AGF Management Limited Reports Results For Fiscal 2008



    
    AGF reinforces its financial strength; pays down $65.2 million of
    long-term debt and leaves dividend unchanged

    AGF MANAGEMENT LIMITED
    Fiscal 2008 Report to Shareholders for the year ended November 30, 2008
    

    TORONTO, Jan. 28 /CNW/ - AGF Management Limited (AGF) today announced
financial results for the year ended November 30, 2008 during which the
company significantly strengthened its balance sheet by paying down $65.2
million of long-term debt. Net income from continuing operations, including
impairment charges, declined 27.0% to $128.5 million, or $1.41 per share
diluted, compared with $175.9 million, or $1.93 per share diluted, in fiscal
2007. Excluding non-cash impairment charges and a $19.5 million reduction in
income taxes in fiscal 2008 related to substantively enacted tax rates, the
Company reported net income from continuing operations of $146.7 million or
$1.61 per share diluted.
    As a result of strong free cash flow from operations (defined as cash
flow from operations before net changes in non-cash balances related to
operations less selling commissions paid) of $191.9 million, the Company not
only paid down long-term debt but also repurchased 1,000,000 AGF Class B
non-voting shares, and paid out cash dividends of $80.2 million.
    The Company also announced it will maintain its quarterly dividend
payment on Class A voting common and Class B non-voting shares at $0.25 per
share subject to quarterly review.
    "The extraordinary instability of financial markets over the past year
has significantly impacted global investment management companies, placing
downward pressure on assets under management and revenue," said Blake C.
Goldring, AGF's Chairman and Chief Executive Officer.
    "While our business has clearly been touched by market declines, we have
taken decisive action to increase our financial strength by reducing expenses
and paying down debt. This will continue in 2009 as we further rationalize our
business structure, lower operating costs and reduce our risk exposure while
maintaining a profitable business with strong cash flows."
    Consolidated revenue from continuing operations declined 7.0% to $725.6
million in fiscal 2008 compared to $780.3 million in the prior year. Revenue
in the Investment Management Operations segment declined 10.1% for the year
ended November 30, 2008, corresponding to lower average levels of assets under
management (AUM), offset by slightly higher deferred sales charges revenue.
The Trust Company Operations segment reported a 12.0% increase in revenue in
fiscal 2008 versus 2007 (or a 22.1% increase excluding an $8.0 million
securitization gain in the year ended November 30, 2007).
    EBITDA (defined as earnings before interest, taxes, depreciation and
amortization, non-controlling interest, impairment of goodwill and customer
contracts and impairment of assets available for sale) from continuing
operations declined 12.2% to $313.7 million in fiscal 2008, compared with
$357.2 million in fiscal 2007. EBITDA margin was modestly lower at 43.2%
compared with 45.8% in fiscal 2007. Excluding the $8.0 million securitization
gain realized by Trust in fiscal 2007, EBITDA declined 10.2% year-over-year.
Approximately half of the year-over-year decline in EBITDA is attributable to
the fourth quarter increase in the provision for loan losses in the Trust
Company operations which increased to $30.4 million in fiscal 2008 from $11.0
million in fiscal 2007 as a result of increases in both general and specific
allowances for credit losses. The increases in the allowances for credit
losses were driven by the current macro economic environment and assessment of
potential losses within the various loan portfolios.
    As a result of continuing market weakness in the fourth quarter, the
Company took $46.3 million in impairment charges consisting of a $7.1 million
reduction in the value of goodwill and $39.2 million ($28.6 million net of
tax) reduction in the value of customer contracts in the Company's
high-net-worth operations. In addition, the Company took a $2.3 million ($2.0
million net of tax) charge related to an investment available for sale. These
impairment charges will not impact the Company's current liquidity, cash flows
from operations, debt covenants or future operations.
    During the fourth quarter of 2008, as a result of the impact of these
impairment charges, the Company recorded a net loss of $19.3 million or $0.21
loss per share diluted, as compared with net income of $49.4 million or $0.54
earnings per share diluted in the fourth quarter of 2007. Excluding the
impairment charges, net income for the fourth quarter of 2008 was $18.4
million or $0.20 per share diluted. In addition, if the year over year
increase in the Trust loan provision is excluded, net income would be $29.8
million or $0.33 per share diluted.
    Consistent with the strong downward industry trend, AGF's total AUM
decreased 33.8% to $35.6 billion at November 30, 2008 from $53.7 billion as at
November 30, 2007.
    While AGF expects the short-term business environment will remain
challenging, its board has endorsed management's plan to continue to focus on
the Company's core business by controlling costs, enhancing revenue
opportunities and maintaining a very strong balance sheet.

    Conference Call

    AGF will host a conference call to review its earnings results today at
11:00 a.m. ET. The live audio webcast with supporting materials will be
available in the Investor Relations section of AGF's website at www.agf.com or
at http://events.startcast.com/events/233/B0023/. Alternatively, the call can
be accessed by dialling 1-866-300-4047 (toll-free in North America). A
complete archive of this discussion along with supporting materials will be
available at the same webcast address within 24 hours of the end of the
conference call.

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

    For the year ended November 30, 2008
    

    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 and Risk Management' section of this MD&A for a further
discussion of factors that may affect actual results.

    Consolidated Performance

    This Management's Discussion and Analysis (MD&A) presents an analysis of
the financial condition of AGF Management Limited (AGF) and its subsidiaries
as at November 30, 2008, compared with November 30, 2007. The MD&A also
includes the results of operations for the year ended November 30, 2008
compared with the corresponding period of 2007. A discussion of the results
for the three months ended November 30, 2008 compared with the three months
ended November 30, 2007 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,
2008. The financial information presented herein has been prepared on the
basis of Canadian Generally Accepted Accounting Principles (GAAP). We also
utilize non-GAAP financial measures to assess each of our operating segments
and our overall performance. Details of non-GAAP measures used are outlined in
the 'Key Performance Indicators and Non-GAAP Measures' section, which provides
calculations of the non-GAAP measures along with reconciliation of non-GAAP
financial measures to GAAP financial statements. Certain prior-year data has
been reclassified to conform to current-year presentation. All dollar amounts
are in Canadian dollars unless otherwise indicated. Throughout this
discussion, percentage changes are calculated based on results rounded to the
nearest thousand. Results, except per share information, are presented in
millions of dollars. Percentage changes are calculated using numbers, rounded
to the decimals that appear in this MD&A.

    Our Business

    With $35.6 billion in assets under management (AUM) as at November 30,
2008, AGF is one of Canada's premier investment management companies, with
operations and investments in Canada, the United Kingdom, Ireland and Asia.
The origin of our company dates back to 1957 with the introduction of the
American Growth Fund (AGF), the first mutual fund available to Canadians
seeking to invest in the United States. As of November 30, 2008, our products
and services include a diversified family of more than 50 mutual funds, the
evolutionary AGF Elements portfolios, the Harmony managed asset program, AGF
Asset Management Group services for institutional and high-net-worth clients,
as well as AGF Trust GICs, loans and mortgages.
    For purposes of this discussion, the operations of AGF and our subsidiary
companies are referred to as "we", "us", "our" or "the Company". The financial
results relating to the operations have been reported in three segments:
Investment Management Operations, Trust Company Operations and Other.
    The Investment Management Operations segment includes the results of our
retail mutual fund, institutional and high-net-worth client businesses. The
Trust Company Operations segment includes the results of AGF Trust Company,
and the Other segment includes our equity interest in Smith and Williamson
Holdings Limited (S&WHL).
    Investmaster Holdings Limited (Investmaster) was divested on April 30,
2007, and, as such, Investmaster's results have been reported as discontinued
operations for the periods disclosed prior to the sale.
    The principal subsidiaries and associated companies included within each
of our reportable segments, collectively referenced to as the AGF Group of
Companies (AGF), include:

    Investment Management Operations Segment

    The Investment Management Operations segment began in 1957. In the 51
years of operations, this segment has evolved from a Canadian-based mutual
fund operation to a global investment platform with $35.6 billion of AUM in
the retail mutual fund, institutional and high-net-worth markets. The
operations within this segment 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 AGF mutual funds.
AGFFI manages over 50 mutual funds, the 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 in Montreal.

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

    AGFIA Limited - Established in 1991, this Dublin-based operation began
trading as an investment manager in 2008 and provides investment advisory
services and investment management services for institutional clients.

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

    Trust Company Operations Segment

    AGF Trust Company (AGF Trust) - in operation since 1988, AGF Trust has
$4.4 billion in loan assets and offers a range of web-enabled products and
services including GICs, term deposits, real estate secured loans and
investment loans. AGF Trust is federally incorporated, licensed across Canada
and is a member of the Canada Deposit Insurance Corporation (CDIC) and Canada
Mortgage and Housing Corporation (CMHC).

    Other Segment

    Smith & Williamson Holdings Limited (S&WHL) - is a leading, independent
private client investment management, financial advisory and accounting group
based in the U.K., with (pnds stlg) 7.8 billion of AUM. We hold a 30.4%
interest in this company as at November 30, 2008.

    Our 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. We will strive to provide investment and other financial products that
serve our clients' investment needs and strategies. We will commit to provide
excellence in customer service and money management.

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

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

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

    -   Improvement in our EBITDA and pre-tax margins
    

    Our strategy also recognizes that both our investment management and
trust businesses will experience cycles related to the global stock markets,
credit availability, employment levels and other economic factors. We believe
that a successful strategy is founded on the ability of our operations to
emerge from downturns positioned to capitalize on the economic upturns.
    Year-over-year improvement in these measures is expected to result in
improved cash flows as well as improved return on equity. Our objective is the
return of a fair share of the annual cash flow to shareholders in the form of
dividends and through share buybacks, with the remaining cash flow being
invested in a manner intended to support our future growth.

    2008 Overview

    During 2008, stock markets globally experienced significant losses. The
declining global stock markets impacted our AUM and our corresponding
financial results. However, consistent with our stated strategy and despite
the market downturn, we were able to reduce our long-term debt, return value
to our shareholders through dividends and share buybacks, and were recognized
at the 2008 Canadian Investment Awards. The following summarizes the key
financial and operational highlights during the year:

    
    -   EBITDA for fiscal 2008 was $313.7 million. Consolidated EBITDA
        margins were 43.2% in fiscal 2008 compared with 45.8% in fiscal 2007.
        These financial results contributed to our return on equity of 11.8%
        in fiscal 2008 compared with 17.4% in fiscal 2007.

    -   Cash flow from continuing operations in fiscal 2008 was
        $278.7 million, compared with $313.4 million in fiscal 2007.

    -   Prudent capital management resulted in a reduction in our total debt
        to $144.9 million as at November 30, 2008 compared with
        $210.1 million as at November 30, 2007. In addition, our long-term
        debt to EBITDA ratio declined to 39.4% in fiscal 2008 from 51.7% in
        fiscal 2007 giving us significant financial flexibility.

    -   We were named the Advisors' Choice Investment Fund Company of the
        Year for the second time in three years at the 2008 Canadian
        Investment Awards. We were also recognized in the following award
        categories:

        -  Highstreet Canadian Equity won the Canadian Equity Pooled Fund

        -  AGF Canadian Large Cap Dividend Fund received the Silver award in
           the Canadian Dividend & Income Equity Fund category

    -   We delivered value directly to our shareholders through dividend
        payments and our share buyback program:

        i)    Total dividends paid and reinvested on AGF Class A Voting
              Common shares and AGF Class B Non-Voting Common shares (AGF
              Class B shares) increased to $84.9 million in 2008 as compared
              with $70.2 million in fiscal 2007. The annual per share
              dividend rate increased to $1.00 per share compared to $0.80
              per share a year earlier.

        ii)   We continued our share buyback program. We repurchased
              1,000,000 AGF Class B shares during 2008 as compared with
              repurchases of 1,437,800 shares in fiscal 2007.

    -   Including cash dividends and share repurchases, we returned 45.9% 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.

    -   AGF Management Limited supported the AGF Trust operation by investing
        $35.0 million in the first quarter of 2008, bringing our total
        investment of debt and equity capital to $256.3 million. AGF Trust
        real estate secured loans have grown 15.1% over the prior year and
        investment loans have grown 25.4%. AGF Trust now has $4.4 billion in
        loan assets and is an important contributor to the financial results
        of AGF.
    

    Key Performance Indicators and Non-GAAP Measures

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

    a) Consolidated Operations

    Revenue

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

    
    -   management and advisory fees based on AUM

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

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

    EBITDA

    We define EBITDA as earnings before interest, taxes, depreciation,
amortization, non-controlling interest, impairment of goodwill and customer
contracts, and impairment of asset available for sale. EBITDA is a standard
measure used in the mutual fund industry by management, investors and
investment analysts 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 non-operational items. EBITDA for the Trust
Company Operations segment includes interest expense related to deposits.
These deposits fund our investment loan and real estate secured loan programs,
and 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 on page 18 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 primarily used to pay
dividends, repurchase shares, and pay down debt.

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                              2008           2007
    -------------------------------------------------------------------------
    Net cash provided by continuing operating
     activities                                   $     351.4    $     400.1
    Less: net changes in non-cash balances related
     to operations                                       72.7           86.7
    -------------------------------------------------------------------------
    Cash flow from continuing operations          $     278.7    $     313.4
    -------------------------------------------------------------------------
    

    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                              2008           2007
    -------------------------------------------------------------------------
    Cash flow from continuing operations (defined
     above)                                       $     278.7    $     313.4
    Less: selling commissions paid                       86.8          154.3
    -------------------------------------------------------------------------
    Free cash flow                                $     191.9    $     159.1
    -------------------------------------------------------------------------

    EBITDA Margin

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

    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                              2008           2007
    -------------------------------------------------------------------------
    EBITDA                                        $     313.7    $     357.2
    Divided by revenue                                  725.6          780.3
    -------------------------------------------------------------------------
    EBITDA margin                                       43.2%          45.8%
    -------------------------------------------------------------------------

    Pre-Tax Profit Margin

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

    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                              2008           2007
    -------------------------------------------------------------------------
    Net income from continuing operations         $     128.5    $     175.9
    Add: income taxes                                    12.7           46.7
    -------------------------------------------------------------------------
    Income before taxes                                 141.2          222.6
    Divided by revenue                                  725.6          780.3
    -------------------------------------------------------------------------
    Pre-tax profit margin                               19.5%          28.5%
    -------------------------------------------------------------------------


    Return on Equity (ROE)

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

    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                              2008           2007
    -------------------------------------------------------------------------
    Net income                                    $     128.5    $     178.7
    Divided by average shareholders' equity           1,088.2        1,024.4
    -------------------------------------------------------------------------
    Return on equity                                    11.8%          17.4%
    -------------------------------------------------------------------------

    Long-term Debt to EBITDA Ratio

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

    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                              2008           2007
    -------------------------------------------------------------------------
    Long-term debt                                $     123.7    $     184.5
    EBITDA                                              313.7          357.2
    -------------------------------------------------------------------------
    Long-term debt to EBITDA                            39.4%          51.7%
    -------------------------------------------------------------------------
    

    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, strategic
accounts and high-net-worth relationships. AUM will fluctuate in value as a
result of investment performance, sales and redemptions. Mutual fund AUM
determines a significant portion of our expenses because we pay upfront
commissions and trailing commissions to financial advisors as well as
investment advisory fees based on the value of AUM.

    Investment Performance

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

    Net Sales

    One of the goals of our mutual fund business is to generate positive net
sales on an annual basis, which allows for increasing revenues. Gross sales
and redemptions as a percentage of AUM are monitored separately, and the sum
of these two amounts comprises net sales. Net sales, together with investment
performance and fund expenses, determine the level of average daily mutual
fund AUM, which is the basis on which management fees are charged. The average
daily mutual fund AUM is equal to the aggregate average daily net asset value
of the AGF mutual funds.
    We monitor inflows and outflows in our high-net-worth and institutional
businesses separately. We do not compute an average daily AUM figure for these
businesses.

    EBITDA Margin - Investment Management

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

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                              2008           2007
    -------------------------------------------------------------------------

    EBITDA                                        $     267.6    $     298.9
    Divided by revenue                                  606.4          674.6
    -------------------------------------------------------------------------
    EBITDA margin                                       44.1%          44.3%
    -------------------------------------------------------------------------
    

    Pre-Tax Profit Margin - Investment Management

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

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                              2008           2007
    -------------------------------------------------------------------------
    Income before taxes and non-segmented items   $     107.8    $     176.7
    Divided by revenue                                  606.4          674.6
    -------------------------------------------------------------------------
    Pre-tax profit margin                               17.8%          26.2%
    -------------------------------------------------------------------------
    

    c) Trust Company Operations

    Loan Asset Growth

    In the Trust Company Operations segment (AGF Trust), we focus on the
growth and credit quality of 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 AGF Trust.

    Net Interest Income

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

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                              2008           2007
    -------------------------------------------------------------------------
    Interest income                               $     303.0    $     236.7
    Less: interest expense                              206.1          158.5
    -------------------------------------------------------------------------
    Net interest income                           $      96.9    $      78.2
    -------------------------------------------------------------------------

    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                              2008           2007
    -------------------------------------------------------------------------
    Net Interest Income                           $      96.9    $      78.2
    Divided by average yearly total loan balance      4,239.6        3,019.6
    -------------------------------------------------------------------------
    Net interest margin                                  2.3%           2.6%
    -------------------------------------------------------------------------

    Efficiency Ratio

    The efficiency ratio is a lending industry KPI that 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                              2008           2007
    -------------------------------------------------------------------------
    Selling, general and administrative expenses  $      42.7    $      36.4
    Add: amortization expense                             2.8            1.7
    -------------------------------------------------------------------------
    Non-interest expense                          $      45.5    $      38.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Other revenue                                 $      12.3    $       8.2
    Gain (loss) from securitization and related
     items                                               (0.3)          10.8
    -------------------------------------------------------------------------
    Non-interest income                           $      12.0    $      19.0
    -------------------------------------------------------------------------

    Net interest income                           $      96.9    $      78.2
    Add: non-interest income                             12.0           19.0
    -------------------------------------------------------------------------
    Total of net interest income and non-interest
     income                                       $     108.9    $      97.2
    -------------------------------------------------------------------------
    Efficiency ratio                                    41.8%          39.2%
    -------------------------------------------------------------------------

    EBITDA Margin - Trust

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

    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                              2008           2007
    -------------------------------------------------------------------------
    EBITDA                                        $      35.8    $      49.8
    Divided by revenue                                  108.9           97.2
    -------------------------------------------------------------------------
    EBITDA margin                                       32.9%          51.2%
    -------------------------------------------------------------------------
    

    Pre-Tax Profit Margin - Trust

    Pre-tax profit margin provides useful information to management and
investors as an indicator of the operating performance in AGF Trust. We
believe pre-tax profit margin is a valuable measure because it assesses the
extent we are able to earn profit from each dollar of 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                              2008           2007
    -------------------------------------------------------------------------
    Income before taxes and non-segmented items   $      33.0    $      48.1
    Divided by revenue                                  108.9           97.2
    -------------------------------------------------------------------------
    Pre-tax profit margin                               30.3%          49.5%
    -------------------------------------------------------------------------
    

    Assets-to-Capital Multiple

    Federally regulated deposit-taking institutions (DTI) are expected to
meet an assets-to-capital multiple test on a continuous basis. In accordance
with the Office of the Superintendent of Financial Institutions (OSFI)
guidelines, the assets-to-capital multiple is determined through standards
established by the Basel ll framework by dividing the DTI's total assets by
the sum of its adjusted Tier 1 and Tier 2 capital. In determining the
assets-to-capital multiple, all items that are deducted from capital are
excluded from total assets.

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                              2008           2007
    -------------------------------------------------------------------------
    Total assets per OSFI guidelines              $   5,325.9    $   4,537.4
    Divided by adjusted Tier 1 and Tier 2 capital       354.8          290.6
    -------------------------------------------------------------------------
    Assets-to-capital multiple                           15.0           15.6
    -------------------------------------------------------------------------

    Loan-to-Value Ratio

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

    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                              2008           2007
    -------------------------------------------------------------------------
    Conventional mortgage loans                   $     766.4    $     765.5
    Divided by fair value of collateral               1,153.4        1,152.0
    -------------------------------------------------------------------------
    Loan-to-value ratio                                 66.4%          66.4%
    -------------------------------------------------------------------------
    

    Significant Accounting Policies

    The Consolidated Financial Statements have been prepared in accordance
with Canadian GAAP. The Consolidated Financial Statements include the accounts
of the Company and its directly and indirectly owned subsidiaries.
Intercompany transactions and balances are eliminated on consolidation. For
subsidiaries where the Company does not own all of the equity, the minority
shareholders' interest is disclosed in the Consolidated Balance Sheet as
non-controlling interest and the related income is disclosed as a separate
line in the Consolidated Statement of Income. Investments over which the
Company is able to exercise significant influence are accounted for by the
equity method.
    A summary of AGF's significant accounting policies can be found in Note 1
of the Annual Consolidated Financial Statements.

