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Bulletin #0462-P

Policy
Amendments to MFDA Rule 3.1.1 (Capital – Minimum Levels) and Form 1 – Financial Questionnaire and Report

Contact: Laura
Milliken

BULLETIN #0462 – P
Director, Financial Compliance
January 21, 2011
Phone: 416-943-5843
E-mail: lmilliken@mfda.ca

MFDA Bulletin

Policy

For Distribution to Relevant Parties within your Firm

Amendments to MFDA Rule 3.1.1 (Capital – Minimum Levels) and
Form 1 – Financial Questionnaire and Report

Proposed amendments to MFDA Rule 3.1.1 (Capital – Minimum Levels) and Form 1 –
Financial Questionnaire and Report (“Form 1”) have received all requisite approvals. The
amendments to Rule 3.1.1 are now in effect. The amendments to Form 1 are subject to transition
periods described in Bulletin #0463-P Transition Periods to Adopt International Financial
Reporting Standards and Other Form 1 Amendments
.

The amendments to Rule 3.1.1 are intended to ensure that MFDA Members registered in other
registration categories under securities legislation are subject to consistent minimum capital
requirements under MFDA Rules and National Instrument 31-103 Registration Requirements
and Exemptions
(“NI 31-103”).

The amendments to MFDA Form 1 are intended to align financial reporting required under Form
1 with IFRS and capital requirements in NI 31-103.

The amended Rule and Form are attached as Schedules “A” and “B”, respectively.

DOCs#239178

Schedule “A”

3.1 CAPITAL

3.1.1 Minimum Levels.

(a)
Each Member shall have and maintain at all times risk adjusted capital greater than zero,
and minimum capital in the amounts referred to below for the Level in which the
Member is designated, as calculated in accordance with Form 1 and with such
requirements as the Corporation may from time to time prescribe:
Level 1
$25,000 for a Member which is an introducing dealer and which satisfies
the requirements of Rule 1.1.6(a) and (b), and is not a Level 2, 3 or 4
Member and is not otherwise registered in any other category of
registration under securities legislation.
Level 2
$50,000 for a Member which does not hold client cash, securities or other
property.
Level 3
$75,000 for a Member which does not hold client securities or other
property, except client cash in a trust account.
Level 4
$200,000, for any other Member, including a Member which acts as a
carrying dealer in accordance with Rule 1.1.6.
For the purposes of the By-laws, Rules, Policies and Forms, a Member which is required
to maintain minimum capital at an amount referred to above is referred to as a Level 1, 2,
3 or 4 Dealer or Member, as the case may be.
(b)
Notwithstanding the provisions of paragraph (a), a Member that is registered as an
investment fund manager under securities legislation and is a Level 2 or 3 Dealer must
maintain minimum capital of at least $100,000.


Schedule “B”

FORM 1 – TABLE OF CONTENTS
MFDA FINANCIAL QUESTIONNAIRE AND REPORT

___________________________________________________
(FirmMember Name)

_______________________________________
(Date)

TABLE OF CONTENTS

GENERAL NOTES AND DEFINITIONS

CERTIFICATE OF PARTNERS OR DIRECTORS

PART I —INDEPENDENT AUDITORS’ REPORT FOR STATEMENTS A, D, E AND F [at audit date only]

INDEPENDENT AUDITORS’ REPORT FOR STATEMENTS B AND C [at audit date only]

PART I
STATEMENT
A

(3 pages) Statements of financial positionassets and of liabilities and shareholder/partner capital
B
Statement of risk adjusted capital
C
Statement of early warning excess and early warning tests
D
Statement of income and comprehensive incomeSummary statement of income
E
Statement of changes in capital and retained earnings (corporations)

or undivided profits (partnerships)
F
Statement of changes in subordinated loans

Notes to the Form 1 financial statements

CERTIFICATE OF PARTNERS OR DIRECTORS

PART II — AUDITORS' REPORT [at audit date only]

REPORT ON COMPLIANCE FOR INSURANCE AND SEGREGATION OF CASH AND SECURITIES [at audit date
only]

REPORT ON COMPLIANCE FOR SEGREGATION OF CASH AND SECURITIES [at audit date only]

SCHEDULE
1
Analysis of securities owned and sold short at market value
2
Analysis of clients' debit balances
3
Current Income taxes
4
Insurance
5
Early warning tests
6
Other supplementary information [not required at audit date]


MFDA FINANCIAL QUESTIONNAIRE AND REPORT FORM 1 –
GENERAL NOTES AND DEFINITIONS

GENERAL NOTES:

1. Each Member shallmust comply in all respects with the requirements outlined in this prescribed Form 1 MFDA Financial
Questionnaire and Report as approved and amended from time to time by the bBoard of dDirectors of the Mutual Fund
Dealers Association of Canada (the Corporation)MFDA) and MFDA Investor Protection Corporation.

Form 1 is a special purpose report that includes financial These statements and schedules, and are is to be prepared in
accordance with generally accepted accounting principlesInternational Financial Reporting Standards (IFRS), except as
prescribed by modified by the requirements of the MFDACorporation.or the MFDA Investor Protection Corporation.
Each Member must complete and file all of these statements and schedules.

2. The following are Form 1 IFRS departures as prescribed by the Corporation:

Prescribed IFRS departure
Trading balances
When reporting trading balances relating to the Member and client securities

and other investment transactions, the Corporation allows the netting of
receivables from and payables to the same counterparty.
Preferred shares
Preferred shares issued by the Member and approved by the Corporation are
classified as shareholders’ capital.
Presentation
Statements A and D contain terms and classifications (such as allowable and
non-allowable assets) that are not defined under IFRS. In addition, specific
balances may be classified or presented on Statements A and D in a manner
that differs from IFRS requirements. The General Notes and Definitions, and
the applicable Notes and Instructions to the Statements of Form 1, should be
followed in those instances where departures from IFRS presentation exists.

Statements B, C, E and F are supplementary financial information, which are
not statements contemplated under IFRS.
Separate financial
Consolidation of subsidiaries is not permitted for regulatory reporting
statements on a
purposes except for related companies that meet the definition of “related
non-consolidated
Member” in MFDA By-law No. 1 and the Corporation has approved the
basis
consolidation.

Because Statement D only reflects the operational results of the Member, a
Member must not include the income (loss) of an investment accounted for
by the equity method.
Statement of cash
A statement of cash flow is not required as part of Form 1.
flow
Valuation
Securities are to be valued and reported at “market value”.

3. The following are Form 1 prescribed accounting treatments based on available IFRS alternatives:

Prescribed accounting treatment
Hedge accounting
Hedge accounting is not permitted for regulatory reporting purposes. All
security and derivative positions of a Member must be marked-to-market at
the reporting date. Gains or losses of the hedge positions must not be
deferred to a future point in time.
Securities owned
A Member must categorize all investment positions as held-for-trading
and sold short as
financial instruments. These security positions must be marked-to-market.
held-for-trading

Because the Corporation does not permit the use of available for sale and
hold-to-maturity categories, a Member must not include other comprehensive
income (OCI) and will not have a corresponding reserve account relating to
marking-to-market available for sale security positions.
Valuation of a
A Member must value subsidiaries at cost.
subsidiary

24. These statements and schedules should be read in conjunction with the Corporation’s Bylaws, Rules, and Policies. and
Forms of the MFDA and MFDA Investor Protection Corporation including, but not limited to rules relating to the early
warning system, segregation of client assets, and insurance and audit requirements.

53. For purposes of these statements and schedules, the accounts of related Members companies as defined by the MFDA
may be consolidated as provided by the Bylaws, Rules and Policies of the MFDA. If consolidation is appropriate, the
names of the companies consolidated must be provided.that meet the definition of “related Member” in MFDA By-law
No. 1 may be consolidated.

4. FOR THE PURPOSES OF THESE CAPITAL CALCULATIONS REPORTING ON A TRADE DATE BASIS MUST BE USED UNLESS
SPECIFIED OTHERWISE IN THE INSTRUCTIONS. THIS MEANS INCLUDING IN THE FOLLOWING PRESCRIBED STATEMENTS
AND SCHEDULES, ALL ASSETS AND LIABILITIES RESULTING FROM SALES AND PURCHASES OF SECURITIES ON OR BEFORE THE
REPORTING DATE, EVEN THOUGH THEY MAY BE FOR NORMAL SETTLEMENT AFTER THE REPORTING DATE.

6. For purposes of the statements and schedules, the capital calculations must be on a trade date reporting basis unless
specified otherwise in the Notes and Instructions to Form 1.

5. All statements and schedules must be filed. If a schedule is not applicable, a "NIL" return must be filed.

67. Comparative figures on all statements are required only at the audit date. As a transition exemption for the changeover to
International Financial Reporting Standards (IFRS) from Canadian Generally Accepted Accounting Principles (CGAAP),
Members are not required to file comparative information for the preceding financial year as part of the first audited Form
1 under IFRS.

78. All statements and schedules must be expressed in Canadian dollars and must be rounded to the nearest dollar.

89. Supporting details should be provided, as required, showing a breakdown Schedules should be attached showing details of
any significant amounts that have not been clearly described on the attached statements and schedules.

910.Mandatory security counts. and reconciliations. Securities held in segregation and safekeeping must be counted once
in the year in addition to the count as at the year-end audit date.

11. Mandatory reconciliations. Reconciliations must be performed monthly in addition to the year-end audit date between
the Member's records and the records of the depository or custodian where the Member holds its own and client securities
in nominee name accounts.

