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Press release from CNW Group

AGF Management Limited - Fiscal 2011 Report to Shareholders for the year ended November 30, 2011

Wednesday, January 25, 2012

AGF Management Limited - Fiscal 2011 Report to Shareholders for the year ended November 30, 201108:01 EST Wednesday, January 25, 2012AGF MANAGEMENT LIMITED REPORTS a 7.0% increase in assets under managementRevenue increases 9.9% to $675.3 millionTORONTO, Jan. 25, 2012 /CNW/ - AGF Management Limited (AGF) today announced financial results for the year ended November 30, 2011, reporting total assets under management (AUM) increased by 7.0% to $46.0 billion at November 30, 2011, from $43.0 billion at November 30, 2010. The increase was the result of the Acuity acquisition in the first quarter of 2011 adding approximately $7.5 billion in AUM.Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 7.3% to $275.5 million, compared to the previous year. Excluding one-time charges related primarily to the Acuity acquisition in 2011 and one-time charges related to Smith & Williamson Holdings Limited in 2010, EBITDA increased 9.6% to $287.4 million compared to $262.3 million in 2010. EBITDA margin for the year ended November 30, 2011, decreased to 40.8% compared to 41.8%. Excluding one-time charges, EBITDA margin decreased to 42.6% compared to 42.7% in 2010."The latter half of 2011 brought a return to global market volatility and there are still challenges ahead for the asset management industry" said Blake C. Goldring, Chairman and CEO of AGF Management Limited. "As we move forward in 2012, we continue to focus on our long-term growth strategy, remain committed to improving sales and performance and look for ways to deliver value to all our stakeholders."Consolidated revenue increased 9.9% to $675.3 million compared to $614.6 million the previous year. Revenue in the Investment Management Operations segment increased 12.6% for the year ended November 30, 2011, to $584.9 million compared to $519.5 million in 2010, due to higher average daily retail fund AUM driven by the acquisition of Acuity.Earnings per share in fiscal 2011, on a fully diluted basis, were $1.18 compared to $1.30 in fiscal 2010. Excluding one-time charges mentioned above, diluted earnings per share were $1.27 per share compared to $1.34 per share in 2010.The Company generated free cash flow from operations of $173.8 million used to pay cash dividends of $97.3 million and repurchase shares of $8.1 million. AGF increased its dividend in the second quarter of 2011 and has maintained the quarterly dividend at $0.27 per share throughout the rest of the year. In total, AGF has returned 60.6% of its free cash flow directly to shareholders through dividend payments and share buybacks in 2011.While AGF Trust total loan assets decreased to $2.9 billion for the year ended November 30, 2011, compared to $3.1 billion in 2010, AGF Trust ended the year on a positive note as loans stabilized in the fourth quarter. Loan originations for the year ended November 30, 2011, increased 125.4% to $401.9 million compared to $178.3 million in 2010.Fourth Quarter OverviewDuring the fourth quarter of 2011, the Company recorded net income of $21.9 million compared to $30.9 million for the three months ended November 30, 2010. Revenue for the fourth quarter ended November 30, 2011 increased to $157.8 million, compared to $155.9 million in the same period in 2010. As a result of increased selling, general and administrative expenses, EBITDA decreased 3.3% in the fourth quarter of 2011. EBITDA margins were 40.5% for the three months ended November 30, 2011 compared to 42.4% for the same period in 2010. Diluted EPS during the fourth quarter of 2011 was $0.23 per share compared to $0.34 per share in 2010.AGF Management LimitedMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSFor the year ended November 30, 2011CAUTION REGARDING FORWARD-LOOKING STATEMENTS This Management's Discussion and Analysis (MD&A) includes forward-looking statements about the Company, including its business operations, strategy and expected financial performance and condition. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as 'expects,' 'anticipates,' 'intends,' 'plans,' 'believes' or negative versions thereof and similar expressions, or future or conditional verbs such as 'may,' 'will,' 'should,' 'would' and 'could.' In addition, any statement that may be made concerning future financial performance (including revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future action on our part, is also a forward-looking statement. Forward-looking statements are based on certain factors and assumptions, including expected growth, results of operations, business prospects, business performance and opportunities. While we consider these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about our operations, economic factors and the financial services industry generally. They are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied by forward-looking statements made by us due to, but not limited to, important risk factors such as level of assets under our management, volume of sales and redemptions of our investment products, performance of our investment funds and of our investment managers and advisors, competitive fee levels for investment management products and administration, and competitive dealer compensation levels, size and default experience on our loan portfolio and cost efficiency in our loan operations and investment management operations, as well as interest and foreign-exchange rates, taxation, changes in government regulations, unexpected judicial or regulatory proceedings, and our ability to complete strategic transactions and integrate acquisitions. We caution that the foregoing list is not exhaustive. The reader is cautioned to consider these and other factors carefully and not place undue reliance on forward-looking statements. Other than specifically required by applicable laws, we are under no obligation (and expressly disclaim any such obligation) to update or alter the forward-looking statements, whether as a result of new information, future events or otherwise. For a more complete discussion of the risk factors that may impact actual results, please refer to the 'Risk Factors and Management of Risk' section of this MD&A.Consolidated PerformanceThis Management's Discussion and Analysis (MD&A) is as at January 24, 2012, and presents an analysis of the financial condition of AGF Management Limited (AGF) and its subsidiaries as at November 30, 2011, compared to November 30, 2010. The MD&A also includes the results of operations for the year ended November 30, 2011, compared to the corresponding period of 2010. A discussion of the results for the three months ended November 30, 2011, compared to the three months ended November 30, 2010, is also included under the section 'Fourth Quarter Analysis.' This discussion should be read in conjunction with our audited Consolidated Financial Statements and Notes for the year ended November 30, 2011. The financial information presented herein has been prepared on the basis of Canadian Generally Accepted Accounting Principles (GAAP). We also utilize non-GAAP financial measures to assess each of our operating segments and our overall performance. Details of non-GAAP measures used are outlined in the 'Key Performance Indicators and Non-GAAP Measures' section, which provides calculations of the non-GAAP measures along with reconciliation of non-GAAP financial measures to GAAP financial statements. All dollar amounts are in Canadian dollars unless otherwise indicated. Throughout this discussion, percentage changes are calculated based on results rounded to the nearest thousand. Results, except per share information, are presented in millions of dollars. Percentage changes are calculated using numbers rounded to the decimals that appear in this MD&A.Our BusinessAGF Management Ltd. consists of two distinct businesses: AGF Investments and AGF Trust. AGF Investments, with $46.0 billion in assets under management (AUM) as at November 30, 2011, is one of the largest independent Canadian-based investment management firms, with operations and investments in Canada, the United States, the United Kingdom, Ireland and Asia. AGF Trust, with $2.9 billion in loan assets as at November 30, 2011, offers mortgage, deposit and consumer lending products to clients of financial advisors and mortgage brokers.The origin of our Company dates back to 1957 with the introduction of the American Growth Fund, the first mutual fund available to Canadians seeking to invest in the United States. As of November 30, 2011, our products and services include a diversified family of award-winning mutual funds, mutual fund wrap programs and pooled funds. AGF also manages assets on behalf of institutional investors including pension plans, foundations and endowments as well as for high-net-worth clients. AGF Trust is a complementary business that offers GICs, loans and mortgages through financial advisor and mortgage broker channels.For purposes of this discussion, the operations of AGF and our subsidiary companies are referred to as 'we,' 'us,' 'our' or 'the Company.' The financial results relating to the operations have been reported in three segments: Investment Management Operations, Trust Company Operations and Other.The Investment Management Operations segment includes the results of our retail, institutional and high-net-worth client businesses. The Trust Company Operations segment includes the results of AGF Trust Company, and the Other segment includes our equity interest in Smith & Williamson Holdings Limited (S&WHL).The principal subsidiaries and associated companies included within each of our reportable segments, collectively referenced to as the AGF Group of Companies (AGF), include:Investment Management Operations SegmentThe Investment Management Operations segment, referred to as AGF Investments, consists of the legal entities listed in the 'Government Regulations' section on page 35 of this MD&A under the section 'Investment Management Operations.' The Investment Management Operations segment dates back to 1957 and has evolved from a Canadian-based mutual fund operation to a global investment management firm with $46.0 billion of AUM. AGF Investments serves the financial needs of a wide range of diversified clients worldwide through its retail mutual funds, institutional and high-net-worth businesses.Our multi-disciplined investment management teams have expertise across the balanced, fixed income, equity and specialty asset categories and are located in Toronto, Dublin and Singapore. Our teams work collaboratively to provide excellence in money management and each has a clearly stated investment philosophy and a unique, research-driven investment process.Our retail operations are responsible for the sales and marketing of AGF mutual funds. AGF offers approximately 89 retail products including mutual funds, Harmony Private Investment Program, AGF Elements portfolios and Acuity funds.Our global institutional business provides investment management services for a variety of clients including institutions, pension funds, endowments, estates and sovereign wealth funds. We offer a diverse range of investment strategies and have sales and client service offices in Toronto, London (Ontario), Boston, Dublin and Hong Kong.Our high-net-worth business provides investment management and counselling services for high-net-worth clients in local markets. It includes the operations of Cypress Capital Management Limited in Vancouver, Highstreet Asset Management Inc. in London, Ontario, and Doherty & Associates Limited in Ottawa and Montreal.Trust Company Operations SegmentAGF Trust Company (AGF Trust) - The Trust Company Operations segment began in 1988. Complementary to our core business of investment management, AGF Trust has $2.9 billion in loan assets and offers a range of products and services including GICs, term deposits, real estate secured loans and investment loans. AGF Trust is federally incorporated, licensed across Canada and is a member of the Canada Deposit Insurance Corporation (CDIC) and Canada Mortgage and Housing Corporation (CMHC).Other SegmentSmith & Williamson Holdings Limited (S&WHL) - is a leading, independent private client investment management, financial advisory and accounting group based in the U.K., with ₤11.4 billion of AUM. As at November 30, 2011, we held a 31.0% interest in this company.Our Strategy AGF Management Limited is committed to providing world-class financial solutions to clients in Canada and abroad. We look to expand our business through organic growth supplemented by strategic acquisitions while continuing to focus on our key financial priorities to create long-term value for shareholders, clients and unitholders.Our Investment Management Operations provide a diverse suite of investment solutions to retail, institutional, and high-net-worth clients. We are focused on delivering strong long-term investment performance and excellence in client service while continuing to build and maintain strong relationships with our distribution partners.Our Trust Company Operations complement our Investment Management Operations and contribute to the profitability of AGF Management Limited. AGF Trust supports the AGF brand by effectively leveraging our financial advisor distribution channel through the delivery of value-added products and services.Measuring long-term shareholder growth, we look to the following key performance indicators:Revenue growth driven by new sales, market performance and client retentionEarnings before interest, taxes, depreciation, amortization and non-controlling interest (EBITDA) growthPre-tax marginsAUM in our Investment Management OperationsLoan assets in our Trust Company OperationsYear-over-year improvement in these measures is expected to result in improved cash flows as well as improved return on equity. Our objective is the return of a fair share of the annual cash flow to shareholders in the form of dividends and through share buybacks, with the remaining cash flow being invested in a manner intended to support future growth.Our strategy also recognizes that both the investment management and trust businesses will experience cycles related to the global stock markets, credit availability, employment levels and other economic factors. We believe that a successful strategy is founded on the ability of our operations to effectively operate through economic downturns and upturns by controlling cost and maintaining an effective infrastructure.2011 Overview Global market volatility continued to negatively impact the investment management industry into 2011. While the global markets were relatively strong during the first half of the year, similar to 2010, the second half of the year returned to uncertainty as a result of the ongoing European debt crisis and continued concerns about global unrest and the strength of the global economy.At AGF, we continued to remain focused on our long-term growth plans and strategic initiatives. On February 1, 2011, AGF completed the acquisition of 100% of Acuity Investment Management Inc. and Acuity Funds Ltd. (Acuity), which managed approximately $7.5 billion in retail and institutional assets. The acquisition strengthened our position as one of Canada's largest independent investment management firms and further diversified AGF's product mix by adding balanced and fixed income products to our product lineup. During the year, AGF fully integrated the operations of Acuity, including the successful completion of certain fund mergers and the transfer agency conversion.AGF Investments grew its AUM by 7.0% in 2011 through its strategic acquisition of Acuity and organic growth in its institutional business, offset by continued redemptions in our retail segment and market declines. We announced several changes to the Investment Management organization in 2011 to strengthen our investment management capabilities and to address certain areas of fund management underperformance. Changes were also announced within AGF International Advisors Co. Ltd. (AGFIA) based in Dublin, Ireland. On the distribution front, we strengthened the leadership with the addition of a new Senior Vice-President to focus on our growing institutional business. We have some of the most experienced asset management leaders in Canada and consider this bench strength to be a competitive advantage as we remain focused on returning to net sales and executing our long-term growth strategy.The following summarizes the key financial and operational results of 2011:Total AUM increased 7.0% to $46.0 billion as at November 30, 2011, from $43.0 billion at November 30, 2010, with the Acuity acquisition in the first quarter of 2011 adding approximately $7.5 billion in AUM.We continued to experience net redemptions in our retail funds, including retail pooled funds. Net redemptions were $2.2 billion in 2011 compared to $1.8 billion in 2010.Institutional and sub-advisory AUM increased 14.4% to $20.1 billion in 2011, while high-net-worth AUM increased 1.8% to $3.2 billion in 2011.Revenue increased 9.9% to $675.3 million compared to the same period in 2010, driven by a 12.6% increase in Investment Management Operations revenue.EBITDA for fiscal 2011 increased to $275.5 million compared to $256.8 million in fiscal 2010. AGF incurred $10.9 million in acquisition and integration costs related to the Acuity purchase during the year and a one-time charge of $1.0 million related to S&WHL. Excluding these one-time costs and one-time charges related to S&WHL in 2010, EBITDA increased 9.6% to $287.4 million. Consolidated EBITDA margins were 40.8% in fiscal 2011 compared to 41.8% fiscal 2010. Return on equity declined to 9.3% in fiscal 2011 compared to 10.2% in fiscal 2010.Diluted EPS was $1.18 per share for the year ended November 30, 2011, compared to $1.30 per share in 2010. Excluding one-time costs referenced above, diluted EPS was $1.27 per share compared to $1.34 per share in 2010. Diluted EBITDA per share was $2.90 for the year ended November 30, 2011, compared to $2.85 per share in 2010. Excluding the one-time costs, diluted EBITDA per share was $3.02 for fiscal 2011 compared to $2.91 per share in 2010.Cash flow from operations in fiscal 2011 was $222.8 million compared to $223.2 million in fiscal 2010.We returned 60.6% of our free cash flow directly to our shareholders through dividend payments and share buybacks. We define free cash flow as cash flow from operations before net change in non-cash balances related to operations less selling commissions paid. In fiscal 2011, dividends paid increased 2.9% to $1.07 per share from $1.04 per share in 2010.On June 21, 2011, the Board of Directors of AGF declared an increase of the quarterly dividend on both the Class A Voting common shares and Class B Non-Voting shares of the Company to $0.27 per share from $0.26 per share.AGF Trust loan assets declined 5.7% year-over-year, as real estate secured loans increased 4.2% over the prior year, offset by an 11.3% decline in investment loans. Loan originations of $401.9 million increased 125.4% compared to 2010, mainly due to higher volumes associated with real estate secured loans.AGF Trust entered into a securitization arrangement in 2011 and securitized $240.6 million in mortgage loans in 2011.Our overall balance sheet remains strong with a long-term debt to EBITDA ratio of 121.9% and undrawn capacity of $294.9 million on our $300.0 million credit facility. In 2011, we arranged an additional $125.0 million in long-term debt through a five-year revolving term facility. To hedge AGF's exposure to interest-rate variability, the Company entered into an interest-rate swap to fully hedge the $125.0 million at a fixed rate over five years.Consolidated Operating ResultsThe table below summarizes our consolidated operating results for the years ended November 30, 2011 and 2010:         ($ millions, except per share amounts)        Years ended November 30 2011  2010  % change         Revenue         Investment Management Operations$584.9 $519.5  12.6%  Trust Company Operations 85.6  95.8  (10.6%) Other 4.8  (0.7)  n/m    675.3  614.6  9.9%          Expenses         Investment Management Operations 348.8  303.2  15.0%  Trust Company Operations 51.0  54.6  (6.6%)  399.8  357.8  11.7%          EBITDA1 275.5  256.8  7.3%  Amortization 100.7  87.2  15.5%  Interest expense 11.8  5.7  107.0%  Impairment of assets available for sale 0.9  -  -   Income taxes 49.2  46.1  6.7%  Net income attributable to non-controlling interest 0.7  1.0  (30.0%)Net income attributable to equity owners of the Company$112.2 $116.8  (3.9%)Earnings per share - diluted$1.18 $1.30  (9.2%)1 For the definition of EBITDA, see the 'Key Performance Indicators and Non-GAAP Measures' section. The items required to reconcile EBITDA to net income, a defined term under Canadian GAAP, are detailed above.Results from OperationsRevenue for the year ended November 30, 2011, increased by 9.9% from the corresponding period in 2010. Revenue in the Investment Management Operations segment increased 12.6% for the year ended November 30, 2011, reflecting higher average levels of AUM as a result of the acquisition of Acuity. The Trust Company Operations segment reported a decrease in revenue of 10.6% in fiscal 2011 over 2010 as average loan balances declined by 11.0% on a year-over-year basis. Revenue from Other, which represents the results of our 31.0% equity interest in S&WHL, was higher for the year ended November 30, 2011, due to AGF's proportion of one-time charges of approximately $5.5 million in 2010, primarily related to a goodwill impairment charge and costs related to investment team recruitment arrangements, offset by a $1.0 million regulatory levy recorded in the second quarter of 2011.Expenses for the year ended November 30, 2011, increased 11.7% compared to fiscal 2010. The Investment Management Operations increase in expenses was primarily attributed to the acquisition of Acuity and higher trailing commissions associated with higher average levels of AUM. Investment Management Operations expenses, excluding one-time acquisition and integration costs, increased 11.4%. The Trust Company Operations expenses decreased primarily due to lower loan loss provisions in 2011 compared to 2010. For further details, refer to each of the segment discussions.The impact of the above items resulted in an increase in total EBITDA of 7.3% for the year ended November 30, 2011, over the respective 2010 period. Excluding one-time charges, EBITDA increased 9.6%. Amortization expense for the year ended November 30, 2011, increased by 15.5% compared to the corresponding period in 2010. Amortization of deferred selling commissions for the year ended November 30, 2011, accounted for $76.8 million (2010 - $78.6 million) of the total amortization expense, while amortization of definite life intangibles increased to $19.7 million related to the Acuity acquisition. Interest expense increased as a result of higher debt levels associated with the Acuity acquisition and increased interest rates.During the year, we recognized an other-than-temporary impairment loss on our available for sale asset of $0.9 million.Income tax expense for the year ended November 30, 2011, was $49.2 million as compared to $46.1 million in 2010. The effective tax rate for the year ended November 30, 2011, was 30.3% compared to 28.1% in the same period of 2010.Net IncomeThe impact of the above revenue and expense items resulted in net income of $112.2 million in 2011 as compared to $116.8 million in the prior year. Diluted earnings per share were $1.18 per share in 2011 as compared to $1.30 per share in 2010. Basic earnings per share were $1.19 per share in 2011 as compared to $1.31 per share in 2010. Excluding one-time costs, diluted earnings per share was $1.27 for the year ended November 30, 2011.For a more detailed discussion of revenue and expense items, please refer to the operating segment discussions. An analysis of the 2011 fourth-quarter results compared to the corresponding period in 2010 is included under the heading 'Fourth Quarter Analysis.'Return on EquityReturn on equity in 2011 was 9.3% as compared to 10.2% in 2010. The decrease was due to lower earnings in 2011, which were impacted by higher amortization on definite life intangibles as well as acquisition and integration costs and increased interest expense associated with the Acuity purchase.Outlook During the beginning of 2011, concerns over a double-dip recession had receded, employment conditions in Canada seemed to be improving and markets were beginning to show positive growth as investors began to regain confidence in the market; however, instability ensued by the second half of 2011. AGF continued to forge ahead with the acquisition and integration of Acuity and continued to strengthen its management team with the announcement of several key appointments and the reorganization of its investment management team.As we move into 2012, AGF will be focused on refining and strengthening its product lineup and bolstering retail sales efforts in Canada while expanding our global institutional sales presence. Our focus on improving investment performance through our distinct and disciplined investment approach will continue to be a priority in 2012, as this will be key to addressing net redemptions and return AGF to positive net retail sales.Business Segment PerformanceWe report on three business segments: Investment Management Operations, Trust Company Operations and Other. AGF's reportable segments are strategic business units that offer different products and services. The Investment Management Operations segment provides investment management and advisory services. It is responsible for the management and distribution of AGF investment products and services, including retail mutual fund and pooled fund operations, institutional investment management and high-net-worth client investment counselling services. The Trust Company Operations segment offers a range of products, including GICs, real estate secured loans and investment loans. The 'Other' segment includes the results of S&WHL, which is accounted for by the equity method and interest expense.Investment Management OperationsBusiness and Industry ProfileWe are an independent investment management operation servicing Canadian and international investors through our retail, institutional and high-net-worth businesses.Our investment management teams provide a diverse range of investment strategies and philosophies and unique research-driven investment processes.Our retail business delivers a wide range of products across a number of investment strategies including AGF mutual funds, the AGF Elements portfolios and the Harmony Private Investment Program. We compete with numerous domestic and foreign players serving the market. Our products are delivered through multiple channels, including advisors, financial planners, banks, life insurance companies and brokers. We have seven sales offices located across Canada serving regional advisors and their clients, while our strategic accounts team serves our corporate distribution partners.Our institutional business offers a variety of investment mandates through pooled funds and segregated accounts. We compete domestically and globally as an institutional investment manager and have sales and client service offices in Canada, the United States, Europe and Asia serving pension funds, foundations, institutions, endowments and sovereign wealth funds.Our high-net-worth business delivers investment management and counselling services in local markets in Canada. It includes the operations of Cypress Capital Management Limited in Vancouver; Highstreet Asset Management in London, Ontario; and Doherty & Associates in Ottawa and Montreal.Segment Strategy and 2011 OverviewBuilding on our over 50-year tradition of being independent, fostering innovation and maintaining integrity, we work to provide excellent products and services across all client segments while building enduring relationships and delivering value to shareholders, clients and unitholders. Our goal is to deliver strong long-term investment performance and client service excellence to the retail mutual fund, institutional and high-net-worth markets. We continue to foster our relationships with advisors and strategic distribution partners and provide a diverse suite of investment solutions. We strive to build strong portfolio management teams to ensure continuity and strength in investment management and to leverage our in-house investment management expertise across multiple client channels.In a consolidating industry, AGF's ability to increase scale strengthens our position as one of Canada's largest independent investment management firms. On February 1, 2011, AGF completed the acquisition of Acuity, which managed approximately $7.5 billion in retail and institutional assets. The acquisition further strengthens AGF's commitment to diversification and providing excellence in wealth management to meet the needs of a diverse range of clients in both the retail and institutional markets.A summary of key results is as follows:We acquired 100% of Acuity in 2011 and fully integrated the business and back office by the third quarter of 2011.We continued to experience net redemptions during the year, despite overall positive industry flows.Institutional and sub-advisory accounts AUM increased 14.4%, while high-net-worth AUM increased 1.8% in 2011.At the 2011 Canadian Investment Awards, AGF Emerging Markets Fund won the Emerging Markets Equity Fund Award  for the sixth consecutive year.In the third quarter of 2011, three portfolio managers received the Brendan Wood Top 15 Investment Minds Award.Our strategic priorities for our Investment Management Operations for 2012 are as follows:Continued focus on excellence in three core activities: investment management, relationship management and product management across domestic and international markets.Focus on returning to net sales through product strategies that target high flow categories, continued strong partner relationships and improved investment performance.Continued organic growth in our institutional business.Become the partner of choice for retail clients by providing products that meet their long-term investment strategies.Improve financial performance.Assets Under ManagementThe primary sources of revenue for AGF's Investment Management Operations segment are management and advisory fees. The amount of management and advisory fees depends on the level and composition of AUM, which in turn is dependent upon investment performance and net sales. Under the management and investment advisory contracts between AGF and each of the mutual funds, we are entitled to monthly fees. These fees are based on a specified percentage of the average daily net asset value of the respective fund. In addition, we earn fees on our institutional and sub-advisory accounts and high-net-worth client AUM. As a result, the level of AUM has a significant influence on financial results.The following table illustrates the composition of the changes in total AUM during the years ended November 30, 2011 and 2010:          ($ millions)      Years ended November 30 2011  2010   % change         Mutual fund AUM, beginning of year$22,264 $22,746  (2.1%)          Acquisition of Acuity1 2,845  -  n/m           Gross sales 2,625  2,611  0.5% Redemptions (4,688)  (4,364)  7.4% Net mutual fund sales (2,063)  (1,753)  17.7%           Market appreciation (depreciation) of fund portfolios (1,060)  1,271  (183.4%)         Mutual fund AUM, end of year$21,986 $22,264  (1.2%)         Retail pooled fund AUM, beginning of year$- $-  -          Acquisition of Acuity1 923  -  n/m           Gross sales 70  -  n/m Redemptions (162)  -  n/m Net retail pooled funds sales (92)  -  n/m           Market appreciation (depreciation) of fund portfolios (114)  -  n/m         Retail pooled fund AUM, end of year$717 $-  n/m         Total retail fund AUM (including retail pooled funds)$22,703 $22,264  2.0%         Average daily retail fund AUM for the year$24,638 $22,091  11.5%         Institutional and sub-advisory accounts AUM, beginning of year$17,585 $18,921  (7.1%)           Acquisition of Acuity1 3,754  -  n/m           Net change in institutional and sub-advisory accounts (1,220)  (1,336)  n/m           Total institutional and sub-advisory accounts AUM$20,119 $17,585  14.4%         High-net-worth AUM$3,221 $3,164  1.8%         Total AUM, end of year$46,043 $43,013  7.0%         1 Acuity was acquired on February 1, 2011.                 