    Changes in Significant Accounting Policies

    a) Capital Disclosures

    Effective December 1, 2007, the CICA's new accounting standard "Handbook
Section 1535, Capital Disclosures" was adopted. The standard requires the
disclosure of both qualitative and quantitative information to enable users of
financial statements to evaluate the entity's objectives, policies and
processes for managing capital. The new standard did not have any impact on
the financial position or earnings of the Company. Refer to Note 23 of the
Consolidated Financial Statements for disclosure.

    b) Financial Instruments Disclosures and Presentation

    Effective December 1, 2007, the accounting and disclosure requirements of
the CICA's two new accounting standards, "Handbook Section 3862, Financial
Instruments - Disclosures" and "Handbook Section 3863, Financial Instruments -
Presentation" were adopted. The new standards enhance the current disclosure
requirements but do not change the existing presentation requirements for
financial instruments. The standards require additional disclosure surrounding
risks related to financial instruments and the management of those risks. The
new standards did not have any impact on the financial position or earnings of
the Company. Refer to Note 24 of the Consolidated Financial Statements for
disclosure.

    Income Taxes

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

    Deferred Selling Commissions

    Selling commissions paid to brokers on mutual fund securities sold on a
deferred sales charge (DSC) basis are recorded at cost and are amortized on a
straight-line basis over a period that corresponds with the applicable DSC
schedule (which ranges from three to seven years). Unamortized deferred
selling commissions are written down to the extent that the carrying value
exceeds the expected future revenue on an undiscounted basis. As at November
30, 2008 and 2007, no impairment losses were required.

    Property, Equipment and Computer Software

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

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

    Customer Contracts

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

    Impairment of Long-lived Assets

    Impairment of long-lived assets, which includes property, equipment and
computer software and intangible assets with finite useful lives, is
recognized when an event or change in circumstance causes the assets' carrying
value to exceed the total undiscounted cash flows expected from their use and
eventual disposition. The measurement of impairment loss is based on the
amount that the carry value exceeds the fair value. During 2008, the Company
recognized an impairment charge on its customer contracts for certain
reporting units. Refer to the 'Consolidated Operating Results' section and
Note 9 of the Consolidated Financial Statements for further disclosure.

    Goodwill, Management Contracts and Trademarks

    The purchase price of acquisitions accounted for under the purchase
method and the purchase price of investments accounted for under the equity
method are allocated based on the fair values of the net identifiable assets
acquired, including management contracts and other identifiable intangible
assets. The excess of the purchase price over the values of such assets is
recorded as goodwill. Management contracts and trademarks have been determined
to have an indefinite life.
    Goodwill, management contracts and trademarks are not amortized, but are
subject to impairment tests on an annual basis or more frequently if events or
changes in circumstances indicate that the asset may be impaired. Goodwill is
allocated to the reporting units, and any impairment is identified by
comparing the carrying value of a reporting unit with its fair value. If any
impairment is indicated, then it is quantified by comparing the carrying value
of goodwill to its fair value, based on the fair value of the assets and
liabilities of the reporting unit. Management contracts and trademarks are
tested for impairment by comparing their fair value to their carrying amounts.
An impairment loss is realized when the carrying amount of the asset exceeds
its fair value. During 2008, the Company recognized an impairment charge
related to goodwill. Refer to the 'Consolidated Operating Results' section and
Note 9 of the Consolidated Financial Statements for further disclosure.

    Real Estate Secured Loans and Investment Loans

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

    Allowance for Loan Losses

    The allowance for loan losses consists of both general allowances and
specific allowances. General allowances are based on management's assessment
of inherent, unidentified losses in the portfolio at the reporting date that
have not been captured in the determination of specific allowances. The
assessment takes into account portfolio-specific credit factors, general
economic factors, geographic exposure, historical loss experience, as well as
probability of default (PD) and loss given default (LGD) pairs.
    Specific allowances consist of provision for losses on identifiable
assets for which the estimated amounts recoverable are less than their
carrying value and are designed to provide against the likelihood of losses
for loans that are deemed to be impaired.
    Specific allowances also include estimated provisions for losses on
identifiable assets that are currently 1-90 days in arrears and are likely to
become impaired based on a combination of historical average roll rates and
LGD for a given loan portfolio

    Impaired Loans

    Loans are classified as impaired when, in the opinion of management,
there is reasonable doubt as to the collectability, either in whole or in
part, of principal or interest, or when principal or interest is 90 days or
greater past due, except where the loan is both well-secured and in the
process of collection. 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
Statement of Income. Where a portion of the loan is written off and the
remaining balance is restructured, the new loan is carried on an accrual basis
when there is no longer any reasonable doubt about the collectability of
principal or interest. Interest income is recognized on impaired loans on a
cash basis only after the specific allowance for losses has been reversed and
provided there is no further doubt as to the collectability of the principal.
Full or partial write-offs of loans are recorded when management believes
there is no realistic prospect of full recovery.

    Stock-based Compensation and Other Stock-based Payments

    The Company has stock-based compensation plans as described in Note 17 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 percentage of their annual earnings withheld subject to a maximum of 6% to
purchase AGF's Class B Non-Voting shares (Class B shares). The Company matches
up to 60% of the amounts contributed by the employee. The Company's
contribution vests immediately and is recorded as a charge to net income in
the period in which the cash contribution is made. All contributions are used
by the plan trustee to purchase Class B shares on the open market.
    The Company has a Restricted Share Unit (RSU) plan for senior employees
under which certain employees are granted RSUs of Class B shares. These units
vest three years from the grant date. AGF will redeem all of the participants'
share units in cash equal to the value of one Class B share for each RSU.
Compensation expense and the related liability are recorded equally over the
three-year vesting period, taking into account fluctuations in the market
price of Class B 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. These units vest three years from the grant date provided the
employees meet certain performance criteria. AGF will redeem all of the
participants' share units in cash equal to the value of one Class B share for
each PSU.
    The Company has a Deferred Share Unit (DSU) plan for non-employee
Directors. The plan enables Directors of the Company to elect to receive their
remuneration in DSUs. These units vest immediately and compensation expense
and the related liability are charged to net income in the period the DSUs are
granted. On termination, AGF will redeem all of the participants' DSUs in cash
or shares equal to the value of one Class B share at the termination date for
each DSU.

    Accounting for Securitizations

    The Company has securitized certain 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.
    Under terms that transfer control to third parties, the transaction is
recognized as a sale and the related loan assets are removed from the
Consolidated Balance Sheet. As part of the securitization, certain financial
assets are retained. The retained interests, classified as AFS, are carried at
fair value, determined using the present value of future expected cash flows.
A gain or loss on the sale of loan receivables is recognized immediately in
income. In determining the gain or loss on sale, management estimates future
cash flows by relying on estimates of the amount of interest that will be
collected on the securitized assets, the yield paid to investors, the portion
of the securitized assets that will be prepaid before their scheduled
maturity, expected credit losses, the cost of servicing the assets and the
rate at which to discount these expected future cash flows. Actual cash flows
may differ significantly from those estimated by management. If actual cash
flows are different from management's estimate of future cash flows, then the
gains or losses on the securitization recognized in income will be adjusted.
    Gains and losses on sale and servicing fee revenues related to the
securitization loan are reported within 'Gain on sale of RSP loan
securitization and related income (loss), net of impairment' in the
Consolidated Statement of Income. Where a servicing liability is recognized,
the amount is recorded in other liabilities in the Consolidated Balance Sheet.
    Retained interests are tested regularly for other-than-temporary
impairment and, if required, the retained interest's carrying value is reduced
to fair value by a charge in the Consolidated Statement of Income.
    Refer to Note 3 of the Consolidated Financial Statements for additional
disclosure regarding the securitizations and related balance sheet and income
statement impacts.

    AGF Elements

    In November 2005, the Company launched AGF Elements, which consists of
five diversified fund-of-fund portfolios. Four of these portfolios include the
Elements Advantage Commitment, which is a commitment to the investor that if
their portfolio does not match or outperform its customized benchmark over a
three-year period, AGF will provide each individual investor up to 90 basis
points in additional units. This will be calculated based on the value of such
investment at the end of its related three-year period.
    The Company records in liabilities up to 30 basis points per year of each
investor's AUM, adjusted for redemptions, until the end of the three-year
measurement period of each investment made by such investor. At that time, if
an individual investor's returns match or exceed the corresponding benchmark,
the Company will recognize the entire amount as management fee revenue. If an
individual investor's actual returns are below the customized benchmark, a
corresponding amount will be distributed to the investor in the form of
additional units. As of November 30, 2008, the Company has recorded a
liability of $7.8 million (2007 - $6.1 million).

    
    Future Accounting Changes

    Goodwill, Intangible Assets and Financial Statement Concepts
    
    The CICA has issued a new accounting standard, "Section 3064, Goodwill
and Intangible Assets," which the Company adopted on December 1, 2008. The
standard clarifies that costs can be deferred only when they relate to an item
that meets the definition of an asset, and as a result, start-up costs must be
expensed as incurred. "Section 1000, Financial Statements Concepts," was also
amended to provide consistency with Section 3064. This standard is not
expected to have a material effect on the financial position or earnings of
the Company.

    Conversion to International Financial Reporting Standards in Fiscal 2012

    The CICA Accounting Standards Board requires all Canadian publicly
accountable enterprises to adopt International Financial Reporting Standards
(IFRS) for years beginning on or after January 1, 2011. The Company will adopt
IFRS for the fiscal year 2012 starting December 1, 2011. The fiscal 2012
Consolidated Financial Statements will include comparative 2011 financial
results under IFRS.
    Although much of Canadian GAAP is similar to IFRS, there are some GAAP
differences that may significantly impact the Company's processes and
financial results. The Company is currently in the planning phase of the
conversion. This includes identifying the differences between existing
Canadian GAAP and IFRS, identifying potential business impacts, developing the
project plan, assessing resource requirements and training staff. Currently,
it is not possible to fully determine the impact to the financial statements
and any potential business impacts, as accounting standards and the
interpretations of those standards are changing.

    Risk Factors and Risk 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 and the Chief Investment
Officer of AGF Funds Inc.
    The Chairman and CEO is directly accountable to the Board of Directors
for all 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 and Benefits,
Information Technology, Fund Oversight, Legal and Compliance. These functions
also play a significant role in ensuring consistent risk management practices
and standards across the company in areas that are common to the business
units.
    In addition, AGF Management Limited applies a disciplined approach to
risk taking through policy formation, reporting and oversight of the
operational units.
    AGF's risk governance structure is designed to balance risk and reward
and promote business activities consistent with our standards and risk
tolerance levels, with the objective of maximizing long-term shareholder
value.
    AGF Trust is also subject to the Basel II framework, which was developed
by the Bank for International Settlements (BIS), with the objectives of
improving the consistency of capital requirements internationally and making
required regulatory capital more risk sensitive. Basel II sets out several
options, which represent increasingly risk-sensitive approaches to calculating
credit-, market- and operational-risk-based regulatory capital. AGF Trust uses
the standardized approach for credit risk under the Basel II capital adequacy
regime. It is the simplest approach, which uses supervisory determined risk
weights to measure risk-weighted assets. 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 uses the basic indicator approach for determining capital
required related to operational risk under the Basel II capital adequacy
regime. The basic indicators approach uses gross income as a proxy for the
institution's overall operational 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.
    Refer to Note 24 of the Consolidated Financial Statements for risks
arising from the use of financial instruments.

    Risk Factors that May Affect Future Results

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

    
    Company-Specific Risk Factors

    Investment Management Operations
    
    Demand for our products depends on the ability of our investment
management team to deliver value in the form of strong investment returns, as
well as the demand for specific investment products. A specific fund manager's
style may fall out of favour with the market, resulting in lower sales and/or
higher redemptions.
    Our future financial performance will be influenced by our ability to
successfully execute our strategy and 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 continued access to distribution channels that are
independent of our company.

    Trust Company Operations

    AGF Trust has experienced a substantial amount of growth in recent years.
AGF Trust is dependent on systems and processes being adequate to process its
business. Systems or process failures could result in financial losses.
    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 may become difficult to attract new lending business.

    
    Non-Company Risk Factors

    Investment Management Operations
    
    A general economic downturn and market volatility could result in lower
sales and lower AUM levels. In addition, market uncertainty could result in
retail investors avoiding traditional equity funds in favour of money market
funds.
    The level of competition in the industry is high. Sales and redemptions
of mutual funds may be influenced by relative service levels, management fees,
attributes of specific products in the marketplace and actions taken by
competitors.
    We take all reasonable measures to ensure compliance with governing
statutes, regulations or regulatory policies. Failure to comply with statutes,
regulations or regulatory policies could result in sanctions or fines that
could adversely affect earnings and reputation. Changes to laws, statutes,
regulations or regulatory policies could affect us by changing certain
economic factors in our industry. See the 'Government Regulations' section for
further details.
    Revenues are generally not subject to significant seasonal swings. We
experience somewhat higher sales during the Retirement Savings Plan (RSP)
season; however, the immediate impact of the level of sales on total revenue
is not significant. The Selected Quarterly Information table shows key
performance statistics for the past eight quarters.
    AUM are exposed to various market risks which are detailed in the 'Market
Risk in Assets under Management (AUM)' section.

    Trust Company Operations

    A general economic downturn 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 growth rates.
    Credit and counterparty risk is the potential for loss due to a client's
or counterparty's inability to fulfil its payment obligations, after taking
into account recovery values and associated costs. 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 criteria and 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.
The ongoing economic and market uncertainty could result in an increase in
loan defaults resulting in higher loan losses.
    The ongoing volatility in the markets has affected the traditional spread
relationship between the Bankers' Acceptance rate (BA) and the Prime lending
rate. A continuing compression in the spread between Prime and the BA rate
would 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 changes in 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.

    Market Risk in Assets under Management (AUM)

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

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

    
    -------------------------------------------------------------------------
    Percentage of total mutual fund AUM
     at November 30                                        2008         2007
    -------------------------------------------------------------------------
    Domestic equity funds                                 37.2%        37.1%
    U.S. and international equity funds                   33.9%        40.6%
    Domestic balanced funds                                9.4%         8.0%
    U.S. and international balanced funds                  2.3%         2.7%
    Domestic fixed income funds                           13.9%         9.3%
    U.S. and International fixed income funds              3.3%         2.3%
    -------------------------------------------------------------------------
                                                         100.0%       100.0%
    -------------------------------------------------------------------------
    

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

    Foreign Exchange Risk

    Our main foreign exchange risk derives from the U.S. and international
portfolio securities held in the mutual fund AUM. Change in the value of the
Canadian dollar relative to foreign currencies will cause fluctuations in the
Canadian-dollar value of non-Canadian AUM upon which our management fees are
calculated. This risk is monitored since currency fluctuation may impact the
financial results of AGF. However, it is at the discretion of the fund manager
to decide whether to enter into foreign exchange contracts to hedge foreign
exposure on U.S. and international securities held in funds.
    We are subject to foreign exchange risk on our integrated foreign
subsidiaries in Ireland and Singapore, which provide investment advisory
services. These subsidiaries retain minimal monetary exposure to the local
currency and their revenues are calculated in Canadian dollars. The local
currency expenses are comparatively small.
    The Company is exposed to foreign exchange risks through its 30.4% equity
interest in Smith and Williamson Holdings Limited (S&WHL), which is
denominated in U.K. pounds. The investment is translated into Canadian dollars
at the rate of exchange in effect at the balance sheet date. Unrealized
translation gains and losses are reported in other comprehensive income. Based
on the carrying value at November 30, 2008, a 5% change in the value of the
Canadian dollar versus the U.K. pound would result in a change in other
comprehensive income of $4.9 million.

    Interest Rate Risk

    Excluding the AGF Trust operations, we have exposure to the risk related
to changes in interest rates on floating rate debt at November 30, 2008. Using
average loan balances outstanding, the effect of a 1% change in variable
interest rates on our floating rate debt in fiscal 2008 would have resulted in
a change of approximately $1.4 million in interest expense for the year ended
November 30, 2008. As the amount of interest paid is small relative to our
operating cash flow, such a change in interest rates would not have a material
impact on the results of operations or the fair value of the related debt.
    For the AGF Trust operations, interest rate risk refers to the treasury
book (non-trading) and can have a potentially adverse impact on AGF Trust's
earnings and economic value due to unexpected changes in interest rates and
interest rate volatility. Categories of interest rate risk include: yield
curve/gap risk; basis or spread compression risk; commitment or embedded
option risk; prepayment risk; and, discretionary. The impact of a 1% change in
interest rates either up or down would be a change of annual net interest
income of approximately $4.7 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.

    
    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 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

    Internal controls over financial reporting are designed to provide
reasonable assurance about the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
Canadian GAAP. During the year ended November 30, 2008, there was no
significant change to the systems of internal controls within AGF.

    Changes in Information Technology Systems

    During 2008, there were no significant changes to Information Technology
Systems.

    
    Consolidated Operating Results

    The table below summarizes our consolidated operating results for the
years ended November 30, 2008 and 2007:

    -------------------------------------------------------------------------
    ($ millions, except per share amounts)
    Years ended November 30                   2008         2007     % change
    -------------------------------------------------------------------------

    Revenue
      Investment Management Operations  $    606.4   $    674.6       (10.1%)
      Trust Company Operations(1)            108.9         97.2        12.0%
      Other                                   10.3          8.5        21.2%
    -------------------------------------------------------------------------
                                             725.6        780.3        (7.0%)

    Expenses
      Investment Management Operations       338.8        375.7        (9.8%)
      Trust Company Operations                73.1         47.4        54.2%
    -------------------------------------------------------------------------
                                             411.9        423.1        (2.7%)

    EBITDA(2) (continuing operations)        313.7        357.2       (12.2%)
      Amortization                           114.0        123.8        (7.9%)
      Interest expense                         9.3          9.9        (6.1%)
      Impairment of asset
       available for sale                      2.3            -          n/m
      Impairment of goodwill
       and customer contracts                 46.3            -          n/m
      Non-controlling interest                 0.6          0.9          n/m
      Income taxes                            12.7         46.7       (72.8%)
    -------------------------------------------------------------------------
    Net income from
     continuing operations              $    128.5   $    175.9       (27.0%)
    Loss on dissolution of
     limited partnerships, net of tax            -         (2.1)
    Gain on sale of discontinued
     operations, net of tax                      -          4.7
    Net earnings from discontinued
     operations, net of tax(3)                   -          0.2
    -------------------------------------------------------------------------
    Net income                          $    128.5   $    178.7       (28.1%)
    -------------------------------------------------------------------------

    Earnings per share from
     continuing operations - diluted    $     1.41   $     1.93       (26.9%)
    -------------------------------------------------------------------------
    (1) The twelve months ended November 30, 2007 include an $8.0 million
        securitization gain.
    (2) For the definition of EBITDA, see the 'Key Performance Indicators and
        Non-GAAP Measures' section. The items required to reconcile EBITDA to
        net income, a defined term under Canadian GAAP, are detailed above.
    (3) On April 30, 2007, AGF sold 100% of Investmaster. Accordingly,
        Investmaster's results have been reported as discontinued operations.
    