10.At the year-end, enclose a list of all brokers and dealers and mutual fund companies for which a confirmation has not been
obtained after two requests. Such list should include the dollar balances in such accounts, as reflected in the firm's
records.

11.For purposes of these statements and capital calculations, all related party debt must be recorded as a current liability unless
a subordination agreement in a form prescribed by the MFDA has been executed by the Member and other relevant
parties in relation to such debt.

DEFINITIONS:

1. “acceptable entity” means:

(a) Acceptable institutions.

(b) Government of Canada, the Bank of Canada and Provincial Governments.

(c) Insurance companies licensed to do business in Canada or a province thereof.

(d) Canadian provincial capital cities and all other Canadian cities and municipalities, or their equivalents.

(e) All crown corporations, instrumentalities and agencies of the Canadian federal or provincial governments which are
government guaranteed as evidenced by a written unconditional irrevocable guarantee or have a call on the consolidated
revenue fund of the federal or provincial governments.

(f) Canadian pension funds which are regulated either by the Office of Superintendent of Financial Institutions or a
provincial pension commission.

(g) Corporations (other than Regulated Entities) with a minimum net worth of $75 million on the last audited balance sheet,
provided acceptable financial information with respect to such corporation is available for inspection.

(h) Members of the Mutual Fund Dealers Association of CanadaCorporation.

(i) Regulated entities.

2. “acceptable institutions” means:

(a) Canadian banks, Quebec savings banks, trust companies licensed to do business in Canada or a province thereof.

(b) Credit and central credit unions and regional caisses populaires.

3. “acceptable securities locations” means those entities considered suitable to hold securities on behalf of a Member, for
both inventory and client positions, without capital penalty, given that the locations meet the requirements outlined in the
segregation Bylaws, Rules or Policies of the Corporation MFDA including, but not limited to, the requirement for a
written custody agreement outlining the terms upon which such securities are deposited and including provisions that no
use or disposition of the securities shall be made without the prior written consent of the Member and the securities can
be delivered to the Member promptly on demand. The Corporation MFDA will maintain and regularly update a list of
those foreign depositories and clearing agencies that comply with these criteria. The entities are as follows:

(a) Depositories

i. Canada
The Canadian Depository for Securities LimitedCDS Clearing and Depository
Services Inc.

ii. United States

Depository Trust Company

Pacific Securities Depository Trust Company

Midwest Securities Trust Company

(b) Government of Canada, the Bank of Canada and Provincial Governments.

(c) Canadian banks, Quebec savings banks, trust companies and loan companies licensed to do business in Canada or a
province thereof.

(d) Credit and central credit unions and regional caisses populaires.

(e) Insurance companies licensed to do business in Canada or a province thereof.

(f) Mutual Funds or their Agents – with respect to security positions maintained as a book entry of securities issued by the
mutual fund and for which the mutual fund is unconditionally responsible.

(g) Regulated entities.

4. “regulated entities” means those that are Members covered by the Canadian Investor Protection Fund or Members of
recognized exchanges and associations. For the purposes of this definition, recognized exchanges and associations are
those that are identified as a "regulated entity" by the Investment Dealers Association of CanadaInvestment Industry
Regulatory Organization of Canada.


MFDA FINANCIAL QUESTIONNAIRE AND REPORT
FORM 1 – CERTIFICATE OF PARTNERS OR DIRECTORS
_______________________________________________
(MemberFirm Name)

I/We have examined the attached statements and schedules and certify that, to the best of my/our knowledge, they present
fairly the financial position and capital of the firmMember at ____________________ and the results of operations for the
period then ended, and are in agreement with the books of the firmMember.

I/We certify that the following information is true and correct to the best of my/our knowledge for the period from the last
audit to the date of the attached statements which have been prepared in accordance with the current requirements of the
CorporationMFDA and MFDA Investor Protection Corporation.:
ANSWERS
1.
Do the attached statements fully disclose all assets and liabilities including the following:

(a) All future purchase and sales commitments? ………………………………………………………………………… _________

(b) Writs issued against the Memberfirm or partners or corporation or any other litigation pending?…
_________

(c) Income tax arrears of partners or corporation?………………………………………………………………………. _________

(d) Other contingent liabilities, guarantees, accommodation, endorsements or commitments

affecting the financial position of the Memberfirm?………………………………………………………………. _________

2. Does
the
firmMember promptly segregate clients' cash and securities in accordance with the Rules and Policies

prescribed by the MFDA?………………………………………………………………………………………………………….. _________

3. Does
the
firmMember determine on a regular basis its segregation amount and act promptly to

segregate assets as appropriate in accordance with the Rules and Policies prescribed by the MFDA? ….. _________

4. Does
the
firmMember carry insurance of the type and in the amount required by the Rules and Policies of

the MFDA? ……………………………………………………………………………………………………………………………… _________

5. Does
the
firmMember monitor on a regular basis its adherence to early warning requirements in accordance

with the Rules and Policies prescribed by the MFDA?…………………………………………………………………… _________

6. Does
the
firmMember perform regular reconciliations of its trust accounts in accordance with the Rules and
Policiesprescribed by the MFDA ? ……………………………………………………………………………………………… _________

7. Does the firmMember perform regular reconciliations of its mutual fund transactions with fund company recordsand
other financial institution records in accordance with the Rules and Policies prescribed by the MFDA ?

_________

8. Does
the
firmMember have adequate internal controls in accordance with the Rules and Policies prescribed

by the MFDA ? ………………………………………………………………………………………………………………………… _________

9. Does
the
firmMember maintain adequate books and records in accordance with the Rules and Policies

prescribed by the MFDA ?…………………………………………………………………………………………………………. _________

_______________________

[date]


Name and Title – Please print




Signature

___________________________________________ __________________________________

___________________________________________ __________________________________

___________________________________________ __________________________________

___________________________________________
___________________________________

CERTIFICATE OF PARTNERS OR DIRECTORS
NOTES AND INSTRUCTIONS

1.
Details must be given for any “no” answers.

2.
To be signed by two of either:

(a)
chief executive officer/partnerUltimate Designated Person (UDP)
(b)
cChief financialExecutive oOfficer
(c)
cChief accountantFinancial oOfficer
(d)
Chief Accountant
(e)
oOne dDirector/ or pPartner not included in (a), (b), or (c) or (d) above.

Where there is only one individual that meets the qualifications of the positions listed above, this
individual must sign the certificate.

3. Two copies with original signatures must be provided to the CorporationMFDA.

MFDA FINANCIAL QUESTIONNAIRE AND REPORT
PART I – AUDITORS' REPORT

TO: The MFDA and the MFDA Investor Protection Corporation.

We have audited the following Part I financial statements of __________________________________:

(firm)

Statement A — Statements of assets and of liabilities and shareholder/partner capital;

Statement B — Statement of risk adjusted capital,

as at __________________ 20___ and __________________ 20___;

(date)
(date)
Statement C — Statement of early warning excess and early warning tests;

Statement D — Summary statement of income for the years ended _______________ 20___

(date)

and __________________ 20___;

(date)

Statement E — Statement of changes in capital and retained earnings (corporations) or

undivided profits (partnerships); and
Statement F — Statement of changes in subordinated loans for the year ended ______ 20___.

(date)
These financial statements have been prepared for the purpose of complying with the By-laws, Rules
and Policies of the MFDA. These financial statements are the responsibility of the firm’s management.
Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those
standards require that we plan and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation.

In our opinion,

(a) the statements of assets and of liabilities and shareholder/partner capital and the summary statement
of income present fairly, in all material respects, the financial position of the firm as at
_________________ 20___ & ________________ 20___ and the results of its operations for

(dates)

the years then ended in the form required by the MFDA in accordance with the basis of accounting
described in the Notes to the Financial Questionnaire and Report.

(b) the statement of risk adjusted capital, as at _______________20____ &

(date)

___________ 20___ and the statements of early warning excess and early warning tests,

(date)

changes in capital and retained earnings (corporations) or undivided profits (partnerships), and
changes in subordinated loans, either as at or for the year ended 20

(date)

are presented fairly, in all material respects, in accordance with the applicable instructions of the
MFDA.
December 11, 2008

These financial statements, which have not been, and were not intended to be, prepared in
accordance with Canadian generally accepted accounting principles, are solely for the information
and use of the firm, the MFDA and the MFDA Investor Protection Corporation, to comply with the
By-laws, Rules and Policies of the MFDA. The financial statements are not intended to be and
should not be used by anyone other than the specified users or for any other purpose.

_______________________________________
_______________________________________
[auditing firm name]
[date]
______________________________________
_______________________________________

[signature]
[place of issue]

December 11, 2008


FORM 1 – INDEPENDENT AUDITORS’ REPORT FOR STATEMENTS A, D, E AND F

To: The Mutual Fund Dealers Association and MFDA Investor Protection Corporation

We have audited the accompanying Statements of __________ (Member name) (the “Member”), which comprise
the statement of financial position as at __________ (date) (Statement A) and the statement of income and
comprehensive income (Statement D) and statement of changes in capital and retained earnings for the year then
ended (Statement E) and the statement of changes in subordinated loans (Statement F), and a summary of
significant accounting policies and other explanatory information. These Statements have been prepared by
management based on the financial reporting provisions of the Notes and Instructions to Form 1 prescribed by the
Mutual Fund Dealers Association of Canada (“MFDA”).