The addition of $3.7 billion in retail AUM from the acquisition of Acuity, offset by declines in the global market and retail fund net redemptions, resulted in a 2.0% increase in retail fund AUM, including retail pooled funds, ending the year at $22.7 billion as compared to $22.3 billion as at November 30, 2010. The average daily retail fund AUM for the year ended November 30, 2011, increased 11.5% to $ 24.6 billion, compared to $22.1 billion for the year ended 2010. During the past 12 months, institutional and sub-advisory accounts AUM increased by $2.5 billion, to $20.1 billion. The Acuity acquisition added $3.8 billion to this category, which was offset by market declines during the year. High-net-worth AUM increased by 1.8% to $3.2 billion. Overall, total AUM increased 7.0% to end the year at $46.0 billion.Investment PerformanceStock market performance influences the level of AUM. During the year ended November 30, 2011, the Canadian-dollar-adjusted S&P 500 Index increased 7.1%, the Canadian-dollar-adjusted NASDAQ Index increased 4.2% and the MSCI World Index increased 1.3%, while the S&P/TSX Composite Index decreased 3.3%. The aggregate market depreciation of our retail fund portfolios for the year ended November 30, 2011, divided by the average daily retail fund AUM for the period, was 4.8% after management fees and expenses paid by the funds.The impact of the U.S. dollar depreciation relative to the Canadian dollar on the market value of AGF retail funds for the year ended November 30, 2011, has been a decrease in AUM of approximately $41.3 million (2010 - $182.2 million).The impact of the euro appreciation relative to the Canadian dollar on the market value of AUM for the year ended November 30, 2011, has been an increase in AUM of approximately $43.4 million (2010 - depreciation of $453.0 million).Consistent with the increase in the stock market, market depreciation net of management fees decreased retail fund AUM by $0.3 billion since November 30, 2010. For the one-year period ended November 30, 2011, 19% of ranked AUM performed above median (2010 - 31%). Over the three-year period ended November 30, 2011, 21% of ranked AUM performed above median (2010 - 35%). The composition of AUM as outlined on page 33 of this MD&A has direct influence on our revenues. Generally, equity funds have higher management fees than fixed income funds and international funds have higher management fees than domestic funds.Financial and Operational ResultsThe table below highlights the Investment Management Operations segment results for the years ended November 30, 2011 and 2010:         ($ millions)        Years ended November 30 2011  2010  % change         Revenue         Management and advisory fees$552.8 $489.6  12.9%  Deferred sales charges 23.2  22.6  2.7%  Investment income and other revenue 8.9  7.3  21.9%    584.9  519.5  12.6%          Expenses         Selling, general and administrative 174.1  155.5  12.0%  Business acquisition and integration 10.9  -  -   Trailing commissions 154.5  138.5  11.6%  Investment advisory fees 9.3  9.2  1.1%   348.8  303.2  15.0%          EBITDA1  236.1  216.3  9.2% Amortization 99.4  85.0  16.9% Impairment of asset available for sale 0.9  -  -  Income before taxes and non-segmented items$135.8 $131.3  3.4%1 As previously defined, see the 'Key Performance Indicators and Non-GAAP Measures - EBITDA' section.RevenueFor the year ended November 30, 2011, revenue for the Investment Management Operations segment increased by 12.6% over the previous year, with changes in the categories as follows:Management and Advisory FeesManagement and advisory fees are directly related to our AUM levels. The 11.5% increase in average daily retail fund AUM for the year ended November 30, 2011, combined with higher levels of institutional and high-net-worth AUM for much of the year, contributed to a 12.9% increase in management and advisory fee revenue compared to 2010.Deferred Sales Charges (DSC)We receive deferred sales charges upon redemption of securities sold on the contingent DSC or low-load commission basis for which we finance the selling commissions paid to the dealer. The DSC ranges from 1.5% to 5.5%, depending on the commission option, of the original subscription price of the funds purchased if the funds are redeemed within the first two years, and declines to zero after three or seven years. DSC revenue fluctuates based on the level of redemptions, the age of the assets being redeemed and the proportion of redemptions composed of back-end assets. DSC revenues increased by 2.7% in 2011 compared to 2010.Investment Income and Other RevenueInvestment income and other revenue increased by 21.9% or $1.6 million in fiscal 2011 over 2010.ExpensesFor the year ended November 30, 2011, expenses for the Investment Management Operations segment increased 15.0% from the previous year. Changes in specific categories are described in the discussion that follows:Selling, General and Administrative ExpensesSelling, general and administrative expenses (SG&A) increased by $18.6 million or 12.0% in 2011 compared to 2010. The increase is made up of the following amounts:    ($ millions)   Year ended November 30     2011      Increase in compensation-related expenses   $17.8Increase in other expenses    4.4Decrease in fund absorption expenses    (3.6)    $18.6      The following explains expense changes in 2011 compared to the prior year:Compensation-related expenses increased $17.8 million. The increase was driven by the acquisition of Acuity, higher headcount levels, a $2.9 million charge recorded in the year related to the Dublin reorganization and higher performance-based bonus costs.Other expenses increased $4.4 million due to an increase in back office costs to support our institutional and investment management functions and the acquisition of Acuity, offset by lower legal costs. Expenses in 2010 included a $3.5 million charge related to a legal settlement.Fund absorption expense decreased by $3.6 million. The lower absorption costs reflect the achievement of our revenue commitment with Citigroup Fund Services, which reduced absorption.Business Acquisition and IntegrationBusiness acquisition and integration costs related to Acuity totalled $10.9 million for the year ended November 30, 2011. The costs incurred comprise of acquisition fees related to professional services, fees associated with financing, severance costs and costs related to fund mergers and the conversion of back office fund accounting systems.Trailing CommissionsTrailing commissions paid to distribution depend on total AUM, the proportion of retail fund AUM sold on a front-end versus back-end commission basis and the proportion of equity fund AUM versus fixed income fund AUM. Trailing commissions as a percentage of average daily retail fund AUM were 0.63% for the 12 months ended November 30, 2011, compared to 0.63% in the same period in 2010.Investment Advisory FeesExternal investment advisory fees increased by 1.1% in 2011 compared to 2010.EBITDA and EBITDA MarginEBITDA for the Investment Management Operations segment was $236.1 million for the year ended November 30, 2011, a 9.2% increase from $216.3 million for the same period of fiscal 2010. The increase is primarily attributable to the acquisition of Acuity. Excluding one-time acquisition and integration costs related to the Acuity acquisition, EBITDA for the year ended November 30, 2011, increased to $247.0 million. EBITDA per share for the year ended November 30, 2011, was $2.90 per share compared to $2.85 per share in 2010.EBITDA margins were 40.4% in fiscal 2011 compared to 41.6% in 2010. EBITDA margins adjusted for one-time acquisition and integration costs increased to 42.2% for the year ended November 30, 2011.Amortization The category represents amortization of deferred selling commissions, customer contracts, other intangible assets, property, equipment and computer software. Deferred selling commission amortization represents the most significant category of amortization. We internally finance all selling commissions paid. The selling commissions are capitalized and amortized on a straight-line basis over a period that corresponds with their applicable DSC schedule. Amortization expense related to deferred selling commissions was $76.8 million in 2011, compared to $78.6 million in 2010.During fiscal 2011, we paid $49.0 million in selling commissions, compared to $49.4 million in 2010. The decline in DSC paid is due to a slightly higher percentage of funds paid on a front-end basis in 2011 compared to 2010. As at November 30, 2011, the unamortized balance of deferred selling commissions financed was $217.6 million, a decrease of $26.3 million from the prior year balance of $243.9 million.Intangible assets acquired as a result of the Acuity acquisition added amortization of approximately $16.9 million during the year ended November 30, 2011. Customer contracts related to the Acuity acquisition are amortized over seven years and other intangible assets are amortized over periods of three to 10 years.Pre-tax Profit MarginPre-tax profit margin decreased to 23.2% for fiscal 2011 compared to 25.3% for 2010, reflecting one-time acquisition and integration costs and higher amortization associated with $68.3 million of definite life assets acquired on the acquisition of Acuity.Segment Outlook AGF began fiscal 2011 very strong with the acquisition of Acuity, a recovery of the capital markets, and increased investor confidence. The second half of the year was dramatically different and brought a return to volatile markets around the globe, investor aversion to equity markets, and continued weakness in investment performance - largely as a result of economic instability in Europe. AGF's 54-year history has given us the perspective to recognize that patience and commitment to our long-term strategy will deliver results to our stakeholders.We see near-term investor demand in our fixed income and balanced products as investors continue to migrate to lower volatility products until global leaders decide on a course of action for sustained economic stability. Over the long-term, as investors recognize the need for equity products and diversification in their portfolios, we anticipate a return to demand for equity funds and skilled investment management. We also believe the Global and Emerging Markets represent an opportunity that many Canadians have not recognized yet, but will become a larger part of their portfolio in the future. Canadian demographics remain favourable to the investment management industry, with the Baby Boomer population poised to save and invest for retirement. Beyond this demographic segment, a large part of the population entering the workforce as well as new Canadians are also expected to begin evaluating savings and investment plans. We believe AGF's product breadth and depth provides an accessible, professionally managed solution for investors.The upcoming year will remain challenging due to the continued global instability, but AGF's experience, strategy and diversification of operating businesses will be critical in helping to manage through this economic cycle.Trust Company OperationsBusiness and Industry ProfileAGF Trust has offered mortgage, deposit and consumer lending products to clients of financial advisors and mortgage brokers for over 20 years. Our products complement wealth management products sold by financial advisors and reinforce sales relationships with our parent company. We remain committed to helping financial advisors serve their clients and supporting AGF Investments Inc. in its mutual fund sales efforts.The residential mortgage market in Canada remains a key driver of balance sheet growth for financial institutions of all sizes. The domestic housing sector, despite signs of stretched valuations in certain markets, continues to be supported by economic fundamentals. The mortgage brokers' share of total loan origination has been resilient in the past year, and our expectation is that mortgage brokers will retain a significant market share. Our strategy is to partner with select mortgage brokerage firms to capture a greater share of mortgage origination volumes. The depth of our management's experience in the broker channel, the strength of the AGF brand and our ability to deploy a substantial capital base relative to current lending assets will all support our efforts to grow our mortgage book.Segment Strategy and 2011 OverviewFor the year ended November 30, 2011, loan originations were $401.9 million compared to $178.3 million in the previous year. Net loan writeoffs were $16.0 million for the year ended November 30, 2011, compared to $25.4 million in the previous year. AGF Trust loan assets declined 5.7% from 2010. This decline in the loan book reflects a graduated approach to redeploying capital against new business. In the fourth quarter, lending volumes increased, as new mortgage business offset declines in other product categories.AGF Trust is expanding its mortgage programs in both the broker and advisor channel, which are expected to gradually increase levels of new originations. A partnership program with a large national mortgage broker firm was launched in January 2011, featuring a co-branded mortgage with a distinctive compensation structure. AGF Trust plans to expand this program to other partners in 2012. AGF Trust views the mortgage broker market as an attractive source of high-quality loan originations. AGF Trust intends to introduce product offerings to better match the competitive dynamics of the mortgage broker marketplace and purchase mortgage assets that fit the Company's desired risk characteristics. In addition, AGF Trust continues to support the financial advisor channel and is looking to expand on the advisor-focused mortgage loan program introduced in 2010. The Company is also enhancing its RSP loan program and providing additional sales support to increase originations during the 2012 RSP season.AGF Trust is financially strong, entering 2012 with an assets-to-capital multiple of 8.7 and a total capital ratio of 26.9%.Financial and Operational ResultsThe Trust Company Operations segment results for the years ended November 30, 2011 and 2010 are as follows:         ($ millions)        Years ended November 30 2011  2010  % change         Interest income         Loan interest$155.9 $169.4  (8.0%) Investment interest 15.4  14.5  6.2%   171.3  183.9  (6.9%)Interest expense         Deposit interest 97.0  124.9  (22.3%) Hedging interest income (20.7)  (46.0)  (55.0%) Other interest expense 17.6  18.6  (5.4%)  93.9  97.5  (3.7%)Net interest income 77.4  86.4  (10.4%)Other revenue 5.6  7.3  (23.3%)RSP loan securitization income, net of impairment 2.6  2.1  23.8% Total revenue 85.6  95.8  (10.6%)         Expenses         Selling, general and administrative 38.7  36.9  4.9%  Provision for loan losses 12.3  17.7  (30.5%)  51.0  54.6  (6.6%)         EBITDA1 34.6  41.2  (16.0%)Amortization 1.3  2.2  (40.9%)Income before taxes and non-segmented items$33.3 $39.0  (14.6%)1For the definition of EBITDA, see the 'Key Performance Indicators and Non-GAAP Measures' section. The items required to reconcile EBITDA to net income, a defined term under Canadian GAAP, are detailed above.Revenue, Net Interest Income and Net Interest MarginNet interest income, which is expressed net of interest on deposits and other interest expenses, was lower by 10.4% compared to the same period in 2010. The decrease is primarily related to a decrease in average loan balances of 11.0% compared to the prior year. The average net interest margin on lending products was 2.6% in fiscal 2011 (2010 - 2.6%). AGF Trust manages its interest rate risk through the use of interest rate swaps. Interest expense includes hedging interest income of $20.7 million for the year ended November 30, 2011 (2010 - $46.0 million). Other revenue decreased 23.3% in the year ended November 30, 2011, primarily due to a $1.7 million decrease in other income and fees. During the year, the Trust Company recognized a $0.2 million writedown of its retained interest in securitized RSP loans compared to $0.9 million in 2010. These factors resulted in an overall decrease in revenue of 10.6% in the year ended November 30, 2011, as compared to 2010.Securitization Income (Loss), Net of ImpairmentAs at November 30, 2011, the balance of all RSP securitized loans outstanding was $41.4 million (2010 - $68.4 million). The total income related to the RSP loan securitization was $2.6 million (2010 - $2.1 million) as a result of lower writedowns in 2011 compared to 2010. RSP loan securitizations qualified for derecognition from the balance sheet, compared to the real estate loan securitizations, which did not meet the derecognition criteria and are reported on the balance sheet.Selling, General and Administrative ExpensesExpense control remains a focus and management will effectively leverage its cost base as it repositions its loan book over time. SG&A expenses were up 4.9% for the year ended November 30, 2011, as compared to the prior year. The increases are related primarily to the additional personnel hired to support product re-launches.Provision for Loan LossesThe total provision for loan losses decreased to $12.3 million in 2011 compared to $17.7 million in 2010, reflecting improved year-over-year condition in the loan book in 2011.EBITDA and EBITDA MarginA decline in revenue partly offset by a decline in loan provisions contributed to a 16.0% decrease in EBITDA for the fiscal year ended November 30, 2011, to $34.6 million, compared to $41.2 million in fiscal 2010. EBITDA margin decreased to 40.4% from 43.0% over the same period of 2010.Pre-tax Profit MarginAs a result of the factors outlined above, pre-tax profit margin decreased to 38.9% in 2011 from 40.7% in 2010.Operational PerformanceThe table below highlights our key operational measures for the segment for the years ended November 30, 2011 and 2010:         ($ millions)        Years ended November 30 2011  2010  % change         Real estate secured loans1         Insured mortgage loans$531.9 $412.0  29.1%  Conventional mortgage loans 446.9  439.5  1.7%  HELOCs 194.7  274.2  (29.0%)  1,173.5  1,125.7  4.2% Investment loans1         Secured investment loans 1,456.2  1,630.3  (10.7%) RSP loans 315.1  364.2  (13.5%) Other loans 0.5  2.0  (75.0%)  1,771.8  1,996.5  (11.3%)Total loan assets 2,945.3  3,122.2  (5.7%)         Other assets 757.3  992.4  (23.7%)Total assets$3,702.6 $4,114.6  (10.0%)         Net interest income$77.4 $86.4  (10.4%)RSP loan securitization income (loss), net of impairement 2.6  2.1  23.8% Other revenue 5.6  7.3  (23.3%)Non-interest expenses2 (40.0)  (39.1)  2.3% Provision for loan losses (12.3)  (17.7)  (30.5%)Income before taxes and non-segmented items$33.3 $39.0  (14.6%)         Efficiency ratio3 46.7% 40.8%  Assets-to-capital multiple3 8.7   10.2    1 Includes loan provision and deferred sales commission.2 Includes SG&A and amortization expenses.3 For the definition of efficiency ratio and assets-to-capital multiple, see the 'Key Performance Indicators and Non-GAAP Measures' section.Loan AssetsReal estate secured loan assets increased by 4.2% year-over-year due to increased real estate lending activity as a result of the expansion of AGF Trust's mortgage program in both the broker and advisor channels in 2011. Secured investment loans decreased 10.7% to $1.5 billion as at November 30, 2011, compared to fiscal 2010, while RSP loan balances and other loans decreased 13.8% to $315.6 million. The declines were due to reduced market demand for these loan products.Efficiency RatioThe efficiency ratio is defined as non-interest expenses divided by the total of net interest income and non-interest income. It is a key industry performance indicator used to measure the efficiency of the organization. During 2011, the efficiency ratio experienced an unfavourable change to 46.7% compared to 40.8% in 2010. The increase is due to lower interest revenue as a result of declining loan balances and higher expenses related to increased staffing levels to support growth initiatives.Balance SheetTotal assets decreased 10.0% to $3.7 billion as at November 30, 2011, compared to the prior year. As at November 30, 2011, our assets-to-capital multiple stood at 8.7 times, compared to 10.2 times at the same time last year. AGF Trust's total capital ratio was 26.9% as at November 30, 2011, compared to 22.5% at November 30, 2010. Liquid assets remained high with $680.2 million in cash and cash equivalents as well as investments available for sale as at November 30, 2011 (2010 - $902.7 million).Loan Portfolio CreditThe credit risk factors considered when assessing the collectability of the various loan portfolios are primarily based on the individual's ability and willingness to make future loan payments, coupled with the underlying collateral security held for each of the loan categories. The key risk factors considered include:Employment rates: higher unemployment rates will likely result in higher default rates as individuals' ability to pay deteriorates.Residential property prices and sales volume: declining residential property prices and reduced volumes of residential property sales may result in lower resale prices and longer disposal times, therefore increasing losses incurred on the disposition of the property.Equity market performance: declining global equity markets present increased risk on the secured investment loan portfolio as the value of the underlying collateral is lower. While the Trust Company has recourse to the personal assets of clients with respect to investment loans, the global macro-economic situation and employment levels may impede the Trust Company's ability to realize on the full value of the loan.The general allowance for real estate secured loan losses decreased to $6.6 million as compared to $7.5 million a year ago. This included a general allowance for insured mortgage loans of $1.5 million (2010 - $2.5 million), which was set up in response to certain mortgage insurers taking a stricter interpretation of policy exclusions for fraud and misrepresentation as a result of the current environment. We have written off $0.3 million of insured mortgage loans during the year ended November 30, 2011 (2010 - $1.3 million). The general allowance for investment loan losses decreased to $13.8 million from $14.7 million in 2010. Approximately 54.3% of real estate secured loan assets, excluding HELOCs, are insured. We have security for non-RSP investment loans, consisting of mutual funds and other investments. The value of this collateral fluctuates with the changes in the underlying investments. The amount of RSP loans written off, net of recoveries (excluding securitized RSP loans) was $6.4 million for the year ended November 30, 2011 (2010 - $13.5 million). For the balance of our loan products, the amount written off net of recoveries was $9.6 million (2010 - $11.8 million).Segment OutlookWe anticipate that AGF Trust will experience net loan growth in fiscal 2012. Although the competitive dynamics in the mortgage space will result in some margin compression during the year, management is confident that through a combination of operating leverage, efficient use of capital, and targeting niche market segments underserved by major financial institutions, AGF Trust will achieve higher levels of profitability over the medium term.In fiscal 2012, we will continue to focus on strengthening client relationships and realizing operational efficiencies while making prudent investments in new products and services. AGF Trust uses disciplined underwriting and sound risk management practices, and we are employing the lessons learned during the economic downturn to improve credit quality and profitability of our lending portfolios.For 2012, we are focused on growth in our mortgage lending programs. Momentum during the latter half of 2011 is expected to continue into 2012, and the addition of new partners in the broker channel is expected to provide a further boost to origination volumes.Liquidity and Capital ResourcesConsolidated cash flow generated from operating activities, before net change in non-cash balances related to operations, was $222.8 million for the year ended November 30, 2011, compared to $223.2 million in the prior year. The primary uses of cash were as follows:We paid $49.0 million in selling commissions, which were capitalized and amortized for accounting purposes, compared to $49.4 million in 2010. Accordingly, our free cash flow (defined as cash flow from operations less selling commissions paid) was $173.8 million for the year ended November 30, 2011, compared to $173.8 million in the  prior year.We paid $97.3 million in dividends, up from $89.2 million in dividends paid in 2010.We repurchased 503,500 Class B Non-Voting shares for a total consideration of $8.1 million in fiscal 2011, compared to 846,100 Class B Non-Voting shares repurchased for a total consideration of $12.2 million in 2010.For the year ended November 30, 2011, we funded the cash portion of the Acuity acquisition by way of a one-time drawdown of $185.0 million through a four-year non-amortization bank loan facility.During 2011, AGF Trust paid a $10 million dividend to AGF Management Limited.Consolidated cash and cash equivalents of $246.6 million decreased by $210.0 million from the November 30, 2010 level of $456.6 million (2010 - increased by $181.7 million). Aside from cash held in the Trust Company Operations segment, which is held to fund loans to clients and GIC maturities, AGF had $62.1 million cash as at November 30, 2011 (November 30, 2010 - $31.7 million).On January 28, 2011, we arranged a four-year non-amortizing acquisition facility with two Canadian chartered banks. The facility allowed for a one-time drawdown of $185.0 million.On August 31, 2011, the Company arranged a syndicated revolving committed term loan with two Canadian chartered banks to a maximum of $125.0 million. As at November 30, 2011, the facility was fully drawn. To hedge AGF's exposure to interest-rate variability, the Company entered into an interest-rate swap to fully hedge the $125.0 million at a fixed rate over a five-year term.We also have a four-year prime rate-based revolving term loan facility to a maximum of $300.0 million, of which $294.9 million was available to be drawn as at November 30, 2011. The loan facility will be available to meet future operational and investment needs. We anticipate that cash flow from operations, together with the available loan facility, will be sufficient in the foreseeable future to implement our business plan, finance selling commissions, satisfy regulatory requirements, service debt repayment obligations, meet capital spending needs and pay quarterly dividends.Limited Partnership FinancingPrior to 2000, the Company financed certain deferred selling commissions using limited partnerships (LPs). The Company is obligated to pay these LPs an annual fee of 0.45% to 0.90% of the net asset value of DSC securities. This obligation will continue as long as such DSC securities remain outstanding except for certain of the LPs, in which case the obligation terminates at various dates from December 31, 2011 to December 31, 2020. For certain LPs, the obligation is secured by the Company's mutual fund management contracts to the extent of the particular obligation.The Company is responsible for the management and administration of the LPs. These services are provided in the normal course of operations and are recorded at the amount of consideration agreed to by the parties. The amount of fees received in 2011 was $0.2 million (2010 - $0.2 million). As at November 30, 2011, the net asset value of DSC securities financed by the LPs was $354.9 million (2010 - $557.0 million).Contractual Obligations The table below is a summary of our contractual obligations at November 30, 2011. See also Notes 9 and 24 of the Consolidated Financial Statements.                ($ millions)  Total    2012  2013-2014  2015-2016  Thereafter                  Long-term debt $310.0 $- $- $310.0 $-Operating leases  82.5  10.7  19.4  17.5  34.9Purchase obligations  26.3  17.0  6.0  3.3  -Total contractual obligations $418.8 $27.7 $25.4 $330.8 $34.9                In addition to the contractual obligations detailed above, the following obligations exist that vary depending upon business volume and other factors:AGF Trust is required to pay depositors amounts representing principal and interest on funds on deposit.A portion of our selling commissions paid on a DSC basis has been financed by LPs held by third-party investors. As at November 30, 2011, the net asset value of DSC securities financed by the LPs was $354.9 million and amounts paid to these partnerships in 2011 were $2.6 million.We pay trailing commissions to financial advisors based on AUM of their respective clients. This obligation varies based on fund performance, sales and redemptions, and in 2011 we paid $154.5 million in trailing commissions.We have committed to 2015 to reimburse Citigroup up to $2.8 million per year if minimum levels of services and related fees are not achieved. We expect to attain the minimum levels required in 2012.In conjunction with the Elements Advantage Commitment on certain Elements portfolios, AGF has committed to investors that if a portfolio does not match or outperform its customized benchmark over a three-year average annualized period, investors will receive up to 90 basis points in new units. Payments related to this began in fiscal 2009 for the applicable funds. AGF capped the AGF Elements Advantage feature on its Elements products to new purchases effective June 22, 2009. Eligible units purchased prior to June 22, 2010, have been grandfathered. The estimated liability as at November 30, 2011, is $6.1 million compared to $7.0 million in 2010.Intercompany and Related Party TransactionsThe Company may enter into certain transactions with entities or senior officers who are directors of the Company. During 2011 and 2010, total amounts paid by the Company to these related parties was nil.Capital Management ActivitiesWe actively manage our capital to maintain a strong and efficient capital base to maximize risk-adjusted returns to shareholders, invest in future growth opportunities, including acquisitions, and ensure that the regulatory capital requirements are met for each of our subsidiary companies.AGF capital consists of shareholders' equity. On an annual basis, AGF prepares a five-year plan detailing projected operating budgets and capital requirements. Each of AGF's operating segments are required to prepare and submit a five-year operating plan and budget to AGF's Finance Committee for approval prior to seeking Board approval. AGF's Finance Committee consists of the Chairman and CEO, the Vice-Chairman, Executive Vice-President and CFO, and the Executive Vice-President and Chief Operating Officer. Once approved by the Finance Committee, the five-year plans are reviewed and approved by AGF's Board of Directors. These plans become the basis for the payment of dividends to shareholders, the repurchase of Class B Non-Voting shares and, combined with the reasonable use of leverage, the source of funds for acquisitions.Investment Management Operations - Regulatory CapitalA significant objective of the Capital Management program is to ensure regulatory requirements are met for capital. Our Investment Management businesses, in general, are not subject to significant regulatory capital requirements in each of the jurisdictions in which they are registered and operate. The cumulative amount of minimum regulatory capital across all of our Investment Management Operations is approximately $6.0 million.AGF Trust - Capital Management FrameworkAGF Trust's regulatory capital consists primarily of common shareholders' equity, preferred shares and subordinated debentures. Regulatory capital is a factor that allows the AGF Trust Board of Directors (Trust Board) to assess the stability and security in relation to the overall risks inherent in AGF Trust's activities.AGF Trust actively manages regulatory capital levels in conjunction with management's internal assessment of capital. Consideration is given to many factors including regulatory guidance, strategic planning, shareholder interests, interests of depositors and internally generated target capital ratios. Minimum regulatory capital requirements are set by the Trust and Loan Companies Act and the Office of the Superintendent of Financial Institutions (OSFI). AGF Trust adopted the Standardized Approach for credit risk and the Basic Indicator Approach for operational risk.A key component of AGF Trust's capital framework is its internal capital adequacy assessment process (ICAAP). This process attributes capital for identified risks in proportion to the assessed risk. Risks are assessed using both qualitative and quantitative factors. The process also incorporates a variety of stress-testing approaches to evaluate the income and capital impacts of potential stress events. Tier 1 and total capital ratios are well above the prescribed minimum-risk-based capital ratios of 7% and 10%, respectively.AGF Trust - Basel II Capital AccordCapital measures at AGF Trust are detailed as follows:          ($ thousands)         November 30  2011    2010           Tier 1 capital $308,025   $287,183 Total regulatory capital  429,716    403,814 Risk-weighted assets  1,599,973    1,795,568 Tier 1 capital ratio  19.3%     16.0%Total capital ratio  26.9%     22.5%Assets-to-capital multiple 8.7    10.2           DividendsThe holders of Class B Non-Voting and Class A shares are entitled to receive cash dividends. Dividends are paid in equal amounts per share on all the Class B Non-Voting shares and all the Class A shares at the time outstanding without preference or priority of one share over another. No dividends may be declared in the event that there is a default of a condition of our loan facility or where such payment of dividends would create a default.Our Board of Directors may determine that Class B Non-Voting shareholders shall have the right to elect to receive part or all of such dividend in the form of a stock dividend. They also determine whether a dividend in Class B Non-Voting shares is substantially equal to a cash dividend. This determination is based on the weighted average price at which the Class B Non-Voting shares traded on the Toronto Stock Exchange during the 10 trading days immediately preceding the record date applicable to such dividend.The following table sets forth the dividends paid by AGF on Class B Non-Voting shares and Class A shares for the years indicated:                     Years ended November 30  20111   2010   2009   2008   2007                       Per share $ 1.07  $1.04  $1.00  $0.95  $0.78 Percentage increase   2.9%    4.0%    5.3%    21.8%    13.0%                     1 Represents the total dividends paid in April 2011, July 2011 and October 2011, and includes dividends to be paid in January 2012.We review our dividend distribution policy on a quarterly basis, taking into account our financial position, profitability, cash flow and other factors considered relevant by our Board of Directors. The quarterly dividend paid on January 20, 2012, was $0.27 per share.Normal Course Issuer BidIn January 2011, the Company's Board of Directors authorized the renewal of AGF's normal course issuer bid for the purchase of up to 7,430,257 Class B Non-Voting shares, or 10% of the public float for such shares. The Company received approval from the Toronto Stock Exchange on March 3, 2011, for the renewal of its normal course issuer bid. This allows AGF to purchase up to 7,430,257 Class B Non-Voting shares through the facilities of the Toronto Stock Exchange (or as otherwise permitted by the Toronto Stock Exchange) between March 7, 2011 and March 6, 2012. The Class B Non-Voting shares may be repurchased from time to time at prevailing market prices or such other price as may be permitted by the Toronto Stock Exchange.During the year ended November 30, 2011, under the current normal course issuer bid, 503,500 Class B Non-Voting shares were repurchased for a total consideration of $8.1 million at an average price of $16.05.AGF's previous normal course issuer bid allowed for the repurchase of up to 7,167,620 Class B Non-Voting shares between February 26, 2010 and February 25, 2011, at prevailing market prices. Under the previous normal course issuer bid, AGF purchased 846,100 Class B Non-Voting shares for a total consideration of $12.2 million at an average price of $14.44.Outstanding Share DataSet out below is our outstanding share data as at November 30, 2011. For additional detail, see Notes 14 and 15 of the Consolidated Financial Statements.      