    Results from Continuing Operations

    Revenue for the year ended November 30, 2008, declined by 7.0% from the
corresponding periods in 2007. Revenue in the Investment Management Operations
segment declined 10.1% for the year ended November 30, 2008. This corresponds
to lower average levels of AUM offset by slightly higher DSC revenue. The
Trust Company Operations segment, excluding an $8.0 million securitization
gain in the year ended November 30, 2007, reported an increase in revenue of
22.1% in fiscal 2008 over 2007. Revenue from Other, which represents the
results of our 30.4% equity interest in S&WHL, was higher for the year ended
November 30, 2008.
    Expenses for the year ended November 30, 2008 decreased 2.7% compared
with fiscal 2007. The Investment Management operations' decline in expenses
was consistent with the decline in average AUM, while Trust operations
experienced higher overall expenses related to volumes and higher loan
provision amounts in 2008. For further details refer to each of the segment
discussions.
    The impact of declining revenue in the Investment Management Operations
segment served to decrease EBITDA by 12.2% for the year ended November 30,
2008 over the respective 2007 period. Excluding the $8.0 million
securitization gain realized by Trust in the year ended November 30, 2007,
EBITDA declined 10.2% for the year ended November 30, 2008.
    Amortization expense for the year ended November 30, 2008 decreased by
7.9% compared with the corresponding period in 2007. The decline was due to
lower amortization of deferred selling commissions in the Investment
Management Operations segment. Amortization of deferred selling commissions
for year ended November 30, 2008 accounted for $98.1 million (2007 - $ 108.0
million) of the total amortization expense.
    Interest expense was $9.3 million for the year ended November 30, 2008,
as compared with $9.9 million in the same period of 2007. Lower interest
expense in the quarter is reflective of declining average debt levels and
interest rates.
    During the 12 months ended November 30, 2008, we determined a decline in
an investment available for sale was other than temporary. As a result, we
recognized a $2.3 million writedown on this investment ($2.0 million net of
tax).
    During 2008, as part of the annual impairment testing of goodwill and
intangible assets, we determined that the carrying value of the goodwill and
customer contracts related to certain reporting units was higher than its fair
value. As a result, an impairment charge of $39.2 million ($28.6 million net
of tax) related to customer contracts and $7.1 million related to goodwill was
recorded. The Company believes that the overall declining markets and the
continuing market uncertainty were the main factors that drove the decline in
the estimated fair value of goodwill and customer contracts within these
reporting units.
    For the year ended November 30, 2008, income tax expense decreased 72.8%
as compared to 2007. Income tax expense for the year ended November 30, 2008
was $12.7 million as compared to $46.7 million in 2007. Results from the year
ended November 30, 2008 include an income tax reduction of $19.5 million
related to the reduction in the federal income tax rate to 15.0% from 18.5% by
January 1, 2012. Results from the year ended November 30, 2007 include an
income tax reduction of $2.4 million related to the reduction in the federal
income tax rate to 18.5% from 19.0% by January 1, 2011. Excluding the impact
of these reductions, the effective tax rate for the year ended November 30,
2008 was 22.7% compared with 22% in the same period of 2007.
    The impact of the above revenue and expense items resulted in net income
from continuing operations of $128.5 million in 2008 as compared with $175.9
million in the prior year. Basic earnings per share from continuing operations
were $1.44 per share in 2008 as compared with $1.96 per share in 2007. Diluted
earnings per share from continuing operations were $1.41 per share in 2008 as
compared with $1.93 per share in 2007.

    Limited Partnerships

    On February 28, 2007, the unit holders 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).

    Results from Discontinued Operations

    On April 30, 2007, AGF sold 100% of Investmaster for $6.8 million. 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. A contingent consideration, which is not determinable at
this time, will be payable to the Company in 2009 and 2010 if certain working
capital and revenue targets are reached by Investmaster. Accordingly, we
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 GAAP.

    Net Earnings

    Net income for the year ended November 30, 2008 was $128.5 million.
Excluding the impairment charges, net of tax, related to assets available for
sale, goodwill and customer contracts, net income was $166.2 million, down
from $178.7 million in fiscal 2007.
    For a more detailed discussion of revenue and expense items, please refer
to the operating segment discussions. An analysis of the 2008 fourth-quarter
results compared with the corresponding period in 2007 is included under the
heading 'Fourth Quarter Analysis'.

    Return on Equity

    Return on equity in 2008 was 11.8% as compared with 17.4% in 2007. The
decline was due to reduced earnings in 2008 which were impacted by lower AUM
levels, higher loan loss provisions and an impairment charge related to
goodwill and customer contracts.

    Outlook

    Fiscal 2008 was a challenging year for the global investment management
industry and for our company. Economic uncertainty and stock market turmoil
reduced AUM in our investment management segment and slowed loan asset growth
in our Trust segment. Entering fiscal 2009, we, like others in the industry,
continued to face stock market volatility, instability in the credit markets,
and continuing weakness in the economy. Major global economies have fallen
into recession. In response to the recession, which is touching virtually
every country around the globe, including Canada, governments have cut
interest rates and announced stimulus packages. We anticipate that it will
take time for these measures to have an effect. We expect this uncertainty to
continue into late 2009 which, in turn, will continue to present challenges to
our financial growth.

    Business Segment Performance

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

    
    Investment Management Operations

    Business and Industry Profile
    
    AGF is an established player within the highly competitive Canadian
investment management business. We compete with numerous domestic and foreign
players serving the market. We believe our status as an independent fund
manufacturer without distribution channel conflict will benefit us and our
shareholders as the industry continues to evolve.
    AGF remains focused on building its reputation internationally as an
institutional investment management firm and continues to attract a
significant amount of interest in our investment strategies from international
investors. 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, banks, life insurance companies, brokers and consultants.
    During AGF's 2008 fiscal year, gross mutual fund sales were negatively
impacted by market volatility and investor nervousness and we ended the year
with $1.6 billion in net redemptions. In addition, fund categories that have
traditionally been AGF's specialty - international and domestic equity - were
not aligned with investor preferences for money market funds in 2008. However,
we believe that as markets stabilize, international and domestic equity fund
investing will regain momentum, and AGF will be in a position to benefit.

    Segment Strategy and Highlights

    Over the past several years, we have focused on enhancing the
client-centric model in our investment management business, which services the
retail mutual fund, institutional and high-net-worth markets. In 2008, we
continued to maintain a high level of contact with our clients in spite of the
global market downturn and reduction in gross sales of investment products. On
the retail mutual fund side, we have a strong and well-regarded client
engagement strategy that defines the way we interact with our clients and
allows us to deliver services with predictable excellence. We use our advisor
contact evaluation program to reach out to advisors to make sure we are having
a positive impact while our activity management program and our customer
relationship management system ensure that we are making the right number of
contacts and engaging in the most effective activities. During 2008, this
consistent effort resulted in the following:

    
    -   At the 2008 Canadian Investment Awards, AGF was named the Advisors'
        Choice Investment Fund Company of the Year for the second time in
        three years. AGF was also recognized in the following award
        categories:

        -  Highstreet Canadian Equity won the Canadian Equity Pooled Fund
        -  AGF Canadian Large Cap Dividend fund received the Silver award in
           the Canadian Dividend and Income Equity Fund category.

    -  Lipper, a mutual fund-rating company, awarded the following AGF
       funds top honours for their consistent long-term performance:

        -  AGF China Focus Class: best ten-year returns in the Miscellaneous
           Funds category.
        -  AGF Precious Metals Fund: best five-year returns in the Precious
           Metals Equity Funds category.

    -   The strategic priorities for our investment management operations for
        2009 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.
        -  Focus on growth in our institutional business.
    

    Focus on Three Core Activities

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

    Investment Management

    Strong long-term investment performance is contingent on having the
correct complement of people, with the right tools and a strong team approach
to fund management. As well, in-depth research, innovative thinking and
rigorous fundamental analysis are key investment principles.
    We also draw on our presence in international markets to bolster
investment performance. In addition to investment professionals in various
locations across Canada, we maintain investment management offices in Dublin
and Singapore.

    Relationship Management

    We engage regularly with advisors and seek their feedback to ensure they
have access to the products and services that will help them help their
clients make the best investment choices.
    Relationship management is an area in which we have worked diligently to
deliver predictable excellence and our efforts were rewarded again in 2008
when we were selected as the Advisors' Choice Investment Fund Company of the
Year at the 2008 Canadian Investment Awards by advisors from across Canada.
    We also garnered positive results in the 2008 Environics Advisor
Perception Study, an independent study based on a survey of over 2000
advisors. We continued to show year-over-year improvement and emerged as the
strongest company on the combined measure of overall company rating and sales
penetration and achieved a first-place ranking for brand equity.

    Product Management

    Our client-centric approach includes offering a suite of products and
solutions designed to meet the needs of our clients. Our product development
efforts focus on identifying current and future investment trends and
introducing products to align AGF with these trends.
    In fiscal 2008, we added three corporate class funds to our All World Tax
Advantage Group and created the Harmony Tax Advantage Group Ltd. to give
clients more choice and access to potential tax benefits. We launched the
Harmony non-traditional Pool and became one of the first fund companies in
Canada to give investors access to global non-traditional investments such as
infrastructure, water, agriculture, oil sands, mining and real estate in a
managed assets program. In addition, we unveiled Bank of Montreal AGF Elements
(TM)RetirePlus(TM) Notes, deposit notes which combine guaranteed cash flow
with protection against inflation and tax-deferral benefits. Finally, in early
December 2008, we announced that investors may open a Tax-Free Savings Account
(TFSA) at AGF. We will continue to track investment trends and preferences to
ensure our product lineup is competitive and gives investors what they want
now and in the future.

    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.
    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.

    Assets Under Management

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

    
    The following table illustrates the composition of the changes in total
AUM during the years ended November 30, 2008 and 2007:

    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                   2008         2007     % change
    -------------------------------------------------------------------------

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

    Gross sales of mutual funds              3,578        6,802       (47.4%)
    Redemptions of mutual funds             (5,159)      (4,392)       17.5%
    -------------------------------------------------------------------------
    Net mutual fund sales                   (1,581)       2,410

    Market appreciation (depreciation)
     of fund portfolios                     (8,710)         785          n/m
    -------------------------------------------------------------------------

    Mutual fund AUM, end of year        $   19,761   $   30,052       (34.2%)

    Institutional AUM                       12,802       19,822       (35.4%)
    High-net-worth AUM                       2,995        3,869       (22.6%)
    -------------------------------------------------------------------------

    Total AUM, end of year              $   35,558   $   53,743       (33.8%)
    -------------------------------------------------------------------------

    Average daily mutual fund
     AUM for the year                   $   26,346   $   29,606       (11.0%)
    -------------------------------------------------------------------------
    

    Global market declines and an industry trend of reduced gross sales of
long-term funds resulted in a decrease in mutual fund AUM to $19.8 billion at
November 30, 2008, from $30.1 billion as at November 30, 2007. The average
daily mutual fund AUM for the year ended November 30, 2008, decreased 11.0% to
$26.3 billion, compared with $29.6 billion for 2007. During the past 12
months, institutional and strategic accounts AUM decreased by $7.0 billion to
$12.8 billion as a result of market volatility, client rebalancing and
redemptions. High-net-worth AUM decreased by $0.9 billion to $3.0 billion due
to market volatility. These decreases resulted in total AUM declining by 33.8%
to $35.6 billion.

    Investment Performance

    Stock market performance influences the level of AUM. During the year
ended November 30, 2008, the Canadian-dollar-adjusted S&P 500 Index decreased
23.4%, the Canadian-dollar-adjusted NASDAQ Index decreased 28.6%, and the
S&P/TSX Composite Index decreased 30.3%. The aggregate market depreciation of
our mutual fund portfolios for the year ended November 30, 2008, divided by
the average daily mutual fund AUM for the period was 33.1% after management
fees and expenses paid by the funds.
    The impact of the U.S. dollar appreciation relative to the Canadian
dollar on the market value of AGF mutual funds for the year ended November 30,
2008, has been an increase in AUM of approximately $0.8 billion.
    Consistent with the decline in the stock market, market depreciation net
of management fees decreased mutual fund AUM by $8.7 billion since November
30, 2007. For the one-year period ended November 30, 2008, 28% of ranked AUM
performed above median. Over the three-year period ended November 30, 2008,
68% of ranked AUM performed above median.
    The composition of AUM as outlined on page 16 of this MD&A has direct
influence on our revenues. Generally, equity funds have higher management fees
than fixed income funds and international funds have higher management fees
than domestic funds.

    
    Financial and Operational Results

    The table below highlights the Investment Management Operations segment
results for the years ended November 30, 2008 and 2007.

    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                   2008         2007     % change
    -------------------------------------------------------------------------

    Revenue
      Management and advisory fees      $    576.8   $    646.5       (10.8%)
      Deferred sales charges                  25.6         20.4        25.5%
      Investment income and
       other revenue                           4.0          7.7       (48.1%)
    -------------------------------------------------------------------------
                                             606.4        674.6       (10.1%)

    Expenses
      Selling, general and administrative    166.6        190.2       (12.4%)
      Trailing commissions                   157.2        169.6        (7.3%)
      Investment advisory fees                15.0         15.9        (5.7%)
    -------------------------------------------------------------------------
                                             338.8        375.7        (9.8%)
    -------------------------------------------------------------------------

    EBITDA(1)                                267.6        298.9       (10.5%)
    Amortization                             111.2        122.2        (9.0%)
    Impairment of asset available for sale     2.3            -          n/m
    Impairment of goodwill and
     customer contracts                       46.3            -          n/m
    -------------------------------------------------------------------------
    Income before taxes and
     non-segmented items                $    107.8   $    176.7       (39.0%)
    -------------------------------------------------------------------------
    (1) As previously defined, see the 'Key Performance Indicators and Non
        GAAP Measures - EBITDA' section.
    

    Revenue

    For the year ended November 30, 2008, revenue for the Investment
Management Operations segment decreased by 10.1% over the previous year, with
changes in the categories as follows:

    Management and Advisory Fees

    Management and advisory fees are directly related to our AUM levels. The
11.0% decline in average daily mutual fund AUM for the year ended November 30,
2008 contributed to a 10.8% decrease in management and advisory fee revenue
over 2007. Management and advisory fee revenue is reported net of distribution
fees paid to limited partnerships and other third-party financing entities.
These distribution fees totalled $6.1 million (2007 - $8.5 million) for the
year ended November 30, 2008.

    Deferred Sales Charges (DSC)

    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 increased by 25.5% in 2008 as compared with 2007, reflecting
higher retail mutual fund redemptions of DSC AUM that are subject to a charge.

    Investment Income and Other Revenue

    Investment income and other revenue decreased by 48.1% in fiscal 2008
over 2007 primarily as a result of the discontinuing of hedge accounting
related to stock compensation, which resulted in a loss of $5.0 million for
the year ended November 30, 2008.

    Expenses

    For the year ended November 30, 2008, expenses for the Investment
Management Operations segment decreased 9.8% compared with the previous year.
Changes in specific categories are as follows:

    
    Selling, General and Administrative Expenses

    Selling, general and administrative expenses (SG&A) decreased by $23.6
million or 12.4% in 2008 compared with 2007. The decrease is made up of the
following amounts:

    -------------------------------------------------------------------------
    ($ millions)                                           2008         2007
    -------------------------------------------------------------------------

    	Increase (decrease) in fund
     absorption expenses                             $     (0.4)  $     (4.2)
    	Increase (decrease) in compensation-related
     expenses                                             (24.2)        11.3
    Increase in other expenses                              1.0          1.8
    -------------------------------------------------------------------------
                                                     $    (23.6)  $      8.9
    -------------------------------------------------------------------------

    The following are explanations for expense changes in 2008 compared with
the same period in the prior year:

    -   Absorption expense is relatively flat year-over-year. Lower AUM
        levels were offset by lower fund expenses.

    -   Compensation-related expenses decreased due to lower performance-
        related bonuses and stock compensation.

    -   Other expenses increased primarily as a result of increased spending
        on sales and marketing initiatives.
    

    Trailing Commissions

    Trailing commissions paid to investment dealers depend on total AUM, the
proportion of mutual fund AUM sold on a front-end versus back-end commission
basis and the proportion of equity fund AUM versus fixed-income fund AUM.
Annualized trailing commissions as a percentage of average daily mutual fund
AUM increased to 0.597% for the 12 months ended November 30, 2008, from 0.573%
in the comparable 2007 period. The trend in increasing trailers expressed as a
percentage of AUM is attributable to an increased proportion of mutual fund
AUM sold on a front-end basis. It is also attributable to a change in the mix
of assets toward managed products, such as Harmony and Elements, which
generally have higher trailer commissions.

    Investment Advisory Fees

    External investment advisory fees decreased by 5.7% as a result of lower
AUM levels in 2008 as compared to 2007.

    EBITDA and EBITDA margin

    EBITDA for the Investment Management Operations segment were $267.6
million for the year ended November 30, 2008, a 10.5% decrease from $298.9
million for the same period of fiscal 2007. The decrease is directly
attributable to lower revenue levels resulting from lower average AUM.
    EBITDA margins were 44.1% in fiscal 2008 compared with 44.3% in 2007.
Lower performance-based compensation costs and declines in costs related to
AUM levels offset declining revenue resulting in a slight decline in EBITDA
margins year-over-year.

    Amortization

    The largest item in this category is amortization of deferred selling
commissions. The category also represents amortization of property, equipment
and computer software and customer contracts. We internally finance all
selling commissions paid. These selling commissions are capitalized and
amortized on a straight-line basis over a period that corresponds with their
applicable DSC schedule. Amortization expense related to deferred selling
commissions was $98.1 million in 2008, compared with $108.0 million in 2007.
    During fiscal 2008, we paid $86.8 million in selling commissions,
compared with $154.3 million in 2007. As at November 30, 2008, the unamortized
balance of deferred selling commissions financed was $304.4 million, a
decrease of $10.9 million from the prior-year balance of $315.3 million. The
contingent deferred sales charges that would be received if all of the DSC
securities were redeemed at November 30, 2008, were estimated to be
approximately $406.8 million (2007 - $417.8 million).

    Impairment of Asset Available for Sale, Goodwill and Customer Contracts

    During the fourth quarter 2008, we determined a decline in an investment
available for sale was other than temporary. As a result, we recognized a $2.3
million writedown on this investment ($2.0 million net of tax).
    In addition, during the fourth quarter, we determined that the carrying
value of the goodwill exceeded its fair value, calculated based on the fair
value of the assets and liabilities of the reporting unit. As a result, the
Company recorded a $7.1 million goodwill impairment charge. In addition, the
Company determined that the carrying value of its customer contracts related
to certain reporting units was higher than its fair value. As a result, an
impairment charge of $39.2 million ($28.6 million net of tax) related to
customer contracts was recorded. The Company believes that the overall
declining markets and the continuing market uncertainty were the main factors
that drove the decline in the estimated fair value of goodwill and customer
contracts within these reporting units.

    Pre-Tax Profit Margin

    Pre-tax profit margin declined to 17.8% for fiscal 2008 compared with
26.2% in 2007 as a result of lower AUM levels resulting in lower EBITDA
margins and a $48.6 million impairment charge relating to goodwill,
intangibles and available for sale assets, offset by declining amortization
expense as discussed above. Excluding the impairment charge, pre-tax margin
declined marginally to 25.8%.

    Segment Outlook

    While current economic and market conditions will likely continue to
dampen investor demand for equities and equity funds for much of 2009, we
expect that demand for investment products will return when the market
stabilizes due to factors such as Canada's projected population growth, the
significant amount of unused Registered Retirement Savings Plan contribution
room, and the introduction of the Tax-Free Savings Account in 2009. Mutual
funds remain a very accessible and attractive investment solution for these
accounts and we expect that guaranteed investment products will continue to
grow in importance. We also see growth opportunities in the institutional
investment management space, both domestically and abroad.
    Volatile markets will continue to reduce sales of mutual funds and asset
levels in the short term. In the longer term, we believe that our extensive,
diverse and responsive product lineup, combined with our commitment to
predictable excellence in relationship management in the retail, institutional
and high-net-worth markets will lead to growth.

    
    Trust Company Operations

    Business and Industry Profile
    
    Through AGF Trust, we offer financial solutions, including GICs, real
estate secured and investment loans.
    AGF Trust investment loans consist of secured investment loans and RSP
loans distributed through financial advisors who continue to broaden their
suite of products to meet the needs of their clients. AGF Trust has a
competitive edge in the advisor channel as we leverage AGF's mutual fund
wholesaler relationships. Our mutual fund wholesalers have operated
successfully in the advisor channel for over 51 years and have a
well-established reputation for quality service.
    We offer real estate secured loans to Canadians who have sound credit,
but whose circumstances may not meet the traditional requirements of Canada's
large banks to qualify for their lowest rate real estate secured loan
products. Real estate secured loan products are distributed primarily through
the mortgage broker channel, which has experienced strong growth. Borrowers
have chosen to deal with mortgage brokers to take advantage of independent
advice and competitive rates. Lenders have provided real estate secured loans
in this channel to reduce distribution costs.

