AGF Management Limited

Greg J. Henderson - Senior Vice-President and Chief Financial Officer Blake C.

Goldring - Chief Executive Officer and Chairman Martin Hubbes - Executive Vice President, Chief Investment Officer of AGF Funds Inc. Mario Causarano - President and Chief Operating Officer of AGF Trust Rob Badun - Executive Vice President of Investments, President of AGF Management Group Rose Cammareri, Executive Vice President Retail Distribution Gareth Pearce – Chairman, Smith and Williamson

Stephen Boland - GMP Securities Ltd. Geoffrey Kwan - RBC Capital Markets Gabriel Dechaine - Genuity Capital Markets Doug Young - TD Newcrest Jeff Fenwick – Cormark Securities

Thank you, operator, and good morning everyone. It is a pleasure to have you join us for this call.

Please note that slides supporting today’s call and webcast can be found in the Investor Relations section of agf.com. Today, Blake Goldring, Chairman and CEO and myself, CFO of AGF Management Limited will discuss our operational and financial results for the third quarter of fiscal 2009.

Also joining us on the call and available to answer questions are Mario Causarano, President and Chief Operating Officer of AGF Trust; Rob Badun, Executive Vice President Investments; Martin Hubbes, Executive Vice President and Chief Investment Officer, Rose Cammareri, Executive Vice President Retail Distribution and it is also my pleasure to welcome Gareth Pearce, Chairman of Smith and Williamson to our call today. I will now turn things over to Blake.

Thank you, Greg, and welcome to everyone listening to today’s conference call. A warm welcome to Garrick who is joining us from the other side of the pond.

As we do with each conference call I would like to provide a brief market update to the end of our fiscal third quarter. Since our previous update in June we have seen the markets continue their positive performance that we witnessed during the previous quarter.

Despite the fact that the summer months are usually quiet, there were developments for investors that we had to keep on top of. For example, the Canadian Dollar has once again resumed its march upwards towards parity with its American counterpart, the goal we recently broke through the psychological $1,000 announced level.

There continues to be a number of positive signs that we may be through the worst of the economic downturn. Here in Canada we saw the latest housing figures post a sharp rebound in the sector now offering positive price appreciation year-over-year and the latest GDP figures also show the trend for the economy returning to an upward trajectory.

Meanwhile, in the U.S. some economists are calling an end to the recession.

FED Chairman Ben Bernanke just last week made comments the U.S. recession is “very likely over.”

His comments came on the heels of data showing retail sales showing the biggest monthly gain in three years. However, there still continues to be some obstacles which must be overcome.

While investors are beginning to test the waters again, there still remains a lot of money parked in products like GICs. The question remains what shape an economic recovery might take.

Headwinds in the economy include consumers who are dealing with record debt loads, unemployment levels which are approaching double digits both in Canada and the United States and government agencies dealing with removing liquidity from the system as economies improve. Whether we are talking about a V-shaped recovery, a W or even a square root shaped recovery as some are calling it, we can be optimistic we are through the worst of the downturn.

Now let’s turn to our third quarter’s results. On slide four you see the strength of the stock markets during the third quarter helped with our AUM assets under management by 9.6% to $41 billion from the second quarter of 2009.

In fact, this was our sixth consecutive month of increases in our overall AUM. On a year-over-year basis AUM declined 15.8% due to market volatility and weakness in mutual fund sales.

The year-over-year decline in AUM reduced revenues in our investment management operations by 22.4% to $120.4 million compared with the third quarter of 2008. On a positive note, the level of net redemptions showed improvement on a year-over-year basis and we have been working hard to address the decline in our gross mutual fund sales.

To this end, we have been aggressively marketing the funds that matter most to investors in the current environment. Funds like our Canadian Balance Fund and the Canadian Global High Yield Bond Fund are performing well and generating good sales numbers.

We have also been working hard to get on some more GMWB platforms. In fact, I am very pleased to report that just last week Manulife Investments announced that its new GIC select platform will include a number of new investment fund options including a bundle from AGF.

