corporations, as
    well as high- net-worth clients; and trust products and services
    (including real estate secured loans and investment loans and Guaranteed
    Investment Certificates (GICs)). The Company conducts the management and
    distribution of mutual funds in Canada under the brand names AGF,
    Elements and Harmony (collectively, AGF Funds). The Company conducts its
    trust business under the name AGF Trust Company (AGF Trust).

    Note 1: Summary of Significant Accounting Policies

    Basis of Presentation and Consolidation

    The Consolidated Financial Statements have been prepared in accordance
    with Canadian generally accepted accounting principles (GAAP). The
    Consolidated Financial Statements include the accounts of the Company and
    its directly and indirectly owned subsidiaries. Intercompany transactions
    and balances are eliminated on consolidation. For subsidiaries where the
    Company does not own all of the equity, the minority shareholders'
    interest is disclosed in the Consolidated Balance Sheet as non-
    controlling interest and the related income is disclosed as a separate
    line in the Consolidated Statement of Income. Investments over which the
    Company is able to exercise significant influence are accounted for by
    the equity method. Certain comparative amounts in these financial
    statements have been reclassified to conform with the current year's
    presentation.

    The principal subsidiaries of AGF are:

        AGF Investments Inc.
        AGF Investments America Inc.
        AGF International Advisors Company Limited
        AGFIA Limited
        AGF Asset Management (Asia) Limited
        AGF Investments Asia Limited
        Doherty & Associates Limited
        Magna Vista Investment Management Limited
        Cypress Capital Management Limited
        Highstreet Asset Management Inc.
        AGF Trust Company
        AGF Securities (Canada) Limited
        AGF Securities Inc.
        20/20 Financial Corporation

    In addition, the Company holds a 30.7% interest in Smith & Williamson
    Holdings Limited (S&WHL), an independent U.K.-based company providing
    private client investment management, financial advisory and tax and
    accounting services.

    This investment is accounted for using the equity method.

    Significant Accounting Changes

    Goodwill, Intangible Assets and Financial Statement Concepts

    Effective December 1, 2008, the CICA's new accounting standard "Handbook
    Section 3064, Goodwill and Intangible Assets" (Section 3064) was adopted.
    The standard clarifies that costs can be deferred only when they relate
    to an item that meets the definition of an asset, and as a result, start-
    up costs must be expensed as incurred. "Handbook Section 1000, Financial
    Statements Concepts" was also amended to provide consistency with Section
    3064. These standards did not have any impact on the financial position
    or earnings of the Company.

    Credit Risk and Fair Value

    Effective December 1, 2008, EIC-173 "Credit Risk and the Fair Value of
    Financial Assets and Financial Liabilities" was adopted. EIC-173 requires
    the Company's own credit risk and the credit risk of the counterparty to
    be taken into account in determining the fair value of financial assets
    and financial liabilities, including derivatives. The new guidance did
    not have a material effect on the financial position or earnings of the
    Company.

    Effective Interest Method

    In June 2009, CICA "Handbook Section 3855, Financial Instruments -
    Recognition and Measurement" (Section 3855) was amended. The amendment
    clarified the calculation of the effective interest method which is a
    method of calculating the amortized cost of financial assets and
    financial liabilities and of allocating the interest income or interest
    expense over the relevant period. The impact of the clarification had no
    material effect on the financial position or earnings of the Company.

    Classification and Impairment of Financial Assets

    In August 2009, Section 3855 was amended. The amendment changed the
    definition of loans and receivables. The new definition allows debt
    securities not quoted in an active market to be classified as loans and
    receivables and carried at amortized cost, or permits the Company to
    designate these instruments as available-for-sale, measured at fair value
    with unrealized gains and losses recorded through other comprehensive
    income. The amendment also requires that credit-related impairment
    charges be recognized in the Consolidated Statement of Income for
    instruments carried at amortized cost as well as the reversal of
    impairment charges for debt instruments classified as available for sale.
    Impairment charges for debt securities classified as loans are recorded
    through the provision for credit losses. The amendment did not have any
    impact on the financial position or earnings of the Company.

    Financial Instruments Disclosure

    During 2009, CICA "Handbook Section 3862, Financial Instruments -
    Disclosures" was amended to include enhanced disclosures about inputs to
    fair value measurement, including their classification within a hierarchy
    that prioritizes the inputs to fair value measurement. The hierarchy
    gives the highest priority to unadjusted quoted prices in active markets
    for identical assets or liabilities (Level 1) and the lowest priority to
    unobservable inputs (Level 3). The three levels of the fair value
    hierarchy are:

        Level 1  Unadjusted quoted prices in active markets for identical
                 assets or liabilities;
        Level 2  Inputs other than quoted prices that are observable for the
                 asset or liability either directly or indirectly; and
        Level 3  Inputs that are not based on observable market data.

    If different levels of inputs are used to measure a financial
    instrument's fair value, the classification within the hierarchy is based
    on the lowest level input that is significant to the fair value
    measurement.

    The amendment only impacted our disclosures in the financial statements.
    Refer to Note 22.

    Financial Instruments

    In accordance with Section 3855, financial assets and financial
    liabilities are initially recognized at fair value. Measurement in
    subsequent periods is dependent upon the classification of each
    instrument. The standard requires that all financial assets be classified
    as either available for sale (AFS), held for trading (HFT), held to
    maturity (HTM) or loans and receivables. Financial liabilities are
    classified as trading or other.

    AFS assets are initially recorded at fair value on the settlement date in
    the balance sheet and are remeasured at fair value with unrealized gains
    and losses, including changes in foreign exchange rates, recognized in
    other comprehensive income (OCI) until the financial asset is disposed of
    or becomes permanently impaired. Transaction costs related to AFS are
    capitalized.

    HFT assets are initially recorded at fair value on the settlement date in
    the balance sheet and are remeasured at fair value, with the changes in
    fair value reported in earnings. Transaction costs related to HFT
    securities are expensed as incurred.

    The Company has not classified any financial assets as HTM.

    Loans and receivables and other financial liabilities are measured at
    amortized cost using the effective interest method. Transaction costs
    related to loans and receivables, deposits and other financial
    liabilities are generally capitalized and are then amortized using the
    effective interest method.

    Use of Estimates

    The preparation of financial statements requires management to make
    estimates and assumptions that affect the reported amounts of assets and
    liabilities and disclosure of contingent assets and liabilities at the
    date of the financial statements and the reported amounts of revenue and
    expenses during the year. Actual amounts could differ from these
    estimates.

    Key areas of estimation, where management has made difficult, complex or
    subjective judgments - often about matters that are inherently uncertain
    - are loan loss provisions, goodwill and intangible assets using
    estimates of future cash flows, as well as the provision for useful lives
    of depreciable assets, commitments and contingencies, fund absorption
    costs, income tax provisions, valuation of retained interest from
    securitization, stock-based compensation, Elements Advantage commitment,
    performance share unit plan expense and the recoverability of property,
    equipment and computer software. The Company has made investments in
    companies or businesses, some of which have experienced operating losses.
    Significant changes in the assumptions, including those about future
    business plans and cash flows, could change the recorded amounts by a
    material amount. Any further operating losses of these investees could
    result in impairment of these investments.

    Assets Under Management

    The Company manages and provides advisory services in respect of mutual
    fund and other investment assets owned by clients and third parties that
    are not reflected on the consolidated balance sheet.

    Consolidation of Variable Interest Entities

    CICA AcG 15, "Consolidation of Variable Interest Entities" (VIE) provides
    guidance for applying consolidation principles to certain entities that
    are subject to control on a basis other than ownership of voting
    interests. An entity is a VIE when, by design, one or both of the
    following conditions exist: (a) total equity investment at risk is
    insufficient to permit the entity to finance its activities without
    additional subordinated support from others; (b) as a group, the holders
    of the equity investment at risk lack certain essential characteristics
    of a controlling financial interest.

    The Company has reviewed its relationships, including mutual funds
    managed, and determined that there are no entities whose financial
    results would be required to be included or disclosed in the consolidated
    results for the years ended November 30, 2009 and 2008.

    Cash and Cash Equivalents

    Cash represents highly liquid temporary deposits with short-term
    maturities of less than three months at inception. Cash equivalents are
    comprised of commercial paper, bank sponsored asset-backed commercial
    paper (ABCP), bank deposit notes, bankers' acceptances (BAs) and
    floating-rate notes (FRNs) with short-term maturities of less than three
    months at inception.

    Accounting for Securitizations

    The Company has securitized certain registered Retirement Savings Plan
    (RSP) loans through the sale of these loans to a securitization trust.
    For a securitization to be treated as a sale, the Company must surrender
    control over those loans included in the securitization. To surrender
    control, the securitized assets must be isolated from the Company and its
    creditors, even in the case of bankruptcy or receivership, and the
    Company must receive consideration other than the beneficial interest in
    the transferred assets.

    Under terms that transfer control to third parties, the transaction is
    recognized as a sale and the related loan assets are removed from the
    Consolidated Balance Sheet. As part of the securitization, certain
    financial assets are retained. The retained interests, classified as AFS,
    are carried at fair value, determined using the present value of future
    expected cash flows. A gain or loss on the sale of loan receivables is
    recognized immediately in income. In determining the gain or loss on
    sale, management estimates future cash flows by relying on estimates of
    the amount of interest that will be collected on the securitized assets,
    the yield paid to investors, the portion of the securitized assets that
    will be prepaid before their scheduled maturity, expected credit losses,
    the cost of servicing the assets and the rate at which to discount these
    expected future cash flows. Actual cash flows may differ significantly
    from those estimated by management. If actual cash flows differ from the
    Company's estimate of future cash flows, the gains on the retained
    interest are recorded in OCI. Any losses are first recognized in OCI to
    the extent there is an offsetting gain and any excess is recognized in
    the Consolidated Statement of Income under RSP loan securitization income
    (loss), net of impairment.

    Servicing fee revenues related to the securitization loan are reported
    within 'RSP loan securitization income (loss), net of impairment' in the
    Consolidated Statement of Income. Where a servicing liability is
    recognized, the amount is recorded in Other Liabilities in the
    Consolidated Balance Sheet.

    Retained interests are tested regularly for other-than-temporary
    impairment and, if required, the retained interest's carrying value is
    reduced to fair value by a charge in the Consolidated Statement of
    Income.

    Refer to Note 3 for additional disclosure regarding the securitizations
    and related balance sheet and income statement impacts.

    Real Estate Secured Loans and Investment Loans

    Real estate secured loans and investment loans are classified as loans
    and receivables and are recorded at amortized cost using the effective
    interest rate method and net of an allowance for loan losses. Interest
    income from loans is recorded on an accrual basis. Accrued but
    uncollected interest on uninsured real estate secured loans and
    investment loans is reversed when a loan is identified as impaired.
    Principal payments on the real estate secured loans and investment loans
    that are contractually due to the Company in the 12-month period from the
    balance sheet date are classified as current assets.

    Fees that relate to the origination of loans are considered to be
    adjustments to loan yield and are deferred and amortized to interest
    income over the expected term of the loans.

    Allowance for Loan Losses

    The allowance for loan losses consists of both general allowances and
    specific allowances. General allowances are based on management's
    assessment of inherent, unidentified losses in the portfolio at the
    reporting date that have not been captured in the determination of
    specific allowances. The assessment takes into account portfolio-specific
    credit factors, general economic factors, geographic exposure, historical
    loss experience, as well as probability of default (PD) and loss given
    default (LGD) pairs.

    Specific allowances consist of provision for losses on identifiable
    assets for which the estimated amounts recoverable are less than their
    carrying value and are designed to provide against the likelihood of
    losses for loans that are deemed to be impaired.

    Specific allowances also include estimated provisions for losses on
    identifiable assets that are currently 1-90 days in arrears and are
    likely to become impaired based on a combination of historical average
    roll rates and LGD for a given loan portfolio.

    Impaired Loans

    Loans are classified as impaired when, in the opinion of management,
    there is reasonable doubt as to the collectability, either in whole or in
    part, of principal or interest, or when principal or interest is 90 days
    or greater past due, except where the loan is both well-secured and in
    the process of collection. Loans that are insured by the federal
    government, an agency thereof, or a third-party insurer are classified as
    impaired when interest or principal is past due 365 days.

    When a loan is identified as impaired, the carrying amount of the loan is
    reduced to its estimated realizable value. In subsequent periods,
    recoveries of amounts previously written off and any increase in the
    carrying value of the loan are credited to the provision for loan losses
    in the Consolidated Statement of Income. Where a portion of the loan is
    written off and the remaining balance is restructured, the new loan is
    carried on an accrual basis when there is no longer any reasonable doubt
    about the collectability of principal or interest. Interest income is
    recognized on impaired loans on a cash basis only after the specific
    allowance for losses has been reversed and provided there is no further
    doubt as to the collectability of the principal. Full or partial write-
    offs of loans are recorded when management believes there is no realistic
    prospect of full recovery.