    Segment Strategy and Highlights

    AGF Trust, similar to other financial institutions in Canada, has seen
its operations impacted by the global credit crisis with the most significant
impact being declining interest rate spreads on the products we offer. The
interest rate spread represents the difference between the rate charged to
Trust customers on products offered versus the rate that Trust pays to borrow
money primarily through the GIC market. Our best strategy, especially during
periods of volatility, is to closely monitor expenses, be prudent with
capital, and strengthen our balance sheet.
    As a result of declining interest rate spreads, our product focus has
evolved with a focus on higher margin products and, as at November 30, 2008,
we have suspended new originations of lower profit business lines and have
made adjustments to our lending programs appropriate to the economic cycle and
market conditions. While we continue to offer our Up to 3 For 1 Investment
Loan products, we have suspended our Home Equity Line of Credit and 100% No
Margin Investment Loan products.
    With declining global stock markets, as at November 30, 2008, the market
value of the collateral on our $1.8 billion secured investment loan portfolio
was approximately $1.2 billion. However, our investment loan program forms a
part of an investment strategy that an advisor incorporates into a client's
long-term wealth accumulation plan thus minimizing focus on short-term market
volatility. The investment advisor is an integral part of their clients'
investment strategies and, as such, we believe that clients will continue to
service their debt in spite of declining equity values.
    These extraordinary economic times have led us to carefully re-examine
our provisions for loan losses. As such, we have prudently increased our
specific loan losses provisions as detailed in the 'Provision for Loan Losses'
section.
    The Trust organization primarily serves two business channels - the
investment advisor and mortgage broker channels. With respect to the
investment advisor channel, the Trust Sales team works collaboratively with
AGF's mutual fund wholesalers and offers a complimentary range of products
including secured investment loans and RSP loans. The mortgage broker channel
is serviced by Trust Area Lending Managers focusing primarily on real-estate
secured loans. AGF Trust continues to build strong relationships with the
financial advisor and mortgage broker communities and continues to work with
them to find appropriate solutions to meet the lending needs of their clients.

    
    Financial and Operational Results

    The Trust Company Operations segment results for the years ended November
30, 2008 and 2007, are as follows:

    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                   2008         2007     % change
    -------------------------------------------------------------------------

    Interest income
      Loan interest                     $    270.8   $    213.6        26.8%
      Investment interest                     32.2         23.1        39.4%
    -------------------------------------------------------------------------
                                             303.0        236.7        28.0%
    Interest expense
      Deposit interest                       200.9        135.5        48.3%
      Other interest expense                   5.2         23.0       (77.4%)
    -------------------------------------------------------------------------
                                             206.1        158.5        30.0%
    -------------------------------------------------------------------------
    Net interest income                       96.9         78.2        23.9%

    Other revenue                             12.3          8.2        50.0%
    Gain on RSP loan securitization
     and related income (loss),
     net of impairment(1)                     (0.3)        10.8      (102.8%)
    -------------------------------------------------------------------------
    Total revenue                            108.9         97.2        12.0%

    Expenses
      Selling, general and administrative     42.7         36.4        17.3%
      Provision for loan losses               30.4         11.0       176.4%
    -------------------------------------------------------------------------
                                              73.1         47.4        54.2%

    EBITDA(2)                                 35.8         49.8       (28.1%)
    Amortization                               2.8          1.7        64.7%
    -------------------------------------------------------------------------
    Income before taxes and
     non-segmented items                $     33.0   $     48.1       (31.4%)
    -------------------------------------------------------------------------
    (1) Year ended November 30, 2007 includes an $8.0 million securitization
        gain.
    (2) For the definition of EBITDA, see the 'Key Performance Indicators and
        Non-GAAP Measures' section. The items required to reconcile EBITDA to
        net income, a defined term under Canadian GAAP, are detailed above.
    

    Revenue, Net Interest Income and Net Interest Margin

    Net interest income, which is expressed net of interest on deposits and
other interest expense, increased 23.9% over 2007. The average loan balances
were approximately 20.4% higher than average balances in 2007. Other revenue
increased 50.0% due to higher loan balances combined with a $3.0 million
increase related to hedge ineffectiveness. Securitization gains and related
items decreased by $11.1 million in 2008 as compared with 2007 as 2007
included an $8.0 million securitization gain. In addition, the Trust Company
recognized a $4.7 million writedown of its retained interest during 2008
compared to $1.9 million in 2007. These factors resulted in an overall revenue
increase of 12.0% as compared with 2007.
    The average net interest margin on lending products was 2.12% (2007 -
2.59%). This spread decrease resulted from compression in the Prime-Canadian
Dollar Offered Rate (CDOR) spread, an increase in the cost of GIC funding over
the past nine months, a decrease in spreads on the investment loan portfolio
and a change in the business mix to include a greater proportion of high
credit-quality HELOCs. Since HELOCs are risk-priced, they earn lower spreads
than the Trust Company's other lending products. During 2008, AGF Trust
discontinued writing new HELOC business as a product offering. AGF Trust
manages its interest rate risk through the use of interest rate swaps.

    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, 2008, the balance of all securitized loans outstanding was equal to $166.6
million (2007 - $291.1 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, 2008, as a result of
higher than anticipated prepayment and loss rates, and lower than anticipated
excess spread earning on securitized assets, a writedown of approximately $4.7
million was incurred.

    Selling, General and Administrative Expenses

    The increase in SG&A expenses of 17.3% over 2007 was as a result of
increased staffing levels to support the loan growth during the past 12 months
combined with additional costs associated to a move to new office premises.

    Provision for Loan Losses

    During the fourth quarter of 2008, AGF Trust thoroughly reviewed its
methodology for allowance for loan losses as a result of the current market
and economic conditions. As a result, methodology was refined to be more
responsive to changes in the economy and increases in delinquency. The
allowance for specific loan losses was refined to include specific allowances
for loans past due but not impaired. Previously, this provision only included
loans identified as impaired. As a result of this change, combined with growth
in the loan portfolio and increases in arrears and impaired loans, the total
provision for loan losses increased by 176.4% in 2008, compared with the prior
period.
    Actual loan write-offs net of recoveries for the twelve months ended
November 30, 2008 were $10.4 million compared with $4.8 million for the fiscal
period ended November 30, 2007, with the increase attributable to the growth
in the loan portfolio and an increase in RSP loan write-offs. Impaired loans
expressed as a percentage of loans outstanding were 1.0% as at November 30,
2008, compared with 0.7% at November 30, 2007.

    EBITDA and EBITDA margin

    A decline in the net interest margin due to a compression in rates, a
higher provision for loan losses, and an $8.0 million securitization gain in
2007 contributed to a decline in EBITDA of 28.1% over 2007 to $35.8 million
and a decline in EBITDA margin to 32.9% from 51.2% in 2007.

    Pre-Tax Profit Margin

    As a result of the factors outlined above, pre-tax margin of 30.3% in
2008 declined from 49.5% in 2007.

    Operational Performance

    The table below highlights our key operational measures for the segment
for the years ended November 30, 2008 and 2007:

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                   2008         2007     % change
    -------------------------------------------------------------------------

    Real estate secured loans(1)
      Insured mortgage loans            $    618.1   $    555.7        11.2%
      Conventional mortgage loans            766.4        765.5         0.1%
      HELOC receivables                      656.3        452.4        45.1%
    -------------------------------------------------------------------------
                                           2,040.8      1,773.6        15.1%
    Investment loans(1)
      Secured investment loans             1,805.4      1,509.4        19.6%
      RSP loans                              573.7        381.8        50.3%
      Finance loans                           11.1         15.6       (28.9%)
    -------------------------------------------------------------------------
                                           2,390.2      1,906.8        25.4%
    Other assets                             895.8        868.4         3.2%
    -------------------------------------------------------------------------
    Total assets                        $  5,326.8   $  4,548.8        17.1%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net interest income                 $     96.9   $     78.2        23.9%
    Gain (loss) on RSP loan
     securitization and related income,
     net of impairment(2)                     (0.3)        10.8      (102.8%)
    Other revenue                             12.3          8.2        50.0%
    Non-interest expenses(3)                  45.5         38.1        19.4%
    Provision for loan losses                 30.4         11.0       176.4%
    -------------------------------------------------------------------------
    Income before taxes and
     non-segmented items                $     33.0   $     48.1       (31.4%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Efficiency ratio(4)                      41.8%        39.2%
    Assets-to-capital multiple(4)             15.0         15.6
    -------------------------------------------------------------------------
    (1) Includes loan provision and deferred sales commission.
    (2) The year ended November 30, 2007 includes an $8.0 million
        securitization gain.
    (3) Includes SG&A and amortization expenses.
    (4) For the definition of efficiency ratio and assets-to-capital
        multiple, see the "Key Performance Indicators and Non-GAAP Measures"
        section.
    


    Loan Asset Growth

    Our continued sales efforts directed at the mortgage broker and advisor
channels resulted in strong loan assets growth year-over-year. Real estate
secured loan assets grew 15.1% year-over-year and benefited from steady
originations of HELOCs.
    New investment loan products and improved collaboration with AGF mutual
fund wholesalers contributed to overall growth in loan advances. Secured
investment loans increased 19.6% to $1.8 billion as at November 30, 2008, over
the same period in 2007. RSP loan balances increased by $191.9 million ($67.4
million, excluding the impact of the securitization) as at November 30, 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 is defined as non-interest expenses divided by the
total of net interest income and non-interest income. It is a key industry
performance indicator used to ensure expenses are contained as the Trust
business grows. During 2008, the efficiency ratio experienced an unfavourable
change to 41.8% from 39.2% in 2007.

    Balance Sheet

    The Trust balance sheet had strong growth during the past year. Total
assets increased 17.1% to $5.3 billion as at November 30, 2008, compared with
the previous year. For the year ended November 30, 2008, our asset-to-capital
multiple stood at 15.0 times, compared with 15.6 times at the same time last
year. Our risk-based capital ratio was 14.7% as at November 30, 2008. During
2008, AGF Trust received $35.0 million in debt and equity capital from AGF
Management Limited (2007 - $86.5 million) to support increased asset levels.
Liquid assets were high with $560.2 million in cash and cash equivalents as at
November 30, 2008 (2007 - $791.3 million), excluding cash currently pledged to
counterparties.

    Loan Portfolio Credit

    The general allowance for real estate secured loan losses was increased
during the year to $9.3 million from $8.1 million a year ago, consistent with
the growth of these loans. The general allowance for investment loan losses
increased to $13.7 million from $7.2 million a year ago, due to an increase in
growth combined with higher experience of loan writeoffs. Approximately 44.5%
of real estate secured loan assets, excluding HELOCs, are insured. We have
security for non-RSP investment loans, consisting of mutual funds and other
investments. The value of this collateral fluctuates with the changes in the
underlying investments. The expense for impaired RSP loans, which consists of
the increase in specific allowances, plus writeoffs net of recoveries
(excluding securitized RSP loans) was $6.3 million for the year ended November
30, 2008 (2007 - $2.1 million). For the balance of our loan products, the
expense for impaired loans was $4.0 million (2007 - $1.6 million).

    Segment Outlook

    We anticipate that AGF Trust loan growth will be minimal in fiscal 2009
until extended disruptions in financial markets subside and interest rate
spreads increase to properly reflect the loan risk. Stock market prices
influence the levels of lending activities for investment-based loan products,
and we believe this will result in reduced growth in these products. A rise in
interest rates or a softening of housing prices, combined with weak consumer
confidence, could negatively affect secured real estate loan portfolio
performance.
    In fiscal 2009, we will focus on strengthening client relationships,
realizing operational efficiencies to reduce costs and complete a thorough
review of our business risks and processes. Given the current economic
environment, we will continue to place an even greater emphasis on risk
management activities. Our product approach has evolved to focus on higher
margin products. AGF Trust uses disciplined underwriting and sound risk
management practices. Management believes it has a solid plan to prudently
manage its capital and strengthen its balance sheet to successfully navigate
through this economic cycle.

    AGF Management Limited

    Liquidity and Capital Resources

    Consolidated cash flow generated from continuing operating activities,
before net change in non-cash balances related to operations, was $278.7
million for the year ended November 30, 2008, compared with $313.4 million in
the prior year.
    In fiscal 2008, we paid $86.8 million in selling commissions, which were
capitalized and amortized for accounting purposes, compared with $154.3
million in 2007. Accordingly, our free cash flow (defined as cash flow from
continuing operations less selling commissions paid) was $191.9 million for
the year ended November 30, 2008, compared with $159.1 million in the prior
year.
    Our free cash flow was used primarily to fund the following:

    
    -------------------------------------------------------------------------
    ($ millions)
    Years ended November 30                                2008         2007
    -------------------------------------------------------------------------

    Payment of dividends                             $     80.2   $     70.2
    Repurchase of AGF Class B non-voting shares
     for cancellation                                       7.8         45.5
    Acquisitions of subsidiaries                           25.2         27.7
    Purchase of property, equipment and other
     intangible assets                                      6.8          8.3
    Bank credit facility repayment (borrowing)             36.3       (104.0)
    Investment in Trust Operations (eliminated
     on consolidation)                                     35.0         86.5
    -------------------------------------------------------------------------
                                                     $    191.3   $    134.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    During the year ended November 30, 2008, our revolving term loan balance
decreased $36.3 million to $123.7 million. Consolidated cash and cash
equivalents of $584.2 million decreased by $243.7 million from November 30,
2007 levels of $827.9 million (2007 - increased by $422.0 million). This was
primarily due to investments at AGF Trust of $171.4 million.
    On May 26, 2008, the Company, under its current loan agreement, arranged
an additional three-year prime rate-based reducing term loan to a maximum of
$60.0 million (Facility 2) to finance share repurchases. This facility was
cancelled on November 30, 2008 and no amounts were drawn.
    We also have a six-year prime rate-based revolving term loan facility to
a maximum of $300.0 million, of which $170.9 million was available to be drawn
as at December 31, 2008. Aside from cash held in the Trust Company Operations
segment, which is held to fund loans to clients and GIC maturities, AGF had
$23.9 million of cash as at November 30, 2008. The loan facility will be
available to meet future operational and investment needs. We anticipate that
cash flow from operations, together with the available loan facility, will be
sufficient in the foreseeable future to implement our business plan, finance
selling commissions, satisfy regulatory requirements, service debt repayment
obligations, meet capital spending needs and pay quarterly dividends.

    Limited Partnership Financing

    Prior to 2005, the Company financed certain deferred selling commissions
using limited partnerships (LPs). The Company is obligated to pay these LPs an
annual fee of 0.47% to 0.90% of the net asset value of DSC securities. This
obligation will continue as long as such DSC securities remain outstanding
except for certain of the LPs, in which case the obligation terminates at
various dates from December 31, 2008 to December 31, 2020. For certain LPs,
the obligation is secured by the Company's mutual fund management contracts to
the extent of the particular obligation.
    The Company is responsible for the management and administration of the
LPs. These services are provided in the normal course of operations and are
recorded at the amount of consideration agreed to by the parties. The amount
of fees received in 2008 was $0.3 million (2007 - $0.4 million). As at
November 30, 2008, the net asset value of DSC securities financed by the LPs
was $0.8 billion (2007 - $1.2 billion)

    Contractual Obligations

    The table below is a summary of our contractual obligations at November
30, 2008. See also Notes 12 & 26 of the Consolidated Financial Statements.

    
    -------------------------------------------------------------------------
    ($ millions)           Total       2009  2010-2011  2012-2013  Thereafter
    -------------------------------------------------------------------------

    Long-term debt     $   144.9  $    21.2  $   123.7  $       -  $       -
    Operating leases        59.5        9.0       17.2       16.2       17.1
    Purchase obligations    19.3       11.4        6.2        1.7          -
    -------------------------------------------------------------------------
    Total contractual
     obligations       $   223.7  $    41.6  $   147.1  $    17.9  $    17.1
    -------------------------------------------------------------------------

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

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

    -   A portion of our selling commissions paid on a DSC basis has been
        financed by LPs held by third-party investors. As at November 30,
        2008, the net asset value of DSC securities financed by the LPs was
        $0.8 billion and amounts paid to these partnerships in 2008 were
        $5.2 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 2008 we paid
        $157.2 million in trailing commissions.

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

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

    Intercompany and Related Party Transactions

    The Company has entered into certain transactions with entities or senior
officers who are directors of the Company. During 2008, total amounts paid by
the Company to these related parties aggregated $0.1 million (2007 - $0.1
million).

    Capital Management Activities

    We actively manage our capital to maintain a strong and efficient capital
base to maximize risk-adjusted returns to shareholders, invest in future
growth opportunities, including acquisitions, and to ensure that the
regulatory capital requirements are met for each of our subsidiary companies.
    AGF capital consists of shareholders' equity. On an annual basis, AGF
prepares a five-year plan detailing projected operating budgets and capital
requirements. Each of AGF's operating segments are required to prepare and
submit a five-year operating plan and budget to AGF's Capital Committee for
approval prior to seeking Board approval. AGF's Capital Committee consists of
the Chairman and CEO, the Vice-Chairman, Senior Vice-President and CFO, and
the Senior Vice-President and General Counsel. Once approved by the Capital
Committee, the five-year plans are reviewed and approved by AGF's Board of
Directors. These plans become the basis for the payment of dividends to
shareholders, the repurchase of Class B shares and, combined with the
reasonable use of leverage, the source of funds for acquisitions.

    Investment Management Operations - Regulatory Capital

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

    AGF Trust - Regulatory Capital

    AGF Trust's regulatory capital consists primarily of common shareholders'
equity, preferred shares and subordinated debentures. Regulatory capital is a
factor that allows the AGF Trust Board of Directors (Trust Board) to assess
the stability and security in relation to the overall risks inherent in AGF
Trust's activities. AGF Trust's policy is to maintain its regulatory capital
ratios consistent with requirements as laid out by the Company's principal
regulator. As of January 1, 2008, AGF Trust is monitoring its regulatory
capital based on the Bank for International Settlements (BIS) regulatory
risk-based capital framework (commonly known as Basel II). AGF Trust uses the
Standardized Approach for credit risk and the Basic Indicator Approach for
operational risk. AGF Trust has complied with these Basel II requirements.
Refer to the following section for more information on Basel II and to Note 23
of the 2008 Consolidated Financial Statements.
    A capital plan prepared annually specifies the target capital ratios by
taking into account the projected risk-weighted asset levels and expected
capital management initiatives. Regulatory capital ratios are reported monthly
to management. Regulatory capital ratio monitoring reports are provided on a
quarterly basis to the Trust Board.

    AGF Trust - Basel II Capital Accord

    AGF Trust is subject to the Basel II framework, which was developed by
the Basel Committee on Banking Supervision. Its objectives are to improve the
consistency of capital requirements internationally and make required
regulatory capital more risk sensitive. Basel II sets out several options,
which represent increasingly risk-sensitive approaches to calculating credit,
market and operational risk-based regulatory capital. AGF Trust uses the
Standardized Approach for credit risk under the Basel II capital adequacy
regime. It is the simplest approach, which uses supervisory determined risk
weights to measure risk-weighted assets. The Standardized Approach under Basel
II is principally distinguished from the prior capital adequacy regime for AGF
Trust in the following ways: Basel II allows 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.
    AGF Trust uses the Basic Indicator Approach under the Basel II capital
adequacy regime to determine the capital required for operational risk. The
Basic Indicator Approach uses gross income as a proxy for the institution's
overall operation risk. The capital required for operational risk is
determined by multiplying the average of the trailing three years' gross
income by a fixed percentage.
    Regulatory capital at AGF Trust is detailed as follows:

    
    -------------------------------------------------------------------------
    ($ thousands)
    As at November 30                                      2008       2007(1)
    -------------------------------------------------------------------------

    Tier 1 capital
      Common shares                                  $   82,768   $   82,768
      Contributed surplus                                 1,338          910
      Retained earnings                                 101,432       79,863
      Non-cumulative preferred shares                    64,000       49,000
      Less: securitization and other                    (15,567)           -
    -------------------------------------------------------------------------
                                                        233,971      212,541
    Tier 2 capital
      Subordinated debentures                           109,500       89,500
      General allowances                                 19,638       15,277
      Less: securitization and other                     (8,295)     (26,669)
    -------------------------------------------------------------------------
                                                        120,843       78,108

    -------------------------------------------------------------------------
    Total capital                                    $  354,814   $  290,649
    -------------------------------------------------------------------------
    (1) Information based on capital adequacy requirements in force at that
        date.
    


    Dividends

    The holders of AGF Class B and Class A 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 (TSX) during the 10 trading days
immediately preceding the record date applicable to such dividend.
    The following table sets forth the dividends paid by AGF on Class B
shares and Class A shares for the periods indicated:

    
    -------------------------------------------------------------------------
    Years Ended
     November 30            2008       2007       2006       2005       2004
    -------------------------------------------------------------------------

    Per share          $   0.950  $   0.780  $   0.690  $   0.560  $   0.410
    -------------------------------------------------------------------------
    Percentage increase      22%        13%        23%        37%        39%
    -------------------------------------------------------------------------
    

    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 2009 will be $1.00 per share.

