AGF Management Limited Reports Strong Third Quarter Financial Results



    Income from continuing operations before taxes up 151.3% and assets under
    management up 37.9% in the third quarter, as compared to prior year.

    TORONTO, Sept. 26 /CNW/ - AGF Management Limited (AGF) today announced
solid financial results for the third quarter ended August 31, 2007 and strong
sales of mutual funds, reporting $346.5 million of net sales of long-term
funds during the third quarter of fiscal 2007, up substantially from the
$77.0 million of net sales reported in the corresponding period of 2006. AGF
is ranked first in net sales among all Canadian non-bank mutual fund firms for
the nine-month period ended August 31, 2007. Sales in September continue to be
positive with AGF recording $37.4 million in net sales as of the close of
business on September 24, 2007.
    "AGF continues to report strong financial and operational results," said
Blake C. Goldring, Chairman and Chief Executive Officer, AGF. "Despite
short-term volatility and uncertainty in the capital markets, we showed
improvement in virtually every financial metric. Assets are up 37.9%, EBITDA
rose 62.5% and income from continuing operations before taxes rose 151.3% -
overall, a very good quarter. Advisor relationships and investment management
expertise are the cornerstone of our business and we will continue to focus on
these areas to realize the potential of our key growth initiatives."
    In the third quarter of fiscal 2007, consolidated revenue from continuing
operations rose to $199.2 million compared with $146.9 million in the third
quarter of the prior year, with both operating segments reporting
year-over-year increases. Earnings before interest, taxes, depreciation and
amortization (EBITDA) from continuing operations were $91.3 million for the
three months ended August 31, 2007, compared with $56.2 million for the three
months ended August 31, 2006.
    Income from continuing operations before taxes for the three months ended
August 31, 2007 was up 151.3% to $57.3 million, compared with $22.8 million
for the three months ended August 31, 2006. Net income from continuing
operations for the three months ended August 31, 2007 was up 8.5% to
$39.4 million or $0.43 per share diluted, compared with $36.3 million or $0.41
per share diluted for the three months ended August 31, 2006. The
year-over-year increase in net income was impacted by the fact that the
three-month period ended August 31, 2006 included a recovery in income tax
expense of $13.5 million as a result of the Canadian federal income tax
reduction that was substantively enacted in June 2006.
    Total assets under management (AUM) increased by 37.9%, rising to
$53.8 billion at the end of the third quarter of 2007 from $39.0 billion as at
August 31, 2006. Over the same period, institutional and private client assets
grew 63.2% and mutual fund assets rose 22.9%. Institutional and private client
assets grew as a result of strong investment performance, new mandates and the
acquisition of Highstreet Partners Limited ('Highstreet'). The Highstreet
acquisition, which closed on December 1, 2006 added $4.8 billion in AUM. The
Trust Company Operations segment continued to grow significantly with total
loan assets rising 69.0% year-over-year.

    Caution Regarding Forward-Looking Statements

    This Management's Discussion and Analysis includes forward-looking
statements about the Company, including its business operations, strategy and
expected financial performance and condition. Forward-looking statements
include statements that are predictive in nature, depend upon or refer to
future events or conditions, or include words such as 'expects',
'anticipates', 'intends', 'plans', 'believes' or negative versions thereof and
similar expressions. 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.
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 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 'Factors that May Affect Future
Results' section for a further discussion of factors that may affect actual
results.

    Dear fellow shareholders

    The markets during the latter part of the third quarter of 2007 proved to
be very challenging - stock markets were volatile and credit-related fears
weighed on the minds of investors. In the midst of these challenges, AGF
remained focused on executing its long-term strategic objectives.
    Our mutual fund sales remain strong and we continue to be the top-selling
non-bank firm in Canada with net sales of long-term funds of $2.3 billion for
the fiscal year to date. Even during the very challenging month of August, we
were able to maintain positive net sales. We know that advisors work very hard
to help their clients achieve their financial objectives and guide their
clients through turbulent markets. We are proud that advisors continue to
partner with AGF to help their clients, and we will continue to work to meet
their needs.
    We introduced the AGF Global Dividend Fund during the quarter, based on
feedback from advisors who sought to increase global diversification and
reduce volatility in their clients' portfolios. In addition, we announced the
addition of Series T and V options on many of our funds, which offer investors
tax-deferral benefits and monthly cash payouts. We offer an innovative and
diverse product shelf designed to address our clients' needs.
    In response to the concerns in the market around asset-backed commercial
paper ('ABCP'), we communicated to stakeholders that we have no exposure to
ABCP in our money market funds and that no companies within our group have
investments in ABCP. The Trust Company Operations' funding sources remain
robust as our loans are primarily funded by selling Guaranteed Investment
Certificates with Canada Deposit Insurance Corporation insurance. Another
important factor is that the credit quality of our loans remains solid.
    Our focus and discipline during this quarter translated into strong
financial performance. Consolidated revenue was $199.2 million, compared with
$146.9 million in the third quarter of the prior year. Earnings before
interest, taxes, depreciation and amortization(1) ('EBITDA') from continuing
operations were $91.3 million, compared with $56.2 million for the three
months ended August 31, 2006. More importantly, we have been able to
demonstrate our ability to improve EBITDA margins. EBITDA margins for the
three and nine months ended August 31, 2007 were 45.8% and 46.4% compared with
38.3% and 41.9% in the three- and nine-month periods ended August 31, 2006.
    For the three months ended August 31, 2007, AGF reported cash flow from
continuing operations(1) (before net change in non-cash balances related to
operations) of $69.7 million, compared with $60.2 million one year ago. Free
cash flow(1) (cash flow from continuing operations less selling commissions
paid) was $38.1 million, compared with $38.5 million one year ago as a result
of increased gross sales.
    It is an exciting time for AGF. Our business fundamentals are among the
best that they have been during the last 50 years. We have strong prospects
for growth via our Investment Management business and our rapidly growing
Trust business. We are also excited to roll out our enhanced institutional
strategy and look forward to communicating this initiative with you during the
early part of 2008.

    Blake C. Goldring, CFA
    Chairman and Chief Executive Officer
    August 31, 2007


    
    (1) Cash flow from continuing operations, free cash flow, EBITDA and
        EBITDA margins are non-GAAP measures. Please refer to page 5 and 6 of
        this report.
    

    Management's Discussion and Analysis of Financial Condition and Results
    of Operations

    For the three and nine months ended August 31, 2007

    This Management's Discussion and Analysis ('MD&A') presents an analysis
of the financial condition of AGF Management Limited and its subsidiaries as
at August 31, 2007, compared with November 30, 2006, and the results of
operations for the three and nine months ended August 31, 2007, compared with
the corresponding periods of 2006. This discussion should be read in
conjunction with our 2006 annual MD&A and 2006 annual audited Consolidated
Financial Statements and Notes. Certain comparative amounts in these financial
statements have been reclassified to conform with the current year's
presentation. The financial information presented herein has been prepared on
the basis of Canadian generally accepted accounting principles ('GAAP').
Percentage changes are calculated using numbers, rounded to the decimals, that
appear in this MD&A. All dollar amounts are in Canadian dollars unless
otherwise indicated.
    There have been no material changes to the information discussed in the
following sections of the 2006 annual MD&A: 'Factors that May Affect Future
Results', 'Disclosure Controls', 'Off Balance Sheet Arrangements',
'Contractual Obligations', 'Intercompany and Related Party Transactions' and
'Government Regulations'. There has been additional disclosure with respect to
the adoption of new accounting policies, which are discussed in the 'Critical
Accounting Policies' section of this MD&A. The 'Key Performance Indicators and
Non-GAAP Measures' section contains a reconciliation of non-GAAP measures to
GAAP measures.

    Overview

    AGF Management Limited ('AGF'), with $53.8 billion in assets under
management ('AUM'), is one of Canada's largest independent mutual fund and
investment management companies, with operations in Canada, the United
Kingdom, Ireland and Asia. Fiscal 2007 represents our 50th anniversary. We
commenced operations in 1957 with one of the first mutual funds available to
Canadians seeking to invest in the United States. As at August 31, 2007, we
offered over 50 domestic and international mutual funds, as well as a
managed-asset program (sold under our Elements and Harmony brands). We also
have a substantial institutional business and a rapidly growing trust company,
in addition to private client businesses.
    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 private client businesses. This segment
also includes the operations of Highstreet Partners Limited ('Highstreet'),
which wholly owns Highstreet Asset Management Inc. AGF acquired 79.9% of
Highstreet on December 1, 2006. 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.

    Strategy and Highlights

    As stated in our 2006 annual MD&A, our overall business strategy is to
help identify and facilitate opportunities for our business segments and
ensure that segment strategies are aligned with the overall corporate strategy
of targeting sustainability, profitability and value for our shareholders over
the long term.

    
    During the third quarter of 2007, we achieved the following:

    -   Total assets under management increased by 37.9%, compared to the
        third quarter of 2006, reaching $53.8 billion.

    -   Our client-centric approach resulted in record sales in our core
        mutual fund business. During the third quarter of 2007, we recorded
        over $1.3 billion in gross sales, up 41.9% over the corresponding
        period in 2006. Net mutual fund sales in the three months ended
        August 31, 2007 were $342 million, up from $58 million in the
        corresponding period in 2006.

    -   We delivered value directly to our shareholders through dividend
        payments. Dividends paid on Class A Voting Common Shares ('Class A
        shares') and Class B Non-Voting Shares ('Class B shares') increased
        13.1% to $18.1 million in the third quarter of 2007, compared with
        $16.0 million in the same period in 2006.

    -   We continued to support the growth of our Trust Company Operations
        ('AGF Trust') and invested $17.0 million during the three months
        ended August 31, 2007, bringing our total investment in debt and
        equity capital to $200.3 million. This compares with the investment
        of $15.5 million for the three months ended August 31, 2006. AGF
        Trust real estate secured loan assets grew 87.2% over the prior year
        and investment loans grew 54.9%.

    -   We introduced the AGF Global Dividend Fund, further increasing our
        global diversification.

    -   We added Series T and V options on many of our funds, which offer
        investors tax-deferred benefits and monthly cash payouts.

    -   Amid concerns in the market around asset-backed commercial paper
        ('ABCP'), we communicated that we have no exposure to ABCP in our
        money market funds and that none of the companies within our group
        have investments in ABCP. Also, the Trust Company Operations'
        principal source of funding is Guaranteed Investment Certificates
        ('GICs') and the underlying credit quality of the loan portfolio is
        solid, which positions AGF Trust well for future growth.
    

    We remain focused on our strategy and are pleased with the results to
date.

    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 not measurements in accordance with
Canadian GAAP and should not be considered as an alternative to net income or
any other measure of performance under Canadian GAAP. Segment discussions
include a review of 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 the potential to deliver cash flow.

    
    We derive our revenue principally from a combination of:

    -   management and advisory fees based on AUM,

    -   administration fees earned on Harmony, institutional and private
        client AUM,

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

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

    EBITDA

    We define EBITDA as income before interest expense, income taxes,
depreciation and amortization. EBITDA is a standard measure used in the mutual
fund industry by management, investors and investment analysts in
understanding and comparing results. We believe this is an important measure
as it allows us to assess our investment management businesses without the
impact of amortization. EBITDA for the Trust Company Operations segment
includes interest expense related to deposits. These deposits fund our
investment loan and real estate secured loan programs, and therefore are
considered an operating cost directly related to generating interest revenue.
We include this interest expense in Trust Company Operations EBITDA to provide
a meaningful comparison to our other business segments and our competitors.
    Please see the 'Consolidated Operating Results' section on page 11 of
this MD&A for a schedule showing how EBITDA reconciles to our GAAP financial
statements.

    Cash Flow from Operations

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

    
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
                                         August 31,                August 31,
                           --------------------------------------------------
    ($ millions)                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    Net cash provided by
     continuing operating
     activities            $    130.0   $     68.5   $    288.5   $    150.2
    Less: net changes in
     non-cash balances
     related to operations       60.3          8.3         65.7        (11.0)
    -------------------------------------------------------------------------
    Cash flow from
     continuing operations $     69.7   $     60.2   $    222.8   $    161.2
    -------------------------------------------------------------------------
    

    Free Cash Flow

    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, as a substantial
amount of cash is spent on upfront commission payments. Free cash flow
represents cash available for distribution to our shareholders or for general
corporate purposes.

    
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
                                         August 31,                August 31,
                           --------------------------------------------------
    ($ millions)                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    Cash flow from
     continuing operations
     (defined above)       $     69.7   $     60.2   $    222.8   $    161.2
    Less: selling
     commissions paid            31.6         21.7        124.9         73.9
    -------------------------------------------------------------------------
    Free cash flow         $     38.1   $     38.5   $     97.9   $     87.3
    -------------------------------------------------------------------------
    

    Return on Equity (ROE) and Return on Investment (ROI)

    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. ROI is a KPI that we utilize to assess prospective
investments and to monitor past investments. ROI measures cash flow in
relation to the original amount invested and incorporates the time value of
money.

    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, as it assesses the extent to which we are able to earn
profit from each dollar of revenue. We define EBITDA margin as the ratio of
EBITDA to revenue.

    
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
                                         August 31,                August 31,
                           --------------------------------------------------
    ($ millions)                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    EBITDA                 $     91.3   $     56.2   $    269.7   $    188.2
    Divided by revenue          199.2        146.9        581.2        448.7
    -------------------------------------------------------------------------
    EBITDA margin               45.8%        38.3%        46.4%        41.9%
    -------------------------------------------------------------------------
    

    (b) Investment Management Operations

    Assets Under Management ('AUM')

    The amount of AUM is critical to our business as it is from these assets
that we generate fees from our mutual fund, institutional and private client
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, as we
pay upfront commissions and trailing commissions to investment advisors as
well as investment advisory fees based on the value of AUM.

    Investment Performance (Market Appreciation of Investment Portfolios)

    Investment performance, which is shown net of management fees received,
is a key driver of the level of AUM and is central to the value proposition
that we offer advisors and unitholders. Growth in AUM resulting from
investment performance increases the wealth of our unitholders and, in turn,
we benefit from higher revenues. Alternatively, poor relative investment
performance may result in redemptions, which reduce our AUM levels and
management fee revenues. Strong relative investment performance may also
contribute to gross sales growth or reduced levels of redemptions.

    Net Sales

    One of the goals of our mutual fund business is to generate positive net
sales on an annual basis, which in turn 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 average daily net asset value.
    We monitor inflows and outflows in our private client and institutional
business separately. Due to the reporting systems utilized in these
businesses, we do not compute an average daily AUM figure for these
businesses.