    Goodwill, Management Contracts and Trademarks

    The purchase price of acquisitions accounted for under the purchase
    method and the purchase price of investments accounted for under the
    equity method are allocated based on the fair values of the net
    identifiable assets acquired, including management contracts and other
    identifiable intangible assets. The excess of the purchase price over the
    values of such assets is recorded as goodwill. Management contracts and
    trademarks have been determined to have an indefinite life.

    Goodwill, management contracts and trademarks are not amortized but are
    subject to impairment tests on an annual basis or more frequently if
    events or changes in circumstances indicate that the asset may be
    impaired. Goodwill is allocated to the reporting units and any impairment
    is identified by comparing the carrying value of a reporting unit with
    its fair value. If any impairment is indicated, then it is quantified by
    comparing the carrying value of goodwill to its fair value, based on the
    fair value of the assets and liabilities of the reporting unit.

    Management contracts and trademarks are tested for impairment by
    comparing their fair value to their carrying amounts. An impairment loss
    is realized when the carrying amount of the asset exceeds its fair value.

    Customer Contracts

    Customer contracts are stated at cost, net of accumulated amortization
    and impairment, if any. Amortization is computed on a straight-line basis
    over seven to 15 years based on the estimated useful lives of these
    assets.

    Deferred Selling Commissions

    Selling commissions paid to brokers on mutual fund securities sold on a
    deferred sales charge (DSC) basis are recorded at cost and are amortized
    on a straight-line basis over a period that corresponds with the
    applicable DSC schedule (which ranges from three to seven years).
    Unamortized deferred selling commissions are written down to the extent
    that the carrying value exceeds the related expected future cash flows on
    an undiscounted basis. As at November 30, 2009 and 2008, no impairment
    losses were required.

    Property, Equipment and Computer Software

    Property, equipment and computer software, which is comprised of
    furniture and equipment, computer hardware, computer software and
    leasehold improvements is stated at cost, net of accumulated amortization
    and impairment, if any. Amortization is calculated using the following
    methods based on the estimated useful lives of these assets:

        Furniture and equipment      20% declining balance
        Computer hardware            30% declining balance
        Leasehold improvements       straight-line over term of lease
        Computer software            straight-line over 3 years

    Impairment of Long-lived Assets

    Impairment of long-lived assets, which includes property, equipment and
    computer software and intangible assets with finite useful lives, is
    recognized when an event or change in circumstance causes the assets'
    carrying value to exceed the total undiscounted cash flows expected from
    their use and eventual disposition. The measurement of impairment loss is
    based on the amount that the carrying value exceeds the fair value.

    Derivatives

    Derivative instruments are used to manage the Company's exposure to
    interest rate risks and to increases in compensation costs arising from
    certain share-based compensation. The Company does not enter into
    derivative financial instruments for trading or speculative purposes.
    When derivative instruments are used, the Company determines whether
    hedge accounting can be applied. Where hedge accounting is applied, a
    hedge relationship is designated as a fair value hedge or a cash flow
    hedge. The hedge is documented at inception, detailing the particular
    risk management objective and the strategy for undertaking the hedge
    transaction. The documentation identifies the specific asset or liability
    being hedged, the risk that is being hedged, the type of derivative used
    and how effectiveness will be assessed. The derivative instrument must be
    highly effective in accomplishing the objective of offsetting either
    changes in the fair value or forecasted cash flows attributable to the
    risk being hedged both at inception and over the life of the hedge. In
    accordance with Section 3865, the accumulated ineffectiveness of hedging
    relationships must be measured, and the ineffective portion of changes in
    fair value must be recognized in the Consolidated Statement of Income.
    Where hedge accounting is not applied, changes in fair value are
    recognized in the Consolidated Statement of income.

    Fair Value Hedges

    Fair value hedge transactions predominantly use interest rate swaps to
    hedge the changes in the fair value of an asset, liability or firm
    commitment. Derivative financial instruments, held for fair value hedging
    purposes, are recognized at fair value and the changes in the fair value
    are recognized in the Consolidated Statement of Income under investment
    income and other. Changes in the fair value of the hedged items
    attributable to the hedged risk are also recognized in the Consolidated
    Statement of Income under Investment Income and Other, with a
    corresponding adjustment to the carrying amount of the hedged items in
    the Consolidated Balance Sheet. When the derivative instrument no longer
    qualifies as an effective hedge or the hedging instrument is sold or
    terminated prior to maturity, hedge accounting is discontinued
    prospectively. The cumulative adjustment of the carrying amount of the
    hedged item related to a hedging relationship that ceases to be effective
    is recognized in income over the remaining period to maturity on an
    effective yield basis. Furthermore, if the hedged item is sold or
    terminated prior to maturity, hedge accounting is discontinued and the
    cumulative adjustment of the carrying amount of the hedged item is then
    immediately recognized in investment income and other.

    Cash Flow Hedges

    Cash flow hedges are used to hedge the changes in fair value related to
    certain cash flows related to compensation costs. The effective portion
    of the change in fair value of the derivative instruments, net of taxes,
    is recognized in OCI, while the ineffective portion is recognized in net
    income.

    Effective September 1, 2008, the Company discontinued hedge accounting on
    its swaps related to share-based compensation.

    AGF Elements

    In November 2005, the Company launched AGF Elements, which consists of
    five diversified fund-of-fund portfolios. Until June 22, 2009, four of
    these portfolios included the Elements Advantage Commitment, which is a
    commitment to investors that if their portfolio does not match or
    outperform its customized benchmark over a three-year period, AGF will
    provide each individual investor up to 90 basis points in additional
    units. This is calculated based on the value of such investment at the
    end of its related three-year period. As of June 22, 2009, the Company
    discontinued the Elements Advantage feature on its Elements products.
    Eligible units purchased prior to June 22, 2009 have been grandfathered
    and will retain the Elements Advantage feature.

    The Company records in liabilities up to 30 basis points per year of each
    investor's AUM, adjusted for redemptions, until the end of the three-year
    measurement period of each investment made by such investor. At that
    time, if an individual investor's returns match or exceed the
    corresponding benchmark, the Company will recognize the entire amount as
    management fee revenue. If an individual investor's actual returns are
    below the customized benchmark, a corresponding amount will be
    distributed to the investor in the form of additional units. As of
    November 30, 2009, the Company has recorded a liability of $8.8 million
    (2008 - $7.8 million).

    Deposits

    Deposits are primarily comprised of GICs that require the Company to pay
    a fixed interest rate until the maturity date of the certificate.
    Deposits are classified as current liabilities and other liabilities,
    depending on the time to maturity, and are carried at amortized cost
    using the effective interest method.

    GICs that mature in the 12-month period following the balance sheet date
    are classified as current liabilities.

    Revenue Recognition

    Management and advisory fees are based on the net asset value of funds
    under management and are recognized on an accrual basis. These fees are
    shown net of management fee rebates and distribution fees payable to
    third-parties and selling-commission financing entities.

    DSC revenue is received from investors when mutual fund securities sold
    on a DSC basis are redeemed. DSC revenue is recognized on the trade date
    of redemption of the applicable mutual fund securities.

    Net interest income on real estate secured and investment loans,
    dividends and other investment income earned are recognized on an accrual
    basis in the period earned.

    Stock-based Compensation and Other Stock-based Payments

    The Company has stock-based compensation plans as described in Note 14.
    The Company utilizes the fair-value-based method of accounting for stock-
    based compensation. The fair value of stock-based compensation,
    determined using an option pricing model, is recorded over the vesting
    period as a charge to net earnings with a corresponding credit to
    contributed surplus.

    The Company also has a share purchase plan under which employees can have
    a percentage of their annual earnings withheld subject to a maximum of 6%
    to purchase AGF's Class B Non-Voting shares. The Company matches up to
    60% of the amounts contributed by the employee. The Company's
    contribution vests immediately and is recorded as a charge to net income
    in the period in which the cash contribution is made. All contributions
    are used by the plan trustee to purchase Class B Non-Voting shares on the
    open market.

    The Company has Restricted Share Unit (RSU) plans for senior employees
    under which certain employees are granted RSUs of Class B Non-Voting
    shares. These units vest three years from the grant date. AGF will redeem
    all of the participants' share units in cash equal to the value of one
    Class B share for each RSU. Compensation expense and the related
    liability are recorded equally over the three-year vesting period, taking
    into account fluctuations in the market price of Class B Non-Voting
    shares, dividends paid and forfeitures.

    The Company has a Performance Share Unit (PSU) plan for senior employees
    under which certain employees are granted PSUs of Class B Non-Voting
    shares. Compensation expense and the related liability are recorded
    equally over the vesting period, taking into account the likelihood of
    the performance criteria being met, fluctuations in the market price of
    Class B Non-Voting shares, dividends paid and forfeitures. These units
    vest three years from the grant date provided employees meet certain
    performance criteria. AGF will redeem all of the participants' share
    units in cash equal to the value of one Class B share for each PSU.

    The Company has a Deferred Share Unit (DSU) plan for non-employee
    Directors. The plan enables Directors of the Company to elect to receive
    their remuneration in DSUs. These units vest immediately and compensation
    expense and the related liability are charged to net income in the period
    the DSUs are granted. On termination, AGF will redeem all of the
    participants' DSUs in cash or shares equal to the value of one Class B
    share at the termination date for each DSU.

    Foreign Currency Translation

    Monetary assets and liabilities denominated in foreign currencies are
    translated at exchange rates prevailing at the balance sheet date and
    non-monetary assets and liabilities are translated at historical exchange
    rates. Foreign currency income and expenses are translated at average
    exchange rates prevailing throughout the year. Unrealized translation
    gains and losses and all realized gains and losses are included in other
    non-operating expenses, except for available for sale securities where
    unrealized translation gains and losses are recorded in other
    comprehensive income until the asset is sold or becomes impaired.

    Financial statements of integrated foreign subsidiaries are translated
    using the temporal method. Under this method, monetary assets and
    liabilities are translated into Canadian dollars at the exchange rate in
    effect at the balance sheet date. Non-monetary assets are translated at
    historical exchange rates. Revenue and expenses are translated at average
    exchange rates for the period, except for amortization which is
    translated on the same basis as the related asset. Translation gains and
    losses are included in net income.

    Investments in foreign associated companies are translated into Canadian
    dollars at the rate of exchange in effect at the balance sheet date.
    Unrealized translation gains and losses are reported in other
    comprehensive income.

    Income Taxes

    The Company follows the liability method in accounting for income taxes
    whereby future income tax assets and liabilities reflect the expected
    future tax consequences of temporary differences between the carrying
    amounts of assets and liabilities and their tax bases. Future income tax
    assets and liabilities are measured based on the enacted or substantively
    enacted tax rates which are expected to be in effect when the future
    income tax assets or liabilities are expected to be realized or settled.
    The effect on future income tax assets and liabilities of a change in tax
    rates is recognized in income in the period that includes the substantive
    enactment date. Future income tax assets are recognized to the extent
    that realization is considered more likely than not.

    Earnings Per Share

    Basic earnings per share are calculated by dividing net income applicable
    to common shares by the daily weighted average number of shares
    outstanding. Diluted earnings per share are calculated using the daily
    weighted average number of shares that would have been outstanding during
    the year had all potential common shares been issued at the beginning of
    the year, or when other potentially dilutive instruments were granted or
    issued, if later.

    The treasury stock method is employed to determine the incremental number
    of shares that would have been outstanding had the Company used proceeds
    from the exercise of options to acquire shares.

    Future Accounting Changes

    Transition to International Financial Reporting Standards

    The CICA Accounting Standards Board requires all Canadian publicly
    accountable enterprises to adopt International Financial Reporting
    Standards (IFRS) for years beginning on or after January 1, 2011. The
    Company will adopt IFRS for the fiscal year 2012 starting December 1,
    2011. The fiscal 2012 Consolidated Financial Statements will include
    comparative 2011 financial results under IFRS. The Company will report
    its financial results for the quarter ended February 29, 2012 on an IFRS
    basis, including comparative IFRS financial results and an opening
    balance sheet as at December 1, 2010.

    The Company's transition to IFRS is on track. However, due to the
    anticipated changes in IFRS, the Company is in the process of determining
    the impact of adopting IFRS on its financial statements at this time.

