AGF Management Limited Reports Record Results For Fiscal 2007



    Pre-tax income from continuing operations up 95.6% and assets under
    management up 25.7% compared to prior fiscal year

    TORONTO, Jan. 30 /CNW/ - AGF Management Limited (AGF) today announced
record financial results for the year ended November 30, 2007. AGF also
announced a 25% increase to quarterly dividends on its Class A voting common
and Class B non-voting shares from 20 cents per share to 25 cents per share,
effective March 2008. AGF was ranked first in long-term net sales among all
Canadian non-bank mutual fund firms for the fiscal year ended November 30,
2007, recording $2.4 billion in net sales.
    "Strong financial results continued into the fourth quarter, closing out
an extremely successful year," said Blake C. Goldring, Chairman and Chief
Executive Officer, AGF. "We continue to focus on delivering value over the
long term and I am confident that we will reach new heights in the next
chapter of our history."
    In fiscal 2007, consolidated revenue from continuing operations rose to
$780.3 million compared with $607.2 million in the prior year, with both
operating segments reporting year-over-year increases. Earnings before
interest, taxes, depreciation and amortization (EBITDA) from continuing
operations were $357.2 million for fiscal 2007, compared with $248.5 million
for 2006.
    Income from continuing operations before taxes for the year ended
November 30, 2007 was up 95.6% to $222.6 million, compared with $113.8 million
for 2006. Net income from continuing operations for fiscal 2007 was up 72.3%
to $175.9 million or $1.93 per share diluted, compared with $102.1 million or
$1.14 per share diluted for 2006. The year-over-year increase in net income
was affected by the inclusion in 2006 of a recovery in income tax expense of
$13.5 million, the result of the Canadian federal income tax reduction that
was substantively enacted in June 2006.
    Total assets under management (AUM) increased by 25.7%, rising to
$53.7 billion at the end of fiscal 2007 from $42.8 billion as at November 30,
2006. Over the same period, institutional and private client assets grew 48.9%
and mutual fund assets rose 11.9%. Institutional and high-net-worth assets
grew as a result of strong investment performance, new mandates and the
acquisition of Highstreet Partners Limited (Highstreet). The Highstreet
acquisition, which closed on December 1, 2006, added $4.8 billion in AUM. The
Trust Company Operations segment also continued to grow significantly with
total loan assets rising 59.6% year-over-year to $3.7 billion.
    Dividends paid per share rose 13.0% in fiscal 2007. AGF has paid
dividends for over 25 years and has increased its dividend for 11 years
consecutively, including the announcement today. The consistency of our
dividend increases is a testament to the stability of our corporate structure
and business model.

    January 2008 Sales Results

    On February 4, 2008, AGF will release sales figures for the month of
January 2008. Market volatility in January 2008 has created a challenging
environment for the sales of long-term funds. Two retail institutions redeemed
$101.8 million due to the rebalancing of Principal Protected Notes and the
internalization of a portfolio by a third party. Redemptions of long-term
funds, as at January 25, 2008, excluding the above mentioned amount, is
$137.2 million. "The current market environment poses challenges to the
industry as a whole. Our business is highly correlated to overall market
sentiment. Cyclicality is a feature of the industry, and we have successfully
faced similar conditions during our 50 years in business," said Goldring.

    Conference Call

    AGF will host a conference call to review its earnings results today at
11:00 a.m. EST. 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.streamlogics.net/agf/jan30-08/index.asp. Alternatively, the
call can be accessed by dialling 1-866-319-8623 (toll-free in North America).
A complete archive of this discussion along with supporting materials will be
available at the same webcast address by 5 p.m. EST.

    Stakeholder Day

    On February 20, 2008 at 9:00 a.m. EST, AGF will host its second annual
stakeholder day, which will consist of presentations by AGF executives along
with a question and answer session. The event is designed to provide a deeper
understanding of AGF Management Limited and its various companies, and the
business objectives and strategic priorities on which the Company is focused.
AGF will invite a group of investment professionals and media to attend the
event and the session will be webcast to allow participation by a broader
audience. The live audio webcast with supporting materials will be available
in the Investor Relations section of AGF's website.

    AGF Management Limited
    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
    CONDITION AND RESULTS OF OPERATIONS

    For the year ended November 30, 2007

    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. The forward-looking
information is provided only as of the date of this MD&A. 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. 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, performance and
opportunities. While we consider these factors and assumptions to be
reasonable based on information currently available, they may be proved 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 redemption 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. 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. Please see the
'Risk Factors that May Affect Future Results' section for a further discussion
of factors that may affect actual results.

    Consolidated Performance

    Overview

    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, 2007, compared with November 30, 2006, and the results of
operations for the year ended November 30, 2007 compared with the
corresponding period of 2006. A discussion of the results for the three months
ended November 30, 2007 compared with the three months ended November 30, 2006
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, 2007. Unless otherwise
indicated, all amounts are in Canadian dollars and have been derived from our
Consolidated Financial Statements prepared in accordance with Canadian
generally accepted accounting principles ('GAAP'). We also utilize non-GAAP
financial measures to assess each of our operating segments and to assess 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, including the
reclassification arising from the sale of discontinued operations.
    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.
    AGF Management Limited is one of Canada's largest independent mutual fund
and investment management companies with operations and investments in Canada,
the U.K., Ireland and Asia. AGF finished the fiscal year with $53.7 billion in
assets under management ('AUM'). Fiscal 2007 represented our 50th anniversary.
The American Growth Fund was launched in 1957, making it the first U.S.
equities fund for Canadians. Fifty years later, as at November 30, 2007, we
offered over 50 domestic and international mutual funds, as well as managed-
asset programs (sold under our Elements and Harmony brands). We also have a
substantial institutional investment management business, high-net-worth
business, and a rapidly growing trust company.
    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 principal subsidiaries and associated companies included within each
of our reportable segments, which are collectively referenced to as the AGF
Group of Companies ('AGF'), include:

    Investment Management Operations Segment

    The Investment Management Operations segment began in 1957. In the
50 years of operations, this segment has evolved from a Canadian-based mutual
fund operation to a global investment platform with $53.7 billion of AUM in
the mutual fund, institutional, and high-net-worth markets. The operations
within this segment are highly integrated and consist of the following legal
entities:

    AGF Funds Inc. ('AGFFI') - provides investment management and advisory
services and is responsible for the sales and marketing of the AGF mutual
funds. Based on AUM, AGFFI is one of the larger mutual fund organizations in
Canada. AGFFI manages over 50 mutual funds, AGF Harmony managed-asset program
and the evolutionary AGF Elements portfolios.

    AGF Asset Management Group Limited ('AMGL') - provides investment
management and counselling services for institutions, corporations,
endowments, estates, and high-net-worth clients. This group includes the
operations of Cypress Capital Management Limited in Vancouver, Highstreet
Asset Management Inc. in London, Ontario, Doherty & Associates Limited in
Ottawa, and Magna Vista Investment Management Limited (formerly AGF Private
Investment Management Limited) in Montreal.

    AGF International Advisors Company Limited ('AGFIA') - Established in
1991, this Dublin-based operation provides investment research on advisory
services for European and other international markets for a number of AGF
mutual funds and other related clients. In addition, they also have global
institutional investment management and advisory mandates.

    AGF Asset Management Asia Limited ('Asia') - Established in 1996, this
Singapore-based operation provides investment research and advisory services
on Asian markets for the AGF mutual funds and other clients.

    Trust Company Operations Segment

    AGF Trust Company ('AGF Trust') - in operation since 1988, AGF Trust has
$3.7 billion in loan assets and offers a broad range of web-enabled products
and services including GICs, term deposits, real estate secured loans and
investment loans, and Home Equity Lines of Credit ('HELOC'). AGF Trust is
federally incorporated, licensed across Canada and is a member of the Canadian
Payments Association.

    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)8.8 billion of assets under management. We
hold a 30.9% interest in this company as at November 30, 2007.

    The following discussion provides details of our overall corporate
business strategy and its achievements in fiscal 2007, as well as our key
performance indicators, which are measures that we use to determine whether we
have been successful in achieving our stated strategy.
    It is also important to understand that significant risks and
uncertainties related to our business exist, which may affect the achievement
of our objectives and strategies. An overview of Risk Factors that May Affect
Future Results related to our business and how we manage these risks has also
been provided.
    Finally, a discussion of Critical Accounting Policies follows. These
accounting policies are an integral part of the preparation of our financial
statements and require us to make estimates and assumptions that affect the
amount of assets, liabilities, revenues and expenses reported in our financial
statements.
    With an understanding of our corporate strategy, relevant measures to
determine success, the risk factors and our critical accounting policies, the
discussion that follows should provide the readers of this material with a
management perspective of our operations.

    Corporate Strategy

    AGF Management Limited will foster the development of best-in-class
operating segments to provide world-class financial services 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. In our 2006 MD&A, we indicated that our principal focus in fiscal
2007 would be to enhance our client-centric approach and promote our
international investment management capabilities in multiple channels. In
2008, this continues to be our focus, which will translate into long-term
improved financial results.
    In terms of measuring long-term shareholder growth, we look to the
following measures as indicators of achievement:

    
    -   Revenue growth driven by new sales, market performance and client
        retention
    -   Earnings before interest, taxes, depreciation, and amortization
        (EBITDA) growth
    -   Improvement in EBITDA and pre-tax margins

    Year-over-year improvement in these measures will result in improved cash
flows as well as improved return on equity. Our objective is the return of
fair share of the annual cash flow to shareholders in the form of dividends
and through share-buy-backs, with the remaining cash flow being invested in a
manner intended to support future growth.
    In 2007 we achieved the following with respect to our stated strategy and
long-term value creation for shareholders:

    -   Financial results for fiscal 2007 were the best in AGF's history with
        EBITDA increasing by 43.7% over 2006 to $357.2 million. Consolidated
        EBITDA margins improved to 45.8% in fiscal 2007 from 40.9% in
        fiscal 2006. These strong financial results contributed to our return
        on equity increasing to 17.4% in fiscal 2007 from 11.9% in
        fiscal 2006.
    -   Within the Investment Management Operations segment, we better
        aligned our operations to clients that we serve. As a result, we have
        realigned our sales and support efforts for retail clients, brokers,
        advisors, institutional and high-net-worth clients. Both
        organizations will leverage our investment management capabilities
        and expertise for each of these client groups.
    -   Our client-centric approach resulted in net sales improvement in our
        core mutual fund business. During fiscal year 2007, we recorded
        $2.4 billion in net sales, a strong improvement over the $0.4 billion
        recorded in the prior year.
    -   At the 2007 annual Canadian Investment Awards, three funds were once
        again recognized for their success:

        -  AGF European Equity Class: winner for a second consecutive year in
           the European Equity Fund Award category. It is now a five-time
           winner since 2001.
        -  AGF Precious Metals Fund: winner for a second consecutive year in
           the Precious Metals Equity Fund Award category. It is now a
           three-time winner since 2001.
        -  AGF Emerging Markets Fund: winner for the third consecutive year
           in the Emerging Markets Equity Fund category.

        In addition, Blake C. Goldring, Chairman and Chief Executive Officer,
        was honoured with the industry's Person of Influence of the Year
        award. This award is presented to an individual who has proven
        superior performance and made an outstanding contribution to the
        financial community during the previous twelve months.

    -   On December 1, 2006, we purchased 79.9% of Highstreet Partners
        Limited, which wholly owns Highstreet Asset Management Inc., an
        investment counsel firm based in London, Ontario, with $4.8 billion
        in assets under management. Rob Badun, formerly Chief Executive
        Officer of Highstreet, was appointed the president of AMGL and is
        responsible for overseeing the strategic plan for growth in the
        institutional and high-net-worth businesses. The Highstreet
        acquisition expanded our presence and capabilities in the
        institutional market and the high-net-worth market. Highstreet's
        investment style is quantitative in nature, which is a complement to
        our existing investment management expertise.
    -   Total assets under management of $53.7 billion as at
        November 30, 2007, increased by 25.7% over the $42.8 billion of
        assets as at November 30, 2006. Excluding the $4.8 billion of
        AUM acquired with the acquisition of Highstreet Partners Limited as
        described above, organic growth in assets under management for the
        year was 14.4%.
    -   We delivered value directly to our shareholders through dividend
        payments and our share buyback program.

           i)  Dividends paid on AGF Class A Voting Common Shares and
               AGF Class B Non-Voting Shares ('AGF Class B Shares') increased
               to $70.2 million in 2007 as compared with $61.5 million in
               fiscal 2006. The annual per share dividend rate increased to
               $0.80 per share compared to $0.72 per share a year earlier.
           ii) We continued our share buyback program. We repurchased
               1,437,800 AGF Class B Shares during 2007 as compared with
               repurchases of 700,000 shares in fiscal 2006. Blackout
               restrictions and limited availability of large blocks of AGF
               Class B Shares limited repurchase activity in 2007.

           Including dividends and share repurchases, we returned 72.7% of
           our free cash flow to shareholders. We define free cash flow as
           cash flow from operations before net change in non-cash balances
           related to operations, less selling commissions paid. Starting
           with our dividend payment in March of 2008, our annual dividend
           rate will increase to $1.00 per share.

    -   AGF Management Limited has supported the growth of AGF Trust by
        investing $86.5 million in 2007, bringing our total investment of
        debt and equity capital to $221.3 million. AGF Trust real estate
        secured loans have grown 68.4% over the prior year and investment
        loans have grown 52.1%. AGF Trust now has $3.7 billion in loan assets
        and is a significant contributor to the financial results of AGF. The
        estimated value of AGF Trust is well in excess of the capital
        invested in the business.
    -   In fiscal 2007, we concluded the sale of Investmaster, completing our
        initiative to sell non-core business operations.

    We remain committed to our corporate strategy, which targets
sustainability, profitability and value for our shareholders in the years to
come. Further discussions of specific business segment strategies follow.

    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 key performance indicators are not measurements in
accordance with Canadian GAAP and 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 key performance indicators 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 the potential to deliver cash flow.
    We derive our revenue principally from a combination of the following:

    -   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 expense, income taxes and
depreciation and amortization. EBITDA is a standard measure used in the mutual
fund industry by management, investors and investment analysts in
understanding and comparing results. We believe this is an important measure
as it allows us to assess our investment management businesses without the
impact of amortization. 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 therefore are
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 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                              2007           2006
    -------------------------------------------------------------------------

    Net cash provided by continuing operating
     activities                                   $     400.1    $     222.9
    Less: net changes in non-cash balances
     related to operations                               86.7            8.6
    -------------------------------------------------------------------------
    Cash flow from continuing operations          $     313.4    $     214.3
    -------------------------------------------------------------------------

    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                              2007           2006
    -------------------------------------------------------------------------

    Cash flow from continuing operations
     (defined above)                              $     313.4    $     214.3
    Less: selling commissions paid                      154.3          101.4
    -------------------------------------------------------------------------
    Free cash flow                                $     159.1    $     112.9
    -------------------------------------------------------------------------

    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 to which 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                              2007           2006
    -------------------------------------------------------------------------

    EBITDA                                        $     357.2    $     248.5
    Divided by revenue                                  780.3          607.2
    -------------------------------------------------------------------------
    EBITDA margin                                       45.8%          40.9%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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 to
which 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.

    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                              2007           2006
    -------------------------------------------------------------------------

    Income before taxes and non-segmented items   $     222.6    $     113.8
    Divided by revenue                                  780.3          607.2
    -------------------------------------------------------------------------
    Pre-tax profit margin                               28.5%          18.7%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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. ROE is a KPI that we use to assess prospective
investments and to monitor past investments.

    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                              2007           2006
    -------------------------------------------------------------------------

    Net income                                    $    178.7     $     112.7
    Divided by average shareholders' equity          1,024.4           949.0
    -------------------------------------------------------------------------
    Return on equity                                   17.4%           11.9%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    b) Investment Management Operations

    Assets Under Management ('AUM')

    The amount of AUM is critical to our business since it is from these
assets that we generate fees from our mutual fund, institutional 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 (Market Appreciation (Depreciation) of Investment
    Portfolios)

    Investment performance, which 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 relative investment
performance may result in redemptions, which reduce our AUM levels and
management fee revenues. Strong relative investment performance may also
contribute to gross sales growth or reduced levels of redemptions.

    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
business separately. Due to the reporting systems utilized in these
businesses, we do not compute an average daily AUM figure for these
businesses.

    EBITDA Margin

    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 to which 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                              2007           2006
    -------------------------------------------------------------------------

    EBITDA                                        $     298.9    $     210.9
    Divided by revenue                                  674.6          537.0
    -------------------------------------------------------------------------
    EBITDA margin                                       44.3%          39.3%
    -------------------------------------------------------------------------

    Pre-tax Profit Margin

    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 to which 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.

    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                              2007           2006
    -------------------------------------------------------------------------

    Income before taxes and non-segmented items   $     176.7    $      80.6
    Divided by revenue                                  674.6          537.0
    -------------------------------------------------------------------------
    Pre-tax profit margin                               26.2%          15.0%
    -------------------------------------------------------------------------

    c) Trust Company Operations

    Loan Asset Growth

    In the Trust Company Operations segment, we focus on growth 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 improve our
profits in the Trust Company Operations segment.

    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                              2007           2006
    -------------------------------------------------------------------------

    Interest income                               $     236.7    $     131.4
    Less: interest expense                              158.5           84.0
    -------------------------------------------------------------------------
    Net interest income                           $      78.2    $      47.4
    -------------------------------------------------------------------------

    Net Interest Margin

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

    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                              2007           2006
    -------------------------------------------------------------------------

    Net Interest Income                           $      78.2    $      47.4
    Divided by average yearly total loan balance      3,019.6        1,786.8
    -------------------------------------------------------------------------
    Net Interest Margin                                 2.59%          2.65%
    -------------------------------------------------------------------------

    Efficiency Ratio

    The efficiency ratio is a standard lending-industry KPI which measures the
efficiency of the organization. We use this ratio to ensure that expenses are
contained as AGF Trust 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                              2007           2006
    -------------------------------------------------------------------------

    Selling, general and administrative expense   $      36.4    $      24.1
    Add: amortization expense                             1.7            1.1
    -------------------------------------------------------------------------
    Non-interest expense                          $      38.1    $      25.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Other income                                  $       8.2    $       5.0
    Gain from securitization and related items           10.8           12.6
    -------------------------------------------------------------------------
    Non-interest income                           $      19.0    $      17.6
    -------------------------------------------------------------------------

    Net interest income                           $      78.2    $      47.4
    Add: non-interest income                             19.0           17.6
    -------------------------------------------------------------------------
    Total of net interest income and non-interest
     income                                       $      97.2    $      65.0
    -------------------------------------------------------------------------
    Efficiency ratio                                    39.2%          38.8%
    -------------------------------------------------------------------------

    EBITDA Margin

    EBITDA margin provides useful information to management and investors as
an indicator of our operating performance in our Trust Company Operations
segment. We believe EBITDA margin is a valuable measure since it assesses the
extent to which 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                              2007           2006
    -------------------------------------------------------------------------

    EBITDA                                        $      49.8    $      32.4
    Divided by revenue                                   97.2           65.0
    -------------------------------------------------------------------------
    EBITDA margin                                       51.2%          49.8%
    -------------------------------------------------------------------------

    Pre-tax Profit Margin

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

    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                              2007           2006
    -------------------------------------------------------------------------

    Income before taxes and non-segmented items   $      48.1    $      31.3
    Divided by revenue                                   97.2           65.0
    -------------------------------------------------------------------------
    Pre-tax profit margin                               49.5%          48.2%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Risk Factors and Management

    Risk is the responsibility of the Executive Committee of AGF Management
Limited. The group is made up of the Chairman and Chief Executive Officer
(CEO) of AGF Management Limited, the Senior Vice-President and Chief Financial
Officer of AGF Management Limited, the Senior Vice-President and General
Counsel of AGF, as well as the presidents of each of AGF Funds Inc., AGF Asset
Management Group Limited and AGF Trust Company.
    The Chairman and CEO is directly accountable to the Board of Directors
for all of AGF's risk-taking 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, Information
Technology, Fund Oversight, Legal and Compliance. These functions also play a
significant role in ensuring the consistency of risk management practices and
standards across the company in areas that are common to the business units.
    In addition, AGF Management Limited facilitates 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.
    AGF Trust is also subject to the Basel 2 framework, which was developed
by the Basel Committee on Banking Supervision, with the objectives of
improving the consistency of capital requirements internationally and making
required regulatory capital more risk sensitive. Basel 2 sets out several
options, which represent increasingly risk-sensitive approaches to calculating
credit-, market- and operational-risk-based regulatory capital. AGF Trust will
use the standardized approach for credit risk under the Basel 2 capital
adequacy regime. It is the simplest approach, which uses supervisory
determined risk weights to measure risk-weighted assets. The standardized
approach under the Basel 2 is principally distinguished from the prior capital
adequacy regime for AGF Trust. It provides some recognition of the credit risk
mitigation provided by mutual funds as collateral for secured investment loans
and imposes a somewhat lower risk weight for retail credit exposures than
under the prior capital adequacy regime.
    AGF Trust will use the basic indicators approach for determining capital
required related to operational risk under the Basel 2 capital adequacy
regime. The basic indicators approach uses gross income as a proxy for the
institution's overall operation risk. The capital required related to
operational risk is determined by multiplying the average of the trailing
three years' gross income by a fixed percentage.

    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 client-centric strategy and maintain our 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.
    Most of our AUM are from financial advisors or strategic partners that
offer our products 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 access to distribution channels that are independent
of our company.