    Normal Course Issuer Bid

    In February 2008, the Company's Board of Directors authorized the renewal
of AGF's normal course issuer bid for the purchase of up to 7,253,822 Class B
shares, or 10% of the public float for such shares. The Company received
approval from the TSX on February 22, 2008, for the renewal of its normal
course issuer bid. This allows AGF to purchase up to 7,253,822 Class B shares
through the facilities of the TSX (or as otherwise permitted by the TSX)
between February 26, 2008 and February 25, 2009. The Class B shares may be
repurchased from time to time at prevailing market prices or such other price
as may be permitted by the TSX.
    As at November 30, 2008, under this current normal course issuer bid,
1,000,000 Class B shares (2007 - 1,437,800) have been repurchased for a total
consideration of $7.8 million (2007 - $45.5 million) at an average price of
$7.79 per share (2007 - $31.67).

    Outstanding Share Data

    Set out below is our outstanding share data as at November 30, 2008. For
additional detail, see Notes 16 and 17 to the 2008 Consolidated Financial
Statements.

    
    -------------------------------------------------------------------------
    Years ended November 30                                2008         2007
    -------------------------------------------------------------------------
    Shares
    Class A Voting Common Shares                         57,600       57,600
    Class B Non-Voting Shares                        88,480,104   88,922,157

    Stock Options
    Outstanding options                               6,576,948    4,268,765
    Exercisable options                               2,543,337    1,954,284
    -------------------------------------------------------------------------
    

    Government Regulations

    AGF Management Limited

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

    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 Commissions and FINTRAC.
    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

    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. It must also obtain a receipt for the same from
provincial and territorial securities regulatory authorities. Certain funds
are offered in overseas jurisdictions, each of which has its own filing
requirements.
    Each mutual fund is managed by AGFFI and as such AGFFI is liable for any
misrepresentation in the offering documents of the funds. Pursuant to
securities legislation in certain of the provinces and territories of Canada,
none of the mutual funds managed by AGFFI can make portfolio investments in
substantial security holders of the funds, in AGF or in corporations in which
the directors or officers of the funds, or their substantial security holders,
have a significant interest.

    AGF International Advisors Company Limited

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

    AGFIA Limited

    AGFIA Limited is a private limited company incorporated under the laws of
the Republic of Ireland and is authorized by the Irish Financial Services
Regulatory Authority (IFSRA), under Regulation 11 of the European Communities
(Markets in Financial Instruments) Regulations 2007, to provide a range of
financial services including the provision of investment advice and the
managing of portfolios, primarily to institutional accounts. As an authorized
entity, AGFIA Limited is subject to a range of Irish and EU regulations. AGFIA
Limited is also registered with the OSC as a non-Canadian investment counsel
and portfolio manager and is subject to the oversight of the Ontario Privacy
Commission and FINTRAC.

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

    AGF Securities Inc.

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

    Trust Company Operations

    AGF Trust Company

    AGF Trust Company (AGF Trust) is incorporated under and governed by the
federal Trust and Loan Companies Act (Canada) and is extra-provincially
licensed and registered under 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 (OFSI). AGF Trust is also
subject to oversight from the Financial and Consumer Agency of Canada, the
Privacy Commission of Canada, FINTRAC, 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, 2008 and 2007:

    
    -------------------------------------------------------------------------
    ($ millions, except per share amounts)
    Three months ended November 30            2008         2007     % change
    -------------------------------------------------------------------------

    Revenue
      Investment management operations   $   123.1   $   172.9        (28.8%)
      Trust company operations                26.6        23.8         11.8%
      Other                                    2.5         2.4          4.2%
    -------------------------------------------------------------------------
                                             152.2       199.1        (23.6%)

    Expenses
      Investment management operations        67.8        98.3        (31.0%)
      Trust company operations                30.4        13.3        128.6%
    -------------------------------------------------------------------------
                                              98.2       111.6        (12.0%)

    EBITDA(1) (continuing operations)         54.0        87.5        (38.3%)
      Amortization                            27.6        30.7        (10.1%)
      Interest Expense                         1.8         2.9        (37.9%)
      Impairment of asset available
       for sale                                2.3           -           n/m
      Impairment of goodwill and
       customer contracts                     46.3           -           n/m
      Non-controlling interest                 0.1         0.2           n/m
      Income Taxes                            (4.8)        4.3       (211.6%)
    -------------------------------------------------------------------------
    Net income                           $   (19.3)  $    49.4       (139.1%)
    -------------------------------------------------------------------------

    Earnings (loss) per share from
     continuing operations - diluted     $   (0.21)  $    0.54       (138.9%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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, 2008 decreased $46.9
million, a 23.6% decrease from the same period in 2007. The Investment
Management segment declined $49.8 million as a result of a 27.7% decline in
average mutual fund AUM levels in the fourth quarter. Revenues in the Trust
segment increased $2.8 million driven by loan asset growth. Revenues from the
Other segment increased 4.2%.
    Expenses in the fourth quarter ended November 30, 2008 decreased by $13.4
million over the same period a year ago. Expenses in Investment Management
Operations decreased $30.5 million or 29.3% due primarily to lower
performance-based compensation expense resulting from lower sales and AUM
levels. The Trust Company Operations segment increased $17.1 million primarily
due to loan provision related costs attributed to a revised loan provision
methodology. Refer to page 28 of this MD&A for further details.
    EBITDA for the quarter ended November 30, 2008, compared with the
respective quarter in 2007, was lower predominantly due to lower revenue in
the Investment Management segment due to a significant decline in average AUM
quarter over quarter.
    During the quarter, as a result of the decrease in markets, we recognized
a $46.3 million writedown in goodwill and customer contracts. In addition, as
a result of an other than temporary decline in an investment, we recognized a
$2.3 million impairment charge. Refer to page 25 of this MD&A for further
details.
    Our income tax recovery for the three months ended November 30, 2008 was
$4.8 million, as compared with an income tax expense of $4.3 million in the
three months ended November 30, 2007.
    The impact of the above revenue and expense items resulted in a net loss
of $19.3 million in the three months ended November 30, 2008 compared with a
net income of $49.4 million in fiscal 2007. Excluding the impairment charges,
net of tax, of $37.7 million, we had net income of $18.4 million in the
quarter. Basic and fully diluted loss per share from continuing operations
were $0.21 and $0.21 per share, respectively, in the three months ended
November 30, 2008 as compared with earnings of $0.55 and $0.54 per share in
2007. Excluding the impact of the impairment charges, net of tax, basic and
fully diluted earnings per share for the quarter were $0.21 and $0.20.
    On a diluted per share basis, cash flow from continuing operations for
the three months ended November 30, 2008 was $0.65 per share (2007 - $0.99).

    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, 2008 and 2007:

    
    -------------------------------------------------------------------------
    ($ millions)
    Three months ended November 30            2008         2007     % change
    -------------------------------------------------------------------------

    Mutual fund AUM, beginning of
     period                             $   26,371   $   30,024       (12.2%)

    Gross sales of mutual funds                651        1,273       (48.9%)
    Redemptions of mutual funds             (1,176)      (1,150)        2.3%
    -------------------------------------------------------------------------
    Net mutual fund sales                     (525)         123

    Market appreciation (depreciation)
     of fund portfolios                     (6,085)         (95)         n/m
    -------------------------------------------------------------------------

    Mutual fund AUM, end of period      $   19,761   $   30,052       (34.2%)

    Institutional AUM                       12,802       19,822       (35.4%)
    High-net-worth AUM                       2,995        3,869       (22.6%)
    -------------------------------------------------------------------------

    Total AUM, end of period            $   35,558   $   53,743       (33.8%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Average daily mutual fund AUM
     for the period                     $   21,682   $   29,995       (27.7%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    During the three months ended November 30, 2008, the
Canadian-dollar-adjusted S&P 500 Index declined 18.0%, the
Canadian-dollar-adjusted NASDAQ Index declined 24.4% and the S&P/TSX Composite
Index declined 32.1%.
    The impact of the U.S. dollar appreciation relative to the Canadian
dollar on the market value of AGF mutual funds since August 31, 2008 has been
an increase in AUM of approximately $0.6 billion (2007 - decrease of $0.3
billion).

    Financial and Operational Results

    The table below highlights the Investment Management Operations segment
results for the three months ended November 30, 2008 and 2007:

    
    -------------------------------------------------------------------------
    ($ millions)
    Three months ended November 30            2008         2007     % change
    -------------------------------------------------------------------------

    Revenue
      Net management and advisory fees  $    119.6   $    163.6       (26.9%)
      Deferred sales charges                   7.0          5.4        29.6%
      Investment income and other revenue     (3.5)         3.9      (189.7%)
    -------------------------------------------------------------------------
                                             123.1        172.9       (28.8%)

    Expenses
      Selling, general and administrative     31.3         48.1       (34.9%)
      Trailing commissions                    33.0         45.1       (26.8%)
      Investment advisory fees                 3.5          5.1       (31.4%)
    -------------------------------------------------------------------------
                                              67.8         98.3       (31.0%)
    -------------------------------------------------------------------------

    EBITDA(1)                                 55.3         74.6       (25.9%)
    Amortization                              26.7         30.1       (11.3%)
    Impairment of asset available
     for sale                                  2.3            -          n/m
    Impairment of goodwill and
     customer contracts                       46.3            -          n/m
    -------------------------------------------------------------------------
    Income before taxes and
     non-segmented items                $    (20.0)  $     44.5      (144.9%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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, 2008 and 2007:

    -------------------------------------------------------------------------
    ($ millions)
    Three months ended November 30            2008         2007     % change
    -------------------------------------------------------------------------

    Interest income
      Loan interest                     $     67.0   $    63.0          6.3%
      Investment interest                      7.0         8.9        (21.4%)
    -------------------------------------------------------------------------
                                              74.0        71.9          2.9%
    Interest expense
      Deposit interest                        51.0        42.0         21.4%
      Other interest expense                  (0.5)        8.7       (105.8%)
    -------------------------------------------------------------------------
                                              50.5        50.7         (0.4%)
    -------------------------------------------------------------------------
    Net interest income                       23.5        21.2         10.9%

    Other revenue                              3.7         3.2         15.6%
    Securitization gains and
     related items                            (0.6)       (0.6)         0.0%
    -------------------------------------------------------------------------
    Total revenue                             26.6        23.8         11.8%

    Expenses
    Selling, general and administrative        9.9         9.9          0.0%
    Provision for loan losses                 20.5         3.4        502.9%
    -------------------------------------------------------------------------
                                              30.4        13.3        128.6%

    EBITDA(1)                                 (3.8)       10.5       (136.2%)
      Amortization                             0.9         0.7         28.6%
    -------------------------------------------------------------------------
      Income before taxes and
       non-segmented items              $     (4.7)  $     9.8       (148.0%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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-month       Nov. 30,     Aug. 31,      May 31,     Feb. 29,
     period ended                2008         2008         2008         2008
    -------------------------------------------------------------------------

    Revenue (continuing
     operations)          $     152.2  $     184.7  $     194.3  $     194.3
    Cash flow from
     continuing
     operations(1)               58.7         66.2         71.5         82.3
    EBITDA (continuing
     operations)(2)              54.0         81.5         88.6         89.5
    Pretax income (loss)
     (continuing operations)    (24.1)        51.3         57.9         56.6
    Net income (loss)           (19.3)        41.1         44.0         62.7

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

    Weighted average
     basic shares          89,446,562   89,451,578   89,349,275   89,039,394
    Weighted average
     fully diluted shares  90,679,048   89,870,475   89,785,796   89,807,506
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    ($ millions, except
     per share amounts)
    For the three month       Nov. 30,     Aug. 31,      May 31,     Feb. 28,
     period ended                2007         2007         2007         2007
    -------------------------------------------------------------------------

    Revenue (continuing
     operations)          $     199.1  $     199.2  $     204.9  $     177.0
    Cash flow from
     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   89,798,419   89,474,827
    Weighted average
     fully diluted shares  91,566,659   91,847,103   91,316,967   90,640,734
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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                   2008         2007         2006
    -------------------------------------------------------------------------

    Revenue (continuing operations)     $    725.6   $    780.3   $    607.2
    Cash flow from continuing
     operations(1)                           278.7        313.4        214.2
    EBITDA (continuing operations)(2)        313.7        357.2        248.5
    Pre-tax income                           141.8        222.6        113.7
    Net income (continuing operations)       128.6        175.9        102.1
    Earnings per share (continuing
     operations)
      Basic                             $     1.44   $     1.96   $     1.15
      Diluted                           $     1.41   $     1.93   $     1.14
    Cash flow from continuing
     operations
      Basic                             $     3.12   $     3.48   $     2.40
      Diluted                           $     3.05   $     3.43   $     2.38
    Dividends per share                 $     0.95   $     0.78   $     0.69
    Total assets                        $  6,534.0   $  5,876.8   $  3,919.8
    Total long-term debt                $    123.7   $    184.5   $     56.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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, 2008, the Company's 2008 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, 2008



    Management's Responsibility for Financial Reporting

    Toronto, January 28, 2009
    

    The accompanying consolidated financial statements of AGF Management
Limited (the Company) were prepared by management, which is responsible for
the integrity and fairness of the information presented, including the amounts
based on estimates and 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,
has performed an independent audit of the consolidated financial statements,
and its report follows. The shareholders' auditors have full and unrestricted
access to the Audit Committee to discuss their audit and related findings.

    (signed)

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


    (signed)

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


    Auditors' Report

    January 28, 2009

    To the Shareholders of AGF Management Limited:

    We have audited the consolidated balance sheet of AGF Management Limited
as at November 30, 2008 and 2007 and the consolidated statement of income,
changes in shareholders' equity, comprehensive income and cash flow for each
of the years in the two-year period ended November 30, 2008. 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, 2008 and 2007 and the results of its operations and its cash flows for
each of the years in the two-year period then ended in accordance with
Canadian generally accepted accounting principles.

    
    (signed)

    PricewaterhouseCoopers LLP
    Chartered Accountants, Licensed Public Accountants
    Toronto, Canada


                           AGF Management Limited
                         Consolidated Balance Sheet

    -------------------------------------------------------------------------
    November 30                                           2008          2007
    ($ thousands)
    -------------------------------------------------------------------------

    Assets
      Current assets
        Cash and cash equivalents                  $   584,168   $   827,874
        Investments available for sale (note 2)        188,435        26,149
        Accounts receivable and prepaid expenses        78,403        93,141
        Current portion of retained interest
         from securitization (note 3)                    5,487         7,501
        Real estate secured and investment loans
         due within one year (note 8(a))               606,844       492,756
    -------------------------------------------------------------------------
                                                     1,463,337     1,447,421

      Retained interest from securitization
       (note 3)                                         39,460        43,424
      Real estate secured and investment
       loans (note 8(a))                             3,824,006     3,187,605
      Investment in associated company (note 2)         98,338       102,600
      Management contracts (note 9)                    504,269       504,269
      Customer contracts, net of accumulated
       amortization and impairment (note 9)             18,783        65,805
      Goodwill, net of impairment (note 9)             172,985       180,058
      Trademarks (note 9)                                1,935         1,935
      Deferred selling commissions, net of
       accumulated amortization                        304,406       315,275
      Property, equipment and computer software,
       net of accumulated amortization (note 10)        19,423        20,812
      Other assets (note 11)                            87,017         7,608
    -------------------------------------------------------------------------
    Total assets                                   $ 6,533,959   $ 5,876,812
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    November 30                                           2008          2007
    ($ thousands)
    -------------------------------------------------------------------------

    Liabilities and shareholders' equity
      Current liabilities
        Accounts payable and accrued liabilities   $   306,834   $   261,115
        Future income taxes (note 15)                   26,240        48,304
        Long-term debt due within one year
         (note 12)                                      21,171        25,611
        Deposits due within one year (note 8(d))     2,486,635     1,847,494
    -------------------------------------------------------------------------
                                                     2,840,880     2,182,524

      Deposits (note 8(d))                           2,275,426     2,235,848
      Long-term debt (note 12)                         123,740       184,486
      Future income taxes (note 15)                    171,293       202,923
      Other long-term liabilities (note 13)             14,995         1,638
    -------------------------------------------------------------------------
    Total liabilities                                5,426,334     4,807,419
    -------------------------------------------------------------------------

      Non-controlling interest (note 5)                    203           391

      Shareholders' equity
        Capital stock (note 16)                        431,897       421,923
        Contributed surplus                             17,127        14,948
        Retained earnings                              676,190       635,369
        Accumulated other comprehensive loss           (17,792)       (3,238)
    -------------------------------------------------------------------------
    Total shareholders' equity                       1,107,422     1,069,002
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity     $ 6,533,959   $ 5,876,812
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Commitments (note 26)
    Guarantees (note 27)
    Contingent Liabilities (note 28)

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


    Approved by the Board:

    (signed)                                   (signed)

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



                           AGF Management Limited
                      Consolidated Statement of Income

    -------------------------------------------------------------------------
    Years ended November 30                               2008          2007
    ($ thousands)
    -------------------------------------------------------------------------

    Revenue
      Management and advisory fees                 $   576,761   $   646,462
      Deferred sales charges                            25,591        20,381
      Gain on sale of RSP loan securitization
       and related income (loss), net of
       impairment                                         (279)       10,769
      Investment income and other                       26,624        24,485
    -------------------------------------------------------------------------
                                                       628,697       702,097
    -------------------------------------------------------------------------
        Trust Company interest income (note 22)        302,981       236,685
        Trust Company interest expense (note 22)      (206,108)     (158,462)
    -------------------------------------------------------------------------
      Trust Company net interest income                 96,873        78,223
    -------------------------------------------------------------------------
    Total revenue                                      725,570       780,320
    -------------------------------------------------------------------------

    Expenses
      Selling, general and administrative              209,326       226,730
      Trailing commissions                             157,161       169,587
      Investment advisory fees                          15,034        15,850
      Amortization of deferred selling commissions      98,064       107,960
      Amortization of customer contracts                 7,791         7,837
      Amortization of property, equipment
       and computer software                             8,142         8,030
      Interest expense                                   9,252         9,895
      Provision for Trust Company loan losses           30,374        10,995
      Impairment of asset available for
        sale (note 2)                                    2,286             -
      Impairment of goodwill and customer
       contracts (note 9)                               46,305             -
    -------------------------------------------------------------------------
                                                       583,735       556,884
    -------------------------------------------------------------------------

    Income from continuing operations before
     income taxes and non-controlling interest         141,835       223,436

    Income tax expense (reduction)
      Current (note 15)                                 63,504        36,436
      Future (note 15)                                 (50,818)       10,253
    -------------------------------------------------------------------------
                                                        12,686        46,689
    -------------------------------------------------------------------------

    Non-controlling interest (note 5)                      557           881

    -------------------------------------------------------------------------
    Net income from continuing operations
     for the year                                      128,592       175,866
    Loss on dissolution of Limited Partnerships,
     net of tax (note 7)                                     -        (2,128)
    Gain on sale of discontinued operations,
     net of tax (note 4)                                     -         4,702
    Net income from discontinued operations,
     net of tax (note 4)                                     -           247
    -------------------------------------------------------------------------
    Net income for the year                        $   128,592   $   178,687
    -------------------------------------------------------------------------

    Earnings Per Share (note 18)
      Basic from continuing operations             $      1.44   $      1.96
      Diluted from continuing operations           $      1.41   $      1.93
      Basic                                        $      1.44   $      1.99
      Diluted                                      $      1.41   $      1.96
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (The accompanying notes are an integral part of these Consolidated
    Financial Statements.)



                           AGF Management Limited
          Consolidated Statement of Changes in Shareholders' Equity

    -------------------------------------------------------------------------
    Years ended November 30                               2008          2007
    ($ thousands)
    -------------------------------------------------------------------------

    Common shares
      Balance, beginning of year                   $   421,923   $   403,566
      Issued through dividend reinvestment plan          4,618         3,614
      Stock options exercised                            5,121        14,688
      Issued on acquisition of Highstreet
       Partners Ltd. (note 5)                            5,116         5,672
      Issued for Cypress contingent
       consideration (note 6)                                -         1,200
      Purchased for cancellation (note 16 (c))          (4,881)       (6,817)
    -------------------------------------------------------------------------
      Balance, end of year                             431,897       421,923
    -------------------------------------------------------------------------

    Contributed surplus
      Balance, beginning of year                        14,948        10,470
      Stock options                                      2,179         4,478
    -------------------------------------------------------------------------
      Balance, end of year                              17,127        14,948
    -------------------------------------------------------------------------

    Retained earnings
      Balance, beginning of year                       635,369       565,576
        Transitional adjustment on adoption
         of new accounting policies (note 1)                 -           (25)
    -------------------------------------------------------------------------
      Balance, beginning of year, as restated          635,369       565,551
      Net income                                       128,592       178,687
      Dividends on AGF Class A Voting Common
       Shares and AGF Class B Non-Voting Shares        (84,860)      (70,151)
      Excess paid over book value of AGF Class B
       Non-Voting Shares purchased for
       cancellation (note 16 (c))                       (2,911)      (38,718)
    -------------------------------------------------------------------------
      Balance, end of year                             676,190       635,369
    -------------------------------------------------------------------------

    Accumulated other comprehensive income (loss)
      Balance, beginning of year                        (3,238)          159
      Transitional adjustment on adoption
       of new accounting policies                            -         3,633
      Other comprehensive loss                         (14,554)       (7,030)
    -------------------------------------------------------------------------
      Balance, end of year                             (17,792)       (3,238)
    -------------------------------------------------------------------------

    Total shareholders' equity                     $ 1,107,422   $ 1,069,002
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (The accompanying notes are an integral part of these Consolidated
    Financial Statements.)