    EBITDA Margin

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

    
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                                Three months ended         Nine months ended
                                         August 31,                August 31,
                           --------------------------------------------------
    ($ millions)                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    EBITDA                 $     76.6   $     49.1   $    224.3   $    159.2
    Divided by revenue          173.4        131.7        501.7        396.1
    -------------------------------------------------------------------------
    EBITDA margin               44.2%        37.3%        44.7%        40.2%
    -------------------------------------------------------------------------
    

    Pre-Tax Profit Margin

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

    
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                                Three months ended         Nine months ended
                                         August 31,                August 31,
                           --------------------------------------------------
    ($ millions)                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    Income before taxes and
     non-segmented items   $     45.7   $     16.6   $    132.2   $     61.5
    Divided by revenue          173.4        131.7        501.7        396.1
    -------------------------------------------------------------------------
    Pre-tax profit margin       26.4%        12.6%        26.4%        15.5%
    -------------------------------------------------------------------------
    

    (c) Trust Company Operations

    Loan Asset Growth

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

    Net Interest Income

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

    Net Interest Margin

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

    Efficiency Ratio

    The efficiency ratio is a lending industry KPI. We utilize 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.

    
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                                Three months ended         Nine months ended
                                         August 31,                August 31,
                           --------------------------------------------------
    ($ millions)                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    Selling, general and
     administrative
     expense               $      8.7   $      6.3   $     26.5   $     17.5
    Add: amortization
     expense                      0.4          0.3          1.0          0.8
    -------------------------------------------------------------------------
    Non-interest expense   $      9.1   $      6.6   $     27.5   $     18.3
    -------------------------------------------------------------------------

    Other income           $      2.4   $      1.6   $      5.0   $      3.5
    Gain from
     securitization and
     related items                1.4          0.7         11.4         11.9
    -------------------------------------------------------------------------
    Non-interest income    $      3.8   $      2.3   $     16.4   $     15.4
    -------------------------------------------------------------------------

    Net interest income    $     20.4   $     12.0   $     57.0   $     33.1
    Add: non-interest
     income                       3.8          2.3         16.4         15.4
    -------------------------------------------------------------------------
    Total of net interest
     income and
     non-interest income   $     24.2   $     14.3   $     73.4   $     48.5
    -------------------------------------------------------------------------
    Efficiency ratio            37.6%        46.2%        37.5%        37.7%
    -------------------------------------------------------------------------
    

    EBITDA Margin

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

    
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
                                         August 31,                August 31,
                           --------------------------------------------------
    ($ millions)                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    EBITDA                 $     13.1   $      6.2   $     39.3   $     24.9
    Divided by revenue           24.2         14.3         73.4         48.5
    -------------------------------------------------------------------------
    EBITDA margin               54.1%        43.4%        53.5%        51.3%
    -------------------------------------------------------------------------
    

    Pre-Tax Profit Margin

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

    
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                                Three months ended         Nine months ended
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                           --------------------------------------------------
    ($ millions)                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    Income before taxes and
     non-segmented items   $     12.7   $      5.9   $     38.3   $     24.1
    Divided by revenue           24.2         14.3         73.4         48.5
    -------------------------------------------------------------------------
    Pre-tax profit margin       52.5%        41.3%        52.2%        49.7%
    -------------------------------------------------------------------------
    

    Critical Accounting Policies

    In the nine months ended August 31, 2007, additional significant
accounting policies were adopted by the Company and are supplemental to the
'Critical Accounting Policies' section of the 2006 annual MD&A. These policies
are as follows:

    1) Financial Instruments, Hedges and Comprehensive Income

    On December 1, 2006, the Company adopted the CICA Handbook Section 3855
Financial Instruments - Recognition and Measurement; Section 3865 Hedges and
Section 1530 Comprehensive Income. These standards require that all financial
assets be classified as either available for sale ('AFS'), trading, held to
maturity ('HTM'), or loans and receivables. Financial liabilities are
classified as either trading or other. Initially, all financial assets and
financial liabilities must be recorded on the balance sheet at fair value,
with subsequent measurement determined by the classification of each financial
asset and liability. Transaction costs related to trading securities are
expensed as incurred. Transaction costs related to AFS, HTM, loans and
receivables, and deposits are generally capitalized and are then amortized
over the expected life of the instrument.
    Financial assets and financial liabilities held for trading are measured
at fair value, with the changes in fair value reported in earnings. Financial
assets held to maturity, loans and receivables, and financial liabilities
other than those held for trading are measured at amortized cost.
Available-for-sale financial assets are measured at fair value, with changes
in fair value reported in other comprehensive income ('OCI') until the
financial asset is disposed of, or becomes impaired.
    Derivative instruments are recorded on the balance sheet at fair value.
Changes in the fair values of derivative instruments are recognized in
earnings, except for derivatives that are designated as a cash flow hedge, the
fair value change for which is recognized in OCI.
    Accumulated other comprehensive income ('AOCI') is a new component of
shareholders' equity. The Consolidated Statements of Changes in Shareholders'
Equity have replaced the Consolidated Statements of Retained Earnings in the
Company's financial statements. The Consolidated Statements of Comprehensive
Income have also been added to the Company's financial statements.
Comprehensive income is composed of the Company's net income and other
comprehensive income. Other comprehensive income includes unrealized gains and
losses on available-for-sale financial assets, foreign currency translation on
net investments in self-sustaining foreign operations, and changes in the fair
market value of derivative instruments designated as cash flow hedges, all net
of income taxes.

    Classification of Financial Instruments

    Available-for-sale assets are those non-derivative financial assets that
are designated as AFS or are not classified as loans and receivables, HTM or
held for trading. Available-for-sale assets are measured at fair value with
unrealized gains and losses included in accumulated other comprehensive income
until sale or other-than-temporary impairment when the cumulative gain or loss
is transferred to the Consolidated Statement of Operations. Assets included in
this category are investments and retained interest from securitization. Upon
adoption of Section 3855, the following adjustments were recorded:

    
    a)  Investments have been re-measured to reflect the unrealized gains and
        losses on these securities. This gave rise to an adjustment to
        accumulated other comprehensive income of $3.2 million ($2.7 million
        net of tax).

    b)  Retained interests from securitization have been re-measured to
        reflect the fair value. This gave rise to an adjustment to
        accumulated other comprehensive income of $1.4 million ($1.0 million
        net of tax).
    

    Loans and receivables are non-derivative financial assets resulting from
the delivery of cash or other assets by a lender to a borrower in return for a
promise to repay on a specified date or dates, or on demand, usually with
interest. They do not include debt securities or loans and receivables
designated as held for trading or AFS. Assets included in this category are
accounts receivable and real estate secured and investment loans. The adoption
of the CICA Handbook Section 3855 gave rise to a reclassification of
$15.9 million of related transaction costs from accounts receivable and
$1.9 million of related fees from accounts payable and accrued liabilities to
real estate secured and investment loans and deposits.

    Hedge Accounting

    Derivative instruments are used to manage the Company's exposure to
interest risks. The Company does not enter into derivative financial
instruments for trading or speculative purposes. When derivative instruments
are used, the Company determines whether hedge accounting can be applied.
Where hedge accounting can be applied, a hedge relationship is designated as a
fair value hedge or a cash flow hedge. The hedge is documented at inception,
detailing the particular risk management objective and the strategy for
undertaking the hedge transaction. The documentation identifies the specific
asset or liability being hedged, the risk that is being hedged, the type of
derivative used and how effectiveness will be assessed. The derivative
instrument must be highly effective in accomplishing the objective of
offsetting either changes in the fair value or forecasted cash flows
attributable to the risk being hedged both at inception and over the life of
the hedge.
    Fair value 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. 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,
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.
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.
    In accordance with Section 3865, the accumulated ineffectiveness of
hedging relationships must be measured, and the ineffective portion of changes
in fair value must be recognized in the Consolidated Statement of Income. As a
result, the opening balance of retained earnings was adjusted by
$0.025 million, as a result of the adoption of Section 3865.
    During the three and nine months ended August 31, 2007, the ineffective
portion of accumulated changes in the fair value of hedging relationships
recognized in the income statement amounted to a gain of $0.1 million and a
loss of $0.9 million, respectively, as it relates to fair value hedging
relationships.

    Transition Adjustment upon Adoption

    As required, a transition adjustment has been recognized in the opening
balance of retained earnings as at December 1, 2006 for the following: i)
financial instruments that the Company classifies as held for trading and that
were not previously recorded at fair value and ii) the difference in the
carrying amount of loans and deposits at December 1, 2006 and the carrying
amount calculated using the effective interest rate from inception of the loan
or deposit. A transition adjustment has been recognized in the opening balance
of AOCI relating to adjustments arising due to the re-measuring of financial
assets classified as available for sale. Prior-period balances have not been
restated, except for the reclassification of the foreign currency translation
balances.

    2) Trust Operations Net Interest Income

    Commencing December 1, 2006, the presentation of the Trust Operations
income has been revised to present net deposit interest expense and other
interest expense in net interest income, as detailed in note 11. Comparative
periods presented have been restated, with interest and investment income
being reclassified from administration fees, interest and other revenue, and
other interest expense being reclassified from interest on Trust Company
deposits and selling, general and administrative expenses.

    3) Purchase Price Allocations and Amortization of Intangible Assets

    On December 1, 2006, the Company acquired 79.9% of Highstreet. The
purchase price of $74.4 million, including expenses related to the
acquisition, has been allocated to the following asset categories.

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

      Net tangible assets                                  $      410
      Management contracts                                     26,010
      Customer contracts                                       14,160
      Goodwill                                                 45,895
      Trademarks                                                1,935
      Future income taxes                                     (14,014)
    --------------------------------------------------------------------
                                                           $   74,396
    --------------------------------------------------------------------
    

    Management contracts, trademarks and goodwill are not amortized but are
subject to an annual impairment test. The estimated useful life of customer
contracts acquired is seven years; accordingly, this finite-life asset will be
amortized on a straight-line basis over seven years.

    4) Discontinued Operations and Assets Held for Sale

    On April 30, 2007, the Company sold 100% of Investmaster for $6.8 million
and additional contingent consideration that is not determinable at this time.
The purchase consideration includes $5.0 million in cash and two notes
receivable from the buyer totalling $1.8 million due on April 30, 2009 and
April 30, 2010, respectively. The contingent consideration will be payable to
the Company in 2007, 2009 and 2010 if certain working capital and revenue
targets are reached by Investmaster.
    Accordingly, Investmaster's operations for the 2007 and 2006 periods have
been reported as discontinued operations, and previously reported financial
statements have been reclassified to reflect the following:

    
    -------------------------------------------------------------------------
    (in thousands of            Three months ended         Nine months ended
    dollars, except per                  August 31,                August 31,
    share amounts)         --------------------------------------------------
                                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    Revenue                $        -   $    3,287   $    4,342   $   11,318
    Net earnings (loss)
     from discontinued
     operations, net of
     tax                   $        -   $     (808)  $      247   $      (23)
    Basic net earnings
     per share             $     0.00   $    (0.01)  $     0.00   $     0.00
    Diluted net earnings
     per share             $     0.00   $    (0.01)  $     0.00   $     0.00
    -------------------------------------------------------------------------
    

    Changes in Internal Controls over Financial Reporting

    Pursuant to Multilateral Instrument 52-109, the Chief Executive Officer
and Chief Financial Officer must certify that they are responsible for the
design of internal controls over financial reporting (or caused them to be
designed under their supervision). Internal controls over financial reporting
are designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with Canadian generally accepted accounting principles.
During the nine-month period ended August 31, 2007, there was no significant
change to the systems of internal controls within our Company, except as noted
below.

    Changes in Information Technology Systems

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

    Consolidated Operating Results

    Our consolidated operating results for the three and nine months ended
August 31, 2007 and August 31, 2006 are as follows:

    
    -------------------------------------------------------------------------
                               Three months ended          Nine months ended
                                        August 31,                 August 31,
                         ----------------------------------------------------
    ($ millions, except                         %                          %
    per share amounts)     2007   2006(1)  change     2007   2006(1)  change
    -------------------------------------------------------------------------

    Revenue
      Investment
       management
       operations       $ 173.4  $ 131.7    31.7%  $ 501.7  $ 396.1    26.7%
      Trust company
       operations          24.2     14.3    69.2%     73.4     48.5    51.3%
      Other                 1.6      0.9    77.8%      6.1      4.1    48.8%
    -------------------------------------------------------------------------
                          199.2    146.9    35.6%    581.2    448.7    29.5%

    Expenses
      Investment
       management
       operations          96.8     82.6    17.2%    277.4    236.9    17.1%
      Trust company
       operations          11.1      8.1    37.0%     34.1     23.6    44.5%
    -------------------------------------------------------------------------
                          107.9     90.7    19.0%    311.5    260.5    19.6%

    EBITDA(2) (continuing
     operations)           91.3     56.2    62.5%    269.7    188.2    43.3%
      Amortization         31.2     32.8    (4.9%)    93.1     98.6    (5.6%)
      Interest Expense      2.8      0.6   366.7%      7.0      2.0   250.0%
      Non-controlling
       interest             0.2        -      n/m      0.7        -      n/m
      Income Taxes         17.7    (13.5) (231.1%)    42.4      6.3   573.0%
    -------------------------------------------------------------------------
    Net income from
     continuing
     operations         $  39.4  $  36.3     8.5%  $ 126.5  $  81.3    55.6%
    Gain on early
     retirement of debt,
     net of tax               -        -                 -     13.3
    Loss on dissolution
     of Limited
     Partnerships,
     net of tax               -        -              (2.1)       -
    Gain (loss) on sale
     of discontinued
     operations, net
     of tax                   -     (0.9)              4.7     (2.9)
    Net earnings (loss)
     from discontinued
     operations, net
     of tax(1)                -     (0.8)              0.2        -
    -------------------------------------------------------------------------
    Net income          $  39.4  $  34.6    13.9%  $ 129.3  $  91.7    41.0%
    -------------------------------------------------------------------------

    Earnings per share
     from continuing
     operations
     - diluted          $  0.43  $  0.41     4.9%  $  1.39  $  0.91    52.8%
    -------------------------------------------------------------------------

    (1) On April 30, 2007, the Company sold 100% of Investmaster.
        Accordingly, Investmaster's results have been reported as
        discontinued operations and previously reported financial statements
        have been reclassified as outlined in the 'Critical Accounting
        Policies' section.