Years ended November 30 2011   2010      Shares     Class A Voting Common Shares57,600 57,600 Class B Non-Voting Shares95,406,796 88,606,196     Stock Options   Outstanding options5,399,429 5,540,399 Exercisable options3,750,272 3,620,914       Key Performance Indicators and Non-GAAP MeasuresWe measure the success of our business strategies using a number of key performance indicators (KPIs), which are outlined below. With the exception of revenue, the following KPIs are non-GAAP measures that are not defined under Canadian GAAP. They should not be considered as an alternative to net income attributable to equity owners of the Company or any other measure of performance under Canadian GAAP. Segment discussions include a review of KPIs that are relevant to each segment.a)     Consolidated OperationsRevenue Revenue is a measurement defined by Canadian GAAP and is recorded net of fee rebates, sales taxes and distribution fees paid to limited partnerships. Revenue is indicative of our potential to deliver cash flow.We derive our revenue principally from a combination of:management and advisory fees based on AUMdeferred sales charges (DSC) earned from investors when mutual fund securities sold on a DSC basis are redeemednet interest income earned on AGF Trust's loan portfolioEBITDAWe define EBITDA as earnings before interest, taxes, loss on available for sale assets, depreciation, amortization and non-controlling interest. EBITDA is a standard measure used in the mutual fund industry by management, investors and investment analysts to understand and compare results. We believe this is an important measure as it allows us to assess our investment management businesses without the impact of non-operational items. EBITDA for the Trust Company Operations segment includes interest expense related to deposits. These deposits fund our investment loan and real estate secured loan programs, and are therefore considered an operating cost directly related to generating interest revenue. We include this interest expense in Trust Company Operations EBITDA to provide a meaningful comparison to our other business segments and our competitors.Please see the Consolidated Operating Results section on page 7 of this MD&A for a schedule showing how EBITDA reconciles to our GAAP financial statements.Cash Flow from OperationsWe 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 sales commissions, pay down debt and fund other needs.      ($ millions)   Years ended November 30  2011    2010      Net cash provided by operating activities$     173.4 $178.5Less: net changes in non-cash balances related to operations      (49.4)  (44.7)Cash flow from operations$     222.8 $223.2      Free Cash Flow from OperationsWe define free cash flow as cash flow from operations before net changes in non-cash balances related to operations less selling commissions paid. This is a relevant measure in the investment management business since a substantial amount of cash is spent on upfront commission payments. Free cash flow represents cash available for distribution to our shareholders and for general corporate purposes.      ($ millions)   Years ended November 30  2011    2010       Cash flow from operations (defined above)$222.8  $223.2Less: selling commissions paid 49.0  49.4Free cash flow$173.8  $173.8      EBITDA MarginEBITDA margin provides useful information to management and investors as an indicator of our overall operating performance. We believe EBITDA margin is a valuable measure because it assesses the extent we are able to earn profit from each dollar of revenue. We define EBITDA margin as the ratio of EBITDA to revenue.       ($ millions)    Years ended November 30 2011    2010       EBITDA$ 275.5 $256.8Divided by revenue  675.3  614.6EBITDA margin 40.8%  41.8%       Pre-tax Profit MarginPre-tax profit margin provides useful information to management and investors as an indicator of our overall operating performance. We believe pre-tax profit margin is a valuable measure because it assesses the extent we are able to earn profit from each dollar of revenue. We define pre-tax profit margin as the ratio of income before taxes to revenue.       ($ millions)    Years ended November 30 2011    2010       Net income attributable to equity owners of the Company$ 112.2 $116.8Add: income taxes  49.2  46.1Income before taxes$ 161.4 $162.9Divided by revenue  675.3  614.6Pre-tax profit margin 23.9%  26.5%       Return on Equity (ROE) We monitor ROE to assess the profitability of the consolidated Company on an annual basis. We calculate ROE by dividing net income attributable to equity owners of the Company by average shareholders' equity.       ($ millions)      Years ended November 30  2011   2010       Net income attributable to equity owners of the Company $112.2 $116.8Divided by average shareholders' equity  1,211.2  1,140.5Return on equity  9.3%  10.2%       Long-term Debt to EBITDA RatioLong-term debt to EBITDA ratio provides useful information to management and investors as an indicator of our ability to service our long-term debt. We define long-term debt to EBITDA ratio as long-term debt at the end of the year divided by EBITDA for the year. ($ millions)     Years ended November 30  2011   2010      Long-term debt1$335.9 $143.7Divided by EBITDA 275.5  256.8Long-term debt to EBITDA 121.9%  56.0%1Includes deferred cash consideration related to the Acuity acquisition.b)     Investment Management OperationsAssets Under Management (AUM)The amount of AUM is critical to our business since these assets generate fees from our mutual fund, institutional and sub-advisory accounts and high-net-worth relationships. AUM will fluctuate in value as a result of investment performance, sales and redemptions. Mutual fund sales and AUM determines a significant portion of our expenses because we pay upfront commissions on gross sales and trailing commissions to financial advisors as well as investment advisory fees based on the value of AUM.Investment Performance Investment performance, which represents market appreciation (depreciation) of fund portfolios and is shown net of management fees received, is a key driver of the level of AUM and is central to the value proposition that we offer advisors and unitholders. Growth in AUM resulting from investment performance increases the wealth of our unitholders, and, in turn, we benefit from higher revenues. Alternatively, poor investment performance will reduce our AUM levels and result in lower management fee revenues. Strong relative investment performance may also contribute to growth in gross sales or reduced levels of redemptions. Conversely, poor relative investment performance may result in lower gross sales and higher levels of redemptions. Refer to the 'Risk Factors and Management of Risk' section of this report for further information.Net Sales (Redemptions)Gross sales and redemptions are monitored separately and the sum of these two amounts comprises net sales (redemptions). Net sales (redemptions), together with investment performance and fund expenses, determine the level of average daily retail fund AUM, which is the basis on which management fees are charged. The average daily retail fund AUM is equal to the aggregate average daily net asset value of the AGF retail funds. We monitor AUM in our institutional, sub-advisory and high-net-worth businesses separately. We do not compute an average daily retail fund AUM figure for them.EBITDA Margin - Investment ManagementEBITDA 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 because it assesses the extent we are able to earn profit from each dollar of revenue. We define EBITDA margin as the ratio of EBITDA to revenue.       ($ millions)   Years ended November 30 2011    2010      EBITDA$236.1  $216.3Divided by revenue 584.9   519.5EBITDA margin 40.4%  41.6%      Pre-tax Profit Margin - Investment ManagementPre-tax profit margin provides useful information to management and investors as an indicator of our operating performance in our Investment Management Operations segment. We believe pre-tax profit margin is a valuable measure because it assesses the extent we are able to earn profit from each dollar of revenue. We define pre-tax profit margin as the ratio of income before taxes and non-segmented items to revenue.       ($ millions)    Years ended November 30   2011    2010       Income before taxes and non-segmented items $135.8 $131.3Divided by revenue  584.9  519.5Pre-tax profit margin  23.2%  25.3%       c)     Trust Company OperationsLoan AssetsIn the Trust Company Operations segment, new originations, net of repayments, drive the outstanding balance of loans on which we charge interest. Loan asset growth contributes to increases in our revenue. Conversely, a decline in loan assets will negatively impact our revenue.Net Interest IncomeNet interest income is a common lending industry performance indicator. We monitor this figure to evaluate the growth of the financial contribution of AGF Trust. The figure is calculated by subtracting interest expense from interest income earned from AGF Trust loan assets. ($ millions)  Years ended November 30 2011  2010          Interest income$171.3  $183.9Less: interest expense 93.9   97.5Net interest income$77.4  $86.4      Net Interest MarginNet interest margin is equal to annualized net interest income for the year divided by the average total loan balance.      ($ millions)      Years ended November 30  2011   2010      Annualized net interest income$77.4 $86.4Divided by average yearly total loan balance 2,976.6  3,343.9Net interest margin 2.6%  2.6%      Efficiency RatioThe efficiency ratio is a financial services industry KPI that measures the efficiency of the organization. We use this ratio to monitor expenses, excluding loan loss provisions. The ratio is calculated from AGF Trust results by dividing non-interest expenses by the total of net interest income and non-interest income.      ($ millions)   Years ended November 30  2011    2010      Selling, general and administrative expenses$38.7 $36.9Add: amortization expense 1.3  2.2Non-interest expense 40.0  39.1      Other revenue$5.6 $7.3RSP loan securitization income (loss), net of impairment 2.6  2.1Non-interest income 8.2  9.4      Net interest income$77.4 $86.4Add: non-interest income 8.2  9.4Total of net interest income and non-interest income 85.6  95.8Efficiency ratio 46.7%  40.8%      EBITDA Margin - Trust EBITDA margin provides useful information to management and investors as an indicator of AGF Trust's operating performance. We believe EBITDA margin is a valuable measure because it assesses the extent we are able to earn profit from each dollar of revenue. We define EBITDA margin as the ratio of EBITDA to revenue. ($ millions)    Years ended November 30 2011    2010        EBITDA$34.6  $41.2Divided by revenue 85.6   95.8EBITDA margin 40.4%  43.0%       Pre-tax Profit Margin - Trust Pre-tax profit margin provides useful information to management and investors as an indicator of AGF Trust's operating performance. We believe pre-tax profit margin is a valuable measure because it assesses the extent we are able to earn profit from each dollar of revenue. We define pre-tax profit margin as the ratio of income before taxes and non-segmented items to total revenue.      ($ millions)   Years ended November 30  2011    2010      Income before taxes and non-segmented items$33.3 $39.0Divided by revenue 85.6  95.8Pre-tax profit margin 38.9%  40.7%      Assets-to-Capital MultipleFederally regulated deposit-taking institutions (DTIs) are expected to meet an assets-to-capital multiple test. The assets-to-capital multiple is determined by dividing the DTI's total assets by its total regulatory capital, and expresses the extent by which capital is leveraged into the assets of the DTI.      ($ millions)     Years ended November 30  2011   2010      Total assets per OSFI1 guidelines$3,731.3 $4,112.7Divided by adjusted Tier 1 and Tier 2 capital 429.7  403.8Assets-to-capital multiple 8.7  10.21OSFI is the Office of the Superintendent of Financial Institutions.Impaired Loans as a Percentage of Loans OutstandingImpaired loans as a percentage of loans outstanding is calculated by dividing total impaired loans by total loans outstanding.      ($ millions)     Years ended November 30  2011   2010      Impaired loans$23.8 $35.7Divided by total loans outstanding1 2,945.3  3,122.2Impaired loans as a percentage of loans outstanding 0.8%  1.1%1 Includes loan provision and deferred sales commission of $22.7 million in 2011 and $28.6 million in 2010.Significant Accounting Policies The Consolidated Financial Statements have been prepared in accordance with Canadian GAAP. The Consolidated Financial Statements include the accounts of the Company and its directly and indirectly owned subsidiaries. Intercompany transactions and balances are eliminated on consolidation. For subsidiaries where the Company does not own all of the equity, the minority shareholders' interest is disclosed in the Consolidated Balance Sheet as non-controlling interest and the related income is disclosed as a separate line in the Consolidated Statement of Income. Investments over which the Company is able to exercise significant influence are accounted for by the equity method. A summary of AGF's significant accounting policies can be found in Note 1 of the Consolidated Financial Statements.Use of EstimatesThe preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the year. Actual amounts could differ from these estimates.Key areas of estimation, where management has made difficult, complex or subjective judgments - often about matters that are inherently uncertain - are loan loss provisions, recoverability of goodwill and intangible assets using estimates of future cash flows, as well as commitments and contingencies, fund absorption costs, income tax provisions, valuation of retained interest from securitization, stock-based compensation, acquisition considerations payable and the provision for performance-related compensation. The Company has made investments in companies or businesses, some of which have experienced operating losses. Significant changes in the assumptions, including those about future business plans and cash flows, could change the recorded amounts by a material amount. Any further operating losses of these investees could result in impairment of these investments.Significant Accounting ChangesBusiness Combinations, Consolidated Financial Statements and Non-Controlling InterestsEffective December 1, 2010, the Company elected to adopt early the CICA's "Handbook Section 1582, Business Combinations" (Section 1582), "Handbook Section 1601, Consolidated Financial Statements" (Section 1601) and "Handbook Section 1602, Non-Controlling Interests" (Section 1602). In accordance with the transitional provisions, these standards were applied on a prospective basis, with the exception of the presentation and disclosure requirements for non-controlling interest, which were applied retrospectively. The adoption of these standards did not have a significant impact on the Company's consolidated financial statements other than the reclassification of non-controlling interests, as described below, and the Company's accounting for the acquisition of Acuity as described in Note 4(a) of the Consolidated Financial Statements.Pursuant to Section 1582 (equivalent to IFRS 3 "Business Combinations"), business combinations completed on or after December 1, 2010, were accounted for using the acquisition method of accounting. Under the acquisition method of accounting, the consideration transferred in a business combination is measured at fair value at the date of acquisition. This consideration includes any cash paid plus the fair value at the date of exchange of assets given, liabilities incurred and equity instruments issued by the Company or its subsidiaries. The consideration transferred also includes contingent consideration arrangements recorded at fair value. Directly attributable acquisition-related costs are expensed in the current period and reported within operating expenses. At the date of acquisition, the Company recognizes the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquired business. The identifiable assets acquired and the liabilities assumed are initially recognized at fair value. Where the fair value of consideration paid is less than the fair value of net assets acquired, the excess is recognized in the Consolidated Statement of Income. Any pre-existing equity interests in an acquiree are remeasured to fair value at the date of the business combination and any resulting gain or loss is recognized in the Consolidated Statement of Income.Business combinations completed prior to December 1, 2010, were accounted for using the purchase method under previous Canadian GAAP. The fundamental requirements of the purchase method of accounting are similar to the acquisition method of accounting described above except that, among other differences, the purchase method required that share consideration issued by the acquirer be measured by reference to its market price for a reasonable period before and after the acquisition was announced; acquisition-related costs were included as part of the fair value of the purchase consideration; contingent consideration was generally not recognized initially as part of the consideration transferred; and identifiable assets acquired and liabilities assumed were adjusted to reflect fair values only to the extent of the acquirer's interest in the acquiree when that interest was less than 100%. Furthermore, where the fair value of consideration paid was less than the fair value of net assets acquired, the excess amount was first deducted proportionally from the purchase price allocated to certain acquired non-current assets until their carrying amounts were reduced to nil. Only then was any remaining excess recognized in the Consolidated Statement of Income.A non-controlling interest may be measured at fair value or at the proportionate share of identifiable net assets acquired. Under previous Canadian GAAP, a non-controlling interest was recorded at the proportionate share of the carrying value of the acquiree.Section 1601 carries forward existing guidance on aspects of the preparation of consolidated financial statements subsequent to the acquisition date other than those pertaining to a non-controlling interest. Section 1602 provides guidance on the treatment of a non-controlling interest after acquisition in a business combination and requires a non-controlling interest to be presented clearly in equity, but separately from the parent's equity; the amount of consolidated net income and other comprehensive income attributable to the parent and to a non-controlling interest to be clearly identified and presented on the Consolidated Statement of Income and Consolidated Statements of Comprehensive Income, respectively; and changes in ownership interests of a subsidiary that do not result in a loss or acquisition of control to be accounted for as an equity transaction.Income TaxesThe Company follows the asset and liability method in accounting for income taxes whereby future income tax assets and liabilities reflect the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities and their tax bases. Future income tax assets and liabilities are measured based on the enacted or substantively enacted tax rates that are expected to be in effect when the future income tax assets or liabilities are expected to be realized or settled. The effect on future income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the substantive enactment date. Future income tax assets are recognized to the extent that realization is considered more likely than not.Deferred Selling CommissionsSelling commissions paid to brokers on mutual fund securities sold on a DSC basis are recorded at cost and are amortized on a straight-line basis over a period that corresponds with the applicable DSC schedule (which ranges from three to seven years).Property, Equipment and Computer SoftwareProperty, equipment and computer software, which is comprised of furniture and equipment, computer hardware, computer software and leasehold improvements, is stated at cost, net of accumulated amortization and impairment, if any. Amortization is calculated using the following methods based on the estimated useful lives of these assets:  Furniture and equipment    20% declining balance  Computer hardware         30% declining balance   Leasehold improvements    straight-line over term of lease  Computer software         straight-line over three yearsCustomer ContractsCustomer contracts are stated at cost, net of accumulated amortization and impairment, if any. Amortization is computed on a straight-line basis over seven to 15 years based on the estimated useful lives of these assets.Impairment of Long-lived AssetsImpairment of long-lived assets, which includes property, equipment and computer software and intangible assets with finite useful lives, is recognized when an event or change in circumstance causes the assets' carrying value to exceed the total undiscounted cash flows expected from their use and eventual disposition. The measurement of impairment loss is based on the amount that the carrying value exceeds the fair value.Goodwill, Management Contracts and TrademarksThe purchase price of acquisitions accounted for under the purchase method and the purchase price of investments accounted for under the equity method are allocated based on the fair values of the net identifiable assets acquired, including management contracts and other identifiable intangible assets. The excess of the purchase price over the values of such assets is recorded as goodwill. Certain management contracts and trademarks have been determined to have an indefinite life.Goodwill, management contracts and trademarks are not amortized but are subject to impairment tests on an annual basis or more frequently if events or changes in circumstances indicate that the asset may be impaired. Goodwill is allocated to the reporting units and any impairment is identified by comparing the carrying value of a reporting unit with its fair value. If any impairment is indicated, then it is quantified by comparing the carrying value of goodwill to its fair value, based on the fair value of the assets and liabilities of the reporting unit. Management contracts and trademarks are tested for impairment by comparing their fair value to their carrying amounts. An impairment loss is realized when the carrying amount of the asset exceeds its fair value.For goodwill impairment testing, the fair value of each reporting unit is determined primarily using a discounted cash flow approach, which incorporates each reporting unit's internal forecasts of revenue and expenses. Estimates and assumptions of discount rates, growth rates, and terminal growth rates are incorporated in this approach.Real Estate Secured Loans and Investment LoansReal estate secured loans and investment loans are classified as loans and receivables, are recorded at amortized cost using the effective interest rate method and are net of an allowance for loan losses. Interest income from loans is recorded on an accrual basis. Accrued but uncollected interest on uninsured real estate secured loans and investment loans is reversed when a loan is identified as impaired. Principal payments on the real estate secured loans and investment loans that are contractually due to the Company in the 12-month period from the balance sheet date are classified as current assets. Fees that relate to the origination of loans are considered to be adjustments to loan yield and are deferred and amortized to interest income over the expected term of the loans.Allowance for Loan LossesThe allowance for loan losses consists of both general allowances and specific allowances. General allowances are based on management's assessment of inherent, unidentified losses in the portfolio at the reporting date that have not been captured in the determination of specific allowances. The assessment takes into account portfolio-specific credit factors, general economic factors, geographic exposure, historical loss experience, as well as probability of default (PD) and loss given default (LGD) pairs.Specific allowances consist of provision for losses on identifiable assets for which the estimated amounts recoverable are less than their carrying value and are designed to provide against the likelihood of losses for loans that are deemed to be impaired.Specific allowances also include estimated provisions for losses on identifiable assets that are currently one to 90 days in arrears and are likely to become impaired based on a combination of historical average roll rates and LGD for a given loan portfolio.Impaired LoansLoans are classified as impaired when, in the opinion of management, there is reasonable doubt as to the collectability, either in whole or in part, of principal or interest, or when principal or interest is 90 days or greater past due, except where the loan is both well-secured and in the process of collection. Loans that are insured by the federal government, an agency thereof, or a third-party insurer are classified as impaired when interest or principal is past due 365 days.When a loan is identified as impaired, the carrying amount of the loan is reduced to its estimated realizable value. In subsequent periods, recoveries of amounts previously written off and any increase in the carrying value of the loan are credited to the provision for loan losses in the Consolidated Statement of Income. Where a portion of the loan is written off and the remaining balance is restructured, the new loan is carried on an accrual basis when there is no longer any reasonable doubt about the collectability of principal or interest. Interest income is recognized on impaired loans on a cash basis only after the specific allowance for losses has been reversed and provided there is no further doubt as to the collectability of the principal. Full or partial writeoffs of loans are recorded when management believes there is no realistic prospect of full recovery.Stock-based Compensation and Other Stock-based PaymentsThe Company has a stock option plan as described in Note 14 of the Consolidated Financial Statements. The Company utilizes the fair-value-based method of accounting for stock-based compensation. The fair value of stock-based compensation, determined using an option pricing model, is recorded over the vesting period as a charge to net earnings with a corresponding credit to contributed surplus.The Company also has a share purchase plan under which employees can have a percentage of their annual earnings withheld subject to a maximum of 6% to purchase AGF's Class B Non-Voting shares (Class B Non-Voting shares). The Company matches up to 60% of the amounts contributed by the employee. The Company's contribution vests immediately and is recorded as a charge to net income in the period in which the cash contribution is made. All contributions are used by the plan trustee to purchase Class B Non-Voting shares on the open market.The Company has Restricted Share Unit (RSU) plans for senior employees under which certain employees are granted RSUs of Class B Non-Voting shares. These units vest three years from the grant date. AGF will redeem all of the participants' share units in cash equal to the value of one Class B Non-Voting share for each RSU. Compensation expense and the related liability are recorded equally over the three-year vesting period, taking into account fluctuations in the market price of Class B Non-Voting shares, dividends paid and forfeitures.The Company has a Partners Incentive Plan (PIP) for senior employees of its Investment Management Operations segment under which certain employees are designated to participate. The plan consists of a number of points, which are allocated among participating employees. The value of each point is determined using a funding rate that is based on a set percentage of targeted earnings before interest and tax (EBIT) that defines the funding pool for the year. At the end of each fiscal year, the funding pool is adjusted up or down to reflect the Company's EBIT performance. The adjusted dollar value is then settled in the form of RSUs or stock options. Stock options are granted under the Company's stock option plan, which is described in Note 14 of the Consolidated Financial Statements. RSUs are granted under the PIP plan. These units vest evenly over three years from the grant date. Upon vesting, the Company will redeem the participants' share units in cash equal to the value of one Class B Non-Voting share for each RSU. During the first year of the plan, compensation expense and the related liability is expensed based on the targeted funding pool over a graded four-year vesting period. Upon the granting of the RSU or stock option, the remaining expense is accounted for under the RSU or option model.The Company has a Performance Share Unit (PSU) plan for senior employees under which certain employees are granted PSUs of Class B Non-Voting shares. Compensation expense and the related liability are recorded equally over the vesting period, taking into account the likelihood of the performance criteria being met, fluctuations in the market price of Class B Non-Voting shares, dividends paid and forfeitures. These PSUs vest three years from the grant date, provided employees meet certain performance criteria. AGF will redeem all of the participants' share units in cash equal to the value of one Class B Non-Voting share for each PSU. As at November 30, 2011, all PSUs were forfeited and cancelled and no further units will be issued under this plan.The Company has a Deferred Share Unit (DSU) plan for non-employee Directors. The plan enables Directors of the Company to elect to receive their remuneration in DSUs. These units vest immediately, and compensation expense and the related liability are charged to net income in the period the DSUs are granted. On termination, AGF will redeem all of the participants' DSUs in cash or shares equal to the value of one Class B Non-Voting share at the termination date for each DSU.Accounting for SecuritizationsThe Company has securitized certain registered Retirement Savings Plan (RSP) loans and insured mortgage loans through the sale of these loans to a securitization trust. For a securitization to be treated as a sale, the securitized assets must be isolated from the Company and its creditors, even in the case of bankruptcy or receivership, and the Company must receive consideration other than the beneficial interest in the transferred assets.Under terms that transfer control to third parties, the RSP loan transaction is recognized as a sale and the related loan assets are removed from the Consolidated Balance Sheet. As part of the securitization, certain financial assets are retained. The retained interests, classified as AFS, are carried at fair value, determined using the present value of future expected cash flows. A gain or loss on the sale of loan receivables is recognized immediately in income. In determining the gain or loss on sale, management estimates future cash flows by relying on estimates of the amount of interest that will be collected on the securitized assets, the yield paid to investors, the portion of the securitized assets that will be prepaid before their scheduled maturity, expected credit losses, the cost of servicing the assets and the rate at which to discount these expected future cash flows. Actual cash flows may differ significantly from those estimated by management. If actual cash flows differ from the Company's estimate of future cash flows, the gains on the retained interest are recorded in OCI. Any losses are first recognized in OCI to the extent there is an offsetting gain and any excess is recognized in the Consolidated Statement of Income under 'RSP loan securitization income (loss), net of impairment.'Servicing fee revenues related to the securitization loan are reported within 'RSP loan securitization income (loss), net of impairment' in the Consolidated Statement of Income. Where a servicing liability is recognized, the amount is recorded in 'Other Liabilities' in the Consolidated Balance Sheet.Retained interests are tested regularly for other-than-temporary impairment and, if required, the retained interest's carrying value is reduced to fair value by a charge in the Consolidated Statement of Income. Refer to Note 3 for additional disclosure regarding the securitizations and related balance sheet and income statement impacts.In 2011, AGF Trust entered into a new securitization of mortgage loans under terms that require the transaction to be accounted for as a secured borrowing.Future Accounting ChangesTransition to International Financial Reporting StandardsCanadian publicly accountable enterprises are required to prepare their financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB), for fiscal years beginning on or after January 1, 2011. Effective December 1, 2011, we adopted IFRS as the basis for preparing our consolidated financial statements. We will report our financial results for the quarter ending February 29, 2012, in accordance with IFRS applicable to the preparation of interim financial statements, including IAS 34 and IFRS1. We will also provide comparative data on an IFRS basis, including an opening balance sheet as at December 1, 2010.To meet the requirement to transition to IFRS, in 2008 we established an enterprise-wide project. We followed a transition plan comprising three phases: (1) IFRS diagnostic assessment, (2) impact analysis, evaluation and design, and (3) implementation and review. We have completed all phases of the plan and are completing the final review of the adjustments to the financial statements.We provide updates to the Audit Committee on a quarterly basis. These updates include a review of timelines, disclosure requirements, expected impact of the new standards on the financial statements and note disclosures, as well as an update on the progress of the IFRS project. We have identified the areas that would be impactful to AGF. Those areas included provision for credit losses on loans, asset securitization, investments available for sale, deferred sales commission, customer contracts, goodwill and impairments.Effect of the Transition to IFRSThe following sets out, by accounting topic, the adjustments the Company will record to its opening balance sheet under IFRS.Deferred sales commissions - Under Canadian GAAP, sales commissions paid to brokers on mutual fund securities sold on a DSC basis are recorded at cost and are amortized on a straight-line basis over the applicable DSC schedule (which ranges from three to seven years). No adjustment is recognized to the cost on redemption of mutual funds and the DSC asset is tested annually for impairment. Under IFRS, sales commissions will continue to be recorded at cost and amortized similar to Canadian GAAP; however, upon redemption, the asset will be derecognized and the unamortized amount will be charged to income through amortization.  