The product to be called Manulife AGF Bundle will consist of three AGF funds; AGF Canada Class, AGF Global Equity Class and AGF Canadian Bond Funds. We are very enthusiastic about our inclusion of this new platform and look forward to its rollout in October.

On the institutional side we have had a significant amount of interest in our mandates gauging by the amount of RFP activity and growth in AUM. We reduced our third quarter selling, general and administrative expenses by 12.5% to $48.4 million compared with 2008.

Throughout the remainder of 2009 we will continue to exercise expense discipline across all of our businesses with an overall target of SG&A expense savings in the 10% range for this year. Meanwhile, at AGF Trust loan assets declined 14.1% when compared to the third quarter of last year.

This is in line with our stated strategy to slow loan growth and ensure AGF Trust remains well capitalized. During the third quarter we continued to focus on responsible management of our loan portfolios and increased credit and collections activities to mitigate default risk and reduce potential losses.

This strategy resulted in a much improved performance at AGF Trust in the third quarter compared to the first six months of this fiscal year. Provisions for loan losses were $7.2 million up from $3.4 million in Q3 2008 but down from $14.9 million in the second quarter.

Trust EBITDA increased 87.8% to $9.2 million sequentially demonstrating once again that Trust remains a profitable and complementary part of the AGF business. Finally, diluted earnings per share were $0.25 compared to $0.19 in the second quarter and $0.46 in the third quarter of last year.

Moving to slide five, as you can see our stock price has performed extremely well since the beginning of this fiscal year after experiencing some dramatic rolls earlier in the year similar to many financial stocks. Our business and our stock price is subject to the erratic nature of the markets.

For this reason it is important to take a long-term perspective. At times it may appear that the returns of AGF.B shares are out of line with TSX.

In the long run, however, we have actually outperformed the TSX. This is a great business and a great industry.

I have to say I am a great booster and number one cheerleader I suppose and as many of you know I bought a significant number of shares, about a half million shares back in February for our family. Value is inherent in everything we do.

Our products must provide value to our clients and we must provide value added services to the advisors that we partner with. We must run our business in an efficient manner that provides value to those who invest in our firm.

My conviction is supported by the fact that we have operated successfully through many bull and bear markets during our 52 year history. We are committed to excellence in money management and client service, we have built a strong and diversified business, and we are a well established and trusted brand and have strong relationships with our clients and advisor partners.

We operate our business with a view to the long-term, carefully managing our resources to assure sustainability and growth in the future while remaining committed to improving profitability. One way of improving profitability is through expense discipline.

On slide six you will see how we have continued to remove costs from the business during the third quarter. On the investment management side of the business we reduced SG&A expenses by 11.8% compared to the third quarter of last year.

As shown on the slide, compensation related expenses were down $2.1 million. This decrease was a result of staff reductions and lower estimates for performance based payouts and stock based compensation expense.

Absorption expenses were down $0.5 million. Severance and restructuring expenses declined $0.2 million while other expenses were down $2.5 million due to continued cost saving initiatives.

For the Trust you will see we reduced this area’s SG&A on a year-over-year basis by about 15% primarily due to lower staffing levels and reduced estimates for performance based payouts. Let’s move to slide number seven.

As I have said in the past, dividends are a foremost indicator of our ability to generate cash flow and we have always believed it is important to share this cash flow with our shareholders. This graph illustrates our history of 70 increasing dividends between 1998 and 2008.

You will recall we paid a quarterly dividend of $0.25 per share on June 23rd and today we announced a $0.25 per share dividend payable on October 20th on the basis of having cash flow available to make such a payment. Our board of directors reviews our dividend policy quarterly taking into account such factors as cash earnings, deferred sales commissions, our future outlook, debt levels and our need for cash.

These factors contribute to our decision on the future dividend payout. With that I would now like to turn the call over to Greg who will take you through a more detailed review of our financial results.

Over to you, Greg.

Thank you Blake. This slide provides an overview of our financial results in the third quarter of 2009 compared to 2008 as well as a comparison of results for the second quarter of 2009.