    (2) As previously defined, see the 'Key Performance Indicators and Non-
        GAAP Measures - EBITDA' section. The items required to reconcile
        EBITDA to net income, a defined term under Canadian GAAP, are
        detailed above.
    


    Revenue for the three and nine months ended August 31, 2007 increased by
35.6% and 29.5%, respectively, from the corresponding periods in 2006 and all
of our operations experienced significant growth. Revenue in the Investment
Management Operations segment was up 31.7% and 26.7% for the three and nine
months ended August 31, 2007, corresponding to higher levels of AUM, which
were a result of improved net sales, market performance and the acquisition of
79.9% of Highstreet. The Trust Company Operations segment reported increases
in revenue of 69.2% and 51.3% for the three and nine months ended August 31,
2007. The first quarter in 2006 included a $9.9 million securitization gain
from the sale of RSP loans and the second quarter in 2007 included an
$8.0 million securitization gain. Revenues from Other, which represents the
results of our 30.8% equity interest in S&WHL, were higher for the three
months ended August 31, 2007, compared with the corresponding period in 2006,
with the growth attributable to the growth in S&WHL operations.
    Expenses for the three and nine months ended August 31, 2007 increased by
19.0% and 19.6%, respectively, as compared with the corresponding periods in
2006, with increases in the Investment Management Operations and Trust Company
Operations segments. The increases for both segments are primarily
attributable to strong sales results and substantially higher assets and loan
levels, which is discussed in greater detail under the segment discussions.
    The revenue and expense impact contributed to the increase in EBITDA of
62.5% and 43.3% for the three and nine months ended August 31, 2007,
respectively, from the corresponding periods of 2006.
    Amortization expense decreased by 4.9% and 5.6% for the three months and
the nine months ended August 31, 2007 compared to the corresponding period in
2006. The decrease is attributable to the fact that certain customer contracts
are now fully amortized as compared to 2006. For the three and nine months
ended August 31, 2007, amortization of deferred selling commissions in the
Investment Management Operations segment accounted for $27.5 million and
$81.2 million (2006 - $27.0 million and $81.4 million) of the total
amortization expense.
    Interest expense increased to $2.8 million and $7.0 million for the three
and nine months ended August 31, 2007 from $0.6 million and $2.0 million in
the corresponding periods of 2006. The increase is mainly the result of higher
average outstanding loan balances and higher interest rates.
    Income tax expense for the three months ended August 31, 2007 was
$17.7 million as compared with an income tax reduction of $13.5 million in the
third quarter of 2006. In the three months ended August 31, 2006, taxes were
in a recovery position due to the impact of the Canadian federal income tax
reduction that was substantively enacted in June 2006. For the nine months
ended August 31, 2007, income tax expense was $42.4 million, as compared with
$6.3 million in the corresponding period in 2006. The effective tax rate for
the first nine months of 2007 was 25.0%, as compared with 7.2% in the
corresponding period in 2006. The change is attributable to the impact of
declining substantively enacted Canadian tax rates and the impact of improved
profitability of foreign operations. Our effective tax rate for the three
months ended August 31, 2007 is 30.9% as a result of the fact that operations
within Canada are experiencing higher levels of profitability relative to
foreign operations. Our overall effective tax rate of approximately 25.0% for
the nine months ended August 31, 2007 reflects our anticipated full-year rate
for fiscal 2007.
    The impact of the above revenue and expense items resulted in net income
from continuing operations of $39.4 million in the quarter ended August 31,
2007, as compared with $36.3 million in the comparable period of 2006. For the
nine months ended August 31, 2007, net income from continuing operations was
$126.5 million, compared with $81.3 million in the prior-year period. Basic
earnings per share from continuing operations were $0.44 in the third quarter
of 2007 as compared with $0.41 per share in the third quarter of 2006.
    Net income was $39.4 million in the quarter ended August 31, 2007, as
compared with $34.6 million in the comparable period of 2006. For the nine
months ended August 31, 2007, net income was $129.3 million, as compared with
$91.7 million in the prior-year period. The nine-month period ended August 31,
2007 included a gain of $4.7 million net of tax related to the sale of
discontinued operations, and a loss of $2.1 million net of tax related to the
dissolution of Limited Partnerships.
    A further discussion of the results of each business segment for the
three and nine months ended August 31, 2007, as compared with August 31, 2006
follows.

    Business Segment Performance

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

    Investment Management Operations

    Business and Industry Profile

    Our Investment Management Operations segment provides products and
services across the wealth continuum, including mutual funds, a managed-asset
program and private investment management. Our products are delivered through
multiple channels, including advisors, financial planners, banks, life
insurance companies, brokers and consultants.
    Investment management remains a highly competitive business, with
numerous domestic and foreign players serving the market. We believe that
although the mutual fund business is reaching the early stages of maturity,
there are opportunities for growth.

    Segment Strategy and Highlights

    The strategic priorities for our Investment Management Operations, which
are detailed in the 2006 annual MD&A, are to build predictable excellence in
three core areas: investment management, relationship management and product
management.
    Consistent with our stated strategy, during the third quarter of fiscal
2007 we achieved the following:

    
    -  EBITDA margins have improved in 2007 over 2006 with an EBITDA margin
       of 44.2% and 44.7%, respectively, for the three and nine months ended
       August 31, 2007, compared with 37.3% and 40.2%, respectively, in the
       three and nine months ended August 31, 2006.

    -  Our client-centric approach resulted in record sales in our core
       mutual fund business. During the third quarter of 2007, we recorded
       more than $1.3 billion in gross sales, up 41.9% over 2006. Net sales
       were $0.3 billion, more than five times the net sales in the prior
       period.

    -  AGF was first in net sales of long-term mutual funds among all
       Canadian non-bank mutual fund firms for the nine months ended
       August 31, 2007.

    -  We successfully promoted international funds. AGF manages its product
       shelf proactively, with an aim to ensure there is sufficient product
       breadth to satisfy changing client needs. During the current fiscal
       year, AGF has emphasized international investing because Canadians are
       committing more investment dollars outside of Canada. Net sales of
       international equity funds for the quarter ended August 31, 2007 were
       $108.9 million, versus net redemptions of $34.5 million reported in
       the same period last year.

    -  We introduced the AGF Global Dividend Fund during the quarter based on
       feedback from advisors who sought to increase global diversification
       and reduce volatility in client portfolios.

    -  We enhanced our already diversified and strong product shelf by
       introducing seven-year principal-protected notes, a product offered
       in partnership with CIBC.

    -  We also announced the addition of Series T and V options on many of
       our funds, offering tax-deferral benefits and monthly cash payments
       targeted at 5% and 8% annually, respectively.

    -  We continued to build on the rigour and discipline of our investment
       management process. This has resulted in AGF maintaining its industry-
       leading investment performance.

    -  Our efforts in relationship management have continued. During the
       quarter we worked to solidify our relationships with financial
       advisors in the domestic market. On the institutional side, we
       furthered our plans to expand our reach both in Canada and abroad.
    

    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 is dependent on the level and composition of AUM (AUM is equal
to the net asset value of each fund). Under the management and investment
advisory contracts between AGF and each of the mutual funds, we are entitled
to monthly fees based on a specified percentage of the average daily net asset
value of the respective fund. In addition, we earn fees on our institutional
and private 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 three and nine months ended
August 31, 2007 and August 31, 2006:

    
    -------------------------------------------------------------------------
                               Three months ended          Nine months ended
                                        August 31,                 August 31,
                         ----------------------------------------------------
                                                %                          %
    ($ millions)           2007     2006   change     2007     2006   change
    -------------------------------------------------------------------------

    Mutual fund AUM,
     beginning of
     period             $30,606  $23,681    29.2%  $26,857  $22,209    20.9%

    Gross sales of
     mutual funds         1,345      948    41.9%    5,529    3,290    68.1%
    Redemptions of
     mutual funds        (1,003)    (890)   12.7%   (3,242)  (3,277)   (1.1%)
    -------------------------------------------------------------------------
    Net mutual fund
     sales                  342       58      n/m    2,287       13      n/m

    Market appreciation
     (depreciation) of
     fund portfolios       (924)     690  (233.9%)     880    2,207   (60.1%)
    -------------------------------------------------------------------------

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

    Institutional
     AUM(1)              19,773   11,492    72.1%   19,773   11,492    72.1%
    Private client
     AUM(1)               3,973    3,059    29.9%    3,973    3,059    29.9%
    -------------------------------------------------------------------------

    Total AUM, end of
     period             $53,770  $38,980    37.9%  $53,770  $38,980    37.9%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Average daily
     mutual fund AUM
     for the period     $30,333  $23,699    28.0%  $29,477  $23,755    24.1%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) Institutional assets previously categorized as Private Client are now
        classified as Institutional.
    

    Strong investment performance and net sales of approximately
$2.3 billion, over the nine months, resulted in an increase in mutual fund AUM
to $30.0 billion at August 31, 2007 from $24.4 billion as at August 31, 2006.
The average daily mutual fund AUM for the three and nine months ended August
31, 2007 increased by 28.0% and 24.1%, respectively, to $30.3 billion and
$29.5 billion. During the past 12 months, institutional AUM increased by
$8.3 billion to $19.8 billion as a result of strong investment performance and
new mandates, as well as the acquisition of Highstreet, and private client AUM
increased by $0.9 billion to $4.0 billion. These increases resulted in total
AUM increasing by 37.9% to $53.8 billion.
    Stock market performance influences the level of AUM. During the three
and nine months ended August 31, 2007, the Canadian-dollar-adjusted S&P 500
Index performance declined 4.7% and 1.4%, the Canadian-dollar-adjusted NASDAQ
Index declined 1.5% and rose 0.8%, and the S&P/TSX Composite Index declined
2.2% and rose 9.1%. The aggregate market appreciation of our mutual fund
portfolios for the nine months ended August 31, 2007 divided by the average
daily mutual fund AUM for the periods was 3.0%, after management fees and
expenses paid by the funds.
    The impact of the U.S. dollar decrease relative to the Canadian dollar on
the market value of AGF mutual funds since November 30, 2006 has been a
decrease in AUM of $0.5 billion. Since May 31, 2007, the impact of the U.S.
dollar decrease has been a decrease in AUM of $0.1 billion.

    Financial and Operational Results

    The Investment Management Operations segment results for the three and
nine months ended August 31, 2007 and August 31, 2006 are as follows:

    
    -------------------------------------------------------------------------
                               Three months ended          Nine months ended
                                        August 31,                 August 31,
                         ----------------------------------------------------
                                                %                          %
    ($ millions)           2007     2006   change     2007     2006   change
    -------------------------------------------------------------------------

    Revenue
      Net management
       and advisory
       fees             $ 137.8  $ 106.5    29.4%  $ 399.2  $ 317.8    25.6%
      Administration
       fees and other
       revenue             28.8     21.2    35.9%     83.8     58.5    43.3%
      Deferred sales
       charges              4.9      5.6   (12.5%)    15.0     19.9   (24.6%)
      Investment income     1.9     (1.6)     n/m      3.7     (0.1)     n/m
    -------------------------------------------------------------------------
                          173.4    131.7    31.7%    501.7    396.1    26.7%

    Expenses
      Selling, general
       and administrative  49.5     44.2    12.0%    142.1    124.3    14.3%
      Trailing
       commissions         43.7     32.0    36.6%    124.5     92.2    35.0%
      Investment advisory
       fees                 3.6      6.4   (43.8%)    10.8     20.4   (47.1%)
    -------------------------------------------------------------------------
                           96.8     82.6    17.2%    277.4    236.9    17.1%
    -------------------------------------------------------------------------

    EBITDA(1)              76.6     49.1    56.0%    224.3    159.2    40.9%
    Amortization           30.9     32.5    (4.9%)    92.1     97.6    (5.6%)
    -------------------------------------------------------------------------
    Income before taxes
     and non-segmented
     items              $  45.7  $  16.6   175.3%  $ 132.2  $  61.5   115.0%
    -------------------------------------------------------------------------

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

    Revenue

    For the three- and nine-month periods ended August 31, 2007, revenue for
the Investment Management Operations segment increased by 31.7% and 26.7%,
respectively, from the previous-year periods, with changes in the categories
as follows:

    Net Management and Advisory Fees

    The 28.0% higher average daily mutual fund AUM in the third quarter of
fiscal 2007 contributed to a 29.4% increase in net management and advisory fee
revenue from the corresponding period in 2006. For the nine months ended
August 31, 2007, average daily mutual fund AUM was up 24.1%, contributing to a
25.6% increase in net management and advisory fee revenue, as compared with
the corresponding period in 2006.
    Management and advisory fee revenue is reported net of distribution fees
paid to limited partnerships and other third-party financing entities of
$2.1 million (2006 - $2.1 million) for the three months ended August 31, 2007
and $6.9 million (2006 - $7.7 million) for the nine months ended August 31,
2007.

    Administration Fees and Other Revenue

    Administration fees and other revenue, which includes fees earned on
Harmony (one of our managed-asset products), institutional and private client
AUM, increased by 35.9% in the three months ended August 31, 2007, as compared
with the corresponding period in 2006. Administration fees and other revenue
increased 43.3% for the nine months ended August 31, 2007, as compared with
the corresponding period in 2006. This was attributable to strong growth in
Harmony revenues and the acquisition of Highstreet, as well as organic growth
in institutional and private client AUM.

    Deferred Sales Charges

    We receive deferred sales charges ('DSC') upon redemption of securities
sold on the contingent DSC or 'back-end' commission basis for which we finance
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 for the three and nine months ended August 31, 2007
decreased by 12.5% and 24.6%, respectively, from the corresponding periods in
2006, reflecting lower retail mutual fund redemptions of DSC AUM that are less
than seven years in age.

    Expenses

    For the three- and nine-month periods ended August 31, 2007, expenses
increased by 17.2% and 17.1%, respectively, from the previous-year periods.
Changes in specific categories are described in the discussion that follows.