                           AGF Management Limited
               Consolidated Statement of Comprehensive Income

    -------------------------------------------------------------------------
    Years ended November 30                               2008          2007
    ($ thousands)
    -------------------------------------------------------------------------

    Net income                                     $   128,592   $   178,687
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Other comprehensive income (losses),
     net of tax
      Foreign currency translation adjustments
       related to net investments in
       self-sustaining foreign operations(1)            (7,188)       (9,157)
        Reclassification of realized gain
         to earnings                                         -           (12)
    -------------------------------------------------------------------------
                                                        (7,188)       (9,169)
    -------------------------------------------------------------------------
    Net unrealized gains (losses) on available
     for sale securities
      Unrealized gains (losses)(2)                      (9,428)        2,421
      Reclassification of realized loss or other
       than temporary impairment to earnings             2,077             -
    -------------------------------------------------------------------------
                                                        (7,351)        2,421
    -------------------------------------------------------------------------
    Net unrealized gains (losses) on cash flow hedge
      Unrealized gains (losses)(3)                        (945)         (282)
      Reclassification of realized loss on
       cash flow hedge                                     930             -
    -------------------------------------------------------------------------
                                                           (15)         (282)
    -------------------------------------------------------------------------
    Total other comprehensive income (loss),
     net of tax                                    $   (14,554)  $    (7,030)
    -------------------------------------------------------------------------

    Comprehensive income                           $   114,038   $   171,657
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Net of income tax reduction of $1.2 million for the year ended
        November 30, 2008. Net of income tax reduction of $0.6 million for
        the year ended November 30, 2007.
    (2) Net of income tax reduction of $2.1 million for the year ended
        November 30, 2008. Net of income tax expense of $0.6 million for the
        year ended November 30, 2007.
    (3) Net of income tax reduction of $0.5 million for the year ended
        November 30, 2008. 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 Statement of Cash Flow

    -------------------------------------------------------------------------
    Years ended November 30                               2008          2007
    ($ thousands)
    -------------------------------------------------------------------------

      Net income                                   $   128,592   $   178,687
      Loss on dissolution of limited
       partnerships, net of tax                              -         2,128
      Gain on sale of discontinued operations,
       net of tax                                            -        (4,702)
      Earnings from discontinued operations,
       net of tax                                            -          (247)
    -------------------------------------------------------------------------
      Net income from continuing operations            128,592       175,866

      Items not affecting cash
        Amortization                                   113,997       123,827
        Future income taxes                            (50,818)       10,253
        Gain on sale of RSP loan securitization
         and related income (loss), net
         of impairment                                     279       (10,769)
        Provision for AGF Trust loan losses             30,374        10,995
        Impairment of asset available for sale           2,286             -
        Impairment of goodwill and customer
         contracts                                      46,305             -
        Stock-based compensation (note 17)               5,548         6,737
        Other                                            2,121        (3,474)
    -------------------------------------------------------------------------
                                                       278,684       313,435
      Net change in non-cash working capital
       balances related to operations (note 21)         72,719        86,676
    -------------------------------------------------------------------------
      Net cash provided by continuing
       operating activities                            351,403       400,111
      Net cash used in discontinued operating
       activities                                            -        (1,271)
    -------------------------------------------------------------------------
      Net cash provided by operating activities        351,403       398,840
    -------------------------------------------------------------------------

    Financing Activities
      Purchase of Class B Non-Voting Shares
       for cancellation                                 (7,792)      (45,532)
      Issuance of Class B Non-Voting Shares              2,483        18,302
      Dividends                                        (80,242)      (70,151)
      Increase (decrease) in bank loan                 (36,152)      104,000
      Net increase in AGF Trust deposits               601,574     1,598,363
    -------------------------------------------------------------------------
      Net cash provided by financing activities        479,871     1,604,982

    Investing Activities
      Deferred selling commissions paid                (86,791)     (154,254)
      Proceeds of RSP loan securitization                    -       252,878
      Acquisition of subsidiaries, net of
       cash acquired                                   (25,224)      (27,673)
      Proceeds of sale of discontinued operations            -         2,747
      Purchase of property, equipment and
       computer software                                (6,753)       (8,328)
      Other investment activities                     (174,838)       (3,222)
      Net increase in AGF Trust real estate
       secured and investment loans                   (781,374)   (1,644,003)
    -------------------------------------------------------------------------
      Net cash used in investing activities         (1,074,980)   (1,581,855)

    Increase (decrease) in cash and cash
     equivalents during the period                    (243,706)      421,967

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

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

    Represented by:
      Cash and cash equivalents                    $    23,927   $    36,601
      AGF Trust cash and cash equivalents              560,241       791,273
    -------------------------------------------------------------------------
                                                   $   584,168   $   827,874
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    For supplemental cash flow information, see Note 21.

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



    Notes to Consolidated Financial Statements

    Years ended November 30, 2008 and 2007
    (tabular amounts in thousands of dollars, except per share amounts)

    Description of Business

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

    Note 1: Summary of Significant Accounting Policies

    Basis of Presentation and Consolidation

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

    The principal subsidiaries of AGF are:

           AGF Funds Inc.
           AGF Asset Management Group Limited
           AGF International Advisors Company Limited
           AGFIA 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 30.4% interest in Smith & Williamson
    Holdings Limited (S&WHL), an independent U.K.-based company providing
    private client investment management, financial advisory and tax and
    accounting services.

    This investment is accounted for using the equity method.

    Significant Accounting Changes

    Capital Disclosures

    Effective December 1, 2007, the CICA's new accounting standard "Handbook
    Section 1535, Capital Disclosures" was adopted. The standard requires the
    disclosure of both qualitative and quantitative information to enable
    users of financial statements to evaluate the entity's objectives,
    policies and processes for managing capital. The new standard did not
    have any impact on the financial position or earnings of the Company.
    Refer to Note 23 for disclosure.

    Financial Instruments Disclosures and Presentation

    Effective December 1, 2007, the accounting and disclosure requirements of
    the CICA's two new accounting standards, "Handbook Section 3862,
    Financial Instruments - Disclosures" and "Handbook Section 3863,
    Financial Instruments - Presentation" were adopted. The new standards
    enhance the current disclosure requirements but do not change the
    existing presentation requirements for financial instruments. The
    standards require additional disclosure surrounding risks related to
    financial instruments and the management of those risks. The new
    standards did not have any impact on the financial position or earnings
    of the Company. Refer to Note 24 for disclosure.

    Prior Year Changes in Accounting Policies

    On December 1, 2006, the Company adopted three new accounting standards:
    (i) CICA Handbook Section 1530 Comprehensive Income, (ii) Section 3855
    Financial Instruments - Recognition and Measurement and (iii) Section
    3865 Hedges. The new standards require all financial assets and financial
    liabilities to be carried at fair value in the Consolidated Balance
    Sheet, except the following, which are carried at amortized cost unless
    designated as held for trading upon initial recognition: loans and
    receivables, securities designated as held-to-maturity and non-trading
    financial liabilities.

    The methods used by the Company in determining the fair value of
    financial instruments were unchanged as a result of implementing these
    new accounting standards.

    As a result of these changes, the Company recorded a net reduction of
    less than $0.1 million to opening retained earnings in 2007. The adoption
    of these new accounting policies did not have a material impact on the
    Company's results from operations for fiscal 2007.

    Financial Instruments

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

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

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

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

    Use of Estimates

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

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

    Assets Under Management

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

    Consolidation of Variable Interest Entities

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

    The Company has reviewed its relationships, including mutual funds
    managed, and determined that there are no entities whose financial
    results would be required to be included or disclosed in the consolidated
    results for the years ended November 30, 2008 and 2007.

    Cash and Cash Equivalents

    Cash represents highly liquid temporary deposits with short-term
    maturities. Cash equivalents are comprised of commercial paper, bank
    sponsored asset-backed commercial paper (ABCP), bank deposit notes,
    reverse re-purchase agreements, bankers' acceptances (BAs) and floating-
    rate notes with short-term maturities.

    Accounting for Securitizations

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

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

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

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

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

    Real Estate Secured Loans and Investment Loans

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

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

    Allowance for Loan Losses

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

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

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

    Impaired Loans

    Loans are classified as impaired when, in the opinion of management,
    there is reasonable doubt as to the collectability, either in whole or in
    part, of principal or interest, or when principal or interest is 90 days
    or greater past due, except where the loan is both well-secured and in
    the process of collection. 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 Statement of Income. Where a portion of the loan is
    written off and the remaining balance is restructured, the new loan is
    carried on an accrual basis when there is no longer any reasonable doubt
    about the collectability of principal or interest. Interest income is
    recognized on impaired loans on a cash basis only after the specific
    allowance for losses has been reversed and provided there is no further
    doubt as to the collectability of the principal. Full or partial write-
    offs of loans are recorded when management believes there is no realistic
    prospect of full recovery.

    Goodwill, Management Contracts and Trademarks

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

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

    Customer Contracts

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

    Deferred Selling Commissions

    Selling commissions paid to brokers on mutual fund securities sold on a
    deferred sales charge (DSC) basis are recorded at cost and are amortized
    on a straight-line basis over a period that corresponds with the
    applicable DSC schedule (which ranges from three to seven years).
    Unamortized deferred selling commissions are written down to the extent
    that the carrying value exceeds the expected future revenue on an
    undiscounted basis. As at November 30, 2008 and 2007, no impairment
    losses were required.

    Property, Equipment and Computer Software

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

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

    Impairment of Long-lived Assets

    Impairment of long-lived assets, which includes property, equipment and
    computer software and intangible assets with finite useful lives, is
    recognized when an event or change in circumstance causes the assets'
    carrying value to exceed the total undiscounted cash flows expected from
    their use and eventual disposition. The measurement of impairment loss is
    based on the amount that the carrying value exceeds the fair value.
    During 2008, the Company recognized an impairment loss on its customer
    contracts. Refer to Note 9 for further disclosure.

    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
    sold its wholly-owned subsidiary Investmaster Holdings Limited
    (Investmaster). Refer to Note 4 for further disclosure.

    Derivatives

    Derivative instruments are used to manage the Company's exposure to
    interest rate risks and to increases in compensation costs arising from
    certain share-based compensation. The Company does not enter into
    derivative financial instruments for trading or speculative purposes.
    When derivative instruments are used, the Company determines whether
    hedge accounting can be applied. Where hedge accounting 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. In
    accordance with Section 3865, the accumulated ineffectiveness of hedging
    relationships must be measured, and the ineffective portion of changes in
    fair value must be recognized in the Consolidated Statement of Income.
    Where hedge accounting cannot be applied, changes in fair value are
    recognized in the Consolidated Statement of income.

    Fair Value Hedges

    Fair value hedge transactions predominantly use interest rate swaps to
    hedge the changes in the fair value of an asset, liability or firm
    commitment. Derivative financial instruments, held for fair value hedging
    purposes, are recognized at fair value and the changes in the fair value
    are recognized in the Consolidated Statement of Income under investment
    income and other. Changes in the fair value of the hedged items
    attributable to the hedged risk are also recognized in the Consolidated
    Statement of Income under Investment Income and Other, with a
    corresponding adjustment to the carrying amount of the hedged items in
    the Consolidated Balance Sheet. When the derivative instrument no longer
    qualifies as an effective hedge or the hedging instrument is sold or
    terminated prior to maturity, hedge accounting is discontinued
    prospectively. The cumulative adjustment of the carrying amount of the
    hedged item related to a hedging relationship that ceases to be effective
    is recognized in income over the remaining period to maturity on an
    effective yield basis. Furthermore, if the hedged item is sold or
    terminated prior to maturity, hedge accounting is discontinued and the
    cumulative adjustment of the carrying amount of the hedged item is then
    immediately recognized in investment income and other. Refer to Note 11
    for disclosure.

    Cash Flow Hedges

    Cash flow hedges are used to hedge the changes in fair value related to
    certain compensation costs (Note 13 and 17(c)). The effective portion of
    the change in fair value of the derivative instruments, net of taxes, is
    recognized in OCI, while the ineffective portion is recognized in net
    income.

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

    AGF Elements

    In November 2005, the Company launched AGF Elements, which consists of
    five diversified fund-of-fund portfolios. Four of these portfolios
    include the Elements Advantage Commitment, which is a commitment to the
    investor that if their portfolio does not match or outperform its
    customized benchmark over a three-year period, AGF will provide each
    individual investor up to 90 basis points in additional units. This will
    be calculated based on the value of such investment at the end of its
    related three-year period.

    The Company records in liabilities up to 30 basis points per year of each
    investor's AUM, adjusted for redemptions, until the end of the three-year
    measurement period of each investment made by such investor. At that
    time, if an individual investor's returns match or exceed the
    corresponding benchmark, the Company will recognize the entire amount as
    management fee revenue. If an individual investor's actual returns are
    below the customized benchmark, a corresponding amount will be
    distributed to the investor in the form of additional units. As of
    November 30, 2008, the Company has recorded a liability of $7.8 million
    (2007 - $6.1 million).

    Deposits

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

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

    Revenue Recognition

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

    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.

    Stock-based Compensation and Other Stock-based Payments

    The Company has stock-based compensation plans as described in Note 17.
    The Company utilizes the fair-value-based method of accounting for stock-
    based compensation. The fair value of stock-based compensation,
    determined using an option pricing model, is recorded over the vesting
    period as a charge to net earnings with a corresponding credit to
    contributed surplus.

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

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

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

    Foreign Currency Translation

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

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

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

    Income Taxes

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

    Earnings Per Share

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

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

    Future Accounting Changes

    Goodwill, Intangible Assets and Financial Statement Concepts

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

    Conversion to International Financial Reporting Standards in Fiscal 2012

    The CICA Accounting Standards Board requires all Canadian publicly
    accountable enterprises to adopt International Financial Reporting
    Standards (IFRS) for years beginning on or after January 1, 2011. The
    Company will adopt IFRS for the fiscal year 2012 starting December 1,
    2011. The fiscal 2012 Consolidated Financial Statements will include
    comparative 2011 financial results under IFRS.

    Although much of Canadian GAAP is similar to IFRS, there are some GAAP
    differences that may significantly impact the Company's processes and
    financial results. The Company is currently in the planning phase of the
    conversion. This includes identifying the differences between existing
    Canadian GAAP and IFRS, identifying potential business impacts,
    developing the project plan, assessing resource requirements and training
    staff. Currently, it is not possible to fully determine the impact to the
    financial statements and any potential business impacts, as accounting
    standards and the interpretations of those standards are changing.

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

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

        ---------------------------------------------------------------------
                                                   November 30,  November 30,
        ($ thousands)                                     2008          2007
        ---------------------------------------------------------------------
        Trust:
          Canadian government debt
            Federal                                $    10,233   $         -
            Provincial                                  45,767             -
          Deposits with regulated institutions          83,498             -
          Other                                         28,992           372
        ---------------------------------------------------------------------
                                                       168,490           372

        Investment Management:
          Canadian government debt
            Federal                                        294           277
        AGF mutual funds and other                      15,013        15,146
        Equity securities                                4,638        10,354
        ---------------------------------------------------------------------
                                                        19,945        25,777

        ---------------------------------------------------------------------
                                                   $    188,435  $    26,149
        ---------------------------------------------------------------------


        During the year ended November 30, 2008, the Company determined that
        a decline in the fair value of an investment in a publicly held
        company was other than temporary. As a result, the Company recognized
        an impairment charge of $2.3 million before tax ($2.0 million after
        tax).

    (b) The Company holds a 30.4% investment in S&WHL accounted for using the
        equity method. At November 30, 2008, the carrying value was $98.3
        million (2007 - $102.6 million). During the twelve months ended
        November 30, 2008, the Company recognized $10.3 million (2007 - $8.5
        million) in revenue and received $6.4 million in dividends (2007 -
        $5.5 million) from S&WHL.

    Note 3: Securitization of AGF Trust Loans

    On March 30, 2007, AGF Trust securitized $263.6 million of RSP loans.
    Cash flows of $252.9 million were received on the securitization and a
    gain of $8.0 million was recorded, net of transaction fees of $0.1
    million. As at November 30, 2008, $166.6 million (2007 - $291.1 million)
    of securitized loans were outstanding.

    During the year ended November 30, 2008, as a result of the extended
    disruption in the market for asset-backed commercial paper (ABCP) issued
    by securitization trusts, AGF Trust revised its assumptions regarding the
    excess spread it will earn on its retained interests in securitization.
    AGF Trust 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 AGF
    Trust'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, AGF Trust wrote down the value of
    the retained interest-only strip by approximately $4.7 million (2007 -
    $1.9 million) as an other than temporary impairment.

    The Company has recorded retained interest of $44.9 million (2007 - $50.9
    million) made up of i) the rights to future excess interest on these RSP
    loans after investors in the securitization trust have received the
    return for which they contracted, valued at $12.4 million (2007 - $20.4
    million), ii) cash collateral of $12.0 million (2007 - $11.3 million) and
    iii) over- collateralization of $20.5 million (2007 - $19.2 million).

    As at November 30, 2008, the impaired loans included in the securitized
    balances were equal to $0.2 million (2007 -
    $0.7 million), and during the 12 months ended November 30, 2008, $2.8
    million (2007 - $2.1 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 12
    months ended November 30, 2008, cash flows of $7.8 million (2007 - $18.0
    million) were received on the securitized loans, of which none (2007 -
    $6.7 million) related to the over- collateralization and $7.8 million
    (2007 - $11.3 million) related to the interest-only strip. The total
    other expense recognized from securitization during the 12 months ended
    November 30, 2008 was $0.3 million (2007 - $4.7 million income), net of
    securitization writedown.

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

                 Excess spread                          3.7% - 3.9%
                 Discount rate on interest-only strip   7.5%
                 Expected credit losses                 1.0% - 1.2%
                 Prepayment rate                        16.3% - 18.3%
                 Expected weighted average life of
                  RSP loans                             2 years

    AGF Trust retained servicing responsibilities for the securitized loans.
    A servicing liability of $1.1 million was recorded as at November 30,
    2008 (2007 - $1.8 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 12 months ended November 30, 2008 was $0.7
    million (2007 - $0.9 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, 2008. Since the sensitivity is
    hypothetical, it should be used with caution. The effect of changes in
    the fair value of retained interests was calculated using a discounted
    cash flow analysis.

    -------------------------------------------------------------------------
                                                     Impact on fair value of
    ($ thousands)                                         retained interests
    -------------------------------------------------------------------------
      Discount rate
        +10%                                                      $     (109)
        +20%                                                            (216)
      Prepayment rate
        +10%                                                      $     (208)
        +20%                                                            (404)
      Expected credit losses
        +10%                                                      $     (328)
        +20%                                                            (657)
      Excess spread
        -10%                                                      $     (997)
        -20%                                                          (1,966)
    -------------------------------------------------------------------------


    Note 4: Discontinued Operations

    On April 30, 2007, AGF sold 100% of Investmaster for $6.8 million
    recognizing a gain on the sale of $4.7 million. The purchase
    consideration included $5.0 million in cash and two notes receivable from
    the buyer. The two notes receivable, totalling $1.8 million at the time
    of sale, are included in account receivable and in other assets and are
    due on April 30, 2009, and April 30, 2010. Additional contingent
    consideration will be payable to AGF in 2009 and 2010 if certain working
    capital and revenue targets are reached by Investmaster.

    Accordingly, Investmaster's operations for the 2007 period have been
    reported as discontinued operations.

    -------------------------------------------------------------------------
    ($ thousands, except per share amounts)
    Year ended November 30                                              2007
    -------------------------------------------------------------------------

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

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

    -------------------------------------------------------------------------
    ($ thousands)
    Year ended November 30                                              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
    -------------------------------------------------------------------------


    Note 5: Acquisition of Highstreet Partners Ltd.