As you can see by this slide a 15.8% decline in AUM resulted in revenue declining by 20.5% and EBITDA declining by 31.2% compared to Q3 2008. However, on a brighter note, compared to the second quarter of 2009 AUM across all our investment management businesses increased by 9.6%, revenue was up 2.4% and EBITDA increased by 14.5% from the second quarter.

I will speak to the financial results in each of our segments shortly. Markets continue their strong performance in the third quarter of 2009 resulting in AUM across all our investment management businesses increasing by 9.6% compared with the second quarter of 2009.

Since the end of February which represented the low point of our AUM based on reported quarters, AUM is up 25.8% which has resulted in improved revenues on the Investment Management side of the business. Moving to the next slide we will look at AGF Trust.

Loan assets, net of provisions, have declined by approximately 14.1% from Q3 2008 and are down approximately 6.8% from the second quarter of 2009. As you have heard before, late last year we strategically decided to reduce the amount of new loan business and slow growth to maintain a strong capital position and focus on collections and profitability.

Clearly our strategy has been effective as Trust has no need for capital from AGF Management Limited, or any other source for that matter, and operations are profitable as we will discuss further. Trust is very well capitalized with a total capital ratio of 17.8% at the end of August 2009 compared with 16.5% at the end of May 2009 and 14.7% at the end of fiscal year ended November 30, 2008.

In the short-term we will continue to focus on improving our profitability, enhancing our capital position, putting ourselves in a position to re-enter the money markets on a very strong basis. Slide 11 shows the overall revenue and EBITDA on a consolidated basis quarter-over-quarter.

Again, we are starting to see a return to positive trends. Third quarter revenue on a consolidated basis declined $37.8 million or 20.5% on a year-over-year basis.

The decline in revenue from $184.7 million for the quarter ended August 31, 2008 to $146.9 million for the quarter ended August 31, 2009 is primarily due to almost 20% decline in average mutual fund assets in the Investment Management operations. On a consolidated basis our SG&A expenses were $48.4 million down 12.5% from $55.3 million in the third quarter 2008.

For the nine months ended August 31, 2009 SG&A expenses of $148.7 million are down $19.4 million or 11.5% in the same period of 2008. EBITDA in the quarter declined by $25.4 million or 31.2% primarily as a result of a $20.2 million decline in the Investment Management operation segments.

Overall, results in the quarter for Smith and Williamson were unchanged at $1.1 million compared with the prior year. On the Investment Management side of the business on the next slide, third quarter revenues were down 22.4% year-over-year to $120.4 million in line with lower average AUM levels.

On a sequential basis revenues increased by 6.5% as our average AUM increased by similar amounts on a quarter-over-quarter basis so again the trends are moving in the right direction. SG&A expenses as Blake discussed earlier were down 11.8% primarily as a result of the decrease in compensation related expenses of $2.1 million and savings in other areas of $3.2 million.

EBITDA of $45.8 million declined 30.6% from the third quarter of 2008 but again improved 9.6% from the second quarter of 2009. On the Trust side of the business revenue declined by 10.6% year-over-year and 9.9% sequentially mainly due to lower interest income as a result of declining loan balances.

SG&A declined 15.1% compared with the third quarter of last year primarily as a result of reduced staffing levels and the emphasis on controlling variable costs and SG&A expenses. EBITDA in the quarter declined 36.1% to $9.2 million on a year-over-year basis due to our increased loan loss provision and the decline in revenue.

However, compared with the second quarter of this year EBITDA improved by 87.8% primarily due to the 51.7% decline in provision for loan losses. I will comment further on our loan loss provisions later.

Turning to the next slide, as I previously indicated our Trust Loan assets have declined by approximately 14.1% from the third quarter of 2008 and 6.8% from the second quarter of 2009 so this slide shows the make up of the loan assets. Again, it was our stated strategy to improve our capital position and reduce our loan assets through the reduction of new loan originations.