Management’s Responsibility for the Statements

Management is responsible for the preparation and fair presentation of these Statements in accordance with the
financial reporting provisions of the Notes and Instructions to Form 1 prescribed by the MFDA and for such
internal control as management determines is necessary to enable the preparation of Statements that are free from
material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these Statements based on our audit. We conducted our audit 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 Statements
are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
Statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of
material misstatement of the 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 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 Statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.

Opinion

In our opinion, the Statements present fairly, in all material respects, the financial position of the Member as at
__________ (date), and the results of its operations and its changes in subordinated loans for the year then ended
in accordance with the financial reporting provisions of the Notes and Instructions to Form 1 prescribed by the
MFDA.

Going Concern [MFDA to allow for auditor to include emphasis of matter paragraph for Going Concern – this
is an option for auditors but not part of the standard report]

Without modifying our opinion, we draw attention to Note _____ in the Statements which indicates that the
Member incurred a net loss of _____ during the year ended ________ (date) and, as of that date, the Member’s
current liabilities exceeded its total assets by _____. These conditions, along with other matters as set forth in
Note _____, indicate the existence of a material uncertainty that may cast significant doubt about the Member’s
ability to continue as a going concern.

December 11, 2008

(EFS to allow for auditor to include other potential Emphasis of Matter and Other Matter paragraphs should one
be required under the CASs or determined appropriate by the auditor to be included in the auditors’ report. Such
wording would be agreed upon with MFDA prior to the filing of Form 1).


Basis of Accounting and Restriction on Use

Without modifying our opinion, we draw attention to Note _____ to the Statements which describes the basis of
accounting. The Statements are prepared to assist the Member to meet the requirements of the MFDA. As a
result, the Statements may not be suitable for another purpose. Our report is intended solely for the Member, the
MFDA and the MFDA Investor Protection Corporation and should not be used by parties other than the Member,
the MFDA and the MFDA Investor Protection Corporation.

Unaudited Information

We have not audited the information in Schedule 5 of Part II of Form 1 and accordingly do not express an opinion
on this schedule.

[Audit Firm]

[Date]

[Address]

December 11, 2008

FORM 1 – INDEPENDENT AUDITORS’ REPORT FOR STATEMENTS B AND C


To: The Mutual Fund Dealers Association and MFDA Investor Protection Corporation

We have audited the accompanying Statements of Form 1 (the “Statements”) of __________ (Member name) (the
“Member”) as at __________ (year end date).

Statement B – Statement of Risk Adjusted Capital
Statement C – Statement of Early Warning Excess

These Statements have been prepared by management based on the financial reporting provisions of the Notes
and Instructions to Form 1 prescribed by the Mutual Fund Dealers Association (“MFDA”).

Management’s Responsibility for the Statements

Management is responsible for the preparation of the Statements of Form 1 in accordance with the financial
reporting provisions of the Notes and Instructions to Form 1 prescribed by the MFDA, and for such internal
control as management determines is necessary to enable the preparation of Statements that are free from material
misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on the Statements based on our audit. We conducted our audit 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 Statements
are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
Statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of
material misstatement of the Statements, whether due to fraud or error. In making those risk assessments, the
auditor considers internal control relevant to the entity’s preparation of the 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 Statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.

Opinion

In our opinion, the financial information in Statements B and C of Form 1 as at __________ (year end) is
prepared, in all material respects, in accordance with the financial reporting provisions of the Notes and
Instructions to Form 1 prescribed by the MFDA.

Basis of Accounting and Restriction on Use

Without modifying our opinion, we draw attention to Note _____ to the Statements which describes the basis of
accounting. The Statements are prepared to assist the Member to meet the requirements of the MFDA. As a
result, the Statements may not be suitable for another purpose. Our report is intended solely for the Member, the
MFDA and the MFDA Investor Protection Corporation and should not be used by parties other than the Member,
the MFDA and the MFDA Investor Protection Corporation.

December 11, 2008

[Audit Firm]

[Date]

[Address]

December 11, 2008
PART I -– FORM 1 – AUDITORS' REPORTS
NOTES AND INSTRUCTIONS

A measure of uniformity in the form of the auditors' reports is desirable in order to facilitate
identification of circumstances where the underlying conditions are different. Therefore, when auditors
are able to express an unqualified opinion, their reports should take the form of the auditors' reports
shown above.

An alternate form of Auditors’ Report is available from the MFDA in the case where the auditor is
unable to express an opinion on previous year’s figures due to not having been the auditor for the
previous year.

Any limitations in the scope of the audit must be discussed in advance with the CorporationMFDA.
Discretionary scope limitations will not be accepted. Any emphasis of matter in the auditors’ reports
must be discussed in advance with the Corporation.

Two copies with original signatures must be provided to the CorporationMFDA.


STATEMENT A
PAGE 1 OF 3
FORM 1, PART I – STATEMENT A
MFDA FINANCIAL QUESTIONNAIRE AND REPORT
_______________________________________________
(Member Firm Name)
STATEMENT OF ASSETSFINANCIAL POSITION
(as at __________________________ with comparative figures as at __________________________)

REFERENCE
NOTES
(CURRENT

(PREVIOUS
YEAR)
YEAR)
C$
C$

LIQUID ASSETS:





1.

Cash on deposit with aAcceptable iInstitutions

$

$
2.

Client funds held in trust with aAcceptable iInstitutions





3.
Sch.1
Securities owned at market value





4.
Receivable
from
carrying
brokerdealer or mutual fund





5.

Trading balances





56.
TOTAL
LIQUID
ASSETS




OTHER ALLOWABLE ASSETS [Receivables fFrom Acceptable Entities]:





67.

Interest and dividends receivable





7.

Other receivables [attach details]





8.
Sch.3
Recoverable and overpaid income taxesCurrent income tax





assets
9.

Recoverable and overpaid taxes





10.

Other receivables [provide details]





1110.

TOTAL OTHER ALLOWABLE ASSETS





1211.

TOTAL ALLOWABLE ASSETS ([line 56 plus line 101)]




NON ALLOWABLE ASSETS:





1312.
Sch.2
Advanced redemption proceeds receivableClient debit balances





14.

Deferred tax assets





15.

Intangible assets





13.

Provincial contingency fund deposits





1614.

Fixed assets at depreciated valueProperty, plant and equipment





1715.

Capitalized leasesFinance lease assets





1816.

Investments in and advances to subsidiaries and affiliatesDue





from related parties [provide details]
1917.

Subordinated loans receivable from other MembersInvestments





in subsidiaries and affiliates
2018.

Other assets [attachprovide details]





2119.

TOTAL NON ALLOWABLE ASSETS





2220.

TOTAL ASSETS ([line 1112 plus line 1921)]

$

$





December 11, 2008
STATEMENT A
PAGE 2 OF 3
FORM 1, PART I – STATEMENT A (CONTINUED)

PART I
MFDA FINANCIAL QUESTIONNAIRE AND REPORT
_______________________________________________
(Firm Name)
STATEMENT OF LIABILITIES AND SHAREHOLDER/PARTNER CAPITAL
(as at _______________________ with comparative figures as at ________________________)

REFERENCE
NOTES
(CURRENT

(PREVIOUS
YEAR)
YEAR)
C$
C$

CURRENT LIABILITIES:





23.21.
Overdrafts and loans

$

$
2224.
Sch.1
Securities sold short at market value





2325.

Trust liabilities





26.

Trading balances





27.

Provisions





2428.
Sch.3
Income taxes payableCurrent income tax liabilities





25.
Sch.3
Future income taxes – current portion





2629.

Variable compensation payable





2730.

Bonuses payable





2831.

Accounts payable and accrued expenses





29.

Capitalized leases and lease-related liabilities – current portion





3032.

Other current liabilities [attachprovide details]





3133.

TOTAL CURRENT LIABILITIES




LONG TERMNON-CURRENT LIABILITIES:





34.

Provisions





3235.
Sch.3
Non-current portion of future income taxesDeferred tax





liabilities
33.

Non-current portion of capitalized leases and lease-related





liabilities
3436.

Other long term non-current liabilities [attachprovide details]





3537.

TOTAL LONG TERMNON-CURRENT LIABILITIES




OTHER LIABILITIES





38.

Finance leases and lease-related liabilities [provide details]





39.

Due to related parties [provide details]





40.
F-6
Subordinated loans





3641.

TOTAL OTHER LIABILITIES





42

TOTAL LIABILITIES [line 3133 plus lines 37 and 3541]




FINANCIAL STATEMENT CAPITAL AND RESERVES:





December 11, 2008
37
F-6
Subordinated loans





38.
E-A-3
Capital





43.
Stmt. E
Issued capital





44.
Stmt. E
Reserves





3945.
E-C-3
Retained earnings or undivided profits





Stmt. E
4046.

TOTAL FINANCIAL STATEMENT CAPITAL





4147.

TOTAL LIABILITIES AND CAPITAL ([line 3642 plus line





4046)]

December 11, 2008
STATEMENT A
PAGE 3 OF 3
PART I
MFDA FINANCIAL QUESTIONNAIRE AND REPORT
_______________________________________________
(Firm Name)
NOTES TO THE FINANCIAL STATEMENTS
[to be provided at audit date]



Notes to the financial statements
– Any notes which may be necessary for the fair presentation of the financial statements in
accordance with generally accepted accounting principles and which are not contained in the supporting schedules must be
attached as page 3 to Statement A, including without limitation:

• Significant accounting policies;

• Subsequent events (which are not otherwise disclosed) to the date of filing, which have a material effect on
the firm’s financial position and risk adjusted capital;

• Obligations under letters of credit;

• Outstanding legal claims which are likely to result in a material adverse effect on the firm’s financial
position and risk adjusted capital;

• Related party transactions, detailing by type of transaction the amount and parties involved, for all such
transactions;

• Description of authorized and issued share capital and subordinated loans;

• Lease commitments; and

• Any other significant commitments or contingencies not otherwise disclosed.