    Note 2: Investments Available for Sale and Investment in S&WHL

    (a) The following table presents a breakdown of available for sale
        investments, excluding retained interest from securitization:


    -------------------------------------------------------------------------
    ($ thousands)
    November 30                                             2009        2008
    -------------------------------------------------------------------------

    Trust:
      Canadian government debt(1)
        Federal                                      $    10,179 $    10,233
        Provincial                                       350,664      45,767
      Deposits with regulated institutions                86,487      83,498
      Other securities                                    83,426      28,992
    -------------------------------------------------------------------------
                                                         530,756     168,490

    Investment Management:
      Canadian government debt
        Federal                                              297         294
      AGF mutual funds and other                          12,909      15,013
      Equity securities                                    6,518       4,638
    -------------------------------------------------------------------------
                                                          19,724      19,945

    -------------------------------------------------------------------------
                                                     $   550,480 $   188,435
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Includes investments issued and/or guaranteed by the Canadian
        government

        The following table presents a breakdown of AGF Trust available for
        sale investments by maturity, excluding retained interest from
        securitization:

    -------------------------------------------------------------------------
                                                          Greater
    ($ thousands)       Credit    1 Year or     1 to 5       than
    November 30, 2009   rating         Less      years    5 years      Total
    -------------------------------------------------------------------------

    Trust:
      Canadian
       government
       debt
        Federal            AAA    $  10,179  $       -  $       -  $  10,179
        Provincial      A to AAA     45,842    264,572     40,250    350,664
      Deposits with
       regulated
       institutions        AA             -     86,487          -     86,487
      Other
       securities     AA High to     83,426          -          -     83,426
                           AAA
    -------------------------------------------------------------------------
                                  $ 139,447  $ 351,059  $  40,250  $ 530,756
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                          Greater
    ($ thousands)       Credit    1 Year or     1 to 5       than
    November 30, 2008   rating         Less      years    5 years      Total
    -------------------------------------------------------------------------

     Trust:
       Canadian
        government
        debt
        Federal            AAA    $       -  $  10,233  $       -  $  10,233
        Provincial     A High to          -     45,767          -     45,767
                         AA Low
       Deposits with
        regulated
        institutions       AA             -     83,498          -     83,498
       Other
        securities       AA High         76     28,916          -     28,992
    -------------------------------------------------------------------------
                                  $      76  $ 168,414  $       -  $ 168,490
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

        AGF Trust's available for sale investments include Government of
        Canada and provincial guaranteed bonds, commercial paper, bank-
        sponsored ABCP, bank-sponsored asset backed securities (ABSs), bank
        deposit notes, BAs and FRNs with terms to maturity greater than three
        months. As at November 30, 2009, $114.7 million (2008 - $111.6
        million) of AGF Trust's available for sale investments were floating-
        rate securities subject to repricing and $416.1 million (2008 - $56.9
        million) were fixed-rate securities. Other securities include FRN
        investments of $29.7 million (2008 - $29.0 million), ABS investments
        of $28.7 million (2008 - nil), and ABCP investments of $25.0 million
        2008 - nil).

        Investment Management's available for sale investment in Canadian
        government debt is a fixed-rate treasury bond with a maturity date
        within one year and a credit rating of AAA.

        As at November 30, 2009, no impairment charges were required. During
        the year ended November 30, 2008, the Company determined that a
        decline in the fair value of an investment in a publicly held company
        was other than temporary. As a result, the Company recognized an
        impairment charge of $2.3 million before tax ($2.0 million after
        tax).

    (b) The Company holds a 30.7% investment in S&WHL accounted for using the
        equity method. At November 30, 2009, the carrying value was $90.4
        million (2008 - $98.3 million). During the twelve months ended
        November 30, 2009, the Company recognized $6.4 million (2008 - $10.3
        million) in earnings and received $5.8 million in dividends (2008 -
        $6.4 million) from S&WHL. The decrease in the carrying value of the
        investment in S&WHL is mainly due to the strength of the Canadian
        dollar relative to the UK pound.

    Note 3: Securitization of AGF Trust Loans

    On March 30, 2007, AGF Trust securitized $263.6 million of RSP loans.
    Cash flows of $252.9 million were received on the securitization and a
    gain of $8.0 million was recorded, net of transaction fees of $0.1
    million. As at November 30, 2009, $108.3 million (2008 - $166.6 million)
    of securitized loans were outstanding.

    When RSP loan receivables are sold in securitization to a securitization
    trust under terms that transfer control to third parties, the transaction
    is recognized as a sale and the related loan assets are removed from the
    Consolidated Balance Sheet. As part of the securitization, certain
    financial assets are retained. The retained interests are carried at fair
    value and are determined using the present value of future expected cash
    flows. A gain or loss on the sale of loan receivables is recognized
    immediately in income. The amount of the gain or loss is determined by
    estimating the fair value of future expected cash flows using
    management's best estimates of key assumptions: excess spread, discount
    rate on the interest-only strip, expected credit losses, prepayment rates
    and the expected weighted average life of RSP loans that are commensurate
    with the risks involved. The current fair value of retained interests is
    determined using the present value of future expected cash flows as
    discussed above. During the year ended November 30, 2009, a $4.1 million
    writedown was booked as an other-than-temporary impairment (2008 - $4.7
    million).

    The Company has recorded retained interests of $40.4 million (2008 -
    $44.9 million) made up of i) the rights to future excess interest on
    these RSP loans after investors in the securitization trust have received
    the return for which they contracted, valued at $6.0 million (2008 -
    $12.4 million), ii) cash collateral of $12.8 million (2008 - $12.0
    million) and iii) over- collateralization of $21.6 million (2008 - $20.5
    million).

    As at November 30, 2009, the impaired loans included in the securitized
    balances were equal to $0.2 million (2008 - $0.2 million), and during the
    year ended November 30, 2009, $2.6 million of securitized RSP loans were
    written off (2008 - $2.8 million).

    The Company's claim on the retained interests is subordinate to
    investors' interests. Recourse available to investors and the
    securitization trust are limited to the retained interests. For the
    twelve months ended November 30, 2009, cash flows of $5.8 million (2008 -
    $7.8 million) related to the interest-only strip were received on the
    securitized loans. The total loss recognized from securitization, net of
    securitization writedown, during the twelve months ended November 30,
    2009, was $0.6 million (2008 - $0.3 million loss).

    The significant assumptions used to value the retained interests were as
    follows:

    -------------------------------------------------------------------------

    November 30                                          2009           2008
    -------------------------------------------------------------------------
    Excess spread                                 4.7% - 4.9%    3.7% - 3.9%
    Discount rate on interest-only strip                 7.5%           7.5%
    Expected credit losses                        1.7% - 2.0%    1.0% - 1.2%
    Prepayment rate                            16.3 % - 18.3%  16.3% - 18.3%
    Expected weighted average life of RSP loans     1.8 years        2 years
    -------------------------------------------------------------------------

    AGF Trust retained servicing responsibilities for the securitized loans.
    A servicing liability of $0.6 million was recorded as at November 30,
    2009 (2008 - $1.1 million). This amount represents the estimated future
    cost of servicing the securitized loans. The amount amortized related to
    the servicing liability during the twelve months ended November 30, 2009
    was $0.5 million (2008 - $0.7 million).

    The following table presents key economic assumptions and the sensitivity
    of the current fair value of retained interests to two adverse changes in
    each key assumption as at November 30. Since the sensitivity is
    hypothetical, it should be used with caution. The effect of changes in
    the fair value of retained interests was calculated using a discounted
    cash flow analysis.

    -------------------------------------------------------------------------
    ($ thousands)                                    Impact on fair value of
                                                          retained interests
                                                   --------------------------
    November 30                                             2009        2008
    -------------------------------------------------------------------------
    Discount rate
      +10%                                            $      (37) $     (109)
      +20%                                                   (73)       (216)
    Prepayment rate
      +10%                                            $      (54) $     (208)
      +20%                                                  (110)       (404)
    Expected credit losses
      +10%                                            $     (331) $     (328)
      +20%                                                  (663)       (657)
    Excess spread
      -10%                                            $     (650) $     (997)
      -20%                                                (1,297)     (1,966)
    -------------------------------------------------------------------------

    Note 4: Discontinued Operations

    On April 30, 2007, AGF sold 100% of Investmaster for $6.8 million
    recognizing a gain on the sale of $4.7 million. The purchase
    consideration included $5.0 million in cash and two notes receivable
    totalling (pnds stlg) 0.8 million or $1.8 million at the time of sale
    from the buyer. On April 30, 2009, AGF received a payment of
    (pnds stlg) 0.4 million or $0.7 million related to the first note
    receivable. The second note receivable for (pnds stlg) 0.4 million is
    included in accounts receivable and is due on April 30, 2010. Additional
    contingent consideration will be payable to AGF in 2010 if certain
    working capital and revenue targets are reached by Investmaster. No
    contingent consideration was payable to AGF in 2009.

    Note 5: Acquisition of Highstreet Partners Ltd.

    On December 1, 2006, AGF acquired 79.9% of Highstreet Partners Limited
    (Highstreet). The purchase consideration was payable in a combination of
    cash and the issue of Class B Non-Voting shares. On March 2, 2009, a
    final payment, excluding contingent consideration, of $21.5 million was
    paid, consisting of $20.0 million in cash and the issuance of 188,444
    Class B Non-Voting shares valued at $1.5 million. The total consideration
    paid, including acquisition costs and imputed interest, was $65.4 million
    in cash and the issuance of 629,443 Class B Non-Voting shares valued at
    $12.3 million. Contingent consideration, based on certain financial
    profitability targets being achieved by Highstreet, of $0.7 million was
    recorded as an increase in goodwill. This amount will be paid at the end
    of February 2010.

    Note 6: AGF Trust

    AGF Trust's principal business activities are originating real estate
    secured loans and investment loans and deposit taking. Details relating
    to these activities are as follows:

    -------------------------------------------------------------------------
    ($ thousands)     Term to contractual repricing
                 ------------------------------------------------------------
                    Variable   1 year or      1 to 5
    November 30         rate        less       years        2009        2008
    -------------------------------------------------------------------------
    Mortgage
     loans       $     1,182 $   428,431 $   637,669 $ 1,067,282 $ 1,394,499
    Home equity
     lines of
     credit
     (HELOC)         384,774           -           -     384,774     651,893
    -------------------------------------------------------------------------
    Total real
     estate
     secured loans   385,956     428,431     637,669   1,452,056   2,046,392
    Investment
     loans         2,172,302       2,758       2,376   2,177,436   2,411,968
                 ------------------------------------------------------------
    Total loans    2,558,258     431,189     640,045   3,629,492   4,458,360
                 ------------------------------------
    Less: allowance
     for loan
     losses                                              (39,818)    (37,130)
    Add: net
     deferred sales
     commissions
     and commitment
     fees                                                  5,081       9,620
                                                     ------------------------
                                                       3,594,755   4,430,850
    Less: current
     portion                                            (537,683)   (606,844)
                                                     ------------------------
                                                     $ 3,057,072 $ 3,824,006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (a) Real Estate Secured and Investment Loans

        The table represents the period of contractual repricing of interest
        rates on outstanding amounts. Principal repayments due on real estate
        and investment loans due within one year as at November 30, 2009 were
        $537.7 million (2008 - $606.8 million).

        As at November 30, 2009, AGF Trust's mortgage portfolio comprises a
        combination of fixed rate and variable rate residential mortgages
        with a weighted average term to repricing of 1.8 years (2008 - 2.0
        years) and a weighted average yield of 6.6% (2008 - 7.1%). Insured
        mortgage loans, excluding loan loss allowance, deferred commissions
        and pending representment, were $501.3 million as at November 30,
        2009 (2008 - $616.6 million). HELOCs, which totalled $384.8 million
        as at November 30, 2009, had an average interest rate of 4.2% (2008 -
        4.5%). Investment loans, excluding RSP loans, totaled $1.7 billion as
        at November 30, 2009, and had an average interest rate (based on the
        prime interest rate) of 4.0% (2008 - 5.5%). RSP loans totaled $430.8
        million as at November 30, 3009, and had an average interest rate of
        5.3% (2008 - 6.6%). The average interest rate on all investment loans
        as at November 30, 2009, was 4.3% (2008 - 5.8%). Mortgage and HELOC
        loans are secured primarily by residential real estate. Secured
        investment loans of $1.7 billion (2008 - $1.8 billion) are secured
        primarily by the investment made using the initial loan proceeds. The
        market value of this investment loan collateral is approximately $1.4
        billion (2008 - $1.2 billion).