As a result, we will record a charge to opening retained earnings of $39.2 million, net of tax of $13.7 million, with a corresponding reduction of $52.9 million to deferred sales commission assets.Customer contracts - Under both IFRS and Canadian GAAP, customer contracts are amortized on a straight-line basis over the period that the economic benefit is expected to arise. Under IFRS, the unamortized customer contracts for which client attrition occurs is immediately charged to net income and included in the amortization of customer contracts. Under Canadian GAAP, the amortization of customer contracts is not adjusted for client attrition. As a result, we will record a charge to opening retained earnings of $0.9 million, net of tax of $0.2 million, with a corresponding reduction of $1.1 million to customer contracts.Goodwill - Under Canadian GAAP, goodwill is tested at the reporting unit level. Under IFRS, goodwill must be tested at the lowest identifiable cash generating unit (CGU) level. Management has reviewed its CGUs and has identified Highstreet as a separate CGU. Under Canadian GAAP, goodwill associated with Highstreet was tested under the Investment Management reporting segment. As a result, we will record an impairment charge to opening retained earnings of $24.0 million with an offsetting reduction of $24.0 million to the goodwill recorded on the acquisition of Highstreet.Written put options on non-controlling interests - Under Canadian GAAP, put options written by the Company on non-controlling interests were accounted for as cash-settled share-based payments and carried at the intrinsic value of the vested options. Under IFRS, to the extent that such options are associated with the shareholder's employment, they are treated as cash-settled share-based payments and are recorded based on the fair value of the vested portion of the options, determined using graded vesting. As a result, we have recorded a charge to opening retained earnings of $8.3 million and a credit to current liabilities of $8.3 million.Investments available for sale - Under Canadian GAAP, investments in AGF mutual funds were designated as available for sale (AFS). AFS assets are initially recorded at fair value on the settlement date in the statement of financial position and are remeasured at fair value with unrealized gains and losses recognized in OCI until the financial asset is disposed of or becomes permanently impaired. Under IFRS, investments in AGF mutual funds are designated as fair value through profit and loss. As a result, we will record a charge to opening retained earnings of $0.9 million, net of tax of $0.2 million, with an offset of $1.1 million to OCI.Termination fees - Under Canadian GAAP, termination fees associated with contracts with referral agents, where the agent continues to have a relationship with the client, are recognized as an expense upon termination. Under IFRS, this cost is recognized over the service period or the contractual period. As a result, we will record a charge to opening retained earnings of $0.9 million, net of tax of $0.3 million, with a corresponding adjustment to accrued liabilities of $1.2 million.Furthermore, we have assessed the exemptions to full restatement that are permitted under IFRS 1. We have applied the following exemptions that impact business combinations, cumulative translation account (CTA) and securitization. Under IFRS 1, a company can elect to (a) restate retrospectively all business combinations after a particular date in accordance with IFRS 3; or (b) apply IFRS 3 prospectively, whereby the value at transition is considered deemed cost under IFRS. Under both options, goodwill must be tested for impairment at transition and on an annual basis thereafter or more frequently if required. We intend to apply IFRS 3 prospectively. In addition, IFRS 1 allows entities to elect to reset the CTA through retained earnings at transition. AGF intends to apply this election. This will result in a reclassification from accumulated other comprehensive income (AOCI) to a charge to retained earnings of $34.9 million. During 2010, a revision was made to IFRS 1 that amended the derecognition date from January 1, 2004, to the date of transition. As a result, we will not recognize securitized assets on the balance sheet at transition.In addition to the above mentioned adjustments, the financial statements presented under IFRS will include certain reclassifications and changes in presentation, compared to those under Canadian GAAP.Risk Factors and Management of Risk Risk is the responsibility of the Executive Committee of AGF Management Limited. The Executive Committee is made up of the Chairman and Chief Executive Officer (CEO), AGF Management Limited; the Executive Vice-President and Chief Financial Officer (CFO), AGF Management Limited; the Executive Vice-President and Chief Operating Officer, AGF Management Limited; the Executive Vice-President, Investments, AGF Investments Inc.; the Executive Vice-President and Chief Investment Officer, AGF Investments Inc.; the Executive Vice-President, Retail Distribution, AGF Investments Inc.; the Executive Vice-President, Product and Marketing, Strategy and Development, AGF Investments Inc.; and the President and Chief Operating Officer, AGF Trust Company. The Chairman and CEO is directly accountable to the Board of Directors for all risk-related activities. The Executive Committee reviews and discusses significant risk action plans that arise in executing the enterprise-wide strategy and ensures that risk oversight and governance occur at the most senior levels of management. Each of the business units owns and assumes responsibility for managing its risk. They do this by ensuring that policies, processes and internal controls are in place and by escalating significant risk identified in the business units to the Executive Committee.AGF Management Limited also oversees or operates key functions for each of the business units on a shared services basis. These functions include Finance, Internal Audit, Human Resources, Compensation and Benefits, Information Technology, Fund Oversight, Legal and Compliance. These functions also play a significant role in ensuring consistent risk management practices and standards across the company in areas that are common to the business units.In addition, AGF Management Limited applies a disciplined approach to risk-taking through policy formation, reporting and oversight of the operational units.AGF's risk governance structure is designed to balance risk and reward and to promote business activities consistent with our standards and risk tolerance levels, with the objective of maximizing long-term shareholder value.As a federally regulated deposit-taking institution, AGF Trust is subject to risk management expectations of its regulators and has responsibilities to its depositors. AGF Trust's management and governance framework is designed to identify, characterize and manage risk. It includes the appointment of a Chief Risk Officer and a management committee structure to ensure appropriate oversight of key risk areas, including: credit, operational, distribution channel and asset and liability.Refer to Note 22 of the Consolidated Financial Statements for risks arising from the use of financial instruments.Risk Factors That May Affect Future ResultsThere are many factors that may affect our ability to execute against our strategy. Some of these factors are within our control and others, because of their nature, are beyond our control. These factors apply to our corporate strategy as well as the business-specific strategies, which are included in the segment discussions that follow.Company-specific Risk FactorsInvestment Management OperationsDemand for our products depends on the ability of our investment management team to deliver value in the form of strong investment returns, as well as the demand for specific investment products. A specific fund manager's style may fall out of favour with the market, resulting in lower sales and/or higher redemptions.Our future financial performance will be influenced by our ability to successfully execute our strategy and generate net sales. If sales do not materialize as planned or key personnel cannot be retained, margins may erode.Our strategy includes strategic acquisitions. There is no assurance that we will be able to complete acquisitions on the terms and conditions that satisfy our investment criteria. After transactions are completed, meeting target return objectives is contingent upon many factors, including retaining key employees and growth in AUM of the acquired companies.Our retail AUM is obtained through third-party distribution channels including financial advisors or strategic partners that offer our products to investors along with competing products. Our future success is dependent on continued access to these distribution channels that are independent of our company.Trust Company OperationsAGF Trust manages its business to a set of identified key risks: credit, operational, interest rate (non-trading), funding and liquidity, and legal and compliance.Credit risk is the risk of loss associated with a counterparty's or client's inability to fulfil its payment obligations, after taking into account recovery values and associated costs. AGF Trust is in the business of providing loans and as a result credit risk is the largest risk exposure to the company. AGF Trust's overall credit risk strategy and credit risk policy are developed by AGF Trust's Risk Management group in conjunction with the business unit and presented to senior management. The overall credit strategies and approaches are supported through the use of policies, processes and internal controls. AGF Trust's Risk Management group ensures these activities and the outcomes are within the standards of risk tolerance levels established by senior management and approved by the Board of Directors, and updates the Board of Directors with the results on a regular basis.Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems. Impact can be financial, loss to reputation, loss of competitive position or regulatory or legal sanction. Operational risk and review of operational processes, activities and systems are the responsibility of the Operations Committee of AGF Trust and the methodologies for measuring and monitoring operational risks reside with the Risk Management department of AGF Trust.Interest rate (non-trading) risk is the risk of adverse impact to AGF Trust's earnings and economic value due to unexpected changes in interest rates and interest rate volatility. Categories of interest rate risk include: yield curve/gap risk, basis or spread compression risk, commitment or embedded option risk, prepayment risk and discretionary. Interest rate (non-trading) risk is monitored by the AGF Trust Treasury department and overseen by the AGF Trust Asset and Liability Committee.Funding and liquidity risk is the risk to earnings and capital if AGF Trust is unable to: (1) meet its obligations due to an inability to liquidate assets or obtain adequate funding; or, (2) unwind or offset specific exposures without incurring a loss as a result of inadequate market depth or market disruptions; or (3) obtain funding at costs that are consistent with historical norms from its traditional funding sources. Funding and liquidity risk is monitored by the AGF Trust Treasury department and overseen by the AGF Trust Asset and Liability Committee.Legal and compliance risk is the risk of legal or regulatory sanctions, material financial loss, or loss to reputation that AGF Trust may suffer as a result of its failure to comply with laws, regulations, rules, related self-regulatory organization standards, and codes of conduct applicable to AGF Trust's business activities. Legal and compliance risk is managed and monitored on a shared services basis.Non-company Risk FactorsInvestment Management OperationsA general economic downturn, market volatility and an overall lack of investor confidence could result in lower sales, higher redemption levels and lower AUM levels. In addition, market uncertainty could result in retail investors avoiding traditional equity funds in favour of money market funds.The level of competition in the industry is high. Sales and redemptions of mutual funds may be influenced by relative service levels, management fees, attributes of specific products in the marketplace and actions taken by competitors.We take all reasonable measures to ensure compliance with governing statutes, regulations or regulatory policies. Failure to comply with statutes, regulations or regulatory policies could result in sanctions or fines that could adversely affect earnings and reputation. Changes to laws, statutes, regulations or regulatory policies could affect us by changing certain economic factors in our industry. See the 'Government Regulations' section for further details.Revenues are generally not subject to significant seasonal swings, but are directly correlated to global stock market volatility. We experience somewhat higher sales during the Retirement Savings Plan (RSP) season; however, the immediate impact of the level of sales on total revenue is not significant. The Selected Quarterly Information table shows key performance statistics for the past eight quarters.AUM are exposed to various market risks that are detailed in the 'Market Risk in Assets Under Management' section.Trust Company OperationsA general economic downturn, increased unemployment rate, declining real estate values, adverse capital market conditions and/or an increase in personal bankruptcy rates could lead to reduced creditworthiness of AGF Trust borrowers and increased loss in the event of default.A portion of AGF Trust's insured mortgage portfolio is insured by private mortgage insurers. AGF Trust is exposed to losses in the event private mortgage insurers fail to perform in accordance with their obligations under insurance contracts. Changes to laws, statutes, regulations or regulatory policies could affect AGF Trust by changing certain economic factors in our industry or increasing costs of compliance. See the 'Government Regulations' section for further details.Market Risk in Assets Under ManagementAUM are exposed to various market risks, including changes in equity prices, interest rates and foreign exchange rates. These risks transfer to the Company as our management fee revenue is calculated as a percentage of the average net asset value of each retail fund or portfolio managed. The Company does not quantify these risks in isolation; however, in general, for every $1 billion reduction of retail fund AUM, management fee revenues would decline by approximately $20 million. The Company monitors these risks as they may impact earnings; however, it is at the discretion of the fund manager to decide on the appropriate risk-mitigating strategies for each fund.To provide additional details on the Company's exposure to these market risks, the following provides further information on our retail fund AUM by asset type as at November 30:      Percentage of total retail fund AUM  2011   2010      Domestic equity funds 38.1%  40.7%U.S. and international equity funds 26.4%  30.7%Domestic balanced funds 14.0%  9.3%U.S. and international balanced funds 2.8%  1.2%Domestic fixed income funds 12.9%  12.8%U.S. and international fixed income funds 4.0%  3.6%Domestic money market 1.8%  1.7%  100.0%  100.0%      Institutional and high-net-worth AUM are exposed to the same market risks as retail fund AUM. In general, for every $1 billion reduction of institutional and high-net-worth AUM, management fee revenues would decline by approximately $4 million.Foreign Exchange RiskOur main foreign exchange risk derives from the U.S. and international portfolio securities held in the retail fund AUM. Change in the value of the Canadian dollar relative to foreign currencies will cause fluctuations in the Canadian-dollar value of non-Canadian AUM upon which our management fees are calculated. This risk is monitored since currency fluctuation may impact the financial results of AGF; however, it is at the discretion of the fund manager to decide whether to enter into foreign exchange contracts to hedge foreign exposure on U.S. and international securities held in funds.We are subject to foreign exchange risk on our integrated foreign subsidiaries in the United States, Ireland and Singapore, which provide investment advisory services. These subsidiaries retain minimal monetary exposure to the local currency and their revenues are calculated in Canadian dollars. The local currency expenses are translated at the average monthly rate, and local currency assets and liabilities are translated at the rate of exchange in effect at the balance sheet date.The Company is exposed to foreign exchange risks through its 31.0% equity interest in Smith & Williamson Holdings Limited (S&WHL), which is denominated in U.K. pounds. The investment is translated into Canadian dollars at the rate of exchange in effect at the balance sheet date. Unrealized translation gains and losses are reported in other comprehensive income. Based on the carrying value at November 30, 2011, a 5% change in the value of the Canadian dollar versus the U.K. pound would result in a change in other comprehensive income of $3.8 million.Interest Rate RiskExcluding the AGF Trust operations, we have exposure to the risk related to changes in interest rates on floating-rate debt and cash balances at November 30, 2011. Using average balances for the year, the effect of a 1% change in variable interest rates on our floating-rate debt and cash balances in fiscal 2011 would have resulted in a corresponding change of approximately $1.6 million in interest expense for the year ended November 30, 2011. As the amount of interest paid is small relative to our operating cash flow, such a change in interest rates would not have a material impact on the results of operations or the fair value of the related debt.For the AGF Trust operations, interest rate risk refers to the treasury book (non-trading) and can have a potentially adverse impact on AGF Trust's earnings and economic value due to unexpected changes in interest rates and interest rate volatility. Categories of interest rate risk include yield curve/gap risk, basis or spread compression risk, commitment or embedded option risk, prepayment risk and discretionary. The impact of a 1% change in interest rates would result in a corresponding change in annual net interest income of approximately $2.5 million.The foregoing discussion is not an exhaustive list of all risks and uncertainties regarding our ability to execute against our strategy. Readers are cautioned to consider other potential risk factors when assessing our ability to execute against our strategy.Controls and ProceduresDisclosure Controls and ProceduresDisclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by AGF Management Limited in reports filed or submitted under Canadian securities laws is recorded, processed, summarized and reported within the time periods specified under those laws and include controls and procedures that are designed to ensure that information is accumulated and communicated to management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), to allow timely decisions regarding required disclosure.AGF Management Limited's management, under the direction of the CEO and CFO, has evaluated the effectiveness of AGF Management Limited's disclosure controls and procedures (as defined in National Instrument 52-109 of the Canadian Securities Commission) as at November 30, 2011, and has concluded that such disclosure controls and procedures were effective.Internal Control Over Financial ReportingThe CEO and CFO have designed, or caused to be designed under their supervision, internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian GAAP.The Company's internal control over financial reporting includes policies and procedures that:Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of the Company;Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with Canadian GAAP, and receipts and expenditures of the Company are made only in accordance with authorizations of management and directors of the Company; andProvide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.Internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be designed effectively can provide only reasonable assurance with respect to financial reporting and financial statement preparation.Management, under the direction of the CEO and CFO, has evaluated the effectiveness of the Company's internal control over financial reporting as at November 30, 2011, and has concluded that internal control over financial reporting is designed and operating effectively to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian GAAP. Management's assessment was based on the framework established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.Changes in Internal Controls Over Financial ReportingOn February 1, 2011, the Company completed its acquisition of Acuity. During the first quarter of 2011, certain internal controls over financial reporting were impacted and interim controls were relied upon. The financial reporting processes were fully integrated with AGF in the second quarter of 2011.Changes in Information Technology SystemsDuring 2011, there were no significant changes to Information Technology Systems.Government RegulationsAGF Management LimitedAGF Management Limited (AGF) is incorporated under the laws of the Province of Ontario and is a reporting issuer in each province and territory of Canada. Accordingly, AGF is subject to applicable securities laws in each jurisdiction. In addition, the Class B Non-Voting common shares of AGF are listed for trading on the Toronto Stock Exchange under the trading symbol AGF.B. AGF is also subject to oversight from other government and regulatory agencies.AGF Mutual Funds To qualify for continuous distribution, each of the mutual funds managed by AGF Investments Inc. (AGFI) must file each year an annual information form and simplified prospectus in every province and territory of Canada in which it intends to distribute securities. It must also obtain a receipt for the same from provincial and territorial securities regulatory authorities. Certain funds are offered in overseas jurisdictions, each of which has its own filing requirements.Each mutual fund is managed by AGFI and as such AGFI is liable for any misrepresentation in the offering documents of the funds. Pursuant to securities legislation in certain of the provinces and territories of Canada, none of the mutual funds managed by AGFI can make portfolio investments in substantial security holders of the funds, in AGF or in corporations in which the directors or officers of the funds, or their substantial security holders, have a significant interest.Investment Management OperationsAGF Investments Inc.AGFI is registered with the Ontario Securities Commission (OSC) as a portfolio manager and investment fund manager and maintains equivalent registrations in each of the other provinces and territories of Canada in which AGFI carries on business. AGFI is also registered as a Mutual Fund Dealer, Exempt Market Dealer and Commodity Trading Manager in certain jurisdictions and is subject to oversight by the federal and provincial Privacy Commissions and Financial Transactions Reports Analysis Centre of Canada (FINTRAC). In its capacity as portfolio manager and investment fund manager, AGFI is subject to conflict of interest provisions pursuant to the Securities Act (Ontario), National Instrument 31-103 and certain other provincial and territorial securities legislation. Amongst other things, these provisions impose limitations on the ability of AGFI to advise or make recommendations with respect to its own securities or securities of a related or connected issuer. AGFI is also subject to certain restrictions that are imposed by applicable provincial and territorial securities legislation on advertising and sales incentives.AGF International Advisors Company LimitedAGF International Advisors Company Limited is incorporated under the laws of the Republic of Ireland and is authorized by The Central Bank of Ireland (Bank of Ireland), under Regulation 11 of the European Communities (Markets in Financial Instruments) Regulations 2007, to provide a range of financial services including the provision of investment advice and the managing of portfolios. As an authorized entity, AGF International Advisors Company Limited is subject to a range of Irish and EU regulations. AGF International Advisors Company Limited also holds an Australian Financial Services Licence granted by the Australian Securities & Investments Commission (ASIC) and is subject to the relevant ongoing requirements of this licence.AGFIA LimitedAGFIA Limited is a private limited company incorporated under the laws of the Republic of Ireland and is authorized by the Bank of Ireland, under Regulation 11 of the European Communities (Markets in Financial Instruments) Regulations 2007, to provide a range of financial services including the provision of investment advice and the managing of portfolios, primarily to institutional accounts. As an authorized entity, AGFIA Limited is subject to a range of Irish and EU regulations. AGFIA Limited is registered with the OSC as a non-resident portfolio manager and maintains equivalent registrations in each of the other provinces and territories of Canada in which AGFIA carries on business.AGF Asset Management (Asia) LimitedEstablished in 1996, AGF Asset Management (Asia) Limited provides investment research and advisory services on Asian markets for AGF mutual funds and other clients. AGF Asset Management (Asia) Limited is regulated by the Monetary Authority of Singapore (MAS) under the Securities and Futures Act. The company holds a Capital Markets Services licence which permits it to offer fund management services to accredited investors. AGF Asset Management (Asia) Limited is required to obtain the prior approval of MAS for any significant change of its members or shareholdings of its members.AGF Investments America Inc.AGF Investments America Inc. (AGFA) is registered with the U.S. Securities and Exchange Commission as an adviser and provides investment management services to (U.S.) institutional clients.AGF Investments Asia LimitedAGF Investments Asia Limited is incorporated as a limited liability company in Hong Kong.Acuity Investment Management Inc.Acuity Investment Management Inc. (AIMI) is registered with the OSC as a portfolio manager and maintains equivalent registration in each of the other provinces in Canada in which it does business. AIMI is also registered as an exempt market dealer in certain jurisdictions for the purposes of facilitating the distribution of certain securities to clients and is subject to oversight by federal and provincial Privacy Commissions and FINTRAC.Acuity Funds Ltd.Acuity Funds Ltd. (AFL) is registered with the OSC as an investment fund manager and mutual fund dealer. AFL is also registered with the OSC as an exempt market dealer for the purposes of facilitating the distribution of certain securities to clients and is subject to oversight by federal and provincial Privacy Commissions and FINTRAC.Highstreet Asset Management Inc.Highstreet Asset Management Inc. (Highstreet) is registered with the OSC as a portfolio manager and maintains equivalent registrations in each of the other provinces and territories of Canada in which it does business. Highstreet is also registered with the OSC as an exempt market dealer for the purpose of facilitating the distribution of certain securities to clients and is subject to oversight by federal and provincial Privacy Commissions and FINTRAC. In addition, Highstreet is registered in Ontario as a Commodity Trading Manager.Highstreet Asset Management U.S. Inc.Highstreet Asset Management U.S. Inc. is a wholly owned subsidiary of Highstreet and is registered with the U.S. Securities and Exchange Commission as an Adviser and provides investment management services to (U.S.) institutional clients.Cypress Capital Management Ltd.Cypress Capital Management Limited (Cypress) is registered with the British Columbia Securities Commission as a portfolio manager and maintains equivalent registrations in each of the other provinces and territories of Canada in which it does business. Cypress is also subject to oversight by federal and provincial Privacy Commissions and FINTRAC.Cypress Capital Management US LimitedCypress Capital Management US Limited (Cypress US) is a wholly owned subsidiary of Cypress and is registered with the U.S. Securities and Exchange Commission as an Adviser. Cypress US provides investment management services to (U.S.) high-net-worth, corporate, endowment and foundation clients.Doherty & Associates Limited Doherty & Associates Limited (Doherty) is registered with the OSC as a portfolio manager and maintains equivalent registrations in each of the other provinces and territories of Canada in which it does business. Doherty is also registered with the OSC as an exempt market dealer for the purpose of facilitating the distribution of certain securities to its clients and is subject to oversight by federal and provincial Privacy Commissions and FINTRAC.AGF Securities (Canada) LimitedAGF Securities (Canada) Limited is a member of the Investment Industry Regulatory Organization of Canada (IIROC). IIROC is the national self-regulatory organization created through the consolidation of the Investment Dealers Association of Canada and Market Regulation Services Inc. AGF Securities (Canada) Limited is registered as an investment dealer with the securities regulatory authorities in each of Alberta, British Columbia, Ontario and Saskatchewan. AGF Securities (Canada) Limited is also a member of the Canadian Investor Protection Fund and is subject to oversight by the federal and provincial Privacy Commissions and FINTRAC.Trust Company OperationsAGF Trust CompanyAGF Trust Company (AGF Trust) is incorporated under and governed by the federal Trust and Loan Companies Act (Canada) and is extra-provincially licensed and registered under applicable legislation in all provinces and territories of Canada. The Trust and Loan Companies Act (Canada) specifies the powers of and imposes investment lending restrictions on federally regulated trust companies. The Trust and Loan Companies Act (Canada) and its related regulations provide for regular reports to be filed on the financial condition of AGF Trust; periodic examinations of AGF Trust's affairs by appropriate regulatory authorities; restrictions on transactions with related parties; corporate governance provisions; and minimum capital standards based on the total assets and risk-weighted assets of AGF Trust. As a federally regulated financial institution, AGF Trust is supervised by the federal Office of the Superintendent of Financial Institutions Canada (OSFI). AGF Trust is also subject to oversight from the Financial Consumer Agency of Canada and other government agencies, including certain provincial authorities.Fourth Quarter AnalysisSummary of Consolidated Operating ResultsThe table below highlights our results for the three months ended November 30, 2011 and 2010:         ($ millions, except per share amounts)        Three months ended November 30 2011  2010  % change         Revenue         Investment Management Operations$136.1 $132.4  2.8%  Trust Company Operations 20.1  22.8  (11.8%) Other 1.6  0.7  128.6%   157.8  155.9  1.2%          Expenses         Investment Management Operations 81.9  76.1  7.6%  Trust Company Operations 12.0  13.7  (12.4%)  93.9  89.8  4.6%          EBITDA1 63.9  66.1  (3.3%) Amortization 25.8  21.2  21.7%  Interest expense 3.3  1.3  153.8%  Impairment of assets available for sale 0.9  -  -   Income taxes 12.0  12.4  (3.2%) Net income attributable to non-controlling interest -  0.3  -  Net income attributable to equity owners of the Company$21.9 $30.9  (29.1%)Earnings per share - diluted$0.23 $0.34  (32.9%)1 As previously defined, see 'Key Performance Indicators and Non-GAAP Measures - EBITDA.' The items required to reconcile EBITDA to Net Income, a defined term under Canadian GAAP, are detailed above.Results from OperationsRevenue for the fourth quarter ended November 30, 2011, increased 1.2% to $157.8 million, compared to $155.9 million in the same period in 2010. The Investment Management segment revenues increased $3.7 million and revenues in the Trust segment decreased $2.7 million. Revenues from our 31.0% equity interests in S&WL increased to $1.6 million compared to $0.7 million in 2010.Expenses in the fourth quarter ended November 30, 2011, increased $4.1 million over the same period a year ago. Expenses in the Investment Management Operations' segment increased $5.8 million or 7.6% while expenses in the Trust Company Operations segment decreased $1.7 million.As a result of lower revenue combined with an increase in expenses, EBITDA decreased 3.3% in the fourth quarter of 2011. Refer to each of the segment discussions for further details. Amortization expense for the three months ended November 30, 2011, increased by 21.7%, compared to the corresponding period in 2010. Amortization of deferred selling commissions for the three months ended November 30, 2011, accounted for $19.2 million (2010 - $19.3 million) of the total amortization expense, while amortization related to definite life intangibles increased to $5.7 million related to the Acuity acquisition. Interest expense increased due to higher debt levels associated with the Acuity acquisition and increased rates.Our income tax expense for the three months ended November 30, 2011, was $12.0 million, as compared to $12.4 million for the three months ended November 30, 2010. The impact of the above revenue and expense items resulted in net income of $21.9 million in the three months ended November 30, 2011, compared to a net income of $30.9 million in fiscal 2010. Basic and fully diluted earnings per share were $0.23 per share, in the three months ended November 30, 2011, as compared to $0.35 and $0.34 per share in 2010.On a diluted per share basis, cash flow from operations for the three months ended November 30, 2011, was $0.50 per share (2010 - $0.56).Investment Management OperationsAssets Under ManagementThe following table illustrates the composition of the changes in retail fund AUM during the three months ended November 30, 2011 and 2010:         ($ millions)        Three months ended November 30 2011  2010  % change         Mutual fund AUM, beginning of period$23,130 $21,443  7.9%          Gross sales 466  678  (31.3%) Redemptions (1,026)  (1,092)  (6.0%) Net mutual fund sales (560)  (414)  35.3%           Market appreciation (depreciation) of fund portfolios (584)  1,235  n/m         Mutual fund AUM, end of year$21,986 $22,264  (1.2%)         Retail pooled fund AUM, beginning of period$825 $-  n/m          Gross sales 10  -  n/m Redemptions (44)  -  n/m Net retail pooled funds sales (34)  -  n/m           Market appreciation (depreciation) of fund portfolios (74)  -  n/m         Retail pooled fund AUM, end of year$717 $-  n/m         Total retail fund AUM (including retail pooled funds)$22,703 $22,264  2.0%         Average daily retail fund AUM for the period$22,817 $22,303  2.3%         Institutional and sub-advisory accounts AUM, beginning of period$21,173 $18,162  16.6%           Net change in institutional and sub-advisory accounts (1,054)  (577)  82.7%           Total institutional and sub-advisory accounts AUM$20,119 $17,585  14.4%         High-net-worth AUM$3,221 $3,164  1.8%         Total AUM, end of year$46,043 $43,013  7.0%1 Acuity was acquired on February 1, 2011.The addition of $3.8 billion in retail AUM as a result of the Acuity acquisition was offset by net outflows and market declines, resulting in a 2.0% increase in retail fund AUM year-over-year. During the past 12 months, institutional and sub-advisory accounts AUM increased by $2.5 billion to $20.1 billion, reflecting the Acuity acquisition offset by redemptions and market declines. High-net-worth AUM increased by 1.8% to $3.2 billion. Overall, total AUM increased 7.0% to $46.0 billion from $43.0 billion at November 30, 2010.Investment PerformanceDuring the three months ended November 30, 2011, the Canadian-dollar-adjusted