December 11, 2008
FORM 1, PART I – STATEMENT A
NOTES AND INSTRUCTIONS
[comparative figures to be completed at audit date only]

Accrual basis of accounting

Members are required to use the accrual basis of accounting.

Allowable assets are those assets which, due to their nature, location or source, are either readily convertible into cash or
from such creditworthy entities as to be allowed for capital purposes.

Line 4 –
In the case of the salesperson’s portion of gross commissions or fees receivable, as recorded on lines 10 (Other
receivables) and 20 (Other assets), to the extent that there is written documentation that the Member does not have a liability
to pay the salespersons’s commission until it is received, the salespersons’s portion of the gross commission or fee receivable
is an allowable asset.

Line 5 – Include amounts owed to the Member for the sale of nominee name client securities.

Line 8 Include only overpayment of prior years' income taxes or current year installments. Taxes recoverable due to
current year losses may be included to the extent that they can be carried back and applied against taxes previously paid.
This line should not include future tax debits arising from losses carried forward.

Line 9 –
Include GST and HST receivables, capital tax, Part IV tax, sales and property taxes.

Line 1110 –
Includes only to extent receivables from Acceptable Entities (for definition, see General Notes and Definitions)
but does not include subordinated loans receivable from other Members which should be shown on line1817. Allowable
assets are those assets which due to their nature, location or source are either readily convertible into cash or from such
creditworthy entities as to be allowed for capital purposes.

Line 15
– Start-up and organizational costs cannot be capitalized. Examples of intangible assets include goodwill and client
lists.

Line 17 – Assets arising from a finance lease (also known as a capitalized lease).

Line 18
– A Member must report non-trading inter-company receivables on a gross basis unless the criteria for netting are
met.

Inter-company receivables generated from trading activity may be reported as allowable assets if the criteria for such
reporting are otherwise satisfied.

Line 19 – Investments in subsidiaries and affiliates must be valued at cost.

Line 1820
Including but not limited to such items as:

• prepaid expenses
• deferred chargescommissions and other receivables from other than acceptable entities

future income tax debitscash surrender value of life insurance
• advances to employees (gross)

• cash surrender value of life insurance

• intangibles

• cash on deposit with non acceptable entities
• provincial contingency/fund deposits


Line 21
– Non-allowable assets mean those assets that do not qualify as allowable assets.

Line 236
– Includes amounts owed by the Member for the purchase of nominee name client securities.

Line 27
– Recognize a liability to cover specific expenditures relating to legal and constructive obligations. A Member
cannot hold provisions as a general reserve to be applied against some other unrelated expenditure.



December 11, 2008

Line 2730 – Include discretionary bonuses payable and bonuses payable to shareholders.

Line 32 – Include all other current liabilities excluding those reported on lines 38, 39 and 40.

Line 36 – Include all other non-current liabilities excluding those reported on lines 38, 39 and 40.

Line 29 –
Include current portion of deferred lease inducements.
Line 40 – Subordinated loans mean approved loans, pursuant to an agreement in writing in a form satisfactory to the
Corporation, obtained from a source approved by the Corporation, the payment of which is deferred in favour of other
creditors and is subject to regulatory approval.

A Member must not pay a debt owed to any of its creditors contrary to any subordination or other agreement to which it and
the Corporation are parties.

Line 44 – Reserve is an amount set aside for future use, expense, loss or claim. It includes an amount appropriated from
retained earnings. It also includes accumulated other comprehensive income (OCI).

Line 45 – Retained earnings represent the accumulated balance of income less losses arising from the operation of the
business, after taking into account dividends and other direct charges or credits.

Line 38 – Include contributed surplus, if applicable.




December 11, 2008
STATEMENT B
PART I
MFDA FINANCIAL QUESTIONNAIRE AND REPORTFORM 1, PART I – STATEMENT B
_______________________________________________
(MemberFirm Name)
STATEMENT OF RISK ADJUSTED CAPITAL
(as at ________________________ with comparative figures as at ______________________)

REFERENCE
NOTES (CURRENT

(PREVIOUS
YEAR)
YEAR)
C$
C$

LIQUID ASSETS:





1. A-
Total Allowable Assets

$
$
1211
2. A-
Deduct: Total Current Liabilities





3331
3. ALLOWABLE WORKING CAPITAL

$
$
4.
A-39
Deduct: Due to related parties





5.

ADJUSTED ALLOWABLE WORKING CAPITAL

$
$
46.
Deduct: Minimum capital





57.
SUBTOTAL





6.

Deduct: Total Long Term Liabilities (A-35)




x10%

8.7.
A-37
Deduct: 10% ofContingent Liabilities [attach





details]__________ Non-current liabilities x10%

89.
SUBTOTAL




Deduct: – amounts required to fully mMargin





required:
910.
Sch.1
Securities owned and sold short





1011.
Sch.4
Financial institution bond deductible [greatest under any





clause]
1112.

Securities held at non-acceptable securities locations





[see note]
13.

Guarantees [provide details]





1214.

Unresolved differences in nominee name accounts





1315.

Unresolved differences in trust accounts





1416.

Other [attachprovide details]





1517.

TOTAL MARGIN REQUIRED [lines 910 through 1416]





1618.

RISK ADJUSTED CAPITAL [line 98 minus line 1517]

$
$




December 11, 2008
FORM 1, PART I – STATEMENT B
NOTES AND INSTRUCTIONS

Capital Adequacy

EACHA MEMBER SHALLMUST HAVE AND MAINTAIN AT ALL TIMES RISK ADJUSTED CAPITAL IN AN
AMOUNT NOT LESS THAN ZERO.

Line 4 Due to related parties

For purposes of this capital calculation, all amounts owing to related parties must be reported as a deduction to risk adjusted
capital.

Line 6 Minimum capital Line 4 -– Rule 3.1.1requires the following minimum capital amounts:
Level
1 Member $ 25,000
Level
2 Member 50,000
Level
3 Member 75,000
Level
4 Member 200,000

Notwithstanding the provisions of Rule 3.1.1, a Member that is registered as an investment fund manager under securities
legislation and is a Level 2 or 3 Dealer must maintain minimum capital of at least $100,000.

Line 12 Securities held at non- acceptable locations

Line 11 – 100% of the market value of securities must be provided in the case where client or firm securities are held at
locations which do not qualify as acceptable securities locations (see General Notes and Definitions). Securities held by an
entity with which the Member has not entered into a written custodial agreement as required by the By-laws and Rules of the
Corporation MFDA shall be considered as being held at non-acceptable securities locations.

Line 13 Guarantees

If the Member is guaranteeing the liability of another party, the total amount of the guarantee must be provided for in
computing Risk Adjusted Capital.

The Member should maintain and retain the details of the margin calculations for guarantees for review by the Corporation.

Lines 14 and 15 Unresolved differences

Items are considered unresolved unless a journal entry to resolve the difference has been processed as of the Due Date of the
Form 1.

This does not include journal entries writing off the difference to profit or loss in the period subsequent to the date of the
Form 1.

Margin must be provided for adverse unresolved differences in nominee name accounts in an amount equal to the market
value of the securities short plus the applicable margin rates related to the security. If the deficiency has not been resolved
within thirty days of being discovered, the Member shall immediately purchase the securities that are short.

For nominee name accounts, where a mutual fund company or financial institution does not provide a monthly statement or
electronic file confirming all of the Member firm's positions, the Member shall provide margin equal to 100% of the market
value of such mutual funds and other investment products held on behalf of clients.

All reconciliations must be properly documented and made available for review by Corporation staff and the Member’s
auditor.

Line 16 – OtherLine 12 and 13 – Items are considered unresolved unless a journal entry to resolve the difference has been
processed as of the Due Date of the questionnaire.

This does not include journal entries writing off the difference to profit or loss in the period subsequent to the date of the
questionnaire.



December 11, 2008

Margin must be provided for adverse unresolved differences in nominee name accounts in an amount equal to the market
value of the securities short plus the applicable margin rates related to the security. If the deficiency has not been resolved
within thirty days of being discovered, the Member shall immediately purchase the securities that are short.

Line 14 – This item should include all margin requirements not mentioned above as outlined in the By-laws and Rules of the
CorporationMFDA.




December 11, 2008

STATEMENT C
PAGE 1 OF 2
DATE:

PART I
MFDA FINANCIAL QUESTIONNAIRE AND REPORTFORM 1, PART I – STATEMENT C
_______________________________________________
(MemberFirm Name)
STATEMENT OF EARLY WARNING EXCESS
at ________________________


(CURRENT YEAR)
REFERENCE
NOTES

C$
B-
1.
1816
RISK ADJUSTED CAPITAL

$




2.

LIQUIDITY ITEMS –


DEDUCT:



A-
2.
1110
(a)
Total Oother allowable assets


ADD:



(b)
10% of Total long term Non-current
3.
B-68
liabilities





34.