    Selling, General and Administrative Expenses

    Selling, general and administrative expenses ('SG&A') for the three- and
nine-month periods ended August 31, 2007 were $49.5 million and
$142.1 million, respectively, representing a 12.0% and 14.3% increase over the
comparable periods in 2006. The increases are made up of the following
amounts:

    
    -------------------------------------------------------------------------
                                                   Three months  Nine months
                                                          ended        ended
                                                      August 31,   August 31,
                                                   --------------------------
    ($ millions)                                           2007         2007
    -------------------------------------------------------------------------

    Decrease in fund absorption expenses             $     (1.2)  $     (7.4)
    Increase in compensation-related expenses               4.3         16.7
    Increase in other expenses                              0.3          2.9
    Highstreet expenses (Highstreet was acquired
     December 1, 2006)                                      2.0          5.7
    -------------------------------------------------------------------------
                                                     $      5.4   $     17.9
    -------------------------------------------------------------------------

    The following are explanations for expense changes in the three- and
nine-month period ended August 31, 2007, compared with the prior-year periods:

    -  Our estimate for absorption expense is lower due to increases in our
       assets under management. A substantial portion of the fund expenses
       are fixed in nature.

    -  Compensation-related expenses increased due to performance-related
       bonuses and increases in stock options, RSUs and PSUs.

    -  Other expenses increased primarily as a result of increased spending
       on sales and marketing initiatives. Highstreet was purchased on
       December 1, 2006, and therefore there were no expenses recorded in the
       prior-year period.
    

    Trailing Commissions

    Trailing commissions paid to investment dealers are dependent on total
AUM, the proportion of mutual fund AUM sold on a front-end versus back-end
commission basis and the proportion of equity fund AUM versus fixed-income
fund AUM. Annualized trailing commissions as a percentage of average daily
mutual fund AUM increased to 0.576% for the three months ended August 31, 2007
from 0.540% in the comparable 2006 period. For the nine months ended
August 31, 2007, annualized trailing commissions as a percentage of average
daily mutual fund AUM increased to 0.563% from 0.518% in the 2006 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 and a
change in the mix of assets toward managed products, such as Harmony and
Elements, which generally have higher trailers.

    Investment Advisory Fees

    External investment advisory fees decreased by 43.8% and 47.1%,
respectively, for the three- and nine-month periods ended August 31, 2007
compared with the prior-year periods. The average AUM managed by sub-advisors
was lower for the three and nine months ended August 31, 2007, compared with
the same periods in 2006, due to the decision to have AGF International
Advisors Company Limited assume the role of Portfolio Advisor to AGF
International Value Fund and AGF International Value Class.

    EBITDA

    EBITDA for the Investment Management Operations segment was $76.6 million
for the three months ended August 31, 2007, an increase of 56.0% from
$49.1 million for the same period of fiscal 2006. For the nine months ended
August 31, 2007, EBITDA was $224.3 million compared with $159.2 million in the
prior-year period, representing an increase of 40.9%. The increases are
primarily due to higher assets under management, lower absorption, lower
investment advisory fees and the impact of the acquisition of Highstreet.

    Amortization

    The largest item in this category is amortization of deferred selling
commissions. Amortization also includes amortization of property, equipment
and other intangible assets and amortization of customer contracts.
    We internally finance all selling commissions paid. These selling
commissions are capitalized and are amortized on a straight-line basis over a
period that corresponds with their applicable DSC schedule. Amortization
expense related to deferred selling commissions was $27.5 million and
$81.2 million, respectively, in the three and nine months ended August 31,
2007, compared with $27.0 million and $81.4 million in the comparable periods
in 2006.
    During the third quarter of fiscal 2007, we paid $31.6 million in selling
commissions, compared with $21.7 million in 2006. As at August 31, 2007, the
unamortized balance of deferred selling commissions stood at $312.5 million,
an increase of $4.3 million from the May 31, 2007 balance of $308.2 million.
The contingent deferred sales charges that would be received if all of the DSC
securities were redeemed at August 31, 2007 were estimated to be approximately
$405.2 million (Q3 2006 - $354.3 million).

    Trust Company Operations

    Business and Industry Profile

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

    Segment Strategy and Highlights

    We strive to earn a high financial return as well as maximize synergies
with the Investment Management Operations segment. Specific strategies
include:

    
    -  continuing to expand mortgage distribution geographically within
       Canada - there are plans to expand AGF Trust's mortgage distribution
       to include Atlantic Canada and the Prairie provinces;

    -  introducing new products that directly serve advisor needs;

    -  developing effective, targeted marketing; and

    -  using disciplined loan-underwriting standards and cost control
       measures.
    

    In the third quarter of 2007, we continued to expand our dedicated sales
staff to promote investment lending and mortgage products. AGF Trust also
continued to support AGF investment management wholesalers with the aim to
make it easier for AGF wholesalers to serve their clients and promote trust
products to advisors.
    AGF Trust will continue to maximize operational synergies with our
investment management business through trust products that assist financial
advisors in broadening and deepening their relationship with clients. In
addition, we will focus on expanding returns by increasing our investment and
real estate secured loan portfolios. We are constantly evaluating new
opportunities, including deposit products.
    We anticipate that the execution of AGF Trust's stated strategy will
result in continued growth. Our growth plans require investing in product
development initiatives and expanding our sales and administrative teams. As a
result, non-interest expenses may rise more than the corresponding increase in
total interest margin in the fourth quarter of 2007.
    With the recent capital market volatility being experienced around the
world, particularly in the United States, and the related impacts of the ABCP
markets, AGF Trust is prepared to continue to adapt to changing business
conditions. As previously reported, AGF Trust holds no ABCP and has relied on
the ABCP markets for a small portion of funding in the current and prior
fiscal year. The majority of the funding for the operations comes from the
ability to sell GICs.
    In addition, the credit quality of our loan portfolio remains strong.
Actual loan write-offs net of recoveries for the nine months ended August 31,
2007 were $2.9 million compared to $2.2 million for the fiscal period ended
November 30, 2006, with the percentage change being consistent with the growth
in the loan portfolio. Impaired loans expressed in a percentage of loans
outstanding were 0.7% as at August 31, 2007, which is consistent with the rate
at November 30, 2006.

    Securitization Transaction

    On March 30, 2007, AGF Trust securitized $263.6 million of RSP loans
through the sale of these loans to a securitization trust. This represented
the second securitization transaction completed by AGF Trust. As at August 31,
2007, the balance of all securitized loans outstanding was equal to
$328.3 million. When RSP loan receivables are securitized, the transaction is
recognized as a sale. Based on assumptions such as prepayments, expected
credit losses and the remaining term, a gain or loss on the sale of loan
receivables is recognized immediately in income. The related loan assets are
removed from the Consolidated Balance Sheet. As part of the securitization,
certain financial assets are retained and a servicing liability is incurred. A
gain of $8.0 million was recognized upon the close of the securitization
transaction on March 30, 2007. Each quarter, 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.

    Financial and Operational Results

    The Trust Company Operations segment results for the three and nine
months ended August 31, 2007 and August 31, 2006 are as follows:

    
    -------------------------------------------------------------------------
                               Three months ended          Nine months ended
                                        August 31,                 August 31,
                         ----------------------------------------------------
                                                %                          %
    ($ millions)           2007     2006   change     2007     2006   change
    -------------------------------------------------------------------------

    Interest income

      Loan interest     $  56.5  $  31.8    77.7%  $ 150.6  $  82.3    83.0%
      Investment
       interest             6.1      3.2    90.6%     14.2      8.5    67.1%
    -------------------------------------------------------------------------
                           62.6     35.0    78.9%    164.8     90.8    81.5%
    Interest expense
      Deposit interest     36.2     19.5    85.6%     93.5     51.3    82.3%
      Other interest
       expense              6.0      3.5    71.4%     14.3      6.4   123.4%
    -------------------------------------------------------------------------
                           42.2     23.0    83.5%    107.8     57.7    86.8%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net interest income    20.4     12.0    70.0%     57.0     33.1    72.2%
    Other revenue           2.4      1.6    50.0%      5.0      3.5    42.9%
    Securitization gains
     and related items      1.4      0.7   100.0%     11.4     11.9    (4.2%)
    -------------------------------------------------------------------------
    Total revenue          24.2     14.3    69.2%     73.4     48.5    51.3%

    Expenses
      Selling, general
       and administrative   8.7      6.3    38.1%     26.5     17.5    51.4%
      Provision for loan
       losses               2.4      1.8    33.3%      7.6      6.1    24.6%
    -------------------------------------------------------------------------
                           11.1      8.1    37.0%     34.1     23.6    44.5%

    EBITDA(1)              13.1      6.2   111.3%     39.3     24.9    57.8%
    Amortization            0.4      0.3    33.3%      1.0      0.8    25.0%
    -------------------------------------------------------------------------
    Income before taxes
     and non-segmented
     items              $  12.7      5.9   115.3%  $  38.3     24.1    58.9%
    -------------------------------------------------------------------------

    (1) As previously defined, see the 'Key Performance Indicators and Non-
        GAAP Measures - EBITDA' section. The items required to reconcile
        EBITDA to net income, a defined term under Canadian GAAP, are
        detailed above.
    

    Revenue, Net Interest Income and Net Interest Margin

    Net interest income, which is expressed net of interest on deposits and
other interest expense, increased 70.0% and 72.2%, respectively, in the three-
and nine-month periods ended August 31, 2007 over the respective periods in
2006 as the average loan balances were approximately 71.6% and 71.5% higher
than average balances during the respective periods in 2006. Other revenue
increased 50.0% and 42.9%, respectively, in the three- and nine-month periods
ended August 31, 2007 over the corresponding periods in the prior year due to
higher loan balances. Securitization gains and related items increased by
$0.7 million in the third quarter of 2007, versus the same quarter last year.
For the nine-month period ended August 31, 2007, securitization and related
items were down 4.2% over the prior-year period. These factors resulted in
revenue increases of 69.2% and 51.3% for the three and nine months ended
August 31, 2007.
    The average net interest margin on lending products in the third quarter
of 2007 was 2.55% (2.57% in 2006). This spread decrease resulted from a slight
decrease in spreads on the investment loan portfolio, and a change in the
business mix to include a higher proportion of high credit quality HELOCs,
which are risk-priced and therefore earn lower spreads than AGF Trust's other
lending products.

    Selling, General and Administrative Expenses

    The increases in SG&A expenses of 38.1% and 51.4% in the three- and
nine-month periods ended August 31, 2007 over the respective periods in 2006
were as a result of increased staffing levels to support the significant loan
growth during the past 12 months. In addition, the higher level of loan
originations resulted in an increase in expenses, as internal sales staff
compensation also includes a variable component related to asset increases.

    Provision for Loan Losses

    The total provision for loan losses increased by 33.3% in the third
quarter of 2007, as compared with the prior-year period, and increased by
24.6% for the nine-month period ended August 31, 2007, compared to the same
period in 2006. The increase is attributable to the increase in our loan
portfolios and the mix of loans. This increase in the loan loss provision was
moderated by the higher proportion of newly originated loans that are lower
risk investment loans or HELOCs, and by recoveries totalling $0.1 million and
$0.9 million in the three- and nine-month periods ended August 31, 2007.

    EBITDA

    Strong asset growth and the completion of a securitization transaction
contributed to EBITDA of $13.1 million and $39.3 million in the three- and
nine-month periods ended August 31, 2007. This represented a 111.3% increase,
as compared with the three months ended August 31, 2006 and a 57.8% increase,
as compared with the nine months ended August 31, 2006.

    Operational Performance

    The table below highlights our key operational measures for the Trust
Company Operations segment for the three and nine months ended August 31, 2007
and August 31, 2006.

    
    -------------------------------------------------------------------------
                               Three months ended          Nine months ended
                                        August 31,                 August 31,
                         ----------------------------------------------------
                                                %                          %
    ($ millions)           2007     2006   change     2007     2006   change
    -------------------------------------------------------------------------

    Real estate secured
     loans(1)
      Insured mortgage
       loans            $ 532.0  $ 379.9    40.0%  $ 532.0  $ 379.9    40.0%
      Conventional
       mortgage loans     701.5    431.2    62.7%    701.5    431.2    62.7%
      HELOCs              391.6     57.1   585.8%    391.6     57.1   585.8%
    -------------------------------------------------------------------------
                        1,625.1    868.2    87.2%  1,625.1    868.2    87.2%
    Investment loans(1)
      Secured invest-
       ment loans       1,368.2    784.6    74.4%  1,368.2    784.6    74.4%
      RSP loans           356.9    324.7     9.9%    356.9    324.7     9.9%
      Other loans          15.5     14.1     9.9%     15.5     14.1     9.9%
    -------------------------------------------------------------------------
                        1,740.6  1,123.4    54.9%  1,740.6  1,123.4    54.9%
    Other assets          635.0    346.5    83.3%    635.0    346.5    83.3%
    -------------------------------------------------------------------------
    Total Assets        4,000.7  2,338.1    71.1%  4,000.7  2,338.1    71.1%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net interest
     income(2)          $  20.4  $  12.0    70.0%  $  57.0  $  33.1    72.2%
    Gain from
     securitization and
     related items          1.4      0.7   100.0%     11.4     11.9    (4.2%)
    Other revenue           2.4      1.6    50.0%      5.0      3.5    42.9%
    Non-interest expenses   9.1      6.6    37.9%     27.5     18.3    50.3%
    Provision for loan
     losses                 2.4      1.8    33.3%      7.6      6.1    24.6%
    -------------------------------------------------------------------------
    Income before taxes
     and non-segmented
     items              $  12.7  $   5.9   115.3%  $  38.3  $  24.1    58.9%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Efficiency ratio(3)   37.6%    46.2%             37.5%    37.7%
    Assets-to-capital
     multiple              15.4     15.1              15.4     15.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) Net of loan provision and deferred sales commission.
    (2) Includes SG&A and amortization expense.
    (3) The efficiency ratio is calculated by dividing non-interest expenses
        by the total of net interest income and non-interest income.
    

    Loan Asset Growth

    Loan assets experienced continued growth during the third quarter of
2007. Real estate secured loan assets grew 87.2% year-over-year, as sales
efforts in the mortgage broker channel continued to be successful and were
supplemented by steady originations of a HELOC product in the advisor channel.
    New investment loan products and improved collaboration with AGF mutual
fund wholesalers contributed to overall growth in loan advances, as secured
investment loans increased 74.4% to $1.4 billion as at August 31, 2007 over
the respective period in 2006. RSP loan balances increased by $32.2 million
($240.5 million excluding the impact of the securitization) as at August 31,
2007 as a result of the strong RSP season and financial advisors' continued
use of AGF Trust's Internet-based loan application system.

    Efficiency Ratio

    The efficiency ratio (non-interest expenses divided by the total of net
interest income and non-interest income) is a key industry performance
indicator utilized to ensure expenses are contained as the Trust business
grows. The efficiency ratio decreased to 37.6% in the third fiscal quarter of
2007 from 46.2% during the comparable quarter in 2006. The efficiency ratio
for the nine-month period ended August 31, 2007 decreased to 37.5% from 37.7%
in the comparable period in 2006. The RSP loan securitization gains recorded
in Q1 2006 and Q2 2007 are added to non-interest income for the purposes of
calculating the efficiency ratio.