    Trust Company Operations

    AGF Trust has experienced a substantial amount of growth in recent
reporting periods. The success of this fast-growing business is dependent on
systems and processes being adequate to process increasing volumes of
business. Systems or process failures could result in financial losses or an
inability to sustain high growth rates.
    The Trust Operations' lending depends on a network of independent
financial advisors, mortgage brokers and referral institutions.
    If service levels were to decline or if the Trust Operations products no
longer met the needs of clients, it might become difficult to attract new
lending business.

    Non-Company Risk Factors

    Investment Management Operations

    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. A 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. 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.
    Our revenue is highly correlated to the value of AUM. As a result, we are
exposed to general stock market fluctuations. A prolonged stock market decline
would reduce revenue and therefore earnings in our Investment Management
Operations segment.

    Trust Company Operations

    A general economic downturn and an increased unemployment rate could lead
to reduced creditworthiness of the Trust segment borrowers. This could lead to
increased default rates and an adverse impact on financial results. There is a
risk that an increase in interest rates could slow the pace of housing sales
and adversely affect growth in the residential mortgage market, which could
adversely affect the ability to sustain present growth rates.
    Credit and counterparty risk is the potential for loss due to the failure
of a borrower, endorser, guarantor or counterparty to repay a loan. This is
the most significant measureable risk that AGF Trust faces.
    Credit risk, and the review of exposures to such, is the responsibility
of the President as well as the Chief Financial Officer of AGF Trust, with
overall review of results by the Chairman and CEO as well as the CFO of AGF
Management Limited. Effective credit risk management begins with experienced
and skilled professional lending staff who operate in an environment with
clearly defined lending limits.
    We monitor both performing and non-performing loan portfolios to assess
credit risk. AGF Trust employs a disciplined approach to loan loss evaluation
with prompt identification of problem loans being a key management objective.
    Recent disruptions to credit markets have affected the traditional spread
relationship between the Banker's Acceptance rate ('BA') and the Prime lending
rate. A sustained compression in the spread between Prime and the BA rate will
lead to a reduction in the net interest margin earned by the Trust Company.
    Pricing pressures in the real estate secured or investment loan markets
could potentially result in net interest margin compression for our Trust
Company Operations segment. Net interest margin compression would adversely
affect profitability.
    Funding of the Trust Company's loan business is highly dependent upon the
Company's ability to access the Guaranteed Investment Certificate (GIC) market
through intermediaries. Failure to access the market at reasonable interest
rates may result in an inability to originate new loan assets and cause
eventual erosion on existing business relationships since GICs, once they have
matured, will likely not be renewed.
    In addition, if access to GIC markets becomes restricted, it may result
in higher interest rates being paid by the Trust Company to maintain its
standing in the GIC market, which, in turn, will result in additional costs to
Trust.
    Our Trust Company Operations segment is also exposed to stock market
levels since collateral for secured investment loans consists of mutual fund
assets, which are highly correlated to general stock market levels. In
addition, the Trust Company Operations segment is exposed to the level of
housing prices since collateral for real estate secured loans consists mainly
of residential real estate.

    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. We monitor this risk since currency fluctuation may influence 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, their revenues are calculated in Canadian dollars and the local
currency expenses are comparatively small.
    We are subject to foreign exchange risk related to our 30.9% interest in
S&WHL, which is denominated in U.K. pounds. On our balance sheet, the
investment is presented in Canadian dollars using the exchange rate prevailing
on the balance sheet date.

    Interest Rate Risk

    Excluding the AGF Trust operations, we have limited exposure to the risk
related to changes in interest rates on floating rate debt at November 30,
2007. Using average loan balances outstanding, the effect of a 1% change in
variable interest rates on this debt in fiscal 2007 would have resulted in a
change of approximately $1.6 million in interest expense for the year ended
November 30, 2007. 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, the impact of a 1% change in interest rates
either up or down would be a change of annual net interest income of
approximately $2.2 million.
    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.

    Critical Accounting Policies

    Accounting policies are an integral part of the preparation of our
financial statements in accordance with generally accepted accounting
principles (GAAP) in Canada. Understanding these policies is a key factor in
understanding our reported results of operations and financial position. For a
discussion of all of our significant accounting policies, see Note 1 of the
Notes to Consolidated Financial Statements. Certain critical accounting
policies require us to make estimates and assumptions that affect the amount
of assets, liabilities, revenues and expenses reported in the financial
statements. Due to their nature, estimates involve judgement based on
available information. Actual results or amounts could differ from estimates
and the difference could have a material impact on the consolidated financial
statements.

    Significant Accounting Changes

    (a) Financial Instruments, Hedges and Comprehensive Income

    
        On December 1, 2006, the Company adopted four new accounting
        standards: CICA Handbook Section 1530 Comprehensive Income,
        Section 3855 Financial Instruments - Recognition and Measurement,
        Section 3861 Financial Instruments - Disclosures and Presentation and
        Section 3865 Hedges. The adoption of these new standards resulted in
        changes in the accounting for financial instruments and hedges as
        well as the recognition of certain transitional adjustments that have
        been recorded in opening retained earnings or opening accumulated
        other comprehensive income as outlined below. Comparative amounts
        related to prior periods have not been restated.

        Comprehensive Income

        Section 1530 introduces Comprehensive Income, composed of the
        Company's net income and other comprehensive income ('OCI'). Other
        comprehensive income will include unrealized gains and losses on
        available-for-sale financial assets, foreign currency translation on
        net investments in self-sustaining foreign operations and changes in
        the fair market value of derivative instruments designated as cash
        flow hedges, all net of income taxes. Accumulated other comprehensive
        income ('AOCI') is a new component of shareholders' equity. The
        Consolidated Statements of Changes in Shareholders' Equity have
        replaced the Consolidated Statements of Retained Earnings in the
        Company's financial statements. The Consolidated Statements of
        Comprehensive Income have also been added to the Company's financial
        statements.

        Financial Instruments - Recognition and Measurement

        Under 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 held for
        trading, available for sale ('AFS'), held to maturity ('HTM') or
        loans and receivables. Financial liabilities are classified as either
        trading or other.

        Financial assets and financial liabilities held for trading are
        measured at fair value, with the changes in fair value reported in
        earnings. Financial assets held to maturity, loans and receivables,
        and financial liabilities other than those held for trading are
        measured at amortized cost using the effective interest method.
        Available-for-sale financial assets are measured at fair value, with
        unrealized gains and losses, including changes in foreign exchange
        rates, recognized in OCI until the financial asset is disposed of or
        becomes impaired.

        Derivative instruments are recorded on the balance sheet at fair
        value. Changes in the fair value of derivative instruments are
        recognized in earnings, except for derivatives that are designated as
        a cash flow hedge, the fair value change for which is recognized in
        OCI.

        The categories of the Company's financial assets and liabilities and
        the related transitional adjustments are:

        Available for sale:

        (i)   Short-term investments, which partially consist of investments
              in mutual funds of AGF and securities that will form the basis
              for commercial products. On transition, investments totalling
              $10.7 million were classified as available-for-sale on
              December 1, 2006, which gave rise to an adjustment to AOCI of
              $3.2 million ($2.7 million net of tax).

        (ii)  Retained interests from securitization have been re-measured to
              reflect the fair value. On transition, retained interests of
              $27.7 million were classified as available-for-sale on
              December 1, 2006, which gave rise to an adjustment to AOCI of
              $1.4 million ($1.0 million net of tax).

        Loans and receivables and financial liabilities other than those held
        for trading:

        (i)   The Company's financial assets include accounts receivable,
              real estate secured loans and investment loans and its
              financial liabilities other than those held for trading are
              comprised of deposits. On December 1, 2006, as a result of the
              adoption of 3855, the Company reclassified $15.9 million of
              related transaction costs from accounts receivable and
              $1.9 million of related fees from accounts payable and accrued
              liabilities to real estate secured and investment loans and
              deposits.

        Held-for-trading:

        Certain derivative instruments that are held for economic hedging
        purposes, and do not meet the requirements of Section 3865, are also
        classified as non-trading derivatives, but the change in fair value
        of these derivatives is recognized in other income. All non-trading
        derivatives are recorded on the Consolidated Balance Sheet in other
        assets or liabilities.

        Hedges

        Section 3865 specifies the criteria that must be satisfied in order
        for hedge accounting to be applied and the accounting for each of the
        permitted hedging strategies. Derivative instruments are used to
        manage the Company's exposure to interest rate risks and exposure 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 can be applied, a hedge
        relationship is designated as a fair value hedge or a cash-flow
        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. As a result, the opening
        balance of retained earnings was adjusted by $0.025 million. For the
        Company's detailed accounting policy on hedge accounting, refer to
        the Derivatives section in Note 1 of the Consolidated Financial
        Statements.

        Impact upon adoption of Sections 3855, 3865 and 1530

        A summary of transition adjustments recognized at December 1, 2006 as
        outlined above is as follows:

    -------------------------------------------------------------------------
                                                     Adjustment
                                                           upon
                                             As at  adoption of        As at
                                       November 30,     Section   December 1,
    (in thousands of dollars)                 2006         3855         2006
    -------------------------------------------------------------------------

    Assets
      Short-term investments            $   10,723   $    3,271  $    13,994
      Retained interest from
       securitization (current
       and long-term)                       27,660        1,352       29,012
      Accounts receivable                   96,031      (15,928)      80,103
      Real estate secured and investment
       loans (current and long-term)     2,306,623        3,183    2,309,806
    -------------------------------------------------------------------------
    Impact on total assets                               (8,122)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and shareholders'
     equity
      Deposits                           2,488,264       (7,074)   2,481,190
      Derivative instruments market
       valuation                                 -       (3,754)      (3,754)
      Future income tax                    230,305          998      231,303
      Accounts payable and accrued
       liabilities                         160,259       (1,900)     158,359
    -------------------------------------------------------------------------
    Impact on total liabilities                         (11,730)
    -------------------------------------------------------------------------

    Shareholders' equity
      Foreign currency translation
       adjustments                             159         (159)           -
      Retained earnings                    565,576          (25)     565,551

    Accumulated other comprehensive
     income
      Foreign currency translation
       adjustments related to net
       investments in self-sustaining
       operations                                -          159          159
      Unrealized gains on
       available-for-sale assets                 -        3,633        3,633
    -------------------------------------------------------------------------
    Accumulated other comprehensive income       -        3,792        3,792
    -------------------------------------------------------------------------
    Impact on shareholders' equity                        3,608
    -------------------------------------------------------------------------
    Impact on liabilities and
     shareholders' equity                            $   (8,122)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (b) Trust Operations Net Interest Income

        Commencing December 1, 2006, the presentation of the Trust Operations
        income has been revised to present net deposit interest expense and
        other interest expense in net interest income, as detailed in Note 19
        of the Consolidated Financial Statements. Comparative periods
        presented have been restated, with interest and investment income
        being reclassified from administration fees, interest and other
        revenue, and other interest expense being reclassified from interest
        on Trust Company deposits and selling, general and administrative
        expenses.

    (c) Purchase Price Allocations and Amortization of Intangible Assets

        On December 1, 2006, the Company acquired 79.9% of Highstreet
        Partners Limited ('Highstreet'). The allocation of the purchase price
        for this transaction involved significant judgements in determining
        the fair values assigned to the intangible assets acquired on
        acquisition. The determination of these fair values involved the use
        of discounted cash flow analysis, estimated future margins, estimated
        assets under management ('AUM') and estimated market growth.

        The determination of the estimated useful lives of the intangible
        assets being customer contracts involves historical redemption rates
        of the AUM and judgements as to applicability of these rates going
        forward. Based on this, the estimated useful lives of customer
        contracts acquired is seven years; accordingly, customer contracts
        will be amortized over a straight-line basis over seven years.
        Management contracts, trademarks and goodwill are not amortized, but
        are subject to an annual impairment test. Refer to Note 4 of the
        Consolidated Financial Statements for the fair value allocation of
        the net assets acquired.

    (d) Accounting Policy Choice for Transaction Costs

        On June 1, 2007, the Emerging Issues Committee of the CICA issued
        Abstract No. 166, Accounting Policy Choice for Transaction Costs
        (EIC-166). This EIC addresses the accounting policy choice of
        expensing or adding transaction costs related to the acquisition of
        financial assets and financial liabilities that are classified as
        other than held-for-trading. Specifically, it requires that the same
        accounting policy choice be applied to all similar financial
        instruments classified as other than held-for-trading, but permits a
        different policy choice for financial instruments that are not
        similar. EIC-166 will be effective for the Company on
        November 30, 2007 and requires retroactive application to all
        transaction costs accounted for in accordance with CICA Handbook
        Section 3855, Financial Instruments - Recognition and Measurement.
        Our current recognition policy for transaction costs is consistent
        with this guidance.

        Transaction costs related to trading securities are expensed as
        incurred. Transaction costs related to AFS are capitalized.
        Transaction costs related to HTM, loans and receivables, and deposits
        are generally capitalized and are then amortized using the effective
        interest method.
    

    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 (DSC)

    Selling commissions paid to brokers on mutual fund securities sold on a
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 expected future revenue
on an undiscounted basis.

    Property, Equipment and Computer Software

    Property, equipment and computer software, which is comprised of
furniture and equipment, computer hardware, computer software and leasehold
improvements and equipment under capital lease, is stated at cost, net of
accumulated amortization. Amortization is computed 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
    

    Finite Life Intangible Assets

    Finite life intangible assets, which are comprised of customer contracts
and relationships, are stated at cost, net of accumulated amortization.
Amortization is computed on a straight-line basis over 7 to 15 years based on
the estimated useful lives of these assets:

    Impairment of Long-lived Assets

    Impairment of long-lived assets 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
impairment loss is calculated by deducting the fair value of the asset or
group of assets from its carrying 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 at least an annual basis. 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. As of November 30, 2007 and 2006, the Company has
completed its annual impairment testing on the carrying values of goodwill,
management contracts and trademarks. No impairment losses were required to be
recognized as a result of this testing.

    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 specific allowances on
impaired loans, and general allowances. General allowances are based on
management's assessment of inherent, unidentified losses in the portfolio that
have not been captured in the determination of specific allowances. The
assessment includes portfolio-specific credit factors, general economic
factors and geographic exposure. Specific allowances consist of provisions for
losses on identifiable assets for which carrying values are higher than
estimated realized values.

    Impaired Loans

    Loans are classified as impaired when, in the opinion of management,
there is reasonable doubt as to the collectibility, either in whole or in
part, of principal or interest, or when principal or interest is past due
90 days, except where the loan is both well-secured and in the process of
collection. In any event, a loan that is insured by the federal government, an
agency thereof or another third-party insurer is classified as impaired when
interest or principal is past due 365 days, or in the case of other loans,
when they are contractually in arrears for 180 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
statements 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 regarding the collectibility 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 collectibility of the principal.

    Stock-based Compensation and Other Stock-based Payments

    The Company has stock-based compensation plans as described in Note 14 of
the Consolidated Financial Statements. 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 portion of their annual earnings withheld to purchase AGF's Class B
Non-Voting Shares (Class B Shares). The Company matches a portion of these
amounts. 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.
    The Company has a Restricted Share Unit ('RSU') plan for senior employees
under which certain employees are granted RSUs of Class B Shares. Compensation
expense and the related liability are recorded equally over the vesting
period, taking into account fluctuations in the market price of Class B
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 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 Shares, dividends paid
and forfeitures.
    During the year, the Company established 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 earnings in
the period the DSUs are granted.
    During 2007, the Company established a hedge program to fix the cost of
compensation related to RSUs and PSUs. Refer to Note 14(c) of the Consolidated
Financial Statements for more details.

    Accounting for Securitizations

    The Company has securitized certain registered Retirement Savings Plan
(RSP) loans through the sale of these loans to a securitization trust. In
order 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.
    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 are
different from management's estimate of future cash flows, then the gains or
losses on the securitization recognized in income will be adjusted. Note 2 to
the financial statements provides 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. If an AGF Elements portfolio does
not match or outperform its customized benchmark over a three-year period,
each individual investor will receive up to 90 basis points in additional
units, calculated based on the value of such investment at the end of its
related three-year period.
    The Company records in other 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, 2007, the Company
has recorded a liability of $6.1 million (2006 - $1.6 million).

    Future Accounting Changes

    Capital Disclosures and Financial Instruments - Disclosures and
    Presentation

    On December 1, 2006, the CICA issued three new accounting standards:
Handbook Section 1535, Capital Disclosures (Section 1535), Handbook Section
3862, Financial Instruments - Disclosures (Section 3862), and Handbook Section
3863, Financial Instruments - Presentation (Section 3863). These new standards
will be effective for the Company on December 1, 2007.
    Section 1535 specifies the disclosure of (i) an entity's objectives,
policies and processes for managing capital; (ii) quantitative data about what
the entity regards as capital; (iii) whether the entity has complied with any
capital requirements; and (iv) if it has not complied, the consequences of
such non-compliance.
    Sections 3862 and 3863 replace Handbook Section 3861, Financial
Instruments - Disclosure and Presentation, revising and enhancing its
disclosure requirements, and carrying forward unchanged its presentation
requirements. These new sections place increased emphasis on disclosures about
the nature and extent of risks arising from financial instruments and how the
entity manages those risks.

    Controls and Procedures

    Disclosure Controls and Procedures

    Pursuant to Multilateral Instrument 52-109, the chief executive officer
and chief financial officer must certify that they are responsible for
establishing and maintaining disclosure controls and procedures and have
designed such disclosure controls and procedures (or caused such disclosure
controls and procedures to be designed under their supervision) to ensure that
material information with respect to AGF, including its consolidated
subsidiaries, is made known to them and that they have evaluated the
effectiveness of AGF's disclosure controls and procedures as of the end of the
period covered by these annual filings. The Company's chief executive officer
and chief financial officer, after evaluating the effectiveness of the
Company's disclosure controls and procedures, have found them to be effective.

    Changes in Internal Controls over Financial Reporting

    Pursuant to Multilateral Instrument 52-109, the chief executive officer
and chief financial officer must also certify that they are responsible for
the design of internal controls over financial reporting (or caused them to be
designed under their supervision). Internal controls over financial reporting
are designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with Canadian generally accepted accounting principles.
During the year ended November 30, 2007, there have been no changes in AGF's
policies and procedures and other processes that comprise its internal control
over financial reporting that have materially affected, or are reasonably
likely to materially affect, AGF's internal control over financial reporting.

    Changes in Information Technology Systems

    Effective December 1, 2006, we converted our general ledger and financial
reporting system to the Multiview Financials Software. The conversion was
implemented successfully.

    Consolidated Operating Results

    The table below summarizes our Consolidated Operating Results for the
years ended November 30, 2007 and 2006:

    
    -------------------------------------------------------------------------
    ($ millions, except per share amounts)
    Years ended November 30                   2007         2006     % change
    -------------------------------------------------------------------------

    Revenue
      Investment management operations  $    674.6   $    537.0        25.6%
      Trust Company operations                97.2         65.0        49.5%
      Other                                    8.5          5.2        63.5%
    -------------------------------------------------------------------------
                                             780.3        607.2        28.5%

    Expenses
      Investment management operations       375.7        326.1        15.2%
      Trust company operations                47.4         32.6        45.4%
    -------------------------------------------------------------------------
                                             423.1        358.7        18.0%

    EBITDA(1) (continuing operations)        357.2        248.5        43.7%
      Amortization                           123.8        131.4        (5.8%)
      Interest Expense                         9.9          3.3       200.0%
      Non-controlling interest                 0.9            -          n/m
      Income Taxes                            46.7         11.7       299.2%
    -------------------------------------------------------------------------
    Net income from continuing
     operations                         $    175.9   $    102.1        72.3%
    Gain on early retirement of debt,
     net of tax                                  -         13.3
    Loss on dissolution of Limited
     Partnerships, net of tax                 (2.1)           -
    Gain (loss) on sale of discontinued
     operations, net of tax                    4.7         (2.9)
    Net earnings from discontinued
     operations, net of tax(2)                 0.2          0.2
    -------------------------------------------------------------------------
    Net income                          $    178.7   $    112.7        58.6%
    -------------------------------------------------------------------------

    Earnings per share from continuing
     operations - diluted               $     1.93   $     1.14        69.3%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) As previously defined, see the 'Key Performance Indicators and
        Non-GAAP Measures - EBITDA' section. The items required to reconcile
        EBITDA to net income, a defined term under Canadian GAAP, are
        detailed above.
    (2) On April 30, 2007, the Company sold 100% of Investmaster.
        Accordingly, Investmaster results have been reported as discontinued
        operations and previously reported results have been reclassified to
        discontinued operations.
    