EARLY WARNING EXCESS

$




December 11, 2008

NOTES:

FORM 1, PART I – STATEMENT C
NOTES AND INSTRUCTIONS

The early warning system is designed to provide advance warning of a Member firm encountering financial difficulties. It will
anticipate capital shortages and/or liquidity problems and encourage firmsMembers to build a capital cushion.

Line 2(a) –
Other allowable assets are deducted from RAC because they are illiquid or the receipt is either out of the firm’s control or
contingent.

Line 2(b)3 –
Long termNon-current liabilities are added back to RAC as they are not current obligations of the firm and can be used as
financing.





December 11, 2008

STATEMENT D
PART I
MFDA FINANCIAL QUESTIONNAIRE AND REPORTFORM 1, PART I – STATEMENT D
_______________________________________________
(MemberFirm Name)
SUMMARY STATEMENT OF INCOME AND COMPREHENSIVE INCOME
FOR THE PERIOD ENDED ________________________
[with comparative figures for the year /month ended ______________________________]

1.
Number of salespersons

2.
Assets Under Administration at statement date

NOTES
(CURRENT

(PREVIOUS
YR/MO
YR/MO
YEAR/MONTH)
YEAR/MONTH)
C$
C$
COMMISSION REVENUE


3.1.

Mutual Funds


4.2.

Segregated Funds


5.3.

Deposit Instruments


6.4.

Limited Partnerships


75.

Other securities [provide details]


86.

Insurance


OTHER REVENUE


9.7.

Interest


10.8.

Fees from clients


119.

Management fees


12.10.

Referral fees


11.
Realized/unrealized gain (loss) on marketable securities


13.12.

Other [provide details]


14.13.

TOTAL REVENUE


EXPENSES


15.14.

Variable compensation


15.

Commissions and fees paid to third parties


16.

Interest expense on subordinated debt


17.

Bad debt expense


18.

Financing costs


17.

Realized/unrealized (gain) loss on marketable securities


19.

Operating expenses


18.20.

Unusual items [attachprovide details]


2021.

Profit (loss) for the year from discontinued operations


19.21

Operating expenses other than lines 21-23


.
20.22.

IncomeProfit (loss) before lines 21-23for Early Warning test


23.

Income – Asset revaluation


24.

Expense – Asset revaluation





December 11, 2008

25.

Interest expense on internal subordinated debt


21.26.

Bonuses


27.

Net income (loss) before income tax




22.28.
S-3(5) Provision for (recovery of) income taxesIncome tax
expense (recovery)


(a) current………………………………………………………………………


(b) future ……………………………………………………………………….


23.

Extraordinary items [attach details]


24.29.

NET INCOMEPROFIT (LOSS) FOR PERIOD







OTHER COMPREHENSIVE INCOME
30.

Gain (loss) arising on revaluation of properties
To E5a


31.

Actuarial gain (loss) on defined benefit pension plans
To E5b



32.
Other comprehensive income for the period, net of tax [Lines 30
plus 31]
33.

Total comprehensive income for the period [Lines 29 plus 32]


25.

Dividends paid or partners drawings



26.
Other [attach details]



27.
NET CHANGE TO RETAINED EARNINGS [lines 23 to 25]





December 11, 2008

FORM 1, PART I – STATEMENT D
NOTES AND INSTRUCTIONS

Comprehensive Income

A comparative statement of income prepared in accordance with generally accepted accounting principles and containing at least the
information shown in the pre-printed Statement D may be substituted. It should be affixed to the statement provided.

It is recognized that the components of the revenue and expense classification on this statement may vary between firms. However, it is important
that each firm be consistent between periods. Fair presentation may require the separate disclosure of additional large and/or unusual items
by way of a note to this statement.
Comprehensive income represents changes in equity during a period, including profit and loss for the period and other comprehensive
income (OCI). OCI captures certain gains and losses outside of net income. For regulatory financial reporting, there are two acceptable
sources of other comprehensive income (OCI):
• the use of the revaluation model for property, plant and equipment (PPE) and intangible assets; and
• actuarial gain (loss) on defined benefit pension plans.

Lines

2
Assets under Administration means the market value of all mutual funds reflected in the client accounts (nominee and
client name) of a Member in all provinces of Canada, excluding Quebec.
31-712 All Commission Revenue should be reported net of payouts to carrying dealers. Commission paid to salespersons should be
shown on line 15.Report all gross commission revenue earned in the appropriate lines.

Report all other revenue earned on a gross basis.

Commission paid to salespersons must be reported on line 14 (Expenses – Variable compensation)

Payouts to other parties must be reported on line 15 (Expenses – Commissions and fees paid to third parties).

31 Includes all gross commissions and trailer fees earned on mutual fund transactions, net of any payouts to the mutual funds.

7
Include all interest revenue. Interest revenue earned by the Member from holding client cash balances should be reported on this
line.

The related interest cost paid to clients should be reported on line 18 (Expenses – Financing costs).

8
Include portfolio service fees, RRSP fees and any charges to clients that are not related to commissions or interest.

10
Includes any charges to clients that are not related to commissions.
119 Includes fund management fees and other consulting fees not charged to parties other than to clients.

1210 Includes all fees earned as a result of referring clients to another entity for products or services.

11
Include all trading profits or losses from principal trading activities and adjustment of marketable securities to market value.

1213 Includes foreign exchange profits/ or losses and all other revenue not reported above.

1415 This category should iInclude commissions, bonuses and other variable compensation of a contractual nature. Examples would
encompass commission payouts to salespersons. Discretionary bonuses should be included on line 21. All contractual bonuses
should be accrued monthly and included on line 15. Discretionary bonuses should be reported separately on line 26 (Expenses –
Bonuses).

15
Include payouts to other parties.

16 Includes all interest on external subordinated debt, as well as non-discretionary contractual interest on internal subordinated debt.

18
Include the interest cost paid to clients.

19
Include all operating expenses except those mentioned elsewhere.




December 11, 2008

17
Includes trading profits/losses from principal trading activities and adjustment of marketable securities to market value.
1820 Unusual items are items that have some but not all of the characteristics of extraordinary items [line 23]. An example of an unusual
item may include costs associated with a branch closure.Unusual items result from transactions or events that are not expected to
occur frequently over several years, or do not typify normal business activities.

Discontinued operations, such as a branch closure, should be reported separately on line 21 (Profit (loss) for the year from
discontinued operations).

21
A discontinued operation is a business component that has either been disposed or is classified as held for sale and represents (or is
part of a plan to dispose) a separate significant line of business or geographical area of operations. For example, a branch closure.
The profit (loss) on discontinued operations for the year is on a pre-tax basis. The tax component is to be included as part of the
income tax expense (recover) on Statement D line 28.

19
Includes all operating expenses except those mentioned elsewhere: Variable compensation [line 15], discretionary bonuses [line
21].

22
This is the profit (loss) number used for the Early Warning profitability tests.

23
When a Member uses the revaluation model for its PPE and intangible assets, changes to the fair value may result in recognizing
income after considering accumulated depreciation (or amortization) and OCI surplus.

24
When a Member uses the revaluation model for its PPE and intangible assets, changes to the fair value may result in recognizing
expense after considering accumulated depreciation (or amortization) and OCI surplus.

25
Include interest expense on subordinated debt with related parties for which the interest charges can be waived if required.

2126 This category should include discretionary bonuses and all bonuses to shareholders in accordance with share ownership. However,
please read the instructions for line 15 before completing. These bonuses are in contrast to those reported on Line 14 (Expenses –
Variable compensation).

2228 Includes
ONLYonly income taxes. Realty and capital taxes should be included on in line 19 (Expenses – Operating expenses).
Also include the tax component relating to the profit (loss) on discontinued operations for the year. Taxes at 33-1/3% on partnership
profits should be disclosed on this line. The current provision should be net of loss carryforwards, the details of which should be
disclosed on Schedule 3.

30
When a Member uses the revaluation model to re-measure its PPE and intangible assets, changes to fair value may result in a
change to shareholders’ equity after considering accumulated depreciation (amortization) and income or expense from asset
revaluation.

31
When a Member has a defined benefit pension plan and initially adopts a policy of recognizing actuarial gains and losses in full in
OCI, the subsequent adjustments must be recognized in OCI.

23
Extraordinary items have the following characteristics:

(a) they are not expected to occur frequently over several years;

(b) they do not typify normal business activities; and

(c) they do not depend primarily on decisions or determinations by management.

They should be reported net of tax. An example of an extraordinary item would include the destruction of a company’s uninsured
art collection by fire.
26
Includes only direct charges or credits to retained earnings that are capital transactions (e.g. premium on share redemptions),
income of a subsidiary accounted for by the equity method and prior period adjustments. Any adjustment(s) required to reconcile
retained earnings on the Monthly Financial Report to the MFDA Financial Questionnaire and Report should be posted to the
individual Statement D line items on the first Monthly Financial Report that is filed after the adjustment(s) is known.




December 11, 2008

STATEMENT E

PART I
MFDA FINANCIAL QUESTIONNAIRE AND REPORT
FORM 1, PART I – STATEMENT E
_______________________________________________
(Member Firm Name)
STATEMENT OF CHANGES IN CAPITAL AND RETAINED EARNINGS (CORPORATIONS) OR
UNDIVIDED PROFITS (PARTNERSHIPS)
FOR THE PERIODYEAR ENDED __________________________


PART A. CHANGES IN ISSUED CAPITAL

REFERENCE

CURRENT YEAR
A. CHANGES IN CAPITAL


1.
Balance at last year-end ………………………………………………………………………. $
2.
Increases (Decreases) during period [provide details] ………………………………….