    Balance Sheet

    Our balance sheet has grown significantly during the past year, with our
financial position remaining solid. Total assets increased 71.1% to
$4.0 billion at August 31, 2007 as compared with the prior year. At August 31,
2007, our asset-to-capital multiple stood at 15.4 times, compared with
15.1 times at the same time last year, which is below our authorized multiple
of 17.5 times. Our risk-based capital ratio was 10.7% at August 31, 2007. AGF
Trust received $17.0 million and $65.5 million in debt and equity capital from
AGF Management Limited during the three- and nine-month periods ended
August 31, 2007, in order to support increased asset levels. Liquid assets
were high, with $547.3 million in cash and cash equivalents at August 31, 2007
(2006 - $283.8 million), excluding cash currently pledged to counterparties.

    Loan Portfolio Credit

    Portfolio credit quality remains consistent as at August 31, 2007,
compared with August 31, 2006. The general allowance for real estate secured
loan losses was increased during the year to $7.4 million from $4.1 million a
year ago. The general allowance for investment loan losses was increased to
$6.7 million from $4.6 million a year ago. Approximately 43.0% of real estate
secured loan assets, excluding HELOC, are insured. We have strong security for
non-RSP investment loans, and loan losses during the history of the program
have been minimal. For RSP loans, the expense for impaired loans, which
consists of the increase in specific allowances plus write-offs net of
recoveries (excluding securitized RSP loans) was $0.4 million in Q3 2007
(Q3 2006 - $0.6 million). For the balance of our loan products, the expense
for impaired loans was $0.5 million (Q3 2006 - $0.1 million).

    Liquidity and Capital Resources

    Consolidated cash flow generated from continuing operating activities
(before net change in non-cash balances related to operations) was
$69.7 million and $222.8 million, respectively, for the three and nine months
ended August 31, 2007, compared with $60.2 million and $161.2 million in the
comparable periods of 2006.
    Consolidated free cash flow (defined as cash flow from operations less
selling commissions paid) was $38.1 million and $97.9 million, respectively,
for the three and nine months ended August 31, 2007, compared with
$38.5 million and $87.3 million in the comparable periods of 2006. We paid
$31.6 million and $124.9 million in selling commissions during the three and
nine months ended August 31, 2007, which were deferred for accounting
purposes, compared with $21.7 and $73.9 million paid and deferred in the
respective periods in 2006. Our free cash flow was used primarily to fund the
following:

    
    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
                                         August 31,                August 31,
                           --------------------------------------------------
    ($ millions)                 2007         2006         2007         2006
    -------------------------------------------------------------------------

    Payment of dividends   $     18.1   $     16.0   $     52.1   $     45.5
    Repurchase of AGF
     Class B non-voting
     shares for
     cancellation                   -            -            -         15.9
    Acquisitions of
     subsidiaries                 7.8          3.9         27.7          4.1
    Purchase of property,
     equipment and other
     intangible assets            3.5          3.6          6.1          9.4
    Investments                   2.0          5.3          5.4          9.7
    Debt repayment
     (borrowing)                 (5.0)        (5.1)       (89.0)       (44.1)
    Investment in Trust
     Operations (eliminated
     on consolidation)           17.0         15.5         65.5         49.5
    -------------------------------------------------------------------------
                           $     43.4   $     39.2   $     67.8   $     90.0
    -------------------------------------------------------------------------
    

    During the three months and nine months ended August 31, 2007, our
revolving term loan balance increased $5.0 million and $89.0 million,
respectively, to $145.0 million.
    Cash and cash equivalents increased by $200.1 million (2006 - increased
by $144.2 million) from November 30, 2006 primarily due to an increase in cash
in the Trust Company Operations segment. Consolidated cash and cash
equivalents amounted to $604.2 million as at August 31, 2007, compared with
$304.2 million a year ago.
    We have a six-year prime-rate-based revolving term loan facility to a
maximum of $300.0 million, of which $155.0 million was available to be drawn
as at August 31, 2007. Aside from cash held in the Trust Company Operations
segment, which is held to fund loans to clients and GIC maturities, the
Company had $52.0 million of cash at August 31, 2007, some of which will be
used to repay bank debt in the remainder of 2007. 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.

    Dividends

    For the three months ended August 31, 2007, we declared a
20-cents-per-share dividend on Class A and Class B Shares. This dividend will
be payable on October 20, 2007 to shareholders of record on October 10, 2007.
    The holders of the Class B shares are entitled to receive cash dividends.
Dividends are paid in equal amounts per share on all the Class B shares and
all the Class A shares at the time outstanding without preference or priority
of one share over another. No dividends may be declared in the event that
there is a default of a condition of our loan facility or where such payment
of dividends would create a default.
    Our Board of Directors may determine that the Class B shareholders shall
have the right to elect to receive part or all of such dividend in the form of
a stock dividend. In determining whether a dividend in Class B shares is
substantially equal to a cash dividend, the Board of Directors may make a
determination based on the weighted average price at which the Class B shares
traded on the Toronto Stock Exchange during the 10 trading days immediately
preceding the record date applicable to such dividend.
    The following table sets forth the dividends paid by AGF on the Class B
shares and the Class A shares for the periods indicated:

    
    -------------------------------------------------------------------------
    Years Ended November 30     2006      2005      2004      2003      2002
    -------------------------------------------------------------------------

    Per share               $  0.690  $  0.560  $  0.410  $  0.295  $  0.255
    -------------------------------------------------------------------------
    Percentage increase          23%       37%       39%       16%       16%
    -------------------------------------------------------------------------

    We review our dividend distribution policy on a quarterly basis, taking
into consideration our financial position, profitability, cash flow and other
factors considered relevant by our Board of Directors.

    Outstanding Share Data

    Set out below is our outstanding share data as at August 31, 2007. For
additional details, see Note 9 of the Consolidated Financial Statements.

    -------------------------------------------------------------------------
                                                      August 31, November 30,
                                                           2007         2006
    -------------------------------------------------------------------------
    Shares
    Class A Voting Common Shares                         57,600       57,600
    Class B Non-Voting Shares                        90,290,515   89,171,997

    Stock Options
    Outstanding options                               3,547,766    4,324,084
    Exercisable options                               1,545,034    1,765,583
    -------------------------------------------------------------------------



    Selected Quarterly Information
    -------------------------------------------------------------------------
    ($ millions, except per
     share amounts)
    For the three-month     August 31,      May 31,     Feb. 28,     Nov. 30,
     period ended                2007         2007         2007         2006
    -------------------------------------------------------------------------

    Revenue (continuing
     operations)           $    199.2   $    204.9   $    177.0   $    158.7
    Cash flow from
     continuing
     operations(1)               69.7         84.4         68.7         53.8
    EBITDA (continuing
     operations)(2)              91.3         98.0         80.4         60.0
    Pretax income
     (continuing
     operations)                 57.3         63.3         49.1         26.1
    Net income                   39.4         53.6         36.3         21.0

    Earnings per share
      Basic                $     0.44   $     0.60   $     0.41   $     0.24
      Diluted              $     0.43   $     0.59   $     0.40   $     0.23

    Weighted average basic
     shares                90,299,033   89,740,819   89,474,827   89,174,064
    Weighted average fully
     diluted shares        91,847,103   91,012,708   90,640,734   89,890,105
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    ($ millions, except per
     share amounts)
    For the three month-    August 31,      May 31,     Feb. 28,     Nov. 30,
     period ended                2006         2006         2006         2005
    -------------------------------------------------------------------------

    Revenue (continuing
     operations)           $    146.9   $    152.2   $    149.5   $    134.6
    Cash flow from
     operations(1)               60.2         52.5         48.4         48.4
    EBITDA (continuing
     operations)(2)              56.2         64.6         67.3         50.2
    Pretax income
     (continuing operations)     22.8         30.9         33.8         16.2
    Net income                   34.6         33.0         24.1         28.0

    Earnings per share
      Basic                $     0.39   $     0.37   $     0.27   $     0.31
      Diluted              $     0.39   $     0.37   $     0.27   $     0.31

    Weighted average basic
     shares                89,055,124   89,006,146   89,190,007   89,203,949
    Weighted average fully
     diluted shares        89,457,921   89,973,999   90,031,001   89,868,786
    -------------------------------------------------------------------------

    (1) Cash flow from operations before net change in non-cash balances
        related to operations.

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

    Additional Information

    Additional information relating to the Company can be found in our
Consolidated Financial Statements and accompanying notes for the three and
nine months ended August 31, 2007, our 2006 annual MD&A and Consolidated
Financial Statements, our 2007 AIF and other documents filed with applicable
securities regulators in Canada, and may be accessed at www.sedar.com.


    
                           AGF Management Limited
                         Consolidated Balance Sheets

    -------------------------------------------------------------------------
                                                       August 31,   November
    (in thousands of dollars)                               2007    30, 2006
    (unaudited)                                                      (note 3)
    -------------------------------------------------------------------------

    Assets
      Current Assets
        Cash and cash equivalents                     $  604,210  $  404,115
        Short-term investments                            23,466      10,723
        Accounts receivable and prepaid expenses          86,382      96,031
        Current portion of retained interest
         from securitization (note 2)                     11,136       3,767
        Real estate secured and investment loans
         due within one year (note 7)                    398,750     309,329
        Assets of discontinued operations (note 3)             -       4,527
    -------------------------------------------------------------------------
                                                       1,123,944     828,492

      Retained interest from securitization (note 2)      45,061      23,893
      Real estate secured and investment
       loans (note 7)                                  2,966,970   1,997,294
      Investment in associated company                   108,263     107,735
      Management contracts (note 4)                      504,269     478,259
      Customer contracts, net of accumulated
       amortization (note 4)                              67,798      59,583
      Deferred selling commissions, net of
       accumulated amortization                          312,488     268,243
      Property, equipment and software, net of
       accumulated amortization                           20,942      19,848
      Goodwill (note 4 & 5)                              180,145     126,399
      Trademarks (note 4)                                  1,935           -
      Other assets                                         1,218       6,424
      Assets of discontinued operations (note 3)               -       3,598
    -------------------------------------------------------------------------
                                                      $5,333,033  $3,919,768
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
      Current Liabilities
        Accounts payable and accrued liabilities      $  233,942  $  160,259
        Long-term debt due within one year (note 8)      170,325      56,000
        Deposits due within one year (note 7)          1,499,000   1,022,774
        Liabilities of discontinued operations
         (note 3)                                              -       4,286
    -------------------------------------------------------------------------
                                                       1,903,267   1,243,319

      Deposits (note 7)                                2,054,546   1,465,490
      Long-term debt (note 8)                             24,212           -
      Future income taxes                                244,584     230,305
      Other long-term liabilities                         21,094         127
      Liabilities of discontinued operations (note 3)          -         756
    ------------------------------------------------------------------------
                                                       4,247,703   2,939,997
    -------------------------------------------------------------------------

      Non-controlling interest                               423           -

      Shareholders' Equity
        Capital stock (note 9)                           427,201     403,566
        Contributed surplus (note 9)                      13,792      10,470
        Retained earnings                                642,771     565,576
        Accumulated other comprehensive income
         (note 1(a))                                       1,143         159
    -------------------------------------------------------------------------
                                                       1,084,907     979,771
    -------------------------------------------------------------------------
                                                      $5,333,033  $3,919,768
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (See accompanying Notes to Consolidated Financial Statements.)



                           AGF Management Limited
                      Consolidated Statements of Income

    -------------------------------------------------------------------------
                                  Three months ended       Nine months ended
                                       August 31,              August 31,
                             ------------------------------------------------
    (in thousands of dollars)       2007        2006        2007        2006
    (unaudited)                              (note 3)                (note 3)
    -------------------------------------------------------------------------

    Revenue
      Net management and
       advisory fees          $  137,765  $  106,598  $  399,206  $  317,893
      Administration fees
       and other revenue          30,441      22,230      89,919      62,573
      Deferred sales charges       4,998       5,606      15,007      19,980
      Gain on sale of RSP
       loan securitization
       and related income          1,424         730      11,404      11,892
      Investment income            4,157        (262)      8,644       3,197
    -------------------------------------------------------------------------
                                 178,785     134,902     524,180     415,535
    -------------------------------------------------------------------------
        Trust Company
         interest income
         (notes 1(b) and 11)      62,549      34,984     164,785      90,757
        Trust Company
         interest expense
         (notes 1(b) and 11)     (42,151)    (22,995)   (107,812)    (57,624)
    -------------------------------------------------------------------------
      Trust company net
       interest income            20,398      11,989      56,973      33,133
    -------------------------------------------------------------------------
    Total Revenue                199,183     146,891     581,153     448,668
    -------------------------------------------------------------------------

    Expenses
      Selling, general and
       administrative             58,161      50,572     168,499     141,749
      Trailing commissions        43,700      31,980     124,566      92,237
      Investment advisory fees     3,615       6,417      10,815      20,436
      Amortization of deferred
       selling commissions        27,502      27,002      81,209      81,396
      Amortization of customer
       contracts                   1,976       3,618       5,944      11,156
      Amortization of property,
       equipment and other
       intangible assets           1,822       2,113       5,946       6,049
      Interest expense             2,754         645       7,030       1,982
      Provision for Trust
       Company loan losses         2,412       1,774       7,597       6,096
    -------------------------------------------------------------------------
                                 141,942     124,121     411,606     361,101

    Income from continuing
     operations before
     income taxes and
     non-controlling interest     57,241      22,770     169,547      87,567

    Income tax expense
     (reduction)
      Current                     22,150      (3,345)     38,996      21,522
      Future                      (4,471)    (10,162)      3,391     (15,254)
    -------------------------------------------------------------------------
                                  17,679     (13,507)     42,387       6,268
    -------------------------------------------------------------------------

    Non-controlling interest
     (note 4)                        211           -         678           -

    -------------------------------------------------------------------------
    Net income from continuing
     operations for the period    39,351      36,277     126,482      81,299
    -------------------------------------------------------------------------
    Gain on early retirement
     of debt, net of tax
     (note 8(b))                       -           -           -      13,309
    Loss on dissolution of
     Limited Partnerships,
     net of tax (note 6)               -           -      (2,128)          -
    Gain (loss) on sale of
     discontinued operations,
     net of tax (note 3)               -        (837)      4,702      (2,887)
    Net earnings (loss) from
     discontinued operations,
     net of tax (note 3(a))            -        (808)        247         (23)
    -------------------------------------------------------------------------
    Net income for the period $   39,351  $   34,632  $  129,303  $   91,698
    -------------------------------------------------------------------------

    Earnings Per Share
     (note 9)
      Basic from continuing
       operations             $     0.44  $     0.41  $     1.41  $     0.91
      Diluted from continuing
       operations             $     0.43  $     0.41  $     1.39  $     0.91
      Basic                   $     0.44  $     0.39  $     1.44  $     1.03
      Diluted                 $     0.43  $     0.39  $     1.42  $     1.02
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (See accompanying Notes to Consolidated Financial Statements.)