    Results from Continuing Operations

    Consolidated revenues increased by 28.5% for the year ended November 30,
2007 as compared with 2006. Investment Management Operations revenue increased
by 25.6% primarily on the strength of average daily mutual fund AUM increasing
by 22.7%. In addition, there was significant growth in institutional and
high-net-worth AUM. These revenue increases were partially offset by lower
deferred sales charge revenues related to declining redemptions of mutual
funds sold on a deferred sales charge basis. Trust Company Operations revenues
increased by 49.5% in fiscal 2007 over 2006 on the strength of increased real
estate secured and investment loans. Other revenue, which represents our
equity interest in Smith & Williamson Holdings Limited (S&WHL), was higher for
the year ended 2007 as compared with 2006, due to strong performance at S&WHL.
    Expenses increased by 18.0% in fiscal 2007 as compared with 2006 as both
Investment Management Operations and the Trust Company Operations segments
experienced year-over-year expense growth. Investment management expenses were
higher due to increased trailing commissions expense and compensation expense
offset by lower investment advisory fees. The increase in the Trust Company
Operations segment was attributable to higher volume of business and increases
in expenses associated with supporting the growth.
    The combined revenue and expense impacts contributed to EBITDA increasing
by 43.7% for the year ended November 30, 2007 over the respective 2006 period
with all segments contributing to the year-over-year growth.
    Amortization expense for the year ended November 30, 2007 decreased by
5.8% compared with the corresponding period in 2006. The decrease is
attributable to the fact that certain customer contracts are now fully
amortized as compared with 2006. Amortization of deferred selling commissions
in the Investment Management Operations segment accounted for $108.0 million
(2006 - $108.2 million) of the total amortization expense.
    Interest expense increased to $9.9 million for the year ended
November 30, 2007 from $3.3 million in the same period in 2006. The increase
is primarily a result of higher average outstanding revolving term loan
balances and higher interest rates in fiscal 2007 as compared with 2006. Our
year-over-year increase in our revolving term loan of $104.0 million is
primarily attributable to our increased investment in the Trust business of
$86.5 million, the acquisition of Highstreet Partners Limited, the repurchase
of AGF Class B Shares and an increase in our dividend.
    Our effective income tax rate for the year ended November 30, 2007 was
20.9% as compared with 10.2% in 2006. Income tax expense for the year ended
November 30, 2007 was $46.7 million as compared with $11.7 million in 2006.
Income tax expense in 2007 included $2.4 million recovery related to the
impact of the Canadian federal income tax reduction to 18.5% from 19.0% by
January 1, 2011 that was substantially enacted in June 2007. Income tax
expense in 2006 included a $15.9 million reduction related to the impact of
the Canadian federal income tax reduction that was substantively enacted in
June 2006.
    The 2007 economic statement tabled by the Department of Finance on
October 30, 2007 proposed to reduce the federal corporate income tax rate to
15% from 18.5% by January 1, 2012. On December 13, 2007 these tax rate changes
were considered to be substantially enacted. As a result, our 2008 tax expense
will be reduced by $19.3 million to reflect this change.
    The impact of the above revenue and expense items resulted in net income
from continuing operations of $175.9 million in 2007 as compared with
$102.1 million in the prior year. Basic earnings per share from continuing
operations were $1.96 per share in 2007 as compared with $1.15 per share in
2006. Diluted earnings per share from continuing operations were $1.93 per
share in 2007 as compared with $1.14 per share in 2006.

    Results from Discontinued Operations

    On April 30, 2007, the Company sold 100% of Investmaster for $6.8 million
and additional contingent consideration that is not determinable at this time.
The purchase consideration included $5.0 million in cash and two notes
receivable from the buyer, totalling $1.8 million, due on April 30, 2009 and
April 30, 2010, respectively. The contingent consideration will be payable to
the Company in 2009 and 2010 if certain working capital and revenue targets
are reached by Investmaster. Accordingly, we have recorded a gain related to
the sale of $4.7 million and the results of Investmaster have been reported as
discontinued operations in accordance with Canadian generally accepted
accounting principles. Previously reported periods have been reclassified to
reflect the current period's presentation of results.
    During 2006, the Company recorded a $2.9 million loss net of tax related
to subsequent adjustments to the final purchase price on the sale of Unisen.

    Net Earnings

    Net income for the year ended November 30, 2007 was $178.7 million as
compared with $112.7 million in 2006. On February 28, 2007, the unitholders
and the respective boards of directors of the following limited partnerships
(LPs) - AGF Limited Partnership 1990, AGF Limited Partnership 1991,
20/20 Group 1990 Private Limited Partnership, 20/20 Group 1990 Limited
Partnership and 20/20 Group 1992 Limited Partnership - approved the
dissolution of each respective LP. On March 1, 2007, as part of the LP
dissolution process, the Company purchased the future distribution fees
remaining payable by the Company to the LPs or purchased the outstanding units
for total cash consideration of $3.2 million ($2.1 million net of taxes).
    The year ended November 30, 2006 included a $13.3 million non-cash gain
on repayment of debt. During 2006, we reached an agreement with Multi-Fund to
terminate our obligation for a cash payment of $3.4 million.
    For a more detailed discussion of revenue and expense items, please refer
to the individual operating segment discussions. An analysis of the 2007
fourth-quarter results compared with the corresponding period in 2006 is
included under the heading 'Fourth Quarter Analysis'.

    Return on Equity

    Return on equity of 17.4% in 2007 compared with 11.9% in 2006 represented
an increase of 46.2% for the year ended November 30, 2007 over 2006 on the
strength of increased income from continuing operations.

    Outlook

    Fiscal 2007 was a very successful year from both a financial perspective
and, more importantly, the growth in our Assets Under Management in our
investment management segment, and loan asset growth in our Trust segment.
Entering into fiscal 2008, we are in a period of extreme market volatility. We
have seen the Canadian dollar reach historic highs in relation to the U.S.
dollar and the world is facing tightening credit markets as a result of
exposures to the U.S. sub-prime markets.
    The fiscal 2007 growth positions us well to weather these issues. While
these issues may temporarily postpone the growth we enjoyed in fiscal 2007,
they also represent opportunities which each of our business will take
advantage to ensure continued growth.
    Business-specific outlooks are included in the segment discussions.

    Business Segment Performance

    We report on three business 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 and
services, including retail mutual fund operations, institutional and high
net-worth client investment counselling services. The Trust Company Operations
segment offers a wide range of trust services and 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, and the
interest expense on our long-term debt. AGF's reportable segments are
strategic business units that offer different products and services.

    Investment Management Operations

    Business and Industry Profile

    AGF is an aggressive player within the highly competitive Canadian
investment management business. We compete with numerous domestic as well as
foreign players serving the market. We believe that although the Canadian
mutual fund business is reaching the early stages of maturity, there are
opportunities for growth. We believe our status as an independent fund
manufacturer with no distribution channel conflict will benefit us as the
industry continues to evolve.
    AGF is also building a reputation internationally as an institutional
investment management firm. Our success in this area has contributed to growth
in institutional AUM of 56.0% during the 12 months ended November 30, 2007. Of
this growth, 39.3% relates to the acquisition of Highstreet on December 1,
2006, with the remainder being attributable to organic growth through new
mandates and investment performance. We believe that further developing our
reputation and relationships with international institutions will be a future
growth opportunity.
    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, brokers, banks, life insurance companies and consultants.
    During AGF's 2007 fiscal year, international funds experienced strong
inflows. The elimination of the foreign content restrictions on retirement
accounts and the acceptance of investors of the value of geographic
diversification contributed to this trend. More recently, the Canadian dollar
had risen and stock markets have been volatile due to challenges in the credit
markets. This has caused a pause in the popularity of international funds.
However, we believe that as markets stabilize, international investing will
regain momentum and AGF is in a position to benefit.

    Investment Management Operations Segment Strategy

    Over the past two years, we stated that our primary focus was to continue
to enhance the client-centric model in our investment management business,
which services the retail mutual fund, institutional and high-net-worth
markets. In order to achieve this, we maintained a high level of contact with
our clients and refined the way we deal with advisors. On the retail mutual
fund side, we implemented a client engagement strategy that defines the way we
interact with our clients and allows us to deliver services in a predictable
manner. We implemented an advisor contact evaluation program, a method of
reaching out to advisors to determine whether we are having a positive impact.
We also utilized our activity management program and our customer relationship
management system to ensure we were making the right number of contacts and
engaging in the most effective activities. During 2007, this consistent effort
resulted in the following:

    
    -   Our net sales improved greatly. During 2007, we recorded $2.4 billion
        in net sales, which is a strong improvement over the $0.4 billion in
        net sales recorded in the prior-year period.
    -   At the 2007 annual Canadian Investment Awards, three funds were
        recognized for their success. Each of these funds were repeat award
        winners:

        -  AGF European Equity Class: winner for a second consecutive year in
           the European Equity Fund Award category. It is now a five-time
           winner since 2001.
        -  AGF Precious Metals Fund: winner for a second consecutive year in
           the Precious Metals Equity Fund Award category. It is now a three-
           time winner since 2001.
        -  AGF Emerging Markets Fund: winner for the third consecutive year
           in the Emerging Markets Equity Fund category.

    -   Lipper, a mutual fund-rating company, awarded the following AGF funds
        top honours for delivering consistently strong risk-adjusted
        performance:

        -  AGF Canadian Balanced Fund: best one-year returns in the Canadian
           Income Balanced category.
        -  AGF China Focus Class: best five-year returns in the Asia ex-Japan
           Equity category.
        -  AGF Global Financial Services Class: best five-year returns in the
           Financial Services category.
        -  AGF Precious Metals Fund: best five-year returns in the Precious
           Metals category.
        -  AGF Canadian Resources Fund: best ten-year returns in the Natural
           Resources category.

    -   We successfully launched a number of products, such as the Global
        Dividend Fund, and the new Harmony Balanced Portfolios, during the
        year, as well as providing innovative offerings with respect to our
        existing fund lineup by offering cash distributions on certain funds.

        The strategic priorities for our investment management operations for
        2008 are to:

    -   Continue to focus on predictable excellence in three core activities:
        investment management, relationship management and product
        management.
    -   Promote international investment management competency across
        multiple channels.
    -   Pursue strategic acquisitions to supplement organic growth.
    

    Focus on Three Core Activities

    We are focused on building predictable excellence in three core areas:
investment management, relationship management and product management.

    Investment Management

    We believe that our strong long-term investment performance record will
be maintained by having the correct complement of people, with the right tools
and a heavy focus on fund management through strong teams, as well as research
and rigorous fundamental analysis.
    Our investment performance is bolstered by our presence in international
markets. In addition to investment professionals in various locations across
Canada, we maintain investment management offices in Dublin and Singapore.

    Relationship Management

    We have chosen to utilize independent channels of distribution. We
believe that supporting independent advice is an attractive distribution
model.
    We are committed to our effective multi-channel distribution approach. We
now have tactical plans in place in three broad distribution categories: the
advisor channel, national accounts and institutional. In each channel, we
strive to make it simple and efficient to do business with AGF.

    Product Management

    Our client-centric approach includes listening to advisors and developing
and marketing products in a way that meets advisors' needs. This approach was
recognized at the 2006 Canadian Investment Awards where AGF was given
Honourable Mention in the category of Canadian Investment Marketing Awards for
its marketing of Elements. Launched in November 2005, Elements is an example
of a product perfectly tailored to the needs of advisors. Elements has
achieved more than $2 billion in assets since inception, making it one of the
most successful product launches in AGF's history.
    In fiscal 2007, we provided innovative offerings by announcing the
addition of Series T and V options on many of our funds, offering tax-deferral
benefits and monthly cash payments targeted at 5% and 8% annually
respectively. The AGF Global Dividend Fund was launched based on feedback from
advisors who sought to increase global diversification and reduce volatility
in client portfolios. Finally, in early January 2008, we launched our initial
quantitative fund offerings with three new funds to be managed by Highstreet.

    Promote International Investment Management Competency

    AGF has a strong product lineup and a diverse range of investment
alternatives. We have a particular strength in the area of international
investment management. We have had success marketing our international money
management expertise to international institutional clients. Our success in
this area has contributed to growth in institutional AUM of 56.0% during the
12 months ended November 30, 2007. Our product lineup includes some superior
performers. The following international funds won awards at the 2007 Canadian
Investment Awards (also noted on previous page):

    
    -   AGF Emerging Markets Fund won the Emerging Markets Equity Fund Award,
        a winner for the third consecutive year
    -   AGF European Equity Class won the European Equity Fund Award, a five-
        time winner since 2001
    

    The depth of our international investment management expertise creates
opportunities; emerging markets is a prime example. As emerging economies
continue to see structural improvements, we believe that Canadians will
increasingly look to emerging markets as a way to diversify and seek suitable
returns. AGF is well positioned in this space with attractive products.

    Pursue Strategic Acquisitions to Supplement Organic Growth

    Our organic growth will be supplemented by acquisitions in the investment
management segment. We have a disciplined acquisition approach. AGF targets
long-term, after-tax return on investment in excess of 15% per annum. We look
for acquisitions that have a financial as well as a strategic rationale, such
as our transactions with Highstreet Partners Limited.

    AGF Asset Management Group Limited

    On December 1, 2006, AGF acquired 79.9% of Highstreet Partners Limited,
which wholly owns Highstreet Asset Management Inc., an investment counsel firm
based in London, Ontario with $4.8 billion in assets under management.
Highstreet joined AMGL, and Highstreet's chief executive officer, Rob Badun,
became president of AMGL. Rob Badun is now working with the AGF group of
companies to maximize growth strategies in both the institutional and
high-net-worth businesses. Part of the strategy will include ensuring that AGF
takes advantage of Highstreet's proprietary quantitative investment process
that has proven to consistently outperform. The strategy will also leverage
the unique offerings of AGF Asset Management Group Limited's other three
platforms: Magna Vista Investment Management in Montreal, Doherty & Associates
in Ottawa and Cypress Capital Management in Vancouver, and will also take
advantage of the investment management capabilities of AGFFI, AGFIA, and Asia
in the institutional space. The strategic plan is being executed and includes
items such as:

    
    -   Realizing synergies with other AGF Companies as evidenced by the
        early January 2008 launch of three new quantitative funds into the
        retail line-up that will be managed by Highstreet. These offerings
        include the AGF Canadian All Cap Equity Fund, the AGF Global High
        Income Fund and the AGF Global Balanced High Income Fund
    -   Delivering consistent investment performance harnessed to an
        international institutional sales force.

    Assets Under Management

    The primary sources of revenue for AGF's Investment Management Operations
are management and advisory fees. The amount of management and advisory fees
is dependent on the level and composition of AUM (AUM is equal to the net
asset value of each fund). Under the management and investment advisory
contracts between AGF and each of the mutual funds, we are entitled to monthly
fees based on a specified percentage of the average daily net asset value of
the respective fund. In addition, we earn fees on our institutional and
high-net-worth 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, 2007 and 2006:

    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                   2007         2006     % change
    -------------------------------------------------------------------------

    Mutual fund AUM, beginning of year  $   26,857   $   22,209        20.9%

    Gross sales of mutual funds              6,802        4,686        45.2%
    Redemptions of mutual funds             (4,392)      (4,249)        3.4%
    -------------------------------------------------------------------------
    Net mutual fund sales                    2,410          437

    Market appreciation (depreciation)
     of fund portfolios                        785        4,211       (81.4%)
    -------------------------------------------------------------------------

    Mutual fund AUM, end of year        $   30,052   $   26,857        11.9%

    Institutional AUM(1)                    19,822       12,704        56.0%
    High-net-worth AUM(1)                    3,869        3,210        20.5%
    -------------------------------------------------------------------------

    Total AUM, end of year              $   53,743   $   42,771        25.7%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Average daily mutual fund
     AUM for the year                   $   29,606   $   24,129        22.7%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Institutional and high-net-worth assets were previously grouped
        together
    

    Strong net sales of $2.4 billion, combined with continued market
appreciation in 2007, resulted in a 11.9% increase in mutual fund AUM over
2006. Institutional AUM increased $7.1 billion or 56.0% as a result of
investment performance, new mandates, and the acquisition of Highstreet.
High-net-worth AUM increased 20.5%. These increases resulted in total AUM
increasing $11.0 billion or 25.7% over 2006.

    Investment Performance

    Stock market performance influences the level of AUM. During the year
ended November 30, 2007, the Canadian-dollar-adjusted S&P 500 Index declined
5.6%, the Canadian-dollar-adjusted NASDAQ Index declined 4.1% and the S&P/TSX
Composite Index rose 10.0%. The total market appreciation of our mutual fund
assets net of fees for the year ended November 30, 2007, divided by the
average daily mutual fund AUM for the year, equals 2.7%.
    The impact of the U.S. dollar decline relative to the Canadian dollar on
the market value of AGF mutual funds since November 30, 2006 has been a
reduction in AUM of approximately $0.9 billion.
    Consistent with the rise in the stock market, market appreciation net of
management fees increased mutual fund AUM by $0.8 billion since November 30,
2006. For the two-year period ended November 30, 2007, 78% of ranked AUM
performed above median. Over the five-year period ended November 30, 2007, 75%
of ranked AUM performed above median.
    The composition of our mutual fund AUM is summarized as follows:

    
    -------------------------------------------------------------------------
    Percentage of total mutual fund AUM
     at November 30                                        2007        2006
    -------------------------------------------------------------------------

    Domestic equity funds                                 37.1%        37.9%
    U.S. and international equity funds                   40.6%        39.0%
    Domestic balanced funds                                8.0%         9.4%
    U.S. and international balanced funds                  2.7%         2.3%
    Domestic fixed income funds                            9.3%         9.5%
    International fixed income funds                       2.3%         1.9%
    -------------------------------------------------------------------------
                                                         100.0%       100.0%
    -------------------------------------------------------------------------

    The composition of AUM 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, 2007 and 2006.

    ($ millions)
    Years ended November 30                   2007         2006     % change
    -------------------------------------------------------------------------

    Revenue
      Management and advisory fees      $    646.5   $    507.5        27.4%
      Deferred sales charges                  20.4         25.5       (20.0%)
      Investment income and other revenue      7.7          4.0        92.5%
    -------------------------------------------------------------------------
                                             674.6        537.0        25.6%

    Expenses
      Selling, general and administrative    190.2        173.2         9.8%
      Trailing commissions                   169.6        125.3        35.4%
      Investment advisory fees                15.9         27.6       (42.4%)
    -------------------------------------------------------------------------
                                             375.7        326.1        15.2%
    -------------------------------------------------------------------------

    EBITDA(1)                                298.9        210.9        41.7%
    Amortization                             122.2        130.3        (6.2%)
    -------------------------------------------------------------------------
    Income before taxes and
     non-segmented items                $    176.7   $     80.6       119.2%
    -------------------------------------------------------------------------
    (1) As previously defined, see the 'Key Performance Indicators and Non
        GAAP Measures - EBITDA' section.
    

    Revenue

    Revenue for the Investment Management Operations segment increased by
    25.6% over the previous year, with changes in the categories as follows:

    Management and Advisory Fees

    The increase in average daily mutual fund AUM in fiscal 2007 of 22.7%
    directly contributed to a 27.4% increase in net management and advisory
    fee revenue from the same period a year ago. In addition, the acquisition
    of Highstreet on December 1, 2006 contributed to the year-over-year
    increase, combined with a 56.0% increase in institutional AUM year-over-
    year.

    Management and advisory fee revenue in fiscal 2007 is reported net of
    distribution fees paid to limited partnerships and other third-party
    financing entities of $8.5 million (2006 - $10.3 million).

    Deferred Sales Charges

    We receive deferred sales charges upon redemption of securities sold on
    the contingent DSC or 'back-end' commission basis for which we financed
    the selling commissions paid to the dealer. The DSC is generally 5.5% of
    the original subscription price of the funds purchased if the funds are
    redeemed within the first two years, and declines to zero after 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 20.0% in 2007 as compared
    with 2006, reflecting lower retail mutual fund redemptions of DSC AUM
    that are less than seven years in age.

    Investment income and other revenue

    Investment income and other revenue increased by 92.5% in fiscal
    2007 over 2006 primarily as a result of increased interest income related
    to short-term deposits.

    Expenses

    Expenses for the Investment Management Operations segment increased 15.2%
    versus the previous year. Changes in specific categories are as follows.

    Selling, General and Administrative (SG&A) Expenses

    SG&A expenses increased by $17.0 million or 9.8% in 2007 compared with
    2006. The increase is made up of the following amounts:

    
    -------------------------------------------------------------------------
    ($ millions)                                                        2007
    -------------------------------------------------------------------------

    Decrease in fund absorption expenses                          $     (4.2)
    Increase in compensation-related expenses                           11.3
    Highstreet expenses (Highstreet was acquired
     December 1, 2006)                                                   8.1
    Increase in other expenses                                           1.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                                  $     17.0
    -------------------------------------------------------------------------

    The following are explanations for expense changes in 2007 compared with
    the same period in the prior year:

    -   Absorption expense is lower due to increases in our assets under
        management. A substantial portion of the fund expenses is fixed in
        nature. Accordingly, as our mutual funds grow, absorption should
        decline.
    -   Compensation-related expenses increased due to performance-related
        bonuses and increases in stock options, RSUs and PSUs.
    -   Highstreet was purchased on December 1, 2006, and therefore there
        were no expenses recorded in fiscal 2006.
    -   Other expenses increased primarily as a result of increased spending
        on sales and marketing initiatives.
    

    Trailing Commissions

    Trailing commissions paid to investment dealers are dependent 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 increased to 0.573% for the 12 months ended November 30,
    2007 from 0.520% in the comparable 2006 period. The increase is
    attributed to an increased proportion of mutual fund AUM sold on a front-
    end basis and a change in the mix of assets towards managed-assets, such
    as Harmony and Elements, which have higher trailer fees.

    Investment Advisory Fees

    External investment advisory fees decreased by 42.4% as the average AUM
    managed by external sub-advisors decreased in 2007 as AGF International
    Advisors Company Limited assumed the role of portfolio advisor for AGF's
    International Value Fund and AGF International Value Class in September
    2006.

    EBITDA and EBITDA margin

    EBITDA for the Investment Management Operations segment were
$298.9 million for the year ended November 30, 2007, a 41.7% increase from
$210.9 million for the same period of fiscal 2006. The increase is directly
attributable to growth in AUM.
    EBITDA margin was 44.3% in fiscal 2007 compared with 39.3% in 2006.
Strong AUM growth in fiscal 2007 compared with 2006 resulted in revenues
increasing by $137.6 million on a year-over-year basis, while overall expense
growth on a year-over-year basis was $49.6 million. Accordingly, the EBITDA
margin on incremental business was 64.0% resulting in an overall increase in
EBITDA margin of 12.8%.