(a) ……………………………………………………………………………………………………..

(b) ……………………………………………………………………………………………………..

(c) ……………………………………………………………………………………………………..
3. Present
capital ……………………………………………………………………………………. $

A-38
B. ANALYSIS OF PRESENT CAPITAL [see note 1]

1. (a) …………………………………………………………………………………………………….. $

(b) ……………………………………………………………………………………………………..

(c) ……………………………………………………………………………………………………..

To agree with line A-3 above……………………………………………………………….. $

C. RETAINED EARNINGS [CORPORATIONS] OR


UNDIVIDED PROFITS [PARTNERSHIPS]
1.
Retained earnings or undivided profits, at last year-end

$
2.
Increases (Decreases) during period [see note 2]:

D-24 (a) Net income (loss) for the period ……………………………………………………….

D-25 (b) Dividends paid or partners drawings…………………………………………………

D-26 (c ) Other [provide details]……………………………………………………………………….

………………………………………………………………………………………………………….

………………………………………………………………………………………………………….

………………………………………………………………………………………………………….

3.
Present retained earnings or undivided profits………………………………………… $

A-39

Notes Share
capital
or
Share premium Issued
capital
Partnership
capital


[a] [b]
[c] = [a] + [b]


C$ C$ C$






1 Beginning
balance







December 11, 2008

2
Increases (decreases) during




the period [provide details]

(a)





(b)





(c)




3 Ending
balance




A
43

PART B. CHANGES IN RESERVES

Notes General Properties Employee
Total reserves
revaluation
benefits

[a] [b] [c] [d] = [a] + [b]
+ [c]

C$
C$ C$ C$

4 Beginning
balance

5
Changes during the period

(a) Other comprehensive income for the

period – properties revaluation (From D
N/A
N/A
30)

(b) Other comprehensive income for the

period – actuarial gain (loss) on defined
N/A
N/A
benefit pension plans (From D 31)

(c) Recognition of share-based payments

(From D 19)
N/A
N/A

(d)

Transfer from/to retained earnings

(From/to E 12)
N/A
N/A

(e)

Other
[provide details]

6 Ending
balance

A 44

PART C. CHANGES IN RETAINED EARNINGS

Notes
Retained earnings
Retained earnings
(current
(previous
year/month)
year/month)

C$ C$

7 Beginning
balance

8
Effect of change in accounting policy [provide details]

(a)

N/A

(b)

N/A

9 As
restated

N/A

10
Payment of dividends or partners drawings

11
Profit or loss for the period (From D 29)

12
Other direct charges or credits to retained earnings [provide

details]
(a)

(b)

(c)

13 Ending
balance

A 45




December 11, 2008

NOTES:
1.Part B – Disclosure should be made of authorized and issued share capital in accordance with generally accepted
accounting principles.
2.Line C-2 – Direct charges or credits to retained earnings are to be restricted to capital transactions (e.g. dividends, premium
on share redemptions, etc.) and prior period adjustments. All income items of an extraordinary or unusual nature (e.g.
profits or losses on sale of fixed assets etc.) are to be included in Statement D in arriving at net income or loss for the
period. The latter amount is to be transferred in total to retained earnings [Statement E-line C-2(a)].




December 11, 2008

FORM 1, PART I – STATEMENT E
NOTES AND INSTRUCTIONS

PART A. CHANGES IN ISSUED CAPITAL

Share premium

When the Member sells its shares (initial issuance or from treasury), share premium is the excess amount received by the
Member over the par value (or nominal value) of its shares. Share premium cannot be used to pay out dividends.

PART B. CHANGES IN GENERAL RESERVE

General reserve

A Member may want to transfer from retained earnings. The creation of a general reserve gives the Member an added
measure of protection.

Reserve – Employee benefits

When a Member has a defined benefit pension plan and initially adopts a policy of recognizing actuarial gains and losses in
full in other comprehensive income (OCI), all subsequent adjustments must be recognized as other comprehensive income
and will be accumulated in a reserve account.

When a Member has stock option or share awards granted to its employees by issuing new shares, the Member recognizes the
fair value of the option or new shares granted as an expense with a corresponding increase in the reserve account.

Reserve – Properties revaluation

When using the revaluation model for certain non-allowable assets (PPE and intangibles), a Member will account for the
initial increase in value as other comprehensive income and will accumulate the increase (and subsequent changes) in a
revaluation reserve account.

PART C. CHANGES IN RETAINED EARNINGS

Changes in accounting policy and retroactive adjustment of prior year’s retained earnings

A change in accounting policy in the current year requires retroactive adjustment of the prior year’s retained earnings.

The beginning balance of the current period must be the ending balance of the prior period.




December 11, 2008

STATEMENT F

PART I
MFDA FINANCIAL QUESTIONNAIRE AND REPORT
FORM 1, PART I – STATEMENT F
_______________________________________________
(Member Firm Name)
STATEMENT OF CHANGES IN SUBORDINATED LOANS
FOR THE PERIODYEAR ENDED ____________________________

Notes

C$
1.
Balance at last periodyear-end

$
2.
Increases during period


[give name of lender and date of increase]



(a)



(b)



(c)



(d)



(e)



(f)



3. Subtotal



4.
Decreases during period


[give name of lender and date of decrease]



(a)



(b)



(c)



(d)



(e)



(f)



5.
Subtotal



6.
Present subordinated loans

$



A-3740


FORM 1, PART I – STATEMENT F
NOTES AND INSTRUCTIONS:

1. At the annual audit date only, provide an attachment to Statement F showing the amount and the name of the lender
for each subordinated loan outstanding.

2. “subordinated loans” means approved loans, pursuant to an agreement in writing in the form prescribed by the
CorporationMFDA, the payment of which is deferred in favour of other creditors and is subject to regulatory approval.




December 11, 2008

MFDA FINANCIAL QUESTIONNAIRE AND REPORT
PART II – AUDITORS' REPORT

TO: The MFDA and the MFDA Investor Protection Corporation.

We have audited Part I of the MFDA Financial Questionnaire and Report (“Part I – FQR”)

of__________________________ as at _________________________ and for the year then reported thereon as of

(firm)



(date)


_________________________.
(date)
The additional information set out in Part II of the MFDA Financial Questionnaire and Report Schedules 1 to 4 (“Part II –
FQR”) have been subjected to the procedures applied in the audit of Part I – FQR, and in our opinion, present fairly the
information contained therein, in all material respects, in relation to Part I – FQR taken as a whole.
No procedures have been carried out in addition to those necessary to form an opinion on Part I – FQR.
The additional information set out in Part II – FQR, which have not been, and were not intended to be, prepared in
accordance with Canadian generally accepted accounting principles, are solely for the information and use of the Company,
the MFDA and the MFDA Investor Protection Corporation to comply with the By-laws, Rules and Policies of the MFDA.
The additional information set out in Part II – FQR are not intended to be and should not be used by anyone other than the
specified users or for any other purpose.

___________________________________
_____________________________
[name of auditing firm]
[date]

___________________________________
______________________________
[signature]
[place of issue]

NOTES:

A measure of uniformity in the form of the auditors' report is desirable in order to facilitate identification of circumstances
where the underlying conditions are different. Therefore, when auditors are able to express an unqualified opinion, their
report should take the above form.

Any limitations in the scope of the audit must be discussed in advance with the MFDA. Discretionary scope limitations will
not be accepted.

Copies with original signatures must be provided to the MFDA.




December 11, 2008

FORM 1 – PART I – NOTES

_______________________________________________
(Member Name)

NOTES TO THE FORM 1 FINANCIAL STATEMENTS

at ________________________



December 11, 2008

FORM 1, PART II
REPORT ON COMPLIANCE FOR INSURANCE AND SEGREGATION OF
CASH AND SECURITIES

To: The MFDA Mutual Fund Dealers Association of Canada (the Corporation) and the MFDA Investor Protection
Corporation.


We have performed the following procedures in connection with the regulatory requirements for
__________________________________________ to maintain minimum insurance and segregate client cash and securities

(Member firm)
as outlined in the By-laws, Rules, and Policies of the CorporationMFDA and the MFDA Investor Protection Corporation.
Compliance with the CorporationMFDA By-laws, Rules, and Policies with respect to insurance and the segregation of client
cash and securities is the responsibility of the management of the Member firm. Our responsibility is to perform the
procedures requested by you.

1. We
have read the Member firm’s written internal control policies and procedures with respect to maintaining insurance
coverage and segregation of client cash and securities to determine that such policies and procedures meet the minimum
required, as prescribed by the Rules and Policies of the CorporationMFDA in regards to establishing and maintaining
adequate internal controls.

2. We obtained representation from appropriate senior management of the Member firm that the Member firm’s internal
control policies and procedures with respect to insurance and segregation of client cash and securities meet the minimum
required, as prescribed by the Policies of the CorporationMFDA in regards to establishing and maintaining adequate
internal controls and that they have been implemented.

3. We read the Financial Institution Bond Form (the “FIB”) insurance policy(s) to determine that the FIB policy(s) includes
the minimum required clauses and coverage limits as prescribed in the By-laws, Rules and Policies of the
CorporationMFDA.