    (b) Loans by Province and by Type

        The following tables are a breakdown of the total value and total
        number of loans by province and by type:

    -------------------------------------------------------------------------
    ($                 Conven-
     millions)          tional   Secured
               Insured   Mort-   Invest-             HELOC
    November  Mortgage    gage      ment      RSP  Receiv-  Finance
     30, 2009    Loans   Loans     Loans    Loans    ables    Loans    Total
    -------------------------------------------------------------------------
    British
     Columbia $   9.9  $  33.8  $  326.9  $  40.2  $  37.5  $  0.2  $  448.5
    Alberta      59.5    147.9     208.3     43.7    280.6     1.4     741.4
    Ontario     299.7    246.9     848.0    143.3     28.4     0.8   1,567.1
    Quebec      132.2    137.4     127.6    166.6      0.2     1.2     565.2
    Other           -        -     230.7     37.0     38.1     1.5     307.3
    -------------------------------------------------------------------------
    Total
     value of
     loans    $ 501.3  $ 566.0  $1,741.5  $ 430.8  $ 384.8  $  5.1  $3,629.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                       Conven-
                        tional   Secured
               Insured   Mort-   Invest-             HELOC
    November  Mortgage    gage      ment      RSP  Receiv-  Finance
     30, 2009    Loans   Loans     Loans    Loans    ables    Loans    Total
    -------------------------------------------------------------------------
    British
     Columbia      58      141     4,830    4,637      170     148     9,984
    Alberta       269      709     3,613    3,867    1,213     649    10,320
    Ontario     1,964    1,505    13,551   16,946      168     336    34,470
    Quebec        750      935     2,354   16,374        4     552    20,969
    Other           -        -     3,350    3,419      265     837     7,871
    -------------------------------------------------------------------------
    Total
     number of
     loans      3,041    3,290    27,698   45,243    1,820   2,522    83,614
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    ($                 Conven-
     millions)          tional   Secured
               Insured   Mort-   Invest-             HELOC
    November  Mortgage    gage      ment      RSP  Receiv-  Finance
     30, 2008    Loans   Loans     Loans    Loans    ables    Loans    Total
    -------------------------------------------------------------------------
    British
     Columbia $  12.8  $  48.2  $  340.2  $  57.8  $  84.7  $  0.6  $  544.3
    Alberta      68.1    214.6     217.9     59.8    446.0     3.0   1,009.4
    Ontario     388.3    335.9     879.9    216.1     60.9     2.0   1,883.1
    Quebec      147.4    179.2     132.5    208.1      0.3     2.6     670.1
    Other           -        -     240.1     48.5     60.0     2.9     351.5
    -------------------------------------------------------------------------
    Total
     value of
     loans    $ 616.6  $ 777.9  $1,810.6  $ 590.3  $ 651.9  $ 11.1  $4,458.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                       Conven-
                        tional   Secured
               Insured   Mort-   Invest-             HELOC
    November  Mortgage    gage      ment      RSP  Receiv-  Finance
     30, 2008    Loans   Loans     Loans    Loans    ables    Loans    Total
    -------------------------------------------------------------------------
    British
     Columbia      66      201     4,944    6,985      354     244    12,794
    Alberta       327      997     3,735    5,551    1,990   1,020    13,620
    Ontario     2,518    2,000    13,930   25,198      327     543    44,516
    Quebec        834    1,221     2,411   19,939        5     857    25,267
    Other           -        -     3,452    4,488      407   1,193     9,540
    -------------------------------------------------------------------------
    Total
     number of
     loans      3,745    4,419    28,472   62,161    3,083   3,857   105,737
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (c) Impaired Loans

        Loans are considered to be past due where repayment of principal or
        interest is contractually in arrears. Loans are classified as
        impaired when, in the opinion of management, there is reasonable
        doubt as to the collectability, either in whole or in part, of
        principal or interest, or when principal or interest is 90 days past
        due, except where the loan is both well-secured and in the process of
        collection. Loans that are insured by the federal government, an
        agency thereof, or a third-party insurer are classified as impaired
        when interest or principal is past due 365 days. As at November 30,
        2009, impaired loans were $48.9 million (2008 - $45.4 million) and
        $33.8 million (2008 - $31.3 million) net of the specific allowance
        for loan losses.

    -------------------------------------------------------------------------
    ($ thousands)
    November 30                                           2009          2008
    -------------------------------------------------------------------------
    Impaired Loans:
      Insured mortgage loans                       $     7,002   $     5,483
      Conventional mortgage loans                       35,523        33,628
      Secured investment loans                           1,619           988
      RSP loans                                          3,840         4,846
      HELOC receivables                                    931           478
    -------------------------------------------------------------------------
                                                   $    48,915   $    45,423
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The following table provides an aging of loans:

    -------------------------------------------------------------------------
    ($ thousands)                                      1 to 29      30 to 60
    November 30, 2009                    Current          days          days
    -------------------------------------------------------------------------
    Insured mortgage loans           $   436,177   $    28,504   $     6,521
    Conventional mortgage loans          479,042        33,173        12,112
    Secured investment loans           1,722,616        12,713         3,550
    RSP loans                            420,096         6,023         1,785
    HELOC receivables                    377,865         5,398           147
    Finance loans                          5,134             -             -
    -------------------------------------------------------------------------
                                     $ 3,440,930   $    85,811   $    24,115
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    ($ thousands)                       61 to 90       Over 90
    November 30, 2009                       days          days         Total
    -------------------------------------------------------------------------
    Insured mortgage loans           $     3,204   $    26,853   $   501,259
    Conventional mortgage loans            6,151        35,545       566,023
    Secured investment loans               1,011         1,619     1,741,509
    RSP loans                              1,329         1,560       430,793
    HELOC receivables                        403           961       384,774
    Finance loans                              -             -         5,134
    -------------------------------------------------------------------------
                                     $    12,098   $    66,538   $ 3,629,492
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    ($ thousands)                                      1 to 29      30 to 60
    November 30, 2008                    Current          days          days
    -------------------------------------------------------------------------
    Insured mortgage loans           $   551,772   $    29,567   $     6,085
    Conventional mortgage loans          670,763        53,741        12,176
    Secured investment loans           1,790,788        15,284         2,220
    RSP loans                            574,049         9,958         4,435
    HELOC receivables                    646,891         3,847           658
    Finance loans                         11,061             -             -
    -------------------------------------------------------------------------
                                     $ 4,245,324   $   112,397   $    25,574
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    ($ thousands)                       61 to 90       Over 90
    November 30, 2008                       days          days         Total
    -------------------------------------------------------------------------
    Insured mortgage loans           $     3,313   $    25,878   $   616,615
    Conventional mortgage loans            7,537        33,668       777,885
    Secured investment loans               1,510           790     1,810,592
    RSP loans                              1,120           752       590,314
    HELOC receivables                          -           497       651,893
    Finance loans                              -             -        11,061
    -------------------------------------------------------------------------
                                     $    13,480   $    61,585   $ 4,458,360
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (d) Mortgages in Legal Action

        The following table provides a summary of conventional mortgages in
        legal action which includes demand for payment, power of sale and
        foreclosures. The table details opening mortgages in legal action for
        the period and related changes to the pool, being additions,
        discharged mortgages other than sold, proceeds on foreclosed
        mortgages discharged and related losses, to arrive at the ending
        balance of mortgages in legal action.

    -------------------------------------------------------------------------
    ($ thousands)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------
    Balance outstanding, beginning of the year       $    44,987 $    35,070
      Additions                                           59,404      46,140
      Discharged mortgages other than sold               (27,126)    (27,336)
      Proceeds on foreclosed mortgages discharged        (23,117)     (7,352)
      Loss on foreclosed mortgages discharged             (3,635)     (1,535)
    -------------------------------------------------------------------------
                                                     $    50,513 $    44,987
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

        In addition, there are $33.8 million (2008 - $30.8 million) of
        insured mortgages in legal action.

    (e) Allowance for Credit Losses

        During 2008, as a result of economic and market indicators, the
        Company refined its loan provision methodology for specific
        allowances to include loans in arrears of one to 90 days in addition
        to impaired loans. Refer to Note 1, Allowance for Loan Losses, for
        further disclosure and for the definition of specific and general
        allowances.

        The continuity in the allowance for loan losses is as follows:

    -------------------------------------------------------------------------
    ($ thousands)                       Specific       General         Total
    Years ended November 30           allowances    allowances    allowances
    -------------------------------------------------------------------------

    Balance, beginning of the year    $   14,163    $   22,967    $   37,130
    Amounts written off                  (36,452)            -       (36,452)
    Recoveries                             1,578             -         1,578
    Provision for loan losses             35,775         1,787        37,562
    -------------------------------------------------------------------------
                                      $   15,064    $   24,754    $   39,818
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Breakdown by category:
      Insured mortgage loans          $        -    $    4,000    $    4,000
      Conventional mortgage loans          4,694         5,383        10,077
      Secured investment loans             3,832         4,354         8,186
      RSP loans                            6,463        10,102        16,565
      HELOCs receivables                      75           915           990
    -------------------------------------------------------------------------
                                      $   15,064    $   24,754    $   39,818
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
    ($ thousands)                       Specific       General         Total
    Years ended November 30           allowances    allowances    allowances
    -------------------------------------------------------------------------

    Balance, beginning of the year    $    1,860    $   15,277    $   17,137
    Amounts written off                  (11,258)            -       (11,258)
    Recoveries                               877             -           877
    Provision for loan losses             22,684         7,690        30,374
    -------------------------------------------------------------------------
                                      $   14,163    $   22,967    $   37,130
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Breakdown by category:
      Conventional mortgage loans     $    5,404    $    7,640    $   13,044
      Secured investment loans             1,310         4,527         5,837
      RSP loans                            7,449         9,171        16,620
      HELOC receivables                        -         1,629         1,629
    -------------------------------------------------------------------------
                                      $   14,163    $   22,967    $   37,130
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (f) AGF Trust Deposits

    -------------------------------------------------------------------------
    ($ thousands)          Term to maturity
                  -----------------------------------------------------------
                               1 year or      1 to 5
    November 30       Demand        less       years        2009        2008
    -------------------------------------------------------------------------

    Deposits      $    4,665  $1,879,571  $2,045,624  $3,929,860  $4,776,511
    Less: deferred
     selling
     commissions                                         (11,297)    (14,450)
    Less: current
     portion                                          (1,884,235) (2,486,635)
    -------------------------------------------------------------------------
    Long-term deposits                                $2,034,328  $2,275,426
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

        As at November 30, 2009, deposits were substantially comprised of
        GICs with a weighted average term to maturity of 1.4 years
        (2008 - 1.4 years) and a weighted average interest rate of 3.60%
        (2008 - 4.22%). Approximately 15.3% (2008 - 11.7%) of deposits mature
         within 90 days.

    (g) Interest Rate Swaps

        To hedge its exposure to fluctuating interest rates, AGF Trust has
        entered into interest rate swap transactions with four Canadian
        chartered banks, as noted below. The swap transactions expire between
        December 2009 and October 2014. They involve the exchange of either
        the one-month bankers' acceptance (BA) rate or the three-month BA
        rate to receive fixed interest rates. The swap contracts designated
        as fair value hedging instruments for deposits are used by AGF Trust
        for balance sheet matching purposes and to mitigate net interest
        revenue volatility. As at November 30, 2009, the aggregate notional
        amount of the swap transactions was $2.3 billion (2008 - $3.2
        billion). The aggregate fair value of the swap transactions, which
        represents the amount that would be received by AGF Trust if the
        transactions were terminated at November 30, 2009, was $55.7 million
        (2008 - $85.0 million). During the 12 months ended November 30, 2009,
        the ineffective portion of accumulated changes in fair value of
        hedging relationships recognized in the Consolidated Statement of
        Income amounted to a loss of $0.9 million (2008 - $3.1 million gain),
        as it relates to fair value hedging relationships.

    -------------------------------------------------------------------------
                                                              Fixed interest
    Notional amount of swap      Fair value   Maturity date    rate received
    -------------------------------------------------------------------------
         ($ thousands)         ($ thousands)
            230,000                 $ 209          2009        0.70% - 4.22%
            985,000                17,545          2010        0.71% - 5.05%
            695,000                24,952          2011        0.85% - 5.08%
            305,000                11,687          2012        1.60% - 5.01%
             35,000                   686          2013        2.37% - 2.71%
             30,000                   573          2014        2.70% - 2.82%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Note 7: Goodwill and Intangibles

    -------------------------------------------------------------------------
    November 30             2009                           2008
                -------------------------------------------------------------
                Opening           Closing  Opening                   Closing
                    net               net      net                       net
                   book   Amorti-    book     book   Amorti-  Impair-   book
    ($ thousands) value   zation    value    value   zation     ment   value
    -------------------------------------------------------------------------
    Customer
     contracts
      Magna Vista
      Investment
      Management
      Limited $   1,724 $  1,724 $      - $ 19,788 $  2,574 $ 15,490 $  1,724
      Doherty &
       Associates 1,650      164    1,486    9,618      868    7,100    1,650
      Cypress
       Capital
       Management
       Limited    5,115      483    4,632   21,993    1,900   14,978    5,115
      ING
       Investment
       Management
       Inc.                             -                                  -
       mutual
       fund
       assets     1,844      501    1,343    2,270      426        -    1,844
      Highstreet
       Asset
       Management
       Inc.       8,450    1,690    6,760   12,136    2,023    1,663    8,450
    -------------------------------------------------------------------------
               $ 18,783 $  4,562 $ 14,221 $ 65,805 $  7,791 $ 39,231 $ 18,783
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    During 2008, as a result of depressed values in global equity markets and
    in accordance with its accounting policies, the Company completed an
    impairment test for customer contracts.

    The determination of the customer contracts recoverability was based on
    an estimate of undiscounted cash flow, and the measurement of impairment
    loss was based on the amount that the carrying value exceeded the fair
    value. As part of the impairment test, the Company updated its future
    cash flow assumptions and estimates, including factors such as customer
    contracts existing from the date of purchase, margins, market conditions
    and the useful lives of assets. Based on the test, the Company concluded
    that intangible assets relating to certain customer contracts were not
    fully recoverable and therefore recorded an impairment charge of $39.2
    million to income ($28.6 million net of tax) during the year ended
    November 30, 2008.