S&P 500 Index increased 7.2%, the Canadian-dollar-adjusted NASDAQ Index increased 5.9% and the MSCI World Index increased 2.6%, while the S&P/TSX Composite Index decreased 3.7%. The aggregate market depreciation of our retail fund portfolios for the three months ended November 30, 2011, divided by the average daily retail fund AUM for the period, was 2.9% after management fees and expenses paid by the funds.The impact of the U.S. dollar appreciation relative to the Canadian dollar on the market value of AUM since August 31, 2011, has been an increase in AUM of approximately $240.7 million (2010 - depreciation of $216.5 million).The impact of the euro depreciation relative to the Canadian dollar on the market value of AUM since August 31, 2011, has been a decrease in AUM of approximately $50.2 million (2010 - $24.6 million).Financial and Operational ResultsThe table below highlights the Investment Management Operations segment results for the three months ended November 30, 2011 and 2010:         ($ millions)        Three months ended November 30 2011  2010  % change         Revenue         Management and advisory fees$126.9 $124.1  2.3%  Deferred sales charges 5.2  5.5  (5.5%) Investment income and other revenue 4.0  2.8  42.9%    136.1  132.4  2.8%          Expenses         Selling, general and administrative 44.0  38.7  13.7%  Business acquisition and integration 0.3  -  -   Trailing commissions 35.5  35.1  1.1%  Investment advisory fees 2.1  2.3  (8.7%)  81.9  76.1  7.6%          EBITDA1  54.2  56.3  (3.7%)Amortization 25.5  20.7  23.2% Impairment of assets available for sale 0.9  -  -  Income before taxes and non-segmented items$27.8 $35.6  (21.9%)1 As previously defined, see the 'Key Performance Indicators and Non-GAAP Measures - EBITDA' section.RevenueFor the three months ended November 30, 2011, revenue for the Investment Management Operations segment increased 2.8% over the previous year, with changes in the categories as follows:Management and Advisory FeesManagement and advisory fees are directly related to our AUM levels. The 2.3% increase in average daily retail fund AUM for the quarter ended November 30, 2011, contributed to a 2.3% increase in management and advisory fee revenue compared to the fourth quarter of 2010.Deferred Sales Charges (DSC)We receive deferred sales charges upon redemption of securities sold on the contingent DSC or low-load commission basis for which we finance the selling commissions paid to the dealer. The DSC ranges from 1.5% to 5.5%, depending on the commission option, of the original subscription price of the funds purchased if the funds are redeemed within the first two years, and declines to zero after three or seven years. DSC revenue fluctuates based on the level of redemptions, the age of the assets being redeemed and the proportion of redemptions composed of back-end assets. DSC revenues decreased by 5.5%, or $0.3 million, to $5.2 million in the fourth quarter of 2011 compared to 2010, reflecting a decline in retail mutual fund redemptions of DSC AUM.Investment Income and Other RevenueInvestment income and other revenue was $4.0 million in the three months ended November 30, 2011, compared to $2.8 million in the three months ended November 30, 2010. The fourth quarter of 2011 included a favourable $0.4 million fair-value adjustment to the acquisition consideration payable associated with future share payments. In addition, the fourth quarter of 2010 included gains on the sale of available for sale assets of $0.8 million as compared to a loss of $0.2 million in the fourth quarter of 2011.ExpensesFor the three months ended November 30, 2011, expenses for the Investment Management Operations segment increased 7.6% from the previous year. Changes in specific categories are described in the discussion that follows:Selling, General and Administrative ExpensesSelling, general and administrative expenses (SG&A) increased by $5.3 million or 13.7% in the fourth quarter of 2011 compared to the same period in 2010. The increase is made up of the following amounts:      ($ millions)   Three months ended November 30     2011      Decrease in compensation-related expenses   $(1.4)Increase in other expenses    5.8Increase in fund absorption expenses    0.9    $5.3      The following explains expense changes in the three months ended November 30, 2011, compared to the same period in the prior year:Compensation-related expenses decreased $1.4 million due to lower performance-based costs in the quarter.Other expenses increased $5.8 million primarily due to increased costs to support our institutional and investment management functions and the acquisition of Acuity.Absorption expense increased by $0.9 million partly due to the inclusion of Acuity funds.Business Acquisition and IntegrationBusiness acquisition and integration costs related to Acuity totalled $0.3 million for the three months ended November 30, 2011. The costs incurred are primarily related to the fund mergers.Trailing CommissionsTrailing commissions paid to distribution depend on total AUM, the proportion of retail 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 retail fund AUM were 0.62% for the three months ended November 30, 2011, compared to 0.63% in the same 2010 period.Investment Advisory FeesExternal investment advisory fees remained relatively stable at $2.1 million in the fourth quarter of 2011.EBITDA and EBITDA MarginEBITDA for the Investment Management Operations segment were $54.2 million for the three months ended November 30, 2011, a 3.7% decrease from $56.3 million for the same period in 2010. EBITDA margins were 39.8% for the fourth quarter of 2011, compared to 42.5% in 2010.Amortization The category represents amortization of deferred selling commissions, customer contracts, other intangible assets, property, equipment and computer software. Deferred selling commission amortization represents the most significant category of amortization. We internally finance all selling commissions paid. The selling commissions are capitalized and amortized on a straight-line basis over a period that corresponds with their applicable DSC schedule. Amortization expense related to deferred selling commissions was $19.2 million in the fourth quarter of 2011, compared to $19.3 million in 2010.For the three months ended November 30, 2011, we paid $8.6 million in selling commissions, compared to $10.8 million in 2010. The decline in DSC paid is due to lower gross sales of retail funds and a slightly higher percentage of funds paid on a front-end basis in 2011 compared to 2010. As at November 30, 2011, the unamortized balance of deferred selling commissions financed was $217.6 million, a decrease of $26.3 million from the prior year balance of $243.9 million.As a result of the intangible assets acquired as a result of the Acuity acquisition, additional amortization of approximately $5.0 million was recognized during the quarter ended November 30, 2011. Customer contracts related to the Acuity acquisition are amortized over seven years and other intangible assets are amortized over periods of three to 10 years.Pre-tax Profit MarginPre-tax profit margin was at 20.4% for three months ended November 30, 2011, compared to 26.9% for the three months ended November 30, 2010.Trust Company Operations Financial and Operational ResultsThe table below highlights the results for the three months ended November 30, 2011 and 2010:         ($ millions)        Three months ended November 30 2011  2010  % change         Interest income         Loan interest$37.5 $42.3  (11.4%) Investment interest 4.0  4.1  (2.4%)  41.5  46.4  (10.6%)Interest expense         Deposit interest 22.0  27.9  (21.1%) Hedging interest income (3.7)  (6.8)  (45.6%) Other interest expense 4.7  4.5  4.4%   23.0  25.6  (10.2%)Net interest income 18.5  20.8  (11.1%)Other revenue 0.9  1.6  (43.8%)RSP loan securitization income (loss), net of impairment 0.7  0.4  75.0% Total revenue 20.1  22.8  (11.8%)         Expenses         Selling, general and administrative 9.2  9.5  (3.2%) Provision for loan losses 2.8  4.2  (33.3%)  12.0  13.7  (12.4%)         EBITDA1 8.1  9.1  (11.0%)Amortization 0.3  0.4  (25.0%)Income before taxes and non-segmented items$7.8 $8.7  (10.3%)1 As previously defined, see the 'Key Performance Indicators and Non-GAAP Measures - EBITDA' section.Revenue, Net Interest Income and Net Interest MarginNet interest income, which is expressed net of interest on deposits and other interest expenses, declined 11.1% compared to the same period in 2010. The decrease was primarily related to a decrease in average loan balances of 7.3% for the three months ended November 30, 2011, compared to the prior year. AGF Trust manages its interest rate risk through the use of interest rate swaps. Interest expense includes hedging interest income of $3.7 million for the three months ended November 30, 2011 (2010 - $6.8 million). Other revenue decreased $0.7 million during the three months ended November 30, 2011, primarily due to a decrease in other income and fees. During the fourth quarter of 2011, the Trust Company recognized a nil writedown of its retained interest in securitized RSP loans compared to $0.3 million in the fourth quarter of 2010. These factors resulted in an overall revenue decrease of 11.8% in the quarter ended November 30, 2011, as compared to 2010.Selling, General and Administrative ExpensesSG&A expenses were down 3.2% for the three months ended November 30, 2011, as compared to the same periods in 2010. The decreases are related primarily to a lower headcount in the fourth quarter of 2011 compared to the same period in 2010.Provision for Loan LossesThe total provision for loan losses in the fourth quarter decreased to $2.8 million in 2011 compared to $4.2 million in 2010. Loan writeoffs, net of recoveries for the three months ended November 30, 2011, were $3.5 million compared to $6.0 million for the period ended November 30, 2010, with the decrease attributable to a decline in RSP loan writeoffs. Loan writeoffs, net of recoveries, for the three months ended November 30, 2011, were $1.2 million in the RSP loan portfolio, $1.5 million in the secured investment loan portfolio, $0.8 million in the mortgage loan portfolio and nil in HELOC receivables, compared to $3.0 million, $1.4 million, $1.5 million, and $0.1 million, respectively, for the three months ended November 30, 2010. Impaired loans expressed as a percentage of loans outstanding were 0.8% as at November 30, 2011, compared to 1.1% at November 30, 2010.EBITDA and EBITDA MarginThe decrease in the provision for loan losses coupled with the decline in revenue led to a decrease in EBITDA for the three months ended November 30, 2011, to $8.1 million compared to $9.1 million in the fourth quarter of 2010. EBITDA margin in the fourth quarter of 2011 was 40.3% (2010 - 39.9%).Pre-tax Profit MarginAs a result of the factors outlined above, AGF Trust had a pre-tax profit margin of 38.8% in the fourth quarter of 2011 (2010 - 38.2%).Selected Quarterly Information             For the three-month period ended   Nov. 30,  Aug. 31,  May 31,  Feb. 28,($ millions, except per share amounts)  2011  2011  2011  2011             Revenue $157.8 $174.5 $180.1 $162.9Cash flow1    48.3    54.8    67.7    52.0EBITDA2  63.9  72.2  75.4  64.0Pre-tax income  34.0  42.9  45.4  39.1Net income  21.9  29.9  32.7  27.7             EBITDA per share            Basic  0.67  0.76  0.79  0.70Diluted  0.67  0.75  0.78  0.70             Earnings per share             Basic $0.23 $0.31 $0.34 $0.31 Diluted $0.23 $0.31 $0.34 $0.30             Weighted average basic shares  95,230,703  95,518,051  95,568,899  90,799,935Weighted average fully diluted shares  95,932,850  96,446,821  96,794,115  92,010,135             For the three-month period ended   Nov. 30,  Aug. 31,  May 31,  Feb. 29,($ millions, except per share amounts)  2010  2010  2010  2010             Revenue $155.9 $148.7 $153.8 $156.2Cash flow1    50.1    51.8  61.9  59.4EBITDA2  66.1  61.0  62.6  67.1Pre-tax income  43.3  38.7  38.3  42.6Net income  30.9  27.8  27.5  30.6             EBITDA per share            Basic  0.75  0.68  0.70  0.75Diluted  0.74  0.68  0.69  0.74             Earnings per share             Basic $0.35 $0.31 $0.31 $0.34 Diluted $0.34 $0.31 $0.30 $0.34             Weighted average basic shares  88,616,451  89,286,335  89,332,374  89,211,983Weighted average fully diluted shares  89,665,401  90,232,708  90,482,468  90,390,1721 Cash flow from operations before net change in non-cash balances related to operations.2  As previously defined, see 'Key Performance Indicators and Non-GAAP Measures - EBITDA' section.Selected Annual Information             ($ millions, except per share amounts)           Years ended November 30 2011  2010  2009 2008  2007              Revenue (continuing operations)$675.3 $614.6 $586.1$725.6 $780.3Cash flow from continuing operations1 222.8  223.1  206.1 278.7  318.9EBITDA (continuing operations)2 275.5  256.8  219.5 313.7  357.2Pre-tax income 161.4  162.9  116.3 141.3  222.6Net income (continuing operations) 112.2  116.8  97.7 128.6  175.9Earnings per share (continuing operations)              Basic$1.19 $1.31 $1.10$1.44 $1.96 Diluted$1.18 $1.30 $1.09$1.41 $1.93Cash flow from continuing operations              Basic$2.36 $2.50 $2.32$3.12 $3.55 Diluted$2.34 $2.47 $2.30$3.05 $3.49Dividends per share$1.07 $1.04 $1.00$0.95 $0.78Total assets$5,231.2 $5,253.9 $5,675.9$6,534.0 $5,876.8Total long-term debt$309.3 $143.7 $143.6$123.7 $184.51 Cash flow from operations before net change in non-cash balances related to operations.2 As previously defined, see 'Key Performance Indicators and Non-GAAP Measures - EBITDA' section.Additional InformationAdditional information relating to the Company can be found in the Company's Consolidated Financial Statements and accompanying notes for the year ended November 30, 2011, the Company's 2011 AIF and other documents filed with applicable securities regulators in Canada and may be accessed at www.sedar.com.  AGF Management LimitedConsolidated Financial StatementsFor the year ended November 30, 2011Management's Responsibility for Financial ReportingToronto, January 24, 2012The accompanying consolidated financial statements of AGF Management Limited (the Company) were prepared by management, which is responsible for the integrity and fairness of the information presented, including the amounts based on estimates and judgments. These consolidated financial statements were prepared in accordance with Canadian generally accepted accounting principles (GAAP). Financial information appearing throughout this Annual Report is consistent with these consolidated financial statements.In discharging its responsibility for the integrity and fairness of the consolidated financial statements and for the accounting systems from which they are derived, management maintains internal controls designed to ensure that transactions are authorized, assets are safeguarded and proper records are maintained. The system of internal controls is supported by a compliance function, which ensures that the Company and its employees comply with securities legislation and conflict of interest rules, and by an internal audit staff, which conducts periodic audits of all aspects of the Company's operations.The Board of Directors oversees management's responsibilities for financial reporting through an Audit Committee, which is comprised entirely of independent directors. This Committee reviews the consolidated financial statements of the Company and recommends them to the Board for approval.PricewaterhouseCoopers LLP, an independent auditor appointed by the shareholders of the Company upon the recommendation of the Audit Committee, has performed an independent audit of the consolidated financial statements, and its report follows. The shareholders' auditor has full and unrestricted access to the Audit Committee to discuss their audit and related findings.(signed)Blake C. Goldring, M.S.M., CFAChairman & Chief Executive Officer(signed)Robert J. Bogart, CPAExecutive Vice-President & Chief Financial OfficerIndependent Auditor's ReportTo the Shareholders of AGF Management Limited:We have audited the accompanying consolidated financial statements of AGF Management Limited and its subsidiaries, which comprise the consolidated balance sheet as at November 30, 2011 and 2010 and the consolidated statements of income, changes in equity, comprehensive income and cash flow for the years then ended, and the related notes, which comprise a summary of significant accounting policies and other explanatory information.Management's responsibility for the consolidated financial statementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.Auditor's responsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of AGF Management Limited and its subsidiaries as at November  30, 2011 and 2010 and the results of their operations and their cash flows for the years then ended in accordance with Canadian generally accepted accounting principles.(signed)Chartered Accountants, Licensed Public AccountantsJanuary 24, 2012Toronto, CanadaAGF Management LimitedConsolidated Balance Sheet        ($ thousands)      November 30 2011  2010        Assets        Current Assets        Cash and cash equivalents$246,631 $456,550   Investments available for sale (Note 2(a)) 517,486  503,963   Accounts receivable, prepaid expenses and other assets 91,988  94,963   Current portion of retained interest from securitization (Note 3(a)) 38,939  21,334   Real estate secured and investment loans due within one year (Note 5) 462,181  433,537   1,357,225  1,510,347         Retained interest from securitization (Note 3(a)) -  17,365  Real estate secured and investment loans (Note 5) 2,483,157  2,688,677  Investment in associated company (Note 2(b)) 76,616  77,049  Management contracts (Note 4(a) and Note 6) 715,769  504,269  Customer contracts, net of accumulated amortization (Note 4(a) and Note 6) 37,951  11,383  Goodwill (Note 4(a) and Note 6) 292,033  173,708  Other intangibles, net of accumulated amortization (Note 4(a) and Note 6) 22,014  -  Deferred selling commissions, net of accumulated amortization 217,649  243,861  Property, equipment and computer software, net of accumulated amortization (Note 7) 11,027  11,230  Other assets (Note 8) 17,718  15,972 Total assets$5,231,159 $5,253,861               ($ thousands)      November 30 2011  2010        Liabilities and equity       Current Liabilities        Accounts payable and accrued liabilities$227,812 $258,728   Secured financing (Note 3(b)) 41,998  -   Future income taxes (Note 12) 16,690  18,024   Acquisition consideration payable (Note 4(a)) 31,663  -   Deposits due within one year (Note 5(f)) 1,706,434  1,814,701   2,024,597  2,091,453         Deposits (Note 5(f)) 1,220,308  1,721,264  Long-term debt (Note 9) 309,341  143,678  Secured financing (Note 3(b)) 196,626  -  Future income taxes (Note 12) 182,187  129,574  Acquisition consideration payable (Note 4(a)) 10,717  -  Other long-term liabilities (Note 10) 16,244  16,701  Total liabilities 3,960,020  4,102,670        Equity        Equity attributable to owners of the Company        Capital stock (Note 13) 560,838  439,216   Contributed surplus 24,797  22,580   Retained earnings 705,823  702,017   Accumulated other comprehensive loss (Note 16) (20,791)  (13,119)    1,270,667  1,150,694           Non-controlling interest 472  497            Total equity  1,271,139    1,151,191  Total liabilities and equity$5,231,159 $5,253,861Commitments (Note 24)     Guarantees (Note 25)     Contingent Liabilities (Note 26)            (The accompanying notes are an integral part of these Consolidated Financial Statements.) Approved by the Board:(signed)       (signed)   Blake C. Goldring, M.S.M., CFA    Douglas L. Derry, FCADirector       DirectorAGF Management LimitedConsolidated Statement of Income      ($ thousands)     Years ended November 30 2011  2010      Revenue        Management and advisory fees (Note 17)$552,836  $489,633  Deferred sales charges  23,159   22,550  RSP loan securitization income, net of impairment (Note 3) 2,602   2,097  Investment income and other revenue 19,276   13,903  597,873   528,183    AGF Trust interest income  171,343   183,879    AGF Trust interest expense (93,905)  (97,484)  AGF Trust net interest income (Note 20) 77,438   86,395Total revenue 675,311   614,578      Expenses        Selling, general and administrative  212,793   192,407  Business acquisition and integration (Note 4) 10,936   -  Trailing commissions  154,466   138,519  Investment advisory fees  9,286   9,176  Amortization of deferred selling commissions  76,832   78,589  Amortization of customer contracts (Note 6) 12,710   2,838  Amortization of other intangibles (Note 6) 6,986   -  Amortization of property, equipment and computer software (Note 7) 4,165   5,777  Interest expense  11,750   5,750  Provision for AGF Trust loan losses (Note 5(e)) 12,302   17,692  Impairment of asset available for sale (Note 2(a)) 907   -  513,133   450,748      Income before income taxes  162,178   163,830      Income tax expense (recovery) (Note 12)       Current  60,797   64,401  Future  (11,593)  (18,339)  49,204   46,062       $112,974  $117,768      Net income attributable to:       Equity owners of the Company 112,242   116,775  Non-controlling interest 732   993 $112,974  $117,768      Earnings per share attributable to equity owners of the Company (Note 15)       Basic $1.19  $1.31  Diluted $1.18  $1.30(The accompanying notes are an integral part of these Consolidated Financial Statements.)AGF Management LimitedConsolidated Statement of Changes in Equity  ($ thousands) Sharecapital Contributedsurplus Retained earnings  Accumulated other comprehensive loss Attributable to equity owners of the Company   Non- controlling interest TotalequityBalance, November 30, 2009$438,612$19,964$685,063$(13,236)$1,130,403 $408$1,130,811Net income for the year - - 116,775 - 116,775  993 117,768 Other comprehensive income                (net of tax) - - - 117 117  - 117 Comprehensive income                 for the year - - 116,775 117 116,892  993 117,885 Issued through stock                dividend plan 2,635 - - - 2,635  - 2,635 Stock options 2,157 2,616 - - 4,773  - 4,773 AGF Class B Non-Voting shares                repurchased for cancellation                (Note 13(c)) (4,188) - (8,029) - (12,217) - (12,217)Dividends on AGF Class A                Voting common shares and                 AGF Class B Non-Voting                 shares - - (91,792) - (91,792) - (91,792)Dividends to non-controlling                interest - - - - -  (904) (904)Balance, November 30, 2010$439,216$22,580$702,017$(13,119)$1,150,694 $497$1,151,191               Net income for the year - - 112,242 - 112,242  732 112,974 Other comprehensive loss                (net of tax) - - - (7,672) (7,672) - (7,672)Comprehensive income (loss)                for the year - - 112,242 (7,672) 104,570  732 105,302 Issued through stock dividend                plan 2,115 - - - 2,115  - 2,115 Stock options 7,782 2,217 - - 9,999  - 9,999 Issued on acquisition of                Acuity 114,679 - - - 114,679  - 114,679 AGF Class B Non-Voting shares               repurchased for cancellation                (Note 13(c)) (2,954) - (5,128) - (8,082) - (8,082)Dividends on AGF Class A                Voting common shares and                 AGF Class B Non-Voting                 shares - - (99,440) - (99,440) - (99,440)Increase in ownership interest                 in Highstreet Partners                Limited (Note 4(b)) - - (3,868) - (3,868) - (3,868)Dividends to non-controlling                interest - - - - -  (757) (757)Balance, November 30, 2011$560,838$24,797$705,823$(20,791)$1,270,667 $472$1,271,139 (The accompanying notes are an integral part of these Consolidated Financial Statements.)AGF Management LimitedConsolidated Statement of Comprehensive Income      ($ thousands)     Years ended November 30 2011  2010      Net income for the year$112,974  $117,768Other comprehensive income (loss), net of tax            Net unrealized gain (loss) on foreign exchange      Foreign currency translation adjustments related to net       investments in self-sustaining foreign operations 44   (6,429)    44   (6,429) Net unrealized gain (loss) on available for sale       securities      Unrealized gain (loss) (4,854)  7,202 Reclassification of realized loss (gain) or other than temporary impairment to earnings 717   (735)    (4,137)  6,467 Net change related to cash flow hedges      Unrealized loss (3,845)  - Reclassification of realized loss on cash flow hedges 266   79  (3,579)  79Total other comprehensive income (loss), net of tax$(7,672) $117      Comprehensive income for the year$105,302  $117,885      Comprehensive income attributable to:      Equity owners of the Company$104,570  $116,892 Non-controlling interests 732   993 $105,302  $117,885(The accompanying notes are an integral part of these Consolidated Financial Statements.) AGF Management LimitedConsolidated Statement of Cash Flow                ($ thousands)     Years ended November 30 2011  2010      Operating Activities       Net income for the year$112,974   $117,768 Items not affecting cash        Amortization 100,693    87,204  Future income taxes (11,593)   (18,339)  RSP loan securitization income, net of impairment (2,602)   (2,097)  Provision for AGF Trust loan losses 12,302    17,692  Stock-based compensation 8,805    6,863  Equity investment in S&WHL (4,874)   750  Other 1,600    8,158 Dividends from S&WHL 5,493    5,128  222,798    223,127 Net change in non-cash balances related to operations (Note 19) (49,400)   (44,669) Net cash provided by operating activities 173,398    178,458       Financing Activities        Repurchase of Class B Non-Voting shares for cancellation (8,082)   (12,217) Issue of Class B Non-Voting shares 6,960    1,924 Dividends paid (97,325)   (89,157) Increase in secured financing 238,624    - Decrease in long-term debt related to Facility 1 (143,678)   (13,053) Increase in long-term debt related to Facility 2 and Acquisition facility 309,341   - Net decrease in AGF Trust deposits (610,537)   (346,014) Net cash used in financing activities (304,697)   (458,517)       Investing Activities        Deferred selling commissions paid (49,013)   (49,408) Proceeds from sale of discontinued operations -     607 Acquisition of Highstreet Partners Limited (Note 4(b)) (3,868)   (723) Acquisition of Acuity Funds Ltd. and Acuity Investment Management,        net of cash acquired (Note 4(a)) (173,415)   - Purchase of property, equipment and computer software (Note 7) (3,962)   (2,880) Net proceeds from sale (purchase) of investments available for sale (13,606)   62,586 Net decrease in AGF Trust real estate secured and investment loans 165,244    451,557 Net cash provided by investing activities (78,620)   461,739        Increase (decrease) in cash and cash equivalents  (209,919)   181,680       Balance of cash and cash equivalents,  beginning of year 456,550    274,870       Balance of cash and cash equivalents, end of year$246,631   $456,550      Represented by:       Investment Management cash and cash equivalents$62,121  $31,691 AGF Trust cash and cash equivalents 184,510   424,859 $246,631  $456,550Refer to Note 19 for supplemental cash flow information.(The accompanying notes are an integral part of these Consolidated Financial Statements.)Notes to Consolidated Financial StatementsYears ended November 30, 2011 and 2010Description of BusinessAGF Management Limited (AGF or the Company) is incorporated under the Business Corporations Act (Ontario). The Company is an integrated, global wealth management corporation whose principal subsidiaries provide investment management for mutual funds, institutions and corporations, as well as high-net-worth clients; and trust products and services (including real estate secured loans and investment loans and Guaranteed Investment Certificates (GICs)). The Company conducts the management and distribution of mutual funds in Canada under the brand names AGF, Acuity,  Elements and Harmony (collectively, AGF Funds). The Company conducts its trust business under the name AGF Trust Company (AGF Trust).Note 1: Summary of Significant Accounting PoliciesBasis of Presentation and ConsolidationThe Consolidated Financial Statements have been prepared in accordance with Canadian generally accepted accounting principles (GAAP). The Consolidated Financial Statements include the accounts of the Company and its directly and indirectly owned subsidiaries. Intercompany transactions and balances are eliminated on consolidation. For subsidiaries where the Company does not own all of the equity, the minority shareholders' interest is disclosed in the Consolidated Balance Sheet as non-controlling interest and the related income is disclosed as a separate line in the Consolidated Statement of Income. The principal subsidiaries of AGF are:   AGF Investments Inc.AGF Investments America Inc.AGF International Advisors Company LimitedAGFIA LimitedAGF Asset Management (Asia) LimitedAGF Investments Asia LimitedAcuity Investment Management Inc.Acuity Funds LimitedDoherty & Associates LimitedCypress Capital Management LimitedHighstreet Asset Management Inc.AGF Trust CompanyAGF Securities (Canada) Limited20/20 Financial CorporationThe Company is able to exercise significant influence over Smith & Williamson Holdings Limited (S&WHL), an independent U.K.-based company providing private client investment management, financial advisory and tax and accounting services. This investment is accounted for using the equity method.Significant Accounting ChangesBusiness Combinations, Consolidated Financial Statements and Non-Controlling Interests Effective December 1, 2010, the Company elected to early adopt the CICA's "Handbook Section 1582, Business Combinations" (Section 1582), "Handbook Section 1601, Consolidated Financial Statements" (Section 1601) and "Handbook Section 1602, Non-Controlling Interests" (Section 1602). In accordance with the transitional provisions, these standards were applied on a prospective basis, with the exception of the presentation and disclosure requirements for non-controlling interest, which were applied retrospectively. The adoption of these standards did not have a significant impact on the Company's consolidated financial statements other than the reclassification of non-controlling interests, as described below, and the Company's accounting for the acquisition of Acuity Funds Ltd. and Acuity Investment Management Inc. (Acuity) as described in Note 4(a).Pursuant to Section 1582 (equivalent to IFRS 3 "Business Combinations"), business combinations completed on or after December 1, 2010, have been accounted for using the acquisition method of accounting. Under the acquisition method of accounting, the consideration transferred in a business combination is measured at fair value at the date of acquisition. This consideration includes any cash paid plus the fair value at the date of exchange of assets given, liabilities incurred and equity instruments issued by the Company or its subsidiaries. The consideration transferred also includes contingent consideration arrangements recorded at fair value. Directly attributable acquisition-related costs are expensed in the current period and reported within operating expenses. At the date of acquisition, the Company recognizes the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquired business. The identifiable assets acquired and the liabilities assumed are initially recognized at fair value. Where the fair value of consideration paid is less than the fair value of net assets acquired, the excess is recognized in the Consolidated Statement of Income. Any pre-existing equity interests in an acquiree are remeasured to fair value at the date of the business combination and any resulting gain or loss is recognized in the Consolidated Statement of Income.Business combinations completed prior to December 1, 2010, were accounted for using the purchase method under previous Canadian GAAP. The fundamental requirements of the purchase method of accounting are similar to the acquisition method of accounting described above except that, among other differences, the purchase method required that share consideration issued by the acquirer be measured by reference to its market price for a reasonable period before and after the acquisition was announced, acquisition-related costs were included as part of the fair value of the purchase consideration, contingent consideration was generally not recognized initially as part of the consideration transferred, and identifiable assets acquired and liabilities assumed were adjusted to reflect fair values only to the extent of the acquirer's interest in the acquiree when that interest was less than 100%. Furthermore, where the fair value of consideration paid was less than the fair value of net assets acquired, the excess amount was first deducted proportionally from the purchase price allocated to certain acquired non-current assets until their carrying amounts were reduced to nil. Only then was any remaining excess recognized in the Consolidated Statement of Income.A non-controlling interest may be measured at fair value or at the proportionate share of identifiable net assets acquired. Under previous Canadian GAAP, a non-controlling interest was recorded at the proportionate share of the carrying value of the acquiree.Section 1601 carries forward existing guidance on aspects of the preparation of consolidated financial statements subsequent to the acquisition date other than those pertaining to a non-controlling interest. Section 1602 provides guidance on the treatment of a non-controlling interest after acquisition in a business combination and requires: a non-controlling interest to be presented clearly in equity, but separately from the parent's equity; the amount of consolidated net income and other comprehensive income attributable to the parent and to a non-controlling interest to be clearly identified and presented on the Consolidated Statement of Income and Consolidated Statements of Comprehensive Income, respectively; and changes in ownership interests of a subsidiary that do not result in a loss or acquisition of control to be accounted for as an equity transaction.Prior Year Significant Accounting ChangesThere were no changes to accounting policies in the prior fiscal year.Financial InstrumentsIn accordance with Section 3855, financial assets and financial liabilities are initially recognized at fair value. Measurement in subsequent periods is dependent upon the classification of each instrument. The standard requires that all financial assets be classified as either available for sale (AFS), held for trading (HFT), held to maturity (HTM) or loans and receivables. Financial liabilities are classified as trading or other.AFS assets are initially recorded at fair value on the settlement date in the balance sheet and are remeasured at fair value with unrealized gains and losses, including changes in foreign exchange rates, recognized in other comprehensive income (OCI) until the financial asset is disposed of or becomes permanently impaired. Transaction costs related to AFS assets are capitalized.HFT assets and