    Amortization

    The largest item in this category is amortization of deferred selling
commissions. Amortization also includes amortization of property, equipment
and other intangible assets, customer contracts, relationships and investment
advisory contracts.
    We internally finance all selling commissions paid. These selling
commissions are capitalized and are amortized on a straight-line basis over a
period that corresponds with their applicable DSC schedule.
    Amortization expense related to deferred selling commissions was
$108.0 million in 2007, relatively flat as compared with $108.2 million in
2006.
    During fiscal 2007, we paid $154.3 million in selling commissions,
compared with $101.4 million in 2006. As at November 30, 2007, the unamortized
balance of deferred selling commissions financed was $315.3 million, an
increase of $47.1 million from the prior-year balance of $268.2 million. The
contingent deferred sales charges that would be received if all of the DSC
securities were redeemed at November 30, 2007 were estimated to be
approximately $417.8 million (2006 - $357.4 million).

    Pre-tax profit margin

    Pre-tax profit margin of 26.2% for fiscal 2007 compared with 15.0% in
2006 was a direct result of improved year-over-year EBITDA margins and
declining amortization expense as discussed above.

    Segment Outlook

    After a period of rapid growth and consolidation of industry players, we
believe that the investment fund industry in Canada is now in the early stages
of maturity. We expect demand for investment products should remain strong due
to factors such as Canada's projected population growth and its significant
amount of unused registered Retirement Savings Plan contribution room. Mutual
funds remain a very accessible and attractive investment solution for these
retirement accounts. An aging and increasingly wealthy Canadian population
will underpin demand for high-net-worth services. We also see growth
opportunities in the institutional investment management space both
domestically and abroad.
    AGF's strategy of focusing on client-centric activities has recently
resulted in higher gross sales and declining redemptions resulting in strong
net sales. A reduction in redemptions increases the value of our franchise in
the long term, but in the short term, reduced redemptions can affect EBITDA as
DSC revenue is reduced. The strength in net sales is positive for long-term
value creation. Volatile markets combined with a strong Canadian dollar may
serve to temporarily reduce sales. In the longer term, we believe that our
extensive product lineup in the retail, institutional and high-net-worth
markets will serve to ensure future growth.

    Trust Company Operations

    Business and Industry Profile

    Through AGF Trust we offer financial solutions including GICs, real
estate secured and investment loans, and Home Equity Lines of Credit
('HELOC').
    AGF Trust investment loans consist of secured investment loans and RSP
loans distributed through financial advisors. The market for these products is
healthy and growing due to the efforts of financial advisors who continue to
broaden their suite of products as they service the needs of their customers.
AGF Trust has a competitive edge in the advisor channel as we leverage AGF's
mutual fund wholesaler relationships. AGF mutual fund wholesalers have
operated successfully in the advisor channel for 50 years.
    We offer real estate secured loans to Canadians who have sound credit but
in some cases have not met the 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 mortgage brokers. The mortgage
broker channel has experienced strong growth. Borrowers have chosen to deal
with mortgage brokers to take advantage of independent advice and competitive
rates, while lenders have provided real estate secured loans in this channel
to reduce distribution costs.

    Trust Company Operation Segment Strategy

    AGF Trust is aligned very closely with the strategy of the investment
management business. The AGF Trust sales team works collaboratively with AGF's
mutual fund wholesalers and offers a compelling suite of products to advisors,
including secured investment loans and RSP loans. The real estate secured loan
business also holds promise in adding value to the advisor relationship. As
advisors seek to manage both sides of their clients' balance sheets, AGF
Trust's lending capabilities will be in increasing demand by advisors. We also
know that as Canadians approach retirement, many will find that their home is
their largest retirement asset. Knowing this, we may be able to assist
advisors in future by leveraging our experience in the real estate secured
loan business to help advisors' clients use their homes as a financial
planning tool. We have already used our real estate secured loan business to
help advisors' clients in this manner. We strive to earn a high financial
return as well as maximize synergies with the Investment Management Operations
segment. Specific strategies include:

    
    -   continuing to focus on organic growth in our real estate secured and
        investment loan portfolios;
    -   introducing new products that directly serve the needs of advisors'
        clients;
    -   developing effective sales strategies and targeted marketing; and
    -   using disciplined loan-underwriting standards and enterprise risk
        management measures.
    

    In fiscal 2007, we continued to expand our dedicated sales staff to
promote investment lending and mortgage products. AGF Trust also continued to
support AGF investment management wholesalers with the aim to make it easier
for AGF wholesalers to serve their clients and promote trust products to
advisors.
    AGF Trust will continue to maximize operational synergies with our
investment management business through trust products that assist financial
advisors in broadening and deepening their relationship with clients. In
addition, we will focus on expanding returns by increasing our investment and
real estate secured loan portfolios. We are constantly evaluating new
opportunities, including deposit products.
    We anticipate that the execution of AGF Trust's stated strategy will
result in continued growth. Our growth plans require investing in product
development initiatives, expanding our sales and administrative teams and
investing in implementing future business improvement initiatives. As a
result, non-interest expenses may rise more than the corresponding increase in
total interest margin in 2008.
    With the recent capital market volatility being experienced around the
world, particularly in the U.S., and the related impacts of the Asset-Back
Commercial Paper (ABCP) markets, AGF Trust is prepared to continue to adapt to
changing business conditions. As previously reported, AGF Trust holds no
non-bank sponsored ABCP and has relied on the ABCP markets for only a small
portion of funding in the current and prior fiscal year. The majority of the
funding for the operations comes from the ability to sell wholesale GICs and
have been a stable source of funding in the past and we expect this trend to
continue.
    In addition, the credit quality of our loan portfolio remains strong.
Actual loan write-offs net of recoveries for the twelve months ended
November 30, 2007 were $4.8 million compared with $2.2 million for the fiscal
period ended November 30, 2006, with the percentage change being consistent
with the growth in the loan portfolio. Impaired loans expressed in a
percentage of loans outstanding were 0.7% as at November 30, 2007, which is
consistent with the rate at November 30, 2006.

    Securitization Transaction

    On March 30, 2007, AGF Trust securitized $263.6 million of RSP loans
through the sale of these loans to a securitization trust. This represented
the second securitization transaction completed by AGF Trust. As at
November 30, 2007, the balance of all securitized loans outstanding was equal
to $291.1 million (2006 - $161.3 million). When RSP loan receivables are
securitized, the transaction is recognized as a sale. Based on assumptions
such as prepayments, expected credit losses and the remaining term, a gain or
loss on the sale of loan receivables is recognized immediately in income. The
related loan assets are removed from the Consolidated Balance Sheet. As part
of the securitization, certain financial assets are retained and a servicing
liability is incurred. A gain of $8.0 million was recognized upon the close of
the securitization transaction on March 30, 2007. Each year, an amount will be
included in the financial results of AGF Trust that relates to the
amortization of retained interest and servicing liability as well as any
change in assumptions. During the year ended November 30, 2007, as a result of
the higher cost of funding in bank-sponsored securitization conduits, the
excess spread earning on securitized assets was lower than anticipated, and
the excess spread assumption for future periods was reduced in line with
estimated asset-backed commercial paper rates over the remaining life of the
securitized RSP loans. A writedown of approximately $1.9 million was incurred
as a result.

    Financial and Operational Results

    The table below highlights our operating segment results for the years
ended November 30, 2007 and 2006:

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                   2007         2006     % change
    -------------------------------------------------------------------------
    Interest income
      Loan interest                     $    213.6   $    119.3        79.0%
      Investment interest                     23.1         12.1        90.9%
    -------------------------------------------------------------------------
                                             236.7        131.4        80.1%
    Interest expense
      Deposit interest                       135.5         74.2        82.6%
      Other interest expense                  23.0          9.8       134.7%
    -------------------------------------------------------------------------
                                             158.5         84.0        88.7%
    -------------------------------------------------------------------------
    Net interest income                       78.2         47.4        65.0%

    Other revenue                              8.2          5.0        64.0%
    Securitization gains and related
     items                                    10.8         12.6       (14.3%)
    -------------------------------------------------------------------------
    Total revenue                             97.2         65.0        49.5%

    Expenses
      Selling, general and administrative     36.4         24.1        51.0%
      Provision for loan losses               11.0          8.5        29.4%
    -------------------------------------------------------------------------
                                              47.4         32.6        45.4%

    EBITDA(1)                                 49.8         32.4        53.7%
    Amortization                               1.7          1.1        54.6%
    -------------------------------------------------------------------------
    Income before taxes and
     non-segmented items                $     48.1         31.3        53.7%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) As previously defined, see the 'Key Performance Indicators - EBITDA'
        section.
    

    Revenue, Net Interest Income and Net Interest Margin

    Net interest income, which is expressed net of interest on deposits and
other interest expense, increased 65.0% over 2006 as the average loan balances
were approximately 69.0% higher than average balances in 2006. Other revenue
increased 64.0% due to higher loan balances. Securitization gains and related
items decreased by $1.8 million in 2007 as compared with 2006 as the Trust
Company recognized a $1.9 million writedown of its retained interest during
2007. These factors resulted in an overall revenue increase of 49.5% as
compared with 2006.
    The average net interest margin on lending products was 2.59% (2.65% in
2006). This spread decrease resulted principally from the impact of Prime-
Canadian Deposit Offering Rate ('Prime-CDOR') compression, as average
Prime-CDOR spread was approximately 25 basis points lower than the historical
average. The Trust Company manages interest rate risk through the use of
interest rate swaps.

    Selling, General and Administrative Expenses

    The increase in SG&A expenses of 51.0% over 2006 was as a result of
increased staffing levels to support the significant loan growth during the
past 12 months. New staff supported balance sheet growth, assisted with new
product introductions and ensured the maintenance of high service levels. In
addition, expenses increased due to higher variable compensation to
salespeople and external brokers related to the high origination levels in
2007.

    Provision for Loan Losses

    The total provision for loan losses increased by 29.4% in 2007, as
compared with the prior-year period, with the increase attributable to the
increase in our loan portfolios. The increase in the loan loss provision was
moderated by the change in the business mix to incorporate a higher proportion
of relatively lower risk secured investment loans and HELOCs.

    EBITDA and EBITDA margin

    Strong real estate secured and investment loan growth contributed to
EBITDA of $49.8 million in 2007. This represented a 53.7% increase as compared
with 2006.

    Pre-tax Profit Margin

    Pre-tax margin of 49.5% in 2007 improved marginally from 48.2% in 2006.

    Operational Performance

    The table below highlights our key operational measures for the segment
for the years ended November 30, 2007 and 2006:

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                   2007         2006     % change
    -------------------------------------------------------------------------

    Real estate secured loans(1)
      Insured mortgage loans            $    555.7   $    398.2        39.6%
      Conventional mortgage loans            765.5        538.6        42.1%
      HELOCs                                 452.4        116.2       289.3%
    -------------------------------------------------------------------------
                                           1,773.6      1,053.0        68.4%
    Investment loans(1)
      Secured investment loans             1,509.4        892.5        69.1%
      RSP loans                              381.8        346.3        10.3%
      Other loans                             15.6         14.9         4.7%
    -------------------------------------------------------------------------
                                           1,906.8      1,253.7        52.1%
    Other assets                             868.4        453.4        91.5%
    -------------------------------------------------------------------------
    Total Assets                        $  4,548.8   $  2,760.1        64.8%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net interest income                 $     78.2   $     47.4        65.0%
    Gain from securitization and
     related items                            10.8         12.6       (14.3%)
    Other revenue                              8.2          5.0        64.0%
    Non-interest expenses(2)                  38.1         25.2        51.2%
    Provision for loan losses                 11.0          8.5        29.4%
    -------------------------------------------------------------------------
    Income before taxes and
     non-segmented items                $     48.1   $     31.3        53.7%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Efficiency ratio(3)                      39.2%        38.8%
    Assets-to-capital multiple                15.6         15.8
    -------------------------------------------------------------------------
    (1) Net of loan provision and deferred sales commission.
    (2) Includes SG&A and amortization expense.
    (3) The efficiency ratio is calculated by dividing non-interest expense
        by the total of the net interest income and non-interest income.
    

    Loan Asset Growth

    Loan assets experienced continued growth during fiscal 2007. Real estate
secured loan assets grew 68.4%, as sales efforts in the mortgage broker
channel continued to be successful and were supplemented by steady
originations of a HELOC product in the advisor channel.
    New investment loan products and improved collaboration with AGF mutual
fund wholesalers contributed to overall growth in loan advances, as secured
investment loans increased 69.1% to $1.5 billion as at November 30, 2007 over
the respective period in 2006. RSP loan balances increased by $35.5 million
($216.1 million, excluding the impact of the securitization) as at
November 30, 2007, as a result of the strong RSP season and financial
advisors' continued use of AGF Trust's Internet-based loan application system.

    Efficiency Ratio

    The efficiency ratio (non-interest expense divided by the total of net
interest income and non-interest income) is a key performance indicator
utilized to ensure that expenses are contained as the Trust business grows.
The efficiency ratio remained relatively constant in 2007 as compared with
2006. The RSP loan securitization gains recorded each year are added to non-
interest income for the purposes of calculating the efficiency ratio.

    Balance Sheet

    AGF Trust's balance sheet has grown significantly during the past year,
with its financial position remaining solid. Total assets increased 64.8% to
$4.5 billion at November 30, 2007 as compared with the previous year-end. At
November 30, 2007, AGF Trust's asset-to-capital multiple stood at 15.6 times
compared with 15.8 times at the same time last year, which is below our
authorized multiple of 17.5 times. AGF Trust's risk-based capital ratio was
10.7% at November 30, 2007. AGF Trust received $86.5 million in debt and
equity capital from AGF during the year, in order to support increased asset
levels. Liquid assets were high, with $791 million in cash and cash
equivalents at November 30, 2007, excluding cash currently pledged to
counterparties. On January 1, 2008, the Basel 2 capital adequacy regime will
be implemented at AGF Trust Company. The Basel 2 regime is designed in part to
improve the link between capital requirements and the level of risk embedded
in the balance sheet of regulated financial institutions. It is anticipated
that subsequent to the application of the Basel 2 rules, AGF Trust's risk-
weighted capital adequacy ratios will improve.

    Loan Portfolio Credit

    Portfolio credit quality remains consistent as at November 30, 2007
compared with the prior year. The general allowance for conventional mortgage
loan losses was increased during the year to $7.0 million from $4.9 million a
year ago. The general allowance for secured investment loan losses was
increased to $3.8 million from $2.2 million a year ago. The general allowance
for RSP loans was increased to $3.4 million from $2.8 million a year ago. Some
31.3% of real estate secured loan assets (including HELOCs) are insured. We
have strong security for secured investment loans, and loan losses during the
history of the program have been minimal. For RSP loans, the expense for
impaired loans, which consists of the increase in specific allowances plus
write-offs (excluding securitized RSP loans) was $2.0 million in fiscal 2007
(2006 - $2.7 million). For the balance of our loan products, the expense for
impaired loans was $2.2 million (2006 - $0.5 million).

    Segment Outlook

    We anticipate that execution of AGF Trust's stated strategy will result
in continued strong growth in 2008. A continuation of disruptions in money
markets, and the associated compression in the Prime-BA spread and elevated
levels of interest rates on asset-backed commercial paper relative to the BA
rate, will negatively affect interest margins. A rise in interest rates or a
softening of housing prices would negatively affect real estate secured loan
growth, but even if these factors materialize, we believe the alternative real
estate secured loan market would still sustain a high level of growth. Stock
market levels influence investment loans. However, the 2008 RSP season has
started strongly for AGF Trust Company, with lending volumes above last year's
pace.
    AGF Trust can accommodate this level of expansion due to scalable
technology platforms and disciplined underwriting and risk analysis.
Management believes the company is on track to solidify its position as a
trusted alternative to traditional banks for the lending products that it
distributes.

    AGF Management Limited

    Liquidity and Capital Resources

    Free cash flow from operations generated from continuing operating
activities (before net change in non-cash balances related to operations) was
$313.4 million for the year ended November 30, 2007, compared with $214.3
million in the prior year.
    In fiscal 2007, we paid $154.3 million in selling commissions, which were
capitalized and amortized for accounting purposes, compared with $101.4
million in 2006. Accordingly, our free cash flow (defined as cash flow from
continuing operations less selling commissions paid) was $159.1 million for
the year ended November 30, 2007, compared with $112.9 million in the prior
year. Free cash flow from operations and our bank facility were used primarily
to fund the following:

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                                2007         2006
    -------------------------------------------------------------------------

    Payment of dividends                             $     70.2   $     61.5
    Repurchase of AGF Class B non-voting shares
     for cancellation                                      45.5         15.9
    Acquisitions of subsidiaries                           27.7          3.2
    Purchase of property, equipment and other
     intangible assets                                      8.3         14.0
    Debt repayment (borrowing)                                -          4.7
    Investment in Trust Operations (eliminated on
     consolidation)                                        86.5         62.4
    -------------------------------------------------------------------------
                                                     $    238.2   $    161.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Consolidated cash and cash equivalents related to continuing operations
increased by $422.0 million from November 30, 2006. The increase is primarily
due to an increase in cash in the Trust Company Operations segment. The
investment in Trust Company Operations is eliminated on consolidation;
however, it represents a transfer of cash from our cash and cash equivalents
balance shown as supplemental information on the Consolidated Statements of
Cash Flow to the Trust Company Operations' cash and cash equivalents balance.
In periods in which the Company has a free cash flow deficiency, these amounts
will be financed by increasing our bank indebtedness.
    During fiscal 2007, we used $45.5 million of free cash flow to repurchase
1,437,800 AGF Class B Shares at an average price of $31.67 per share.
    We have a six-year prime-rate-based revolving term loan facility to a
maximum of $300.0 million, of which $140.0 million was available to be drawn
as of November 30, 2007. Aside from cash held in the Trust Company Operations
segment, which is held to fund loans to clients and GIC maturities, the
Company had $36.6 million of cash at November 30, 2007, some of which will be
used to repay bank debt in 2008. This 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

    Selling commissions paid on certain sales of mutual fund securities of
the AGF Funds made on the DSC basis ('DSC securities') have been financed by
limited partnerships held by third-party investors. Such limited partnerships
have financed selling commissions of approximately $440 million in respect of
such DSC securities. The Company no longer finances selling commissions using
limited partnerships. The Company is obligated to pay the relevant limited
partnership an annual fee of 0.47% to 0.90% of the net asset value of DSC
securities. The limited partnerships also receive any DSC resulting from the
redemption of such securities. These obligations continue as long as such DSC
securities remain outstanding except for certain of the limited partnerships,
in which case the obligation terminates at various dates from December 31,
2007 to December 31, 2020. For certain limited partnerships 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
limited partnerships. 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 2007 was $0.4 million (2006 -
$0.6 million). As at November 30, 2007, the net asset value of DSC securities
financed by the limited partnerships was $1.2 billion (2006 - $1.6 billion).

    Contractual Obligations

    The table below is a summary of our contractual obligations at
November 30, 2007. See also Notes 9 & 21 of the Consolidated Financial
Statements.

    
    -------------------------------------------------------------------------
    ($ millions)           Total       2008  2009-2010  2011-2012  Thereafter
    -------------------------------------------------------------------------

    Long-term debt     $   210.1  $    25.6  $   184.5  $       -  $       -
    Operating leases        33.6        4.6        8.8        7.6       12.6
    Purchase obligations    19.3       11.4        6.2        1.7          -
    -------------------------------------------------------------------------
    Total contractual
     obligations       $   263.0  $    41.6  $   199.6  $     9.3  $    12.6
    -------------------------------------------------------------------------

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

    -   The AGF Trust Company 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 limited partnerships held by third-party investors. As at
        November 30, 2007, the net asset value of DSC securities financed by
        the limited partnerships was $1.2 billion and amounts paid to these
        partnerships in 2007 were $8.5 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 2007 we paid $169.6
        million in trailing commissions.

    -   In conjunction with the sale of Unisen, we capped the management
        expense ratio on all our funds until 2008 to the lower of the levels
        incurred in 2004 and 2005. This could result in increased absorption
        of fund expenses if the individual mutual funds do not show growth in
        AUM in 2008 as compared with November 30, 2005 AUM. In addition, AGF
        is committed to October 2, 2015 to reimburse CitiFinancial Canada
        Inc. ('CitiFinancial') should CitiFinancial's annual revenues derived
        from AGF fund administration services fall below a pre-determined
        level. To date, revenues have been above the pre-determined levels
        and are expected to stay so.

    -   In conjunction with the launch of the Elements portfolios, AGF has
        guaranteed 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.
    

    Intercompany and Related Party Transactions

    The Company has entered into certain transactions with entities or senior
officers who are directors of the Company. During 2007, total amounts paid by
the Company to these related parties aggregated $0.1 million (2006 -
$0.1 million).

    Dividends

    The holders of AGF Class B Shares are entitled to receive cash dividends.
Dividends are paid in equal amounts per share on all the Class B 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 the Class B shareholders shall
have the right to elect to receive part or all of such dividend in the form of
a stock dividend. In determining whether a dividend in Class B Shares is
substantially equal to a cash dividend, the Board of Directors may make a
determination based on the weighted average price at which the Class B 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 dividends paid by AGF on the Class B
Shares and the Class A Shares for the periods indicated:

    
    -------------------------------------------------------------------------
    Years Ended
    November 30             2007       2006       2005       2004       2003
    -------------------------------------------------------------------------

    Per share          $   0.780  $   0.690  $   0.560  $   0.410  $   0.295
    -------------------------------------------------------------------------
    Percentage increase      13%        23%        37%        39%        16%
    -------------------------------------------------------------------------

    We review our dividend distribution policy on a quarterly basis, taking
into consideration our financial position, profitability, cash flow and other
factors considered relevant by our Board of Directors. The announced annual
dividend rate effective for March 2008 will be $1.00 per share.