    During 2009, the Company determined there were no triggering events to
    warrant an impairment test on customer contracts. Accordingly, the
    Company concluded that customer contracts are fully recoverable and no
    impairment charges were recorded in 2009.

    -------------------------------------------------------------------------
    ($ thousands)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------
    Goodwill
      Opening Balance                                 $  172,985  $  180,058
      Impairment related to Magna Vista
       Investment Management Limited                           -      (7,073)
      Acquisition of Highstreet Partners Limited
       (note 5)                                              723           -
    -------------------------------------------------------------------------
                                                      $  173,708  $  172,985
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    During 2009, the Company determined that a final payment related to
    contingent consideration of $0.7 million was payable to Highstreet by the
    end of February 2010. As a result, goodwill was increased by $0.7
    million.

    During the year ended November 30, 2009, the Company completed an
    impairment test on management contracts, trademarks and goodwill and
    determined that no impairment existed. Accordingly, there was no change
    to the carrying value of management contracts, trademarks and goodwill
    during the year.

    During 2008, the Company determined that the carrying value of its Magna
    Vista Investment Management Limited (Magna Vista) reporting unit exceeded
    its fair value, indicating an impairment of goodwill. The Company
    recorded an impairment charge of $7.1 million, based on the difference of
    the carrying value of goodwill and its fair value, calculated based on
    the fair value of the assets and liabilities of the reporting unit.

    Note 8: Property, Equipment and Computer Software

    -------------------------------------------------------------------------
    ($ thousands)
                                 Opening         Net                 Closing
                                net book   Additions/     Amorti-   net book
    November 30, 2009              value  (Disposals)     zation       value
    -------------------------------------------------------------------------
    Furniture and equipment   $    3,712  $     (277) $      447  $    2,988
    Leasehold improvements         7,104         386       2,501       4,989
    Computer hardware              3,999         409       1,520       2,888
    Computer software              4,608       1,607       2,953       3,262
    -------------------------------------------------------------------------
                              $   19,423  $    2,125  $    7,421  $   14,127
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    ($ thousands)
                                 Opening                             Closing
                                net book         Net      Amorti-   net book
    November 30, 2008              value   Additions      zation       value
    -------------------------------------------------------------------------
    Furniture and equipment   $    3,595  $    1,058  $      941  $    3,712
    Leasehold improvements         6,401       3,187       2,484       7,104
    Computer hardware              4,983         597       1,581       3,999
    Computer software              5,833       1,911       3,136       4,608
    -------------------------------------------------------------------------
                              $   20,812  $    6,753  $    8,142  $   19,423
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Note 9: Other Assets

    -------------------------------------------------------------------------
    ($ thousands)
    November 30                                             2009        2008
    -------------------------------------------------------------------------
    Other Assets
      Long-term portion of derivatives used to
       manage interest rate exposure                  $   40,637  $   72,352
      Other                                                3,321       1,920
    -------------------------------------------------------------------------
                                                      $   43,958  $   74,272
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The current portion of derivatives used to manage interest rate exposure
    is included under accounts receivable, prepaid expenses and other assets.
    As at November 30, 2009, the current portion was $15.0 million (2008 -
    $12.7 million). Refer to Note 6(g) for details on the derivatives used to
    manage interest rate exposure. Refer to Note 22 for further details of
    the Company's derivative instruments.

    Note 10: Long-term Debt

    -------------------------------------------------------------------------
    ($ thousands)
    November 30                                             2009        2008
    -------------------------------------------------------------------------
    Revolving term loan                               $  156,731  $  123,740
    Payment related to acquisition of
     Highstreet Partners Limited (note 5)                      -      21,171
    -------------------------------------------------------------------------
                                                         156,731     144,911
    Less: amount included in current liabilities          13,083      21,171
    -------------------------------------------------------------------------
                                                      $  143,648  $  123,740
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (a) Revolving Term Loan

        The Company has arranged a three-year prime-rate-based revolving term
        loan to a maximum of $300.0 million (November 30, 2008 - $300.0
        million) with a Canadian chartered bank. Under the loan agreement,
        AGF is permitted to draw down the revolving term loan by direct
        advances and/or BAs. The revolving term loan is available at any time
        for a period of 364 days from commencement of the loan (the
        commitment period). The expiration of the current commitment period
        is July 31, 2010. However, AGF may request within 75 to 90 days prior
        to the end of the commitment period a recommencement of the three-
        year term at the expiry of the then-current commitment period.
        Without recommencement, the loan shall be automatically converted to
        a term loan facility having a term of two years. The loan balance
        shall be repaid over a period of two years in minimum quarterly
        installments of one-twelfth of the amount of principal outstanding
        with the balance payable at the end of the term. As at November 30,
        2009, AGF has drawn $156.7 million (November 30, 2008 - $123.7
        million) against the facility in the form of seven to 31 day BAs
        at an effective average interest rate of 2.1% (November 30, 2008 -
        2.9%) per annum.

        Security for the bank loans include a specific claim over the
        management fees owing from the mutual funds (subject to the existing
        claims of related limited partnerships) for which AGF acts as manager
        and a pledge of assets by AGF Management Limited and certain
        subsidiaries, including AGF Investments Inc. and 20/20 Financial
        Corporation.

    (b) Payments Due Related to Acquisition of Highstreet Partners Limited

        On December 1, 2006, AGF acquired 79.9% of Highstreet (refer to Note
        5). On March 2, 2009, a payment of $21.5 million was paid. The
        payment consisted of $20.0 million in cash and the issuance of
        188,444 Class B Non-Voting shares valued at $1.5 million. In
        addition, a further contingent payment of $0.7 million is due in 2010
        as described in Note 5.

    Note 11: Other Long-term Liabilities

    -------------------------------------------------------------------------
    ($ thousands)
    November 30                                             2009        2008
    -------------------------------------------------------------------------
    Other Long-term Liabilities
      Long-term portion of derivative used to
       manage changes in share-based
       compensation                                   $    1,498  $    6,744
      Long-term compensation-related liabilities          11,637       8,112
      Long-term portion of Elements Advantage              3,487       3,808
      Other                                                   53         764
    -------------------------------------------------------------------------
                                                      $   16,675  $   19,428
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The current portion of the derivative used to manage changes in
    share-based compensation is included under accounts payable and accrued
    liabilities. As at November 30, 2009, the current portion was
    $2.4 million (2008 - $1.0 million). On December 3, 2009, the Company
    settled with its counterparty 91,225 units having a notional value of
    $2.7 million based on their November 30, 2009 fair value. After including
    the effect of this transaction, the remaining notional amount of the
    derivative used to manage share-based compensation as at November 30,
    2009, is $6.2 million or 208,731 share units and matures in 2010. Refer
    to Note 22 for further details on the Company's derivative instruments.

    The current portion of the Elements Advantage liability is included under
    accounts payable and accrued liabilities. As at November 30, 2009, the
    current portion was $5.3 million (2008 - $4.0 million).

    Note 12: Limited Partnership Financings

    Prior to 2005, the Company financed certain deferred selling commissions
    using limited partnerships (LPs). The Company is obligated to pay these
    LPs an annual fee of 0.45% to 0.90% of the net asset value of DSC
    securities. This obligation will continue as long as such DSC securities
    remain outstanding except for certain of the LPs, in which case the
    obligation terminates at various dates from December 31, 2009 to December
    31, 2020. For certain LPs, the obligation is secured by the Company's
    mutual fund management contracts to the extent of the particular
    obligation.

    The Company is responsible for the management and administration of the
    LPs. These services are provided in the normal course of operations and
    are recorded at the amount of consideration agreed to by the parties. The
    amount of fees received in 2009 was $0.3 million (2008 - $0.3 million).
    As at November 30, 2009, the net asset value of DSC securities financed
    by the LPs was $0.7 billion (2008 - $0.8 billion).

    Note 13: Income Taxes

    (a) The Company's effective income tax rate for continuing operations is
        comprised as follows:

    -------------------------------------------------------------------------
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------
    Canadian corporate tax rate                            32.8%       33.5%
    Net tax rate reduction                                  (8.4)      (13.8)
    Rate differential on earnings of subsidiaries           (8.3)      (12.1)
    Amortization of customer contracts and relationships     0.2         4.1
    Tax exempt investment income                            (1.2)       (2.1)
    Other                                                    0.8        (0.7)
    -------------------------------------------------------------------------
    Effective income tax rate                              15.9%        8.9%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (b) The tax effects of temporary differences which gave rise to future
        tax liabilities and assets are as follows:

    -------------------------------------------------------------------------
    ($ thousands)
    November 30                                             2009        2008
    -------------------------------------------------------------------------
    Future income tax liability
      Deferred sales commissions                      $  (75,427) $  (92,901)
      Deferred revenue                                       497         838
      Undepreciated capital cost in excess of
       carrying values                                     4,969       4,057
      Loss carryforwards                                  10,236       7,928
      Expenses deductible or gain to be recognized
       in future periods                                   6,026       6,708
      Provision for loan losses                            6,618       7,188
      Securitization of RSP loans                         (7,819)     (7,881)
      Deferred charges                                    (5,309)     (6,732)
      Goodwill and management contracts                 (100,145)   (117,241)
      Investments                                            945       1,493
      Other                                               (9,690)       (990)
    -------------------------------------------------------------------------
                                                        (169,099)   (197,533)
    Less: current portion                                 22,190      26,240
    -------------------------------------------------------------------------
    Future income tax liability - long-term portion   $ (146,909) $ (171,293)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (c) As at November 30, 2009, certain subsidiaries of the Company have
        accumulated aggregate non-capital losses of approximately $27.4
        million (2008 - $10.1 million) and $17.3 million (2008 - $15.6
        million) of capital loss that may be used to reduce taxable income in
        the future. These tax loss carry-forwards expire as follows:

             $27.4 million non-capital loss           2014 to 2029
             $17.3 million capital loss               no expiry date

    (d) In November 2009, a reduction of the Ontario corporate income tax
        rate from 14% to 10% by July 1, 2012 was substantively enacted.
        Accordingly, during the 12 months ended November 30, 2009, the
        Company has recognized a $9.8 million net reduction in future income
        tax liabilities.

           In December 2007, a reduction of the federal corporate income tax
           rate from 18.5% to 15.0% by January 1, 2012 was substantively
           enacted. Accordingly, during the 12 months ended November 30,
           2008, the Company has recognized a $19.5 million reduction in
           future income tax liabilities.

           In June 2007, a reduction in the federal corporate income tax rate
           from 19% to 18.5% by January 1, 2011 was considered to be
           substantively enacted. During the 12 months ended November 30,
           2008, the Company recognized a $2.4 million reduction in future
           income tax liabilities related to this reduction.

    Note 14: Capital Stock

    (a) Authorized Capital

        The authorized capital of AGF consists of an unlimited number of AGF
        Class B Non-Voting Shares and an unlimited number of AGF Class A
        voting common shares (Class A shares). The Class B Non-Voting shares
        are listed for trading on the Toronto Stock Exchange (TSX).

    (b) Changes During the Year

        The change in capital stock is summarized as follows:

    -------------------------------------------------------------------------
    Years ended
     November 30                         2009                    2008
                              -----------------------------------------------
    ($ thousands, except                      Stated                  Stated
     share amounts)               Shares       value      Shares       value
    -------------------------------------------------------------------------

    Class A shares                57,600  $        -      57,600  $        -
    -------------------------------------------------------------------------

    Class B shares
      Balance, beginning
       of the year            88,480,104  $  431,897  88,922,157  $  421,923
      Issued through stock
       dividend plan             239,352       2,627     211,914       4,618
      Stock options exercised    189,500       2,552     130,150       5,121
      Issued on acquisition
       of Highstreet Partners
       Limited (note 5)          188,444       1,536     215,883       5,116
      Purchased for
       cancellation                    -           -  (1,000,000)     (4,881)
    -------------------------------------------------------------------------
    Balance, end of the year  89,097,400  $  438,612  88,480,104  $  431,897
    -------------------------------------------------------------------------

    (c) Class B Non-Voting shares Purchased for Cancellation

        AGF has obtained applicable regulatory approval to purchase for
        cancellation, from time to time, certain of its Class B Non-Voting
        shares through the facilities of the TSX (or as otherwise permitted
        by the TSX). Under its normal course issuer bid, AGF may purchase up
        to 10% of the public float outstanding on the date of the receipt of
        regulatory approval or up to 7,108,630 shares through to February 25,
        2010. During the year ended November 30, 2008, 1,000,000 Class B Non-
        Voting shares were purchased at a cost of $7.8 million and the excess
        paid of $2.9 million over the book value of the shares purchased for
        cancellation was charged to retained earnings. These shares were
        traded and settled in November 2008 and subsequently cancelled in
        December 2008. No shares were repurchased in 2009.

    Note 15: Stock-based Compensation and Other Stock-based Payments


    (a) Stock Option Plans

        AGF has established stock option plans for senior employees under
        which stock options to purchase an aggregate maximum of 3,854,052
        Class B Non-Voting shares could have been granted as at November 30,
        2009 (2008 - 4,094,002). The stock options are issued at a price not
        less than the market price of the Class B Non-Voting shares
        immediately prior to the grant date. Stock options are vested to the
        extent of 25% to 33% of the individual's entitlement per annum, or in
        some instances, vest at the end of the term of the option.