liabilities are initially recorded at fair value on the settlement date and are remeasured at fair value in the balance sheet, with the changes in fair value reported in earnings. Transaction costs related to HFT securities are expensed as incurred. The Company has not classified any financial assets as HTM.Loans and receivables and other financial liabilities are measured at amortized cost using the effective interest method. Transaction costs related to loans and receivables, deposits and other financial liabilities are capitalized and are then amortized using the effective interest method.Use of EstimatesThe preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the year. Actual amounts could differ from these estimates.Key areas of estimation, where management has made difficult, complex or subjective judgments - often about matters that are inherently uncertain - are loan loss provisions, recoverability of goodwill and intangible assets using estimates of future cash flows, as well as commitments and contingencies, the fair value of the acquisition consideration payable, fund absorption costs, income tax provisions, valuation of retained interest from securitization, stock-based compensation and the provision for performance-related compensation. The Company has made investments in companies or businesses, some of which have experienced operating losses. Significant changes in the assumptions, including those about future business plans and cash flows, could change the recorded amounts by a material amount. Any further operating losses of these investees could result in impairment of these investments.Assets Under ManagementThe Company manages and provides advisory services in respect of mutual fund and other investment assets owned by clients and third parties that are not reflected on the consolidated balance sheet.Consolidation of Variable Interest EntitiesCICA AcG 15, "Consolidation of Variable Interest Entities," provides guidance for applying consolidation principles to certain entities that are subject to control on a basis other than ownership of voting interests. An entity is a variable interest entity (VIE) when, by design, one or both of the following conditions exist: (a) total equity investment at risk is insufficient to permit the entity to finance its activities without additional subordinated support from others; (b) as a group, the holders of the equity investment at risk lack certain essential characteristics of a controlling financial interest.The Company has reviewed its relationships, including mutual funds managed, and determined that there are no such entities whose financial results would be required to be included or disclosed in the consolidated results for the years ended November 30, 2011 and 2010.Cash and Cash EquivalentsCash represents highly liquid temporary deposits while cash equivalents are comprised of bank term deposits, both of which have short-term maturities of less than three months at inception.Accounting for SecuritizationsThe Company has securitized certain registered Retirement Savings Plan (RSP) loans and insured real estate secured loans through the sale of these loans to a securitization trust. For a securitization to be treated as a sale, the Company must surrender control over those loans included in the securitization. To surrender control, the securitized assets must be isolated from the Company and its creditors, even in the case of bankruptcy or receivership, and the Company must receive consideration other than the beneficial interest in the transferred assets.The RSP loan securitization is recognized as a sale under terms that transfer control to third parties, and the related loan assets are removed from the Consolidated Balance Sheet. As part of the securitization, certain financial assets are retained. The retained interests, classified as AFS, are carried at fair value, determined using the present value of future expected cash flows. A gain or loss on the sale of loan receivables is recognized immediately in income. In determining the gain or loss on sale, management estimates future cash flows by relying on estimates of the amount of interest that will be collected on the securitized assets, the yield paid to investors, the portion of the securitized assets that will be prepaid before their scheduled maturity, expected credit losses, the cost of servicing the assets and the rate at which to discount these expected future cash flows. Actual cash flows may differ significantly from those estimated by management. If actual cash flows differ from the Company's estimate of future cash flows, the gains on the retained interest are recorded in OCI. Any losses are first recognized in OCI to the extent there is an offsetting gain and any excess is recognized in the Consolidated Statement of Income under RSP loan securitization income (loss), net of impairment.Servicing fee revenues related to the securitization loan are reported within 'RSP loan securitization income (loss), net of impairment' in the Consolidated Statement of Income. Where a servicing liability is recognized, the amount is recorded in Other Liabilities in the Consolidated Balance Sheet.Retained interests are tested regularly for other-than-temporary impairment and, if required, the retained interest's carrying value is reduced to fair value by a charge in the Consolidated Statement of Income.In 2011, AGF Trust entered into a new securitization of real estate secured loans. The real estate secured loan securitization is recognized as a financing transaction under terms that do not give the transferee the unrestricted right to pledge or sell the real estate secured loan assets, and that permit the Company to retain an unrestricted right to repurchase more than 10% of the assets. Since the transaction is recognized as financing, the related loan assets are accounted for on the balance sheet and the transaction is accounted for as a secured borrowing. The secured assets continue to be classified as loans and receivables and are recorded at amortized cost using the effective interest rate method, net of any allowance for loan losses. Principal payments on the real estate secured loans that are contractually due to the Company in the 12-month period from the balance sheet date are classified as current assets, and those with future principal payments that are contractually due to the Company greater than 12 months from the balance sheet date are classified as long-term assets.  Interest income from loans is recorded on an accrual basis. Accrued but uncollected interest on uninsured real estate secured loans and investment loans are reversed when a loan is identified as impaired. Fees that relate to the origination of loans are considered to be adjustments to loan yield and are deferred and amortized to interest income over the expected term of the loans.Refer to Note 3 for additional disclosure regarding the securitizations and related balance sheet and income statement impacts.Real Estate Secured Loans and Investment LoansReal estate secured loans and investment loans are classified as loans and receivables and are recorded at amortized cost using the effective interest rate method and are net of an allowance for loan losses. Interest income from loans is recorded on an accrual basis. Accrued but uncollected interest on uninsured real estate secured loans and investment loans is reversed when a loan is identified as impaired. Principal payments on the real estate secured loans and investment loans that are contractually due to the Company in the 12-month period from the balance sheet date are classified as current assets. Fees that relate to the origination of loans are considered to be adjustments to loan yield and are deferred and amortized to interest income over the expected term of the loans.Allowance for Loan LossesThe allowance for loan losses consists of both general allowances and specific allowances. General allowances are based on management's assessment of inherent, unidentified losses in the portfolio at the reporting date that have not been captured in the determination of specific allowances. The assessment takes into account portfolio-specific credit factors, general economic factors, geographic exposure, historical loss experience, as well as probability of default (PD) and loss given default (LGD) pairs.Specific allowances consist of provision for losses on identifiable assets for which the estimated amounts recoverable are less than their carrying value and are designed to provide against the likelihood of losses for loans that are deemed to be impaired.Specific allowances also include estimated provisions for losses on identifiable assets that are currently one to 90 days in arrears and are likely to become impaired based on a combination of historical average roll rates and LGD for a given loan portfolio.Impaired LoansLoans are classified as impaired when, in the opinion of management, there is reasonable doubt as to the collectability, either in whole or in part, of principal or interest, or when principal or interest is 90 days or greater past due, except where the loan is both well-secured and in the process of collection. Loans that are insured by the federal government, an agency thereof, or a third-party insurer are classified as impaired when interest or principal is past due 365 days.When a loan is identified as impaired, the carrying amount of the loan is reduced to its estimated realizable value. In subsequent periods, recoveries of amounts previously written off and any increase in the carrying value of the loan are credited to the provision for loan losses in the Consolidated Statement of Income. Where a portion of the loan is written off and the remaining balance is restructured, the new loan is carried on an accrual basis when there is no longer any reasonable doubt about the collectability of principal or interest. Interest income is recognized on impaired loans on a cash basis only after the specific allowance for losses has been reversed and provided there is no further doubt as to the collectability of the principal. Full or partial writeoffs of loans are recorded when management believes there is no realistic prospect of full recovery.Goodwill and Management ContractsThe purchase price of acquisitions accounted for under the acquisition method and the purchase price of investments accounted for under the equity method are allocated based on the fair values of the net identifiable assets acquired, including management contracts and other identifiable intangible assets. The excess of the purchase price over the fair values of such net assets is recorded as goodwill. Management contracts and trademarks have been determined to have an indefinite life.Goodwill and management contracts are not amortized but are subject to impairment tests on an annual basis or more frequently if events or changes in circumstances indicate that the asset may be impaired. Goodwill is allocated to the reporting units and any impairment is identified by comparing the carrying value of a reporting unit with its fair value. If any impairment is indicated, then it is quantified by comparing the carrying value of goodwill to its fair value, based on the fair value of the assets and liabilities of the reporting unit. Management contracts are tested for impairment by comparing their fair value to their carrying amounts. An impairment loss is realized when the carrying amount of the asset exceeds its fair value.For goodwill impairment testing, the fair value of each reporting unit is determined primarily by using a discounted cash flow approach that incorporates each reporting unit's internal forecasts of revenue and expenses. Estimates and assumptions of discount rates, growth rates and terminal growth rates are incorporated in this approach.Customer Contracts and Other IntangiblesCustomer contracts and other intangibles are stated at cost, net of accumulated amortization and impairment, if any. Amortization is computed on a straight-line basis over seven to 15 years based on the estimated useful lives of these assets.Deferred Selling CommissionsSelling commissions paid to brokers on mutual fund securities sold on a deferred sales charge (DSC) basis are recorded at cost and are amortized on a straight-line basis over a period that corresponds with the applicable DSC schedule (which ranges from three to seven years).Property, Equipment and Computer SoftwareProperty, equipment and computer software, which is comprised of furniture and equipment, computer hardware, computer software and leasehold improvements is stated at cost, net of accumulated amortization and impairment, if any. Amortization is calculated using the following methods based on the estimated useful lives of these assets:       Furniture and equipment       20% declining balance Computer hardware    30% declining balance Leasehold improvements    straight-line over term of lease Computer software    straight-line over three years    Impairment of Long-Lived AssetsImpairment of long-lived assets, which includes property, equipment and computer software and intangible assets with finite useful lives, is recognized when an event or change in circumstance causes the assets' carrying value to exceed the total undiscounted cash flows expected from their use and eventual disposition. The measurement of impairment loss is based on the amount that the carrying value exceeds the fair value.DerivativesDerivative instruments are used to manage the Company's exposure to interest rate 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 is applied, a hedge relationship is designated as a fair value hedge or a cash flow hedge. The hedge is documented at inception, detailing the particular risk management objective and the strategy for undertaking the hedge transaction. The documentation identifies the specific asset or liability being hedged, the risk that is being hedged, the type of derivative used and how effectiveness will be assessed. The derivative instrument must be highly effective in accomplishing the objective of offsetting either changes in the fair value or forecasted cash flows attributable to the risk being hedged both at inception and over the life of the hedge. In accordance with CICA "Handbook Section 3865, Hedges," the accumulated ineffectiveness of hedging relationships must be measured, and the ineffective portion of changes in fair value must be recognized in the Consolidated Statement of Income. Where hedge accounting is not applied, all changes in fair value are recognized in the Consolidated Statement of Income.Fair Value HedgesFair value hedge transactions predominantly use interest rate swaps to hedge the changes in the fair value of an asset, liability or firm commitment with a fixed rate of interest. Derivative financial instruments, held for fair value hedging purposes, are recognized at fair value and the changes in the fair value are recognized in the Consolidated Statement of Income under investment income and other revenue. Changes in the fair value of the hedged items attributable to the hedged risk are also recognized in the Consolidated Statement of Income under investment income and other revenue, with a corresponding adjustment to the carrying amount of the hedged items in the Consolidated Balance Sheet. When the derivative instrument no longer qualifies as an effective hedge or the hedging instrument is sold or terminated prior to maturity, hedge accounting is discontinued prospectively. The cumulative adjustment of the carrying amount of the hedged item related to a hedging relationship that ceases to be effective is recognized in income over the remaining period to maturity on an effective yield basis. Furthermore, if the hedged item is sold or terminated prior to maturity, hedge accounting is discontinued and the cumulative adjustment of the carrying amount of the hedged item is then immediately recognized in investment income and other.Cash Flow HedgesCash flow hedges are used to hedge the Company's exposure to fluctuating interest rates on its long-term debt. The effective portion of the change in fair value of the derivative instruments, net of taxes, is recognized in OCI, while the ineffective portion is recognized in the Consolidated Statement of Income under investment income and other revenue. The cumulative balance related to the effective portion is recorded into income in a manner that is symmetric to the recognition of the earnings impact of the hedged item.DepositsDeposits are primarily comprised of GICs that require the Company to pay a fixed interest rate until the maturity date of the certificate. Deposits are classified as current liabilities and other liabilities, depending on the time to maturity, and are carried at amortized cost using the effective interest method. GICs that mature in the 12-month period following the balance sheet date are classified as current liabilities.Revenue RecognitionManagement and advisory fees are based on the net asset value of funds under management and are recognized on an accrual basis. These fees are shown net of management fee rebates and distribution fees payable to third parties and selling-commission financing entities.DSC revenue is received from investors when mutual fund securities sold on a DSC basis are redeemed. DSC revenue is recognized on the trade date of redemption of the applicable mutual fund securities.Net interest income on real estate secured and investment loans, dividends and other investment income earned are recognized on an accrual basis in the period earned.Stock-based Compensation and Other Stock-based PaymentsThe Company has stock option plans as described in Note 14. The Company utilizes the fair-value-based method of accounting for stock-based compensation. The fair value of stock-based compensation, determined using an option pricing model, is recorded over the vesting period as a charge to net earnings with a corresponding credit to contributed surplus.The Company also has a share purchase plan under which employees can have a percentage of their annual earnings withheld subject to a maximum of 6% to purchase AGF's Class B Non-Voting shares. The Company matches up to 60% of the amounts contributed by the employee. The Company's contribution vests immediately and is recorded as a charge to net income in the period in which the cash contribution is made. All contributions are used by the plan trustee to purchase Class B Non-Voting shares on the open market.The Company has Restricted Share Unit (RSU) plans for senior employees under which certain employees are granted RSUs of Class B Non-Voting shares. These units vest three years from the grant date. AGF will redeem all of the participants' share units in cash equal to the value of one Class B Non-Voting share for each RSU. Compensation expense and the related liability are recorded equally over the three-year vesting period, taking into account fluctuations in the market price of Class B Non-Voting shares, dividends paid and forfeitures.The Company has a Partners Incentive Plan (PIP) for senior employees of its Investment Management Operations segment under which certain employees are designated to participate. The plan consists of a number of points, which are allocated among participating employees. The value of each point is determined using a funding rate that is based on a set percentage of targeted earnings before interest and tax (EBIT) that defines the funding pool for the year. At the end of each fiscal year, the funding pool is adjusted up or down to reflect the Company's EBIT performance. The adjusted dollar value is then settled in the form of RSUs or stock options. Stock options are granted under the Company's stock option plan, which is described in Note 14. RSUs are granted under the PIP. These units vest evenly over three years from the grant date. Upon vesting, the Company will redeem the participants' share units in cash equal to the value of one Class B Non-Voting share for each RSU. During the first year of the plan, compensation expense and the related liability is expensed based on the targeted funding pool over a graded four-year vesting period. Upon granting of the RSU or stock option, the remaining expense is accounted for under the RSU or option model.The Company has a Deferred Share Unit (DSU) plan for non-employee Directors. The plan enables Directors of the Company to elect to receive their remuneration in DSUs. These units vest immediately and compensation expense and the related liability are charged to net income in the period the DSUs are granted. On termination, AGF will redeem all of the participants' DSUs in cash or shares equal to the value of one Class B Non-Voting share at the termination date for each DSU.Foreign Currency TranslationMonetary assets and liabilities denominated in foreign currencies are translated at exchange rates prevailing at the balance sheet date and non-monetary assets and liabilities are translated at historical exchange rates. Foreign currency income and expenses are translated at average exchange rates prevailing throughout the year. Unrealized translation gains and losses and all realized gains and losses are included in other non-operating expenses, except for available for sale securities where unrealized translation gains and losses are recorded in other comprehensive income until the asset is sold or becomes impaired.Financial statements of integrated foreign subsidiaries are translated using the temporal method. Under this method, monetary assets and liabilities are translated into Canadian dollars at the exchange rate in effect at the balance sheet date. Non-monetary assets are translated at historical exchange rates. Revenue and expenses are translated at average exchange rates for the period, except for amortization, which is translated on the same basis as the related asset. Translation gains and losses are included in net income.Investments in foreign associated companies are translated into Canadian dollars at the rate of exchange in effect at the balance sheet date. Unrealized translation gains and losses are reported in other comprehensive income.Income TaxesThe Company follows the asset and liability method in accounting for income taxes whereby future income tax assets and liabilities reflect the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities and their tax bases. Future income tax assets and liabilities are measured based on the enacted or substantively enacted tax rates that are expected to be in effect when the future income tax assets or liabilities are expected to be realized or settled. The effect on future income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the substantive enactment date. Future income tax assets are recognized to the extent that realization is considered more likely than not.Earnings Per ShareBasic earnings per share are calculated by dividing net income applicable to AGF Class A Voting common shares and AGF Class B Non-Voting shares by the daily weighted average number of shares outstanding. Diluted earnings per share are calculated using the daily weighted average number of shares that would have been outstanding during the year had all potential Class B Non-Voting shares been issued at the beginning of the year, or when other potentially dilutive instruments were granted or issued, if later. The treasury stock method is employed to determine the incremental number of shares that would have been outstanding had the Company used proceeds from the exercise of options to acquire shares.Future Accounting ChangesTransition to International Financial Reporting Standards The CICA Accounting Standards Board requires all Canadian publicly accountable enterprises to adopt International Financial Reporting Standards (IFRS) for years beginning on or after January 1, 2011. The Company will adopt IFRS for the fiscal year 2012 starting December 1, 2011. The fiscal 2012 Consolidated Financial Statements will include comparative 2011 financial results under IFRS. The Company will report its financial results for the quarter ended February 29, 2012 on an IFRS basis, including comparative IFRS financial results and an opening balance sheet as at December 1, 2011.Note 2: Investments Available for Sale and Investment in S&WHL(a)     The following table presents a breakdown of available for sale investments, excluding retained interest from securitization:           ($ thousands)          November 30       2011  2010            Trust           Canadian government debt1             Federal      $31,753$-   Provincial       442,572 392,261 Mortgage-backed securities       22,149 - Deposits with regulated institutions       - 85,557        496,474 477,818           Investment Management           Canadian government debt             Federal       299 297 AGF mutual funds and other       15,673 19,572 Equity securities       5,040 6,276        21,012 26,145                  $517,486$503,9631 Includes investments issued and/or guaranteed by the Canadian government or agencies of the Government of Canada.The following table presents a breakdown of AGF Trust available for sale investments by maturity, excluding retained interest from securitization:  ($ thousands)           Greater than   November 30, 2011   Credit rating    1 year or less  1 to 5 years 5 years  Total                Trust                Canadian government debt               Federal   AAA  $-$-$31,753$31,753   Provincial   A to AAA   102,042 340,530 -$442,572  Mortgage-backed securities AAA   - 10,496 11,653 22,149         $102,042$351,026$43,406$496,474                 ($ thousands)           Greater than   November 30, 2010   Credit rating    1 year or less  1 to 5 years 5 years  Total                Trust                Canadian government debt               Provincial   A to AAA  $36,169$328,545$27,547$392,261  Deposits with regulated institutions AA   85,557 - - 85,557         $121,726$328,545$27,547$477,818                AGF Trust's available for sale investments include federal and provincial guaranteed bonds, mortgage-backed securities (MBSs) and floating-rate notes (FRNs) with original terms to maturity greater than three months. As at November 30, 2011, $56.8 million of AGF Trust's available for sale investments were floating-rate securities subject to repricing (2010 - $85.1 million) and $439.7 million were fixed-rate securities (2010 - $392.7 million).Investment Management's available for sale investment in Canadian government debt is a fixed-rate treasury bond with a maturity date within one year and a credit rating of AAA.During the year ended November 30, 2011, the Company determined that a decline in the fair value of certain equity securities was other than temporary. As a result, the Company recognized an impairment charge of $0.9 million before tax ($0.8 million after tax). As at November 30, 2010, no impairment charges were required.(b)     The Company holds a 31.0% investment in S&WHL accounted for using the equity method. At November 30, 2011, the carrying value was $76.6 million (2010 - $77.0 million). During the 12 months ended November 30, 2011, the Company recognized earnings of $4.9 million (2010 - $0.8 million in losses) and received $5.5 million in dividends (2010 - $5.1 million) from S&WHL.Note 3: Securitization of AGF Trust LoansThe Company participates in securitizations as part of its funding activities. Under the terms of securitization agreements with third party trusts, the Company's securitized RSP loans qualify for derecognition from the balance sheet, whereas its securitized real estate secured loans are retained on the balance sheet as a secured financing transaction.(a)     RSP Loan SecuritizationSecuritized RSP loan assets qualify under the rules for derecognition and are removed from the Consolidated Balance Sheet. As part of the RSP loan securitization, certain financial assets are retained. The Company has recorded retained interests of $38.9 million (2010 - $38.7 million) made up of (1) 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 $0.6 million (2010 - $2.5 million), (2) cash collateral of $14.4 million (2010 - $13.6 million) and (3) over-collateralization of $23.9 million (2010 - $22.6 million).The significant assumptions used to value the retained interests were as follows:           November 30        2011  2010           Excess spread       5.0% 4.9% - 5.0%Discount rate on interest-only strip       7.5% 7.5%Expected credit losses       0.8% - 1.0% 2.3% - 2.4%Prepayment rate       15.7% 16.2% - 17.0%Expected weighted average life of RSP loans      1.4 years 1.6 years            The effect of changes to these key assumptions on the fair value of retained interests is not significant.(b)     Real Estate Secured Loan SecuritizationIn the fourth quarter of 2011, AGF Trust securitized $240.6 million of real estate secured loans. Under the terms of a secured financing transaction, the Company retained the risks and rewards of ownership and has unrestricted rights to repurchase more than 10% of the securitized loan assets, which were retained on the balance sheet. At November 30, 2011, the outstanding balance of the securitized loan assets was $238.5 million. The securitized loans assets were pledged as collateral for secured financing with a third party funding trust. At inception, a financing liability of $240.7 million was established, equal to the notional amount of the securitized real estate secured loans. The financing liability will be reduced as the secured loans are paid down. At November 30, 2011, the outstanding balance of the secured financing liability was $238.6 million. Cash collateral equal in value to 0.25% of the notional amount of the securitized assets has also been pledged as part of the secured financing transaction and is recorded on the Consolidated Balance Sheet under other assets. At inception and as at November 30, 2011, the cash collateral was $0.6 million.Note 4: Acquisitions(a)     Acquisition of Acuity Funds Ltd. and Acuity Investment Management Inc.On February 1, 2011, the Company completed its acquisition of 100% of the shares of Acuity for a purchase price of $335.5 million. Acuity is included in the Company's Investment Management Operations segment and manages retail and institutional assets. Goodwill of $118.3 million was recognized as the fair value of consideration paid in excess of the fair value of separately recognized tangible and intangible assets acquired, net of liabilities assumed.The fair values of net assets acquired and consideration paid are summarized in the table below:           ($ thousands)                     Net assets acquired           Cash        $4,842 Other assets         10,646 Management contracts         211,500 Customer contracts         39,278 Non-competition agreement1         21,900 Finite-life management contracts1         5,500 Trademark1         1,600 Goodwill         118,325 Liabilities         (14,028) Future income taxes         (64,014)         $335,549           Consideration paid           Cash        $178,257 Cash payments due February 1, 2012         18,391 Cash payments due February 1, 2013         3,644 Cash payments due February 1, 2014         3,579 Issuance of Class B Non-Voting shares (Note 13(b))         55,683 Issuance of Class B Non-Voting shares held in escrow (Note 13(b))       58,996 Issuance of Class B exchangeable preferred shares, redeemable February 1, 2012     9,756 Issuance of Class C exchangeable preferred shares, redeemable February 1, 2012     2,517 Issuance of Class D exchangeable preferred shares, redeemable February 1, 2013     2,400 Issuance of Class E exchangeable preferred shares, redeemable February 1, 2014     2,326         $335,5491 Grouped as other intangibles on the Consolidated Balance Sheet.The non-competition agreement, finite-life management contracts, and trademarks are stated at cost (being the fair value at the date of acquisition), net of accumulated amortization and impairment, if any, on the Consolidated Balance Sheet under other intangibles. Amortization is computed on a straight-line basis over three to 10 years based on the estimated useful lives of these assets.The deferred cash payments and Class B, C, D and E exchangeable preferred shares are subject to an adjustment based on Acuity's net sales of institutional AUM between the date of acquisition and the payment or redemption date of these preferred shares. The adjustment is not expected to be significant, but could range between the fair value of the acquisition consideration payable and an unlimited amount. The Class B, C, D and E exchangeable preferred shares are to be settled by the issuance of a variable number of AGF Class B Non-Voting shares, the number of which is determined by reference to a fixed exchange ratio. The deferred cash payments and Class B, C, D and E exchangeable preferred shares are accounted for as contingently returnable consideration carried at fair value and have been classified on the Consolidated Balance Sheet as acquisition consideration payable.The Class B Non-Voting shares held in escrow, as part of the consideration paid outlined in the above table, are released to the Acuity vendors between August 1, 2011 and February 1, 2014. Dividends declared on the Class B Non-Voting shares are paid to the vendors during the escrow period. During the year ended November 30, 2011, no Class B Non-Voting shares were released from escrow and 3,475,752 Class B Non-Voting shares continue to be held in escrow. Prior to the acquisition, the Company also advanced $14.0 million to Acuity, which was converted into common shares of Acuity upon closing and has been reflected above as cash consideration paid.The following is a summary of the fair values of contingently returnable consideration as at November 30, 2011:                    November 30, ($ thousands)         2011            Cash payments due February 1, 2012        $19,693Cash payments due February 1, 2013         3,563Cash payments due February 1, 2014         3,306Issuance of Class B exchangeable preferred shares, redeemable February 1, 2012     9,515Issuance of Class C exchangeable preferred shares, redeemable February 1, 2012     2,455Issuance of Class D exchangeable preferred shares, redeemable February 1, 2013     1,984Issuance of Class E exchangeable preferred shares, redeemable February 1, 2014     1,864         $42,380Less: current portion         31,663         $10,717           The following is a summary of post-acquisition amounts included in the Company's Consolidated Statement of Income for the year ended November 30, 2011:             For the year ended($ thousands)   November 30, 2011                Revenue        $            66,818Net income1             20,6031 Excluding integration costs and fair value adjustments related to the acquisition consideration payable.During the year ended November 30, 2011, the Company recognized $10.9 million (2010 - nil) in expenses related to the acquisition and integration of Acuity and a $0.2 million (2010 - nil) recovery related to the fair value adjustment on the acquisition consideration payable.