Regulatory capital as detailed in Note 13 of our financial statement has improved by 3.7% over November 30, 2008 all of which is internally generated by the Trust Company. In spite of the economic environment, Trust was able to generate organic increases in capital through its very profitable operations.

The next slide shows our gross impaired loans and I think what it shows here is that things are flattening out. Impaired loans declined in Q3 over Q2 2009.

However, expressed as a percentage of total loans outstanding it remained relatively flat at about 1.5% compared with the second quarter of 2009 and again there was an 8.7% decline in gross impaired loans and a 6.8% decline in total loans. Again, I think we are seeing things flattening out.

When you look at our allowance for loan losses, again you can see they have come down but expressed as a percentage of total loans in the next slide they are relatively flat at 1.2%. So again this is a trend we are quite encouraged about.

The next slide shows our provision for loan losses. As you can see in this slide our provision for loan losses was much improved from the second quarter of 2009 declining 51.7% and leading to significantly higher EBITDA at Trust.

As previously mentioned on prior calls we have approximately $25 million of higher risk RSP loans. Of this $25 million on a year-to-date basis we have written off $11.5 million and taken provisions of $7 million for a total remaining exposure of $6.5 million so the remaining exposure on this group of loans is pretty insignificant.

These identified loans serve to increase our expense in this quarter by $2.5 million and I believe last quarter it was about $5 million so if you take that out you would see that our provision on a more normalized basis would be reduced by $2.5 million. Of the roughly $13.5 million of these loans still on our books we have identified and included $4.3 million of these loans as being impaired.

Accordingly, it is our belief that we are very well provided on this book of loans. In addition, when you go through the notes for our financial statements you will note impaired loans of $55.6 million are down from $60.9 million in Q2.

Mortgages and legal action from Q2 declined slightly as described in Note 5B and it is encouraging to see the proceeds of foreclosed mortgages discharged for the quarter drop substantially and losses on these properties actually declined as compared to the prior year. Again, very encouraging trends.

The next slide is a new slide that just basically at a very high level shows our coverage ratio and again, I think this shows we are very adequately provided for if you take a look at our allowance compared to our gross impaired loans where we are at 79.5% and again that doesn’t take into account the underlying collateral we have in many of these portfolios. So, again I think the loan to value on the conventional mortgage portfolio is about 62% and basically the shortfall on the investment loan portfolio is approximately $400 million.

So again I think this shows we are very, very adequately provided for. On the cash side of the business in this quarter we were able to pay down $12.1 million of bank debt while maintaining our dividend.

Again our emphasis is to keep our balance sheet strong and pay down debt, a trend we believe will continue in the next quarter. On that note, I will turn the call back to Blake.

Thank you Greg. In closing I want to just focus on those key initiatives that management is looking at over the next quarter.

We have our focused sales strategy which is really geared towards really invigorating gross sales. Second, we are remaining focused on expanding sales in the instructional space.

We have opened an office in Boston and we have another office to open in Hong Kong towards the end of this year. We have been working on streamlining and simplifying our product line while assuring that we remain extremely attractive to our clients and meet their needs.

Finally, we are going to continue to leverage our investment management capabilities across all distribution channels. At AGF we are committed to maintaining our strong financial position and our competitive advantages.

We have taken and are taking the decisive and appropriate steps to ensure that AGF is well positioned for the long-term and to deliver value to our shareholders, clients and our unit holders. On that note, we would now be pleased to take your questions.

First, I am not challenging you here on the Trust in terms of you are seeing a leveling off. When I look at the aging of the portfolio, even mortgages and legal actions it still seems to be ticking up quarter-over-quarter so I guess are you looking out even another quarter and sort of saying that ticking up is going to halt or start to reverse in the next quarter or two?

Actually if you look at mortgages under legal action they were down slightly quarter-over-quarter. Very slightly but as I said if you look at Note…

I meant for 9 months in that bucket.

Certainly if you look at the trend we saw in the early part of the year it going negative. What we are starting to see now is an improving trend our belief is.