    Outstanding Share Data

    Set out below is our outstanding share data as at November 30, 2007. For
additional detail, see Notes 13 and 14 to the 2007 Consolidated Financial
Statements.

    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                                2007         2006
    ------------------------------------------------------------------------
    Shares
    Class A Voting Common Shares                         57,600       57,600
    Class B Non-Voting Shares                        88,922,157   89,171,997

    Stock Options
    Outstanding options                               4,268,765    4,324,084
    Exercisable options                               1,954,284    1,765,583
    ------------------------------------------------------------------------
    

    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 Shares of AGF are listed for
trading on the Toronto Stock Exchange under the trading symbol AGF.B. AGF is
subject to oversight from other government and regulatory agencies including,
but not limited to, the Privacy Commissioner of Canada and the Financial
Transactions and Reports Analysis Centre of Canada ('FNTRAC').

    Investment Management Operations

    AGF Funds Inc.

    AGF Funds Inc. ('AGFFI') is registered with the Ontario Securities
Commission ('OSC') as an investment counsel and portfolio manager and
maintains equivalent registrations in each of the other provinces and
territories of Canada in which AGFFI carries on business. AGFFI is also
registered as a mutual fund dealer, limited market dealer and commodity
trading manager in certain jurisdictions and is subject to oversight by the
federal and provincial Privacy Commissioners and FNTRAC.
    In its capacity as investment counsel and portfolio manager, AGFFI 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 AGFFI to advise or make recommendations with respect to its own
securities or securities of a related or connected issuer. AGFFI is also
subject to certain restrictions that are imposed by applicable provincial and
territorial securities legislation on advertising and sales incentives.

    AGF Mutual Funds

    In order to qualify for continuous distribution, each of the mutual funds
managed by AGFFI 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 and 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 AGFFI and as such AGFFI is liable for any
misrepresentation in the offering documents of the fund. Pursuant to
securities legislation in certain of the provinces and territories of Canada,
none of the mutual funds managed by AGFFI can make portfolio investments in
substantial securityholders of the funds, in AGF or in corporations in which
the directors or officers of the funds, or their substantial securityholders,
have a significant interest.

    AGF International Advisors Company Limited

    AGF International Advisors Company 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.  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 also registered with the OSC as a non-Canadian investment counsel
and portfolio manager and is subject to the oversight of the Ontario Privacy
Commissioner and FNTRAC.

    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 Asset Management Group Limited

    AGF Asset Management Group Limited (AMGL), through its subsidiaries,
provides investment management and counselling services for institutions,
corporations, endowments, estates, and high-net-worth clients. This group
includes the operations of Cypress Capital Management Limited, Highstreet
Asset Management Inc., Doherty & Associates Limited, and Magna Vista
Investment Management Limited.
    Doherty & Associates Limited (formerly P.J. Doherty & Associates Co.
Limited) ('Doherty'), Highstreet Asset Management Inc. ('Highstreet') and
Magna Vista Investment Management Limited (formerly AGF Private Investment
Management Limited) ('Magna') are each registered with the OSC as an
investment counsel and portfolio manager, and maintain equivalent
registrations in each of the other provinces and territories of Canada in
which they respectively do business. Cypress Capital Management Limited
('Cypress') is registered with the British Columbia Securities Commission as a
Portfolio Manager (Securities) and maintains equivalent registration in each
of the other provinces and territories of Canada in which they do business.
Cypress, Doherty, Highstreet and Magna are also registered with the OSC as
limited 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 Commissioners and FNTRAC. In addition, Highstreet is
registered in Ontario as a Commodity Trading Manager.
    AGF Private Investment Advisors Inc. ('PIA'), a wholly owned subsidiary
of Magna Vista Investment Management Limited, is registered as an Investment
Advisor with the U.S. Securities and Exchange Commission ('SEC'). Investment
advisor firms registered with the SEC may be required to provide to state
securities authorities a copy of their Form ADV and any accompanying
amendments filed with the SEC. These filings are called 'notice filings'.
Currently PIA makes no notice filings.
    Cypress Capital Management U.S. Limited ('Cypress U.S.'), a wholly owned
subsidiary of Cypress Capital Management Limited, is registered as an
Investment Advisor with the SEC. Investment advisor firms registered with the
SEC may be required to provide to state securities authorities a copy of their
Form ADV and any accompanying amendments filed with the SEC. These filings are
called 'notice filings'. Cypress U.S. makes notice filings in Washington
State.
    AGF Asset Management Group Limited (US) ('AMGUS'), a wholly owned
subsidiary of AMGL, is registered as an Investment Advisor with the SEC.
Investment advisor firms registered with the SEC may be required to provide to
state securities authorities a copy of their Form ADV and any accompanying
amendments filed with the SEC. These filings are called 'notice filings'.
Currently AMGUS makes no notice filings.

    AGF Securities (Canada) Limited

    AGF Securities (Canada) Limited is a member of the Investment Dealers
Association and 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 Commissioners and FNTRAC.

    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 the 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. Most significantly, 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. AGF Trust is also subject to
oversight from the Financial and Consumer Agency of Canada, the Privacy
Commissioner of Canada, FNTRAC, and other government agencies, including
provincial authorities.
    AGF Trust is a member of 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, 2007 and 2006:

    -------------------------------------------------------------------------
    ($ millions, except per share amounts)
    Three months ended November 30            2007         2006     % change
    -------------------------------------------------------------------------
    Revenue
      Investment management
       operations                       $    172.9   $    140.9        22.7%
      Trust company operations                23.8         16.5        44.2%
      Other                                    2.4          1.1       118.2%
    -------------------------------------------------------------------------
                                             199.1        158.5        25.6%

    Expenses
      Investment management operations        98.3         89.2        10.2%
      Trust company operations                13.3          9.0        47.8%
    -------------------------------------------------------------------------
                                             111.6         98.2        13.7%

    EBITDA(1) (continuing operations)         87.5         60.3        45.1%
      Amortization                            30.7         32.8        (6.4%)
      Interest Expense                         2.9          1.3       123.1%
      Non-controlling interest                 0.2            -          n/m
      Income Taxes                             4.3          5.4       (20.4%)
    -------------------------------------------------------------------------
    Net income from continuing
     operations                         $     49.4   $     20.8       137.5%
    Gain on early retirement of debt,
     net of tax                                  -            -
    Loss on dissolution of Limited
     Partnerships, net of tax                    -            -
    Gain (loss) on sale of discontinued
     operations, net of tax                      -            -
    Net earnings (loss) from
     discontinued operations, net of tax         -          0.2
    -------------------------------------------------------------------------
    Net income                          $     49.4   $     21.0       135.2%
    -------------------------------------------------------------------------

    Earnings per share from continuing
     operations- diluted                $     0.54   $     0.23       134.8%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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 Continuing Operations

    Revenue for the fourth quarter ended November 30, 2007 increased $40.6
million, a 25.6% increase from the same period in 2006, with the Trust Company
segment contributing $7.3 million of the increase and the Investment
Management segment contributing $32.0 million, with each driven by respective
AUM and loan asset growth. Revenues from the Other segment increased 118.2%.
    Expenses in the fourth quarter ended November 30, 2007 increased by
$13.4 million over the same period a year ago. Expenses in Investment
Management Operations increased $9.1 million or 10.2% due primarily to
increased trailer fees resulting from higher AUM levels. Selling, general and
administrative expenses were flat in the quarter on a year-over-year basis.
The Trust Company Operations segment increased $4.3 million primarily due to
higher staff related costs attributed to growth.
    EBITDA for the quarter ended November 30, 2007, compared with the
respective quarter in 2006, was higher predominantly due to increased revenue
in both the Investment Management and Trust Company Operations segments.
    Our income tax expense for the three months ended November 30, 2007 was
$4.3 million, as compared with an income tax expense of $5.4 million in the
three months ended November 30, 2006.
    The impact of the above revenue and expense items resulted in net income
from continuing operations of $49.4 million in the three months ended November
30, 2007 compared with a net income from continuing operations of $20.8
million in fiscal 2006. Basic and fully diluted earnings per share from
continuing operations were $0.55 and $0.54 per share, respectively, in the
three months ended November 30, 2007 as compared with $0.24 and $0.23 per
share in 2006.
    On a diluted per share basis, cash flow from continuing operations for
the three months ended November 30, 2007 was $0.99 per share (2006 - $0.59).

    Net Earnings

    Net income for the three months ended November 30, 2007 was $49.4 million
as compared with $21.0 million in the prior year. The 135.2% increase in net
income was a direct result of higher EBITDA quarter over quarter.
    The details of the 2007 fourth-quarter results for each business segment
follow.

    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, 2007 and 2006:

    
    -------------------------------------------------------------------------
    ($ millions)
    Three months ended November 30            2007         2006     % change
    -------------------------------------------------------------------------

    Mutual fund AUM, beginning of
     period                             $   30,024   $   24,429        22.9%

    Gross sales of mutual funds              1,273        1,396        (8.8%)
     Redemptions of mutual funds            (1,150)        (972)       18.3%
    -------------------------------------------------------------------------
    Net mutual fund sales                      123          424

    Market appreciation (depreciation)
     Of fund portfolios                        (95)       2,004      (104.7%)
    -------------------------------------------------------------------------

    Mutual fund AUM, end of period      $   30,052   $   26,857        11.9%

    Institutional AUM(1)                    19,822       12,704        56.0%
    High-net-worth AUM(1)                    3,869        3,210        20.5%
    -------------------------------------------------------------------------

    Total AUM, end of period            $   53,743   $   42,771        25.7%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Average daily mutual fund AUM
     for the period                     $   29,995   $   25,251        18.8%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Institutional and high-net-worth assets were previously grouped
        together
    

    During the three months ended November 30, 2007, the Canadian-dollar-
adjusted S&P 500 Index declined 4.39%, the Canadian-dollar-adjusted NASDAQ
Index declined 2.94% and the S&P/TSX Composite Index rose 0.82%.
    The impact of the U.S. dollar decline relative to the Canadian dollar on
the market value of AGF mutual funds since August 31, 2007 has been a
reduction in AUM of approximately $0.3 billion (2006 - increase of
$0.2 billion).

    Financial and Operational Results

    The table below highlights the Investment Management Operations segment
results for the three months ended November 30, 2007 and 2006:

    
    -------------------------------------------------------------------------
    ($ millions)
    Three months ended November 30            2007         2006     % change
    -------------------------------------------------------------------------

    Revenue
      Net management and advisory
       fees                             $    163.6   $    133.5        22.6%
      Deferred sales charges                   5.4          5.6        (3.6%)
      Investment income and other
       revenue                                 3.9          1.8       116.7%
    -------------------------------------------------------------------------
                                             172.9        140.9        22.7%

    Expenses
      Selling, general and administrative     48.1         48.9        (1.6%)
      Trailing commissions                    45.1         33.1        36.3%
      Investment advisory fees                 5.1          7.2       (29.2%)
    -------------------------------------------------------------------------
                                              98.3         89.2        10.2%
    -------------------------------------------------------------------------

    EBITDA(1)                                 74.6         51.7        44.3%
    Amortization                              30.1         32.7        (8.0%)
    -------------------------------------------------------------------------
    Income before taxes and
     non-segmented items                $     44.5   $     19.0       134.2%
    -------------------------------------------------------------------------
    (1) As previously defined, see the 'Key Performance Indicators and Non-
        GAAP Measures - EBITDA' section.



    Trust Company Operations

    Financial and Operational Results

    The table below highlights the results for the three months ended November
30, 2007 and 2006:

    -------------------------------------------------------------------------
    ($ millions)
    Three months ended November 30            2007         2006     % change
    -------------------------------------------------------------------------

    Interest income
      Loan interest                     $     63.0   $     37.0        70.3%
      Investment interest                      8.9          3.6       147.2%
    -------------------------------------------------------------------------
                                              71.9         40.6        77.1%
    Interest expense
      Deposit interest                        42.0         22.9        83.4%
      Other interest expense                   8.7          3.4       155.9%
    -------------------------------------------------------------------------
                                              50.7         26.3        92.8%
    -------------------------------------------------------------------------
    Net interest income                       21.2         14.3        48.3%

    Other revenue                              3.2          1.5       113.3%
    Securitization gains and related
     items                                    (0.6)         0.7      (185.7%)
    -------------------------------------------------------------------------
    Total revenue                             23.8         16.5        44.2%

    Expenses
      Selling, general and administrative      9.9          6.6        50.0%
      Provision for loan losses                3.4          2.4        41.7%
    -------------------------------------------------------------------------
                                              13.3          9.0        47.8%

    EBITDA(1)                                 10.5          7.5        40.0%
    Amortization                               0.7          0.3       133.3%
    -------------------------------------------------------------------------
    Income before taxes and
     non-segmented items                $      9.8   $      7.2        36.1%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) As previously defined, see the 'Key Performance Indicators and
        Non-GAAP Measures - EBITDA' section.



    Selected Quarterly Information

    -------------------------------------------------------------------------
    ($ millions, except
     per share amounts)
    For the three-            Nov. 30,     Aug. 31,      May 31,     Feb. 28,
     month period ended          2007         2007         2007         2007
    -------------------------------------------------------------------------
    Revenue (continuing
     operations)          $     199.1  $     199.2  $     204.9  $     177.0
    Cash flow from
     continuing
     operations(1)               90.7         69.7         84.4         68.7
    EBITDA (continuing
     operations)(2)              87.5         91.3         98.0         80.4
    Pretax income
     (continuing operations)     53.9         57.3         63.3         49.1
    Net income                   49.4         39.4         53.6         36.3

    Earnings per share
      Basic               $      0.55  $      0.44  $      0.60  $      0.41
      Diluted             $      0.54  $      0.43  $      0.59  $      0.40

    Weighted average
     basic shares          90,200,924   90,299,033   89,740,819   89,474,827
    Weighted average
     fully diluted shares  91,566,659   91,847,103   91,012,708   90,640,734
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    ($ millions, except
     per share amounts)
    For the three month-      Nov. 30,     Aug. 31,      May 31,     Feb. 28,
     period ended                2006         2006         2006         2006
    -------------------------------------------------------------------------

    Revenue (continuing
     operations)          $     158.5   $    146.9  $     152.2  $     149.5
    Cash flow from
     operations(1)               53.1         60.2         52.5         48.4
    EBITDA (continuing
     operations)(2)              60.3         56.2         64.6         67.3
    Pretax income
     (continuing operations)     26.2         22.8         30.9         33.8
    Net income                   21.0         34.6         33.0         24.1

    Earnings per share
      Basic               $      0.24   $     0.39  $      0.37  $      0.27
      Diluted             $      0.23   $     0.39  $      0.37  $      0.27

    Weighted average
     basic shares          89,174,064   89,055,124   89,006,146   89,190,007
    Weighted average
     fully diluted
     shares                89,890,105   89,457,921   89,973,999   90,031,001
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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                   2007         2006         2005
    -------------------------------------------------------------------------

    Revenue (continuing operations)     $    780.3   $    607.2   $    546.6
    Cash flow from continuing
     operations(1)                           313.4        214.2        219.0
    EBITDA (continuing operations)(2)        357.2        248.5        246.6
    Pre-tax income                           222.6        113.7        105.8
    Net income (continuing operations)       175.9        102.1         76.6
    Earnings per share (continuing
     operations)
     Basic                              $     1.96   $     1.15   $     0.85
     Diluted                            $     1.93   $     1.14   $     0.85
    Cash flow from continuing
     operations
     Basic                              $     3.48   $     2.40   $     2.43
     Diluted                            $     3.43   $     2.38   $     2.42
    Dividends per share                 $     0.78   $     0.69   $     0.56
    To al assets                        $  5,876.8   $  3,919.8   $  2,709.7
    Total long-term debt                $    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, 2007, the Company's 2007 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

    November 30, 2007



    Management's Responsibility for Financial Reporting

    Toronto, January 30, 2008

    The accompanying consolidated financial statements of AGF Management
Limited were prepared by management, which is responsible for the integrity
and fairness of the information presented, including the amounts based on
estimates and judgements. 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, independent auditors appointed by the
shareholders of the Company upon the recommendation of the Audit Committee,
have performed an independent audit of the consolidated financial statements,
and their 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, CFA
    Chairman & Chief Executive Officer


    (signed)

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



    Auditors' Report

    January 30, 2008

    To the Shareholders of AGF Management Limited:

    We have audited the consolidated balance sheets of AGF Management Limited
as at November 30, 2007 and 2006 and the consolidated statements of income,
changes in shareholders' equity, comprehensive income and cash flows for each
of the years in the two-year period ended November 30, 2007. 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, 2007 and 2006 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 Sheets

    -------------------------------------------------------------------------
    November 30                                          2007           2006
    (in thousands of dollars)                                        (note 3)
    -------------------------------------------------------------------------

    Assets
      Current assets
        Cash and cash equivalents                 $   827,874    $   404,115
        Short-term investments available for sale      26,149         10,723
        Accounts receivable and prepaid expenses       93,141         96,031
        Current portion of retained interest
         from securitization (note 2)                   7,501          3,767
        Real estate secured and investment
         loans due within one year (note 7(a))        492,756        309,329
        Assets of discontinued operations (note 3)          -          4,527
    -------------------------------------------------------------------------
                                                    1,447,421        828,492

        Retained interest from securitization
         (note 2)                                      43,424         23,893
        Real estate secured and investment
         loans (note 7(a))                          3,187,605      1,997,294
        Investment in associated company              102,600        107,735
        Management contracts (note 4)                 504,269        478,259
        Customer contracts, net of
         accumulated amortization (note 4)             65,805         59,583
        Goodwill (note 4 & 5)                         180,058        126,399
        Trademarks (note 4)                             1,935              -
        Deferred selling commissions, net
         of accumulated amortization                  315,275        268,243
        Property, equipment, and computer software,
         net of accumulated amortization (note 8)      20,812         19,965
        Other assets                                    7,608          6,307
        Assets of discontinued operations
         (note 3)                                           -          3,598
    -------------------------------------------------------------------------
    Total assets                                  $ 5,876,812    $ 3,919,768
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                           AGF Management Limited
                         Consolidated Balance Sheets

    -------------------------------------------------------------------------
    November 30                                          2007           2006
    (in thousands of dollars)                                        (note 3)
    -------------------------------------------------------------------------

    Liabilities and shareholders' equity
      Current liabilities
        Accounts payable and accrued
         liabilities                              $   261,115    $   160,259
        Future income taxes (note 12)                  48,304         45,396
        Long-term debt due within one year
         (note 9)                                      25,611              -
        Deposits due within one year (note 7(b))    1,847,494      1,022,774
        Liabilities of discontinued
         operations (note 3)                                -          4,286
    -------------------------------------------------------------------------
                                                    2,182,524      1,232,715

        Deposits (note 7(b))                        2,235,848      1,465,490
        Long-term debt (note 9)                       184,486         56,000
        Future income taxes (note 12)                 202,923        184,909
        Other long-term liabilities                     1,638            127
        Liabilities of discontinued
         operations (note 3)                                -            756
    -------------------------------------------------------------------------
      Total liabilities                             4,807,419      2,939,997
    -------------------------------------------------------------------------

        Non-controlling interest (note 4)                 391              -

        Shareholders' equity
          Capital stock (note 13)                     421,923        403,566
          Contributed surplus                          14,948         10,470
          Retained earnings                           635,369        565,576
          Accumulated other comprehensive income
           (loss) (note 1(a))                          (3,238)           159
    -------------------------------------------------------------------------
      Total shareholders' equity                    1,069,002        979,771
    -------------------------------------------------------------------------
      Total liabilities and shareholders' equity  $ 5,876,812    $ 3,919,768
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Commitments (note 21)
    Guarantees (note 22)
    Contingent Liabilities (note 23)

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


    Approved by the Board:

    (signed)                             (signed)

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



                           AGF Management Limited
                      Consolidated Statements of Income

    -------------------------------------------------------------------------
    For the years ended November 30                      2007           2006
    (in thousands of dollars)                                        (note 3)
    -------------------------------------------------------------------------

    Revenue
      Management and advisory fees                $   646,462    $   507,531
      Deferred sales charges                           20,381         25,474
      Gain on sale of RSP loan securitization
       and related income, net of impairment           10,769         12,583
      Investment income and other                      24,485         14,263
    -------------------------------------------------------------------------
                                                      702,097        559,851
    -------------------------------------------------------------------------
        Trust Company interest income
         (notes 1(b) and 19)                          236,685        131,355
        Trust Company interest expense
         (notes 1(b) and 19)                         (158,462)       (84,004)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Trust company net interest income                78,223         47,351
    -------------------------------------------------------------------------
    Total Revenue                                     780,320        607,202
    -------------------------------------------------------------------------

    Expenses
      Selling, general and administrative             226,730        197,219
      Trailing commissions                            169,587        125,331
      Investment advisory fees                         15,850         27,647
      Amortization of deferred selling commissions    107,960        108,169
      Amortization of customer contracts                7,837         14,863
      Amortization of property, equipment, computer
       software and other intangible assets             8,030          8,409
      Interest expense                                  9,895          3,346
      Provision for Trust Company loan losses          10,995          8,501
    -------------------------------------------------------------------------
                                                      556,884        493,485
    -------------------------------------------------------------------------

    Income from continuing operations before
     income taxes and non-controlling interest        223,436        113,717

    Income tax expense (reduction)
      Current                                          36,436         31,492
      Future (note 12)                                 10,253        (19,841)
    -------------------------------------------------------------------------
                                                       46,689         11,651
    -------------------------------------------------------------------------

    Non-controlling interest (note 4)                     881              -

    -------------------------------------------------------------------------
    Net income from continuing operations
     for the year                                     175,866        102,066
    Gain on early retirement of debt,
     net of tax (note 9(b))                                 -         13,309
    Loss on dissolution of Limited Partnerships,
     net of tax (note 6)                               (2,128)             -
    Gain (loss) on sale of discontinued
     operations, net of tax (note 3)                    4,702         (2,887)
    Net income from discontinued operations,
     net of tax (note 3(a))                               247            169
    -------------------------------------------------------------------------
    Net income for the year                       $   178,687    $   112,657
    -------------------------------------------------------------------------

    Earnings Per Share (note 15)
      Basic from continuing operations            $      1.96    $      1.15
      Diluted from continuing operations          $      1.93    $      1.14
      Basic                                       $      1.99    $      1.26
      Diluted                                     $      1.96    $      1.25
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (The accompanying notes are an integral part of these Consolidated
    Financial Statements.)