    On December 1, 2006, AGF 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 issue of Class
    B shares. As at November 30, 2008, the Company has made payments of $45.4
    million in cash and $10.8 million through the issue of 440,999 AGF Class
    B shares, which approximates 72.2% of the expected total payments. An
    additional payment of $21.5 million (principal and imputed interest) is
    due on 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 20.1% 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:

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

    ($ thousands)                                                       2007
    -------------------------------------------------------------------------

    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
        Issue of Class B shares (note 16)                              5,672
        Payments subsequent to acquisition date (note 12(b))          47,896
        Acquisition costs                                                600
    -------------------------------------------------------------------------
                                                                 $    74,396
    -------------------------------------------------------------------------


    Note 6: Acquisition of Cypress Capital Management Ltd.

    On June 30, 2004, AGF acquired 100% of the shares of Cypress Capital
    Management Limited (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. During 2007, AGF determined that these revenue levels were
    exceeded, and the consideration of $9.0 million was paid. The payment was
    recorded as an increase in goodwill on June 30, 2007.

    Note 7: 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, AGF
    purchased the future distribution fees remaining payable by AGF to the
    LPs or purchased the outstanding units for total cash consideration of
    $3.2 million ($2.1 million net of taxes). As a result of the
    aforementioned transaction, no further distribution will be made to these
    LPs.

    Note 8: AGF Trust

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

    -------------------------------------------------------------------------
                       Term to contractual repricing
                  -----------------------------------------------------------
                   Variable   1 year or      1 to 5 November 30, November 30,
    ($ thousands)      rate        less       years        2008         2007
    -------------------------------------------------------------------------

    Mortgage
     loans        $    1,566  $  559,844  $  833,089  $1,394,499  $1,326,327
     Home equity
      lines of
      credit (HELOC) 651,893           -           -     651,893     449,151
    -------------------------------------------------------------------------
    Total real
     estate secured
     loans           653,459     559,844     833,089   2,046,392   1,775,478
    Investment
     loans         2,400,906       4,560       6,502   2,411,968   1,914,686
                  -----------------------------------------------------------
                   3,054,365     564,404     839,591   4,458,360   3,690,164
                  -----------------------------------
    Less: allowance
     for loan losses                                     (37,130)    (17,137)
    Add: net
     deferred sales
     commissions
     and commitment
     fees                                                  9,620       7,334
                                                      -----------------------
                                                       4,430,850   3,680,361
    Less: current
     portion                                            (606,844)   (492,756)
                                                      -----------------------
                                                      $3,824,006  $3,187,605
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (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, 2008 were
        $606.8 million (2007 - $492.8 million).

        As at November 30, 2008, AGF Trust's mortgage portfolio comprises a
        combination of fixed rate and variable rate residential mortgages.
        Insured mortgage loans, excluding loan loss allowance, deferred
        commissions,and pending representment, were $616.6 million as at
        November 30, 2008 (2007 - $562.0 million), with a weighted average
        term to repricing of 2.0 years (2007 - 2.0 years) and a weighted
        average yield of 7.1% (2007 - 7.2%). Investment loans have interest
        rates based on prime. As at November 30, 2008, the average interest
        rate on HELOCs was 4.5% (2007 - 6.3%) and on investment loans was
        5.8% (2007 - 7.6%). Mortgage and HELOC loans are secured primarily by
        residential real estate. Investment loans, excluding RSP loans, of
        $1.8 billion, are secured primarily by the investment made using the
        initial loan proceeds. The market value of this investment loan
        collateral is approximately $1.2 billion.

    (b) Aging of Loans

        Loans are considered to be past due where repayment of principal or
        interest is contractually in arrears. Loans are classified as
        impaired when, in the opinion of management, there is reasonable
        doubt as to the collectability, either in whole or in part, of
        principal or interest, or when principal or interest is 90 days past
        due, except where the loan is both well- secured and in the process
        of collection. As at November 30, 2008, impaired loans were $45.4
        million (2007 - $25.8 million) and $31.3 million (2007 - $24.0
        million) net of the specific allowance for loan losses.


        ---------------------------------------------------------------------
                                                    November 30, November 30,
        ($ thousands)                                      2008         2007
        ---------------------------------------------------------------------
        Impaired Loans:
          Insured mortgage loans                    $     5,483  $     1,434
          Conventional mortgage loans                    33,628       21,871
          Secured investment loans                          988          837
          RSP loans                                       4,846        1,679
          HELOC receivables                                 478            -
        ---------------------------------------------------------------------
                                                    $    45,423  $    25,821
        ---------------------------------------------------------------------



        The following table provides an aging of loans:

        ---------------------------------------------------------------------
        ($ thousands)                                   1 to 29     30 to 60
        As at November 30, 2008            Current         days         days
        ---------------------------------------------------------------------

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


        ---------------------------------------------------------------------
        ($ thousands)                     61 to 90      Over 90
        As at November 30, 2008               days         days        Total
        ---------------------------------------------------------------------

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



        ---------------------------------------------------------------------
        ($ thousands)                                   1 to 29     30 to 60
        As at November 30, 2007            Current         days         days
        ---------------------------------------------------------------------

        Insured mortgage loans(*)      $   511,635  $    24,887  $     6,476
        Conventional mortgage loans(*)     684,172       40,255        9,364
        Secured investment loans         1,497,746       11,827        1,882
        RSP loans                          377,059        5,138        1,741
        HELOC receivables                  441,310        6,488          970
        Finance loans                       15,743            -            -
        ---------------------------------------------------------------------
                                       $ 3,527,665  $    88,595  $    20,433
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------


        ---------------------------------------------------------------------
        ($ thousands)                     61 to 90      Over 90
        As at November 30, 2007               days         days        Total
        ---------------------------------------------------------------------

        Insured mortgage loans(*)      $     3,788  $    15,258  $   562,044
        Conventional mortgage loans(*)       8,509       21,983      764,283
        Secured investment loans               580          838    1,512,873
        RSP loans                              791        1,340      386,069
        HELOC receivables                      294           90      449,152
        Finance loans                            -            -       15,743
        ---------------------------------------------------------------------
                                       $    13,962  $    39,509  $ 3,690,164
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        (*) The entire mortgage portfolio is related to properties located in
            the provinces of Ontario, Alberta, Quebec and British Columbia.


    (c) Allowance for Credit Losses

        During 2008, as a result of economic and market indicators, the
        Company refined its provision for specific allowance to include loans
        in arrears of one to 90 days in addition to impaired loans. In 2008,
        mortgage foreclosures totalled $8.9 million, for which there were
        recoveries of $6.6 million. Refer to Note 1, Allowance for Loan
        Losses, for further disclosure and for the definition of specific and
        general allowances.

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

        ---------------------------------------------------------------------
                                                 November 30, 2008
                                      ---------------------------------------
                                          Specific      General        Total
        ($ thousands)                   allowances   allowances   allowances
        ---------------------------------------------------------------------

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

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


        ---------------------------------------------------------------------
                                                 November 30, 2007
                                      ---------------------------------------
                                          Specific      General        Total
        ($ thousands)                   allowances   allowances   allowances
        ---------------------------------------------------------------------

        Balance, beginning of
         the year                      $     2,448  $    10,251  $    12,699
        Amounts written off                 (8,001)           -       (8,001)
        Recoveries                           3,210            -        3,210
        Reduction due to RSP loan
         securitization                          -       (1,766)      (1,766)
        Provision for loan losses            4,203        6,792       10,995
        ---------------------------------------------------------------------
                                       $     1,860  $    15,277  $    17,137
        ---------------------------------------------------------------------

        Breakdown by category:
          Conventional mortgage loans  $       795  $     6,983  $     7,778
          Secured investment loans             121        3,782        3,903
          RSP loans                            944        3,394        4,338
          HELOC receivables                      -        1,118        1,118
        ---------------------------------------------------------------------
                                       $     1,860  $    15,277  $    17,137
        ---------------------------------------------------------------------


    (d) AGF Trust Deposits

        ---------------------------------------------------------------------
                              Term to maturity
                       ------------------------------------------------------
                               1 year or      1 to 5
        ($ thousands)  Demand       less       years        2008        2007
        ---------------------------------------------------------------------

        Deposits  $    6,495  $2,480,139  $2,289,877  $4,776,511  $4,099,663
        Less:
         deferred
         sales
         commissions                                     (14,450)    (16,321)
        Less:
         current
         portion                                      (2,486,635) (1,847,494)
        ---------------------------------------------------------------------
        Long-term
         deposits                                     $2,275,426  $2,235,848
        ---------------------------------------------------------------------

        As at November 30, 2008, deposits were substantially comprised of
        GICs with a weighted average term to maturity of 1.4 years (2007 -
        1.8 years) and a weighted average interest rate of 4.22% (2007 -
        4.38%). Approximately 11.7% of deposits mature within 90 days.

    (e) Interest Rate Swaps

        To hedge its exposure to fluctuating interest rates, AGF Trust has
        entered into interest rate swap transactions with four Canadian
        chartered banks, as noted below. The swap transactions expire between
        December 2008 and October 2012. They involve the exchange of either
        the one-month bankers' acceptance (BA) rate or the three-month BA
        rate to receive fixed interest rates. The swap contracts designated
        as fair value hedging instruments for deposits are used by AGF Trust
        for balance sheet matching purposes and to mitigate net interest
        revenue volatility. As at November 30, 2008, the aggregate notional
        amount of the swap transactions was $3.2 billion (2007 - $2.8
        billion). The aggregate fair value of the swap transactions, which
        represents the amount that would be received by AGF Trust if the
        transactions were terminated at November 30, 2008, was $85.0 million
        (2007 - $6.7 million). During the 12 months ended November 30, 2008,
        the ineffective portion of accumulated changes in fair value of
        hedging relationships recognized in the Consolidated Statement of
        Income amounted to a gain of $3.1 million, as it relates to fair
        value hedging relationships.

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

         $   220,000      $   395,986          2008            4.04% - 4.43%
           1,577,000       13,862,883          2009            1.31% - 4.97%
             815,000       32,813,676          2010            1.53% - 5.05%
             415,000       27,435,135          2011            2.23% - 5.08%
             140,000       10,537,188          2012            3.60% - 5.01%
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    Note 9: Goodwill and Intangibles

    During the fourth quarter of 2008, as a result of the recent declines in
    equity markets and in accordance with its accounting policies, the
    Company completed an impairment test for customer contracts, management
    contracts, trademarks and goodwill.

    -------------------------------------------------------------------------
                                                2008
                          ---------------------------------------------------
    ($ thousands)                      Accumulated
    Years ended November 30      Cost Amortization   Impairment          Net
    -------------------------------------------------------------------------
    Customer contracts:
      Magna Vista
       Investment
       Management Limited $    37,803  $    20,589  $    15,490  $     1,724
      Doherty &
       Associates              13,015        4,265        7,100        1,650
      Cypress Capital
       Management Limited      28,480        8,387       14,978        5,115
      ING Investment
       Management Inc.
       mutual fund assets       3,687        1,843            -        1,844
      Highstreet Asset
       Management Inc.         14,158        4,045        1,663        8,450
    -------------------------------------------------------------------------
                          $    97,143  $    39,129  $    39,231  $    18,783
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -----------------------------------------------------------
                                                2007
                          -------------------------------------
    ($ thousands)                      Accumulated
    Years ended November 30      Cost Amortization          Net
    -----------------------------------------------------------
    Customer contracts:
      Magna Vista
       Investment
       Management Limited $    37,803  $    18,015  $    19,788
      Doherty &
       Associates              13,015        3,397        9,618
      Cypress Capital
       Management Limited      28,480        6,487       21,993
      ING Investment
       Management Inc.
       mutual fund assets       3,687        1,418        2,269
      Highstreet Asset
       Management Inc.         14,158        2,021       12,137
    -----------------------------------------------------------
                          $    97,143  $    31,338  $    65,805
    -----------------------------------------------------------
    -----------------------------------------------------------

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

    -------------------------------------------------------------------------
    ($ thousands)
    Years ended November 30                                2008         2007
    -------------------------------------------------------------------------
    Goodwill:
      Opening Balance                               $   180,058  $   126,399
      Impairment related to Magna Vista Investment
       Management Limited                                (7,073)           -
      Acquisition of Cypress Capital Management
       Limited (note 6)                                       -        9,000
      Acquisition of Highstreet Partners
       Limited (note 5)                                       -       45,895
      Disposition of Investmaster (note 4)                    -       (1,236)
    -------------------------------------------------------------------------
                                                    $   172,985  $   180,058
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

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

    The Company completed an impairment test on management contracts and
    trademarks and determined that no impairment existed. Accordingly, there
    was no change to the carrying value of management contracts and trademark
    during the year.

    Note 10: Property, Equipment and Computer Software

    -------------------------------------------------------------------------
    ($ thousands)                                   Accumulated
    Year ended November 30, 2008              Cost Amortization          Net
    -------------------------------------------------------------------------

    Furniture and equipment            $     9,233  $     5,521  $     3,712
    Leasehold improvements                  18,779       11,675        7,104
    Computer hardware                        8,988        4,989        3,999
    Computer software                       17,886       13,278        4,608
    -------------------------------------------------------------------------
                                       $    54,886  $    35,463  $    19,423
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    ($ thousands)                                   Accumulated
    Year ended 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
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Note 11: Other Assets

    -------------------------------------------------------------------------
    ($ thousands)
    Years ended November 30                                2008         2007
    -------------------------------------------------------------------------

    Derivatives used to manage interest rate
     exposure                                       $    85,097  $     6,644
    Other                                                 1,920          964
    -------------------------------------------------------------------------
                                                    $    87,017  $     7,608
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Refer to Note 8(e) for details on the derivatives used to manage interest
    rate exposure. Refer to Note 24 for further details of the Company's
    derivative instruments.

    Note 12: Long-term Debt

    -------------------------------------------------------------------------
    ($ thousands)
    Years ended November 30                                2008         2007
    -------------------------------------------------------------------------

    Revolving term loan                             $   123,740  $   160,000
    Payment related to acquisition of Highstreet
     Partners Ltd. (note 5)
      February 28, 2008                                       -       25,611
      February 28, 2009                                  21,171       24,486
    -------------------------------------------------------------------------
                                                        144,911      210,097

    Less: amount included in current liabilities         21,171       25,611
    -------------------------------------------------------------------------

                                                    $   123,740  $   184,486
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (a) Revolving Term Loan

        The Company has arranged a six-year prime-rate-based revolving term
        loan to a maximum of $300.0 million (Facility 1) (2007 -
        $300.0 million) with a Canadian chartered bank. Under the loan
        agreement, AGF is permitted to draw down the revolving term loan by
        direct advances and/or 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, 2009. However, AGF may
        request by April 15, 2009, 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, 2008, AGF has drawn $123.7 million (2007 -
        $160.0 million) against Facility 1 in the form of three to 33 day BAs
        at an effective average interest rate of 2.9% (2007 - 4.5%) per
        annum.

        On May 26, 2008, the Company, under its current loan agreement,
        arranged an additional three-year prime rate based reducing term loan
        to a maximum of $60.0 million (Facility 2) to finance share
        repurchases. Under this facility, AGF is permitted to draw down the
        reducing term loan by direct advances and/or BAs. The reducing term
        loan is available to the latest of December 31, 2008, or the date
        that the facility is fully drawn. Following this date, Facility 2 is
        payable in equal quarterly instalments over twelve quarters. Any
        undrawn portion of the facility at the end of the availability date
        will be permanently cancelled. No amounts were drawn under this
        facility and the facility was cancelled on December 31, 2008.

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

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

        On December 1, 2006, AGF acquired 79.9% of Highstreet (refer to
        Note 5). During 2008, a payment of $30.3 million was paid. The
        payment consisted of $25.2 million in cash and the issuance of
        215,883 Class B shares valued at $5.1 million. A final payment of
        $21.5 million, which includes principal and imputed interest at the
        rate of 4.5% per annum, is due to the vendors on February 28, 2009
        and will be satisfied through a combination of cash and Class B
        shares.

    Note 13: Other Long-term Liabilities

    -------------------------------------------------------------------------
    ($ thousands)
    Years ended November 30                                2008         2007
    -------------------------------------------------------------------------

    Derivative used to manage changes in
     share-based compensation                       $     7,755  $       682
    Long-term compensation liabilities                    2,668          422
    Other                                                 4,572          534
    -------------------------------------------------------------------------
                                                    $    14,995  $     1,638
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The notional amount of the derivative used to manage share-based
    compensation is $10.3 million or 317,589 share units and matures in 2010.
    Refer to Note 24 for further details on the Company's derivative
    instruments.

    Note 14: Limited Partnership Financings

    Prior to 2005, the Company financed certain deferred selling commissions
    using limited partnerships (LPs). The Company is obligated to pay these
    LPs an annual fee of 0.47% to 0.90% of the net asset value of DSC
    securities. This obligation will continue as long as such DSC securities
    remain outstanding except for certain of the LPs, in which case the
    obligation terminates at various dates from December 31, 2008 to
    December 31, 2020. For certain LPs, the obligation is secured by the
    Company's mutual fund management contracts to the extent of the
    particular obligation.

    The Company is responsible for the management and administration of the
    LPs. These services are provided in the normal course of operations and
    are recorded at the amount of consideration agreed to by the parties. The
    amount of fees received in 2008 was $0.3 million (2007 - $0.4 million).
    As at November 30, 2008, the net asset value of
    DSC securities financed by the LPs was $0.8 billion (2007 -
    $1.2 billion).

    Note 15: Income Taxes

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

        ---------------------------------------------------------------------
        Years ended November 30                            2008         2007
        ---------------------------------------------------------------------

        Canadian corporate tax rate                       33.5%        35.9%
        Changes in future federal and provincial
         income tax rates                                (13.8)        (1.1)
        Rate differential on earnings of subsidiaries    (12.1)       (10.3)
        Acquisition of tax-related benefits (net)            -         (2.5)
        Amortization of customer contracts and
         relationships                                     4.1          0.1
        Tax exempt investment income                      (2.1)        (1.2)
        Other                                             (0.7)         0.0
        ---------------------------------------------------------------------
        Effective income tax rate                          8.9%        20.9%
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

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

        ---------------------------------------------------------------------
        ($ thousands)
        Years ended November 30                            2008         2007
        ---------------------------------------------------------------------

        Future income tax liability
          Deferred sales commissions                $   (92,901) $  (105,270)
          Deferred revenue                                  838        1,110
          Undepreciated capital cost in excess of
           carrying values                                4,057        3,467
          Loss carryforwards                              7,928        6,603
          Expenses deductible or gain to be
           recognized in future periods                   6,708        3,025
          Provision for loan losses                       7,188        5,154
          Securitization of RSP loans                    (7,881)     (10,239)
          Deferred charges                               (6,732)      (9,289)
          Goodwill and management contracts            (117,241)    (145,395)
          Investments                                     1,493         (982)
          Other                                            (990)         589
        ---------------------------------------------------------------------
                                                       (197,533)    (251,227)
        Less: current portion                            26,240       48,304
        ---------------------------------------------------------------------
        Future income tax liability - long-term
         portion                                    $  (171,293) $  (202,923)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    (c) As at November 30, 2008, certain subsidiaries of the Company have
        accumulated aggregate non-capital losses of approximately
        $10.1 million (2007 - $8.2 million) and $15.6 million (2007 -
        $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:

              $10.1 million non-capital loss      2015 to 2027
              $15.6 million capital loss          no expiry date

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

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

    Note 16: Capital Stock

    (a) Authorized Capital

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

    (b) Changes During the Year

        The change in capital stock is summarized as follows:

        ---------------------------------------------------------------------
        Years ended November 30        2008                    2007
                             ------------------------------------------------
        ($ thousands, except                  Stated                  Stated
         share amounts)           Shares       value      Shares       value
        ---------------------------------------------------------------------

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

        Class B shares
          Balance, beginning
           of the year        88,922,157 $   421,923  89,171,997 $   403,566
          Issued through
           dividend re-
           investment plan       211,914       4,618     110,627       3,614
          Stock options
           exercised             130,150       5,121     818,850      14,688
          Issued on acquisition
           of a subsidiary
           (note 5)              215,883       5,116     225,116       5,672
          Issued for Cypress
           contingent consider-
           ation (note 6)              -           -      33,367       1,200
          Purchased for
           cancellation       (1,000,000)     (4,881) (1,437,800)     (6,817)
        ---------------------------------------------------------------------
          Balance, end of
           the year           88,480,104 $   431,897  88,922,157 $   421,923
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    (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 TSX (or as otherwise permitted by the
        TSX). Under its normal course issuer bid, AGF may purchase up to 10%
        of the public float outstanding on the date of the receipt of
        regulatory approval or up to 7,253,832 shares through to February 25,
        2009. During the year ended November 30, 2008, 1,000,000 Class B
        shares (2007 - 1,437,800) were purchased at a cost of $7.8 million
        (2007 - $45.5 million) and the excess paid of $2.9 million (2007 -
        $38.7 million) over the book value of the shares purchased for
        cancellation was charged to retained earnings. These shares were
        traded and settled in November 2008 and subsequently cancelled in
        December 2008.