        The change in stock options during 2009 and 2008 is summarized as
        follows:

    -------------------------------------------------------------------------
    Years ended
     November 30                        2009                    2008
                               ----------------------------------------------
                                            Weighted                Weighted
                                             average                 average
                                            exercise                exercise
                                 Options       price     Options       price
    -------------------------------------------------------------------------

    Class B share options
      Balance, beginning
       of year                 6,576,948  $    16.59   4,268,765  $    22.50
      Options granted            797,000       16.82   2,721,000        8.45
      Options forefeited/
       expired                  (557,050)      21.04    (282,667)      26.24
      Options exercised         (189,500)      13.36    (130,150)      19.08
    -------------------------------------------------------------------------
      Balance, end of year     6,627,398  $    16.34   6,576,948  $    16.59
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

        The following summarizes information about stock options outstanding
        as at November 30, 2009:

    -------------------------------------------------------------------------
                                   Weighted   Weighted  Number of   Weighted
                       Number of    average    average    options    average
    Range of exercise    options  remaining   exercise   exercis-   exercise
     prices          outstanding       life      price       able      price
    -------------------------------------------------------------------------

    $8.01 to $15.00    2,597,300  5.9 years  $    8.24    623,073  $    8.24
    $15.01 to $25.00   2,778,117  4.0            18.10  1,938,617      18.54
    $25.01 to $35.00   1,239,249  4.5            29.16    747,312      28.50
    $35.01 to $45.00      12,732  4.3            35.70      6,366      35.70
    -------------------------------------------------------------------------
                       6,627,398  4.9        $   16.34  3,315,368  $   18.88
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

        The outstanding stock options have expiry dates ranging from December
        2009 to November 2016.

        During 2009, AGF granted 797,000 options (2008 - 2,721,000) and
        recorded $2.9 million (2008 - $4.8 million) in compensation expense
        and contributed surplus. The fair value of options granted during
        2009 has been estimated at $3.77 per share (2008 - between $0.57 and
        $3.19 per share) using the Black-Scholes option-pricing model. The
        following ranges of assumptions were used to determine the fair value
        of the options granted in 2009:

          Risk-free interest rate             2.79%
          Expected dividend yield             5.98%
          Expected share price volatility     41.30%
          Option term                         5 years

    (b) Share Purchase Plan

        The Company's contributions are recorded in payroll costs and
        amounted to $0.5 million for the year ended November 30, 2009
        (2008 - $1.3 million).

    (c) Restricted Share Unit (RSU) and Performance Share Unit (PSU) Plans

        The change in share units during 2009 and 2008 is as follows:

        ---------------------------------------------------------------------
        Years ended November 30
                                        2009                    2008
                              -----------------------------------------------
                               Number of share units   Number of share units
        ---------------------------------------------------------------------

        Outstanding, beginning
         of year
          Non-vested                         680,889                 345,257
        Issued
          Initial allocation                 151,886                 340,698
          In lieu of dividends                55,734                  15,858
        Settled in cash                      (59,219)                   (482)
        Forfeited and cancelled             (143,428)                (20,442)
        ---------------------------------------------------------------------
        Outstanding, end of year             685,862                 680,889
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Compensation expense for the year ended November 30, 2009 related to
        these share units was $1.5 million (2008 - $0.7 million). During the
        year ended November 30, 2008, it was determined that the achievement
        of certain performance criteria necessary for the PSUs to be paid was
        unlikely. As a result, the Company reversed a $1.1 million liability
        related to these units. AGF has entered into a swap agreement to fix
        the cost of compensation related to certain RSUs and PSUs. As at
        November 30, 2009, AGF has economically hedged 243,861 (2008 -
        91,549) share units at a fixed cost of $29.73 (2008 - $32.35)

    (d) Deferred Share Unit (DSU) Plan

        There is no unrecognized compensation expense related to directors'
        DSUs since these awards vest immediately upon grant. As at November
        30, 2009, 43,150 (2008 - 24,394) DSUs were outstanding. Compensation
        expense related to these DSUs for year ended November 30, 2009 was
        $0.5 million (2008 - $0.1 million).

    Note 16: Earnings Per Share

    The following table sets forth the calculation of both basic and diluted
    earnings per share and basic earnings per share and diluted earnings per
    share from continuing operations:

    -------------------------------------------------------------------------
    ($ thousands, except per share amounts)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Numerator
      Net income for the year                        $    97,694 $   128,592

    Denominator
      Weighted average number of shares - basic       88,845,141  89,321,964
      Dilutive effect of employee stock options          815,703   2,011,980
    -------------------------------------------------------------------------
      Weighted average number of shares - diluted     89,660,844  91,333,944

    Earnings per share
      Basic                                          $      1.10 $      1.44
      Diluted                                        $      1.09 $      1.41
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Note 17: Agreements with Mutual Funds

    The Company acts as manager for the AGF Funds and receives management and
    advisory fees from the AGF Funds in accordance with the respective
    agreements between the Funds and the Company. In return, the Company is
    responsible for management and investment advisory services and all costs
    connected with the distribution of securities of the Funds. Substantially
    all the management and advisory fees the Company earned in 2009 and 2008
    were from the AGF Funds. As at November 30, 2009, the Company had $34.6
    million (2008 - $35.2 million) receivable from the AGF Funds. The Company
    also acts as trustee for the AGF Funds that are mutual fund trusts.

    The aggregate unitholder services costs absorbed and management and
    advisory fees waived by the Company during the year on behalf of the
    Funds were approximately $15.0 million (2008 - $12.7 million).

    Note 18: Related Party Transactions

    The Company has entered into certain transactions with entities or senior
    officers who are directors of the Company.

    During 2009, total amounts paid by the Company to these related parties
    aggregated $0.1 million (2008 - $0.1 million).

    Note 19: Supplemental Disclosure of Cash Flow Information

    (a) Changes in Non-Cash Operating Working Capital Items

    -------------------------------------------------------------------------
    ($ thousands)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------
    (Increase) decrease in accounts receivable       $    (7,662) $    2,212
    Decrease in other assets                               6,822      16,898
    Increase (decrease) in accounts payable and
     accrued liabilities                                 (21,625)     42,524
    Increase in deposits and other liabilities             5,850      11,085
    -------------------------------------------------------------------------
                                                     $   (16,615) $   72,719
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (b) Income Taxes and Interest Paid

    -------------------------------------------------------------------------
    ($ thousands)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    Income taxes paid                                $    54,996 $    49,758
    Interest paid                                        112,376     190,186
    -------------------------------------------------------------------------
                                                     $   167,372 $   239,944
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Note 20: AGF Trust Net Interest Income

    The breakdown of net interest income is as follows:

    -------------------------------------------------------------------------
    ($ thousands)
    Years ended November 30                                 2009        2008
    -------------------------------------------------------------------------

    AGF Trust interest income
      Loan interest                                  $   211,253 $   270,762
      Investment interest                                 14,951      32,219
    -------------------------------------------------------------------------
                                                         226,204     302,981

    AGF Trust interest expense
      Deposit interest                                   175,367     200,901
      Hedging interest income                            (68,532)    (18,583)
      Other interest expense                              23,120      23,790
    -------------------------------------------------------------------------
                                                         129,955     206,108

    -------------------------------------------------------------------------
    AGF Trust net interest income                    $    96,249 $    96,873
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Note 21: Capital Management

    The Company's objectives when managing capital are to:

        -  Provide returns for shareholders through the payment of dividends,
           the repurchase of Class B Non-Voting shares and the reasonable use
           of leverage.

        -  Ensure that AGF Trust maintains the level of capital to adequately
           protect depositors and to meet the requirements of its principal
           regulator, the Office of the Superintendent of Financial
           Institutions Canada (OSFI).

    The Company's capital consists of shareholders' equity. The AGF Capital
    Committee is responsible for the management of capital. The AGF Board of
    Directors is responsible for overseeing the Company's capital policy and
    management. The Company reviews its five-year capital plan annually.

    Our Investment Management businesses, in general, are not subject to
    significant regulatory capital requirements in each of the jurisdictions
    in which they are registered and operate. The cumulative amount of
    minimum regulatory capital across all of our investment management
    operations is approximately $6.0 million.

    AGF Trust's regulatory capital requirements are determined in accordance
    with guidelines issued by OSFI, which are based on a framework of risk-
    based capital standards developed by the Bank for International
    Settlements (BIS). Effective January 1, 2008, AGF Trust is monitoring its
    regulatory capital based on the BIS regulatory risk-based capital
    framework (Basel II). BIS standards require that AGF Trust maintain
    minimum Tier 1 and total capital ratios of 4% and 8%. As at November 30,
    2009, AGF Trust was in compliance with these regulatory capital
    requirements. OSFI has also prescribed a maximum asset-to-capital
    leverage multiple; AGF Trust was in compliance with this threshold at
    November 30, 2009.

    A capital plan prepared annually specifies the target capital ratios by
    taking into account the projected risk-weighted asset levels and expected
    capital management initiatives. Regulatory capital ratios are reported
    monthly to management. Regulatory capital ratio monitoring reports are
    provided on a quarterly basis to AGF Trust's Board of Directors.

    Regulatory capital for AGF Trust is detailed as follows:

    -------------------------------------------------------------------------
    ($ thousands, except for risk-weighted
    assets in $ millions)                                   Basel II
                                                  ---------------------------
    November 30                                           2009        2008
    -------------------------------------------------------------------------
    Risk-weighted assets(1)
      Credit risk                                    $   1,754.8 $   2,244.3
      Operational risk                                     216.6       172.6
    -------------------------------------------------------------------------
    Total risk-weighted assets                           1,971.4     2,416.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Tier 1 capital
      Common shares                                 $     82,768 $    82,768
      Contributed surplus                                  1,476       1,338
      Retained earnings                                  120,646     101,432
      Non-cumulative preferred shares                     64,000      64,000
      Less: securitization and other                     (11,378)    (15,567)
    -------------------------------------------------------------------------
                                                         257,512     233,971
    Tier 2 capital
      Subordinated debentures                            109,500     109,500
      General allowances                                  15,355      19,638
      Less: securitization and other                      (6,902)     (8,295)
    -------------------------------------------------------------------------
                                                         117,953     120,843

    -------------------------------------------------------------------------
    Total capital                                   $    375,465 $   354,814
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) For operational risk, AGF Trust uses the Basic Indicator Approach -
        calculated as 15% of the previous three-year average of net interest
        income and other income, excluding gain or loss on investments. The
        risk-weighted equivalent is determined by multiplying the capital
        requirement for operational risk by 12.5.


    Note 22: Financial Instruments

    Financial instruments are classified based on categories according to
    CICA Handbook "Section 3855 Financial Instruments - Recognition and
    Measurement" as follows:

    -------------------------------------------------------------------------
    ($ thousands)                        Carrying amount on balance sheet
                                     ----------------------------------------
                                              Fair value      Amortized cost
                                     ----------------------------------------
                                                                   Loans and
                                                                 Receivables
                                                                    or Other
                                       Available      Held for     Financial
    November 30, 2009                   for Sale       Trading   Liabilities
    -------------------------------------------------------------------------

    Cash and cash equivalents        $         -   $   274,870   $         -
    Investments                          550,480             -             -
    Retained interest from
     securitization                       40,448             -             -
    Accounts receivable                        -             -        80,968
    Real estate secured and
     investment loans                          -             -     3,594,755
    Derivatives                                -        55,652             -
    Other assets                               -             -         3,321
    -------------------------------------------------------------------------
    Total financial assets           $   590,928   $   330,522   $ 3,679,044
    -------------------------------------------------------------------------

    Accounts payable and
     accrued liabilities             $         -   $         -   $   281,641
    Long-term debt                             -             -       156,731
    Deposits                                   -             -     3,918,563
    Derivatives                                -         3,900             -
    Other long-term liabilities                -             -        15,177
    -------------------------------------------------------------------------
    Total financial liabilities      $         -   $     3,900   $ 4,372,112
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
    ($ thousands)                        Carrying amount on balance sheet
                                     ----------------------------------------
                                              Fair value      Amortized cost
                                     ----------------------------------------
                                                                   Loans and
                                                                 Receivables
                                                                    or Other
                                       Available      Held for     Financial
    November 30, 2008                   for Sale       Trading   Liabilities
    -------------------------------------------------------------------------

    Cash and cash equivalents        $         -   $   584,168   $         -
    Investments                          188,435             -             -
    Retained interest from
     securitization                       44,947             -             -
    Accounts receivable                        -             -        76,316
    Real estate secured and
     investment loans                          -             -     4,430,850
    Derivatives                                -        85,097             -
    Other assets                               -             -         1,920
    -------------------------------------------------------------------------
    Total financial assets           $   233,382   $   669,265   $ 4,509,086
    -------------------------------------------------------------------------

    Accounts payable and
     accrued liabilities             $         -   $         -   $   301,390
    Long-term debt                             -             -       144,911
    Deposits                                   -             -     4,762,061
    Derivatives                                -         7,755             -
    Other long-term liabilities                -             -        12,684
    -------------------------------------------------------------------------
    Total financial liabilities      $         -   $     7,755   $ 5,221,046
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Fair value hierarchy

    Financial Instruments Carried at Fair Value

    The financial instruments carried at fair value have been categorized
    under three levels of fair value hierarchy as follows:

    Quoted Prices in an Active Market (Level 1)

    This level of the hierarchy includes listed equity securities on major
    exchanges, investments in AGF mutual funds, highly liquid temporary
    deposits with Canadian and Irish Banks, as well as term deposits, and
    bank deposit notes. The fair value of instruments that are quoted in
    active markets are determined using the quoted prices where they
    represent those at which regularly and recently occurring transactions
    take place.