Maybe Mario can talk on some of the activities they are doing.

We do track the number. What we are seeing is a stabilization in our default rates across the whole portfolio, mortgages included.

That is the sign, or one sign for us. We actually go inside the portfolio to try and determine where we think the loss rate will come in even on some of this legal action stuff we go through the whole portfolio and do a forecast in terms of where we think the loss rate is going to come in relation to the run rate we have on our existing loss rates.

I can tell you that we are pleased with the way it is performing and we don’t expect any surprises going into the future. To Greg’s point we are seeing stabilization across all of those portfolios from that perspective.

Certainly I think if you look at the $7.2 million for loan losses and take out the $2.5 million related to that $25 million book of business, obviously you are getting much more comparable to the levels that we saw last year in the business where we were at $3.4 million. Again, I think we have a much more conservative methodology.

We have built up a pretty substantial provision. One of the reasons I wanted to show that coverage ratio is I just believe we are very adequately provided for anything that could happen to us right now and hopefully we will start to see some improvement.

I will just add one more element on the investment loan portfolio. The other thing you need to think about in terms of the trending is that loss rate we have been experiencing so far is based on a much higher unsecured portion in terms of that portfolio.

We haven’t seen the benefit of that unsecured portion closing down to $400 million. We will see some of those benefits as we go forward as well from here.

The last time Greg when you were in a period where your assets were increasing you focused a lot of the margin expansion, expenses keeping them steady and the revenue sort of increasing but not expansion, is that what we should expect going forward now that you should be hitting a period of where we can start to see that margin increasing per quarter as the assets move up?

Certainly as we look at the assets moving up a lot of that just drops right to the EBITDA line because again we are not anticipating you are going to see any increases in SG&A. In fact if you take a look at our SG&A and how it has tracked for the last three quarters and you look at the fourth quarter again, we are pretty conservative about how we budget our bonus numbers and all that.

So generally if you are going to get a surprise it is going to be a positive surprise as opposed to a whole bunch of extra expense being plowed into the fourth quarter. Last year it was quite a significant positive surprise because the markets went sideways on us but again we tried to be very conservative.

From a trending standpoint you will probably see SG&A come down a little bit. Absorption [rates could fund] year end or September 30th.

Again, when you start looking at that and looking forward, anticipating higher levels of expenses your fourth quarter expense should drop there. Yeah, I think you are spot on.

You should start to see some margin expansion.

Being added to the Manulife GIC that is pretty positive. What is your anticipation of gross sales coming in from that product and are you looking at getting on any other platforms?

Certainly we have had discussions but we wouldn’t want to at this point speculate on what actually might happen. Obviously it is very good to be back with a group with considerable placement power.

With regard to getting onto other programs you can absolutely bet we are working hard at that.

The first question I have relates to the SG&A and I think your guidance had mentioned you were looking for total SG&A to be down 10% in 2009 versus 2008. I noticed in the presentation you talk about needing to make some adjustments for one-time items.

If I look at what you have got so far through the first three quarters without making the adjustments for one-time items that would suggest the SG&A in Q4 would have to be down almost 18%. I am wondering if you could provide some color in terms of whether or not here is what the one-time items were for last year and what we have seen so far this year.

If you look at our one-time items those are things like severance and restructuring costs. Again, we spent considerable amounts on those items and if you exclude those items we will be down around that 10% level.

As you note, last year in Q4 our SG&A in the Investment Management segment went down dramatically because obviously the markets turned sideways and the bonuses we paid out were considerably less. We are now in a market up tick so again things act a little bit differently in that.

I might back off a little bit on that guidance because we just don’t know over the next 2-3 months how things are going to go. If they go extremely, extremely well then I think you will see the bonus numbers come up.

If they stay around the levels we are at now, then you will see a pickup in our fourth quarter SG&A.

So if we assume that it is the latter where everything is kind of steady if we look at what we saw in Q3 total SG&A does that mean we look for something flattish for Q4 or would it be down a bit?