                           AGF Management Limited
         Consolidated Statements of Changes in Shareholders' Equity

    -------------------------------------------------------------------------
                                  Three months ended       Nine months ended
                                       August 31,              August 31,
                             ------------------------------------------------
    (in thousands of dollars)       2007        2006        2007        2006
    (unaudited)                              (note 1)                (note 1)
    -------------------------------------------------------------------------

    Common shares
      Balance, beginning
       of period              $  425,122  $  396,499  $  403,566  $  394,154
      Issued through dividend
       reinvestment plan             594         598       3,069       1,367
      Stock options exercised        285       2,555      13,694       7,239
      Issued on acquisition
       of subsidiary                   -           -       5,672           -
      Issued for Cypress
       contingent consideration
       (note 5)                    1,200       2,600       1,200       2,600
      Purchased for cancellation       -           -           -      (3,108)
    -------------------------------------------------------------------------
      Balance, end of period     427,201     402,252     427,201     402,252
    -------------------------------------------------------------------------

    Contributed surplus
      Balance, beginning
       of period                  12,720       8,168      10,470       5,900
      Stock options
        Current period expense     1,072       1,172       3,322       3,440
    -------------------------------------------------------------------------
      Balance, end of period      13,792       9,340      13,792       9,340
    -------------------------------------------------------------------------

    Retained earnings
      Balance, beginning
       of period                 621,477     542,076     565,576     527,197
        Transitional adjustment
         on adoption of new
         accounting policies
         (note 1(a))                   -           -         (25)          -
    -------------------------------------------------------------------------
      Balance, beginning of
       period, as restated       621,477     542,076     565,551     527,197
      Net income for the period   39,351      34,632     129,303      91,698
      Dividends on AGF Class A
       Voting Common Shares and
       AGF Class B Non-Voting
       Shares                    (18,057)    (16,044)    (52,083)    (45,474)
      Excess paid over book
       value of AGF Class B
       Non-Voting Shares
       purchased for
       cancellation (note 9)           -           -           -     (12,757)
    -------------------------------------------------------------------------
      Balance, end of period     642,771     560,664     642,771     560,664
    -------------------------------------------------------------------------

    Accumulated other
     comprehensive income
      Balance, beginning of
       period (note 1(a))          2,917      (7,210)      3,792           -
      Other comprehensive
       income (loss)              (1,774)      1,565      (2,649)     (5,645)
    -------------------------------------------------------------------------
      Balance, end of period       1,143      (5,645)      1,143      (5,645)
    -------------------------------------------------------------------------

    Total shareholders'
     equity                   $1,084,907  $  966,611  $1,084,907  $  966,611
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (See accompanying Notes to Consolidated Financial Statements.)



                           AGF Management Limited
               Consolidated Statements of Comprehensive Income


    -------------------------------------------------------------------------
                                  Three months ended       Nine months ended
                                       August 31,              August 31,
                             ------------------------------------------------
    (in thousands of dollars)       2007        2006        2007        2006
    (unaudited, note 1)
    -------------------------------------------------------------------------

    Net income                $   39,351  $   34,632  $  129,303  $   91,698
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Other comprehensive
     income (loss), net of tax:
      Foreign currency
       translation adjustments
       related to net
       investments in self-
       sustaining foreign
       operations(1)                 293       1,565      (5,276)     (5,645)
      Unrealized gain (loss)
       on available-for-sale
       securities(2)              (1,554)          -       2,631           -
      Reclassification of
       realized loss to
       earnings                     (513)          -          (4)          -

    -------------------------------------------------------------------------
    Total other comprehensive
     income (loss), net of tax    (1,774)      1,565      (2,649)     (5,645)
    -------------------------------------------------------------------------

    Comprehensive income      $   37,577  $   36,197  $  126,654  $   86,053
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Net of income tax reduction of $0.1 million for the three months
        ended August 31, 2007 and $1.0 million for the nine months ended
        August 31, 2007.
    (2) Net of income tax reduction of $0.6 million for the three months
        ended August 31, 2007 and $0.5 million for the nine months ended
        August 31, 2007.

    (See accompanying Notes to Consolidated Financial Statements.)



                           AGF Management Limited
                    Consolidated Statements of Cash Flow

    -------------------------------------------------------------------------
                                  Three months ended       Nine months ended
                                       August 31,              August 31,
                             ------------------------------------------------
    (in thousands of dollars)       2007        2006        2007        2006
    (unaudited)                              (note 3)                (note 3)
    -------------------------------------------------------------------------

    Operating Activities
      Net income for the
       period                 $   39,351  $   34,632  $  129,303  $   91,698
      Gain on early retirement
       of debt, net of tax             -           -           -     (13,309)
      Loss on dissolution of
       Limited Partnerships,
       net of tax                      -           -       2,128           -
      (Gain) loss on sale of
       discontinued operation,
       net of tax                      -         837      (4,702)      2,887
      Loss (earnings) from
       discontinued operations,
       net of tax                      -         808        (247)         23
    -------------------------------------------------------------------------
      Net income from
       continuing operations      39,351      36,277     126,482      81,299

      Items not affecting cash
        Amortization of
         capital assets           31,300      32,733      93,099      98,601
        Future income taxes       (4,471)    (10,162)      3,391     (15,254)
        Gain on sale of RSP
         loan securitization
         and related income       (1,424)       (730)    (11,404)    (11,892)
        Provision for Trust
         Company loan losses       2,412       1,774       7,597       6,096
        Other                      2,534         287       3,615       2,329
    -------------------------------------------------------------------------
                                  69,702      60,179     222,780     161,179
      Net increase in non-cash
       balances related to
       operations                 60,341       8,352      65,712     (10,988)
    -------------------------------------------------------------------------
      Net cash provided by
       continuing operating
       activities                130,043      68,531     288,492     150,191
      Net cash provided (used)
       in discontinued operating
       activities                      -        (493)     (1,271)      1,043
    -------------------------------------------------------------------------
      Net cash provided by
       operating activities      130,043      68,038     287,221     151,234
    -------------------------------------------------------------------------

    Financing Activities
      Purchase of Class B
       Non-Voting Shares for
       cancellation                    -           -           -     (15,866)
      Issuance of Class B
       Non-Voting Shares             879       3,154      16,763       8,607
      Dividends                  (18,057)    (16,044)    (52,083)    (45,474)
      Retirement of debt               -      (3,360)          -      (3,360)
      Increase in bank loan        5,000       8,500      89,000      47,500
      Decrease in other
       long-term debt                  -           -           -      (1,324)
      Net increase in Trust
       Company deposits          413,995     251,814   1,093,648     688,578
    -------------------------------------------------------------------------
      Net cash provided by
       continuing financing
       activities                401,817     244,064   1,147,328     678,661

    Investing Activities
      Deferred selling
       commissions paid          (31,589)    (21,691)   (124,901)    (73,870)
      Proceeds of RSP loan
       securitization                  -           -     252,878     206,274
      Acquisition of
       subsidiaries               (7,800)     (3,900)    (27,673)     (4,116)
      Proceeds of sale of
       discontinued operations         -        (193)      2,747       1,985
      Purchase of property,
       equipment and other
       intangible assets          (3,503)     (3,563)     (6,101)     (9,399)
      Other investment
       activities                 (2,070)     13,622      (5,440)     12,477
      Net increase in Trust
       Company mortgages and
       consumer loans           (390,986)   (293,766) (1,325,964)   (819,033)
    -------------------------------------------------------------------------
      Net cash used in
       continuing investing
       activities               (435,948)   (309,491) (1,234,454)   (685,682)

    Increase in cash and
     cash equivalents             95,912       2,611     200,095     144,213

    Balance of cash and cash
     equivalents, beginning
     of period                   508,298     301,576     404,115     159,974
    -------------------------------------------------------------------------

    Balance of cash and cash
     equivalents, end of
     period                   $  604,210  $  304,187  $  604,210  $  304,187
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash and cash equivalents
     related to:
      Continuing operations                           $  604,210  $  303,080
      Discontinued operations                                  -       1,107
    -------------------------------------------------------------------------
                                                      $  604,210  $  304,187
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Represented by:
      Cash and cash equivalents                       $   52,001  $   20,405
      Trust Company cash and
       cash equivalents                                  552,209     283,782
    -------------------------------------------------------------------------
                                                      $  604,210  $  304,187
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (See accompanying Notes to Consolidated Financial Statements.)



    Notes to Consolidated Financial Statements

    For the three and nine months ended August 31, 2007 and August 31, 2006
    (tabular amounts in thousands of dollars, except per share amounts)
    (unaudited)

    These unaudited interim Consolidated Financial Statements of AGF
    Management Limited ('AGF' or the 'Company') have been prepared in
    accordance with Canadian generally accepted accounting principles using
    the same significant accounting policies as AGF's consolidated financial
    statements for the year ended November 30, 2006. These financial
    statements do not contain all the disclosures required by Canadian
    generally accepted accounting principles for annual financial statements
    and should be read in conjunction with the consolidated financial
    statements for the year ended November 30, 2006, as set out in AGF's 2006
    Annual Report. Certain comparative amounts in these financial statements
    have been reclassified to conform to the current year's presentation.

    Note 1: Change in Accounting Policy

    (a) Financial Instruments, Hedges and Comprehensive Income

        On December 1, 2006, the Company adopted the CICA Handbook Section
        3855 Financial Instruments - Recognition and Measurement; Section
        3865 Hedges and Section 1530 Comprehensive Income. These standards
        require that all financial assets be classified as either available
        for sale ('AFS'), trading, held to maturity ('HTM') or loans and
        receivables. Financial liabilities are classified as either trading
        or other. Initially, all financial assets and financial liabilities
        must be recorded on the balance sheet at fair value, with subsequent
        measurement determined by the classification of each financial asset
        and liability. Transaction costs related to trading securities are
        expensed as incurred. Transaction costs related to AFS, HTM, loans
        and receivables, and deposits are generally capitalized and are then
        amortized over the expected life of the instrument.

        Financial assets and financial liabilities held for trading are
        measured at fair value, with the changes in fair value reported in
        earnings. Financial assets held to maturity, loans and receivables,
        and financial liabilities other than those held for trading are
        measured at amortized cost. Available-for-sale financial assets are
        measured at fair value, with changes in fair value reported in other
        comprehensive income ('OCI') until the financial asset is disposed
        of, or becomes impaired.

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

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

        Classification of Financial Instruments

        Available-for-sale assets are those non-derivative financial assets
        that are designated as AFS or are not classified as loans and
        receivables, HTM or held for trading. Available-for-sale assets are
        measured at fair value with unrealized gains and losses included in
        accumulated other comprehensive income until sale or other-than-
        temporary impairment when the cumulative gain or loss is transferred
        to the Consolidated Statement of Operations. Assets included in this
        category are investments and retained interest from securitization.
        Upon adoption of Section 3855, the following adjustments were
        recorded:

           a) Investments have been re-measured to reflect the unrealized
              gains and losses on these securities. This gave rise to an
              adjustment to accumulated other comprehensive income of
              $3.2 million ($2.7 million net of tax).

           b) Retained interests from securitization have been re-measured to
              reflect the fair value. This gave rise to an adjustment to
              accumulated other comprehensive income of $1.4 million
              ($1.0 million net of tax).

        Loans and receivables are non-derivative financial assets resulting
        from the delivery of cash or other assets by a lender to a borrower
        in return for a promise to repay on a specified date or dates, or on
        demand, usually with interest. They do not include debt securities or
        loans and receivables designated as held for trading or AFS. Assets
        included in this category are accounts receivable and real estate
        secured and investment loans. The adoption of the CICA Handbook
        Section 3855 gave rise to a reclassification of $15.9 million of
        related transaction costs from accounts receivable and $1.9 million
        of related fees from accounts payable and accrued liabilities to real
        estate secured and investment loans and deposits.

        Hedge Accounting

        Derivative instruments are used to manage the Company's exposure to
        interest risks. The Company does not enter into derivative financial
        instruments for trading or speculative purposes. When derivative
        instruments are used, the Company determines whether hedge accounting
        can be applied. Where hedge accounting can be applied, a hedge
        relationship is designated as a fair value hedge or a cash flow
        hedge. The hedge is documented at inception, detailing the particular
        risk management objective and the strategy for undertaking the hedge
        transaction. The documentation identifies the specific asset or
        liability being hedged, the risk that is being hedged, the type of
        derivative used and how effectiveness will be assessed. The
        derivative instrument must be highly effective in accomplishing the
        objective of offsetting either changes in the fair value or
        forecasted cash flows attributable to the risk being hedged both at
        inception and over the life of the hedge.

        Fair value 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. 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, 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 investment income in the
        periods during which the hedged item affects income. 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.

        In accordance with Section 3865, the accumulated ineffectiveness of
        hedging relationships must be measured, and the ineffective portion
        of changes in fair value must be recognized in the Consolidated
        Statement of Income. As a result, the opening balance of retained
        earnings was adjusted by $0.025 million, as a result of the adoption
        of Section 3865.

        During the three and nine months ended August 31, 2007, the
        ineffective portion of accumulated changes in the fair value of
        hedging relationships recognized in the income statement amounted to
        a gain of $0.1 million and a loss of $0.9 million, respectively, as
        it relates to fair value hedging relationships.