    Note 17: 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 4,094,002
        Class B shares could have been granted as at November 30, 2008
        (2007 - 6,532,335). 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, vest at
        the end of the term of the option.

        The change in stock options during 2008 and 2007 is summarized as
        follows:

        ---------------------------------------------------------------------
                                          Year ended November 30
                             ------------------------------------------------
                                       2008                    2007
                             ------------------------------------------------
                                            Weighted                Weighted
                                             average                 average
                                            exercise                exercise
                                 Options       price     Options       price
        ---------------------------------------------------------------------

        Class B share options
          Balance, beginning
           of the year         4,268,765 $     22.50   4,324,084 $     19.91
          Options granted      2,721,000        8.45     781,981       31.96
          Options cancelled     (282,667)      26.24     (18,450)      19.93
          Options exercised     (130,150)      19.08    (818,850)      17.94
        ---------------------------------------------------------------------
          Balance, end of
           the year            6,576,948 $     16.59   4,268,765 $     22.50
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The following summarizes information about stock options outstanding
        as at November 30, 2008:

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

        $8.24 to
         $11.00       2,681,000  7.0 years $     8.24           - $        -
        $11.27 to
         $16.87         269,500        1.7      15.37     269,500      15.37
        $17.06 to
         $17.36         647,900        3.2      17.14     473,025      17.14
        $17.87 to
         $18.94         380,717        4.2      18.84     380,717      18.84
        $18.95 to
         $19.38         890,000        3.9      19.38     652,500      19.38
        $19.39 to
         $27.73         950,850        3.9      24.37     578,350      24.05
        $30.00 to
         $35.72         756,981        6.0      32.00     189,245      32.00
        ---------------------------------------------------------------------
                      6,576,948        5.3 $    16.59   2,543,337 $    20.46
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The outstanding stock options have expiry dates ranging from November
        2008 to November 2015. Options granted prior to 2005 require the
        Company or employee to meet performance criteria for certain of the
        options to vest.

        During 2008, AGF granted 2,721,000 options (2007 - 781,981) and
        recorded $4.8 million (2007 - $4.5 million) in compensation expense
        and contributed surplus. The fair value of options granted during
        2008 has been estimated at between $0.57 and $3.19 per share (2007 -
        between $6.80 and $8.46 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 grant date:

              Risk-free interest rate             2.13% - 3.43%
              Expected dividend yield             4.67% - 12.14%
              Expected share price volatility     26.03% - 32.26%
              Option term                         4.8 years - 5.1 years

    (b) Share Purchase Plan

        The Company's contributions are recorded in payroll costs and
        amounted to $1.3 million for the year ended November 30, 2008 (2007 -
        $1.1 million).

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

        The change in share units during 2008 and 2007 is as follows:

        ---------------------------------------------------------------------
                                                         2008         2007
                                                    -------------------------
                                                      Number of    Number of
                                                    share units  share units
        ---------------------------------------------------------------------

        Outstanding, beginning of the year
          Non-vested                                    345,257      142,992
        Issued
          Initial allocation                            340,698      210,330
          In lieu of dividends                           15,858        4,205
        Vested                                                -            -
        Settled in cash                                    (482)      (4,400)
        Forfeited and cancelled                         (20,442)      (7,870)
        ---------------------------------------------------------------------
        Outstanding, end of the year                    680,889      345,257
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Compensation expense for the year ended November 30, 2008 related to
        these share units was $0.7 million (2007 - $2.2 million). During the
        year ended November 30, 2008, it was determined that the achievement
        of certain performance criteria necessary for the PSUs to be paid was
        unlikely. As a result, the Company reversed a $1.1 million liability
        related to these units. AGF has entered into a swap agreement to fix
        the cost of compensation related to certain RSUs and PSUs. As at
        November 30, 2008, AGF has economically hedged 91,549 share units at
        a fixed cost of $32.35.

    (d) Deferred Share Unit (DSU) Plan

        There is no unrecognized compensation expense related to directors'
        DSUs since these awards vest immediately upon grant. As at
        November 30, 2008, 24,394 (2007 - 9,035) DSUs were outstanding.
        Compensation expense related to these DSUs for year ended
        November 30, 2008 was $0.1 million (2007 - $0.1 million).

    Note 18: Earnings Per Share

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

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

    Numerator
      Net income from continuing operations for
       the year                                     $   128,592  $   175,866
      Loss on dissolution of partnerships, net of
       tax (note 7)                                           -       (2,128)
      Gain on sale of discontinued operations, net
       of tax (note 4)                                        -        4,702
      Net earnings from discontinued operations,
       net of tax (note 4)                                    -          247
    -------------------------------------------------------------------------
      Net income for the year                       $   128,592  $   178,687

    Denominator
      Weighted average number of shares - basic      89,321,964   89,945,162
      Dilutive effect of employee stock options       2,011,980    1,350,249
    -------------------------------------------------------------------------
      Weighted average number of shares - diluted    91,333,944   91,295,411

    Earnings Per Share
      Basic from continuing operations              $      1.44  $      1.96
      Diluted from continuing operations            $      1.41  $      1.93
      Basic                                         $      1.44  $      1.99
      Diluted                                       $      1.41  $      1.96
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Note 19: 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 2008 and 2007
    were from the AGF Funds. As at November 30, 2008, the Company had
    $35.2 million (2007 - $56.6 million) receivable from the AGF Funds. The
    Company also acts as trustee for the AGF Funds that are mutual fund
    trusts.

    The aggregate unitholder services costs absorbed and management and
    advisory fees waived by the Company during the year on behalf of the
    Funds were approximately $14.2 million (2007 - $14.6 million).

    Note 20: Related Party Transactions

    The Company has entered into certain transactions with entities or senior
    officers who are directors of the Company. During 2008, total amounts
    paid by the Company to these related parties aggregated $0.1 million
    (2007 - $0.1 million).

    Note 21: Supplemental Disclosure of Cash Flow Information

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

        ---------------------------------------------------------------------
        ($ thousands)
        Years ended November 30                            2008         2007
        ---------------------------------------------------------------------

        (Increase) decrease in accounts receivable  $    14,602  $    (8,422)
        (Increase) decrease in other assets               4,508       (1,179)
        Increase in accounts payable and accrued
         liabilities                                     46,957      139,488
        Increase (decrease) in deposits and other
         liabilities                                      6,652      (43,211)
        ---------------------------------------------------------------------
                                                    $    72,719  $    86,676
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    (b) Supplemental Cash Flow Information

        ---------------------------------------------------------------------
        ($ thousands)
        Years ended November 30                            2008         2007
        ---------------------------------------------------------------------

        Income taxes paid                           $    49,758  $    32,163
        Interest paid                                   190,186      150,071
        ---------------------------------------------------------------------
                                                    $   239,944  $   182,234
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------


    Note 22: AGF Trust Net Interest Income

    The breakdown of net interest income is as follows:

    -------------------------------------------------------------------------
    ($ thousands)
    Years ended November 30                                2008         2007
    -------------------------------------------------------------------------

    AGF Trust interest income
      Loan interest                                 $   270,762  $   213,553
      Investment interest                                32,219       23,132
    -------------------------------------------------------------------------
                                                        302,981      236,685
    AGF Trust interest expense
      Deposit interest                                  200,901      135,493
      Other interest expense                              5,207       22,969
    -------------------------------------------------------------------------
                                                        206,108      158,462

    -------------------------------------------------------------------------
    AGF Trust net interest income                   $    96,873  $    78,223
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Note 23: Capital Management

    The Company's objectives when managing capital are to:

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

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

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

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

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

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

    Regulatory capital for AGF Trust is detailed as follows:

    -------------------------------------------------------------------------
    ($ thousands)
    As at November 30                                      2008       2007(1)
    -------------------------------------------------------------------------

    Tier 1 capital
      Common shares                                 $    82,768  $    82,768
      Contributed surplus                                 1,338          910
      Retained earnings                                 101,432       79,863
      Non-cumulative preferred shares                    64,000       49,000
      Less: securitization and other                    (15,567)           -
    -------------------------------------------------------------------------
                                                        233,971      212,541
    Tier 2 capital
      Subordinated debentures                           109,500       89,500
      General allowances                                 19,638       15,277
      Less: securitization and other                     (8,295)     (26,669)
    -------------------------------------------------------------------------
                                                        120,843       78,108

    -------------------------------------------------------------------------
    Total capital                                   $   354,814  $   290,649
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Information based on capital adequacy requirements in force at that
        date.


    Note 24: Financial Instruments

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

    -------------------------------------------------------------------------
                                                                   Loans and
                                                                 Receivables
                                         Available         Held     or Other
    ($ thousands)                              for          for    Financial
    As at November 30, 2008                   Sale      Trading  Liabilities
    -------------------------------------------------------------------------

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

    Accounts payable and accrued
     liabilities                                 -            -      306,834
    Long-term debt                               -            -      144,911
    Deposits                                     -            -    4,762,061
    Derivatives                                  -        7,755            -
    Other long-term liabilities                  -            -        7,240
    -------------------------------------------------------------------------
    Total financial liabilities        $         -  $     7,755  $ 5,221,046
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                                   Loans and
                                                                 Receivables
                                         Available         Held     or Other
    ($ thousands)                              for          for    Financial
    As at November 30, 2007                   Sale      Trading  Liabilities
    -------------------------------------------------------------------------

    Cash and cash equivalents          $         -  $   827,874  $         -
    Investments                             26,149            -            -
    Retained interest from
     securitization                         50,925            -            -
    Accounts receivable                          -            -       91,107
    Real estate secured loans and
     investment loans                            -            -    3,680,361
    Derivatives                                  -        6,644            -
    Other assets                                 -            -          964
    -------------------------------------------------------------------------
    Total financial assets             $    77,074  $   834,518  $ 3,772,432
    -------------------------------------------------------------------------

    Accounts payable and accrued
     liabilities                       $         -  $         -  $   261,115
    Long-term debt                               -            -      210,097
    Deposits                                     -            -    4,083,342
    Derivatives                                  -          682            -
    Other long-term liabilities                  -            -          956
    -------------------------------------------------------------------------
    Total financial liabilities        $         -  $       682  $ 4,555,510
    -------------------------------------------------------------------------


    Risk Management

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

    Market Risk

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

    Fair Value Risk

    Fair value risk is the risk of loss due to adverse changes in equity
    prices. The Company is exposed to fair value risk on its investments
    available for sale and retained interest from securitization and certain
    derivative positions. The Company's investments include mutual funds
    managed by the Company, common shares, short-term commercial paper, bank
    sponsored ABCP, floating-rate notes and treasury bills. Any unrealized
    gains or losses arising from changes in the fair value of these financial
    instruments available for sale are recorded in other comprehensive
    income. Based on the carrying value of these investments at November 30,
    2008, the effect of a 10% decline or increase in the value of investments
    would result in a $2.0 million unrealized gain or loss to other
    comprehensive income. Refer to Note 3 for the effect of changes to key
    assumptions on the fair value of retained interests.

    At November 30, 2008, details of the Company's derivative instruments are
    as follows:

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

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

    At November 30, 2008, the effect of a 10% decline or increase in the
    value of the derivatives used to manage changes in share-based
    compensation would result in a $0.1 million increase or decrease in
    investment income.

    Interest Rate Risk

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

    The Company, through AGF Trust, is exposed to interest rate risk through
    its real estate secured and investment loans receivable, managed and
    supervised by AGF Trust's Asset and Liability Committee. AGF Trust
    employs a number of techniques to manage this risk, including the
    matching of asset and liability terms. AGF Trust also uses interest rate
    swaps to manage any residual mismatches. In addition, AGF Trust has
    assessed the interest rate risk for investment loans, RSP loans and HELOC
    receivables, to be low due to the variable rate nature of these products.
    A 1% change in interest rates, either up or down, would result in an
    increase or decrease in annual net interest income of approximately
    $4.7 million.

    The Company is also exposed to interest rate risk through its floating-
    rate debt and cash balances. As at November 30, 2008, the effect of a 1%
    change in the variable interest rates on the average loan balance
    outstanding for the year would have resulted in an annualized change in
    interest expense of approximately $1.1 million.

    Foreign Exchange Risk

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

    Liquidity Risk

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

    The Company manages its liquidity risk through the management of its
    capital structure and financial leverage as outlined in Note 12 and 23.
    In its Investment Management segment, the Company manages its liquidity
    by monitoring actual and projected cash flows to ensure that it has
    sufficient liquidity through cash received from operations as well as
    borrowings under its credit facility. The key liquidity requirements
    within this segment are the funding of commissions paid on mutual funds
    and dividends paid to shareholders. The Company is subject to certain
    financial loan covenants under its credit facility and has met all of
    these conditions.

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

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

    The Government of Canada introduced a guarantee program on debt issuances
    of deposit-taking institutions subsequent to the end of Q3 2008. Under
    that program, AGF Trust can issue up to $900.0 million of debt with a
    government backstop and a term of up to 3 years.

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

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

    -------------------------------------------------------------------------
                                                         1 Year         1 to
    ($ thousands)                           Demand      or Less      5 Years
    -------------------------------------------------------------------------

    Accounts payable and accrued
     liabilities                       $         -  $   306,834  $         -
    Long-term debt                               -       21,461      124,000
    Deposits(*)                              6,495    2,532,945    2,532,330
    Other liabilities                            -            -       14,995
    -------------------------------------------------------------------------
    Total                              $     6,495  $ 2,861,240  $ 2,671,325
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (*) Excluding deferred commission. Includes interest payments.

    Credit Risk

    Credit risk is the potential of financial loss arising from the failure
    of a borrower or counterparty to honour its financial or contractual
    obligations to the Company. The Company's overall credit risk strategy
    and credit risk policy are developed by its Executive Committee and
    further refined at the business unit level, through the use of policies,
    processes and internal controls, designed to promote business activities
    while ensuring these activities are within the standards of risk
    tolerance levels. As at November 30, 2008, financial assets of
    $5.4 billion, consisting of cash and cash equivalents, investments,
    retained interests from securitization, real estate secured loans and
    investment loans, accounts receivable and other assets, were exposed to
    credit risk up to the maximum of their respective carrying value.

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

    Investments subject to credit risk consist primarily of floating-rate
    notes, senior debt instruments, investments in mutual funds of AGF and
    other securities. For investing activities done through AGF Trust,
    policies have been established that identify the types and rating of debt
    investments in which AGF Trust can invest. These policies also restrict
    AGF Trust's transactions primarily to major chartered banks and
    recognized investment dealers who are members of the Investment Industry
    Regulatory Organization of Canada (IIROC). AGF Trust Executive Committee
    (EXCO) maintains a list of the approved securities dealers and
    counterparties, which are reviewed at least annually by the Trust Board.

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

    At November 30, 2008, AGF Trust's loan assets totalled $4.5 billion (2007
    - $3.7 billion) and were comprised of mortgage loans, investment loans,
    RSP loans, finance loans and HELOC receivables. Of this amount,
    $1.4 billion (2007 - $1.3 billion) was represented by mortgage loans and
    $0.7 billion (2007 - $0.4 billion) was represented by HELOC receivables,
    both of which are secured by residential real estate. At November 30,
    2008, 44.2% of mortgage loans were insured by Canada Mortgage and Housing
    Corporation (CMHC) or another insurer. Conventional uninsured mortgages
    have loan-to-value ratios of less than 80% of the appraised value of the
    property at the time the mortgage loan was granted. The average loan-to-
    value ratio of uninsured mortgage loans was 66.4% as at November 30, 2008
    (2007 - 66.4%).

    Residential mortgages represent the largest component of the total
    mortgage portfolio, comprising 97.5% as at November 30, 2008 (2007 -
    97.4%). AGF Trust's credit risk on these loans is also mitigated through
    the use of collateral, primarily in the form of residential real estate.
    Under AGF Trust's lending criteria, management reviews all mortgage loans
    on a regular basis to determine the appropriate allowance for loss
    required by AGF Trust. Risk is also mitigated through residential
    mortgage insurance through CMHC or another insurer. As at November 30,
    2008, $616.6 million of AGF Trust's residential mortgage portfolio was
    insured (2007 - $562.0 million).

    Credit risk for HELOCs and investment loans is mitigated by collateral in
    the form of residential mortgages and investment funds, respectively.
    Investment loans, excluding RSP loans, of 1.8 billion are secured
    primarily by the investment made using the initial loan proceeds. The
    market value of this investment loan collateral is approximately
    $1.2 billion.

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

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

    Note 25: Segment Information

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

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

    -------------------------------------------------------------------------
    ($ thousands)          Investment        Trust
    Year ended             Management      Company
     November 30, 2008     Operations   Operations     Other(2)        Total
    -------------------------------------------------------------------------

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

    Total assets          $ 1,207,142  $ 5,326,817  $         -  $ 6,533,959
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    ($ thousands)          Investment        Trust
    Year ended             Management      Company
     November 30, 2007     Operations Operations(1)     Other(2)       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 from
     continuing operations
     before taxes and
     non-controlling
     interest             $   176,746  $    48,129  $    (1,439) $   223,436

    Total assets          $ 1,328,056  $ 4,548,756  $         -  $ 5,876,812
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) AGF Trust results for the year ended November 30, 2007 include an
        $8.0 million securitization gain.
    (2) Other revenue relates to S&WHL.


    Note 26: Commitments

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

    -------------------------------------------------------------------------
    ($ thousands)
    -------------------------------------------------------------------------
    2009                                                         $     8,950
    2010                                                               8,670
    2011                                                               8,541
    2012                                                               8,117
    2013                                                               8,078
    Thereafter                                                        17,051
    -------------------------------------------------------------------------

    AGF Trust has outstanding mortgage commitments of $17.4 million as at
    November 30, 2008 (2007 - $180.3 million) at rates of interest prevailing
    at the time the commitments were issued. Any interest rate commitment has
    a term of less than 60 days.

    The Company is committed for a 10-year period expiring 2015 to reimburse
    Citigroup Fund Services Inc. (Citigroup) and CitiFinancial should annual
    revenues derived from AGF fund administration services fall below
    predetermined levels.

    Note 27: Guarantees

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

    Note 28: 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

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

    Operations
      Total revenue
        (continuing
        operations)       $   725,570  $   780,320  $   607,202  $   546,567
      Net income              128,592      178,687      112,657       91,872
      Dividends                84,860       70,151       61,521       50,522

    Financial position
      Working capital
       (deficit)          $(1,377,543) $  (735,103) $  (404,223) $   (31,958)
      Long-term debt          123,740      184,486       56,000       17,364
      Shareholders' equity  1,107,422    1,069,002      979,771      918,326
      Return on equity          11.8%        17.4%        11.9%        10.0%

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

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

    Operations
      Total revenue
        (continuing
        operations)       $   545,393  $   510,571  $   637,660  $   630,525
      Net income               77,287       44,016      119,839      163,754
      Dividends                37,474       27,150       22,967       19,577

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

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

    -----------------------------------------------
    ($ thousands, except
     per share amounts)
    Years ended November 30      2000         1999
    -----------------------------------------------

    Operations
      Total revenue
        (continuing
        operations)       $   500,377  $   349,652
      Net income               95,931       61,710
      Dividends                14,092       11,642

    Financial position
      Working capital
       (deficit)          $   (86,692) $    55,348
      Long-term debt          278,051       72,048
      Shareholders' equity    480,091      284,244
      Return on equity          25.1%        23.8%

    Per share
      Net income - basic  $      1.12  $      0.80
      Dividends                  0.18         0.15
       Book value
        (continuing
        operations)              5.78         3.64
    -----------------------------------------------
    

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

    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 Asset Management Group services for institutional and
high-net-worth clients, as well as AGF Trust GICs, loans and mortgages. With
approximately $35.8 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, CA, Senior Vice-President and Chief
Financial Officer, (416) 865-4156, greg.henderson@AGF.com; Deirdre Neary,
Director, Investor Relations, (416) 815-6268, deirdre.neary@AGF.com; Media,
please contact: Lucy Becker, Vice-President, Corporate Communications, (416)
865-4284, lucy.becker@AGF.com

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