(b)     Acquisition of Highstreet Partners Ltd.On December 1, 2006, AGF acquired 79.9% of Highstreet Partners Limited (Highstreet). During the year ended November 30, 2009, contingent consideration, based on certain financial profitability targets being achieved by Hightstreet, of $0.7 million was recorded as an increase in goodwill. This amount was paid on March 3, 2010. In 2011, the Company increased their ownership interest in Highstreet to 84.0% for cash consideration of $3.9 million. The payments were recorded as an adjustment to retained earnings.Note 5: AGF TrustAGF Trust's principal business activities are originating real estate secured loans and investment loans and deposit taking. Details relating to these activities are as follows: ($ thousands)Term to contractual repricing       Variable  1 year or  1 to 5      November 30 rate  less  years   2011  2010            Mortgage loans $85,754$359,060$537,989$982,803$861,007Home equity lines of credit (HELOC)             receivables 195,277 - - 195,277 273,272Total real estate secured loans 281,031 359,060 537,989 1,178,080 1,134,279Investment loans 1,789,431 453 83 1,789,967 2,016,501Total loans 2,070,462 359,513 538,072 2,968,047 3,150,780Less: allowance for loan losses       (28,415) (32,063)Add: net deferred sales commissions and commitment fees     5,706 3,497        2,945,338 3,122,214Less: current portion       (462,181) (433,537)       $2,483,157$2,688,677           (a)     Real Estate Secured and Investment LoansThe table represents the period of contractual repricing of interest rates on outstanding amounts. Principal repayments due on real estate and investment loans due within one year as at November 30, 2011, were $462.2 million (2010 - $433.5 million).As at November 30, 2011, AGF Trust's mortgage portfolio comprises a combination of fixed rate and variable rate residential mortgages with a weighted average term to repricing of 1.5 years (2010 - 1.7 years) and a weighted average yield of 5.2% (2010 - 6.1%). Insured mortgage loans, excluding loan loss allowance, deferred commissions and pending representment, were $527.5 million as at November 30, 2011 (2010 - $413.9 million). HELOCs, which totalled $195.3 million as at November 30, 2011 (2010 - $273.3 million), had an average interest rate of 4.9% (2010 - 4.9%). Investment loans, excluding RSP loans, totalled $1.5 billion as at November 30, 2011 (2010 - $1.6 billion), and had an average interest rate (based on the prime interest rate) of 4.8% (2010 - 4.8%). RSP loans totalled $323.8 million as at November 30, 2011 (2010 - $378.0 million), and had an average interest rate of 6.1% (2010 - 6.2%). The average interest rate on all investment loans as at November 30, 2011, was 5.0% (2010 - 5.0%). Mortgage and HELOC loans are secured primarily by residential real estate. Secured investment loans of $1.5 billion (2010 - $1.6 billion) are secured primarily by the investment made using the initial loan proceeds. The market value of this investment loan collateral is approximately $1.2 billion (2010 - $1.4 billion).(b)     Loans by Province and by TypeThe following tables are a breakdown of the total value and total number of loans by province and by type: ($ millions) Insured Conventional Secured        November 30, 2011 mortgageloans mortgageloans investmentloans RSP loans HELOC receivables Financeloans Total British Columbia$34.0 $49.1 $272.2 $27.6 $10.5 $-  $393.4  Alberta 97.0  106.5  160.7  33.6  155.1  0.1  553.0  Ontario 270.2  209.9  716.2  97.6  10.7  0.1  1,304.7  Quebec 110.5  66.7  110.7  135.7  0.2  0.1  423.9  Other 15.8  23.3  205.7  29.3  18.7  0.2  293.0 Total value of loans$527.5 $455.5 $1,465.5 $323.8 $195.2 $0.5 $2,968.0                (number of loans) Insured Conventional Secured        November 30, 2011 mortgageloans mortgageloans investmentloans RSP loans  HELOCreceivables Finance loans Total               British Columbia             129                 175           4,133           3,238                 54                21 7,750 Alberta             423                 508           2,830           2,956               652                87 7,456 Ontario          1,632              1,099         11,696         11,144                 71                65 25,707 Quebec             663                 489           2,051         14,386                   3                86 17,678 Other               86                 136           2,987           2,736               136              188 6,269 Total number of loans          2,933              2,407         23,697         34,460               916              447 64,860                ($ millions) Insured   Conventional   Secured        November 30, 2010 mortgageloans mortgageloans investmentloans RSP loans  HELOC receivables Finance loans  Total                British Columbia$10.5 $26.2 $305.0 $33.4 $21.0 $0.1 $396.2  Alberta 59.1  115.7  190.0  38.5  207.5  0.5  611.3  Ontario 237.0  210.0  800.2  117.6  17.8  0.3  1,382.9  Quebec 104.0  90.3  120.4  154.8  0.3  0.5  470.3  Other 3.3  4.9  220.9  33.7  26.7  0.6  290.1 Total value of loans$413.9 $447.1 $1,636.5 $378.0 $273.3 $2.0 $3,150.8                (number of loans) Insured   Conventional   Secured        November 30, 2010 mortgageloans mortgageloans investmentsloans RSP loans  HELOC receivables Finance loans                             Total British Columbia               54                 112           4,583           3,591               105                57 8,502  Alberta             262                 576           3,332           3,094               877              260 8,401  Ontario         1,551              1,206         12,887         12,423               114              162 28,343  Quebec            604                 653           2,234         15,281                   4              253 19,029  Other               19 33           3,214           2,912               193              441 6,812 Total number of loans          2,490 2,580         26,250         37,301            1,293           1,173 71,087                (c)     Impaired LoansLoans are considered to be past due where repayment of principal or interest is contractually in arrears. Loans are classified as impaired when, in the opinion of management, there is reasonable doubt as to the collectability, either in whole or in part, of principal or interest, or when principal or interest is 90 days past due, except where the loan is both well-secured and in the process of collection. Loans that are insured by the federal government, an agency thereof, or a third-party insurer are classified as impaired when interest or principal is past due 365 days. As at November 30, 2011, impaired loans were $23.8 million (2010 - $35.7 million) and $15.8 million (2010 - $25.8 million), net of the specific allowance for loan losses.           ($ thousands)          November 30       2011 2010           Impaired Loans:            Insured mortgage loans       $3,984$6,488 Conventional mortgage loans        14,926 25,157 Secured investment loans        1,372 1,357 RSP loans        2,214 1,335 HELOC receivables        1257 1,412       $23,753$35,749The following table provides an aging of loans:               ($ thousands)              November 30, 2011   Current 1 to 29 days 30 to 60 days 61 to 90 days Over 90 days Total               Insured mortgage loans$495,215$14,725$2,078$1,763$13,679$527,460 Conventional mortgage loans 428,392 9,938 1,569 881 14,563 455,343 Secured investment loans 1,449,316 13,315 1,808 687 517 1,465,643 RSP loans   318,870 2,307 613 309 1,688 323,787 HELOC receivables   190,730 1,737 610 325 1,875 195,277 Finance loans   537 - - - - 537    $2,883,060$42,022$6,678$3,965$32,322$2,968,047                ($ thousands)              November 30, 2010   Current 1 to 29 days 30 to 60 days 61 to 90 days Over 90 days Total               Insured mortgage loans$371,731$16,391$2,518$2,627$20,588$413,855 Conventional mortgage loans 400,783 17,722 2,866 1,174 24,607 447,152 Secured investment loans 1,617,556 14,701 2,525 862 898 1,636,542 RSP loans   371,553 4,301 1,043 661 420 377,978 HELOC receivables   266,663 4,289 375 - 1,945 273,272 Finance loans   1,981 - - - - 1,981    $3,030,267$57,404$9,327$5,324$48,458$3,150,780 (d)     Mortgages in Legal ActionAs at November 30, 2011, there were $16.5 million (2010 - $23.7 million) of insured mortgages in legal action. In addition, the following table provides a summary of conventional mortgages in legal action, including demand for payment, power of sale and foreclosures. The table details opening mortgages in legal action for the period and related changes to the pool, being additions, discharged mortgages other than sold, proceeds on foreclosed mortgages discharged and related losses, to arrive at the ending balance of mortgages in legal action.           ($ thousands)          Years ended November 30       2011 2010           Balance outstanding, beginning of the year      $28,297$50,513 Additions        16,483 27,619 Discharged mortgages other than sold        (13,394) (25,624) Proceeds on foreclosed mortgages discharged        (12,645) (20,455) Loss on foreclosed mortgages discharged        (3,287) (3,756)Balance outstanding, end of the year       $15,454$28,297           (e)     Allowance for Credit LossesThe continuity in the allowance for loan losses is as follows:         ($ thousands) Specific  General  TotalYear ended November 30, 2011 allowances  allowances  allowances         Balance, beginning of the year$9,866 $22,197 $32,063Amounts written off (18,902)  -  (18,902)Recoveries 2,952  -  2,952Provision for loan losses 14,049  (1,747)  12,302Balance, end of the year$7,965 $20,450 $28,415         Breakdown by category as at November 30, 2011:         Insured mortgage loans$- $1,500 $1,500 Conventional mortgage loans 3,123  4,652  7,775 Secured investment loans 1,176  8,571  9,747 RSP loans 3,362  5,277  8,639 HELOC receivables 304  450  754Balance, end of the year$7,965 $20,450 $28,415         ($ thousands) Specific  General  TotalYear ended November 30, 2010 allowances  allowances  allowances         Balance, beginning of the year$15,064 $24,754 $39,818Amounts written off (27,463)  -  (27,463)Recoveries 2,016  -  2,016Provision for loan losses 20,249  (2,557)  17,692Balance, end of the year$9,866 $22,197 $32,063         Breakdown by category as at November 30, 2010:         Insured mortgage loans$- $2,500 $2,500 Conventional mortgage loans 4,001  4,338  8,339 Secured investment loans 1,560  5,005  6,565 RSP loans 4,121  9,716  13,837 HELOC receivables 184  638  822Balance, end of the year$9,866 $22,197 $32,063         (f)     AGF Trust Deposits            ($ thousands)Term to maturity      1 year or 1 to 5    November 30 Demand less years 2011 2010           Deposits$4,050$1,702,384$1,227,506$2,933,940$3,545,529Less: deferred selling commissions       (7,198) (9,564)Less: current portion       (1,706,434) (1,814,701)Long-term deposits      $1,220,308$    1,721,264As at November 30, 2011, deposits were substantially comprised of GICs with a weighted average term to maturity of 1.2 years (2010 - 1.3 years) and a weighted average interest rate of 2.7% (2010 - 3.1%). Approximately 10.3% (2010 - 13.8%) of deposits mature within 90 days.(g)     Interest Rate SwapsTo hedge its exposure to fluctuating interest rates, AGF Trust has entered into interest rate swap transactions with four Canadian chartered banks, as noted below. The swap transactions expire between December 2011 and March 2015. They involve the exchange of either the one-month bankers' acceptance (BA) rate or the three-month BA rate to receive fixed interest rates. The swap contracts designated as fair value hedging instruments for deposits are used by AGF Trust for balance sheet matching purposes and to mitigate net interest revenue volatility. As at November 30, 2011, the aggregate notional amount of the swap transactions was $2.0 billion (2010 - $2.4 billion). The aggregate fair value of the swap transactions, which represents the amount that would be received by AGF Trust if the transactions were terminated at November 30, 2011, was $14.1 million (2010 - $15.9 million). During the 12 months ended November 30, 2011, the ineffective portion of accumulated changes in fair value of hedging relationships recognized in the Consolidated Statement of Income amounted to a loss of $0.7 million (2010 - $1.4 million loss), as it relates to fair value hedging relationships.              ($ thousands)  Notional  Fair Maturity  Fixed interest  November 30, 2011  amount of swap  value date  rate received   $60,000 $52 2011  1.30% - 4.17%    1,280,000  4,035 2012  0.92% - 5.01%    510,000  5,180 2013  0.90% - 2.71%    80,000  2,453 2014  2.09% - 2.82%    50,000  2,425 2015  2.48% - 2.93%   $1,980,000 $14,145                      ($ thousands)  Notional  Fair Maturity  Fixed interest  November 30, 2010  amount of swap  value date  rate received   $235,000 $140 2010  0.60% - 4.34%    1,290,000  6,523 2011  0.61% - 5.08%    685,000  6,252 2012  1.26% - 5.01%    170,000  1,501 2013  1.86% - 2.71%    40,000  797 2014  2.22% - 2.82%    25,000  687 2015  2.82% - 2.93%   $2,445,000 $15,900       Note 6: Goodwill and IntangiblesThe continuities of goodwill and management contracts are as follows:            ($ thousands)             Years ended November 30           2011 2010              Goodwill              Opening Balance         $173,708$173,708 Acquisition of Acuity Investment Management Inc. (Note 4(a))        118,325 -         $292,033$173,708            ($ thousands)             Years ended November 30           2011 2010              Management contracts              Opening Balance         $504,269$504,269 Acquisition of Acuity Investment Management Inc. (Note 4(a))        211,500 -         $715,769$504,269During the years ended November 30, 2011 and 2010, the Company completed an impairment test on goodwill and management contracts and determined that no impairment existed. Accordingly, there was no change to the carrying value of management contracts and goodwill during 2011 and 2010.The continuity of customer contracts is as follows:             ($ thousands)     Opening     Closing      net book Net   net bookNovember 30, 2011     value additions Amortization value             Customer contracts             Doherty & Associates    $1,322$-$164$1,158 Cypress Capital Management Limited     4,149 - 483 3,666 ING Investment Management Inc.               mutual fund assets     842 - 501 341 Highstreet Asset Management Inc.     5,070 - 1,690 3,380 Acuity Investment Management Inc. (Note 4(a))     - 39,278 9,872 29,406     $11,383$39,278$12,710$37,951             ($ thousands)     Opening     Closing      net book Net   net bookNovember 30, 2010     value additions Amortization value             Customer contracts             Doherty & Associates    $1,486$-$164$1,322 Cypress Capital Management Limited     4,632 - 483 4,149 ING Investment Management Inc.               mutual fund assets     1,343 - 501 842 Highstreet Asset Management Inc.     6,760 - 1,690 5,070     $14,221$-$2,838$11,383The continuity of other intangibles is as follows:             ($ thousands)     Opening     Closing      net book Net   net bookNovember 30, 2011     value additions Amortization value             Other intangibles             Acuity - trademark (Note 4(a))    $-$1,600$444$1,156 Acuity - finite-life management contracts (Note 4(a))     - 5,500 458 5,042 Acuity - non-competition agreement (Note 4(a))     - 21,900 6,084 15,816      $-$29,000$6,986$22,014The Company concluded that customer contracts and other intangibles are fully recoverable and no impairment charges were recorded in 2011 and 2010.Note 7: Property, Equipment and Computer Software             ($ thousands)     Opening     Closing      net book Net   net bookNovember 30, 2011     value additions1 Amortization value             Furniture and equipment    $2,583$228$537$2,274Leasehold improvements     3,405 591 882 3,114Computer hardware     2,990 1,769 1,104 3,655Computer software     2,252 1,374 1,642 1,984     $11,230$3,962$4,165$11,027             ($ thousands)     Opening     Closing      net book Net   net bookNovember 30, 2010     value additions Amortization value             Furniture and equipment    $2,988$213$618$2,583Leasehold improvements     4,989 247 1,831 3,405Computer hardware     2,888 1,119 1,017 2,990Computer software     3,262 1,301 2,311 2,252     $14,127$2,880$5,777$11,230Note 8: Other Assets           ($ thousands)           November 30       2011 2010           Long-term portion of derivatives used to manage interest rate exposure on deposits  $10,408$9,746Other         7,310 6,226       $17,718$15,972The current portion of derivatives used to manage interest rate exposure is included under accounts receivable, prepaid expenses and other assets. As at November 30, 2011, the current portion was $3.7 million (2010 - $6.2 million). Refer to Note 5(g) for details on the derivatives used to manage interest rate exposure. Refer to Note 22 for further details of the Company's derivative instruments.Note 9: Long-Term Debt         ($ thousands)        November 30     2011  2010          Revolving term loans (Note 9(a))          Facility 1    $- $143,678 Facility 2     124,723  -Acquisition facility (Note 9(b))     184,618  -     $309,341 $143,678         On August 31, 2011, the Company, through its subsidiary AGF Investments Inc., amended and restated its loan agreements. All facilities are now under one syndicated agreement with two Canadian chartered banks as follows:(a)     Revolving Term LoansOn August 31, 2011, the Company amended and restated its revolving committed term loan (Facility 1). Facility 1 is a syndicated revolving term loan with two Canadian chartered banks and with a maximum aggregate principal of $300.0 million (November 30, 2010 - $300.0 million). Advances under Facility 1 are made available by prime-rate loans in U.S. or Canadian dollars, under BAs or by issuance of letters of credit. Facility 1, if not renewed, is due in full on January 28, 2015. As at November 30, 2011, AGF had not drawn against Facility 1. As at November 30, 2010, AGF had drawn down $143.7 million against Facility 1 at an effective average interest rate of 2.6% per annum.On August 31, 2011, the Company arranged an additional syndicated revolving committed term loan with two major Canadian chartered banks (Facility 2). Facility 2 is a five-year revolving term loan with a maximum aggregate principal of $125.0 million. Advances under Facility 2 are made available by prime-rate loans in U.S. or Canadian dollars, under BAs or by issuance of letters of credit. Facility 2, if not renewed, is due in full on August 31, 2016. As at November 30, 2011, AGF had drawn down $125.0 million against Facility 2 in the form of a one-month BA at an effective average interest rate of 2.7% per annum.Facility 1 and Facility 2 are guaranteed by AGF Management Limited and certain subsidiaries, including the Acuity group of companies and 20/20 Financial Corporation.To hedge the Company's exposure to fluctuating interest rates on its long-term debt, AGF has entered into an interest rate swap transaction with a Canadian chartered bank. The swap transaction expires in July 2016 and involves the exchange of the one-month BA rate to receive a fixed interest rate of 3.8%. The swap contract is designated as a cash flow hedging instrument and is used to mitigate interest expense volatility on Facility 2. As at November 30, 2011, the notional amount of the swap transaction was $125.0 million. Refer to Note 10 and 22 for further details on the Company's derivative instruments.(b)     Acquisition FacilityOn August 31, 2011, the Company amended its syndicated four-year non-amortizing term loan credit facility with two Canadian chartered banks (acquisition facility). The acquisition facility was originally arranged on January 28, 2011, to partially fund the acquisition of Acuity, and consists of a one-time drawdown of $185.0 million. The facility must be fully repaid by January 28, 2015, and is not renewable. Advances under the facility are made available by way of Canadian-dollar prime-rate loans or Canadian-dollar BAs. As at November 30, 2011, AGF had drawn $185.0 million against the facility in the form of a one-month BA at an effective average interest rate of 2.7% per annum.The acquisition facility is guaranteed by AGF Management Limited and certain subsidiaries, including the Acuity group of companies and 20/20 Financial Corporation. Refer to Note 4(a) for further details of the Company's acquisition of Acuity.Note 10: Other Long-Term Liabilities            ($ thousands)           November 30     2011 2010            Long-term portion of derivative used to manage interest rate exposure on long-term debt $3,302$-Long-term compensation-related liabilities      9,776 12,772Long-term portion of Elements Advantage      2,506 3,883Other         660 46        $16,244$16,701The current portion of the derivative used to manage interest rate exposure on long-term debt is included under accounts payable and accrued liabilities. As at November 30, 2011, the current portion was $1.7 million (2010 - nil). Refer to Note 9(a) for details on the derivative used to manage interest rate exposure on long-term debt. Refer to Note 22 for further details on the Company's derivative instruments.The current portion of compensation-related liabilities is included under accounts payable and accrued liabilities. As at November 30, 2011, the current portion was $38.5 million (2010 - $30.7 million).In November 2005, the Company launched AGF Elements, which consists of five diversified fund-of-fund portfolios. Until June 22, 2009, four of these portfolios included the Elements Advantage Commitment, which is a commitment to investors that if their portfolio does not match or outperform its customized benchmark over a three-year period, AGF will provide each individual investor up to 90 basis points in additional units. This is calculated based on the value of such investment at the end of its related three-year period. As of June 22, 2009, the Company discontinued the Elements Advantage feature on its Elements products. Eligible units purchased prior to June 22, 2009, have been grandfathered and will retain the Elements Advantage feature. The current portion of the Elements Advantage liability is included under accounts payable and accrued liabilities. As at November 30, 2011, the current portion was $3.6 million (2010 - $3.1 million).Note 11: Limited Partnership FinancingsPrior to 2000, the Company financed certain deferred selling commissions using limited partnerships (LPs). The Company is obligated to pay these LPs an annual fee of 0.45% to 0.90% of the net asset value of DSC securities. This obligation will continue as long as such DSC securities remain outstanding except for certain of the LPs, in which case the obligation terminates at various dates from December 31, 2011 to December 31, 2020. For certain LPs, the obligation is secured by the Company's mutual fund management contracts to the extent of the particular obligation.The Company is responsible for the management and administration of the LPs. These services are provided in the normal course of operations and are recorded at the amount of consideration agreed to by the parties. The amount of fees received in 2011 was $0.2 million (2010 - $0.2 million). As at November 30, 2011, the net asset value of DSC securities financed by the LPs was $354.9 million (2010 - $557.0 million).Note 12: Income Taxes(a)     The Company's effective income tax rate for continuing operations is comprised as follows:         Years ended November 30     2011   2010         Canadian corporate tax rate    28.4%  31.1%Rate differential on earnings of subsidiaries    (3.1)   (5.6) Tax-exempt investment income    (0.8)   (0.4) Other    5.8    3.0  Effective income tax rate    30.3%  28.1%(b)     The tax effects of temporary differences that gave rise to future tax liabilities and assets are as follows:         ($ thousands)        November 30    2011  2010         Future income tax liability         Deferred sales commissions      $(54,219) $(64,272) Deferred revenue       101  192 Undepreciated capital cost in excess of carrying values       4,111  5,513 Loss carryforwards       3,280  3,319 Expenses deductible or gain to be recognized in future periods       6,360  6,010 Provision for loan losses       5,635  8,040 Securitization of RSP loans       (4,323)  (4,615) Deferred charges       (3,350)  (4,617) Management contracts and intangibles       (159,968)  (99,275) Investments       3,370  2,723 Other       126  (616)         (198,877)  (147,598)Less: current portion    16,690  18,024Future income tax liability - long-term portion   $(182,187) $(129,574)(c)     As at November 30, 2011, certain subsidiaries of the Company have accumulated aggregate non-capital losses of approximately $4.1 million (2010 - $4.4 million) and $18.2 million (2010 - $16.8 million) of capital loss that may be used to reduce taxable income in the future. These tax loss carryforwards expire as follows:               $0.5 million non-capital loss           2027               $0.4 million non-capital loss           2029               $0.1 million non-capital loss           2030               $2.9 million non-capital loss           2031               $0.2 million non-capital loss           no expiry date                                          $18.2 million capital loss             no expiry dateNote 13: Capital Stock(a)     Authorized CapitalThe authorized capital of AGF consists of an unlimited number of AGF Class B Non-Voting shares and an unlimited number of AGF Class A Voting common shares. The Class B Non-Voting shares are listed for trading on the Toronto Stock Exchange (TSX).(b)     Changes During the YearThe changes in capital stock are summarized as follows:             Years ended November 30 20112010($ thousands, except share amounts) Shares  Stated value  Shares  Stated value             Class A Voting common shares  57,600 $-  57,600 $-             Class B Non-Voting shares             Balance, beginning of the year  88,606,196 $439,216  89,097,400 $438,612 Issued through stock dividend plan  118,847  2,115  162,296  2,635 Stock options exercised  698,050  7,782  192,600  2,157 Issued on acquisition of Acuity (Note 4)  6,487,203  114,679  -  - Repurchased for cancellation  (503,500)  (2,954)  (846,100)  (4,188) Balance, end of the year  95,406,796 $560,838  88,606,196 $439,216             (c)     Class B Non-Voting Shares Repurchased for CancellationAGF has obtained applicable regulatory approval to repurchase for cancellation, from time to time, certain of its Class B Non-Voting shares through the facilities of the TSX (or as otherwise permitted by the TSX). Under its normal course issuer bid, AGF may repurchase up to 10% of the public float outstanding on the date of the receipt of regulatory approval or up to 7,430,257 shares through to March 6, 2012. During the year ended November 30, 2011, 503,500 Class B Non-Voting shares were repurchased at a cost of $8.1 million and the excess paid of $5.1 million over the recorded capital stock value of the shares repurchased for cancellation was charged to retained earnings. During the year ended November 30, 2010, 846,100 shares Class B Non-Voting shares were repurchased at a cost of $12.2 million and the excess paid of $8.0 million over the recorded capital stock value of the shares repurchased for cancellation was charged to retained earnings.Note 14: Stock-Based Compensation and Other Stock-Based Payments(a)     Stock Option PlansAGF has established stock option plans for senior employees under which stock options to purchase an aggregate maximum of 4,191,371 Class B Non-Voting shares could have been granted as at November 30, 2011 (2010 - 4,748,451). The stock options are issued at a price not less than the market price of the Class B Non-Voting shares immediately prior to the grant date. Stock options are vested to the extent of 25% to 33% of the individual's entitlement per annum, or in some instances, vest at the end of the term of the option.The change in stock options during 2011 and 2010 is summarized as follows:    Years ended November 30 20112010      Weighted     Weighted      average     average   Options  exercise price  Options  exercise price             Class B Non-Voting share options             Balance, beginning of year   5,540,399 $16.35  6,627,398 $16.34 Options granted   678,780  19.03  75,000  16.20 Options forfeited   (46,650)  8.93  (449,125)  13.27 Options expired   (75,050)  21.11  (520,274)  21.21 Options exercised   (698,050)  9.97  (192,600)  9.99 Balance, end of year   5,399,429 $17.51  5,540,399 $16.35The following summarizes information about stock options outstanding as at November 30, 2011:                     Number of  Weighted   Weighted  Number of   Weighted   options  average   average  options   averageRange of exercise prices  outstanding  remaining life   exercise price  exercisable   exercise price                  $8.01 to $15.00  1,513,350  4.0 years  $8.24  982,723  $             8.24$15.01 to $25.00  2,863,347  3.3   18.16  1,744,817              18.15$25.01 to $35.00  1,010,000  2.6   29.31  1,010,000              29.31$35.01 to $45.00  12,732  2.3   35.70  12,732              35.70   5,399,429  3.4  $17.51  3,750,272  $           18.62During the year ended November 30, 2011, 678,780 stock options were granted (2010 - 75,000) and compensation expense and contributed surplus of $2.4 million (2010 - $2.8 million) was recorded. The fair value of options granted during the year ended November 30, 2011, has been estimated at $4.43 per share using the Black-Scholes option-pricing model. The following assumptions were used to determine the fair value of the options granted during the year ended November 30, 2011.          Risk-free interest rate         2.45%           Expected dividend yield         5.47%          Expected share price volatility      41.37%          Option term           5 years(b)     Restricted Share Unit (RSU)The change in share units during 2011 and 2010 are as follows:     Years ended November 30  2011 2010  Number of share units Number of share units                    Outstanding, beginning of year                   Non-vested   487,761  685,862Issued       Initial allocation   329,736  12,122 In lieu of dividends   44,062  41,442Settled in cash  (449,326)  (96,091)Forfeited and cancelled  (74,065)  (155,574)Outstanding, end of year  338,168  487,761Compensation benefit for the year ended November 30, 2011, related to these share units was $5.1 million (2010 - $3.8 million). In 2007, the Company entered into a swap agreement to fix the cost of compensation related to certain RSUs. As at November 30, 2010, AGF had hedged 43,237 share units at a fixed cost of $27.49. On December 3, 2010, AGF fully settled with its counterparty the remaining 124,626 units having a notional value of $3.4 million based on their November 30, 2010, fair value thereby terminating the hedging relationship. As at November 30, 2011, AGF had not economically hedged any RSUs. Refer to Note 22 for further details on the Company's derivative instruments.(c)     Deferred Share Unit (DSU) PlanThere is no unrecognized compensation expense related to directors' DSUs since these awards vest immediately upon grant. As at November 30, 2011, 71,355 (2010 - 53,446) DSUs were outstanding. Compensation benefit related to these DSUs for year ended November 30, 2011, was $0.1 million (2010 - $0.2 million).