    Valuation Techniques with Observable Parameters (Level 2)

    This level of the hierarchy includes derivative instruments with major
    Canadian chartered banks, as well as investments held by AGF Trust which
    include commercial paper, bank-sponsored ABCP, and FRNs. These
    instruments are recorded at fair value on the settlement date. AGF Trust
    values its investment holdings primarily using counterparty mark to
    markets provided by the major financial institutions or investment
    brokerages with which it deals.

    The fair value of derivatives used to manage interest rate exposure is
    calculated through discounting future expected cash flows using the BA-
    based swap curve. Since the BA-based swap curve is an observable input,
    these financial instruments are considered Level 2.

    The fair value of the derivative used to manage changes in share-based
    compensation is calculated as the difference between the initial swap
    price and the market value of Class B Non-Voting shares on the valuation
    date, multiplied by the total number of shares outstanding. The initial
    price is equal to the price agreed to at the onset of the swap agreement,
    adjusted for dividends that have been reinvested by the equity holder.
    Since the market value of Class B Non-Voting shares is an observable
    input, this financial instrument is considered Level 2.

    Valuation Techniques with Significant Unobservable Parameters (Level 3)

    This level of the hierarchy includes the retained interest from
    securitization. Instruments classified in this category have a parameter
    input or inputs which are unobservable and which have a more than
    insignificant impact on either the fair value of the instrument or the
    profit or loss of the instrument. The fair value of the retained interest
    from securitization is determined using the present value of future
    expected cash flows. The expected cash flow model incorporates expected
    credit losses, prepayment rates, discount rate, and excess spread.
    Expected credit losses and prepayment rates are primarily based on
    historical portfolio performance, while discount rate and excess spread
    are based on portfolio performance combined with Management's assessment
    of the impact of market and economic factors on expected cash flows.

    The following table classifies the carrying value of the financial
    instruments held at fair value across the fair value hierarchy as at
    November 30, 2009:

    -------------------------------------------------------------------------
    ($ thousands)                   Financial instruments at fair value
                             ------------------------------------------------
    November 30, 2009            Level 1     Level 2     Level 3       Total
    -------------------------------------------------------------------------

    Cash and cash
     equivalents              $  274,870  $        -  $        -  $  274,870
    Investments                   19,724     530,756           -     550,480
    Retained interest
     from securitization               -           -      40,448      40,448
    Derivatives                        -      55,652           -      55,652
    -------------------------------------------------------------------------
    Total financial assets    $  294,594  $  586,408  $   40,448  $  921,450
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Derivatives               $        -  $    3,900  $        -  $    3,900
    -------------------------------------------------------------------------
    Total financial
     liabilities              $        -  $    3,900  $        -  $    3,900
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    During the year ended November 30, 2009, there were no significant
    transfers between Level 1 and Level 2 of the fair value hierarchy.

    The following is a reconciliation of Level 3 fair value measurements from
    November 30, 2008 to November 30, 2009:

    -------------------------------------------------------------------------
    ($ thousands)                              Fair value measurements using
                                                              level 3 inputs
                                          -----------------------------------
                                                           Retained interest
                                                         from securitization
    -------------------------------------------------------------------------
    Balance at November 30, 2008                                 $    44,947
    Accretion income                                                   3,021
    Cash receipts, net of writeoffs                                   (3,234)
    Securitization writedown                                          (4,085)
    Unrealized losses recognized in OCI                                 (201)
    -------------------------------------------------------------------------
    Balance at November 30, 2009                                 $    40,448
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Financial Instruments not Carried at Fair Value

    The following table presents the estimated fair value of the Company's
    financial instruments which are not carried at fair value in the balance
    sheet:

    -------------------------------------------------------------------------
    ($ thousands)                    2009                      2008
                             ------------------------------------------------
                             Carrying         Fair     Carrying         Fair
    November 30, 2009           value        value        value        value
    -------------------------------------------------------------------------

    Accounts receivable   $    80,968  $    80,968  $    76,316  $    76,316
    Real estate secured
     loans and investment
     loans                  3,594,755    3,611,473    4,430,850    4,467,638
    Other assets                3,321        3,321        1,920        1,920
    -------------------------------------------------------------------------
    Total financial
     assets               $ 3,679,044  $ 3,695,762  $ 4,509,086  $ 4,545,874
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Accounts payable
     and accrued
     liabilities          $   281,641  $   281,641  $   301,390  $   301,390
    Long-term debt            156,731      156,731      144,911      144,911
    Deposits                3,918,563    3,963,517    4,762,061    4,757,379
    Other long-term
     liabilities               15,177       15,177       12,684       12,684
    -------------------------------------------------------------------------
    Total financial
     liabilities          $ 4,372,112  $ 4,417,066  $ 5,221,046  $ 5,216,364
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For accounts receivable, other assets, accounts payable and accrued
    liabilities, long-term debt and other long-term liabilities, the carrying
    amount represents a reasonable approximation of fair value.

    Real estate secured loans, investment loans, RSP loans, HELOC
    receivables, and finance loans are classified as loans and receivables
    and are recorded at amortized cost using the effective interest method,
    net of any allowance for loan losses and related deferred fees and
    charges. The fair value of mortgage loans and deposits is calculated
    based on the discounted present value of future cash flows associated
    with the loans and deposits. The discount rates used reflect prevailing
    market rates for loans and deposits with similar residual terms to
    maturity and product characteristics. For all other loan types, the
    carrying value is considered to be a reasonable approximation of fair
    value due to the variable interest rate nature of the loan.

    Risk Management

    In the normal course of business, the Company manages risks that arise as
    a result of its use of financial instruments. These risks include market,
    liquidity and credit risk.

    Market Risk

    Market risk is the risk that the fair value of financial instruments will
    fluctuate due to changes in market factors. Market risk includes fair
    value risk, interest rate risk and foreign currency risk. The Company is
    exposed to these risks directly through its financial instruments.

    Fair Value Risk

    Fair value risk is the risk of loss due to adverse changes in prices
    other than from change in interest rates and foreign currency. The
    Company is exposed to fair value risk on certain of its investments
    available for sale and certain derivative positions. The Company's
    investments that have fair value risk include mutual funds managed by the
    Company and common shares of $19.4 million (2008 - $19.7 million). Any
    unrealized gains or losses arising from changes in the fair value of
    these financial instruments available for sale are recorded in other
    comprehensive income. Based on the carrying value of these investments at
    November 30, 2009, the effect of a 10% decline or increase in the value
    of investments would result in a $1.9 million (2008 - $2.0 million)
    unrealized gain or loss to other comprehensive income.

    At November 30, 2009, details of the Company's derivative instruments are
    as follows:

    -------------------------------------------------------------------------
    ($ thousands)                     Hedging item
                                           maximum
                                          maturity     Notional         Fair
    November 30, 2009   Interest Rate         date        Value        Value
    -------------------------------------------------------------------------

    Derivatives used
     to manage interest
     rate exposure      0.70% - 5.08%         2014    2,280,000       55,652
    Derivatives used
     to manage changes
     in share-based
     compensation                  -          2010        8,919       (3,900)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    ($ thousands)                     Hedging item
                                           maximum
                                          maturity     Notional         Fair
    November 30, 2008   Interest Rate         date       amount        Value
    -------------------------------------------------------------------------

    Derivatives used
     to manage interest
     rate exposure      1.31% - 5.08%         2012    3,167,000       85,097
    Derivatives used
     to manage changes
     in share-based
     compensation                  -          2010       10,275       (7,755)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    At November 30, 2009, the effect of a 10% decline or increase in the
    value of the underlying reference asset of the derivatives used to manage
    changes in share-based compensation would result in a $0.4 million
    (2008 - $0.8 million) increase or decrease in income.

    Interest Rate Risk

    Interest rate risk, inclusive of credit spread risk, is the risk of loss
    due to the following: changes in the level, slope and curvature of the
    yield curve; the volatility of interest rates; mortgage prepayment rates;
    changes in the market price of credit and the creditworthiness of a
    particular client.

    The Company, through AGF Trust, is exposed to interest rate risk
    primarily through its cash and cash equivalents, investments available
    for sale, real estate secured and investment loans receivable and
    deposits, managed and supervised by AGF Trust's Asset and Liability
    Committee. AGF Trust employs a number of techniques to manage this risk,
    including the matching of asset and liability terms. AGF Trust also uses
    interest rate swaps to manage any residual mismatches. At November 30,
    2009, a 1% increase in interest rates in the aforementioned financial
    instruments would result in an increase in annual net interest income of
    approximately $4.1 million. As a result of current interest rate levels,
    a sensitivity analysis based on a 1% decrease would not provide
    meaningful information. At November 30, 2008, a 1% change in interest
    rates in the aforementioned financial instruments, either up or down,
    would result in an increase or decrease in annual net interest income of
    approximately $4.7 million. Refer to Note 3 for the effect of changes to
    key assumptions on the fair value of retained interests.

    The Company, excluding AGF Trust, is also exposed to interest rate risk
    through its floating-rate debt and cash balances. As at November 30,
    2009, the effect of a 1% change in the variable interest rates on the
    average balances for the year would have resulted in an annualized change
    in interest expense of approximately $1.2 million (2008 - $0.8 million).

    Foreign Exchange Risk

    Foreign currency risk is the risk of loss due to changes in spot and
    forward rates and the volatility of currency exchange rates. The Company
    is subject to foreign exchange risk on its integrated foreign
    subsidiaries in Ireland and Singapore, which provide investment advisory
    services. These subsidiaries retain minimal monetary exposure to the
    local currency, as the majority of revenues are earned in Canadian
    dollars and salaries and wages are primarily paid on a monthly basis and
    represent the majority of the local currency expenses. As such, these
    foreign subsidiaries have limited use of financial instruments
    denominated in local currencies, thus resulting in minimal foreign
    exchange risk.

    Liquidity Risk

    Liquidity risk arises from the possibility that the Company cannot meet a
    demand for cash resources when required or meet its financial
    obligations.

    The Company manages its liquidity risk through the management of its
    capital structure and financial leverage as outlined in Note 10 and 21.
    In its Investment Management segment, the Company manages its liquidity
    by monitoring actual and projected cash flows to ensure that it has
    sufficient liquidity through cash received from operations as well as
    borrowings under its credit facility. The key liquidity requirements
    within this segment are the funding of commissions paid on mutual funds
    and dividends paid to shareholders. The Company is subject to certain
    financial loan covenants under its credit facility and has met all of
    these conditions.

    AGF Trust manages liquidity risk through deposit taking activities and
    through the securitization of loans. The key liquidity requirements
    within this segment are the funding of mortgages and loans and the
    ability to pay out maturing GICs. AGF Trust's overall liquidity risk is
    managed by its treasury department and is supervised by AGF Trust's Asset
    and Liability Management Committee in accordance with the policies for
    management of assets and liabilities, liquidity and loan financing
    activities. These policies aim to ensure that AGF Trust has sufficient
    cash resources to meet its current and future financial obligations in
    the regular course of business and under a variety of conditions.

    Management monitors cash resources daily to ensure that AGF Trust's
    liquidity measurements are within the limits established by policies. In
    addition, management meets regularly to assess the timing of cash inflows
    and outflows related to loan and deposit maturities, and to review
    various possible stress scenarios. AGF Trust aims to maintain a prudent
    reserve of unencumbered liquid assets that are readily available if
    required. It strives to maintain a stable volume of base deposits that
    originate from its deposit brokerage clientele.

    The Government of Canada introduced a short-term guarantee program on
    debt issuances of deposit-taking institutions. Under that program, which
    terminates on December 31, 2009, AGF Trust can issue up to $952.9 million
    of debt with a government backstop and a term of up to three years.

    The Company's internal audit department reviews the compliance of AGF
    Trust's liquidity policies. Internal audit reports are presented to the
    Audit Committee of the Trust Board for review.