4. We requested and obtained confirmation from the Member firm’s Insurance Broker(s) as at ________________ 20____

(period end date)

as to the FIB coverage maintained with the Insurance Underwriter(s) including:

(a)
clauses
(d) name of insurer and insured
(b)
aggregate and single loss limits
(e) claims made on the policy since last audit date
(c)
deductible amounts
(f) details of losses/claims outstanding

5. We traced the total client cash and securities held by the Member to the Member's books and records as at the audit date
to check that the compilation of the total client cash and securities held by the Member is in accordance with the Notes
and Instructions to Schedule 4 of Form 1.

6. We obtained a listing of all securities segregation locations used by the Member firm and determined that each location
met the definition of “Acceptable Securities Locations” as defined in the General Notes and Definitions to Form 1.

7. We obtained a listing of all cash segregation locations used by the Member firm and determined that each location met
the definition of "Acceptable Institutions" as defined in the General Notes and Definitions of Form 1 and that each
account was designated as "in trust" and was interest bearing.

These procedures do not constitute an audit and therefore we express no opinion on the adequacy of the Member firm’s
insurance coverage, segregation of client cash and securities, or its internal control policies and procedures.

This letter report is for use solely by the CorporationMFDA and the MFDA Investor Protection Corporation to assist in their
assessment of the Member firm’s compliance with the requirements to regarding maintaining minimum insurance and
segregating client cash and securities as outlined in the Bylaws, Rules and Policies of the CorporationMFDA and not for any
other purpose.





December 11, 2008

(auditing firm)
(date)

(signature)
(place
of
issue)



December 11, 2008
REPORT ON COMPLIANCE FOR SEGREGATION OF CASH AND SECURITIES

To: The MFDA and the MFDA Investor Protection Corporation.

We have performed the following procedures in connection with the requirement for ________________________________

(Member firm)
to segregate client securities as outlined in the By-laws, Rules and Policies of the MFDA. Compliance with the MFDA By-
laws, Rules and Policies with respect to the segregation of client cash and securities is the responsibility of the management
of the Member firm. Our responsibility is to perform the procedures requested by you.

1. We have read the Member firm’s written internal control policies and procedures with respect to segregation of client
cash and securities to determine that such policies and procedures meet the minimum required under the policies of the
MFDA in regards to establishing and maintaining adequate internal controls.

2. We obtained representation from appropriate senior management of the Member firm that the Member firm’s internal
control policies and procedures with respect to segregation of client cash and securities meet the minimum required
under the policies of the MFDA in regards to establishing and maintaining adequate internal controls.

3. We obtained a listing of all securities segregation locations used by the Member firm and determined that each location
met the definition of “Acceptable Securities Locations” as defined in the General Notes and Definitions to the MFDA
Financial Questionnaire and Report.

4. We obtained a listing of all cash segregation locations used by the Member firm and determined that each location met
the definition of "Acceptable Institutions" as defined in the General Notes and Definitions of the MFDA Financial
Questionnaire and Report and that each account was designated as "in trust" and was interest bearing.

As a result of applying the above procedures, we found the following exceptions:

These procedures do not constitute an audit of segregation of client cash and securities and therefore we express no opinion
on the adequacy of the Member firm’s internal control policies or procedures over segregation of client cash and securities.

This letter is for use solely by the MFDA and the MFDA Investor Protection Corporation to assist in their assessment of the
Member firm’s compliance with the requirements regarding segregation of client cash and securities as outlined in the By-
laws, Rules and Policies of the MFDA and not for any other purpose.

(auditing firm)
(date)

(signature) (place of issue)



December 11, 2008
DATE: __________________________
SCHEDULE 1

PART II
MFDA FINANCIAL QUESTIONNAIRE AND REPORT FORM 1, PART II – SCHEDULE 1

DATE:___________________________
_______________________________________________
(MemberFirm Name)
ANALYSIS OF SECURITIES OWNED AND SOLD SHORT AT MARKET VALUE

Market Value

Margin
Long
Short
required
Category

Notes

C$

C$

C$
1. Money
market

$
$
$

Accrued interest


NIL

TOTAL MONEY MARKET






2.
Money market mutual funds

NIL




3. Mutual
funds

NIL

(other than money market mutual funds)






4. Equities



Accrued interest on convertible debentures


NIL
TOTAL
EQUITIES






5.
BondsDebt



Accrued interest


NIL
TOTAL
BONDSDEBT






6. Other
([provide details])



Accrued interest


NIL
TOTAL
OTHER






7. TOTAL

$
$
$

A-3

A-2224

B-109


December 11, 2008
FORM 1, PART II – SCHEDULE 1
NOTES AND INSTRUCTIONS

1. All securities are to be valued at market (see General Notes and Definitions) as of the reporting date. The margin rates to
be used are those outlined below:

(a)
Bonds, Debentures, Treasury Bills and Notes

(i)
Bonds, debentures, treasury bills and other securities of or guaranteed by the Government of
Canada, of the United Kingdom, of the United States of America or guaranteed by any province of
Canadaand of any other national foreign government (provided such foreign government securities
are currently rated Aaa or AAA by Moody’s Investors Services Inc. or Standard & Poor’s
Corporation, respectively), maturing (or called for redemption):

within 1 year
1% of market value multiplied by the fraction
determined by dividing the number of days to
maturity by 365

over 1 year

5% of market value

(ii)
All other bonds, debentures and notesBonds, debentures, treasury bills and other securities of or
guaranteed by any province of Canada and obligations of the International Bank for
Reconstruction and Development, maturing (or called for redemption):

within 1 year
32% of market value multiplied by the fraction
determined by dividing the number of days to
maturity by 365

over 1 year

105% of market value

(iii)
Bonds, debentures or notes (not in default) of or guaranteed by any municipal corporation in
Canada or the United Kingdom maturing:

within 1 year
3% of market value multiplied by the fraction
determined by dividing the number of days to
maturity by 365

over 1 year

5% of market value

(iv)
Other non-commercial bonds and debentures (not in default):

10% of market value

(v)
All other bonds, debentures and notes (not in default):

within 1 year
3% of market value multiplied by the fraction
determined by dividing the number of days to
maturity by 365

over 1 year

10% of market value


December 11, 2008

(b)
Bank Paper

Deposit certificates, promissory notes or debentures issued by a Canadian chartered bank (and of Canadian chartered
bank acceptances) maturing:

within 1 year
2% of market value multiplied by the fraction determined by dividing the
number of days to maturity by 365

over 1 year
10% of market value

(c) Mutual
Funds

Securities of mutual funds qualified by prospectus for sale in any province of Canada shall be margined at the
following rates:

Money Market Funds (as defined in NI81-102) – 5% of market value.

All Other Mutual Funds – 50% of market value.

(d)
Stocks

On securities (other than bonds and debentures) including rights and warrants listed on any recognized stock
exchange in Canada or the United States:

Long Positions – Margin Required

Securities selling at $2.00 or more – 50% of market value

Securities selling at $1.75 to $1.99 – 60% of market value

Securities selling at $1.50 to $1.74 – 80% of market value

Securities selling under $1.50 – 100% of market value

Short Positions – Credit Required

Securities selling at $2.00 or more – 150% of market value

Securities selling at $1.50 to $1.99 – $3.00 per share

Securities selling at $0.25 to $1.49 – 200% of market value

Securities selling at less than $0.25 – market value plus $0.25 per share

(e)
FOR ALL OTHER SECURITIES – 100%.

2. Schedule
1
summarizes
all securities owned and sold short by the categories indicated. Details that must be included for
each category are total long market value, total short market value and total margin required as indicated.

3. The Examiners and/or Auditors of the CorporationMFDA may request additional details of securities owned or sold
short as they, in their discretion, believe necessary.

Line 1 – Money market shall include Canadian & US Treasury Bills, Bankers Acceptances, Bank paper (Domestic &
Foreign), Municipal and Commercial Paper or other similar instruments.

December 11, 2008
DATE: _____________________________
SCHEDULE 2

PART II
MFDA FINANCIAL QUESTIONNAIRE AND REPORT
FORM 1, PART II – SCHEDULE 2

DATE:______________________
_______________________________________________
(MemberFirm Name)
ANALYSIS OF CLIENTS' DEBIT BALANCES

Advanced Redemption
Other Client

Proceeds Receivable
Receivables

[attach details]

1. Non-registered accounts………………………………..
_ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _

2. RRSP and other registered accounts…………….
_ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _

3. TOTAL……………………………………………………………
$============ $============

A-12
Note 2
Line

Advanced
Other Client
Client Debit
Redemption
Receivables
Balances
Proceeds
Receivable

[a] [b]
[c] = [a] + [b]

C$ C$ C$
1.
Non – registered accounts

2
RRSP and other registered accounts

3 TOTAL

A-13

SUPPLEMENTARY DISCLOSURE:
NAME OF RRSP TRUSTEE(S)
1.

2.

3.

4.


December 11, 2008

FORM 1, PART II – SCHEDULE 2
NOTES: AND INSTRUCTIONS

1. Rule 3.2.1 prohibits Members from lending or extending credit to a client unless the Member is in compliance with Rule
3.2.3 which provides for the advancement of redemption proceeds.

2.Receivables from clients are non-allowable assets and are to be reported on Statement A line 18.

Supplementary Disclosure:
The name of the RRSP trustee(s) used by the Member must be provided. The RRSP or other similar balances held at a
trustee must be insured by the Canada Deposit Insurance Corporation (CDIC) or Quebec Deposit Insurance Corporation
(QDIC).