It is hard for me to predict how the markets are going to go in the next quarter but I would say it is going to be down, definitely down.

The second question I had was for Mario. When I look at the net interest spreads on the portfolio it was reported to be down by 20 basis points in the quarter.

Can you kind of talk about what was happening there and as well what opportunities you have to expand those spreads going forward?

I actually think we have done a good job in terms of maintaining our spreads through the quarter and in fact I am not sure where you are picking it up because they have from 2008 been relatively flat. So going into this period you would have thought we would have really been compressed and we have done I think a great job in terms of ensuring that hasn’t happened and it has really driven a lot of our profitability.

We did that through two mechanisms really. One of them was our prime rate and the other was the way we re-priced some of our products.

What we are now starting to see is some adjustment in cost of funds. So since September we had cost of funds that had gone up as high as an additional 200 basis points from where we were typically in around 50 basis points now.

So we are getting from that perspective we are also going into a more favorable cost of funds and the way we have been managing the term on our GIC portfolio we have a number of maturities coming due in the next little while that are going to be in the right part of the cycle. We are pleased with our ability to maintain this going into 2010.

Again, if you go back to the second quarter we reported for that specific quarter the net interest margin of 2.5% . It has declined slightly to 2.3% in this quarter so you are spot on.

Overall if you compare it to the prior year it is flat.

Is there some opportunity through GIC re-pricing or essentially paying lower funds or maybe re-pricing the loans to see expansion in some upcoming quarters? We have seen some of your competitors at least on the mortgage side be able to do that and expand their net interest spreads.

Sure. We will do exactly the same thing as we go back into the market.

We will re-look at all of our pricing as we start to re-lend. The HELOC program is a good example of that.

Most banks today are about 125 basis points higher than they were about a year ago on that product. We actually in fact re-priced that product back in the early part of the year and some banks are just getting to re-pricing their legacy book now.

We will continue to look at those spreads and that is across the board for all of our competitors. As we continue to do more lending we will just make sure that we are keeping our spreads as wide as we can.

On the institutional side it looks like you mentioned you picked up some mandates. Can you talk about the pipeline and what it looks like going forward?

The activity that we have seen year-to-date and the pipeline going forward has exceeded our expectations when we started the year. It is coming not just from Canada but it is coming from each of the markets where we are active.

As Blake mentioned in his remarks we opened our office in Boston earlier this year and haven’t seen a tremendous amount of activity there. A lot of interest in our products and we have been successful on a number of fronts likewise in Europe.

Our expectation is as we open our office in Hong Kong we will experience the same sort of success. What we are finding is that as a relatively new entrant in the global institutional market we have a very, very attractive suite of products.

One of the benefits of entering the market in a period of equity market turmoil is that investors, plan sponsors or whatever are willing to listen to new ideas. We happen to represent a whole bunch of new ideas and are meeting with a lot of success as a result.

A quick follow-up on these expenses. Am I correct in understanding if things stay relatively good we won’t see a true up in bonus accruals in Q4 so essentially no spikes or anything like that?

You definitely won’t see a spike up. Like I said, I think more than likely you will see small spike down.

On the absorption expenses we settle at the end of September with the Fund. So when you go into the fourth quarter you always anticipate assets are going to grow and you start making your accruals on that basis so you will see that expense come down.

Like we have seen in the past couple of years, our seasonality of our expenses and we see our fourth quarter expenses trend down. As I said, you won’t get surprised in a negative way the way we do our accruals it will be in a positive way.

On the elimination of caps on these funds, that has been a pretty big positive benefit to your expenses. Have any advisors been upset about that?

For the most part these are very, very negligible impacts on the funds so we are talking 2-3 basis points. Again, the funds year-end are September and we will see how expenses lay.

We will see how the assets under management in those particular funds come in and we will determine what our exact absorption level will be. Like I said, for 99% of the funds we are talking at most a 2-3 basis points increase.

A few million bucks which is pretty big for AGF but not versus $30 billion or whatever mutual fund assets?

Sure. Three basis points on $20 million is $6 million.