        As required, a transition adjustment has been recognized in the
        opening balance of retained earnings as at December 1, 2006 for the
        following: i) financial instruments that the Company classifies as
        held for trading and that were not previously recorded at fair value
        and ii) the difference in the carrying amount of loans and deposits
        at December 1, 2006 and the carrying amount calculated using the
        effective interest rate from inception of the loan or deposit. A
        transition adjustment has been recognized in the opening balance of
        AOCI relating to adjustments arising due to the re-measuring of
        financial assets classified as available for sale. Prior-period
        balances have not been restated, except for the reclassification of
        the foreign currency translation balances. The impact of adopting
        these standards as at December 1, 2006 was as follows:


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

    Assets
      Short-term investments              $   10,723  $    3,271  $   13,994
      Retained interest from
       securitization                         27,660       1,352      29,012
      Accounts receivable                     91,328     (15,928)     75,400
      Real estate secured and
       investment loans                    2,306,623       3,183   2,309,806
    -------------------------------------------------------------------------
    Impact on total assets                 2,436,334      (8,122)  2,428,212
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and shareholders' equity
      Deposits                             2,488,264      (7,074)  2,481,190
      Derivative instruments
       market valuation                            -      (3,754)     (3,754)
      Future income tax                      230,305         998     231,303
      Accounts payable and accrued
       liabilities                           160,259      (1,900)    158,359
    -------------------------------------------------------------------------
    Impact on total liabilities            2,878,828     (11,730)  2,867,098
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

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

    Accumulated other comprehensive income
      Foreign currency translation
       adjustments related to net
       investments in self-sustaining
       operations                                  -         159         159
      Unrealized gains on
       available-for-sale assets                   -       3,633       3,633
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Accumulated other comprehensive income         -       3,792       3,792
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Impact on shareholders' equity           565,735       3,608     569,343
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Impact on liabilities and
     shareholders' equity                 $3,444,563  $   (8,122) $3,436,441
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (b) Trust Operations Net Interest Income

        Commencing December 1, 2006, the presentation of the Trust Operations
        income has been revised to present net deposit interest expense and
        other interest expense in net interest income, as detailed in
        note 11. Comparative periods presented have been restated, with
        interest and investment income being reclassified from administration
        fees, interest and other revenue, and other interest expense being
        reclassified from interest on Trust Company deposits and selling,
        general and administrative expenses.

    (c) Purchase Price Allocations and Amortization of Intangible Assets

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

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

    Note 2: Securitization of AGF Trust Loans

    On March 30, 2007, the Company, through its wholly owned subsidiary AGF
    Trust Company ('Trust Company'), securitized $263.6 million of RSP loans
    through the sale of these loans to a securitization trust. Cash flows of
    $252.9 million were received on the securitization and a gain of
    $8.0 million was recorded, net of transaction fees and servicing
    liabilities. On February 28, 2006, $218.4 million of RSP loans was
    securitized through the sale of these loans to a securitization trust.
    Cash flows of $206.3 million were received on the securitization and a
    gain, net of transaction fees and expenses, of $9.9 million was recorded.
    As at August 31, 2007, $328.3 million of securitized loans were
    outstanding.

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

    The Company has recorded retained interests of $56.2 million (2006 -
    $27.7 million) made up of i) the rights to future excess interest on
    these RSP loans after investors in the securitization trust have received
    the return for which they contracted, valued at $ 24.2 million (2006 -
    $13.7 million), ii) cash collateral of $11.1 million (2006 -
    $5.7 million) and iii) over-collateralization of $20.9 million (2006 -
    $8.3 million).

    As at August 31, 2007, the impaired loans included in the securitized
    balances were equal to $1.1 million (2006 - $0.3 million), and during the
    three and nine months ended August 31, 2007, $0.5 million (2006 -
    $0.4 million) and $1.1 million (2006 - $0.5 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 three
    months ended August 31, 2007, cash flows of $5.7 million were received on
    the securitized loans, of which $2.3 million related to the over-
    collateralization and $3.4 million related to the interest-only strip.
    For the nine months ended August 31, 2007, cash flows of $13.4 million
    were received on the securitized loans, of which $4.8 million related to
    the over-collateralization and $8.6 million related to the interest-only
    strip. The total other income recognized from securitization during the
    three and nine months ended August 31, 2007 was $1.4 million and
    $3.3 million, respectively.

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

              Excess spread                             3.3% - 3.9%
              Discount rate on interest-only strip      7.5%
              Expected credit losses                    0.8%
              Prepayment rate                          17.7%
              Expected weighted average life
               of RSP loans                           23 - 27 months

    The Trust Company retained servicing responsibilities for the securitized
    loans. A servicing liability of $2.0 million was recorded as at
    August 31, 2007 (2006 - $1.1 million). This amount represents the
    estimated future cost of servicing the securitized loans and has been
    offset against the gain on the sale of the RSP loans. The amount
    amortized related to the servicing liability during the three and nine
    months ended August 31, 2007 was $0.3 million and $0.7 million,
    respectively.

    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 August 31, 2007. As the sensitivity is
    hypothetical, it should be used with caution. The impact of changes in
    the fair value of retained interests was calculated using a discounted
    cash flow analysis.

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

    Discount rate
      +10%                                                        $      264
      +20%                                                               525
    Prepayment rate
      +10%                                                        $      467
      +20%                                                               887
    Expected credit losses
      +10%                                                        $      475
      +20%                                                               950
    Excess spread
      +10%                                                        $    2,011
      +20%                                                             4,026
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Note 3: Discontinued Operations and Assets Held for Sale

    (a) On April 30, 2007, the Company sold 100% of Investmaster for
        $6.8 million and additional contingent consideration that is not
        determinable at this time. The purchase consideration includes
        $5.0 million in cash and two notes receivable from the buyer,
        totalling $1.8 million, due on April 30, 2009 and April 30, 2010,
        respectively. The contingent consideration will be payable to the
        Company in 2007, 2009 and 2010 if certain working capital and revenue
        targets are reached by Investmaster.

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

    -------------------------------------------------------------------------
                                  Three months ended       Nine months ended
                                       August 31,              August 31,
    (in thousands of dollars, -----------------------------------------------
     except per share amounts)      2007        2006        2007        2006
    -------------------------------------------------------------------------

    Revenue                   $        -  $    3,287  $    4,342  $   11,318
    Net earnings (loss) from
     discontinued operations,
     net of tax               $        -  $     (808) $      247  $      (23)
    Basic net earnings
     per share                $     0.00  $    (0.01) $     0.00  $     0.00
    Diluted net earnings
     per share                $     0.00  $    (0.01) $     0.00  $     0.00
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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

    (b) On October 3, 2005, the Company sold 100% of wholly owned subsidiary
        Unisen Holdings Inc. ('Unisen') to Citifinancial Canada Inc.
        ('Citifinancial') for cash consideration of US$97.5 million
        ($114.0 million). The purchase price was subject to a claw back
        should Unisen's revenue fall below a threshold during the 12-month
        period ended June 30, 2006. A provision of $9.5 million was included
        in accounts payable related to this possible claw back. During the
        three months ended August 31, 2006, the aforementioned provision was
        increased by $0.7 million, with the increase being recorded as a loss
        on sale of discontinued operations net of tax of $0.1 million. In
        addition, a provision of $0.3 million was recorded relating to a
        potential tax liability, including estimated interest and penalties
        owed by Unisen for periods prior to October 3, 2005. This was
        recorded as a loss on the sale of discontinued operations, net of tax
        of $0.1 million. There is no contingent payment remaining related to
        this transaction.

    Note 4: Acquisition of Highstreet Partners Ltd.

    On December 1, 2006, the Company acquired 79.9% of Highstreet Partners
    Ltd. ('Highstreet'), which wholly owns Highstreet Asset Management Inc.,
    an investment counsel firm based in London, Ontario. The purchase
    consideration is payable in a combination of cash and the issuance of
    Class B Non-Voting Shares ('Class B shares'). As at August 31, 2007, the
    Company has made payments of $20.2 million in cash and $5.7 million
    through the issuance of 225,116 AGF Class B shares, which approximates
    33.3% of the purchase price. Additional payments aggregating
    $51.8 million (principal and imputed interest) are due on February 28,
    2008 and February 28, 2009 for total minimum consideration, including
    acquisition costs, of $74.4 million. In addition, a contingent
    consideration will be paid in 2010 if certain financial profitability
    targets are achieved by Highstreet. At this time, the amount of the
    contingent consideration is not determinable.

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

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

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

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

    Consideration paid (including acquisition costs)
      Cash                                                        $   20,228
      Issuance of Class B shares (note 9)                              5,672
      Payments subsequent to acquisition date (note 8)                47,896
      Acquisition costs                                                  600
    -------------------------------------------------------------------------
                                                                  $   74,396
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Note 5: Acquisition of Cypress Capital Management Ltd.

    On June 30, 2004, the Company acquired 100% of the shares of Cypress. At
    the time of purchase, contingent consideration of up to $9.0 million was
    due to the vendors, subject to Cypress achieving certain revenue levels
    over the three-year period ended June 30, 2007. The Company has
    determined that these revenue levels were exceeded. Accordingly, the
    consideration of $9.0 million was paid. The payment consisted of
    $7.8 million in cash and the issuance of 33,367 Class B Non-Voting shares
    valued at $1.2 million (note 9). The payment was recorded as an increase
    in goodwill.

    Note 6: Dissolution of Partnerships

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

    Note 7: Trust Company

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

    -------------------------------------------------------------------------
                     Term to contractual repricing
                  -----------------------------------------------------------
                                                          August    November
    (in thousands   Variable   1 year or      1 to 5          31,         30,
     of dollars)        rate        less       years        2007        2006
    -------------------------------------------------------------------------

    Mortgage
     loans        $    1,952  $  528,300  $  707,725  $1,237,977  $  941,962
    Home equity
     lines of
     credit
     (HELOCs)        389,089           -           -     389,089     116,194
    -------------------------------------------------------------------------
    Total real
     estate secured
     loans           391,041     528,300     707,725   1,627,066   1,058,156
    Investment
     loans         1,732,667       5,237      10,239   1,748,143   1,261,166
                  -----------------------------------------------------------
                   2,123,708     533,537     717,964   3,375,209   2,319,322
                  -----------------------------------
                  -----------------------------------
    Less: allowance for loan losses                      (15,645)    (12,699)
    Add: net deferred sales commissions
     and commitment fees                                   6,156           -
                                                     ------------------------
                                                       3,365,720   2,306,623
    Less: current portion                               (398,750)   (309,329)
                                                     ------------------------
                                                      $2,966,970  $1,997,294
                                                     ------------------------
                                                     ------------------------

    Impaired loans included in above                  $   23,880  $   16,368
    Less: specific allowance for loan losses              (1,545)     (2,448)
                                                     ------------------------
                                                      $   22,335  $   13,920
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                     Nine months   12 months
                                                           ended       ended
                                                       August 31,   November
    (in thousands of dollars)                               2007    30, 2006
    -------------------------------------------------------------------------

    The change in the allowance for loan losses
     is as follows:
      Balance, beginning of period                    $   12,699  $    8,200
      Amounts written-off                                 (3,808)     (2,697)
      Recoveries                                             939         465
      Reduction due to RSP loan securitization            (1,486)     (1,770)
      Provision for loan losses less
       insurance premiums                                  7,301       8,501
                                                     ------------------------
      Balance, end of period                          $   15,645  $   12,699
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (a) Real Estate Secured and Investment Loans

        The table represents the period of contractual repricing of interest
        rates on outstanding amounts. Principal repayments due on real estate
        and investment loans due within one year as at August 31, 2007 were
        $400.3 million (November 30, 2006 - $309.3 million).

        As at August 31, 2007, the Company's mortgage portfolio was composed
        of a combination of fixed rate and variable rate residential
        mortgages, of which $532.0 million (November 30, 2006 -
        $403.4 million) is insured, with a weighted average term to repricing
        of 2.0 years (November 30, 2006 - 1.8 years) and a weighted average
        interest rate of 7.08% (November 30, 2006 - 6.81%). Investment loans
        have interest rates based on prime. As at August 31, 2007, the
        average interest rate on HELOCs was 6.33% (November 30, 2006 - 6.08%)
        and on investment loans was 7.61% (November 30, 2006 - 7.39%).

    (b) Trust Company Deposits

    -------------------------------------------------------------------------
                            Term to maturity
                  -----------------------------------------------------------
                                                          August    November
    (in thousands              1 year or      1 to 5          31,         30,
     of dollars)      Demand        less       years        2007        2006
    -------------------------------------------------------------------------

    Deposits       $   5,562  $1,493,438  $2,068,820  $3,567,820  $2,488,264
    Less: deferred
     sales
     commissions                                         (14,274)          -
    -------------------------------------------------------------------------
                                                      $3,553,546  $2,488,264
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

        As at August 31, 2007, deposits were composed substantially of GICs
        with a weighted average term to maturity of 1.8 years (November 30,
        2006 - 1.9 years) and a weighted average interest rate of 4.25%
        (November 30, 2006 - 4.05%).

    (c) Interest Rate Swaps

        To hedge its exposure to fluctuating interest rates, the Trust
        Company has entered into interest-rate-swap transactions with four
        Canadian chartered banks as noted below. The swap transactions expire
        between September 2007 and July 2012 and involve the exchange of
        either the one-month bankers' acceptance rate or the three-month
        bankers' acceptance rate to receive fixed interest rates. The swap
        contracts designated as fair value hedging instruments for deposits
        are used by the Trust Company for balance sheet matching purposes and
        to mitigate net interest revenue volatility. As at August 31, 2007,
        the aggregate notional amount of the swap transactions was
        $2.4 billion (November 30, 2006 - $1.7 billion). The aggregate fair
        value of the swap transactions, which represents the amount that
        would be paid by the Trust Company if the transactions were
        terminated at August 31, 2007, was $18.4 million (November 30, 2006 -
        $3.8 million).

    -------------------------------------------------------------------------
    Notional amount of swap   Maturity date    Fixed interest rate  received
    -------------------------------------------------------------------------
    (in thousands of dollars)
             462,000               2007                3.28% - 4.37%
             727,000               2008                3.17% - 4.83%
             457,000               2009                3.47% - 4.97%
             435,000               2010                3.62% - 5.05%
             270,000               2011                4.07% - 5.08%
              70,000               2012                4.25% - 5.01%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (d) Interest Rate Sensitivity

        For the Trust Company, the impact of an adverse change in interest
        rates of 1.0% would be a change of annual net interest income of
        approximately $3.4 million, as most of the loan portfolios are
        hedged.