December 11, 2008
DATE: ____________________________
SCHEDULE 3

PART II
MFDA FINANCIAL QUESTIONNAIRE AND REPORT FORM 1, PART II – SCHEDULE 3

DATE:_____________________________
_______________________________________________
(MemberFirm Name)
CURRENT INCOME TAXES


A. INCOME TAX PAYABLE (RECOVERABLE) INCOME TAX LIABILITY (ASSET)
C$

C$
1.
Balance payable (recoverable) at last periodyear-end

$
2.
(a) Payments (made) or received relating to above balance
$

(b) Adjustments, including reassessments, relating to prior periods [giveprovide
details if significant]




3. Total adjustment to prior periods’ years’ payable (recoverable) taxes during
current periodyear



4. Subtotal
[add or subtract line 3 from line 1]



5. Provision for (recovery of) taxes, including Income tax expense taxes on
extraordinary items – current(recovery)


D-2822 (a)


6.
less: Current installments



7. Other
adjustments
[giveprovide details if significant]



8.
Total adjustment for current year's taxestax liabilities (assets)


9. TOTAL
PAYABLE (RECOVERABLE) LIABILITY (ASSET)[add or subtract
line 8 from line 4]

$
A-8 — if
recoverableasset
A-248 — if



payableliability

B. ANALYSIS OF FUTURE INCOME TAXES
Credit re
Credit re Non-current
Current assets assets and
Debit and liabilities liabilities
1. Unrealized – Trading……………………………………. $_ _ _ _ _ _ _ _ $_ _ _ _ _ _ _ _ $_ _ _ _ _ _ _ _
– Commission…………………………….. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
2. CCA/Depreciation …………………………………………………. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
3. Other [give details] …………………………………………………. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
4. TOTAL FUTURE INCOME TAXES………………………. $============ $============ $============
A-18 details A-25


December 11, 2008
DATE: _____________________________
SCHEDULE 4
PAGE 1 OF 2
PART II
MFDA FINANCIAL QUESTIONNAIRE AND REPORT FORM 1, PART II – SCHEDULE 4
DATE: _____________________________
_______________________________________________
(MemberFirm Name)
INSURANCE


PART A. FINANCIAL INSTITUTION BOND (FIB) CLAUSES (A) TO (E)
C$
1. Minimum coverage required for each clause:
LEVEL 1, 2 OR 3 DEALERS
(a) Lesser of $50,000 per Approved Person or $200,000
_ _ _ _ _ _ _
(b) Allowable assets (A-112) $============ x 1%
_ _ _ _ _ _ _
Greater of (a) and (b) above


$===========

The actual coverage required for each clause is the greater of (a)and (b) above
to a maximum requirement of $25,000,000.

LEVEL 4 DEALERS
(a) Minimum coverage of

$500,000
(b) Total client cash and securities

held by the Member

$============ x 1%
_ _ _ _ _ _ _
(c) Allowable assets (A-112) $============ x 1%
_ _ _ _ _ _ _
Greater of (a), (b) and (c) above


$===========

The actual coverage required for each clause is the greater of (a), (b) and (c) above
to a maximum requirement of $25,000,000.
2. Coverage maintained per FIB
_ _ _ _ _ _ _
[Notes 3&7]
3. Excess / (Deficiency) in coverage
$============
[Note 4]
4. Amount deductible under FIB (greatest under any clause)
$============
[Note 5]


B-101
PART B. REGISTERED MAIL INSURANCE
1. Coverage per mail policy
$============
[Note 6]
PART C. FIB AND REGISTERED MAIL POLICY INFORMATION [Note 8]
FIB/
Expiry
Insurance Company
Name of the Insured Registered
Mail Date Coverage Premium


December 11, 2008

DATE: _____________________________
SCHEDULE 4
PAGE 2 OF 2
PART II
MFDA FINANCIAL QUESTIONNAIRE AND REPORTFORM 1, PART II – SCHEDULE 4

_______________________________________________
(MemberFirm Name)
INSURANCE


PART D. LOSSES AND CLAIMS [Note 9]

Deductible
Date of
Date of
Amount
Applying
Claim
Date
Loss
Discovery of Loss

to Loss

Description

Made? Settlement
Settled


December 11, 2008
FORM 1, PART II – SCHEDULE 4
NOTES AND INSTRUCTIONS

1.
Member firms must maintain minimum insurance in type and amounts as outlined in the By-laws, Rules and Policies of the
CorporationMFDA and the MFDA Investor Protection Corporation.

2.
Schedule 4 must be completed at the audit date.

3.
The amounts of insurance required to be maintained by a Member firm shall as a minimum be by way of a Financial Institution
Bond with a double aggregate limit or a provision for full reinstatement.

For Financial Institution Bond policies containing an “aggregate limit” coverage, the actual coverage maintained should be
reduced by the amount of reported loss claims, if any, during the policy period.

Cash and securities held by a Member in its capacity as agent for the trustee must be included in the determination of total
client cash and securities held by the Member.

4.
The Certificate of Partners or Directors contains a question pertaining to the adequacy of insurance coverage. The Auditors’
Report requires the auditor to state that the question has been fairly answered. The CorporationMFDA Rules also state:
“Should there be insufficient coverage, firms shall be deemed to be complying with this Rule 4 provided that any such
deficiency does not exceed 10% of the insurance requirement and that evidence is furnished within two months of the dates of
completion of the monthly operations questionnaire and annual audit that the deficiency has been corrected. If the deficiency is
10% or more of the insurance requirement, action must be taken by the Member to correct the deficiency within 10 days of its
determination and the Member shall immediately notify the CorporationMFDA.”

5.
A Financial Institution Bond maintained pursuant to the MFDA Rules may contain a clause or rider stating that all claims made
under the bond are subject to a deductible, provided that the firm’s margin requirement is increased by the amount of the
deductible.

6.
Every MFDA Member firm shall effect and keep in force Mail Insurance against loss arising by reason of any outgoing
shipments of money, securities, or other property negotiable or non-negotiable, by first-class mail, registered mail, registered air
mail, express or air express, such insurance to provide at least 100% coverage.

7.
The aggregate value of securities in transit in the custody of any employee or any person acting as a messenger shall not at any
time exceed the coverage per the Financial Institution Bond (Schedule 4, line 2).

8.
List all Financial Institution Bond and Registered Mail underwriters, policies, coverage and premiums indicating their expiry
dates. State type of aggregate limits, if applicable, or note that provision for full reinstatement exists.

9.
List all losses reported to the insurers or their authorized representatives including those losses that are less than the amount of
the deductible. Do not include lost document bond claims. Indicate in the “Amount of Loss” column if the amount of the loss
is estimated or unknown as at the reporting date.

Losses should continue to be reported on Schedule 4 Part D until resolved. In the reporting period where a claim has been
settled or a decision has been made not to pursue a claim, the loss should be listed along with the amount of the settlement, if
any.

At the annual audit date, list all unsettled claims, whether or not the claims were initiated in the period under audit. In
addition, list all losses and claims identified in the current or previous periods that have been settled during the period under
audit.


December 11, 2008
DATE: _____________________________
STATEMENT C
PAGE 2 OF 2
PART II
MFDA FINANCIAL QUESTIONNAIRE AND REPORT FORM 1, PART II – SCHEDULE 5
DATE: _____________________________


_______________________________________________
(MemberFirm Name)
EARLY WARNING TESTS

Early Warning

A. CAPITAL DEFICIENCY
B-18
Is RAC less than 0?
_________

YES/NO

B. LIQUIDITY TEST
C-4
Is Early Warning Excess less than 0? _________

YES/NO
C. PROFITABILITY TEST [(note 3)]


1. Loss for current quarter

$=============
B-1618 2. RAC
[at questionnaire date]

$=============

Is line 2 less than line 1?


_________

YES/NO
D. FREQUENCY PENALTY


Has the Member triggered Early Warning

more than 2 times in the past 12 months?









_________

YES/NO


December 11, 2008
STATEMENT C FORM 1, PART II – SCHEDULE 5
NOTES AND INSTRUCTIONS

1. The objective of the various Early Warning Tests is to measure characteristics likely to identify a firm
heading into financial trouble and to impose restrictions and sanctions to reduce further financial
deterioration and prevent a subsequent capital deficiency. “Yes” answers indicate Early Warning has been
triggered.

If the firm is currently capital deficient (i.e. risk adjusted capital is negative), only Part A of the early
warning tests need be completed.

2. The profit or loss figures to be used are before asset revaluation income and expense, bonuses, and income
tax expensees and extraordinary items [Statement D, line 22 – Profit (loss) for Early Warning test20]. Note that the
“current quarter” figure must also reflect any audit adjustments made subsequent to the filing of the
Monthly Financial Report.monthly report.

3. If the current quarter is profitable, enter a "No" answer for Part C.




December 11, 2008

FORM 1, PART II – SCHEDULE 6

_______________________________________________
(Member Name)
DATE: _____________________________
OTHER SUPPLEMENTARY INFORMATION



1.
Number of salespersons

(a)
Registered only in Quebec…………………………………………………………………. _____

(b)
Registered outside Quebec………………………………………………………………… _____


Total…………………………………………………………………………………………………_____


2.
Assets Under Administration at statement date…………………………………………………… _____




December 11, 2008

FORM 1, PART II – SCHEDULE 6
NOTES AND INSTRUCTIONS

1.
For individuals licensed in Quebec and also licensed in any other province, report on (b).

2.
Assets under Administration means the market value of all mutual funds reflected in the client accounts

(nominee and client name) of a Member in all provinces of Canada, excluding Quebec.