                           AGF Management Limited
         Consolidated Statements of Changes in Shareholders' Equity

    -------------------------------------------------------------------------
    For the years ended November 30                      2007           2006
    (in thousands of dollars)                                        (note 1)
    -------------------------------------------------------------------------

    Common shares
      Balance, beginning of year                  $   403,566    $   394,154
      Issued through dividend reinvestment plan         3,614          1,985
      Stock options exercised                          14,688          7,935
      Issued on acquisition of Highstreet
       Partners Ltd. (note 4)                           5,672              -
      Issued for Cypress contingent
       consideration (note 5)                           1,200          2,600
      Purchased for cancellation                       (6,817)        (3,108)
    -------------------------------------------------------------------------
      Balance, end of year                            421,923        403,566
    -------------------------------------------------------------------------

    Contributed surplus
      Balance, beginning of year                       10,470          5,900
      Stock options                                     4,478          4,570
    -------------------------------------------------------------------------
      Balance, end of year                             14,948         10,470
    -------------------------------------------------------------------------

    Retained earnings
      Balance, beginning of year                      565,576        527,197
      Transitional adjustment on adoption of
       new accounting policies (note 1(a))                (25)             -
    -------------------------------------------------------------------------
      Balance, beginning of year, as restated         565,551        527,197
      Net income                                      178,687        112,657
      Dividends on AGF Class A Voting Common
       Shares and AGF Class B Non-Voting Shares       (70,151)       (61,521)
      Excess paid over book value of AGF Class B
       Non-Voting Shares purchased for
       cancellation (note 13)                         (38,718)       (12,757)
    -------------------------------------------------------------------------
      Balance, end of year                            635,369        565,576
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Accumulated other comprehensive income (loss)
      Balance, beginning of year (note 1(a))              159         (8,925)
      Transitional adjustment on adoption of
       new accounting policies (note 1(a))              3,633              -
      Other comprehensive income (loss)                (7,030)         9,084
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Balance, end of year                             (3,238)           159
    -------------------------------------------------------------------------

    Total shareholders' equity                    $ 1,069,002    $   979,771
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (The accompanying notes are an integral part of these Consolidated
    Financial Statements.)



                           AGF Management Limited
               Consolidated Statements of Comprehensive Income

    -------------------------------------------------------------------------
    For the years ended November 30                      2007           2006
    (in thousands of dollars)                                        (note 1)
    -------------------------------------------------------------------------

    Net income                                    $   178,687    $   112,657
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Other comprehensive income (loss), net of tax:
      Foreign currency translation adjustments
       related to net investments in
       self-sustaining foreign operations(1)           (9,157)         9,084
      Net change in unrealized gain (loss) on
       available-for-sale securities(2)                 2,421              -
      Reclassification of realized loss or other
       than temporary impairment to earnings with
       respect to available-for-sale securities           (12)             -
      Net change in unrealized gains (losses)
       on cash flow hedges(3)                            (282)             -

    -------------------------------------------------------------------------
    Total other comprehensive income (loss),
     net of tax                                        (7,030)         9,084
    -------------------------------------------------------------------------

    Comprehensive income                          $   171,657    $   121,741
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Net of income tax reduction of $0.6 million for the year ended
        November 30, 2007. Net of income tax expense of $1.8 million for the
        year ended November 30, 2006.
    (2) Net of income tax of $0.6 million for the year ended November 30,
        2007.
    (3) Net of income tax reduction of $0.1 million for the year ended
        November 30, 2007.

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



                           AGF Management Limited
                    Consolidated Statements of Cash Flow

    -------------------------------------------------------------------------
    For the years ended November 30                      2007           2006
    (in thousands of dollars)                                        (note 3)
    -------------------------------------------------------------------------

    Operating Activities
      Net income                                  $   178,687    $   112,657
      Gain on early retirement of debt, net of tax          -        (13,309)
      Loss on dissolution of Limited
       Partnerships, net of tax                         2,128              -
      (Gain) loss on sale of discontinued
       operation, net of tax                           (4,702)         2,887
      Earnings from discontinued operations,
       net of tax                                        (247)          (169)
    -------------------------------------------------------------------------
      Net income from continuing operations           175,866        102,066

      Items not affecting cash
        Amortization                                  123,827        131,441
        Future income taxes                            10,253        (19,841)
        Gain on sale of RSP loan securitization
         and related income, net of impairment        (10,769)       (12,583)
        Provision for Trust Company loan losses        10,995          8,501
        Stock-based compensation (note 14)              6,737          4,808
        Other                                          (3,474)          (152)
    -------------------------------------------------------------------------
                                                      313,435        214,240
      Net increase in non-cash balances
       related to operations                           86,676          8,629
    -------------------------------------------------------------------------
      Net cash provided by continuing
       operating activities                           400,111        222,869
      Net cash provided (used) in discontinued
       operating activities                            (1,271)          (659)
    -------------------------------------------------------------------------
      Net cash provided by operating activities       398,840        222,210
    -------------------------------------------------------------------------

    Financing Activities
      Purchase of Class B Non-Voting Shares
       for cancellation                               (45,532)       (15,865)
      Issuance of Class B Non-Voting Shares            18,302          9,920
      Dividends                                       (70,151)       (61,521)
      Retirement of debt                                    -         (3,360)
      Increase in bank loan                           104,000         56,000
      Decrease in other long-term debt                      -         (1,324)
      Net increase in Trust Company deposits        1,598,363      1,080,512
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Net cash provided by continuing
       financing activities                         1,604,982      1,064,362

    Investing Activities
      Deferred selling commissions paid              (154,254)      (101,397)
      Proceeds of RSP loan securitization             252,878        206,274
      Acquisition of subsidiaries                     (27,673)        (3,198)
      Net proceeds of sale of discontinued
       operations                                       2,747         (7,767)
      Purchase of property, equipment and
       other intangible assets                         (8,328)       (14,042)
      Other investment activities                      (3,222)        15,966
      Net increase in Trust Company mortgages
       and consumer loans                          (1,644,003)    (1,136,475)
    -------------------------------------------------------------------------
      Net cash used in continuing investing
       activities                                  (1,581,855)    (1,040,639)

    Increase in cash and cash equivalents
     during the period                                421,967        245,933

    Balance of cash and cash equivalents,
     beginning of year                                405,907        159,974
    -------------------------------------------------------------------------

    Balance of cash and cash equivalents,
     end of year                                  $   827,874    $   405,907
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash and cash equivalents related to:
      Continuing operations                       $   827,874    $   404,115
      Discontinued operations                               -          1,792
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                  $   827,874    $   405,907
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Represented by:
      Cash and cash equivalents                   $    36,601    $    17,159
      Trust Company cash and cash equivalents         791,273        388,748
    -------------------------------------------------------------------------
                                                  $   827,874    $   405,907
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (The accompanying notes are an integral part of the Consolidated
    Financial Statements.)



    Notes to Consolidated Financial Statements

    Years ended November 30, 2007 and 2006
    (tabular amounts in thousands of dollars, except per share amounts)

    Description of Business

    AGF Management Limited ('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 and investment lending 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 (the 'Trust Company').

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

    In addition, the Company holds a 30.9% interest in Smith & Williamson
    Holdings Limited ('S&WHL'), an independent U.K.-based company providing
    private client investment management, financial advisory, tax and
    accounting services.

    This investment is accounted for using the equity method.

    Significant Accounting Changes

    (a) Financial Instruments, Hedges and Comprehensive Income

        On December 1, 2006, the Company adopted four new accounting
        standards: CICA Handbook Section 1530 Comprehensive Income,
        Section 3855 Financial Instruments - Recognition and Measurement,
        Section 3861 Financial Instruments - Disclosures and Presentation and
        Section 3865 Hedges. The adoption of these new standards resulted in
        changes in the accounting for financial instruments and hedges as
        well as the recognition of certain transitional adjustments that have
        been recorded in opening retained earnings or opening accumulated
        other comprehensive income as outlined below. Comparative amounts
        related to prior periods have not been restated.

        Comprehensive Income

        Section 1530 introduces Comprehensive Income, composed of the
        Company's net income and other comprehensive income ('OCI'). OCI will
        include unrealized gains and losses on available-for-sale financial
        assets, foreign currency translation on net investments in
        self-sustaining foreign operations and changes in the fair market
        value of derivative instruments designated as cash flow hedges, all
        net of income taxes. Accumulated other comprehensive income ('AOCI')
        is a new component of shareholders' equity. The Consolidated
        Statements of Changes in Shareholders' Equity have replaced the
        Consolidated Statements of Retained Earnings in the Company's
        financial statements. The Consolidated Statements of Comprehensive
        Income have also been added to the Company's financial statements.

        Financial Instruments - Recognition and Measurement

        Under 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 held for
        trading, available for sale ('AFS'), held to maturity ('HTM') or
        loans and receivables. Financial liabilities are classified as either
        trading or other.

        Financial assets and financial liabilities held for trading are
        measured at fair value, with the changes in fair value reported in
        earnings. Financial assets held to maturity, loans and receivables,
        and financial liabilities other than those held for trading are
        measured at amortized cost using the effective interest method.
        Available-for-sale financial assets are measured at fair value with
        unrealized gains and losses, including changes in foreign exchange
        rates, recognized in OCI until the financial asset is disposed of or
        becomes impaired.

        Derivative instruments are recorded on the balance sheet at fair
        value. Changes in the fair value of derivative instruments are
        recognized in earnings, except for derivatives that are designated as
        a cash flow hedge, the fair value change for which is recognized in
        OCI.

        The categories of the Company's financial assets and liabilities and
        the related transitional adjustments are:

        Available for sale:

        (i)  Short-term investments, which partially consist of investments
             in mutual funds of AGF and securities that will form the basis
             for commercial products. On transition, investments totalling
             $10.7 million were classified as available-for-sale on
             December 1, 2006, which gave rise to an adjustment to AOCI of
             $3.2 million ($2.7 million net of tax).

        (ii) Retained interests from securitization have been re-measured to
             reflect the fair value. On transition, retained interests of
             $27.7 million were classified as available-for-sale on
             December 1, 2006, which gave rise to an adjustment to AOCI of
             $1.4 million ($1.0 million net of tax).

        Loans and receivables and financial liabilities other than those held
        for trading:

        (i)  The Company's financial assets include accounts receivable, real
             estate secured and investment loans, and its financial
             liabilities other than those held for trading are comprised of
             deposits. On December 1, 2006, as a result of the adoption of
             Section 3855, the Company reclassified $15.9 million of related
             transaction costs from accounts receivable and $1.9 million of
             related fees from accounts payable and accrued liabilities to
             real estate secured and investment loans and deposits.

        Held-for-trading:

        Certain derivative instruments that are held for economic hedging
        purposes, and do not meet the requirements of Section 3865, are also
        classified as non-trading derivatives, but the change in fair value
        of these derivatives is recognized in other income. All non-trading
        derivatives are recorded on the Consolidated Balance Sheet in other
        assets or liabilities.

        Hedges

        Section 3865 specifies the criteria that must be satisfied in order
        for hedge accounting to be applied and the accounting for each of the
        permitted hedging strategies. Derivative instruments are used to
        manage the Company's exposure to interest rate risks and exposure 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 can be applied, a hedge
        relationship is designated as a fair value hedge or a cash flow
        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. As a result, the opening
        balance of retained earnings was adjusted by $0.025 million. For the
        Company's detailed accounting policy on hedge accounting, refer to
        the Derivatives section in Note 1.

        Impact upon adoption of Sections 3855, 3865 and 1530

        A summary of transition adjustments recognized at December 1, 2006 as
        outlined above is as follows:

        ---------------------------------------------------------------------
                                                      Adjustment
                                             As at          upon       As at
                                       November 30,  adoption of  December 1,
        (in thousands of dollars)             2006  Section 3855        2006
        ---------------------------------------------------------------------

        Assets
          Short-term investments        $   10,723   $    3,271   $   13,994
          Retained interest from
           securitization (current
           and long-term)                   27,660        1,352       29,012
          Accounts receivable               96,031      (15,928)      80,103
          Real estate secured and
           investment loans (current
           and long-term)                2,306,623        3,183    2,309,806
        ---------------------------------------------------------------------
        Impact on total assets                           (8,122)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Liabilities and shareholders'
         equity
          Deposits                       2,488,264       (7,074)   2,481,190
          Derivative instruments
           market valuation                      -       (3,754)      (3,754)
          Future income tax                230,305          998      231,303
          Accounts payable and accrued
           liabilities                     160,259       (1,900)     158,359
        ---------------------------------------------------------------------
        Impact on total liabilities                     (11,730)
        ---------------------------------------------------------------------

        Shareholders' equity
          Foreign currency
           translation adjustments             159         (159)           -
          Retained earnings                565,576          (25)     565,551

        Accumulated other
         comprehensive income
          Foreign currency translation
           adjustments related to net
           investments in self-
           sustaining operations                 -          159          159
          Unrealized gains on
           available-for-sale assets             -        3,633        3,633
        ---------------------------------------------------------------------
        Accumulated other
         comprehensive income                    -        3,792        3,792
        ---------------------------------------------------------------------
        Impact on shareholders' equity                    3,608
        ---------------------------------------------------------------------
        Impact on liabilities and
         shareholders' equity                        $   (8,122)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    (b) Trust Operations Net Interest Income

        Commencing December 1, 2006, the presentation of the Trust Operations
        income has been revised to present net deposit interest expense and
        other interest expense in net interest income, as detailed in
        Note 19. Comparative periods presented have been restated, with
        interest and investment income being reclassified from administration
        fees, interest and other revenue, and other interest expense being
        reclassified from interest on Trust Company deposits and selling,
        general and administrative expenses.

    (c) Purchase Price Allocations and Amortization of Intangible Assets

        On December 1, 2006, the Company acquired 79.9% of Highstreet
        Partners Ltd. ('Highstreet'). The allocation of the purchase price
        for this transaction involved significant judgements in determining
        the fair values assigned to the intangible assets acquired on
        acquisition. The determination of these fair values involved the use
        of discounted cash flow analysis, estimated future margins, estimated
        assets under management ('AUM') and estimated market growth.

        The determination of the estimated useful lives of the intangible
        assets being customer contracts involves historical redemption rates
        of the AUM and judgements as to applicability of these rates going
        forward. Based on this, the estimated useful lives of customer
        contracts acquired is seven years; accordingly, customer contracts
        will be amortized on a straight-line basis over seven years.
        Management contracts, trademarks and goodwill are not amortized, but
        are subject to an annual impairment test. Refer to Note 4 for the
        fair value allocation of the net assets acquired.

    (d) Accounting Policy Choice for Transaction Costs

        On June 1, 2007, the Emerging Issues Committee of the CICA issued
        Abstract No. 166, Accounting Policy Choice for Transaction Costs
        (EIC-166). This EIC addresses the accounting policy choice of
        expensing or adding transaction costs related to the acquisition of
        financial assets and financial liabilities that are classified as
        other than held-for-trading. Specifically, it requires that the same
        accounting policy choice be applied to all similar financial
        instruments classified as other than held-for-trading, but permits a
        different policy choice for financial instruments that are not
        similar. EIC-166 will be effective for the Company on November 30,
        2007 and requires retroactive application to all transaction costs
        accounted for in accordance with CICA Handbook Section 3855,
        Financial Instruments - Recognition and Measurement. Our current
        recognition policy for transaction costs is consistent with this
        guidance.

        Transaction costs related to trading securities are expensed as
        incurred. Transaction costs related to AFS are capitalized.
        Transaction costs related to HTM, loans and receivables, and deposits
        are generally capitalized and are then amortized using the effective
        interest method.

    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-party, selling-commission financing entities.

    Deferred sales charge ('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.

    Cash and Cash Equivalents

    Cash and cash equivalents are comprised of cash and other highly liquid
    investments with short-term maturities.

    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.

    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.

    Deferred Selling Commissions

    Selling commissions paid to brokers on mutual fund securities sold on a
    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 expected future revenue on an undiscounted basis.

    Property, Equipment and Computer Software

    Property, equipment and computer software, which is comprised of
    furniture and equipment, computer hardware, computer software and
    leasehold improvements and equipment under capital lease, is stated at
    cost, net of accumulated amortization. Amortization is computed 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

    Finite Life Intangible Assets

    Finite life intangible assets, which are comprised of customer contracts
    and relationships are stated at cost, net of accumulated amortization.
    Amortization is computed on a straight-line basis over 7 to 15 years
    based on the estimated useful lives of these assets.

    Impairment of Long-lived Assets

    Impairment of long-lived assets 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 impairment loss is calculated by deducting the fair value of the
    asset or group of assets from its carrying 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 at least an annual basis. 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. As of November 30, 2007
    and 2006, the Company has completed its annual impairment testing on the
    carrying values of goodwill, management contracts and trademarks. No
    impairment losses were required to be recognized as a result of this
    testing.

    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 of specific allowances on
    impaired loans, and general allowances. General allowances are based on
    management's assessment of inherent, unidentified losses in the portfolio
    that have not been captured in the determination of specific allowances.
    The assessment includes portfolio-specific credit factors, general
    economic factors and geographic exposure. Specific allowances consist of
    provisions for losses on identifiable assets for which carrying values
    are higher than estimated realized values.

    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 past due
    90 days, except where the loan is both well-secured and in the process of
    collection. In any event, a loan that is insured by the federal
    government, an agency thereof or another third-party insurer is
    classified as impaired when interest or principal is past due 365 days,
    or in the case of other loans, when they are contractually in arrears for
    180 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 statements 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
    regarding 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 collectibility of the principal.

    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.

    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 portion of their annual earnings withheld to purchase AGF's Class B
    Non-Voting Shares ('Class B Shares'). The Company matches a portion of
    these amounts. 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.

    The Company has a Restricted Share Unit ('RSU') plan for senior employees
    under which certain employees are granted RSUs of Class B Shares.
    Compensation expense and the related liability are recorded equally over
    the vesting period, taking into account fluctuations in the market price
    of Class B 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
    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 Shares, dividends paid and forfeitures.

    During the year, the Company established 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 earnings in the period the DSUs are granted.

    During 2007, the Company established a hedge program to fix the cost of
    compensation related to RSUs and PSUs. Refer to Note 14(c) for more
    details.

    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.

    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.

    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 judgements - often in respect of matters that are inherently
    uncertain - are the provision for useful lives of depreciable assets,
    commitments and contingencies, loan loss provisions, income tax
    provisions, valuation of retained interest from securitization,
    stock-based compensation, performance share unit plan expense and the
    recoverability of property, equipment, goodwill and intangible assets
    using estimates of future cash flows. In addition, the Company has made
    investments in companies or businesses, some of which have experienced
    operating losses. Significant changes in the assumptions, including those
    with respect to future business plans and cash flows, could change the
    recorded amounts by a material amount. In addition, further operating
    losses of certain investees could result in impairment of these
    investments.

    Disposal of Long-lived Assets and Discontinued Operations

    Long-lived assets to be disposed of by sale are measured at the lower of
    their carrying amount or fair value less cost to sell, and are not
    depreciated while classified as held for sale.

    During 2007, the Company concluded the sale of its wholly-owned
    subsidiary Investmaster Holdings Limited ('Investmaster'). Investmaster's
    assets and liabilities have been reclassified as discontinued operations
    and its operations for the 2006 period are reported as discontinued
    operations as discussed in Note 3.

    Accounting for Securitizations

    The Company has securitized certain registered Retirement Savings Plan
    (RSP) loans through the sale of these loans to a securitization trust. In
    order 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.

    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 are different from management's estimate
    of future cash flows, then the gains or losses on the securitization
    recognized in income will be adjusted. Note 2 to the financial statements
    provides 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. If an AGF Elements portfolio
    does not match or outperform its customized benchmark over a three-year
    period, each individual investor will receive up to 90 basis points in
    additional units, calculated based on the value of such investment at the
    end of its related three-year period.

    The Company records in other 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, 2007, the Company has recorded a liability of $6.1 million
    (2006 - $1.6 million).

    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 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,
    2007 and 2006.

    Derivatives

    Derivative instruments are used to manage the Company's exposure to
    interest rate risks and exposure 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 can be
    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.

    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. During the twelve
    months ended November 30, 2007, the ineffective portion of accumulated
    changes in fair value of hedging relationships recognized in the income
    statement amounted to a gain of less than $0.1 million, as it relates to
    fair value hedging relationships.