(d)     Partners Incentive Plan (PIP)Compensation expense related to this incentive plan are recorded in payroll costs and amounted to $1.2 million for the year ended November 30, 2011 (2010 - $3.8 million).Note 15: Earnings Per ShareThe following table sets forth the calculation of both basic and diluted earnings per share:             ($ thousands, except per share amounts)            Years ended November 30         2011   2010             Numerator             Net income for the year attributable to equity owners of the Company        $112,242 $116,775             Denominator             Weighted average number of shares - basic         94,295,903  89,112,595 Dilutive effect of employee stock options         815,415  1,044,990 Weighted average number of shares - diluted         95,111,318  90,157,585             Earnings per share attributable to equity owners of the Company             Basic        $1.19 $1.31 Diluted       $1.18 $1.30Note 16: Accumulated Other Comprehensive Loss               Foreign Available       currency for sale Cash flow  ($ thousands)   translation securities hedge Total           Opening Balance           Other comprehensive income (loss)  $(27,606)$13,817$(126)$(13,915) Income tax recovery (expense)   4,099 (3,467) 47 679Balance, November 30, 2009   (23,507) 10,350 (79) (13,236)Transactions during the year ended November 30, 2010          Other comprehensive income (loss)   (7,347) 9,668 126 2,447 Income tax recovery (expense)   918 (3,201) (47) (2,330)Balance, November 30, 2010   (29,936) 16,817 - (13,119)Transactions during the year ended November 30, 2011          Other comprehensive income (loss)   50 (6,059) (4,772) (10,781) Income tax recovery (expense)   (6) 1,922 1,193 3,109Balance, November 30, 2011  $(29,892)$12,680$(3,579)$(20,791)Note 17: Agreements with Mutual FundsThe Company acts as manager for the AGF Funds and receives management and advisory fees from the AGF Funds in accordance with the respective agreements between the AGF Funds and the Company. In return, the Company is responsible for management and investment advisory services and all costs connected with the distribution of securities of the AGF Funds. Substantially all the management and advisory fees the Company earned in 2011 and 2010 were from the AGF Funds. As at November 30, 2011, the Company had $36.3 million (2010 - $33.0 million) receivable from the AGF Funds. The Company also acts as trustee for the AGF Funds that are mutual fund trusts.The aggregate unitholder services costs absorbed and management and advisory fees waived by the Company during the year on behalf of the AGF Funds were approximately $4.9 million (2010 - $9.0 million). The decrease is primarily related to the achievement of the revenue commitment with Citigroup Fund Services (Citigroup).Note 18: Related Party TransactionsThe Company may enter into certain transactions with entities under common control or senior officers who are directors of the Company. During 2011 and 2010, total amounts paid by the Company to these related parties were nil.Note 19: Supplemental Disclosure of Cash Flow Information(a)     Changes in Non-Cash Operating Working Capital Items          ($ thousands)         Years ended November 30      2011 2010          Decrease in accounts receivable     $11,840$3,088Increase in other assets      (8,955) (11,278)Decrease in accounts payable and accrued liabilities      (55,005) (28,915)Increase (decrease) in deposits and other liabilities      2,720 (7,564)      $(49,400)$(44,669)(b)     Income Taxes and Interest Paid          ($ thousands)         Years ended November 30      2011 2010          Income taxes paid     $50,334$72,113Interest paid      85,919 83,465      $136,253$155,578          Note 20: AGF Trust Net Interest IncomeThe breakdown of net interest income is as follows:            ($ thousands)           Years ended November 30        2011  2010             AGF Trust interest income             Loan interest       $      155,925 $      169,371 Investment interest                15,418          14,508               171,343        183,879             AGF Trust interest expense             Deposit interest                96,967        124,893 Hedging interest income        (20,703)  (45,971) Other interest expense        17,641  18,562                 93,905          97,484              AGF Trust net interest income       $        77,438 $        86,395            Note 21: Capital ManagementThe Company's objectives when managing capital are to:Provide returns for shareholders through the payment of dividends, the repurchase of Class B Non-Voting shares and the reasonable use of leverage.Ensure that AGF Trust maintains the level of capital to adequately protect depositors and to meet the requirements of its principal regulator, the Office of the Superintendent of Financial Institutions Canada (OSFI).The Company's capital consists of shareholders' equity. The AGF Capital Committee is responsible for the management of capital. The AGF Board of Directors is responsible for overseeing the Company's capital policy and management. The Company reviews its five-year capital plan annually.The Investment Management businesses, in general, are not subject to significant regulatory capital requirements in each of the jurisdictions in which they are registered and operate.AGF Trust's regulatory capital requirements are determined in accordance with guidelines issued by OSFI, which are based on a framework of risk-based capital standards developed by the Bank for International Settlements (BIS).AGF Trust's regulatory capital consists of Tier 1 capital and Tier 2 capital, less certain deductions. Tier 1 capital is comprised of common shares, retained earnings, non-cumulative preference shares and contributed surplus. Gains on the sale of securitized assets and retained interests from securitized assets are deducted from Tier 2 capital. Tier 2 capital is comprised of subordinated debt and eligible general allowances. Retained interests from securitization are deducted from Tier 2 capital. For Tier 1 and Tier 2 capital, the deductions related to retained interests on securitization are subject to a 50/50 allocation.Regulatory capital ratios are reported monthly to management and quarterly to AGF Trust's Board of Directors. As at November 30, 2011, AGF Trust continues to be in compliance with its regulatory capital requirements. The regulatory capital ratios and assets-to-capital multiple for AGF Trust are as follows:              ($ thousands)      November 30 2011   2010       Tier 1 capital$308,025  $287,183  Total regulatory capital 429,716   403,814  Risk-weighted assets 1,599,973   1,795,568  Tier 1 capital ratio 19.3%   16.0%Total capital ratio 26.9%   22.5%Assets-to-capital multiple  8.7   10.2        Note 22: Financial InstrumentsFinancial instruments are classified based on categories according to CICA Handbook "Section 3855 Financial Instruments - Recognition and Measurement" as follows:        ($ thousands)  Carrying amount on balance sheet   Fair value  Amortized cost         Loans and   Available  Held  receivables or   for  for  other financialNovember 30, 2011  sale  trading  liabilities             Cash and cash equivalents $- $246,631 $-  Investments   517,486  -  -  Retained interest from securitization   38,939  -  -  Accounts receivable   -  -  85,972  Real estate secured and investment loans   -  -  2,945,338  Derivatives   -  14,145  -  Other assets   -  -  5,375  Total financial assets  $556,425 $260,776 $3,036,685                Accounts payable and accrued liabilities $- $- $226,065  Long-term debt  -  -  309,341  Deposits  -  -  2,926,742  Secured financing  -  -  238,624  Acquisition consideration payable  -  42,380  -  Derivatives  -  5,049  -  Other long-term liabilities  -  -  12,942  Total financial liabilities  $- $47,429 $3,713,714      ($ thousands)  Carrying amount on balance sheet   Fair value  Amortized cost         Loans and   Available  Held  receivables or   for  for  other financialNovember 30, 2010  sale  trading  liabilities             Cash and cash equivalents $- $456,550 $-  Investments   503,963  -  -  Retained interest from securitization   38,699  -  -  Accounts receivable   -  -  85,925  Real estate secured and investment loans   -  -  3,122,214  Derivatives   -  15,900  -  Other assets   -  -  4,291  Total financial assets  $542,662 $472,450 $3,212,430               Accounts payable and accrued liabilities $- $- $257,451  Long-term debt  -  -  143,678  Deposits  -  -  3,535,965  Derivatives  -  1,277  -  Other long-term liabilities  -  -  16,701  Total financial liabilities  $- $1,277 $3,953,795            Fair Value HierarchyFinancial Instruments Carried at Fair ValueThe financial instruments carried at fair value have been categorized under three levels of fair value hierarchy as follows:Quoted Prices in an Active Market (Level 1) This level of the hierarchy includes listed equity securities on major exchanges, investments in AGF mutual funds, highly liquid temporary deposits with Canadian banks, an Irish government guaranteed bank and non-Irish banks in Ireland, as well as bank term deposits. The fair value of instruments that are quoted in active markets are determined using the quoted prices where they represent those at which regularly and recently occurring transactions take place.Valuation Techniques with Observable Parameters (Level 2) This level of the hierarchy includes derivative instruments with major Canadian chartered banks, as well as investments held by AGF Trust, which include FRNs and MBS instruments. AGF Trust values its investment holdings primarily using a third-party investment valuation service. If prices are not readily available, the Company relies on counterparty valuations from financial institutions and brokerages with which it deals.The fair value of derivatives used to manage interest rate exposure on deposits and long-term debt is calculated through discounting future expected cash flows using the BA-based swap curve. Since the BA-based swap curve is an observable input, these financial instruments are considered Level 2.The fair value of the derivative used to manage changes in share-based compensation was calculated as the difference between the initial swap price and the market value of Class B Non-Voting shares on the valuation date, multiplied by the total number of shares outstanding. The initial price was equal to the price agreed to at the onset of the swap agreement, adjusted for dividends that had been reinvested by the equity holder. Since the market value of Class B Non-Voting shares is an observable input, this financial instrument was considered Level 2.Valuation Techniques with Significant Unobservable Parameters (Level 3) This level of the hierarchy includes the retained interest from securitization. Instruments classified in this category have a parameter input or inputs that are unobservable and that have a more than insignificant impact on either the fair value of the instrument or the profit or loss of the instrument. The fair value of the retained interest from securitization is determined using the present value of future expected cash flows. The expected cash flow model incorporates expected credit losses, prepayment rates, discount rate and excess spread. Expected credit losses and prepayment rates are primarily based on historical portfolio performance, while discount rate and excess spread are based on portfolio performance combined with management's assessment of the impact of market and economic factors on expected cash flows. Refer to Note 4(a) for a discussion of the fair value of the acquisition consideration payable.The following table classifies the carrying value of the financial instruments held at fair value across the fair value hierarchy:    ($ thousands)Financial instruments at fair valueNovember 30, 2011 Level 1 Level 2Level 3Total            Cash and cash equivalents$246,631 $- $-$246,631Investments 21,012  496,474  -  517,486Retained interest from securitization -  -  38,939  38,939Derivatives -  14,145  -  14,145Total financial assets$267,643 $510,619 $38,939$817,201             Acquisition consideration payable$- $- $42,380$42,380Derivatives -  5,049  -  5,049Total financial liabilities$- $5,049 $42,380$47,429  ($ thousands)Financial instruments at fair valueNovember 30, 2010 Level 1 Level 2Level 3Total            Cash and cash equivalents$456,550 $- $-$456,550Investments 26,145  477,818  -  503,963Retained interest from securitization -  -  38,699  38,699Derivatives -  15,900  -  15,900Total financial assets$482,695 $493,718 $38,699$1,015,112            Derivatives$- $1,277 $-$1,277Total financial liabilities$- $1,277 $-$1,277           During the years ended November 30, 2011 and 2010, there were no significant transfers between Level 1 and Level 2 of the fair value hierarchy.The following is a reconciliation of Level 3 fair value measurements from November 30, 2010 to November 30, 2011 and November 30, 2009 to November 30, 2010 for the retained interest from securitization:        ($ thousands)  Fair value measurements using Level 3 inputs      Retained interest          from securitization          Balance at November 30, 2010      $38,699Accretion income       2,546Cash receipts, net of writeoffs       (2,443)Securitization writedown       25Unrealized losses recognized in other comprehensive income      112Balance at November 30, 2011      $38,939            ($ thousands)  Fair value measurements using Level 3 inputs      Retained interest   from securitization            Balance at November 30, 2009        $  40,448Accretion income           2,682Cash receipts, net of writeoffs           (3,037)Securitization writedown           (906)Unrealized losses recognized in other comprehensive income          (488)Balance at November 30, 2010        $  38,699            Refer to Note 3 for the significant assumptions used to value the retained interests. The effect of changes to key assumptions on the fair value of retained interests is not significant.The following is a reconciliation of Level 3 fair value measurements from November 30, 2010 to November 30, 2011 for the acquisition consideration payable:        ($ thousands)  Fair value measurements using Level 3 inputs      Acquisition consideration           payable          Balance at November 30, 2010      $-Fair value of cash payments due based on purchase price allocation     25,614Fair value of exchangeable preferred shares issued based on purchase price allocation    16,999Contingent portion adjustment       (2,064)Interest accretion on cash payments due       2,301Fair value adjustment on exchangeable preferred shares issued      (470)Balance at November 30, 2011      $42,380        The contingent adjustment to acquisition consideration payable is based on net sales of Acuity institutional mandates by both Acuity and AGF employees. Through January 31, 2012, the adjustment is 1.36% of net AUM sales by Acuity employees, plus 0.68% of net AUM sales by AGF employees.  From February 1, 2012 through January 31, 2014, the adjustment to acquisition consideration payable is 0.59% of net AUM sales by Acuity employees, plus 0.30% of net AUM sales by AGF employees.Financial Instruments Not Carried at Fair ValueThe following table presents the estimated fair value of the Company's financial instruments that are not carried at fair value in the balance sheet:      ($ thousands)20112010November 30Carrying value Fair value Carrying valueFair value            Accounts receivable$85,972 $85,972 $85,925$85,925Real estate secured loans and investment loans 2,945,338  2,953,190  3,122,214  3,135,568Other assets 5,375  5,375  4,291  4,291Total financial assets$3,036,685 $3,044,537 $3,212,430$3,225,784             Accounts payable and accrued liabilities$226,065 $226,065 $257,451$257,451Long-term debt 309,341  309,341  143,678  143,678Deposits 2,926,742  2,941,347  3,535,965  3,568,319Secured financing 238,624  238,624  -  -Other long-term liabilities 12,942  12,942  16,701  16,701Total financial liabilities$3,713,714 $3,728,319 $3,953,795$3,986,149           For accounts receivable, other assets, accounts payable and accrued liabilities, long-term debt, secured financing and other long-term liabilities, the carrying amount represents a reasonable approximation of fair value.Real estate secured loans, investment loans, RSP loans, HELOC receivables, and finance loans are classified as loans and receivables and are recorded at amortized cost using the effective interest method, net of any allowance for loan losses and related deferred fees and charges. The fair value of mortgage loans and deposits is calculated based on the discounted present value of future cash flows associated with the loans and deposits. The discount rates used reflect prevailing market rates for loans and deposits with similar residual terms to maturity and product characteristics. For all other loan types, the carrying value is considered to be a reasonable approximation of fair value because of the variable interest rate nature of the loan.Risk ManagementIn the normal course of business, the Company manages risks that arise as a result of its use of financial instruments. These risks include market, liquidity and credit risk.Market RiskMarket risk is the risk that the fair value of financial instruments will fluctuate because of changes in market factors. Market risk includes fair value risk, interest rate risk and foreign currency risk. The Company is exposed to these risks directly through its financial instruments.Fair Value RiskFair value risk is the risk of loss due to adverse changes in prices other than from changes in interest rates and foreign currency. The Company is exposed to fair value risk on certain of its investments available for sale and certain derivative positions. As at November 30, 2011, the Company's investments that have fair value risk include mutual funds managed by the Company of $15.7 million (2010 - $19.6 million) and equity securities of $5.0 million (2010 - $6.3 million). Any unrealized gains or losses arising from changes in the fair value of these financial instruments available for sale are recorded in other comprehensive income. Based on the carrying value of these investments at November 30, 2011, the effect of a 10% decline or increase in the value of investments would result in a $2.1 million (2010 - $2.6 million) pre-tax unrealized gain or loss to other comprehensive income. The Company is also exposed to fair value risk on its acquisition consideration payable associated with future share payments. The Class B, C, D and E exchangeable preferred shares are to be settled by the issuance of a variable number of AGF Class B Non-Voting shares, the number of which is determined by reference to a fixed exchange ratio. As at November 30, 2011, the effect of a $1.00 increase or decrease in the market value of the AGF Class B Non-Voting shares would result in a $1.2 million gain or loss to investment income and other revenue.Details of the Company's derivative instruments are as follows:                        ($ thousands)    Hedging item        Interest  maximum  Notional  FairNovember 30, 2011 rate  maturity date  value  value            Derivatives used to manage             interest rate exposure on deposits 0.90% - 5.01%  2015  1,980,000  14,145Derivatives used to manage            interest rate exposure on long-term debt 3.83%  2016  125,000  (5,049)            ($ thousands)    Hedging item        Interest  maximum  Notional   FairNovember 30, 2010 rate  maturity date  amount   value            Derivatives used to manage             interest rate exposure 0.60% - 5.08%  2015  2,445,000  15,900Derivatives used to manage            changes in share-based compensation -  2010  3,426  (1,277)            Interest Rate Risk Interest rate risk, inclusive of credit spread risk, is the risk of loss due to the following: changes in the level, slope and curvature of the yield curve; the volatility of interest rates; mortgage prepayment rates; changes in the market price of credit and the creditworthiness of a particular client.The Company, through AGF Trust, is exposed to interest rate risk primarily through its cash and cash equivalents, investments available for sale, real estate secured and investment loans receivable and deposits, managed and supervised by AGF Trust's Asset and Liability Committee. AGF Trust employs a number of techniques to manage this risk, including the matching of asset and liability terms. AGF Trust also uses interest rate swaps to manage any residual mismatches. At November 30, 2011, a 1% increase in interest rates in the aforementioned financial instruments would result in an increase in annual net interest income of approximately $2.1 million (2010 - $4.0 million), while a 1% decrease in interest rates would result in a decrease in annual net interest income of approximately $2.5 million (2010 - $4.0 million). Refer to Note 3 for the significant assumptions used to value the retained interests. The effect of changes to key assumptions on the fair value of retained interests is not significant.The Company, excluding AGF Trust, is also exposed to interest rate risk through its floating-rate debt and cash balances. AGF entered into an interest swap to manage interest rate exposure on the Facility 2 portion of its long-term debt. As at November 30, 2011, the effect of a 1% change in the variable interest rates on the average balances for the year would have resulted in an annualized change in interest expense of approximately $1.6 million (2010 - $1.5 million).Foreign Exchange RiskForeign currency risk is the risk of loss due to changes in spot and forward rates and the volatility of currency exchange rates. The Company is subject to foreign exchange risk on its integrated foreign subsidiaries. These subsidiaries retain minimal monetary exposure to the local currency, as the majority of revenues are earned in Canadian dollars and salaries and wages are primarily paid on a monthly basis and represent the majority of the local currency expenses. As such, these foreign subsidiaries have limited use of financial instruments denominated in local currencies, thus resulting in minimal foreign exchange risk.Liquidity RiskLiquidity risk arises from the possibility that the Company cannot meet a demand for cash resources when required or meet its financial obligations.The Company manages its liquidity risk through the management of its capital structure and financial leverage as outlined in Notes 9 and 21. In its Investment Management segment, the Company manages its liquidity by monitoring actual and projected cash flows to ensure that it has sufficient liquidity through cash received from operations as well as borrowings under its credit and acquisition facilities. The key liquidity requirements within this segment are the funding of commissions paid on mutual funds, dividends paid to shareholders and the repayment of its acquisition facility. The Company is subject to certain financial loan covenants under its credit and acquisition facilities and has met all of these conditions.AGF Trust manages liquidity risk through deposit-taking activities and through the securitization of loans. The key liquidity requirements within this segment are the funding of mortgages and loans and the ability to pay out maturing GICs. AGF Trust's overall liquidity risk is managed by its treasury department and is supervised by AGF Trust's Asset and Liability Committee in accordance with the policies for management of assets and liabilities, liquidity and loan financing activities. These policies aim to ensure that AGF Trust has sufficient cash resources to meet its current and future financial obligations in the regular course of business and under a variety of conditions.Management monitors cash resources daily to ensure that AGF Trust's liquidity measurements are within the limits established by policies. In addition, management meets regularly to assess the timing of cash inflows and outflows related to loan and deposit maturities, and to review various possible stress scenarios. AGF Trust aims to maintain a prudent reserve of unencumbered liquid assets that are readily available if required. It strives to maintain a stable volume of base deposits that originate from its deposit brokerage clientele.The Company's internal audit department reviews the compliance of AGF Trust's liquidity policies. Internal audit reports are presented to the Audit Committee of the Trust Board for review.The following table presents contractual terms to maturity of the financial liabilities owed by the Company:                        ($ thousands)           November 30, 2011  Demand1 year or less1 to 5 years            Accounts payable and accrued liabilities   $- $227,812$-Long-term debt    -  -  310,000Deposits1    4,050  1,728,617  1,300,172Secured financing    -  41,998  196,626Acquisition consideration payable    -  20,448  9,176Other liabilities    -  -  16,244Total   $4,050 $2,018,875$1,832,218             ($ thousands)           November 30, 2010  Demand 1 year or less 1 to 5 years             Accounts payable and accrued liabilities   $- $258,728$-Long-term debt    -  -  144,000Deposits1    3,630  1,839,525  1,850,820Other liabilities    -  -  16,701Total   $3,630 $2,098,253$2,011,5211  Includes future interest payments and excludes deferred selling commissions.Credit RiskCredit risk is the potential of financial loss arising from the failure of a borrower or counterparty to honour its financial or contractual obligations to the Company. The Company's overall credit risk strategy and credit risk policy are developed by senior management and further refined at the business unit level, through the use of policies, processes and internal controls designed to promote business activities, while ensuring these activities are within the standards of risk tolerance levels. As at November 30, 2011, financial assets of $3.9 billion (2010 - $4.2 billion), consisting of cash and cash equivalents, investments, retained interests from securitization, real estate secured loans and investment loans, accounts receivable and other assets, were exposed to credit risk up to the maximum of their respective carrying value.Cash and cash equivalents consist primarily of highly liquid temporary deposits with Canadian banks, an Irish government guaranteed bank and non-Irish banks in Ireland, as well as bank term deposits.Investments subject to credit risk consist primarily of FRNs, senior debt instruments, investments in mutual funds of AGF and other securities. For investing activities done through AGF Trust, policies have been established that identify the types and rating of debt investments in which AGF Trust can invest. These policies also restrict AGF Trust's transactions primarily to major chartered banks and recognized investment dealers who are members of the Investment Industry Regulatory Organization of Canada (IIROC).AGF Trust maintains a list of approved securities dealers and counterparties, which are reviewed at least annually by the Trust Board. AGF Trust uses external credit rating agencies in assessing the credit quality of certain investments in financial assets. The credit rating agencies used include DBRS, S&P and Moody's. Refer to Note 2 for a breakdown of the credit ratings for AGF Trust's investments available for sale.The Company's most significant credit risk is through AGF Trust's real estate secured loans and investment loans. AGF Trust mitigates this risk through stringent credit policies and lending practices. These policies aim to ensure that the authority to approve credit applications is appropriately delegated by senior management of AGF Trust, depending on the risk and the amount of the credit application. The credit policies also provide guidelines for pricing based on risk, for reviewing any collateral pledged for a credit application, for monitoring of impaired loans and for establishing and reviewing loan loss provisions to ensure they are adequate. The policies establish risk limits for credit concentration by counterparty, geographic location and other risk factors that would impact AGF Trust's credit risk profile.At November 30, 2011, AGF Trust's loan assets totalled $2.9 billion (2010 - $3.2 billion) and were comprised of mortgage loans, investment loans, RSP loans, finance loans and HELOC receivables. Of this amount, $1.0 billion (2010 - $0.9 billion) was represented by mortgage loans and $0.2 billion (2010 - $0.3 billion) was represented by HELOC receivables, both of which are secured by residential real estate. At November 30, 2011, 53.7% of mortgage loans were insured by Canada Mortgage and Housing Corporation (CMHC) or another insurer (2010 - 48.1%). Conventional uninsured mortgages have loan-to-value ratios of less than 80% of the appraised value of the property at the time the mortgage loan was granted.Residential mortgages represent the largest component of the total mortgage portfolio, comprising 96.0% as at November 30, 2011 (2010 - 97.2%). AGF Trust's credit risk on these loans is also mitigated through the use of collateral, primarily in the form of residential real estate. Under AGF Trust's lending criteria, management reviews all mortgage loans on a regular basis to determine the appropriate allowance for loss required by AGF Trust. Risk is also mitigated through residential mortgage insurance through CMHC or another insurer. As at November 30, 2011, AGF Trust's insured residential mortgage portfolio was $527.5 million, net of deferred sales commission and allowances (2010 - $413.9 million).Credit risk for HELOCs and investment loans is mitigated by collateral in the form of residential mortgages and investment funds, respectively. Investment loans, excluding RSP loans, of $1.5 billion as at November 30, 2011 (2010 - $1.6 billion), are secured primarily by the investment made using the initial loan proceeds. The market value of this investment loan collateral is approximately $1.2 billion as at November 30, 2011 (2010 - $1.4 billion).RSP loans are used by borrowers to purchase assets in a retirement savings plan. The creditworthiness of each borrower is assessed prior to approval of the loan. Predictive scorecards are used to determine the probability of default and bankruptcy of the borrowers. On a regular basis, AGF Trust reviews the credit quality in the portfolio. Loans in arrears are also reviewed regularly to determine the appropriate loan loss reserves.Derivative financial instruments expose AGF Trust to credit risk to the extent that if a counterparty default occurs, market conditions are such that AGF Trust would incur a loss in replacing the defaulted transaction. AGF Trust negotiates derivative master netting agreements with counterparties with which it contracts. These agreements reduce credit risk exposure. AGF Trust assesses the creditworthiness of the counterparties to minimize the risk of counterparty default under the agreements. AGF Trust only uses major chartered banks with a minimum credit rating of AA as counterparties.Note 23: Segment InformationAGF has three reportable segments: Investment Management Operations, Trust Company Operations and Other. The Investment Management Operations segment provides investment management and advisory services and is responsible for the management and distribution of AGF investment products. AGF Trust offers a wide range of trust services including GICs, term deposits, real estate secured loans and investment loans. The results of Smith & Williamson Holdings Limited have been included in Other.The results of the reportable segments are based upon the internal financial reporting systems of AGF. The accounting policies used in these segments are generally consistent with those described in the 'Summary of Significant Accounting Policies' detailed in Note 1.                        ($ thousands) Investment  Trust        Management  Company      Year ended November 30, 2011 Operations  Operations  Other1  Total            Revenue$584,871 $85,566 $4,874 $675,311Operating expenses 348,805  50,978  -  399,783Amortization and other expenses 100,345  1,255  11,750  113,350Segment income (loss) before taxes$135,721 $33,333 $(6,876) $162,178            Total Assets$1,528,543 $3,702,616 $- $5,231,159            ($ thousands) Investment  Trust        Management  Company      Year ended November 30, 2010 Operations  Operations  Other1  Total            Revenue (loss)$519,490 $95,838 $(750) $614,578Operating expenses 303,238  54,556  -  357,794Amortization and other expenses 84,978  2,226  5,750  92,954Segment income (loss) before taxes$131,274 $39,056 $(6,500) $163,830            Total Assets$1,139,262 $4,114,599 $- $5,253,8611  Other revenue relates to equity earnings in S&WHL and other expenses relates to interest expense.Note 24: CommitmentsThe Company is committed under operating leases and purchase obligations for office premises and equipment. The approximate minimum annual cash payments related to the above are as follows:          ($ thousands)    2012  $27,7072013   13,2512014   12,1532015   10,6282016   10,238Thereafter   34,900     The Company is also committed for a 10-year period expiring 2015 to reimburse Citigroup and CitiFinancial up to $2.8 million per year should annual revenues derived from AGF fund administration services fall below predetermined levels. AGF expects to attain the minimum levels required. No payment was required for 2011.AGF Trust has outstanding mortgage commitments of $109.3 million as at November 30, 2011, (2010 - $36.1 million) at rates of interest prevailing at the time the commitments were issued. Any interest rate commitment has a term of less than 60 days.Note 25: Guarantees(a)     The Company, under an indemnification agreement with each of the directors of the Company, as well as directors of the mutual fund corporations, has agreed to indemnify the directors against any costs in respect of any action or suit brought against them in respect of the proper execution of their duties. There have been no claims under these indemnities.(b)     The Company has provided a performance guarantee to a third-party funding trust in connection with obligations pursuant to the securitization transaction of certain real estate secured loans entered into by AGF Trust. The guarantee is not expected to have any financial impact to the Company.Note 26: Contingent Liabilities(a)     The Company believes that it has adequately provided for income taxes based on all of the information that is currently available. The calculation of income taxes in many cases, however, requires significant judgment in interpreting tax rules and regulations. The Company's tax filings are subject to audits, which could materially change the amount of the current and future income tax assets and liabilities, and could, in certain circumstances, result in the assessment of interest and penalties.(b)     There are certain claims and potential claims against the Company and its subsidiaries. None of these claims or potential claims are expected to have a material adverse effect on the consolidated financial position of the Company.Consolidated 10-Year Review                      ($ thousands, except per share amounts)          (unaudited)          Years ended November 30 2011 2010 2009 2008 2007           Operations            Total revenue               (continuing operations)$675,311$614,578$586,114$725,570$780,320  Net income attributable to equity owners             of the Company   112,242   116,775   97,694 128,592 178,687  Dividends 99,440 91,792 88,821 84,860 70,151            Financial position            Working capital (deficit)$(667,372)$(581,106)$(738,223)$(1,360,365)$(735,103)  Long-term debt 309,341 143,678 143,648 123,740 184,486  Shareholders' equity 1,271,139 1,150,694 1,130,403 1,107,422 1,069,002  Return on equity 9.3% 10.2% 8.7% 11.8% 17.4%           Per share            Net income - basic$1.19$1.31$1.10$1.44$1.99  Dividends 1.07 1.04 1.00 0.95 0.78  Book value (continuing operations) 13.48 12.91 12.72 12.40 12.02                      ($ thousands, except per share amounts)          (unaudited)          Years ended November 30 2006 2005 2004 2003 2002           Operations            Total revenue               (continuing operations)$607,202$546,567$545,393$510,571$637,660  Net income attributable to equity owners             of the Company   112,657 91,872 77,287 44,016 119,839  Dividends 61,521 50,522 37,474 27,150 22,967            Financial position            Working capital (deficit)$(404,223)$(31,958)$56,363$62,490$95,287  Long-term debt 56,000 17,364 68,292 112,192 225,403  Shareholders' equity 979,771 918,326 914,366 903,360 887,566  Return on equity 11.9% 10.0% 8.5% 4.9% 14.5%           Per share            Net income - basic$1.26$1.02$0.85$0.48$1.34  Dividends 0.69 0.56 0.41 0.30 0.26  Book value (continuing operations) 10.99 10.30 10.08 9.79 9.74This report contains forward-looking statements with respect to AGF, including its business operations, strategy, financial performance and condition. Although Management believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause results to differ materially include, among other things, general economic and market factors including interest rates, business competition, changes in government regulations or in tax laws, and other factors discussed in materials filed with applicable securities regulatory authorities from time to time.Conference CallAGF will host a conference call to review its earnings results today at 11 a.m. ET. The live audio webcast with supporting materials will be available in the Investor Relations section of AGF's website at www.agf.com or at http://www.media-server.com/m/p/8ad84dzy. Alternatively, the call can be accessed toll-free in North America by dialling 1-866-713-8564 (Passcode #: 95974047). A complete archive of this discussion along with supporting materials will be available at the same webcast address within 24 hours of the end of the conference call.About AGF Management LimitedAGF Management Limited is one of Canada's premier independent investment management firms with offices across Canada and subsidiaries around the world. AGF's products include a diversified family of award-winning mutual funds, mutual fund wrap programs and pooled funds. AGF also manages assets on behalf of institutional investors including pension plans, foundations and endowments as well as for private clients. In addition, AGF Trust is a complementary business that offers GICs, loans and mortgages through the financial advisor and mortgage broker channels. With $46 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: AGF Management Limited shareholders and analysts, please contact: Robert J. Bogart, CPA Executive Vice-President and Chief Financial Officer 416-865-4264, bob.bogart@agf.com Michael Clabby Vice-President, Investor Relations and Corporate Development 416-815-6275, michael.clabby@agf.com Media, please contact:   Odette Coleman Director, Public Relations and Public Affairs 416-865-4308, odette.coleman@agf.com