AGF Trust, and this is something I have kind of been wondering, as you shrink the loan book and that is something that has been helping free up capital, what is the future for that business? Is it runoff or what?

Also as the loan book shrinks are you facing potential leverage selection with some of the loans maybe going to other institutions and you might end up with some of the lower quality ones representing a bigger chunk of your total loans?

So in terms of the adverse selection a lot of the runoff we are seeing is in the HELOC portfolio. The whole book is great quality quite frankly.

What we are seeing is it is skewed to Alberta so we are still left with a good number of high quality clients in that portfolio. Some of them aren’t able to refinance just because where some of the equity markets are out there and they can’t get refinancing.

Yes, there is some anticipation of that but we don’t really see it as a big issue for us. The investment loan portfolio quite frankly has not been running off.

It has stayed pretty much steady. What you are seeing in the RSG portfolio is because we didn’t really have a program last year it is just natural pay downs on that program so you are not really getting adverse selection on that group and then we will run another program this year.

So getting back to your second part of your question, which is where are we heading from here, we are going back into lending. We will start our C program and then move to our mortgage program and then ultimately back into the IOP program.

To go back quickly on the sales, what is the chance because you have been making some pretty positive moves on the expense numbers. What are the odds of you cutting the trailer on elements?

We are very happy. We talk to our clients and we take a look at competitive type products and what is out there and we are happy where we sit.

For the sales, the Manulife GIC is that going to count on your retail or in your institutional? What is the update on promoting some of your other funds?

I know on Junior Investor Day you talked about some lesser known funds that have been doing pretty well and weren’t well known by the community. Can you give me an update on that if Rose is there?

Rose is here. I will just answer your first question.

The Manulife product is institutional. Rose?

On the sales strategy front we have been in discussion with the advisors and what they want. We constantly review the marks and the trends both from an investor economics and [significant] numbers.

I talked to Martin and the six SVP’s in terms of their market outlook and we are really channeling our sales efforts based on all this information. We are expecting that clients and advisors are telling us that clients are slowly moving back into the equity market so with that we expect to participate in that growth.

Some of your clients move back into the market in some of the fixed income and balance funds are getting the early flows I guess. Is that where you are pushing more product?

That is exactly the two areas we are pushing.

On the Trust business, back to the provision discussion, I know the $7.2 million you talked about removing the $2.5 million related to the RSP but I think there was also $2.8 million of reversals out of the general allowance portfolio. I am hoping to get a bit more color around that.

Is that just a result of your better outlook or is that a result of the shrinking of the book? Is that something we should be expecting over the next year or so?

It is a combination of two things. Basically as I have indicated and we have indicated before we have a formula that is based on the loss giving default and the probability of default.

You could be in a situation where you could see our general allowances, unlike other financial institutions, move up with no movement in the loan book. So again we are seeing some improvement there so you start to see the provision come up from that perspective.

That impacts your specific provisions as well as your general. As you indicated, the book is coming off somewhat so you get a pick up there.

Which is more meaningful? The first or the second?

I would say it is pretty evenly split right now. The reason I say that is when I look at it the amounts they have come down is relatively the same in both the specific and general compared to last quarter.

On the Trust side, I think we have talked about this in the past but I know there was a swap gain in the quarter. Can you remind me where the offset, is that through the interest income line?

Is that an offset to that swap gain?

Exactly.

Your thoughts about writing 100% margin loans again. Is that a business that you will consider again?

The answer to that is yes. If you look at this portfolio it is performing extremely well so we will go back into the 100% loan program.

We will obviously look at how we can make it a better program based on some of the choices we make around the program and some of the features that we put on the program and how we continue to understand it and segment it and underwrite it. So those are changes that we will make.

As a broad statement, yes we will be back into that kind of a program but we have got pretty good line of sight in terms of the segments of the portfolio that perform and the ones that perform less well. They all performed relatively well across most segments.

Can you maybe give specifics? How do you make it a better product?

Do you try to make more of the assets going to your own funds? Can you talk about specifics on that side?