    Note 8: Long-term debt

    -------------------------------------------------------------------------
                                                       August 31,   November
    (in thousands of dollars)                               2007    30, 2006
    -------------------------------------------------------------------------

    Revolving term loan                               $  145,000  $   56,000
    Payment related to acquisition of Highstreet
     Partners Ltd. (note 4)
      February 28, 2008                                   25,325           -
      February 28, 2009                                   24,212           -
    -------------------------------------------------------------------------
                                                         194,537      56,000

    Less: amount included in current liabilities         170,325      56,000
    -------------------------------------------------------------------------

                                                      $   24,212  $        -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (a) Revolving Term Loan

        The Company has arranged a six-year prime-rate-based revolving term
        loan to a maximum of $300.0 million (2006 - $200.0 million) with a
        Canadian chartered bank. Under the loan agreement, the Company is
        permitted to avail the revolving term loan by direct advances and/or
        bankers' acceptances ('BAs'). The revolving term loan is available at
        any time for a period of 364 days from commencement of the loan (the
        'Commitment Period'). The expiration of the current commitment period
        is June 30, 2008. However, the Company may request by April 15, 2008,
        and prior to April 15 in any calendar year thereafter, a
        recommencement of the six-year term at the expiry of the then-current
        commitment period. No repayment of the principal amount outstanding
        pursuant to the revolving term loan is required during the first
        three years of the then-applicable term. Thereafter, the loan balance
        shall be repaid in minimum monthly instalments of at least
        one-thirty-sixth of the amount of principal outstanding.

        As at August 31, 2007, the Company has drawn $145.0 million (2006 -
        $56.0 million) against the available loan amount in the form of six-
        to 52-day BAs at an effective average interest rate of 5.08% per
        annum. As this loan functions as a working capital facility, it has
        been included in current liabilities.

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

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

        During the nine months ended August 31, 2006, the Company reached an
        agreement with Multi-Fund Management Inc., the manager of Multi-Fund
        Income Trust ('Trust'), to terminate its obligations to the Trust for
        a cash payment of $3.4 million. The termination of the Company's cash
        flow obligation was subject to a Trust Unitholder meeting, which was
        held on June 8, 2006. The Trust Unitholders approved the agreement
        and on June 12, 2006, the Company repurchased the debt related to the
        Trust.

        Details of the gain on repayment of debt are as follows:

    -------------------------------------------------------------------------
                                                                   August 31,
    (in thousands of dollars)                                           2006
    -------------------------------------------------------------------------

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

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

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

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

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

    Note 9: Capital Stock

    (a) Authorized Capital

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

    (b) Change During the Period

        The change in capital stock during the nine months ended August 31,
        2007 and 2006 is summarized as follows:

    -------------------------------------------------------------------------
                                       Nine months ended August 31,
                          ---------------------------------------------------
                                      2007                      2006
    (in thousands of      ---------------------------------------------------
     dollars, except                        Stated                    Stated
     share amounts)            Shares        value       Shares        value
    -------------------------------------------------------------------------
    Class A shares             57,600   $        -       57,600   $        -

    Class B shares
      Balance, beginning
       of period           89,171,997   $  403,566   89,123,205   $  394,154
      Issued through
       dividend
       reinvestment plan       94,435        3,069       60,913        1,367
      Stock options
       exercised              765,600       13,694      495,550        7,239
      Issued on acquisition
       of a subsidiary
       (note 4)               225,116        5,672            -            -
      Issued for Cypress
       contigent
       consideration
       (note 5)                33,367        1,200      129,601        2,600
      Purchased for
       cancellation                 -            -     (700,000)      (3,108)
    -------------------------------------------------------------------------
      Balance, end
       of period           90,290,515   $  427,201   89,109,269   $  402,252
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (c) Class B Shares Purchased for Cancellation

        AGF has obtained applicable regulatory approval to purchase for
        cancellation, from time to time, certain of its Class B shares
        through the facilities of the Toronto Stock Exchange. Present
        approval for such purchases extends through to February 25, 2008.
        Under this issuer bid, the Company may purchase up to 10% of the
        public float outstanding on the date of the receipt of regulatory
        approval or up to 7,303,844 shares. No Class B shares were purchased
        during the nine months ended August 31, 2007. During the nine months
        ended August 31, 2006, 0.7 million Class B shares were purchased at a
        cost of $15.9 million and the excess paid of $12.8 million over the
        book value of the shares purchased for cancellation was charged to
        retained earnings.

    (d) Stock Option Plans

        AGF has established stock option plans for senior employees under
        which stock options to purchase an aggregate maximum of 7,306,584
        Class B shares could have been granted as at August 31, 2007 (2006 -
        5,624,323). The stock options are issued at a price not less than the
        market price of the Class B shares immediately prior to the grant
        date. Stock options are vested to the extent of 25% to 33% of the
        individual's entitlement per annum, or, in some instances 100% vest
        at the end of the term of the option.

        The change in stock options during the nine months ended August 31,
        2007 and 2006 is summarized as follows:

    -------------------------------------------------------------------------
                                       Nine months ended August 31,
                           --------------------------------------------------
                                      2007                      2006
                           --------------------------------------------------
                                          Weighted                  Weighted
                                           average                   average
                                          exercise                  exercise
                              Options        price      Options        price
    -------------------------------------------------------------------------
    Class B share options
      Balance, beginning
       of period            4,324,084   $    19.93    4,781,875   $    18.72
      Options granted          12,732        35.70       90,000        22.98
      Options cancelled       (23,450)       19.93     (727,492)       20.86
      Options exercised      (765,600)       17.89     (495,550)       14.61
    -------------------------------------------------------------------------
      Balance, end
       of period            3,547,766   $    20.41    3,648,833   $    18.95
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

        During the three months ended August 31, 2007, the Company did not
        grant any options (2006 - Nil) and recorded $1.1 million (2006 -
        $1.2 million) in compensation expense and contributed surplus. During
        the nine months ended August 31, 2007, the Company granted 12,732
        options (2006 - 90,000) and recorded $3.3 million (2006 -
        $3.4 million) in compensation expense and contributed surplus.

    (e) Restricted Share Unit ('RSU') Plan

        Under the Company's RSU plan, certain senior employees are issued
        RSUs. These units vest three years from the grant date. On the
        vesting date, the Company will redeem all of the participants' RSUs
        in cash equal to the value of one Class B share for each RSU.

        At August 31, 2007, 132,890 RSUs (2006 - 55,817) were outstanding to
        employees of the Company. Compensation expense for the three months
        ended August 31, 2007 related to these RSUs was $0.3 million (2006 -
        $0.1) and for the nine months ended August 31, 2007 was $0.8 million
        (2006 - $0.1 million).

    (f) Performance Share Unit ('PSU') Plan

        Effective November 30, 2006, the Company established a PSU plan,
        which enables certain senior employees to participate in the growth
        and development of AGF by providing such employees with the
        opportunity, through PSUs, to acquire a proprietary interest in AGF.
        Under the terms of the plan, PSUs are issued to the participant and
        the units issued vest three years from the grant date subject to
        certain performance criteria being met.

        On the vesting date, AGF, subject to the performance criteria being
        met, will redeem all of the participants' PSUs in cash equal to the
        value of one Class B share for each PSU.

        At August 31, 2007, 68,456 PSUs were outstanding to employees of the
        Company. Compensation expense for the three months ended August 31,
        2007 related to these PSUs was $0.2 million (2006 - nil) and for the
        nine months ended August 31, 2007 was $0.6 million (2006 - nil).

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

        During 2007, the Company established a DSU plan for non-
        employee directors. The plan enables directors of the Company to
        elect to receive their remuneration in DSUs. On termination, the
        Company will redeem all of the participants' DSUs in cash or shares
        equal to the value of one Class B share at the termination date for
        each DSU. There is no unrecognized compensation related to directors'
        DSUs since these awards vest immediately when granted. As at
        August 31, 2007, 1,699 DSUs were outstanding. Compensation expense
        related to these DSUs for the three and nine months ended August 31,
        2007 was $0.1 million.

    (h) Earnings Per Share

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

    -------------------------------------------------------------------------
                                  Three months ended       Nine months ended
                                       August 31,              August 31,
    (in thousands of dollars, -----------------------------------------------
     except per share amounts)      2007        2006        2007        2006
    -------------------------------------------------------------------------

    Numerator
      Net income from
       continuing operations
       for the period         $   39,351  $   36,277  $  126,482  $   81,299
      Gain on early retire-
       ment of debt, net of
       tax                             -           -           -      13,309
      Loss on dissolution of
       partnerships, net of
       tax (note 6)                    -           -      (2,128)          -
      Gain (loss) on sale
       of discontinued
       operations, net of tax          -        (837)      4,702      (2,887)
      Net earnings from
       discontinued operations,
       net of tax (note 3(a))          -        (808)        247         (23)
    -------------------------------------------------------------------------
      Net Income for
       the period             $   39,351  $   34,632  $  129,303  $   91,698

    Denominator
      Weighted average number
       of shares - basic      90,299,033  89,055,124  89,860,219  89,083,057
      Dilutive effect of
       employee stock options  1,548,070     402,797   1,363,927     727,307
    -------------------------------------------------------------------------
      Weighted average number
       of shares - diluted    91,847,103  89,457,921  91,224,146  89,810,364
    -------------------------------------------------------------------------

    Earnings Per Share
      Basic from continuing
       operations             $     0.44  $     0.41  $     1.41  $     0.91
      Diluted from continuing
       operations             $     0.43  $     0.41  $     1.39  $     0.91
      Basic                   $     0.44  $     0.39  $     1.44  $     1.03
        Diluted               $     0.43  $     0.39  $     1.42  $     1.02
    -------------------------------------------------------------------------

    Note 10: Supplemental Disclosure of Cash Flow Information

    Interest payments for the three months ended August 31, 2007 were
    $41.8 million (2006 - $21.7 million). Interest payments for the nine
    months ended August 31, 2007 were $102.3 million (2006 - $54.3 million).

    Income tax payments for the three months ended August 31, 2007 were
    $0.1 million (2006 - $9.2 million). Income tax payments for the nine
    months ended August 31, 2007 were $15.6 million (2006 - $36.6 million).

    Note 11: Trust Company Net Interest Income

    The breakdown of net interest income is as follows:

    -------------------------------------------------------------------------
                                  Three months ended       Nine months ended
                                       August 31,              August 31,
                              -----------------------------------------------
    (in thousands of dollars)       2007        2006        2007        2006
    -------------------------------------------------------------------------

    Trust Company interest
     income:
      Loan interest           $   56,492  $   31,785  $  150,556  $   82,298
      Investment interest          6,057       3,199      14,229       8,459
    -------------------------------------------------------------------------
                                  62,549      34,984     164,785      90,757

    Trust Company interest
     expense:
      Deposit interest            36,236      19,509      93,491      51,323
      Other interest expense       5,915       3,486      14,321       6,301
    -------------------------------------------------------------------------
                                  42,151      22,995     107,812      57,624

    -------------------------------------------------------------------------
    Trust Company net
     interest income          $   20,398  $   11,989  $   56,973  $   33,133
    -------------------------------------------------------------------------

    Note 12: Segment Information

    AGF has three reportable segments: Investment Management Operations,
    Trust Company Operations and Other. The Investment Management Operations
    segment provides investment management and advisory services and is
    responsible for the management and distribution of AGF investment
    products. AGF Trust Company offers a wide range of trust services
    including GICs, mortgages, investment loans and RSP loans. The results of
    S&WHL have been included in Other. The reportable segments are strategic
    business units that offer different products and services.

    The results of the reportable segments are based upon the internal
    financial reporting systems of AGF. The accounting policies used in these
    segments are generally consistent with those described in the summary of
    significant accounting policies detailed in AGF's 2006 annual financial
    statements.

    -------------------------------------------------------------------------
    (in thousands of dollars) Investment       Trust
    Three months ended        Management     Company
    August 31, 2007           Operations  Operations       Other       Total
    -------------------------------------------------------------------------

    Revenue                   $  173,410  $   24,176  $    1,597  $  199,183
    Operating expenses            96,827      11,061           -     107,888
    Amortization and other        30,873         427       2,754      34,054
    -------------------------------------------------------------------------
    Segment income (loss)
     from continuing
     operations before taxes  $   45,710  $   12,688  $   (1,157) $   57,241
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    (in thousands of dollars) Investment       Trust
    Three months ended        Management     Company
    August 31, 2006           Operations  Operations       Other       Total
    -------------------------------------------------------------------------

    Revenue                   $  131,681  $   14,273  $      937  $  146,891
    Operating expenses            82,618       8,125           -      90,743
    Amortization and other        32,453         280         645      33,378
    -------------------------------------------------------------------------
    Segment income from
     continuing operations
     before taxes             $   16,610  $    5,868  $      292  $   22,770
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    (in thousands of dollars) Investment       Trust
    Nine months ended         Management     Company
    August 31, 2007           Operations  Operations       Other       Total
    -------------------------------------------------------------------------

    Revenue                   $  501,659  $   73,439  $    6,055  $  581,153
    Operating expenses           277,422      34,055           -     311,477
    Amortization and other        92,016       1,083       7,030     100,129
    -------------------------------------------------------------------------
    Segment income (loss)
     from continuing
     operations before taxes  $  132,221  $   38,301  $     (975) $  169,547

    Total assets              $1,332,327  $4,000,706  $        -  $5,333,033
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    (in thousands of dollars) Investment       Trust
    Nine months ended         Management     Company
    August 31, 2006           Operations  Operations       Other       Total
    -------------------------------------------------------------------------

    Revenue                   $  396,148  $   48,480  $    4,040  $  448,668
    Operating expenses           236,933      23,585           -     260,518
    Amortization and other        97,761         840       1,982     100,583
    -------------------------------------------------------------------------
    Segment income from
     continuing operations
     before taxes             $   61,454  $   24,055  $    2,058  $   87,567

    Total assets              $1,154,862  $2,338,148  $        -  $3,493,010
    -------------------------------------------------------------------------
    

    Conference Call

    AGF will host a conference call to review its earnings results today at
11:00 am 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.streamlogics.net/agf/sep26-07/index.asp. Alternatively, the
call can be accessed by dialing 1-866-319-8623 (toll-free in North America). A
complete archive of this discussion along with supporting materials will be
available at the same webcast address as of 5 p.m. ET.

    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. 2007
marks AGF's 50th anniversary of providing Canadians with innovative investment
solutions across the wealth continuum. AGF's products and services include a
diversified family of more than 50 mutual funds, the evolutionary AGF Elements
portfolios, the Harmony asset management program, AGF Institutional Account
Services, private client products, and AGF Trust GICs, loans and mortgages.
With approximately $54 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: Greg Henderson, Senior Vice-President and Chief
Financial Officer, AGF Management Limited, (416) 865-4156,
greg.henderson@AGF.com


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