    The following table presents contractual terms to maturity of the
    financial liabilities owed by the Company at November 30, 2009 and 2008:


    -------------------------------------------------------------------------
    ($ thousands)                                        1 Year         1 to
    November 30, 2009                       Demand      or Less      5 Years
    -------------------------------------------------------------------------

    Accounts payable and
     accrued liabilities               $         -  $   284,043  $         -
    Long-term debt                               -       13,083      143,648
    Deposits(1)                              4,665    1,909,845    2,218,390
    Other liabilities                            -            -       16,675
    -------------------------------------------------------------------------
    Total                              $     4,665  $ 2,206,971  $ 2,378,713
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    ($ thousands)                                        1 Year         1 to
    November 30, 2008                       Demand      or Less      5 Years
    -------------------------------------------------------------------------

    Accounts payable and
     accrued liabilities               $         -  $   302,401  $         -
    Long-term debt                               -       21,461      124,000
    Deposits(1)                              6,495    2,532,945    2,532,330
    Other liabilities                            -            -       19,428
    -------------------------------------------------------------------------
    Total                              $     6,495  $ 2,856,807  $ 2,675,758
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Excluding deferred commission.

    Credit Risk

    Credit risk is the potential of financial loss arising from the failure
    of a borrower or counterparty to honour its financial or contractual
    obligations to the Company. The Company's overall credit risk strategy
    and credit risk policy are developed by senior management and further
    refined at the business unit level, through the use of policies,
    processes and internal controls, designed to promote business activities
    while ensuring these activities are within the standards of risk
    tolerance levels. As at November 30, 2009, financial assets of
    $4.6 billion, consisting of cash and cash equivalents, investments,
    retained interests from securitization, real estate secured loans and
    investment loans, accounts receivable and other assets, were exposed to
    credit risk up to the maximum of their respective carrying value.

    Cash and cash equivalents consist primarily of highly liquid temporary
    deposits with Canadian and Irish banks, as well as commercial paper,
    bank-sponsored ABCP, bank deposit notes, reverse re-purchase agreements,
    BAs and FRNs.

    Investments subject to credit risk consist primarily of FRNs, senior debt
    instruments, investments in mutual funds of AGF and other securities. For
    investing activities done through AGF Trust, policies have been
    established that identify the types and rating of debt investments in
    which AGF Trust can invest. These policies also restrict AGF Trust's
    transactions primarily to major chartered banks and recognized investment
    dealers who are members of the Investment Industry Regulatory
    Organization of Canada (IIROC). AGF Trust maintains a list of approved
    securities dealers and counterparties, which are reviewed at least
    annually by the Trust Board. AGF Trust uses external credit rating
    agencies in assessing the credit quality of certain investments in
    financial assets. The credit rating agencies used include DBRS, S&P and
    Moody's. Refer to Note 2 for a breakdown of the credit ratings for AGF
    Trust's investments available for sale.

    The Company's most significant credit risk is through AGF Trust's real
    estate secured loans and investment loans. AGF Trust mitigates this risk
    through stringent credit policies and lending practices. These policies
    aim to ensure that the authority to approve credit applications is
    appropriately delegated by senior management of AGF Trust, depending on
    the risk and the amount of the credit application. The credit policies
    also provide guidelines for pricing based on risk, for reviewing any
    collateral pledged for a credit application, monitoring of impaired loans
    and for establishing and reviewing loan loss provisions to ensure they
    are adequate. The policies establish risk limits for credit concentration
    by counterparty, geographic location and other risk factors that would
    impact AGF Trust's credit risk profile.

    At November 30, 2009, AGF Trust's loan assets totaled $3.6 billion
    (2008 - $4.5 billion) and were comprised of mortgage loans, investment
    loans, RSP loans, finance loans and HELOC receivables. Of this amount,
    $1.1 billion (2008 - $1.4 billion) was represented by mortgage loans and
    $0.4 billion (2008 - $0.7 billion) was represented by HELOC receivables,
    both of which are secured by residential real estate. At November 30,
    2009, 47.6% of mortgage loans were insured by Canada Mortgage and Housing
    Corporation (CMHC) or another insurer. Conventional uninsured mortgages
    have loan-to-value ratios of less than 80% of the appraised value of the
    property at the time the mortgage loan was granted. The average
    loan-to-value ratio of uninsured mortgage loans was 61.3% as at
    November 30, 2009 (2008 - 66.4%).

    Residential mortgages represent the largest component of the total
    mortgage portfolio, comprising 97.0% as at November 30, 2009 (2008 -
    97.5%). AGF Trust's credit risk on these loans is also mitigated through
    the use of collateral, primarily in the form of residential real estate.
    Under AGF Trust's lending criteria, management reviews all mortgage loans
    on a regular basis to determine the appropriate allowance for loss
    required by AGF Trust. Risk is also mitigated through residential
    mortgage insurance through CMHC or another insurer. As at November 30,
    2009, $501.3 million of AGF Trust's residential mortgage portfolio was
    insured (2008 - $616.6 million).

    Credit risk for HELOCs and investment loans is mitigated by collateral in
    the form of residential mortgages and investment funds, respectively.
    Investment loans, excluding RSP loans, of $1.7 billion, are secured
    primarily by the investment made using the initial loan proceeds. The
    market value of this investment loan collateral is approximately
    $1.4 billion.

    RSP loans are used by borrowers to purchase assets in a retirement
    savings plan. The creditworthiness of each borrower is assessed prior to
    approval of the loan. Predictive scorecards are used to determine the
    probability of default and bankruptcy of the borrowers. On a regular
    basis, AGF Trust reviews the credit quality in the portfolio. Loans in
    arrears are also reviewed regularly to determine the appropriate loan
    loss reserves.

    Derivative financial instruments expose AGF Trust to credit risk to the
    extent that if a counterparty default occurs, market conditions are such
    that AGF Trust would incur a loss in replacing the defaulted transaction.
    AGF Trust negotiates derivative master netting agreements with
    counterparties with which it contracts. These agreements reduce credit
    risk exposure. AGF Trust assesses the credit worthiness of the
    counterparties to minimize the risk of counterparty default under the
    agreements. AGF Trust only uses major Chartered banks as counterparties
    with a minimum credit rating of AA.

    Note 23: Segment Information

    AGF has three reportable segments: Investment Management Operations,
    Trust Company Operations and Other. The Investment Management Operations
    segment provides investment management and advisory services and is
    responsible for the management and distribution of AGF investment
    products. AGF Trust offers a wide range of trust services including GICs,
    term deposits, real estate secured loans and investment loans. The
    results of Smith & Williamson Holdings Limited have been included in
    Other.

    The results of the reportable segments are based upon the internal
    financial reporting systems of AGF. The accounting policies used in these
    segments are generally consistent with those described in the 'Summary of
    Significant Accounting Policies' detailed in Note 1.

    -------------------------------------------------------------------------
    ($ thousands)          Investment        Trust
    Year ended             Management      Company
     November 30, 2009     Operations   Operations     Other(1)        Total
    -------------------------------------------------------------------------

    Revenue               $   475,429  $   104,286  $     6,399  $   586,114
    Operating expenses        293,774       72,802            -      366,576
    Amortization and
     other expenses            93,880        2,822        5,983      102,685
    -------------------------------------------------------------------------
    Segment income
     before taxes         $    87,775  $    28,662  $       416  $   116,853

    Total Assets          $ 1,175,612  $ 4,500,310  $         -  $ 5,675,922
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    ($ thousands)          Investment        Trust
    Year ended             Management      Company
     November 30, 2008     Operations   Operations     Other(1)        Total
    -------------------------------------------------------------------------

    Revenue               $   606,396  $   108,918  $    10,256  $   725,570
    Operating expenses        338,782       73,113            -      411,895
    Amortization and
     other expenses           159,816        2,772        9,252      171,840
    -------------------------------------------------------------------------
    Segment income
     before taxes         $   107,798  $    33,033  $     1,004  $   141,835

    Total Assets          $ 1,207,142  $ 5,326,817  $         -  $ 6,533,959
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Other revenue relates to S&WHL.

    Note 24: Commitments

    The Company is committed under operating leases and purchase obligations
    for office premises and equipment. The Company is also committed for a
    10-year period expiring 2015 to reimburse Citigroup Fund Services Inc.
    (Citigroup) and CitiFinancial should annual revenues derived from AGF
    fund administration services fall below predetermined levels. The
    approximate minimum annual cash payments related to the above are as
    follows:

    ----------------------------------------
    ($ thousands)
    ----------------------------------------
    2010                        $    22,229
    2011                             16,813
    2012                             13,385
    2013                             11,628
    2014                              7,523
    Thereafter                       15,268
    ----------------------------------------
    ----------------------------------------

    AGF Trust has outstanding mortgage commitments of $8.8 million as at
    November 30, 2009 (2008 - $17.4 million) at rates of interest prevailing
    at the time the commitments were issued. Any interest rate commitment has
    a term of less than 60 days.

    Note 25: Guarantees

    The Company, under an indemnification agreement with each of the
    directors of the Company, as well as directors of the mutual fund
    corporations, has agreed to indemnify the directors against any costs in
    respect of any action or suit brought against them in respect of the
    proper execution of their duties. To date, there have been no claims
    under these indemnities.

    Note 26: Contingent Liabilities

    (a) The Company, through its subsidiary AGF Investments Inc., is a party
        to two class action proceedings alleging inappropriate frequent
        trading market timing activity in certain funds. These proceedings
        were instituted in the provinces of Quebec and Ontario in 2004 and
        2005, respectively. The authorization motion for the Quebec action
        was heard in April 2009 and a decision is still pending. The
        certification motion for the Ontario action was heard in December
        2009 and was dismissed.

    (b) The Company believes that it has adequately provided for income taxes
        based on all of the information that is currently available. The
        calculation of income taxes in many cases, however, requires
        significant judgment in interpreting tax rules and regulations. The
        Company's tax filings are subject to audits, which could materially
        change the amount of current and future income tax assets and
        liabilities, and could, in certain circumstances, result in the
        assessment of interest and penalties.

    (c) There are certain claims and potential claims against the Company.
        None of these claims or potential claims are expected to have a
        material adverse effect on the consolidated financial position of the
        Company.


    Consolidated 10-Year Review

    -------------------------------------------------------------------------
    ($ thousands, except
     per share amounts)
    Years ended
     November 30        2009        2008        2007        2006        2005
    -------------------------------------------------------------------------

    Operations
      Total
       revenue
       (continuing
       opera-
       tions)    $  586,114  $   725,570  $  780,320  $  607,202  $  546,567
      Net income     97,694      128,592     178,687     112,657      91,872
      Dividends      88,821       84,860      70,151      61,521      50,522

    Financial
     position
      Working
       capital
       (deficit) $ (738,223) $(1,360,365) $ (735,103) $ (404,223) $  (31,958)
      Long-term
       debt         143,648      123,740     184,486      56,000      17,364
      Shareholders'
       equity     1,130,403    1,107,422   1,069,002     979,771     918,326
      Return on
       equity          8.7%        11.8%       17.4%       11.9%       10.0%

    Per share
      Net income
       - basic   $     1.10  $      1.44  $     1.99  $     1.26  $     1.02
      Dividends        1.00         0.95        0.78        0.69        0.56
      Book value
       (continuing
       operations)    12.72        12.40       12.02       10.99       10.30
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    ($ thousands, except
     per share amounts)
    Years ended
     November 30       2004         2003        2002        2001        2000
    -------------------------------------------------------------------------

    Operations
      Total
       revenue
       (continuing
       opera-
       tions)    $  545,393  $   510,571  $  637,660  $  630,525  $  500,377
      Net income     77,287       44,016     119,839     163,754      95,931
      Dividends      37,474       27,150      22,967      19,577      14,092

    Financial
     position
      Working
       capital
       (deficit) $   56,363  $    62,490  $   95,287  $   (9,950) $  (86,692)
      Long-term
       debt          68,292      112,192     225,403      165,481     278,051
      Shareholders'
       equity       914,366      903,360     887,566      764,707     480,091
      Return on
       equity          8.5%         4.9%       14.5%        26.3%       25.1%

    Per share
      Net income
       - basic   $     0.85  $      0.48  $     1.34  $      1.84  $     1.12
      Dividends        0.41         0.30        0.26         0.22        0.18
      Book value
       (continuing
       operations)    10.08         9.79        9.74         8.56        5.78
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    This report contains forward-looking statements with respect to AGF,
    including its business operations, strategy, financial performance and
    condition. Although Management believes that the expectations reflected
    in such forward-looking statements are reasonable, such statements
    involve risks and uncertainties. Actual results may differ materially
    from those expressed or implied by such forward-looking statements.
    Factors that could cause results to differ materially include, among
    other things, general economic and market factors including interest
    rates, business competition, changes in government regulations or in tax
    laws, and other factors discussed in materials filed with applicable
    securities regulatory authorities from time to time.

    

SOURCE AGF

For further information: For further information: AGF Management Limited shareholders and analysts, please contact: Greg Henderson, CA, Senior Vice-President and Chief Financial Officer, (416) 865-4156, greg.henderson@AGF.com; Deirdre Neary, Director, Investor Relations, (416) 815-6268, deirdre.neary@AGF.com; Media, please contact: Lucy Becker, Vice-President, Public Relations & Public Affairs, (416) 865-4284, lucy.becker@AGF.com

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