    Cash Flow Hedges

    Cash flow hedges are used to hedge the changes in fair value related to
    certain compensation costs (Note 14). 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.

    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. During the twelve months ended November 30, 2007, the ineffective
    portion of accumulated changes in the fair value of hedging relationships
    recognized in the income statement amounted to a gain of less than
    $0.1 million, as it relates to cash flow hedging relationships.

    Future Accounting Changes

    Capital Disclosures and Financial Instruments - Disclosures and
    Presentation

    On December 1, 2006, the CICA issued three new accounting standards:
    Handbook Section 1535, Capital Disclosures (Section 1535), Handbook
    Section 3862, Financial Instruments - Disclosures (Section 3862), and
    Handbook Section 3863, Financial Instruments - Presentation
    (Section 3863). These new standards will be effective for the Company on
    December 1, 2007.

    Section 1535 specifies the disclosure of (i) an entity's objectives,
    policies and processes for managing capital; (ii) quantitative data about
    what the entity regards as capital; (iii) whether the entity has complied
    with any capital requirements; and (iv) if it has not complied, the
    consequences of such non-compliance.

    Sections 3862 and 3863 replace Handbook Section 3861, Financial
    Instruments - Disclosure and Presentation, revising and enhancing its
    disclosure requirements, and carrying forward unchanged its presentation
    requirements. These new sections place increased emphasis on disclosures
    about the nature and extent of risks arising from financial instruments
    and how the entity manages those risks.


    Note 2: Securitization of AGF Trust Loans

    On March 30, 2007, the Company, through its wholly owned subsidiary
    AGF Trust Company ('Trust Company'), securitized $263.6 million of RSP
    loans through the sale of these loans to a securitization trust. Cash
    flows of $252.9 million were received on the securitization and a gain of
    $8.0 million was recorded, net of transaction fees and servicing
    liabilities. On February 28, 2006, $218.4 million of RSP loans was
    securitized through the sale of these loans to a securitization trust.
    Cash flows of $206.3 million were received on the securitization and a
    gain, net of transaction fees and expenses, of $9.9 million was recorded.
    As at November 30, 2007, $291.1 million ($2006 - $161.3 million) of
    securitized loans related to these two securitization transactions were
    outstanding.

    When RSP loan receivables are sold in a 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, 2007, as a result of the extended disruption in the market
    for asset-backed commercial paper ('ABCP') issued by securitization
    trusts, the Trust Company revised its assumptions regarding the excess
    spread it will earn on its retained interests in securitization. The
    Trust Company is exposed to the increased costs of ABCP, as the interest
    expense incurred by the securitization trust on commercial paper issued
    to fund the purchase of assets directly impacts the amount of residual
    interest earned by the retained interests. As a result of decreasing the
    Trust Company's estimate of the future difference between the rates on
    ABCP and the rates on the related RSP loans, and due to the higher actual
    rates paid to ABCP holders during the year, the Trust Company wrote down
    the value of the retained interest-only strip by approximately
    $1.9 million as an other than temporary impairment.

    The Company has recorded retained interests of $50.9 million (2006 -
    $27.7 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 $20.4 million (2006 -
    $13.7 million), ii) cash collateral of $11.3 million (2006 -
    $5.7 million) and iii) over-collateralization of $19.2 million (2006 -
    $8.3 million).

    As at November 30, 2007, the impaired loans included in the securitized
    balances were equal to $0.7 million (2006 - $0.3 million), and during the
    12 months ended November 30, 2007, $2.1 million (2006 - $0.8 million) of
    securitized RSP loans were written off.

    The Company's claim on the retained interests is subordinate to
    investors' interests. Recourse available to investors and the
    securitization trust is limited to the retained interests. For the twelve
    months ended November 30, 2007, cash flows of $18.0 million (2006 -
    $9.9 million) were received on the securitized loans, of which
    $6.7 million (2006 - $4.1 million) related to the over-collateralization
    and $11.3 million (2006 - $5.8 million) related to the interest-only
    strip. The total other income recognized from securitization during the
    twelve months ended November 30, 2007 was $4.6 million (2006 -
    $2.2 million).

    The significant assumptions used to value the sold and retained interests
    at the date of securitization for securitizations completed during the
    year and at year-end were as follows:

           Excess spread(1)                                    2.7% - 3.8%
           Discount rate on interest-only strip                7.5%
           Expected credit losses                              0.8%
           Prepayment rate                                    16.3%
           Expected weighted average life of RSP loans        23 - 27 months

    (1) The excess spread at year-end is expected to fluctuate over these
        ranges over the life of the retained interests.


    The Trust Company retained servicing responsibilities for the securitized
    loans. A servicing liability of $1.8 million was recorded as at
    November 30, 2007 (2006 - $1.1 million). This amount represents the
    estimated future cost of servicing the securitized loans and has been
    offset against the gain on the sale of the RSP loans. The amount
    amortized related to the servicing liability during the twelve months
    ended November 30, 2007 was $0.9 million (2006 - $0.5 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, 2007. As the sensitivity is
    hypothetical, it should be used with caution. The impact of changes in
    the fair value of retained interests was calculated using a discounted
    cash flow analysis.

    -------------------------------------------------------------------------
    (in thousands of dollars)
    -------------------------------------------------------------------------

    Discount rate
      +10%                                                        $     (225)
      +20%                                                              (448)
    Prepayment rate
      +10%                                                        $     (365)
      +20%                                                              (737)
    Expected credit losses
      +10%                                                        $     (423)
      +20%                                                              (846)
    Excess spread
      -10%                                                        $   (1,681)
      -20%                                                            (3,354)
    -------------------------------------------------------------------------


    Note 3: Discontinued Operations and Assets Held for Sale

    (a) On April 30, 2007, the Company sold 100% of Investmaster Group
        Limited for $6.8 million and additional contingent consideration. The
        purchase consideration includes $5.0 million in cash and two notes
        receivable from the buyer, totalling $1.8 million, due on April 30,
        2009 and April 30, 2010, respectively. The contingent consideration
        will be payable to the Company in 2009 and 2010 if certain working
        capital and revenue targets are reached by Investmaster.

        Accordingly, Investmaster's operations for the 2007 and 2006 periods
        have been reported as discontinued operations and previously reported
        financial statements have been reclassified to reflect the following:

        ---------------------------------------------------------------------
        (in thousands of dollars, except per share amounts)

        Years ended November 30                            2007         2006
        ---------------------------------------------------------------------

        Revenue                                      $    4,342   $   14,457
        Net earnings from discontinued
         operations, net of tax                      $      247   $      169
        Basic net earnings per share                 $        -   $        -
        Diluted net earnings per share               $        -   $        -
        ---------------------------------------------------------------------

        The carrying values of the assets and liabilities related to the
        discontinued operations are as follows:

        ---------------------------------------------------------------------
                                                                 November 30,
        (in thousands of dollars)                                       2006
        ---------------------------------------------------------------------

        Current assets of discontinued operations
          Cash and term deposits                                  $    1,792
          Accounts receivable and prepaid expenses                     2,735
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
                                                                  $    4,527
        ---------------------------------------------------------------------

        Long-term assets of discontinued operations
          Property, equipment and other assets, net               $    3,598
        ---------------------------------------------------------------------
                                                                  $    3,598
        ---------------------------------------------------------------------

        Current liabilities of discontinued operations
          Accounts payable and accrued liabilities                $    4,286
        ---------------------------------------------------------------------
                                                                  $    4,286
        ---------------------------------------------------------------------

        Long-term liabilities of discontinued operations
          Future income tax                                       $      756
        ---------------------------------------------------------------------
                                                                  $      756
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Details of the gain on sale of Investmaster are as follows:

        ---------------------------------------------------------------------
                                                                 November 30,
        (in thousands of dollars)                                       2007
        ---------------------------------------------------------------------

        Proceeds on sale                                          $    6,821
        Expenses related to transaction                               (2,303)
        Carrying cost of investment                                   (3,916)
        ---------------------------------------------------------------------
        Gain on sale before income taxes                                 602
        Income tax reduction                                           4,100
        ---------------------------------------------------------------------
        Gain on sale of discontinued operations                   $    4,702
        ---------------------------------------------------------------------

    (b) During the year ended November 30, 2006, the Company recorded a loss
        on sale of discontinued operations of $2.9 million, net of tax of
        $0.6 million, in relation with certain purchase price adjustments and
        a potential tax liability with the sale of Unisen Holdings Inc.
        ('Unisen'). There is no contingent payment remaining for this
        transaction.


    Note 4: Acquisition of Highstreet Partners Ltd.

    On December 1, 2006, the Company acquired 79.9% of Highstreet Partners
    Ltd. ('Highstreet'), which wholly owns Highstreet Asset Management Inc.,
    an investment counsel firm based in London, Ontario. The purchase
    consideration is payable in a combination of cash and the issuance of
    Class B Shares. For the year ended November 30, 2007, the Company has
    made payments of $20.2 million in cash and $5.7 million through the
    issuance of 225,116 AGF Class B Shares, which approximates 33.3% of the
    purchase price. Additional payments aggregating $51.8 million (principal
    and imputed interest) are due on February 28, 2008 and February 28, 2009
    for total minimum consideration, including acquisition costs, of
    $74.4 million. In addition, a contingent consideration will be paid in
    2010 if certain financial profitability targets are achieved by
    Highstreet. At this time, the amount of the contingent consideration is
    not determinable. The 21.1% held by the former principals of Highstreet,
    who are also current employees of Highstreet, is shown as non-controlling
    interest.

    The fair value of the net assets acquired and consideration paid are
    summarized as follows:

    -------------------------------------------------------------------------
    (in thousands of dollars)
    -------------------------------------------------------------------------

    Net assets acquired
      Cash                                                        $      354
      Other assets                                                     3,011
      Management contracts                                            26,010
      Customer contracts                                              14,160
      Goodwill                                                        45,895
      Trademarks                                                       1,935
      Current liabilities                                             (2,955)
      Future income taxes                                            (14,014)
    -------------------------------------------------------------------------
                                                                  $   74,396
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Consideration paid (including acquisition costs)
      Cash                                                        $   20,228
      Issuance of Class B shares (note 13)                             5,672
      Payments subsequent to acquisition date (note 9 (c))            47,896
      Acquisition costs                                                  600
    -------------------------------------------------------------------------
                                                                  $   74,396
    -------------------------------------------------------------------------


    Note 5: Acquisition of Cypress Capital Management Ltd.

    On June 30, 2004, the Company acquired 100% of the shares of Cypress. At
    the time of purchase, contingent consideration of up to $9.0 million was
    due to the vendors, subject to Cypress achieving certain revenue levels
    over the three-year period ended June 30, 2007. The Company determined
    that these revenue levels were exceeded and, accordingly, the
    consideration of $9.0 million was paid during the year and recorded as an
    increase in goodwill. The payment consisted of $7.8 million in cash and
    the issuance of 33,367 Class B Shares valued at $1.2 million (Note 13).


    Note 6: Dissolution of Partnerships

    On February 28, 2007, the unitholders and the respective boards of
    directors of the following limited partnerships (LPs) - AGF Limited
    Partnership 1990, AGF Limited Partnership 1991, 20/20 Group 1990 Private
    Limited Partnership, 20/20 Group 1990 Limited Partnership and 20/20 Group
    1992 Limited Partnership - approved the dissolution of each respective
    LP. On March 1, 2007, as part of the LP dissolution process, the Company
    purchased the future distribution fees remaining payable by the Company
    to the LPs or purchased the outstanding units for total cash
    consideration of $3.2 million ($2.1 million net of taxes). In fiscal
    2006, distributions of approximately $1.0 million were made to these
    partnerships. As a result of the aforementioned transaction, no further
    distribution will be made to these specific LPs.


    Note 7: Trust Company

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

    -------------------------------------------------------------------------
                     Term to contractual repricing
                  -----------------------------------------------------------
                                                         As of November 30,
    (in thousands   Variable      1 year      1 to 5  -----------------------
     of dollars)        rate     or less       years        2007        2006
    -------------------------------------------------------------------------

    Mortgage
     loans        $    1,653  $  549,855  $  774,819  $1,326,327  $  941,962
    Home equity
     lines of
     credit (HELOCs) 449,151           -           -     449,151     116,194
    -------------------------------------------------------------------------
    Total real
     estate secured
     loans           450,804     549,855     774,819   1,775,478   1,058,156
    Investment
     loans         1,898,987       5,463      10,236   1,914,686   1,261,166
                  -----------------------------------------------------------
                   2,349,791     555,318     785,055   3,690,164   2,319,322
                  -----------------------------------
                  -----------------------------------
    Less: allowance
     for loan losses                                     (17,137)    (12,699)
    Add: net
     deferred sales
     commissions
     and commitment fees                                   7,334           -
                                                      -----------------------
                                                       3,680,361   2,306,623
    Less: current portion                               (492,756)   (309,329)
                                                      -----------------------
                                                      $3,187,605  $1,997,294
                                                      -----------------------
                                                      -----------------------

    Impaired loans included
     in above                                         $   25,821  $   16,368
    Less: specific allowance
     for loan losses                                      (1,860)     (2,448)
                                                      -----------------------
                                                      $   23,961  $   13,920
                                                      -----------------------
                                                      -----------------------

    The change in the allowance for
     loan losses is as follows:
      Balance, beginning of year                      $   12,699  $    8,200
      Amounts written-off                                 (5,899)     (2,697)
      Recoveries                                           1,110         465
      Reduction due to RSP loan securitization            (1,486)     (1,770)
      Provision for loan losses                           10,713       8,501
                                                      -----------------------
      Balance, end of year                            $   17,137  $   12,699
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (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, 2007 were
        $492.8 million (2006 - $309.3 million).

        As at November 30, 2007, the Company's mortgage portfolio was
        comprised of a combination of fixed rate and variable rate
        residential mortgages, of which $563.5 million (2006 -
        $403.4 million) is insured, with a weighted average term to maturity
        of 2.0 years (2006 - 1.8 years) and a weighted average yield of 7.20%
        (2006 - 6.81%). Investment loans have interest rates based on prime.
        For the year ended November 30, 2007, the average interest rate on
        HELOC was 6.30% (2006 - 6.08%) and on investment loans was 7.60%
        (2006 - 7.39%). Mortgage and HELOC loans are secured primarily by
        residential real estate. Investment loans are secured by the
        investment made using the initial loan proceeds.

    (b) Trust Company Deposits

    -------------------------------------------------------------------------
                            Term to maturity
                  -----------------------------------------------------------
    (in thousands              1 year or      1 to 5
     of dollars)      Demand        less       years        2007        2006
    -------------------------------------------------------------------------

    Deposits      $    7,813  $1,839,680  $2,252,170  $4,099,663  $2,488,264
    Less: deferred
     sales
      commissions                                        (16,321)          -
    Less: current
     portion                                          (1,847,494) (1,022,774)
    -------------------------------------------------------------------------
    Long-term
     deposits                                         $2,235,848  $1,465,490
    -------------------------------------------------------------------------

        As at November 30, 2007, deposits were comprised substantially of
        GICs with a weighted average term-to-maturity of 1.8 years (2006 -
        1.9 years) and a weighted average interest rate of 4.38% (2006 -
        4.05%).

    (c) Interest Rate Swaps

        To hedge its exposure to fluctuating interest rates, the Trust
        Company has entered into interest rate swap transactions with four
        Canadian chartered banks as noted below. The swap transactions expire
        between December 2007 and July 2012 and involve the exchange of
        either the one-month bankers' acceptance rate or the three-month
        bankers' acceptance rate, to receive fixed interest rates. The swap
        contracts designated as fair value hedging instruments for deposits
        are used by the Trust Company for balance sheet matching purposes and
        to mitigate net interest revenue volatility. As at November 30, 2007,
        the aggregate notional amount of the swap transactions was
        $2.8 billion (2006 - $1.7 billion). The aggregate fair value of the
        swap transactions, which represents the amount that would be received
        by the Trust Company if the transactions were terminated at
        November 30, 2007, was $6.7 million (2006 - $3.8 million).

        ---------------------------------------------------------------------
        Notional amount                                       Fixed interest
        of swap              Fair value      Maturity date     rate received
        ---------------------------------------------------------------------
        (in thousands
         of dollars)

          $   100,000         $     (60)         2007          3.92% - 4.20%
            1,262,000               417          2008          3.17% - 4.83%
              567,000             1,927          2009          3.47% - 4.97%
              495,000             1,670          2010          3.62% - 5.05%
              340,000             2,551          2011          4.07% - 5.08%
               70,000               143          2012          4.25% - 5.01%
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    (d) Interest Rate Sensitivity

        For the Trust Company, the impact of a 1% change in interest rates
        either up or down would be an increase or decrease in annual net
        interest income of approximately $2.2 million.


    Note 8: Property, Equipment and Computer Software

    -------------------------------------------------------------------------
    (in thousands of dollars)                        Accumulated
    November 30, 2007                         Cost  Amortization         Net
    -------------------------------------------------------------------------

    Furniture and equipment             $    8,306   $    4,711   $    3,595
    Leasehold improvements                  15,592        9,191        6,401
    Computer hardware                        8,391        3,408        4,983
    Computer software                       15,976       10,143        5,833
    -------------------------------------------------------------------------
                                        $   48,265   $   27,453   $   20,812
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    (in thousands of dollars)                        Accumulated
    November 30, 2006                         Cost  Amortization         Net
    -------------------------------------------------------------------------

    Furniture and equipment             $   19,753   $   16,532   $    3,221
    Leasehold improvements                  20,430       12,792        7,638
    Computer hardware                        6,957        2,541        4,416
    Computer software                       42,243       37,553        4,690
    -------------------------------------------------------------------------
                                        $   89,383   $   69,418   $   19,965
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Note 9: Long-term Debt

    -------------------------------------------------------------------------
    (in thousands of dollars)
    Years ended November 30                                2007         2006
    -------------------------------------------------------------------------

    Revolving term loan                              $  160,000   $   56,000
    Payment related to acquisition of
     Highstreet Partners Ltd. (note 4)
      February 28, 2008                                  25,611            -
      February 28, 2009                                  24,486            -
                                                        210,097       56,000
    -------------------------------------------------------------------------

    Less: amount included in current liabilities         25,611            -
    -------------------------------------------------------------------------
                                                                           -
                                                     $  184,486   $   56,000
    -------------------------------------------------------------------------

    (a) Revolving Term Loan

        The Company has arranged a six-year prime-rate-based revolving term
        loan to a maximum of $300.0 million (2006 - $200.0 million) with a
        Canadian chartered bank. Under the loan agreement, the Company is
        permitted to draw down the revolving term loan by direct advances
        and/or bankers' acceptances (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 June 30, 2008. However, the Company may request
        by April 15, 2008, and prior to April 15 in any calendar year
        thereafter, a recommencement of the six-year term at the expiry of
        the then-current commitment period. No repayment of the principal
        amount outstanding pursuant to the revolving term loan is required
        during the first three years of the then-applicable term. Thereafter,
        the loan balance shall be repaid in minimum monthly instalments of at
        least one-thirty-sixth of the amount of principal outstanding.

        As at November 30, 2007, the Company has drawn $160.0 million (2006 -
        $56.0 million) against the available loan amount at an effective
        average interest rate of 4.48% (2006 - 4.60%) per annum.

        Security for the bank loan includes a specific claim over the
        management fees owing from the mutual funds (subject to the existing
        claims of related limited partnerships) for which the Company acts as
        manager and, depending upon the amount of the loan outstanding, an
        assignment of AGF's investments in 20/20 Financial Corporation and
        AGF International Company Limited.

    (b) Notes Payable Due April 30, 2013 and Participation Units

        During the twelve months ended November 30, 2006, the Company reached
        an agreement with Multi-Fund Management Inc., the manager of
        Multi-Fund Income Trust ('Trust'), to terminate its obligations to
        the Trust for a cash payment of $3.4 million.

        Details of the gain recorded on repayment of debt were as follows:

        ---------------------------------------------------------------------
        (in thousands of dollars)
        ---------------------------------------------------------------------

        Notes payable due April 30, 2013                          $   17,817
        Participation Units                                            6,157
        ---------------------------------------------------------------------
                                                                      23,974
        Cash consideration paid, June 12, 2006                        (3,360)
        ---------------------------------------------------------------------

        Gain on early repayment of debt                               20,614
        Income taxes                                                   7,305
        ---------------------------------------------------------------------

        Gain on early repayment of debt, net of tax               $   13,309
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

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

        On December 1, 2006, the Company acquired 79.9% of Highstreet
        (Note 4). Additional payments of $25.9 million, which includes
        principal and imputed interest at the rate of 4.5% per annum, are due
        to the vendors on February 28, 2008 and February 28, 2009, and will
        be satisfied through a combination of cash and Class B Shares.

    (d) Interest Rate Sensitivity

        The impact of a 1% change in interest rates either up or down will
        increase or decrease annual interest expense on the Company's debt by
        $1.6 million (2006 - $0.2 million).


    Note 10: Financial Instruments

    The Company's financial instruments consist of cash and cash equivalents,
    short-term investments, accounts receivable, retained interest from
    securitization, real estate secured and investment loans, accounts
    payable and accrued liabilities, deposits, long-term debt, interest rate
    swap contracts and share-based compensation cost hedges.

    The carrying value of cash and cash equivalents, accounts receivable,
    accounts payable, accrued liabilities and long-term debt approximates
    fair value.