It would be more in terms of, and everybody in the industry who has this product and some of our competitors are looking at it in terms of where do you set your limits in terms of additional net worth outside of the underlying portfolio? As I said we just don’t underwrite that based on what is going into the fund.

We look at an individual’s net worth. We look at home ownership.

We look at other variables that speak to character and capacity to be able to carry that loan. That has always been how we have underwritten this portfolio.

You can make adjustments there that can drive up your profitability in terms of who you are lending to and in terms of who you are not lending to.

Back to the Manulife GIC can you talk about the margins on that product? I don’t know if you can give any sense, but how meaningful could this be when you look at this opportunity?

First, we don’t divulge margins on specific products with contracts between clients of ours. That is number one.

Number two, as I said at the outset, I don’t want to get into speculating on what we might expect. This is really frankly getting onto the platform of an incredibly powerful distribution organization and manufacturing firm and we are delighted to be partnering with them.

We look forward to doing similar types of products with other firms.

Certainly some of our competitors have made a big issue over this and I have seen some amazingly good write ups by the analysts on how well they have done on these platforms. Obviously we are quite encouraged to be part of it.

I guess it is safe to assume the margin is going to be less than on the retail side but I was just wondering on the institutional side.

I think it is all a function of the underlying costs that go with it. Again on a pure retail product there is a lot of SG&A costs attached to it where those costs aren’t there.

So again I have always said that I think the instructional business is a good business. It supplements and it is complementary to our mutual fund business.

When we start doing business and losing money then I think that is a different issue but that is not the case here. We see it as a very, very positive.

Any time your name is up in lights so to speak that should have some ancillary benefits as well from the perspective of selling our current mutual funds.

I wanted to follow-up with a question on the AGF Trust which back to the mortgage lending. You stated you would like to get back into that.

I would just like to get my head around the timing of doing that and the time to ramp up that business. I would assume that you have pretty well nobody that is on your internal to AGF that can do the origination side of that.

So how long does it take you to get back in the game and get back to speaking with the mortgage brokers and generate new business?

The assumption isn’t quite right because we do actually have infrastructure and we have kept some infrastructure through this cycle in terms of our underwriting. So we do have infrastructure today.

We obviously ratcheted some of it down as we have brought down our expenses through this cycle particularly on the sales side. As we are going through this last 12 months we have renewals coming up all the time and you need underwriters to be looking at those.

We have the infrastructure to be able now to move forward in terms of getting back into the channel. The issue will be how quickly do you want to get back in and what is the timing in terms of doing that.

Now we are looking at this as an opportunity to say where do we want to specifically go with respect to one the mortgage broker channel or two even the advisor channel in terms of what we might do there with mortgages. We are looking at our strategy from that perspective.

You feel when the time comes you have the ability to ramp up in fairly short order then?

We could start underwriting today. We don’t have a problem with respect to starting adjudicating mortgages.

The issue is we want to come out on a timed basis in terms of who do we want to go after from a sales strategy and when we want to go after them but we have the infrastructure in place and it is all geared to go in terms of we just need to push the button to go.

Along with that, during the shareholder day you put up on one of your slides you were contemplating some strategic options for the business including possibly bringing on a partner to co-invest with you. Is that something that is still on the table?

We talked about that on a strategic level with the whole management team here. The answer to that is we have lots of capital today and we have lots of room for growing the business.

That doesn’t mean as we look out in the future we are not continuing to look at multiple options in terms of how do we maximize value of the Trust company for the shareholder. The short answer is yes we are always looking at those kinds of strategic options that increase shareholder value.

Thank you operator. Thank you very much for joining our call today.

Our next earnings call will take place in late January 2010 when we will review our fiscal 2009 results. Details of the exact date and time will be posted on our website.

As always, we would be more than happy to answer any questions after the fact. Either get in touch with Deirdre or myself.

Also, an archive of the audio webcast of today’s call with supporting materials will be available in the Investor Relations section of our website. Again, thank you very much.