    The carrying value of short-term investments and retained interest from
    securitization represents their fair value as they are classified as
    available-for-sale. Short-term investments are valued based on quoted
    market values and include $16.4 million (2006 - $10.1 million) invested
    in AGF mutual funds. These investments have an expected maturity of less
    than one year. Real Estate Secured loans are classified as loans and
    receivables and are measured using the amortized cost method. As at
    November 30, 2007, the fair value of loans and receivables was
    $3.7 billion (2006 - $2.3 billion). Deposits are classified as
    liabilities and are measured using the amortized cost method. As at
    November 30, 2007, the fair value of deposits was $4.1 billion (2006 -
    $2.5 billion).

    The fair values of the Company's derivative financial instruments, which
    are used to manage exposure to interest rate risks, and the fair values
    of the Company's derivative instruments used to manage exposure to
    increase in compensation costs related to certain RSU's and PSU's
    represent the amount that would be paid if the transaction were
    terminated at November 30, 2007.

    To fix the interest rate paid on a portion of its revolving term loan,
    the Company has entered into two interest rate swap transactions (the
    'Swap Transactions') with Canadian Chartered banks. The swaps mature
    January 2008 and the fair value as at November 30, 2007 is not
    significant.

    The following details the Company's derivative instruments:

    -------------------------------------------------------------------------
                                                2007              2006
                  ----------------------------------------- -----------------
                                Hedging
                                 item
                                maximum
    (in thousands   Interest   maturity    Notional   Fair   Notional   Fair
     of dollars)      rate       date       amount   Value    amount   Value
    -------------------------------------------------------------------------

    Derivatives
     used to manage
     interest rate
     exposure:    3.17%-5.08%  2007-2012  2,834,000  6,700  1,712,700  3,800

    Derivatives
     used to manage
     changes in
     share-based
     compensation:             2009-2010     10,275 (681.8)         -      -

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

    The Company did not hedge its currency exposure in connection with its
    investment in S&WHL in 2007 and 2006.


    Note 11: Limited Partnership Financings

    Selling commissions paid on certain sales of mutual fund securities of
    the AGF Funds made on the DSC basis ('DSC securities') have been financed
    by limited partnerships held by third-party investors. Such limited
    partnerships have financed selling commissions of approximately
    $440 million in respect of such DSC securities. The Company no longer
    finances selling commissions using limited partnerships. The Company is
    obligated to pay the relevant limited partnership an annual fee of 0.47%
    to 0.90% of the net asset value of DSC securities. The limited
    partnerships also receive any deferred sales charges resulting from the
    redemption of such securities, although no further amounts will be
    received as the DSC redemption schedules for these financings have all
    ended. These obligations continue as long as such DSC securities remain
    outstanding except for certain of the limited partnerships, in which case
    the obligation terminates at various dates from December 31, 2007 to
    December 31, 2020. For certain limited partnerships, 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
    limited partnerships. 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 2007 was $0.4 million (2006 -
    $0.6 million). As at November 30, 2007, the net asset value of DSC
    securities financed by the limited partnerships was $1.2 billion (2006 -
    $1.6 billion).


    Note 12: Income Taxes

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

        ---------------------------------------------------------------------
        Years ended November 30                            2007         2006
        ---------------------------------------------------------------------

        Canadian corporate tax rate                       35.9%        35.9%
        Changes in future federal and
         provincial income tax rates                      (1.1)       (14.0)
        Rate differential on earnings of subsidiaries    (10.3)       (10.8)
        Acquisition of tax related benefits (net)         (2.5)           -
        Amortization of customer contracts
         and relationships                                 0.1          1.1
        Tax exempt investment income                      (1.2)        (0.9)
        Other                                                -         (1.1)
        ---------------------------------------------------------------------
        Effective income tax rate                         20.9%        10.2%
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

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

        ---------------------------------------------------------------------
        (in thousands of dollars)
        Years ended November 30                            2007         2006
        ---------------------------------------------------------------------

        Future income tax liability
          Deferred sales commissions                 $ (105,270)  $  (92,405)
          Deferred revenue                                1,110          518
          Undepreciated capital cost in
           excess of carrying values                      3,467        2,799
          Loss carryforwards                              6,603        1,484
          Expenses deductible or gain to be
           recognized in future periods                   3,025          542
          Provision for loan losses                       5,154        3,057
          Securitization of RSP loans                   (10,239)      (5,046)
          Deferred charges                               (9,289)      (4,430)
          Goodwill and management contracts            (145,395)    (136,259)
          Investments                                      (982)          (6)
          Other                                             589         (559)
        ---------------------------------------------------------------------
                                                       (251,227)    (230,305)
        Less: current portion                            48,304       45,396
        ---------------------------------------------------------------------
        Future income tax liability -
         long-term portion                           $ (202,923)  $ (184,909)
        ---------------------------------------------------------------------

    (c) As at November 30, 2007, certain subsidiaries of the Company have
        accumulated aggregate non-capital losses of approximately
        $8.2 million (2006 - $4.7 million) and $22.6 million of capital loss
        that may be used to reduce taxable income in the future. These tax
        loss carry-forwards expire as follows:

           $8.2 million non-capital loss          2014 to 2027
           $22.6 million capital loss             no expiry date

    (d) The 2007 federal budget announced on March 19, 2007 proposed to
        reduce the federal corporate income tax rate to 18.5% from 19% by
        January 1, 2011. On June 12, 2007, this tax rate change was
        considered to be substantively enacted. Consequently during the year,
        the Company recognized a $2.4 million reduction in future income tax
        liabilities. The 2006 federal budget announced on May 2, 2006
        proposed to reduce the federal corporate income tax rate to 19% from
        21% by January 1, 2010 and to eliminate the federal corporate surtax
        rate of 1.12% effective January 1, 2008. On June 6, 2006, these tax
        rate changes were considered to be substantively enacted.
        Consequently, during 2006, the Company recognized a $15.9 million
        reduction in future income tax liabilities.


    Note 13: Capital Stock

    (a) Authorized Capital

        The authorized capital of AGF consists of an unlimited number of
        Class B Shares and an unlimited number of Class A Voting Common
        Shares ('Class A shares'). The Class B Shares are listed for trading
        on The Toronto Stock Exchange.

    (b) Changes During the Year

        The change in capital stock is summarized as follows:

    -------------------------------------------------------------------------
                                          Year ended November 30,
                              -----------------------------------------------
                                       2007                    2006
                              -----------------------------------------------
    (in thousands of dollars,                 Stated                  Stated
     except share amounts)        Shares       value      Shares       value
    -------------------------------------------------------------------------

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

    Class B shares
      Balance, beginning
       of the year            89,171,997  $  403,566  89,123,205  $  394,154
      Issued through dividend
       reinvestment plan         110,627       3,614      87,891       1,985
      Stock options exercised    818,850      14,688     531,300       7,935
      Issued on acquisition of
       a subsidiary (note 4)     225,116       5,672           -           -
      Issued for Cypress
       contingent consideration
       (note 5)                   33,367       1,200     129,601       2,600
      Purchased for
       cancellation           (1,437,800)     (6,817)   (700,000)     (3,108)
    -------------------------------------------------------------------------
      Balance, end of
       the year               88,922,157  $  421,923  89,171,997  $  403,566
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (c) Class B Shares Purchased for Cancellation

        AGF has obtained applicable regulatory approval to purchase for
        cancellation, from time to time, certain of its Class B Shares
        through the facilities of the Toronto Stock Exchange. Present
        approval for such purchases extends through to February 25, 2008.
        Under this issuer bid, the Company may purchase up to 10% of the
        public float outstanding on the date of the receipt of regulatory
        approval or up to 7,303,844 shares. During the year ended
        November 30, 2007, 1,437,800 (2006 - 700,000) Class B Shares were
        purchased at a cost of $45.5 million (2006 - $15.9 million) and the
        excess paid of $38.7 million ($12.8 million) over the book value of
        the shares purchased for cancellation was charged to retained
        earnings.


    Note 14: 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 6,532,335
        Class B Shares could have been granted as at November 30, 2007 (2006 -
        5,421,773). The stock options are issued at a price not less than the
        market price of the Class B 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 100% vest at
        the end of the term of the option.

        The change in stock options during 2007 and 2006 is summarized as
        follows:

    -------------------------------------------------------------------------
                                          Year ended November 30,
                              -----------------------------------------------
                                       2007                    2006
                              -----------------------------------------------
                                            Weighted                Weighted
                                             average                 average
                                            exercise                exercise
                                 Options       price     Options       price
    -------------------------------------------------------------------------

    Class B share options
      Balance, beginning
       of the year             4,324,084  $    19.91   4,781,876  $    18.72
      Options granted            781,981       31.96     730,000       25.14
      Options cancelled          (18,450)      19.93    (656,492)      20.88
      Options exercised         (818,850)      17.94    (531,300)      14.98
    -------------------------------------------------------------------------
      Balance, end of
       the year                4,268,765  $    22.50   4,324,084  $    19.91
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The following summarizes information about stock options outstanding as
    at November 30, 2007:

    -------------------------------------------------------------------------
                                Weighted    Weighted                Weighted
     Range of      Number of     average     average   Number of     average
     exercise        options   remaining    exercise     options    exercise
      prices     outstanding        life       price exercisable       price
    -------------------------------------------------------------------------
    $11.27 to
     $16.87          274,500   2.7 years  $    15.35     241,167  $    15.15
    $17.06 to
     $17.36          697,900         4.2       17.14     318,150       17.14
    $17.87 to
     $18.94          424,884         5.3       18.85     337,967       18.90
    $18.95 to
     $19.38          920,000         4.9       19.38     435,000       19.38
    $19.39 to
     $27.73        1,169,500         4.1       24.83     622,000       24.56
    $30.00 to
     $35.72          781,981         7.0       31.96           -           -
    -------------------------------------------------------------------------
                   4,268,765         4.9   $   22.50   1,954,284  $    20.06
    -------------------------------------------------------------------------

        The outstanding stock options have expiry dates ranging from June
        2008 to November 2014. Options granted prior to 2005 require the
        Company or employee to meet performance criteria for certain of the
        options to vest.

        During 2007, the Company granted 781,981 options (2006 - 730,000)
        and recorded $4.5 million (2006 -- $4.6 million) in compensation
        expense and contributed surplus in respect of the options granted
        since December 31, 2002. The fair value of options granted during
        2007 has been estimated at between $6.80 and $8.46 per share (2006 -
        between $5.63 and $7.16 per share) using the Black-Scholes option-
        pricing model. The following ranges of assumptions were used to
        determine the fair value of the options on the date of grant:

              Risk-free interest rate             3.81% - 4.04%
              Expected dividend yield             2.24% - 2.51%
              Expected share price volatility     24.75% - 26.58%
              Option term                         4.9 years

    (b) Share Purchase Plan

        Under the Company's share purchase plan, eligible employees can have
        a percentage of their annual earnings withheld subject to a maximum
        of 6%, to purchase the Class B Shares. The Company matches up to 60%
        of the amounts contributed by employees. All contributions are used
        by the plan trustee to purchase Class B Shares on the open market.
        Shares purchased with Company contributions vest immediately. The
        Company's contributions are recorded in payroll costs and amounted to
        $1.1 million for the year ended November 30, 2007 (2006 -
        $0.7 million).

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

        Under the Company's RSU and PSU plans, certain senior employees are
        issued either RSUs or PSUs. These units vest three years from the
        grant date provided the employee meets certain performance criteria.
        On the vesting date, the Company will redeem all of the participants'
        share units in cash equal to the value of one Class B Share for each
        RSU or PSU, as applicable.

    The change in share units during 2007 and 2006 is as follows:

                               2007                           2006
                  ------------------------------ ----------------------------
                     Number of share               Number of share
                               units   Weighted              units   Weighted
                  -------------------   average   -----------------   average
                      Non-           grant date     Non-           grant date
                    vested    Vested fair value   vested    Vested fair value
    -------------------------------------------------------------------------
    Outstanding,
     beginning
     of the year
      Non-vested   142,992            $  23.30         -
      Vested                       -                             -
    Issued
      Initial
       allo-
       cation      210,330         -  $  33.48   143,316         -  $  23.30
      In lieu of
       dividends     4,205         -                 917         -
    Vested               -         -                             -
    Settled
     in cash        (4,400)        -                             -
    Forfeited
     and
     cancelled      (7,870)        -              (1,241)        -
    -------------------------------------------------------------------------
    Outstanding,
     end of the
     year          345,257         -             142,992         -
    -------------------------------------------------------------------------

        Compensation expense for the year ended November 30, 2007 related to
        these share units was $2.2 million (2006 - $0.2 million). During
        2007, the Company entered into swap agreements to fix the cost of
        compensation related to certain RSUs and PSUs. As of November 30,
        2007, the Company has hedged 350,872 share units at a fixed cost
        between $31.28 and $35.07.T

    (d) Deferred Share Unit ('DSU') Plan

        During 2007, the Company established a DSU plan for non-employee
        directors. The plan enables directors of the Company to elect to
        receive their remuneration in DSUs. On termination, the Company 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.
        There is no unrecognized compensation related to directors' DSUs
        since these awards vest immediately when granted. As at November 30,
        2007, 9,035 DSUs were outstanding. Compensation expense related to
        these DSUs for year ended November 30, 2007 was $0.1 million.

    Note 15: Earnings Per Share

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

    -------------------------------------------------------------------------
    (in thousands of dollars, except per share amounts)
    Years ended November 30                                 2007        2006
    -------------------------------------------------------------------------

    Numerator
      Net income from continuing operations
       for the year                                   $  175,866  $  102,066
      Gain on early retirement of debt, net of tax             -      13,309
      Loss on dissolution of partnerships, net of
       tax (note 6)                                       (2,128)          -
      Gain (loss) on sale of discontinued
       operations, net of tax                              4,702      (2,887)
      Net earnings from discontinued operations,
       net of tax (note 3(a))                                247         169
    -------------------------------------------------------------------------
      Net income for the year                         $  178,687  $  112,657

    Denominator
      Weighted average number of shares - basic       89,945,162  89,105,541
      Dilutive effect of employee stock options        1,350,249     734,510
    -------------------------------------------------------------------------
      Weighted average number of shares - diluted     91,295,411  89,840,051

    Earnings Per Share
      Basic from continuing operations                $     1.96  $     1.15
      Diluted from continuing operations              $     1.93  $     1.14
      Basic                                           $     1.99  $     1.26
      Diluted                                         $     1.96  $     1.25
    -------------------------------------------------------------------------


    Note 16: 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 2007 and 2006
    were from the AGF Funds. As at November 30, 2007, the Company had
    $49.7 million (2006 - $35.7 million) receivable from the AGF Funds. The
    Company also acts as trustee for the AGF Funds that are mutual fund
    trusts.

    Up until the sale of Unisen to CitiFinancial Canada Inc.
    ('CitiFinancial') in 2005, the Company directly provided unitholder
    services to the funds and was compensated for such services. These
    services were provided in the normal course of operations and were
    recorded at the amount of consideration agreed to by the parties.
    Concurrent with the sale of Unisen, the Company entered into a new 10-
    year services agreement with Citigroup Global Transaction Services. 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 $14.6 million (2006 - $15.7 million).


    Note 17: Related Party Transactions

    The Company has entered into certain transactions with entities or senior
    officers who are directors of the Company. During 2007, total amounts
    paid by the Company to these related parties aggregated $0.1 million
    (2006 - $0.1 million).


    Note 18: Supplemental Disclosure of Cash Flow Information

    Interest payments in 2007 were $150.1 million (2006 - $79.4 million).
    Income tax payments in 2007 were $32.2 million (2006 - $48.1 million).


    Note 19: Trust Company Net Interest Income

    The breakdown of net interest income is as follows:

    -------------------------------------------------------------------------
    (in thousands of dollars)
    Years ended November 30                                 2007        2006
    -------------------------------------------------------------------------

    Trust Company interest income
      Loan interest                                   $  213,553  $  119,254
      Investment interest                                 23,132      12,101
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                         236,685     131,355

    Trust Company interest expense
      Deposit interest                                   135,493      74,211
      Other interest expense                              22,969       9,793
    -------------------------------------------------------------------------
                                                         158,462      84,004

    -------------------------------------------------------------------------
    Trust Company net interest income                 $   78,223  $   47,351
    -------------------------------------------------------------------------


    Note 20: 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 Company offers a wide range of trust services
    including GICs, term deposits, real estate secured loans, investment
    loans and HELOC loans. The results of S&WHL have been included in Other.
    The reportable segments are strategic business units that offer different
    products and services.

    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.

    -------------------------------------------------------------------------
    (in thousands
     of dollars)              Investment       Trust
    For the year ended        Management     Company
     November 30, 2007        Operations  Operations       Other       Total
    -------------------------------------------------------------------------

    Revenue                   $  674,647  $   97,217  $    8,456  $  780,320
    Operating expenses           375,730      47,432           -     423,162
    Amortization and other       122,171       1,656       9,895     133,722
    -------------------------------------------------------------------------
    Segment income (loss)
     from continuing
     operations before
     taxes                    $  176,746  $   48,129  $   (1,439) $  223,436

    Total assets              $1,328,056  $4,548,756  $        -  $5,876,812
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
    (in thousands
     of dollars)              Investment       Trust
    For the year ended        Management     Company
     November 30, 2006        Operations  Operations       Other       Total
    -------------------------------------------------------------------------

    Revenue                   $  537,007  $   64,968  $    5,227  $  607,202
    Operating expenses           326,094      32,604           -     358,698
    Amortization and other       130,324       1,117       3,346     134,787
    -------------------------------------------------------------------------
    Segment income from
     continuing operations
     before taxes             $   80,589  $   31,247  $    1,881  $  113,717

    Total assets              $1,159,697  $2,760,071  $        -  $3,919,768
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Note 21: Commitments

    The Company is committed under operating leases for office premises and
    equipment, which require approximate minimum annual cash rental payments
    as follows:

    -----------------------------------
    (in thousands of dollars)
    -----------------------------------
    2008                    $    4,594
    2009                         4,517
    2010                         4,309
    2011                         4,022
    2012                         3,556
    Thereafter                  12,634
    -----------------------------------
    -----------------------------------

    AGF Trust Company has outstanding mortgage commitments at rates of
    interest prevailing at the time the commitments were issued of
    $180.3 million as at November 30, 2007 (2006 - $144.7 million). Any
    interest rate commitment has a term of less than 60 days.

    Concurrent with the sale of Unisen to CitiFinancial, AGF has capped the
    management expense ratio on all of the AGF funds for three years at the
    lower of the actual levels reported in 2004 and 2005.


    Note 22: 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 and the Company does not anticipate that any will
    occur.

    The Company is committed for a ten-year period expiring October 2, 2015
    to reimburse CitiFinancial should CitiFinancial's annual revenues derived
    from AGF fund administration services fall below a pre-determined level.
    To date, Citifinancial's annual revenues derived from AGF have been well
    above the predetermined level. The Company is not able to reasonably
    estimate this future amount, if any, that may be due to Citifinancial
    under the terms of this agreement.


    Note 23: Contingent Liabilities

    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

    -------------------------------------------------------------------------
    (in thousands
     of dollars,
     except per
     share amounts)
    Years ended
     November 30        2007        2006        2005        2004        2003
    -------------------------------------------------------------------------

    Operations
      Total
       revenue
        (conti-
         nuing
         opera-
         tions)   $  780,320  $  607,202  $  546,567  $  545,393  $  510,571
      Net income     178,687     112,657      91,872      77,287      44,016
      Dividends       70,151      61,521      50,522      37,474      27,150

    Financial
     position
      Working
       capital
       (deficit)  $ (735,103) $ (404,223) $  (31,958) $   56,363  $   62,490
      Long-term
       debt          184,486      56,000     17,364      68,292     112,192
      Share-
       holders'
       equity      1,069,002     979,771     918,326     914,366     903,360
      Return
       on equity       17.4%       11.9%       10.0%        8.5%        4.9%

    Per share
      Net income
       - basic    $     1.99   $    1.26  $     1.02  $     0.85  $     0.48
      Dividends         0.78        0.69        0.56        0.41        0.30
      Book value
        (contin-
         uing
         opera-
         tions)        12.02       10.99       10.30       10.08        9.79
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    (in thousands
     of dollars,
     except per
     share amounts)
    Years ended
     November 30        2002        2001        2000        1999        1998
    -------------------------------------------------------------------------

    Operations
      Total
       revenue
        (conti-
         nuing
         opera-
         tions)   $  637,660  $  630,525  $  500,377  $  349,652  $  282,422
      Net income     119,839     163,754      95,931      61,710      48,777
      Dividends       22,967      19,577      14,092      11,642       9,970

    Financial
     position
      Working
       capital
       (deficit)  $   95,287  $   (9,950) $  (86,692) $   55,348  $   40,186
      Long-term
       debt          225,403     165,481     278,051      72,048      81,422
      Share-
       holders'
       equity        887,566     764,707     480,091     284,244     233,383
      Return
       on equity       14.5%       26.3%       25.1%       23.8%       22.9%

    Per share
      Net income
       - basic    $     1.34  $     1.84  $    1.12   $     0.80  $     0.64
      Dividends         0.26        0.22       0.18         0.15        0.13
      Book value
        (contin-
         uing
         opera-
         tions)         9.74        8.56       5.78         3.64        3.03
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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 more than 50 mutual
funds, the evolutionary AGF Elements portfolios, the Harmony asset management
program, AGF Institutional Account Services, private client products, and AGF
Trust GICs, loans and mortgages. With approximately $53 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".
    





For further information:

For further information: AGF Management Limited shareholders and
analysts, please contact: Greg Henderson, Senior Vice-President and Chief
Financial Officer, (416) 865-4156, greg.henderson@AGF.com; Media, please
contact: Lucy Becker, Vice-President, Corporate Communications, (416)
865-4284, lucy.becker@AGF.com


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890